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Help with My Budget and Spending

Help with My Budget and Spending

Apr 2021

Saving for retirement is very important, but many people feel that they can’t spare the money to participate in a retirement plan or even create a basic savings account. Retirement plan consultants suggest that the first step is to create a budget. Once you figure out where your money is going, you can look for ways to save more.

Track your spending -

There are a number of ways to create a budget, but one of the easiest ways to get started is to simply record everything you spend. A notebook works just fine, but you can also use your phone or other device. The key is that it needs to be portable, and you need to note every time you spend money, even on cups of coffee or snacks. Many people find this to be an eye-opening experience, since they don’t realize how much spending they actually do. It’s becoming much easier to swipe a card or even use digital payments, so you don’t always have the sensation of handing away your money.

Once you’ve collected at least a month’s worth of information, you can start creating your budget. At this point a spreadsheet or an online budgeting program could be very helpful. Ideally, you should be able to divide your expenses into three categories:

Fixed Expenses -

These are regular payments you make every month, like house or car payments, or electric and utility bills. Make sure you include any subscriptions, like moving streaming services or gym memberships

Flexible Expenses -

These are expenses that vary from month to month, like entertainment,gasoline, groceries, hobbies, or other bills that change every month. Some of these are necessities, like groceries or gas, but you can still control how much you spend on food(groceries versus dining out, for example) or gas (by sharing rides, walking, or biking instead).

Financial Goals

These are expenses that are important for your future. Paying down credit card bills or saving for a down payment on a home are two examples. You should definitely establish an emergency fund for unexpected expenses, like car or home repairs, and start saving for retirement.

Start making changes -

Once you’ve established your baseline budget, you can start looking for ways to trim your flexible and fixed expenses, and use those funds for your financial goals. Can you pack a lunch more often instead of eating out? Can you make your own coffee instead of buying a cup each day? And remember, fixed expenses aren’t always “fixed” – can you eliminate some subscriptions, reduce your utility bills, or make other changes to free up money?

Paying down high-interest debt and establishing an emergency fund are key goals, but remember that you also need to save for retirement. If your employer offers a tax-advantaged retirement plan, like a 401(k), you’ll want to take full advantage of it as soon as possible. Starting now gives your money more time to grow through compounding, and will help put you on the road to a successful retirement.

Benefits and Insurance for People with Disabilities

Benefits and Insurance for People with Disabilities

Apr 2021

If you can't work because you get sick or injured, disability insurance will pay part of your income. You may be able to get insurance through your employer. You can also buy your own policy

Types of Disability Policies

There are two types of disability policies.

  • Short-term policies may pay for up to two years. Most last for a few months to a year.
  • Long-term policies may pay benefits for a few years or until the disability ends.

Employers who offer coverage may provide short-term coverage, long-term coverage, or both. If you plan to buy your own policy, shop around and ask:

  • How is disability defined?
  • When do benefits begin?
  • How long do benefits last?
  • How much money will the policy pay?

Federal Disability ProgramsTwo Social Security Administration programs pay benefits to people with disabilities. Learn about Social Security Disability Insurance (SSDI) and Supplemental Security Insurance (SSI).

Social Security Benefits for People with Disabilities

The Social Security Administration (SSA) has two programs that provide benefits to people with disabilities:

  • Social Security Disability Insurance (SSDI). SSDI is for people who have earned enough Social Security work credits within a certain time period

Definition of Disability

To qualify for either program as a person with a disability, you must meet SSA’s definition of disability, which says:

  • You can’t work, and
  • Your disability is expected to last for at least one year or result in death

Social Security uses a step-by-step process to decide if you have a disability. Partial and shortterm disabilities do not meet SSA’s standard and are not eligible for benefits.

Benefit Eligibility Screening Tool

You can use the Benefit Eligibility Screening Tool to find out quickly whether you may be eligible for SSDI or SSI disability benefits.

Learn More About Social Security Disability Insurance (SSDI)

Work Requirements

When you work and pay Social Security taxes, you earn Social Security “work credits,” up to four a year depending on your income. To be eligible for SSDI, you must have accumulated a certain number of work credits, some of them relatively recently. The number of work credits you need is based on your age when you stopped working due to your disability.

Benefits for Family Members

Your spouse or former spouse and your children may be eligible for benefits when you start receiving SSDI in some situations.

Applying for SSDI

You can apply for benefits online, by phone, or in person.

  • If your application is denied, you can appeal the decision.
  • If your application is approved, you’ll start receiving benefits about six months after your disability began. You’ll automatically be enrolled in Medicare two years after you begin receiving SSDI payments.

Returning to Work

You can generally return to work without losing your SSDI benefits if you earn less than what SSA considers a “substantial” amount. In 2018, average earnings of $1,180 or more per month are usually considered substantial.

Learn More About Supplemental Security Income (SSI)

SSI benefits are for adults and children with a disability who have little income or resources. Seniors 65 and older without a disability may be eligible for benefits if they meet the income limits. People who are eligible to receive SSDI may be eligible for SSI too.

In most states, people who receive SSI also receive Medicaid coverage. Many states also provide supplemental payments to certain SSI recipients.

Defining Disability for SSI

Adults under 65 must meet SSA’s definition of disability.

For a child, disability means:

  • Having a physical or mental impairment that causes marked and severe functional limitations
  • The disability is expected to last for at least one year or result in death

Applying for SSI

Adults can apply for SSI by phone, in person at a local Social Security office, or in some cases online. To apply for SSI for a child, you can start the process online but will need to complete it either in person or by phone.

  • You can appeal if your claim is denied.

Explore this listing of SSI topics to learn more detailed information.

Going to Work

SSI work incentives can help you go to work by lowering the chances that you’ll lose your SSI benefit or Medicaid coverage. You can earn $65 a month without it affecting your cash benefit. Beyond that, your SSI payment will go down $1 for every $2 you earn.

Health Coverage for People With Disabilities

If you have a disability, you have a number of options for health coverage through the government.

  • Medicaid provides free or low-cost medical benefits to people with disabilities. Learn about eligibility and how to apply.
  • Medicare provides medical health insurance to people under 65 with certain disabilities and any age with end-stage renal disease (permanent kidney failure requiring dialysis or a kidney transplant). Learn about eligibility, how to apply and coverage.
  • Affordable Care Act Marketplace offers options to people who have a disability, don’t qualify for disability benefits, and need health coverage. Learn about the Marketplace, how to enroll, and use your coverage.

Health Resources for People With Disabilities

Federal, state, and local government agencies and programs can help with your health needs if you have a disability.

  • Explore the Disability and Health section of CDC.gov for articles, programs, tips for healthy living and more
  • Learn more about assistance and benefits for people with disabilities from the Social Security Administration.
  • Contact your local city or county government to find out what medical and health services are available locally for people with disabilities.
  • Your state social service agency can help you locate medical and health programs.
  • Visit USA.gov’s Government Benefits page to learn more about government programs and services that can help you and your family.

https://www.usa.gov/disability-benefits-insurance

tags: disability insurance, disability, insurance, retirement

NFPR-2019-81

Insurance Basics

Insurance Basics

Apr 2021

Insurance may be less about if you’ll need it than when you’ll need it. Anyone who started driving at 16 is likely to have had a claim by the time they’re 34. More than 1 in 20 insured properties reported a claim in 2016, according to Insurance Services Office (ISO). And according to the U.S. government, someone who turns 65 this year has an almost 70% chance of needing long-term care services, which are generally not covered by Medicare.

A network of prudent insurance coverage is the foundation of any solid financial plan. A single healthcare crisis, incident of property loss, or other liability can quickly wipe out a lifetime of savings. The types of circumstances that may require the use of insurance may not be a subject we like to think about, but it’s one of the most important issues to address when planning for the financial security of you and your family.

Here are some common types of insurance available and the associated risks they can help address.

Health Insurance:

Many people receive health insurance through their employer, while others purchase it independently. Health insurance can cover everything from preventive care, treatment for injuries and disease and mental health treatment, as well as products and equipment necessary to address various medical needs. Your insurance may dictate from whom and in what types of facilities you are eligible to receive treatment. It will also indicat what your responsibilities are for payment in terms of deductibles and any limits to your coverage. It is critically important that you review your health insurance on an annual basis and fully understand your policy.

Auto Insurance:

Your automobile insurance is designed to cover property damage and personal injury in the event of an accident. The amount of coverage for these occurrences can range dramatically from policy to policy. With car insurance, you not only have to be concerned about covering your own liability if you’re at fault — but damage that may be caused by uninsured drivers as well. One in eight drivers are uninsured according to The Insurance Information Institute. Luckily uninsured motorists coverage for both property damage and bodily injury is available, although not all states require it.

Disability Insurance:

This covers loss of income resulting from injury or illness. Many people receive disability insurance from their employer, but not everyone does — so it’s important to understand whether or not you have this benefit. If you do not have disability insurance through your employer, you may wish to buy a private policy. You may elect to purchase short-term disability insurance, long-term disability insurance or both. Many people think they’re automatically covered for disability losses through Social Security disability, otherwise known as SSD. However, SSD which is administered through the Social Security Administration, has stringent requirements:

  • You are unable to perform the work you did before.
  • The SSA determines you are unable to do other work due to your condition(s).
  • The disability is expected to last at least a year or lead to death.

Private disability insurance eligibility requirements are often less strict and no not require a complete inability to work in order to receive benefits. And it is possible to receive SSD and benefits from private disability insurance simultaneously.

Long-term Care Insurance:

This can cover medically necessary assisted living or nursing home care —or if you require help at home to carry out daily activities. Many people mistakenly assume that Medicare pays for such services, but this would be a faulty assumption. With Medicare, coverage is generally limited to rehabilitation from an acute injury or illness where a full recovery is anticipated as opposed to long-term care needed in old age as a result of gradually declining function. This type of care is extremely costly. Here are some averages according to government statistics:

  • $6,844/month for a semi-private room in a nursing home
  • $7,698/month for a private room in a nursing home
  • $3,628/month for care provided in an assisted living facility

Life Insurance:

This coverage pays a death benefit when the insured passes away. It’s particularly important for breadwinners with family members who depend on their income. Life insurance needs often change over time as children grow up and move out of the house. Here’s an article that explains some common types of life insurance (link to previous life insurance blog here). This may be the type of insurance people don’t like to think about the most — but in the event of the unthinkable, it may matter the most.

Property and Casualty Insurance:

P&C can cover your home and possessions as well as provide personal liability protection should you injure someone or damage their property. It’s a broad category of insurance. Here are some common types:

  • Homeowners Insurance:insures your home and possessions in the event of theft or damage. It’s important to know your deductible for different types of losses, and any limitation for certain types of events, such as floods and hurricanes.
  • Renters Insurance:this insurance is specifically designed for renters, who do not own their dwelling. It is substantially less expensive than homeowners insurance, and can cover property and liability as a renter.
  • Condo Insurance: These policies can mitigate risks specific to condominium owners,including portions of the structure they’re responsible for, as well as assessments levied against owners to pay for repairs or improvements to commonly owned elements.
  • Umbrella PolicyAn umbrella can extend the coverage of your auto and homeowners insurance policies. Carriers will generally require insured individuals to have a minimum amount of coverage already in place before they will write an umbrella policy.

Risk is a part of life — there’s no getting around that. But with solid insurance coverage, you just might be able to sleep a little better at night no matter what the future may hold.

Reference:

https://www.iii.org/fact-statistic/facts-statistics-homeowners-and-renters-insurance

https://longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html

Tags: Baby Boomer, behavioral finance, education, finance, insurance, millennials, retirement planning, risk management

What If I Can’t Save Enough to Reach my Retirement Goals?

What If I Can’t Save Enough to Reach my Retirement Goals?

Apr 2021

You just ran the numbers on your retirement and realized that you aren’t going to be able to save enough to make it happen. Don’t panic: There are still things you can do to better your situation, especially if you’re willing to be flexible about your plans and your lifestyle.

The first step is to determine exactly where you are. In retirement, you may have income from a number of sources:

  • Social Security
  • Pensions
  • Investment income
  • An inheritance
  • Earned income from a side hustle

Next, estimate the likely cost of your future monthly expenses: rent or mortgage, utilities, automobile payments and insurance, credit card and loan payments, food, health care (insurance plus out of pocket) and emergency repairs. A good way to capture these categories is to look at your credit card statements and checkbook and list everything you’re spending on now. If you haven’t kept track of this on paper, most online bank and credit card services offer easy access to your transaction history.

Leave out or lower your estimate for anything you won’t spend as much on when you’re retired (your commuting cost should go down, for example). Now, what about potential costs for travel, hobbies and other post-retirement fun? Will you set aside money to give to grandchildren or other relatives in the years ahead?

Once you have your monthly income and expense estimates, compare the two. Are you still coming up short?

If you don’t have enough income to cover your projected expenses, there are some things you can do. But first, there are some things you should definitely NOT do:

  • Panic.
  • Shift into higher-risk investments to try to capture higher returns.
  • Decide your head hurts, avoid thinking about it altogether and assume your health and career will allow you to work long enough to make up the difference.

Here are some things you CAN do:

  • Make catchup contributions to an IRA. The tax code allows workers over 50 to make extra, pre-tax contributions to boost their savings.
  • Re-think your lifestyle. Do you really need to live on a golf course? Maybe you could live near a golf course and be just as happy.
  • Take on a side hustle to create a little extra income. This could be something that’s been a hobby – tying fishing flies, restoring old cars, or knitting comforters. Or work a few hours a week at a friend’s business. Be aware, however, that your earnings may have implications for your taxes and Social Security benefits. Because the tax code governing what portion of benefits can be taxed is complex and subject to change, you should talk to an accountant or financial advisor well versed in that part of the code.
  • Do you have two cars? Maybe one would do. Or perhaps you can do just fine with a used model with a reputation for reliability and longevity.
  • Downsize. Move to a smaller house or condo, and if you’re single, maybe take on a roommate.
  • Consider relocating to a lower-cost area. The cost of living in Knoxville, TN is about 17% below the national average, and there are plenty of other places below the norm: Cheyenne, WY (-8%), Green Bay, WI (-10%) and Sherman, TX (-14%) are just a few.
  • Tap your home equity to pay expenses.
  • Consider a reverse mortgage. However, be aware that the reverse mortgage products offered by various lenders are wildly different in their terms and risks. Look at this very, very carefully before committing.
  • Delay taking Social Security benefits. Waiting until at least your full retirement age boosts your monthly check significantly; your monthly benefit will increase by about 0.67% for each month you delay past your full retirement age, and will add about 8% for each full year you wait until you reach age 70. Your full retirement age depends on your year of birth. Use the calculator on The Social Security Administration website to figure all of this out for your particular situation based on your personal earnings record.

But before you do any of these things, the most important step you can take is to talk to your financial advisor. Because they deal with the intricacies of the tax codes and Social Security every day, they can help you steer clear of landmines and set a course to that bright retirement you’ve been dreaming of.

Sources:

1. https://www.forbes.com/sites/investor/2017/06/09/what-to-do-when-you-havent-saved-enough-for-retirement/#368f06f06e20

2. https://www.aginginplace.org/are-there-taxes-on-social-security-for-seniors/

3. https://www.ssa.gov/planners/retire/1955-delay.html

4. https://www.kiplinger.com/slideshow/retirement/T047-S001-cheapest-places-where-you-ll-want-to-retire-2019/index.html

#save #retirement #future #wellcents

ACR# 336900 NFPR-2020-8

Frequently Overlooked Retirement Costs

Frequently Overlooked Retirement Costs

Apr 2021

Think you know how much you’ll need to retire comfortably? You might want to think again. According to the Schroders Global Investor Study 2018, which surveyed more than 22,000 investors from 30 countries, 15% of retirees lacked sufficient income to support a comfortable retirement. Moreover, the research found that people anticipate budgeting 34% of their retirement income for basic expenses but actually require nearly 50%. This disparity is understandable given the many unexpected changes that can occur during this phase of life. With that in mind, here are some costs that are often overlooked or underestimated when planning for retirement.

Taxes. No more employer means no one is withholding income taxes from your Social Security check each month (unless you specifically request it from the Social Security Administration)— and that can lead to an unwelcome surprise at tax time. Many retirees don’t realize that their Social Security benefits are taxable as income, so it’s important to plan ahead for any retirement tax bills. And you’ll pay taxes on withdrawals in retirement from your traditional (but not Roth) IRA.

Home Maintenance. Hopefully you’ll remain robust enough to continue to maintain your home yourself during retirement, but it’s often wise to put aside a little extra in case you need to make routine repairs or hire outside help for some home maintenance tasks you’ve been handling such as lawn care, laundry and general housekeeping.

Medical Costs. While many retirees are often pleased when they’re finally Medicare eligible, they’re often surprised when they learn that some costs are not covered under the government plan. For example, many dental, vision and other expenses (e.g., hearing aids) are generally out-of-pocket expenses and can run in the thousands of dollars. Also, Medicare premiums, deductibles, copayments, coinsurance and medication costs can add up once you’re no longer on your employer-sponsored health insurance plan.

Aging-in-Place Renovations. Many retirees want to be able to remain in their homes as opposed to receiving care in an assisted living or nursing home facility. Often, however, modifications to an existing floor plan to accommodate wheelchair access or a live-in caregiver become necessary. For example, you might require a walk-in tub or shower, grab bars or an entrance ramp to your home. While needs in this area can be hard to predict, additional dollars in your emergency fund to cover such renovations constitutes smart retirement planning.

Home Care. While we all hope to maintain our independence throughout our lives, the reality is that most of us will require some additional help with activities of daily living as we age. And the cost of this assistance isn’t cheap. Purchasing long-term care insurance is one way to plan for this expense, but that can be quite costly as well. Another option is relocating to a state with more favorable Medicaid benefits. Speak with your advisor about this essential part of your retirement plan.

Family Assistance. Many retirees want to be able to help out their children, grandchildren and extended family. You may wish to contribute to a college fund, treat your grandkids to a nice vacation, or help your children with a first home purchase. Try to anticipate these wants and budget for them accordingly.

Vehicle Replacement. For many retirees, retirement can last for decades. So it’s likely that you’ll need to replace your car at least once or twice if you continue to drive. This can be a significant expense to cover if not budgeted for ahead of time.

Inflation. Again, with many retirements lasting 20-30 years, it’s important to take inflation and the degradation of your retirement dollars’ purchasing power over time into account. This can be a complex cost to calculate, and it’s another good reason to consult with a professional.

Retirement is an exciting time of transition that brings with it many changes to your budget and lifestyle. Speak with your financial advisor to help you create a realistic budget that will anticipate as many of your retirement expenses as possible. Then, when the time comes, you’ll be in a better position to sit back and enjoy the adventure.

#costreduction #overlookedcosts #wellcents #financialwellness

Sources:

1. https://www.schroders.com/en/media-relations/newsroom/all_news_releases/schroders-global-investor-study-2018-people-significantly-underestimating-cost-of-living-in-retirement/

2. https://www.advisortoday.com/2018/07/17/people-underestimate-cost-of-living-in-retirement/

3. https://www.ssa.gov/planners/taxwithold.html


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