Archive for December, 2011

Less than half of millionaire boomers say that leaving money for their kids is a priority for them, according to a new U. S. Trust study. Instead 64% of boomers say they plan to use their money to travel and more than one in three say they want to use it to “have fun.”

This is in contrast to boomers’ parents – the greatest generation. According to another study published by the Journal of Financial Planning, older retirees are seven times more likely than boomers to believe they owe their children an inheritance.

“But boomers are more concerned with leaving behind things like values and keepsakes,” says Katie Libbe, the vice president of consumer insights for Allianz Life, the company that conducted the survey.

Even boomers who do plan to leave an inheritance may do so with strings attached. Some parents have concerns about how their kids would invest and spend the money and only one-third of the parents in the U.S. Trust Study felt that their children will be able to handle an inheritance.

“Make room kids, we’ll be living with you when we’re old.”

Boomers are expected to live longer than any other generation. At the same time, it’s no secret they haven’t saved nearly enough for retirement. Overall, the average retirement savings shortfall for married baby boomers is about $30,000, according to the Employee Benefit Research Institute (EBRI).

Nearly half of early boomers, born between 1948 and 1954, and 44% of late boomers, born between 1955 and 1964, may not be able to afford even basic living expenses in retirement, according to EBRI. The result? Kids could be supporting mom and dad well into their eighties and nineties.

One of the biggest drains on boomer retirement savings will be health-care costs. Medicare pays for just over half of the health-care expenses that the typical elderly person will face, estimates EBRI. A couple that is 65 today will need nearly $300,000 to cover those costs.

If parents do move in, their kids should expect to spend an extra $6,000 and $10,000 annually on food, clothing and other basics according to Caring.com, a website devoted to helping caregivers. Add thousands more for big-ticket items like wheelchair ramps or home health-care aids. Expensive as that sounds, it’s still less than the $60,000 to $100,000 per year it would cost to move a parent into an Assisted Living Community.

Read the article here.

If you have not yet taken all of the 2011 Required Minimum Distribution’s (RMD’s) from your IRA and you contribute to charity, this year is a good time to consider a direct transfer to the charity from the IRA.

This option began in 2006 but will expire on Dec. 31st of this year. Using this  provision under the tax code allows taxpayers who are at least age 70 and a half to transfer as much as $100,000 per year from their IRA to an eligible charity.

If you don’t need your RMD and you want the contribute to charity, this may be a  good option to consider. You don’t get a charitable deduction for this transfer but unlike other amounts distributed from your IRA, you aren’t taxed on these and the full amount of the transfer counts as part of your 2011 RMD.

Here are the logistics: the account owner must direct the IRA custodian to make the distribution and it is important to note that not all charitable organizations “count”. For example, a contribution to a Donor Advised Fund (DAF) is not permitted. Also, distributions from employer sponsored plans like SIMPLE IRAs are not permitted.

These transfers are most beneficial to people who:

• use the standard deduction
• don’t need all of their RMD
• can’t deduct all their charitable contributions because of deduction limitations.

If you want to take advantage of this provision, you need to act quickly because the ability to make transfers like these expires at the end of this month.

You can read more at Boston.com here.

The 72 million American baby boomers, born between 1946 and 1964, are turning 65 at the rate of roughly 10,000 a day, and many are considering not just how to age  but  where.The old housing options for seniors just don’t appeal to the baby boom generation.

Wid Chapman, an architect and Jeffrey P. Rosenfeld, a gerontologist published a book recently with  33 examples of  homes to  bridge the gap between what’s available and what boomers want.

The book collects 33 residences for graying boomers, some with features you might not expect in such homes, like stairs. One chapter is called “Affordable but Never Boring.” The authors, who live in the New York area, were interviewed by a New York Times reporter.

Q: What do aging baby boomers want from housing that’s different from previous generations?

Mr. Rosenfeld: As we began the project and talked to friends, who are mostly boomers, they said again and again: “There’s no way I’m moving into a nursing home. You’re going to have to shoot me first.”

Mr. Chapman: Even if they go to a senior living center, it’s going to be a more forward-thinking kind of contemporary environment. Metropolis magazine published an article five years ago about “rock ’n’ roll” housing for seniors that had been done in Holland.

Mr. Chapman:  In Europe, the boomer generation is called the protest generation. There is even more irreverence and indignation about the idea that we’re going to go easily into some senior home modeled after some prior generation.

Mr. Rosenfeld: One of the defining characteristics of boomers is that they want to push the boundaries and rethink the rules.

Mr. Chapman: Gone is the idea of heading south at a particular age. The whole notion of retirement is changing. There is no set retirement age. Technology is allowing us to combine leisure and work in a remote setting, so there are a lot of changes that are facilitating a completely different mind-set.

Mr. Rosenfeld: Years ago, Jane Jacobs was asked where should older people live. She said everywhere. We’d like to think boomers are leading that charge.

Mr. Chapman: Also prevalent in this generation is the unconventional family unit. The notion of family and home is different. A boomer may have children of different ages as well as an ailing parent under the same roof. Connections to different fragments of family units are compelling factors for staying in one area and not heading to the Sun Belt.

Q: Along with grab bars (which are frequently mentioned in your book, though none is visible in the pictures), what makes a house suitable for aging?

Mr. Chapman: A lack of thresholds as you enter. Surfaces that don’t create glare from sunlight. Obviously, accessible bathrooms and showers that have no or minimal thresholds.

Mr. Rosenfeld: Also, décor that makes for easy navigation. A minimum of surfaces where you can slip. A minimum of places where you can bump into furniture. Most of these interiors can be beautiful, but we like to think of them as streamlined so you don’t trip or fall as you cross them.

Q: Does this mean that the modernist design revival that has been celebrating sparseness for so long might be with us a good deal longer?

Mr. Chapman: Some of the features Jeff just described, a lack of clutter and easy navigation, suggest a logic that dovetails with that aesthetic.

Mr. Rosenfeld: When you mentioned grab bars, it reminded me that most of the homes in the book speak to a Western medical aesthetic, but a few support non-Western ideas about healing. There’s one in particular, Bioscleave, in East Hampton, N.Y., that builds on the idea of reversible destiny: that the home can challenge and stimulate inhabitants to keep them youthful. Everything about that home is colorful. It’s angular. It’s full of intentional surprises and quirks.

Q: I’m glad you mentioned Bioscleave. I wanted to ask about the sloping, textured floors the architects designed to make walking more of an “adventure.” Isn’t that the kind of adventure that can lead to a broken hip?

Mr. Rosenfeld: The house is occupied by a person who lives there part time. A mature person. I haven’t dared ask her age, but I can say that neither of her hips is broken.

Q: Bioscleave may be an extreme example of a challenging environment for the elderly, but it’s not the only one. I saw stairs in many of the projects in your book.

Mr. Rosenfeld: One of those homes was for a man who was not just a boomer but the director of the geriatric department at a medical school. He was creating a home for his own retirement, and he insisted on stairs. He said to the architect, “I know what I’m supposed to be doing, but I’m going to need exercise.”

Mr. Chapman: In projects you’re looking at with stairs, often there’s a bedroom suite downstairs. It could be for a caregiver, but it could also be a place where the owner can move if necessary.

Where do you two plan to age?

Mr. Chapman: I’m 51, and I don’t see myself retiring. I’m not sure I imagine leaving New York. There may be plenty of denial left in me, but I don’t see any kind of senior living facility. I certainly want to be engaged in a multigenerational place. Being close to my children will continue to be important.

Mr. Rosenfeld: I am the classic textbook boomer: I was born in 1946. My wife and I live in a Tudor house built in 1936, and we are beginning to think about how we’re going to deal with our inevitable aging. We’re going to try to somehow retrofit the house, because we love our neighborhood. We love our lifestyle. We want to be near our kids. We also want to be near our gym.

Click here to view the article from the New York Times