Retirement Living News

June 2007

HEADLINES  (Click on headline to read story)

• New Service Model Emerging for Assisted Living
• NAHB Study Reveals Property Tax Rates in Each State
• Survey Finds Most Retirees Don't Plan to 
  Tap Their Home Equity in Retirement
• NOAA Predicts a Rough Hurricane Season This Year
• Florida Experiencing Record Drought
• New Book: Encore -- Finding Work That Matters in the 
  Second Half of Life

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NEWS STORIES

New Service Model Emerging for Assisted Living 

Assisted living in the United States is regulated differently in each state. In most states, assisted living is licensed as a single entity that provides housing and services to residents. However, in a growing number of states a new service model has emerged in which assisted living services are provided in unlicensed housing. In this model, the building is not licensed, but instead the facility makes arrangements with licensed service agencies to provide services to residents.

AARP's Public Policy Institute has prepared a 43-page Issue Paper that describes the experiences of Connecticut, Minnesota, New Jersey and North Carolina with this model and the implications for consumers -- http://assets.aarp.org/rgcenter/il/2007_08_housing.pdf. Findings are based on a review of the laws and regulations, and interviews with key informants in four states with this approach: 

• In Connecticut, assisted living consists of senior apartment buildings called managed residential communities that contract with assisted living services agencies to provide services to residents. The state also provides Medicaid funding for these services in 16 state- and three federally-subsidized senior housing communities. 
• In Minnesota's version of assisted living, apartment buildings called housing with services establishments contract with home care agencies to provide services to residents. Last year the state passed a law improving consumer protection for assisted living residents. 
• New Jersey originally had two types of licensed assisted living settings: (1) assisted living residences and (2) comprehensive personal care homes. In 1996, the state added a third category of assisted living, assisted living programs (ALPs). ALPs are licensed agencies that bring assisted living services to older residents in subsidized housing. 
• North Carolina has two types of assisted living. Adult care homes are licensed assisted living settings. Multi-unit assisted housing with services (MAHS) are not licensed but contract with home care agencies to provide services to residents. MAHS are private pay, and residents are generally more independent than adult care home residents. 

According to the AARP report, assisted living in unlicensed housing has several potential benefits as well as problems for consumers. Potential benefits include improved access to assisted living for people with low incomes living in subsidized apartments, a home environment, a range of housing options, and in some cases, the ability of residents to remain in assisted living when their needs increase.

Challenges for states include ensuring that consumers are well informed. This includes protecting residents' rights and ensuring quality of care, particularly regarding assessments, service terminations, and evictions; and providing adequate oversight and enforcement while maintaining the home environment that consumers prefer.
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NAHB Study Reveals Property Tax Rates in Each State

Property taxes accounted for about 22% of state and local government revenue in 2005, according to a study by economists at the National Association of Home Builders (NAHB). The analysis is important for comparing the affordability of housing and the cost of living in general, and is helpful for those planning to relocate or retire in another state. 

Natalia Siniavskaia, the author of the report, notes that it is often difficult to compare effective tax rates on residential real estate based on state and local government data because local jurisdictions follow different assessment, administration and reporting procedures, and 37 states also collect property taxes on the state level. However, expansion of information collected by the U.S. Census Bureau at the request of NAHB has provided more data for counties and metropolitan areas. 

State and local governments in New Jersey and New Hampshire rely on property taxes for their revenue more than governments in any other state, the study finds. New Hampshire, a state that does not tax wages and salaries, derives almost 43% of statewide government revenue from property taxes. New Jersey derives 35%. 

In a recent development since the NAHB study was completed, New Jersey passed legislation that reduces property taxes for about 95% of all homeowners. Starting in 2007, homeowners will receive a 20% tax credit (incomes up to $100,000), a 15% tax credit (incomes between $100,000 and $150,000, and a 10% tax credit (incomes between $150,000 and $250,000) up to a maximum of $2,000. 

The six New England states are among the 10 states most dependent on property taxes as a source of government revenue, according to the report. On the other hand, Delaware, New Mexico and southern states such as Alabama, Arkansas and Louisiana derive no more than 9% to 11% of statewide revenue from property taxes. 

The study finds a strong correlation between the extent to which state and local governments rely on property taxes to fund local services and the amount of real estate taxes they collect per home. While state median property taxes per home reflect home values to a certain extent, the correlation is not as strong. 

Among other findings of the study: 

• The state with the highest median real estate taxes is New Jersey, where more than 50% of all households pay more than $5,352 in property taxes per home. States like California, Hawaii and the District of Columbia have higher home values than New Jersey but on average collect significantly less real estate taxes per property. The state with the second highest property taxes, New Hampshire, collects a median of $3,920, or $1,432 less per home than New Jersey. 
• At the low end of the spectrum, states in the South Census Region -- such as Arkansas, Mississippi, West Virginia, Alabama and Louisiana -- have median real estate taxes that don't even reach $500. In Louisiana, half of all households pay less than $175 in taxes per home. 
• With its generous homestead exemption, Louisiana has the lowest real estate tax rate in the nation, at $1.72 per $1,000 of home value. Two states with the highest effective tax rates are Wisconsin and Texas, where rates exceed $18 per $1,000 of property value. 
• Median home values in the highest tax rate states -- Wisconsin and Texas -- are well below the national average. But the three states (including Washington, D.C.) with the most expensive homes -- California, Hawaii and the District of Columbia -- have some of the lowest property tax rates in the nation -- $4.77, $2.04 and $3.76 per $1,000 of value, respectively. 
• Niagara, N.Y. is the county with the highest effective median tax rate, with a rate of $28.12 per $1,000 of value. New York stands out for having the most diverse tax rates across the state. At the low end, Kings County has a tax rate of $4.79 per $1,000 of value, almost six times lower than in Niagara. 
• Among states where there is data covering more than two counties, Nebraska has the most consistent tax rates across its counties. 
• St. Bernard Parish, La.; Maui, Hawaii; and Apache County, Ariz. have the lowest median tax rates among all counties - $1.35, $1.62 and $1.64 per $1,000 of value, respectively. 

To read the report and view a map and two tables showing the property tax burden in each state, click http://www.nahb.org/fileUpload_details.aspx?contentTypeID=
3&contentID=76984&subContentID=105281
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Survey Finds Most Retirees Don't Plan to 
Tap Their Home Equity in Retirement

A recent survey of 2,673 homeowners aged 50 to 65, whose primary earner was not retired, found that three-quarters of the respondents said they do not plan to use any of their home equity to finance ordinary living expenses in retirement. Most of the rest were unsure and a few said yes. Those who said no indicated they plan to hold on to their house as insurance against unplanned living or health expenses. 

The survey, released last month by the Center for Retirement Research at Boston College, was conducted during January and February 2007. It reported that many of today's workers are at risk of having insufficient resources in retirement. The reason for this gloomy picture is a rapidly changing retirement landscape defined by a rising Social Security retirement age, a sharp decline in traditional pensions coupled with modest 401(k) balances, and longer life spans. Yet, in spite of these trends, Americans have not responded by saving more on their own. Outside of employer-sponsored pension plans, individuals save virtually nothing for retirement. 

While most retired households do not currently tap equity, future retirees may not be able to enjoy the same luxury. As the baby boomers retire and the retirement income system contracts, housing equity is likely to become an increasingly important source of support. 

The retirement landscape is becoming more treacherous, the report states, and future retirees may have to tap their home equity. The data suggests that being inadequately prepared for retirement, having to rely on a defined contribution plan, and having a mortgage, are all positively related to the need to use home equity in retirement. These factors are on the rise and the survey suggests that a similar survey five years from now will show many more people planning to tap their home equity to cover living expenses.
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NOAA Predicts a Rough Hurricane Season This Year

Federal scientists weighed in on the upcoming hurricane season last month and their report echoes that of other forecasters: The 2007 hurricane season will produce a greater number of storms than usual. 

The National Oceanic and Atmospheric Administration's (NOAA) report calls for 13 to 17 named storms, up to 10 of which might become hurricanes. About 10 tropical storms and hurricanes form during an average year. 

Hurricane experts at Colorado State University (CSU), led by professor William Gray, are once again forecasting an active season. They are predicting 17 named tropical storms in the Atlantic between now and the end of hurricane season, November 30. The researchers expect nine of these storms to become hurricanes, with five of those becoming intense hurricanes, with winds of 177 kilometers-per-hour or more. 

The CSU report says that there is a 74 percent chance that at least one major hurricane will make landfall on the U.S. coastline. There is a 49 percent chance that a strong hurricane will hit the Gulf of Mexico coast and an above-average chance that a major hurricane will strike Caribbean islands. 

Federal officials, including Secretary of Homeland Security Michael Chertoff, took the opportunity recently to warn coastal-dwelling Americans not to become complacent about the coming season, after a relatively mild hurricane season last year. 

In 2006 the federal government predicted 13 to 16 named storms (Actual was 10), 8 to 10 hurricanes (Actual was 5), and that 2 to 4 hurricanes would hit the U.S. (Actual was 2 tropical storms, no hurricanes). 

Experts at the NOAA Climate Prediction Center are projecting a 75 percent chance that the Atlantic hurricane season will be above normal this year-showing the ongoing active hurricane era remains strong. It recommends those in hurricane-prone regions to begin their preparation plans. 

Climate patterns responsible for the expected above normal 2007 hurricane activity continue to be the ongoing multi-decadal signal (the set of ocean and atmospheric conditions that spawn increased Atlantic hurricane activity), warmer-than-normal sea surface temperatures in the Atlantic Ocean and the El Niņo/La Niņa cycle. 

Last year, seasonal hurricane predictions proved to be too high when an unexpected El Niņo rapidly developed and created a hostile environment for Atlantic storms to form and strengthen. When storms did develop, steering currents kept most of them over the open water and away from land. 

There is some uncertainty this year as to whether or not La Niņa will form, and if it does how strong it will be," said Gerry Bell, Ph.D., lead seasonal hurricane forecaster at the NOAA Climate Prediction Center. "The Climate Prediction Center is indicating that La Niņa could form in the next one to three months. If La Niņa develops, storm activity will likely be in the upper end of the predicted range, or perhaps even higher depending on how strong La Niņa becomes. Even if La Niņa does not develop, the conditions associated with the ongoing active hurricane era still favor an above-normal season." 

Bell also noted that pre-season storms, such as Subtropical Storm Andrea in early May, are not an indicator of the hurricane season ahead. "With or without Andrea, NOAA's forecast is for an above normal season." 

With expectations for an active season, it is critically important that people who live in East and Gulf coastal areas as well as the Caribbean be prepared," said Bill Proenza, NOAA National Hurricane Center director.
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Florida Experiencing Record Drought

Florida is in the middle of one of the worst droughts ever recorded and those planning a move to that state should take notice. Signs of the problem are everywhere - from the golf course to the nursery and sugar cane industries. Recent rainfall has barely made a dent in the multiyear shortfall happening all across the state. 

On May 30 South Florida's Lake Okeechobee, the region's primary reservoir, was down to a record low. Farmers and the area's 600 golf courses must use 45 percent less water in the hardest-hit areas, and home sprinklers are restricted to once a week. 

Florida's citrus industry could also be affected, but consumers are unlikely to notice until next year. Much of the current harvest is already picked, but the dry weather stresses blooming fruit, said Mike Sparks, head of the grower's group Florida Citrus Mutual. 

Voluntary water restrictions were recommended around the start of this year, and mandatory limits came in March. Tighter clamps were ordered in April, and last month the toughest restraints in history took effect in some areas, limiting home watering and cutting commercial use by almost half. Among the counties affected are Martin, St. Lucie, Palm Beach, Broward, Miami-Dade, Monroe, Collier, Glades, Hendry, Lee, and parts of Charlotte. 

The population of Florida has more than tripled in the last 40 years and the record-high number of people is straining the record-low water supply, prompting widespread water restrictions over the last several months. Generally nearly all of the state is affected by the drought, with central Florida experiencing the driest conditions. Authorities hope the rainy season, which typically begins June 1, will wash away the trouble, but the area is so dry that even an average summer wouldn't break the drought. The wildfire danger continues to rise.
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New Book:  Encore -- Finding Work That Matters in the Second Half of Life

The boomers are rejecting conventional notions of retirement and crossing into a new stage of work -- and their energy could transform what work means for all Americans, according to author Marc Freedman. 

In his book, Encore - Finding Work That Matters in the Second Half of Life, Freedman writes about one of the most significant trends of the new century, and the biggest transformation of the American workforce since the women's movement. He says members of the baby boom generation are inventing a new phase of work. If the old dream of the Golden Years was the Freedom from Work, the dream of this new wave is the Freedom to Work -- in new ways, on new terms, to new ends. As their numbers begin to swell, these individuals hold the potential not only to transform work in America, but to create a society that balances the joys and responsibilities of contribution across the generations -- in other words, one that works better for everyone. 

Freedman says the movement of millions of 60-somethings into a new phase in their working lives constitutes one of the most significant social trends in this country in nearly half a century. Encore describes the competing visions for work that are already lining up to capture the hearts and minds, and the time, of waves of baby boomers who are not content, or affluent enough, to spend their next 20-30 years on the golf course. Baby boomers are searching for a calling in the second half of life; they are moving beyond midlife yet refusing to phase out or fade away. 

He tells the stories of several encore pioneers who are moving beyond midlife careers yet refusing to phase out or fade away. They are searching for a calling and crafting a new phase of work that not only offers continued income but the promise of more meaning in their life. 

Author Marc Freedman is the founder and CEO of Civic Ventures - www.civicventures.org. The 224-page book is available from Amazon. Go to: http://www.amazon.com/Encore-Finding-Work-Matters-
econd/dp/1586484834/ref=pd_bbs_sr_1/105-3074157-1371604?ie=
UTF8&s=books&qid=1180715265&sr=1-1
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