The Best Life
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State Money Woes May Affect Where You Retire
Continue reading… 1 CommentThe recession is causing long-term problems for the states, including budget deficits, service cuts, and public-worker pension shortfalls—none of which will disappear quickly. They will, however, raise pressure for tax increases. A third of states have already raised taxes this year, and more will be forced to do so. Significant cost and service gaps among the states will make retirement relocation decisions increasingly important. Here are some key variables that may affect where you want to live:
Budget problems. If you live in Montana, North Dakota, or Wyoming, congratulations: According to the Center on Budget and Policy Priorities, you live in the only states that have no budget deficit. Collectively, the states are looking at more than $350 billion in red ink over the next few years and the federal stimulus package represents a band-aid but no cure. "It may be particularly difficult for states to recover from the current fiscal situation," the Center on Budget and Policy Priorities said in a recent study: "The decline in housing markets has already depressed consumption and sales taxes as people refrain from buying furniture, appliances, construction materials, and the like. Property tax revenues are also affected, and local governments will be looking to states to help address the squeeze on local and education budgets." According to the center, here are the five worst states in terms of fiscal-year 2009 budget shortfalls as a percent of general fund revenues: California, 35.5 percent; Arizona, 34.8 percent; Rhode Island, 24.5 percent; Florida, 22.2 percent; Illinois, 21.4 percent.
[See the 10 Low-Tax Places to Retire.]
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Take a Road Test of Your Driving Skills
Continue reading… 17 CommentsMay is Older Americans Month. Each year, the U.S. Administration on Aging picks an apple-pie theme for the month. This year's theme: “Living Today for a Better Tomorrow.” Hard to argue with that.
My theme is a bit more specific: Make sure your driving skills are still solid. Safe driving is key to the independence of millions of older Americans, whose presence on the nation's roads is growing. By 2030, according to U.S. Census Bureau data cited by AAA, one in four drivers will be age 65 or older. -
See if You May Be a Victim of Ageism
Continue reading… 0 CommentsRemember the old saw, “You’re only as old as you feel?” It needs to be replaced. Everyone, and I mean everyone, has some bad-feeling moments as they cross into their 60s, 70s and 80s. No, the new catch-phrase for aging, particularly among the “newly” aging boomers, should be, “You’re only as old as you act.”
Kay Van Norman, an aging and wellness consultant (when she’s not riding her horse in and around Bozeman, Mont.) remembers a couple of events in her life about eight years ago that marked a branch in the road of her own development and attitudes toward aging. -
Four Fitness Tips to Get and Stay in Shape
Continue reading… 8 CommentsThe Boomerater™ Report, our weekly collaboration with online baby boomer resource Boomerater, this week has some tips for those of you who want to start going to gym but don’t know what fitness program to pursue.
Question: I am mid-50s and want to start going to gym but don't want to over strain myself. What are the tips for someone getting started on this regime for the first time? -
Should You Manage Your Own Portfolio?
Continue reading… 8 CommentsSelf-directed investing—that is, managing one's own portfolio—makes sense for savvy retirees who want more control and lower investment fees. It's especially logical for the newly risk-adverse: people who are not trying to break the bank but protect their nest eggs from breaking, as many did during the market meltdown. But taking direct responsibility for your investments is not for everyone. Follow this guide to see if there might be at least a sliver of Warren Buffett in you.
What's y our investment IQ? You need not be another Sage of Omaha to be a great manager of your own portfolio. But you do need a basic understanding of stocks, bonds and alternative investments. "You need to put as much energy and investment into your own education as you do into your investing," says Lee Barba, head of thinkorswim Group, an online broker that offers extensive education programs through its Investools affiliate. The tax consequences of your investment actions are often the deciding factor in making the best choice, so you need to know the tax treatment of your investment-account contributions, investment earnings, and distributions. You'll also need time to get comfortable with the language of buying and selling, especially since most of your investment activity will be taking place between you and a computer screen.
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Low CPI Creates Medicare Winners and Losers
Continue reading… 7 CommentsMedicare Part B, which covers physician and outpatient services, will most likely levy no premium increase on about 30 million participants in 2010 and perhaps 2011 as well. Their good fortune, however, will be effectively paid for by the program's 10 million or so other participants. They will see premiums rise by a projected 8 percent in 2010 and another 13 percent jump in 2011. This discrepancy is an ironic consequence of a piece of good news, namely that very low levels of inflation are expected to result in no cost-of-living-adjustment (COLA) for Social Security recipients in 2010 and, quite likely, 2011.
Basic Medicare includes Part A coverage of hospital services, fully paid for by the federal government, and Part B, where the government foots 75 percent of the cost and participants must pay the remaining 25 percent, in the form of insurance premiums. Basic Part B premiums are $96.40 a month. Additional amounts, ranging as high as $211.90 a month, are charged on top of the basic premium, beginning with people who make more than $85,000 (individual tax return) and $170,000 (joint filers) a year. -
Tips for New Boomer Grandparents
Continue reading… 1 CommentThe Boomerater (tm) Report, our weekly collaboration with online baby boomer resource Boomerater, looks at valuable tips on being a new boomer grandparent and some great ideas to get prepared for this new role.
Q. We're about to become first-time grandparents and would like to hear tips from others to make this is the best experience for our new grandchild and our son and daughter-in-law. We have a good relationship with the kids and live close by. I want to be supportive and helpful, but don't want to overstep boundaries in my role as mother-in-law.
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How to Get Your Finances Back on Track in 6 Steps
Continue reading… 19 CommentsThe downturn has stopped accelerating, stocks have perked up, and the banking system is healthy enough to withstand more economic adversity (with a manageable amount of additional taxpayer money). Economic reports are being sifted for signs of "green shoots" that signal economic recovery. On a personal level, it's time to come out of our bunkers, survey the damage, and get on with our lives. In financial terms, picking up the pieces may not be a pleasant exercise, especially for people in or near retirement age (or what they had hoped would be retirement age). But it needs to be done, and here are six steps to follow:
Understand your new reality. The future will not be like the past. At best, many experts agree, it will take at least two years to recover market losses, and it could take a decade if the recovery is slow. Most retirement-plan participants are not investors--they're savers. These investors never intended to actively manage their 401(k) and IRA holdings. Instead, they aimed to buy and hold, watch their investments grow over time, and then use the resulting nest egg to support a pleasant and lengthy retirement. Even during the worst of the market meltdown, the big mutual fund companies report that retirement-plan participants kept their funds in place and continued making contributions. Now, it's time to take a clear-headed view of account holdings and make a realistic judgment of your new retirement glide path. ING has an easy-to-use calculator,and there are lots of others. Their underlying assumptions may differ, so use a few to develop a consensus outlook that feels right to you.
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Six Pillars of Solid Retirement Communities
Continue reading… 75 CommentsJohn Erickson has the conviction of success. More than 22.000 people live in his 20 retirement communities in 11 states. He opened the first outside of Baltimore in 1983, at a time when large, apartment-oriented facilities were considered unappealing by many experts. Today, Erickson Retirement Communities has grown into one of largest Continuing Care and Retirement Community (CCRC) operators, and is widely considered at the top of the industry in quality and consumer appeal. Erickson himself has reached traditional retirement age but clearly has no interest in slowing down.
Erickson's facilities are big but broken down into multiple clubhouses, low-rise apartment buildings and interconnected facilities that permit residents to walk the entire complex without going outside. As with other CCRCs, residents have a continuum of living and care options depending on their physical conditions and medical needs. The most common purchasers are healthy couples in their mid-to-late 70s who move into independent living apartments and continue to keep their cars. Over time, they likely will need increasing amounts of medical care and can find assisted-living and more advanced nursing care within their community. Most expenses are covered with a single monthly payment and the initial purchase price of the apartment is refundable to the buyers or their heirs. -
Social Security, Medicare Busts Move Closer
Continue reading… 65 CommentsThe annual hair shirt report of Social Security trustees was released on Tuesday. To no one's surprise, our national retirement and health benefit programs are headed for perdition even more quickly than they were last year. Due to the recession, the effective bankruptcy date is 2037 for what's technically called the Old-Age and Survivors, and Disability Insurance (OASDI) Trust Funds. That's four years earlier than the forecast in last year's report -- no mean feat in only one year. Program expenses exceed revenues beginning in 2016 -- that's only seven years away, folks -- and all assets are exhausted 21 years later.
And this, sadly, was the good news. -
Unforgettable TV: HBO's Alzheimer's Project
Continue reading… 12 CommentsHBO launched its ambitious documentary, The Alzheimer's Project, on Mother's Day. The series is being aired on four consecutive evenings. If you don't subscribe to HBO you can view the programs at the HBO web site, along with a lot of background and educational materials.
Alzheimer's is a tough disease, on all levels. The often lengthy process of seeing a loved one's personality and memories literally disappearing before your eyes is upsetting to everyone and devastating to some. It's not the kind of thing you want to bring out of the closet and examine. And when you do, it's not the kind of thing you want to keep out in the open. The emotions are too raw, too painful. -
Need a Personal Stimulus Program? Travel!
Continue reading… 5 CommentsThe banks have had their stress tests, and it looks like they'll get the relief the need. What about the rest of us? Haven't we been pretty stressed as well? The Boomerater™ Report, our weekly collaboration with online baby boomer resource Boomerater, explores some great online discount travel resources that will help you take that well-deserved break.
Q. I'm on a budget but still need to rejuvenate with time away from my everyday routine. Looking for affordable vacation ideas, good deals, discount Web sites, etc. Especially interested in southern states and the Atlantic coast, but if I find out about a great deal to Europe or the Caribbean, I'd go for it. Can you help me?
A. Cruises are a great deal right now. I live in Miami, so I don't have to fly to get to the ship. Tripology.com can help you find a great cruise, or any other kind of trip, at a great price. You choose the destination and the services you want. You can also define a special occasion and price range. Once you fill out the trip request, Tripology contacts travel specialists who have expertise in the type of trip you want (in my case, cruises). They each put together a customized itinerary and contact you with the options. Because they are competing for your business, they will work hard to come up with the best trip in your price range.
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4 Myths About Target-Date Funds
Continue reading… 13 CommentsIt turns out that target-date funds, which are designed to be a simple, hands-off solution for investors, are widely misunderstood. Investors often mistakenly think these mutual funds provide guaranteed returns that begin at age 65, researchers have found. Even after the funds' purpose and methods were explained in an online research project, participants continued to associate the funds with Social Security-like guarantees that carry little or no investment risk.
Target-date funds have become popular default investment choices inside employer retirement programs. They are designed to automatically shift their investment holdings out of stocks to bonds to meet the increasingly conservative goals of people as they age and move into retirement. Yet the funds carry substantial investment risks. Even funds designed for people retiring next year, for example, include large percentages of stocks. That's because they are designed to support retirement plans, or glide paths, that extend 20 or 30 years into the future.
The consumer-reality disconnect is important. When 2010 target date funds—designed for people turning 65 next year—lost 25 percent of their value in 2008, outraged investors triggered a wave of sharp criticism of 401(k) retirement plans in general. (These funds posted their sixth consecutive quarterly loss in the first quarter of this year.) Legislation has been introduced to change the way the plans operate and subject mutual funds to more regulation, particularly in broadening their reporting of the fees they charge.
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It's Time for Some Life Planning
Continue reading… 19 CommentsIf you need guidance figuring out the next steps in your life -- and who doesn't these days -- a new workbook and DVD from MetLife could be very helpful. Developed by the insurer's Mature Market Institute in partnership with life coach and author Richard Lieder, Your Guide to the Good Life is a straightforward but not simplistic tool to get you thinking -- and acting -- about the important stuff in life.
There are four components in the workbook's formula for the Good Life -- living in the place you belong, with the people you love, doing the right work and having a sense of purpose in what you do. -
New Health Account from TIAA-CREF
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TIAA-CREF, the big retirement firm for educational, health, research, and other organizations, is rolling out a new retirement investment account for healthcare expenses. By setting up what's called a VEBA (voluntary employees beneficiary association), TIAA wants to help people use the same tools employed in tax-advantaged retirement accounts to fund their future medical expenses. Current surveys put lifetime retiree health expenses -- excluding what's covered by Medicare and other programs -- at upwards of $250,000, and climbing.
"We've been hearing over the last 5 and 10 years the increasing importance of continuing coverage of healthcare benefits," says Doug Chittenden, the organization's vice president of institutional product management. "In the markets we serve," he notes, "people often accept a trade-off of salary versus benefits," and the new program provides an efficient way to do that. -
New Tool to Compare Long Term Care Costs
Continue reading… 9 CommentsEach year, MetLife and Genworth Financial issue extensive surveys of long term care costs, supporting each franchise's substantial long term care insurance business. The predictable results: long term care continues to get more expensive. This, of course, has scary implications about how we will pay for in-home care providers and the extended stays in nursing homes and assisted-living facilities that are part of our demographic destiny as the nation's longest-living generation.
MetLife has two studies, both issued last fall, that cover nursing homes and assisted living costs and adult day services and home care costs. Genworth's inclusive 2009 study of these costs was released at the end of April. These studies are well worth your time if you're wrestling with long term care decisions.
Genworth also has provided a valuable service by making an interactive version of its survey available. By using this tool, you can compare up to four urban areas at a time. The tool generates side-by-side comparisons that are easy to understand. It also provides a predictive guide to future costs. Using the results of current and past-year surveys, Genworth has developed trends to predict what care costs will be like in 5, 10, 15, or 20 years. Small differences among two cities can grow very large after 20 years. -
Know the Tax Rules for Charitable Donations
Continue reading… 7 CommentsThe Boomerater™ Report, our weekly collaboration with online baby boomer resource Boomerater, deals this week with how to correctly manage tax deductions for donations.
Q. This year donation of items to charities is way up. This has been a great boost to people who really need our help, and it's also a good way to reduce your taxes through deductions. If you are making donations to charities, I'd like to know what your experiences have been and how you are ensuring you will be able to take the deduction.
A. Household items and clothing must be in good used condition or better in order for you to get a deduction. However, if you donate a single item worth over $500 you can claim a deduction, no matter its condition, but you have to submit an appraisal from a qualified appraiser. You can deduct furniture, furnishings, electronics, appliances, linens. Generally you can only get the fair market value for the items, basically what they will sell for at a thrift shop, like the Salvation Army. Special rules apply to donating cars, food, art objects, jewelry, furs and collections.
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Is Longevity Insurance Right for You?
Continue reading… 26 CommentsWith life expectancies on the rise, millions of people are now facing the challenge of how to support themselves into their 80s, 90s, and even beyond. Longevity insurance is one possible solution. That's the descriptive name for a specialized annuity designed to begin making lifetime income payments to recipients at a trigger date of their choosing.
Age 85 appears to be the most common start date for these annuities, but the date can be tailored by the recipient at the time of purchase. Usually, the type of annuity used for this protection is called a single-premium deferred annuity (SPDA), meaning the annuity is purchased with a single payment, and the date payments begin is deferred to a future time. "It's a very interesting alternative to a traditional annuity," says Anna M. Rappaport, a consulting actuary and chair of the Society of Actuaries' Committee on Post-Retirement Needs and Risks. She notes that devoting a portion of your existing nest egg to such a product will reduce your investment portfolio, and thus your income during the earlier years of your retirement. But this may be more than offset by the income you can earn in your post-85 years. Plus, you'll be certain that you can spend down your portfolio by the time you turn 85 and not worry about outliving your income.
