Women and Aging 2011: Policy Implications for an Aging Population

The United States is bracing for a dramatic cultural and economic shift sparked by our rapidly-aging population. Women over 60 make up a rapidly growing percentage of those retired or entering retirement. As this trend continues, the need for a national dialogue on the future of America’s aging women is more urgent than ever before.

Volunteers of America is excited to announce its third-annual discussion on women and aging on May 10, 2011, at the National Press Club in Washington, DC. Guest panelists include Arianna Huffington of the Huffington Post; Debra Ness, President of the National Partnership for Women & Families; Lorraine Cortés-Vázquez, Executive Vice President of Multicultural Markets and Engagement for AARP; and Mike King, National President of Volunteers of America. The discussion will focus on public policy surrounding the needs of America’s women as they age into an uncertain economic future where access to health care, income and other vital resources is often elusive. Everyone who can make it is encouraged to attend the event and participate in the discussion.

To illustrate the importance of public policy for aging seniors, consider some important facts and figures:

· Women over 60 make up 80% of the caregivers for chronically ill or aging relatives.

· Women can expect to spend 18 years caring for a parent.

· Women have a longer life expectancy than men on average.

· 66% of baby boomers feel they have not adequately prepared financially for the future.

· Nearly half of women caregivers (48 percent) say the economic situation has made providing care more difficult.

· 39% of current non-caregivers are not confident about their ability to cover the costs of their possible future care responsibilities.

Responsible public policy is crucial to meet the needs of our nation’s women. Women like Jeannette can’t afford to wait and women like her need a certain future in our society. As a community, we must start this discussion today. Please join the conversation, spread awareness and get involved today.

12 Financial Facts About Women

Image via WikipediaFed Governor Elizabeth A. Duke recently gave an interesting speech called "Women and Money: Challenging the Myths". She was nominated to the Board of Governors of the Federal Reserve by President George W. Bush on May 15, 2007. The Board of Governors of the Federal Reserve consists of 7 members with Ben Bernanke as its chairman.

One of Elizabeth A. Duke's many interests is financial education. It seems the myth is that men make most of the financial decisions in our families. But this is wrong, women overall are in the drivers seat for family finances.

Even women are under the impression that leaving it to their spouse or significant other is the norm. Elizabeth A. Duke has been integral to setting up financial education for women and encouraging them to seek it.

The following is a list of facts that indicate that most women will someday need the knowledge coming from financial literacy.

• Women are quite likely to be solely responsible for financial decision making at some point in their lives. Indeed, as women age, the probability of living alone increases.
• According to the Social Security Administration, the average life expectancy for women is 81 years, compared to 73 years for men.
• Census information tells us that the average age of widowhood is 55 years old.
• The current divorce rate is estimated at between 36 and 50 percent.
• Statistics indicate that the earlier in life one marries, the higher the probability of divorce.
• Women are more likely than men to be single parents.
• Women have lower average wages, lower lifetime earnings, and are less likely to be covered by a pension plan.
• The Bureau of Labor Statistics reports that median earnings for all women are $638 a week, compared to $798 for men–approximately 80 percent of what men earn on average.
• The Department of Labor reported in 2008 that less than half of working women participated in a pension or retirement plan.
• Women are more likely to work in part-time jobs that don’t offer retirement plans.
• The typical woman spends 10 years out of the workforce for care giving, while the typical man spends just 2 years out of the workforce,
• Nearly two-thirds of U.S. women ages 40 to 79 have already dealt with a major financial “life crisis,” such as job loss, divorce, the death of a spouse, or serious illness.

These facts indicate the importance of financial education for women. After all, women are central to our national prosperity as workers, taxpayers, voters, consumers, and financial managers. Today, half the labor force is composed of women, compared to 38 percent in 1970. While the overall civilian unemployment rate is 9.7 percent, the unemployment rate for women 20 years and older is 8.0 percent. And nearly one-third of married women workers now out-earn their husbands.

Reader: What do you think?

Want a No Money Down Home Loan Then Try USDA Rural Loans

Image by Shahram Sharif via FlickrRural Housing Direct Loans are loans that are directly funded by the Government. These loans are available for low- and very low-income households to obtain homeownership. 

Applicants may obtain 100% financing to purchase an existing dwelling, purchase a site and construct a dwelling, or purchase newly constructed dwellings located in rural areas. Mortgage payments are based on the household's adjusted income. These loans are commonly referred to as Section 502 Direct Loans.

How do I know if I am eligible?

As you may assume your income must have to be low. But that's not true. In my county a person can make as much as $68,000 per year. Other areas of the country you can make as much as $97,000. Low income, really! Very low income is defined as below 50 percent of the area median income (AMI); low income is between 50 and 80 percent of AMI; moderate income is 80 to 100 percent of AMI. 

 Families must be without adequate housing, but be able to afford the mortgage payments, including taxes and insurance, which are typically within 22 to 26 percent of an applicant's income. However, payment subsidy is available to applicants to enhance repayment ability. Applicants must be unable to obtain credit elsewhere, yet have reasonable credit histories. .

What are the terms of the loan?

Loans are for up to 33 years (38 for those with incomes below 60 percent of AMI and who cannot afford 33-year terms). The term is 30 years for manufactured homes. The promissory note interest rate is set by HCFP based on the Government’s cost of money. However, that interest rate is modified by payment assistance subsidy.

How long does it take to be approved?

Rural Development officials should make a decision within 30 days of the Rural Development office's receipt of the application.

Does the USDA have guaranteed loans?

Yes. Section 502 loans are primarily used to help low-income individuals or households purchase homes in rural areas. Funds can be used to build, repair, renovate or relocate a home, or to purchase and prepare sites, including providing water and sewage facilities.

Eligibility: Applicants for loans may have an income of up to 115% of the median income for the area. Area income limits for this program are here. Families must be without adequate housing, but be able to afford the mortgage payments, including taxes and insurance. In addition, applicants must have reasonable credit histories.

Approved lenders under the Single Family Housing Guaranteed Loan program include:

• State housing agency;
• Lenders approved by:
• HUD for submission of applications for Federal Housing Mortgage Insurance or as an issuer of Ginnie Mae mortgage backed securities;
• the U.S. Veterans Administration as a qualified mortgagee;
• Fannie Mae for participation in family mortgage loans;
• Freddie Mac for participation in family mortgage loans;
• Any FCS (Farm Credit System) institution with direct lending authority;
• Any lender participating in other USDA Rural Development and/or Farm Service Agency guaranteed loan programs.

What are the Terms?

Loans are for 30 years. The promissory note interest rate is set by the lender.

There is no required down payment. The lender must also determine repayment feasibility, using ratios of repayment (gross) income to PITI and to total family debt.

What will they guarantee loans for?

 Under the Section 502 program, housing must be modest in size, design, and cost. Houses constructed, purchased, or rehabilitated must meet the voluntary national model building code adopted by the state and HCFP thermal and site standards. New Manufactured housing must be permanently installed and meet the HUD Manufactured Housing Construction and Safety Standards and HCFP thermal and site standards. Existing manufactured housing will not be guaranteed unless it is already financed with an HCFP direct or guaranteed loan or it is Real Estate Owned (REO) formerly secured by an HCFP direct or guaranteed loan.

It's amazing these kinds of loans still exist. No money down and no PMI. They are meant to serve the low income population, but are upper limits of $97,000 condidered low income? Rural is the the key word here but when you use their eligibility map most cities are eligible, but not your major cities. But some areas are in close proximity to major cities, check the sites map function to see.

To see if you and your property location is eligible go to USDA Income and Property Eligibility Site

Are You Suffering Gold And Silver Investment Envy Syndrome?

Image by hto2008 via FlickrI opened the morning paper to read the headline "Investors Stampede To Silver". What's going on? First it was the rush to gold, now it's silver. The price of silver is definitely going up. Are you participating in this modern day silver rush?

People worried about the U.S. governments soaring debt load, the Federal Reserve's easy money policy and the slumping dollar; investors have run to silver and gold as money refuges. I can't blame them they see the value of their dollar eroding and see this as the only way to keep ahead.

For those of you who have not jumped on the band wagon yet yet; do you think you should have? Are you getting that sick feeling in your stomach that you missed something big? What should you do?

The basics of investing are to buy low and sell high but do they apply in this situation. The people who are buying gold and silver are not buying as investors, they are buying as a hedge against inflation. A way to keep the value of their money. This frenzy is being fueled buy the small time players, the average guy who is afraid of the financial future ahead.

If you are already invested in gold and silver you must be pleased with your good decision. If your not invested do you feel you should be? I for one feel no need to buy gold and silver. If there is one thing that I have learned from years of investing is never buy at the top. Don't chase an investment. Every time I did buy high, I lost money. The volatility of these precious metals makes me to nervous. The general consensus is that the price of these metals still have room to appreciate, but for me I don't have the stomach for it.

I am perfectly happy investing in my index fund portfolio. I don't envy those who are investing in gold and silver. I judge all investments by the "sleep at night factor". If I have an investment and it doesn't worry me and I sleep well owning it, then it passes for me as a good investment. I believe gold and silver investing is too speculative and not an investment. Those who understand the nuances of gold and silver investing, more power to them. If you have a core holding of good investments and you want to play around with gold set aside no more than 5% of your total investment balance and buy some gold or silver.

My investing style is simple. I use stock index funds:

• 20% VTI: Vanguard Total Stock Market 
• 20% IVE: iShares S&P 500 Value Index 
• 20% IWD: iShares S&P 1000 Value Index 
• 15% IWN: iShares Russell 2000 Value Index 
• 15% IWS: iShares Russell Midcap Value Index 
• 10% DIA: DIAMONDS Trust Series 1

Also Bond Index Funds:

• 50% TIP: iShares Barclays TIPS Bond Fund 
• 50% SHY: iShares Barclays 1-3 Year Treasury Bond Fund 

With this group I get a broad spectrum of stocks across the entire market. The bonds are short term and TIPS which are inflation adjusted.

Investing should not be hard. It's made more complicated buy the equity industry. We are always being sold something. Step back from all the noise and check out index funds.

Here are some additional resources for a short course on investing:

Asset Allocation

The rule of 120 in Asset Allocation

Behavioral Biases

Why most investors don’t make money in the stock market–they do it wrong

Index Investing

Active vs. passive management
Issues with active management
Efficiency and indexing, even for small caps

Investments

TIPS, short term bonds, and inflation hedges
Fama and French’s value and small cap findings:

If your new to investing and want index funds and a simple way of implementing a saving and investing plan check out Betterment.com

The 30 Year Mortgage Is The Biggest Financial Mistake You Will Ever Make

What makes the standard 30 year mortgage the norm for purchasing a home? The answer is if we didn't have the 30 year mortgage most people would not be able to afford the home they are in. The 30 year mortgage allows them to qualify and have an affordable payment. Affordable being a relative term. 

How it normally goes is that you find your dream house, you need to apply for a mortgage of $200,000. The rates are at 5%. You look into the payment on a 15 year mortgage and it is $1581 a month. You could probably swing it, but your hesitant. Your mortgage broker says you can get a 30 year mortgage and the payment would be only $1073. Yes, a $500 savings. You could really use that $500 for a lot of other things. It's temping and you decide on the 30 year. Bam. You just made the biggest mistake of your life.

By taking the 30 year mortgage, over the 30 years, you will of paid $100,000 more to the bank in interest. For that $200,000 house you will have given the bank $386,511. If you had a 15 year mortgage, you will only have to give the bank $284,685 over a 15 year period. What could you do with that $100,000 if you could of kept it in your pocket. What things were you not able to do because you gave all that money away? I have an alternative.

The 30 Year Home and Retirement Plan.

Start with the same $200,000 house purchase. Apply for the 15 year mortgage. Make the payments and pay off your house in 15 years. It's doable. Fifteen years will fly by and you will have a paid off house. Now your living in a paid off house, right? Take the same house payment and invest it every month. Put it in a stock and bond mutual fund or ETF's. Do this monthly investment for 15 years. Your writing checks as if you were paying on a 30 year mortgage. But now you are paying yourself.

If your investments grow at a rate of only 8%, which is a conservative percentage, at the end of 15 years your investment balance will be $547,089. Next step quit your job and retire. Your house is paid off and you have more than a half million dollars in the bank. If you wish to continue working 5 more years, continue with the plan and continue to make the monthly investment. At the end of the 20th year your balance will be $931,246. Almost one million dollars, now please retire.

"The 30 Year Home and Retirement Plan" will take planning and discipline on your part. It's a long term plan that will take good budgeting and sharp planning. The heart of the plan is the 15 year mortgage. The hardest part will be your determination to have a 15 year mortgage. It's so tempting to get a 30 year mortgage. I can hear the reasons for having a 30 year. I have heard all the excuses. With a 30 you have a lower payment and more cash flow to do other things in life. You may claim you will pay of the 30 off in 15 years. You just want the leeway in case some trouble comes down the road. The best thing about a 15 year mortgage is that it always pays off in 15 years.

The ground rules for this plan to work is you need to purchase a home that is affordable to you. It must not be so pricey that the payment makes you house poor. What is an affordable payment? The rule of thumb is only purchase a home where the payment is 25% of your income. If you earn $4000 a month, then largest house payment you can afford is $1000.

It's your choice. Make payments for 30 years to the bank or make payments for your home and to your future.

Betterment Review: Making Investing Easy For The Rest Of Us.

Image via CrunchBaseBetterment is an easy way for the new investor to get started saving for retirement. All of us know that investing in equities is one of the best ways to prepare for retirement and future goals like college or purchasing a home. The problem is, it's hard to get started investing because you don't know what investments are the right ones. Your choices consist of stocks, bonds, mutual funds, and ETF's. Who knows what to pick? Even if you knew what to invest in, what percentages in each investment is appropriate.

Betterment solves all those problems. You pick how much you want to invest in stocks and how much you want to invest in Treasury bonds. If you don't know what to pick, Betterment helps you choose with recommendations depending on your goals and age. Signing up is quit and easy. You have a dashboard where you can set up automatic deposits. You link your Betterment account with your bank. Transferring money in or out of your account is available at any time with no fees involved.


Click Here to open an account at Betterment

What does Betterment invest my money in?

Your money is invested in a stock market portfolio made up of ETFs that reflect the broad US market, which allows you to invest in literally thousands of companies all at once. Currently the Stock Market basket is made up of the following of ETFs:

• 20% Vanguard Total Stock Market 
• 20% iShares S&P 500 Value Index 
• 20% iShares S&P 1000 Value Index 
• 15% iShares Russell 2000 Value Index 
• 15% iShares Russell Midcap Value Index 
• 10% DIAMONDS Trust Series 1 

Why these investments?

Individual stocks are very risky, but they deliver a higher overall return. Some stocks don't do so well. The trick is picking the winners. Most professional stock pickers don't always get it right. For the new investor, it's extremely difficult to be successful. Over the last 80 years the US stock market has returned about 9.4% per year on average. The key to long term stock investing is diversification. Betterment's portfolio represents the total US stock market, so it's like owning a little piece of every company in America. This spreads risk and reward over a broad number of companies.

Betterment also invests your money in Treasury bond ETFs that are lower-risk and steadier-earning than most other investments. They consist of:

• 50% iShares Barclays TIPS Bond Fund 
• 50% iShares Barclays 1-3 Year Treasury Bond Fund

With this simple combination of stocks and bonds your portfolio is ready to go. With these few investments Betterment gives you abroad diversification.

What's this going to cost me?

The fee structure is very simple. There is an annual 0.95 fee prorated over the four quarters of the year, 0.225% a quarter. There is no other charges. There are no transaction fees, no deposit fees, no withdrawal fees, no rebalance fees, no maintenance fees, and no other hidden fees.


Why do I like Betterment?

• They pick all the investments.
• The fee structure is dead simple.
• You can move your money in and out when ever you like. It's linked to you checking account.
• Your account is automatically rebalanced when it drifts by 5%.
• Betterment is a Registered Investment Advisor with the SEC and they’re SIPC insured.
• No minimum balance to sign up.

Here is a link to the free Betterment Demo Page.

Why trust my money to Betterment?

Betterment is an SEC Registered Investment Advisor, and Betterment Securities is a broker-dealer regulated by FINRA and the SEC. The securities in your account are protected up to $500,000 by SIPC. Betterment is simple and transparent. Your money is invested in well-established funds, chosen for their good management, efficiency, and long track records.

Who will benefit from Betterment?

If you are brand new to investing, without a clue of what to do, or where to get started, this is for you. They take care of it all. At Betterment you will finally have an easy way to get your feet wet in investing.

Click Here to open an account at Betterment