Money in the Middle

Sandwich Generation Talking About Money Up, Down and Across Generations

Archive for July 2009

Is Being Mortgage Free in Retirement Right for You?

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Should you carry a mortgage into retirement?  Probably not.  That’s the recommendation from a new report from the Center for Retirement Research at Boston College called  “Should Your Carry a Mortgage Into Retirement.”   And it’s an issue many baby boomers and seniors are grappling with since housing was to finance their retirement.  it really requires a different look at how we think about housing .

 Pay off the mortgage before you retire was generally the rule of thumb for previous generations,  But housing price escalation and the promise ( false, we know now) that housing value would continue to rise kept many people buying up.

 Among households aged 60 to 69 in 2007, 41% had a mortgage.  And, 51% had suffieneict assets to repay their mortgage, according to the report.  But they chose not be “mortgage free.”

 So now that the housing market has changed what the right thing to do.  As with all things financial, it depends on your personal circumstances, but the report says that unless your after-tax return on risk-free assets such as certificates of deposits and Treasury bills exceeds the after-tax interest cost of the mortgage (a rare occurrence)– you’d generally be better off using the assets to pay down the mortgage.

 One of the points made in the paper is the risk retired households take by not paying off the mortgage and investing assets.  “If a household with a mortgage mismanages its investments, or over-estimates the rate at which it can decumulate those investments, it risk losing the house, it’s only remaining asset.”  A pretty dark scenario.

 Baby boomers in particular have a very complex relationship with housing values and financial planning.  Most have grown up with continually escalating home values and most recently have used those homes to underwrite their financial lifestyle.  There’s an interesting post on Boomers and Housing:  A Symbiotic Relationship Unravels that’s worth a read.

 So, if you are nearing retirement, or in retirement, and still holding a mortgage, but could pay it off, it’s worth examining whether continuing to pay that mortgage makes sense.  

 The days of a house serving as a piggybank are gone. It’s time for most of us to start thinking of our house as a home and figure out the best way to build it into our financial and retirement planning.


Written by Laura Rossman

July 31, 2009 at 3:36 pm

Baby boomers and aging parents shun “it’s time to hang up the keys” conversation

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Driving and seniors is a touchy topic – for everyone. boomers, their parents, other drivers, state legislators setting the rules for driving tests.  A new survey says most baby boomers say neither they nor anyone else has spoken to their parents about driving safety issues.

 Baby boomers say a conversation with their parents about driving would be uncomfortable (58%) or that it would make their parents angry (38%).  However, only 24% of seniors say they would feel uncomfortable and only 9% say they would be angered.  On the other hand, 92% of seniors say their adult children “have a right” to raise this issue with them.

 My guess is it all boils down to how that conversation is conducted because no matter what you say in response to a “what if” question feels very different when confronted with the issue on a personal basis.  No matter how old…or young…we are.

 So, a new site sponsored by Liberty Mutual provides tips on how to have that conversation.  And for seniors, some tips on how to identify your driving habits.  The site also provide a simulation game “Driver Seat Game” that allows players of alleges to experience first-hand the physical and cognitive limitation that an older driver might experience.  I didn’t find it very compelling, so try it before you suggest it to a senior driver.

 AAA launched a senior driving website too.  Check it out for tips as well.

 One of the big issues facing older drivers is very simply if they stop driving, how do they get where they need to go without having to rely (and burden) family and friends.  Liberty Mutual has teamed up with ITNAmerica, the first and only national, non-profit transportation network.  The good news is that the service is low cost and is now available in nine cities and regions.  For more information, see their website at

 The costs of driving escalate with age, too.  Insurance rates increase even though miles driven decreases.  Hopefully services like ITNAmerica will expand so that there are cost effective alternatives when you decide to hang up the keys.

Written by Laura Rossman

July 22, 2009 at 12:49 pm

Grandparents, grandchildren and money. What’s the right thing to do?

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Is it right for grandparent to financially help grandchildren, if that puts their own financial security at risk? 

 A new survey from the MetLife Mature Market Institute says grandparents are providing more financial support than ever to their grandchildren, yet one in five reports that the generosity has had a negative impact on their own finances.

 Over $370 billion changed hands between grandparents and grandchildren over the past five years—an average of $8,661.  Most of it was in cash (83%). Yet with the cash, came little advice –only a small portion said they talk to their grandchildren about the importance of hard work, saving for a rainy day and intelligent use of credit.  Hmmmm

 That’s an opportunity missed.  It’s a perfect time to impart a bit of financial wisdom about the importance of saving early and often and the dangers of debt.  “Grandparents are in a unique position to provide another valuable legacy, that of helping grandchildren to understand the value of a dollar and the importance of saving money,” said MetLife Mature Market Institute director Dr. Sandra Timmermann.

 Many of our college students and recent graduates followed the advice to borrow for college to get that high paying job.  Leaving school with huge amounts of debt, they now find themselves unable to find jobs that will pay the bills – and they are looking at a lifetime of payment.  So maybe a bit of perspective on a debt going forward would be helpful.

 And grandparents, if giving your grandchildren puts you at financial risk – how has that helped the family?  Are you now going to turn to your children for financial help?  That’s probably not what you want to do, but giving to your grandchildren may end up doing more harm than good for the entire family.

 These are highly charged, emotional issues.  And there is no right or wrong answer.  But if you find yourself in this position, think the financial impact all the way through.  If you can provide the financial support – great!.Enjoy it and consider, as many are, of giving smaller gifts throughout your lifetime as needed, rather than a larger legacy.  It’s a thrill to see how the kids use the help you’ve provided. And do take the time to talk with them about your financial values — the more they hear, the more perspective they get.

 But if that squeezes your finances even further than they already are then maybe it’s time to provide emotional and not financial support. And some wise sage about how to save for their future retirement.

Written by Laura Rossman

July 21, 2009 at 7:17 pm

Share Your Caregiving Insights and Stories

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A few nights ago I was sharing war stories of long-distance caregiving.  We both agree that the worst part of long-distance caregiving is the guilt – when you weren’t there you worried and felt terrible you weren’t doing more when you were there, you felt terrible you had been away and now couldn’t do more.  Any woman who has been a caregiver, revels in sharing with others – to learn and also, just to feel like you’re not alone.

 So, I’m intrigued by an invitation I received to join a Twittercast on caregiving July 13.  You should join in too if you are a caregiver.

Caregiving is a huge part of women’s lives, and so often it’s a job for which we usually don’t get or expect monetary compensation. How can caregiving be made easier to make our lives easier?

Over the next couple of weeks, Fem2.0 is partnering with the National Family Caregivers Association and the Christopher and Dana Reeve Foundation to start a fresh discussion about caregiving and women.

 What is caregiving in all its shapes and forms?
 What role does it play in women’s lives?
What can be done, or what changes need to happen, to facilitate caregiving?

They are  looking for insights, comments, and expertise. And,for personal stories to illustrate the human experience of caregiving and to build a sense of solidarity among all caregivers.

Want to join in?  Here’s how.      Participate in the Women and Caregiving Twittercast Monday night, July 13, 10 PM EST — hashtag #fem2. Find out how to join a Twittercast here:

Written by Laura Rossman

July 13, 2009 at 12:26 pm

The New Retirement is Working

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As the economy continues to putter along, and the employment numbers continue to drop, it looks like there will be more potential workers.  About 9.5 million retirees hope to re-enter the workforce at least part-time, according to new research from Charles Schwab.  Another 32% of workers say they’ll hold onto their job and delay retirement.  Looks like we’re redefining retirement and retirement planning.

 It’s tricky water for retirees who may already have put in place retirement funding such as Social Security, distributions from 401(k).  But, many times what has been turned on can be turned off.  Just make sure you know all the rules.  Here some things to consider if this is the situation you find yourself or family member in.

 *Consider stopping your social Security payments.  Watch the maximum earnings.  If you are going to exceed that and can afford to, you can pay back the Social Security payments you’re received.  And then restart Social Security all over again later.

 * If  you are approaching 70 ½ remember you’ll need to take required minimum distributions from any traditional IRAs.

* Review your insurance coverage and see if there is anyplace to trim ( a good tip for any age).  If you are over 65 and enrolled in Medicare, you can’t make changes in many plans until Nov. 15, but keep any eye out for premium notices this fall.  Higher rates might make it a good time to shop and compare. Retiree health care costs can take a big bite into your budget.

* Stay as debt free as possible.  Staying debt free gives you more options and is a less of a strain on your retirement income as you seek a job.

* Watch your risk factor in your investments.  It can be tempting to jump into the market in hopes of restocking the nest egg.  But if you are thinking of returning to work to get more money, it’s not the best time to put more risk into your savings.  Can you really afford to lose again?

* Get healthy/stay healthy. Poor health stops many from returning to work and forces others to retire sooner than they planned.  Exercise regularly, eat healthy, stay fit.  Not only does it help in the job search, but it helps keep your health care costs down.

Written by Laura Rossman

July 6, 2009 at 4:13 pm

Obesity Raises Health Care Costs for All of Us

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As a nation, we are getting fatter.  And that’s costing all of us lots of money in health care costs.  Those are the simple facts from a new study that shows not a single state decreased obesity rates in the past year.  And, 23 states saw increased rates of obesity.  The report, F as in Fat:  How Obesity Policies are Failing in America 2009 , should be a wake up call for all of us.

 “Our health care costs have grown along with our waist lines,” said Jeff Levi, Ph.D., executive director of the Trust for America’s Health.  “The obesity epidemic is a big contributor to the skyrocketing health care costs in the United States.”

 No generation is left out.  Baby boomers have a higher rate of obesity than previous generations the study found.  And that will lead to increase costs for Medicare and Medicaid as obesity leads to more severe chronic medical conditions.  Children age 10-17 are also seeing higher rates of obesity.  Habits formed in these years are harder to break with age. 

I remember years ago at Disney World being asked by a European tourist “where do all the fat people come from ?”  I guess now I could honestly answer, “everywhere.”

 We often don’t tie the impact of our health to our wealth.  But not only does it impact health care costs directly, but can impact the cost and availability of other types of insurance like life insurance and long-term care insurance.  Obesity can make you uninsurable.

 So if this is an issue with you or your family.  Think not only about the strain the weight is putting on your body, but also on your pocket book through higher health and insurance costs.

The report recommends a number of federal and state policies that can be promoted to improve healthfulness.  And some of them are things you can do yourself.  So resolve to take a few steps now to reduce obesity:

  • Provide healthy foods and beverages to students at school
  • Increase the availability of affordable health food at home
  • Increase physical activity – frequency and intensity
  • Limit screen time (computer and video games)
  • Take advantage of workplace wellness programs

 If this is an issue in your multigenerational family, make a pact among the generations to change your ways.  It’s much easier to make changes in habits when we hold ourselves responsible to reporting in to someone else on our progress.

Written by Laura Rossman

July 2, 2009 at 2:50 pm