No matter where you turn it seems health insurance rates are going up.  

Medicare Advantage plans are no exception. Enrollees in Medicare Advantage Prescription Drug Plans will pay an average of $39.61 per month in 2010, an increase of 14.2% from 2009.   

Even harder hit are people who remained in the same plan between 2009 and 2010.  They saw their premiums increase an average of 22%.  The data analysis comes from Avalere Health, a healthcare consulting company. 

If you have a Medicare Advantage plan you still may be able to switch to another Medicare Advantage Plan (as long as they both have drug coverage).  The Medicare open enrollment period runs through March 31.  

So if you saw a big increase in your premiums and didn’t shop around, you may still be able to switch plans if there is one that is more affordable and meets your health care needs, including physicians. Remember, Medicare Advantage plans usually require you to use a network of doctors and hospitals. 

Experts say the premium increases are a result of cuts of 3 to 5 percent that the plans took in payment from the government.  While it appears those cuts may not be as high for the 2011 plans, Medicare Advantage rates, like most health insurance rates, are expected to continue to rise. 

If you decide to shop and compare Medicare Advantage plans remember to look beyond the premium, recommends Longevity Alliance.  Look at the amount of any co-payments you would pay at the time of any services.  Also look at the extra benefits and see if they are of value to you.  If not, another plan may be a better value and match for your needs. But it is to your advantage to get insurance quotes from at least two different insurance companies and compare rates and benefits. 

Medicare Advantage plans have special sign up periods.  After this open enrollment period, which ends March 31, the next enrollment period is Nov. 15 – Dec. 31 to sign up for 2011 plans.  You can find out more about Medicare Advantage plans and other type of Medicare plans at http://www.Medicare.gov.

If you have a credit card, you’ve received a notice outlining changes in some features of rules for using your credit card.  And, for the most part, it’s good news.

 So open the email or envelope and read your new credit card agreement. (It’s not so bad as the companies have tried to use more consumer friendly language).

 We’ve highlighted some of the changes below as well as provided links to sites you might find helpful. 

Whether you are working or retired, knowing the rules can help you manage your money better.

And, even with the changes, there are three basic rules that still apply to wise use of credit cards:  

1.  Pay on time.  Whether you pay in full (preferable) or you pay the balance over time, a late payment or two gives the credit card company the opportunity to change the rules to its favor, not yours.  Miss two payments – 60 days late paying the minimum – and the rate goes up. Know the rules of payment for your card and put reminders wherever you need to –sticky notes, Outlook reminders, mobile phone reminders – paying on time saves you money. 

2. Pay more than the minimum – pay in full, if you can.  Get into the habit of paying your credit card in full each month.  New disclosures on your statement show you how long it takes to pay off your credit card balance if you are just paying the minimum – and how much it ultimately costs you.  It’s good perspective next time you think about charging a deal that’s too good to pass up.  The reality is that with interest charges the “great deal” turns into “more than full price.” 

3. Nearing retirement – keep debt to a minimum.  As you approach retirement, keeping debt to a minimum gives your finances (and you) more “room to breathe” each month. Using the credit card for convenience and paying it off each month – or for emergencies with a payback plan in mind – helps you keep you debt in line with your retirement income. 

Here are highlights of the new credit card rules that go into effect Feb. 22: 

* Raising rates on existing balances is now prohibited, unless you don’t pay on time.  That doesn’t help you if you are already paying a high rate of interest.  But going forward, you’ll know the rules and can make accurate calculations about what it will cost to pay off your debt. 

* Credit cards can’t charge a fee for over-limit charges unless you tell them it is okay to do so (opt-in).  Previously, people were hit with over-limit fees that could amount to hundreds of dollars as they used the card unknowingly exceeding their credit limit.  If you don’t let the card company charge the fee, remember the charge will be declined.  A good reason to be well below your credit limit in the first place. 

* Your payment (anything above the minimum) gets paid against the highest interest rate balances first. Before, the banks would generally apply it to the lower rate balances.  So this does automatically what you always want to do – pay off your highest rate balances first. 

* You’ll find some new terms and disclosures on your statement.  If you carry a balance, you’ll now know how long –and how much you’ll pay – to pay off that balance if you only pay the minimum.  In the example provided by the Federal Reserve Board if you have a $3,000 balance, a 14.4% interest rate and pay the $90 minimum amount due it will take you 11 years to pay off the debt and it will cost you $4745.  Pay $103 per month and it takes 3 years to pay off at a total of $3712. 

* There will be fewer credit card offers on college campuses as the new rules require proof of income to issue a card to anyone under 21 years old.  If you want your college student to have a card, it means you’ll need to co-sign.  So make sure you both agree on the rules for use of the card, since card use now becomes part of your credit history. 

Resources: 

Here’s a helpful summary of the new rules for credit card companies from the Federal Reserve Board   

5 Tips for the New Credit Card Era from CNBC    

Credit card reform and your wallet – The Washington Post  

What to Expect from the New Credit Card Rulesfrom SmartMoney

Do you ever feel like you just can’t think of one more way to cut back on spending?  You know even small savings can add up over time, but where do you look now? 

New research from Harris Interactive gives you some idea of what others of your age – and other generations – are doing to make their money last longer. 

Here’s where baby boomers and seniors are making changes in spending:

 * Purchasing more generic brands

 * Going to the hairdresser less

 * Cancelling one or more magazine subscriptions

 * Cutting down on dry cleaning

 * Brown bagging rather than purchasing lunch

The “great recession” has made some things we once thought we couldn’t live without dispensable. The one thing none of the generations seem to be willing to cut back on is cell phone service.

The researchers say these may seem like small savings, but they are the things many financial planners say people need to do more of to save money. And, it seems in these times of greater economic hardship, Americans are finally heeding that advice.

The big question is whether these cuts are temporary or will they become lifestyle changes?  What do you think?

Results of The Harris Poll of 2,576 adults surveyed online between January 18 and 25, 2010 by Harris Interactive

The Social Security Administration expanded its list of diseases that qualify for expedited processing including early-onset Alzheimer’s.  The addition of 38 new conditions means that “tens of thousands of Americans with devastating disabilities will now get approved for benefits in a matter of days rather than months and years,” according to Commissioner of Social Security Michael J. Astrue.

Among those who will be eligible for speedy action on their applications – known as Compassionate Allowance– are people diagnosed with early-onset Alzheimer’s and mixed dementia. About 200,000 people in the U.S. are thought to have early-onset Alzheimer’s, according to the Alzheimer’s Association. 

Compassionate allowance is a way of quickly identifying diseases and other medical conditions that clearly qualify for Social Security and Supplemental Security Income disability benefits.  It allows the agency to electronically target and make speedy decisions for the most obviously disabled individuals. 

“The diagnosis of Alzheimer’s indicates significant cognitive impairment that interferes with daily living activities, including the ability to work,” said Harry Johns, President and CEO of the Alzheimer’s Association.  “Now, individuals who are dealing with the enormous challenges of Alzheimer’s won’t also have to endure the financial and emotional toll of a long disability decision process.” 

It is estimated that about five million* Americans suffer from Alzheimer’s disease, and about 360,000 people are newly diagnosed every year. Alzheimer’s affects about 10 percent of people ages 65 and up, and the prevalence doubles roughly every 10 years after age 65. Half of the population ages 85 and up may have Alzheimer’s. 

The new Social Security process begins March 1. Here is a checklist from the Alzheimer’s Association on how to apply for Social Security disability and Supplemental Security Income Benefits for early-onset Alzheimer’s. 

Go to this Social Security website for more information on Compassionate Allowances and a list of the 38 new diseases eligible for the program.  The Alzheimer’s Association has information here that is a bit easier to understand.  

A reminder, too, for those with long-term care insurance with a diagnosis that impacts two or more activities of daily living — contact your long-term care insurance company as soon as  possible after the diagnosis.  This will provide you with clear information about your policy coverage and help you plan for future care.  If you are qualified, it may also trigger the creation of a care plan and beginning of the count on elimination days (your deductible). 

If you have a history of Alzheimer’s in your family, you might want to consider purchasing a long-term care insurance in your 40s or 50s to cover some of the potential costs of care – whether at home or in a long-term care facility.compassion

Do you know someone over the age of 60 who is engaged in an encore career?  Encore careers combine personal meaning and social impact with continued work in the second half of life.

Ann Higdon isn’t your average baby boomer.  Inspired by her own difficult childhood, she’s now running a nonprofit that helps disadvantaged teens in Dayton, Ohio, turn their lives around. She’s also one of 10 people to win the 2009 Purpose Prize for changing lives – starting with her own.

The 2010 Purpose Prize is accepting nominations, including self-nominations, at Encore Careers by March 5, 2010.

The eligibility criteria:

• Be at least 60 years old (by the deadline of March 5, 2010).
• Be a legal resident of the U.S. (including U.S. territories).
• Be someone who has initiated important innovations (in a new or ongoing organization) in an encore career.
• Be currently working in a leadership capacity in an organization or institution (public, private, nonprofit, or for-profit) to address a major social problem in the United States or abroad.
• Have initiated important innovations (in a new or ongoing organization), and have demonstrated recent creativity and leadership with the promise of more to come.

Ann’s organization, Improved Solutions for Urban Systems (ISUS), helps high school dropouts get their degrees and build careers.  Her students not only get a high school education, they also learn job skills in health care, computer operation and construction. Many students take their training and use it to improve their community, such as building homes in run-down neighborhoods.

The Purpose Prize is looking for 10 people over age 60 to win up to $100,000 each to support their work solving some of our most pressing social issues – from health care to the environment, poverty to education.

 Find out more about criteria and eligibility at Encore Careers.

There is a rash of recent articles about the financial state of the Social Security system and the impending retirement of baby boomer.  While there are numerous immediate financial concerns for retirees, the impending doom of the Social Security system is not one of them. 

Here’s an article from USA Today warning of impending doom. Here’s an article from CNBC that lays out many of the issues facing Social Security.  It’s worth a read to provide some perspective.

Social Security expert Nancy Altman reminded a group of aging experts yesterday that the 2009 Social Security Trustees reports says Social Security will have sufficient income to pay benefits in full until 2037, and at a 78% level after that.  Obviously, Congress will have to step in before that to put a plan in place for Social Security.  She’s chair of the board of directors of the Pension Rights Center.

What is alarming though are the statistics of how many people rely so heavily on Social Security to cover their expenses once they retire.  Altman says 2 in 3 retirees get half or more of their income from Social Security and 1 in 5 retirees get all their income from Social Security.

So, if you are still planning your retirement, and considering how long you will continue working and the sources of income you will have to draw on in retirement to pay your expenses. here are two things to think about in deciding when to begin Social Security payments:

1.  Rather than thinking of Social Security eligibility as a single age, think of it as bands of retirement ages.  The longer you wait to begin Social Security payments, the more money you will receive on a monthly basis. You can begin at 62 and take a reduced benefit or you can wait until your full retirement age (linked to when you were born) to receive full benefits or wait until say 70 and receive an even higher monthly payment.  

Here’s how it works. If your full retirement age is 67, the reduction for starting your benefits at

• 62 is about 30 percent;
• age 63 is about 25 percent;
• age 64 is about 20 percent;
• age 65 is about 13 and 1/3 percent; and
• age 66 is about 6 and 2/3 percent.  

Because so many of us rely so heavily on those payments in our retirement years, this is a really important decision in determining how much money you receive monthly to cover your expenses in retirement.  Here’s a link to the Social Security Retirement Estimator.   

2. The age at which Medicare begins and Social Security begins are no longer linked.  Medicare is age based – 65 (unless you are disabled) and based upon having worked 40 quarters (10 years of payroll tax payments). Social Security is generally 66 or 67, depending on the year you were born.

If you are not already getting benefits when you turn 65, you should call 1-800-772-1213 three months prior to your birthday so they can help you decide if you should sign up for Medicare. You should do this even if you plan to continue working or do not think you have enough work credit under Social Security, because Medicare enrollment period rules are very strict.

 If you would like to file for Medicare only, you can apply by calling 1-800-772-1213.

Making the right decision about when to begin receiving Social Security and signing up correctly for Medicare can make a big financial difference in your retirement income.

For example, if you do not enroll in Medicare Part B when you are first eligible (and not covered by an employer health plan) you’ll have to wait until the next General Enrollment Period, which is January 1 through March 31 of each year. You may then have to pay a higher Medicare Part B premium because you could have had Medicare Part B and did not take it.

So as you plan your retirement, make sure you know the rules around Social Security and Medicare.

Resources

 Social Security Administration Website         

  National Academy of Social Insurance – When to Take Social Secuity 

Longevity Alliance – Managing Risk in Retirement

Here are three frequent responses when the issue of long-term care planning comes up:

 1. It won’t happen to me (Get me that crystal ball and I’ll use it to pick stocks too!)

 2. I don’t want to think about it (Who does? But statistically it probably will happen)

 3. My children will take care of me. (Do they know?)

So, here comes some new information that may alter your thinking about excuse #3:

Employees in the U.S. who are caring for an older relative are more likely to report health problems like depression, diabetes, hypertension or heart disease.

That costs employers an estimated $13.4 billion per year, according to a MetLife Study of Working Caregivers and Employer Health Care Costs.  And some of those health care costs are borne directly by the employee, as well.

So, to put it bluntly, taking care of you may cost your children their good health.

Here are some additional findings:

* Employees providing eldercare were more likely to report fair or poor health in general.

 *Younger caregivers (18-39 years old) demonstrated significantly higher rates of cholesterol, hypertension, COPD, depression, kidney disease, and heart disease compared to non-caregivers of the same age.

* Caregivers tend to skip their own preventive health screenings such as mammograms.

* Caregivers are more likely to miss days of work and are often forced to switch from full-time to part-time to care for their elder reducing their income and losing health care coverage.

 * Eldercare may be closely associated with high-risk behaviors like smoking and alcohol consumption.

While eldercare is usually considered an older worker (50+) issue, this survey shows the heaviest health toll is taken by those ages 18-39.  This report doesn’t go into the financial toll it can take as well on the caregiver who often delays their own retirement saving while they care for their elder.

The report calls on employers for better coordination of wellness and eldercare programs, more work time flexibility and stress reduction seminars, among other benefits.  “They need solutions so they can be healthier and perform better,” said Gail Hunt of the National Alliance for Caregivers.

But, this report is also a wake-up call to anyone thinking that having their adult children care for them as they age is a long-term care solution with no consequences.

It’s good reason to put a long-term care plan in place for when you need it and to figure out now how to finance your long-term care, whether through your own assets or long-term care insurance or some combination.  

That way your children can lend a hand and emotional support as needed and preserve their good health.

In the coming months, you’ll be hearing more about annuities as a solution to outliving your savings, especially immediate annuities.

The White House said last week it plans to promote “the availability of annuities and other forms of guaranteed lifetime income, which transform savings into guaranteed future income, reducing the risks that retirees will outlive their savings or that their retirees’ living standards will be eroded by investment losses or inflation.”

Income for Life

For retirees and near retirees, the annuity type that is getting a lot of attention right now is the immediate fixed annuity ,also called life annuity or single premium immediate annuity (SPIA).

The concept of an immediate annuity is simple: you give an insurance company a lump sum of money; it gives you a contract guaranteeing how and when you receive payments that include interest on your money.  The amount of money you receive depends on the contract terms including your age, gender, ownership and payment terms. 

It is this contracted guarantee that makes an immediate annuity an attractive way to manage risk of outliving your money.

 A study from Americans for a Secure Retirement conducted by Ernst & Young, LLP, warns that “…many American will be forced to reduce their standard of living, some by as much as 51 percent, to avoid outliving their financial assets and that households with a guaranteed source of retirement income outside of Social Security, such as a lifetime annuity, showed greatest chance of financial success.”

5 questions about annuities

The good news is that immediate annuities are pretty straightforward.  Here are a few questions you’ll want to answer if you consider an annuity as part of your retirement portfolio:

 1. How much of your retirement savings will you use to purchase an immediate annuity?  Financial experts advise that this type of investment is best for only part of your savings leaving you adequate money for unexpected expenses and risks that are not insured.

 2. Do the annuity payments just apply to your life, or to you and your spouse (joint and survivor)?

 3. Does your annuity payment include inflation protection? 

 4. Is the insurance company financially strong and one that you have confidence will be there to pay throughout your lifetime?

 5.  Have you compared immediate annuity quotes from several companies to make sure you are getting the right annuity for your needs? 

An immediate annuity is like creating your own pension plan.  Like any financial product, it may or may not be the right solution for your retirement needs.  And purchasing an immediate annuity is a permanent decision, so consider your options carefully.

An immediate annuity does have the benefits: it increases the probability that your savings will last a lifetime; it makes budgeting easier by giving you predictable payments; and it provides peace of mind knowing that these funds are not subject to market fluctuates and are guaranteed.