Archive for Retirement
Get Audio Education from the Social Security Site
Posted by: | CommentsFor those of you nearing retirement, at retirement or not even close, who have questions about social security and Medicare, I present to you this handy page from the SSA website:
Here there are audios as well as written articles (in PDF format) that you can listen to to learn about such things as applying for Medicare early, SSI, part D and more.
The audio and PDF are easy to access on mobile devices such as smart phones and iPads. Enjoy!
Best Ways to Support Aging Parents
Posted by: | CommentsReuters published a pertinent article on financially supporting aging parents:
Reuters: Best Ways to Financially Support Aging Parents
This fairly recent trend of older adults living in a large house by themselves is a relatively new thing. It wasn’t long ago (maybe mid- 1980s?) that parents lived with their children. It provides safety, family closeness, financial savings, and a built in baby sitter!
But because many older people want to live on their own, the overall cost to the family increases, which pinches more at a time like this when incomes are strained due to job loss risk, low interest on savings and rising insurance costs crimp the budget.
In fact, the article points to a study showing that 32% of adult children have spent more than $5,000 on their parents in the last year – that’s a lot! If you find yourself pinched in this situation, it’s time for some honest conversation with the whole family regarding finances. if you’ve been putting that off, maybe it’s time to face it. If having a financial professional lead this conversation would be helpful, then consider that.
Feel free to contact me through my company site here: WHA contact
Boomers – Feelin’ Young at 60
Posted by: | CommentsA fun article from the East Oregonian recently highlighted some interesting facts about how some boomers are approaching life past 60:
East Oregonian – “Boomers Say 60 Isn’t That Old”
Are you having fun after 60?
Good tidbits from the article include:
“In my 20s, I would have thought the 60s were bad, but they’re not so bad at all,” says 64-year-old Lynn Brown, a retired legal assistant and grandmother of 11 living near Phoenix in Apache Junction, Ariz.
A strong majority of baby boomers are enthusiastic about some perks of aging — watching their children or grandchildren grow up, doing more with friends and family and getting time for favorite activities. About half say they’re highly excited about retirement. And boomers most frequently offered the wisdom and knowledge accumulated over their lives as the best thing about getting older.
“My own parents, by the time they were 65 to 70, were very, very inactive and very much old in their minds,” says Brown. So they “sat around the house and didn’t go anywhere.”
“I have no intentions of sitting around the house,” says Brown, whose hobbies include motorcycle rides with her husband. “I’m enjoying being a senior citizen more than my parents did.”
There are more quotables in the article, so check it out!
And if you’re over 60 or approaching 60, feel free to share your thoughts here in the comment box.
The Fed’s Collateral Damage to Retirees
Posted by: | CommentsI have discussed the various “side-effects” of the Federal Reserve’s zero interest rate policy (ZIRP) including a depreciating dollar (causing large cost of living increases), and people experiencing no interest earned on bank accounts (which hurts seniors’ income) - which causes conservative savers to take extended risks to earn some yield (junk bonds yield what CD’s did just a decade ago).
YES YOU! Look Here
Another consequence that I want to bring to you attention is the effect of ZIRP on pensions. If you are receiving or expecting pension payments, pay attention here. Typically pension portfolios blend stocks and bonds. And managers have to manage the large sum of money so that it can pay out pension payments each year and still grow to cover future years’ payments. And historically, pension managers could earn 5-7% on the bond side of their portfolio by investing in US government bonds and high quality corporate bonds. With a solid 5-7% yield, it was easier for pension managers to hit their target returns.
For example:
Lets assume that a pension manager is trying to earn 8% on the portfolio. And this manager has split the portfolio – 50% in bonds and 50% in stocks. And let’s assume 2 scenarios: one with high quality bonds yielding 6%, and one with high quality bonds yielding 3%.
If bonds yield 6%, then stocks would have to earn 10% to earn the target 8% return (1/2 bond portfolio earning 6% + 1/2 stock portfolio earning 10% = blended 8%). If bonds yielded 3% however, then stocks must earn 13% to blend an 8% return.
Which is more realistic – stocks earning 10% or 13% average YEARLY? And many would say 10% is too high. Either way, the pension manager must take MORE STOCK MARKET risk to offset the lower bond yields (thanks Ben Bernanke!).
Bottom line – Ben Bernanke and the Federal Reserve have created numerous casualties as “side effects” in their efforts to bail out banks and prop up stocks. Millions have been terribly harmed – lower lifetime pension income or no bank interest to pay the property tax for example – and for many it’s irreversible. And let’s not even get started on the price increases in food, energy, taxes, insurance premiums, services, copper and other metals, and other items that we must spend money on, caused by monetary inflation. Shame on the Fed – really.
Your Action Plan
it’s hard to come up with exactly the right plan for each person but here are some things to consider:
1. If you’re involved in a pension that is not insured by the pension benefit guaranty corp, and you can roll over the money to an IRA, consider that move
2. If you’re being offered a pension payment, compare it to rolling over an IRA and purchasing an annuity in the marketplace
3. If you can hold off taking the pension and keeping it growing, consider that strategy – as opposed to annuitizing at a lower rate today
4. Be careful about taking too much risk with your nest egg by investing in higher yielding but more risky investments. The choice may be to live on less now because the alternative – losing capital – may not be preferable!
Do you have questions? Drop a comment here and let’s discuss.
Do make sure you visit with a professional - financial planner, accountant, attorney, anyone who can guide you in a good direction – before making major planning decisions. Having a 2nd and maybe 3rd set of eyes looking at a problem can help!
