WalletPop Blog

Bad actors continue to prey on seniors

Amy Pyle — Wed, 04 Nov 2009 17:00:00 EST

Filed under: Banks, Borrowing, Home, Insurance, Real Estate, Retire, Fraud, Mortgages

Bad actors have solidly shifted their attention to reverse mortgages, causing a top consumer organization to warn seniors to choose such loans carefully.

A new report by the National Consumer Law Center likens the aggressive lending practices in today's reverse mortgage lending to those common in the sub-prime mortgage heyday -- featuring some of the same players.

"Well-funded marketing campaigns and perverse incentives to brokers are targeting seniors' home equity and using reverse mortgages as their tools," attorney Tara Twomey said in the NCLC news release.

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Recession tales: The price of growing old in a lousy economy

Jennie L. Phipps — Wed, 04 Nov 2009 12:00:00 EST

Filed under: Retire, Recession, Retirement-401(k), Retirement-403(b), Retirement advice

I just bought my airline ticket for my friend's 100th birthday party, which she's anticipating with considerable excitement. Life has been quiet since she gave up competitive ballroom dancing at 85. Planning a party spices things up.

The oil wells that my friend's husband left her have kept her lifestyle comfortable - until the last couple of years when she developed a need for 24-hour care after the car she was riding in was broadsided.

Even a couple of active oil wells don't gush enough money to cover all the expenses of extreme aging. My friend and her children, who are old enough to be contemplating their own retirements, can see the day when it is all going to run out. If mom's still around - and the doc says she very well could be - longevity is going to be an expensive problem.

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Lending Club makes P2P diversification simple with new investor tools

Josh Smith — Fri, 30 Oct 2009 13:30:00 EST

Filed under: Retire, Technology, Investing, Personal loans

Peer-to-peer lending marketplace Lending Club just announced several new features for investors who use the service which can help them earn an average return of 9.67%.

The new features, which went live this morning, make it easier than ever to find the types of loans you want to invest in and create a diversified portfolio based on how much risk you want to take.

The new investor experience provides you with more information and the ability to filter on several factors to find loans that appeal to you. For instance, if you want to avoid a specific type of loan such as home improvement projects, you can exclude them from your loan search. Another welcome filter will show only loans that have been approved for funding.

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Majority of Americans worried about retirement - plan to work longer

Josh Smith — Thu, 22 Oct 2009 12:00:00 EST

Filed under: Retire, Saving Money, Economizer

This week is National Retirement Week, which is a good thing since it is a topic weighing heavily on our minds. According to a recent survey by MoneyRates and GetRichSlowly, 52% of respondents didn't feel on track with their retirement. It's no wonder so many people are concerned about their retirement savings, since the Sun Financial Unretirement Index found that nearly two-thirds of Americans will delay retirement one year -- with 27% of those individuals delaying retirement by 5 years!

The most popular reason given for entering "unretirement" was to "to earn enough money to live well," a change from last year's top reason of, "staying mentally engaged," which is in second place this year. These changes are explained in part by the general pessimism of American workers, such as findings that:

58% of workers under 60 don't believe Social Security will be available to them upon retirement.
42% aren't confident about Social Security Benefits.
41% don't feel confident about prescription drug benefits.
38% are not confident in Medicare benefits.

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Living to 100: Financial planning for a longer lifespan

Martha C. White — Tue, 20 Oct 2009 15:30:00 EST

Filed under: Budgets, Retire, Health, Relationships, Special Reports

Medical journal The Lancet reported a story that's been widely covered by major news outlets: According to The Lancet, more than half of all babies born in the U.S. (and other industrialized countries) since 2000 will live to be 100 years old.

Once a milestone only a handful of seniors reached, this new triple-digit benchmark will become downright commonplace by the time this century winds to a close. Half of all babies born in this country in 2007 will live to be 104 years old.

While the novelty factor is high ("Grandpa, tell us again how there was only one channel of the Internet when you were growing up!"), this announcement has far more serious implications for today's Americans -- both young and old -- when it comes to managing their personal finances. The Lancet study's lead author called the news good for individuals but challenging for societies.

First, a bit of history: While improvements in lifespans over the first half of this century were largely due to decreased infant mortality, longer living today comes on the back end. While the nation braces for the aging of the Baby Boomers, a process that's only just begun and has huge implications on everything from Social Security to health care, the impact of the next wave will be even greater. Fortunately, the study indicates that not only are people living longer, they're staying active longer; in other words, 70 could be the new 40 by the time your kids are adults.

What does this brave new world mean for your personal finances -- and that of your children? Walletpop spoke with John Rother, executive vice president for policy and strategy at the AARP, and asked him to weigh in on the implications for tomorrow's seniors.

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Who needs a pension when dogfood will do?

Jennie L. Phipps — Tue, 13 Oct 2009 11:00:00 EST

Filed under: Retire, Recession

The reward for working 35 years at a modestly paying job in the public sector has long been security and the promise of a pension that nearly equaled and occasionally exceeded what a worker was receiving when he accepted his gold watch. And in most cases, these pension promises were indexed for inflation so they'd grow as the worker aged.

These pension liabilities don't have to be accounted for like they are in the corporate world. No putting on the balance sheet what actuaries believe the municipalities, school boards, etc., will need to meet these pension obligations so that taxpayers can understand what they've committed to and workers can judge the odds that they'll get what they're owed.

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Medicare premiums going up, Social Security checks going down

Lita Epstein — Mon, 12 Oct 2009 11:00:00 EST

Filed under: Retire, Saving Money, Retirement advice

Many seniors will see their Social Security check go down because their Medicare Part D (prescription plans) and their Medicare Part C (also known as Medicare Advantage) plans are expected to go up in cost. Since Social Security is not expected to provide a cost of living increase (COLA) this year for the first time in 25 years, this rise in medical premiums will actually mean many seniors will get a lower Social Security check because premiums for most seniors are taken out of this check.

Congress is considering a one time payment of $250 for singles and $500 for couples to help offset the rising costs seniors face for medical care, prescription drugs, energy and food. But whether or not that will really cover a senior's increases will depend upon where they live and who their Medicare provider is.

The Kaiser Family Foundation reports that Medicare Part D plans are expected to increase an average of 7% plus about 60% of available plans will have an annual deductible in 2010 ($310 is standard). Only 45% had an annual deductible last year.

In addition fewer Medicare Part D programs will be offering coverage in the doughnut hole. Once spending for a senior's drugs tops $2,830 (and that includes both what the senior pays and the insurer pays), the senior enters the doughnut hole and can't get out of it until spending reaches $6,440. Not many seniors escape the doughnut hole once they get into it. When in the doughnut hole, seniors get no coverage for their prescription drugs.

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Book Review: The Complete Idiot's Guide to Personal Finance in Your 20s & 30s

Josh Smith — Thu, 08 Oct 2009 15:00:00 EST

Filed under: Budgets, Retire, Saving Money, Simplification

For a lot of individuals in their 20s and 30s personal finances have a lot in common with David Copperfield; money appears and disappears and sometimes it earns more in a bank account but at the end of the day it's all magic.

If you fall into this group you can either sit around and moan about the lack of a personal finance course at your high school or you can do something about it.

Good, you're still reading, so I assume you'd rather your finances are a bit more like Penn & Teller; mind blowing and quick to call "BS" on gotcha's and bad money deals. Well you're in luck, "The Complete Idiot's Guide to Personal Finance in Your 20s & 30s" does just that; offering up sound advice in an easy to access format that calls attention to important facts with sidebars throughout the book.

My favorite sidebar examples in the book are of the "Money Pit" and "Dollars and Sense" variety, which you can see throughout this post. These include cautionary notes and tips to keep you on top of your personal finances.

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Financial skills can erode before dementia is even suspected

Tom Barlow — Thu, 01 Oct 2009 08:00:00 EST

Filed under: Retire, Health, Relationships

When Mom begins to mislay her car keys, or Dad misses bathing for a couple of days, many of us realize that it might be time to take at peek at their finances to make sure nothing has gone awry.

However, this could be much too late. According to a couple of recent studies, patients with mild memory problems may already be exhibiting signs of financial impairment, putting their assets at risk.

I had the chance to talk in a telephone interview with one the field's foremost experts on Alzheimer's and financial behavior, Dr. Daniel Marson J.D., Ph.D., professor and director of the Alzheimer's Disease Center in the Department of Neurology at the University of Alabama at Birmingham, who recently completed a new study on this topic.

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What percent of your state's residents are in the work force?

Tom Barlow — Mon, 28 Sep 2009 09:00:00 EST

Filed under: Retire, Career, Insurance-health

An undertow of the current health care debate has been the suspicion that working Americans will be forced to cover the cost of health care for deadbeats who decline to work and pay for their own. I thought it would be interesting to look, state by state, at just how many people 16 years of age or older are actually in the work force as defined by the census bureau, i.e., working outside of the home or actively looking.

This graphic, from the latest American Community Survey by Bureau of the Census, shows a large disparity from region to region.

Why are so many people older than 15 not in the work force today? According to a 2004 study (current unemployment will change these numbers temporarily) the main reasons are:

37.9% are retired
19.1% are going to school
14.7% suffer from chronic illness or disability
13.2% are taking care of children/others at home
4.3% are unable to find work
3.6% are uninterested in working

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Social Security benefit checks could go down in 2010

Lita Epstein — Thu, 17 Sep 2009 16:00:00 EST

Filed under: Retire, Retirement advice

While we won't have the official word on the annual cost-of-living increases (COLA) until mid-October, the Congressional Budget Office estimates that there will be no COLA increase for 2010 -- the first time without an increase in 35 years.

For most that also means there will be no increase for Part B premiums, but some will see an increase.

For all, whether or not their Social Security benefit checks go down will depend upon how private insurers price the Medicare Part D premiums (prescription benefits). If those premiums go up, as expected, the actual check Social Security recipients receive could go down.

Even if Medicare Part D premiums remain the same, about 25% of Social Security beneficiaries will net less cash thanks to expected increases in Medicare Part B benefits. Medicare Part B benefits, which cover doctor's visits and other outpatient services, must stay the same thanks to a "hold-harmless" clause of the federal law that forbids increases in Part B premiums when there is no COLA increase.

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Life settlement funds: good investment, ghoulish, or a death bubble?

Tom Barlow — Wed, 16 Sep 2009 15:00:00 EST

Filed under: Insurance, Retire, Insurance-life

Investors large and small are looking for a new way to return to the juicy profit level of sub-prime's heyday, and one product beginning to gain popularity is life settlement funds, AKA Grim Reaper funds.

In a life settlement, investors pay the elderly cash today in return for the money from their life insurance when they pass. Yes, it sound ghoulish, but when has that been an impediment on Wall Street? With $26 trillion of life insurance currently in effect, the prospects are enormous.

In the same way that mortgages were bundled and turned into securities, companies such as Credit Suisse are buying up quantities of policies to create funds. Investors are hoping for returns as generous as 20-40%. Last year, seniors sold life settlements with a face value of $11.8 billion. But I have some serious reservations above this investment vehicle.

You'll recall that the sub-prime mortgage fiasco was due in large part to fraud on behalf of those selling mortgages to anyone with a pulse, regardless of qualifications. Viaticals were a precursor to life settlements. In the 1980s, investors bought the right to life insurance settlements from AIDS victims who they expected would die soon, never expecting that the cocktail would kills their profits.

This seamy business attracted scam artists like flies to a dump. In a 2000 Florida court case the jury found that almost half of the viaticals offered as investments by companies in that state were fraudulent. Can the life settlement industry avoid the same fate?

Accurately projecting the life span of those from whom the policies are purchased is a key to the profitability. What happens if our medical care changes substantially? What if we cure cancer? What if the swine flu turns dramatically more deadly? These factors add risk to the investment. The industry plans to manage these risks by doing a better job of vetting those buying and selling the settlements, and creating bundles of policies that include a wide variety of diseases and maladies.

The return on investment also depends on the dependability of the insurance companies to pay claims. As we've seen, the fortunes of these companies are deeply intertwined with the general economy, and if some were to go bust, so would the life settlement funds that depend on their payments.

Finally, there's the question of ethics. Some people (including yours truly) would be very uncomfortable knowing that widespread, unexpectedly early death would result in a windfall for them.

Ironically, one of the biggest customers for such a product? Public and private retirement funds, which already stand to benefit most from early death.

Don't be surprised if, in a few years, pundits begin to talk about a death bubble. I just don't want to be on one. Or in one.

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Grandma's tips for a long and prosperous retirement

Jennie L. Phipps — Wed, 16 Sep 2009 14:00:00 EST

Filed under: Retire, Saving Money, Relationships, Retirement advice

Money magazine in its September issue, lists four steps to "Worry-Free Retirement":

Know the risks of stocks and bonds
Crunch the numbers
Worry less by downsizing your plans
Control what you can including spending

The advice is laced with what are probably savvy suggestions for making the decision between stocks and bonds, calculating risk and evaluating the value of a pension, no matter how small.

As I read it, I couldn't help thinking about my 85-year-old mother-in-law, a recent widow. She and her late husband, a former draftsman, lived in retirement for 20 years - on his pension, banking most of their combined Social Security.

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Ask the Dolans: How much money do I need to retire?

Ken and Daria Dolan — Fri, 04 Sep 2009 10:00:00 EST

Filed under: Retire, The Dolans, Video, Banking-savings-account, Retirement-401(k), Retirement-403(b), Retirement advice

Ken and Daria Dolan, America's first family of personal finance, answer your questions every Friday.

Click here to ask Ken and Daria your question.

Americans have lost trillions -- with a "T" -- of dollars in the stock and housing market collapses. The average person with a 401(k) plan has lost five years worth of their savings! No wonder people are nervous about whether they have enough money saved for retirement. Today, Ken and Daria Dolan of Dolans.com have a surprising answer to the question "How much money do I need in retirement." The conventional wisdom is dead wrong, they say -- listen to it and your retirement dream could become a nightmare.

Dear Ken and Daria,

How can i figure out if I have enough money to retire?

--Mary

Use our retirement planning worksheet to figure out how much you need for retirement. It's not too late to rebuild your retirement savings!

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Retiree Tax Heavens (and Hells)

Andrea Chalupa — Thu, 03 Sep 2009 12:33:00 EST

Filed under: Retire, Saving Money, Tax, Retirement-401(k), Retirement-403(b), Retirement advice, Taxes-audit

Maybe you're thinking about relocating in retirement, in hopes of enjoying milder weather and lower expenses. Before you make a move, it pays to assess the overall tax burden of your future home. Some states are a lot more tax friendly then others.
Click through our photo gallery and see which cities are the most tax-friendly & unfriendly for retirees.

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IRS could cut 401(k) contribution limits in 2010

Zac Bissonnette — Thu, 27 Aug 2009 11:00:00 EST

Filed under: Retire, Retirement-401(k)

It's hard to imagine, but it's true: two years after one of the greatest stock market drubbings in history, at a time when most people will need to put their saving into overdrive to recoup what they've lost, the IRS may actually reduce the amount you're allowed to contribute to your 401(k) in 2010.

And it isn't even really its fault: 401(k) contribution limits are indexed to inflation. A temporary decline in prices has led to deflation in recent months -- and that could mean a decline in 401(k) limits to $16,000, which would be down $500 from this year's max, according to the USA Today.

Congress could act to change this because of the extraordinary circumstances, and hopefully it will. With all the money that is being pumped into the economy to try to stimulate spending, it would be absolutely criminal to discourage people from saving at a time when saving has never been more important.

But in order to get this taken care of in time, Congress will need to start looking at possible solutions now -- I would support raising the cap on 401(k) contributions to $30,000 per year for the next three years to encourage/allow people to play catch up in the wake of the recession. Here's an idea: write to your Congressman today, include this blog post (or the USA Today story) and make him or her aware of this issue.

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No Social Security cost of living adjustment for you!

Tom Barlow — Mon, 24 Aug 2009 18:30:00 EST

Filed under: Retire, Tax, Economizer

For 50 million Americans currently collecting Social Security, the news that they will receive no yearly cost-of-living adjustment this year for the first time since the COLA was added to the program in 1975 is distressing. However, is it unfair?

The COLA is based on the Bureau of Labor Statistics' Consumer Price index, a monthly and yearly computation that more or less reflects the change in prices of 200 products. The products fall within eight categories; Food and Beverages, Housing, Apparel, Transportation, Medical Care, Recreation, Education and Communication, Other goods and services. It does not include income and Social Security tax, or changes in value of investment items and real estate.

At the end of 2008, SS recipients were given a 5.8% COLA, although the CPI was only up 3.8% for the year. While this might seem like a bonus, remember that 2008 was an atypical year, with energy costs driving the index up to a high of 219.086 before falling back to 215.303 at the end of the year.

Continue reading No Social Security cost of living adjustment for you!

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Making extra money is simple with Jobpic

Josh Smith — Fri, 21 Aug 2009 18:00:00 EST

Filed under: College, Retire, Technology, Career

Looking for a simple way to make some extra cash by selling your skills to the highest bidder? If so, then the recently launched Jobpic, an online auction site for services, may be just what you're looking for.

Jobpic is essentially an eBay for your talent; letting you turn your skills into cash for customers locally or globally.

Jobpic is new so there aren't a million auctions to choose from but there are some interesting examples of how to use Jobpic to earn some extra cash or to find a freelancer to do some work for you.

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Ask the Dolans: Should I raid my 401(k) to pay off debt?

Ken and Daria Dolan — Fri, 21 Aug 2009 12:00:00 EST

Filed under: Debt, Retire, The Dolans, Video, Personal loans

Ken and Daria Dolan, America's first family of personal finance, answer your questions every Friday.

Click here to ask Ken and Daria your question.

When money is tight, it can be tough deciding what your money priorities should be. One of the biggest challenges can be balancing short-term vs. long-term needs. Watch Ken and Daria Dolan of Dolans.com help Joe, a WalletPop reader facing a money dilemma that pits his retirement vs. his debt.

Dear Ken and Daria,

I lost my job last year and have accumulated substantial credit card debt. I have over $600,000 and am 58 years old. Should I take money out of my 401(k) and pay off my debt?

--Joe

If you are in over your head, don't panic! Learn about all of your options for getting out of debt at Dolans.com.

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How the rich get richer: inside our growing income inequality gap

Damanick Dantes — Thu, 20 Aug 2009 18:00:00 EST

Filed under: Entrepreneurship, Retire, Career, Wealth, Recession, Investing, Stimulate US

Emmanuel Saez, a professor of Economics at UC Berkeley has raised concern about income inequality in the United States. In his recent article, he stated that the income gap is at an all time high; exceeding levels during the Great Depression. His research provides us with a candid look at a telling issue.

Professor Saez states that 2007 was a good year for both the rich and the bottom 99%, who experienced a rise in income by 2.8%. But since the 2001 recession, the top 1% captured two thirds of overall income growth. Thus, the main question is why the rich thrive in any economy, while income for the rest of us grows at a snail's pace?

Continue reading How the rich get richer: inside our growing income inequality gap

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