September 2, 2014
Sorting Out Medicare Enrollment Dates
Failing to meet one of Medicare’s many enrollment deadlines can be costly to new or imminent 65 year olds.
The Journal of Financial Planning helps aging baby boomers start out on the right foot with a clear run-down of at least five different enrollment windows for various parts of Medicare.
Getting these dates right is “very tricky,” and people often make mistakes that lead to higher out-of-pocket medical costs and gaps in their coverage, said Katy Votava, president of the consulting firm, Goodcare.com, and author of “Making the Most of Medicare: A Guide for Baby Boomers.”
“They often receive well-meaning but mistaken advice, and then they’re really in a pickle,” she said. “They aren’t eligible to apply when they want to or face penalties down the road. Coverage gaps can be a tremendous financial burden.”
The image displayed was extracted from the Journal’s enrollment timeline, and the entire graphic and a Journal article by Votava can be viewed here. The graphic is worth 1,000 words but here are some important don’t-miss dates: …Learn More
August 26, 2014
A Financial Plan for Alzheimer’s
First, the facts from the Alzheimer’s Association. At age 65, one in nine individuals has Alzheimer’s disease. At 85, the risk exceeds one in three. Its victims are more often women.
In the Ted video above, the global health consultant and writer Alanna Shaikh disclosed that her professor-father had Alzheimer’s. Since it can be hereditary, she’s preparing to possibly share his fate, by keeping her mind active and by learning to do things with her hands, such as knitting.
Shaikh doesn’t discuss financial preparations. But experts have some suggestions, chief among them getting one’s will, health care directive, and perhaps a power of attorney in order. Paramount in this process is finding trustworthy people to handle your affairs. You can also arrange for a lawyer or outside mediator if family members disagree about your care.
The Alzheimer’s Association recommends putting a financial plan in place as soon as there is a diagnosis. “Financial planning often gets pushed aside because of the stress and fear the topic evokes,” the association said in this new booklet. “The sooner planning begins, the more the person with dementia may be able to participate in decision making.” …Learn More
August 19, 2014
Retirees Live on Less
Many recent U.S. retirees in a new survey receive less than two-thirds of what they earned during their working years, and they’ve made significant adjustments along the way.
That finding for baby boomers who’ve retired in the past five years is contained in a larger national survey conducted by T. Rowe Price, the Baltimore mutual fund company. The full survey covered some 2,500 working and retired individuals, age 50 and over. All of them have at least some savings in a 401(k) account.
The majority of the recent retirees reported their annual income is between $25,000 and $100,000. Social Security is the largest single source of that income, and smaller but equal shares come from defined benefit pensions and from retirement savings plans.
Many of the retirees report their households are managing to get by on less than the 70 percent to 80 percent of their pre-retirement income that most financial planners and retirement experts estimate they need. And four out of 10 are living on 60 percent or less.
The retirees surveyed said they’ve had to lower their living standards, and four out of 10 described their situation as adjusting “a great deal.” …Learn More
August 14, 2014
South Has Highest Debt Collection Rate
It’s old news that working people in the South earn less than residents of thriving communities in California, the Northeast, the Upper Midwest and elsewhere.
What’s troubling is how many Southerners apparently can’t pay their bills.
West Virginia, North Carolina, Alabama, Kentucky, Texas – they’re among 13 states where more than four in 10 state residents’ credit card or other debts have been sent to collection agencies, according to a July report by the Urban Institute.
The report, based on data from the credit reporting firm TransUnion, provides insight into how many Americans continue to experience financial stress even though the recession is technically over. The Urban Institute’s analysis doesn’t focus on mortgage debt, since delinquent home loans generally go into foreclosure and rarely to collections. Yet many of the Southern states were also hit harder by the housing market collapse than the nation as a whole. …Learn More
August 12, 2014
Credit Union Popularity Rises
It’s not hard to find glowing testimonials online about credit unions – friendlier staff, lower fees, and faster processing of loan applications, credit union customers say.
“Way better than a bank!” Dan F. says about his Iowa credit union.
Now this warm, fuzzy feeling among existing credit union members seems to be reaching the general public. The Credit Union National Association (CUNA) reports membership growth exceeded 2 percent annually for the past three years, ending a lull that was taking hold only a decade ago.
In CUNA’s newest count – the year ending 2014 – total membership increased to 100.1 million members. CUNA president Bill Hampel’s theory is the financial crisis of 2008-2009 “soured a lot of people on the big banks.”
People do trust credit unions a lot more than banks, especially large banking companies, according to a “trust index” tracked by the University of Chicago and Northwestern University’s business schools. Two-thirds of Americans trust credit unions, the index showed recently, while only one in four trust a major bank. …Learn More
July 17, 2014
College 529 Plans: a Video Primer
In this video, the president of a Boston-area community bank explains the fundamentals of 529 college savings plans, which most state governments offer.
Bob Mahoney recently put both of his daughters through college with money he’d saved in 529 plans. While it can be difficult for many parents to scrape together the money, he said 529 plans provide some hedge in the future against the ever-rising cost of a college education.
Mahoney suggested starting small and contributing, say, $1,000 or $5,000 each year and also asking grandparents to put money into the 529, in lieu of giving toys and other gifts.
As he explains in the video, the advantage is that 529 plans are free of federal and often state taxes on the investment returns earned while the future student is growing up.
One disadvantage is that they require parents to make difficult decisions about how to invest the money they’re saving. Mahoney’s advice is to avoid high-flying stocks and to approach 529s as one would approach 401(k) investing. And, like 401(k)s, low-fee funds also make sense for 529 plans. …Learn More
July 15, 2014
Target Date Funds Keep Growing
The number of employers offering target date funds as an option in their 401(k) plans, and the number of workers using these funds, continue to increase.
In 2013, 86 percent of all employer plans offered target date funds (TDFs) – double the share of plans offering them in 2006 – according to Vanguard’s annual report on defined-contribution plans, “How America Saves 2014,” released in June.
Vanguard data also support TDFs’ growing popularity among employees: more than half of plan participants now have some or all of their retirement accounts in TDFs, compared with just one in 10 in 2006.
TDFs eliminate the need for employees to wade in and make complex investment decisions about choosing and updating their asset allocations. A TDF initially invests largely in stocks, but the portfolio becomes more conservative and the allocation to stocks declines as the individual approaches the targeted retirement date he selected. …Learn More