We have a lot of helpful information on our site to help explain Long Term Care Insurance.  It's a confusing topic. However, I know a lot of people have to care for elderly parents right now and are probably starting to think about this type of  insurance for their retirement.  Here's some additional tips from MSNBC.

How much will it cost?
The American Association of Long Term Care Insurance publishes an average cost index that can offer some pointers. For example, the average cost for a 55-year-old purchasing long-term care insurance is $772-per-year. The average annual cost for a 65-year-old is $1,456. Buyers at these prices are cutting their costs with spousal discounts, good health, and 3-year limitations on their benefits

Here's a financial planning topic most people tend to put off-establishing a will.  We have a section on our web site that explains the importance of beneficiaries on retirement accounts, however I've read studies that indicate half of all Americans die without a will.  Clearly this is so important.  We'll be establishing a new section on the site this summer with some estate planning essentials.  Sandra Block of USAToday provides some will basics.

Everyone should have a will, but it's particularly important if:

•You have minor children. If you and your spouse die without a will, a court will decide who will raise your children. This can lead to confusion and infighting among surviving grandparents and other relatives, says Brian Liu, CEO of LegalZoom, a will-preparation Internet site.

By preparing a will, you can name a guardian for your children and a trustee to manage your estate on their behalf, Belcher says. You can designate the guardian to serve as trustee, he says. But if the person you want to raise your children isn't financially savvy, you might want to name someone else as the trustee

Delta Airlines wants to terminate the pension plan for its 6,000 pilots.  This seems to be the trend for airlines as United Airlines and US Airways both ended their pension in Chapter 11 filings.

Delta Air Lines Inc. will file a request Monday to terminate its pilots' pension plan, the company's chief executive said Friday. But the nation's third-largest carrier still holds out hope pension reform will save other employees' retirement plans.

Here's an update.

Asking how much capital a person needs to save to generate enough income for a comfortable life in the twilight years is a bit like asking how long is a piece of string. The answer really is "it depends." CNN gives us information.

We get a lot of questions and inquiries on the different types of IRA accounts.   I hope everyone will review our IRA section. 

Suze Orman give us some valuable information on the new tax laws and her view of the Roth IRA.

I think that the Roth IRA is one of the best investments, period. There's no initial tax deduction for the money you put into a Roth, but your investment grows tax-deferred, and assuming you follow simple rules, you will be able to withdraw all your money after you turn 59 1/2 without paying a penny in income tax.

And hey, if you need some money before you are 59 1/2 , your Roth can be a great emergency fund: You can always withdraw any amount that you invest regardless of your age or how long the money has been in there without taxes or penalties. It's just the earnings on your contributions that need to stay put to avoid a penalty and tax for early withdrawals.

Today, the PBGC protects the pensions of 44.1 million American workers and retirees in just 30,330 private single-employer and multiemployer defined benefit pension plans.

The trend is clear:

• The number of Fortune 100 companies offering pensions in 2005 has dropped to 37, down from nearly 90 in 1985. The number of companies offering only 401(k) plans rose from 10 to 36 in the same time period.

 

• Total underfunding among the 1,108 weakest defined benefit pension plans in the country reached $353.7 billion at the end of 2004, the PBGC announced last year.

   

• In 1980, 80 percent of American workers participated in defined benefit pensions plans. The PBGC reports that figure is now half that level.

The Center For Retirement Research (CRR) at Boston College released a new study.  CNN provides some of their findings. 

Many of us are not on track to replace our pre-retirement income.  Their study indicates a shortfall for 43% of Americans.  I'll add the CRR link for our readers who would like to read the study which will hopefully provide suggestions.

 There are several reasons so many working-age households are at risk, CRR notes.

• Life expectancy is on the rise.

• Defined-benefit pensions are on the decline.

• Social Security benefits will replace a smaller percentage of one's pre-retirement income as the age at which workers become eligible for full benefits rises from 65 to 67. By 2030, when the first Gen Xers turn 65, Social Security is projected to cover 33 percent of pre-retirement income after deducting payments for Medicare Part B premiums. That's down from a 40 percent replacement rate in 2002.

• 401(k) balances are not high. The median balance is $60,000 among households nearing retirement.

• Most workers don't save for retirement outside of their 401(k)s.

Marshall Loeb of CBS Marketwatch provides some tips.

Never fear. The immediate fixed annuity is a relatively simple tool to guarantee yourself regular income after you retire. You pay a lump sum to the insurer and in return you get a monthly check until you die. I say "relatively" simple because you still need to calculate an annuity's internal rate of return since each payment returns some of your principal to you.

Unfortunately the article doesn't explain the internal rate of return calculation.  That's my homework assignment this weekend.   I'll try to explain this financial calculation later this weekend or point out some resources on the web that help.

I've talked to a lot of people trying to pay off their mortgage before retirement.  It really could be the ultimate "peace of mind" and a great goal for a comfortable retirement.  This article from the Christian Science Monitor explains some of the math.

Here's how the math works in the case of a couple with a 25 percent federal tax rate and a 6 percent rate on their mortgage. Because mortgage interest is tax-deductible, their effective interest rate, with the tax-benefit figured in, is 4.5 percent. If stocks return about 7 percent a year - which some analysts see as a reasonable forecast - the couple stands to gain by investing rather than paying down the mortgage. But much of the financial benefit vanishes if the investment isn't tax-sheltered.

Jonathan Clements writes a great financial planning column each Wednesday in the Wall Street Journal.  We've mentioned several of his articles, especially those concerning income annuities.  He recently gave us some guidelines for postponing Social Security payments.  WSJ May 10 subscription required.

Delaying social Security strikes me as a great way to lock up a healthy stream of inflation-linked income.  But most retirees clearly disagree.  Among women applying for Social security in 2004, over 70% were under age 65, while almost 67% of men took benefits early.

Three reasons to take Social Security early:

• You can earn high returns investing the money,
• You're in poor health.
• You need the money to retire.

Three reasons to delay:

• You want to ensure a big survivor's benefit for your spouse.
• Your life expectancy is good.
• You want to trim taxes in your 70's and beyond.

Terry Savage gives us information on reverse mortgages.

To get a reverse mortgage you (and your spouse or co-owner) must be at least 62 years old. But it's best to wait to make the move until you're at least in your 70s because the amount of money you can receive each month -- or in a lump sum -- is determined by the value of your home, your age and the current level of interest rates. The older you are, the more money you'll receive.

Hewitt presents it's annual study of the saving and investing habits of more than 2.6 million employees eligible for 401(k) plans. Hewitt provides retirement and benefits for many large plans. 

Hewitt’s survey results highlight very real challenges for companies: In 2005, average 401(k) plan balances grew more than 10 percent to nearly $76,000, but median plan balances were much lower than the average at only $27,100. One-third (32.8 percent) of employees did not participate in their 401(k) plan, and contribution rates remained steady at approximately 8 percent. Of those employees who did participate, approximately one in five (22 percent) didn’t contribute enough to obtain the full company match, and just 30 percent contributed only enough to obtain the match. Younger, lower-tenured and lower-salaried workers were most likely to contribute in a nominal way.