October 9, 2014

Home Deport Credit Card Hackers strike home!

When I opened my email today I was alerted to an international charge for 41 cents for "OFICINA INKJET" which was obviously a fraudulent charge. Having used the card at Home Depot a number of times in the last few months and knowing that their credit card system had been hacked, I immediately called my credit card company. They cancelled the card and will send me a new card (one reason to have 2 credit cards). So many retailers have been hacked and the pace is accelerating. One can choose to pay with cash or check in the future but that doesn't work for online transactions; PayPal may be the best option for online shopping. But one still must use credit cards for reserving airline tickets; it's hard to go credit card-free. So the moral of the story is: watch your credit card statements vigilantly and don't ignore small charges. Better yet, sign up for email notification of charges.

October 6, 2014

Time for boomers to play defense with retirement investments

Two of the most brilliant minds in financial planning, Wade Pfau & Michael Kitces, suggest that boomers approaching retirement or already retired should plan for a market correction after 5 years of a raging bull market. Ian McGugan, write in the Toronto Globe & Mail: "After five years of surging stock prices, many people are nearing the end of their working lives while sitting on big gains in the equity portion of their portfolios. A bear market now could tear a massive hole in their retirement plans.While that risk is always present to some degree, there's reason to think that the danger is particularly acute right now."McGugan explains:
"The first strategy consists simply of reducing your stock exposure in the early years of retirement then gradually increasing it as you age. This, of course, is precisely the opposite of the traditional strategy of paring back your equity holdings as you age."
"The second strategy consists of reducing your stock exposure at times – like now – when the market is seriously overpriced in terms of what is known as the cyclically-adjusted price-to-earnings ratio."
Read the details:

5Things Retirement Plan Participants Get Wrong

Misconceptions about retirement planning and preparation abound according to Jill Cornfield, writer for Planadviser, starting with target date funds (TDFs). Specifically, some participants believe that the account balance in a TDF will never go down, that a TDF guarantees income in retirement, and that TDFs guarantee lifetime income. All three misconceptions are untrue.  Beyond TDFs, check out these 5 misconceptions:
1. ‘I’ll never be able to retire, anyway.’ So… why worry?
2. ‘I can’t afford to increase my contribution.’ Just do it… 1% at a time.
3. 'I don't need to worry about retirement now.' “Time discounting—when people discount something as not important because it is so far in the future—is a widespread misconception….”
4. ‘I’m responsible?!?’ “No one is responsible for our financial security but us,”
5. ‘Oh, the plan has costs?’

September 29, 2014

Buying Affordable Care Act Health Insurance: Subsidy Calculator

Use this calculator provided by the Kasier Family Foundation to  estimate whether you are eligible for a tax subsidy, and if so, how much. "This tool illustrates health insurance premiums and subsidies for people purchasing insurance on their own in new health insurance exchanges (or “Marketplaces”) created by the Affordable Care Act (ACA). Beginning in October 2013, middle-income people who are not eligible for coverage through their employer, Medicaid, or Medicare, can apply for tax credit subsidies available through state-based exchanges." The kff.org website is a wonderful source of information about the ACA and related health insurance and health care topics. Use the calculator at: 

September 24, 2014

Unexpected early retirement: 8 tips

“Numerous surveys have shown that people think that they are going to retire later than it happens. The two big reasons: health issues and losing your job.”
Almost half of current retirees left employment before they planned, mostly due to health problems or disability.
“Unplanned or unexpected early retirement can create havoc with your retirement plans. Some who had to retire early weren't quite ready financially: Those five or 10 additional years of saving for retirement were no longer possible. Some may have had to take Social Security earlier than expected. And, as we all know, the earlier you take Social Security, the lower your monthly check.” Read the 8 tips on coping from Rodney Brooks in USA Today: http://www.usatoday.com/story/money/columnist/brooks/2014/09/23/retire-pension-401k-boomer/16047453/

September 23, 2014

Reverse Mortgages

A new booklet from the Center for Retirement Research at Boston College explains reverse mortgages and the role they can play for promoting financial security in old age (age 62 is minimum age for a RM). PDF available at: http://crr.bc.edu/wp-content/uploads/2014/09/c1_your-house_final_med-res.pdf

"The booklet’s key points are:

  • Home equity is the largest store of wealth for retirees and, with reduced support from Social Security and pensions, many more will need it for retirement income.
  • The two ways to tap home equity are downsizing and a reverse mortgage.
  • Downsizing:
    • Adds to your savings, which boosts income from savings.
    • Frees up more income by reducing taxes, insurance, and upkeep.
  • A Reverse Mortgage:
    • Allows you to stay in your home.
    • Provides income through a line of credit, lump sum, or monthly payments."
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