Will You Qualify for Long Term Care Insurance?

A few years ago, when I was in my late 50's and my husband was in his early 60's, we were fortunate enough to be able to purchase Long Term Care Insurance for both of us.  Even though we were healthy at the time, it was still not easy to obtain.  The first company where we applied accepted me, but not my husband.  Disappointed, we consulted with an insurance broker and, on our second attempt, we were both accepted.

Most people are somewhere between the ages of 50 and 75 before they realize that owning LTC insurance could be beneficial.  By that time, it may be too late for many of them to be accepted.  According to the American Association for Long-Term Care Insurance, only about 51% of applicants qualify in their 50's, 42% in their 60's, and 24% in their 70's.  This means that far fewer than half of all people over the age of 50 would be accepted if they applied. If you have tried to get LTC insurance in the past and been turned down, you are definitely not alone.

In fact, the website for this organization has a list of conditions that they say will make it nearly impossible for you to qualify for this insurance.  They are pretty blunt on their site.  They tell you not to even bother to fill out an application if you currently use a walker, wheelchair, crutches, a multi-pronged cane, or need oxygen.

That's just the beginning.  They also say that "it generally won't pay to take the time to request a quote" if you already require assistance with dressing, bathing, feeding or other areas of daily care, including help with grocery shopping, the use of a telephone or the use of transportation. (I wonder if getting confused by a "smartphone" would disqualify someone from LTC insurance?  Better not mention it!)

In addition, they also tell you not to fill out the form if you have a history of certain illnesses.

Illnesses That Automatically Disqualify You for LTC Insurance

AIDs or HIV
Alzheimer's or other types of dementia or memory loss
ALS
Cystic Fibrosis
Hemophilia
Hepatitis
Kidney Failure
Cirrhosis of the Liver
Multiple Sclerosis
Muscular Dystrophy
Paralysis
Parkinson's
Post-Polio Syndrome
Schizophrenia
Sickle Cell Anemia
Systemic Lupus Erythematosus

At the end of this list of illnesses they also say on their site, "If you are not insurable, then we are truly sorry."  Of course, this is small consolation for the more than 50 percent of Baby Boomers who do not qualify for this insurance.

If you do not have any of the illnesses or health problems listed above, it is highly recommended by most retirement planners that you purchase the insurance at the earliest possible time, while you are young enough and healthy enough to qualify, and while you can still get the lowest possible premium.

Other Health Conditions That May Disqualify You

On the other hand, just because you do not have one of the health conditions that was listed above, you are not guaranteed to be accepted.  I have also known people who had problems obtaining LTC insurance because they had diabetes, a history of heart problems, or because they had been treated for cancer.  Since these illnesses are not specifically mentioned on the above list, it may be that each carrier of LTC insurance has difference standards regarding these health issues.  In addition, it may also depend on other factors, such as how long ago the cancer was treated, or the severity of the cardiac problems.

Best Time to Buy LTC Insurance   

The ideal time to purchase LTC insurance is when you are young and healthy, before you have been diagnosed with a serious disease.  However, how many healthy young adults in their 20's, 30's and 40's are thinking about how they will pay for their nursing home or personal care when they become old and frail?  Unfortunately, very few think about it.

In my next post, "Alternatives to Long Term Care Insurance," we will discuss some of the options that are available for people who become incapacitated in their later years and do not have LTC Insurance.

If you are interested in reading more about planning for your retirement years, you may want to look through the index articles listed below.  Each one contains some general information plus links to a number of articles on that topic:

Gifts, Travel and Family Relationships

Great Places for Boomers to Retire Overseas

Great Places to Retire in the United States

Health and Medical Topics for Baby Boomers

Money and Financial Planning for Baby Boomers


You are reading from the blog:  http://baby-boomer-retirement.blogspot.com

Photo of elderly man courtesy of www.morguefile.com


Source:

http://www.aaltci.org/long-term-care-insurance/learning-center/are-you-even-insurable.php

Popular Part-time Jobs For Retirees

One way to stretch our retirement income is with a part-time job.  Not only does it help retirees afford a higher quality of life, but it is also a pleasant way to stay connected to other people.  Because part-time work is becoming so common,  AARP recently came out with their list of five great part-time jobs for retirees.

As you may remember, I have written other blog posts about part-time jobs for retirees.  With Social Security benefits so low and retirement savings inadequate for at least half of all people who will be retiring soon, working after retirement is often not simply a matter of enjoyment, but of necessity.

There are many possible occupations for retirees.  Before you even browse through the AARP suggestions below, you should consider continuing to work in the same field where you have earned a living in the past, by asking for a lighter schedule.  You will not need to get more training and you may be able to earn at the top of the pay scale for that occupation.  For example, many retired teachers continue to work periodically as substitute teachers.  Other people may fill in for vacationing employees at their old company, or cover for someone who goes on maternity leave.  However, if you want to consider additional options for part-time retirement jobs, here are the AARP ideas:

Library Assistant or Aide

If you love to work around books, you might apply for a job at your local library.  You could work behind the desk answering questions and checking out books, or you might spend the time re-shelving books and sending out notices.  You could work a wide variety of hours, since many libraries are open late and on weekends.  In fact, if there is a university near you, some libraries stay open 24 hours of day!  Of course, that does not mean you would necessarily be expected to work in the middle of the night.   If you find a library position, you can expect to be paid anywhere from the minimum wage to as much as $17 or $18 an hour, depending on your experience and education.

In order to get a part-time job doing this, you may need to have prior experience working in a library or have a degree in library science.  Even having experience as a library volunteer may be helpful.  In addition, it could help you secure a library job if you worked in an office in the past and you can point out that you are able to do data entry or word processing on a computer, keep good records and you are knowledgeable about how a library works.

Bookkeeper

If you have a background in bookkeeping, this can be a fabulous part-time occupation after you retire.  Many small businesses hire part-time bookkeepers because they do not need a full-time one. You may only need one or two local clients to keep you busy and help you earn a little extra money.  Clients will expect to pay anywhere from $10 to $25 an hour, and sometimes as much as $50 an hour if you have extensive experience and training. It is possible that you will work at the business establishment that hires you.  However, many bookkeepers also perform this service from their own homes, which is appealing to many Baby Boomers who want to work their own hours. 

If you are looking for clients, it will be helpful to have experience in this field.  If you do not, you could complete a bookkeeping course at at local community college.  You will have to be familiar with accounts payable and receivable, maintaining bank accounts, producing financial reports, overseeing audits and maintaining computer systems.  Of course it is also important for you to be detail oriented.

You also need to be willing to contact local companies to find one that needs your services.  In other words, you have to have the ability to sell yourself and your skills.

Personal or Home-Care Aide

If you are healthy and active, you may be able to work as a home health aide during the first few years after you retire.  In this job you will take care of people who are much older than you.  Your duties would include companionship, grocery shopping, preparing meals, dispensing medications, and helping them with bathing and dressing.  It is common for home-care aides to only work a few hours a day, two or three days a week, so it is a perfect part-time job.  You can expect to be paid anywhere from the minimum wage to about $12 or $13 an hour.

There are training programs required for most jobs as a home care aide, but the programs only take a few weeks to complete.  Agencies often provide the training and then they will help place you in a job. If you have physical limitations, such as the inability to lift someone who has fallen, you need to let the agency know so that you are assigned to jobs that will not cause you harm.

As our population ages, the demand for home-care aides has become greater.  You do not need to have any prior experience in order to work part-time in this field, and it can be a welcome change from those high pressure jobs you may have had in the past.

Handyman

When I sold real estate, one of the most desirable people to know was the local handyman.  If you are adept at making minor repairs around the house, you will be able to find all the part-time jobs you can handle.  In fact, if you live in an area where there are many retirees, you are sure to get a lot of calls.  The types of jobs you will be asked to do include minor carpentry jobs, plumbing, basic electrical work, painting and similar minor home improvement projects.

You can charge $10 to $20 an hour, and sometimes more for larger or more complicated jobs.  You can work your own hours and decide which jobs you want to take.  In most states you will need to have a license to perform handyman services and you may need to carry liability insurance.  It is also necessary for you to have your own tools, as well as a desire to be helpful to others.

Medical Assistant

If you have experience working in a hospital or medical office, you may be able to find part-time work in this field after you retire.  The types of jobs you could do include working in the front office, billing insurance companies, scheduling appointments, etc.  Depending on your experience, you may also have additional duties.  Your pay can range from $10 to $20, or more, depending on your experience.

The medical field is an area that is growing rapidly.  If you do not have experience, however, it may be impossible to find a job in this area.  If you are inexperienced but have a strong desire to work in the medical field, you may decide to go through a certificate program at a local community college.  Some of these programs only take nine months to complete in order to be qualified to work in a variety of medical assisting occupations.


In addition to these jobs recommended by AARP, you will want to check out my other articles about jobs for retiring Baby Boomers.  You will find links to them in the index article "Money and Financial Planning for Baby Boomers."

If you are planning to retire soon, you may also be interested in checking out the index articles below.  Each one contains an introduction and a links to a variety of articles on those topics.

Gifts, Travel and Family Relationships

Great Places for Boomers to Retire Overseas

Great Places to Retire in the United States

Health and Medical Topics for Baby Boomers

Money and Financial Planning for Baby Boomers


You are reading from the blog:  http://baby-boomer-retirement.blogspot.com

Photo of carpenter courtesy of www.morguefile.com

Update on 2014 Affordable Care Act

Now that January, 2014 is only a few months away, it is becoming clearer how the Affordable Care Act will be implemented.  Like millions of other Americans, I recently received a letter from my insurance carrier, Kaiser Permanente, that provided more information about what to expect in the coming months.

These changes will have a major impact on many families and it is important that all of us stay informed so we are prepared to make the best decision for our family.  In addition, you may want to read my earlier blog post, "Help Soon for Boomers Without Health Insurance," to learn a little more information about how the the new health insurance exchanges will work.

Brief Overview of Heathcare Reform Changes

As of January 1, 2014, nearly everyone in the United States will have new health insurance opportunities as the result of the Affordable Care Act.  Here are some facts you will want to know:

Nearly everyone will be required to purchase health insurance or they will pay a penalty on their taxes at the end of the year.  At the end of the first year the penalties will be minimal, allowing people time to become accustomed to the change.  Gradually, the tax penalties will increase.

Every state will operate a Health Insurance Marketplace or Exchange.  Open enrollment begins in October, 2013.  You will be able to purchase insurance either in person, through the mail, by phone or on a website.

You cannot be turned down for health insurance, even if you are currently being treated for a serious illness such as cancer or diabetes.  You will no longer be required to have a medical review prior to approval.  People who have been unable to purchase an individual insurance policy in the past will now become eligible.

You may be able to get financial assistance to pay for your insurance and your out-of-pocket expenses.  The amount of assistance you get will depend on your income.  Kaiser gave the example that a single person earning less than $45,000 a year will be eligible for some financial aid.  This will be a tremendous help to a lot of single people and young families who are currently uninsured.  It could also help Baby Boomer couples when one of them is old enough for Medicare and their spouse is not.  If the older spouse is retired and their family income is low, they will be able to get financial assistance to help with the cost of health insurance for the younger spouse.  Since I have known several Baby Boomer couples who were faced with this situation, this could literally be a life-saver.

The Affordable Care Act requires four levels of coverage.  These have been called Bronze, Silver, Gold and Platinum.  Bronze plans will have the lowest premiums and the highest co-pays and out-of-pocket expenses.  At the other end of the spectrum, Platinum plans will have the highest premiums and the lowest co-pays and out-of-pocket expenses.  These four options will give everyone the choice that best meets their budget and healthcare needs.  Regardless of cost, all of the policies will have the same basic benefits such as a free annual physicals and certain diagnostic tests.

In addition to the plans mentioned above, there is also a catastrophic plan option.  This is only available for young adults under the age of 30, as well as families and older individuals who can show that they are not covered under an employer provided plan or an affordable individual plan.  The catastrophic plans will have even lower premiums and higher co-pays and out-of-pocket expenses than the Bronze plan mentioned above.  They will also provide the same basic benefits as the other plans, such as a free annual physical and preventative tests.  It's main purpose is to make it possible for everyone to have a comprehensive annual physical so that illnesses are caught early, when they can be treated most economically.  The catastrophic plan will also provide protection against crippling medical bills in the event of an emergency or serious illness.

If you currently have health insurance, over the next few months your carrier will be providing you with information about the changes you can expect to your policy.  Each company will have their own versions of the various plans for their customers to review. For those of you who do not currently have health insurance, you will find additional information in the coming months on this blog, as it becomes available.

Planning for Retirement

If you want more information to help you with your retirement plans, you may be interested in reading some of the articles listed in the index links shown below.  Click on the category that interests you and you will discover an introduction and a links to related articles on each topic:

Gifts, Travel and Family Relationships

Great Places for Boomers to Retire Overseas

Great Places to Retire in the United States

Health and Medical Topics for Baby Boomers

Money and Financial Planning for Baby Boomers


You are reading from the blog:  http://baby-boomer-retirement.blogspot.com

Photo of stethoscope courtesy of www.morguefile.com

Traditional IRA vs Roth IRA

As you save money for retirement, you may be confused about whether you would be better off sticking with a traditional IRA or moving your money to a Roth IRA, instead.  Both are great retirement tools, and there are advantages to each.  Recently, the April, 2013 edition of the AARP Bulletin addressed this very question (pg. 28). While there is no answer that is right for everyone, learning a few important facts about each type of retirement savings plan may help you make the decision that will work best for you. Here is some information that will help you compare the two.

Traditional IRA

The traditional IRA is what most of are are accustomed to using for our retirement savings.  They are a great way to save tax deferred income that you will be able to withdraw when you retire.  Here are some facts you should know about this type of savings:

You can put $5500 a year in an IRA or $6500 if you are age 50 or older.

When you initially invest the money in the IRA, that money is not subject to income taxes.  This reduces the amount of taxes you owe in the current year.  The taxes are deferred until you withdraw the money. This will reduce your tax liability during your working years, which can be a major benefit to families who want to save for retirement and reduce their taxes at the same time.

However, if you make early withdrawals, they may be subject to taxes and penalties (there are some exceptions).  When you die, any remaining money that is passed on to your heirs is also subject to income taxes.

You will not pay income taxes on the money until you begin to withdraw it when, presumably, you will be taxed at a lower tax rate than you currently pay.  On the other hand, once you do begin to withdraw your IRA savings, the additional income could increase the tax rate some people actually do pay on their retirement income.  In other words, if your Social Security income alone is low enough that you would not be required to pay taxes on it, adding annual disbursements from your IRA could mean that more of your income is subject to taxation.  This will not apply to everyone, but it could apply to people who will be withdrawing large amounts from their IRA's.

Mandatory withdrawals are required beginning at age 70 1/2.  You can no longer contribute to a traditional IRA after that time.

Roth IRA

The Roth IRA works quite differently and is an excellent retirement option for people who expect that their tax rate will be about the same after retirement as it is now.  However, the taxes on the money that is invested in a Roth IRA are not deferred.  Savers must be willing to pay income taxes on the money during the year the money is earned.  Here are some additional facts you will want to know about a Roth IRA:

You can invest up to $17,500 this year, and $23,000 if you are age 50 or older.

As mentioned above, when you put the money in your Roth IRA account, you will still include it as part of your earnings on this year's tax return, and you will pay income taxes on it.

The Roth IRA has the advantage that you can make early withdrawals at any time, without penalty, so you can treat your Roth IRA as a savings account.  Since you already paid taxes on the principal, you do not owe taxes or penalties on your initial investment when you withdraw it.  In addition, if you hold the money in your IRA for at least five years and you reach the age of 59 1/2, the dividends and capital gains you earned  on the money over the preceding years will be also be tax free when you withdraw these funds.  

Paying the taxes up front can be a big advantage if you expect to hold the investment for a long time and you believe that your investments could increase substantially in value.  This can potentially give you the income you need in your later years while keeping your tax rate low.  In addition, your heirs can inherit the funds tax free.

You do not have to withdraw your money at age 70 1/2.  In fact, if you are still working at that age, you can continue to contribute to the Roth IRA.  

Can You Change Your IRA Designation?

If you have money in a traditional IRA and you want to put it into a Roth IRA, it is possible to make the change as long as you are willing to pay taxes on the money during the year when you make the transfer. 

If you don't want to pay taxes on all the money you have in your traditional IRA in one year, you can spread the transfer out over several years.  

Which IRA is right for you?  That depends on many factors.  As always, you would be wise to discuss this decision with your CPA and your investment adviser.  No one choice is right for everyone.

If you want to learn more about factors that could affect your retirement planning, you may also be interested in reading the information in the index articles listed below.  Each one contains links to a number of helpful articles on that topic.

Gifts, Travel and Family Relationships

Great Places for Boomers to Retire Overseas

Great Places to Retire in the United States

Health and Medical Topics for Baby Boomers

Money and Financial Planning for Retirement

You are reading from the the blog:  http://baby-boomer-retirement.blogspot.com

Photo courtesy of www.morguefile.com

 

Pros and Cons of Reverse Mortgages for Seniors

Many Baby Boomers have decided that they do not want to move to a retirement community or anyplace else when they retire.  Instead, they plan to age in place. They love their current home and neighborhood, and they have no intention of going anywhere.  For those retirees who have a lot of equity in their homes, most believe that they will have no problem continuing to live in their home.  After all, if home repairs are needed or medical bills pile up, they blithely assume that they can simply get reverse mortgages and tap the equity in their homes.  In some cases, this is a reasonable solution that has made it possible for thousands of seniors to remain in their homes.  However, in far too many situations this complicated type of loan has resulted in the loss of the family home along with all the equity that had been accumulated in it.  Before a homeowner considers this option, borrowers need to understand the advantages and disadvantages.

What are Reverse Mortgages?

Reverse Mortgages are loans that allow homeowners to borrow against the equity they have built up over the years. The homeowners do not make payments on the loan and the loan is not repaid until they either die or move out of the house. 

To qualify, the borrower has to be at least 62 years old.  They must either have paid off the house entirely or have a small enough mortgage that they can pay it off when they take out the reverse mortgage.  This loan is available to any homeowner, regardless of their income or credit rating. 

As mentioned, you do not have to repay the loan or even make payments on it until you either move out or die. However, you are expected to continue paying the annual property taxes and insurance bills on your home, as well as any homeowners' association fees and maintenance expenses.  If you fail to pay for the insurance and taxes, the company that gave you the reverse mortgage can declare you to be in default and foreclose on the home ... forcing you to move out.

Pros of Reverse Mortgages

There are advantages to these loans for some people, and they are certainly one tool that many have used to improve their quality of life as they age.

For example, if someone on a small fixed income is having trouble keeping up with their mortgage payments, a reverse mortgage can eliminate those payments for the rest of their life.  This may make it possible for them to continue to live in the home for years without house payments.

In addition, if someone has other debts such as large medical bills that they cannot afford, a reverse mortgage may enable them to pay off all their debts (including their remaining mortgage) and eliminate the payments.  Again, this can allow them to remain in their home for years and make it easier for them to survive on a small fixed income.

Cons of Reverse Mortgages

Unfortunately, not all the news about reverse mortgages is positive.  According to the April, 2013 edition of the AARP Bulletin, about 58,000 (or one in ten) of these mortgages end up in default.  Here are some of the problems:

People frequently take these mortgages out as soon as they can, often before they are even retired, and use the the money to finance their lifestyle.  If they face a real emergency in the future, they no longer have any equity left in their homes.  If the home requires major maintenance, such as a new roof, they are unable to come up with the money to make the repairs.  The federal government is concerned about these issues.  Skip Humphrey, who runs the Federal Office for Older Americans at the Consumer Financial Protection Bureau, has expressed concern that many borrowers are taking out these loans as soon as they turn 62.  The Bureau feels that these loans are more appropriate for people who are in their 70's or older.  (March, 2013 AARP Bulletin)

In addition to taking the loans out too soon, some people get into trouble with them because they cannot afford to pay the property taxes and insurance.  They may start out using some of the borrowed money to pay these bills during the first few years after they take out the loan.  However, eventually they run out of this cash and cannot borrow more.

There are problems with these loans for married couples, too.  If the older spouse takes out a reverse mortgage while the younger spouse is still too young to qualify, the younger spouse will be kicked out of the home when the older spouse dies.  This can be a serious problem for the younger spouse who risks losing their home and all the equity in it at the very time when they are also distraught  over the loss of their spouse.  Frequently, the home is only real asset the couple may own, and the result can be that the surviving spouse is left destitute.

Finally, many people do not realize that the up-front fees on reverse mortgages can be $10,000 or more, and these fees are financed as part of the loan.  

Proposed Changes to Reverse Mortgages

The AARP Foundation and some other organizations have filed suit to force changes in the ways that these mortgages are handled.  The Department of Housing and Urban Development (HUD) has also begun to make some reforms to these loans.  Among the proposed changes are:

Protecting surviving spouses;
Getting stricter about deceptive advertising;
Requiring a financial assessment before these loans are approved;
Requiring set-asides to cover future expenses such as taxes and insurance for a number of years.

Hopefully, the benefits of these loans will be preserved while some of the disadvantages will be minimized.


If you are interested in learning more about how to get the most out of your retirement planning, look through the five index articles listed below.  Each one contains links to nearly all the articles that have been written for this blog.

Gifts, Travel and Family Relationships

Great Places for Boomers to Retire Overseas

Great Places to Retire in the United States

Health and Medical Topics for Baby Boomers

Money and Financial Planning for Retirement



You are reading from:  http://baby-boomer-retirement.blogspot.com

Photo of home courtesy of:  http://www.morguefile.com