October 23, 2018

FICO changing how credit scores are calculated- may boost scores

"FICO will introduce a credit score next year that incorporates information about how consumers handle savings, checking and money market accounts. The model could help some of the millions of people who have poor credit or no credit." Writing for USA Today, Janna Herron explains: "This additional information could help boost the credit scores of some of the 79 million Americans who have poor credit histories, along with the 53 million who have no credit score at all under the traditional FICO model. That, in turn, could help them qualify for a credit card or loan."
Details at: https://www.usatoday.com/story/money/2018/10/22/new-fico-credit-score-uses-checking-and-savings-account-history/1730838002/

October 18, 2018

The freelance retirement crisis no one is talking about

Americans don’t save enough for retirement. And gig economy workers are likely to struggle more than others. 

Freelancers, independent contractors and sharing economy workers may be even less prepared for retirement but those who work in the gig economy have some options if they wish to take advantage of provisions in the US tax code.

  • Seven in 10 full-time gig economy workers are unprepared to sustain their lifestyle in retirement
  • One in three of them set aside no money for retirement
  • One-third associate retirement with anxiety

So what can you do? Check out this link: https://www.fastcompany.com/90243884/the-freelance-retirement-crisis-no-one-is-talking-about 

Immediate Fixed Annuities are path to retirement security and success

Jonathan Clements, a longtime financial columnist and author of books on personal finance, said the "plain-vanilla immediate fixed annuity" is an excellent way to finance retirement, particularly when combined with delayed Social Security benefits. "If you reach retirement age and want regular income and to hedge against outliving your money, buying an immediate fixed annuity could be a smart purchase," he says. (Retirement Security Smart Brief, October 10, 2018). read the full interview by Jane Wollman Rusoff.

Jonathan Clements was a Wall Street Journal personal finance columnist for 20 years, is author of eight finance books, and founder of HumbleDollar.com — serving up a blog, guide and newsletter.

To quote Clements from the article:
"If clients are thinking about making money last through retirement, a combination of delayed Social Security benefits and an immediate fixed annuity could indeed ensure that they’re less likely to outlive their money. The longevity risk is a real risk."

About annuities:
"Unfortunately, the term 'annuity' has an extremely bad name. That’s mostly because of some really atrocious products, specifically, variable annuities with high annual expenses and equity-indexed annuities. But the plain-vanilla immediate fixed annuity is a great product. If you reach retirement age and want regular income and to hedge against outliving your money, buying an immediate fixed annuity could be a smart purchase. However, this is a product that financial advisors don’t tend to sell, in part, because the commissions tend to be very low."
Read the full interview at: https://www.thinkadvisor.com/2018/10/08/jonathan-clements-fund-fees-have-dropped-advisor-f/?slreturn=20180918224750

Budget deficit grows at alarming rate due to Trump tax cuts

"The US budget deficit reached $779 billion in fiscal 2018, a 17% increase compared with fiscal 2017 and the biggest total in six years. Revenue increased only $14 billion because of tax cuts enacted by the Trump administration."
Consider this factor as you make decisions on who to elect to Congress.
The Republicans are talking about cuts to Social Security and Medicare because of the growing deficit.

Smishing... a variation on phishing

"Smishing" is an attempt by cybercriminals to get personal information and to steal identities through text messaging. Learn about common scams and how to protect against them.
October is Cybersecurity Awareness Month
"Smishing is yet another tool used by cybercriminals to obtain personal information and steal identities. You’ve probably heard of ‘phishing,’ which is an attempt to get people to provide sensitive information via email, like credit card numbers or passwords. Smishing is a mashup of SMS (short message service) and phishing. Basically, it’s phishing via text."
Thanks to: Samantha Delgado, Communications, PR & Corporate Responsibility, Association of International Certified Professional Accountants
Get the details at http://blog.aicpa.org/2018/10/smishing-what-you-need-to-know.html#sthash.q6I8AByU.dpbs

Coverage for pre-existing conditions at risk under Republican administration

"Protections in the Affordable Care Act that ensure people with pre-existing conditions can get and keep health insurance are popular, but may be in jeopardy due to Republican attacks on the law. Republicans contend they have plans to replicate the ACA protections for patients with pre-existing conditions, but critics claim they would not be as comprehensive." Read the details at: https://khn.org/news/fact-check-whos-right-on-protections-for-preexisting-conditions-its-complicated/

Fact Check: Who’s Right On Protections For Preexisting Conditions? It’s Complicated

October 16, 2018

Roth IRA conversions can no longer be reversed

"As a result of the Tax Cuts and Jobs Act signed into law late last year, investors who convert a traditional IRA or other tax-deferred retirement account to a Roth IRA after December 31, 2017, can no longer recharacterize (in other words, reverse) the conversion."
Q. What types of IRA recharacterizations have been eliminated?
A. The law eliminated the option to recharacterize conversions made after December 31, 2017, from a traditional, SEP, or SIMPLE IRA, or from a 401(k) or 403(b) retirement plan account, to a Roth IRA.
Q. Can IRA contributions still be recharacterized?
A. Yes. The law didn't impact the ability to recharacterize IRA contributions. Contributions to a traditional IRA can still be recharacterized to a Roth IRA, and Roth IRA contributions can be recharacterized to a traditional IRA, if they're completed prior to the applicable IRS deadline.

Quoted from Vanguard.  For more details see: https://investornews.vanguard/the-new-tax-bill-and-ira-conversions-how-should-investors-respond/

October 6, 2018

Our problem isn't insurance, it's how we use health care

Is Medicare for all the answer to our problems? 
Richard Quinn writes: "Today, a common focus is on insurance premiums and insurance companies. Indeed, many people see insurance as the problem. It isn’t. Our problem is how we use health care. That’s what drives premiums and that’s what we must deal with. Changing how Americans use health care and their expectations for the health care system isn’t easy."
"It has been estimated that up to $25 billion annually is spent on health care that’s low value or unnecessary. Sound high? Maybe not. The Institute of Medicine estimates that $210 billion is spent needlessly on medical testing and medical care annually in the U.S. Who knows what the right number is? But one thing is certain: Unnecessary care—often expected, if not demanded, by patients—not only costs money, but can also harm patients."
To learn more and read the full blog post go to: https://humbledollar.com/2018/09/get-me-the-doctor/Richard Quinn blogs at QuinnsCommentary.com. Before retiring in 2010, Dick was a compensation and benefits executive.

October 4, 2018

How Early Retirees Can Get ACA Premium Subsidies

A big challenge to retiring before age 65 when you become eligible for Medicare is qualifying for and paying for health insurance. Under Obamacare everyone was eligible, regardless of preexisting conditions. The Trump administration is trying to roll back that protection. Unlike in other industrialized countries, in the U.S. the health insurance situation is always changing.
Check out Jonathan Guyton's article on managing your income to qualify for an ACA subsidy. https://blogs.wsj.com/experts/2018/09/24/how-early-retirees-can-get-aca-premium-subsidies/

Beware: Short-term, Limited Duration Health Insurance

In its attempts to eliminate Obama-care (the Affordable Care Act), the Trump Administration is allowing the sale of Short-term, Limited Duration Health Insurance. These policies became available on October 1, 2018.
This is a type of health insurance coverage that was primarily designed to fill gaps in coverage that may occur when transitioning from one plan or coverage to another plan or coverage, such as in between jobs.
They are stop-gap policies for up to one year that can be renewed up to 2 times.
The policies
  • provide minimal coverage
  • cover fewer services than the ACA
  • have big deductibles (what patient needs to pay before any insurance pays)
  • pay only half the bill after the huge deductible.
You may end up paying plenty in premiums but never be able to collect on the insurance, even when you have valid expenses.

Before you consider such a policy, read the Kaiser Family Foundation's analysis:

Understanding Short-Term Limited Duration Health Insurance


Personal Finance Videos for Young Adults

"PBS Digital Studios is producing an excellent video series to guide 20-somethings who are starting their careers and want to get a handle on their finances.

In “Two Cents,” financial planners Julia Lorenz-Olson and her husband, Philip Olson, will make you laugh as they convey their very solid advice about personal finance. “How to Ask for a Raise is perhaps the most relevant video to young adults – especially the ladies. Only one in three women believe that their pay is negotiable. Nearly half of all men do."

"The “Love and Money” episode asks the questions that are crucial to a successful partnership: how much does he or she earn and how much does this person owe? In “How Cars Can Keep You Poor,” the Olsons advise against buying a new car, which depreciates 63 percent in just five years – they compare it to investing in an ice cream cone on a hot day."

Thanks again to Kim Blanton who writes The Squared Away Blog for this great info. read her full blog post at: http://squaredawayblog.bc.edu/squared-away/personal-finance-videos-for-young-adults/

Avoid "Retire Rich" sales pitches

Kim Blanton write for The Squared Away Blog (one of my favorite resources):
"Many Americans approach retirement planning with dread – hardly surprising, given that only about half of working-age adults are on track to have sufficient savings to retire in the lifestyle they’ve grown accustomed to while working.

But there purports to be an easier way – and it’s on YouTube. Googling “retirement” turns up all kinds of outlandish promises of nirvana for regular folks.  Examples of YouTube titles are: “Retire Young. Retire Rich.” “Guaranteed Ways to Retire Rich.” “How to Retire in 10 Years – Much Easier Than You Think.” You get the picture.

Don’t be fooled. In a 401(k) world, what workers need is determination, planning, and persistence to ensure they’ll be prepared for old age.  YouTube offers only magic bullets."

Read more on Kim 's blog post: http://squaredawayblog.bc.edu/squared-away/retire-rich-dont-believe-this-sales-pitch/

Are your children ruining your retirement prospects?

"Raising children has never been inexpensive. But the costs go well beyond daycare and college today, extending far into young adulthood—and that could pose a problem for parents’ retirement plans.
Parents spend $500 billion annually on their adult children—about double what they put into their retirement accounts, according to a study released on Tuesday by Bank of America Merrill Lynch and aging consultancy Age Wave. Nearly 80% of U.S. parents give some financial support to their early-adult children...." Get the details from Reshma Kapadia, writing for Barrons: https://www.barrons.com/articles/urban-outfitters-stock-run-isnt-done-quite-yet-1538495424


October 2, 2018

Another Facebook data breach!

Nearly 50 million Facebook accounts were compromised last week (end of September 2018) in an attack against the social media giant.
Time to reconsider your use of FB.
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