Author Archives: Nancy Hecht

Will I pay a penalty on my Social Security?

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Q: If I start taking Social Security at age 62 vs. my full retirement age of 66, will my pension count against me for tax purposes?

A: There are two issues to look at when taking Social Security benefits prior to your full retirement age. One is will there be a penalty against your Social Security of $1 for every $2 paid. The second issue is will your Social Security benefit be taxed as ordinary income. Pension income is not considered earned income and, therefore, will not be charged the penalty. You may have to pay ordinary income tax on up to one-half of your Social Security benefits due to your pension and other forms of income.

 

disclosures:http://www.hechteffect.net/?page_id=31

Plan your Exit – part 2

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Fewer than 10% of private employers offer insurance to retirees, though we all are eligible for Medicare at age 65. If you are offered health insurance as a retirement benefit – grab it! Having health insurance through a group, even as a retiree, is always less expensive than as an individual. But health insurance isn’t the only issue.

Many employees have life insurance as a benefit, generally at least one time your salary. Often, as a retiree, you can take this coverage with you but you will now have to pay the annual premium out of pocket. If you still have a mortgage or kids in college you may want to continue this life insurance.

Long term care insurance you had as a benefit is also one that you can take with you. Again, you will have to pay the premiums yourself but this expense is well worth it.

 

Disclosures:  http://www.hechteffect.net/?page_id=31

Plan your Exit.

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You are ready to walk out of the corporate door, have the retirement party, say good-bye to your co-workers. Are you also ready to say good-bye to your benefits?

Over the next few blogs, I will give you tips on how to plan your exit. Today, we will look at squeezing out those last few dollars. It is all in the timing.

When does your company credit the employees with the 401k match? Most companies have a regular time table to matching 401k contributions. Look at your last few pay stubs to see when that deposit is made. This is “free money” that you don’t want to leave on the table. Another monetary perk to pay attention to is profit-sharing. Most companies make this contribution once a year, generally at the same time each year. If you do not know when your company doles out the profit sharing, ask your H.R. department.

Lastly, make sure you know the rules for cashing out your unused paid leave and sick time. Does your company have a “use it or lose it’ policy, or can you bank the unused time and have it paid out in a lump sum?

Check these things out before you plan the retirement party. Next, I will discuss your retirement insurance benefits.

 

Disclosures:http://www.hechteffect.net/?page_id=31

Listen to me this Saturday on 96.5 FM.

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Be sure to catch “On The Money”

This Saturday hear
Nancy Hecht and Joe Bert
co-host our program
“On The Money”!

They’ll be discussing . . .
To buy out or not –that is the question?
• When do I take my pension?
• When do I start drawing from my retirement accounts?
• What do I do with all of this money? I am not married and do not have children.

Call or eMail
your questions:
407-290-0058 OR
1-800-328-5858
Nancy@FinancialGroup.com
Joe@FinancialGroup.com

Call in your
questions at
407-290-0058 OR
1-800-328-5858

Listen for details about
our upcoming workshops:
Social Security:
Maximize Your Benefits
Thursday, January 24, 2013
6:45 p.m.-8:30 p.m.
Countdown to Retirement
Saturday, March 2, 2013
11:00 a.m.-1:00 p.m.

Tune in for
“On The Money”
Every Saturday
on WDBO at 9:00 a.m.

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WDBO offers a variety of information radio talk programs on a variety of topics. For nearly 20 years, Certified Financial Group has been the selected host for the 9:00 a.m. Saturday time slot to discuss topics pertinent to the financial world.

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It’s an Age Thing.

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A common question I hear is: “when should I take Social Security”? This may be one of the biggest decisions you can make. For those born between 1943-1954 full retirement age is 66. It climbs to age 67 for those born between 1955-1959. You can start taking Social Security at age 62 but you will condemn yourself to a 25% reduction in benefits.

Besides waiting to full retirement age to avoid a haircut, waiting can open up a variety of choice for married couples. Your decision is much greater than taking these benefits early or waiting to full retirement age or beyond.

On January 24th Denise Kovach and I will discuss all of the Social Security choices and the impact each can make in your retirement. Go to www.financialgroup.com to make a reservation for our Social Security Seminar.

 

Disclosures:http://www.hechteffect.net/?page_id=31

How to raise a trillion dollars….

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We have been hearing nothing but fiscal cliff and spending cuts lately is there a solution on the horizon? I don’t know when we will get past this but here are a couple of items that I hope do not get touched.

Employer-provided pensions, which allow companies to offer tax-deferred pensions and 401k’s could be a major target for savings. These accounts defer $163 billion in revenue that could help reduce the deficit. I would rather have that savings in my pocket – a 401k is the best way to save for retirement in my opinion.

Another cherished middle-class deduction is mortgage interest; this too is on the line. Nearly $100 billion a year. Taking away this deduction would also have a major negative impact on many people and industries, also, my opinion.

Please find out who your Congressmen & Senators are and write them regarding these issues.

 

Disclosures:http://www.hechteffect.net/?page_id=31

When was the last time you looked?

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You may or may not know this but I have been the victim of identity theft twice. I subscribe to a credit alert service and check my bank account daily. Some may think that is a bit much but once you have gone through the process of trying to straighten everything out, it is not.

Each year we can all look at our credit files free of charge. If you have not done this, I strongly suggest that you do. Here is the web address to go to for your free look:

www.annualcreditreport.com

You owe it yourself to look.

 

Disclosures:http://www.hechteffect.net/?page_id=31

How much should I keep liquid?

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I purchased a home earlier this year and want to know how much money to keep in my home repair/upkeep fund. I have a small house (3 bdrm, 2 bath, 1500 sq ft) on a small lot. I have no debt other than my small mortgage ($900/month, including taxes and insurance).

My retirement (including a pension) is continuing to be fully funded on an ongoing basis and I already have an emergency fund that is fully funded with six months of living expenses.

Thanks, in advance, for your advice. Happy New Year!

My answer:

Congrats – it sounds like you have put yourself in a fine position for short term emergency funds and long term savings. Home repairs can be tricky as far as pre-funding goes. Next week we will be replacing our roof at a cost of $20k. If you were to look at that as being the most expense home repair to plan for, that would be my goal. Any repair below that, such as a hot water heater, would be less than $1000. If you use the roof as a maker you should be well prepared for anything. If you have any other questions, please let me know.

The final comment:

Thanks for responding. I was thinking around $20K too, good to have it confirmed by an expert.

 

Disclosures:http://www.hechteffect.net/?page_id=31

What is Chained-CPI?

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We are familiar with hearing about CPI, which is actually called CPI-U. This is a measure of the average expenditures on selected items by the urban shopper. Fluctuations in these prices have an impact on what the Government perceives inflation to be. In plain English, this tells us if there will be a raise in Social Security payments or not.

As part of the Fiscal Cliff negotiations we are now introduced to Chained-CPI. Chained-CPI attempts to account for how we react to inflated prices. Would we buy cheaper meat or more house brand products if we feel that prices are rising? It follows the chain of spending. But why make a change now from the standard CPI-U to Chained-CPI?

Making this change would mean paying out less in Social Security benefits over time. Chained-CPI would lead to a larger across-the-board cut in Social Security benefits and a .19% income surtax.

Will Chained-CPI become the new policy? Watch the news and the Fiscal Cliff negotiations to find out.

 

 

disclosures:http://www.hechteffect.net/?page_id=31