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Out of Work, Out of Options and Over the Hill

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    Out of Work, Out of Options and Over the Hill

    October 24, 2010

    After 20 months without a job, 55-year-old Henry Dietz has nearly drained his 401(k) retirement plan.

    He already has used up his personal savings, borrowed extensively, switched to a catastrophic health plan, which only covers medical emergencies, and even skipped family funerals because of travel expenses.

    If he doesn't find a job soon, he may not be able to make his mortgage payments and the family may have to "move back with Mama," says the married father of three from Raleigh, N.C., who was laid off from an advertising agency.

    Mr. Dietz's situation may be extreme, but many people are facing a similar dilemma: over 50, unemployed and running out of options.

    With no job prospects long before they can afford to retire -- and Social Security benefits still years away -- many unemployed workers in their 50s and early 60s are struggling to pay the bills, the mortgage, health-care expenses and college tuition. It's a scenario that was unimaginable to many just a few years ago.

    Of the 14.9 million unemployed, more than 2.2 million are 55 or older, according to the U.S. Labor Department. And almost half of those have been unemployed six months or longer. The unemployment rate in that age group is a record high 7.3%.

    So what's an unwitting early retiree to do? Here are some tips to help stretch your finances.

    1. Retirement Accounts

    If, like Mr. Dietz, you have no choice but to dig into your retirement account, there are ways to minimize the tax hit and penalties.

    Withdraw money from an individual retirement account or 401(k) before age 59 1/2 and you'll pay federal income taxes on the withdrawals and will get hit with a 10% penalty.

    But the tax code has a provision, 72(t), that allows someone younger than 59 1/2 to withdraw a set amount of money at least five times until age 59 1/2 or for five years, whichever is longer. You won't pay a penalty, but the money is still taxed.

    The caveat: Once you start taking out the money, you're locked into making withdrawals, says Jerod Wurm, a certified financial planner in Sacramento.

    Jonathan Pond, a financial adviser for AARP, says that if you were laid off this year, you might want to delay tapping your retirement money until next year, when you might be in a lower tax bracket.

    If you need a chunk of money for a short period of time, consider the 60-day rollover requirement. This rule allows you to take money out of a qualifying retirement account, tax- and penalty-free, once a year, regardless of your age -- but the full amount must be deposited back into the account within 60 days.

    2. Health Insurance

    "It really is penny wise and pound foolish to go without" health coverage, says Mr. Pond, especially at an age when health-care expenses can start to rise.

    Maintaining coverage is easier said than done when the pennies are hard to come by. But your lower income may qualify you for options you may not have considered if your Cobra coverage is coming to an end or you didn't have employer-provided insurance to begin with. (Cobra allows terminated workers to continue under a former employer's group plan.)

    Most states have programs that offer low-cost coverage, typically if one earns less than $30,000 a year. The MassHealth program in Massachusetts, for example, covers adults and children under age 19 if they live with the parents.

    Short-term insurance policies, which typically cover unexpected illnesses and accidents, can run as low as $30 per person for a month. Catastrophic insurance typically starts as low as $30 a month depending on a person's age and health.

    Have you been denied coverage or been quoted an exorbitant rate because of a pre-existing condition? You can enroll in the federal Pre-existing Condition Insurance Plan, a part of the new health-care law. (The provision banning insurers from denying coverage based on pre-existing conditions doesn't take full effect until 2014.)

    Premiums range from $320 to $570 a month per person depending on the state. But with private insurance, premiums for people with "pre-existing conditions...could easily run into the four figures," says Henry Aaron, a senior fellow at the Brookings Institution.

    You also may be able to use out-of-pocket health-care costs to your advantage come tax time. You can deduct medical expenses exceeding 7.5% of your adjusted gross income. While that may have been too high of a threshold in the past, you may qualify now because of your lack of income. (See Topic 502 at www.irs.gov.)

    3. Real Estate

    The typical advice is to downsize to a cheaper home in a cheaper locale. But today's real-estate market is anything but typical. And for people who are hunting for work or have a spouse with a much-needed job, moving to a state with a lower cost of living may not be feasible.

    So use your home to make some extra cash. If you live near a college or university, for instance, rent an extra room to a student or recent graduate. You can easily get a few hundred dollars a month. Contact a school's student-housing department or put up fliers on campus.

    For homeowners who are 62 and over and still have equity, another option is a reverse mortgage, which allows older homeowners to tap their home's equity while they remain in the house. The loan typically doesn't come due until the homeowner sells the house or dies. And upfront fees have come down some recently.

    4. College Expenses

    Still on the hook for college tuition for your kids or yourself? Try renegotiating loan and aid terms.

    Jerome Chester, a 51-year-old from Bethesda, Md., who has been unemployed since June, went to student-loan provider Sallie Mae to renegotiate his tuition loan. He was able to defer payments, about $1,000 a month, for six months.

    And a school's aid package isn't always set in stone. Go back to the school and ask for more aid given your financial troubles. Results will vary by school and a family's financial status.

    Filed Chapter 7 July 2010
    Attended 341 September 2010
    Discharged November 2010 Closed November 2010

    #2
    this reality is so frightening for the what i concern to be the "silent" group of those drowning with to way no to make it above water again. EVER again

    actually.....this is us!

    Out of Work, Out of Options and Over the Hill

    some just don't get it, what it's like not to have any more chooses left.

    thanks again for the interesting read!
    Last edited by tobee43; 10-30-2010, 07:18 AM.
    8/4/2008 MAKE SURE AND VISIT Tobee's Blogs! http://www.bkforum.com/blog.php?32727-tobee43 and all are welcome to bk forum's Florida State Questions and Answers on BK http://www.bkforum.com/group.php?groupid=9

    Comment


      #3
      Excellent post 'keepinitreal'. Thank you. 'Hub
      If I knew it all, would I be here?? Hang in there = Retained attorney 8-06, Filed 12-28-07, Discharge 8-13-08, Finally CLOSED 11-3-09, 3-31-10 AP Dismissed, Informed by incompetent lawyer of CLOSED status, October 14, 2010.

      Comment


        #4
        This just breaks your heart to read about this, and its just getting worse...

        Comment


          #5
          Originally posted by ryan View Post
          This just breaks your heart to read about this, and its just getting worse...
          Unfortunately, I feel it is being "Orchestrated". But as we get our "bread and circuses", Rome is burning and "Nero fiddles around", our leader will be so beat campaigning for more Czars in meaning and "Congress People" in name that he needs a vacation in India, 550 rooms Taj Mahal Hotel, 40 aircraft, hundreds of people, three helicopters, 30 armored limos, and what the hell. He deserves a rest. Those last three vacations where tough on anyone, so a good rest will do him good while he contemplates fiscal responsibilities for us, and the new taxing policy to bring our Nation out of the Depression it is in. After all, it could be worse. If it weren't for his right hand man, Reid, the whole World would be in as bad a shape as we are. 'Hub
          If I knew it all, would I be here?? Hang in there = Retained attorney 8-06, Filed 12-28-07, Discharge 8-13-08, Finally CLOSED 11-3-09, 3-31-10 AP Dismissed, Informed by incompetent lawyer of CLOSED status, October 14, 2010.

          Comment


            #6
            We just attended my 40th High School reunion last week. So we classmates are 57, 58, or 59, depending on when the calendar fell when our parents started sending us to school. In talking to several of my classmates--by no means a scientific study--the consensus was that most of us were either 'underemployed', 'unemployed', or 'retired by choice'. Few of us were still working in our chosen professions. Some had actually made the thirty years necessary to be able to retire on full pensions, but many of us are just 'hanging on'.
            "To go bravely forward is to invite a miracle."

            "Worry is the darkroom where negatives are formed."

            Comment


              #7
              And in less than two years. It took A. Hitler a decade to build up a country. Months to take one down. UMMMMMM, UMMMMM, UMMMMM. Dat's da man.
              If I knew it all, would I be here?? Hang in there = Retained attorney 8-06, Filed 12-28-07, Discharge 8-13-08, Finally CLOSED 11-3-09, 3-31-10 AP Dismissed, Informed by incompetent lawyer of CLOSED status, October 14, 2010.

              Comment


                #8
                Originally posted by AngelinaCat View Post
                We just attended my 40th High School reunion last week. So we classmates are 57, 58, or 59, depending on when the calendar fell when our parents started sending us to school. In talking to several of my classmates--by no means a scientific study--the consensus was that most of us were either 'underemployed', 'unemployed', or 'retired by choice'. Few of us were still working in our chosen professions. Some had actually made the thirty years necessary to be able to retire on full pensions, but many of us are just 'hanging on'.
                interesting....your impromptu survey is most likely more accurate than we'd like to think....and sad.

                i had many lifes in my lifetime...however, no matter what you do, one would have to lie on a resume to erase experience .....your almost better off at our age if we never worked a day in our lives, and now trying for the first time to seek employment...maybe then walmart would pay me the $11 plus an hour to greet!! could be a plan....
                8/4/2008 MAKE SURE AND VISIT Tobee's Blogs! http://www.bkforum.com/blog.php?32727-tobee43 and all are welcome to bk forum's Florida State Questions and Answers on BK http://www.bkforum.com/group.php?groupid=9

                Comment


                  #9
                  Originally posted by AngelinaCatHub View Post
                  And in less than two years. It took A. Hitler a decade to build up a country. Months to take one down. UMMMMMM, UMMMMM, UMMMMM. Dat's da man.
                  you R naughty!!
                  8/4/2008 MAKE SURE AND VISIT Tobee's Blogs! http://www.bkforum.com/blog.php?32727-tobee43 and all are welcome to bk forum's Florida State Questions and Answers on BK http://www.bkforum.com/group.php?groupid=9

                  Comment


                    #10
                    Originally posted by ryan View Post
                    This just breaks your heart to read about this, and its just getting worse...

                    Unless I'm not looking close enough I noticed the usual cheerleaders aren't posting anything arguing with what you just said.

                    Maybe they lost their income and can't pay their broadband bill. I hope not!! But maybe they did.

                    Most of who I discuss my opinions with about this subject in my personal life are also out of ammo too and can finally read the writing on the walls.

                    I only wish they were telling me how wrong I am and I can just smile at them.

                    If you haven't seen tonight's 60 minutes I suggest you search for it online and watch it. Sadly it's no news to some of us.
                    The essence of freedom is the proper limitation of Government

                    Comment


                      #11
                      Originally posted by banca rotta View Post
                      Unless I'm not looking close enough I noticed the usual cheerleaders aren't posting anything arguing with what you just said.

                      Maybe they lost their income and can't pay their broadband bill. I hope not!! But maybe they did.
                      How'd you know that banca? This posting from the local library computer is really annoying - they kick me out at 6 pm...


                      If you haven't seen tonight's 60 minutes I suggest you search for it online and watch it. Sadly it's no news to some of us.
                      60 Minutes is doing what it does best - create sensational stories... They forgot to interview the 83% that still have full-time jobs. The largest employer in my state (Intel) has just announced a large plant expansion for my county - several Billion dollars will be spent here in new construction (and construction jobs) and another 1,000 well paying permanent high tech jobs here when the new plants open. They are also expanding in Arizona. They are not expanding in California because of the tax structure and high cost of living...

                      http://www.kgw.com/home/Intel-expans...105260573.html
                      Last edited by WhatMoney; 11-01-2010, 06:05 PM.
                      “When fascism comes to America, it’ll be wrapped in a flag and carrying a cross” — Sinclair Lewis

                      Comment


                        #12
                        Originally posted by WhatMoney View Post
                        60 Minutes is doing what it does best - create sensational stories... They forgot to interview the 83% that still have full-time jobs. The largest employer in my state (Intel) has just announced a large plant expansion for my county - several Billion dollars will be spent here in new construction (and construction jobs) and another 1,000 well paying permanent high tech jobs here when the new plants open. They are also expanding in Arizona. They are not expanding in California because of the tax structure and high cost of living...

                        http://www.kgw.com/home/Intel-expans...105260573.html
                        Hey Whatmoney, I always believed you agreed with BankaRotta for most part. I've remembered both your conservative ideas, absolutely on message.

                        Tomorrow the Public will speak for the best or not, depending on the isle you are on. I have two bottles of champagne, either to celebrate or just get d@mned drunk.

                        You mentioned only one major industry that not only do they design chips for missals, space craft, or Gameboys. But where are these chips made? China, my friend.

                        Once our confiscatory tax policies convince this firm that over seas is a bit better than here, then perhaps the engineers in China can do a better jobs. With what comes out of our Public school system is any sign of super talent, I fear our future engineers.

                        Well it is late for me now, but I'll look for your response and we can continue. LOL. 'Hub
                        If I knew it all, would I be here?? Hang in there = Retained attorney 8-06, Filed 12-28-07, Discharge 8-13-08, Finally CLOSED 11-3-09, 3-31-10 AP Dismissed, Informed by incompetent lawyer of CLOSED status, October 14, 2010.

                        Comment


                          #13
                          Originally posted by AngelinaCatHub View Post
                          Hey Whatmoney, I always believed you agreed with BankaRotta for most part. I've remembered both your conservative ideas, absolutely on message.

                          Tomorrow the Public will speak for the best or not, depending on the isle you are on. I have two bottles of champagne, either to celebrate or just get d@mned drunk.

                          You mentioned only one major industry that not only do they design chips for missals, space craft, or Gameboys. But where are these chips made? China, my friend.

                          Once our confiscatory tax policies convince this firm that over seas is a bit better than here, then perhaps the engineers in China can do a better jobs. With what comes out of our Public school system is any sign of super talent, I fear our future engineers.

                          Well it is late for me now, but I'll look for your response and we can continue. LOL. 'Hub
                          I agree with Banca and my conservative ideas? You must have me confused with someone else.

                          Intel does in fact make most of their highest technology chips right here in Oregon, where we also do most of the R&D to get the chips into production. Once everything is running smoothly at our plants the technology may be moved to other overseas plants in Ireland and Israel, but the majority of manufacturing still remains in the States. The new expansions here and in AZ are all chip fabrication plants and upgrades - an $8 Billion dollar commitment to continued US manufacturing. The completed wafers are sent overseas where they are sawed, sorted and packaged, although the highest tech chips are still sawed here in the States. It's not clear that even the high tech sawing operations will be moved overseas, as this is a critical process step. One wrong move and you've destroyed a $100K wafer.

                          Intel has just completed their one and only chip plant in China - but is is several generations behind in technology, and it is highly automated. It's like moving incandescent light bulb production overseas (GE did that 40 years ago.) It's not clear the plant will remain open for long either because of Chinese government policies.

                          Most packaging operations have always been done overseas, in Indonesia, Costa Rica, and other countries - because it is basically a lower skill manufacturing process. It has been this way since the 1970's in fact.

                          There will eventually be more low value chip technology production overseas, but the high margin latest technology manufacturing will never go to China, and remain in the USA. You can't say the same for AMD, which has it's highest technology plant in Germany.
                          “When fascism comes to America, it’ll be wrapped in a flag and carrying a cross” — Sinclair Lewis

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