retirement

Underfunded pensions – Do you have one?

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This morning my friend Sharon and I were talking and the subject of pensions came up.  We both receive a pension from the Public Employees Retirement Account (PERA), a Colorado teacher’s retirement fund.  I asked her if she knew if it was in good standing.  She said she thought it had gotten better than in years past.

This evening while reading the Denver Post, I read an article by Terry Savage titled, “Pensions at risk, group finds.” After checking out the website mentioned, it appears the Colorado PERA account gets a grade of D.  The School Division Trust Fund of PERA (Sharon’s and my pension fund) had unfunded benefits of -$15.30 billion in 2015! That’s a negative in front of the number!

underfunded pensions
biswa.net

Check out your city or state pension fund to see if you have an underfunded pension after you read this article:

Don’t Count on that Government Pension

by Terry Savage, The Savage Truth

April 23, 2017

“Millions of Americans are expecting to receive a pension from the city or state that employs them. Many will be in for a terrible surprise, according to the nonprofit organization Truth in Accounting.

It surveyed 237 municipal pension plans across the country, using newly required reporting data about pension underfunding. Although it has taken decades for many of these pension funds to get into such bad shape, only now are the details being revealed, says Sheila Weinberg, president of Truth in Accounting and a CPA who has dedicated her life to requiring full and useful disclosure of federal, state and local debt obligations. (I am a board member of Truth in Accounting.)

This newly collected data should be frightening to those counting on a state or municipal pension. The latest numbers are available at http://www.statedatalab.org/pension_database. There you can search by state to find both state and local pension statistics. The report for each city and state includes the amount of pension plan assets, the amount of plan promises, and the dollar amount and percentage of pension underfunding. Every plan also receives a letter grade, from A to F.

Of the 237 cities studied, 29 received an ‘F’ grade, reflecting a funding ratio of less than 35 percent. Those plans cover many thousands of workers who cannot possibly be paid their full promised pensions, absent a huge tax increase (which would also come out of their pockets as workers).”

Read more about underfunded pensions

Embrace retirement by working

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After about three months of experiencing retirement, I realized I wasn’t ready for the drastic adjustment.  I had worked full-time as a high school teacher so I decided to embrace retirement by working part-time as a substitute teacher to help with the transition.  I loved the flexibility and the ability to continue working with young people.  Rob Peters was in a similar situation…

A Californian’s ‘Retirement’ is Part-Time

By Kim Blanton, Squared Away Blog

April 20, 2017

A new body of research indicates that continuing to work but gearing down to a lower-intensity job is often good for older Americans, because it reduces their stress, increases their job satisfaction, and is an encouragement to continue working and preparing financially for retirement.

“Rob Peters’ approach to retiring wasn’t much different from hitting the road in 1975 to help drive a college friend from New York to California. He didn’t really know where he was going.

When he first laid eyes on California, he was captivated by its beauty, as well as the left-leaning politics absent in the conservative Long Island community he grew up in. But Peters, equipped only with an English degree from the State University of New York at Buffalo, bounced around for years among the various part-time and full-time counseling jobs available to him in his new paradise.

Not until age 38, after earning a master’s degree in counseling and 13 job interviews, did he land his dream job at Diablo Valley College, a community college serving mostly low-income and minority students. He stayed more than 26 years, as a student adviser, program facilitator, and instructor.

He took a blind leap into retirement, too. Again, finding his place was a process. Within four months of retiring, at the end of 2014, he contacted Diablo Valley College.  Yes, they would welcome him back as a counselor for four hours in the morning, two days per week in the spring and three days in the fall.”

Read more about embracing retirement while working

Considering a job change?

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The Benefits of Late-career Job Changesjob change

by Kim Blanton, Squared Away Blog

March 23, 2017

“Finding a new job in one’s 50s is not that easy to pull off, and it’s risky if the new employer doesn’t work out.  But there’s a silver lining for people who can make the change to a job they feel is better: they work longer than those who don’t make a move.

A new study by the Center for Retirement Research, which supports this blog, finds the probability that older workers remain in the labor force until they’re 65 increases considerably – by 9 percentage points – if they voluntarily made a job change sometime during their 50s.

This lends credence to other research showing that when older workers voluntarily find a new employer, they often experience more job satisfaction and less on-the-job stress, which makes it easier to resist retiring.

The benefits from changing jobs are both psychic and practical.

More than half of U.S. workers haven’t saved enough.  A few more years of work increases your monthly Social Security, reduces the number of years an under-saver has to finance in retirement, and gives retirement savings accounts a little more time to accumulate investment earnings.”

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Considering long-term care insurance?

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Long-Term Care Combo Policies

by Terry Savage

August 9, 2016

“Needing long-term care is an unpleasant thought as you approach retirement age.  But ducking this issue could be the most expensive mistake you make about your retirement.

Aside from the obvious reluctance to think you might need help with basic activities of living, you might figure you’ve saved enough to cover the costs of care.  Think again.

According to the latest Cost of Care survey by Genworth, which sells long-term care insurance, it now costs an average of about $3,800 per month for in-house care for a year, a similar amount in assisted living and about $7,700 per month for a private room in a nursing home.

Need for care typically lasts only about two to three years, but extended care for Alzheimer’s could wipe out (your) savings….

According to Home Instead Senior Care, one of the largest franchisers of care-giving services, only about 20 percent of its clients pay for care through long-term care insurance policies.  The rest are digging into their own pockets.”

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To compare long-term care costs by state go to:  https://www.genworth.com/about-us/industry-expertise/cost-of-care.html

Terry Savage is a nationally known expert on personal finance, the markets, and the economy. Terry is a regular blogger at the Huffington Post. She is a frequent guest on television and radio shows, including CNN, CBS, and she has appeared many times on Oprah.

 

Embracing life after 50

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Becoming an Elder:  The Next Step in a Life of Meaningimages (47)

By Lorie A. Parch

July 26, 2016

“It often seems that our culture neither values the aging or the aged.

Simply put, things aren’t like they were in our grandparents’ era when older folks received a fair amount of respect.. So these days, the idea of becoming an ‘elder’ may not sound like something you’d ever want to do. If so, you’d be missing out on an essential life experience, says Michael Gurian, a counselor and author of the about-to-be-reissued The Wonder of Aging: A New Approach to Embracing Life After Fifty.”

…Gurian thinks that becoming an elder in your circle, or even in a wider community, is extremely important—and not just because it helps others. ‘We want to become elders because a life of meaning now depends on it,’ he says emphatically.”

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Note:  Gurian’s book was re-released in paperback June 7, 2016.

Strategies to ease pain of health care costs

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Ease the Pain of Health Care Costs in Retirement

by Kimberly Lankford, Kiplinger’s Retirement Report

February 2016

“This number should hurt a lot: The average 65-year-old couple will pay $240,000 in out-of-pocket costs for health care during retirement, according to Fidelity Investments. And that does not include potential long-term-care costs.

Critical, yes. Incurable, no. The worst thing you can do is take to your bed and expect the pain will go away with an aspirin or two. The best medicine is to make sure your retirement plan takes into account this large line item — and to find ways to cut future costs or develop income streams to pay expenses.images (50)

It’s easy to see how the costs can add up. Just Medicare premiums alone for 25 years — for standard Part B (which pays for outpatient care), a Part D prescription-drug policy and a Medigap supplemental insurance policy — will set a couple back close to $200,000. And that does not include dental and vision care, hearing aids, and out-of-pocket drug costs. A Medicare Advantage plan could cost somewhat less. Thank goodness Part A, which pays for hospital care, is free.

In your planning, prepare for unexpected spikes in spending, such as a new dental crown. Also, adjust your estimates for inflation, perhaps by 4% a year. And if you expect to live longer than average, plan for those extra years.

Here are some strategies to ease the pain of an acute case of health care costs.”

Read more at:  http://www.kiplinger.com/article/retirement/T027-C000-S004-ease-the-pain-of-health-care-costs-in-retirement.html

Single ladies

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Retirement may be dicey for single women 

Sharon Epperson/Laura Sanicola

March 22, 2016

“Across all age groups, women have substantially less income in retirement than men, according to another report from the National Institute on Retirement Security. For women age 65 and older, their income is generally 25 percent lower than that of men. As men and women age, the gap widens to 44 percent by age 80.

As a result, the study found that women are 80 percent more likely than men to be impoverished at age 65 or older. Additionally, women age 75 to 79 are three times more likely to fall below the poverty level than men in the same age group.

Why the disparity? The gap may stem in part from the fact that women live longer on average than men, said Diane Oakley, executive director of the National Institute. In the United States, a woman turning 65 today can expect to live to more than 86. For men, it’s 84.

Women generally still earn less than men during their working years and that could affect their financial situation down the road, said Andrew Simonelli, director of communications and marketing at the Insured Retirement Institute.”

Read the entire article at: http://www.cnbc.com/2016/03/18/women-more-likely-than-men-to-retire-poor.html