Thank you for Visiting my Seniors Section of the website. It is packed with information that you may find useful to you. I specialize in the Senior Community and would love to meet with you in person to answer any Real Estate questions you may have.
Please note that the information provided below is for informational purposes only with ther understanding that myself Leonardo Gonzalez nor Century 21 All Real Estate is engaged in rendering legal or financial advice. If legal or other expert assistance is required you should contact your attorney.
Do you have enough saved? Add up your sources of income. You will have Social Security. Maybe you will have a pension. On top of that, there’s the income from your savings. You might start retirement with a 4.5% annual portfolio withdrawal rate, meaning you would pull out $18,000 if you have $400,000 saved. In subsequent years, you would step up your annual withdrawals with the inflation rate. If annual inflation runs at 3%, you would pull out $18,540 in year two, $19,096 in year three and so on. These sums would include any dividends and interest you receive. Keep in mind that part of this money would go toward taxes. There’s a good chance you won’t have as much retirement income as you would like. To give yourself some financial breathing room, you might trade down to smaller home, move to a less-expensive part of the country, take cheaper vacations and eat out less. If that doesn’t make your numbers work, maybe you need to stick with your job a little longer or work part time in retirement.
How will you cover major expenses? With a little belt-tightening, your projected retirement income may cover your monthly costs. But that isn’t enough. You also need to budget for major expenses, such as replacing the car, the furnace and the roof. And then there’s the really scary cost, long-term care. A majority of seniors will, at some point during retirement, need help with activities like bathing and dressing. For most folks, the costs involved will be fairly small. An unlucky minority, however, will get hit with truly horrendous costs. A study in the winter 2005-2006 issue of Inquiry, authored by academics Peter Kemper and Harriet Komisar and consultant Lisa Alecxih, estimated that 16% of today’s 65-year-olds will incur expenses of over $100,00. This sum represents the amount you would need at age 65 to cover projected long-term-care costs. How will you cope if you are walloped with expenses like this? You need to head into retirement with some sort of plan. Maybe you are willing to deplete your assets and then fall back on Medicaid. Maybe you can cover the costs with pension income, Social Security and portfolio withdrawals. Maybe you will tap these income sources-and supplement them with a long-term-care insurance policy.
How will you generate income A fat nest egg, a balanced portfolio of stocks and bonds and a modest withdrawal rate, like 4.5%, are good starting points. But you also need a system for extracting cash from your investments. Your goal: to generate an income stream that lasts as long as you do, that rises with inflation and that doesn’t get derailed by bad markets. To that end, you might take your dividends and interest in cash, and then garner extra safety income each year by selling either stocks or bonds, depending on which has lately performed better. Alternatively, for extra safety, you might draw your spending money from a cash reserve equal to three or even five years of portfolio withdrawals. To replenish the reserve, you would occasionally sell stocks and bonds. Meanwhile, for further protection against bad markets, you have Social Security and any pension income, while also offering a safety net in case you outlive your savings. If you want additional protection, you might delay Social Security to get a larger benefit. You could also use a slice of your savings to purchase an immediate annuity that pays lifetime income.
Is your mortgage paid? Call me old fashioned, but I have always thought that paying off the mortgage was a key step on the road to retirement. Yet more and more seniors are quitting the work force with their mortgage still outstanding. In theory, if you have enough pension, Social Security and investment income to service your mortgage, there’s nothing wrong with carrying that debt into retirement in practice, making those mortgage payments will likely crimp your retirement lifestyle-and leave you in a nasty tax trap. What trap? To pay the mortgage company, you will probably have to make larger retirement-account withdrawals, which will be taxable. This extra income could, in turn, trigger taxes on your Social Security benefit. To be sure, this double tax whammy will be partly offset by the mortgage-interest tax deduction. But if you are near the end of your mortgage, your monthly payment may include relatively little mortgage interest, so the tax benefit will be modest. In fact, your itemized deductions may be barely above your standard deduction. That standard deduction, of course, is available to all taxpayers- including your mortgage- free neighbors.
What will you do? As you approach retirement, it’s enticing to think about waking up a little more slowly and breezing through the rest of the day at a similar pace. But in truth, if your notion of retirement is confined to vague thoughts of relaxing, playing golf and traveling, it is likely to be a disaster. The reason: Upon retirement, you lose not only the daily structure that a job offers, but also the social, physical and intellectual stimulation that comes with heading to work five days a week. If you don’t replace that, both your physical and mental health may rapidly deteriorate. What to do? You need an exercise schedule. You should make a point of seeing friends regularly. Most important, you need to find a new purpose. That might mean taking college courses, volunteering or working part time in a job that’s always intrigued you. The litmus test: When people ask what you do, your answer shouldn’t be, “I’m retired.”
Planning For A Grandchild With Special Needs Grandparents want the best for their children and grandchildren. Grandparents want the best for their children and grandchildren. They often worry about the future of a disabled grandchild and want to provide for them, but are sometimes told not to leave their grandchild(ren) with special needs anything -- because the child(ren) may lose government benefit eligibility. The fact is grandparents can leave money to their grandchild with special needs. There are special ways do to this. Here are some simple do's and don'ts that may help explain how: Do's: Do make provisions for your grandchild(ren) with special needs. Leave money to the child's special needs trust. The special needs trust is the only way to leave money without losing government benefits. Do coordinate all planning with the child's parents and other relatives. Notify the parents when you plan for the grandchild(ren). Do consult with financial and legal professionals whose expertise is in special needs estate planning. Don'ts: Do not disinherit your grandchild(ren) with special needs. Do not leave life insurance and annuities to the child's special needs trust. The special needs trust can be named as the policy beneficiary. When the insured or annuitant dies, the death benefit is paid to the special needs trust, which can then be used for the benefit of the child. Don't give money to your grandchild(ren) with special needs under a Uniform Gift or Transfer To Minors Act (UTMA), which automatically belongs to the children upon upon reaching legal age. Don't leave money to a grandchild with special needs through a will. Money will be a countable asset for the child and may cause the loss of government benefit eligibility. For more information about this and other related topics call 1-877-MetDESK or visit the MetDesk web site at www.metlife. com/specialneeds or call 1-877-638-3375. David Harmon is the MetDESK Manager, and is himself the parent of a special needs child. MetDESK is a division of Metropolitan Life Insurance Co., New York, NY 10010 that focuses on the financial concerns of families with special needs children.
Thinking of moving in the near Future? Whether we're changing jobs, retiring, or making a new start, relocating has turned into a national pastime. According to the U.S. Census Bureau, an astounding 16 percent of the population moves every year. Despite a common notion that Americans only move during the dog days of summer, an increasingly transient percentage of Americans relocate year round to make a fresh start. But getting to know new neighbors and a community isn't like it used to be. With the advent of the Internet, hundreds of cable channels and prerecorded messages, neighbors and people in general have less need to seek information through other neighbors and live faces. So how does the modern-day nomad successfully settle into a new home and surrounding community once the boxes are unpacked and the cable is hooked up? "What most people want following the seismic disruption of a move is to feel settled and to quickly resume their lives. Making a new place for ourselves -- while an adventure for some -- is a colossal task and a major stress for others," says Leslie Levine, a former upstate New York resident and an expert in the issues facing families and individuals who relocate.Levine says, "Because more people and families are becoming islands unto themselves, a dynamic which will increase in the near future because of technology, there will be a loss of skills on how to connect emotionally and reach out to other people. The question will become, `Are people adequately equipped to handle the physical and emotional transitions that accompany a move in today's times?" To answer that question, and based on her own relocation experiences, Levine has interviewed more than 120 people who recently transplanted their lives or careers. The result is a book titled Will This Place Ever Feel Like Home? Simple Advice for Settling In After Your Move. Levine is a thoughtful and humorous speaker on relocation and the human issues connected with moving. Prior to relocating from Washington D.C., to New York and then Chicago, she was an exchange student in Kenya and Scotland, where she learned first-hand how it felt to be a stranger in a foreign land. Those experiences and her subsequent relocations taught her the basic principles of human adjustment, change, and the effect "people in transit" has on others. Levine's guide reveals the secrets and strategies that have helped many people adjust to relocation stress. But the book also offers compelling psychological insights and statistics: That the people left behind from someone else's relocation also experience the move vicariously; their own anchors are pulled up as well. When most people move, they secretly hope they will be missed; but what they sometimes overlook is that the friends or family left behind also want to be missed. According to research from The Employee Relocation Council (ERC), the average cost of relocating a home-owning employee averaged to a whopping $47,901 (based on 1996 figures). For people who move in the near future, Levine emphasizes the importance of filling an unfamiliar place with the comforts and meaningful connections of home while trying to master new terrain. Even in large cities like New York, Levine says it is possible to carve out a small area of a few blocks to make the vicinity "one's own." Among other issues, Levine's new book shows people how to say good-bye in meaningful ways and how to work collaboratively with employers to achieve a smooth transition.
Offspring May Inherit a Whopping Tax Break as Well Offspring May Inherit a Whopping Tax Break as Well By Ann Perry Special to The Times September 25, 2005 California homes passed down from parents to their children carry potential property tax savings worth thousands of dollars a year. Thanks to a state proposition that took effect in 1986, knows as the “parent-child reassessment exclusion,” a child can inherit a parent’s principal residence, whether modest or worth millions, without triggering a reassessment for property taxes. In general, a transfer of ownership – except from one spouse to another – leads to a reassessment and, given the tremendous appreciation of real estate in recent years, a hike in property taxes. With the reassessment exclusion, a child who inherits a home in which a parent has lived for 35 years, for example, would also inherit the low tax assessment and annual tax bill. The home could have a market value of $800,000 by an assessed value of $85,000, kept low by limits on increases established by Prop. 13 in 1978. The inheritor would have an annual tax bill of about $850 with the parent-child reassessment exclusion, rather than about $8,000 with a reassessment. “It’s a great program,” said Sharon Ferguson, assistant division chief with the San Diego County assessor’s office, because it helps heirs keep family homes in pricey Southern California. “Otherwise, they may not be able to afford to keep the home.” Inherited homes qualify for the tax break, whether the children use them as principal residence or as rentals. And the break applies not only to a parent’s principle residence, but also to any other inherited real estate, whether commercial or rental, valued up to $1 million. Though the property transfer covered by the law is typically from parent to child, it can also be from child to parent. Under California’s Prop. 193, property is eligible if the transfer is between grandparent and grandchild – but only if both parents of the grandchild are dead. The parent-child transfer can occur while a parent is alive, although most usually happen after a parent has died. When more than one child is inheriting, getting the maximum from the reassessment exclusion lies in the estate-planning details, according to the experts. Consider a hypothetical scenario in which an elderly woman dies, leaving her estate to three daughters to be divided equally among them. Her $600,000 house is the estate’s largest asset. Two of the daughters want to sell the house and receive cash, while the third, who served as the mother’s caregiver, want to buy out her sisters. If they transfer their interest to her, however, two-thirds of the parent-child reassessment exclusion has been wiped out. “The exclusion is parent to child, not sibling to sibling,” explained Gregory Smith, San Diego County assessor. A parent with significant assets can avoid that situation by dividing the estate into three parts – the house for one child and other assets of equal value for the other siblings. The exclusion is not automatic. A claim must be filed with the local assessor’s office within three years of with the date of transfer or death, or before the sale of the property to a third party. For a claim filed after three years, a reassessment exclusion can be granted starting the year the claim is filed, but no refunds will be issued. County officials may ask to see a parent’s will or trust when considering whether to approve a request for a reassessment exclusion. Though the exclusion is not automatic, the Los Angeles County Office of the Assessor does alert many eligible property owners to the tax break. The office mails them claim forms if they check off the box indicating a parent-child transfer when filing routine, transfer-of-ownership documents with the county. Los Angeles County approves 47,000 to 65,000 parent-child exclusion applications a year. The two-page claim forms are available at the county assessor’s public-service counter or at www.lacountyassessor.com
Saving Seniors From Tax Scam Saving seniors from tax scams By Jannise Johnson Staff Writer Whittier Daily News Some of those who filed their income-tax forms at the last minute are soon to receive their refund checks, and there are plenty of people out there ready to help spend them. And some of those people – con artists – have ideas of their own when it comes to separating tax refunds from victims, especially the elderly. Home Instead, and organization that provides in-home, nonmedical care to seniors, would like the public to be on alert for such cons. Janice Hall, general manager of Home Instead’s Rancho Cucamonga and Victorville offices, said tax-season fraud is the same as any other time of the year. Contractor, lottery and Internet fraud are some of the more common scams floating around that seem particularly targeted at seniors, she said. “There’s so many scams anyway towards the seniors,” Hall said. “We try to tell them if they have family, to field the calls as they come in.” Unfortunately, Hall said, seniors are typically “very free with their information.” Knowing that seniors might have a little extra cash at their disposal this time of year may bring some unethical contractors our in the open. This may arise in the form of people claiming to be contractors who go door to door offering to work on homes. In some cases, these contractors are unlicensed, leaving their customers without legal recourse if something goes wrong. “Almost every senior’s home needs something done to it,” Hall said. But in some cases, these contractors offer to make unnecessary repairs, she said. The usual gamut of scams is also a danger during this time of year, she said. These include lottery and Internet fraud scams. Seniors often fall prey to identity thieves because they are unaware of how to protect their Social Security number, Hall said. “Seniors who live by themselves are isolated and befriend people easily,” she said. “Just because people want to talk to you doesn’t mean they want to be your friend, which is very sad.” Hall advises seniors who get phone calls soliciting them for donations to check out these charities thoroughly before sending in any money. If they are not sure how to check on these organizations, they should have someone they trust look into the charity for them, Hall said. The Internal Revenue Service issued an official statement last month regarding an online scam that involves e-mails being sent to consumers asking for such personal information as bank account numbers. The IRS does not send out unsolicited e-mails asking for detailed financial
Even at 60,There is Still Time to Build a Livable Retirement Even at 60, There’s Still Time to Build a Livable Retirement Liz Pulliam Weston Money Talk March 13, 2005 Question: I am a 60-year-old computer programmer who has endured some bumpy years. I have no cash in the bank and no money in retirement funds, which were cased out along the way. What I do have is debt: credit cards, a mortgage and a small auto payment. I recently landed a job after a period of unemployment that allows me to start seriously paying off the credit cards, but there is no retirement plan. I know you have good advice about putting pennies away and over 30 years or so they will become big bucks, but I don’t think I will have 30 years. And so my question is: Is it too late for me? Answer: If your dream is to buy a fancy yacht and sail the world, then, yes, it’s probably too late for you to build a retirement nest egg that would support that lifestyle. If your dream is simply to retire someday, then it may not be too late, as long as you’re willing to make difficult choices. As a guidebook, pick up a copy of “Your Money or Your Life” by Joe Dominguez and Vicki Robin (Penguin Books, 1999). This book describes the strategies and lifestyles of people who radically altered their ideas about how much money they need to live. Many retired in their 50s, 40s or even younger or at least switched to part-time work they enjoyed. These are not folks who drive luxury cars of ski Aspen in the high season. Most lead extraordinarily frugal lives. But they’ve unchained themselves from the work-spend cycle that keeps many people stressed and in debt. You actually have an advantage that younger advocates of this “financial independence” movement lack: You soon will have a guaranteed source of income. The annual statement you should have been getting each year for the Social Security Administration will show you how much you can expect to get each month if you retire at 62, 65, or 70. If you can ratchet your expenses down to the smallest amount shown (the benefit at age 62), then conceivably you could retire in two years. More likely, you wouldn’t want to live on quite that little, and will want a few more working years to pay off your debts, build up your funds and increase your future Social Security benefits. To get to your goal, you will probably need to make drastic changes in how much you spend now as well as in retirement. You may need to more to a cheaper area (again, now or in retirement), and you may have to watch your pennies for as long as you live. That may sound grim, but lots of people live on small, fixed incomes in retirement and still manage to have happy lives. As Ralph Warner explains in his book “Get a Life: You Don’t Need a Million to Retire Well” (Nolo Press, 2005), money is only part of the retirement equation: Good health, good relationships and absorbing interests matter too. Fight Collection Firms That ‘Re-Age’ Old Debts Question: I’ve been working at cleaning up my credit report, but a collection agency keeps changing the date of my oldest debts so they look more recent than they really are. These debts are all more than seven years old and should have fallen off my report by now. But they’re still there, depressing my credit score. What can I do? Answer: The tactic of changing delinquency dates on old debts is called “re-aging,” and it’s illegal. One collection agency, NCO Group, was recently fined $1.5 million for re-aging accounts; that is the largest civil penalty ever obtained under the Fair Credit Reporting Act. Your first step is to write a letter to the credit bureaus that are reporting the inaccurate information. Make it clear that the collection agency has illegally re-aged the accounts and ask that the accounts be deleted from your files. Send this, and all other correspondence about the matter, by certified mail, return receipt requested. You’ll want to keep a good paper trail. Unfortunately, the bureaus may make only a cursory check with the collection agency, which will probably insist that the information is accurate. You will then need to dispute the accounts directly with the collector, pointing out that re-aging is illegal and insisting that the agency provide the correct delinquency dates to the bureaus. Debt expert Gerri Detweiler recommends sending copies of your letter to the Federal Trade Commission, your state’s attorney general, your U.S. senators and congressional representative and the Better Business Bureau in the city where the collection agency is located. The collection agency “may decide they don’t want any more trouble and resolve it for her,” said Detweiler, founder of StopDebtCollectorsCold.com. “If not, she will need an attorney.” It would be nice if you could solve the problem by paying the old debt. But that probably would make matters worse, because the payment would make the delinquencies look even more recent to the FICO credit scoring formula that most lender use. Besides, a collection agency shouldn’t be rewarded for using such sleazy and illegal tactics.
Workers Giving Retirement the Boot Workers giving retirement the boot By Jonathan Peterson Times Staff Writer May 30, 2007 Every morning, a trusty alarm in his own head wakes up John Feyk before 5. Less than an hour later, he is stepping into the white commuter van that drives him 20 miles to Aerospace Corp. in El Segundo. He has worked there for almost half a century. "It does get to be more of a strain getting up at 5 in the morning," said Feyk, 79. But retirement, he added, is something he has given little thought to over the years. "I didn't decide not to retire at 65," said Feyk, a chemical engineer who lives in Rancho Palos Verdes. "You have to decide to retire." A growing portion of the U.S. workforce seems to agree. After falling for more than 100 years, the retirement age chosen by working Americans is edging up once again, and the trend could have broad consequences for households and the economy. In the mid-1980s, just 18% of people in their late 60s still had jobs, the Bureau of Labor Statistics said. That figure is now up to 29%, and experts believe the level will continue to rise as people confront the prospect of a lengthy and expensive old age with limited retirement benefits. More than 1 in 4 baby boomers — the huge generation born from 1946 to 1964 — plan never to retire, a recent survey by the National Assn. of Realtors shows. Many will not achieve that goal. Health problems and workplace pressures such as cutbacks force many workers into retirement earlier than they expect. And employers that have a choice often prefer the young, viewing older workers as costly and resistant to new technologies. Despite that, more older Americans are pulling paychecks, a shift that is increasingly noticeable among people in their late 60s. The trend "is really quite dramatic, considering what was going on for so long before that," said Sara Rix, a strategic policy advisor at the AARP Public Policy Institute. For many years, society made it increasingly easy to stop working. Social Security retirement benefits were repeatedly enhanced after World War II. The advent of Medicare in 1965 helped pay the medical bills. Large employers typically offered pensions that guaranteed set payments for life. Today's workers face a more hazardous landscape. Traditional pensions are increasingly rare. Companies are cutting back retiree healthcare benefits. Even the bulwark of Social Security is quietly retrenching. The traditional age of 65 to qualify for full retirement benefits is gradually moving upward — workers born in 1960 and after will have to wait until they are 67 to get their full amount. In the coming years, more Social Security benefits will be subject to income tax, and higher premiums for Medicare Part B (which covers certain medical services) will further erode benefits. These growing financial pressures may hit baby boomers particularly hard. As much as 80% of this group expects to work during what would normally be their retirement years, according to polling by AARP. Meanwhile, legal barriers to work for older people are largely a thing of the past. In 1986, the government outlawed mandatory retirement for most jobs. "I'm not sure when I would want to retire at this point," said Claudine Welsh, 60, a Corona resident who works for a benefits administrator. She is thinking about taking on a second job and expects to work for at least seven more years. "Basically, it's because of money." Welsh, who is single, has no private pension, and her 401(k) balance is $10,000. Home equity is key to her future economic security — she co-owns two houses with relatives. Beyond that, she views work as an important part of life and talks about one day opening up a coffee shop with her older sister. Otherwise, "what are you going to do with all that time?" she asked. And there could be a lot of that. For a married couple of 65-year-olds, the odds are 83.7% that at least one spouse will survive to age 85, according to the Society of Actuaries. Chances that one will live to 90 are 63%, and chances that one will reach 95 are 35.7%. Ten years ago, the typical age of retirement for all U.S. workers was 60, according to the Employee Benefit Research Institute. Recently, it has risen to 62 overall, a shift that researchers believe may be partly tied to the increasing reliance on 401(k) plans and the decline of traditional pensions that guaranteed monthly payments for life. The trend could potentially have a big effect on society, putting more money in the pockets of the elderly and even giving the economy a boost, as more workers continue paying income taxes in their golden years. Research by analysts at the Urban Institute suggests that if all workers added one year to their careers, it could markedly reduce the projected shortfall in Social Security. "It's a direction we have to go in," said Alicia H. Munnell, director of the Center for Retirement Research at Boston College. "You can let your 401(k) plan build up some more. You can reduce the period that you have to live off your assets." The economy's long-term shift toward knowledge-based jobs and away from physical labor is another force that might be increasing the rolls of older workers. Already, older employees with higher levels of education seem to be playing a major role in the trend, and some say the psychological rewards rather than money are what motivate them. "It's interesting work," said Feyk, who has worked at Aerospace Corp. for most of the last 45 years. "It's new challenges." Feyk helps oversee classified work of contractors on military space and missile systems. "The things that we do, the projects that we look at, have never been done before." Still, it is unclear how far the trend toward working later in life will go. Society is much richer than the days when people worked almost until death, and early retirement continues to hold some of its allure. Older employees can find themselves scrambling between different jobs, as companies rise and fall and long-term relationships between employer and employee become rarer. When Jules Lippert's business of selling prebuilt homes went bust in the 1980s, he loaded a van with antiques and spent the next 16 years selling his wares at trade shows around the United States. Finally wearying of the road, he tried to shift his business to EBay. A couple of years ago, he took up his neighbor's offer to train interviewers for market research. Now 76, Lippert still works as many as 35 hours a week: "As long as I'm in good health, I see no reason to retire," said the suburban Philadelphia resident. "I would sit around and vegetate." At the same time, money "is important," said the grandfather of seven. "My wife and I could exist on our combined Social Security plus our IRA, but it would not leave a lot of room for extras." Employers will play a big role in deciding whether baby boomers' visions of an industrious old age turn out to be fantasy. Some companies rely on the institutional memory and experience of longtime employees. "We encourage people to stay with the company," Aerospace spokesman David L. Jonta said. "We have a lot of people that do, and we value that expertise." Hospitals and other employers struggling with labor shortages are also known to court older employees by offering flexible schedules and extra leeway for time off. Still, such companies "quite frankly are ahead of the curve," said Deborah R. Russell, director of workforce issues at AARP. After interviewing 400 employers, researchers at Boston College recently concluded that many companies were only "lukewarm" about accommodating older workers who might be willing to stay on the job a few extra years. Which doesn't make a lot of sense to Feyk. "Somehow we're going to have to get people over 65 into productive work, because there aren't going to be enough of the young people to support them," he said. He is not the only member of his family who feels that way. Feyk's wife, he noted, recently got a job as a church organist in San Pedro. "She's getting her W-2 right now," he said, adding: "She's just a young thing. She's only 75." jonathan.peterson@latimes.com * (INFOBOX BELOW) Staying on the payroll The trend: Americans are now typically retiring at age 62, compared with age 60 in 1997, reversing decades of decline in the retirement age. What's behind it: As employers scale back pensions and health benefits for retirees, many people cannot afford to retire. Others simply choose to work, saying they would be bored otherwise. The consequences: By staying in the workforce, older employees generate more spendable income — buoying the economy and contributing additional income taxes. Social Security could also be helped as workers pay into the system for additional years. Los Angeles Times. If you want other stories on this topic, search the Archives at latimes.com/archives.
Gift Tax Advantage Donating real estate offers gift-giver a double tax advantage By Lew Sichelman, United Feature Syndicate June 10, 2007 WASHINGTON — "If I could just burn the place down," many a frustrated seller might think, "my troubles would be over." Luckily, few people act on such a felonious impulse. And why should they when the fire department would torch the house for them lawfully? Local fire officials gladly accept houses or other structures as donations. Of course, there's a drawback to giving your house away to Sparky and his friends: You won't get any cash for it. Consequently, if the warm-and-fuzzy feeling you'd get from doing a good deed isn't good enough, you'll have to find another way to unload your white elephant of a house. If, on the other hand, cash isn't your primary objective, donating your property to a tax-exempt charity may be an avenue worth considering. Actually, people give away real estate all the time. The Giving Institute in Glenview, Ill., estimates that $260 billion was contributed to schools, museums, the Scouts and other groups in 2005, the last year for which such information is available. Roughly 25% of that was in real estate. Some came from corporations donating real estate they no longer used or needed. But almost $9 of every $10 contributed to charity or other public entities came from individuals. "Right now, vacation properties and rental properties are the most common real-estate gifts offered to us," said John McKee, director of gift planning at the University of Maryland in College Park. "With diligence, these properties can be a great way to fulfill charitable goals," he said. Donors can give property either outright or by retaining life-tenancy rights. Why give your real estate away? Because you can deduct the full value of the property, including appreciation, on your income-tax return. Yet you don't have to report the appreciation as capital gains. In other words, you get two benefits in one. "It's hard to imagine a better tax-savings device," said Mackenzie Canter III, a Washington, D.C., attorney who specializes in philanthropy law. Consider this possibility: You're in the top-tier, 35% tax bracket. You own free and clear a house worth $150,000, but you paid only $75,000 for it 20 years ago. Because you've owned it for more than a year, it's considered a long-term capital asset. If you sold the place outright, you'd have a capital-gains tax liability of $75,000 (assuming it was not your primary residence), and your tax liability would be 15% of $75,000, or $11,250. So the real liquid value of your property is $138,750, or $150,000 less $11,250. Now suppose you donate the house to a college. You'd be entitled to a charitable-tax deduction of $150,000, and there would be no tax on the $75,000 gain. In your 35% bracket, the tax savings would be $52,500. So the net cost of making a charitable gift of your $150,000 property would be only $86,250 ($150,000 less your $11,250 tax liability less your $52,500 tax savings). Your gift is deductible only up to 30% of your adjusted gross income in the year it is made. But any contribution above that amount may be carried over for up to five more years. Furthermore, donating real estate also avoids the hassles involved with selling: no sales commission, no fix-up costs, no prospects traipsing through your place at all hours and, perhaps best of all, no haggling. If you need at least some cash out of the deal, consider what's known as a "bargain sale." With this type of gift, instead of donating the property outright, you sell it to the charitable organization for something less than its full market value. That way, both parties win. You not only get a deduction, you also get some cash, and the charity can sell the place and pocket the difference between what it gave you and what it eventually gets for the house on the open market. Before signing over your property talk first with an expert in philanthropy law. Not all organizations qualify as tax-exempt charities eligible to receive deductible contributions. For a complete list of qualified so-called Section 501(c)(3) groups, request Publication 78 from your local IRS office. Also, ask the group you are considering for a copy of its IRS exemption letter. --
Charitable Donation HOUSING SCENE Make charitable donation -- your house -- work for you too By Lew Sichelman United Feature Syndicate June 17, 2007 WASHINGTON — If there is a problem with owning real estate, it comes when it's time to get rid of it. For starters, real estate isn't highly liquid. Although you can dispose of stocks and bonds within minutes by simply calling a broker, it takes time to sell a house or other property. Then there's the matter of obtaining a fair price. And when the need to sell is urgent, the chances of receiving market value are greatly reduced. Indeed, the faster sellers want to move, the less they'll usually take. But these negatives can be overcome by donating property instead of selling it. And there are a variety of ways it can be given without jeopardizing your family's financial security. Maximum benefits can be realized by donating your property to a qualified charitable group. There's no taxable capital gain on a gift of appreciated real property, and the full fair-market value of the gift is deductible. Even if you need to net some cash out of your house, a charitable donation may work for you. By selling a property to a charity at less than its appraised value, you can deduct the difference as a gift and pay taxes only on the realized gain. And there are several other ways to structure your gift that may not be as emotionally wrenching. Take the case of the elderly couple who own a condominium at the beach. They used the place every summer for years, but now it sits largely unused. They need a tax deduction this year, but they'd still like to visit the place once in a while. One way to solve their dilemma is to make a retained-life-tenancy gift of the condo; that is, to donate it to their alma mater while retaining the right of possession and full use of the property for the rest of their lifetimes. With such gifts, as with other charitable donations, the capital gains tax on the property's appreciated value is avoided completely. However, because you are retaining some rights to the property, the gift deduction is based on the fair market value reduced by the actuarial value of your right to continue using the property. Also, when a property is donated with a retained life tenancy, it is removed from its owner's estate. So when the owners pass away, the property passes to the charity and is not subject to probate or estate tax. Personal homes and farms are the only types of property from which a remainder interest can be transferred to a qualified charity in this manner. But you don't have to work the farm personally to obtain a deduction. Another option is to exchange your home for an annuity based on the full market value of the property. Under this arrangement, the income is guaranteed, does not fluctuate and comes to you regularly for life. With this type of donation, a deduction is allowable for only a percentage of the property's value. But the older you are, the larger the deduction. And a portion of the income you receive each month is tax-free. If you are not yet ready to move from your house but still want to receive an annuity, consider an annuity with a re-rent option, which will allow you to remain in the property for as long as you want. Under this arrangement, you retain control over when you will move. When you finally decide to leave, the charity — not you — has to sell the property. And after you move, you still receive your annuity payments for the remainder of your life. Now, suppose you have business real estate, such as a small office building or warehouse, that has increased in value over the years — so much so that you can hardly afford to pay the capital gains tax. You can avoid the tax and convert the asset into a steady, secure income stream by conveying it to a remainder trust benefiting the charitable organization of your choice. With a charitable remainder trust, you'd not only receive an immediate deduction equal to the value of the property less an amount equal to the income interest to be paid to you, but you also would have income for your lifetime, or the lifetime of your spouse or other beneficiary. What's more, the income would come to you (or your heirs) for a fixed number of years of your choice, not to exceed 20, regardless of your life expectancy.
Ready For Retirement? Your Finances Ready for Retirement? By GLENN RUFFENACH AND KELLY GREENE June 17, 2007 Research shows that almost half the people who put numbers on paper -- who actually take the time to estimate how much money will be coming in the door during retirement and how much will be going out -- end up changing their savings plans. And yet, most of us don't make the effort. First, there are the emotional aspects. For most of our adult lives, we've had the "right" to spend our money as we wish. Suddenly, in retirement, we have a finite amount of resources. Second, retirement has many unknowns: life expectancy, health costs and inflation, among others. How are you supposed to know what your expenses will be? RELATED STORY When it comes to retirement, most of us don't have the expertise, and most of us don't take the time, to develop a solid financial plan. What we need is a good financial check-up.What follows are two of the most straightforward approaches to estimate how much money you'll need in retirement and to determine whether your nest egg is sufficient. The first takes about one minute and gets you in the ballpark. The second approach takes a bit longer and gets you a seat behind home plate. One-Minute Drill This method, developed by Charles J. Farrell, a tax attorney in Denver, is based on the idea of replacement ratios. First, to calculate your annual budget, multiply your current gross income by the replacement ratio of 0.8. This means we're estimating that you will need a "salary" in retirement that amounts to 80% of your pre-retirement income. Then, to calculate the size of the nest egg needed in later life, multiply your current gross income by 12. Let's see what this math would look like for a couple -- we'll call them Andrea and Scott -- who are a year or two away from retirement and are making about $80,000 (combined) a year: Multiplying that income by 0.8 shows they will need $64,000 a year in retirement. Multiplying $80,000 by 12 shows they will need a nest egg of $960,000. It's important to note that we start with a big assumption: that the average American can, in fact, live comfortably on 80% of his or her pre-retirement income in retirement itself. While the rule of thumb has long been that most of us will need about 70% to 80% of our pre-retirement earnings once we leave work, this assumes that about 20% to 30% of our money while we're working goes to things like taxes, transportation and savings and that all those bills will drop off in retirement. In recent years, though, some financial planners have begun arguing that we actually need 100% -- or more -- of our pre-retirement income in later life because, if anything, expenses increase in retirement: for travel, home improvements and health care, among other items. (As one financial planner told us, "I have yet to see a client who, the day he or she retired, started living on 30% less than the day before.") As you might imagine, research supports both sides of the argument. The Employee Benefit Research Institute found that more than half of current retirees (55%) had replacement ratios of 100% or more in retirement. Conversely, some of the best research on replacement ratios, done by Aon Consulting and Georgia State University, has found that the "average" retiree (making about $60,000 a year before retirement) needs about 75% of that income after leaving the workplace. For his part, Mr. Farrell, the Denver attorney, reasons that if individuals entering retirement have paid off their major debts, including a mortgage, and if they already were saving about 10% of each paycheck during their working years (as almost all financial advisers recommend), then 80% of pre-retirement income should suffice in later life. For the moment, let's accept that figure and finish examining his math. So now you know what your yearly "salary" should be, but where does that money come from? Again, we need to make some assumptions: first, that your nest egg will earn between 4% and 5% a year in retirement (after inflation) and, second, that you can safely withdraw 5% of your savings each year. So, let's return to our couple -- Andrea and Scott -- who are making $80,000 a year before retiring. If they have managed to build a nest egg totaling $960,000, a 5% withdrawal yields $48,000. Add to that figure a minimum of $16,000 that our retirees will collect each year from Social Security (that's a rough calculation from the Social Security Administration) and -- voila! -- you get $64,000, or 80% of pre-retirement income. The numbers above, as you may have already figured out, don't account for pensions, annuities or other sources of income. Most important, the math doesn't account for your particular needs and expenses. Building a Budget In order to figure your retirement finances more precisely, let's turn to a framework developed by T. Rowe Price Group, the Baltimore-based mutual-fund company. While we don't have room to get into all the details here, you take the time to tote up your expected expenses and sources of income -- and then revisit both categories as needed to bring them into alignment. EXPENSES. Expenses can be broken down into as many categories as you wish. Our framework has five: essentials, discretionary, special, debt and reserves. Essentials are fairly self-explanatory (housing, food, transportation), as are discretionary (travel, entertainment, gifts). "Special" would include major purchases (like a recreational vehicle) or major investments, like Andrea and Scott's desire to help with their grandsons' college education. Debt includes mortgage payments, car payments and the like. And reserves (a critical but often overlooked category) include savings for future purchases, like a car, new furnace or new roof on the house. INCOME. Most retirees have two sources of income: "benefits" income (which involves relatively predictable payments, like Social Security and pensions) and "income from assets" (money withdrawn from individual retirement accounts, personal savings and the like). Identifying the former is fairly easy, using benefits estimates you can obtain from Social Security and your employer. Calculating the latter will take a few extra minutes. In looking at your assets, add up taxable and tax-deferred holdings (such as 401(k)s and individual retirement accounts). The next step is a crucial one: selecting a rate of withdrawal -- how much to pull from your nest egg each year. To make the decision easier, we can use a technique called Monte Carlo analysis, which has nothing to do with the European resort city and everything to do with "probability theory." This analysis (made with various software programs) gives us a probability that our savings will last as long as we do, given tens of thousands of potential economic, market, mortality and spending possibilities. The accompanying table shows some withdrawal rates and their chances of success, as calculated by T. Rowe Price. In this case, "success" is defined as having at least $1 in your savings at the end of each time period. So, if you expect your retirement to last 30 years and your investment mix is 60% stocks and 40% bonds, for example, there's an 87% chance that your savings will last for those 30 years at a withdrawal rate of 4%. Increasing the withdrawal rate to 6% lowers the likelihood of having at least $1 at the end of 30 years to just 38%. These numbers simply represent the "likelihood" or the "probability" of a particular outcome, and Monte Carlo analysis does have its detractors; some financial planners argue that the results can give clients a false sense of security. Many financial advisers, though, agree that such calculations -- because they consider variability -- are superior to those built around averages. TAXES. Don't forget that your income will be reduced by taxes. You can review your most recent tax returns to figure your average tax rate. Or, to simply pick a figure, 20% is a reasonable estimate for many families and takes into account both federal and state taxes. RESULTS AND REVISIONS. You now have all the pieces to estimate your surplus or shortfall for the first year in retirement. There's good news even if you are looking at a shortfall: You are no longer operating in the dark. Instead, with all these figures clearly in front of you, you can start making some decisions about possibilities such as delaying retirement or trimming some spending. You are able to consider -- and see the consequences of -- each option because you took the time in the first place to estimate your expenses and income.
REVERSE MORTGAGE
Reverse mortgage can be golden opportunity Lenders and seniors warm up to that type of loan, though it's not for everyone. By Jonathan Peterson Times Staff Writer June 24, 2007 Like millions of Americans, Bill and Helen Bluett's greatest financial asset is their home, a Spanish-style dwelling just a quarter of a mile from the ocean in San Clemente. Selling the place and buying a cheaper one elsewhere could have brought the couple hundreds of thousands of dollars in extra money for their retirement years. But there was one problem with that idea. "We love our home," said Bill Bluett, 67, a retired mechanical engineer. "We love our neighborhood. As long as we're physically able, we want to stay right where we are." So this year, the Bluetts signed up for a reverse mortgage, a type of loan that allows older borrowers to tap their home equity without making payments as long as they live in the house. With the money, the Bluetts are more than able to take on projects like remodeling the kitchen and bathrooms. More important, Bill Bluett said, the reverse mortgage makes them financially prepared for "any emergency — whether it's medical or whatever — that might come up" in the future. "My wife and I decided it would give us a lot of peace of mind," he explained. Reverse mortgages have been criticized for high upfront costs. Lenders may charge 2% of the loan amount in origination fees — as much as $7,256 in California — and most borrowers also pay 2% for mortgage insurance, along with other fees that can far exceed those in conventional home loans. Loan amounts are often subject to strict limits, and many financial planners are still not familiar enough with reverse mortgages to guide their clients. But in an era when legions of older homeowners are sitting on vast amounts of untapped equity, reverse mortgages seem to be catching on. Competition has started to push down costs, and lenders are beginning to offer loans on unlimited amounts, a noteworthy shift in an industry that has mostly relied on federally insured mortgages with strict caps. In recent months, Countrywide Financial Corp., Bank of America Corp. and BNY Mortgage Co. all have scaled up their efforts in the growing field. After years on the sidelines, Wall Street has entered the game, with investment banks for the first time purchasing such loans in a "secondary market" that may further stir innovation and encourage more lenders to offer reverse mortgages. At the current rate, lenders could sell more than 100,000 reverse mortgages this year — more than double the number from 2005. "The significant thing in the last several months is that the big boys are coming in," said Bart Johnson, president of Irvine-based Financial Freedom Senior Funding Corp., a leading provider of reverse mortgages. He added, "The last six months to a year have been incredible." Just last week Housing and Urban Development Secretary Alphonso Jackson described reverse mortgages as "the bright spot in today's housing market," adding that "their significance will only increase as more baby boomers reach retirement." In a conventional mortgage, the lender lends you money to buy a house and you gradually pay down the debt — and build up equity — as you make monthly payments. In a reverse mortgage, the lender gives you the money — as a lump sum, in monthly installments or as a line of credit — and takes your home equity as payment. Typically, reverse mortgages don't have to be paid back until you sell your home, move or die. People must be at least 62 to qualify for a reverse mortgage. In California, borrowers must receive counseling on the implications of these loans (which is also required for all federally insured reverse mortgages). As with all loans, reverse mortgages have fees and charge interest. For example, a 78-year-old borrower whose home is worth $200,000 might end up with a reverse mortgage of $123,000, based on his age, interest rate levels and other factors. In this case, the borrower might pay about $13,000 in upfront fees — including a $4,000 loan origination fee, $4,000 in mortgage insurance and a $4,000 "set-aside" to cover servicing costs for the life of the loan, according to Fannie Mae, the federally chartered lender. Based on recent interest rates, such a loan might come with an adjustable interest rate of about 6%, with interest charges compounding during the life of the mortgage. Given that, homeowners should carefully weigh their options, experts say. Home equity loans can be a cheaper way to come up with cash for people willing and able to make payments in retirement. Selling the house and downsizing to a cheaper dwelling is another alternative, depending on the borrower's priorities. If the goal is simply home repair, seniors should explore whether their communities have low-cost loans available for that very purpose, said John Rother, director of policy and strategy for AARP. "It's good to have the option," Rother said of reverse mortgages. "But it's not an option appropriate for everyone." But for people who are long on home equity and short on cash, the reverse mortgage offers a key advantage: Borrowers don't have to pay back the loan as long as they stay in the house. Indeed, a reverse mortgage may be the only way that some people can afford to stay in their own home. "People who are using them, by and large, have a huge degree of satisfaction," said Peter H. Bell, president of the National Reverse Mortgage Lenders Assn., whose membership has more than doubled over the last few years to 540 firms. "For a senior with a fixed income, taking on a loan with monthly payments doesn't make a lot of sense." Most reverse mortgages are insured by the Federal Housing Administration, but loans insured by the agency are capped at $362,790 in higher-cost regions such as Southern California. In lower-cost areas, the cap is as low as $200,160. In some cases, older borrowers seek reverse mortgages to gird for future medical bills. Malcolm Greenhill, a financial planner in San Francisco, recalled a 72-year-old client with emphysema who feared his health would decline further but lacked the income to pay for in-home care. The man's home was worth $1.2 million. "I put his mind at rest and said there's a way here that you can tap into your equity," Greenhill said. "A reverse mortgage would be a good option for somebody like that." Others enjoy good health and view their home equity as an asset that should enhance their later years. They are people like Diana Stuart, 88, who has lived for more than three decades in a four-bedroom home in Huntington Beach that she bought for $30,000. Stuart remains active, traveling overseas and managing properties in Orange County. She also gives to charity, including missionary efforts abroad. "I was sitting in a house that's worth about $850,000, free and clear," she said of her decision to take out a reverse mortgage. "I've got no heirs. What am I wasting all that money for nothing?" "If anything happens, and I have to go to a 'home' or something like that, at that time the house would be sold, and we'd pay off the balance. It's such a simple thing." Increasingly, big lenders are stepping up efforts to market the loans and starting to offer some breaks in their cost. They are motivated in part by the high level of homeownership among older people. And they are aware of the aging of the baby boom generation, whose oldest members are now 61 and who will be making big-ticket retirement decisions in the coming years. Early this year, Countrywide Financial of Calabasas, the nation's biggest mortgage lender, introduced SimpleEquity, its reverse mortgage that imposes no caps, waives the origination fee for certain borrowers and charges no premium for mortgage insurance. In April, Bank of America announced that it would buy Seattle Mortgage Co., one of the leading reverse-mortgage providers in the country, and in May, BNY Mortgage of New York unveiled the first fixed-rate reverse mortgage for jumbo home loans, filling one of the gaps in the industry. By some indications, new offerings are filling a gap in the market. Countrywide's SimpleEquity, which is granted for amounts far above the federal lending limit, now accounts for almost half the lender's reverse mortgages. Such innovations "are opening up doors that didn't exist in the past," said D. Steve Boland, managing director of reverse mortgages at Countrywide. He added, "It's a very natural part of the evolution of homeownership to make mortgages that will enable people to stay in their homes." As some see it, reverse mortgages — in new variations — are destined to become increasingly popular as 76 million baby boomers head into old age. Boomers may prove much more comfortable with accepting debt in old age than today's seniors. Beyond that, many could face financial hardship because of a squeeze on pension benefits and increases in healthcare costs. "In the future we'll see new vehicles, new pricing, new ways of pulling out just the amount of money that you need," predicted Michael Boone, a financial planner in Bellevue, Wash. "I fully expect a reverse mortgage to be as normal as a 30-year fixed." At Financial Freedom, Johnson envisions a future in which reverse mortgages may be seamlessly linked with the conventional variety. Such a loan might start off as a traditional mortgage. But years later, when the note is finally paid off, nobody burns it or throws it out: Instead, the mortgage automatically moves into reverse, as the borrower — older now — takes out cash for retirement and allows some of the equity to flow back to the lender. "I think that's going to become a pretty mainstream product," Johnson predicted. "Today it doesn't even exist."
Reverse mortgage Q&A Some points to consider:
What is a reverse mortgage? A reverse mortgage allows people to borrow against the equity in their home, taking the money in monthly payments, as a lump sum or as a line of credit. Do I qualify? If you are at least 62, own your home and are not delinquent on any federal loans, you qualify. If the reverse mortgage enables you to pay off the remainder of your conventional mortgage, you also would qualify. Does it make sense for me? Are you able and willing to make payments on a conventional loan that may be cheaper? Are you willing to sell your house to capture some of your home equity? Do you have enough income to cover your living costs? If you answered no to any of these questions, a reverse mortgage might fit into your plans. What are the alternatives? A big alternative is to sell your home and move somewhere cheaper. To consider this option, you would explore what your home is worth, what it might cost to buy or rent another one, perhaps in another city, and what kind of financial returns you could rely on if you had money left over after those transactions. Beyond that, other kinds of loans may cost less than a reverse mortgage, but they require monthly payments. Where can I get more information? AARP offers information at http://www.aarp.org/money/revmort . The site includes a reverse mortgage calculator that may provide an idea of how much money you would qualify to borrow, based on your age and the appraised value of your house. Source: Times research --------------------------------------------------------------------------------
SOCIAL SECURITY How Spouses Can Maximize Social Security Benefits June 30, 2007; Page B2 My wife and I will soon be eligible for our full Social Security benefits, but each operates our own consulting practice, and we don't need the income now. Are there implications in the size of payments if only one of us takes Social Security and the other delays until age 70? Does it make any difference which one of us takes it? I have higher earnings and more years of eligible service. --Mark Hoover, New York * * * How does the spousal benefit for Social Security work? It is my understanding that the spousal benefit is 50% of my benefit. This would seem straightforward if my wife and I were the same age and applied for benefits at the same time. But I'm 62 and my wife is 58. Say I started taking benefits at my full retirement age -- 66. If my wife, who would then be 62, took her spousal benefit at that point, would she get half of my full benefit, or less than that? If she waited until age 66, would she get half of my benefit at that point, or half of my benefit dating back to when I was 66? --Drew Smith, Kalispell, Mont. Figuring out the best way to take Social Security is tricky for married couples. In the first situation, where both the husband and wife are working, having one spouse wait until age 70 would increase that individual's Social Security benefit. If you were born in or after 1943, for example, postponing your benefits past your full retirement age would increase them by 8% a year. Wait to start your checks until age 70, and you've given yourself a 32% raise, says Dorothy Clark, a spokeswoman for the Social Security Administration in Baltimore. So, for example, if you were entitled to $1,000 a month in benefits at age 66, you would get $1,320 a month by waiting until age 70. (A chart at www.ssa.gov/retire2/delayret.htm shows how this works.) You should be able to see what you would get at age 70 on the statement that Social Security mails you each year, adds Mary Jane Yarrington, a senior policy analyst for the National Committee to Preserve Social Security and Medicare, a Washington advocacy group, who answers questions online at www.ncpssm.org/maryjane. It does make a difference which spouse takes the benefit at full retirement and which one postpones until age 70 -- but not until one of you dies. At that point, you're better off if the higher-earning spouse waited until age 70, because the surviving spouse is entitled to the larger of the two spouses' benefits. The situation in the second question is a common one: A married person (usually the wife) collects Social Security based on her husband's earnings record when her own Social Security benefit wouldn't equal or exceed 50% of her husband's. For example, if the wife's full retirement age is 66, but she opts to start receiving Social Security checks at age 62, she would get 35% of her husband's full benefit amount; by waiting until her full retirement age, she would get 50%, Ms. Clark says. So, for instance, if the husband were collecting $1,000 a month, the wife would get $350 a month at age 62 -- or $500 a month if she started her benefit at her full retirement age, 66. Keep in mind that the wife (in this example) can't collect Social Security based on her husband's record until the husband files for benefits, as well. And even if the husband starts his benefit as early as age 62, the wife's benefit would be based on the amount he would be entitled to at his full retirement age, Ms. Clark says. What if the husband already has been collecting his full retirement benefit for a few years? The wife's benefit would be based on his current payment amount. The Social Security Administration's Web site has a quick calculator to help you determine your individual benefit amount at www.ssa.gov/OACT/quickcalc. You also can call Social Security at 800-772-1213 or find a local office using the "Social Security Office Locator" by going to www.ssa.gov, and then clicking on "Find a Social Security office" in the left-hand column. • Send your question to encore@wsj.com. Ask Encore/Focus on Retirement is a weekly column answering readers' questions about retirement and personal finance -- from annuities and bonds, to trusts and inheritance issues.
MAXIMIZE SOCIAL SECURITY How Couples Can Maximize Social Security By GLENN RUFFENACH July 8, 2007 New research suggests there could be an optimal strategy for couples trying to decide when to collect Social Security. In short: A wife should jump early, and her husband should wait. If our mailbox is any indication, many couples aren't sure when to file for Social Security. Some guidance came in the June issue of the Journal of Financial Planning. Alicia Munnell, director of the Center for Retirement Research at Boston College, and Mauricio Soto, a researcher at the center, set out to determine the best age for women to claim Social Security. In doing so, the pair also calculated how a wife and husband could accumulate as many Social Security dollars as possible during their years together -- and during the life of the surviving spouse -- given various differences in ages and pre-retirement income. Their conclusion: Wives generally should claim benefits at 62 (the earliest eligibility age), and husbands generally should delay filing until 69. (You can read the study at fpanet.org/journal. Click on "Past Issues and Articles" for June 2007.) In theory, most healthy women should wait until their mid- to late-60s to collect benefits and men should start earlier. That's because women are more likely than men to live beyond the "break-even" age at which the accumulated value of higher benefits (for a person who postpones retirement) will start to exceed the accumulated value of lower benefits (for a person who chooses early retirement). Dr. Munnell and Mr. Soto, though, determined that when a man and woman are part of a couple, each should consider the contrarian path. Their findings are based in large part on differing income levels (and thus, differing Social Security benefits) for men and women, age differences between spouses, life spans -- and on the fact that a surviving spouse (typically, a wife) can collect 100% of a deceased spouse's Social Security benefit. A husband who delays benefits until age 69 is actually helping his wife -- in the long run -- by increasing the value of her survivor benefit. (This assumes the husband earned more than the wife during their working years, which is often the case.) The wife, meanwhile, by claiming benefits at age 62, is bringing Social Security dollars into the home for the longest period possible. Two caveats: If a wife and husband are about the same age and her benefit is expected to be about one-third of his benefit or smaller, the "62/69" recommendation doesn't work as well. (Both spouses should delay benefits.) Second, decisions about Social Security shouldn't be made in a vacuum. When it comes to retirement finances, couples can help themselves in several ways in later life. Says Dr. Munnell: "My advice generally is that women and men, if they're healthy, should keep working for as long as they possibly can...[and] reduce the amount of time they're dependent on their savings
Co-Housing Offers Alternative To Age-Restricted Communities Quarterly Newsletter – August, 2007 www.seniorsrealestate.com Co-housing offers alternative to age-restricted communities, board & care. Shared meals. Walkable communities. Arts and fitness amenities. Caring neighbors. Multi-generational demographics. These are just some of the attributes of a typical co-housing community, a concept in which like-minded people come together to create their own community. Such communities are created with mutual values and interests in mind. Co-housing properties include shared space—a common house for dining and hobbies, for example—and green space. Residents also participate in activities that benefit the whole community, such as gardening and communal meal preparation. When you’re working with a REALTOR® to sell your primary residence or you’re considering downsizing, ask your REALTOR® about co-housing. Some practitioners, such as Neshama Abraham Paiss, a broker-associate with Keller Williams Front Range Properties and co-founder of Elder Co-housing Network, Boulder, Colorado, are starting to include co-housing as specialties and can help you find an existing community or introduce you to others working to develop one. “We’re also able to help groups find land and we refer interested parties to experienced brokers in other parts of the country,” she says. For many Seniors and Boomers, co-housing is more appealing than other living options, such as seniors-only buildings or nursing homes, because residents live in safe, nurturing environments, where neighbors care for one another. Neshama believes “A co-housing community is a vivid, spontaneous, vibrant setting—just the opposite of most care facilities.” Usually, a group of like-minded people join forces to develop a co-housing community. That includes defining a mission, choosing a site, determining the physical components, deciding on shared duties (landscaping, cooking, and so forth), and working with experts, such as REALTORS® and builders, to locate and buy sites (land or existing buildings) and build or renovate the facilities. Another option is to buy into an existing community. Abraham Paiss emphasizes that co-housing is not a commune. “There’s no shared income, and people pay monthly homeownership dues to maintain the property. No guru, leader, or religious person directs people’s thinking or activities. Everyone is independent and free,” she explains. Though each person or family owns a unit (a house or condo, for instance), residents benefit from access to shared amenities, such as a common house, communal kitchens, art studios, guest rooms for visitors, and space for exercise and lectures. Residents have as much privacy as they wish, but can always find companionship and social events within the neighborhood. In addition, newer communities are being designed to accommodate aging-in-place, by designing common areas with no steps, for instance, and creating gardens that are wheelchair-accessible. One co-housing approach is a multigenerational model, with families, young and old singles, and married couples. Often, one-third of residents are over 50, which is a model that works well, according to Abraham Paiss. For those with tenuous connections to faraway grandchildren, Seniors frequently become surrogate grandparents to the community’s kids. In Abraham Paiss’ community, for instance, one man hosts a weekly story hour for neighborhood children. Moreover, Boomers and Seniors see and communicate with the kids and other families at shared meals, which occur two to three times per week in most co-housing communities. Residents take turns preparing such meals. For those who don’t want to live among children, another option is creating a community that groups people of similar ages—say 50+ residents—all together. Abraham Paiss says the co-housing model is especially beneficial to Boomers and Seniors. If you’ve created and lived in a community starting in your 50s, for instance, and people come to know and care about you, then when something happens to you in your 80s or 90s, you’re surrounded by people who look after you. “As you age, you’re treated as a human being, not as a condition,” comments Abraham Paiss. Another benefit is that the cost of living in co-housing is lower than in other housing options. People can downsize and not feel they’re doing without. Common houses, for example, often include guest rooms so that residents can still host relatives and friends for overnight stays without maintaining a guest room in their own home. Moreover, houses are typically built to very energy efficient standards, resulting in lower utility bills. And costs are spread among many. As an example, Abraham Paiss says one co-housing community has monthly dues of $200 and that fee covers water, common house maintenance, Internet connections, and trash removal. Co-housing works in urban, suburban, and rural locations. Communities exist in areas such as Virginia, urban Washington, D.C., and Davis, California, just outside Sacramento. Some have units priced at $400,000 and others include affordable rental and ownership opportunities. According to the Elder Co-housing Network: Medical research has found there is a direct link between good health and living in community. People with strong social ties recover faster from illness and live longer. People who live in community have lower healthcare costs. Visit their website below to read several studies linking community and health, including the Harvard and Yale researchers’ The Roseto Effect. Neshama Abraham Paiss believes co-housing is an ideal housing option for Boomers and Seniors. “Especially for shy people, it’s an easy way to connect and build a social life. Outgoing people tend to be the organizers,” she observes. “Co-housing also is an antidote to loneliness and isolation; there are always people around if you want them,” Neshama adds. Additional Resources: -Elder Co-housing Network— www.eldercohousing.org -The Co-housing Association of the United States-- http://www.cohousing.org/default.aspx
California Center for the Aging, one of the leading authorities in Geriatric Care Management and Long Term Care Planning, has developed an innovative new approach to Non-Medical In-Home Care...Read More
Prestige owns and operates independent, assisted living and memory care communities as well as nursing and rehabilitation centers in Alaska, Arizona, California, Idaho, Montana, Nevada, Oregon and Washington. It is the company's mission to provide quality care guided by a compassionate heart with values based on respect, integrity, commitment and t...Read More
DATELINE: BROCKTON, MA (December 28, 2011)... This holiday season, the staff at Old Colony Elder Services (OCES), the Brockton based regional elder services agency serving seniors, their families and caregivers throughout greater Brockton and Plymouth county, has gone above and beyond to help those in need. ...Read More
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Foster Hamilton Real Estate 1765 4th Avenue San Diego, CA 92101
