A newly retired couple will need an estimated $240,000 to meet their health care expenses over the course of their lives. Fidelity Investments releases their estimate every year and the mutual fund giant reports that health care costs are increasing again, after dipping slightly last year. This year’s total is up about 4 percent from a year ago. Annual increases have averaged about 6 percent since Fidelity published its first estimate in 2002. How the Fidelity report was conducted The study is based on projections for a 65-year-old couple retiring this year with Medicare coverage. The estimate includes Medicare’s premiums, co-payments and deductibles, and out-of-pocket prescription costs. The study assumes the couple does not have any other insurance, and then incorporates a life expec...

European governments face debt problems that seem to threaten the survival of the euro. The future is uncertain, as it always is when major economic events are concerned. On this side of the lake, however, our main concern with this debt crisis is what the potential impacts could be on our own retirements and on the retirement income of those who have already retired. Some tactics in the fight again a collapse in the Euro One of the government responses to the crisis has been a series of austerity budgets. Government spending is being cut back so that deficits can be reduced and even balanced at some time in the future. The impact of these budget cuts will have serious impacts on the citizens of the countries involved. Some countries are even considering cutting back on retirement benefits...

If home prices deliver double-digit gains from their current depressed levels, it will take about five years until they get back to their 2006 highs. Sustained annual price gains of ten percent a year are unlikely in any market, making the best case of a full recovery in home prices by 2017 an unlikely event. With average gains of five percent a year, prices could reach new highs in about 2021 – nine years from now. Housing markets still sluggish The reality that it will take years to recover from losses is a hard lesson that investors have learned over the past 12 years. Stock market investors know that it takes a 100 percent gain to recover from a 50 percent loss. Broad stock market averages fell more than 50 percent in the 2008/2009 bear market, and although stocks have more than ...

Interest is the cost you pay on a loan. Mortgages have been available with fixed rates or adjustable rates for a number of years. Fixed rates carry the same interest rate for the life of the loan. The interest rate can change with an adjustable rate mortgage based on what happens in the financial markets. Fixed rates are often thought of as the more conservative option because they eliminate the risk of higher monthly payments if interest rates rise. Rates have been falling since about 1981, however, and many people believe that they will eventually reverse course and rise for several decades. Many of these people have believed that for at least ten years now and rates are still near record lows. Many home owners have benefitted from low payments over that time with adjustable rate mortg...

Reverse mortgages can be secured with one of two (or a combination of the two) faciltiies: With fixed interest rate that never change over the life of the loan, or With adjustable rates that could change as frequently as monthly Adjustable rate reverse mortgages usually charge a current interest rate that is based on LIBOR. The rate could be quoted as something like “LIBOR + 2%” or some other margin. The London Interbank Offer Rate is defined as the average interest rate that leading banks in London charge each other when making short term loans. Banks often borrow money from other banks so this rate is updated daily and it is widely available. Reasons we base our reverse mortgage interest rates on LIBOR Loans are actually made based upon LIBOR rates so the rates are available for se...

You may have saved for retirement and could be confident that you have enough income streams set up. Unfortunately income is only part of the retirement planning puzzle. What things cost is another factor as inflation chips away at what a dollar can buy. Even a small amount of inflation can have a big impact on your lifestyle. Over the past ten years, inflation has averaged about 2.4 percent a year. Over that same time, the purchasing power of a dollar has fallen by about the same amount, on average, every year. That means $1,000 ten years ago is only buying about $780 worth of goods and services today. Unless your income has gone up by more than 20 percent in the past ten years, you have fallen behind economically. The realities of inflation The future looks like it will be similar to the...

Government economic forecasters are a vital part of the budget process. Revenue from taxes increases with economic growth and declines during the inevitable slow downs.  In order to help policy makers plan for spending in the years ahead, economists make detailed estimates of economic growth. The Congressional Budget Office (CBO) is a nonpartisan group that reviews all proposed legislation to determine the costs associated with it. This office also analyzes budget forecasts to estimate the level of revenue, spending and the deficit. Housing is a major contributor to overall economic growth. Many well known investment experts believe that the economy will grow slowly as long as the housing market continues to struggle. The CBO seems to agree with this assessment and includes an estimate of...

In September 2012, the interest rate on the ten-year Treasury note fell below 1.7 percent, reaching an all-time low. Since then, the rate has drifted higher, although it is still very low by historical standards, especially when thinking about where interest rates were when Jimmy Carter or Ronald Reagan was president. You may remember when this interest rate was over 15 percent in 1981. Interest rates have now been falling for more than thirty years. Some financial historians report thirty years is about the average time for a long-term trend in interest rates to last. Looking at rates over the past two hundred years or more, they have found that rates fall for about twenty to forty years and then move higher for the next twenty to forty years. Low rates lower the cost of any loan, includi...

Mortgage denials are increasingly common, even for people who have a 20 percent down payment and a steady income. The Mortgage Bankers Association reports that lenders are turning down about 50 percent of the applications they see from home owners hoping to refinance their mortgage. Prospective home owners fare a little better – mortgage application from those hoping to buy a home have a slightly lower denial rate of about 30 percent. Denials are usually due to bad credit or low appraisals. The most common reason a loan application is being denied is because potential borrowers don’t have a good enough credit history to win approval. About 37 percent of refinancing requests are turned down for this reason and nearly half of hopeful home buyers will not have their loan approved beca...

BP was until recently thought of as a blue chip stock, valued by investors for safety and income. In 2009, BP paid out dividends that amounted to $10.5 billion. Many pensioners in England relied on the company to deliver a significant part of their retirement. BP’s dividend made up 14% of total shareholder payout of the largest stocks on the London Stock Exchange in 2009. Then came the massive and tragic oil spill in the Gulf of Mexico. After that, the company halted all dividend payments for nine months. Eventually, the company started making dividend payments again, but only at half the yield they were paying before the disaster. In the future, dividend payments are expected to stay below the levels seen in 2009. Other retirement income strategies are disasters, too This is just on...