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How to Build Your Retirement Money Plan
Tweet Share on Facebook April 30, 2013 CommentTurning your retirement savings into a flow of predictable income payments is, of course, essential to a successful retirement. It's also often one of the hardest and most overlooked tasks leading up to actually retiring.
Some experts may give different names to the steps of this task, but they boil down to three: your preparation, your buckets and your investments.
Your Preparation
Review 10 or even 20 retirement books and the same preparation steps appear over and over again. Here are the ones common to most approaches:
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How to Become a Savvy Nursing-Home Shopper
Tweet Share on Facebook April 29, 2013 CommentThe story of an aging America often focuses on the large number of people turning 65 every day—a stream averaging 10,000 a day over the next 18 years or so. But for the rapidly expanding health care industry, perhaps the more relevant and frightening number involves how many of us will be celebrating our 85th birthdays. This is the age when chronic illness and frailty often force people to seek extended and expensive health care.
Based on U.S. Census Bureau projections issued late last year, roughly 9.5 million people in the U.S. will turn 85 over the next 10 years. That's an average of more than 2,600 each day. And unless they are a lot healthier than today's 85-year-olds, every day hundreds of them and their families will be looking for spaces in the nation's 18,000 to 20,000 nursing homes.
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15 Ways Our Financial Decisions Cost Us
Tweet Share on Facebook April 26, 2013 CommentChances are, you sweat over how to pay the bills, keep a roof over your head and maybe set aside a few bucks for a retirement that seems to recede further in the distance with every birthday you celebrate. While you've been going about your life, a small army of economists and behavioral researchers have been studying what you do and don't do, what you know about finances and how you make important money decisions.
Foremost among them are academics Annamaria Lusardi at the George Washington University School of Business and Olivia S. Mitchell at the University of Pennsylvania's Wharton School. Frequently doing joint research projects, the two have amassed an enormous body of work about the level of consumer financial literacy, which is generally abysmal, its consequences and what we should do about it.
Their findings are important to consumers for two powerful reasons: First, if people understand exactly what their poor decisions cost them, perhaps they'll do something about it, and second, the experts' views on consumer behavior increasingly wind up turned into a law that forces consumers to do certain things because they're deemed not capable of making good decisions on their own. Welcome to the world of behavioral economics.
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How to Do Your Homework on Health Care Reform
Tweet Share on Facebook April 25, 2013 CommentIt is hard to believe that the much-maligned and often misunderstood Affordable Care Act was signed into law more than three years ago. Ever since, one group or another has been trying to overturn it in either the courts or Congress.
Now, the law's most far-reaching requirement—the individual mandate for nearly all Americans to have health insurance—will become real with this fall's annual enrollment period for 2014 coverage.
As we near this milestone, it is uncomfortably clear that we should have spent a lot more time and money trying to help Americans understand this law. It can lay claim to being the most far-reaching piece of domestic legislation since the enactment of Medicare and Medicaid in 1965.
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Video: Job and Career Tips for Older Workers
Tweet Share on Facebook April 23, 2013 Comment -
Chained CPI: Social Security Friend or Foe?
Tweet Share on Facebook April 22, 2013 CommentPresident Obama's budget proposes to use the chained CPI as a more accurate way of setting the annual inflation increases for Social Security benefits. It is not a cure-all for the program's long-term funding challenge but would, by itself, eliminate about a fifth of that gap. It does so, however, by cutting benefits to most recipients.
Not surprisingly, the idea is roundly denounced by seniors' groups. It is also just as solidly supported by an impressive group of economists and program experts.
The president's budget is not likely to be enacted in anything like its current form, and this goes for the chained CPI proposal. But making sense of the starkly opposing views of the "pro" and "con" camps provides an illuminating look at how hard it is to tweak even a single feature without affecting many other pieces of the nation's bedrock retirement program.
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Financial Advisers Abusing Senior Specialist Labels
Tweet Share on Facebook April 19, 2013 CommentSeniors are being confused and, most likely, mislead by the proliferation of special "senior designations' being used by tens of thousands of financial advisers, the U.S. Consumer Financial Protection Bureau (CFPB) said. It released a study that found more than 50 such designations in use, and said many of them require no study and are not formally approved or recognized.
The agency said it will ask the U.S. Securities and Exchange Commission and Congress to expand their authority over the designations, including greater oversight of financial advisers who use them. It also will recommend stepped-up oversight by state lawmakers.
"We found that these so-called advisers may use any of more than fifty different senior designations to promote their services to older Americans," CFPB director Richard Cordray said in prepared remarks. "With such a bewildering array of titles and acronyms, it is no wonder that older Americans are often confused and misled by these titles."
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Long-Term Care Expenses Could Swamp Medicaid
Tweet Share on Facebook April 17, 2013 CommentCautionary tales abound about relatively affluent households being forced to spend their accumulated wealth on expensive long-term care for a family member. With the annual cost of care well above $100,000 in many parts of the country, it doesn't take long to drain a family's financial resources. Once the money is gone, the family member can qualify for Medicaid, and Uncle Sam will pick up the tab for long-term care.
The only problem with this tale is that it isn't true for many people. A study of actual Medicaid spend-down patterns finds that it is overwhelmingly poorer households that qualify for Medicaid by exhausting their relatively meager financial assets. The SCAN Foundation, which supported the research, says it's the first detailed look in 25 years at how Americans actually qualify for Medicaid support for their long-term care needs.
This finding has important implications for any effort to develop a large-scale support system to help families pay for long-term care. Studies show that 70 percent of us will need some period of extended long-term care during our lives, most commonly during our later years. This figure is so large that it argues for some kind of insurance program to spread the costs of care over a larger population. That's the way auto and home insurance work. The premiums from people with little or no claims wind up effectively supporting the claims of people with big losses.
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Video: Health Experts Provide Advice on Living to 100
Tweet Share on Facebook April 16, 2013 Comment -
Retirement Crisis a 'Looming Catastrophe' for Boomers?
Tweet Share on Facebook April 15, 2013 CommentRonald P. O'Hanley is president of asset management and corporate services for Fidelity Investments, the huge Boston-based provider of employer retirement plan services to roughly 20 million people. Last week, he gave a speech in Washington at the "Capital Markets Summit" sponsored by the U.S. Chamber of Commerce. I know, another droning, predictable paean to the virtues of free enterprise and the marvelous retirement industry in which Fidelity plays such a major role.
Only it wasn't. It was, instead, an aggressive and unequivocal wake-up call. Think Churchill talking about manning the retirement barricades. Unless a lot of people begin changing their ways, and changing them soon, O'Hanley said, the nation will not be able to avert a "looming catastrophe" in the retirements of millions of baby boomers who are now headed for destitute financial futures and old ages spent in poverty.
Such an outcome, he stressed, would have a disastrous affect on everyone in the United States, not just the elderly. "If tens of millions of Americans reach retirement with insufficient savings," O'Hanley said, "the impact on our citizens, our economy and our national security could be catastrophic—and not something we could solve for most retirees after the fact."
[Read: 2 Simple Steps to Make Your Retirement Savings Leap.]
