Retirement Living News

June 2013

HEADLINES

• 10 Best States for Retirement
• 10 Worst States for Retirement
• U.S. Housing Market Finally Reaches a Turning Point
• More Studies Urged on Linkage of Three Diseases
• Younger Seniors Withdrawing More Money from IRA
• Oldest Boomers Retiring at a Faster Pace

Visit New Retirement Communities

NEWS STORIES

10 Best States for Retirement

What are the best states for retirees? The popular answer seems to be anywhere along the Sun Belt, where retiring Americans have flocked for generations in search of sunshine, swimming pools and year-round golf.

Yet, if you consider other factors that are important for seniors, you’d find that some of the best spots are actually located farther north. Bankrate, which operates Bankrate.com – a financial website – examined a range of key factors, including access to medical care, cost of living, local crime rates, state and local taxes — as well as climate.

Here, in ascending order, is Bankrate’s list of the 10 unexpectedly best states for retirement. For details on each one, click the link.

10. North Dakota  — http://www.bankrate.com/finance/retirement/best-states-for-retirement.aspx#slide=2

9.  Nebraska — http://www.bankrate.com/finance/retirement/best-states-for-retirement.aspx#slide=3

8.  Alabama – http://www.bankrate.com/finance/retirement/best-states-for-retirement.aspx#slide=4

7.  West Virginia — http://www.bankrate.com/finance/retirement/best-states-for-retirement.aspx#slide=5

6.  Virginia — http://www.bankrate.com/finance/retirement/best-states-for-retirement.aspx#slide=6

5.  Mississippi — http://www.bankrate.com/finance/retirement/best-states-for-retirement.aspx#slide=7

4.  Kentucky — http://www.bankrate.com/finance/retirement/best-states-for-retirement.aspx#slide=8

3.  South Dakota — http://www.bankrate.com/finance/retirement/best-states-for-retirement.aspx#slide=9

2.  Louisiana — http://www.bankrate.com/finance/retirement/best-states-for-retirement.aspx#slide=10

1.  Tennessee — http://www.bankrate.com/finance/retirement/best-states-for-retirement.aspx#slide=11

Bankrate identified the sources and methodology used in its analysis. For sources it listed Kaiser Family Foundation; U.S. Census; 2011 FBI Uniform Crime Report; the Tax Foundation; National Oceanic and Atmospheric Administration and Western Regional Climate Center; Council for Community and Economic Research.

As for methodology Bankrate used medical statistics that included the number of hospital beds per 1,000 people from the Kaiser Family Foundation and the number of doctors per 100,000 residents from the U.S. Census. Crime statistics of violent crimes and property crimes per 100,000 people are from the 2011 FBI Uniform Crime Report. Tax rates are based on an estimate of the state and local tax burden (income, sales, property and other taxes) by the Tax Foundation. Average temperatures over 30 years (from 1981-2010) come courtesy of the National Oceanic and Atmospheric Administration and the Western Regional Climate Center. Cost-of-living stats are from the Council for Community and Economic Research.

Top

10 Worst States for Retirement

Beware of the beach! Watch out for historic neighborhoods, vineyards, sweeping verandas — especially if you’re about to retire. These places will steal your heart and get you thinking about a permanent move before you’ve considered all the angles. And there are many. Bankrate analyzed a variety of data, including state taxes, local crime rates, access to medical care and cost of living. It found that some of the prettiest, most touristy states in the nation are also some of the toughest on retirees.

Here, in descending order, are 10 of the lowest-ranking states for retirement based on the criteria noted above.

10. Delaware — http://www.bankrate.com/finance/retirement/worst-states-for-retirement.aspx#slide=2

9.  Minnesota — http://www.bankrate.com/finance/retirement/worst-states-for-retirement.aspx#slide=3

8.  Maryland (tie with Vermont) — http://www.bankrate.com/finance/retirement/worst-states-for-retirement.aspx#slide=4

7.  Vermont (tie with Maryland) — http://www.bankrate.com/finance/retirement/worst-states-for-retirement.aspx#slide=4

6.  Maine — http://www.bankrate.com/finance/retirement/worst-states-for-retirement.aspx#slide=5

5. Wisconsin — http://www.bankrate.com/finance/retirement/worst-states-for-retirement.aspx#slide=6

4.  California — http://www.bankrate.com/finance/retirement/worst-states-for-retirement.aspx#slide=7

3.  Washington — http://www.bankrate.com/finance/retirement/worst-states-for-retirement.aspx#slide=8

2.  Alaska — http://www.bankrate.com/finance/retirement/worst-states-for-retirement.aspx#slide=9

1.  Oregon — http://www.bankrate.com/finance/retirement/worst-states-for-retirement.aspx#slide=10

Top

U.S. Housing Market Finally Reaches a Turning Point

Home valuations will start to climb again while adjacent consumer industries will capture significant new growth opportunities in 2012 and beyond as the U.S. housing market finally turns the corner, concludes a major new study released last month by The Demand Institute. The recovery of the housing market will have far-reaching impacts in the coming years across the United States and international markets as U.S. consumers increase their spending on buying, renovating, furnishing and maintaining their homes.

Launched in February 2012 and jointly operated by The Conference Board and Nielsen, The Demand Institute is a non-profit, non-advocacy organization with a mission to illuminate where consumer demand is headed around the world.

The new report, The Shifting Nature of U.S. Housing Demand, predicts that average home prices will increase by up to 1 percent in the second half of 2012. By 2014, home prices will increase by as much as 2.5 percent. From 2015 to 2017, the study projects annual increases between 3 and 4 percent. This recovery will not be uniform across the country, and the strongest markets could capture average gains of 5 percent or more in the coming years.

“In these initial years, the prime driver of recovery won’t be new home construction, but rather demand for rental properties,” said Louise Keely, chief research officer at The Demand Institute and a co-author of the report. “This is a remarkable change from previous recoveries. It is a measure of just how severe the Great Recession has been that such a wide swath of Americans had to delay, scale back, or put off entirely their dreams of home ownership.”

“In the long-term, we don’t expect home ownership rates to change,” said Bart van Ark, chief economist at The Conference Board and co-author of the report. “Over 80 percent of Americans in recent surveys still agree that buying a home is the best long-term investment they can make. What will be intriguing to watch is how their aspirations around home ownership are affected by this period of extended austerity.”

Between 2006 and 2011, some $7 trillion in American wealth was wiped out when home prices dropped 30 percent after a dramatic climb in valuations during the housing bubble. Looking forward, the moderate growth expectations for coming years suggest a return to normalcy. As home prices continue to drop and interest rates fall further, first-time buyers and others who remained relatively cautious will be drawn back into the housing market. And, as the market recovers, so too will consumer spending.

“As the U.S. housing market strengthens, almost every consumer-facing industry will be impacted in the coming years,” said Mark Leiter, chairman of The Demand Institute. “Business and government leaders will benefit by fully understanding the nature of this recovery. In doing so they will be better able to anticipate how consumer demand will evolve, and to formulate critical business and policy decisions to lead their organizations.”

Key Findings in the Report
In addition to the projected gains in home prices, the report discusses in detail the dynamics at work in the U.S. housing market and the impacts across industries. What follows are highlights from the report:

• The recovery will be led by demand from buyers for rental properties, rather than, as in previous cycles, demand from buyers acquiring new or existing properties for themselves. More than 50 percent of those planning to move in the next two years say they intend to rent.
•  Young people—who were particularly hard hit by the recession—and immigrants will lead the demand for rental properties. Developers and investors will fulfill it, developers by building multifamily homes for rent (that is, buildings containing two or more units, such as apartment blocks or townhouses), and investors by buying foreclosed single-family properties for the same purpose.
• Rental demand will help to clear the huge oversupply of existing homes for sale. In 2011, some 14 percent of all housing units were vacant, while almost 13 percent of mortgages were in foreclosure or delinquent — increases of 12 and 129 percent, respectively, over 2005 levels. It will take two to three years for this oversupply to be cleared and at that point home ownership rates will increase and return to historical levels.
• The housing market recovery will not be uniform across the country. Some states will see annual price gains of 5 percent or more. Others will not recover for many years. The deciding factors will include the level of foreclosed inventory and rates of unemployment.
• There will also be vast differences within states. Here, additional factors count, such as whether local amenities, including access to public transportation, are within walking distance of homes. By examining seven factors that influence house prices at a local level, the report identifies four categories of cities and towns in which prices will behave differently.
•  The average size of the American home will shrink. Many baby boomers who delayed retirement for financial reasons during the recession will downsize. They will not be alone. The majority of Americans have seen little or no wage increase for several years, and many will scale back their housing aspirations. The size of an average new home is expected to continue to fall, reaching mid-1990s levels by 2015.
• Consumer industries including financial services, home furnishings, home remodeling will all experience shifts in demand and new growth opportunities. Part of this spending is linked to increases in wealth from improving home valuations, while an even bigger part is tied to the “transaction” of buying or selling the home which sets in motion increased demand for a wide range of products and services.
• Despite the number of Americans who have been hurt financially by the housing crash, the desire to own a home remains strong. We do not expect to see a long-term drop in ownership rates. Indeed, one survey has revealed that more than 80 percent of Americans recently thought buying a home remained the best long-term investment they could make.

The new report can be downloaded by clicking here.

Top

More Studies Urged on Linkage of Three Diseases

Alzheimer’s disease, high blood pressure and heart disease are the three most common chronic conditions in assisted living facilities.  And 82 percent of residents have at least one of them, according to a 2010 study by the National Center for Health Statistics.

What is alarming, says a New York Times report, is just how often these three conditions coincide in patients and why this overlap is becoming an important new field of study. There are more than 733,000 people in assisted living facilities. They move there when they or their families decide they need help with daily activities, like bathing, dressing or taking medications. The study found that more than half the residents are 85 or older.  Researchers were surprised that so many required medical care. “These findings suggest a vulnerable population with a high burden of functional and cognitive impairment,” the authors wrote in a brief last year.

Forty-two percent of assisted living residents had dementia.  About nine percent had dementia, high blood pressure and some form of heart disease, like atherosclerosis.  Many studies have suggested a link between vascular disease and dementia, particularly Alzheimer’s, and researchers are focusing on possible interconnections. Dr. P. Murali Doraiswamy, a psychiatry professor at Duke, told the Times, that it may not be possible to treat dementia without treating vascular problems.

But treating patients with multiple conditions can be very difficult.  We don’t universally do a good job of how we treat conditions that overlap, for example Alzheimer’s and high blood pressure,” said Dr. Cynthia Boyd, a professor of geriatric medicine at Johns Hopkins.

Diuretics to treat high blood pressure, for example, often increase the need to urinate, yet many patients with dementia are already incontinent.  Some studies have suggested that on rare occasions statins used to lower cholesterol and prevent heart attacks may also have cognitive side effects, which could complicate care for dementia patients.

“Much of the way we practice medicine is looking at disease by disease,” Dr. Boyd said.  “We aren’t doing enough thinking about how to add them together and really integrate care.”

The number of people with at least one of these three diseases is expected to continue to rise, increasing the need to focus on their overlaps. “It’s time for the best minds in vascular research to unite with the best minds in amyloid and tau protein research,” says Dr. Doraiswamy, referring to the proteins tied to Alzheimer’s disease.

Top

Younger Seniors Withdrawing More Money from IRA

Those Americans between ages 61 and 70, who are withdrawing money from their individual retirement accounts (IRA), are making withdrawals that are larger, both in absolute dollar amounts and as a percentage of their IRA account balance, than those taken by older households, according to a new report from the nonpartisan Employee Benefit Research Institute (EBRI).

This trend holds true even though those younger retiree age households are not required under current tax rules to start taking required minimum distributions (RMDs) from those IRAs.  Tax rules require that traditional IRA holders begin to take withdrawals from their IRAs no later than April 1 of the following year in which they reach age 70 ½ or be subjected to tax penalties.

“As more and more Baby Boomers enter retirement with large portions of the retirement savings in IRAs, their financial security in retirement may well depend on how they manage these accounts post-retirement,” said Sudipto Banerjee, EBRI research associate and author of the report. “Some may be overly cautious in drawing down their IRA balances, sacrificing a more enjoyable retirement, while others spend too much too soon, jeopardizing their retirement security.

Also, ERBI found that low-income households were far more likely to make an IRA withdrawal – and to withdraw a larger percentage of their account balance – than higher income families.  Households between age 61 and 70 are also more likely to spend their money than save it, and they are depleting other sources of savings simultaneously. Additionally, among households between ages 71 and 80 that are subject to RMDs, those that had a withdrawal exceeding the RMD amount had average withdrawal amounts that were more than double the amounts taken by those that withdrew only the RMD amount.

“There are important questions of concern for policy makers and the retirement solutions industry,” noted Banerjee. “Individuals above age 70 ½ are required to withdraw stipulated amounts from their traditional IRAs to avoid tax penalties.  But do they simplify transfer of money to other forms of savings after paying the taxes or do they spend the money?  These are some questions that this study tries to explore.”

The study is based on data from the University of Michigan’s Health and Retirement Study (HRS), sponsored by the National Institute of Aging, considered the most comprehensive survey of older Americans.

Top

Oldest Boomers Retiring at a Faster Pace

The first set of Baby Boomers – those born in 1946 and are 67 now – continue to be myth busters, according to a new study by the MetLife Mature Market Institute (MMI). Data from the company says that the earliest Boomers aren’t necessarily “working till they drop,” as was predicted.

The new study, titled Healthy, Retiring Rapidly and Collecting Social Security: The MetLife Report on the Oldest Boomers, says that more than half (52 percent of the 1946 Boomers are now fully retired.  Of those, 38 percent say “I’m ready,” while 17 percent cite health reasons and 10% attribute a job loss.  Twenty-one percent remain employed full-time and 14 percent are working part-time.  Of those, most plan to retire fully by age 71, up from 69 in 2011.

The figures from the MetLife Mature Market Institute represent a big jump since 2007 and 2008 when just 19 percent of the oldest Boomers were retired and a significant leap from the 45 percent retired in 2011.

MMI has studied the oldest Boomer cohort on numerous occasions, most recently in 2012.  The current study follows the group as they’ve moved from age 62 to age 67, their finances, housing status, family lives and their views on generational issues.  For instance, though the majority of retirees say they have less income than when they were working, lower income does not always equal a lower standard of living, as only 20 percent felt theirs had declined.

Among other findings based on the data collected are the following:

• 86% are collecting Social Security benefits; 43% began collecting earlier than they had planned.
• Only 14% of oldest Boomers are working part-time or seasonally; 4% are self-employed.
• Long-term care rose to the top of the list of retirement concerns; 31% reporting concern about providing for themselves or their spouses.
• Despite the fact that they are worried about long-term care, just under a quarter own private long-term care insurance.
• 81% want to age in place and do not plan any future moves.
• 8% are “upside down” on their mortgage, owing more than the value of their home.
• The average number of grandchildren is 4.8
• 79% of oldest Boomers have neither of their parents living, but more than one in 10 are providing regular care for a parent or older relative; for many, the level of care has increased.
• Oldest Boomers continue to believe they will see themselves as “old” at the age of 78.5.
• 16% of the oldest Boomers see themselves as being sharpest mentally now, in their 60s, but the largest group (30%) believes they were sharpest in their 40s.
• More than 40% of the oldest Boomers are optimistic about the future.  Nearly a quarter of those are optimistic about their health, and two in 10 feel good about their personal finances.
• More than half of the oldest Boomers feel their generation is leaving a positive legacy for future generations. Values and morals and good work ethics were the two top items cited.

To download the full report, click here

Top