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Retiree Health Benefits a Thing of the Past
Tweet Share on Facebook April 23, 2008 Comment (6)A Wall Street Journal article by Paul Fronstin and Stephen Blakely of the Employee Benefit Research Institute says we are past the tipping point when health benefits were available for retirees. They write:
Most active workers will never be eligible for health insurance in retirement through a former employer. The Agency for Healthcare Research and Quality (AHRQ) reports that only 13 percent of private-sector establishments offered health benefits to early retirees in 2005, down from 22 percent in 1997. Furthermore, 13 percent of private-sector establishments offered health benefits to Medicare-eligible retirees in 2005, down from 20 percent in 1997. The trend among large employers—those most likely to offer health benefits—has been down as well.
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401(k) Investing: Buy In for the Long Term
Tweet Share on Facebook April 18, 2008 Comment (2)Dear Planning to Retire,
As a 25-year-old watching my 401(k) balance heading in the wrong direction, should I be stuffing money in my mattress?
Having a 401(k) in your 20s already puts you on the right track. If you're a 20-something, you have the most to gain from the effect of compounding over time. But making your investment grow can be tricky, and there are plenty of pitfalls to trip you up. I posed five questions about 401(k) investing in your 20s to Brian Jones, a certified financial planner and author of Getting Started: The Financial Guide for a Younger Generation. Excerpts:
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A Tricky Number: Your Own Life Expectancy
Tweet Share on Facebook April 17, 2008 CommentSaving for retirement is largely a matter of figuring out the slippery number of how many years you will live and accruing enough assets to live comfortably until that day arrives, plus any inheritance you want to leave behind. The National Center for Health Statistics puts the average American life expectancy at 77.8 years. But, of course, the elusive number varies by gender, race, health, genetics, lifestyle choices, and even socioeconomic status, the New York Times reports.
Many financial advisers will tell you to conservatively plan for 30 years in retirement. But Dean Foster, a professor of statistics as the University of Pennsylvania's Wharton School, contends he can predict your life expectancy using the information you enter and statistics about Americans, as does Thomas Perls, a geriatrician at the Boston University medical school who studies centenarians. Armed with the age at which you're expected to die, you can more accurately plan when to sign up for Social Security and how much you need to save.
You can also take a short Longevity Alliance online quiz that promises to tell you "your attitude toward longevity and money, along with tips and ideas to help you make sure your health and wealth match your longevity expectations." Although no numbers are involved, the seven-question survey will get you thinking about how long you might live and give you a little insight into your financial personality. But if you're looking for a retirement savings goal, you should try an online calculator.
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How Do You Plan to Ride Out the Slowdown?
Tweet Share on Facebook April 14, 2008 Comment (7)I hesitate to use the "R" word. But it's easy to lose sleep if your nest egg is wrapped up in the stock market at a time when every politician and poll says the economy is ailing. Although most financial advisers won't recommend this (because selling low is not a good idea), I often think of putting my savings in something nice and conservative—even an FDIC-insured account—just in case, until things get better. (It breaks my heart to look at downward trend lines on financial statements.)
Many baby boomers are making changes to their retirement plans. A recent Longevity Alliance and Harris Interactive survey found that 39 percent of baby boomers with retirement savings have changed or plan to alter their retirement allocations as a direct result of current economic conditions. Their changes include seeking the counsel of a financial adviser (43 percent), moving funds from stocks to more conservative investments (31 percent), investing in value-priced stocks (20 percent), buying long-term-care insurance (13 percent), and purchasing an annuity (12 percent). If you have a winning strategy for riding out the downturn, please tell us about it below.
But whatever you do, don't invest your entire nest egg in one company—even if it's the one you work for. Avoid the fate of Bear Stearns and Enron employees by diversifying retirement funds outside the company.
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Who Has It Harder, Boomers or Their Kids?
Tweet Share on Facebook April 10, 2008 Comment (3)Some baby boomers have spent their entire life working at a single job, only to see health and retirement benefits slashed or even find themselves laid off in middle age. But their children, 20-somethings burdened with unprecedented student loan and credit card debt, often fear they will be the first generation in American history not to do better financially than their parents.
A recent online survey of 1,752 members of generations X and Y, those between the ages of 19 and 39, asked, "To the best of your knowledge, do you think it is easier or harder for people in your generation to do each of the following than it was for your parents 'generation'?" Their answers:
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Boomers Meet Their Match Online
Tweet Share on Facebook April 10, 2008 Comment (16)Single, divorced, and widowed baby boomers are hitting the dating scene online. A crop of websites have sprung up to connect allegedly mature adults looking for love. Most, like Senior Match, Prime Singles, Seniors Circle, and Senior Friend Finder are aptly named.
"We like to think of it as the Facebook for the over-50s," says John Hatton, cofounder of the eight-year-old website Overfifties, which has about 18,500 members. The free portion of the website allows users to chat, blog, and use message boards. But, as with many dating websites, if you want to E-mail other users, you'll have to pay up—in this case, $49.95.
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Did You Sign Up for Social Security Too Soon?
Tweet Share on Facebook April 9, 2008 Comment (794)The first baby boomers, born in 1946, can claim Social Security benefits this year, and almost a third of them plan to do so, according to a MetLife Mature Market Institute survey. But filing at age 62 pays out a reduced benefit, compared with holding out until what the Social Security Administration deems their full retirement age—in this case, 66. (Boomers born after 1946 can find their full retirement age here.) Waiting until age 70 produces an even bigger monthly check.
But if you've already signed up and received reduced payments, all hope is not lost—provided you haven't spent all the cash yet. A recent paper by Laurence Kotlikoff, professor of economics at Boston University and a codeveloper of the retirement planning software ESPlanner (Economic Security Planner), explains that you can repay the Social Security dollars you have already received and then reapply for monthly payments that are higher because of your advanced age.
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Have You Calculated How Much You Will Need for Retirement?
Tweet Share on Facebook April 9, 2008 Comment (5)Calculating how much money you will need to live comfortably in retirement is a difficult task, especially when the number seems unattainable. But simply doing a retirement-needs calculation caused 44 percent of workers to save more, according to an Employee Benefit Research Institute survey released today. Employees who established a retirement planning goal report saving or investing more (59 percent), changing their investment mix (20 percent), reducing their debt or spending (7 percent), enrolling in a retirement savings plan at work (5 percent), deciding to work longer (3 percent), and researching other ways to save for retirement (3 percent).
Yet only 47 percent of workers say they or their spouse have tried to calculate how much money they will need to retire comfortably. Calculation methods included doing their own estimate (35 percent), asking a financial adviser (33 percent), using an online calculator (15 percent), filling out a worksheet or form (9 percent), guessing (8 percent), and reading or hearing how much would be needed (7 percent). (Multiple responses were accepted.) Predictably, workers also arrived at wildly different numbers.
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Americans Lose Confidence in Their Ability to Retire
Tweet Share on Facebook April 9, 2008 Comment (3)As the economy tanks, so does Americans' confidence about their ability to afford retirement. Workers saying they feel very confident about having enough money for a comfortable retirement decreased from 27 percent in 2007 to 18 percent this year, according to an Employee Benefit Research Institute survey released today. That's the biggest one-year drop in the 18-year history of the survey.
Current retirees are also feeling the pinch. Retirees' confidence in their financial security decreased to 29 percent from 41 percent last year. "The economy and health costs are major concerns," explains Dallas Salisbury, president of the nonpartisan EBRI, in a statement.
