Retirement Living News

September 2009

HEADLINES  (Click on headline to read story)

• Social Security Checks May Shrink in 2010 and 2011
• Many State Tax Changes prompt Mid-Year Update 
  of Our 'Taxes by State' Section
• Senior Care Industry Welcomes Mature Job Seekers
• Florida's Population Dwindling
• Effort Underway to Block Estate Tax Repeal
• Water War Continues in Georgia, Alabama and Florida

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NEWS STORIES

Social Security Checks May Shrink in 2010 and 2011 

By law, Social Security benefits cannot go down. Nevertheless, monthly payments will drop over the next two years for millions of people in the Medicare prescription drug program because the premiums, which often are deducted from Social Security payments, are scheduled to go up slightly. The trustees who oversee Social Security are projecting there won't be a cost of living adjustment (COLA) for the next two years. This hasn't happened since automatic increases were adopted in 1975. COLAs are tied to inflation, which has been negative this year, largely because energy prices are below 2008 levels. 

About 50 million retired and disabled Americans receive Social Security benefits. The average monthly benefit for retirees is $1,153 this year. All beneficiaries received a 5.8 percent increase in January, the largest since 1982. 

Advocates say older people still face higher prices because they spend a disproportionate amount of their income on health care, where costs rise faster than inflation. Many also have suffered from declining home values and shrinking stock portfolios just as they are relying on those assets for income. 

"For many elderly, they don't feel that inflation is low because their expenses are still going up," said David Certner, legislative policy director for AARP. "Anyone who has savings and investments has seen some serious losses." 

More than 32 million people are in the Medicare prescription drug program. Average monthly premiums are set to go from $28 this year to $30 next year, though they vary by plan. About 6 million people in the program have premiums deducted from their monthly Social Security payments, according to the Social Security Administration. 

Millions of people with Medicare Part B coverage for doctors' visits also have their premiums deducted from Social Security payments. Part B premiums are expected to rise as well. But under the law, the increase cannot be larger than the increase in Social Security benefits for most recipients. There is no such hold-harmless provision for drug premiums. 

Social Security is also facing long-term financial problems. The retirement program is projected to start paying out more money than it receives in 2016. Without changes, the retirement fund will be depleted in 2037, according to the Social Security trustees' annual report this year. 
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Many State Tax Changes Prompt Mid-Year Update 
of Our 'Taxes by State' Section

The number and significance of state tax changes that have occurred in the first half of 2009 has necessitated our first mid-year update of the Taxes by State section of our Web site.

States are trying to balance their budgets at a time when state and local sales tax collections experienced their worst decline in 50 years and demands for state services are up dramatically as laid-off workers and struggling families seek unemployment benefits, food stamps and health care. 

Some states have enacted the largest tax increases in recent memory to balance their ledgers while others made deep cuts, slashing budgets for prisons, mental health and higher education. Many states found short-term patches to plug holes, laying the groundwork for even bigger problems in the coming year, particularly when the federal stimulus money starts drying up. 

Several of the new state tax hikes are temporary, including higher sales taxes in California and Nevada and heftier personal income taxes in Hawaii, New York and New Jersey. Illinois turned to another short-term fix by borrowing $3.5 billion to pay its pension obligation. Minnesota put off payments to school districts. California raided $2 billion from local governments to balance its books. 

• At least 18 states raised personal income and/or state sales taxes, with seven states levying higher taxes on those in upper-income brackets; 
• At least 18 will collect more revenue in cigarette and/or alcohol sales; 
• Some 35 states cut higher education spending or increased tuition; 
• At least four states are forcing Medicaid patients to pay more for their care, and at least eight states cut optional benefits under Medicaid, the joint federal-state program that provides health coverage to more than 60 million low-income people; 
• Seven sought new gambling revenue, including Delaware, which this fall will join Nevada as the only states to allow sports betting. Ohio approved some 17,500 slot machines at race tracks, and Illinois added video poker at bars.
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Senior Care Industry Welcomes Mature Job Seekers

As America's population ages, the need for qualified senior care health professionals continues to increase. For job hunters over 50, this need has become a unique employment option. The National Senior Living Providers Network (NSLPN) offers tools to help these potential employees explore opportunities in the senior care industry. Many seniors enjoy receiving care from employees of a similar generation. These employees and seniors can build meaningful relationships that enhance the benefits of senior care. 

Those seeking employment in the senior care industry can find the most up-to-date listings for senior care jobs across the country on NSLPN's Web site - www.NSLPN.com. The web site makes it easy for mature workers to find employers who recognize the benefits of hiring mature workers. Potential candidates can be recruited and screened through the Web site. 

"Mature workers are a great asset to the senior care industry," says Britt Nichols co-founder of NSLPN. "They can often transfer skills from other disciplines to find the flexible, enjoyable employment they desire at this stage in their life. Our web site is a great community where these potential senior care employees can interact with healthcare industry employers looking for their unique skills." 

The National Senior Living Providers Network (NSLPN) is an online community for senior care industry news and career opportunities for all professionals involved in the senior living marketplace.
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Florida's Population Dwindling

Florida, which has always struggled to manage its growth, has stopped growing. University of Florida demographers reported last month that the state lost about 50,000 residents between April 2008 and April 2009. It was the first decline in 63 years. The recession is mostly to blame for the drop. 

Florida, like many states, has been squeezed by the housing and credit crunch and decline in wealth. More than most states, Florida's economic base depends on retirees moving there, attracted by the favorable climate and low taxes. That trend stopped, demographers believe, because out-of-staters could not sell their homes and move to Florida or could not afford the down payment. 

Many immigrants also moved back to their countries because they could not find work in Florida's slumping construction industry, the demographers said. The Census Bureau pegs Florida's population at 18.3 million, the fourth largest. The state demographers said they believe that population growth will resume starting next year, with 20 million residents living there by 2016. 

To read more about this trend, go to a story in USA Today -- http://www.usatoday.com/news/nation/2009-08-31-florida_N.htm
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Effort Underway to Block Estate Tax Repeal

The House of Representatives is likely to propose a temporary, one-year measure to prevent repeal of the estate tax, as time is running short for a bipartisan group of senators to agree on a permanent rate by the end of this year. 

The Wall Street Journal reports that Democrats are determined not to see the estate tax repealed, which according to tax cuts passed under President George W. Bush, will happen on January 1 if Congress doesn't act by the end of the year.

The House will likely propose to scrap the one-year repeal and instead extend 2009 estate-tax rates for another year, according to congressional aides. At current levels, the first $3.5 million of estate wealth is exempt from the tax. Above that amount, wealth is taxed at a 45% rate. 

Some Washington lobbyists say that despite the House position, there is still a chance for Senate Republicans and Democrats to strike a deal this year for a permanent rate structure more favorable to wealthy taxpayers. Senators Blanche Lincoln (D., Ark.) and Jon Kyl (R., Ariz.) in April won support from a majority of the Senate including 11 Democrats for an amendment that would have exempted estates under $5 million and set a 35% rate. 

Under current law, following one year of repeal in 2010, the estate tax rate in 2011 is slated to revert to 55%, with only the first $1 million exempted.
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Water War Continues in Georgia, Alabama and Florida

Georgia is preparing to step up its offensive in the long-running battle with its neighbors over federal water rights by focusing on Florida's environmental record and dredging up a 150-year-old ruling that could give Alabama less control of a key river, Gov. Sonny Perdue said in July. 

He added that he was prepared to play "hardball" with his neighbors in the regional fight over water rights after a federal judge issued a ruling last month that could restrict metro Atlanta from tapping its main water source. 

In May U.S. Interior Secretary Ken Salazar visited Georgia and Florida and said he won't force Alabama, Georgia and Florida to negotiate a settlement of their 20-year water sharing fight, but he's willing to help negotiations. Also in May Florida Gov. Charlie Crist sent a letter to Salazar saying it is "imperative" to find a long-term solution to the Florida, Georgia, Alabama water sharing dispute. 

On July 17 U.S. District Judge Paul Magnuson ruled that Atlanta has three years to obtain Congressional approval to keep using Lake Lanier for drinking water. In the days following the ruling, Georgia Gov. Sonny Perdue said he will appeal the decision but is also open to negotiations with Florida and Alabama. 

Atlanta area developers, politicians and business leaders said the ruling could prove catastrophic. "This is an extraordinarily draconian ruling," said Tad Leithead, senior vice president with Cousins Properties. "It has the potential to be extremely damaging to growth and development in the Atlanta area." 

New home construction would wither without Lake Lanier. Water-dependent industries might disappear; they certainly wouldn't relocate to Atlanta. Residential and commercial water rates could skyrocket. Lawns would die. 

"It would perhaps have a Katrina-sized effect on the metro economy," said Sam Williams, president of the Metro Atlanta Chamber. "We've got to make sure this gets solved before the ultimate deadline hits us." 

Not everybody believes that Atlanta's economy would be under water without Lanier. Land-use patterns might shift, but construction would continue. Counties beyond the river's watershed - Morgan, Floyd, Lamar - might boom. 

Older communities on both sides of I-285 could be redeveloped. Denser urban communities might spawn environmentally friendly mass transit. Conservation would become more than a buzzword. 

The U.S. Army Corps of Engineers releases millions of gallons of water daily from Lake Lanier. But Florida and Alabama say they don't get enough of the Chattahoochee River for their needs. 

Roughly 5.5 million people live in the 20-county metro area, according to the Atlanta Regional Commission ARC), 10 times the number in 1956 when the Chattahoochee River was dammed to create Lake Lanier. Another 3 million people, and 1.6 million jobs, are expected by 2040. The ARC reported, before the judge's ruling, that water supply would keep up with future demand. Water usage in the 15-county Metropolitan North Georgia Water Planning District is expected to skyrocket from an average of 600 million gallons daily (in 2006) to slightly more than 1 billion gallons by 2035. 

If that water dries up, much of the projected growth will dry up too. "Without water, there is no economic development," said Leithead. "So growth will gravitate to where water is not an issue."
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