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Employer Health and Retirement Plans Converging
Tweet Share on Facebook March 28, 2013 CommentDriven by rising costs and the Affordable Care Act, employee health programs are beginning to look like employee retirement plans. Using 401(k)s and other tools, administrators of those plans have spent decades trying to influence employees to save more money and make better retirement investment decisions.
Employers increasingly are approaching their health plans in similar ways, according to a recent survey. The result is a convergence that finds both types of plans trying to use incentives to change employee behavior even as they offload more key decisions and financial responsibility onto employees.
Beginning in the 1970s, employers began shedding traditional defined benefit pensions in favor of defined contribution plans. These newer plans limited employers' financial liability and shifted costs and responsibilities to employees. Federal tax breaks were approved to encourage employees to contribute pre-tax dollars to the plans and shield any investment gains from taxes until funds were withdrawn from the plan.
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7 Tips for Coping With a Smaller Government
Tweet Share on Facebook March 26, 2013 CommentReality has a way of tempering ideological views. So it is with the fierce debate over government spending. For the anti-spending hawks, the uncomfortable message from the implementation of sequestration cuts is that they really hurt, that much of government spending is not at all wasteful and that there is a real human cost here. For the crowd that continues to favor economic stimulus, often by stressing the anti-growth consequences of European austerity measures, it is notable that businesses and investment markets have continued to grow in the face of reduced government spending. What do they know that we don't?
Meanwhile, countless senior organizations and social service nonprofits are howling over possible cuts. The House of Representatives has passed another version of tough budget love from Rep. Paul Ryan (R-Wis.). The Senate passed its first budget in four years but just barely. Now that the boundaries of these opposing political views have been defined, the volume knob will be turned up in coming months. But the illusion that we can somehow afford to continue spending at anything near current levels is disappearing. Smaller government is inevitable.
[Read: The Big Tax Shelter Many Financial Planners Overlook.]
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Should Long-Term Care Be an Entitlement?
Tweet Share on Facebook March 25, 2013 CommentThe elderly have always needed help in their later years. It has come mainly from family members, and this continues to be the case. But today's family is far smaller and more likely to be geographically scattered than in the past. These trends are expected to become more pronounced. Add in rising numbers of older Americans and the outlook is for a nation increasingly unable to have the time or money to take care of its older citizens.
Obamacare recognized this problem. Led by efforts of the late Sen. Ted Kennedy, the law included an employer-based long-term care insurance program. Employees would have paid the premiums and the level of coverage was modest. But it would have added a layer of protection that does not exist for most people.
To get votes to pass the program, however, it was approved as a voluntary benefit and not as coverage everyone had to get. This universal aspect of insurance is crucial to health care reform. If only sicker people had to get health insurance, their costs would be very high. Healthy people would not feel the need to buy it and would not offset the expenses incurred by those most likely to use the product.
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Despite Recovery, Retirements Still Shaky
Tweet Share on Facebook March 21, 2013 CommentIt's hardly surprising that prospects for a decent retirement took a big hit during the recession. But as the stock market hits new highs, the housing market recovers, and jobs slowly return, there has been no recovery in people's fears about being able to afford to retire.
The recovery has, perhaps ironically, underscored how far away most Americans are from a decent retirement even when economic times are better. And while a few bad years can derail retirement plans, it is becoming uncomfortably clear that even many years of increased attention to retirement savings might not be enough to make a big difference.
[Read: Do You Have a Retirement Gap?]
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What Seniors Should Expect from Aging in Place Villages
Tweet Share on Facebook March 20, 2013 CommentBOSTON—In 2001, a group of seniors got together in the Beacon Hill neighborhood here and began developing a network of support services to help older residents remain in their homes. The effort grew into the nation's first "village" program to support a concept that has now come to be known as "aging in place." Back then, however, it was just a bunch of neighbors looking to help each other, maybe leverage their numbers to earn product discounts, and provide mutual support.
It sounds simple enough, but Beacon Hill Village was so far ahead of the curve that it took a full five years, officials say, before the nation's second village opened its doors. Since then, more than 85 villages have opened throughout the country and another 120 are in development, according to a 2012 study by the Rutgers School of Social Work.
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Social Security 'Reforms' Are Never Far Away
Tweet Share on Facebook March 19, 2013 CommentSocial Security is never far from the Congressional budget ax. Although it's been spared actual cuts to date, program defenders have already lost their battle to keep it from being considered for cuts. The battleground thus will be moving to specific reform proposals. Depending on who's talking, Social Security is either a runaway fiscal disaster that needs to be overhauled or a healthy program that has done its job and needs only a tweak or two. With the spin doctors in high gear, here are factual answers to key statements about the program.
First, a little background. Social Security is funded by payroll taxes, paid equally by employees and employers. Since 1990, each has paid 6.2 percent of covered wages up to a ceiling, which is currently the first $113,700 in annual earnings. This tax supports the Old-Age, Survivors, and Disability Insurance (OASDI) program, which has two parts—Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI)—paying monthly benefits to retirees and their families and to disabled workers and their families.
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Employers Slowly Enrich Programs for Older Workers
Tweet Share on Facebook March 18, 2013 CommentThe later-life needs of older Americans are often expressed as quality-of-life goals: health and wellness, rich family and personal ties, and meaningful pursuits and travel, among others. To employers, however, older workers increasingly represent serious bottom-line expense and profitability issues.
These financial issues may translate seniors' lifestyle aspirations into some impersonal statistics. But in terms of changing workplace programs and perceptions, dollars and cents may also drive change more quickly and effectively than any set of "feel good" motivations.
Kristin Tugman is the senior director of health and productivity at Unum, the large Maine-based provider of disability insurance. Unum has seen rising trends of disability claims among older employees, coupled with ever-higher percentages of workplaces staffed with people past the age of 50. Nationally, roughly a third of all seniors ages 65 to 69 are still in the workforce.
[Read: Understanding Your Retirement Fees.]
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How Elder-Friendly is Your Community?
Tweet Share on Facebook March 15, 2013 CommentThe implications of an aging population continue to seep into all facets of society. Few areas are more important than the mix of largely local rules and cultural practices that determine whether a town or city is a good place in which to grow old and live.
Aging in place has emerged as the catch-all category that has evolved in response to surveys showing that, for 90 percent of us, our retirement dream consists of nothing more (or less) than staying put in the homes and towns that mean the most to us. The label may refer to in-home modifications that accommodate elderly occupants. In our label-crazed culture, this topic also has its own label: universal design.
Livable communities is another buzz phrase under the aging-in-place umbrella. You may notice these phrases lack specific reference to aging and the elderly. That's on purpose. Senior-centric programs often are seen as a turn-off to non-seniors.
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Do You Recognize These Lessons of Longevity?
Tweet Share on Facebook March 13, 2013 CommentSurveys taken as recently as a few years ago regularly found that Americans underestimated how long they would live. That's no longer the case. We now have a pretty good idea of our longevity.
Longevity is not a topic of discussion for most middle-income Americans, with only half talking about it with a doctor (50 percent) or spouse (49 percent) and only one-fifth (21 percent) discussing life expectancy with a professional advisor.
To compensate for the possibility of outliving their income, nearly two-thirds (63 percent) of middle-income Americans plan to reduce their own spending to deal with shortfalls in retirement income and resources. Two-fifths (41 percent) would get a part-time job and one-quarter (25 percent) would sell their home.
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5 Ways to Keep Money All in the Family
Tweet Share on Facebook March 12, 2013 CommentFiguring out smart ways to convey money and assets to family members does not require a huge estate or sophisticated trusts. Especially during these hard economic times, it can make sense to use some basic tools to help the folks you love, while paying Uncle Sam as few tax dollars as possible.
Gifts. Before exploring more extensive ways to transfer wealth, make sure you've taken full advantage of gift tax rules. You can give up to $14,000 in 2013 to as many individuals as you wish, and what they receive will not be taxed as income. Your spouse can do the same, providing the easiest way to convey family assets to relatives without creating tax liabilities for them. For details, check out IRS Publication 950: Introduction to Estate and Gift Taxes.
Family loans. It's also possible to structure loans among family members that are very flexible and totally compliant with IRS tax rules. For example, perhaps an older homeowner has a short-term need for some cash. He could take out a home equity loan, but could achieve a better deal with one or more of his children. They can loan him the money, usually at rates lower than those charged by a commercial lender. The IRS maintains current tables of what it calls "applicable federal rates," or AFRs.
