5 Ways to Retool Your Retirement

NONE OF US HAD THE perfect career, family or life. Why should retirement be any different? You will face problems and issues that limit your ability to enjoy retirement. You will need to shift your thoughts and energies to the people and activities that bring you a sense of satisfaction and hope for the future. Here are five tips to improve your retirement:

Manage Expectations

The media, along with our own fantasies, push us to envision an ideal retirement basking in the sun on a beach, or wandering over pristine golf courses. There’s nothing wrong with this dream, but it can dampen the satisfaction you get from real life. When something doesn’t measure up to your expectations, you might become frustrated.  Focus instead on creating your own version of retirement that has meaning for you.

Accept the Things You Cannot Control

Most people end up making compromises and adjustments as they get older. Sometimes your happiness depends on whether you fight or accept the changes as a part of life you cannot control. You can’t change the weather, but you can choose where you live and how much of your retirement savings to risk in the markets. You can’t change your genes, but you can adjust the way you feel about yourself.

Hold No Regrets

By the time you’ve retired you have probably experienced some failure, loss or heartbreak. But the ghosts of the past will haunt you only if you let them. Remember that the best revenge is living well.

Focus on Others

As you age, you might shift your attention from your own needs to the needs of others. Retirement is a stage of life when many people can focus on family and what they can do for the next generation. You may spend more time with relatives or friends.

Appreciate the Small Things

Maybe you don’t have the financial resources or the physical stamina to fly to Peru and hike up to Machu Picchu. That doesn’t mean you can’t take a walk in your community park, visit a museum in a nearby city or plant a garden in the backyard. After you retire, the symbols of success often mean less than small personal pleasures. You no longer worry about what your colleagues and competitors think.

With this last blog post, I will retire end of June – Thanks for your interest in Money Tips financial topics.

Susan Taylor

Susan Taylor

Resources are important whether you are looking to rent your first apartment, pay your bills, buy your first home or send your child to college. There are many ways to save money to reach your goals, and hopefully ISU Money Tip$ will be one of them. I enjoy traveling, needlework and am a novice gardener.

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Insurance Claim Denied? Appeal!

Stamp: Denied They are words we hope we’ll never hear: “your health insurance claim is denied.” It happens, though – millions of times each year. Sometimes a denial is legitimate – the treatment truly is not covered by the insurance policy. But at other times the claim was denied in error.

A recent study by the Kaiser Family Foundation revealed that, when faced with a denied health claim, fewer than one percent of consumers appeal.* The study did not explore why consumers don’t appeal. It is likely that sometimes they don’t appeal because they are so busy dealing with all their health problems and don’t have the energy to deal with it. In addition, I can imagine that consumers may be intimidated by the complexity of the insurance world; I can also imagine some people may not even realize that appealing is an option.

When I read how few people appeal, I was concerned. I want consumers to know they can appeal, and that they should appeal if they believe a medical treatment should have been covered by their policy. NOTE: insurance companies generally allow a specific window of time in which to appeal – probably 2-4 months – so try to deal with it fairly speedily.

Knowing you have the right to appeal is the first step. Contacting the insurance company to request a written statement explaining the reason for denial is step two.

From there, options vary. You may be able to enlist support from your medical provider to justify the medical necessity or clear up any coding errors. Beyond that, ask the insurance company to outline its appeal process, and follow it carefully, keeping copies of all correspondence. If your appeal is denied by the company, ask about an external appeal process — some types of plans include provisions for external review.

If you are not satisfied with how your appeal is handled, consider a complaint through the Iowa Insurance Division. ISU Extension’s Iowa Concern Hotline (800-447-1985) is another resource when you don’t know what steps to take next; their staff attorney provides legal education and may be able to help you identify additional options.  

*Note: the data used in the KFF study was limited to plans offered through the healthcare.gov Marketplace; it is possible that appeals rates might be different for other plans, including employer-sponsored plans.

Barb Wollan

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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TCJA and Estate Planning

Office file folder in a business. Legal will for inheritance

The Tax Cuts and Jobs Act was passed in 2017. The legislation increased the amount that is exempt from federal estate taxation.  Between 2018 and 2025 the amount exempt from taxes is $11,180,000 for singles (more than $22 million for couples) and is adjusted for inflation each year after 2018.  In 2026 the amount will fall back to $5,400,000.  A majority of individuals will never exceed either amount; however, estate planning is more than avoiding estate taxes.  Some decisions about property transfer can have other tax consequences. Changes in tax law can make old estate plans obsolete.

One important element of estate transfer is the “step up” in basis of real estate and other property that has gained value over time.  An acre of ground purchased for $200 (original cost or basis) in 1984 could have a value of $4000 or more in 2019.  If the property were sold it would be subject to capital gains taxes on the $3,800 of appreciated value. If the property is inherited, it passes without taxation and the basis is reset to the market value the day the owner died.  This “stepped-up basis” is a key consideration when decisions are made about gifting property, setting up trusts, and developing other estate transfer plans. Example: suppose you gave your daughter that acre of land today. Upon selling the land, she would owe income tax on the $3800 capital gain; if she had received it as an inheritance after your death, the sale would involve little or no capital gain, saving her the tax bill. 

Transfer of wealth through estate plans has also resulted in new requirements for reporting and keeping records on appreciated property (real estate, stocks, etc.) with a stepped up basis.  New IRS rules define the property subject to appraisal, steps to ensure accuracy, and required reporting to the IRS and beneficiaries.  Executors are responsible for date of death appraisals. Appraisals must be kept by the beneficiaries and used if the property is sold.  It is wise to complete the date of death appraisal promptly; the IRS is more likely to question an appraisal that is completed a long time after the death of the owner. Details are included in IRS Form 706.

Ag Decision Maker is an Iowa State University Extension source of additional estate planning resources and information.  Scroll down the page to find estate planning publications.

 

Joyce Lash

Joyce Lash

Joyce Lash is a Human Sciences Specialist in Family Finance who wants to keep you ahead of the curve on financial information.

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Less is More

Woman holding clothes on a hangerIn December, the calendar may say it is winter, but I am never in the mood to do wintery things (decorate, bake and eat comfort foods, etc.) until there is snow on the ground. The same is true for Spring which officially began March 21…almost 2 months ago. The last of our snow recently left and the grass finally turned green and I am now just finding myself in the mood to do spring cleaning…which includes digging out summer clothes and putting away the sweaters.

As I put winter clothes away, I discovered that most of the items in my closet are worn year round…like a short-sleeved t-shirt, jeans, a black dress, a white long-sleeved blouse, a black blazer and dress slacks.

The CAPSULE wardrobe, a term coined in the 70’s, refers to a collection of a few essential, quality items of clothing that never go out of fashion, do not wear out, and can be paired with seasonal pieces. The key is to make sure your essentials are well-made and fit properly…basics that you can wear daily and from which you can create different looks.

If done correctly, a capsule wardrobe should reduce the number of items in your closet — and thus, reduce the amount of time you spend organizing and cleaning out your closet and donating unused items.

Because it is now okay to wear white after Labor Day, to mix prints, and to wear navy and black together, you will find the items in your capsule can remain in your closet all year, eliminating the time-consuming task of removing, organizing and properly storing out-of-season items.  Reducing the number of pieces in your closet also makes it possible to keep all your clothes in your closet, year round.

If these aren’t reasons enough to create a capsule wardrobe, consider the environmental ramifications of cheap, “disposable” clothing. Poor quality clothes lose shape and look tired after being worn only a dozen times. According to a 2017 report we are wearing pieces fewer times before disposing of them. The study says that more than half of all lesser-quality clothes are disposed of in under a year. It also noted that less than one percent of the materials used are recycled; as a result, “one garbage truck full of textiles is land-filled or burned every second.”

Buying high-quality, well-made pieces of clothing that will last years instead of months is not only far better for the environment, but it’s also better for your pocketbook in the long term. And, the capsule wardrobe has great potential to reduce the amount of time spent organizing, storing and cleaning out your closets.

Brenda Schmitt

Brenda Schmitt

A Iowa State University Extension and Outreach Family Finance Field Specialist helping North Central Iowans make the most of their money.

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Your Phone Rings Again

Your phone rings and you don’t recognize the number. Sound familiar? At my house, nine out of ten calls are unknown, or out of area calls.  When I have a few “missed call” numbers, I put them in the computer browser to see they are legitimate or a scam.  Most of the calls are scams. Phone scams are common, and they often prey on people’s generosity or fear. Nearly 1 in 6 Americans have lost money to a phone scam in the last 12 months, according to the 2019 U.S. Spam and Scam Report.

They are good at it. Scam artists have perfected their pitch, and they use spoofed numbers to make calls look legitimate on caller ID. However, you’ll know it’s a scam if the person on the other end of the phone demands payments via gift cards or wire transfers. Requesting sensitive information such as Social Security numbers, birth dates and passwords should also be red flags. Seniors may be more trusting on the phone. Everyone should have a conversation with an older loved one.

Your best defense against these types of calls is just to ignore them. While some people like to waste a scammer’s time by stringing along the conversation, it may not be wise. Some scams use voice-recording software, and the more you talk, the more likely you’ll say something that the crooks can use to make unauthorized transactions in your name. It’s best to hang up immediately. 

Here are the top three scam phone calls:

  • THE IRS AGENT CALLING you on the phone. This call isn’t really from the government.  The IRS doesn’t initiate contact with taxpayers by email, text messages or social media channels to request personal or financial information.  Note: they may call as a follow-up to a letter they have already sent, especially if you gave them a phone number and best time to call as part of responding to their letter. Please report IRS or Treasury-related fraudulent calls to phishing@irs.gov (Subject: IRS Phone Scam).
  • Technical Support Calls.  The caller says they are from a well-known company like Microsoft and have detected an error on a person’s computer. They will then talk the victim through a series of steps to “fix” the problem. A person is unwittingly downloading software that will hijack their system or give the caller remote access. Scammers use it to gather sensitive data or install ransomware, which will then require a payment to unlock a computer’s files.
    Older adults may ripe for this scam because they often lack technical sophistication. Younger people might recognize something fishy about Microsoft calling them, but seniors could be more trusting. These calls are always fake. Microsoft and other tech companies do not make unsolicited technical support calls.
  • Fake Charity Appeals. Charity scams are especially likely after a natural disaster or other tragedy. The crooks count on the good will of people who want to help. To avoid giving money to a criminal, don’t make any donations to unsolicited callers. Instead, do your own research to select a reputable charitable organization.

If you find yourself the victim of a phone scam, it can be difficult to recover money. However, you should file a police report and contact your bank. If your Social Security number has been compromised, contact the three credit-reporting bureaus of Experian, Equifax and TransUnion to request fraud protections be placed on your credit reports.

Susan Taylor

Susan Taylor

Resources are important whether you are looking to rent your first apartment, pay your bills, buy your first home or send your child to college. There are many ways to save money to reach your goals, and hopefully ISU Money Tip$ will be one of them. I enjoy traveling, needlework and am a novice gardener.

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Measles and Money??

global information sourcesThe current widespread measles outbreak results from too many people remaining un-vaccinated. But the underlying cause is deeper – the true cause is misinformation. There are some people who don’t get vaccinated because of an existing health problem. But most people who have not been vaccinated based that choice on information that was inaccurate and/or misleading.

Misinformation abounds in today’s world, and not just in health care. As a consumer educator, I am constantly reminding people to make sure they base important decisions on sound information. That means:

  • Not relying solely on the opinion or experience of a few friends. Aside: it’s perfectly appropriate to choose a dessert based on recommendations from friends; that’s a situation where there are no costly consequences if you later regret your choice.  Your friends’ insights can be useful, but they should not be the ONLY reason you make an important decision. Examples of important decisions include where and how much to invest your money, whether and where to get a loan, major purchases (house, car, …), college selection, and so on; these are all decisions that could have substantial long-term costs (financial costs and opportunity costs) if an unfortunate choice is made, OR significant long-term benefits (financial or otherwise) if a productive option is chosen.
  • Reading and learning from on-line product reviews, but not assuming they are 100% accurate or unbiased. One source of product reviews that are generally unbiased is Consumer ReportsStaff there purchase products as ordinary consumers and conduct rigorous scientific testing to assess product performance and reliability. Most libraries carry the magazine, and some material is available on-line even to non-subscribers.
  • Considering the possible motives behind the information you receive, whether it be from a website, a salesperson, an advertisement, or any other source. Advertisements clearly have a goal of selling their product, but a sales goal can also be somewhat hidden. An “informational” website or article might actually be owned by a company that sells investments, for example. In general, you can trust information from websites with a “.gov” or “.edu” URL (including Iowa State University Extension and Outreach). When it comes to “.org” sites, it can be more difficult to discern whether the organization is a credible source. A couple of reliable non-profit organizations are:
  • In many cases, commercial sources of information are a necessary part of your information-gathering. This includes articles in commercial magazines and commercial websites, because there is always a possibility that the information provided may be influenced by their advertisers. When using a commercial source, be sure to seek out multiple sources to see if the information is corroborated elsewhere.
  •  Taking enough time to gather information from a variety of sources. Avoid succumbing to sales pressure suggesting that a decision must be made now.

Just as with measles vaccinations, relying on unbiased, accurate and complete information about consumer decisions will have a positive impact on your well-being!

Barb Wollan

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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Rule Changes for PrePaid Cards

A client at the volunteer income tax site asked if we could load her tax refund on a prepaid card. The free volunteer site doesn’t offer a prepaid card option; refunds are direct deposited or sent by paper check. Some prepaid cards restrict deposits of federal funds. A test of prepaid cards was completed by volunteers a number of years ago. The sites raised concerns about the fees and hidden charges associated with the cards. An example was a $25 fee paid to receive a cash withdrawal from refunds loaded on a card.

The Consumer Finance Protection Bureau proposed rule changes for the popular cards in 2016. They are used by employers to issue paychecks, government agencies for benefits, and colleges/universities for financial aid.  The new rules took effect on April 1, 2019.

Primary changes include simple upfront details of fees for store purchased cards; expanded access to account activity and balances at no charge; and registration options that afford protections if the cards are used for unauthorized transactions, lost or stolen. These rule changes also apply to electronic wallets.

Employers, government agencies, and colleges/universities must offer an alternative method of funds transfer. If a card option is used there must be access to monthly account transactions and fees.

Consumers should read materials explaining card use; register their cards when the option is available; and become more informed about their rights.  Cards can have high fees that make their convenience questionable.

 

 

 

Joyce Lash

Joyce Lash

Joyce Lash is a Human Sciences Specialist in Family Finance who wants to keep you ahead of the curve on financial information.

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Surviving Tax Season???

It’s April 16 and most of us survived another tax season. Were you happy with your refund or did you have to pay in more than you have in the past? If your refund was too big, or you had to pay in a lot, you may wish to revisit your Form W-4.

Every time you earn income, you’ll most likely owe state and federal income tax.  Your Form W-4 determines how much tax is withheld from your paychecks. Your employer deducts taxes based on the number of allowances you claim on your W-4. This system works well if you’re a “standard” taxpayer who files single, has one job, and claims a standard deduction.  But if you don’t fit into this category—and many of us don’t—it’s likely that you have too much or too little tax withheld.

Workers complete form W-4 when they start a job. For many people, that is the last time they pay attention to it. Has there been a change in your household – did you add a child, get married or have a divorce, change jobs or did your spouse get a job?  Any of these changes may impact your tax status; that means reviewing your form W-4 is a good idea. In addition, changes in tax law may affect your ultimate tax bill; after passage of the most recent federal tax bill in late 2017, some workers consulted with the payroll office of their employer to review their allowances.

When you have too much money withheld from your paychecks, you end up giving Uncle Sam an interest-free loan (and getting a tax refund). Ask yourself if there are better ways to use that money. Why not take home more money in your weekly paycheck? Or invest the proceeds and earn interest on it?  On the other hand, having too little withheld from your paycheck could mean an unexpected tax bill or even a penalty for underpayment. Either way, there’s a better way to manage your hard-earned money.

The key to having the right amount of tax withheld is to update your W-4 regularly.  Do this whenever you have a major personal life change. For people who wish to avoid providing that interest free loan to the government, the goal is to file a tax return with zero refund and zero owed. While it is rare to get an actual zero as a result, these folks are generally happy if they either owe a small tax bill or receive a small tax refund. If you count on a big tax refund every year, you should also pay attention to your withholding, because how much you have withheld directly impacts your refund.

Is it time to call your employer’s payroll office?

 

Susan Taylor

Susan Taylor

Resources are important whether you are looking to rent your first apartment, pay your bills, buy your first home or send your child to college. There are many ways to save money to reach your goals, and hopefully ISU Money Tip$ will be one of them. I enjoy traveling, needlework and am a novice gardener.

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Shopping for People

It’s a rare person who buys a car or a refrigerator without comparing several different options, probably from several different sellers. Yet we humans have a lot of trouble shopping around and comparing our options before we hire a professional. That doesn’t make sense when you think about it — our professional advisers may have a much greater impact on our well-being than our refrigerator!

I’m guessing that maybe there are two reasons we don’t shop around for professional advisers: a) we didn’t learn how from our parents (who may have taught us how to shop around for products from groceries to vacuum cleaners); and b) we feel awkward asking a lot of questions and interviewing professionals, especially when they are the experts and we may not know very much about the topic for which we are seeking an adviser.  This applies to attorneys, tax preparers, investment advisers and a wide range of other professionals. It probably applies to experts like plumbers and electricians, too.

I’m going to focus here on financial advisers, but the principles are the same for all professionals. Our financial advisers have a huge impact on our lives, so we need to get over our discomfort, and “just do it.” (forgive me for relying on a phrase made famous in commercials back in the 1970’s or 80’s).  Really. This is a time to suck it up and force ourselves to take on something even if we’re nervous about it.

Here’s some good news: reputable financial professionals will understand and support our desire to choose an adviser that fits our needs. They will generally be happy to schedule an appointment (maybe 30 minutes) so we can learn more about them – how they do their work, how they are compensated, what experience they have, and how they stay current in their field. Our job will be to go in prepared with questions we want to ask.  (Don’t worry — some resources are identified below!). And then our job is to finish the interview, thank them, and leave without making any decisions. That allows us to interview other individuals, check references, consider what we have learned, and follow up with additional questions before choosing the professional we trust to guide our financial future.

For ideas on what to look for and what kinds of questions to ask, I suggest you begin with information at the following links: FINRA (the Financial Industry Regulatory Authority); Investing for Your Future (national Extension system); Investor Bulletin (from the Securities and Exchange Commission).

Add  your ideas here — what are YOU looking for in a financial professional?

 

Barb Wollan

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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Identity Theft and Your Tax Return

Social Security numbers have to be correct on tax returns. At the Volunteer Income Tax Assistance sites we receive an immediate reject on the return if the name and numbers don’t match Social Security records.  We also receive a reject code when a social security number has already been used on a tax return. Individuals must still file a return, but with the electronic submission blocked, it must be a mailed copy.

The IRS  and Iowa Department of Revenue will send you a letter saying more than one return was filed in your name.  Be sure to respond to the letter promptly. Use the internet to validate the IRS phone number and address (scam artists are now creating very good look alike letters). Call and discuss the evidence needed to support your tax return submission.

A letter will also be sent if the IRS or Iowa Department of Revenue has a record of earned income that you didn’t report on a return. It may mean your SSN was used by someone else so they could avoid paying taxes on their earnings.

Social Security numbers can be obtained through scams or by buying numbers that were stolen in a security breach.  If you have been notified that someone has committed tax-related identity theft with your personal information, report it promptly. Go to identitytheft.gov to complete and send the IRS Identity Theft Affidavit.  By doing this, you will also file a complaint with the Federal Trade Commission and obtain an ID Theft Recovery Plan.

After your identity is falsely used for tax purposes, the IRS will send you an annual PIN number (a new number each year). This PIN number will be added to your tax return to verify your identity to the IRS, and will prevent anyone else from continuing to use your social security number on false claims.

Joyce Lash

Joyce Lash

Joyce Lash is a Human Sciences Specialist in Family Finance who wants to keep you ahead of the curve on financial information.

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