Retirement: When to Begin Collecting Social Security Benefits

Social secruity (Photo credit: SalFalko)

At age 40 or even 50, many Wisconsinites may find it ludicrous to think about collecting Social Security payments. Yet knowing the facts now can be a good foundation as you plan for your future retirement. After all, everyone grows older.

For boomers retiring now, the full retirement age is 66 (up from 65). By 2026 it will be 67, as the federal government takes into account people’s increased longevity.

Did you know? How long you work and when you claim will usually have a much greater impact on your retirement income than how much you save or invest on your own. You can claim retirement benefits anywhere between the ages of 62 and 70. If you wait until age 70, your monthly benefit amount will be more than 75 percent higher than if you begin taking payments at age 62. If your benefit at age 62 is $1,000, your benefit at age 70 would be more than $1,750.

In some cases, it makes sense to delay claiming your Social Security benefits even if that means using some of the money you’ve saved for retirement to meet monthly expenses. For example, if you are 62 and no longer working, it might make sense to use CDs, stocks, bonds, or other investment assets now, in order to collect a larger Social Security benefit later. (Many investments would not increase sufficiently to pay an additional 75 percent over the course of eight years.)

Did you know? If you are married, the lower-earning spouse is guaranteed half what the higher earner would receive at full retirement age. And, if one spouse dies, the widow(er) receives the higher of their own or their spouse’s monthly benefit.

One big factor in determining when to claim your Social Security benefits is the state of your health. If you suffer serious health issues you may decide to claim sooner rather than wait, especially if poor health makes it difficult to work. If you’re in poor health and unlikely to live as long as the average person, you would likely receive less over your lifetime if you claim later.

Of course, many people in poor health still outlive the average person. Odds are, your best move is usually to wait to claim your benefits. And most investments to improve your health – exercise more, eat well-balanced meals, etc. – are always good ideas.

A final caveat: If you read the headlines about Social Security’s money problems and the government’s options for fixing them, don’t use that as a reason to claim benefits early. Even if the full retirement age is raised or other measures are taken to fix the Social Security budget, you would still profit the most from waiting as long as feasible before claiming your benefits.

 To learn more, visit the Social Security website (www.socialsecurity.gov) or this University of Wisconsin-Extension site: http://fyi.uwex.edu/financialseries/2010/11/04/understanding-social-security-insurance-programs/.

Online Mortgage Center is Open for Business!

Have you been putting off refinancing your home loan because the bank is not open at 9 p.m. when you finally have a few minutes to yourself?  If so, you are in luck!  Union State Bank is now open 24 hours, 7 days a week to help you with your mortgage application online!  Our new online mortgage center provides you with the current interest rates, calculators you can use to figure your savings on a 15 year loan versus a 30 year loan, and frequently asked questions about home buying and refinancing. 

Once you decide you want to apply for a mortgage loan, the process takes about 20 to 30 minutes and asks you only the questions that pertain to the type of transaction you are engaged in, such as a refinance or a purchase.  At this time only fixed rate loans are available online.  However, if you are interested in a variable rate loan or a commercial loan, simply fill out the information and a loan officer will contact you on your schedule! 

 You can also sign up to receive emails when the mortgage rates change.  We have built the online mortgage center to be user-friendly and to meet your needs of applying anytime, anywhere! 

Check out the online mortgage center by clicking the link below!   

http://unionstatebank.mortgagewebcenter.com/Default.asp?bhcp=1

Social Media Safety Tips

Social media – Facebook Twitter, Linked In, You Tube, and other ways to interact online – can be great fun. You can share updates with friends across Wisconsin and around the globe, relax with humorous pet videos, and stay abreast of new trends. You can also build your professional network, job hunt, and learn new skills.

But like many power tools, social media is best approached with care. Consider:

• Once you post an update, it’s there for the world to see. Do you really want your boss to view photos of your last Madison party escapades? Or, are you ready to broadly share your recent trip to the emergency room?
• Discretion is important when it comes to consumer information. If you blog about your plans to buy a house or a cabin up north, do not be surprised when you begin to receive promotions from realtors.
• Discretion is especially important in the area of financial or personal data. You wouldn’t post your Social Security number on your Linked In profile. Before posting personal data, including your exact birth date, cell phone number, or information about your CD collection, you may want to think about how people might use the information.
• Be sure the information you share is accurate and that you’ve gained permission to share photos or information from friends. You do not want to open yourself to liability for defamation, libel, copyright infringement, or other suits.
• Consider where the information might go after you post it. Will a friend share your bungee-jumping video with his friends? Will your photo eventually show up on others’ Facebook pages or a community website? Would you want it to?
• Stop to think about the information you post. Don’t post when you are feeling rushed or impatient. Once information has been posted, it can be difficult to remove from all network caches – not to mention impossible to remove from other sites once your information has been shared.

Learning more about social media is simple and information is readily available. Many Wisconsin school districts and colleges offer social media guidelines on their websites for both staff and students. While guidelines geared toward the specific institution, they still provide solid advice for people posting either as individuals or on the behalf of an organization. A number of Wisconsin organizations also publish guidelines for their paid and volunteer staff.

As social media has grown in popularity, the amount of advice available for their use has also grown. The trick is not in finding these words of wisdom, but in applying them. Remember to take a breath, count to 10, and you’ll do just fine.

Tips for Avoiding Scams

There is plenty of information available to consumers to help avoid being a fraud or theft victim. “But some people complain that there is too much to remember and that being vigilant can be a daunting task,” said Millie Spencer, a financial crimes specialist with the FDIC. Here’s a short list of simple ways to avoid many financial crimes.

• Never provide passwords, credit or debit card information, Social Security numbers and similar personal information in response to an unsolicited text message, e-mail, call or letter. An identity thief can use this information to apply for credit cards or loans, access your bank accounts online or otherwise commit fraud using your name.
• Crooks often send e-mails, text messages or phone messages that appear to be from a legitimate, trusted organization asking consumers to “verify” or “update” personal information. The scam is called phishing (pronounced “fishing”) because the criminals throw out bait in hopes of luring a consumer into biting.
• Criminals also create bogus Web sites in hopes that consumers will enter valuable personal information. “We’ve seen everything from fake bank Web sites to sites offering payday loans or credit repair services,” added Michael Benardo, Manager of the FDIC’s Cyber Fraud and Financial Crimes Section. “Some of these sites offer incredibly low prices or other enticing promotions.”  And, as Spencer noted, “Always be suspicious of these types of requests because a legitimate organization would not solicit updates in an unsecured manner for information it already has.”
• Think twice before opening attachments or clicking on links in unsolicited e-mails and text messages. These messages may install “malware” (malicious software) on your computer or cellphone. “This software could allow crooks to spy on you and gain access to your online banking sites,” explained Benardo.
• To confirm a message’s validity, contact the supposed sender. “But don’t automatically assume the contact information listed in the e-mail is accurate,” said Benardo. He recommended finding the telephone number, Web site or e-mail address from an independent, reliable source.
• For guidance on whether a bank or bank Web site is legitimate, you can call the FDIC at 1-877-275-3342 or use Bank Find, our online directory of FDIC-insured institutions that provides Web sites, at http://research.fdic.gov/bankfind.
• Deal only with reputable merchants, service providers and charities. Friends and family may be able to provide recommendations. You can search for complaints against a business by contacting your state or local consumer affairs office (www.consumeraction.gov/state.shtml) and your local Better Business Bureau (www.bbbonline.com).  There also are popular sites on the Internet for consumer ratings and reviews of businesses.
• Fraud artists also claim to be from legitimate charitable organizations — especially after a major disaster — and ask for “donations.” The Better Business Bureau’s Wise Giving Alliance (www.give.org) and other organizations can help you find legitimate charities with good reputations.
• Be on guard against counterfeit checks, cashier’s checks or money orders. These often are associated with scams that say you have won a lottery or other prize, are bogus work-from-home offers, or are attempts to steal something you are selling on the Internet. They can also be associated with offers to purchase items you are selling online or through classified ads. Be especially leery if you get a check for more than the amount due and you’re instructed to return the difference by depositing the check and wiring the excess amount to the other party’s account or to an associate. If the check turns out to be counterfeit, you will be out the money regardless of whether you sent a check, wire or cash.
• Be wary of unsolicited investment offers that sound too good to pass up or that require you to act fast. “Statements about low-risk investments with ‘guaranteed returns’ that are unusually high are red flags,” said Luke W. Reynolds, Acting Associate Director in the FDIC’s Division of Depositor and Consumer Protection. He also advised walking away from any offer that involves pressure to pay cash or provide personal information right away. For additional guidance, see “Don’t Get Burned by Hot Investments,” in the Spring 2007 FDIC Consumer News (www.fdic.gov/consumers/consumer/news/cnspr07/investments.html).
• Protect your mail and other documents at home. Thieves know that credit card or bank statements and other documents contain valuable, confidential information. Try to use a secure mailbox for your incoming mail. Keep bank and credit card statements, tax returns, credit and debit cards and blank checks secure, even at home. Also shred sensitive documents before discarding them. Similarly, use an updated security program to protect your computer.
• Look at your bank statements and credit card bills as soon as they arrive. Immediately report any discrepancy or anything suspicious, such as an unauthorized withdrawal or charge, to your financial institution.
• Periodically review your credit reports and dispute any inaccurate information, which could indicate identity theft. You are entitled to a free copy from each of the nation’s three major credit bureaus every 12 months. To request a credit report, go to http://www.AnnualCreditReport.com or call toll-free 1-877-322-8228.

To learn more about protecting yourself from common financial frauds, see back issues of FDIC Consumer News (www.fdic.gov/consumernews) and the FDIC’s multimedia presentation “Don’t Be an Online Victim” (www.fdic.gov/consumers/consumer/guard/index.html). Also visit the federal government’s central Web site for financial information at www.mymoney.gov/category/topics/scams/-fraud.html.

Reprinted from FDIC  Consumer News (http://www.fdic.gov/consumers/consumer/news/cnwin1213/avoidscams.html)

Answers to Some Common Questions…

Below are some common questions that we hope provide some answers for you.

There is a billing error (e.g., an incorrect amount or a transaction I didn’t make) on my credit card statement. What should I do?

The Fair Credit Billing Act (FCBA) requires a consumer who is reporting a billing error — including a fraudulent transaction — to write to the credit card issuer at the address for billing disputes noted on the monthly statement. While not required by law, it’s also a good idea to try to work out a dispute with the merchant before filing a dispute, and to call the bank right away to report a fraudulent transaction.

In general, the creditor must resolve the dispute within 90 days after getting your letter. In some situations, the consumer incorrectly mailed the dispute letter to the card issuer’s address for payments instead of the one for error disputes. “Make sure the card issuer receives your written dispute at the correct address within 60 days of when it sent your billing statement, and you may want to use certified mail as proof of your dispute,” suggested Kirk Daniels, an FDIC Supervisory Consumer Affairs Specialist.

In other examples, consumers called, faxed or e-mailed about their dispute instead of submitting a letter. If your card issuer allows you to report a billing error securely online, print a copy for your records.

Finally, some consumers have said that, for fraudulent transactions, their card issuer required a copy of a police report to consider the dispute. Although it may be a good idea to report identity theft or similar incidents to the police, the FCBA does not require it, and there is no guarantee the police will conduct an investigation or issue a report.

For additional guidance, go to the Federal Trade Commission’s (FTC) “Fair Credit Billing” page at www.consumer.ftc.gov/articles/0219-fair-credit-billing.

A thief used my debit card to withdraw money from my checking account, but I’m being told I am responsible for the loss. Why?

The Electronic Fund Transfer Act limits your liability for unauthorized transactions to $50 if your debit card was lost or stolen or you saw an unauthorized transaction from your account and you notify the bank within two business days. “But if you wait more than two business days, you may be responsible for up to $500 or even more,” said Daniels.

Some banks may voluntarily waive liability if you took reasonable care to avoid fraud or theft, but you still need to report errors promptly. And as described previously for credit card errors, it may be wise to first seek a refund from the merchant or report a theft to the police, but you are not required to do so by law.

For more information, see the Fall 2009 FDIC Consumer News (www.fdic.gov/consumers/consumer/news/cnfall09/debit_vs_credit.html).

What’s the best way to get a copy of my credit reports and credit score?

To order the free credit report authorized by law from each of the three main credit bureaus every 12 months, go to www.AnnualCreditReport.com or call 1-877-322-8228.

One of the reasons it’s important to check your credit report is to look for mistakes. As a new FTC study suggests, a sizable percentage of consumers had errors on their credit reports that could damage their credit scores and increase costs for products such as consumer loans and various kinds of insurance.

Also consider spreading out your requests so you receive one credit report approximately every four months.

As for credit scores, various sources prepare them based on the information in your credit report. Under the law, you can get your credit score free from your lender but only in certain circumstances.

For more information, visit the FTC’s “Credit and Loans” page at www.consumer.ftc.gov/topics/credit-and-loans.

My mortgage loan is past due. Where can I go for help?

Contact your lender or your mortgage servicer right away. If you need help working with your lender, you can receive free or low-cost assistance from a housing counselor approved by the U.S. Department of Housing and Urban Development. For a referral, call HUD at 1-800-569-4287 or visit www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm. For more information, including how to avoid foreclosure scams, see tips from the FDIC at www.fdic.gov/consumers/loans/prevention/toolkit.html.

If you have questions about your consumer rights, start at www.fdic.gov/quicklinks/consumers.html or visit www.mymoney.gov. To speak with an FDIC information specialist, call toll-free 1-877-ASK-FDIC (1-877-275-3342).

Reprinted from FDIC Consumer News.  http://www.fdic.gov/consumers/consumer/news/cnwin1213/commonquestions.html

Cabin-Fever Reliever: Vacation Planning

Living in Wisconsin means distinct seasons to enjoy and a great quality of life. This time of

English: Wind Point Lighthouse, Wind Point, Wisconsin. Constructed on the shore of Lake Michigan in 1880. Français : Phare de Wind Point, à Wind Point, dans le Wisconsin. Le phare, datant de 1880, est sur les rives du lac Michigan, aux États-Unis. (Photo credit: Wikipedia)

year, living in Wisconsin can also bring a weariness with snow shoveling and a case of the winter blahs. If you’re a gardener, the lengthening days may spark you to plan new vegetable plots or start seedlings indoors. You may also be dreaming about a summer vacation.

Is this the year you finally take a long-planned trip to Alaska or Europe? Or, maybe your children are the right age for that car trip to Yellowstone or the Black Hills? If you have small children or prefer to break up your routine with more frequent trips closer to home, Wisconsin offers a wealth of reasonably priced possibilities. Wherever you decide to head, planning can result in a more relaxed trip, usually with fewer unexpected expenses.

If you’ve been dreaming about a trip for a few years, you probably have many of the details in mind. You want to visit the nation’s capital in time to see the cherry blossoms or walk the streets of San Antonio before – or after – the heat of midsummer. You can see yourself trekking the Appalachian Trail or zooming along in a San Francisco cable car.

The more details you can envision in advance, the more satisfied you’re likely to be with the trip itself. It may seem obvious, but consider:

• Why are you going? Do you want to see Wisconsin’s art museums? Dive to shipwrecks in Lake Michigan? Hike the National Ice Age Trail?
• Are you traveling with friends or family (or pets) that have special needs or desires?
• When will you go? Do work assignments or children’s schedules dictate a specific time or do you want to attend the Lumberjack World Championships in Hayward or other events?
• How will you get where you’re going and how will you get around when you get there – will you fly, drive, hike, bike, or kayak?
• Where will you stay? There are often advantages (financial, convenience) to reserving rooms or campsites early; on the other hand, it you’ll be in a locale with lots of options, you may want to choose spontaneously when you arrive.

Especially in Wisconsin, travel resources are endless and a sure cure for cabin fever. Here are a few of the best:

• Wisconsin’s official tourism website, www.travelwisconsin.com, gets you dreaming with information on “green” travel options, accommodations from log cabins to luxury hotels, maps, guides you can order, and special offers.
• The Wisconsin Department of Natural Resources, http://dnr.wi.gov/topic/parks/, provides information on state parks, trails, and wildlife areas, including e-newsletters, volunteering in the parks, and how to reserve cabins and campsites.

If you are planning a family reunion or other group tour, Circle Wisconsin, http://www.circlewisconsin.com/, offers regional and themed tours – for instance, Showtime Wisconsin Style, Where History and Nature Meet, and Gangster Getaway, to name a few.

Saving for a Large Purchase

Tip #5:  Save for a Large Purchase

How to do it: Whether you are savings for a home, a car, or college, America Saves has information to help you reach your savings goals.

Using the tips provided all week can help you save for a larger purchase.  Of course, the more you are willing to cut back on day-to-day expenses, and save that money you would have spent on dining out or other expenses, the sooner you will reach your financial goal. 

There are many advantages to having a larger down payment for a home.  Most banks require that you have 20% down to purchase a home.  If you have less than 20% down, you will usually be required to have private mortgage insurance (PMI).  Your interest rate may also be higher if you do not have a large enough down payment. 

The same holds true for the purchase of a car.  Banks usually require you to have a set percentage of the purchase price paid for with your own funds.  This also helps to keep the interest rate lower.  Having a larger down payment reduces the amount you have to borrow.  This in turn reduces the amount of interest you must pay over the life of the loan and also keeps your payments lower. 

Union State Bank would be happy to discuss financing options available to you.  Stop in or call one of our lenders today!

Boost your Savings

Tips #4:  Save for Retirement

Retirement (Photo credit: 401(K) 2013)

How to do it: Participate in a work-related retirement program and/or open up a Roth IRA.  Already saving?  Increase the amount you save toward retirement by 1% in 2013.

Retirement savings is a top priority for many Savers. Unfortunately, many do not have access to an employer-sponsored retirement plan, such as a 401(k) plan.

Even if your employer doesn’t offer a retirement plan, you can still save for retirement, and get some tax benefits in the process, by putting money in an Individual Retirement Account (IRA).

Who qualifies to make IRA contributions?

Anyone who earns income (or receives alimony) can put money in an IRA. Couples can also put money in an  IRA for a non-working spouse.

Each person can put up to $5,000 in an IRA if you are age 49 or below and up to $6,000 if you are age 50 or above for the 2012 tax year, so long as your contributions do not exceed your earned income. Each year, you have until the April 15 tax filing deadline to make your IRA payment for the previous tax year.  In 2013, you can contribute up to $5,500.  Those 50 and over can contribute up to $6,500.

There are two main types of IRA – traditional IRAs and Roth IRAs. In addition, those who are self-employed can put money in a SEP-IRA. Each has its own set of rules and offers different tax benefits. This article will deal with traditional and Roth IRAs.

Traditional IRAs are open to anyone up to the age of 70 1/2. Money in a traditional IRA grows tax-deferred. In other words, you won’t have to pay taxes on any earnings until you take the money out. That allows your money to grow faster than it would if you had to pay income tax each year on those earnings.

Traditional IRAs Offer Tax-deductible contributions

Your contributions to a traditional IRA may also be tax-deductible, which is an attractive feature for many people. That’s because you get a portion of your IRA payment “back” immediately in the form of a lower tax bill.

If you are not eligible for an employer sponsored retirement plan, you can make tax-deductible contributions to a traditional IRA. You can also do so if your income falls below certain levels, regardless of your retirement plan status.

For tax year 2012, couples filing a joint tax return who report adjusted gross income of up to $92,000, or singles with income up to $58,000, are eligible to make fully deductible contributions to a traditional IRA. In addition, taxpayers with incomes slightly above those limits – $92,000 – $112,000 for couples and $58,000 – $68,000 for singles – can make partially deductible contributions.

When you put money in a traditional IRA, you can’t get it out before you reach age 59 1/2 without paying a penalty, although there are exceptions. Some people consider this a disadvantage of traditional IRAs, but it can help keep your retirement savings on track.

Once you start taking money out of a traditional IRA in retirement, you will have to pay ordinary income tax on any earnings and on your tax-deductible contributions, but no federal taxes on withdrawals of non-deductible contributions. Depending on where you live, you may have to pay state taxes on those withdrawals.

ROTH IRAs Offer Tax-Free Withdrawals

The benefits of Roth IRAs are almost exactly opposite those of traditional IRAs.
You can’t make tax-deductible contributions to a Roth IRA. On the other hand, the money you put in a Roth IRA grows not just tax-deferred, but tax-free. In other words, you won’t have to pay any federal taxes, or state taxes in most states, on your earnings when you take money out, provided you meet certain requirements. You are also less likely to have to pay a tax penalty if you withdraw money early from a Roth IRA.

There are no age limits for contributions to a Roth IRA, so long as you have earned income. On the other hand, there are income limits. However, those limits are quite high.  Singles who report adjusted gross incomes of up to $110,000 in 2012 and couples with incomes up to $173,000  qualify for a full contribution. Taxpayers with slightly higher incomes – $110,000 – $125,000 for singles and $173,000 – $183,000 for couples filing jointly – can make partial contributions.

Where Can You Open an IRA?

Virtually all major financial services companies – such as banks, brokers, insurance, and mutual fund companies – offer IRAs and make it easy to open an account.  Union State Bank offers traditional and Roth IRA options to meet your retirement needs.

A reputable mutual fund company that offers a wide selection of funds, low costs, and reasonable minimum investment requirements, is a particularly good option for many. Many of the top companies also offer excellent educational materials to help you pick the best funds for you.

Regardless of where you decide to open an account, your retirement savings will get a real boost if you commit yourself to making annual contributions an IRA.

Reprinted from America Saves.  www.americasaves.org

America Saves Tip #3

Tip #3:  Save Automatically

Money cash (Photo credit: @Doug88888)

It can be hard to put aside money for savings. But there is an easy way to save money without ever missing it –Make your savings automatic. You can start small and save $20 a week or month or you can try to save more.

How to save automatically

• Many employers allow you to divide your paycheck into different accounts. Take advantage by putting part of your pay into a savings account.
• If you get paid in cash, take a small amount to the bank to deposit into a savings account. Many banks make this easy by allowing you to deposit cash directly at an ATM. Tip: do this the day you get paid. That way you will be less tempted to spend the money.

Why automatic savings works

• Saving automatically makes it easier to save because your money is saved with each paycheck – you don’t have to think about how much to save or take any additional steps.
• It’s tempting to spend money when it’s readily available. If you don’t see the money, you are less likely to miss it.

I don’t have enough money to save

Everyone has the ability to save. At America Saves, we say “Start Small, Think Big.” You can start with only $10 a week or month. You have to start somewhere. When you get extra income, you can add that money to your account as well:

• Put a portion of your tax return money into savings.
• Put birthday or holiday money into savings.
• Hold a garage sale and put that money into savings

Over time, your deposits will add up. Even small amounts of savings can help you in the future.

Reprinted from America Saves.  www.americasaves.org

 

America Saves Week

Tip #2:  Pay Off High-Interest Debt

Wipe our Debt (Photo credit: Images_of_Money)

How to do it: Find places to cut your spending so that you can pay down your debts faster. 

Roughly one in six Savers has selected paying off consumer debts as their wealth-building goal. That does not come as a surprise since a 2012 survey showed that 45% of families with annual incomes under $50,000 are relying on their credit cards to pay for basic needs such as rent, utilities, insurance and food.  Large consumer debts can also keep you from saving and building wealth.

The good news is that there is hope. With planning, discipline, patience, and maybe some outside help, almost anyone can reduce their debts and start to accumulate wealth.

Are you in Trouble?

If you answer “yes” to any of the following questions, then you probably need to get your debts under better control:

1. Can you only afford to make minimum payments on your credit cards?
2. Do you worry about finding the money to make monthly car payments?
3. Do you borrow money to pay off old debts?
4. Have you used a home equity loan to refinance credit card debts, then run up new revolving balances on your cards?

Click on the link to find places to trim your expenses.  Just cutting back a little on a few of the suggestions can have you saving for an emergency fund or paying off those high interest credit cards!  http://americasaves.org/savings-tips/54-ways-to-save-money

Reprinted from American Saves.  WWW.americasaves.org