By Jason Alderman
Senior Director, Global Financial Education, VISA
One indicator that our economy is still hurting is that more and more people are postponing retirement. According to the Department of Labor, the number of people over 55 still working has increased steadily since the recession began – 28.9 million at last count – and some surveys show more than a third of employees expect to work past age 70 or never retire.
A perfect storm of negative factors have forced many people into this position:
They’ve had to tap retirement savings early to cover bills or tide them through unemployment – just when retirement account values had been decimated by the market crash.
Plunging home values have diminished or erased the equity many had hoped to draw on in retirement.
They’re unable to afford – or qualify for – health insurance they’ll need until Medicare kicks in.
And many boomer parents have put their own savings on hold while helping their kids struggle through the recession.
If you’re hoping to retire in the next few years, consider the following:
How much will you need? Financial planners often suggest people may need 70 percent or more of pre-retirement income to maintain their current lifestyle, but it’s difficult to generalize. For example, some people downsize housing or retire to less expensive areas and thus need less. Others can expect increased medical, utility and other bills to outpace earnings on their savings.
Crunch the numbers. Start estimating your retirement needs by using online calculators, including:
Social Security’s Retirement Estimator, which automatically enters your earnings information from its records to estimate your projected Social Security benefits under different scenarios, such as age at retirement, future earnings projections, etc. You can also download a more detailed calculator to make more precise estimates.
Check whether your 401(k) plan administrator’s website has a calculator to estimate how much you will accumulate under various contribution and investment scenarios. If not, try Bankrate.com’s 401(k) calculator, or their other calculators for estimating monthly retirement income, retirement shortfall and more.
AARP offers a retirement calculator to help determine your current financial status and what you’ll need to save to meet your retirement needs.
Consult a professional. After you’ve explored various retirement scenarios, consider paying a financial planner to help work out an investment and savings game plan. If you don’t have a personal referral, good resources include the Certified Financial Planner Board of Standards, the National Association of Personal Financial Advisors and the Financial Planning Association.
Social Security issues. To make ends meet, many people begin drawing reduced benefits from Social Security before reaching full retirement age (65 for those born before 1938 and gradually increasing to 67 thereafter). This can have several financial consequences:
Your monthly benefit will be reduced by up to 30 percent. (Conversely, if you postpone benefits until after reaching full retirement age, your benefit increases by 7 to 8 percent per year, up to age 70.)
Although many states don’t tax Social Security benefits, they are counted as taxable income by the federal government. So, depending on your overall income, you could owe federal tax on a portion of your benefit. IRS Publication 915 has full details.
If you begin drawing Social Security while still working, your benefit could be significantly reduced depending on your income. Read How Work Affects Your Benefits for more details. Rest assured, however: Those reductions aren’t truly lost since your benefit will be recalculated upward once you reach full retirement age.
If you’re still working when you begin drawing Social Security, your benefit could be significantly reduced. The benefit reduction formula is rather complicated and depends of whether your income exceeds certain levels as well as on when you reach full retirement age.
Other tax implications. Even if your income drops significantly after retirement, chances are you’ll still be taxed on a portion of it, including withdrawals from regular IRAs and 401(k) plans. And, depending on where you choose to retire and your income sources, you’ll probably also face additional taxes on everyday purchases, real estate, capital gains, inheritances – the list goes on.
The Retirement Living Information Center features breakdowns of the various kinds of taxes seniors are likely to pay, state by state, including taxes on income, sales, fuel, property, inheritances and other items. For more on taxes in retirement, read my previous blog, Taxes Follow You Into Retirement.
One last suggestion: Once you’ve settled on what you think will be a sufficient retirement budget, try living on it for a few months first before retiring to make sure it actually works.
This article is intended to provide general information and should not be considered legal, tax or financial advice. It’s always a good idea to consult a legal, tax or financial advisor for specific information on how certain laws apply to you and about your individual financial situation.
Source
Friday, September 9, 2011
Friday, May 20, 2011
When Inflation Could Interfere with Your Retirement
When inflation is up 3.2 percent from a year ago, retirement seems like it will never come or that it could be more of a challenge than anything. And since oil prices seem to always be on the rise that means other necessary items like food and gas are rising too. So what do you do when you want to retire but inflation makes the dream a hardship? Well here are some tips from Forbes that could help.
Do you own your home? Though the prices of homes are low right now, it is usually a trend that when the cost of living rises so does the price of housing. However, if you’re looking at downsizing maybe weigh your options before putting your home on the market. If you own your current home and can afford to stay in it, when the market returns to a healthy state you could gain from a sale.
Think about what gold can do for you. Gold is always going to be of value, but prices and appeal rise during tough times. Think about investing in it, though it is a risky move since “the quadrupling of prices over the past decade will draw out a multitude of new sources,” according to Forbes.
Delaying your Social Security payments could pay more than you think. If your delay your Social Security benefits to age 66 the payments may last longer. In some cases the payments could last up to age 94! In this situation you would need to speak with and work out the specifics with your spouse because this plan works best if one of you keeps collecting while the other defers. If this is the route decided upon, there are few major risks involved.
Overall, retirement should be a time of relaxation and enjoyment, and despite inflation, it should also be attainable. Click to read more information about inflation and other tips on how to combat it.
Sources:
New York Times
Forbes.com
Do you own your home? Though the prices of homes are low right now, it is usually a trend that when the cost of living rises so does the price of housing. However, if you’re looking at downsizing maybe weigh your options before putting your home on the market. If you own your current home and can afford to stay in it, when the market returns to a healthy state you could gain from a sale.
Think about what gold can do for you. Gold is always going to be of value, but prices and appeal rise during tough times. Think about investing in it, though it is a risky move since “the quadrupling of prices over the past decade will draw out a multitude of new sources,” according to Forbes.
Delaying your Social Security payments could pay more than you think. If your delay your Social Security benefits to age 66 the payments may last longer. In some cases the payments could last up to age 94! In this situation you would need to speak with and work out the specifics with your spouse because this plan works best if one of you keeps collecting while the other defers. If this is the route decided upon, there are few major risks involved.
Overall, retirement should be a time of relaxation and enjoyment, and despite inflation, it should also be attainable. Click to read more information about inflation and other tips on how to combat it.
Sources:
New York Times
Forbes.com
Friday, April 29, 2011
NEW RULES FOR SOCIAL SECURITY MAY 1
BOSTON, MA − Beginning May 1, 2011, elders, veterans, and the disabled can rest a bit easier as a new federal rule kicks in that will limit creditors’ ability to seize funds from Social Security, Social Supplemental Income (SSI), VA, and other federal benefits held in bank accounts in favor of direct deposit or prepaid cards. New rules making the Direct Express® prepaid card the default method of issuing federal payments and limiting the use of other prepaid cards and paper checks will also be in effect May 1.
If a bank receives a garnishment order, the bank will be required to determine whether an account contains electronically deposited federal benefit payments, and if so, the bank will be obligated to protect two months of those payments from seizure to satisfy garnishment orders. To protect funds deposited before the two-month time period, or deposited by check the recipient will have to follow the state procedure for claiming exemptions.
“This regulation will provide a much-needed protection for exempt federal benefits. We are enormously grateful to the U.S. Treasury Department for its leadership in resolving the difficult issue of how to protect federal benefits in bank accounts from illegal seizure,” said Margot Saunders of the National Consumer Law Center. “We also appreciate the Treasury Department’s efforts in the new prepaid card regulation to protect recipients from overdraft and pay-day type loans attached to these new payment devices.”
The U.S. Treasury recently took a hard-line approach regarding elimination of paper checks. Effective May 1 of this year, new applicants filing for all federal payments including Social Security, Supplemental Security Income (SSI), veterans benefits and wages will receive their payments electronically, unless they qualify for one of a very few exemptions. If recipients do not provide information to the federal payment agency regarding a bank account or prepaid card into which they want their payments electronically deposited, they will be provided the federal government-issued Direct Express® card. The Direct Express card is likely to be the best option for recipients who are unbanked, but pursuant to a new rule, they may also choose privately branded prepaid cards to receive their benefits. Additionally, most current recipients will be required to receive their federal benefits electronically as of May 1, 2013.
The Direct Express® prepaid debit card, issued through the U.S. Treasury, is the best prepaid card available. Direct Express® cards have considerable protections for recipients, including limits on fees, legal protection against unauthorized charges, and requirements for free access to funds. They are likely to be substantially less expensive than other prepaid cards.
Nevertheless, if a federal payment recipient wishes to have funds deposited to a prepaid card other than the Direct Express® card, only certain cards are eligible. The most important conditions are that (1) prepaid cards cannot receive federal payments if they are attached to a line of credit or loan agreement that is automatically repaid upon deposit of the federal payment, and (2) the card must comply with consumer protections required through the Electronic Funds Transfer Act (EFTA). Importantly, the EFTA limits overdraft fees for ATM and one-time debit transactions unless the person opts in for such coverage (opting in for overdraft protection may not be beneficial for the recipient). The EFTA protections against unauthorized charges, billing errors, and disclosure of fees will also be in effect for these cards.
Current benefits recipients have until March 1, 2013 to choose an electronic payment option. After that date, no payments will be issued via check, unless the person qualifies and is approved for an exemption.
To continue receiving paper checks, recipients must be approved by the US Treasury for one of the following exemptions:
• Aged 90 years or older, as of May 1, 2011 (no wavier required)
• Mentally impaired
• Live in a remote geographic area lacking the capability to support an electronic financial transaction
Effective March 1, 2013, both new applicants and current recipients who do not choose another option (and have not been granted a wavier) will automatically receive their payments on the federal government’s Direct Express card.
###
National Consumer Law Center® (NCLC®) is a non-profit organization specializing in consumer issues on behalf of low-income and other vulnerable people. Since 1969, NCLC has worked with legal services and nonprofit organizations as well as government and private attorneys across the United States, to create sound public policy for low-income and elderly individuals on consumer issues.
www.debthelper.com
Credit Card Management Services, Inc. d.b.a. Debthelper.com is an IRS Approved 501c3 Non-Profit Florida Corporation dedicated to our mission of providing compassionate and professional, financial counseling and education in an ethical manner with efficient, timely and problem-solving client support.
Debthelper.com partners with those who create opportunities for people to live in affordable homes, improve their lives and strengthen their communities.
If a bank receives a garnishment order, the bank will be required to determine whether an account contains electronically deposited federal benefit payments, and if so, the bank will be obligated to protect two months of those payments from seizure to satisfy garnishment orders. To protect funds deposited before the two-month time period, or deposited by check the recipient will have to follow the state procedure for claiming exemptions.
“This regulation will provide a much-needed protection for exempt federal benefits. We are enormously grateful to the U.S. Treasury Department for its leadership in resolving the difficult issue of how to protect federal benefits in bank accounts from illegal seizure,” said Margot Saunders of the National Consumer Law Center. “We also appreciate the Treasury Department’s efforts in the new prepaid card regulation to protect recipients from overdraft and pay-day type loans attached to these new payment devices.”
The U.S. Treasury recently took a hard-line approach regarding elimination of paper checks. Effective May 1 of this year, new applicants filing for all federal payments including Social Security, Supplemental Security Income (SSI), veterans benefits and wages will receive their payments electronically, unless they qualify for one of a very few exemptions. If recipients do not provide information to the federal payment agency regarding a bank account or prepaid card into which they want their payments electronically deposited, they will be provided the federal government-issued Direct Express® card. The Direct Express card is likely to be the best option for recipients who are unbanked, but pursuant to a new rule, they may also choose privately branded prepaid cards to receive their benefits. Additionally, most current recipients will be required to receive their federal benefits electronically as of May 1, 2013.
The Direct Express® prepaid debit card, issued through the U.S. Treasury, is the best prepaid card available. Direct Express® cards have considerable protections for recipients, including limits on fees, legal protection against unauthorized charges, and requirements for free access to funds. They are likely to be substantially less expensive than other prepaid cards.
Nevertheless, if a federal payment recipient wishes to have funds deposited to a prepaid card other than the Direct Express® card, only certain cards are eligible. The most important conditions are that (1) prepaid cards cannot receive federal payments if they are attached to a line of credit or loan agreement that is automatically repaid upon deposit of the federal payment, and (2) the card must comply with consumer protections required through the Electronic Funds Transfer Act (EFTA). Importantly, the EFTA limits overdraft fees for ATM and one-time debit transactions unless the person opts in for such coverage (opting in for overdraft protection may not be beneficial for the recipient). The EFTA protections against unauthorized charges, billing errors, and disclosure of fees will also be in effect for these cards.
Current benefits recipients have until March 1, 2013 to choose an electronic payment option. After that date, no payments will be issued via check, unless the person qualifies and is approved for an exemption.
To continue receiving paper checks, recipients must be approved by the US Treasury for one of the following exemptions:
• Aged 90 years or older, as of May 1, 2011 (no wavier required)
• Mentally impaired
• Live in a remote geographic area lacking the capability to support an electronic financial transaction
Effective March 1, 2013, both new applicants and current recipients who do not choose another option (and have not been granted a wavier) will automatically receive their payments on the federal government’s Direct Express card.
###
National Consumer Law Center® (NCLC®) is a non-profit organization specializing in consumer issues on behalf of low-income and other vulnerable people. Since 1969, NCLC has worked with legal services and nonprofit organizations as well as government and private attorneys across the United States, to create sound public policy for low-income and elderly individuals on consumer issues.
www.debthelper.com
Credit Card Management Services, Inc. d.b.a. Debthelper.com is an IRS Approved 501c3 Non-Profit Florida Corporation dedicated to our mission of providing compassionate and professional, financial counseling and education in an ethical manner with efficient, timely and problem-solving client support.
Debthelper.com partners with those who create opportunities for people to live in affordable homes, improve their lives and strengthen their communities.
Monday, March 28, 2011
A Homeowner With No Savings, but Some Options
If you’re worried that you haven’t saved enough for retirement, you’re probably right. Most of us haven’t. In fact, the Employee Benefit Research Institute found the majority of American workers had put away less than $25,000 for their golden years.
But even those people are in better financial shape than Susanna Wilson, 70, who saved nothing.
Her only dependable income is a Social Security check of about $900 a month.
“I can never retire,” she said, her voice trembling as she stared at the floor of her living room in Grass Valley, Calif. “Probably about every two weeks when the bills are due, that’s when I get really worried. I think ‘How am I going to pay this one?’ ”
It should never have come to this. Ms. Wilson attended the University of California, Berkeley, in the late 1950s, though she left before graduating to move to New York and marry her college sweetheart, the Minimalist sculptor and sometime rock musician Walter De Maria.
Ms. Wilson spent her prime earning years engaged in various creative endeavors in New York, mostly as a designer. Her clothing line, O’Susanna, found a home in the late 1970s at Saks Fifth Avenue and Bloomingdale’s. Glamour and Seventeen magazines featured Perfumes by Susanna, including a popular fragrance called Strawberry Love.
In her 40s, Ms. Wilson moved to California and became a publicist. At her peak, she made around $65,000 a year, she said, and not a penny of that made its way into a retirement fund. “One thing kind of led to another,” Ms. Wilson said. “I’ve always put all my money into my businesses. And I always thought the business I was in was going to be a great success.” She also raised a daughter, Corie, 36, who lives in Los Angeles with her two children and is not in a position to help her mother financially.
Now twice divorced and living alone with her Shetland Sheepdog, Rooney, Ms. Wilson subsists on those government checks, plus a one-day-a-week job at a local jewelry store that pays $12.50 an hour. She received no alimony from either divorce. Ms. Wilson also makes little girls’ dresses under her O’Susanna label, at a vintage Singer Featherweight sewing machine in her dining room. But she sells only about six a month for around $200.
Grass Valley, an old gold mining town of 12,300 residents in the foothills of the Sierra Nevada, near Lake Tahoe, isn’t an expensive place to live. But Ms. Wilson isn’t the only one struggling. Her friend Molly Fisk, 55, a poet and teacher, was visiting the house and joked that her retirement planning was “all tied up in MasterCard futures. Sad but true.”
Ms. Wilson would probably manage on her current income, though not without sacrifice, were it not for the debt she had accumulated. All told, she averages about $1,400 in monthly income, including Social Security (adjusted for one of her former husbands’ earnings). A third of that goes toward fixed expenses like utilities. She pays $300 toward a mortgage balance of $5,477. She inherited the house, fully paid off, from her parents, but took out the mortgage a few years ago to pay for repairs.
The balance of her income goes toward the monthly minimum payments on $9,000 in credit card debt, racked up for daily living expenses. “I think I might just have to declare bankruptcy,” she said. “I just can’t live with that.”
Before she takes that drastic step, Ms. Wilson should consider some other options, said Elizabeth Rutter Baer, a certified financial planner in Lansing, Mich. She worries that Ms. Wilson is “extremely close” to the edge and isn’t getting anywhere with her debt payments because she keeps putting more expenses, like food, on her credit cards.
Yes, she could try to find other income, Ms. Baer said. But that’s a short-term solution. At some point, despite her excellent health, Ms. Wilson may not be able to work. “Bankruptcy is possible, but my advice is, let’s liquidate assets and get those debts paid off,” Ms. Baer said.
To that end, Ms. Baer recommended something she said she had never before suggested: a reverse mortgage. Such mortgages allow homeowners to tap existing home equity to receive a lump sum or monthly checks. Unlike a home equity loan, however, borrowers don’t have to make any repayments until they no longer live in the home. The strategy can be risky, with high fees and sometimes poor counseling for borrowers. Reverse mortgages are available only to homeowners 62 or older.
“Susanna is the ideal candidate,” Ms. Baer said. “This is one instance where it could work.”
The house is valued from $150,000 to $200,000. Ms. Baer said Ms. Wilson should work with a bank to see if she could wrap the current mortgage into a reverse and then take cash out. Ms. Wilson is already making phone calls to explore the idea.
Ms. Baer also noted that Ms. Wilson was part owner, with her two brothers, of several tracts of timberland in northern California. The land’s value has dropped because of the economy, but Ms. Baer said that shouldn’t stop them from selling it.
“Whatever the purpose of this land was before, today’s the rainy day,” she said. “It may not be that much, but at this point $25,000 would change her life, totally.” Ms. Wilson said she was discussing this with her brothers and a real estate agent.
Ms. Baer, who is 67 and single, said there were particular financial difficulties facing single people as they aged. Even people in a relationship should make financial plans that can work even if they were to be single during retirement, she said, adding, “Nobody knows who’s going to be there at the end.”
Ms. Wilson agreed with that assessment. “I have friends, and they’re two people together, and it’s a lot easier.” At that point she again spoke through tears. “My Mom would say, ‘Why don’t you just go and get married?’ and that’s just not me,” she said. “I believe you have to love somebody.”
Ms. Baer’s advice provided a push for her to explore some options she had already thought about, but hadn’t followed through on, Ms. Wilson said, because she had been paralyzed by the fear of what might happen if she could no longer generate extra income. Overcoming that fear will be key to recovering her financial health. And she’s confident that will happen.
“I don’t want to be a Pollyanna,” Ms. Wilson said. “But tomorrow is another day.”
Source
But even those people are in better financial shape than Susanna Wilson, 70, who saved nothing.
Her only dependable income is a Social Security check of about $900 a month.
“I can never retire,” she said, her voice trembling as she stared at the floor of her living room in Grass Valley, Calif. “Probably about every two weeks when the bills are due, that’s when I get really worried. I think ‘How am I going to pay this one?’ ”
It should never have come to this. Ms. Wilson attended the University of California, Berkeley, in the late 1950s, though she left before graduating to move to New York and marry her college sweetheart, the Minimalist sculptor and sometime rock musician Walter De Maria.
Ms. Wilson spent her prime earning years engaged in various creative endeavors in New York, mostly as a designer. Her clothing line, O’Susanna, found a home in the late 1970s at Saks Fifth Avenue and Bloomingdale’s. Glamour and Seventeen magazines featured Perfumes by Susanna, including a popular fragrance called Strawberry Love.
In her 40s, Ms. Wilson moved to California and became a publicist. At her peak, she made around $65,000 a year, she said, and not a penny of that made its way into a retirement fund. “One thing kind of led to another,” Ms. Wilson said. “I’ve always put all my money into my businesses. And I always thought the business I was in was going to be a great success.” She also raised a daughter, Corie, 36, who lives in Los Angeles with her two children and is not in a position to help her mother financially.
Now twice divorced and living alone with her Shetland Sheepdog, Rooney, Ms. Wilson subsists on those government checks, plus a one-day-a-week job at a local jewelry store that pays $12.50 an hour. She received no alimony from either divorce. Ms. Wilson also makes little girls’ dresses under her O’Susanna label, at a vintage Singer Featherweight sewing machine in her dining room. But she sells only about six a month for around $200.
Grass Valley, an old gold mining town of 12,300 residents in the foothills of the Sierra Nevada, near Lake Tahoe, isn’t an expensive place to live. But Ms. Wilson isn’t the only one struggling. Her friend Molly Fisk, 55, a poet and teacher, was visiting the house and joked that her retirement planning was “all tied up in MasterCard futures. Sad but true.”
Ms. Wilson would probably manage on her current income, though not without sacrifice, were it not for the debt she had accumulated. All told, she averages about $1,400 in monthly income, including Social Security (adjusted for one of her former husbands’ earnings). A third of that goes toward fixed expenses like utilities. She pays $300 toward a mortgage balance of $5,477. She inherited the house, fully paid off, from her parents, but took out the mortgage a few years ago to pay for repairs.
The balance of her income goes toward the monthly minimum payments on $9,000 in credit card debt, racked up for daily living expenses. “I think I might just have to declare bankruptcy,” she said. “I just can’t live with that.”
Before she takes that drastic step, Ms. Wilson should consider some other options, said Elizabeth Rutter Baer, a certified financial planner in Lansing, Mich. She worries that Ms. Wilson is “extremely close” to the edge and isn’t getting anywhere with her debt payments because she keeps putting more expenses, like food, on her credit cards.
Yes, she could try to find other income, Ms. Baer said. But that’s a short-term solution. At some point, despite her excellent health, Ms. Wilson may not be able to work. “Bankruptcy is possible, but my advice is, let’s liquidate assets and get those debts paid off,” Ms. Baer said.
To that end, Ms. Baer recommended something she said she had never before suggested: a reverse mortgage. Such mortgages allow homeowners to tap existing home equity to receive a lump sum or monthly checks. Unlike a home equity loan, however, borrowers don’t have to make any repayments until they no longer live in the home. The strategy can be risky, with high fees and sometimes poor counseling for borrowers. Reverse mortgages are available only to homeowners 62 or older.
“Susanna is the ideal candidate,” Ms. Baer said. “This is one instance where it could work.”
The house is valued from $150,000 to $200,000. Ms. Baer said Ms. Wilson should work with a bank to see if she could wrap the current mortgage into a reverse and then take cash out. Ms. Wilson is already making phone calls to explore the idea.
Ms. Baer also noted that Ms. Wilson was part owner, with her two brothers, of several tracts of timberland in northern California. The land’s value has dropped because of the economy, but Ms. Baer said that shouldn’t stop them from selling it.
“Whatever the purpose of this land was before, today’s the rainy day,” she said. “It may not be that much, but at this point $25,000 would change her life, totally.” Ms. Wilson said she was discussing this with her brothers and a real estate agent.
Ms. Baer, who is 67 and single, said there were particular financial difficulties facing single people as they aged. Even people in a relationship should make financial plans that can work even if they were to be single during retirement, she said, adding, “Nobody knows who’s going to be there at the end.”
Ms. Wilson agreed with that assessment. “I have friends, and they’re two people together, and it’s a lot easier.” At that point she again spoke through tears. “My Mom would say, ‘Why don’t you just go and get married?’ and that’s just not me,” she said. “I believe you have to love somebody.”
Ms. Baer’s advice provided a push for her to explore some options she had already thought about, but hadn’t followed through on, Ms. Wilson said, because she had been paralyzed by the fear of what might happen if she could no longer generate extra income. Overcoming that fear will be key to recovering her financial health. And she’s confident that will happen.
“I don’t want to be a Pollyanna,” Ms. Wilson said. “But tomorrow is another day.”
Source
Tuesday, February 1, 2011
What to Do With Your W2...
In the last few weeks, many Americans received their W2 tax documents. So now what? While the April deadline may seem light-years away, it's never too soon to get a head start on your taxes.
Here are a few reasons why.
More time, fewer mistakes. A journalist would never turn in an article before editing and proofing it several times, and the same goes for filing your taxes. The more time you give yourself, and your CPA, to look over your information, the more likely you are to notice mistakes or forgotten deductions.
Get your refund sooner. It's simple. The sooner you file your taxes, the sooner you'll be able to reap the benefits of your refund. And setting your refund up for direct deposit can expedite the process even more, in addition to saving you a trip to the bank.
Consider setting up your refund to be deposited directly into your savings account; this will give your savings a boost before you have a chance to spend your refund.
Beat the rush. While many plan to file their taxes early, there's always the mad dash of filers come April. Starting and filing now means you'll avoid the craziness at the end and the possibility of having to file for an extension if the unexpected happens.
Filing for an extension means more paperwork, and who wants to be stuck inside filling out forms when spring rolls around?
Whether you prepare your taxes yourself, or have someone do it for you, starting early and having more than one set of eyes review your documents is always a good idea. So, whip out your W2 and get started on your taxes today!
Click here for tips on starting your tax return.
For more information on creating an investment portfolio, click here.
Visit http://click.bsftransmit1.com/ClickThru.aspx?pubids=6698%7c9374%7c9435&digest=YcgbPeqSZ39%2f8WwQMX%2fKrA&sysid=1 or http://www.debthelper.com/ for more money-saving tips.
Share this tip with your friends.
Source © 2010 American Institute of CPAs
Here are a few reasons why.
More time, fewer mistakes. A journalist would never turn in an article before editing and proofing it several times, and the same goes for filing your taxes. The more time you give yourself, and your CPA, to look over your information, the more likely you are to notice mistakes or forgotten deductions.
Get your refund sooner. It's simple. The sooner you file your taxes, the sooner you'll be able to reap the benefits of your refund. And setting your refund up for direct deposit can expedite the process even more, in addition to saving you a trip to the bank.
Consider setting up your refund to be deposited directly into your savings account; this will give your savings a boost before you have a chance to spend your refund.
Beat the rush. While many plan to file their taxes early, there's always the mad dash of filers come April. Starting and filing now means you'll avoid the craziness at the end and the possibility of having to file for an extension if the unexpected happens.
Filing for an extension means more paperwork, and who wants to be stuck inside filling out forms when spring rolls around?
Whether you prepare your taxes yourself, or have someone do it for you, starting early and having more than one set of eyes review your documents is always a good idea. So, whip out your W2 and get started on your taxes today!
Click here for tips on starting your tax return.
For more information on creating an investment portfolio, click here.
Visit http://click.bsftransmit1.com/ClickThru.aspx?pubids=6698%7c9374%7c9435&digest=YcgbPeqSZ39%2f8WwQMX%2fKrA&sysid=1 or http://www.debthelper.com/ for more money-saving tips.
Share this tip with your friends.
Source © 2010 American Institute of CPAs
Tuesday, January 4, 2011
Accounts You Need for Your Retirement Savings Plan
In addition to planning for retirement, other needs such as healthcare, possible unemployment, and other emergencies require that you save more money for your retirement savings plan with accounts that can optimize how much you put aside or stabilize the state of your nest egg. If you do not have these accounts yet, it is high time that you revisit your financial strategies and use them in the years to come.
Emergency Savings Accounts
The largest obstacle to accumulating enough savings for retirement is the lack of a savings routine. To get into the savings habit, you will need to pay yourself a certain percentage of your regular paycheck or investment profits. Bolster the process further with direct deposits from your monthly salary or checking account into a dedicated account solely for your emergency savings fund. You can also save money for retirement while simultaneously paying down your debts. Automatic savings methods such as this help you reinforce the routine, as you will not be tempted to spend the money that goes directly into the emergency savings account. This account can also help you take care of unexpected expenses that can threaten the stability of your overall savings, with the savings balance only a month or so away from being replenished.High-yield Savings Accounts
High-yield savings accounts may seem impossible to find in this day and age, as many accounts only generate a dismal amount of profit for the holder via interest. Choose a stable bank with the highest possible interest to get the most out of your money, and make sure that you can access your savings at any time. There must be no investment risk involved in the account, and you have to get returns that boost your purchasing power and buffer it against the effects of inflation.
Free Checking Accounts
An ill-chosen checking account can take hundreds of dollars out of your funds per year, with the average checking account that bears interest charging monthly fees of about $13, and has a maintaining balance upwards of $3,800 at negligible interest rates if you want the fees out of the way. What you can do is look for an account that does not come with monthly or transactional fees, as well as no maintaining balance. Community banks, online banks, and credit unions are just some of the banks that that offer this type of checking account where one of the accounts you need to incorporate into your retirement savings plan.
Articles Source
About the Author:Katherine Smith is an author who specializes in financial topics concerning seniors. Puritan Financial Group gives you access to reliable investments and expert financial advice. For more information on how Puritan Financial Group can help you, please visit our website at http://www.puritanlife.com.
Monday, November 1, 2010
9 tips for sticking to a holiday budget
As reported by CreditCards.com, October 29, 2010: Here's one way to make 2011 a happy new year: Rein in holiday spending. To do that, create a holiday budget and stick to it.
"Think of a budget as a financial GPS," says Cate Williams, national spokeswoman for Money Management International, a nonprofit credit counseling agency with offices in 24 states. Drawing up a soup-to-nuts budget helps safeguard cash, without quenching the holiday spirit: "It makes us a cheerful giver because we're not spending money that should go to another expense," Williams says.
Holiday budgeting takes time, buy-in from the entire family and discipline. Here's a nine-step plan to make, and keep, a holiday budget.
1. Decide how much you can spend. Holiday money must come from your current disposable income. If you plan to spend money you don't have, prepare for a credit card bill that could take years to pay off. The National Retail Federation predicts consumers will spend an average of $688.87 on holiday-related expenses this year. If that amount is on a credit card with an 18 percent annual percentage rate (APR), and you pay the minimum payment of 4 percent due each month, it will take you three years to pay off the charges, and you'll pay an extra $203 in interest. (See our CreditCards.com payoff calculator to see how long it will take to pay off your credit card balance.)
Ideally, you've saved some holiday money. If not, cut back on extras such as movies, dinners out or coffee drinks until the holidays are over. "There are always things in a budget you can trim back," Williams says.
2. Budget for everything. "There are a lot of things people don't think about," says David Jones, president of the Association of Independent Consumer Credit Counseling Agencies, a Fairfax, Va.-based accrediting agency for counseling firms. Gifts, the cost of shopping (gas, parking), decorations, food and drink for parties, greeting cards, postage for cards and out-of-town gifts, travel expenses, holiday-related apparel and charitable contributions should all be in the budget.
3. Make a complete gift list with the entire family present. The list should include everyone -- relatives and friends, piano teachers and mail carriers -- who must be acknowledged during the holiday season. And don't forget the office gift exchange.
4. Decide who's getting what. For each person, set a firm "no more than" purchase price for that gift. Be realistic: $50 might be enough for a terrycloth bathrobe from Sears, Williams says, but not for triple-ply cashmere.
If disposable income is tight, Jones suggests designating half the list "card-only people" and specifying "make or bake" gifts -- cookies, pumpkin bread, handmade ornaments -- for 40 percent of the remaining recipients. Such "from the heart" gifts are welcome, especially if children make them, he says.
5. Set expectations with family members, especially children. If gifts will be minimal, Williams advises telling children now, to bring their expectations in line and absolve parents of gift-giving guilt. Now is also the time to discuss reasonable and economically feasible gift-giving tactics with family and friends, such as grab bags, name exchanges or skipping gifts altogether. "Open up the dialogue," she says.
6. Start shopping now. Late November and December bring sales, but they also bring crowds and pressure to get shopping (and wrapping and mailing) done.
Donna Thomas-Rodgers, 37, a leadership consultant who lives in Birmingham, Ala., expects to finish her shopping well before "Black Friday," the Friday after Thanksgiving, the day the winter holidays traditionally begin. Thomas-Rodgers is shopping now and getting bargains. "Right now, so many items are on sale and nobody's really thinking about it," she says. One example: She bought her daughter a new bedspread, originally $50, for $19.97 at Target.
To stay within her $1,000 holiday budget, Thomas-Rodgers signs up for e-mail alerts from retailers to get a heads-up on big sales. She saves money and time and reduces stress by not wrapping gifts. And seven years ago, when her daughter was born on Dec. 12, she stopped giving gifts to family members. "I told them, I'm a parent now and my daughter is my priority,'" Thomas-Rodgers recalls. "They understood."
7. Check your emotions at the store door. "Gift-giving deals with emotion, and emotion and spending don't go hand in hand," says Ornella Grosz, the Atlanta-based author of "Moneylicious: A Financial Clue for Generation Y." To keep the feelings out of shopping, Grosz suggests keeping a list of other financial obligations -- credit card debt, car payments, mortgage payments -- on a slip of paper in your wallet. When tempted to overspend, remind yourself of what you owe.
Grosz also suggests shopping when pressed for time; less time in a store usually means fewer purchases. Shopping with a trusted friend who will firmly guide you away from the sale tables, and shopping with cash only can also help curb impulse purchases.
8. Work sales, don't let them work you. If a gift on your list is on sale, buy it. If it's not, "you're buying stuff not on the list and you'll go over budget," says Joseph Montanaro, a certified financial planner at USAA, a San Antonio-based financial services firm.
9. Keep track of spending. "Cash is king," Montanaro says. "It's very easy to stretch the budget with credit cards." He and others suggest "the envelope trick," giving each household member her or his holiday budget in cash, in an envelope: When the money's gone, it's gone.
If you use credit cards for convenience, hold a weekly reckoning with yourself, your spouse and your credit card receipts to make sure nobody's going overboard.
Montanaro suggests paying off holiday credit card debt quickly, in three months if possible. Yes, you'll still pay interest, but it won't be egregious. Consider the following: paid off over three months, $750 on a credit card with 18 percent interest will cost a total of $772.60. (Use the CreditCards.com payoff calculator to calculate your own scenarios.)
Your best bet: Pay it off in one lump sum. "Don't handicap yourself as you go into the new year," Montanaro says. "It's all about putting yourself in the position to be financially successful."
"Think of a budget as a financial GPS," says Cate Williams, national spokeswoman for Money Management International, a nonprofit credit counseling agency with offices in 24 states. Drawing up a soup-to-nuts budget helps safeguard cash, without quenching the holiday spirit: "It makes us a cheerful giver because we're not spending money that should go to another expense," Williams says.
Holiday budgeting takes time, buy-in from the entire family and discipline. Here's a nine-step plan to make, and keep, a holiday budget.
1. Decide how much you can spend. Holiday money must come from your current disposable income. If you plan to spend money you don't have, prepare for a credit card bill that could take years to pay off. The National Retail Federation predicts consumers will spend an average of $688.87 on holiday-related expenses this year. If that amount is on a credit card with an 18 percent annual percentage rate (APR), and you pay the minimum payment of 4 percent due each month, it will take you three years to pay off the charges, and you'll pay an extra $203 in interest. (See our CreditCards.com payoff calculator to see how long it will take to pay off your credit card balance.)
Ideally, you've saved some holiday money. If not, cut back on extras such as movies, dinners out or coffee drinks until the holidays are over. "There are always things in a budget you can trim back," Williams says.
2. Budget for everything. "There are a lot of things people don't think about," says David Jones, president of the Association of Independent Consumer Credit Counseling Agencies, a Fairfax, Va.-based accrediting agency for counseling firms. Gifts, the cost of shopping (gas, parking), decorations, food and drink for parties, greeting cards, postage for cards and out-of-town gifts, travel expenses, holiday-related apparel and charitable contributions should all be in the budget.
3. Make a complete gift list with the entire family present. The list should include everyone -- relatives and friends, piano teachers and mail carriers -- who must be acknowledged during the holiday season. And don't forget the office gift exchange.
4. Decide who's getting what. For each person, set a firm "no more than" purchase price for that gift. Be realistic: $50 might be enough for a terrycloth bathrobe from Sears, Williams says, but not for triple-ply cashmere.
If disposable income is tight, Jones suggests designating half the list "card-only people" and specifying "make or bake" gifts -- cookies, pumpkin bread, handmade ornaments -- for 40 percent of the remaining recipients. Such "from the heart" gifts are welcome, especially if children make them, he says.
5. Set expectations with family members, especially children. If gifts will be minimal, Williams advises telling children now, to bring their expectations in line and absolve parents of gift-giving guilt. Now is also the time to discuss reasonable and economically feasible gift-giving tactics with family and friends, such as grab bags, name exchanges or skipping gifts altogether. "Open up the dialogue," she says.
6. Start shopping now. Late November and December bring sales, but they also bring crowds and pressure to get shopping (and wrapping and mailing) done.
Donna Thomas-Rodgers, 37, a leadership consultant who lives in Birmingham, Ala., expects to finish her shopping well before "Black Friday," the Friday after Thanksgiving, the day the winter holidays traditionally begin. Thomas-Rodgers is shopping now and getting bargains. "Right now, so many items are on sale and nobody's really thinking about it," she says. One example: She bought her daughter a new bedspread, originally $50, for $19.97 at Target.
To stay within her $1,000 holiday budget, Thomas-Rodgers signs up for e-mail alerts from retailers to get a heads-up on big sales. She saves money and time and reduces stress by not wrapping gifts. And seven years ago, when her daughter was born on Dec. 12, she stopped giving gifts to family members. "I told them, I'm a parent now and my daughter is my priority,'" Thomas-Rodgers recalls. "They understood."
7. Check your emotions at the store door. "Gift-giving deals with emotion, and emotion and spending don't go hand in hand," says Ornella Grosz, the Atlanta-based author of "Moneylicious: A Financial Clue for Generation Y." To keep the feelings out of shopping, Grosz suggests keeping a list of other financial obligations -- credit card debt, car payments, mortgage payments -- on a slip of paper in your wallet. When tempted to overspend, remind yourself of what you owe.
Grosz also suggests shopping when pressed for time; less time in a store usually means fewer purchases. Shopping with a trusted friend who will firmly guide you away from the sale tables, and shopping with cash only can also help curb impulse purchases.
8. Work sales, don't let them work you. If a gift on your list is on sale, buy it. If it's not, "you're buying stuff not on the list and you'll go over budget," says Joseph Montanaro, a certified financial planner at USAA, a San Antonio-based financial services firm.
9. Keep track of spending. "Cash is king," Montanaro says. "It's very easy to stretch the budget with credit cards." He and others suggest "the envelope trick," giving each household member her or his holiday budget in cash, in an envelope: When the money's gone, it's gone.
If you use credit cards for convenience, hold a weekly reckoning with yourself, your spouse and your credit card receipts to make sure nobody's going overboard.
Montanaro suggests paying off holiday credit card debt quickly, in three months if possible. Yes, you'll still pay interest, but it won't be egregious. Consider the following: paid off over three months, $750 on a credit card with 18 percent interest will cost a total of $772.60. (Use the CreditCards.com payoff calculator to calculate your own scenarios.)
Your best bet: Pay it off in one lump sum. "Don't handicap yourself as you go into the new year," Montanaro says. "It's all about putting yourself in the position to be financially successful."
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