Top 10 Retirement Destinations for Europeans (for those who hope to retire abroad):

    1) Spain
    2) France
    3) USA
    4) Italy
    5) Australasia
    6) Africa
    7) Switzerland
    Latin America
    9) United Kingdom
    10) The Netherlands

Percentage of those wishing to retire in their home country:

    Spain             86.8%
    France            81.1%
    Denmark           73.6%
    Norway            63.4%
    The Netherlands   61.4%
    Switzerland       53.0%
    Ireland           49.0%
    Germany           45.9%
    UK                42.7%

"Cheap air travel and the communication tools available over the internet means that retiring overseas doesn’t necessarily mean being completely absent from your family’s life, making the prospect of emigration to other countries on an previously unseen scale a real possibility. Not surprisingly, most people want to spend their retirement predominantly in countries with good weather and good social and government benefits, and ideally close enough so that they can get home quickly if they need to,” said Oliver Rowlands, head of retirement, Europe, Middle East and Africa, at Aon Consulting.

According to the Survey of Consumer Finances (SCF), households with a head age 65-74 had a median net worth of $239,400 in 2007 which includes home equity.  As older adults enter retirement with significant leverage from real estate debt, consumer loans and credit card debt, they are beginning to rely more on their children for advice, guidance and assistance to manage their complex financial situation.  When family assistance is not available, the brief identifies possible solutions such as specific policy strategies and better financial education.  Will a “personal finance drivers license” be necessary?

For the brief, see “What is the age of reason?”

2010 Employee Retirement Benefits Institute Report

The questions are now arising about what those rules, regulations and safeguards actually may say and how they will be enforced on the industry.  Some estimates show that the bill will require over 500 new rules to be written to provide the framework for much of the new law and that some of the law will be implemented immediately while other parts may take up to 18 months or longer before fully implemented.  Most consumer groups think that fees and rates will increase for consumers as higher costs for regulatory compliance with the new regulations.  Those changes may mean that free checking accounts and lower fees for loan products for senior customers will go away.

• Nearly 60 percent of respondents volunteer their time to a charitable cause in Mexico and over 29 percent volunteer at least once a week or on a regular basis.
• Almost 70 percent of respondents reported contributing financially to Mexican charitable organizations, with over half (53 percent) reported donating over $100, sometimes significantly more, including over 4 percent that gave over $2,500 annually.

• This is not a win-lose between U.S. and Mexican charities. Over 51 percent of those surveyed continue to contribute to U.S. charities back in their communities of origin.
• Forty-two percent of American retirees surveyed are actively involved in at least one or two Mexican charities in their adopted communities, while another 11 percent are affiliated with more than three.

The survey was conducted by interviewing 840 U.S. retirees over 50 years of age in Mexico’s coastal communities to identify trends in this population regarding lifestyle, housing/real estate, health care, and environmental issues, as well as civic engagement, volunteerism and charitable giving.

The research series can be accessed electronically at “Civic Engagement, Volunteerism and Charitable Giving: Americans Retiring in Mexico’s Coastal Communities”

The strategic plan calls for ending Veterans and chronic homelessness by 2015, and to ending homelessness among children, family and youth by 2020. Opening Doors includes strategies based on the fact that housing, health, education and human service programs must be coordinated to end homelessness. The plan also calls for increased access to stable and affordable housing and permanent supportive housing for all Americans.

While seniors aren’t a specific target of the plan, many parts of the plan focus on ending homelessness for veterans which are a large part of the US’s aging population.  The plan and the goals are clear and well written but dodges the trillion dollar question:  Where will the funding come from to reach these goals?

Click for the 74 page plan Opening Doors: Federal Strategic Plan to Prevent & End Homelessness

Oliver Rowlands, head of retirement, Europe Middle East and Africa, at Aon Consulting commented: "Recent events have shown the value of defined contribution pension funds can go down sharply in a recession, which has come as a shock to many people used to gold-plated defined benefit pensions and generous state benefits. As responsibility for retirement savings has moved from the state and corporations to the individual, people are increasingly realising they need to take an active interest and take steps, such as delaying retirement, to make sure they are financially secure in retirement.”

• Half of older Americans exhibit one or more of the warning signs of current financial victimization. For example, more than one out three seniors (37 percent) are currently being pitched by "people (who) are calling me or mailing me asking for money, lotteries, and other schemes," while a much lower 19 percent of adult children believe that their parents are being pressured in such a fashion.
• Almost half of those aged 65 or over (44 percent) got at least two out of four questions wrong about basic investment knowledge.
• About one out of three older Americans (31 percent) says they are vulnerable in one or more ways to potential financial victimization.

• Only 5 percent of adult children in touch with their parents’ doctors report "the healthcare providers ever mention[ing] any concerns about your parents handling of money or relayed any concern from your parent about handling money." However, of that same group, nearly one in five (19 percent) report the health care provider has mentioned concerns about "your parents’ mental comprehension." Only 2 percent of Americans aged 65 or older say that their healthcare provider has ever asked about "how you are handling money issues or problems."

IPT President and CEO Don Blandin said: "We now know that a shockingly large number of older Americans are already victims of financial swindles and millions more are in danger of being exploited in such a fashion. Given that front-line medical professionals who deal everyday with older Americans are ideally positioned to spot the impaired mental capacity that can leave seniors vulnerable to financial abuse, our new program seeks to inform doctors, nurses and others about the warning signs of elder investment fraud and financial exploitation. Our goal is to improve the communication among medical professionals, older Americans, adult children and state securities regulators in order to head off financial swindles before the damage is done."

Visit the IPT Investor Fraud Survey

Sources of income:

• Overall, Social Security accounted on average for 39.8 percent of the income of those 65 and older in 2008.
• Pension and annuities was 19.7 percent
• income from assets was 13.0 percent
• income from earnings was 25.6 percent.

Income by Gender:

• 48.4 percent of elderly women’s income in 2008
• 33.7 percent of elderly men’s income
• And pensions and annuities accounted for 21.8 percent of elderly men’s income, compared with 16.8 percent of elderly women’s.

Considering this survey was done in 2008 during the onset of the economic challenges of the Great Recession, the reliance on Social Security will most likely be nearing 50% or greater as a component of retirement income.

For the full report, visit EBRI.

(Adapted from “Tax Incentives and the 50-Plus To Retire In Mexico)

As the North American 50+ population looks to retire after the pain of a severe global economic crisis, retiring in Mexico will offer the benefits of a hospitable low-cost environment in the charm of pristine beaches with either lush tropical or desert surroundings and the of Mexico’s interior colonial towns. The good news is that under provisions of the US-Mexico and Canada-Mexico tax treaties to prevent double taxation, pensions and annuities received by residents of the US or Canada, are taxable only in the US or Canada, not in Mexico. It is important to confirm that, although “retired in Mexico” the beneficiaries of the pensions or annuities are still considered either US or Canadian residents for tax purposes, otherwise, if considered Mexican residents for tax purposes, the treaty benefits would not apply.  There are some aspects that deserve special attention to enhance the position of Mexico as a destination for retirement and health tourism in the years to come that include:

VAT on hospital services

Health tourism, as far as Mexico is concerned, implies that a non-Mexican resident comes to Mexico to receive medical treatment. After the treatment, the patient stays in Mexico a few more days and goes back to its country of residence. It may be said that the patient will actually enjoy the benefits of the medical treatment in Mexico back in his or her country. However, under the Mexican Value-Added Tax Law (VATL), hospital services, not including medical fees that are exempted, are subject to value-added tax.  Hospital services including ancillary services such as X ray, lab analysis, MRI, etc. provided to a “health tourist” are conceptually services that are exported, since the patient ultimately enjoys back in his or her country the benefits of the service received in Mexico. Accordingly, following the spirit of the VATL, they should be subject to a 0% VAT rate. In other words, the patient should not be paying VAT to the hospitals and labs.

Cross Border Social Security Benefits

Back in 2004, Mexico and the United States signed a Social Security Agreement that would permit a cross granting of social security benefits between Mexico and the United States.  These types of agreements, which have been in existence since the 1970s, are also known as Totalization Agreements.  The US has entered into this type of agreement with various countries and about 20 of such are in force, including Canada since 1984. Hopefully, the Senates of Mexico and the US will soon approve the 2004 Agreement and possibly a similar agreement could be reached between Canada and Mexico.

Sale of residential property in Mexico

Under current law, US and Canadian residents, among others, owning residential property in Mexico are subject to tax when they sell their Mexican residential property. On the other hand, Mexican residents are not subject to tax when they sell their home under certain conditions. Although it may be interpreted that both Canadian and US residents should be given the same treatment as the Mexican residents, the law is not explicit and clarification of the Mexican domestic law is needed if US, Canadian and residents of other Mexico treaty countries are not to subjected to tax when they sell their residential property in Mexico.

www.mauriciomonroy.com

Senior Housing News developed a simple calculator to examine the basic income and expenses associated with senior living.  Our senior living costs calculator is a simple calculator, leaving the guess work up to the user.  It’s simple and straight-forward.  At the end of the day, we provide a tool to estimate and compare expenses between living at home versus some kind of assisted living or skilled nursing care.  The calculators are not meant to be 100% accurate because the inputs follow the typical “Garbage In, Garbage” out theory.

Whether you like the fancy calculators with the bells and the whistles or the simple income and costs analysis, using some kind of planning tool, albeit imperfect is better than ignoring fiscal responsibility for planning retirement.

Does keeping healthy really reduce the costs of living in retirement or does it actually increase those costs because improved health leads to longer life?  A recent brief from the Center for Retirement Research at Boston College reported new findings on average lifetime health care costs at selected ages and on the distribution of those costs.  The main finding is that although the current health care costs of healthy retirees are lower than those of the unhealthy, the healthy actually face higher total health care costs over their remaining lifetime.  Individuals currently in good health would be unwise to think that they will continue to enjoy lower than average health care costs. Odds are that even those who are currently healthy will suffer from some type of chronic disease which would result in high out-of-pocket and long-term care costs.

Details include:

• A typical healthy couple at age 65 can expect to spend $260,000 with a 5-percent risk of exceeding $570,000.
• A typical unhealthy couple can expect to spend $220,000 with a 5-percent risk of exceeding $465,000.
• Those in good health live longer, eventually become less healthy, and often need nursing home care.

Does Staying Healthy Reduce Your Lifetime Health Care Costs?