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Harikrishna Majumdar
By Harikrishna Majmundar


Q. I have invested all my savings to buy a triplex in an expensive area hoping to earn good rental income. As there are liquor and convenience shops all around, I do not get adequate rent. My son pays mortgage. I practically do not get any income as the taxes are high. When my wife and I became eligible for Supplemental Security Income (SSI), the Social Security officer pressurized me to sell the triplex. He feels that with so many resources I am not eligible for welfare. I have retained the triplex to get advantage of inflation in real property. Is it necessary for me to sell the triplex? If my wife and I do not get SSI, we shall be compelled to sell our beloved property. Is there any way to resolve this problem?

A: You need not sell the property. It is exempted for the purpose of computing your resources. From the gross income you get, you can create a fund for taxes so that the months in which you do not pay tax, your gross income would be above the prescribed limit. As the mortgage is being paid by your son, you would get SSI at the reduced rates.

Q: Before applying for SSI, I bought an expensive car though I do not drive. My grandchildren would escort me to my friends, library, hospital and my friends. My SSI officer says that the value of the car is more than $4,500. He says the additional amount -- the difference between the price of the car and $4,500 -- is my resource and as it is over the prescribed limit, I am not eligible to get SSI. Please state the correct position.

A: The re-sale value of the car is not a resource because one car is exempted in computing the resources. Please ask for review/appeal to get the SSI.

Q: I am on green card. I have more than 40 credits but my pay was not enough to get me a sizeable amount of Social Security. If I go to India and stay there, shall I have to come back every six months to continue my eligibility for getting SSI?

A: Not necessarily. Please obtain a pamphlet issued by Social Security administration. The title of the pamphlet is �your payments while you are outside the United States.�

Q: I am getting disability SSI/Medicaid. The amount is not enough and I feel short of about $300 per month. Though I am disabled, I can do some work of and on and get some $600 per month on an average. I was told my SSI/Medicaid would be discontinued because I am not yet 65 and I am able to work. What should I do as $4,600 wouldn�t be sufficient to cover Medicaid expenditure?

A: As the state encourages disabled people to work, your SSI/medical will not be discontinued. In addition to whatever you get as your pay, they would give you the present SSI and continue the Medicaid. As you get income by earning, the first $85 is free and $208 per month would be deducted from your SSI. Do note that the administration is sympathetic toward those who work.

Q: After six months, I shall be completing 65 years and become eligible by virtue of age and citizenship for SSI. As I am widowed and staying with my son, I may have to pay him a small amount for my expenditure � food, shelter, clothing, etc. I have $3,000 here in USA and some Rs. 30,000 (about $700) in India. As it is more than the prescribed limit, I shall not get SSI and Medicaid. I am getting nervous and wonder if I will have to run away to India. Please advise.

A: Though you have a little more than the prescribed limit, you can spend the amount before you apply for SSI. Please try to bring funds from India. The total resources are about $3,750. You make monthly payments to your son, you may buy computer or clothings or a second-hand car. As you are paying monthly say at $1,000 to your son, you would get full SSI. If you are able to spend down your resources, you are allowed to repay your debt to bring down your resources.

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 [email protected] if you have a question.

Bijan Mohseni

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.


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.


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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