April 24, 2014

Podcast: What you need to know about mutual fund fees

"All mutual funds charge fees. The higher the fees you pay while owning a mutual fund, the lower the return you can make from your fund shares. Even a small percentage difference in the fees among funds can add up to a big difference in the dollars you can make. It's important to be aware of all the fees associated with a mutual fund investment." Listen to the 6 minute FINRA podcast  (& check out other podcasts) at: http://www.finra.org/Investors/SmartInvesting/GettingStarted/Podcasts/MutualFundsETFs/P487257?utm_source=MM&utm_medium=email&utm_campaign=Investor_News_042414_FINAL

April 21, 2014

Facing hard decisions about the high cost of college?



Check out these perspectives from Michelle Singletary (Washington Post $ columnist): The bottom line when picking a university: ‘No debt for our daughter or for us’ by http://www.washingtonpost.com/business/the-bottom-line-when-picking-a-university-no-debt-for-our-daughter-or-for-us/2014/04/17/d3310c5c-c4ac-11e3-bcec-b71ee10e9bc3_story.html and this article by her daughter (now finishing her first year in college): The best education your money can buy. http://www.washingtonpost.com/business/the-best-education-your-money-can-buy/2014/04/18/8665ce38-c580-11e3-bf7a-be01a9b69cf1_story.html

Resetting (overturning) decision to claim early Social Security benefits



About half of SS beneficiaries elect to claim retirement benefits “early” (before their “full” retirement age), thus locking in a lower benefit for the rest of their lives. While some workers make this decision because they absolutely need the income, it can be a big mistake for beneficiaries (and/or their spouses) who live longer than average lifespans. “So what can a retiree do if she later regrets the decision to take early benefits or her circumstances change such that she no longer needs the early income? It turns out there is a way to mitigate this decision after the fact—a ‘reset’ allowed under the Social Security rules.” Joe Alfonso explains, “Social Security allows you, upon reaching full retirement age, to stop receiving benefits until sometime in the future. Under the program rules, delayed benefits after full retirement age are entitled to earn credits of 8% per year up to age 70. Beneficiaries whose full retirement age is 66 and who delay benefits until they reach age 70 can therefore receive delayed credits totaling up to 32%.” Read the details in the Christian Science Monitor: http://www.csmonitor.com/Business/Saving-Money/2014/0419/Deciding-when-to-take-Social-Security-benefits  Don’t forget that the real full retirement age is 70; anyone who claims benefits before that age accepts a lower monthly benefit for life. Read the 10/23/13 blog post for details.

Don't forget taxes in retirement income planning!

Investors looking at a substantial retirement account balance need to remember that they will owe taxes on most of their income in retirement. Funds in employer sponsored plans (401k,403b, 457) and traditional IRAs will be subject to income taxes in retirement, substantially reducing the amount available to spend. "Dan Caplinger, The Motley Fool's director of investment planning, looks more closely at this disaster scenario that results from people overestimating how much in retirement savings they actually have. Dan notes that most people use traditional IRAs and 401(k) accounts to save for retirement, taking advantage of the tax-deferred growth that they offer. But those accounts require you to pay tax on the amounts you withdraw during retirement, and many people fail to take the tax liability into account in evaluating their retirement nest eggs. Dan notes that you can overestimate your actual after-tax retirement savings by anywhere from 10% to 40% or more, depending on how much you pay in taxes." Watch the video at this link: 
http://www.fool.com/retirement/general/2014/04/19/the-nightmare-retirement-scenario-you-must-avoid.aspx

Restaurant selection takes more time than IRA planning



American adults spend more time choosing a restaurant for a special occasion than planning their IRA investments.  Only 15% of the more than 1,000 adults surveyed allotted two or more hours to planning an IRA investment while 25% said they'd spend 2+ hours selecting a restaurant, 21% to buy a flat screen TV, and 16% report buying a tablet took up this time. The survey found a lack of understanding of IRAs is still prevalent. More than 1/3 of respondents do not understand the difference between an IRA and an employer-sponsored plan. For Gen Y, the lack of comprehension reached 45% of the sample, according to TIAA-CREF's survey https://www.tiaa-cref.org/public/about/press/about_us/releases/articles/pressrelease451.html

Social Security Statements of Estimated Benefits



Starting in September 2014, the Social Security Administration (SSA) will resume mailings at five-year intervals to workers who have not signed up to view their statements online. The statements will be sent to workers at ages 25, 30, 35, 40, 45, 50, 55 and 60. The statement includes an estimate of monthly benefits at various claiming ages. The SSA stopped mailing paper statements in 2011 due to budget cuts by Congress which resulted in big reductions in customer service. Don’t wait for the mail; sign up for electronic access to your account at: http://www.ssa.gov/myaccount/

April 16, 2014

April 16 is TWOKAM “Talk with our kids about money” day



"There are all sorts of ideas to get the conversation started from books you can read together or crafts like making a piggy bank," says Massey-Wiebe, who is a financial counsellor at Community Financial Counselling Services, which helps individuals facing financial difficulties.  "One of the most common things I will hear from people who come in to talk to me is 'I never learned this at home' and 'I was never taught this at school.' " www.talkwithourkidsaboutmoney.com  
http://www.winnipegfreepress.com/business/finance/having-the-money-talk-255006551.html

9 ways pre-retirees crash their retirement



By Kenn Tacchino
1.      Retire too soon (read: Checklist of Retirement-Date Considerations)
2.      Carry debt into retirement
3.      Claim Social Security too soon
4.      Underestimate your life expectancy
5.      Underestimate health-care costs and needs
6.      Using a life-only annuity instead of a joint and survivor annuity for a married couple
7.      Counting on continued work or part-time employment
8.      Underestimating inflation.
9.      Choosing to age in place
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