FedUpUSA

Archive for July 18th, 2010

Many Americans are likely to run out of money in retirement. Almost half (47 percent) of early baby boomers currently ages 56 to 62 are at risk of outliving their retirement savings, according to a new Employee Benefit Research Institute study. Even among late boomers ages 46 to 55 and generation Xers ages 36 to 45, who still have plenty of time to save for retirement, 43 percent and 45 percent respectively are at risk of not having enough money to pay for basic retirement expenses.

[See 10 Best Affordable Mountain Towns for Retirement.]

Predictably, households with the lowest third of pre-retirement income are the most at risk of falling short in retirement (70 percent). But there’s also a significant possibility that middle income workers (42 percent) and even the highest earners (23 percent) will lack sufficient resources to fund their retirement.

Retirement income was estimated in the study by taking into account Social Security, 401(k) and IRA balances, traditional pension and annuity payments, and net home equity. A worker is considered to run short of money if the sum from those sources is not enough to pay for basic living expenses, health insurance premiums and out-of-pocket costs, and nursing home and home health care charges until the point they are picked up by Medicaid. Workers are assumed to retire at age 65 and immediately begin to withdraw money from their retirement accounts to pay for expenses that exceed income from Social Security and traditional pensions if they have one.

[See The 10 Most Common Retirement Benefits.]

Surprisingly, retirement preparedness has actually increased slightly since this analysis was last conducted in 2003. Well over half (59 percent) of early baby boomers were determined to be unprepared in 2003 compared to 47 percent this year. And 80 percent of the lowest income households were projected to outlive their savings in 2003, which dropped to 70 percent this year. “This is likely due to the impact of switching to automatic enrollment 401(k) plans while the worker is young enough to benefit from the new plan design for several years prior to retirement,” write EBRI research director Jack VanDerhei and senior research associate Craig Copeland.

[See 10 Things Retirees are Doing Without.]

The Pension Protection Act of 2006 made it easier for companies to automatically enroll workers in retirement accounts, which increased the number of people participating in 401(k) plans. Workers with access to a retirement plan at work are significantly less likely to be at risk of running out of money in retirement. For example, among generation Xers with a 401(k) plan, 20 percent have a high probability of outliving their savings. Workers the same age who who don’t have access to a retirement account at work have a 60 percent chance of not being able to retire comfortably.

USNews and World Report

SEATTLE — A Seattle bar owner is so angry at Chase Bank that he’s offering a free steak to anyone who can prove he or she has closed his or her account at Chase this week.

Stephen Mollmann, who owns Twilight Exit in the city’s Central Area, told KIRO 7 Eyewitness News he’s fed up with Chase because he said the bank has dragged its feet over his application to refinance his home mortgage. His offer was reported on CapitolHillSeattle.com.

“I can use the Twilight Exit as my soapbox and my weapon,” Mollmann said. “I can just load it full of steak.”

He said the bank is stalling “or hoping I just go away and keep paying my mortgage” because “I’m a cash cow to them.”

A Chase representative said the bank is trying to work through Mollmann’s application, but Mollmann said he’s hoping new banking regulations passed by Congress on Thursday will speed that along.

Tighter rules for big banks and financial institutions are among the key provisions of the new law, along with stricter regulations for real estate and mortgage transactions.

“It’s a win-win for consumers,” said Bruce McClary, with Clearpoint in Seattle — a nationwide, nonprofit consumer counseling service.

McClary said the Consumer Protection Agency that will be established under the new law will help rein in fraudulent banking practices of the past few years.

“I think the big benefit is where the teeth come in and the enforcement mechanism that’s put in place based on this legislation,” McClary said.

The new agency will promote consumer financial education. It will help protect seniors from lending abuse. It will require clear, understandable language on all financial documents.

And it will eventually offer a free, 800 number for consumers to call for help.

McClary said consumers should start seeing the new rules of the legislation later this summer, but that the 800 number may not come along until sometime next year. SEATTLE — A Seattle bar owner is so angry at Chase Bank that he’s offering a free steak to anyone who can prove he or she has closed his or her account at Chase this week.

Stephen Mollmann, who owns Twilight Exit in the city’s Central Area, told KIRO 7 Eyewitness News he’s fed up with Chase because he said the bank has dragged its feet over his application to refinance his home mortgage. His offer was reported on CapitolHillSeattle.com.

“I can use the Twilight Exit as my soapbox and my weapon,” Mollmann said. “I can just load it full of steak.”

He said the bank is stalling “or hoping I just go away and keep paying my mortgage” because “I’m a cash cow to them.”

A Chase representative said the bank is trying to work through Mollmann’s application, but Mollmann said he’s hoping new banking regulations passed by Congress on Thursday will speed that along.

Tighter rules for big banks and financial institutions are among the key provisions of the new law, along with stricter regulations for real estate and mortgage transactions.

“It’s a win-win for consumers,” said Bruce McClary, with Clearpoint in Seattle — a nationwide, nonprofit consumer counseling service.

McClary said the Consumer Protection Agency that will be established under the new law will help rein in fraudulent banking practices of the past few years.

“I think the big benefit is where the teeth come in and the enforcement mechanism that’s put in place based on this legislation,” McClary said.

The new agency will promote consumer financial education. It will help protect seniors from lending abuse. It will require clear, understandable language on all financial documents.

And it will eventually offer a free, 800 number for consumers to call for help.

McClary said consumers should start seeing the new rules of the legislation later this summer, but that the 800 number may not come along until sometime next year.

KIROTV – Seattle, WA

Note:  Sadly hoping that the financial regulation bill just passed will help him with this is futile.  It’s actually going to help the big banks avoid having to do further mortgage modifications.