shAARP Talk: Observations from AARP

We're on a guest blogger roll here folks! Yesterday Congressman Neal, from the fine state of Massachusetts, held a hearing about saving for retirement at work. Now, if you didn't know already, 75 million people in the United States have no way of saving for their retirement! Congressman Neal is working to change that. Read on below to see his plan.

We have all heard of the three-legged “retirement” stool meant to prop us up in our golden years -- that is, Social Security, pensions, and savings. Without one leg, that stool will be hard to sit on. Unfortunately, recent statistics show that our personal savings rate continues to decline. In fact, our personal savings rate has declined so much over the last few decades that, since 2005, it has been a paltry one-half of one percent.

Individual Retirement Accounts, or IRAs, have existed for decades, with the hopes that those without employer plans would save on their own, and yet we are still faced with underutilization by the intended targets. The Government Accountability Office (GAO) recently projected that 37% of all workers will retire with zero plan savings, and that of young and low-income workers, 63% will have no plan savings at retirement. Clearly, Congress must do more to foster personal savings.

We must begin to think more creatively and use innovation to capture this group of workers who are not saving. One of these vehicles is the Auto-IRA (HR 2167), a bipartisan bill that I have sponsored along with my colleague Rep. Phil English (R-PA). With 75 million workers with no access to a workplace retirement plan, and only 10% of these workers saving on their own, clearly the current incentives are not working.

Our bill creates automatic payroll deposit Individual Retirement Accounts for workers who do not have access to employer-provided qualified pension plans. Our bill would require employers to automatically enroll employees in an “auto IRA” unless the employee opts out. These are ‘set it and forget it’ payroll deposit accounts. The non-partisan Retirement Security Project has estimated that this proposal could raise net national savings by nearly eight billion dollars annually.

At a recent hearing before a House Ways and Means Subcommittee, Dr. Leo Estrada, a member of the Board of Directors of AARP, testified in support of this bill. He said, “Studies have shown that automatic enrollment programs provide a way of improving retirement savings by using the so-called ‘power of inertia’ to change non-savers into savers.” I am pleased to be joined by the more than 39 million members of AARP in supporting this innovative savings vehicle.

As George Foreman observed, “The question isn't at what age I want to retire, it’s at what income.” If only we all had this same observation in our 20’s, we wouldn’t be fighting so hard to save in our 50’s.

Dying to find some old Sinatra flicks? Wanna know who's on first? Well there haven't been a lot of options for folks looking to watch great older movies, but that is starting to change. Slowly but surely an effort by both major and independent studios to release older films onto DVD is taking place. This is a great chance to take home some vintage movies, many of which never even made it to VHS. Check out Legend Films for a full list of their DVDs.

This has been quite a week for talking about money - especially for AARP. Our folks have been at conferences, talking to Congress, and popping up in the media even!

We thought we'd invite someone to guest blog with us here at Shaarp Session about your money and offer some advice. Ric Edelman has been ranked among the 100 best financial advisors in America five times and he's here to offer some advice about what do with your 401(k) when it's time to move on to a new job. Check it out below - and send us your questions about personal finance. We'll make sure Ric gets to see them.

If you’re leaving an employer, what should you do with the money in your retirement plan?

Regardless of why you’re leaving — you’re retiring, you found a new job, you quit, you were fired, whatever — we routinely recommend that you move the money to an IRA account. This is true regardless of what kind of retirement plan you have — 401(k), 403(b), 457, TSP, etc.

Moving the money from a former employer’s plan to an IRA has several advantages: You gain the ability to select from a potentially unlimited number of investment options, and you enjoy complete control over your account, with no interference from a Human Resources or plan administrator.

When people move money from an employer plan to an IRA, they frequently refer to the transaction as a “rollover.” But that term is rather inaccurate. A true rollover occurs only when your employer sends you a check for the account balance that’s made payable to you. In this case, you’d deposit the check and write a new one, which you’d forward to your IRA account. Rollovers must be completed (meaning the money must be deposited into the IRA) within 60 days; otherwise, you’ll owe taxes (plus a 10% IRS penalty if you are under age 59½ at the time of the rollover). To make matters worse, employers typically withhold 20% of the funds when sending you that check. It’s hard to roll over money that you never get — making it more likely that you’ll incur taxes and penalties!

Fortunately, there’s an easier way to move money out of that employer plan. Simply sign a form your employer can give you, authorizing a “direct transfer.” The form instructs your employer to send the money in your retirement account directly to your IRA. This is easy (you just sign the form) and stress-free (there’s no 60-day deadline). Plus, your employer will not withhold 20% of your money!

Sometimes, employers send “transfer” checks to the employee (you) instead of directly to the IRA. Have no fear: As long as the check is payable to the IRA trustee or custodian, it’s considered a transfer and not a rollover. It’s OK even if your name appears on the check. (Your name should be preceded by the initials FBO, which means “For the Benefit Of.”)

Thus, if you receive such a check, don’t deposit or sign it. Instead, just mail it to your IRA. You’ll get confirmation shortly, showing that the money has been deposited into your account.

Then, sit back and relax, knowing that your retirement assets are working for you.

By Ric Edelman

Well boomers have had a rough go of it when it comes to saving for retirement. The diminishing likelihood of support from Social Security and the end of the pension era have closed many doors to those looking to prepare financially for retiring. Throw in the trouble in the housing market and its little wonder that by 2009 the net worth of boomers will have dropped between 20 and 40 percent.

Despite all the doom and gloom in regard to the economy and retirement savings, there are still simple, common-sense approaches to encourage growth of personal savings. The automatic IRA proposal first thought up by David John and Mark Iwry is a simple but effective plan to help many of the over 75 million workers who have no work place retirement programs. That's why AARP and several other organizations are backing the proposal. We need to adopt ideas like these to prevent a future with millions of older Americans living in poverty.

It used to be generally accepted that you could count on a nice little inheritance from your parents. That just isn't the case these days. More and more parents who thought they would be able to leave money to their kids can't. People are being stretched in all directions between living longer and having greater expenses, depleting their savings. With the economy being down, it looks like everyone will have to fend for themselves.

To help deal with all the growing costs and a longer life-span, many 50+ Americans are doing what was once unthinkable: looking for new jobs. As costs are rising and the labor pool is shrinking, there are more and more opportunities for older Americans to stay employed and share their experience. Take a look at some tips on how older Americans can find jobs.

So last weekend a group of ten divas got together in Atlanta, GA for an AARP 50th Anniversary concert. (Yes, AARP can now join itself...) The divas represented old to young, hip hop to gospel and shared their passion with the crowd.

Here's a picture of Queen Latifa belting out some tunes for you!

There has been an enormous effort to get those stimulus checks to everyone who qualifies. AARP is continuing its effort to inform people on how to get their payment and has created a tool to assist in filling out forms and filing a return. Happy filings!

It's always to get a little extra cash to spend, but hold off on that big purchase you were planning. You might just need that check to help pay for necessities, especially health care. For example, if you currently rely on Medicare, you don't need me to tell you that premiums have doubled over the last eight years. If you have a private plan, that might seem like a bargain.

How are you planning on spending your stimulus check? Impulse thrills or insurance bills? Comment below.

Tomorrow Congress is going to take a closer look at payday lenders and their targeting of social security beneficiaries. These crafty and unscrupulous businesses set up shop around government subsidized housing and sometimes even around retirement communities! Generally speaking, I’d say payday loans aren’t the way to go - but they are especially dangerous for Social Security recipients who are bamboozled into signing their checks over to these lenders to settle accumulating debts.

If you ARE dealing with payday lenders never, ever sign over your Social Security checks to a bank account that’s controlled by the loan company. You always have options, so talk to your family about a small loan or call your creditors and explain the situation – many are happy to develop a payment plan that works for everyone.

While you’re spreading the word, AARP will be up on Capitol Hill tomorrow talking about ways to protect ya’ll and your Social Security checks! We’ll keep you posted.

So we all know that the boomers are getting ready to enter their golden years, but what you might not know about are the widespread efforts to prepare for all the changes this entails. One great example can be found in the area of driving. The driving experience will soon be very different. Driving courses can help older drivers to adjust their driving style to match their abilities, but cars will feature new designs meant to customize the driving experience and help keep older drivers on the road. New cars could feature customizable displays capable of using a larger font. Future vehicles may even be able to vary their performance based on the abilities of the driver or even forward medical records to the hospital after an accident. It's not quite the Jetsons, but it's pretty interesting.

Driving isn't the only arena that is adjusting to this massive demographic shift. From helping people to remember their medication to alerting loved ones in the event of a fall, new inventions are helping to ensure that technology allows people to age in place. It is great to see new inventions helping people to stay in the homes they love.