Social Security changes for 2020

• Benefits are increasing 2.8% (but Medicare premiums are going up, too).
• Maximum monthly benefit at full retirement age will increase by $150 a month to $3,011.
• The full retirement age will increase by two months to 66 years and eight months for persons born in 1958. Anyone born in 1960 and later has a full retirement age of 67.
• Disability benefits increased.
• Filers who reach full retirement age in 2020 are allowed to earn $48,600 ($4,050 a month) before any withholding, an increase of $140 a month from 2019. 

Source: http://advisornews.com/innarticle/changes-to-social-security-you-need-to-know-for-2020#.XeHuRdV7mCg

Coping with Student Loan Debt

Yes, You Can Buy a Home, Start a Family AND Pay Off Your Student Loans

• From loan forgiveness, to  
• expedited payments and 
• income-adjusted payments, there are strategies available to get a grip on overwhelming student debt.

Randi Lupi explains the options at: https://www.kiplinger.com/article/college/T042-C032-S014-yes-you-can-buy-a-home-and-pay-off-student-loans.html

Retirement Caregiver Crisis

A labor shortage in the caregiving market could have widespread implications for families. Nursing homes in Maine, the state with the oldest average age, are having to close down due to not being able to hire enough staff. Other nursing homes throughout the U.S. struggle with keeping qualified staff. This situation does not portend well for the massive baby boom generation that is reaching the period when they need assistance with daily living activities. Other nursing homes have lost accreditation due to resident abuse or neglect.
No one likes to think that they will need care in cold age but plenty of us boomers have had experience with dealing with aging parents and know the facts are we will likely need support. But who will be there to provide it?
 
This shortage could be readily alleviated if we were more friendly to immigrants who would love to have steady employment in the U.S.

Source: https://www.wealthmanagement.com/retirement-planning/retirement-caregiver-crisis

Homeowner's Insurance Resource

Time to review your current HO policy, especially if you've made renovations to your home or condo. If you have children going to college away from home, their possessions are usually covered by standard HO policies.


Reminders:

• Make sure your home valuation report is up to date
• Consider full-replacement cost coverage if you live in a high-risk area
• Find out exactly what your policy covers before purchasing it
• Consider add-on coverages for flood & earthquake-prone areas

There are some new "kids on the block." Have you ever heard of Lemondade, Hippo Home, Young Alfred? Learn about these options at:
https://www.consumersadvocate.org/home-insurance

Preventing Dementia

What Science Tells Us About Preventing Dementia 

"There are no instant, miracle cures. But recent studies suggest we have more control over our cognitive health than we might think."

by Anne Tergesen in the 11/17/19 Wall Street Journal. 

1. Control high blood pressure

2. Exercise

3. Cognitive training

4. Diet: eating "a Mediterranean diet, which is high in fish, fruits, nuts and vegetables, have lower rates of dementia."
"But a variation on that diet may offer even more protection against the development of Alzheimer’s disease." The Mind Diet:

Eat more: leafy green and other vegetables, nuts, berries, beans, whole grains, fish, poultry, olive oil and wine (in moderation). 

Eat less: red meat, butter, cheese, sweets and fried and fast foods. 

Research study showed:
"there were about 50% fewer Alzheimer’s diagnoses among participants who most closely followed either the Mind diet or the Mediterranean diet, compared with those who followed either diet only a little."

5. Sleep

6. Combination: the more positive factors you incorporate, the better equipped to avoid dementia.

Seven Days to a Better Retirement

The 7 days to retirement challenge is brought to you by The New York Times! Writer Ann Carrns explains the process and why you need to start now. https://www.nytimes.com/2019/11/06/business/not-yet-ready-for-retirement-give-us-one-week.html?te=1&nl=your-money&emc=edit_my_20191111?campaign_id=12&instance_id=13780&segment_id=18703&user_id=bde4c6c63beab087f13b761e1ee9fe1e&regi_id=83720664

"In the shuffle of immediate priorities, don't push off planning for what could be the best chapter of your life. Get a week’s worth of simple steps you can take to help plan for and secure a stable and successful retirement."  Get started here:

Seven Days to a Better Retirement:  https://www.nytimes.com/programs/better-retirement-planning?module=inline

Day 1: What is my retirement?
Day 2: Your financial starting point
Day 3: Set your goal
Day 4: Start saving (a little) more
Day 5: Consider health costs
Day 6: Protect your wishes
Day 7: Consider a financial planner

Mounting car debt traps more drivers

Look at all those huge shiny new pick up trucks and SUVs on the roads these days! Are Americans really that affluent? Not really.

How could it make sense to buy a $27,000 vehicle with a $45,000 loan? No I did not mix up the numbers as reported by AnnaMaria Andriotis & Ben Eisen on the front page of the November 11 Wall Street Journal. "Consumers, salespeople and lenders are treating cars a lot like houses during the latest financial crisis: by piling on debt to such a degree that it often exceeds a car's value"

Forget about envying your neighbors driving expensive new vehicles; it may be all debt and more! One-third of new vehicle buyers who traded in a car during first 9 months of 2019 had negative equity. On average these borrowers owed about $5,000 on their trade-in before taking on new debt.

"Easy lending standards are perpetuating the cycle, with lenders routinely making car loans with low or no down payments that can lst seven years or longer." Don't get sucked in! 

Did no one learn any lessons from the Great Recession? 

2020: Increased limits for employee contributions to retirement plans

The IRS limit on annual employee contributions to 401(k)s, 403(b)s, most 457 plans and the federal government's Thrift Savings Plan will rise to $19,500 next year, up from $19,000 in 2019 .

The limit for IRAs remains $6,000 or $7,000 for ages 50 +.

4 Steps to choosing a health plan for the coming year

Get guidance for this important decision from the Humble Dollar, courtesy of Richard Conner.

4-step process:
1. Calculate the total annual premium
2. To the results from step No. 1, add the deductible for each plan. 
3. Subtract the deductible from the out of pocket (OOP) maximum.
4. Add the premium amount from step No. 1 to the OOP maximum.

An example will help. Get the full details and example at:  https://humbledollar.com/2019/10/decision-2020/

Best Credit Cards for 2019

"Credit cards are a useful financial tool if used responsibly. With a credit card, you can charge items and services that you need and then pay them off at a later date. If chosen wisely, a credit card can even be used to earn rewards or to build credit."

Writing for Consumer Affairs, Beverly Harzog provides an excellent, easy to use guide to choosing a credit card and evaluating the ones you hold. Data current as of 3/29/19.

Looking for best "balance transfer" card? airline miles? cash back? hotel, business or travel cards?
Check out:
https://www.consumeraffairs.com/credit_cards/credit_cards.htm#

What will Medicare cost me in retirement?

"Health care inflation has been running about double the rate of general inflation." 

"The standard monthly premium for Part B (outpatient services) this year is $135.50; Medicare’s trustees forecast annual increases averaging 5.9 percent through 2028. Enrollees in traditional Medicare can expect inflation of 6 percent if inflation for Medigap premiums is included."

"According to HealthView, a 65-year-old couple using original Medicare this year will spend around $10,300 on premiums for prescription drugs and Medigap, and various out-of-pocket costs. In 20 years, their costs are projected to be around $33,000 annually (future dollars)."

"High-income Medicare enrollees have been paying surcharges on Part B and Part D premiums since 2007. These so-called Income-Related Monthly Adjustment Amounts (IRMAA) affect a relatively small share of the Medicare population — about 7 percent this year, according to federal data — but they are steep."

Source: "Medicare Can Be Confusing: 6 of Your Top Questions," Answered by Mark Miller for The New York Times, 11/1/19.

Note: My husband and I pay $4,020/year this year in Medicare and Advantage premiums for both of us. Eye and dental exams are free in our Medicare Advantage plan. We pay $50 to visit specialists ($30 in 2020) and a few dollars for prescriptions so I estimate about $4,200/year. 

The US Centers for Medicare & Medicaid Services says premiums will rise about 6.7% next year (2020) for most people who participate in Medicare Part B. The increase "is largely due to rising spending on physician-administered drugs," the agency says. 
This increase is way above the CPI rate of inflation!

Tips for College Graduates Making Their First Loan Payments

Your Money adviser (The New York Times)

Tips for College Graduates Making Their First Loan Payment.

By Ann Carrns, Nov. 1, 2019

Make sure you know how much you owe and to whom. Then, look at your payment options.

"Student borrowers typically get a six-month grace period after graduating from college. For students who earned their diplomas in the spring, that means monthly loan payments start in November or December."

"The loan servicer — the company that collects payments and otherwise manages student loans — usually sends a notice a month or so ahead of the first due date."

 

"Go online and check your borrowing history at the National Student Loan Data System. There, you will find a list of your federal student loans and the amounts as well as their servicers, so you can contact them to make sure you are receiving necessary information. (Loans made by private banks and lenders, rather than the federal government, are not included.)"

"Unless you choose an alternative, you will automatically be placed in a standard 10-year loan repayment plan. That’s usually the cheapest option in the long run, and the one that will get you out of debt the quickest." 
Set it and forget it

By Bijan Stephen Nov 1, 2019
"Digit — the automatic savings app that deducts small amounts from your checking account and deposits them into an account you designate — has decided to get further into the debt game. Now, you can use the app to pay off your student loans."

"Digit can help you pay down at least some of that debt painlessly in the same way that the app does everything else. All you have to do is link your student loan account to Digit, set a loan goal, and then quite literally forget about it." 

Well... may be your shouldn't forget about it but it is a strategy to consider. 

Colleges mislead high school student into applying

Numerous reports are coming out with reports that many colleges and universities are recruiting applicants who have no chance of being accepted to their institution. The goal of the colleges is to reduce their acceptance rate, making them appear to be more selective. This process hurts students who may pay substantial application fees to institutions where they have no change of acceptance, bruising their confidence and steering them away from realistic college choices.

So beware of enticements to apply to institutions where your SAT/ACT scores and grades indicate you are unlikely to be accepted.

Source:

For Sale: SAT-Takers’ Names. Colleges Buy Student Data and Boost Exclusivity

By Douglas Belkin (11/5/19)

For 47 cents, the College Board will sell an individual’s information, feeding admissions frenzy

How much do you need to retire?

The “Rule of 25” says you should multiply your total annual expenses by 25 to determine how much you’ll need to have saved by the time you retire. So if you plan to spend $50,000 per year in retirement, you’ll need to save $1.25 million. To have $100,000 per year to spend, you’ll need $2.5 million.
The Rule of 25 is a good starting point, but it is not an ironclad, one-size-fits-all solution for everyone. Among the uncertainties are health care and long-term care costs and inflation.
There are numerous other posts on this blog to provide guidance on how much to save.
For those who gasp and shake their heads at million dollar goals, a book that provides a contrary perspective is “Get a Life: You don’t need a million to retire well” by Ralph Warner.