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Building A Bridge To Retirement: Leaseback Arrangements

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Whether they want to get more sun, get closer to grandchildren or downsize their home to cash out some equity, Baby Boomers are moving more often during their first few years after retirement than did the previous generations of retirees. The final year in the workforce can feel a lot like moving, as individuals run themselves ragged trying to make last-second arrangements, finalize budgets and journey into a yet-unexperienced phase of life. So retirees who are moving often have twice the stress, too.  Leaseback arrangements, a staple of commercial real estate, have become far more popular as Boomers retire, allowing retirees to eliminate some of the stress and uncertainty involved in moving during retirement. 

How it works 

A leaseback is a financial arrangement in which an individual sells their home with the understanding that they will immediately enter a lease agreement with the new homeowners so they can stay in the house for an agreed-upon amount of time.  Leasebacks can work two ways for those nearing retirement. First, a retiree can sell the house in which they’ve been living and lease it from the new homeowner until they retire, or alternatively, retirees can buy the perfect retirement property as soon as it becomes available and lease it back to the previous homeowners until the retiree is ready to move in.  Leaseback arrangements don’t have to be complicated or intimidating, and they can provide security to both sides of a home sale. 

Benefits for home sellers 

  • Selling a home before retirement ensures retirees know exactly how much money they will get for their home.  One of the scariest parts of retirement planning is the fear that something will go wrong. Knowing exactly how much money a soon-to-be-retired individual will get for their home can help provide some peace of mind.
  • Leaseback arrangements let homeowners take a long time selling their home while having the confidence they can begin the process early without ending up without a place to live. The extra time ensures they don’t have to jump at the first offer that comes along, and can wait for a good bid.
  • With a traditional home sale, there is the potential that retirees won’t sell their home in time and then end up with two monthly mortgage payments.  A leaseback arrangement lets retirees sell their home first, guaranteeing they won’t end up with two mortgages.
  • Arranging a leaseback gives retirees cash in hand to improve their financial outlook.  By selling their home and becoming renters for a year, retirees can reinvest their home equity in the high-return parts of their portfolio, pay off high interest credit card debt or finance the business they plan to run in retirement.
  • The cash from a leaseback also helps reduce the uncertainty of the first year, when most retirement calculators ask people to guesstimate their expenses.  The first year of retirement is often the most expensive, as newly retired folks take celebratory vacations, buy hobby supplies or make COBRA payments while they await Medicare or Medigap eligibility.
  • Leaseback arrangements can also help retirees who are too young for full Social Security or pension payments by giving them cash up front to hold them over until they can receive full benefits.

Benefits for homebuyers

  • While leaseback arrangements offer more benefits to sellers than they do to buyers, they still offer buyers some pretty big advantages.  Most importantly, buying a home and leasing it back to the current residents ensures that retirees who can wait a little while to move in can get exactly the home they want.
  • Nothing says that homeowners need to lease their home at the same price as the mortgage.  By entering a leaseback agreement and waiting an agreed-upon amount of time, retirees can make a profit off of their retirement home while they wait!
  • Leasebacks give those near retirement the ultimate bargaining chip when they’re negotiating the sales price: By starting the process earlier and having more time to shop for a retirement home, those nearing retirement have the ability to walk away, helping ensure they get the best possible price.

Arranging a Leaseback

Arranging a leaseback is actually quite simple and only involves two steps, one of which you’ve done before.  First, arrange a home loan like you would for any other residential property.  If you already know what you want to buy, apply for your mortgage at Destinations Credit Union.

Then, talk to your realtor about a leaseback arrangement.  Many realtors offer temporary leaseback agreements as a standard part of a sale, so even if they haven’t arranged a long-term leaseback before, it should be a piece of cake.

Sources

College Credit: Where will you live?

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Brought to you by Destinations Credit Union

Top on the priority list for high school graduates is often, “Move out of mom and dad’s house.” And while sometimes mom and dad can’t agree more, this is not always the best financial move for teens.


What are some options for room and board while you are in college? There are plenty. Weighing the financial and personal benefits and downsides to each living situation can help you find the best possible option. Here are some possibilities for you to consider:

  • Staying at Home. This is often the most affordable option, especially if your parents will let you live in their home rent-free. If your college is within driving distance, you can live for free, eat for virtually nothing, and have the moral support of your parents nearby. The downside is being an adult and living in your parents’ home. This is not always an ideal situation for some new college students.
  • Living in the Dorms. The dorm life will help you meet people on campus and make it easier to get involved. However, the convenience comes with a price tag. The cost of living in the dorms varies by college and you often have at least one roommate in a very small room. There’s also the added cost of campus meals plan to consider.
  • Finding an Apartment. An apartment provides you the privacy of a home but at a lower cost than a house or some dorms. Finding a roommate will help defray some of the cost so you don’t have to foot the bill all on your own. The downside is that apartment living can be more expensive than a dorm room when utilities and other expenses are added in. Don’t forget to factor in the cost of food as well.
  • Live with Family. If your college is away from home, living with other family members that reside in or near the college town is a great option. You’ll get to know your extended family a bit more, plus live at a relatively low cost. Perhaps you can babysit for younger cousins to help cover expenses. The downside, again, is living in someone else’s home. If you’re looking to reconnect with family, though, this could be a great option.

Whatever housing option you choose during college, make sure you do your research and find an option that works for you-both financially and personally.

Mobile Banking – 4 Ways To Stay On Top Of Your Finances While On The Go

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Most people have a checklist they go through before they leave the house. Is the stove turned off? Are the doors locked? Do I have my wallet, my keys and my cellphone? The only thing that has changed about that process in the last few years has been the addition of that last item on the list.

Today, 91% of Americans have cellphones and 61% of them have smartphones. This is a remarkable change from even two years ago. More than half of the people you see every day are carrying a computer that dwarfs the most powerful computing technology that was available a decade ago. It’s also connected to all of the world’s information, literally at our fingertips. What do we use it for? Drawing moustaches on our selfies and tossing wingless birds at shoddily made pig housing.

If you’d like to use your smartphone for more sophisticated purposes, plus add a ton of convenience and peace of mind to your life, consider mobile banking. With a couple of taps, you can access a whole suite of financial information. Let’s look at four scenarios where mobile banking can save you some time … and even some money. 

1.) Say goodbye to security woes 

Despite all of the data breaches that have been in the public eye over the past few years, no one has figured out how to compromise mobile devices as a platform. Security leaks have affected PCs, Macs and point of sale terminals, but no widespread security vulnerability has compromised mobile banking. Despite the fear, mobile banking is actually a fundamentally secure platform.

The first reason for this is the plurality of platforms. You and your neighbor may not be able to share cellphone chargers, much less apps or other experiences. This diversity makes it difficult for a single vulnerability to affect many users. Since there’s less possibility of large scale attacks, hackers have very little incentive to dedicate time toward trying to compromise mobile platforms.

The second reason for this is the tight control placed on mobile devices. Because these devices have to send regular usage information back to your mobile provider, they tend to be far less prone to modification. There’s just not as much you can do to an iPhone or an Android as you can to a PC. While some users might override those protections, such modifications are not widespread enough to justify attempted infiltration.

Mobile banking is secure and safe. Data transmitted from your cellphone to your provider is heavily encrypted. If you lose your phone, it can be remotely deactivated and passwords usually aren’t stored on the device. 

2.) You can check your balance any time 

Rather than waiting for your statement every month or booting up that slow PC for checking your account balances online, you can view transactions while waiting for a bus or in line at a restaurant. You can stay vigilant against illegal account access any time you’ve got your phone and a spare few seconds.

The convenience of mobile banking can also keep you from making costly mistakes. If you know funds may be running tight, check your account balance while in the checkout line to make sure you can cover the cost of your purchases. You can see if your monthly rent check has been withdrawn from your account to avoid the costly fees associated with overdrafting. It’s easier than ever to keep track of your finances.

You can also help to prevent errors with mobile banking. Accidental overpayment, duplicate payments and other errors are a regrettable reality of the modern high-speed economy. By regularly checking your account statement, you can catch these pesky problems before they turn into big issues. 

3.) It’s where you’ll find the next big thing 

Mobile payments and mobile check depositing are becoming more widely available and are already being used in many places. As technology gets better, these functions will become cheaper, faster and even more widespread. Getting involved in mobile banking on the ground floor will help you stay up to speed with this rapidly evolving world.

Imagine getting turn-by-turn walking directions to your nearest ATM. You could get alerts when new houses are listed for sale along your daily commute. You might pay for your breakfast by signing a receipt on your phone.  These and other changes are coming and they are only the beginning. If mobile banking doesn’t do something you need, wait six months. Someone will probably find an app for that. 

4.) 24-hour-a-day instant access 

Do you ever wake up in the middle of the night in a panic because you can’t remember if you paid your electric bill? Ever have a tiny freakout on the bus because you suspect someone may have accessed your account? Are money worries preventing you from enjoying your vacation? If you have these concerns and are nowhere near your computer, you could just suffer through them.

As an alternative, though, you could use a mobile app to check your balance and transaction history. See if your monthly bills have cleared. Make sure your balance is safe. You can do all of this any time you’ve got your phone, day or night.

Mobile banking won’t replace traditional, face-to-face interaction. There will always be a place in the credit union service standards for the human interaction. What mobile banking apps offer is a wonderful supplement to those high-quality services. Space-age convenience, top-level security, and blissful peace of mind are all available from your pocket, anywhere in the world. 

SOURCES:

Four Ways To Repay Your Student Loans With Help From Destinations Credit Union!

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Graduation day seemed like it would never come. As a freshman, you saw
seniors swaggering about like they owned the place. Then, just a few short years later, there you are. You’ve crammed for your last final, written your last paper and said tearful goodbyes to your friends. For many graduating seniors, though, leaving college isn’t “real” for quite some time.

For many college students, the reality of moving on from college doesn’t set in when they throw a mortarboard. It comes a few months later, when they get their first billing statement for their student loans. Seeing a balance of $30,000 can make the gravity of adult life hit home in a very real way.

It’s easy to put making the minimum payment on auto-pilot and to treat your student loan bill like your cellphone bill or rent payment. It gets sorted into the pile of bills to pay and never gets a second thought. However, you might be leaving money on the table by using the loan company’s bill pay service.

Destinations Credit Union can help you pay back your loan in more ways than you might realize, and save you money in the process. Here are four convenient ways you can pay for your education and get greater flexibility. You might be able to get some extra rewards out of the deal, too!

1.) A savings account for college students

You can’t start paying off your student loans while you’re in college. But that doesn’t mean you have to sit and wait to get buried under an avalanche of debt. You can take proactive steps while you’re in school to make your life easier.

Your student work or part-time job might not make a dent in astronomical tuition costs, but it can still help you get out of debt faster. Setting up automatic savings account transfers will force you to put away a little bit each month. Check out Destinations Credit Union Kasasa Cash or Cash Back (free checking with rewards) to see how you can get extra money for your savings every month.  You can use that once you’re out of school to make a big first payment. It’ll really take the sting out of the debt load.

Make sure to put this money into an account you won’t be tempted to use for other things. The $100 or $200 you put away every month could rapidly disappear through dinners out and concert tickets. Automating savings is a way to keep yourself disciplined and on target.

2.) Automatic bill pay

Your student loan provider is a business, and they’re out to make money. All aspects of their operations, from the materials they send you when you start borrowing to the bills they send you each month, are marketing materials. They’re designed to maximize profit. For lenders, that means keeping you paying the minimum amount for as long as possible.

That’s why their bills make it as easy as possible to pay the minimum and require extra work to pay more than that. They want you to pay the “amount due” every month. It’s more profitable for them that way.

You can get the advantage back by setting up automatic bill pay. When you do, you can designate an amount of your choosing to be paid to the lender every month. You can pay your bill back at your own pace and save some money on overall interest while you’re at it! As a bonus, you can often get around nuisances like “technology fees” with automatic bill payment.

3.) Pay with a Destinations Credit Union credit card

One of the benefits of a student loan is the bump you get on your credit score by paying it regularly. Lenders see your management of student loan debt as evidence of responsible borrowing, making them more likely to trust you in the future. If you want to maximize the benefit to your credit score, you can use a credit card from Destinations Credit Union to make your student loan payments.  You can earn rewards with each “purchase” but make sure you are paying down the credit card as you make these payments.  There’s not much point in trading one kind of debt for another unless there is a long-term benefit.

This advice deserves some qualification. Many lenders don’t accept credit card payments, and many others charge handling fees. A 1% transaction fee for using a credit card should be seen as a 1% increase in interest. Also, credit cards can be an easy way to get into trouble. Don’t use them if you don’t have an emergency fund to fall back on. Credit card interest rates are frequently much higher than student loan interest rates and missing a credit card payment is just as detrimental as missing a student loan payment!

Still, if you’re careful about it, you can build your credit score twice for the same loan. Both your student loan and your credit card will show as paid each month, which will make you look twice as responsible for paying one bill. You will be able to earn a few rewards points as icing on the cake.

4.) Consolidate and refinance

College is about the journey, not the destination. If your journey was a longer one than usual, you may have debt from several places. You may have used your credit card to finance your living expenses or taken out unsubsidized loans from private lenders. These variable interest rate loans can really hurt you financially.

It might be time to consider refinancing. You can take a personal loan for all your outstanding debt and consolidate it into one monthly payment. You can lower your interest rate and simplify your financial life at the same time.

This process can also include one-on-one time with a trained financial professional at Destinations Credit Union. You can gain advice on budgeting and make a roadmap to a truly debt-free future. To see if consolidation is right for you, call, click, or stop by Destinations CU today!

SOURCES:

http://www.bankrate.com/finance/college-finance/repay-college-loans-fast-4.aspx

Bubble Bursting

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The economy has always moved in cycles. There are times of vigorous expansion followed by periods of slower growth or retraction. It’s been happening since the dawn of recorded history and will likely continue to go that way for generations to come. There are a million theories to explain this phenomenon, from sun spots to demographics, but the “why” is less important than the demonstrable fact of the business cycles.

When people talk about “bubbles” and “bursting,” they’re putting this widely observable fact into panic-inducing language for the purpose of sensationalism. A headline reading “Economy doomed due to bursting bubble” sells a lot more papers than one that reads “Economic cycles continuing as normal for past and foreseeable future.” Yes, some periods of economic retraction are more intense than others, but the sky is not falling.

Federal Reserve meetings have begun regularly discussing the possibility of raising interest rates. Such a move might make several investments that have been lucrative for several years, such as insurance companies and financial service providers, suddenly less attractive. Such a shift, particularly by investment-generating annuities and other managed funds, will drive down prices in these sectors.

Changes are likely coming in the economy and it makes sense to modify your investment strategy. Sensible investors respond to market conditions to protect their portfolio. There are a number of seasonal adjustments that can help to insulate you from the inevitable retraction. You should discuss these moves with a qualified financial advisor.

1.) Sell off risky investments

Most people who predict a bubble bursting have some idea of what industries are exposed to the greatest levels of risk. Popular choices include real estate, financial services and manufacturing. These industries are generally more exposed to volatility in the market, so it makes sense to shade your portfolio away from these sectors.

This isn’t a permanent move. This is part of the most basic wealth-building strategy: sell high and buy low. Stocks and funds that comprise these sectors are likely near a temporary high. Their prices will fall and investors who sell will have the opportunity to reinvest at much friendlier prices.

2.)  Shift to non-cyclical stocks

“Sell in May and walk away” is common stock market advice. Many sectors, especially cyclical consumer goods, tend to notice dropoffs in their stock prices during the summer months. Families choose to spend their discretionary money on vacations and other experience-related items instead of electronics or fancy clothing. While this advice is generally good, it’s incomplete.

Rather than leaving your investments in cash, move them into less volatile options. With interest rates poised to go up, bonds and other savings instruments can be a good way to shield yourself from risk. This is called “defensive investment.” When you expect stocks to perform slightly worse than average, investment vehicles, which are less influenced by market forces, become smarter picks.

3.) Adjust your retirement plans

One of the only dangers to the coming retraction is to people who are planning to retire in the next year or two. Those folks may experience a dramatic dip in their available retirement funds right at the time they need it. If retirement plans are flexible, it makes sense to wait out a market downturn. Postponing retirement by a year or two can improve your standard of living dramatically.

Otherwise, not only will you not be pulling out money from your retirement account at the time you can least afford it, but you’ll also lose out on years of buying cheaper stocks. Those prices will rebound eventually, which will magnify the return on those dollars. Earnings invested in down economic times are worth more in retirement than those invested in boom times.

4.) Stay calm

If you’re invested in managed funds, you may not need to take any action. Mutual funds, which are widely diversified, will likely continue to experience a similar rate of return. Individual securities will fluctuate wildly in price and sector funds will also be subject to some day-to-day volatility. Market-wide index funds will have slightly higher day-to-day changes in price, but on the whole, will still experience the same gradual rate of return. Odds are good your retirement account is in one of these funds if you selected it in consultation with a retirement planner.

As always, you need a certain amount of money available easily in case of emergency.  This is where Destinations Credit Union can help.  We have lots of savings options that will help you get the best return on your safe (insured) and liquid cash.  Payroll deductions or automatic transfers can help you save painlessly.  
You don’t need to panic about your 401(k) and put all your money in a mattress. You don’t need to quit your job and run for the hills. You may need to adjust your portfolio to take advantage of changing market conditions, but you shouldn’t stop planning for the future. Keep calm and save on!

SOURCES:

The Three Best Jobs For College Students

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College is a place for learning, but one of the best ways to learn is by doing. If you’ve been keeping up with friends who have graduated, you know the job market can be a cruel and unforgiving place. To prospective employers, your GPA, your extracurricular activities and your major matter a whole lot less than the all-powerful “experience.” You need a job!

In addition to the resume boost, a little disposable income can really take the pressure off your budget. Being able to finance a spontaneous road trip, a midnight taco run or a ticket to your favorite band’s show without having to dig yourself further into debt is a great feeling. How can you squeeze in work experience between classes, projects and a social life? It’s all about choosing the right job. Here are three jobs ideas. 

1.) Retail sales 

Getting a job working in sales is a great way to start a career in marketing, advertising, or business. It doesn’t matter what you’re selling, because you’ll learn the fundamentals of convincing people to buy. Look for stores you shop at regularly. If you’re a clothes horse, Kohls or GAP might be your best bet. If you’re more outdoorsy, REI or Sports Authority could be a better fit. These places do most of their business after hours and on weekends, so you can work around your class schedule. 

2.) Freelance writing 

If you’re thinking about a career in journalism, getting some bylines under your belt is a necessity. One of the best ways to do that is to sell your own work. Sites like Blogmutt will pay a few dollars for a few hundred words, while sites like Elance offer longer-term projects. Either way, the work is the focus, not the hours. You can tackle projects in your spare time, earn a little money, and build your portfolio in the process. 

3.) Fitness instructor 

You know you need to get to the gym anyway. Why not make a gig out of it? Teaching yoga or leading a calisthenics class can be a great way to get your sweat on while building your resume. If you plan to go into education or physical training, this experience will set you apart from your peers. Even better, you’ll learn how to market yourself – which is a valuable skill in any endeavor.

Financial Literacy Month – Celebrate Knowledge!

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“April showers bring May flowers” goes the old saying. It’s also a great lesson about the importance of saving – where weathering some light showers can pay dividends during the nicer days that are to come.

April is Financial Literacy Month, and a great time to think about some important lessons everyone can learn about finances. Whether you’re a parent looking to make talking money with your kids easier or a professional looking for a few tips, there’s always something to learn. Here are some fun activities you can do to expand your financial knowledge.

1.) Make a financial date night

Most people dread doing anything with their money. Unless there’s a serious issue, they don’t think about their bills or their paychecks. When something serious comes up, they do little more than panic and figure out how much money to throw at it so it’ll go away. Money is scary, and not dealing with it is the easiest thing to do.

If you want to improve your knowledge of finances this month, schedule a financial date night. It doesn’t matter if you’re partnered or on your own, it works the same way. Pick a day when there’s nothing good on TV, no major social events and no serious distractions. Put some light music on. Pour yourself a glass of wine. Sit down with your bills, your paycheck and anyone else who matters to your finances, and figure out where you stand.

This can be a time to make dealing with your finances fun. You can do a little daydreaming and figure out what your future looks like. Jot down some goals and think about how you can achieve them through your monthly budget. Make a financial date night part of your monthly routine!

2.) Build a list of needs and wants

One of the best ways to build an efficient budget is to start from a list of priorities. What do you spend your money on each month? Make a list of all your expenses. Then, break them into one of three categories.

The first category is the essential, non-negotiable bills. These are your big-ticket essentials that have serious consequences for missed payments. Your auto loan, your rent or mortgage, your utilities and your taxes go here. This is the bare minimum you need to bring in each month.

The second category is the essential, negotiable obligations. These are unsecured loans such as credit cards and student debt. You need to pay them, but if you have to miss a payment, these are the ones to miss. Paying these off is a priority after you make your essential payments, and you may have some room to negotiate and reduce these payments if things get dicey.

The third category is the inessential spending. This is everything else you spend money on each month. This is the best place to make cuts when you want to shift your priorities.

Making a list of priorities is the first step to making solid plans and reshaping your own financial destiny. When you know where your money is going, you can start to move from financially existing to intentionally spending. That’s the beginning of improved financial literacy.

3.) Take charge of your retirement planning

Financial security means planning for the day when you can’t work anymore. Financial literacy is all about taking an active role in thinking about that future. There are a few concrete steps you can take in April to put yourself ahead of the game.

If you’re not already doing so, contribute to your employer’s 401(k) program. Most employers will match contributions up to a certain level. If you’re not contributing enough to get the full amount of that match, you’re leaving money on the table. Set up automatic contributions out of every paycheck to automate that savings.

April 15 is the last day to contribute to an IRA for 2014. Even if you’ve already filed your taxes, you can file an amended return to get credit for your contribution. More importantly, you can add to your retirement nest-egg and take advantage of the tax benefits of those accounts. Visit Destinations Credit Union to open your IRA today.

There’s also no shame in asking for help. Retirement laws are complicated, and it takes an expert to really understand their intricacies. Speaking with a qualified financial planner can take some of the guesswork out of it. This conversation can also help you clarify what retirement looks like: what your goals are, how much you need to save to achieve them and what programs are available to help you get there.

If you’re counting on Social Security to provide for your entire retirement, you’re in for a rude awakening. Benefits are shrinking and the fiscal solvency of the program is always in danger. Taking an active role in your retirement planning is the best way to get some peace of mind about your future. It’s never too late. Retirement planning you do at 50 is better than retirement planning that never gets done!

SOURCES:

Social Security Changes: What You Need To Know

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About 46 million retired people and their dependents receive Social Security, and the average benefit is around $1,300. If you’re reading this, odds are good you either know someone who gets this benefit or are someone who does. What you may not know is that this benefit may be subject to change this year. 

Most experts agree that the Social Security program is in long-term trouble. By 2033, the program will only be able to fund about 75% of its current obligations. By 2083, that level drops to 72%. With these breakdowns in funding looming, changes had to happen. Imagine a current retiree on a fixed income being asked to give up 23% of her monthly check. That would mean poverty and destitution for millions of elderly people. 

Significant overhauls of the program are coming but involve a lot of complicated political maneuvering. In legislative circles, Social Security is known as the “third rail.” In subway language, the third rail is the one in the middle that carries all the electricity. If you touch it, you die.

In the mean time, a variety of smaller reforms have been implemented, designed to ensure the short-term survival of the program. In 2015, there are three significant changes to Social Security benefits. Note that most of these changes only apply to future beneficiaries and current recipients will continue to receive a benefit similar to the one they’re currently receiving.

If you’re worried about how your chances of collecting change, take a look at these three upcoming changes:

1.) Mail-in benefit statements

If your age ends in “5” or “0” in 2015, expect a letter from the Social Security Administration this year. The statement will explain how much you’ve paid in and what kind of benefit you can expect to receive. The benefit will be estimated based upon several retirement age options, starting with age 65.

The administration suspended mailed statements last year, but restored them for 2015 to allay fears about the short-term survivability of the program. Obviously, the numbers listed in the statement are estimates, but they should provide a helpful guide for those approaching retirement. They expect to send out 48 million statements in 2015.

If you’re already receiving Social Security, you’ll receive an annual statement unless you’ve already opted to receive online-only statements. That recipient statement will include the cost of living adjustment for the year, the monthly benefit and any survivor benefit your spouse will receive.

2.) Higher Social Security taxes

One of the biggest problems facing Social Security as a program is a shortage of revenue. The way income is taxed for the program is riddled with exceptions and exemptions. The Social Security Administration can’t encourage people to die sooner, but it can collect more revenue to make up for longer life spans.

Previously, employees were taxed on the first $117,000 of income. This year, that amount will be $118,500. To make up for the slightly increased ceiling, the maximum benefit will also increase. For people who wait until age 66 to take Social Security, there will be no maximum to their benefits. Also new this year, people who wait until 66 will receive an additional return on benefits they deferred during their 65th year.

3.) Windfall Elimination Provision

The biggest change facing Social Security is the attempt to correct “double pensioners.” People who work government jobs (as well as some kinds of non-government jobs whose salaries are carefully regulated) are enrolled in separate retirement programs outside Social Security. These individuals did not have FICA (the tax that pays for Social Security) deducted from their paycheck. They instead paid into a different retirement system.

Previously, such employees received the same spousal benefits as those who paid into Social Security. They also received additional Social Security benefits if they held a FICA-paying position at another time in their lives. This windfall elimination is the subject of a 1985 regulation that takes effect this year.

This change doesn’t affect members of the Armed Forces, whose checks have included FICA deductions since 1957. It also doesn’t affect state or federal employees who have FICA deductions from their paychecks. If you’re unsure, check your paycheck stub for a line labeled “FICA taxes.”

Those who didn’t pay in will have their direct benefits reduced by a proportion of their government pension. They will also have any spousal or widower benefits they would have received reduced by a similar amount. These so-called “double-dipping” eliminations will save Social Security $3.4 billion, helping to ensure the program’s longevity.

If you’re concerned about the availability of Social Security for your retirement, it’s never too late to take control of it yourself. Many savings vehicles are available, from savings accounts and certificates to IRAs. To find out what options work best for you, call, click, or stop by Destinations Credit Union today. Our representatives can walk you through all the options and help you get to the retirement of your dreams.

SOURCES:

Prior Year Tax Returns

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Brought to you by Destinations Credit Union
If you didn’t file your taxes for the last couple of years because you didn’t think you made enough to pay taxes, what should you do?  You might be missing out on some refunds that you should have had!

“Paying” your taxes can be a misnomer for many folks. This year, 8 out of 10 people who filed taxes got a refund. The average refund was nearly $3,000, according to the IRS.

Many people think of tax refunds as bonuses, but it’s really an interest-free loan you gave the government. Filing your taxes is how you collect on that loan. If you don’t file, the IRS is only too happy to keep that money.

As a matter of fact, the window is closing on returns from prior years — with a big chunk of money still left unclaimed. About 1 million taxpayers didn’t file 2011 returns and are owed refunds. They have until April 15 to file for 2011 or they lose out on that money for good.

There’s quite a bit of money still unclaimed. About $1 billion in total tax refunds are still owed by the IRS. More than half of the refunds are for more than $698, with most of that money earmarked for seasonal or part-time workers. The reason for this is simple. If you only work for part of the year, your employer still “withholds,” or pre-pays income taxes, as though you were going to work all year.

Other people who are eligible for refunds include students and families. You may be entitled to a refund from so-called refundable credits. Programs like the Earned Income Tax Credit offer you a tax credit you can get even if you don’t owe taxes. The Earned Income Tax Credit provides relief for people with low incomes. Other refundable credits include the Child Tax Credit, which offers refunds of up to $1,000 per child. You might also qualify for the American Opportunity Tax Credit, which offers refunds for tuition and other expenses related to higher education.

Whatever the source, you won’t know for sure until you file. If you owed money, the IRS would not be so laid back about collecting, so there’s not much chance you’ll end up having to pay more. You’ve got nothing to lose and quite a bit to gain.

Ready to start filing your back taxes? Here are three steps you need to take!

1.) Gather your documents

You’ll need all your tax documents from the year for which you’re planning to file. Remember, these refer to year you earned, not the year you were supposed to file. Your 2011 tax return was due in April of 2012, but covers what you earned between Jan. 1 and Dec. 31, 2011.

If you’ve lost these forms, employers are supposed to keep them on file. Few people ever ask for them, so your employer’s HR representative may not be used to finding them. The information may also be available online if your employer uses an electronic workforce management system. It might take a few days for your employer to find the appropriate forms, but since you’ve waited this long, there’s no harm in waiting a few more days.

If you can’t find your documents, don’t guess! Filling in tax forms with incorrect information might be considered tax fraud, especially if you guess low. The IRS might accuse you of fudging the numbers to get more money. Make sure you’re only entering accurate information.

2.) Use the appropriate software

Tax rules and rates change from year-to-year. Always check in the upper left-hand corner of the federal forms for the year of the return. You’ll want to make sure you’re using the forms for the year you’re filing.

Most tax filing software will let you file prior years at a discounted rate, but you’ll still have to pay for e-filing. In some cases, you can deduct this amount from the refund you’d receive, so you won’t have to pay anything upfront. If paying for tax forms is too frustrating, you can always find the forms in the IRS form library.

3.) Plan for the money

It’s tempting to think of a tax refund as free money and spend it on a creature comfort or a silly luxury. In fact, the most common decision people make about their tax refund is to purchase a big-screen TV. For many people, this is the biggest influx of cash you’ll get all year. Spending it foolishly is a big mistake.

If you don’t have a plan for the money, it’ll disappear into a thousand momentary indulgences. Make a plan once you see how much you’ll get back. Just make sure your plan achieves a goal that’s important and impactful to you financially.

A prior year tax return would make a great start to paying down your credit card or other high-interest debts. It would also make a great emergency fund that could keep you out of debt in a crisis situation. This money could also be the start of a retirement nest egg that will get you in the habit of saving.

SOURCES:

Involvement In Finances

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In many relationships, one partner handles all of the financial arrangements.  If your partner is the one who handles everything, but you want to be more involved, how can you start that conversation?

You’re not alone. A recent study by Fidelity Investments showed many people want to be more involved with their finances. Among women, 92% wanted to learn more about their finances, while 86% wanted to take a more active role in managing them. It’s very easy to get caught in a routine with bill paying, checking and spending. The person who was doing so when you started cohabiting just continues to do so exactly the same way they always have.

What’s more, those conversations are really difficult to initiate. Even with close friends, 56% of survey respondents say finances are “too personal” to discuss. Of those survey respondents, 43% were willing to talk about their health issues, but only 17% would talk about investments. About half of respondents would willingly talk about the strange things their bodies are doing, but talking about where they save their money is considered “too personal.”

Intimate partner relationships aren’t a safer space for conversations about money, either. Only 66% of respondents talk about investments or salary with their spouses or partners. In one out of every three relationships, finances are not a common topic of conversation between people who likely share a checking account!

If you’d like to change that dynamic in your relationship, there are a couple of approaches you might consider. No matter what you do, make sure you’re approaching this sensitive topic from a place of love. Fights over money occur when one partner feels put on the defensive about budgeting or spending. Take care and try these three techniques!

1.) Talk about a common goal

If you and your partner have been trying to plan a summer getaway, save for a new car or put a down payment on a house, this can be an excellent place to start a conversation. It’s best to begin on broad notes. Ask about hotel choice or means of transportation. From there, it can be easy to talk about making a budget for the occasion. Once you and your partner are talking about dollar amounts, it can spill over into a more general conversation about finance.

If you ask about saving for this project, it’s important to have suggestions or ideas. Come to the conversation prepared to make a small sacrifice to contribute to saving for the project or have some cost-saving strategy to make the process easier. This encourages a feeling of joint struggle as opposed to you “checking up on” or “managing” your partner.

2.) Set guidelines for spending

Spending is the biggest cause of fights between couples. In general, people tend to see their decisions as rational and the choices they disagree with as irrational or impulsive. In relationships, it’s tempting and gratifying to think of yourself as the sensible one and your partner as the reckless one.

Your partner likely feels the same way. For instance, you may enjoy a daily coffee drink while your partner might consider that to be frivolous spending because they don’t know the joy and satisfaction you derive from that little indulgence. Conversely, your partner’s enthusiasm for home electronics might make you see a top-of-the-line stereo system as an extravagance, while your partner sees it as a way for the two of you to spend more time together at home.

The best way to avoid resentment while still keeping your spending under control is to set personal allowances for you and your partner. You can spend so much each week or month without consulting your partner. Major purchases that go over that limit require consultation. Try to avoid bringing up recent or specific purchases and focus on planning for the future rather than placing blame for the past. This will keep the conversation from feeling accusatory.

3.) Dream about the future

Retirement planning is a difficult subject to broach. Many people don’t want to do it on their own because the prospect of saving that much money is frightening. Add in the stress of talking about money in a relationship and this can be a conversation filled with dread.

It doesn’t have to be that way. Many couples find retirement to be a time of great relationship strength and bonding. If you and your partner didn’t have to work, you could spend a lot more time together, enjoying your mutual interests and each others’ company. Instead of beginning a retirement planning conversation with a dollar amount, begin it with a dream.

Maybe you’d like to travel the world together and see exotic sights. Maybe you want to build furniture out of your home. Maybe you want to become active in the leadership of your church. Beginning with such dreams in mind, as opposed to how much they’re going to cost, can help you and your partner better share the stress involved in saving and planning.

However you broach the conversation about money, it’s important to do so. Secrets about finances in a relationship can lead to stress, interfere with honest communication and produce relationship-ending fights. On the other hand, couples who talk openly and honestly about their financial situation can use that transparency to build stronger, more straightforward communication strategies about other topics. As many people have found, the couple who saves together, stays together!

SOURCES:
http://www.benefitspro.com/2015/02/13/women-find-personal-finance-too-personal https://www.key.com/html/couples-financial-planning-articles.html