Medicare Part D participants: For 2010, you better shop around

Medicare has announced its Part D drug plan costs for 2010. More seniors than ever will be combing through that data to try and find a better deal. Sixteen percent say they are likely to, or are considering, switching plans in 2010, according to a recent survey of seniors by Allsup, a provider of Social Security disability, Medicare and workers' compensation services. That’s a big jump; only five percent have switched since they’ve been eligible for the program.

However, figuring out which program is best for you can be a pain. You may have dozens of private plans to choose from, with different levels of coverage.

But staying put can cost you plenty, in terms of both access to the medicines you take and the amount of money you will spend. Consumers Union has been monitoring the total cost of buying five common drugs in five states since the Part D program began in 2006. Next year Illinois residents, for example, may be able to save more than $2,200 year if they switch to a better plan. Stay stuck in the wrong one, however, and your costs may rise by more than $1,500.

Open enrollment starts November 15 and runs through the end of the year. You can find out how to switch plans (or enroll) by going to the Centers for Medicare and Medicaid Services Web site.–Mandy Walker

New survey bites back at 'free lunch' seminar scams

I don’t know about you, but whenever I get one of those “free” lunch or dinner invites in the mail from some financial services outfit, I can’t throw it away fast enough. Sometimes I want to use tongs.

But lots of people apparently take up the offer. Some 6 million Americans have attended one of these cringe-worthy events in the past three years, according to AARP and the North American Securities Administrators Association (NASAA). 

Typically billed as educational seminars, the lunches and dinners often tend to be little more than sales pitches for inappropriate, high-commission products—or worse.  A joint survey released today by AARP and NASAA reports that 40 percent of respondents who attended one (all Americans 55 and older) said the presenter tried to sell them something during or after the seminar. And it doesn’t end with dessert: 46 percent said the presenter tried to make a follow-up appointment at their home.

If you or anybody you know are ever tempted to take up a free-meal offer, here's some food for thought: 

• The AARP/NASAA survey referenced above.
• Some related news from the Securities and Exchange Commission (SEC).
• Advice from Consumer Reports on avoiding investment scams, including those that involve a supposedly free meal.  — Greg Daugherty

Greg writes the “Retirement Guy” column each month in the Consumer Reports Money Adviser newsletter.

Cheapest college towns for retirees

Retiring to a leafy college town is a fantasy shared by many people I know, me included. We envision good, cheap restaurants; abundant movies, lecture series, and book stores; a happy, youthful vibe in the air— and no requirement that we do any actual school work.

So it was interesting to see real-estate giant Coldwell Banker’s new survey of 120 college markets
across the U.S., ranked in terms of affordability. (The survey uses a 2,200-square-foot, four-bedroom, two-and-a-half bath home for comparison purposes, and while that may be bigger than many of us will need, it’s probably a pretty good proxy for housing prices generally.)

My own alma mater came in near the bottom, with an average house in excess of $663,000, which makes it unlikely I’ll be heading back there, older and wiser, when the day comes. But many other places on the list had average prices well under $200,000.

The three most affordable college towns were: Akron, Ohio, home to the University of Akron (house price: $122,000); Muncie, Indiana, with Ball State University ($145,000); and Ann Arbor, Michigan, with the University of Michigan ($148,000).  In case a Midwestern winter isn’t your idea of retirement bliss, three Texas cities also made the top 10: Fort Worth, Denton, and Houston. You can read the full list of 120 college towns by clicking on the link above.

We have other advice on this site that may help in making your “where to retire” decision, including:

• A blog post with links to two recent lists of best places to retire.
• Our own retirement readiness quiz. 
• Retired readers talk about their best (and worst) planning moves in an exclusive Consumer Reports survey.
• An overview of places to retire, including college towns, with tips on how to compare them.

— Greg Daugherty

Greg writes the “Retirement Guy” column each month in the Consumer Reports Money Adviser newsletter.

Variable annuities may be getting even worse

Regular readers of Consumer Reports will know that we’ve never been big fans (or even small fans) of variable annuities, insurance contracts that promise you payments based, in part, on the performance of whatever mutual funds you pick when you sign up. 

So we were interested to see this Wall Street Journal article on variable annuities the other day, indicating that many insurers may be reducing the guarantees on their products, making them an even worse deal for consumers.

While annuities have a tax advantage over conventional mutual funds, in that your earnings are tax-deferred until you take money out, they also have some serious drawbacks. Those typically include high sales charges and considerably higher annual fees than regular mutual funds, plus punishing surrender charges if you need to get your money out early.  And don’t even get us started on the aggressive sales tactics often used to push them.

The only reasonable case we can see for buying an annuity is if you don’t have access to other tax-deferred accounts, such as a 401(k) plan or an IRA, or if you have already maxed-out on them. If you must buy one, be sure it’s from a really solid insurer. 

Subscribers to our Consumer Reports Money Adviser newsletter will find a more comprehensive analysis of variable annuities in their December issue.  

Stressed-out Americans see hope in retirement

Is retirement the cure for what ails us? A significant number of Americans seem to think so, according to a survey released today. The survey was sponsored by Princess Cruises, which presumably believes relief might also be found on a deck chair or in the midnight-buffet line.

The survey asked about people’s ability to balance work demands and personal priorities. Nearly three-fourths (72 percent) reported their lives were out of balance, with 15 percent saying they didn’t expect that to change until they retired.

This expectation puts a pretty big burden on retirement. Still, the 15 percent may be onto something. Most of the studies I’ve seen over the years show that retirement can indeed be a happy phase of life, especially if you're reasonably healthy, have enough money to live on, and keep up meaningful contact with the outside world. The most satisfied retirees seem to be those who planned ahead and made it happen rather than letting it happen to them.

Toward that end, we have a lot of retirement-planning advice on this site, including this pre-retirement timetable and an article on why retiring early isn’t always a great idea.

And, in case retirement seems too far over the horizon, these articles on anxiety, tension headaches, and insomnia might offer some stress relief in the meantime. — Greg Daugherty

PS: We'd especially welcome any comments/advice from our retired readers on whether retirement has lived up to your expectations and how people can get more out of it. Please comment below.

Greg writes the “Retirement Guy” column each month in the Consumer Reports Money Adviser newsletter.

401(k) limits won't change for 2010

In case you missed it amid the media hoopla over the 0 percent cost-of-living increase for Social Security recipients, the IRS announced yesterday that 401(k) contribution limits will also remain unchanged for 2010.

In a way this is good news for people trying to put money aside for retirement because there had been some speculation that the limits might actually go down.

So, for 2010, as for 2009, the limit will be $16,500 for anyone under 50 and $22,000 for anyone 50 and over.

Some other 401(k)-related content on this site: 

• Checking up on your 401(k) investments   
• Using target date funds in your 401(k)
• Best and worst ways of tapping your 401(k) (This one is a video.)
• Does contributing still make sense if your employer is no longer matching? 
• Some common 401(k) problems and solutions

 — Greg Daugherty

Greg writes the “Retirement Guy” column each month in the Consumer Reports Money Adviser newsletter.

Best dogs for retirees

Now that the stock market seems to have calmed down a bit, those of us who are planning for retirement might want to put away the Tums and focus on some other important matters. One of those, for the dog nuts among us (and you know who you are), is to consider what kind of canine we'd most enjoy spending our retirement years with.

I recently consulted professional dog trainers from across the U.S. on that topic. Obviously a lot depends on your lifestyle and other circumstances, so there’s no all-around ideal retirement dog. But these are some of the breeds the trainers said they often recommend:

• Basset hound
• Bichon
• Cavalier King Charles spaniel
• French bulldog
• Greyhound, or the smaller whippet
• Maltese
• Papillon
• Poodle
• Pug
• Sporting dog (pointer, retriever, setter)
• Yorkie

If you have a type of dog you'd nominate (or, on the other paw, suggest that retirees avoid), we'd welcome your comments, below.

Meanwhile, three more of the trainers’ suggestions:

1. Consider an older dog. They’re calmer and less destructive than puppies, cute as those may be.

2. Check out shelters and rescue organizations. You can find many breed-specific rescue organizations on the Internet. And if you’re looking for a non-dog pet companion, you can probably find that too: In our vet’s office the other day I saw a flier for a hamster rescue group.

3. If adopting a dog isn’t workable because of your travel plans, where you live, or whatever, note that you can often volunteer to walk one at your local shelter.

Finally, here's some other pet-related content on this site that you might find useful: an article on setting up a trust to take care of a pet, an article on saving on pet expenses, a video on buying pet toys, and another video on saving money on pet food. — Greg Daugherty

Greg writes the “Retirement Guy” column each month in the Consumer Reports Money Adviser newsletter.

Plan to work longer? Here's some advice

Yet another new survey, this one from Bankrate.com, shows most Americans (a stunning 75 percent, in fact) plan to cling to their jobs as long as they can during their “retirement” years. This is a trend we’ve been reporting on here for some time, and while it predates the recession, there doesn’t seem to be any question that the thrills-and-chills economy of the past year has helped drive those percentages into the high double digits.

Here’s some of our advice:

...on deciding when to retire (this one’s a video).

...on the advantages of working longer.

...on starting your own business in retirement.

...and, on working plus other alternatives, such as volunteering or going back to school.  —Greg Daugherty

Greg writes the “Retirement Guy” column each month in the Consumer Reports Money Adviser newsletter.

October 15 deadline to change Roth IRAs for tax savings

Last year's stock-market meltdown was hard enough to stomach without having to lose a chunk of losses to taxes. If you converted from a traditional IRA to a Roth IRA last year and paid taxes on an account that's been decimated, you have until October 15 to reverse it. 

Say your IRA was worth $100,000 last year when you converted it to a Roth, and your account is only worth $60,000 now. You essentially paid taxes to convert the IRA on an additional $40,000 you no longer have. The tax code allows you to reconvert, or recharacterize, the Roth back to a traditional IRA and get a refund on the taxes you paid. And if you want, you can then convert it back to a Roth, but pay taxes only on the new account value. If you undo a Roth conversion that you made in 2008, you only have to wait 31 days to reconvert it into a Roth. However, if you converted in 2009, you'll have to wait until Jan. 2, 2010 to reconvert.

To do the deal, talk with the custodians of your Roth IRA; they’re the ones who need to set up a new IRA in which to transfer your Roth money, says Jim Wagner, CEO of Trust Administration Services, a Carlsbad, Ca.-based company that provides services for self-directed retirement plans. Depending on your administrator, there may be fees involved. You’ll need to fill out IRS Form 8606, Nondeductible IRAs. Your accountant can tell you whether you’ll need to amend any tax returns as a result of the change.

For a more in-depth discussion see this article in Financial Planning magazine by IRA guru Ed Slott  and this article from Bankrate.com. For more information on tax-law changes that will give many more people the chance to convert to Roth IRAs next year, read "New Twists on Roth IRAs" from Consumer Reports Money Adviser.–Chris Fichera 

Hail Columbia (S.C.): Best of the ‘best places’ to retire?

We rate many things around here, but so far, places to retire isn’t one of them.

A major reason is that deciding where to retire is a very subjective business. The huge majority of us (80 percent or so in every survey I’ve seen) tend to stay where we were before we retired. We may trade down to a smaller home, but we aren’t likely to require a long-distance mover.

Still, it’s always interesting to see other publications and Web sites take a shot at it—especially because their lists are often so different.

As it happens, two such lists came out just recently: Money magazine’s “25 Best Places to Retire” and the U.S. News Group’s “America’s Best Affordable Places to Retire,” with 10 entries.

So, how many places do Money and U.S. News agree on? Just one, it seems: Columbia, South Carolina.

Sorry, Columbia, but it looks like your secret is out. —Greg Daugherty

Greg writes the “Retirement Guy” column each month in the Consumer Reports Money Adviser newsletter.