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Seniors Win Big in Court's Obamacare Ruling
Tweet Share on Facebook June 29, 2012 CommentPutting aside political views and inevitable legislative challenges still to come, seniors are big winners in the U.S. Supreme Court's 5-4 decision supporting Obamacare. The court upheld just about the entire law, including its most controversial feature—the individual mandate that will by 2014 require nearly every American to have health insurance or pay a penalty to the IRS.
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In the process of providing health insurance to more people, the mandate will generate more premium dollars to private insurers. These funds, in turn, will be necessary so insurers can afford the law's guarantees: No one can be denied health insurance because of a pre-existing condition and insurers can't gouge such people with unreasonable premiums. The law also limits insurers' ability to impose age-related premium increases for private coverage.
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Why Investment Brokers Provide Poor Advice
Tweet Share on Facebook June 27, 2012 CommentSitting face-to-face across from a professional investment broker is widely extolled as the preferred way for individual investors to get the best advice. Yet a study of retirement-plan investors who took advantage of this option found that their investment results were markedly worse than participants in the same plan who made their own investment decisions. And both groups, it turns out, did worse than plan participants who used the plan's default investment option for target-date mutual funds.
[See top-rated funds by category ranked by U.S. News Mutual Fund Score.]
Researchers John Chalmers (University of Oregon) and Jonathan Reuter (Boston College) conducted a detailed study of participants in the defined-contribution plan of the Oregon University System (OUS). It offers employees the option of working directly with investment brokers or of making their own choices from the plan's investment options. The study looked at the choices and investment results made by participants as well as their level of investment expertise.
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8 Building Blocks for a Solid Retirement
Tweet Share on Facebook June 26, 2012 CommentRetirement planning can be a complex and daunting task. People with small nest eggs are particularly at risk. Their retirement hopes, modest to begin with, have taken a serious beating in recent years. And no one is predicting a return to happier days anytime soon.
When times are tough, however, is exactly when long-term planning and money management skills are most needed. For anyone seeking a structured approach to retirement issues, MyRetirementPaycheck.org is worth a visit. It was developed by the National Endowment for Financial Education (NEFE) in partnership with many leading retirement experts.
[See top-rated funds by category ranked by U.S. News Mutual Fund Score.]
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Age Wave Creates Nation of Elder Caregivers
Tweet Share on Facebook June 25, 2012 CommentThe surging number of older Americans is regularly cited in concerns about rising government spending on Medicare, Medicaid, and Social Security. In particular, society must wrestle with how to provide Medicare and other health services to the roughly 10,000 people who will be turning 65 each and every day in this country for the better part of the next 20 years.
[See Top-Rated Funds by Category Ranked by U.S. News Mutual Fund Score.]
Serious as this problem is, in some ways, it is the most visible component of an aging iceberg that can't help but fundamentally change the way we live. The latest evidence of the enormous impact of aging is contained in a detailed annual survey that the Bureau of Labor Statistics (BLS) conducts about how Americans spend their time.
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State Retirement Benefit Gap Getting Wider
Tweet Share on Facebook June 22, 2012 CommentRetirement benefits for state and local employees have come under enormous funding pressure because of the recession, slow recovery in tax receipts, and cutbacks in federal stimulus and support spending. The 2010 shortfall in public pension and healthcare benefits was nearly $1.4 trillion, according to a report from the Pew Charitable Trusts. That's the difference between what the states have on hand and the benefit obligations they have promised to pay retirees.
[See Top-Rated Funds by Category Ranked by U.S. News Mutual Fund Score.]
The retirement prospects of public employees are, of course, directly affected by the adequacy of retirement benefit funding. But the health or weakness of state retirement benefits also affects a state's broader tax and spending environment. States with well-funded retirement systems are less likely to boost taxes on their residents than states with public retirement programs in poor financial shape. If you're nearing retirement, a state's fiscal health may play a big role if you're considering moving to a place.
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4 Mid-Year Resolutions for a Better Retirement
Tweet Share on Facebook June 20, 2012 CommentTime really does fly as we get older. Here we are, already near the halfway point of 2012. As July approaches, it's a good time to see how your New Year's plans have fared. Here's a short list of adjustments worth considering that can improve the quality of your life in retirement.
[See The 10 Best Places to Retire in 2012.]
First, there are important background issues to consider:
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Slow and Steady Wins the Life-Insurance Race
Tweet Share on Facebook June 19, 2012 CommentLong derided for providing low returns and high agent commissions, traditional whole life insurance has been on a four-year roll. Its plain-vanilla sales points—permanent insurance, annual dividends, financial stability—have emerged in uncertain times as attractive virtues. With low interest rates pushing down returns across the spectrum of so-called "safe" investments, the modest returns of whole life insurance policies no longer seem so unappealing.
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For the past five years, industry researcher LIMRA reports, sales of whole life insurance policies have taken a rising share of all life insurance sales, steadily rising from 22 percent of industry sales in 2007 to 31 percent last year.
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How Obamacare Ruling May Affect Senior Healthcare
Tweet Share on Facebook June 18, 2012 CommentThe loudest shoe to drop so far in the 2012 election season, not to mention healthcare in general, will be heard later this month when the U.S. Supreme Court rules on the constitutionality of the health reform law. Enacted in 2010, the Affordable Care Act (ACA), informally referred to as Obamacare, is being implemented in stages over several years. Its most far-reaching proposals are scheduled to take effect in 2014.
The court could toss out all, some, or none of the act's provisions, so the range of possible outcomes of its decision is very broad. And depending on what the court does, of course, politicians in both parties will propose steps to either restore or remove ACA components.
Seniors age 65 and older already have guaranteed access to health insurance through Medicare and, for lower-income seniors, Medicaid. They thus would not be directly affected by the most far-reaching and controversial requirement of the law. This is the individual mandate that would require nearly everyone in America to get health insurance or pay a penalty for failing to do so, beginning in 2014.
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How Nursing Home Stays Ravage Finances
Tweet Share on Facebook June 15, 2012 CommentRetirement healthcare costs get regular attention as the biggest unknown expense most of us will face as we age. Yet at least one of those costs—long-term care—stems from a situation that is statistically well-known. About 70 percent of people now age 65 and older will need some period of extended care during the remainder of their life. Further, according to a recent study, people who think they may need long-term care at some point turn out to be pretty reliable forecasters of their own futures.
[See 10 Places Where Retirees Live in Poverty.]
The heavy odds of incurring long-term care expenses makes a recent study by the Employee Benefit Research Institute (EBRI) all the more dramatic. The study, by EBRI research associate Sudipto Banerjee, calculates the enormous financial drain of nursing home stays on several components of household wealth, and compares this impact with the financial health of households that don't have to absorb such costs.
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How to Use New 401(k) Fee Reports
Tweet Share on Facebook June 13, 2012 CommentNext month, more than 30 years after 401(k)s began to appear, employers with plans will finally receive standardized and detailed information from plan administrators about how much they pay in fees. Within the following 60 days, and no later than the end of August, plan investors will get their own reports showing these costs.
How much is this new rule needed? Many 401(k) investors have said in polls that they believe the investment programs are free. Even the people at their employers who oversee the plans are often clueless about fees and other 401(k) matters, according to a recent study by the U.S. Government Accounting Office.
