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    Avoiding Disasters:Where Should You Retire?

    Idyllic coastal locations, especially those blessed by wide, sandy beaches, warm coastal waters, and sunny subtropical weather, have long been prized as retirement havens. Unfortunately, as Hurricanes Katrina and Rita have demonstrated recently, the good life along some of America’s most popular coasts is not without serious risks to life and property.

    What should careful retirees consider when relocating?

    Warren Bland, a geographer and professor at California State University, Northridge, and author of “Retire in Style: 60 Outstanding Places Across the USA and Canada,” has these suggestions:

    • Don’t overreact to perceived dangers. Understand that you are in greater danger during routine car trips and from air pollution than from catastrophic but rare hazards like hurricanes, tsunamis, earthquakes and tornadoes.

    • If you decide to live along the Gulf or Atlantic coasts despite the hurricane threat, be sure to minimize your risk from storm surges by choosing a home site at least a mile inland and 20 feet above sea level.

    • If your choice is California, avoid low-lying, tsunami-threatened areas along the coast, proximity to active earthquake faults, smoggy areas, and places having a history of landslides.

    • In the American Heartland, avoid floodplain sites and have a storm cellar where you can seek shelter from tornadoes.
    Dr. Bland’s top picks include: Victoria, British Columbia; Boulder, Colorado; Portland, Oregon; San Antonio, Texas; Asheville, North Carolina; Sarasota, Florida; Tucson, Arizona; and Ithaca, New York.

    Home Investing: Keep It Leveraged

    While discussion about why homeowners should reconsider trying to pay off their mortgage as quickly as possible is not new, Roland Manarin, president of Manarin Investment Counsel, takes this message one step farther, recommending that many investors should keep the largest mortgage possible.

    “People believe their home is a financial asset, but it isn’t an investment. Investment assets make money for you, but a house is actually a liability because you have to pay taxes, insurance, upkeep, etc. The only way that I can turn my house into an asset is to take the money out of the house with a loan and own something that pays me more money than what the taxes, insurance and upkeep cost.

    “For people who’ve paid their houses off, I ask them: ‘If you could borrow at 4% to earn 10%, would you do it?’ If they answer, ‘Yes,’ I tell them to borrow 80% of the market value of the house, take the money out, and own a diversified portfolio of good companies with a five- to 10-year minimum time horizon.

    “It’s actually a fairly simple principle called OPM—‘Other People’s Money.’ You have to learn how to make money work for you. Having money is one thing, making it work for you is the key.”

    Source: Manarin Investment Counsel, an investment advisory firm based in Omaha, Nebraska.

    Low Basis Company Stock: Getting More by Paying Less (Taxes)

    Upon retirement, you face a number of important investment decisions. One important decision concerns what to do with company stock. A substantial position in company stock can be a mixed blessing: It may be the source of much of your wealth, but it can also be a risky concentration of assets. To complicate matters, you may face a sizable tax bill if you sell. How can you maximize your position in a low basis stock? A number of approaches may make sense, including:

    • Selling the stock outright—incurring a possible capital gains tax, but freeing up assets for diversification.

    • Contributing the stock to a charitable remainder trust—an arrangement that allows for sale of the stock without any immediate tax consequences, a tax deduction for the gift to charity and a subsequent income stream.

    • Writing covered calls—by selling the upside potential of your stock for a limited time, you can generate a substantial income.

    • Initiating hedging strategies—for example, buying “puts” or writing customized “private collars” to protect against a drop in the stock’s value.

    • Contributing the stock to an “exchange fund”—an investment pool in which a group of investors contribute low-basis shares; each investor receives an interest in the overall, diversified portfolio.
    Source: Neuberger Berman, an investment advisory firm based in New York; www.nb.com.

    Your Family’s HealthBudget: New Web Tool

    Whether a consumer is insured through an employer, an individual plan or Medicare, health care costs extend far beyond monthly premiums. Out-of-pocket expenses often exceed the amount of yearly insurance premiums. But many consumers fail to include these additional health care expenses in their family’s budgets.

    However, a new Web site offers an easy-to-use tool designed to provide a personalized view of a family’s health-related budgetary needs. The site also provides a variety of additional tools, including a health plan chart that compares different aspects of HMOs, preferred provider organizations (PPOs) and high–deductible health plans (HDHPs).

    The Web site can be found at www.familyhealthbudget.com. It is sponsored by Humana, one of the nation’s largest health benefits companies.