September/October 2016

September 6, 2016


AARP Launches Digital Finance Magazine

In an effort to help seniors take control of their finances, AARP has launched AARP The Magazine’s Special Edition Finance & Retirement Issue. The new digital magazine offers reliable instructions on making financial decisions related to retirement and provides an enhanced experience via interactive content and features.

“AARP is offering its members a valuable resource filled with the best advice from industry experts to help them make educated financial decisions as they plan for retirement,” said Jean Chatzky, AARP’s Financial Ambassador. “I’m thrilled to offer my tips and guidance throughout this digital magazine in my continued work with AARP to provide the tools members need to get their finances in order.”

In this edition, readers will find interactive tools, videos, and expert advice on everything from figuring out how much is needed to retire to investing tips for those in their 50s, 60s and beyond. Take a peek at some of what you’ll find in the issue, below.

How Much Do I Need? A Few Simple Ways to Figure Out Your Number: The amount needed to retire is unique to each individual. AARP’s The Magazine Finance & Retirement Digital Edition discusses the important questions that need to be asked when determining your retirement number.

Should I Take My Pension In A Lump Sum? Our Decision Tree Offers Some Guidance: Traditional pensions are becoming a thing of the past and more employers are purchasing annuities for their pensioners or offering to buy them out. This issue features a pension decision tree to help you choose which option is best for you.

What’s My Medicare IQ? Don’t Let Health Care Costs Wreck Your Retirement: Did you know in some cases you must enroll in Medicare by the age of 65 to avoid late penalties? Learn all about Medicare, in this edition, to avoid costly penalties and see how COBRA and HSAs fit into the equation.

Investing At Any Age: Tips For Your 50s, 60s and 70s: AARP’s Financial Ambassador, Jean Chatzky shares her rule of thumb for investing in your 50s, 60s and beyond. Read Chatzky’s advice advice to see if you’re investing properly and meeting your retirement goal.

Where Do You Park Your Money? Take These Retirement Vehicles For A Spin: AARP’s The Magazine Finance & Retirement Digital Edition offers key tips and easy-to-understand explanations on retirement savings options. From 401(k) early withdrawal penalties to understanding bond risks – this edition has got you covered.

How to Avoid Investment Cons: Jane Bryant Quinn Leads The Way: Jane Bryant Quinn, a personal finance expert, offers her input on the top five investment pitches to watch out for to avoid being “taken for a financial ride.”

How to Fend Off Identity Theft: Keep Your Financial Self Safe: Simple changes protect you from big losses! AARP’s The Magazine Finance & Retirement Digital Edition shares tips for keeping your identity safe in the virtual world.

AARP The Magazine’s Finance & Retirement Issue is available in the AARP Publications App for iPad.  For more information, visit


Rhode Island Unveils Plan to Support State’s Growing Older Population

Rhode Island has released a plan designed to enable the state’s growing population of older adults to safely remain living at home and in community settings.

According to the state’s planning office projections, residents age 65 and over will make up 23 percent of the population by 2030. By 2040, the number of people ages 74 to 84 will increase by 100% and those 85 and over will increase by 72%.

The report “Aging in Community,” largely put together with the oversight of the state’s Subcommittee of the Long Term Care Coordinating Council, offers strategies for addressing key topics affecting older adults including Communication and Information, Transportation, Economic Security, Community and Social Engagement, Volunteerism, Nutrition Assistance, Housing and Healthcare.

For example, to address the issues of economic security, the group recommends a freeze of the city’s taxes for adults over 65, to provide financial services to help seniors with financial planning and oversight and to create partnerships with schools, colleges, churches and community service groups to encourage young adults and others to provide services to seniors living in the community.


Study Finds Older Assisted Living Residents Seek Sexual Freedom

Older adults in assisted-living facilities experience limits to their rights to sexual freedom because of a lack of policies regarding the issue and the actions of staff and administrators at these facilities, according to research conducted by the Gerontology Institute at Georgia State University.

Though assisted-living facilities emphasize independence and autonomy, this study found staff and administrators behave in ways that create an environment of surveillance. The findings, published in the Journals of Gerontology: Social Sciences, indicate conflict between autonomy and the protection of residents in regard to sexual freedom in assisted-living facilities.

Nearly one million Americans live in assisted-living facilities, a number expected to increase as adults continue to live longer. Regulations at these facilities may vary, but they share a mission of providing a homelike environment that emphasizes consumer choice, autonomy, privacy and control. Despite this philosophy, the autonomy of residents may be significantly restricted, including their sexuality and intimacy choices.

Sexual activity does not necessarily decrease as people age. The frequency of sexual activity in older adults is lower than in younger adults, but the majority maintain interest in sexual and intimate behavior. Engaging in sexual relationships, which is associated with psychological and physical well-being, requires autonomous decision-making.

While assisted-living facilities have many rules, they typically lack systematic policies about how to manage sexual behavior among residents, which falls under residents’ rights, said Elisabeth Burgess, an author of the study and director of the Gerontology Institute.

“Residents of assisted-living facilities have the right to certain things when they’re in institutional care, but there’s not an explicit right to sexuality,” Burgess said. “There’s oversight and responsibility for the health and well-being of people who live there, but that does not mean denying people the right to make choices. If you have a policy, you can say to the family when someone moves in, here are our policies and this is how issues are dealt with. In the absence of a policy, it becomes a case-by-case situation, and you don’t have consistency in terms of what you do.”

The researchers collected data at six assisted-living facilities in the metropolitan Atlanta area that varied in size, location, price, ownership type and resident demographics. The data collection involved participant observation and semi-structured interviews with administrative and care staff, residents and family members, as well as focus groups with staff.

The study found that staff and administrators affirmed that residents had rights to sexual and intimate behavior, but they provided justifications for exceptions and engaged in strategies that created an environment of surveillance, which discouraged and prevented sexual and intimate behavior.

The administrators and staff gave several overlapping reasons for steering residents away from each other and denying rights to sexual and intimate behavior. Administrators emphasized their responsibility for the residents’ health and safety, which often took precedence over other concerns.

Family members’ wishes played a role. Family members usually choose the home and manage the residents’ financial affairs. In some instances, they transport family members to doctor’s appointments, volunteer at the facility and help pay for the facility, which is not covered by Medicaid. They are often very protective of their parents and grandparents and are uncomfortable with new romantic or intimate partnerships, according to staff. Administrators often deferred to family wishes in order to reduce potential conflict.

Staff and administrators expressed concern about consent and cognitive impairment. More than two-thirds of residents in assisted-living facilities have some level of cognitive impairment, which can range from mild cognitive impairment to Alzheimer’s Disease or other forms of dementia. They felt responsible for protecting residents and guarding against sexual abuse even if a person wasn’t officially diagnosed.


Older Demographic Poses Double Whammy for Economy

Planning to retire in the next few years? Please reconsider: The economy needs you more than you know.

Economists have long expected an aging population to hamper growth for the simple reason that it means a smaller labor force. But new research has identified a potentially more powerful impact: Rapid retirements deprive companies of critical experience and knowledge, which undermines productivity across the entire economy. Demographics may thus be a critical factor in why the current economic expansion, which began as the first baby boomers qualified for Social Security, is the weakest on record.

The findings are contained in a new paper by Nicole Maestas of Harvard University and Kathleen Mullen and David Powell of the Rand Corp., a think tank. Because the 50 states are aging at different rates, they were able to tease out the impact of aging on economic growth. Their conclusion: On average, every 10% increase in the share of state’s population over the age of 60 reduced per capita growth in gross domestic product by 5.5%.

This came through two effects. First, as more workers retire, the labor force grows more slowly. This, they reckon, explains one-third of the 5.5% growth hit.

But the bigger effect was through reduced productivity—that is, output per hour—of the remaining workers. The authors found that this couldn’t be explained by emigration, mortality or an influx of younger, inexperienced workers. Rather, they found that everyone became less productive in an aging state.

So what explains this impact?

The authors note: “An older worker’s experience increases not only his own productivity but also the productivity of those who work with him.” All else equal, experienced workers are more productive. One study found that productivity peaks at age 50, when productivity is 60% higher than for the average 20 year old.

A journeyman carpenter doesn’t just work faster than an apprentice; he also helps the apprentice learn the tricks of the trade. New doctors diagnose patients more accurately under the tutelage of experienced practitioners. A rookie salesman learns the territory faster in the company of longtime veteran.

Of course, aging can also cut in the opposite direction. Older workers may be slower to adapt to new technology. If laid off from a dying industry, their experience may be irrelevant to a new one. Older workers are more likely to suffer from injury or illness and less likely to have a college degree.

But these disadvantages have shrunk: The average 60-year-old in the 2000s was as healthy as the average 55-year-old in the 1970s, and in many occupations, cognitive skill matters more than physical stamina.

Since college enrollment began climbing steadily in the 1980s, older workers today are increasingly likely to have a degree.

So how much has aging hurt overall growth? In the past five years, the labor force grew just 0.6% per year, half the rate of a decade earlier, much of it due to retiring boomers. Meanwhile,productivity grew just 0.5% per year, the second-weakest such stretch since the 1950s. The productivity slowdown is a puzzle. Businesses appear reluctant to invest due to financing constraints, a dim sales outlook or a paucity of exciting new innovations. The new research suggests retirements could be part of the story. By applying their state-level findings to the whole country, the authors estimate that aging will reduce growth by 1.2 percentage points between 2010 and 2020, with two-thirds of the effect attributable to reduced productivity.

This could also explain the weakness of wages. When experienced workers retire, their younger, less-productive replacements earn less. Hourly wages are up just 2.6% in the past year, but up 3.6% when adjusted for the shifting demographic makeup of the workforce, according to the Federal Reserve Bank of Atlanta.

To be sure, the precise magnitude can be debated; most countries, regardless of demographic profile, have suffered a productivity slump. Nonetheless, anecdotal evidence is supportive. Many employers say they aren’t short of skills but experience.

“As your employees who have been working in manufacturing start to retire, you’re not just losing people, but that knowledge and experience is walking out the door,” says Jenny Stupica, human resources manager at SSP Fittings Corp., a Twinsburg, Ohio supplier of hydraulic fittings and a board member of ConxusNEO, a regional workforce development group. She said people with basic skills and aptitude for math and mechanical learning can be trained to do manufacturing work, but what her company really missed was experience.

This all adds to the urgency of overhauling both the private and public pension systems to encourage later retirement, by shifting benefits to favor later retirement and reducing tax penalties on earnings for those who are already collecting Social Security. The payoff: a more solvent pension system and a more productive economy.


Six Cheap Places to Retire Abroad

Over the 20th century, many retirees moved from New England, California and the Midwest to the sunny and sparsely populated Sun Belt, where low taxes and warm weather beckoned. Today, many Americans are moving much farther afield to enjoy a new life at a low cost. Thousands are migrating to Asia, South America, Europe and beyond to stretch their retirement dollars. And foreign countries, eager for the boost to their economies, have taken notice.

With so many nations interested in attracting retirees from abroad, Americans are spoiled for choice. Bankrate has identified six up-and-coming destinations where retirees can easily live on an income of $2,000 a month. In some cases, retirees are already living there for far less. Read on to discover the affordability of housing, food and medical care at these retirement destinations.
Chiang Mai, Thailand
Thanks to its weather and low cost of living, Thailand has been on retirees’ radars for years, and Chiang Mai is cheap, even by Thai standards.

“For under $2,000, I live like a king,” says Barry, a Canadian who relocated to Chiang Mai in early 2009. Since then, he has rented a 1,200-square-foot condo for a little more than $400 per month. Groceries are no big concern, usually running him about $50 per month. Restaurants cost about twice that at $100 per month — and he goes out to eat almost every day.

Barry says that Chiang Mai has just about everything he needs. “There are Western-style restaurants, entertainment venues and social events,” he says. The city has several modern hospitals. “I had an emergency spinal fusion 2 years ago at a cost of 280,000 baht (about $9,300 at the time). In Canada, medical coverage is free, but the waiting time is long. Here, the service is almost instantaneous and very professional.”

More routine medical issues are so inexpensive, Barry says, that he doesn’t need insurance to cover them. “Going to a dentist for a checkup and cleaning is 500 baht,” or about $17

Guam is an often-overlooked alternative for American retirees, despite its many benefits. Because it’s a U.S. territory, English is spoken everywhere on the island, and its currency is the U.S. dollar. And, at least on the surface, much of the country’s culture and politics will seem familiar to many Americans.

Situated 3,700 miles southwest of Honolulu, Guam is a lower-cost alternative to Hawaii — while sharing the same climate. One-bedroom apartments in Guam can rent for as low as $400 per month, with luxury units facing the sea costing $1,000 per month. American citizens can buy property on the island; 3-bedroom houses often sell for less than $200,000.

Since the territory is a small, remote island, most items have to be imported, which means groceries can be more expensive than on the U.S. mainland. Meats, most vegetables and some dairy products can cost twice as much. Restaurants, however, are usually comparable in cost to their American counterparts.

Besides enjoying the weather, retirees in Guam can use both American and Guam-based insurers — including Medicare — to cover their health care costs. All major medical services are available at Guam Memorial Hospital, which is certified and accredited by several federal agencies in the U.S.

Vancouver, British Columbia
While it doesn’t have a reputation as a retiree destination, Vancouver remains a viable option for Americans who want to stay close to home while living the cosmopolitan life across the border. The biggest hurdle for Vancouver-bound Americans is real estate. With the most expensive housing prices in Canada and some of the most expensive property in the world, Vancouver is not an investment option for many retirees.

The average house price is $857,400, according to Renting is a possibility: 1-bedroom apartments in downtown Vancouver start at around 1,400 Canadian dollars (nearly $1,364). Food and entertainment cost about the same as in Seattle, which is less than 3 hours away by car.

While Americans may not save much on rent or living costs by moving to Canada, one expense is considerably lower up north: health care. “I save over $400 per month on medicine, and I never have to wait to see my doctor,” says Betty Segel, an American who has lived in suburban Vancouver for 5 years. Retirees in Canada have access to the country’s public health care system, which provides free care to residents, including expats with a permanent residence in the country.

For Americans concerned about health care costs, the added premium of Vancouver property just might be worth it.

Valencia, Spain
The subprime mortgage crisis caused property values to plummet everywhere, including Spain, making the Mediterranean nation suddenly affordable for a number of retirees. The euro crisis notwithstanding, the southeastern coastal city of Valencia offers hundreds of villas, apartments and houses for less than $200,000. New 1-bedroom apartments in the city sell for less than 50,000 euros ($65,575). For those who do not want to invest in real estate, rentals are cheap and plentiful. A 2-bedroom apartment in the center of Valencia rents for 600 euros per month ($780).

Groceries sold in traditional open-air markets cost the same or less than supermarket prices back in the States, while low property taxes keep the cost of living affordable for expats in Spain. The country offers free public health coverage, and additional health insurance rarely exceeds $300 per month. Prescription medicines are almost always a fraction of what they would be in America.

Valencia is a great option for retirees who want to spend their golden years traveling. Its airport offers direct flights to France, Germany, the United Kingdom, Morocco and Norway. Round-trip flights to the rest of Europe often cost less than 150 euros ($195).

Buenos Aires, Argentina
Although Buenos Aires is pricier than most parts of South America, it is still a bargain compared to most American cities. A 1-bedroom apartment in a good neighborhood can be rented for less than $400 per month or bought for less than $70,000. Internet, cable and electricity combined rarely costs more than $100 per month. The city’s comprehensive subway system and buses make transportation cheap. One ride on the subway costs 2.50 Argentine pesos (about 50 cents).

Health care in Argentina is a bargain, thanks to the country’s public health care system and surplus of doctors. The quality and affordability of Argentina’s medical services has led to a booming medical tourism industry. In 2011, more than 100,000 visitors came to Argentina to receive medical care, according to Argentina’s National Institute of Tourism Promotion.

For most expats, the costliest part of Buenos Aires is dining in the city’s European-style cafes, restaurants and night spots. While movies are relatively cheap in Argentina (a ticket costs less than $8 in most places), dinner out at a restaurant usually costs between $25 and $45. An espresso will cost around $2.50 and can be found in any of the city’s thousands of small open-air cafes.

Lake Atitlan, Guatemala
Lake Atitlan is about 75 miles away from Guatemala City and is surrounded by volcanoes and villages where Mayan traditions still thrive. The area has perennial spring-like temperatures ranging from the 60s to 80s Fahrenheit. Several waterfront houses are available for rent on the lake; a 3-bedroom house costs around $300 per month to rent.

Other expenses remain extremely low in this retiree-friendly part of Guatemala. “Restaurants cost about $10 per dinner and $3 (to) $4 for breakfast,” says Andy Lee Graham, founder of The cheapest foods are also the healthiest; fresh fruits and vegetables cost about a third less in local markets than they do in the U.S.

For those who require assisted living, a full-time personal nurse can be hired for $15 to $20 per day, says Graham. “A maid is about $4 (to) $10 per day.”

Graham recommends using taxis or tuk-tuks in Guatemala, which he notes are very cheap. Tuk-tuks are 3-wheeled motorized versions of rickshaws. “Tuk-tuks will go between cities for about $3 (to) $5 per city. Inside metropolitan areas, they cost 75 cents for one trip.” He warns that, “Driving a car is dangerous, but taxis are safe.”

Andy estimates that retirees need $1,000 per month to live near Lake Atitlan.


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