Your Biggest Financial Decision

What’s the biggest financial decision you’ll ever make? Going to college? Buying a house? Maybe, but it may also be true that the biggest financial decision is the decision about when to claim Social Security. And that is a decision where you’ll hear people give opposite advice – some will recommend claiming early, and others encourage you to wait.

Because it’s a big decision, it’s worth exploring your options carefully using readily available online tools. Tool #1 is well-known, but read on to tool #2, as well, because it offers a bonus.

Tool #1: Set up your account at www.socialsecurity.gov and check out your options. Notice how your monthly Social Security income changes depending on your age at claim. You’ll notice that it’s not just what year, but also what month, that matters. For example, if you turn 67 in November, but really don’t have any plans until summer, working an extra 5 or 6 months will give you a higher monthly income.

Tool #2: Check out the Social Security Estimator from the Consumer Financial Protection Bureau (CFPB).  Although this tool is not personalized to your individual history of work and earnings, it does something the Social Security tool does not. It shows the cumulative impact of your decision about when to claim. 

Here’s how the CFPB tool works: You enter your birthdate, and type in how much has been your highest annual earned income in your career. Based on that, it estimates what your social security retirement benefit would be at your full retirement age, and at other ages between 62 and 70. When you select an age, it shows what your monthly income will be, AND (in the left margin) it shows the total amount you will receive from Social Security if you live to the average life expectancy of 85.

graphic depiction of output described.
Combined graphic showing calculator results at ages 62 and 70

I ran an example for a person born in 1960 whose highest earning level was $50,000/year. If they claimed at age 62 and lived till age 85, they would receive a monthly benefit of $1,112 and would have received a total of $305,800 from Social Security during their life. By contrast, if they claimed at age 70 and lived to age 85, their monthly benefit would be $1,958 and their total by age 85 would be $352,440. Note: all these figures would actually be higher, because of adjustments for inflation.

There is no “right” age to claim Social Security; your choice depends on your situation – your needs, other sources of income, health situation, and more. But using available tools, including the CFPB calculator which enables you to easily see the total impact of your decision at age 85, will help you make a well-informed decision. Find more retirement planning information our retirement resource page.

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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Managing Someone Else’s Money – Being a Financial Caregiver

Today’s guest blogger is Sandra McKinnon, Human Sciences Specialist in family finance serving southwest Iowa.

Are you managing money or property for a loved one who is unable to pay bills or make financial decisions? According to the Consumer Financial Protection Bureau, 40% of those over 60 years old have a power of attorney. That amounts to over 26 million people in the U.S. with this responsibility.

Being legally designated as power of attorney is one of 4 different types of financial caregivers, also known as a fiduciary. You must be trustworthy, honest and act in good faith.

Other types of fiduciaries include: a court-appointed guardian of property (known as a conservator); a government fiduciary (such as a Social Security representative payee); and a trustee under a revocable living trust. Each of these is a separate responsibility.

Each has duties, powers and responsibilities. In general, there are 4 basic legal duties of a fiduciary:

  1. Act only in best interest of your family member or friend
  2. Manage their money and property carefully
  3. Keep their money and property separate from your own
  4. Keep good records and report as required

Another role of a financial caregiver is to watch out for financial exploitation and be on guard for consumer scams. If you suspect exploitation of an older adult, call the Eldercare Locator 1-800-677-1116 or visit www.eldercare.acl.gov. They will assist you in finding the state or local agency that investigate.

For more information, visit https://www.consumerfinance.gov/consumer-tools/managing-someone-elses-money/ or seek guidance of an appropriate legal 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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Currency Exchange Cautions

Last month I took a vacation to Ireland. It had been years since I’d traveled outside the US and Canada, so I did some “homework” before I left.  One key step was to talk with my credit card carriers. Two purposes:

  1. Let them know I was going to be traveling (always a good idea, even when traveling in the U.S.).
  2. Find out what their currency conversion fees are.
Dollars becoming Euros

When exchanging U.S. Dollars for another currency, there is always an exchange rate, because U.S. Dollars and Mexican Pesos and Euros and Indian Rupees are not equivalent. Currently, it takes about $1.10 US to buy one Euro, which is the currency used in Ireland.

Beyond that, however, there MAY be another cost: the bank that is converting the money may charge a fee for converting the funds. When I called my credit card companies, I got good news: two of my cards charged no conversion fees! My third card did charge a fee (3%), so I didn’t use it at all.

So far it sounds like I did a great job, right? But no – not completely. My mistake came in a situation I hadn’t anticipated. Sometimes when I was paying for a purchase in Ireland, the store gave me a choice: would I like to have the transaction charged to my credit card in US dollars or in Euros? A few times, caught by surprise, I said “US Dollars.”

Unfortunately, that was the wrong answer, as I learned when I looked closer at my receipts. Because when the store or restaurant ran the transaction in US Dollars, then they charged me a conversion fee (3.5% in one case). The right answer to the question would’ve been to have them go ahead and process the transaction as Euros, since I knew my credit card wasn’t going to charge me a fee.

Was this the end of the world? Absolutely not. It was a small expense, since I only did that a few times before I noticed the fee, and luckily not on any large purchases. But I was still a little disappointed in myself. After preparing to be a smart traveler, I undid the benefit by making a poorly-informed decision on the spot.

I’ll do better next time. And maybe YOU will have a chance to benefit from the lesson I learned!

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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Sports Betting Tips

Today’s guest blogger is Kalyn Cody, ISU Extension Human Sciences Specialist serving the DesMoines metro region. Kalyn Cody photo

Last week, I, like many Iowans, walked into my local casino to set up a profile for online sports betting. 

After a law passed in May and final rules were approved in July, sports betting began on August 15th at many casinos in Iowa.  The law allows for both in-person and online bets, but everyone must first check in at a casino to verify their age and identity. With this new opportunity to gamble in Iowa, it is important that we remember some key tips to bet responsibly and not get in over our heads. 

First, always gamble with a plan.  Pick an amount you are comfortable losing.  Does this amount fit into your budget?  Will you have to sacrifice things you need if you lose?  Additionally, pick an amount you are comfortable winning.  Set a dollar amount at which you will walk away.  It is very common to see a stack of chips or winning tickets and continue playing, only to look down again a bit later with nothing left.  Whether you are winning or losing, have an exit strategy.

Second, never borrow money to make a bet.  Think of sports betting as entertainment.  Would you take a loan to watch the headliner at the State Fair?  To go out to a 4-star dinner?  Every gambler has a bad beat story—probably many—and taking a loss on borrowed money can easily spiral out of control. 

Finally, if you do find yourself struggling with a gambling problem, be aware of resources that are available to help.  The Iowa Department of Public Health has set up a website with a risk assessment, hotline, live chat, and more.  You can also call the ISU Extension Iowa Concern Line at 800-447-1985. 

Enjoy your new options, but remember to stay in control of your bets.

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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Trends in Saying, “Good Bye”

Dad's Urn
My Dad’s Urn

My brother and I had what I would consider “a lot” of time to prepare for the passing of our father, since Alzheimer’s is a slow-progressing disease. We had time to talk, ask questions, research and make decisions. This was especially helpful since we knew that Dad would most likely pass in Indiana; the funeral would be in Iowa at my church; and the burial would be next to our mom in Minnesota. As we liquidated his Minnesota assets, we consulted our lawyers in Indiana, Iowa and Minnesota as we made decisions about where the estate’s bank account should be located and in which state to file probate. The choice of cremation made for less paperwork and expense when it came to transporting his remains from Indiana to Iowa and then on to Minnesota.

The funeral home director in Indiana made everything very easy and advised us on issues we had not considered like the purchase of a vault for the urn holding dad’s ashes. Not all cemeteries require urn vaults, but Dad’s did. For being nothing more than a small plastic box that is sealed with rubber cement, it came with a hefty price tag. The funeral director suggested finding one online, which was about a fourth the price.

It is interesting the things that are said during the time of grief. Old feelings bubble up. Emotions are raw and run deep. Two of our family members were struggling with the fact that they had not attended my mom’s funeral 30 years ago, and had not even known where she was buried; in some ways they were burying two family members that day. It became apparent to me the important role the graveside service played for these two family members. Interestingly though, the one struggling most had made the decision to donate her body to science. In this way, her body would then be cremated (at no cost to her) and the remains returned to her family. She intends to have no grave, no funeral…no final expenses. Her decision was purely a financial decision. I wonder if she will think differently now that she has experienced the effects of 30 years of deeply buried grief, magnified because she had experienced all the traditional rituals that come with the passing of a loved one.

A financially secure and elderly friend passed away recently. She was devout in a faith which we shared. Her children lived far away and I was eager and willing to help them make all the funeral arrangements through our church. It caught me completely by surprise that they decided that there would be NO funeral. She had the means to pay for such things. She was a long-time member of our church and community, so there were a lot of people planning to say “good bye” in a public way AND a lot of people trying to make sense of this decision. She had donated her body to science and the remains were returned to her children…end of story.

With increased access to information, survivors as consumers are seeking more alternatives to the conventional funeral. Funerals are among the most expensive purchases made in a lifetime. The national median cost of an adult funeral is $7,360. The time to make these decisions is now…not during a period of duress, grief, and guilt. Funeral Directors are excellent sources of information and you may want to check out this document by the University of Florida Extension – The Art of Goodbye; A Closer Look at Emerging Trends in End-of-Life-Rituals.

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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Equifax Claim

I didn’t rush to file my claim for a portion of the $425 million settlement from Equifax. In 2017, when the security breach occurred, I confirmed my information had been compromised multiple times by using the look up tool. As an eligible person, I contacted Equifax to put a freeze in place on my file and enrolled in credit monitoring services for a 12 month period.

Everyone is going to benefit from the settlement. In addition to the 3 free credit reports you can receive each year from the credit reporting agencies (one each Experian, Equifax and Transunion), Equifax will be furnishing 6 additional reports for 7 years. Consumers can use an electronic notification system to remind them at set intervals to check their reports.

As a member of the group of 147 million people impacted by the breach, I could request a $25 @ hour payment for the time I spent setting up safeguards to make my identity more secure. I could also opt to request repayment of the fees paid to put freezes in place. Note: Iowa has since disallowed the $10 fee per reporting bureau, so that won’t be an issue in the future. Recent press releases have indicated that both types of payment requests are likely to be paid at a reduced rate, due to the large number of individuals who have filed claims.

Credit monitoring is also an option. It will result in four years of coverage at all three credit bureaus and 6 additional years of monitoring at Equifax. I can also receive enrollment again in a $1,000,000 Identity Theft Insurance policy. A word of caution here: the original policy offered in 2017 included two key measures that limited the scope of benefits. A claim had to be filed within 90 days of an identity theft event and only one claim could be made in a 12 month cycle. Anyone who selects this option should read the policy.

Equifax is required to offer recovery services for those impacted by their breach. To obtain assistance individuals will need to contact the settlement administrator at 1-833-759-2982.

If you need more details about the Equifax settlement or how to take steps to add more security to your personal credit file, visit the Federal Trade Commission website. A claim can be submitted online or by paper; you have until January 22, 2020.

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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Medical Bill Mysteries: New Tool

Stethoscope with a $100 bill

For the past year-and-a-half I have joined others in being surprised, frustrated and horrified by the “Bill-of-the-Month” news stories presented cooperatively by National Public Radio (NPR) and Kaiser Health News (KHN). The NPR/KHN team receives real bills from real people across the U.S., for treatments ranging from a cat bite and a knee brace to spinal surgery and stroke.

In every case, the consumer submitted the bill because it either seemed outrageously high or it just didn’t make sense. The investigative reporters dug into the issues, usually gathering information from the medical provider and the insurance company as well as the consumer. Sometimes they found errors that could be corrected to reduce the bill; more often, they uncovered prices that were simply inexplicably high. Sometimes, but not always, shining the light of publicity on the situation led to a reduction or elimination of the bill.

Last month Kaiser Health News launched “Your Go-To Guide to Decode Medical Bills.” This new tool includes three components: 1) Pro Tips for Navigating Surprise Medical Bills; 2) a helpful Glossary; and 3) an example of a medical bill and corresponding insurance documents, with notes highlighting key items to pay attention to. The guide is not a magic wand – it doesn’t make navigating difficult medical bills easy. But it does point consumers in the right direction, so we can get started advocating for ourselves and our loved ones.

The guide reminds us that our consumer options begin even before we seek medical treatment – with a set of items to check on before going in or making an appointment. If, despite advance preparation, you end up with a surprising medical bill, a key step is to request an itemized bill. Medical providers are required by law to provide this if consumers request it. Along with other tips, the guide identifies two websites that can help you compare the price you were charged with prices of other providers: Health Care Blue Book and Fair Health Consumer.

As consumers we need to be our own advocates. It helps to have some guidance on how to do that effectively!

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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Navigation Apps- Failures

View of a car's dashboard, steering wheel, and street ahead.

My glove box is full of printed maps and I carry a road atlas with me on vacations. Even when my car was equipped with a navigation system, I still planned my trips with the aid of a printed map.

My experience using electronic navigation aids has been mixed. In the very early days of the programs, our home address was entered on a road one mile south of its actual location. Delivery van drivers had to be warned not to rely on them. We Extension field staff frequently have programs in unfamiliar locations and the apps have been helpful, but I’ve also had experiences with closed roads and wrong locations. This lack of reliability has taught me to allow ample time to search again when I land at the wrong place and ask a local resident for directions.

When it comes to travel, understanding how navigation systems work can help you pick the best one for the job. Examples of features that improve their guidance would be using traffic congestion to direct you to routes that are longer, but less likely to result in a white knuckle drive or traffic jams. Several commercial sites are available that rate the apps and share details about their operation.

Using navigation apps to locate specific nearby businesses and repair services has its own set of problems. One major navigation app has recently come under fire for a serious flaw in its program. Fake business listings are hijacking the names of real businesses, and then providing a phone number that calls a scam artist. The scammer is able to enter the fake business in multiple locations, making it more likely to appear early in the search results.

In the spirit of “buyer beware” it makes sense to use personal sources whenever possible for reliable contact information. Confirm business numbers by cross checking in a local directory or phone book. The Better Business Bureau or local Chamber office is also a source to confirm a location and phone number. Use the police department’s regular phone number if you can find no other source to confirm your information. IMPORTANT NOTE: 911 should only be used for an emergency.

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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Peak Alert

Peak Energy Alert

I love the fact that our home has hot-water heat. As a person with allergies, I am not overwhelmed in the summer or winter when the central-air or furnace blows the collected dust out of the vents. But with hot water heat, there’s no option for central air conditioning; I would have to say that this week I would give almost anything to have central air! As I write this during a heatwave, it is expected to hit 95 degrees today with a feel-like temperature of 103 degrees. I can only imagine how widespread the brown-outs will be with everyone retreating to their air-conditioned homes and places of employment.

So, what about those brown-outs? In visiting with my co-worker (who has central-air) I have learned that our local energy-provider has a program called Appliance Cycling. This program will not only reduce the amount of energy used by the homeowner, which will reduce their cost…but the homeowner will also be compensated with a credit of $8/month for participating in the program.

When you sign up for the program, a technician will come to your home and install a small radio-control switch on or near your outdoor central air conditioner at no cost to the homeowner. 

If the demand for electricity escalates to a critical point, a “system emergency” or “peak alert” is announced, and a radio signal is sent to activate the switch on your air conditioner. Your outdoor cooling unit will then cycle off while the furnace fans continue to circulate the cooler, drier air already in your home. 

The program runs from May to September and the cycling events typically occur Monday through Friday from 1 PM – 7 PM…never on weekends or holidays.

My co-worker says she notices a slight difference in the temperature and humidity in their home during peak alerts but nothing that a box fan or ceiling fan can’t make up for. Do you have a similar program in your area?  What has been your experience? As for me…I think I will plan on supper at a restaurant!

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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To Buy or Borrow?

My family just returned from a camping trip in the mountains of Montana. Our decision as to where to camp was determined by the fact that not all campsites would allow soft-sided tents and campers because of bears living in the area. We drove up into the mountains to picnic, visit sites and see the wildlife…including bears. Those that were serious hikers wore bells so bears would hear them coming; as to not surprise the bears that might be along the path. Hikers also carry BEAR SPRAY…a kind of “pepper spray” to temporarily blind a bear, giving a hiker a chance to escape, if they did come upon a bear. This product was sold in all the shops for more than $50 for a small spray can…OR you could rent a can. If you were a visitor to the area, and would not have use for the spray once you returned home, renting was a good option. At $10 per day rental, you would have to spend more than 5 days hiking to justify buying the can of spray.

Our son almost purchased a family pass at their local pool because that is what they had always done. At the last minute, he changed his mind and decided to buy a couple of punch cards. They have hired a high school girl to watch their oldest child for the summer, and wanted their daughter and the sitter to be able to spend time at the pool. The family pass would not cover a caregiver…only family members. When he added up the number of times they visited the pool, divided that into the cost of the family pass, it made more financial sense to buy the punch passes instead of the family season ticket.

I can think of many times where a decision to rent or borrow was a better financial choice…like borrowing an expensive tool that you would only use once or twice. I can also think of times where I mindlessly purchased something rather than looking for a more economical way of doing something…just because it was easier, faster or just “the way I’ve always done something.” How about you? What are some ways you have accomplished something without actually buying something?

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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