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4 Retirement Pillars Have Serious Cracks
Tweet Share on Facebook January 31, 2011 Comment (1)Something not-so-funny has happened to millions of Americans, including me, on the way to retirement. The rules have changed. This is hardly news, but much of the debate over retirement security is still shaped by the traditional view of retirement supports. That long-held view was that retirement was a three-legged stool, supported by an employer pension, private investments, and Social Security.
[See 10 Senior-Smart Community Ideas.]
One of the major legs of the stool—employer pensions—began weakening in the 1980s as employers began moving away from traditional, defined benefit pension plans to defined contribution plans. How's that working out for us? Not so good. As employees, we were not very responsible in taking advantage of these new contribution-based plans. As investors, we often sell low and buy high. Important reforms enacted in 2006 put badly needed improvements in place—just in time for the market crash of 2007 and 2008. Most 401(k) plans have since recovered a lot of ground, but not enough to reverse life-altering declines in nest eggs that weren't big enough even before the Wall Street collapse.
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Senior Villages Take Root as Movement Matures
Tweet Share on Facebook January 28, 2011 Comment (4)Throughout the country, 55 "village" programs are up and running, providing a range of low-cost home, medical, shopping, and social services and activities to senior members. Another 120 are in the works. And there are hundreds of other organized efforts to structure services to older residents of what are called "naturally occurring retirement communities." Their common goal is to help people stay in their homes through their 70s and 80s and, in a growing number of cases, into their 90s.
[See 10 Senior-Smart Community Ideas.]
U.S. Census Bureau numbers document the geographic impact of an aging country. There has been a gradual but sustained move toward more concentrations of older people in 55-plus neighborhoods and age-restricted communities. Last year, there were 39.5 million households with a primary homeowner who was at least 55 years of age, nearly six million more than in 2001. But over the same period, the total of non-55+ households was unchanged, at about 65.5 million. By 2020, it's projected that 45 percent of American households will be headed by someone who's at least 55 years old.
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Public Supports Continued Strong Senior Benefits
Tweet Share on Facebook January 26, 2011 Comment (5)While President Obama's State of the Union message was not directly about senior issues, it's clear that the major domestic challenges facing the new Congress—healthcare and deficit reduction—have enormous implications for older Americans.
In particular, Obama said Social Security needed to be strengthened, but he made it clear that he would oppose the degree of cuts that have been included in several deficit-reduction proposals. "We must do it without putting at risk current retirees, the most vulnerable, or people with disabilities; without slashing benefits for future generations; and without subjecting Americans' guaranteed retirement income to the whims of the stock market."
In a telling poll released in advance of the President's address, Americans again revealed no dominant public sentiment about healthcare reform and ominously, little public support for serious spending cuts to help close the huge federal deficit.
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New Guide to Avoid and Treat Elderly Falls
Tweet Share on Facebook January 24, 2011 Comment (5)The older we get, the more prone we are to falling down, which can trigger serious health consequences. New guidelines from the American Geriatrics Society (AGS) provide solid, research-backed advice for how to treat falls and, perhaps of greater importance, how to avoid them in the first place. The preventive steps are relatively easy for seniors, their families, and their physicians to put into place. Let's repeat the key words here—preventive and easy, for seniors and their families.
[See Design Awards Enable Aging in Place.]
One out of three people age 65 and older fall each year, and the odds rise to 70 percent and even higher for the oldest age groups, according to research findings distributed by the AGS. Roughly an eighth of all falls lead to serious injuries, with a total price tag of nearly $20 billion in medical bills and an average hospital bill of $17,500 for seniors who require hospitalization.
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Should You Sell Your Life Insurance Policy?
Tweet Share on Facebook January 21, 2011 Comment (10)Selling a life insurance policy to generate current income has historically been a controversial practice. Investors who buy the policies do not make money until the selling policyholder dies, creating a death-watch dynamic that is morally repugnant to critics. The life settlements industry, as it's now called, accurately notes that such settlements have long been an acceptable estate planning tool. Now, with rising numbers of aging seniors, companies and brokers involved in life settlements are seeking acceptance of selling a life insurance policy as a mainstream retirement tool alongside annuities, long-term care, and other age-related financial products.
[See 10 Ways to Improve Your Finances in 2011.]
"A life settlement, in our view, is a legitimate transaction made in the financial interest of the policyholder," says Michael McRaith, the commissioner of insurance in Illinois and an active regulator in national life settlements issues. There can be valid estate considerations or a change in family circumstances that support the need to sell a life insurance policy, he notes. For example, he said, parents who have had life insurance policies for decades may no longer need or desire to leave death benefits to their grown children. "It might be better for the parents to have access to a cash settlement for that policy," he said.
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Real Resolutions for the New Year
Tweet Share on Facebook January 19, 2011 CommentNow that the holidays are over and the world has gone back to work, it's time for a real list of resolutions for 2011. Beyond losing those extra pounds, being nicer to family and friends, building a legacy worthy of a Nobel laureate, and generally being the best person on earth, what are you really going to accomplish this year? Here are some suggestions—mine and those culled from an opinion poll.
[See 10 Ways to Improve Your Finances in 2011.]
Real bucket list. With due apologies to Morgan Freeman and Jack Nicholson, my real bucket list is not about skydiving and boat rides down the Nile (although I actually did the latter more than 20 years ago and highly recommend it). My buckets are labeled: stuff I enjoy doing, stuff I don't enjoy doing but have to do anyway, and stuff I don't enjoy doing and don't have to do. My goals are to do more things in the first bucket, as little as possible in the second, and none in the third.
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What Senior Workers Want as the Economy Improves
Tweet Share on Facebook January 18, 2011 Comment (1)Today, of course, employers are in the driver's seat when it comes to finding a job. Millions of people have been out of work a long time. Millions more have become so frustrated about not being able to find a job that they've stopped looking and temporarily left the labor force. They will flood back into the market as job prospects brighten, which has been a theme of recent economic forecasts.
[See 10 Seniors Thriving in Encore Careers.]
As this happens, employers will find older employees grateful for the chance to work. But after three years of a tough job market, seniors who find themselves in demand will also be looking for different types of job opportunities, including telecommuting, flexible hours, and even seasonal, "on-again-off-again" jobs.
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How to Make Multigenerational Living Work
Tweet Share on Facebook January 14, 2011 Comment (2)Putting three generations under one roof—the most common multigenerational living arrangement—has become a growth industry of the recession and an aging society. Even as the economy slowly recovers, experts expect that more seniors will find themselves in such expanded families. The mortgage crisis and collapse of home values may retard new home formations for years. Rising numbers of older Americans will require caregivers, and will either be unable to afford private care or unable to find professionals who provide it.
[See 10 Key Retirement Ages to Plan For.]
Before World War II, about 25 percent of Americans were in multigenerational households. After the war, rising affluence and a mobile society led to a steady decline. "In 2008, an estimated 49 million Americans, or 16 percent of the total U.S. population, lived in a family household that contained at least two adult generations or a grandparent and at least one other generation," the Pew Research Center reported in a study last year. "In 1980, this figure was just 28 million, or 12 percent of the population." In 2008 alone, 2.6 million Americans became part of multigenerational households.
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The Graying of American Housing Continues
Tweet Share on Facebook January 12, 2011 CommentSenior housing decisions remain in a "back to basics" mode, according to a new report from the National Association of Home Builders (NAHB) and the MetLife Mature Market Institute (MMI). Based on U.S. Census Bureau data, the report found that proximity to family has become a stronger reason for seniors to relocate in recent years. And because of the slow pace of home sales, seniors have become much more likely to fund new-home down payments from cash and savings than with proceeds from the sale of their prior homes.
[See the 10 Best Places for Single Seniors to Retire.]
"Only 55 percent of the new age-qualified active adult home buyers who made a down payment reported that it came from the sale of a previous home, significantly down from 92 percent in 2007," the report said. "Other 55+ home buyers registered similar difficulties selling their previous residences in 2009."
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Delinquency Crisis Hits Reverse Mortgages
Tweet Share on Facebook January 10, 2011 Comment (7)The government is moving to head off a growing problem with its reverse mortgage program. Large numbers of elderly borrowers—perhaps thousands—face possible evictions from their homes because they've stopped making property tax and home insurance payments. While homeowners with reverse mortgages are freed from mortgage payments after taking out the loans, they remain liable for property tax, home insurance, and maintenance expenses. Failure to make these payments can trigger foreclosure and possible eviction.
[See 10 Costs That Could Increase in Retirement.]
Most reverse mortgages are made by the Federal Housing Administration's (FHA) Home Equity Conversion Mortgage program (HECM). It provides insured protection of reverse mortgage loans made by private lenders, and is available where the youngest homeowner is at least 62 years old and has substantial equity in his or her home. The FHA is part of the U.S. Department of Housing and Urban Development (HUD). The volume of HECM loans has averaged about 100,000 a year recently but dropped last year as growing loan losses caused the FHA to tighten its loan underwriting standards. The most recent FHA report lists nearly 520,000 still-active reverse mortgages.
