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Credit Card Mistakes You Could Be Making

by Scott Darling


There are practical
 uses for credit cards, such as rewards points, cash back on purchases, and airline miles to name a few.  Having a credit card can also have drawbacks if you’re not responsible with that piece of plastic.  Read on to see if you’re making any of these mistakes… 

 

  • Paying the minimum payment every month keeps your credit score in check, but the interest added to the balance can make a negative impact on your credit.  Pay as much as you can afford over the minimum billed amount, or, better yet, pay off the balance each month. 
     

  • Late payments not only damage your credit, but if you’re sending it late every month, the late fees and interest on the balance will max that credit card out, and it could take years to pay it off.  Set up an auto-pay plan or mail your payment a week in advance of the due date. 
     

  • Spending just to receive rewards is a good way to get you into credit trouble!  Sure, those rewards are great, but they’re usually a small percentage of your purchases.  The added interest will be far more than any rewards you’re seeking and will cost much more in the end. 
     

  • Cash advances may seem like help, but the interest on them starts as soon as that money is in your hand, and there are usually extra fees involved.  Cash advances are essentially cash loans and are treated as such.  Beware of “convenience” checks your card company offers to you because they are cash advances in disguise. 
     

  • Maxing out your balance, or worse, spending over your credit limit, is a good way to reduce your credit score.  The over-balance fees are tremendous, and not having any available credit left on the card will affect the credit utilization ratio. 
     

  • Tossing your statement without reading it can cause you to miss important announcements from the company, as well as fraudulent activity, or changes in your minimum payment due. 
     

  • Using your credit card at the grocery store or to pay utility bills will help in an urgent situation, but only if you can pay the full balance at the end of the month.  If you’re using a credit card for everyday purchases, it’s time to get your finances under control. 

 

Don’t let mistakes cost you money and a good credit rating!  Keep your balance less than 30% of your credit limit, maintain a manageable monthly payment, and your credit report will benefit.  Credit cards are good tools to use to build credit or keep your score high, but only if used wisely.   

 

Courtesy of Chester County PA Realtor Scott Darling.

Photo credit: mirror

How To Select An Elder Law Attorney

by Scott Darling

When you are confronting a difficult life issue, you routinely seek guidance from someone who can help you to solve the problem.  So, it stands to reason that when you or a family member are confronting the potential or immediate need for long term nursing care, you will want someone experienced with the related planning opportunities on your side.  Elder Law attorneys counsel the elderly and their families through all of the important legal considerations they encounter through the phases of the aging process.  Elder Law attorneys typically handle legal matters related to preparation of estate planning documents, health care, nursing care planning, and asset protection, guardianship and Medicare/Medicaid.

It is important to select an attorney with a practice that focuses on issues confronting older adults.  This should not be a general practice attorney who dabbles in “preparing simple wills” or even an estate planning attorney who does not regularly deal with your specific concerns on a regular basis.  Don’t be afraid to interview a potential Elder Law advocate to make sure they have the proper experience and can help you to obtain the best result.

Not only should an Elder Law attorney be able to handle all of the technical and legal needs of the family, but they should also be experienced in dealing with “real people” and their emotional needs.  Protecting and providing for the family are central goals for all of us.  That being said, much of the planning for protection of assets in the face of the rising cost of long term nursing care involves emotional decision making for all people involved.  You need to have an advocate who is calm and comforting, but who is also willing to lay out the hard facts of the situation so you can have a full array of options and consequences.

What Are Some Of The Jobs Of The Elder Law Attorney?

An Elder Law attorney’s role can involve some or all of the following:

  • Working with clients to prepare properly drafted estate planning documents such as wills, revocable trusts, general durable powers of attorney, medical powers of attorney and living wills.
  • Working with clients to prepare and implement a plan to protect and preserve their home and financial assets so that they are not lost to long term care spending.
  • Working with clients to integrate estate and inheritance tax planning and savings into the overall approach.
  • Working with clients to select an appropriate assisted living, continuing care or nursing care facility.
  • Working with clients to review admissions agreements for care facilities.
  • Working with Agents under power of attorney documents to make sure they do not incur personal liability.
  • Working with clients to apply for Medicaid.
  • Working with clients to apply for Veterans’ Benefits such as Aid & Attendance.
  • Working with the family to make sure that all of the parties understand the plan and agree with the way it will be implemented.

Elder Law Attorneys Will Charge For Their Services.  What Are Their Fees?

The legal fees associated with assisting the elderly client will vary significantly depending on the tasks that need to be completed.

For aspects of the representation that involve work with an uncertain time commitment, an attorney is likely to charge on an hourly basis.  In these cases, you should ask for a good faith estimate on the time expenditure and hourly rate.  You can also provide the attorney with a cap at which point he or she must report to you before spending more time/charging more.

For more comprehensive plans, like the protection of family wealth through the use of a Medicaid Asset Protection Trust, flat fee planning is best for the client.  This allows you to know the fee upfront without the uncertainty of hourly billing.  Additionally, a flat fee structure creates an open sense of collaboration and communication without concern for hourly billing.

In the end, the planning done by the Elder Law attorney can result in tens or hundreds of thousands of dollars of savings for the family.  The return on investment in an experienced Elder Law counsel should be significant and well worth the effort once you have located the right advocate.

What Do You Need To Know About Your Elder Law Attorney?  Here Are Some Questions To Ask:

It is important to find an attorney who is experienced in dealing with your exact legal issue.  “Elder Law” does encompass a broad range of legal issues.  It is possible that a single attorney has not covered every issue in the Elder Law universe.  Just check with them to make sure your case fits within their wheelhouse.

Additionally, you will want to “like” the person you hire.  You should be able to get a sense from the attorney and all of the people you talk to at the law firm that their team will be a good fit for you and your family.  You will want someone you feel comfortable calling and a staff of individuals who are willing to go the extra mile for you.

Here are some questions you should ask:

  • Is your practice focused on the Elder Law related issues?
  • How long has your practice been focused on Elder Law?
  • What percentage of your practice is presently devoted to Elder Law?
  • Is there an aspect of Elder Law that you would consider your forte?
  • Do you have a client intake form that I will need to fill out in advance of meeting?
  • What is your fee structure?

Generally, you have to view hiring your Elder Law counsel to be the same as entering into a relationship.  You have to trust your attorney to help you and your family through delicate issues and to provide advice that could ultimately protect hundreds of thousands of dollars.  This selection will be a key to achieving a successful completion of your goals.

Once you have selected the proper Elder Law attorney, some of the other most common planning considerations are:  Creation of Last Will & Testament, Creation of a Medicaid Asset Protection Trust, use of a Medicaid Compliant Immediate Annuity, qualification of the Family Caregiver Exception, creation of the Caregiver Agreement, Irrevocable Burial Reserve, Monthly Gifting Exception, Elder Law Friendly Financial Power of Attorney, Medical Power of Attorney, Living Will.

Check out our other great articles throughout this site that more specifically address the different ways to protect and preserve your assets.  Click here:  Access to More Blog Articles

For PA Residents:  To request our informative Elder Law Guides click here:  Request Elder Law Guides Today!

To keep up-to-date with changing laws and new planning options sign up for our free newsletter by clicking here:  Subscribe to our Newsletter Here!

By and photo credit: https://www.paelderlawsolutions.com/2017/04/how-to-select-an-elder-law-attorney/

Courtesy of Chester County PA Realtor Scott Darling.

Common Factors Affecting Retirement Income

by Scott Darling

When it comes to planning for your retirement income, it’s easy to overlook some of the common factors that can affect how much you’ll have available to spend. If you don’t consider how your retirement income can be impacted by investment risk, inflation risk, catastrophic illness or long-term care, and taxes, you may not be able to enjoy the retirement you envision.

Investment Risk

Different types of investments carry with them different risks. Sound retirement income planning involves understanding these risks and how they can influence your available income in retirement.

Investment or market risk is the risk that fluctuations in the securities market may result in the reduction and/or depletion of the value of your retirement savings. If you need to withdraw from your investments to supplement your retirement income, two important factors in determining how long your investments will last are the amount of the withdrawals you take and the growth and/or earnings your investments experience. You might base the anticipated rate of return of your investments on the presumption that market fluctuations will average out over time, and estimate how long your savings will last based on an anticipated, average rate of return.

Unfortunately, the market doesn’t always generate positive returns. Sometimes there are periods lasting for a few years or longer when the market provides negative returns. During these periods, constant withdrawals from your savings combined with prolonged negative market returns can result in the depletion of your savings far sooner than planned.

Reinvestment risk is the risk that proceeds available for reinvestment might have to be reinvested at an interest rate that’s lower than the rate of the instrument that generated the proceeds. This could mean that you have to reinvest at a lower rate of return, or take on additional risk to achieve the same level of return. This type of risk is often associated with fixed-interest savings instruments such as bonds or bank certificates of deposit. When the instrument matures, comparable instruments may not be paying the same return or a better return as the matured investment.

Interest rate risk occurs when interest rates rise and the prices of some existing investments drop. For example, during periods of rising interest rates, newer bond issues will likely yield higher coupon rates than older bonds issued during periods of lower interest rates, thus decreasing the market value of the older bonds. You also might see the market value of some stocks and mutual funds drop due to interest rate hikes, because some investors will shift their money from these stocks and mutual funds to lower-risk fixed investments paying higher interest rates compared to prior years.

Inflation Risk

Inflation is the risk that the purchasing power of a dollar will decline over time, due to the rising cost of goods and services. If inflation runs at its historical long-term average of about 3%, the purchasing power of a given sum of money will be cut in half in 23 years. If it jumps to 4%, the purchasing power is cut in half in 18 years.

A simple example illustrates the impact of inflation on retirement income. Assuming a consistent annual inflation rate of 3%, and excluding taxes and investment returns in general, if $250,000 satisfies your retirement income needs this year, you’ll need $257,500 of income next year to meet the same income needs. In 10 years, you’ll need about $335,979 to equal the purchasing power of $250,000 this year. Therefore, to outpace inflation, you should try to have some strategy in place that allows your income stream to grow throughout retirement.

Long-Term Care Expenses

Long-term care may be needed when physical or mental disabilities impair your capacity to perform everyday basic tasks. As life expectancies increase, so does the potential need for long-term care.

Paying for long-term care can have a significant impact on retirement income and savings, especially for the healthy spouse. While not everyone needs long-term care during their lives, ignoring the possibility of such care and failing to plan for it can leave you or your spouse with little or no income or savings if such care is needed. Even if you decide to buy long-term care insurance, don’t forget to factor the premium cost into your retirement income needs.

A complete statement of coverage, including exclusions, exceptions, and limitations, is found only in the long-term care policy. It should be noted that carriers have the discretion to raise their rates and remove their products from the marketplace.

The Costs of Catastrophic Care

As the number of employers providing retirement health-care benefits dwindles and the cost of medical care continues to spiral upward, planning for catastrophic health-care costs in retirement is becoming more important. If you recently retired from a job that provided health insurance, you may not fully appreciate how much health care really costs.

Despite the availability of Medicare coverage, you’ll likely have to pay for additional health-related expenses out of pocket. You may have to pay the rising premium costs of Medicare optional Part B coverage (which helps pay for outpatient services) and/or Part D prescription drug coverage. You may also want to buy supplemental Medigap insurance, which is used to pay Medicare deductibles and co-payments and to provide protection against catastrophic expenses that either exceed Medicare benefits or are not covered by Medicare at all. Otherwise, you may need to cover Medicare deductibles, co-payments, and other costs out of pocket.

Taxes

The effect of taxes on your retirement savings and income is an often overlooked but significant aspect of retirement income planning. Taxes can eat into your income, significantly reducing the amount you have available to spend in retirement.

It’s important to understand how your investments are taxed. Some income, like interest, is taxed at ordinary income tax rates. Other income, like long-term capital gains and qualifying dividends, currently benefit from special—generally lower—maximum tax rates. Some specific investments, like certain municipal bonds,* generate income that is exempt from federal income tax altogether. You should understand how the income generated by your investments is taxed, so that you can factor the tax into your overall projection.

Taxes can impact your available retirement income, especially if a significant portion of your savings and/or income comes from tax-qualified accounts such as pensions, 401(k)s, and traditional IRAs, since most, if not all, of the income from these accounts is subject to income taxes. Understanding the tax consequences of these investments is important when making retirement income projections.

Have You Planned for These Factors?

When planning for your retirement, consider these common factors that can affect your income and savings. While many of these same issues can affect your income during your working years, you may not notice their influence because you’re not depending on your savings as a major source of income. However, investment risk, inflation, taxes, and health-related expenses can greatly affect your retirement income.

By and photo credit: www.key.com/kpb/our-insights/your-lifestyle/factors-affecting-retirement-income.jsp?CMP_ID=RTXKPB1018

Courtesy of Chester County PA Realtor Scott Darling.

Confused about the differences between these types of plans? Let’s take a look.

First, understand that Medicare generally pays about 80%, and the rest is up to you. That’s where Medicare advantage plans or medigap plans make up the difference.  For Medicare quotes for your area, click HERE

Medicare Advantage Plans:

  • Are also referred to as part C. These plans REPLACE Original Medicare. In other words, instead of using original Medicare to see doctors or go to facilities, you have a private insurance plan that replaces parts A & B.
  • Advantage plans combine parts A & B, and sometimes part D (part D is Prescription drug coverage), and must provide as much services or more than original Medicare
  • May include extras such as dental, vision, hearing, fitness & wellness programs. Some Advantage plans have prescription coverage built in as well
  • Are usually in the form of HMO, PPO, Medical Savings accounts and Private fee for service type plans. Except for emergencies, HMO plans typically require the beneficiary to obtain referrals to see specialists and require them to use a network of providers. PPO plans allow for coverage outside of a network, usually at higher cost sharing to the beneficiary
  • Are guaranteed issue for most Medicare beneficiaries, but can only be signed up for at certain times of year

Medigap Plans:

  • Also referred to as Medicare supplement plans. You remain on ‘Original Medicare’ and the plans supplement to pay all or some of the “gaps” (or costs) that Parts A & B do not pay, such as deductibles, co-payments and coinsurance
  • Medigap plans do not have networks or require referrals. Any Doctor, hospital or facility that accepts Medicare in the United States is covered.
  • Are standardized. In other words, all Plan G Medigap plans offer the same standardized benefits, no matter what company issues them. Usually, the only difference is price, however, some plans may have some value-added services such as fitness benefits.
  • Do not include Prescription drug coverage (except for some old plans that are no longer offered to new enrollees) If a Medicare beneficiary would like prescription coverage he or she would need to buy a separate Part D policy.
  • Unlike Medicare Advantage policies which can only have rate increases once a year, can have rate increases at any time.
  • Have no annual enrollment period, and can be applied for any time of year (however you may not be able to disenroll in an advantage plan if you are currently in one or add a prescription plan depending on the time of year)
  • Are only guaranteed issue at certain times, such as when you initially reach age 65. Most other times, they are medically underwritten and a beneficiary could see a higher rate or even be declined.

Courtesy of Chester County PA Realtor Scott Darling.

By: David Kring, regardingwealth.com

It’s That Medicare Time of Year Again

by Scott Darling

** October 15th starts the Annual enrollment period for Medicare, the following is an updated reprint of this article originally from 2015.

For help with Medicare advantage, Medigap and Prescription drug plans click HERE

You’ve reached that magical age of 65, Congratulations, you are now Medicare eligible.

But, where to start?? It can be one of the most confusing and consequential choices folks make in their retirements.  It may be the only time that you have certain guarantees of coverage choices, so your choice needs to be informed.

Do you still have coverage at work?  You need to contact the Center for Medicare.  And don’t forget to ask HR if your prescription drug coverage is creditable; you don’t want penalties in the future.  What about the alphabet soup of Medicare letters… Parts A, B, C & D? and what about those letters in the Medigap supplement universe that go further up into the alphabet?

Read more at Conestoga Wealth Management

 

The Quality of RE/MAX Agents Is On Display Once Again

by Scott Darling

remax

In the 2016 Franchise Times 200 ranking released recently, RE/MAX not lead all real estate brands for the eighth consecutive year, but also climbed to the Top 10 overall – in 8th place ahead of household names such as Marriott, Wendy’s, and Domino's.

Meet Scott Darling Chester County PA Realtor

by Scott Darling

Meet Scott Darling Chester County PA Realtor

Check out my new introduction video. Be sure to watch all the way to the end...

Millennials: 3 Financial Priorities That Shouldn't Wait

by Scott Darling

millenials

Millennials are frequently criticized for needing instant gratification, but recent reports point out that they actually have more patience than previous generations. Both the U.S. Census Bureau and Centers for Disease Control and Prevention (CDC) say millennials are delaying getting married and starting a family by almost a decade.

And it's not just life decisions millennials are postponing; this behavior is also prevalent in their financial decisions. According to a recent survey from Bankrate.com, millennials are putting off important financial moves due to high levels of student debt.

"Knocking out debt should be a priority when you are young, but it's also important to balance that with other key financial priorities," says JJ Montanaro, a financial planner with USAA. "Time is your number one ally when planning for the future and delaying now may cost you more in the long run."

Montanaro highlights the three main financial priorities millennials shouldn't hit the pause button on:

Life Insurance

A recent survey found that one in three millennials acknowledge they need additional life insurance coverage. However, most aren't purchasing it because they think it's too expensive or because they have other financial priorities.

While millennials may not immediately reap the benefits of life insurance coverage, locking in the cost of life insurance premiums at a young age can pay off in the future. Montanaro explains that life insurance premiums will only increase with age and additional health complications.

With many life changes likely on the horizon, millennials should find a plan that offers term life event options that allow them to easily increase coverage following significant events such as getting married, having a child or buying a home.

Montanaro also points out that life insurance may not cost as much as buyers anticipate. More than eight in 10 people overestimate the cost of a policy. He says a life insurance calculator is a great place to start to understand coverage needs and estimate costs.

Health Insurance

Regardless of overall health or age, it's important to have health insurance and understand what it covers to avoid additional penalties and plan for the unexpected.

Under the Affordable Care Act, not having a qualified health insurance plan can result in a penalty at tax time. Montanaro points out that this penalty has risen to 2.5 percent of household adjusted gross income in 2016, or a flat rate which is expected to rise in the coming years.

For millennials who may not currently have large medical bills or health issues, Montanaro recommends they look at a high-deductible plan with a health savings account (HSA). An HSA allows account holders to set aside pre-tax money for health expenses and free-up some emergency cash when they do eventually need it.

Retirement Investing

Only one-third of individuals aged 18 to 35 say they invest in the market, according to a recent Bankrate.com survey. Montanaro says sitting on the sidelines with retirement savings may result in millennials missing out on the power of compounding returns and may even extend their retirement timeline.

But retirement investing doesn't have to be intimidating. Montanaro recommends starting small with a low-cost mutual fund, such as a target date fund, that allows a low entry point, requires little maintenance and invests in a portfolio that automatically adjusts as retirement gets closer.

The most important step is to get a foot in the door. While USAA recommends investing 10 percent of your income toward retirement, even earmarking 1 percent for the future provides a foundation upon which to build.

This material is for informational purposes. Consider your own financial circumstances carefully before making a decision and consult with your tax, legal or estate planning professional. (BPT)

Election Update: Americans Want Action On Housing and Credit

by Scott Darling

Decisions made by the next President and Congress could change the way Americans buy and sell homes for generations to come. Rising prices are making it more difficult for working families and young adults to become homeowners. Government control over the vast majority of mortgages through Freddie Mac and Fannie Mae unnecessarily exposes taxpayers to risk and continue to stifle the innovation of new lending products that responsible borrowers need and want.

More business as usual?

Depending on who is elected this year’s presidential election could either deliver a mandate for Washington to act on far-reaching reforms integral to our system of housing finance or bring more business as usual.

Here are the priorities Americans want the next President and Congress to address, according to a new research conducted for loanDepot, the nation’s second largest nonbank consumer lender: 

* Make homeownership more affordable for middle- and lower-income families (37 percent).

* Keep interest rates low, especially during the first 100 days of the new presidency (34 percent).

* Make more credit available to small businesses (11 percent).

Few see the election improving their pocketbooks

Most Americans expect their personal financial situation to either stay the same or get worse when new leaders take over the White House and Congress. Only 6 percent think that they will be better off as a result of the election.

Each vote counts

One out of every five Americans said the candidates’ housing and finance policies will influence their vote. Another 40 percent have not yet made up their minds. That is because only 9 percent think the candidates have done a good job articulating their positions on the economic issues that affect peoples’ daily lives.

Perception doesn’t match reality

Some 77 percent think it is just as hard or even harder to get a loan today than during the Great Recession eight years ago. Young adults may be more discouraged than most; they worry about not making enough money and nearly half (46 percent) fear the election outcome will make it even harder to get a loan.

In fact, while guidelines have tightened since 2008, applications for purchase mortgages were more likely to be denied in 2008 than in 2014, the most recent year for which Federal Reserve data is available. Denial rates for home purchase loan applications hit 18 percent in 2008, while denials in 2014 topped out at 13 percent. Denial rates for home refinance applications in 2008 were 38 percent and dropped to 31 percent in 2014.

Find out if you qualify for a home loan

Getting into the home of your dreams may be easier than you think. All you have to do is get pre-qualified by the local lender of your choice. Don’t know a lender? Contact us and we’ll be glad to recommend someone.

5 Tips To Protect Your Identity and Celebrate Refund Season

by Scott Darling

tax refund

Tax refund season is here and there's a lot to celebrate. This tax season, while consumers are eagerly awaiting their refund, tax preparation companies, tax officials and the IRS are working together to combat one of the fastest growing threats for tax season 2016 - tax identity fraud.

Based on IRS data, nearly 3 million people have been victims of tax identity theft since 2010. Every year, criminals use increasingly advanced tactics - particularly geared toward taxpayers filing online - to steal taxpayers' personal information, file fraudulent tax returns in their names and steal their refunds. After fraud occurs, it can take months and multiple steps by the victim to access a stolen refund and regain an identity with the IRS.

Protect your identity - and your refund - with these five tax tips from H&R Block:

 1. File early and be cautious. Filing your taxes early will allow you to claim your refund before a criminal can. Before you file, protect your personal information by installing a security software with anti-virus and firewall protections.

 2. Keep your paper records safe. Shred records you are no longer using and keep your social security card and any sensitive documents under lock and key.

 3. Do not respond to individuals posing as a tax agency. The IRS does not demand immediate payment without sending a bill in the mail first. If you receive a phone call or an email with an external link, do not click on the link or share personal or financial information unless you personally know the person on the other end.

4. Change your password. The 2015 tax season saw a significant increase of tax fraud in the do-it-yourself (DIY) space. When using at-home tax software create a strong password with capitalization, numbers, and symbols or avoid the risk by visiting a tax preparer.

 5. Use tax identity protection services. Visit the IRS website to learn more about how to protect your identity.

This tax season, take away the stress and put the "fun" back in "refund" by filing early. (BPT)

Displaying blog entries 1-10 of 53

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Scott Darling
RE/MAX Action Associates
403 W. Lincoln Highway #101
Exton PA 19341
(610) 594-SCOT
610-363-2001
Fax: (610) 363-5275