Retirement Living News

September 2010

HEADLINES  (Click on headline to read story)

• Four Out of Five Seniors Are Optimistic and 
  Look Forward to the Next Chapter of Life 
• Survey Shows Destinations for Europeans 
  Wishing to Retire Abroad...in the Sun
• CAEL Sees Expanding Career Opportunities for Older Workers
• GE and Intel Create New Healthcare Firm
• AARP Analysis Finds Brand Name Drug Prices Skyrocketing
• Social Security Board of Trustees: 
  Long-Range Financing Outlook Remains Unchanged

Archive of Past Issues                          New Retirement Communities

NEWS STORIES

Four Out of Five Seniors Are Optimistic and 
Look Forward to the Next Chapter of Life 

A new nationwide poll of older Americans, titled the Vi Next Chapter, revealed seniors to be redefining "senior moments." The Vi Next Chapter study was commissioned by Vi, (formerly Classic Residence by Hyatt) and conducted by Penn Schoen Berland who surveyed nearly 800 U.S. adults between the ages of 65 and 80. 

Rather than look upon their "senior moments" as a negative, older adults are turning the traditional perception of that phrase upside down to more accurately reflect their health-conscious, active lifestyles, as well as their points of view about the next chapter of their lives. In fact, 39% say the phrase "senior moments" is a common joke among their friends, and they use it themselves. Indeed, more than four out of five seniors polled (82%) feel they have "so much to look forward to" and 83% say they feel "younger than they are." 

"Today's seniors are relatively healthy, very active, engaged in their lives, their interests and their communities and are a real hoot to be around," said Kenneth Brummel-Smith, MD, Charlotte Edwards Maguire Professor and Chair of the Department of Geriatrics, Florida State University. "This generation is redefining so many aspects of aging and retirement. It is no surprise this dynamic demographic is shattering outdated perceptions and rewriting the way we perceive older adults." 

Survey highlights from Vi Next Chapter include: 

Not Their Father's Retirement 
Of those surveyed, 81% have a different vision of retirement from that of their parents. Almost nine out of ten (86%) say they want their retirement to be more exciting and more active than their parents' retirement, while almost all (98%) say retirement "can and should be a fun experience." A scant 6% look to their parents' retirement as a guide for their own future. The majority (96%) say retirement doesn't mean they are ready to stop being productive, and 79% feel productive currently. 

Independence Means Freedom 
The concept of "independence" in the later years is also undergoing a transformation. Older adults today equate independence with freedom to do what they like (72%) and from the responsibilities of work (42%) and raising a family (26%), from worries about money and bills (43%). 

A Little "Me" Time 
Nearly half (46%) say they're done taking care of chores - it's time to take care of "myself." Two in five (40%) report they like to frequently treat themselves to new purchases such as shoes or clothes. More than one third (37%) of older Americans surveyed say they go out socially two or more nights each week. Half (50%) say having a healthy and active sex life is important to them. 

Great Expectations 
Two in five (39%) say that as they've gotten older, they've become "more adventurous." A similar number (38%) say they've never had as much fun as they're having now. Older adults polled say they are most excited about and fully expect to travel (57%) and spend time with family (57%). 

Health Trumps Money 
Health trumps money by a ratio of 4 to 1 when it comes to things older Americans are worried about. Eight out of 10 older adults (80%) say that "losing my health" concerns them more while only 17% are worried about "not having enough money to get by." 

Fitter Not Fatter 
Sixty percent of older Americans polled say they are exercising more than 2-3 hours a week with 21% saying they exercise more than 5 hours each week. More than four out of five say they prepare meals from scratch rather than eating frozen, pre-prepared or takeout meals and 97% say the food they eat is very or somewhat healthy. 

About Vi 
Vi, (pronounced Vee) formerly Classic Residence by Hyatt, was founded in 1987 as a developer, owner and operator of older living communities. It currently operates nine continuing care retirement communities (CCRCs) with another one under development and 10 rental communities.
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Survey Shows Destinations for Europeans 
Wishing to Retire Abroad...in the Sun

European retirees want to retire in warmer climates and predominantly in countries other than their own according to a new survey of 7,500 European workers from Aon Consulting. Spain was the most popular retirement destination and also had the highest percentage of respondents who were citizens that wanted to remain in their home country for retirement. 

In second place was France according to 15% of Europeans. The next three most popular destinations (which also have warm climates) were the United States, Italy and Australasia. The balance of the top 10 retirement destinations for Europeans who hope to retire abroad were: Africa, Switzerland, Latin America, United Kingdom, and The Netherlands. 

Spain and France also topped the popularity tables when it came to workers intending to retire in their home country. In this case, the Spanish (86.8%), French (81.1%) and Danes (73.6%) keenest to retire at home, in stark contrast to workers in the UK (42.7%), Germany (45.9%) and Ireland (49.0%) where the majority hope to retire abroad. 

An influx of retiree immigrants to any one country could exacerbate the already ticking time bomb of an aging population in Europe, forcing countries like Spain and France to rethink social policies and budgets to deal with extra pressures on healthcare resources. 

This research is part of the Aon Consulting European Employee Benefits Benchmark, a survey of more than 7,500 workers from across Belgium, Denmark, France, Germany, Ireland, The Netherlands, Norway, Spain, Switzerland and the UK, 10 of the leading economies in Europe. The Benchmark focuses on the views of workers across Europe on topics such as retirement, employee benefits and other pension-related issues. 

Oliver Rowlands, head of retirement, Europe, Middle East and Africa, at Aon Consulting commented: "Cheap air travel and the communication tools available over the Internet means that retiring overseas doesn't necessarily mean being completely absent from your family's life, making the prospect of emigration to other countries on a previously unseen scale a real possibility. 

"Not surprisingly, most people want to spend their retirement predominantly in countries with good weather and good social and government benefits, and ideally close enough so that they can get home quickly if they need to. 

"There are financial implications that people thinking about retiring overseas need to consider. Cost of living may be higher in the country of choice, and so people planning on retiring abroad need to factor that in to their savings plan. There can also be tax implications both at home and in a new country of residence, so it is certainly worth investigating that in advance so there are no nasty surprises later on. And finally healthcare benefits can vary widely for expatriates and this will be a major concern for retirees as they grow older." 

Aon Consulting has recently published an in depth report, Expectations vs. Reality: Meeting Europe's Retirement Challenge, based on the data from the European Employee Benefits Benchmark. This report gives insight into some of the retirement and pension issues across an aging workforce in Europe, one of the key human capital risks for European employers today. The report can be downloaded by clicking here.  

Aon Consulting is among the top global human capital consulting firms, with more than 6,300 professionals in 229 offices worldwide. The firm works with organizations to improve business performance and shape the workplace of the future through employee benefits, talent management and rewards strategies and solutions.
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CAEL Sees Expanding Career Opportunities for Older Workers

The Council for Adult and Experiential Learning (CAEL) will embark on a new project to identify emerging industries in cities around the country to link them with career opportunities for older workers, thanks to a $350,000 grant from the MetLife Foundation. The program will also help equip community colleges to provide information, career advice and training to older adults. 

CAEL, a Chicago-based national nonprofit, seeks to further adult learning and works to identify new career opportunities for older workers, the unemployed and other job seekers. The new project will focus on six cities by identifying their key industries and providing a framework for occupations in those areas. Information gained will be shared with career counselors at community colleges who help prepare older workers for new jobs and careers. The six cities will be selected this fall. 

The criteria for target industries and sectors will be determined by the potential for job and wage growth in each region. Working with human resources professionals and operations staffs at a representative sample of regional firms in those industries, CAEL will document emerging opportunities. It will then map out job descriptions, career progressions and education and training requirements. The organization will also take the skills generally held by older workers and match them with appropriate career sectors and opportunities. Analyses will then be provided to advisors at community colleges for training and career advice purposes. 

"With the continued state of flux in employment and the economy, older workers frequently suffer the most from dramatic changes in which skills and knowledge are most needed in the workforce," said Pamela Tate, CEO and president of CAEL. "Although these workers have the most work experience, they are also usually the ones who have the most difficult time transitioning to new jobs. Through this project, we will ensure that older workers have the training and support they need to make successful changes." 

The Council for Adult and Experiential Learning is a national leader in the fields of adult learning and workforce development, providing colleges and universities, companies, labor organizations and state and local governments with the tools and strategies they need for creating practical, effective lifelong learning solutions. With a membership of over 600 colleges, universities, corporations, labor unions, associations, and individuals, CAEL is headquartered in Chicago and also maintains offices in Denver, Philadelphia, and New York City. More information is available at www.cael.org.
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GE and Intel Create New Healthcare Firm

GE and Intel Corporation have announced the entry into a definitive agreement to form a 50/50 joint venture to create a new healthcare company focused on telehealth and independent living. The new company will be formed by combining assets of GE Healthcare's Home Health division and Intel's Digital Health Group, and will be owned equally by GE and Intel. Pending regulatory and other customary closing conditions, the joint venture is expected to become operational by the end of the year. 

The venture builds on the GE-Intel healthcare alliance announced in April 2009 around independent living and chronic disease management. GE and Intel share a common vision to use technology to bring more effective healthcare into millions of homes and to improve the lives of seniors and people with chronic conditions. With the dramatic increase of people living with chronic conditions, and a global aging population, there is a need to find new models of healthcare delivery and extend care to the home and other residential settings. 

Once formed, the new company will develop and market products, services and technologies that promote healthy, independent living at home and in assisted living communities around the world. It will focus on three major segments: chronic disease management, independent living and assistive technologies. GE Healthcare and Intel will contribute assets in remote patient monitoring, independent living concepts and assistive technologies, such as the IntelŽ Health Guide, IntelŽ Reader and GE Healthcare's QuietCareŽ. 

"New models of care delivery are required to address some of the largest issues facing society today, including our aging population, increasing healthcare costs and a large number of people living with chronic conditions," said Intel President and CEO Paul Otellini. "We must rethink models of care that go beyond hospital and clinic visits, to home and community-based care models that allow for prevention, early detection, behavior change and social support. The creation of this new company is aimed at accelerating just that." 

GE chairman and CEO Jeff Immelt said "Controlling healthcare costs while bringing quality care to an increasingly aging population is one of the largest global challenges we face today. We think this joint venture will offer great potential to address these challenges by improving the quality of life for millions while lowering healthcare costs through new technology. This new company is the next step forward in a healthcare partnership that combines the complementary expertise and capabilities of GE and Intel to accelerate the development of innovative home health technology."
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AARP Analysis Finds Brand Name Drug Prices Skyrocketing

AARP's first-ever analysis of retail price trends of prescription drugs finds prices for widely used brand name drugs skyrocketed in 2009, climbing more than eight percent even as general inflation remained negative. The AARP Rx Price Watch report findings align with the association's earlier Rx Watchdog reports, which found similarly large increases in manufacturer prices for brand name drugs. 

The brand name drug industry has criticized AARP's past drug pricing reports for analyzing manufacturer list prices that do not reflect discounts and rebates often provided by drug makers. However, the new Rx Price Watch report indicates that such discounts do little to protect consumers from growth in brand name prices. While manufacturer prices for widely used brand name drugs increased 9.3 percent in 2009, retail prices for the same drugs climbed nearly as quickly at 8.3 percent. 

All but six of the 217 brand name prescription drugs studied by AARP had retail price increases exceeding general inflation last year. Each of the top 25-selling brand name drugs had price increases, with most jumping more than five percent. Prostate drug Flomax (0.4 mg capsules) saw the largest increase in this top-selling group, climbing 24.8 percent during 2009. Flomax first began facing generic competition in early 2010 . 

Among brand name manufacturers, products of two drug makers--Boehringer Ingelheim and BTA Pharmaceuticals--had average increases of over 15 percent among the drugs studied by AARP. Notably, manufacturers Merck, Allergan and Alcon had average increases of less than five percent. 

AARP is working to lower prescription drug costs and create more competition in the marketplace. The health care law enacted earlier this year will begin closing the gap in Medicare drug coverage in 2011 and provide people who fall into the gap this year with an extra $250 to help pay for their drug costs. 

The list of prescription drugs analyzed in the AARP Rx Price Watch report is based on the drug products most widely prescribed to people in Medicare Part D. Price changes are measured using retail prices as reported by the Thomson Reuters MarketScanŽ Research Databases. For a complete copy of the AARP Rx Price Watch report, visit http://www.aarp.org/health/drugs-supplements/info-08-2010/rx_price_watch.html.
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FHA Announces Lower Cost Reverse Mortgage Product

In an effort to combat fears over the cost of a reverse mortgage, the Federal Housing Administration (FHA) will modify its Home Equity Conversion Mortgage (HECM) product (known as HECM Standard) to provide a more affordable reverse mortgage for seniors looking to tap the equity of their homes. It is proposing a variation of the traditional reverse mortgage product, which is being called HECM Saver, and is aimed at seniors looking for options to access home equity with lower costs. It is expected to take effect in October. 

A HECM is a reverse mortgage loan insured by the federal government, used by seniors to cover gaps in living expenses. The outstanding balance is not due until the last borrower leaves the home, sells or dies. With an HECM, if the balance due upon settlement of the loan exceeds the value of the home, the FHA insurance covers the difference. 

Principal Limit Factor of the HECM Standard will be decreasing slightly and the mortgage insurance premium for the annual renewal will be increasing from .5% to 1.25%. 

The up-front Mortgage Insurance Premium will remain 2% of the property value or the Housing and Urban Development (HUD) lending limit, whichever is less. The Up Front Mortgage Insurance Premium for the HECM Saver will be only .01% of the HUD property value or lending limit, whichever is less, in recognition of the lower risk associated with the lower loan to values associated with the HECM Saver product. The renewal for the HECM Saver will also be 1.25% of the principal balance annually. HECM Saver borrowers will receive approximately 10 to 18% less money than HECM Standard borrowers. 

The HECM Saver program can be used with all programs but appears to be best suited for the fixed rate product which requires a full draw at closing. For those borrowers who did not necessarily want all the proceeds for which they were eligible anyway, the HECM Saver is an opportunity to curtail unnecessary costs. The interest will also accumulate at a reduce rate since borrowers will not be borrowing as much money at the onset which some borrowers will see as a positive if they are seeking to preserve equity.
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Social Security Board of Trustees: 
Long-Range Financing Outlook Remains Unchanged

The Social Security Board of Trustees released its annual report last month on the financial health of the Social Security Trust Funds and the long-range outlook remains unchanged. The combined assets of the Old-Age and Survivors Insurance, and Disability Insurance (OASDI) Trust Funds will be exhausted in 2037, the same as projected last year. The Trustees also project that program costs will exceed tax revenues in 2010 and 2011, be less than tax revenues in 2012 through 2014, and then permanently exceed tax revenues beginning 2015, one year earlier than estimated in last year's report. The worsening of the short-range outlook for the Social Security Trust Funds is due in large part to the recent economic downturn. 

In the 2010 Annual Report to Congress, the Trustees announced: 

• The projected point at which the combined Trust Funds will be exhausted comes in 2037 - the same as the estimate in last year's report. At that time, there will be sufficient tax revenue coming in to pay about 78 percent of benefits.
• The projected point at which tax revenues will fall below program costs comes in 2010. Tax revenues will again exceed program costs in 2012 through 2014 before permanently falling below program costs in 2015 -- one year sooner than the estimate in last year's report. 
• The projected actuarial deficit over the 75-year long-range period is 1.92 percent of taxable payroll -- 0.08 percentage point smaller than in last year's report. 
• Over the 75-year period, the Trust Funds would require additional revenue equivalent to $5.4 trillion in present value dollars to pay all scheduled benefits. 

"The impact of the current economic downturn continues to be felt by the Social Security Trust Funds," said Michael J. Astrue, Commissioner of Social Security. "The fact that the costs for the program will likely exceed tax revenue this year is not a cause for panic but it does send a strong message that it's time for us to make the tough choices that we know we need to make. I applaud President Obama for his creation of the Deficit Commission so we can start the national discussion needed to ensure that Social Security remains a foundation of economic security for our children and grandchildren." 

The Board of Trustees is comprised of six members. Four serve by virtue of their positions with the federal government: Timothy F. Geithner, Secretary of the Treasury and Managing Trustee; Michael J. Astrue, Commissioner of Social Security; Kathleen Sebelius, Secretary of Health and Human Services; and Hilda L. Solis, Secretary of Labor. The two public trustee positions are currently vacant. President Obama nominated two individuals to serve as public trustees, and the Senate Finance Committee held hearings on July 29 for both trustee nominees. Their confirmations are pending.
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