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Show DAILY C8 THE WALL STREET JOURNAL Sunday, April 6, 2008 HERALD fflM LOVES MONEY An Update on Grandma and Mom to catch up. fTime I I've written in recent L mpnths about two issues involving money and parents." The first dealt with my grandmother's recent bladder-cance- r diagnosis; the other, with my efforts at managing my mom's money. Here's an update on those two issues. Earlier this year, I wrote about concerns I have for my grandmother's and finances, the costs she might face for care following her treatment for bladder cancer. Doctors found that the cancer had not spread beyond the bladder, and convinced my grandmother that this type of cancer responds well to chemotherapy and radiation. While ' she won't be as active as she once was, she'll still have a fine quality of life, which was her biggest concern. So, she has begun chemo treatments, and still has a few months to go. That episode ultimately raised several other issues: finding the money to pay for the care she may eventually need, and figuring out who would assist my grandmother in getting to and from doctors' appointments, given that neither my wife nor I has the flexibility at work to regularly drop our assignments during the day. To that last point: My mom is the ideal candidate, since she no longer works. But she has retired to India and was planning to return there later this month after flying in to be with my grandmother for her hospitalization. A week after my grandmother's procedure, my wife, Amy, and I convened a family meeting to discuss the situation. The upshot: My mom will remain here in Louisiana HEALTH COSTS I lr-- ii ' By JeffD. Opdyke JHli If ""'in , 1 I 'iiMiiniiiif iim 5. I J gj until my grandmother's medical issues pass. As for the money, my concern was that my grandmother doesn't have the kind of liquid wealth that will allow her to afford care. Neither my mom nor I can afford it, either. My solution, as I wrote about, was to get my grandwho mother and my great-aun- t, lives with her, to consider a reverse mortgage. With this product, the bank would pay my grandmother every month instead of the reverse. That loan is repaid, with interest, when my grandmother and aunt die or the house is sold. This would free up a meaningful sum of cash for both women by eliminating their current house note, and then allowing them to receive a monthly payment for life. I stopped by my grandmother's house for lunch one day and broached the topic, and it turns out that my great-auhad been thinking about this for about a year, but was uncertain of the mechanics or whether it was a scam. Now, they're collecting the documents to begin the process. Finally, in dealing with an unrelated legal matter, I found two flawed insurance policies in my grandmother's files. One named the wrong beneficiary; J UUIMI...MI I'm still trying to fix that with the insurer. The second is more painful for my grandmother For about a and great-aun- t. dozen years, they've been paypolicy ing for a designed to pay off the mortgage when either of them dies, leaving the other debt-freWell, think again. It turns out my aunt bought an accidental-deat- h policy that won't pay a dime if either of them dies from natural causes, including cancer or some other illness. At best, they were just wasting several hundred dollars annually they could have used for living expenses. She canceled the policy after confirming my analysis with the insurer. The message here: Check your parents' financial documents from time to time to make sure everything is in order, and make the changes necessary now. That includes paying close attention to beneficiary designations, account balances and the types of coverage provided by insurance policies. e. Last fall, I wrote about essentially having to parent my mom financially. She had received a setrelatively small lump-sutlement and asked me to manage that money since it represented the entirety of her nest egg. But then, she decided she v js V V '?' i ' ernment groups. Public and commercial buildings nationwide have installed ramps, automatic doors and wheelchair-accessibl- e bath- rooms, thanks largely to the federal Americans With Disabilities Act. But while the law can apply to apartment buildings and condos, it doesn't apply to private homes. Only a few communi-- , ties including Tucson, Ariz., and surrounding Pima County-h- ave begun requiring new homes to include some key accommodations. knobs. Bathrooms may need grab bars near the toilet to offer a firm handhold. Aid from Uncle Sam The Cost of 'Accessible' In new homes, accessibility features typically add no more than about 5 to construction costs, according to the Center for Universal Design at North Carolina State University. But retrofitting an existing home can be more challenging and more expensive: Many were built with narrow doorways and stepped front stoops, or would require in. bathroom stalling a first-floor a chairlift or elevator to make a bathroom on a" higher floor accessible. External elevators might cost $26,000 or more, while a simple chairlift on a straight stairway could cost $2,500 to $5,000, the Center for Universal Design estimates. Outdoor ramps might cost a few hundred dollars to $2,400 per foot of rise; a wider exterior door could cost $1,600, the group says. Simpler fixes are cheaper. Fputy members with Parkin-swMlisea- or other conditions limiting fine motor skills faucet or may need lever-styl- e door handles in place of Federal tax law can help defray the costs by letting you deduct them from your taxable income as medical expenses. However, only medical expenses exceeding 7.5 of adjusted gross income generally are deductible. A physician should also approve the changes as medically necessary in writing, says Rosanne Grande, a financial adviser in Bohemia, N.Y., who has had several clients make their , homes more accessible. And don't push it. "A lot of people think putting a pool in your backyard is physical therapy," Ms. Grande says. Except in limited circumstances, "it's not," she says. "It's recreation." The tax break can shrink if improvements increase the value of the home, and the cost of making an improvement prettier isn't deductible. See guidelines and eligible expenses in Internal Revenue Service Publication 502. Some expenses may be deductible under state tax rules as well. If you receive Social Security disability benefits or Supplemental Security Income, you may be eligible for additional benefits for "impairment-related work expenses," or certain costs that make it . . hopes to comand other as- sistance for home modifications by year end. I U t' ,: Vanguard Target Retirement Princ'ipalTriv I Fii ii Llfefirne ioiO Z'Z'jM 2010 n' " From ioib A Advlsor (x . . SunAmerica 2010 High Watermark -- ' 2020 Fidelity Freedom A 1,799 531 m SWBRX" -- 6.43 FFFDX -- f 5,46 - ' 231 f ' 124 . - . Fi(teAdviSOTFrertom'2020A FDAFX ' Jones 2020 L .r7:27 6,77 . j6J5 ... 749 -- - 6.80 3,658 ; 2,747 ) -- 3.56 NETWX ' FidelityFreedom2030 '" IRoSi'Refirent'2030 t- PpaHnv'LMitie2030Wi ' ::lmmmtm RdeMdvisorFremOT " A and Bottom Barclays Global - 37, FFFEX -- 9.08 7.56 $13,410 -- Hi 774 1,745 PMTIX -- 8118 "7.32 VTHRX -- 771 FAFEX -- 928 ''"7.18 -- 6.01 STLDX v FFFFX . - ' --9.66 and Bottom ' 7.66 . . , .$6,885 7.61 2,452 81 7.49 X574 ' . -7- 71 ; -- 7.36 6,57 447 ' -- i6.30 5.03 31 -- VFORX 816 20401 Ready STLEX ' ' PRRZX A less than $25 million in assets are excluded : la Source: Morntngstar Ian Salisbury lyst Laura Lutton. The SEC is proposing to al- low fund firms to emphasize much shorter summaries of key information.. The agency offered a prototype last November and is currently reviewing feedback from fund companies and others, mostly focused on what to include and what to leave out An SEC spokesman declines to estimate how long that process will take. In the meantime, here's a quick guide to what to look for in a mutual fund and where to find the information among ex- isting fund documents!.' , portfolio-manageme- m investors fees, few mutual-fun- d do better than they would have if they bought index funds that simply hold all the stocks in the market and keep expenses low. While prospectuses already include tables with information about expenses, the new summaries would put them front and center. How much should investors pay? As' a rule, broad-base- d k funds that charge more than 1 of assets a year are relatively expensive and may be less likely to beat their benchmarks over the long run., On average, investors in k funds pay annual exof assets penses equal to 0.84 ' while those in international-stoc- k funds pay L05 and bond-fun- d investors pay 0.68, acc- For instance, Fidelity Magellan Fund was up 27.2 for the last quarter of 1998, amid the Internet bubble, and fell 16.4 in the third quarter of 2002. If you can't stomach the idea of losing 16 of your investment in three months, you might want to stay away from that fund. f' Managers and Their Money U.S.-stoc- , '.'''..'. ,: " U.S.-stoc- ording to the Investment Company Institute, a trade group. 7 Track Record All funds report their returns going back one, five and Investment Strategy 10 years (or to their inception). This is the most basic ques- - v. Rules for how fund firms pertion to ask about a fund. Unfor- - form . these calculations are tunately, fund companies Can strict,' so investors can easily be pretty vague in describing compare different funds. In addition, investors should how they invest" With stock funds; two key always compare funds' returns words to look for are "growth," to a benchmark, information that should be in a fund's prosignaling a focus on companies that have the best chance to spectus and annual report. The most common benchboost their ' earnings, ; and mark for U.S.rstock funds is the "value," which suggests fund ink Standard & Poor's managers favor stocks they perdex. . ceive as cheap. Among classic If you're investing in a taxgrowth companies are Internet able account and not, say, a firms like Google, while utilities such as Public . Service Enter- retirement account, you should also check the proprise Group and Duke Energy usually fall in the value group. spectus for a fund's after-ta- x reThese are hypothetical-assumi- ng, turns. other descriptions, Among "balanced" indicates a . fund for instance, that inowns both stocks and bonds, vestors are in the top tax bracket-b- ut and "income" means a fund emthey are useful for phasizes regular distributions comparison shopping. from dividends or interest. .. ' Volatility - After deciding on the type of fund, some experts say. ex In general, funds that own only stocks have sharper ups and downs than funds that own ; , 7 One final thing: Don't forget to check the manager. You're paying a professional to oversee your savings, so at least glance at his or her background, which should be outlined in 'the mutual fund's prospectus, v You can even check to make sure the manager invests his or her own money in the fund a strong indication that the person is serious about doing a . good job. This information is in a fund's ."statement of additional information." That's available at the Web site of the SEC (sec. gov) and on some Web sites-a- nd also by request to the fund. fund-compa- HOW TO CONTACT US Our address. ! The Wall Street Journal Sunday 1 ' 4300 Route 1 North 500-stoc- . t both stocks and bonds. .... Funds that focus on narrow corners of the stock market are likely to be more volatile than broader funds, and long-terbond funds are typically more volatile than short-terones. Fund prospectuses must re? port annual returns, for each of the past 10 years as well as the biggest gain and the biggest loss the fund recorded during any quarter in the past 10 years. penses are the single most im- -' portant factor in making a selection. The fees and other expenses that are automatically subtracted from fund assets lower the returns paid to investors. Academic research shows that, after subtracting these ' Expenses 4 Performance ;nyctf2040 Note: Funds with , ' ' 35 -- 9.11 PTDIX Vard'ta'Rrtren'2640' Putnam Retirement fx J , TRRDX Barclays Global .: ;' wild TRwePric Top ; i' 651 6,48 -- 10.38 If S'iw'yfeTMiiS ' ; 1,092 - . . FidelityFreedom2040 r - . Performance Investors LP 2030 J LargestFunds - . '"J,135 -"- '""'"i'635 lliiUvlllliililillMliniiBli?i1C p: i 34 5,3? -- 9.91 TRRCX RiveVSourceRetirementPlusioSOA m , ' 2020 A Plus ) ; ' 1,513 - LargestFunds Top J.20,082 .7,22 Performance and Bottom RiverSource Retirement jj't . ' 1 VTWNX NestEgg Dow 7.27.. M.:...."J.M VardTet'RrtireroinMM Top ' "" 2020 Iristl PrinclpallnvLlfefime '') ' ' . ' ; " 712 5.78 1.88 HWIAX. ; tRoweMceRetir ' , ) 2,032 14 Largest Funds f $4 , : ... FACFX SchwabTarget'iblO ) - -- 4.08 .T.4 ! 06. Performance Top and Bottom I PTT W. -- 5:6.i VJE N X '' ' '' :W?..SW.MM. FFFCX FideiityFreedom2010 TRoweteRetiremertMio I ; l ;" : : : iM;;t;ai.ii..,,:i-tf.j.i.Largest Funds . ' Symbol Fund Name Three-Ye- Net Assets , Return Quarter Return (Annualized) (mils.) i fl thorny legal jargon that they can be mtimidating. ' "I don't think investors are reading the prospectus as it ex- ists now," says Morningstar ana-- . stateatprojects.asp. Some states offer direct aid as well. Pennsylvania residents AARP says it pile a list of tax first- - N vestors need. The problem: Prospectuses, currently include so much detail much of it in low-inco- home. s t the right mutual never been but regulators in Washington are trying to make it a little easier. The Securities and Exchange Commission has been working to streamline a mutual fund's basic document, offering known as a prospectus, which includes much information in- insurSome' ance policies pay for some home modifications, as do some state Medicaid programs. Private health insurance and Medicare typically don't For those unable to cover the costs themselves, various organizations, many local, might help, or even do the renovations directly. Some 400 Centers for Independent Living around the country can direct residents to local assis- tance programs, and may offer lists of contractors specializing in making homes more accessible. (Find a local center at ilru.org, the Web site of Independent Living Research Utilization.) Local housing authorities and Area Agencies on Aging may offer referrals too. In Atlanta, for example, Senior Citizens Services runs a volunteer program that will install ramps, grab bars and raildisabled ings for residents, as well as help with more routine maintenance, says program director Stephanie Suggs. The group also keeps a list of other area groups with similar programs. Most states have an agency organized under the federal 1997 Assistive Technology Act to help disabled residents find financial assistance. The Association of Assistive Technology Act programs offers contact information at ataporg.org or elderly resident's primary tumble. But in a key way these ' retirement portfo- I lios performed just as inves- ' tors should have expected: 1 The funds geared to people early in their careers-su- ch mas funds targeted to retire- : ment in 2040-w- ere hit hard Picking possible to work. These can. include some expenses as well as wheelchairs, vehicle modifications and even some medications. can seek loans from the state's Housing Finance Agency to modify a home they are buying. The Massachusetts Home Modification Loan Program offers low-an- d loans of up to $30,000 to modify a disabled : Deciphering a Prospectus Sources of Help age-relat- By . first-quart- ,' Aid to Make Homes 'Accessible' ' :' parent to water but you can't make her drink. My goal is to help my mom manage her finances to the degree she, allows. If she insists on pursuing a certain path with her. money, then I have to back down. All I can do now is hope for the best for her. v MUTUAL FUNDS "' I well-bein- Jeff Opdyke covers personal finance for The Wall Street Jour- nal. Email: lovemoneywsj.com - get-dat- ; ' ' By Theo Francis generally Americans growing own homes. Yet many of those homes are to the disabilities that can accompany old age. While the prospect of renovating to accommodate or other disabilities may seem daunting, experts say there are ways to keep costs down, including potential federal tax deductions and assistance from nonprofit and gov- 5 : by their heavy stock exposure. Meanwhile, funds for r people closer to retirement age saw losses limited by those portfolios' more muted stock exposure. Portfolios with a target ; year of 2010 had a negative ' 4.13 quarterly return on av- erage, according to Morninga and actually couple star, eked out gains. That compares to a negative 8.91 aver- ; funds. 2040 the for age Tnvestors who parked their 1 retirement savings in tar-e mutual funds suf-fered along with other inves- tors in the stock market's , wanted to give away a meaningful amount to a woman she barely knew who needed cash. 7 " I had a difficult conversation with my mom, at one point telling her I was ready to quit as her adviser because I wasn't willing to sit by and let her continue her long string of bad financial decisions. She backed down and, surprising to me, thanked me for caring enough to stop the misguided path. Since then, my mom has been slowly taking money out of her U.S. account and transferring it to India, where she lives. I She wants the comfort of know ing her money is within easy reach overseas. I understand her rational, but, again, I think it's misguided. Despite India's growth, and despite the weakening U.S. dollar, India's currency isn't the most stable. Anytime the world gets itself into a bad spot, investors rush out of risky currencies, such as India's, and into the security of the U.S. greenback. I've tried to tell my mom that to protect her purchasing power, she needs to keep the bulk of her assets in the states. Alas, my words are falling flat. She's adamant that her g is tied to havmental ing most of her money in an Indian bank account. At some point, I can't argue anymore be-- ; cause it's not my money. The only positive is that at least the money is going into a bank account. The message: You can lead a Funds Post Losses Target-Dat- e : South Brunswick, N.J. 08852 Our email: ' . sunday03(3wsj.com . . Clements ' !;jonathan.clementsi3wsj,com f Getting f loved Money-Je- ff i lovemoneywsj.com ,!; , ! Ask Dow t Barron's Insight ' ! mailf3barrons.com i SmartMoney ! edltorssmartmoney.com Herman m Jones-To- ; ' Opdyke ', askdowjones.sunday03i3wsj.com . : i: ' f ,, SmartMoney.com lettersf3smartmoney.com ' ' .;. 'i J |