Wednesday, February 29, 2012

Some companies will give you cash for your annuities. (Don't do it!)


I’ve noticed recently that there are companies that will buy your annuity and give you cash now. To me, it sounds imprudent – it sounds like something people turn to when they have those upside-down-mortgages.  I hear a lot about premature withdrawals from 401(k)’s (with penalty), but not about this.

Some of the companies include Novation Cap, J G Wentworth, Woodbridge Investments. 

This does sound like another topic for the media finance gurus to write about. I have a feeling that these would get smackdowns from Suze Orman. 

Tuesday, February 28, 2012

Middle East instability can increase COLA's, making Social Security Trust Fund evaporate more quickly


Allan Sloan has an interesting short column in the Feb. 28 Washington Post, “Arab Spring fallout hits Social Security”, link here.

What’s the link?  Instability in the Middle East has helped boost the cost-of-living adjustment that started this year, to more than what was expected.  The threats from Iran certainly will add. So the projections on the longevity of the Trust Fund could quickly become quite a bit less than expected. 

Sunday, February 26, 2012

How to "buy your own pension" (IFA's)


Here’s an article, from 2009, Kiplinger, that I thought I would pass along, “Buy a Pension with an Immediate Annuity”, by Steven Goldberg. The discussion concerns IFA’s, Immediate Fixed Annuities, with link here
.

He says that sales people don’t earn much selling them. And once you pay the single premium, it’s out of your hands; you can’t get the principal back for an emergency, ever, beyond your payments.  But if you’re going to live a long time, it could become a good deal. 

I have a variable annuity contract with Met Life (not fixed), and in general many of the same concepts would apply. 

Normally there are beneficiaries, and sometimes a death benefit may remain, depending on the contract.  


Friday, February 17, 2012

"Taking the Keys" from elderly drivers

NBC Nightly News aired a short report "Taking the Keys" of adult children having to coax their parents to give up driving, or sometimes give up driving in certain circumstances, such as at night.

Some states are requiring retesting or medical histories of older drivers more often, and auto insurance companies are becoming more concerned about age as people live longer.




My own mother drove until May 2009, when she was 95.  I took away the keys when asked to after a mild stroke (and it apparently hadn't been the first).

Older drivers could start getting lost, or having more trouble merging lanes in heavy traffic (such as having to enter an Interstate from the left, common in older interchanges in the East).

Whether adult children who knew or suspected a hazard if they didn't act could be held liable (after a parent's auto accident) would be a vague and troubling question.  I've been told they could be.  Some lawyers will go after who has the deepest pockets.

I am 68 now, and my VA license expires in 2016.  What will I face then?

There is a tort of "negligent entrustment" that Nolo discusses here.

Thursday, February 16, 2012

Primer on Social Security and pension survivor benefits for couples (when "marriage" matters)

In this time that same-sex marriage is a political issue for some candidates, it’s well to review, under federal law, just when “legal marriage” can improve benefits. 
  
The main circumstance is when, in a couple, one largely supported the other and the dependent spouse did not have significant social-security-eligible earnings.  In that case, the spouse gets a portion (usually 50%) of the other partner’s benefit (one half if waiting until full retirement age), link here.  Even so, Social Security always computes the benefit the spouse earned on his or her own first to see if it is more.  The rules are more generous if there are dependent children (which is admittedly more like a “welfare benefit” than annuity).

On the other hand, if both spouses had comparable income and both earned their own benefits, there is, in practice, neither a marriage benefit nor penalty while both are alive.

However, a surviving legal spouse (under federal rules) receives 100% of the partner’s benefit, a possibility not available to same-sex couples when one has passed away.  Here’s another reference from 2010 at “Personal Finance by the Book” (link).   I know this was the case with my mother.

Here’s another GLAD worksheet (from Rhode Island) on the effect of marriage on social security and private defined benefit pensions, link

The Human Rights Campaign has a valuable worksheet on “Domestic Partner Benefits: Pension Survivor Annuties” here with discussion of the now unfavorable (for same-sex couples, because of DOMA) IRS rules for  QJSA (Qualified Joint Survivor Annuity) and QPSA (Qualified pre-Retirement Survivor Annuity).

On another topic, the “spend-down” rule for Medicaid eligibility when entering a nursing home, I found this reference on how to use annuities to soften the blow, link.  I had not heard of this financial planning "technique" and will return to it later. 

Wednesday, February 15, 2012

Should retirement condos offer (just) a "simple way to live"?


Today, I “happened by” Ashby Ponds and Erickson Senior Living near Ashburn, VA (link), in Loudoun County, more or less near Leesburg. My understanding that this is a normal condo community for age 62 and up, not a CCRC.   It may have a connection with the Methodist denomination, if I remember correctly.
  
What strikes me is the TV ad, “a simple way to live”.   At 68, I’d still like to “accomplish something”, not just “live”.  My own mother used to talk about the idea that “you can still live”.   Here, the word “simple” sounds like a downer.

I do understand, of course, the advantage of having all of the services, of being in an area with stable amenities, of no time taken in managing a house and property, and of living in an area where there are no trees to fall on the buildings in storms, and with underground utilities.  (The surrounding countryside, in winter when there is no snow, looks more like Texas than Virginia.)   In that sense, “simple” is good.

The website doesn’t give prices as far as I can tell – so it must be expensive. 

Not very far away is a training camp for the Washington Redskins.  A big white tent. 

Let me add, also, that when I lived in Minneapolis, I noticed that the Twin Cities seemed to have a tremendous concentration of 55+ apartment communities, more than the DC area. 

Thursday, February 09, 2012

Public employee "double dipping" on the wane; unions fight back with words on pension attacks

There are still some states, such as Wisconsin, that sometimes allow employees to go back to work and still collect pensions, as in this Racine Journal Times story from Oct. 2011, link. That “double dipping” is supposed to come to an end.

Nevertheless, unions are fighting back from the verbal attack on the “pension tsunami” from public employee pensions, as with this Teamsters post. Yet the post has more to do with wages of uniformed services and teachers than with pensions themselves.  

Wednesday, February 08, 2012

NIH asks for more funding for Alzheimer's, but may reclassify some patients with "mild impairment" in such a way as to affect benefits

The recent expansion of the definition of MCI, or “Mild Cognitive Impairment”, complicates the picture of estimating the public health problems likely to follow with a rapidly aging population. The definition has been expanded to include other activities of daily living as well as memory, but some of these could other kinds of disabilities.  

CBS News ran the story from WebMD here

The National Institute of Aging  proposed new criteria, which would classify as MCI symptoms of many people who still function independently, and which critics say might cut them off from care that could prevent progression to Alzheimer’s, including various new drugs.

Some people say that up to 90% of diagnoses could be downgraded.  Forbes has an article by Bernard Krooks Feb. 8, 2012 here

Time, in a story by Alice Clark, says that about 99% of those diagnosed with mild dementia would be classified with MCI and could lose critical services, including support for anti-dementia drugs, link here

It would seem that the MCI definition could complicate the CDC projections of the explosion of the Alzheimer's epidemic and the effect it will have on families and on public budget deficits. 

My own mother took both Aricept and Namenda during her last twelve months for what would now be considered MCI, but her MRI’s showed some plaques.  They were expensive, covered by Medicare but fell into the doughnut hole – but there were also some physician samples. 

I could not find the criteria on NIA’s website. Instead I found a statement of the intention of the Obama administration to increase funding for research and treatment (“we can’t wait”), link here.

Tuesday, February 07, 2012

Some companies really need to hire seniors, for their own good

Some employers will find that, to serve properly the needs of many clients, raised in a different cultural and legal environment a couple generations ago, they have no choice but to actively recruit other seniors. 

Some years back, AARP partnered up with Home Depot, to offer seniors positions on the sales floors. Why? Seniors would be more likely to know about the sensitive problems that exist in home built before modern building codes, which can provoke delicate situations and demand certain people skills.

HR Block often hires and trains seniors as tax preparers.  Seniors are more likely to be personally familiar with the complexities that can come from retirement, and from having gone through family estate matters.


Friday, February 03, 2012

Alzheimer's may start in one area of the brain and involve a special protein called the "tau" which propagates

Recent research suggests that Alzeheimer’s disease may start in one area of the brain and spread through synapses by cell-to-cell movement of a “tau” protein.  Previously the disease had been thought to be multifocal.  This model suggests what is already known for a few diseases like “Mad Cow” where an “infectious protein” changes the geometry of cells it contacts and propagates.  New medications could target the tau protein as well as the amyloid.  But the story also presents the disease as a sort of pseudo-malignancy.

MSNBC reproduced the MSNBC story here

There is a more detailed article by Rick Nauert from the University of Texas in Psych Central here

Thursday, February 02, 2012

Some references on trusts: "Grantor v. non-grantor"; "revocable" v. "irrevocable"

Rocco Beatrice of Estate Street Partners and UltraTrust have a recent video explaining Grantor Trust and Irrevocable v. Revocable Trust here.  In 2013, the estate tax exemption on a person is $5 million, but Rocco says the estate tax levels have changed 38 times since 1950.


A Grantor Trust creates a third legal person and gets assets out of the grantor’s (the real person with the money) name, for protection from creditors.   The Grantor has the money but does not formally own the assets (often not even the home).  It is typically desirable to make the trust irrevocable, which typically means that the Grantor cannot withdraw from it but may borrow from it “almost” without supervision and without repayment, and in the mean time files income and expenses on his regular income tax. The main provisions are in IRS codes 674-675 and 121  (for example, Tax Almanac gives this).  


It would seem that the Grantor's behavior, while he has great powers to "borrow", could be questioned by others if he acted irresponsibly, particularly in today's sensitive political climate.  If you draw on assets that are not yours, it's better if somehow they can help take care of other people (maybe by employing them). 




A revocable trust would remain exposed to creditors.   Rocco gives an example similar to my “back yard baseball” in the 50s.  The “grantor” – in my case, me (in effect) allowing other boys to play softball in our backyard, could control the rules (how far it is to the outfield fences – we had a big yard). When the other boys “lose” they can whine and go home, particularly if the grantor changes the rule so he can personally get better results.  The sports analogy of “home field advantage” makes sense (but not during Super Bowl week!).

The UltraTrust link (which was apparently first written around 2001) is here.

“Dummies” has a page explaining grantor v. non-grantor trusts here.