[See the Best Places to Retire in 2012.]

One of the key problems with retirement planning is that people dont know where to start, says John Migliaccio, director of research for the Institute. With these 15 tasks theyve got something specific, so if you start anywhere within this list, youre making progress.

As people get older and closer to retirement, they do tend to accomplish many of these things, he says. Doing so gives you more control over your own retirement. Moreover, Migliaccio says, research spanning nearly 20 years has shown remarkable consistency in how well people carry out these tasks, and the ages at which they do so. The deep recession and continuing financial setbacks have not changed the research findings.

The 15 retirement-readiness tasks identified by MetLife are broken into five categories:

Work

1. Decide whether to fully retire, or to work part-time in retirement.

2. Formulate ideas about how much youd like to work in retirement.

3. Determine which skills could be easily transferred to a new part-time job.

[See Retirement Planning: Couples Edition.]

4. Explore what employment possibilities are available if you want to keep working full- or part-time in retirement.

5. Look into alternate career or part-time work opportunities in retirement.

Leisure amp; Activity

6. Determine the proper balance between work and leisure if forced to choose.

7. Identify personal goals in retirement.

Relationships

8. Consider the importance of relationships with co-workers when making a decision to retire.

9. Consider how the various aspects of retirement might positively or negatively affect relationships with family and friends.

Income amp; Benefits

10. Determine the steps necessary to receive company, government, or other benefits in retirement.

11. Evaluate how changes in the economy will affect your pension, investments, and retirement benefits.

12. Assess whether full-time retirement will be financially feasible.

[See How Delaying Retirement Can Help You.]

Planning

13. Determine the factors that are critical to maintaining a satisfying retirement.

14. Develop an alternative plan that could get you through a considerable and unexpected setback in retirement.

15. Evaluate whether your retirement plans meet the demands of personal, social, and financial changes.

Migliaccio says theres no weighting of the tasks. You need to do them all. The most important tasks are the ones you havent done yet, he jokes. However, among equals, he says that when people decide to find out the details of their benefits (Task #10), they have crossed the threshold into serious retirement planning. Once they get that in order, theyre ready to go forward, he says.

People who say they feel prepared for retirement had, on average, completed nine of the 15 tasks. People who did not feel ready had done only three of the things on the list. Overall, about half of the people polled by the Institute said they felt prepared for retirement, and half said they did not feel retirement-ready.

Fortunately, there is a solution to this, but its primary obstacle will be election year politics. The issue will test President Obama and how badly he wants to exploit rising student loan debt for his own political gain.

Congress should prevent the loan rate hike and pay for it by targeting the very root of this increase – a provision in the 2010 federal health care law that raids student aid to the tune of $9 billion in order to “pay for” other parts of ObamaCare. Since this problem is of President Obama’s own making, we should clean up this latest ObamaCare mess by ending this slush fund and applying the savings to prevent the upcoming rate increase.

For me, the issue of student loans is one that I am intimately familiar with. In fact, I was only able to afford college because of student loan and grant programs.

After high school, I attended Tarkio College in Missouri to play football. Since my parents could not afford to help me financially, the school put together a financial aid package that allowed me to pursue my dreams of going to college and playing football.

After one season, I moved back to Florida and dedicated myself more to my studies, first at community college, then the University of Florida and finally the University of Miamis law school. Throughout this time, I relied on student loans, grants and hard work.

These experiences taught me about the challenges students face in making ends meet in college, and later on as graduates trying to pay off their student loans.

]]> http://www.888-mymoney.net/student-loans-are-a-burden-but-its-the-lack-of-jobs-that-hurts-america-more/feed/ 0 http://www.888-mymoney.net/this-week-in-credit-card-news/ http://www.888-mymoney.net/this-week-in-credit-card-news/#comments Fri, 18 May 2012 22:12:14 +0000 admin http://www.888-mymoney.net/?p=1316 Why Are Credit Report Errors So Hard to Fix?

A study by the Columbus Dispatch found flaws in the data collection and dispute resolution processes used by the credit bureaus with an error rate of around 30%. For consumers, this can mean months of frustration trying to get the mistakes corrected and many people may be denied credit cards, mortgages and car loans, or are forced to pay much higher interest rates because of errors on their reports. In many cases, attempts to fix even simple mistakes dragged on for months. Consumer advocates say the bureaus could easily fix many of these errors. [Time]

Bill Would Crack Down on Nasty Overdraft Fees

Rep. Carolyn Maloney introduced the “Overdraft Protection Act,” a bill that aims to crack down on overdraft fees. The bill includes when and how banks charge consumers who try to spend more money than they have in their bank account. If approved, the House bill would also require overdraft fees to be “reasonable and proportional” to the cost of the transaction; limit the quantity of fees that can be charged to one per month and six per year; ban banks from manipulating the order in which transactions are posted. [MSNBC]

Contactless Payments-Bad News for Consumers?

A study released by MasterCard shows that consumers may spend up to 30 percent more with the new contactless payment methods than they do with credit cards. Contactless payments take place with credit cards or smart phones that have chips implanted with radio frequency identification, commonly referred to as RFID. Consumers simply “wave” the card or smart phone over a payment terminal rather than having to “swipe” the card through the terminal. Contactless payment methods are becoming more common. Visa has recently introduced PayWave; MasterCard has PayPass and American Express has Express Pay. The MasterCard study predicts 150 million mobile devices will be contactless enabled within the next few years. [LowCards.com]

Many Households Have Negative Self Worth, Survey Finds

About one in five US households owe more on credit cards, medical bills, student loans and other debts that aren’t backed by collateral than they have in savings, checking accounts and other liquid assets, according to a new University of Michigan report. About 10 percent of families in 2011 had $30,000 or more in credit card debt and other non-collateralized debts. That compares with 8.5 percent in 2009. [Detroit Free Press]

American Express Targets College Students With Campus Prepaid Card

American Express is selling reloadable prepaid cards at more than 500 Barnes amp; Noble bookstores on college campuses. The new Campus Edition Prepaid Card is an extension of an existing product the company rolled out last summer in a bid to attract new customers who don’t qualify for one of its credit or charge cards, which are typically offered to consumers with the best credit. [Wall Street Journal]

Could Student Loan Trigger Americas Next Financial Crisis?

Now, a study is showing that compared to just five years ago, the number of pensioners with serious debt-problems have almost doubled. At the same time, recent court rulings have made it so that pensions are more vulnerable to creditors during bankruptcy.

This makes it even harder for pensioners to deal with debt. Filing for bankruptcy was often the only option for managing debt and issues like that for retired persons, since the overwhelming majority are on a fixed income.

More than 400,000 Affected

The reports were made by the debt charity Consumer Credit Councelling Service. They found out that over 427,000 households in the UK where someone was 70 years or older are in serious financial difficulty, and are already either three months behind with repayments or have to suffer some kind of debt action, such as insolvency.

Previously, an option for pensioners to deal with situations like that were to file for bankruptcy, and have their pensions still be protected. That is, however, no longer the case after a recent High Court judgment in the Raithatha v Williamson case in April this year. The ruling now means that, for individuals over the age of 55, creditors will be able to claim parts of the pension of those filing for bankruptcy.

The law firm representing the bankrupt individual in that case is appealing the decision however, but for now that is the ruling in effect.

Insolvency Levels Rising Fastest for Pensioners

Pensioners is the age-group where insolvency has increased the most in the last 12 months, according to analysis made by the credit-checking agency Experian.

The amount of bankrupt pensioners is still relatively small compared with other age-groups over all, but as we can see pensioners often have the least amount of options available to them for creating a solution. In total, the accountancy firm RSM Tenon has calculated, the amount of over-66s that have been made insolvent has nearly doubled in the last five years.
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Say youre retired, plan to buy a new car for $30,000 and have all of your savings tied up in a traditional IRA or 401(k) plan. If youre in the 25-percent tax bracket, youll need to withdraw $40,000 to have enough after-tax money to buy that $30,000 car. Ouch!

Two small Ohio banks currently issue credit cards, including Credit First National Association in Brook Park, which issues cards for Firestone Complete Auto Care and testified in favor of the bill.

But several Statehouse sources have told The Dispatch that Huntington officials have been quietly supportive of House Bill 322, and passing it could mean jobs for a Columbus region where the bank already employs 8,100 people. Huntington representatives did not testify on the bill, which has been introduced repeatedly for a number of General Assemblies.

The bill passed the House in late March and could see Senate action as early as this week. It would allow Ohio-chartered financial institutions to charge the same interest and fees that out-of-state banks now charge Ohio customers. Ohio’s credit-card cap is 25 percent.

Ohio-based banks have been at a competitive disadvantage because credit-card issuers based in other states can ignore Ohio’s interest-rate limit. Most of the nation’s largest card issuers are based in states with no usury limits and largely deregulated consumer-credit markets.

“It doesn’t protect us as much as maybe is perceived and is a little bit of an obstacle to job creation,” Kenny McDonald said of Ohio’s credit-card cap.

McDonald is the chief economic officer for Columbus 2020, an economic-development organization for the 11-county region. He said he has had no specific talks with Huntington or any bank about jobs opportunities related to the bill. But in trying to add to the 69,000 financial-services industry jobs already

in the region, McDonald said, the bill would remove a disadvantage Ohio has compared with other states, 31 of which have passed similar laws.

“We think it would make Ohio more attractive to put those servicing operations here if we didn’t have this (credit limit),” he said. “If we change this, it would be something we’d take on our travels around the country and make people aware of it.”

Huntington spokesman Matthew Samson declined to comment specifically on the ties between the bank’s plans and passage of the bill, but he noted the bank is working to develop its own line of credit cards for both consumer and business customers by mid-2013. The bank does not currently offer a credit card.

Thousands of Chesapeake workers have retirement portfolios that are heavily invested in Chesapeake stock, which has declined sharply following revelations about Chief Executive Aubrey K. McClendons business dealings.

But while retail and institutional investors have sold the stock, employees dont always have that option.

Overall, 38 percent of Chesapeake Energys Savings Incentive Stock Bonus Plan – the only 401(k) plan available to the majority of the firms employees – is in company stock, far above the 10 percent many plan consultants advise.

Currently, Chesapeake says about 4,000 employees are restricted from selling shares the company puts into their retirement portfolios to match the employees own contribution in the plan.

Most companies stopped offering 401(k) matches in stock after the 2001 collapse of Enron Corp, where employees were unable to sell their shares as the company went bankrupt.

Despite regulatory reforms aimed at reducing worker exposure to employer stock, Chesapeake is among a minority of companies that still offer 401(k) matching contribution in shares, highlighting the risk of tying a workers nest egg to an employers success.

Chesapeakes stock had dropped almost 40 percent to $15.52 at Mondays close since its high this year of $25.58 in March. The shares were down nearly 7 percent on Tuesday, hit by a rating downgrade and word the company had increased a new bridge loan.

Employees are naturally worried, said Greg Womack, an Edmond, Oklahoma-based financial adviser who says he has been fielding calls from concerned Chesapeake employees. If the stock doesnt recover, this is a substantial part of peoples retirement.

Chesapeakes retirement plan, to be sure, has been a generous one, and helped put the Oklahoma City-based company on Fortunes 100 Best Places to Work since 2008.

The company matches every dollar a salaried employee invests in the 401(k) plan – up to 15 percent of an employees salary – with shares of stock. Thats more than three times the typical match.

Stock matching programs help companies keep employee interests aligned with corporate goals. They also offer big tax benefits and substantial financial savings to companies.

Out of more than 13,000 employees, the 4,000 workers who cannot sell shares in the stock plan only represent 5 percent of the plan assets, said Michael Kehs, a Chesapeake spokesman, who declined to give total assets in the plan or plan details.

Those 4,000 employees are newer employees, who likely are making small contributions to the plan, thus accounting for the 5 percent, said Don Stone, managing partner of Chicago-based Plan Sponsor Advisors, a plan consultant.

But just because they may have small balances in their 401(k) plans doesnt change the fact that it could be a big percentage of those employees money, Stone said.

According to a Chesapeakes 2010 filing on its 401(k) plan, which is the latest available, the plan had $490 million in assets as of December 31, 2010. The firms 149 union employees are offered a different 401(k) plan that matches employees contributions in cash – 50 cents for every dollar up to 4 percent of employees salaries, Kehs said.

Chesapeake requires employees in its retirement plan to hold stock for the maximum amount of time allowed by law: until they have been employed for three years or have reached age 55.

Chesapeake has created a fairly volatile situation here, said Greg Ash, a partner at Kansas City-based Spencer Fane Britt Browne LLP, which represents employers on retirement plan issues.

In an industry in which the stock price can go up and down quickly and especially with all of the recent headlines, I would hope they are talking about removing the three-year lock in (for the employee match), said Ash.

Chesapeakes workers can invest their own contributions in company stock or in an array of more than 28 investment options, according to BrightScope, which tracks 401(k) plans and rates the plan above-average compared to its peers.

Chesapeake says 95 percent of the plan assets and 98 percent of the vested plan assets can be diversified.

On average, employers match worker contributions up to 3 to 4 percent of their salary, almost always with cash, according to plan consultants. Some companies offer slightly more.

Only 12 percent of companies provide a company stock match, down from 45 percent in 2001, according to benefits consultancy Aon Hewitt. And only 1.2 percent of plans that give a match in company stock do not allow employees to sell that stock immediately.

Three former employees interviewed by Reuters said they still held Chesapeake shares and were holding onto their stock with the hope that it would rebound.

For others, what was once an attractive perk doesnt seem that way anymore.

At the time, I viewed it as a company putting their money where their mouth is, said one former employee, who has left the company.

Now that hes in his thirties and has a family, he said he would not be as comfortable with the idea.

Many companies offer an Employee Stock Ownership Plan (ESOP) inside a 401(k) – which is what Chesapeake offers – and supplement it with another kind of retirement benefit plan to provide employees more diversification, according to Michael Keeling, president of the Employee Stock Ownership Plan Association, a trade group. But there is no additional plan available for non-union employees at Chesapeake.

EDUCATIONAL EFFORTS

Chesapeake routinely reviews the plan design and investments taking into account all Internal Revenue Service and Department of Labor guidelines, the company spokesman said in an email to Reuters.

Principal Financial Group runs the companys financial literacy education program. According to Principal documents about the program supplied to Reuters by Chesapeake, the company regularly sends educational materials about its 401(k) plan to employees that emphasize the need to diversify.

Five former employees interviewed by Reuters agree that the company makes concerted efforts to educate plan participants.

Despite these efforts, more than one-third of Chesapeakes plan remains in company stock, down from a high of 77 percent in 2005, but still way above industry average.

The average 401(k) plan had 11.4 percent in company stock at the end of 2010, down from 13 percent in 2009, according to an Aon Hewitt survey of 401(k) plans that, in total, served more than 12 million employees.

LITIGATION LIABILITIES

From 1997 through July 2010, 211 class action lawsuits were filed against employers over company stock, according to Cornerstone Research.

While these cases tend to be dismissed or settled, the threat of a suit and the bad publicity and legal hassles that come with it has led many companies to stop offering stock matches, said Bill McClain, a consultant for Mercer who advises 401(k) plans.

If you have major movement in the company stock it could be very well made into a lawsuit, McClain said.

But it could be hard to get traction for litigation, given that Chesapeakes 401k plan is an ESOP.

In a regular 401(k) plan with a company stock fund, it would be easier to make a case that the plan should have removed the stock fund if the stock fell dramatically, said Elizabeth Nedrow, a partner at Holland Hart LLP, who represents employers in these cases.

That argument is harder to make with an ESOP because by statute there is a presumption that the plan is supposed to invest in company stock, Nedrow says.

(Reporting By Jessica Toonkel; Matt Robinson; Additional reporting by Jennifer Cummings; Editing by Lauren Young, Jennifer Merritt and Tim Dobbyn)

The proposal would create a cheaper investment account similar to a 401(k) plan for state employees hired after July 1, 2013, instead of a monthly retirement payment based on their salaries and years of employment.

Supporters said the new system would help shrink the growth in the costs of pension programs that are more than $18 billion short of the funding theyll need to pay for all the benefits promised.

Jindals deputy chief of staff, Kristy Nichols, said the proposal represented very much a balance and a compromise of ensuring taxpayers can afford the pensions offered to its workers, while honoring the commitment made to employees of a sustainable retirement benefit.

Critics said the new plan, called a cash balance plan, could leave workers without enough of a safety net, since Louisiana state employees arent part of the Social Security system. They noted the only other state that has a cash balance plan for its workers, Nebraska, also includes them in the Social Security system.

Frank Jobert, executive director of the Retired State Employees Association of Louisiana, questioned whether the amount of money accumulated by workers for their pension benefits would be enough to give retirees security.

It has to be a livable benefit, Jobert said.

The cash balance bill by Rep. Kevin Pearson, R-Slidell, narrowly received the backing of the House earlier this month. If it gets approval from the full Senate, the measure would have to go back to the House for review of Senate changes.

Financial analysts disagree widely on whether the retirement plan change for new employees would cost or save the state money.

Under the proposed system, the contributions made by the employee and the state would be invested, and the account would grow at the rate of investment earnings. The employee would never lose money for investment slumps, as in a traditional 401(k) plan, however.

The risk shifts to the employee, because the state would no longer be guaranteeing a specific level of expected investment return, or a monthly payment based on the workers highest years of salary.

When employees leave their state jobs, they would get a lump sum payment of their account balance, including interest and credits for the investment earnings, or they could get an annuity, a fixed annual payment for life once they reach age 60.

If they stop working for the state in fewer than five years, employees would get a refund of what they paid into the system, but not the employer contributions.

The cash balance plan wouldnt apply to law enforcement workers and others considered hazardous duty employees. It also wouldnt apply to public school teachers, unless they chose to opt into the program.