Retirement Living News

November 2008

HEADLINES  (Click on headline to read story)

• Retirement Dreams Falter as Economy Slumps
• Social Security Administration Increases Benefits 
  to Retirees in 2009
• T. Rowe Price Launches New Retirement Income Calculator
• Eskaton Unveils Demonstration Home About the Future of Aging
• MetLife Survey Finds Assisted Living and Nursing Home Rates Remain Steady in 2008
• Texas Adds Two More Cities to its Certified 
  Retirement Community Program

Archive of Past Issues                          New Retirement Communities

NEWS STORIES

Retirement Dreams Falter as Economy Slumps 

Last month AARP released a report examining the state of Americans' retirement and financial security. The finding paints a bleak picture for retirement dreams right now and in the future. The report, Retirement Security or Insecurity? The Experience of Workers Aged 45 and Older, finds that 13 percent of Americans 45 and older are tapping into their retirement accounts, or other investments, to cover day-to-day expenses. It also found that 20 percent have stopped contributing to retirement accounts during the past 12 months, which is further jeopardizing their long-term retirement dreams. For millions, saving for retirement at work is not an option at all. 

The challenge of preparing adequately for retirement has grown markedly. As people live longer, fewer companies offer defined benefit plans and nest eggs are increasingly linked to Wall Street. This challenge becomes even markedly more difficult during turbulent economic times. People are now changing their behavior in significant ways to deal with their financial pressures, which they believe will undermine their future retirement security. 

To understand how recent changes in the economy have affected financial security of workers who are at least 45 years old, including preparations for retirement, AARP commissioned a national survey that was conducted from September 3 to 21, 2008. The survey found, among other things, that: 

• If the economy does not improve significantly, over six in ten workers age 45 and older say it is likely they will spend less in retirement (69%) as well as delay retirement and work longer (65%). Far fewer say it is likely they will save more for retirement. 
• Because of recent changes in the economy during the last 12 months, 24% of workers age 45+ have increased the number of hours they work and 20% have actually stopped putting money into a 401(k), IRA, or other retirement accounts. 
• Over a quarter (28%) of respondents felt their savings were not on track for retirement before the economy slowed down, and nearly six in ten respondents (58%) think they are not saving enough for retirement. 
• Over six in ten respondents (63%) whose current employer does not offer a retirement plan say they would be likely to use it if their employer offered one. 

There are several implications of this study: 

• Employer-provided pension coverage needs to be greatly increased; 
• There is considerable distress among vulnerable elements of the population suggesting the most at-risk individuals may be the hardest hit; 
• Middle-age workers (45-49) need to make saving for retirement a priority; 
• Most workers are relying on working longer to compensate for retirement nest-egg shortfalls. 

To read a copy of the 19 page report, click here. 
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Social Security Administration Increases Benefits to Retirees in 2009

The Social Security Administration announced in October that monthly Social Security and Supplemental Security Income benefits will increase 5.8% in 2009. This increase isn't enough to offset the increases that many seniors have seen in their housing expenses including their property taxes and insurance, let alone any increases in rent or mortgage payments. 

More than 55 million Americans receive these benefits annually and the increase is the largest since 1982. Social Security and Supplemental Security Income benefits increase automatically each year based on the rise in the Bureau of Labor Statistics' Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), from the third quarter of the prior year to the corresponding period of the current year. This year's increase in the CPI-W was 5.8 percent. 

The 5.8 percent Cost-of-Living Adjustment (COLA) will begin with benefits that over 50 million Social Security beneficiaries receive in January 2009. Increased payments to more than 7 million Supplemental Security Income beneficiaries will begin on December 31. The typical retiree's monthly check will go from $1,090 currently to $1,153. 

Some other changes that take effect in January of each year are based on the increase in average wages. The maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $106,800 from $102,000. Of the estimated 164 million workers who will pay Social Security taxes in 2009, about 11 million will pay higher taxes as a result of the increase in the taxable maximum. Even with these cost of living adjustments, the increases in the cost of gasoline, heating gas/oil, medical expenses, prescription drugs, property taxes and home owners insurance far outweigh any of the increases that seniors are receiving by the increase in their Social Security benefits.
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T. Rowe Price Launches New Retirement Income Calculator

T. Rowe Price, the Baltimore-based mutual fund company has updated its Web-based Retirement Income Calculator which enables those planning for, transitioning to, or in retirement to estimate their monthly retirement income with inflation adjustments. The interactive tool enables users to immediately see the impact on retirement income of changing various factors, such as the amount being saved, retirement age, number of years in retirement, asset allocation strategy, and for retirees, the monthly amount they expect to spend. 

The new Retirement Income Calculator (www.troweprice.com/ric) is far more robust than the Web-based tool it replaces. Although the prior retirement planning tool was aimed only at those in or near retirement, it had been the most popular tool on the firm's web site. 

The new tool calculates a projected monthly income stream throughout retirement for those in any phase of retirement planning, taking into account such factors as current savings, future savings in employer-sponsored retirement plans, as well as other tax-deferred and tax-exempt retirement accounts, and regular taxable accounts, Social Security and other sources of income, the expected number of years in retirement, and investment strategy before and after retirement. For couples, the calculator accommodates such data for each spouse. The whole process takes about 10 minutes. 

Like its predecessor, the new Retirement Income Calculator also incorporates the firm's proprietary "Monte Carlo" methodology, providing personalized results based on 1,000 potential market simulations, assuming a certain probability that income will be sustained throughout the retirement period. This approach provides a more realistic and reliable estimate than simply projecting results based on an assumed average rate of return on an investment portfolio.
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Eskaton Unveils Demonstration Home About the Future of Aging

Last month Eskaton Senior Residences and Services, a nonprofit corporation, unveiled the home and research center that was the focus of its National Demonstration Home project. The event was attended by aging experts, policymakers, technology leaders, and seniors and their families who gathered to talk about this innovative project that incorporates universal design and health and wellness technologies. 

The demonstration home project evolved from a unique partnership that married innovative universal design, health, wellness and social technologies, and green living. Located in Roseville, Calif., the home offers a glimpse into the future of aging - one where independence is key. This concept allows older adults to stay in their own homes longer, avoiding premature moves and maintaining independence.

"Until now, our options were limited," explains Eskaton Senior Residences and Services CEO Todd Murch. "It's our hope that the National Demonstration Home project and research center will change the future of aging." 

"By offering proactive design solutions, empowering technologies and cost-efficient green living features, we are creating livable environments that support what older Americans value most - their independence and dignity," Murch says. To view a brochure about the project, click here.  For additional details, click here. 
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MetLife Survey Finds Assisted Living and Nursing Home 
Rates Remain Steady in 2008

The average rates for a private room in a nursing home remained essentially unchanged nationally from 2007, while semi-private rates increased 1.1%, from $189 daily or $68,985 annually in 2007, to $191 daily or $69,715 annually in 2008, according to the MetLife Mature Market Institute. The survey also found that the average assisted living rates increased by 2.1%, from $2,969 monthly or $35,628 annually in 2007, to $3,031 monthly or $36,372 annually in 2008. 

According to the 2008 MetLife Market Survey of Nursing Home and Assisted Living Costs report published late last month, the highest daily rates for nursing homes are in Alaska -- $577 for a private room and $566 for a semi-private room. The new survey found that the non-metropolitan and non-suburban areas of Louisiana had the lowest daily rates for a private room in a nursing home - averaging $127 per day. The non-metropolitan and non-suburban areas of Minnesota and Oklahoma had the lowest semi-private nursing home room, averaging $121 per day. 

For assisted living communities, Southern Maine had the highest average monthly base rate at $4,708 and North Dakota had the lowest average month base rate at $1,980. The study found that the advertised base rates for assisted living may not comprise the total cost families will pay when additional charges, like those associated with providing additional assistance, are added. 

The average monthly rate for assisted living communities providing assistance with activities of daily living (ADL) above the base rate is $386. The average monthly rate for providing assistance with instrumental activities of daily living (IADL), such as medication management, is $327. 

Assisted living communities that offer just basic services cost an average of $2,873 per month while those in the standard category (offering more services) have an average base cost of $2,985, a 3.9% increase. Communities in the inclusive category (offering still more services) have an average base cost of $3,354 monthly, a 12.4% increase over "standard" and a 16.7% increase over "basic." 

To view the full 28-page report, including the state rates for key cities, go to: http://www.metlife.com/FileAssets/MMI/MMIStudies2008NHALCosts.pdf
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Texas Adds Two More Cities to its 
Certified Retirement Community Program

Last month the Texas Agriculture Commissioner, Todd Staples, announced that two more cities have qualified to be certified retirement communities (CRC) under the GO TEXAN program. The cities of Tulia and Canyon now join 19 other cities and counties that have been certified. 

Launched in June 2006, the Texas Department of Agriculture's CRC initiative helps rural Texas communities attract retirees and potential retirees to reside in their respective locales. The CRC program also encourages tourism while promoting the state as a desirable retirement destination to current and future retirees across the country. 

Communities already certified as GO TEXAN Certified Retirement Communities are: Athens, Clifton, Cuero, DeKalb, Duncanville, Franklin County, Harlingen, Longview, Lufkin, Nacogdoches County, Odessa, Palistine, Panola County, Paris, Pittsburg, San Augustine County, Shelby County, Texarkana, and Winnsboro. For more information, visit the Web site at: http://www.retireintexas.org/.
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