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Estimate
Your Future Social Security Benefits
By Stanley W. Fromuth
Social Security District Manager, Reading
Social Security recently introduced a new “Retirement
Estimator” at
www.socialsecurity.gov. Getting a personalized online
estimate of your future retirement benefits is now easier
than ever before.
The online Retirement Estimator is a convenient, secure and
quick financial planning tool that lets workers calculate
how much they might expect to receive in Social Security
benefits when they retire. The attractive new feature of
this calculator is that it eliminates the need to manually
key in years of earnings information. It’s so easy to use.
Visit
www.socialsecurity.gov/estimator. To get an estimate,
you’ll need to enter your first and last name, date of
birth, Social Security number, mother’s maiden name and
place of birth. If the information matches our records, then
you can enter an expected retirement age and future wages.
The Estimator combines this information with the information
that we have on record, including your yearly earnings, to
provide a quick and reliable online benefit estimate.
To protect your privacy, only the final retirement estimates
are given to you online. The Retirement Estimator does not
show your earnings record information on which the final
benefit estimate was calculated. And it does not reveal any
personal information, such as your address, earnings or
other information, that could lead to identity theft.
The Estimator also will let you create “what if” scenarios.
You can, for example, change “stop work” dates or expected
future earnings to create and compare different retirement
options.
When you visit our website at
www.socialsecurity.gov to see the new Retirement
Estimator, take a few minutes to become familiar with our
many other online services – including applying online for
Social Security retirement and disability benefits.
Energy
Assistance Program
Important Information
If you need help paying your heating bills,
or have a heating emergency, LIHEAP may be able to help.
LIHEAP opens for applications on November 3, 2008 and closes
March 31, 2009. You may qualify for a LIHEAP grant if you
meet the following income guidelines for home owners and
renters.
For a household of one the maximum income is $15,600. For a
household of two the maximum income is $21,000.
Remember, LIHEAP is a grant. This means you don’t have to
pay it back, you don’t have to get public assistance, you
don’t have to have an unpaid heating bill and you can either
rent or own your home.
You can apply online at
www.compass.state.pa.us or call toll-free 1-866-857-7095
TDD for the Hearing Impaired: 1-800-451-5886.
Applications are also available at your local county
assistance office.
LIHEAP is a federally funded program administered by the
Department of Public Welfare.
Protect
against gasoline theft
SUVs and other large vehicles are popular
targets. Consider buying a locking gas cap (about $15 to
$20). Always park in well-lit, high-traffic areas or a
locked garage. Set car alarms. Never leave an activated pump
unattended while at a gas station.
Vol. 29 no. 17
September 1, 2008
How Safe Is Your
Money In the Bank?
California-based IndyMac Bank failed in July,
leading many bank customers to wonder how safe their money
really was. For most, the answer is extremely safe. Prior to
1934, bank failures often meant disaster for depositors, but
the Federal Deposit Insurance Corporation (FDIC) now
guarantees most bank deposits.
As crucial as FDIC insurance is for our financial security,
few Americans know very much about it – and what they don’t
know could cost them a bundle. Bottom Line/Personal asked
top financial analyst Greg McBride for details …
Do bank customers need to worry about money they have in
banks?
The vast majority do not. The only people who should worry
at all are those whose accounts at any single bank exceed
the limits of FDIC insurance - $100,000 … or $250,000 for
certain retirement accounts, such as IRAs held in
certificates of deposit (CDs) and money-market accounts.
Stay below these limits, and 100% of your deposits are
completely protected even if the bank fails.
What should people do if they want to keep more in a
bank?
The easiest way around the rules is to divide your money
among several banks – that means among different bank
companies, not just several branches of the same bank. FDIC
insurance covers up to $100,000 (or up to $250,000 in some
retirement accounts) at each bank with which you do
business.
If you prefer to keep more than $100,000 in a single bank,
you still can be 100% covered by FDIC insurance as long as
you divide your money among several “ownership categories.”
Ownership categories include personal accounts in your name
… personal accounts in your spouse’s name … joint accounts
co-owned by you and someone else (such as your spouse) … and
trust accounts naming someone other than yourself as trust
beneficiary.
Example: With proper planning, a married couple can deposit
more than $1 million in a single bank with all of the money
insured by the FDIC. Each spouse can put $100,000 in an
account in his/her own name … each can have $250,000 in a
retirement account … the couple can co-own a joint account
up to $200,000 … and each can have a trust containing
$100,000 that names the other spouse as the beneficiary.
Total: $1.1 million.
Which types of bank accounts are protected by the FDIC,
and which types are not?
Checking accounts, savings accounts, CDs, Christmas club
accounts and money-market savings accounts are covered by
the FDIC.
Investment products, such as stocks, bonds and mutual fund
shares (including money-market mutual fund shares) are not
covered even if they were purchased through and FDIC bank.
The Securities Investors Protection Corporation (SIPC), an
organization unrelated to the FDIC, does protect investors
when brokerages, including bank brokerages, fail. Look for
the phrase “Member SIPC” on bank signs … ask your bank’s
brokerage department whether the bank (or the subsidiary
that holds investments) is a member of the SIPC … or contact
the SIPC to check membership (202-371-8300, www.sipc.org).
Note: SIPC coverage does not protect investors from losses
from market fluctuations.
Aside from not knowing the rules, what are other ways
that customers wind up with uncovered deposits?
People sometimes purchase “brokered CDs” – CDs sold through
investment brokers – without realizing that these CDs will
be placed with a bank at which they already have accounts.
If the CD and these other accounts total more than $100,000,
they might not be completely covered. Ask where a brokered
CD will be placed before buying.
Others put money into interest-bearing accounts right up to
the FDIC limit. Then the interest earned by these accounts
pushes them over the limit and leaves them less than fully
covered.
Is money in a credit union or a savings and loan as safe
as in a bank?
Yes. Most savings-and-loan deposits are FDIC insured. Most
credit union deposits are covered by the national Credit
Union Share Insurance Fund, which is essentially identical
to FDIC insurance (www.ncua.gov, and click on “Share
Insurance”).
How long after a bank fails do depositors have to wait to
receive their money from the FDIC?
You may be hearing the myth that it takes months for the
FDIC to pay up, but in truth, depositors usually have full
access to their money aby the next business day after a bank
is closed by regulators. Typically, failed banks are closed
on Fridays, and funds are fully available by the following
Monday. Even during that weekend, bank customers generally
can use their ATM cards and write checks, though they might
not be able to use on-line banking services. (Deposited
funds held through brokered accounts or trusts might take
slightly longer to become fully available.)
Do bank customers who exceed FDIC limits lose all of
their uncovered funds when their banks fail?
They are likely to recover a portion of their uncovered
money after the bank’s assets are sold, but probably not
everything. Historically, they can expect to receive around
70 cents on the dollar, though this varies.
Source: Bottom Line Personal, Vol. 29 Number 17
Pgs 5-6
Pension Rights Project
Free pension problem resolution
is now available for Pennsylvania residents through the
Senior Law Center of Pennsylvania, and its collaboration
with the Pension
Rights Project.
Pension and other retirement
benefits play an important part in the economic security and
independence of many older persons. The trained advocates of
the Pension Rights Project provide basic information and
advice about laws and pension rights to workers, their
spouses, and their survivors. The Pension Rights Project
can also inform seniors about the pension rights
of divorced
pensions.
The Pension Rights Project
actively investigates pension claims by finding pensions
“lost” due to company mergers, relocation, or bankruptcy.
Project staff also intercedes on behalf of Pennsylvanian by
filing pension claims, investigating benefit denials, and
filing internal appeals, funding from the Federal
Administration on Aging makes these innovative services
possible.
Seniors who need help with
pensions are encouraged to call the Pension Rights Project
at (866)735-7737.
Beware
Co-signing a loan can damage your credit rating. If you
co-sign a loan for someone who is late with the payments,
your credit score will be affected and you may be liable for
payments. The creditor can try to garnish your wages.
Self-defense: If you feel that you must co-sign-as parents
often do for children who are borrowing for school or a
home-insist that a copy of the bill be sent to you each
month. Then you will know if payments are up-to-date and
can take action if they are not, before your own credit is
harmed.
Vol. 29
no. 17
September 1, 2008
Gambling winnings are taxable
Gambling
winnings are taxable and must be reported as other income on
the first page of your tax return. The amount won is the
net gain-how much you took home, including fair-market value
of non cash prizes, minus the cost of making all wagers.
Casinos, racetracks and other gambling facilities are
required to report winnings above certain threshold directly
to the IRS-the requirements vary by type of gambling
activity. Gambling losses are deductible (as an itemized
deduction) up to the amount of gambling winnings in any
given tax year. Save any records associated with wagers
made for gambling losses are deductible (as an itemized
deduction) up to the amount of gambling winnings in any
given tax year. Save any records associated with wagers
made for gambling activities in case of an audit.
Vol. 29
no. 17
September 1, 2008
Treasury issues brief on Social Security reform
The U.S. Treasury Department
has issued yet another report detailing strategies to rescue
Social Security. The brief, the fifth in a series of such
reports, addresses “the possible role that progressive
reductions in scheduled benefits would play in Social
Security reform.” According to the report, “a progressive
reduction in scheduled benefits would have high earners bear
a relatively larger share of the burden of the adjustments
needed to make Social Security permanently solvent, while
workers with low earnings would be relatively shielded from
the impact of benefit reductions. Under such a change, the
reduction in scheduled benefits expressed as a share of
wages while working would be higher for high-wage workers
than it is for low-wage workers. While there is considerable
disagreement about the precise nature and timing of the
reforms that will ultimately make Social Security solvent,
there is broad agreement that progressive benefit
adjustments will be a key component of those reforms.
Indeed, most proposed reforms to move Social Security toward
permanent solvency call for benefit changes of this type.”
To learn more, visit
http://www.treasury.gov.
Source: Retirement
Weekly – June 27, 2008 (Vol. 6, No. 26)
So How Much Money Am
I Really Going To Need?
By Pam Blumer
Everyone knows that health-care costs are expensive. But how
much money should we be setting aside now to pay for medical
costs once we retire? It would be nice to have an easy
answer, a monetary figure to strive for, a goal to reach.
However, as is often the case with our health-care system,
the answer is complicated.
A report published last month by the Employee Benefit
Research Institute (ERBI) attempts to offer some clarity.
“The amount of money a person needs will depend upon the age
at which he or she retires, length of life after retirement,
the availability of health insurance coverage after
retirement to supplement Medicare and the source of that
coverage, health status and out-of-pocket expenses, the rate
at which health care costs will increase, and interest rates
and other rates of return on investments. In addition,
public policy that changes any of the above factors will
also affect spending on health-care in retirement. While it
is possible to come up with a single number that individuals
can use to set retirement savings goals, a single number
based on averages will be wrong for the vast majority of the
population,” wrote ERBI researchers Paul Fronstin, Dallas
Salisbury, and Jack Van Derhei.
So they devised a model to estimate what would be the
adequate savings needed to cover health insurance premiums
and other health care expenses in retirement 50% of the
time, 75% of the time, and 90% of the time. The report also
took into account; a) those individuals who have subsidized
retiree health benefits, b) those individuals who have
unsubsidized retiree health benefits, and c) those
individuals who supplement traditional Medicare with Medigap
and Medicare Part D and who have relatively high
prescription drug expenses.
The researchers found that a 65 year-old man retiring in
2008 will need between $64,000 and $159,000 in savings if
they are satisfied with a 50% chance of having enough money,
and between $196,000 and $331,000 to cover expenses 90% of
the time. On the other hand, a 65 year-old woman retiring in
2008 will need between $86,000 and $184,000 in savings if
they are satisfied with a 50% chance of having enough money,
and between $223,000 and $390,000 to cover expenses 90% of
the time. (The complete report can be read at http://www.ebri.org.)
Be aware that this study did not take into account the cost
of annual premiums for long-term care insurance, which would
cover the costs associated with an in-home caregiver or the
fees for living in a nursing home. Joan Bloom, senior vice
president for financial services firm, Fidelity Investments,
suggests that a 65- year old couple today will need $85,000
on average for long term care insurance. “We need to get
people thinking about long-term care – an unpleasant topic
made more difficult by rising costs and the growing demand
for such care as Baby Boomers enter retirement and
eventually need help caring for themselves,” says Bloom.
“People should consider buying long-term care insurance when
they’re in their 50’s. Policies generally cost less the
earlier in life they’re purchased.”
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