• Micro-Business Owners Face Considerable Gap Between
  Current And Expected Retirement Savings
• Bill To Provide Grants To Health IT Info-Seekers
• Subcommittee Warns Against Axing Employer-Based Health Systems

Micro-Business Owners Face Considerable Gap Between Current And Expected Retirement Savings

A large majority of owners and employees of America’s micro-businesses do not have access to retirement plans and are financially unprepared for retirement, according to a survey by the National Association for the Self-Employed. The results showed that the gap between what many business owners say they will need for retirement and what they actually have saved is considerable – nearly 13 percent have no savings at all, and 26 percent have banked less than $50,000. The NASE wishes to help ease the burden micro-businesses feel about their retirement future. Here are five questions self-employed business owners should ask when planning for retirement: When Should I Start Saving? Many people don’t start saving until they determine their retirement goals, write a will and answer all the questions to get their lives in order. But the early saver without a plan is better off than the careful planner who delays. Just opening an individual retirement account (IRA) and developing the habit of saving is half the battle. Start saving early. If you get a late start, save more. How Much Money Will I Need For Retirement? Start with a list of current bills: rent or mortgage, food, car loan, gasoline, utilities, clothes, credit card payments, etc. Health care costs, the decision to travel extensively, or retiring to an active lifestyle community could add to your retirement budget. While you’re still working, one of the top goals should be to pay off all credit cards and installment loans, and if possible, the mortgage on a primary residence. Can I Use Home Equity For Retirement Income? You don’t necessarily have to sell your home to reap some retirement money. With a reverse mortgage, the lender puts a lien on a home whose owner has built a large amount of equity. The borrower (or the borrower’s heir) never has to pay back more than the value of the home; the Federal Housing Administration (FHA) pays the excess amount if any. However, there are some downsides to reverse mortgages. Upfront fees can be 10 percent of the home’s value and by taking a reverse mortgage, the owner might not have any equity left to tap in case of an emergency. What Sources Of Retirement Income Will I Have? Chances are your retirement income will come from several different arenas, including Social Security and personal savings plans. The classic investment is an insurance annuity. However, other retirement plans, such as an IRA, Simplified Employee Pension (SEP) and individual 401(k), have become more popular with micro-business owners. Be sure to explore them all before deciding which option is best for you. When Can I Retire? Americans traditionally think 65 is the age to retire. However, the rules have changed over the years so that the age 65 benchmark is no longer true. In fact, only Social Security contributors born before 1938 can draw full payments at age 65. Younger people have to wait. Those born in 1960 or later must wait two full years, to age 67. And “full payment” is no longer accurate. Workers willing to delay drawing Social Security until age 70 can receive more. At the other extreme, people can start drawing smaller monthly payments as early as age 62. For more retirement tips or to obtain a copy of Planning for Retirement: A Micro-Business Perspective, which contains the results of the NASE survey, please contact Kristin Oberlander at 202-466-2100, koberlander@nase.org.

Bill To Provide Grants To Health IT Info-Seekers Legislation intended to increase development of health IT data systems is making rounds in the House. If it passes, the National Science Foundation (NSF) would receive $100 million through 2011 for research and development and academic scholarships in the field of “informantics,”or data gathering and management systems. It would also fund the formation of Centers for Informantics Research at various colleges and universities across the nation. “This bill lays the groundwork for the building of comprehensive health IT data management systems, and trains the professionals who would use those systems,” said Kristie Darien, executive director of the NASE legislative office. “Hopefully, the passing of this legislation will grease the wheels for real progress to be made in the health IT field, which in turn will assist in lowering costs and minimizing mistakes in our health care system.” The “10,000 By 2010” bill would ramp up funding for the development of an integrated system that would allow doctors and health care professionals to access patients’ medical history for prescription management and treatment options based on medical history. To read the full text of the bill, visit http://thomas.loc.gov.   Subcommittee Warns Against Axing Employer-Based Health Systems   Congress put universal health coverage under the microscope again last week, this time to examine the effects of state-controlled proposals to lower the numbers of uninsured Americans. The House of Representatives Health, Employment, Labor and Pensions Subcommittee members hosted a number of lawmakers and business leaders at a hearing titled, “Health Care Reform: Recommendations to Improve Coordination of Federal and State Initiatives” “While we may agree there are flaws in the current system, the private sector – as opposed to government – is in the best position to lead reform efforts and effectuate change,” said Rep. John Kline of Minnesota and the panel’s Ranking Republican Member. “While there is a role for government, we must recognize the potential impact of any change and take care to improve the system while not unnecessarily disrupting the high quality coverage enjoyed by most Americans.” Rep. Kline and others in the panel argued that impact could come in the form of states enacting their own employer-sponsored health benefits packages, which is prohibited by federal laws currently in place. The 1974 Employee Retirement Income Security Act (ERISA) allows large employers to offer standardized coverage nationwide, instead of subjecting the company to navigate state-by-state regulations. Other attendees point to the successes of state-sponsored programs in New Jersey, Massachusetts, New York, Montana and Vermont, while arguing that ERISA is regulating a different population than when it was created more than 30 years ago. In addition, universal care proponents argued that the law has been a barrier in state reform initiatives, including efforts to fund high-risk pools and self-insured plans and to collect data to better evaluate the effectiveness of self-insured plans. To read more about the hearing, including a list of additional witnesses and their testimony, please visit http://edworkforce.house.gov/hearings/help052207.shtml. Voice Of Change - Write To Congress Washington may seem far away but you can have an impact, according to NASE executive director of the legislative office Kristie Darien. If gas prices are affecting your business, write to your Member of Congress. Health care costs high? Worried about tax gap proposals? Your Member of Congress can do something about it. Keep your letters short and to the point, and only write about one issue per letter. It’s better for the Congressperson to get three letters from you in one day, than for your concerns to be dismissed because your letter covers too much ground. To find your Member of Congress, visit the NASE Advocacy page at http://advocacy.nase.org/ and search by zip code.