I received a call from a client the other day asking what to do if your identity is stolen and, as a victim in the past, I do. My client recently had shoulder surgery where he had to present his Medicare card. He is angry that the ID on this card is your social security number and there is nothing that can be done about that. This surgery is the only “out of the ordinary” thing that has occurred in his life this year. He uses his credit card everywhere, pays it off in full each month, and was shocked the other day when his purchase was declined.
He called the credit card company only to be told that they sent him a letter about being delinquent on his new credit card, therefore, his credit was “turned off” on both of his cards. Needless to say, my client was shocked to hear about the second card, he asked what address the letter was sent to – surprise – it was not his address. He was able to terminate the two cards, correct his address, get a new card, and have an alert filed with that company. His question to me was; what do I do next?

My advice was for him to contact the surgery center and rehab facility he went to and tell the office management at both places what happened to him. If this theft stemmed from the surgery, these seemed like natural notifications. Next, I told him that we use Life lock™ to monitor our credit files. I told him to set an alert so he would get a text message if anything is charged over a certain dollar limit. I told him he would need to monitor his accounts weekly just to make sure nothing else gets stolen or changed.
Identity theft takes a lot of work to recover from; the thieves are getting smarter and faster every day.

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Holiday decorations and sales are already showing up everywhere. The “official” start of shopping is right around the corner, will you shop brick & mortar or online? I do a fair amount of shopping online either through Amazon or directly from a particular store’s website. Many of you shop through apps – this is where a new problem is cropping up.
The newest phishing scheme is fake apps for retailers. The apps look just like the real retailer’s link, but it is anything but that. Protect yourself by going from your store of choice directly to their online purchasing site to buy your gifts.
Apps can be a great tool, but trying to recover your identity and stolen funds will take a long time. Be fiscally safe this holiday season.

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For many of us, age 67 + a few months is what is considered full retirement age for Social Security benefits. If nothing changes with the current system, the trust fund will be depleted in 2034. It is estimated that the contributions paid in after that date will not provide the needed funds to support those who will be getting Social Security checks. So what is the solution?
Most likely, the age to receive full benefits will be pushed out to 70, with early Social Security benefits starting somewhere around age 64. Currently, for those who choose to defer their payments, there is a credit of 8%/year up to age 70. In my humble opinion, if the deferral rate was lowered to 5%, that would save the current trust fund a lot of money.
Who really knows what changes will occur – but change will occur.

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For the whole 34yrs. that I have been part of my husband’s family, his parents have been divorced. They have had a very friendly, caring relationship over the years, sharing many family life-cycle events together. Sadly, my Father-in-law passed away almost two years ago. While processing everything that goes along with someone passing, no one paid attention to the positive economic effect that resulted for my Mother-in-law.
Because they had a long term marriage and she never re-married, when he passed she automatically received an increase in her Social Security benefit as a Surviving Spouse. While this may seem like a distasteful benefit, she is a woman in her 80’s in failing health; anything extra has been a god-send.
You never know what type of legacy you leave, or to whom.

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I have received a number of calls over the past few weeks from clients stating that they are putting in their papers to retire. After I congratulate them, I always ask, “Now what are you going to do with your time?” This is not a silly question as this life change impacts everyone in the household. Some are retiring because they need to take care of a family member. After watching my husband do that for the past three years, I know how time consuming and exhausting a job that can be. Some are retiring because there are mandatory age restrictions where they work. Many of these folks will look for part time work elsewhere as they don’t feel ready to completely leave the work force. For those who are retiring completely by choice, the story is different.
I ask my questions because when the retiree does not know how they will fill their time, things seem to fall apart. Often, the spouses are not used to spending so much time together and that may cause stress. Another byproduct of not knowing what to do is overeating and overspending, neither of which lead to any good.
Happily, most of my clients have long “honey-do” lists that they are eager to tackle, family out of town that they wish to visit, and a number of “bucket list” trips to take.
Retirement involves big decisions – not only financially but also a mentally.

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This is a text I received from my husband the other day:
“We are slated to have a 27% increase in our medical premium. Coverage for just you and me will be about $3050/month.” Yikes! We are not huge consumers of medical items, but we do not belong to a group. This is what it means to be a middle aged – self employed person in regard to health insurance today. This adds insult to injury as we were recently audited, with the audit zeroing in on the amount we paid toward health insurance in 2013, which was only $22,000.
I don’t know what the answer is to this problem – I just hope there is one soon.

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When the Roth IRA was started in 1997 we all thought this was a great plan. Yes, if you transferred assets from a traditional IRA you had to pay current tax, but then the account would grow tax free forever. Additionally, no one had to take a required minimum distribution. The Federal government did not anticipate so many tax payers would take advantage of this new account. Looking back, there are a lot of tax dollars that were taken off of the table. Your government does not like this. Changes have occurred and it is rumored that more changes will occur to the Roth. Here are a few reasons to just say no:
If you have less than 5 years until retirement, the time frame for tax free withdrawals from a Roth is just too close. You will pay ordinary income tax on income you withdraw that has been on deposit for less than 5 years.
If your employer has any type of pre-tax contribution plan and you opt for an after-tax Roth instead, you are wasting money. Pre-tax savings allows for saving whole dollars. It is money being deposited into your account vs. going to pay Federal Income Tax. Pre-tax savings is the best option of any for retirement savings.
If your tax bracket will stay the same or be lower in retirement, a Roth is not for you. An up-front deduction while you are in a higher tax bracket means so much more than tax free withdrawals in the future.

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Most people think of “bucket lists” as those items they wish to accomplish or experience before they die. I have a “bucket list” for successfully withdrawing from your retirement to help assure that you don’t run out of money.
First, set aside enough cash to cover one to three years worth of fixed expenses.
Second, move up the risk ladder a bit to intermediate-term (less than 5 years maturity) bonds or bond funds for additional income. Along with the bonds, a diversified mutual fund portfolio of dividend paying equities will help provide income for additional spending.
Third, think long term. Most people look at the timeframe between now and when they will retire, ignoring that they may be retired for 25 years or more. A balanced portfolio geared toward growth will help fill this bucket.
Once the investment “bucket list” is filled – you can move on to the fun type.

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Recently I was listening to a competitor’s radio show and the Financial Advisor speaking stated that your past life as am employed person, and how you were living it, does not matter for retirement planning. I respectfully disagree with this guy. Your past matters a lot. The crux of his comment was that your personal expenses will decrease so much with your retired lifestyle that you can completely ignore them. Sure, you may not be buying business wear anymore and may pay less in tolls, but there will be plenty to replace those items.
When we gather data for a comprehensive retirement plan, one of the most important things we look at is expenses. We have an 81/2 x 11, doubled column page just for expenses. We have tried to think of every expense most people have in their everyday life, whether monthly or annually, add inflation on to those expenses, + taxes, then look at net cash flow.
No one likes to go backward in lifestyle. Travel and healthcare expenses can easily replace clothing and tolls, generally at a greater expense than those items cost while you were working.
If I am helping you plan for 25yrs. or more as retirees, your past certainly does matter.
If you would like a copy of our expense report that you can fill in if needed for your records and future reference, email me at: nancy@financialgroup.com

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