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Harikrishna Majumdar
WELFARE CONCERNS FOR ELDERLY IMMIGRANTS ADDRESSED
By Harikrishna Majmundar

FREQUENTLY ASKED QUESTIONS

Q: I am 70 years old. I came to the U.S. in June 1998. I am not good at English and cannot not pass the citizenship test. I badly need Medicaid. Is there any way to get it?

A: You may apply for Medicare. The normal period of application is between January 1 and March 31. You also can apply for the staus of Qualified Medicare Beneficiary program though you may apply for Medicare B at any time of the year. Some of the states do not accept Medicare application earlier than January month of the year. Please let me know if you do not get Medicare Part B now.

Q: Only last month, I got American citizenship. I am 62 years old. Can I get supplementary Security Income (SSI) at reduced rates?

A: SSI is admissible only after 65. You try for SSI on disability. If you are found disabled, you may get SSI if you satisfy the conditions of limited resources.

Q: I am an American citizen. I work in my friend's motel. He has given me a room free of charge. He pays me only $400 per month in cash. I get food outside in an Indian restaurant. Can I get some help from Social Security?

A: Yes, you are eligible to get SSI if you satisfy the condition of age 65 and over and limited resources.

Q: I have shifted my residence from my son's house to my old friend's house. it is a spacious house in an affluent locality near the downtown. Though the market rent is high, he has agreed to charge only $400 a month. Can I get the full SSI even though I do not pay the market rent? I have made separate arrangements for my food.

A: Yes. The rent that you pay to a person other than your near relative has to be approved by the SSI administration.

Q: My SSI/Medicaid was stopped when the SSI administration saw my old bank statements in review. I wish to appeal. I have received the denial only to day. Please advise me.

A: Please immediately appeal against the denial. If you appeal within 10 days, requesting them not to stop your SSI/Medicaid. Till the decision of your appeal, you have fair chances of success. Though you are supposed to get your funds from all sources, you need not go to the court for recovering your loan.

These questions and answers are courtesy of Harikrishna Majmundar of California, author of “Mapping the Maze: A Guide to Welfare for Elderly Immigrants.” He has advised several hundred welfare applicants. A copy of this 2003 published book is available for $10 from H.J. Majmundar, 450 Melville Ave., Palo Alto, Calif. 94301 or send an e-mail to haripremi@hotmail.com if you have a question.





Bijan Mohseni
RETIREMENT PLANNING: BABY BOOMERS ARE SHIFTING THEIR PRIORITIES
By BIJAN MOHSENI

Planning and Saving – Part I

Are you a member of the baby boom generation? If so, you’re probably focused on paying your children’s college tuition, while at the same time, saving enough money to fund your own retirement. You may even be concerned about the health and well-being of your parents or in-laws. And you may be balancing all of this while maintaining a full-time career. If this sounds like your personal profile, you’re not alone.

In 1993, AXA Financial conducted its first Nest Egg Study to discover what financial and economic concerns baby boomers expected to encounter. We wanted to learn what you were doing to prepare for your future; if you had mapped out a plan; were you achieving your goals.

Ten years later, in 2003, we turned our attention again to this important demographic group. We sought to determine how attitudes towards personal finances, setting priorities and achieving financial goals for yourself and your children have changed since 1993.

Retirement on the horizon

When asked in 2003 what was their single greatest economic concern, 43 percent (compared to 26 percent in 1993) responded that their greatest concern was having adequate retirement resources. This is mirrored in how they are setting their priorities. Compared to 10 years ago, more affluent baby boomers expect to assign a higher priority to providing a financial base for their retirement (55 percent in 2003 vs. 43 percent in 1993). Fewer respondents cited balancing savings and financial security as their single greatest financial concern (only 9 percent in 2003 vs. 17 percent in 1993). This perhaps indicates that this area of financial management is under control.

There are other indications that priorities are being rearranged. This generation, also known as the “sandwich generation,” now expects to assign a higher priority to providing for their parents or in-laws (19 percent in 2003 vs. only 9 percent in 1993), as paying for their children’s education recedes from being their No. 1 economic concern (21 percent in 2003 vs. 28 percent in 1993).

Having a plan helps

The AXA 2003 Nest Egg Study results indicate that having a financial plan improves one’s chances of attaining financial goals. Those with a plan are more likely to achieve their goal for setting funds aside (86 percent of those with a plan vs. 74 percent of those without a plan) and believe they will achieve their goal of leaving an estate to their heirs (80 percent of those with a plan vs. 68 percent of those without a plan).

Those without a financial plan are more likely to say they did not try to save any money in the past year or two (9 percent of those with a plan vs. 25 percent without a plan). Those who have made poor financial preparations have saved the least and report the lowest amount of assets.

Saving to secure that retirement

Baby boomers continue to recognize the importance of saving for their future. More than eight in 10 have attempted to set aside some form of savings over the past year or two (84 percent in 2003 vs. 81 percent in 1993). Results from the AXA 2003 Nest Egg Study indicate baby boomers are utilizing more sophisticated financial products that offer diversity, long-term growth potential and tax-deferred benefits.

Indeed, the use of IRAs increased dramatically with four in 10 respondents (40 percent) in 2003 calling it a primary investment compared to less than half as many who did so in 1993 (17 percent). Use of CDs or money market accounts as primary investment has decreased over the past 10 years (14 percent in 2003 vs. 23 percent in 1993).

In closing

In the past 10 years, as baby boomers have approached retirement age, they have begun to think more about their financial futures. There are indications that priorities are being rearranged. Retirement savings plans are being created and savings are being set aside to provide for a secure retirement. And those who plan and prepare well will, perhaps, have the secure retirement they seek.

Bijan Mohseni of the Business Planning Group of Tampa offers securities through AXA Advisors, LLC (member NASD, SIPC) and annuity and insurance products through an insurance brokerage affiliate, AXA Network, LLC and its subsidiaries. He can be reached at 4890 W. Kennedy Blvd., Suite 800, Tampa, FL 33609 or call (813) 282-9088.

PREVIOUS COLUMNS

Part 2

Part 1 of this article examined several misperceptions Americans have about preparing for retirement, issues to be considered during the “accumulation phase,” while they’re still working and saving. It concluded with the concept of longevity risk – the possibility that you will outlive your money. Now, let’s look at planning for the “distribution phase,” when you will depend on your nest egg for income.

How much money should you save?

Many financial professionals believe that people plan to replace at least 70 percent of pre-retirement income when they stop working. According to the National Retirement Planning Coalition’s (NRPC) “2002 Survey of Prospective Retirees,” people feel they need to replace, on average, only 60 percent of their pre-retirement income.

Furthermore, only 58 percent of NRPC’s respondents said they had actually attempted to calculate how much they would need to save. More revealing is the finding that among those who tried to do the calculation, 39 percent either could not actually do the calculation or still did not know the total needed.

The calculation is complex. It is not simply a matter of adding up projected expenses and multiplying it by a number of years. Factors to consider include market volatility, inflation and now, longevity. The effect of recent stock market volatility on retirement savings demonstrates the seriousness of this risk. Asset allocation strategies, a topic beyond the scope of this article, can help manage that risk.

Inflation – compounding in a bad way

What makes inflation so potent a threat is the fact that it compounds over time. Perhaps you decide to retire at 65 and estimate that you need $50,000 a year to support your lifestyle. At 3 percent inflation (the average over the last 20 years), by age 89 – and remember, there’s a good chance you’ll live that long – you would need $100,000 a year to maintain the same standard of living. At 6 percent inflation, you would need $100,000 per year by the time you turn 77. The longer you live, the more inflation will consume the value of your retirement dollars.

The Downside of Longevity

Simply living longer can add significant expenses. Medical advances may have reduced the incidence of fatal illnesses, but longer lives are often beset with chronic health problems requiring prescription drugs, medical treatments or periodic hospitalizations – sometimes all three. In its “Guide to Long-Term Care Insurance,” America’s Health Insurance Plans (AHIP) states that people now 65 years old face a 40 percent lifetime risk of entering a nursing home sometime during their lives. AHIP also notes that the likelihood of entering a home, and staying for longer periods of time, increases as people age.

In the field of health care, inflation and longevity combine in an especially insidious way. The costs of medical care, prescriptions and long-term care are rising faster than the general inflation rate. The longer you live, the more you could be affected.

Distribution choices

When discussing retirement, emphasis is usually placed on saving and accumulating assets. In fact, when people reach retirement, key decisions must be made about how to distribute funds accumulated in retirement accounts. Choices made at this time may determine whether those assets will provide lifelong income. A U.S. Government Accounting Office (GAO) study found that defined benefit plans and defined contribution plans offer markedly different distribution choices. Defined benefit plans tend to offer annuities that provide guaranteed income for life – no matter how long that life is (guarantees are based on the claims-paying ability of the issuer). Defined contribution plans, on the other hand, tend to offer lump sum distributions or the option to keep assets in the plan.

The GAO further reports that a growing number of plan participants who have a choice of benefit payouts take lump sums or leave their money in the plan rather than receive an annuity. On what basis do they make those decisions?

Plan sponsors usually provide ample information about investing, but surprisingly little information about taking distributions. Prospective retirees often are not given the assistance needed to assess the advantages and risks of different distribution options.

Develop a Retirement Resource Plan

When developing a retirement resource plan, you should consider a number of factors. First and foremost, do not underestimate your life expectancy. Other considerations include: your housing needs, health and long-term care insurance; provisions for dependent care, funding a child’s education, perhaps travel expenses.

It’s your future. Careful planning now can ensure that your money will last throughout your lifetime.

Bijan Mohseni of the Business Planning Group of Tampa offers securities through AXA Advisors, LLC (member NASD, SIPC) and annuity and insurance products through an insurance brokerage affiliate, AXA Network, LLC and its subsidiaries. He can be reached at 4890 W. Kennedy Blvd., Suite 800, Tampa, FL 33609 or call (813) 282-9088.

Part 1

Americans are living longer. Life expectancy for Baby Boomers (born between 1946 and 1965) is greater than for any previous generation. National Center for Health Statistics tables show that life expectancy increased by 30 years during the 20th century -- from 47 in 1900 to 77 at the millennium. And, figures compiled in the Society of Actuaries' 2000 Annuity Table estimate the life expectancy of men 65 years old to be another 15.9 years. At the same age, women can expect to live an additional 19.2 years.

What do these numbers mean to you? The good news is that your retirement may be years longer than you thought it would be. That also could be the bad news. It all depends on how well you have planned and saved for your retirement. Longevity is, increasingly, becoming a major factor in retirement planning.

Recent surveys have sought to determine whether Americans are aware of the implications of longer lives in relation to future sources of income. Questions concerning Social Security, pensions and individual savings -- referred to as a "three-legged stool" in the traditional paradigm of retirement income -- were included in the surveys. These surveys have found major misperceptions regarding these three important retirement issues. Let's look at a few of these misperceptions and their potential impact over longer lifespan.

Social Security

The Employment Benefit Research Institute (EBRI) 2003 Retirement Confidence Survey found that the average retirement age is 62. When EBRI asked respondents when they thought they could receive full Social Security Benefits, 51 percent believed that they could claim full benefits at a younger age than is actually the case. Most people working today won't be eligible for full benefits until age 67. Since Social Security accounts for close to 40 percent of the average retiree's income, this lack of awareness can adversely impact plans about when to retire, how much Social Security income to expect and how much more money will be needed in retirement income.

Pensions

Defined benefit plans are traditional employer-funded retirement plans that provide income for life. These plans are guaranteed (up to certain limits) by a federal agency. According to the Department of Labor, the number of these plans has dropped from 139,000 in 1979 to 56,000 in 1998. The number of plans and workers covered continues to decline.

Defined contribution plans (401(k) s), on the other hand, are mainly employee-funded. Between 1979 and 1998, the number of these plans increased from 331,000 to 674,000, according to the Department of Labor. Here, the individual employees are totally responsible for deciding how much to contribute, where to invest, and how the money will be distributed at and through retirement. They assume all the risks and bear all losses. According to Merrill Lunch’s 2003 Retirement Survey, 50 percent of Americans believe that these plans are guaranteed by law up to certain limits. They are not. And as we saw a few years ago, losses close to, or during, retirement can prove devastating.

Savings

In the National Retirement Planning Coalition's (NRPC) 2002 Survey of Prospective Retirees, 31 percent of the respondents reported less than $50,000 saved in defined contribution plans, with another 40 percent having between $50,000 and $199,999 in such plans. Personal savings excluding defined contribution plans and home equity is likewise modest, with 38 percent of the survey's respondents having less than $50,000 and another 36 percent reporting $50,000 to $199,999. Other recent surveys report similar figures.

How long would these nest eggs last? People often use 85 as an assumed life expectancy when calculating retirement needs. Remember the life expectancies mentioned earlier? Those actuarial figures are averages. So, half of those 65-year-old males will live past 80, while half of the 65-yearold females can expect to live past 85. According to the Census Bureau, there are presently more than 60,000 Americans over 100 years old. What if you are one of the estimated 600,000 centenarians in 2040 and you had used age 85 in planning? For 15 or more years, you might find yourself totally dependent solely on Social Security and perhaps a small pension income. This is what's known as longevity risk -- the real possibility that you might very well outlive your money.



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