June 23, 2017

Treasury Securities—3 Ways to Lend to Uncle Sam PODCAST

Do you know the difference between Treasury bills, notes, and bonds? Listen to a 6 1/2 minute podcast from FINRA to learn about treasury securities. FINRA has lots of other podcasts to inform you about financial affairs. Check out: http://www.finra.org/investors/podcasts/treasury-securities-3-ways-lend-uncle-sam?utm_source=MM&utm_medium=email&utm_campaign=Investor%5FNews%5F062317%5FFINAL
Lots more podcasts at: http://www.finra.org/investors/podcasts

A negative view of reverse mortgages

Economist Laurence Kotlikoff offers an alternative to a reverse mortgage for the house-rich and cash-poor senior homeowner. He is not a fan of the Home Equity Conversion Mortgage, or HECM. "An HECM sounds like a great financial product. It lets people 62 and older, many with little if any financial assets, tap into their home equity to get either immediate or monthly cash payments to help pay bills." Kotlikoff objects to the high fees and potentially high variable interest rates that lender charge on HECMs. As an alternative he suggests that a senior homeowner take out a mortgage and use the funds to buy a life-time annuity. If you are considering a HECM, read his opinion at: http://www.seattletimes.com/business/a-reverse-mortgage-sounds-great-but-there-are-risks/

June 22, 2017

Paid credit card late fees recently?

"Credit card companies usually set small-dollar minimum payments, so there’s really no excuse for incurring fees for late card payments."
"Yet many consumers fail to pay on time. In a new study, British researchers found a no-brainer solution that is highly effective: setting up automatic payments of our credit cards."
"The researchers started out with a different premise: that customers might learn, over time, to prevent maddening late fees after having to pay them numerous times. The researchers roundly rejected this after following nearly 250,000 U.K. credit card holders over two years.  When it comes to late fees, we do not learn from our mistakes."
"What they noticed, however, was a clear distinction between card holders who incur late fees regularly and those who don’t or who stopped incurring the fees.   Setting up autopay 'all but eliminates the likelihood of future [late] fees,' while the probability remains “persistently high” (about one in five) among people who did not, they said."
It's a no-brainer. Set up autopay for your credit cards!
Thanks to the Squared Away Blog: http://squaredawayblog.bc.edu/squared-away/autopay-ends-credit-card-late-fees/

June 21, 2017

IRA or Tattoo? Tattoo or IRA?

"What's an IRA?" the young person planning to get a tattoo might ask.
A tattoo is forever, following you into retirement. How many future retirees will look at their sagging tattoos and wish they had saved more for retirement?
How much are you spending on tattoos that provide no economic return while claiming you can't afford to contribute to an Individual Retirement Account? When I see people with extensive tattoos my first reaction is: "bet they aren't saving for retirement!" You can start an IRA with as little as $100 to open an account. Check out Schwab mutual fund company's target retirement index funds. http://www.schwab.com/public/schwab/investing/accounts_products/investment/mutual_funds/mutual_fund_portfolio/target_funds

June 19, 2017

7 Retirement X-Factors for Your Nest Egg

Almost everything you need to know to plan for retirement is available on the blog post by Joseph Hogue, author of the PeerFinance101 blog: 7 Retirement X-Factors for Your Nest Egg. It's never as simple as accumulating X times your salary or other "rules of thumb." Check out: http://peerfinance101.com/retirement-x-factors-how-much-need/

Financial decisionmaking decline in older adults

 A recent study confirms that seniors become more confident in their ability to make financial decisions at the same time that their financial knowledge and decision making skills are declining... an ominous combination.
"Although episodic memory and financial literacy score decline at roughly the same rate after age 60, confidence in financial decision-making ability remains relatively unchanged with age. The percentage of overconfident respondents with high self-assessed ability and low objective literacy scores increases from about 10% in the 60s to higher than 30% among respondents over 85."
The likelihood of being overconfident with one’s financial knowledge increases with age. Each year of age after 60 increases the likelihood of having high confidence and low financial literacy scores by 7 %. Higher levels of education are associated with a much lower likelihood of overconfidence, as are being male and white."
"Recognition of diminished investment skills may increase demand for annuitization or the delegation of important financial decisions to a trusted advisor. However, our study finds that, in aggregate and within all financial decision-making domains, advanced age increases overconfidence in financial decision-making abilities. The largest marginal effects are within the investment and insurance topic areas."
Similarly, "older drivers generally do not perceive a decline in their driving skills despite a predictable deterioration in sensory ability with advanced age."
Researchers Finke, Huston, and Howe: Old Age and the Decline in Financial Literacy, published in:
Management Science. Abstract available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1948627

10 Retirement Mistakes Baby Boomers Are Making

To avoid these mistakes, check out:

Deciding when to retire... lots of factors to consider

"If you're in your 50s or 60s, deciding when and how to leave the workforce for good is one of the most important decisions you'll face during the rest of your life. You'll want to consider and balance many factors when making a thoughtful choice. Fortunately, help is available from the Society of Actuaries (SOA), which recently published a brief titled "When Should I Retire?" It's part of the organization's "Managing Retirement Decisions" series" according to Steve Vernon writing for Money Watch." Check out the details at: http://www.cbsnews.com/news/when-should-you-retire/

June 13, 2017

5 Steps to take before you retire

Image result for retirement
1. Make a financial plan that starts with a budget.
2. Determine how much you can safely withdraw from savings.
3. Identify which retirement sources to use when.
4. Set your asset allocation.
5. Figure out how to pay for medical costs.
Get the details from Margaret Price, writing for Investors Business Daily at: http://www.investors.com/etfs-and-funds/retirement/dont-quit-your-job-before-taking-these-5-retirement-steps/    

Understand Key Concepts: Return and Rate of Return

When evaluating investment options or assessing the performance of your current investments, two concepts are key: return and rate of return. In this podcast, we explain both and how to use them to get the most out of your investments. Listen | 4 min. 45 sec. https://www.finra.org/investors/podcasts/key-concepts-return-and-rate-return?utm_source=MM&utm_medium=email&utm_campaign=Investor%5FNews%5F053117%5FFINAL

Image result for rate of return

Medicare Primer

Most people should sign up for Medicare during the three months before their 65th birthday to avoid costly penalties, even if you are still working and covered by health insurance through your employer. Failure to sign up at the right time can result in a financial penalty for the rest of your life (to discourage people from waiting until they really need care and failing to pay monthly premiums). But Medicare part A is free so be sure to sign up. Read the details from The Motley Fool at: https://www.fool.com/retirement/2017/05/22/should-you-enroll-in-medicare.aspx
Image result for retire early 

May 18, 2017

Don't be put off by high sticker price of private colleges

"Phillip Levine is breaking down a barrier: the well-founded fear among low-income and even middle-class families that an elite liberal arts college is out of the question."
Levine, a professor at Welleseley College, "designed a calculator to estimate how much an individual applicant will actually pay, after plugging in his or her family’s unique financial data, such as income, house value, mortgage amount, etc. – and the calculator is way easier than filling out a FAFSA form." Check out the details at the Squared Away blog: http://squaredawayblog.bc.edu/squared-away/college-calculator-bridges-class-divide/

Analyze My Divorce Settlement

"Analyze My Divorce Settlement calculates how each spouse will fare financially under any proposed divorce agreement entered into the program.  This software gets to the bottom line—how much each spouse will have to spend  based on the details in a specific divorce agreement. For households and professionals." Visit analyzemydivorcesettlement.com to learn more.

Are Indexed Annuities Really as Good as They Are Made to Sound?

"Some of the hottest selling financial products currently being sold are called indexed annuities.  They are often promoted as a way to potentially earn double digit returns with no downside risk and no risk of outliving your money.  The insurance reps and supposed advisors that sell them often prey on people’s fears of stock market crashes, unstable economies and rising taxes.  Anytime someone tries to scare you into making a decision or evoke strong emotion to compel you to do something you should BEWARE.  Additionally, if something sounds too good to be true it usually is.  Our experience with talking to those who have purchased indexed annuities as well as some of our own research has led us to conclude that in most cases the returns are usually lower single digit returns comparable to a bond return.  Additionally, the lack of liquidity and flexibility in accessing funds in the annuity often proves inconsistent with many retiree’s income needs.
For more information on this subject we have provided links to two articles that go into greater detail about indexed annuities.  The first is a FINRA Investor Alert.  FINRA is a not-for-profit organization authorized by congress to protect America’s investors and to make sure the industry operates fairly and honestly.  The second is from Fidelity Investments, which operates a brokerage firm managing a large family of mutual funds and provides fund distribution and investment advice along with retirement services, life insurance and wealth management."
FINRA Investor Alert – Equity-Indexed Annuities: A Complex Choice
Fidelity – Indexed Annuities:  Look before you leap
Thanks to Networth Advisory Group for this post. Check out their website and blog: http://networthadvice.com/net-worth-blog/

May 16, 2017

How to Create a Retirement Plan in 15 Minutes

Writing for the Motley Fool, Wendy Connick explains that this 5 step process "will work for the majority of savers to ensure that they have enough funds for a comfortable retirement."

Step one: Set aside 15% of your income
Step two: Put your retirement savings into a tax-deferred retirement account
Step three: Put the money in a target date fund
Step four: Check in once a year
Step five: Enjoy your retirement
Get the details at: https://www.fool.com/retirement/2017/05/13/how-to-create-a-retirement-plan-in-15-minutes.aspx

May 15, 2017

The latest internet scam

"Your love of a good deal could be a deal breaker. Fake gift cards and coupons for Lowe’s, Bed Bath & Beyond, Home Depot, Target and IKEA (phew!) have infiltrated the internet. On Facebook, the phishing scam is taking the form of a $50 coupon for Lowe’s and a $75 one for Bed Bath & Beyond. (Check out photos of the bogus bucks here and here). The coupons appear as posts and ads on the social media site. Once you click on them, you’re directed to fake websites or survey pop-ups that instruct you to answer a few questions in order to “earn” the coupons. The surveys, predictably, ask for your personal information (in order to steal your identity, and yada, yada, the rest is history). The Better Business Bureau (BBB) is telling consumers to beware of pop-up-type offers and to “watch out for a reward that's too good to be true” because “few businesses can afford to give away $50 gift cards for completing a few questions.” They also caution that it’s easy for scammers to mimic a company’s website by tacking on a company’s logo, using its letterhead or making the website address (URL) look similar. If you’re wondering about a particular offer, visit the company’s real website and see if it’s listed there. And remember, $75 off nothing equals...nothing!"
A Consumer Action News Alert • May 2017 • www.consumer-action.org
SCAM GRAM is Consumer Action’s monthly e-newsletter alerting you to the dirtiest players in the world of tech fraud, credit card scams, ID theft and general con-artistry. Don’t be fooled by liars, cheats and crooks—wise up with SCAM GRAM!

May 4, 2017

A great tutorial on Medicare

Kiplinger's just published an excellent article "FAQs about Medicare" by Kimberly Langford. It is mandatory reading for persons approaching age 65 as well as a great refresher for those already on Medicare. Check out: http://www.kiplinger.com/article/insurance/T027-C000-S002-faqs-about-medicare.html
For a much more detailed explanation of the complexities of Medicare I highly recommend the book  Medicare Demystified: A physician helps you save time, money, and frustration by Ronald Kahan, MD.

April 29, 2017

Who is Middle Class in the US?

Although we read and hear many references to the "middle class," there is no official definition of who qualifies as middle class. Many people assume it means a certain level of income, homeownership, and a steady income. A recent study by the Pew Research Center defined middle class in relation to the median U.S. income of $55,000. Pew considered the middle class as households with 2/3 to 2 times the national median income ($55,000), which in 2010 amounted to $35,294 to $105,881 after taxes. Check out pew's middle class calculator for European countries and the U.S.: http://www.pewglobal.org/interactives/european-middle-class-calculator/

As reported in the NYT “Middle class contracted in US over two decades, study finds” by Nelson D. Schwartz, April 24, 2017.

April 27, 2017

A plan for your digital legacy

"When thinking about your digital legacy consider:
  • social networks, such as Facebook, Twitter, or LinkedIn
  • blogs and licensed domain names
  • your presence in online communities or listserves
  • music, photos, or other files that you store online
  • seller’s accounts on Amazon, eBay, or Itsy, and
  • access to financial accounts or utilities."  As part of your estate plan you should arrange for the  management/termination of your accounts. For advice read Nolo's recommendation at: http://www.nolo.com/legal-encyclopedia/a-plan-your-digital-legacy.html

April 26, 2017

Do you have enough money to retire?

A common question for pre-retirees is whether they have enough money to retire. Of course, the most accurate answer is: "It depends." How long are you likely to live? What lifestyle do you desire? What "guaranteed" sources of income do you have and how secure are those sources? What health expenses will you face? Will you need long term care? Here is an article from US News and World Report to help individuals answer this question. Keep in mind that spending is likely to vary widely with many retirees spending much more in the first "go-go" years of retirement than they did while employed because now they have time to travel, golf, recreate, and might want to buy an RV trailer or second home. Check out Brian O'Connell's article: http://money.usnews.com/investing/articles/2017-04-25/how-to-know-if-youre-underfunded-in-your-retirement-account

April 23, 2017

Got credit card complaints? Call your card issuer!

"The Consumer Financial Protection Bureau received more than 26,000 complaints regarding credit cards last year, with billing the most common reason. But intense competition in the industry means credit card companies can be responsive if cardholders call." Read :

Here’s proof that disputing your credit-card bill could be worth it

The CFPB is the consumer's best friend in the financial services marketplace yet it is under attack by the Trump administration.  How soon politicians have forgotten the horrors and agony of the 2008 global financial meltdown caused by banks and mortgage lenders. Check out the CFPB's website and learn how the agency, created in the aftermath of the financial disaster, can help you and your family: https://www.consumerfinance.gov/. The CFPB is a "U.S. government agency that makes sure banks, lenders, and other financial companies treat you fairly"

13 Questions to help plan your retirement

"Many pre-retirees spend more time planning vacations than they do preparing for retirement, resulting in a lack of financial readiness. But planning is essential to avoid the worst, and Life Income Management founder Melody Juge reviews 13 questions to ponder to move toward sound retirement."
"What is your target retirement date?
• What are your monthly living expenses? Exactly.
• Do you have special interests and hobbies? If so, are there costs involved?
• What amount of money will you need to set aside to build your cash emergency fund?
• What is the amount of Social Security benefit you will be receiving? When will it start?
• What is the total amount of all your retirement savings?
• Where do you plan on living; are you staying in your home? Will you be downsizing?
• Do you currently have special health issues that need consideration?
• Do you plan on earning income during your early retirement years doing consulting or pursuing an income generating hobby?
• Do you know what required minimum distributions are?
• Do you have a will?
• Do you know the importance of having a Power of Attorney for medical and financial matters?
• Do you realize that your investment risk profile needs to be re-evaluated as a retiree?"
 For any of the questions that can be answered with "yes" or "no," change the question to explain HOW you plan on earning extra money and what you have done to determine if your plan is realistic?
Instead of answering Y or N to whether you have a will... If yes, When is the last time you reviewed your will and estate plan? What changes do you need to make in your plan?
Instead of answering Y or N to required minimum distributions, write down what they are, when they will affect you (what age), and how you expect to be affected. If you don't know about RMDs, look up the term on the internet.
Read the full article at: http://www.marketwatch.com/story/when-it-comes-to-retirement-a-dream-isnt-a-plan-2017-04-14

April 20, 2017

Almost everything you need to know to plan for retirement

Almost everything you need to know to plan for retirement is available on the blog post by Joseph Hogue, author of the PeerFinance101 blog: 7 Retirement X-Factors for Your Nest Egg. It's never as simple as accumulating X times your salary or other "rules of thumb." Check out: http://peerfinance101.com/retirement-x-factors-how-much-need/

A visual representation of investment diversification

Check out the Squared Away blog for an effective visualization of investment diversification. I used the Callan Table in teaching diversification to my university students. It's a great way to understand why no one can predict future investment returns. http://squaredawayblog.bc.edu/squared-away/the-picture-of-investment-diversity/
Callan table excerpt

What mom REALLY needs for Mother's Day

My New York City sister sent me an email about a Mother's Day Brunch for "only" $105 per adult and $45 per child! Obviously that's what the 1% (or 10%) does to celebrate Mother's Day.
What mom really needs is not an expensive restaurant meal, flowers, or another kitchen gadget. What most mothers need, especially those who are NOT in the paid workforce is... an IRA! Yes, an individual retirement account! Women who are working full time (unpaid) in the home need to build retirement security and, unfortunately, most will depend on their husbands, who are subject to the 4 Ds: Divorce, Disability, premature Death, and Desertion.
Time to enter the 21st century and fund a Roth IRA for mom. Check out the ultra low cost, low entry, very diversified options from mutual fund companies Charles Schwab and Vanguard.
You only need $100 to open a Schwab target retirement index fund IRA. http://www.schwab.com/public/schwab/investing/accounts_products/investment/mutual_funds/mutual_fund_portfolio/target_funds
If Mom is worth $1,000, then check out Vanguard Target Date Retirement Funds:
Both mutual fund company websites explain mutual funds, target date funds and IRAs.
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