Friday, July 31, 2015

Update on other countries’ approach to long-term care

The U.S. is facing a crisis as millions of baby boomers are approaching the age when the possibility of needing long-term care skyrockets. Our government provides minimal care via Medicare, while you must be almost broke to receive Medicaid. The CLASS Act program, which was part of Obamacare, died before the law went into effect — a prediction I made while Washington’s wonks were muddling behind closed doors. And only a small percentage of boomers have long-term care insurance.

Other industrial countries are facing a similar shift in demographics. And last December I shared a report with you on how they’re coping. Here is an update on three of them …

The United Kingdom

Single-premium immediate annuities are popular among those who currently need long-term care and can afford them. They provide a guaranteed, tax-free income that can help fund LTC bills. Starting next April, the British government is phasing in new restrictions on access to public LTC benefits. Individuals will have to spend £72,000 (US$113,000) on LTC services and all but £118,000 (US$184,000) of their assets before government benefits start. Afterwards, the government will provide “full state support,” which has limitations. 


15% of those over age 40 have private LTCI. And to keep premiums down, waiting periods of 3 years for dementia and 1 year for other covered conditions are common.


Singapore has a mandatory saving plan for all workers that they can use for retirement, housing, and health care. Workers ages 40 to 69 are automatically enrolled in an ElderShield LTC benefits program. But the monthly benefit is only 400 Singapore dollars (US$293) per month; nursing home care in the country runs at least 1,200 dollars (US$878). However, participants have the option of contributing up to 600 dollars (US$439) into a private plan each year giving them up to 3,500 dollars (US$2,562) per month in benefits.


Based on those few brief observations, governments remain the provider of last resort for long-term care. And the trend seems to be shifting to requiring citizens to take on even greater responsibility for their own care. Their tools of choice: Immediate and deferred annuities, and private long-term care insurance.

Thursday, July 30, 2015

Long-term care guide on Kindle

Due to numerous requests, A Boomer’s Guide to Long-term Care is now available in Kindle format. You can order your copy here for immediate download. 

Wednesday, July 29, 2015

Experts say invest in these properties ...

The research and valuation firm, Situs RERC, conducts surveys of experts each quarter to find out which types of commercial properties offer the best potential for investors. The survey has a scale from 1 to 10, 1 representing the poorest conditions and 10 the best.

Here are the preliminary results for the second quarter. Final results will come out early August.
  • Apartment building: 5.9
  • Hotels: 6.4
  • Student housing: 6.5
  • Neighborhood shopping centers: 6.6
  • Office building in central business districts: 6.6
  • Industrial warehouses: 7.6
If you are an individual investor, you might not be in a position to pluck down the amount of money required to buy one of the above properties. But there are real estate investment trusts (REITs) that focus on each of these sectors. 

For more information on REITs, the National Association of Real Investment Trusts’ website is a good place to start. 

Tuesday, July 28, 2015

Big-buck investors piling into real estate

Yesterday I wrote about how investors are jumping back into real estate. But it’s not just everyday folks like you and me. The big money is pouring in, too.

Did you ever hear of Tiger 21? It’s an investment group made up of entrepreneurs, CEOs, inventors and top executives with backgrounds in financial services, real estate, industrial and consumer goods, legal services, entertainment and medicine. In other words, they’re a pretty bright group of guys and gals with deep pockets.

The more than 300 members collectively manage about $30 billion in assets. And last week, Tiger 21 reported that members’ real estate allocation increased to 30%, up one percent from the first quarter. That’s a new high for the asset class and a big leap from 22% a year earlier. 

By the way, if you’d like to join Tiger 21, the annual membership fee is $30,000. 

Monday, July 27, 2015

Americans back to lovin’ real estate!

The housing bubble that led to massive foreclosures and the crisis in 2008 is a distant memory. According to a new survey, investors would rather put their long-term money in real estate than anything else.

Of the 1,000 investors surveyed, 27% picked real estate as their top choice for money they wouldn’t need for at least 10 years. Cash was the favorite for 23% of them. Stocks came in third at 17%.

Look, I like real estate, too. Always have. But you need to do it right, otherwise you’re sure to lose your butt! 

So before you buy a property with the intention of renting it out, be sure to get your copy of What You Must Know BEFORE Becoming a Greedy Landlord. I’m putting the finishing touches on it now and will let you know the moment it’s available on and other booksellers. 

Friday, July 24, 2015

Hillary and the Senate bearing gifts for you …

The race is on … the one where those fighting for a four-year stint in the White House see who can promise the most freebees to voters.

On one side we have Hillary Clinton who has dangled higher minimum wages in front of supporters. And most recently, she pledged to reform capital gains taxation to fight those evil fat cats who make quick profits in the markets.

Will those moves benefit Americans and the U.S. economy? Who cares! Voters only need to think they’ll get something for nothing.

Not to be out done, the Republican-controlled Senate pulled a rabbit out of their hat on Tuesday by passing a package of more than 50 tax extenders.

The majority of voters couldn’t give a hoot about most of the extensions, such as:       
  • Special rules for certain film television productions
  • Indian employment tax credit
  •  Three-year depreciation for racehorses

However, there is one that is surely aimed at buying votes: Mortgage debt relief.

Currently, taxpayers who have mortgage debt canceled or forgiven may be required to declare that amount as taxable income. So those who walked away from a mortgage or had their home sold in a short-sale could be on the hook to the IRS for a healthy chunk of money.

The Senate’s provision will allow up to $2 million of forgiven debt to be excluded from taxable income through the tax year 2016.

Sweet deal for many who were conned by a slick banker, made a lousy decision, or had a streak of bad luck.

But like all giveaways, someone pays the price. And as usual that one will fall on the shoulders of the rest of us taxpayers to the tune of $5.122 billion.

And if you haven’t received your giveaway yet, be patient. The season has just begun. 

Wednesday, July 22, 2015

In case you missed the announcement …

This is National my Social Security Week! It’s the government’s big push to get everyone to sign up for a free online account. With an online account, you’ll be able to change your address, start or change your direct deposit, get a replacement Medicare card, check your retirement benefits, and a host of other tasks.

To create your account,
click here

Monday, July 20, 2015

"It seems like retirement is a good place to be"

Devon Gorry, an assistant professor of economics at Utah State University, said this in an interview on TODAY. She also noted that retirees were happier on average and less depressed.
Gorry is co-author of a study published this month by the National Bureau of Economic Research. The results are based on data from the Health and Retirement Study, which contains in-depth interviews with 20,000 Americans over 50 on every aspect of their lives, including physical and mental health. Researchers follow up with them every two years until their deaths.
The report found that retirement quickly boosts life satisfaction, with meaningful improvements in health showing up a few years later and has long lasting benefits to individual well-being.

Click here to read the full scope of the study, Growing Older in America: The Health and Retirement Study.  

Friday, July 17, 2015

Before buying that dream vacation home …

Vacation-home salespeople dangle the lure of rental income in front of buyers like a fresh worm in front of a hungry bass. So it’s no surprise that in a survey
by the National Association of Realtors, 92 percent of vacation-home buyers said they planned to rent their property within 12 months, and 76 percent said the potential for rental income influenced their decision to make the purchase.
What’s more, many pre-retirement-age folks are taking the opportunity to purchase a high-end second home at a more affordable price now and rent it out until they retire.  
Please don’t buy a vacation home thinking it’s a great addition to your real estate rental portfolio. I have never seen one that was. Buy it because you want a nice place to spend some time. Any rental income should be considered extra cash to help offset your expenses.
If you think this is for you, check the HOA’s rules to ensure short-term rentals are allowed. And don’t forget that there may be expenses that you don’t have with your other rentals, such as hotel-occupancy taxes, maid service, and management-company fees. Also your insurance company may require special liability coverage renting out a luxury property.
Gonna go in with some friends on the deal? Maybe you’ve taken vacations with them, had a great time, and get along well. What could possible go wrong?
A lot … for instance who will use the home and when. Can relatives or friends of your friends spend time there? What about d├ęcor? Will one of you want contemporary while another wants rustic?
Most importantly, though, how well do you know your friends’ financial situation? How good is their credit? Could you count on them to come up with the bucks for maintenance and repairs?

Better have everything in writing — kind of like a prenup — so you don’t get stuck paying the bills. While you’re at it, include a provision on what happens if one of your friends wants to sell his or her share. You sure don’t want to end up with a stranger as a new partner. 

Thursday, July 16, 2015

Retiring overseas? Don’t let FATCA bite you

Baby boomers in record numbers are looking to spend their golden years outside of the U.S. Latin America has become a popular destination. Mexico, Nicaragua, Costa Rica, Belize, Panama, Columbia, and Ecuador top the list. And in the Central Valley region of Costa Rica where I frequently travel, gringos can be found in most all of the supermarkets and restaurants.

The IRS caught wind of this trend, too, and wanted to make it tougher for expats to hide money in offshore accounts. As a result, if you are a U.S. citizen living abroad you must comply with the Foreign Account Tax Compliance Act (FATCA).  

That means attaching Form 8938 to your Form 1040 when you file your income taxes.

Here is a breakdown of which foreign assets you must report:

You only have to file if your foreign assets exceed certain thresholds, which you can find here.

Failure to report foreign financial assets on Form 8938 may result in a penalty of $10,000 (and a penalty up to $50,000 for continued failure after IRS notification). Further, underpayments of tax attributable to non-disclosed foreign financial assets will be subject to an additional substantial understatement penalty of 40 percent.

With steep penalties like those, it’s worth taking a little time to make sure the IRS’ posse doesn’t put a damper on your retirement adventure.   

Tuesday, July 14, 2015

How much can you make as a landlord?

Thinking about becoming a landlord? I’m putting the finishing touches on my book — What You Must Know BEFORE Becoming a Greedy Landlord — that will give you the ins and outs of what it takes to be a successful landlord.

Meanwhile, you can check out RealtyTrac’s data on average rental returns for three-bedroom properties in 285 counties nationwide. So far this year the average return is about 9%; in 2011 it was 10%. Some markets are showing an average gross rental yield of over 17%.

In the county where I live, the average yield is 8%. The highest-yielding zip code showed 13.4%. The zip code with lowest return came in at 4.9%.

These numbers provide a very rough idea of the possibilities in your area. But they’re not good enough if you’re serious about becoming a successful landlord. In What You Must Know BEFORE Becoming a Greedy Landlord, I’ll show you how to more accurately determine potential yields so you can maximize your returns and minimize the chance of making a lousy investment.

Stay tuned, and I’ll let you know when
What You Must Know BEFORE Becoming a Greedy Landlord is available in print and Kindle formats. 

Friday, July 10, 2015

Study finds Baby Boomers starry-eyed

Nearly two-thirds of America's Baby Boomers plan to work for pay in retirement. However, a new study found that they are unrealistic about the compensation and work arrangements.

Click here for the details.

Tuesday, July 7, 2015

Couples worlds apart when it comes to money …

You might think you know your spouse’s money facts and attitudes. But when push comes to shove, you could find yourself a world apart. 

At least that’s according to a Fidelity Investments study. Click here for the study’s complete findings.

Thursday, July 2, 2015

Missing one payment can get you canceled!

Do you have long-term care insurance? Then don't you dare miss a single premium payment. Click here to read how one lady missed a payment and is now fighting to get reinstated, even though she is in good health.