Category Archives: #BrownleeGlobal

Financial Planning and Market Volatility

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“The first rule of investment is ‘buy low and sell high’, but many people fear to buy low because of the fear of the stock dropping even lower. Then you may ask: ‘When is the time to buy low?’ The answer is: When there is maximum pessimism.”  Sir John Templeton

Market volatility is a fundamental part of trading and investing. When market volatility strikes, it’s common for investors to succumb to temptation and follow the herd to panic sell stocks.

Financial Planning is About Long-Term Goals

“All financial success comes from acting on a plan. A lot of financial failures come from reacting to the market.” Nick Murray

Setting financial goals—and sticking with your plan—is key to potential long-term success. Rather than letting market volatility change your long-term financial plans, it is important to stay focused on your long term goals and disciplined in your investment philosophy.

“Your financial goals aren’t set in stone,” according to Mark Gleason, senior manager of investment products and guidance at TD Ameritrade. “Circumstances change, and what you want might change. When that happens, it does make sense to change your approach.”

“Everyone has the brainpower to make money in stocks. Not everyone has the stomach. If you are susceptible to selling everything in a panic, you ought to avoid stocks and mutual funds altogether.” Peter Lynch

Just remember, the time to make adjustments to your long term financial plan are due to changes in life circumstances and should not be in response to market volatility. Here are four reasons to adjust your financial plan:

  1. Change in risk tolerance. If something has happened to change your risk tolerance, making tweaks to your financial plan can make sense. When a recent shakeup forces you to confront where you stand, it might be time to adjust your approach.
  2. New life events. Perhaps there’s been a death in the family. Or you’ve added a new baby to the mix. Maybe you’re getting married or going through a divorce. All of these life events can indicate a change in your financial planning approach.
  3. Shifting to a new life phase. Sometimes your approach needs to change as you actually start approaching your long-term financial goals. When you move from preretirement to actual retirement, your strategy is likely to change. Likewise, if you’ve been growing your child’s 529 and you’re worried about potential market volatility, you might make a few tweaks to the portfolio.
  4. Setting new financial goals. Most people set different financial goals as they move through life. Maybe you decide that buying a home isn’t the goal now; you’d rather get an RV and travel. Perhaps your target retirement age has changed. Whatever the new goal, you might need different financial planning in order to meet it.

Stay disciplined when investing.

Market volatility can cause discomfort, but it is important to realize that market volatility is short term and should not impact your long term goals and financial planning. You’ve set long-term financial goals designed to help you reach certain life milestones—and you don’t want to undo all your progress just to feel better during a market downturn.

“Why is staying the course so important?  As an extreme example, consider the investor who lost faith in the markets and cashed out on March 23, the low point in the U.S. stock market. Stocks subsequently rebounded more than 39% over the next three months; the unfortunate individual who moved to a money market fund earned a meager 0.14%. Vanguard’s analysis found that about 85% of investors who fled to cash would have been better off if they had just held their own portfolio.” (Source:  Vanguard, https://investornews.vanguard/a-snapshot-of-investor-behavior-during-a-downturn/)

Reference:

  1. https://tickertape.tdameritrade.com/investing/financial-planning-setting-financial-goals-amid-market-volatility-18160
  2. https://www.livewiremarkets.com/wires/ten-quotes-on-volatility-from-the-masters-of-the-market
  3. https://investornews.vanguard/a-snapshot-of-investor-behavior-during-a-downturn/

Financial Literacy and COVID-19 | Charles Schwab Foundation

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“89 percent of respondents to a Charles Schwab’s survey believe a lack of financial literacy contributes to larger social issues—from poverty, to fewer job opportunities, to wealth and gender inequality.” Carrie Schwab-Pomerantz

  • Even in the wake of a global health crisis, Americans value financial education.
  • An overwhelming majority of Americans believe that a lack of financial literacy contributes to larger social issues.
  • Americans want our schools to take the lead in providing our youth with a financial education.

The impact of financial illiteracy is not lost on the American public. 89% of Americans agree that lack of financial education contributes to some of the biggest social issues our country faces, including poverty (58%), lack of job opportunities (53%), unemployment (53%), and wealth inequality (52%).

“Financial illiteracy is insidious. The antidote is financial education, which gives people the skills they need to make smart money decision and can help improve their lives.” Carrie Schwab-Pomerantz, president of Charles Schwab Foundation.

Americans indicated they wish they had better money management skills, according to a Charles Schwab survey. When asked what they would teach their younger selves about personal finance based on what they know today, Americans said the value of saving money (59%), basic money management (52%), and how to set financial goals and work toward them (51%).

From the survey, it is apparent that every person in America should be taught the fundamentals of money management including budgeting, saving, avoiding debt, setting financial goals and investing.

“The pandemic has underscored just how critical basic personal finance skills are in preparing for the unexpected. Financial literacy is a survival skill that everyone needs.” Carrie Schwab-Pomerantz

Carrie Schwab-Pomerantz recommends five key steps every American can take to help shore up their finances during this period of global health crisis and economic uncertainty.

  • Start an emergency fund (or add more to it) to help protect yourself against an unexpected drop in income or expense shock. Set aside whatever you can – every little bit counts. Try to aim for $1,000-$2,000 to get started, and then work your way up to 3-6 month worth of essential expenses over time.
  • Create a budget to help you prioritize and assess your financial resources. Self-isolation has led to different spending patterns for many people, including cutting back on what we may have previously thought of as “essential.”
  • Create a financial plan to help you navigate from where you are to where you want to be. You don’t need to have a lot of money to need a financial plan. Consider it a roadmap to reach your financial goals, whether that’s to pay off debt, build savings, or make a large purchase.
  • Ask for help if you’re struggling. Given the scale of this economic crisis, the government, lenders and creditors are trying to work with borrowers through this difficult time. Don’t hide from creditors – that can make things worse.
  • Focus on what you can control. You can’t predict or control the market, but you can control how you manage your investments, your savings rate, having a financial plan and how you react to events.

“The need for financial literacy is especially urgent for women and minorities, who continue to face unique challenges at home and in the workplace,” said Schwab-Pomerantz.

However, financial literacy isn’t a cure-all, but it is an essential key to unlocking doors to opportunity and financial security.

References:

  1. https://www.schwab.com/resource-center/insights/content/americans-want-financial-literacy-now?SM=URO#sf237483690
  2. https://pressroom.aboutschwab.com/press-releases/press-release/2020/Charles-Schwab-Financial-Literacy-Survey-Exposes-Grave-Impact-of-Lack-of-Financial-Education-During-COVID-19/default.aspx

Melatonin and COVID-19

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Researchers at the Cleveland Clinic, using AI, found that those who regularly took the sleep hormone melatonin were about 28 percent less likely to test positive for COVID—with Black patients showing an even greater reduced likelihood of 52 percent.

Through the use of artificial intelligence, results from a Cleveland Clinic led study suggests that melatonin, a hormone that regulates the sleep-wake cycle and is commonly used as a sleep aid, may be a viable treatment option for COVID-19.

Melatonin supplements are commonly recommended by many health professionals to help induce sleep, according the the Cleveland Clinic. Research has found that taking melatonin in low doses is the most effective way to promote sleep if you are experiencing restlessness, sleeplessness or insomnia.

Melatonin naturally produced by our bodies

The hormone serotonin (which regulates mood, appetite and memory) is produced during the day and this changes to melatonin when it gets dark outside, Cleveland Clinic reports. Peak levels of melatonin are produced before 3 a.m., when it sharply decreases before natural daylight returns.

Researchers at the Cleveland Clinic were able to sort through data on over 27,000 patients in a COVID-19 registry to find any commonalities. Interestingly, results showed that those who regularly took melatonin were about 28 percent less likely to test positive for COVID—with Black patients showing an even greater reduced likelihood of 52 percent.

Researchers admit that they don’t entirely understand what “exact mechanisms” about melatonin provide extra protection against COVID, including whether or not it’s because patients are sleeping better, longer hours, the New York Post reports.

Some studies have shown that melatonin can reduce chronic and acute inflammation. And, a recent study from the University of Toronto published in the journal Diseases found that melatonin could help boost the efficacy of the coronavirus vaccine, calling it a potential “silver bullet” in the fight against the pandemic.

Health experts know that the coronavirus can trigger “a massive inflammatory reaction,” also known as a “cytokine storm,” in the body that can lead to permanent tissue damage, heart injury, acute respiratory distress syndrome (ARDS), organ failure and death, according to a study published in the journal Frontiers in Medicine.

Melatonin can control and reverse this immune response, suggesting it may have beneficial effects in preventing or reducing the inflammation overload.

Short-term use of melatonin has relatively few side effects and is well-tolerated by the majority of people who take it, according to the Sleep Foundation. The most commonly reported side effects are daytime drowsiness, headaches, and dizziness, but these are experienced by only a small percentage of people who take melatonin.

References:

  1. https://consultqd.clevelandclinic.org/melatonin-a-promising-candidate-for-prevention-and-treatment-of-covid-19/
  2. https://health.clevelandclinic.org/melatonin-how-much-should-i-take-for-a-good-nights-rest/#:~:text=It%20is%20sold%20over%20the%20counter%20in%20a,Advertising%20on%20our%20site%20helps%20support%20our%20mission.
  3. https://bestlifeonline.com/melatonin-covid/
  4. https://nypost.com/2020/12/29/scientists-study-melatonin-as-possible-covid-19-treatment/amp/?__twitter_impression=true
  5. https://www.miamiherald.com/news/coronavirus/article248150170.html
  6. https://www.sleepfoundation.org/melatonin

Kaizen – Daily Incremental Change for Better

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Always learning. Continuous improvement…get 1% better everyday.

Lifelong learning, the ongoing, deliberate, and self-motivated pursuit of knowledge can enrich your life and make you a better person every day. When lifelong learning is fused with the practice of Kaizen, or continuous improvement, they form a powerful approach for improving yourself. Kaizen is the practice of improving yourself or a process by taking small, incremental, daily actions, which then forms habits that stick and, ultimately, makes you succeed. The word kaizen simply means “change for better.” In the context of people, it refers to continuous self-improvement.

Kaizen was developed by American businessmen.

The U.S. didn’t have a multi-trillion dollar defense budget and was not financially able to efficiently build new armament factories to fight World War II. A plan was devised to support the war effort to have industries make small, continuous improvements to existing plants and retrofit their factories to build the new weaponry.

This system grew into a business philosophy. Factory floor supervisors were challenged to look for hundreds of small things to improve upon, as there was not enough time or resources to make sudden big changes to their equipment.

America introduced the concept to Japan after World War II in an effort to help rebuild their war devastated economy. The Japanese took this idea and enhanced it. The idea of small, continual, incremental improvements became known as Kaizen.

“When you improve a little each day, eventually big things occur. When you improve conditioning a little each day, eventually you have a big improvement in conditioning. Not tomorrow, not the next day, but eventually a big gain is made. Don’t look for the big, quick improvement. Seek the small improvement one day at a time. That’s the only way it happens — and when it happens, it lasts.”— John Robert Wooden, the “Wizard of Westwood”

The philosophy of Kaizen can be incredibly helpful in your personal and professional lives. Instead of trying to make radical life changes overnight, you should start with small, daily improvements.  

Focus on getting 1% better each and every day.

Small-scale incremental improvements start compounding on the previous day’s accomplishment. At first, the changes will seem inconsequential. Gradually, you’ll start to notice improvements. Over time, there will be profound positive changes. One percent compounds each day and doubles every 72 days.

Find something that you’d like to improve upon and try to do 1% better than the day before. Don’t get tempted or become impatient and rush headfirst into everything all at once. Your mantra should be to take it slow, steady, consistent and focus on doing things a little bit better than you did the day before.

Just like you shower, floss and brush your teeth, and comb your hair every day, incorporate Kaizen self-improvement techniques into your daily routine, and you will be amazed at the long-term and lasting results.

Most people want one big quick fix, but these attempts frequently fail. Instead, small improvements produce results that you can see overtime, and this will be gratifying and encouraging.

Lifelong learning combined with becoming 1% better everyday are simple, practical ways to achieve continuous growth and big goals. They’re easy. They’re doable. And they’re applicable to most things you want to learn, do or accomplish in your life.

References:

  1. https://www.forbes.com/sites/jackkelly/2019/01/17/the-practice-of-kaizen-will-help-you-improve-1-per-day-and-lead-to-amazing-long-term-success/?sh=4a01467259a1
  2. https://thriveglobal.com/stories/the-kaizen-approach-to-achieving-your-biggest-goal-the-philosophy-of-constant-improvement/?utm_medium=Twitter&utm_source=Arianna
  3. https://www.inc.com/minda-zetlin/kaizen-continuous-improvement-self-improvement-1-percent-goals-thomas-oppong.html?cid=sf01001

The Novice Investor

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Many successful investors follow this one rule of thumb: Never invest in something you don’t understand.

If you’re new to investing, figuring out how to get started and where to start your investing journey can be challenging. First things first before you invest, set goals, create a financial plan, and save and invest over a long-period-of-time will help put you on a path toward building a strong financial future.

Moreover, it’s important to think about what are the reasons and goals you want to save and invest for in life−a house, an emergency fund, retirement. Then decide your financial priorities and plan accordingly. Keep in mind that when you start early, your money grows through the magic of compounding.

When creating your financial plan, you should also consider paying yourself first and paying off any high-interest debt. For example, the interest rate on credit cards is often far higher than the returns you can expect from your investments. No investment strategy pays off as well as, or with less risk than, eliminating high interest debt.

The first steps to successful investing include:

  1. What is your current cash flow (income – expenses) and net worth (assets – liabilities)?
  2. How much are you going to invest?
  3. For how long? What are your financial goals?
  4. Do you understand your tolerance for risk? All investments carry some risk.

You’re money can grow when you save and invest wisely.

The actions toward financial freedom and building wealth include three basic steps: first, pay off high-interest debt; second, set goals and make a financial plan; and third, start saving and investing early and often.

Knowing how to secure your financial well-being is one of the most important things you’ll ever need in life. And, you don’t have to be a financial genius to do it. You just need to know a few basics financial rules, create a plan, and be prepared to stick to it. No matter how much or little money you have, the important thing is to focus on getting started, to become financially literate and to educate yourself about your opportunities.

As a first-time investor, you should always ask yourself a few questions before you commit your hard-earned money and capital to an investment. In addition, new investors should check the background of anyone or any company promoting an investment opportunity, even before learning about opportunity itself.

  1. Do you understand the investment? Many successful investors follow this simple rule: “Never invest in something you don’t understand.” Be sure to always read an investment’s prospectus or disclosure statement carefully. If you can’t understand the investment and how it will help you make money, ask a trusted financial professional for help. If you are still confused, you should think twice about investing.
  2. How do the risks compare with the potential rewards? Can you afford to lose the money or capital you are about to invest? The potential for greater returns comes with greater risk. Understanding this trade-off between risk and reward can help you since investments with greater risk may offer higher potential returns, but they may expose you to greater investment losses. Keep in mind every investment carries some degree of risk.
  3. Where can you turn for help? Whether checking out an investment professional, researching an investment, or learning about new products or scams, unbiased information can be a great advantage when it comes to investing wisely. Make a habit of using the information and tools on securities regulators’ or third party websites

As a initial step, it’s important to understand your financial goals, the different kinds of accounts, and investments that can get you moving in the right direction.

  • Stocks.  When you buy a stock, you own a piece of a company and its cash flow and profits. Stocks have high growth potential, but with that comes high risk.
  • Bonds. Bonds are loans where you’re the creditor. You lend money to the bond issuer in exchange for repayment with interest by a certain date. Bonds are considered moderate-risk investments.
  • Cash. Cash in your portfolio can preserve the value of your money when you’re saving for short-term goals. It carries the least risk when it comes to losing money in the short term, but there’s also not much potential for growth and in the long term there is risk of inflation and lost purchasing power.

No one can provide an 100% guarantee that you’ll make money from investing. But if you get the facts about investing and follow through with an intelligent investment plan, you should be able to gain financial security over the long term and enjoy the benefits of managing your money.

No one is born knowing inherently how to save or to invest wisely. Every successful investor starts with learning the basics and getting started. For most people, the only way to attain financial security is to save for the future and invest over a long period of time.

Time after time, people of even modest means who begin the saving and investing journey reach financial security and all that it promises: buying a home, educational opportunities for their children, and a comfortable retirement. If they can do it, so can you.

References:

  1. https://www.investor.gov/introduction-investing/getting-started/five-questions-ask-you-invest
  2. http://investornews.vanguard/getting-started-with-investing/
  3. https://blogs.va.gov/VAntage/68037/serving-americas-veterans-providing-tips-investing-future/
  4. https://www.investor.gov/additional-resources/spotlight/directors-take/military-service-members-immediate-actions-financial

Zoom Calls Aren’t as Private as You May Think | Consumer Reports

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This year has been a challenging year for everyone, throwing just about everything into disarray and forcing people to change the way they live, work and play. Which is where where Zoom come in. Zoom has become one of the primary video conferencing software tools for conducting remote/virtual meetings.

Privacy concerns

Zoom seems to be the video conferencing tool that can do it all. Yet, Zoom does collect and share copious amounts of personal information and data about its users and doesn’t provide a lot of detail about how it’s used for advertising, marketing, or other business purposes, according to Consumer Reports. Users of video conferencing services such as Zoom and Ring Central should think about data-privacy concerns similar to other online platforms such as Facebook or Google.

Most people on Zoom calls don’t realize how much information the company and a host can gather. Depending on what tier of service—from a free option to advanced levels for big companies—a host can make a recording of the conference, have it transcribed automatically, and share the information later with people who aren’t in the meeting.

the free and low-cost versions are also being used by individuals for everything from therapy sessions to video lessons with guitar legends to informal gatherings.

Look at the privacy issues from two perspectives. The first thing to understand is what information Zoom itself can collect, and what it can do with the information. Then there’s the information that the meeting host gets and how it can be shared.

Individuals can take some measures to safeguard their privacy by changing the way they use the service. But Consumer Reports’ advocates say that Zoom should also improve the platform’s privacy practices.

Zoom’s privacy policy is similar to many digital platforms’, claiming the right to collect and store personal data, and share it with third parties such as advertisers.

In Zoom’s case, that extends to what the company calls customer content, or “the content contained in cloud recordings, and instant messages, files, whiteboards … shared while using the service.”

Videos aren’t off-limits, according to the document, and neither are transcripts that can be generated automatically, the documents you share on your screen, or the names of everyone on a call.

Your instant messages and videos could be used to target advertising campaigns or develop a facial recognition algorithm, like videos collected by other tech companies “Zoom isn’t necessarily doing anything users would object to” with the data, says Bill Fitzgerald, a Consumer Reports privacy researcher who analyzed the company’s policies. “But their terms of use give them a whole lot of leeway to collect information and share it, both now and in the future.”

Zoom Hosts

Zoom video conferences are started by what the company calls a “host.” Unlike other services you may have used, Zoom provides the host with rights that might not be immediately apparent to other participants.

A Zoom host can be someone you know, like a friend, an employer, a client, a school official, or a relative stranger from a social gathering. “Zoom puts a lot of power in the hands of the meeting hosts,” says Justin Brookman, director of privacy and technology policy at Consumer Reports. The host has more power to record and monitor the call than you might realize if you’re just a participant, especially if he or she has a corporate account. There are a few things you should know when you’re on a call.

When the video is being recorded, a small red button pops up along with the word “recording” in small type. If a host records a conference, the video could be passed around the same way any video makes the rounds on social media. For that reason, Consumer Reports is recommending that Zoom require participants to click on a consent button before recording can begin. Zoom already has this feature available, but it’s off by default.

Zoom provides hosts with a feature that appears quite intrusive. The host can turn on “attention tracking” to monitor whether any participant clicks away from the Zoom window for more than 30 seconds while a screen is being shared.

CR’s and other online privacy experts have some advice for enhancing your privacy while using Zoom.

  • Keep your camera and mic turned off unless you’re actually speaking. If you feel that you need to have the camera turned on, choose a photo as the background for your video.
  • Do not use Facebook to sign in since it is a poor security practice and dramatically increases the amount of personal data Zoom has access to.
  • Keep your Zoom app updated.
  • Prevent intruders and Zoombombing on your calls: Before you set up a public Zoom call, go to Settings and turn Screen Sharing to “Host only,” disable “Join Before Host,” disable “Allow Removed Participants to Rejoin,” and disable “File Transfers.” If practical, you should also protect your conference call with a password.

References:

  1. https://www.consumerreports.org/video-conferencing-services/zoom-teleconferencing-privacy-concerns/
  2. https://protonmail.com/blog/zoom-privacy-issues/

Social Security at 62

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31% of women and 27% of men tapped into Social Security at age 62.

FIDELITY VIEWPOINTS – 07/28/2020 7 MIN READ

You can start collecting your Social Security retirement benefits at any age from 62 to 70, and when you do so affects how big the checks will be. Start earlier, and you’ll receive smaller checks; delay, and you’ll receive bigger ones.

Key takeaways

  • If you claim Social Security at age 62, rather than wait until your full retirement age (FRA), you can expect up to a 30% reduction in monthly benefits.
  • For every year you delay claiming Social Security past your FRA up to age 70, you get an 8% increase in your benefit. So, if you can afford it, waiting could be the better option.
  • Health status, longevity, and retirement lifestyle are 3 variables that can play a role in your decision when to claim your Social Security benefits.
  • After you reach full retirement age, you have the option of temporarily suspending your benefits. During a suspension you can rack up delayed retirement credits, which will increase your eventual payments.

When it comes to Social Security, it is tempting to take benefits as soon as you’re eligible at age 62. In 2018, 31% of women and 27% of men tapped into Social Security at age 62. After all, these men and women have been paying into the system for all of their working life, and they’re ready to receive their benefits (guaranteed monthly income).

Health status, longevity, and retirement lifestyle

Health status, longevity, and retirement lifestyle are 3 key factors that can play a role in your decision when to claim your Social Security benefits. No one can predict the true impact of these variables, but you can rely on the simple fact that if you claim early versus later, you will likely have lower benefits from Social Security to help fund your retirement over the next 20-30+ years.

The earliest age you can sign up for Social Security is 62, and if you go that route, you’ll permanently shrink your monthly benefit by 25% to 30%, depending on your full retirement age. But in spite of that, it still may pays to sign up for benefits at 62.

One of the best reasons to take Social Security at 62 is if you’ve got a serious illness or chronic medical conditions. As with all retirement planning, you’re acting like an amateur actuary, predicting your own life expectancy to determine how long you’ll need your money to last.

Research shows that the more chronic conditions you have, the shorter your lifespan is likely to be. A 2014 study by researchers at Johns Hopkins University showed that a 67-year-old individual with no chronic conditions will live on average 22.6 years (almost to 90) but that a person of that age with five chronic conditions will live on average 7.7 fewer years than the healthy 67-year-old.

Those chronic conditions included heart disease, cancer, chronic obstructive pulmonary disease, stroke and Alzheimer’s disease. Other common chronic illnesses, according to the Chronic Conditions Data Warehouse, which uses data from Medicare and Medicaid, include hypertension, arthritis, diabetes and kidney disease.

You’ve saved enough that filing early doesn’t matter

If you have more than enough money in your IRA or 401(k) to live comfortably throughout retirement, filing at 62 may not hurt you financially. And, you should consider taking your money and use it to enjoy the early part of your later years. Your benefits could make it possible to travel or do the many things you’ve always dreamed of doing. If claiming Social Security early won’t hurt you in the long run, why not go for it.

Investing your benefits

With investing, there are no guarantees, but if you’re a seasoned investor and are confident in your ability to make a lot of money by putting your Social Security benefits to work, then claiming them at 62 could be a good idea.

Working during retirement

Working during retirement could raise your provisional income, and the higher that income, the more likely you are to have your Social Security benefits taxed. Provisional income is what’s used to determine whether your Social Security benefits will be subject to federal taxes. It’s calculated by taking all of your non-Social Security income and then adding in 50% of your annual benefits. If that total falls between $25,000 and $34,000 and you’re a single tax filer, you could be taxed at the federal level on up to 50% of your Social Security benefits. If it exceeds $34,000, up to 85% of your benefits could be taxed.

The average amount spent in retirement by Americans 65-74 is $55,000 a year. The average Social Security check is $14,000 a year. Only 23 percent of boomers ages 56-61 expect to receive income from a private company pension plan, and only 38 percent of older boomers expect a pension. As for personal savings, most boomers have not saved nearly enough and 45% of boomers have zero savings for retirement.

Change your mind

If you develop filer’s remorse, Social Security gives you 12 months from the date you applied for retirement benefits to change your mind and cancel that initial claim. You’ll have to repay what Social Security has already paid you (and what it has paid your spouse and kids, if they’re collecting family benefits on your record), but this way you can refile later at full retirement age and get your full benefit.

There is one circumstance in which Social Security raises your payment at full retirement age, although probably not to 100 percent of your full benefit. That’s if they withheld some of your benefits during early retirement because you had work income that exceeded Social Security’s earnings limit. In this case, they recalculate your benefit at full retirement age to help you recoup those losses

You Have Minor Children

If you have children, eligible grandchildren, or even a spouse providing care for these children at home, these family members may be eligible for a benefit. Just know you will have to file first before they can receive it!

There’s a rule that states that before benefits can be paid to anyone off of your work record, you have to be receiving benefits. That means filing early could make more sense than waiting.

When combined with your benefits, the benefits to children and your eligible spouse can be up to 180% of your full retirement age benefit. If you have children at home that meet the criteria for eligibility, that’s an obvious reason to consider filing early.

Let’s look at an example to illustrate this.

Say you’re 62 and your wife is 50. You have two children, ages 13 and 11. Thanks to good savings habits throughout your working career, you don’t need Social Security income and can be flexible when you file.

Take into account the benefits paid to your children.

While your children would be eligible for benefits based upon your retirement, the kids cannot get benefits until you file. That means your family would able to collect thousands of dollars more in lifetime benefits if you file early and turn on the benefits for your kids.

File and suspend

Lawmakers made changes to benefits available to Social Security participants who waited until full retirement age to claim benefits. Among them were the repeal of the restricted application or file-as-a-spouse-first strategy and the file-and-suspend strategy. Under a restricted application, those who reached full retirement age could elect to claim only spousal benefits, leaving their own retirement benefits untouched. Similarly, using file and suspend, someone at full retirement age or older could file for benefits but immediately suspend them and still allow a spouse to claim spousal benefits.

As a result of these legal changes, there’s no longer as much incentive for married couples to wait until full retirement age — currently age 66 — to claim their benefits. The thousands of dollars that these couples will no longer be eligible to receive could be enough to push the balance toward claiming earlier rather than waiting.

When to claim Social Security is a tough decision that involves plenty of variables. But even though many financial planners urge their clients to think twice before claiming benefits at the earliest possible age, there are situations where it makes more sense to go ahead and take Social Security at 62 rather than waiting.

References:

  1. https://www.fidelity.com/viewpoints/retirement/social-security-at-62#:~:text=If%20you%20start%20taking%20Social%20Security%20at%20age,FRA.%20Remember%2C%20FRA%20is%20no%20longer%20age%2065.
  2. https://www.fool.com/retirement/2020/10/08/why-working-during-retirement-could-hurt-you-from/
  3. https://www.fool.com/retirement/2020/09/07/3-great-reasons-to-take-social-security-benefits-a/

Online Security

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With more people than ever shopping online this holiday season, scams are an even bigger risk.

Always look for the little lock symbol or “https” is the web address. That lets you know your traffic to and from the webpage is encrypted. Encryption is standard these days for any kind of e-commerce site. If you don’t see it, it could mean you’re on the wrong site, according to Consumer Reports.

It’s more important than ever to use strong passwords

A strong password isn’t always enough to keep your personal and financial information safe. Many security experts recommend safeguarding your accounts with another layer of defense, namely multifactor authentication (MFA…aka two-factor authentication).

When you turn on MFA, which is available for financial sites, social media sites, and many others, you need a second factor in addition to your password to log in. That way, if a hacker gets your password, they still won’t be able to access your account. Probably the most common way to use MFA is to have the site send you a text message with a code that you enter into a pop-up box.

To beef up your password security, many experts recommend using an authentication app.

Cut down on data collection and prevent hackers from invading your laptop, tablet and even your phone. To do a thorough digital cleanup, there’s a free wonderful tool called #SecurityPlanner developed by internet watchdog group @citizenlab, now run by @ConsumerReports:

  • Safely backup files
  • Browse online without tracking
  • Avoid phishing scams
  • Prevent identity theft

https://twitter.com/manjaselva/status/1331366229840424967?s=21

References:

  1. https://www.consumerreports.org/digital-security/use-authentication-apps-for-multifactor-security/?EXTKEY=YSOCIAL_TW

Top Money Resolutions for 2021 | Experian

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It’s no surprise that many of us will be eager to say goodbye to 2020 so we can start fresh in 2021. But as the economic and personal effects of the COVID-19 pandemic continue to weigh heavily on Americans, the kinds of resolutions needed might be a little different this year.

Maybe you dealt with or are still dealing with a period of unemployment or poor health. Maybe your saving and budgeting priorities have shifted. If you’re hoping to overhaul your finances, or at least revisit them in the new year, here are some options to consider.

(Re-)Build Your Emergency Fund

Some consumers found they had fewer ways to spend their money during lockdown this year, while others dipped into or cleared out savings to make up for lost income. Wherever you stand, it’s a good idea to take stock of your savings. The effects of the pandemic are a reminder that it’s never a waste of time to consider how to protect yourself from a financial curveball.

Experts say it’s best to save at least three months’ worth of expenses in an account you can easily access in case of financial necessity. Your emergency fund can help you pay for basic items like food, housing and utilities during an emergency like job loss, or if you’re on the hook for surprise medical bills.

Set up an automatic transfer now, of as little as $25 or $50 a month if necessary, to get yourself in the habit of saving. And if you receive a tax refund in 2021, consider putting at least a portion of it toward emergency savings to kick-start the fund.

Look Into Refinancing Your Mortgage or Student Loan

In an attempt to restabilize the economy after the shockwaves of business closures and unemployment due to COVID-19, the Federal Reserve set interest rates near zero. Mortgage rates and federal student loan interest rates both hit record lows in 2020.

That means it’s a good time to consider refinancing your mortgage to a lower rate if you qualify. You’ll still have to pay closing costs of 2% to 6% of the loan amount, on average, when you refinance. But by using an online mortgage calculator, you can determine whether the lower rate you may receive will make the cost worth it.

Refinancing student loans is only possible through a private lender, which means you’ll lose federal loan benefits like Public Service Loan Forgiveness and long periods of forbearance. But getting a lower interest rate might also be worthwhile if you have high-rate private student loans, or you have stable income and don’t plan to use the protections available on your federal loans.

Double Down on Retirement Savings

Just 58% of working-age adults had any retirement savings in a 401(k) or individual retirement account (IRA) in 2016, according to an analysis of federal data by the Economic Policy Institute. That means a sizable number of individuals could stand to save more for retirement. And if you lost a job or took a pay cut in 2020, your workplace retirement savings might have been hit particularly hard.

If you’re able to, start contributing to a retirement plan or up your savings rate to ensure a comfortable retirement. An ideal aim, recommended by experts, is to save 15% of your pretax income for retirement each year. Your best first step is to save at least as much as your employer will match in your 401(k), if that’s an option at your workplace. Increase your savings rate by 1% or 2% in 2021 to get as close to that guideline as possible.

Make Sure Your Credit Card Fits the Bill

There are lots of reasons to reconsider the plastic you’re carrying in the new year. If you accrued debt to help pay bills or finance a small business during 2020, consider moving the balance to a balance transfer credit card. If you qualify, usually with a good or excellent credit score, you’ll receive a period of time to pay off the balance transfer interest-free: 18 months and you’ll pay a lower fee on the transferred amounts.

Another possibility is that you’re carrying a credit card with a high annual fee that you no longer use. Canceling the card might not be your best bet, since it could lead to a dip in your credit score due to a higher credit utilization ratio. Instead, ask the issuer to switch to a credit card from the same company with no annual fee.

Save for the Trip You’ve Been Dreaming Of

For many people, “travel” in 2020 meant carrying the laptop from the desk to the couch. Still others worked essential jobs or otherwise put travel far from their minds while safety was a top priority. But COVID-19 vaccine availability could make travel an option for a wider group of people in 2021.

That means it’s a good time to think about how you’ll pay for it, even if you don’t plan to fly until mid-2021 or later. Setting up a separate savings account—or subaccount, if your bank offers that feature—just for travel or fun stuff can help motivate you to save. Your employer may even be able to direct-deposit a portion of your earnings into an account that’s separate from your main checking account, if you have a particular goal you’re eager to hit.

Also consider using credit card rewards points to fund travel. Perhaps you’ve continued to use your card but haven’t applied the points to gift cards or statement credits as many issuers have allowed. In that case, you may have a surplus of points to use. It might be ideal to wait it out and apply those points to any hotel or airline deals that arise when companies urge consumers to travel again.