Retirement Living News

August 2007

HEADLINES  (Click on headline to read story)

• AARP's Magazine Announces Top Five Places to Live (and Retire)
• GAO Report Urges Congress to Consider Changes 
  in Retirement Security Programs
• Continuing Care Retirement Community Options Are Growing
• MetLife Mature Market Institute Offers Two Publications 
  for Women Planning Their Retirement
• AARP Issues Fact Sheet on Long Term Care Insurance

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NEWS STORIES

AARP's Magazine Announces Top Five Places to Live (and Retire) 

The September/October issue of AARP The Magazine will carry a story about the top five places in the U.S. for boomers 50+ seeking a great community to retire in. This year's list includes Atlanta, Beacon Hill in Boston, Chandler, Milwaukee and Portland. It also named the top four places to watch - Austin, TX; Burlington, VT; Mankato, MN; and Traverse City, MI. 

The magazine takes an in-depth and colorful look at why these areas rank highest and are ideal for older residents. "The places we chose are ahead of the curve in providing services for empty nesters, active retirees, and everyone in between, and we're thrilled to recognize them for their efforts," said Steve Slon, editor of AARP The Magazine. "City living may cost a bit more, but urban communities also deliver peak value in the form of culture, work options, mass transit and fitness opportunities, and this year's selections really cover the spectrum." 

The selections were based on specific criteria for what makes a community livable: new urbanism, smart growth, mixed-use development, and easy-living standards. These include mass-transit systems so residents can drive less, expanded sidewalks to encourage walking, better health care, and a wide range of mixed use housing. 

The top five cities are: 

• Atlanta, GA: A sophisticated metropolis with southern charm, Atlanta offers abundant volunteer and cultural opportunities. Retirees also appreciate the wide range of housing options. 
• Beacon Hill in Boston, MA: This historically genteel part of Boston is full of culture and great restaurants. The Beacon Hill Village provides concierge style access to a network of support services for aging residents including transportation, healthcare and entertainment. 
• Chandler, AZ: Gracious desert living combined with an activist twist that encourages residents to get involved with the spirit of the town. A city climate and plenty of parks and open space provide ample recreation opportunities. 
• Milwaukee, WI: An example of urban renewal at its best, Milwaukee features picturesque river walks and affordable waterfront living. 
• Portland, OR: European charm meets environmental nirvana in this environmentally progressive city. 50-plus residents love the miles of safe bike lanes and the revitalized Pearl District.
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GAO Report Urges Congress to Consider Changes 
in Retirement Security Program

An new report issued by the General Accountability Office (GAO) last month suggests that Congress consider changes to laws, programs and policies that support retirement security. It urges a review of retirement ages in order to provide a set of signals that operate in tandem to encourage people to work at older ages.

In its study -- Retirement Decisions: Federal Policies Offer Mixed Signals About When to Retire -- GAO found that government policies offer incentives to retire both earlier and later than Social Security's full retirement age depending on a worker's circumstances. The availability of reduced Social Security benefits at age 62 provides an incentive to retire well before the program's age requirement for full retirement benefits. However, the gradual increase in this age from 65 to 67 provides an incentive to wait in order to secure full benefits. 

The elimination of the Social Security earnings test in 2000 for those at or above their full retirement age also provides an incentive to work. Medicare's eligibility age of 65 continues to provide a strong incentive for those without retiree health insurance to wait until then to retire, but it can also be an incentive to retire before the full retirement age. 

Meanwhile, federal tax policy creates incentives to retire earlier, albeit indirectly, by setting broad parameters for the ages at which retirement funds can be withdrawn from pensions without tax penalties. Nearly half of workers report being fully retired before turning age 63 and start drawing Social Security benefits at the earliest opportunity -- age 62. Early evidence, however, suggests small changes in this pattern. 

Traditionally, some workers started benefits when they reached age 65. Recently, workers with full retirement ages after they turned 65 waited until those ages to start benefits. Also, following the elimination of the earnings test, some indications are emerging of increased workforce participation among people at or above full retirement age. GAO's analysis indicates that retiree health insurance and pension plans are strongly associated with when workers retire. After controlling for other influences such as income, GAO found that those with retiree health insurance were substantially more likely to retire before the Medicare eligibility age of 65 than those without. GAO also found that men with defined benefit plans were more likely to retire early (before age 62) than those without, and men and women with defined contribution plans were less likely to do so.

Commenting on the report, AARP says it has consistently supported an individual's choice and opportunity to work later in life. For example, to eliminate disincentives for those who want to work, AARP championed the elimination of the Social Security Earnings Limit for workers at age 65. In this report, GAO found indications that removing that limit led to a higher number of people working in their late 60s. 

Since 1999, AARP surveys have consistently shown that a large majority of boomers (as high as 80 percent) plan to work into their retirement years-citing reasons such as income needs, health care coverage and personal fulfillment. To read the full GAO report, click on: http://www.gao.gov/new.items/d07753.pdf
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Continuing Care Retirement Community Options Are Growing 

As continuing care retirement communities (CCRCs) gain in popularity, the payment options are growing as well. They offer a spectrum of care, from independent housing to assisted living to round-the-clock nursing services, all on one campus. According to an article in The New York Times, the new payment options mean selecting a CCRC has become more complicated. 

CCRC residents must pay a large entrance fee plus a monthly fee, but the amount of each fee and what it covers can vary, depending on the contract. There are three basic CCRC contracts: life contracts, which cover unlimited long-term nursing care at little or no increase in the monthly fee; modified contracts, which include a specified duration of long-term nursing care, beyond which fees rise as care increases; and fee-for-service contracts, in which residents pay a reduced monthly fee but pay full daily rates for long-term nursing care. 

Communities typically offer several variations on each contract. Some CCRCs give residents the option of paying a higher entry fee, which remains refundable. Part of the entry fee will be refunded either to the resident when the resident moves or to the resident's estate once the resident dies. At some other CCRCs, entrance fees are refundable for a period of time, and then become nonrefundable. Still other communities may require residents to purchase their residences. What the monthly fee covers can also vary. Some places include housekeeping and meals, and others don't. 

All these choices mean that CCRC contracts have become much more confusing. There is help available. At www.ccrcdata.org you can find a directory of CCRCs and sort them by location, price, long-term health coverage, and refund plans. In addition, once you have selected a CCRC, you should have a lawyer review the contract before signing it. Deciding on a CCRC is a once-in-a-lifetime choice, and it is a decision that should be made carefully. 

To find a qualified elder law attorney to review your contract, click here.  

To read The New York Times article reprinted in the International Herald Tribune, click here. 
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MetLife Mature Market Institute Offers Two Publications 
for Women Planning Their Retirement

MetLife Mature Market Institute is offering a free report titled What Today's Woman Needs to Know: A Retirement Journey. It points out that today's women are redefining retirement with plans to work outside the home longer than their mothers, and to actively pursue such interests as travel, volunteerism, and higher education. 

The report has been published in conjunction with the institute's latest study, It's Not Your Mother's Retirement -- a study of women and generational differences. The latter was produced in cooperation with the Women's Institute for a Secure Retirement (WISER) and is designed to help women prepare for retirement. It addresses specific challenges that women face: job switching, taking time out for family and the important consideration of when to retire. It also helps with financial questions about how much money one will need to retire, what kinds of investments are available, protecting assets, health care costs, and ways to use home equity. 

The findings from It's Not Your Mother's Retirement indicate that retirement for women will be redefined by the younger generations who expect to work longer than their mothers and to have a more active retirement with varied pursuits. Daughters, it reports, may be more vulnerable because they will enter retirement with considerably higher levels of debt than their mothers and are expected to make a greater financial adjustment than their mothers. 

"Today's women are leading very different lives than their mothers and all indications are that their retirement will be different at well," said Sandra Timmerman, Ed.D, director of MetLife Mature Market Institute. "If you think of retirement as a destination, many of our mothers were better prepared for their journey. They had what they would need: a pension, a spousal Social Security benefit, affordable private health care insurance in addition to Medicare, and a deed to their mortgage-free home. 

"By contrast, younger women will probably live longer than their mothers and will make the journey with less in hand. They may carry only a 401(k) and IRA savings along with Social Security and Medicare benefits. It is less likely that they will have a pension and private health care coverage. In addition, many may have a mortgage or other debt. Our survey shows that today's working women are twice as likely as their mothers' generation to carry debt of $25,000 or more."

The Women's Institute for a Secure Retirement  works to provide low and moderate income women (aged 18 to 65) with basic financial information aimed at helping them take financial control over their lives and to increase awareness of the structural barriers that prevent women's adequate participation in the nation's retirement systems.

The MetLife Mature Market Institute is MetLife's information and policy center on issues related to aging, retirement, long-term care and the 50+ marketplace. Copies of both studies can be viewed using the following links:

What Today's Woman Needs to Know: A Retirement Journey   

It's Not Your Mother's Retirement 
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AARP Issues Fact Sheet on Long Term Care Insurance

Relatively few older persons have private insurance that covers the cost of long-term care. Many common long-term care needs (e.g., bathing, dressing, and household chores) do not require skilled help and therefore are not generally covered by private health insurance policies or Medicare. 

But without private insurance or public program coverage, the high cost of long-term care is unaffordable for most Americans. The average cost of a nursing home stay is more than $67,000 per year and exceeds $100,000 in some urban areas. The base rate for assisted living facilities is over $35,000 per year. Hourly home care agency rates average $37 for a licensed practical nurse and $19 for a home health aide. 

As an alternative to public program coverage and direct payments for services, a market for private long-term care insurance (LTCI) has developed in recent years. However, its overall role is still limited: private insurance currently pays for about 7 percent of all long-term care costs. 

To view the two-page fact sheet, click on link: http://assets.aarp.org/rgcenter/health/fs7r_ltc.pdf. You may also want to visit the National Clearinghouse for Long-Term Care Information which is run by the U.S. Department of Health and Human Services at http://www.longtermcare.gov/LTC/Main_Site/index.aspx
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