Four things to watch

by Mark S. Stegman, Financial Advisor, ameripriseadvisors.com/mark.s.stegman

One of the biggest hurdles to the passage of the sweeping health care overhaul was to determine how it will be funded. The Patient Protection and Affordable Care Act will tap a variety of funding sources, and will shift some costs from one part of the system to another as modified by the Health Care and Education Affordability Reconciliation Act of 2010. As a result, the average health consumer may see shifts in their premiums, taxes, deductibles, and co-pays. Here are four ways in which the health care reform bill might possibly change your finances, and each of them is worth watching.

You may receive a tax subsidy.
The new law establishes state- or region-based insurance exchanges where individuals and small businesses can shop for insurance plans. These regulated plans will be subject to standardization rules, and may offer better benefits than some current plans – but that may also drive their price tag higher. Enter the tax subsidy program, which will offset some of the increased cost of plans available in the exchanges, beginning in 2014. Families earning up to four times the poverty rate ($88,200 for a family of four in 2009) will be eligible for a tax subsidy that ensures they pay no more than 9.5 percent of their income.

You’ll pay if you don’t play.
Beginning in 2014, the federal government will fine those who don’t have health insurance. Why? Those most likely to risk living without health insurance are the young and the healthy. However, when insurers are forced to cover anyone who applies, and the healthy people leave the system, the insured pool is likely to need more health services, and be more expensive on average. That starts a negative trend where premiums are driven higher, and even more healthy people opt out.

The insurance mandate, for which there are only a handful of exemptions, will levy fines that go up for the first three years.

You might pay more if you earn more.
Couples who earn more than $250,000 a year, and singles earning more than $200,000 through wages or self-employment, will be subject to an additional tax starting in 2013. If you fall into one of these categories, you will pay an additional 0.9 percent tax for Medicare Part A (hospital insurance) on earned income over the threshold amount. Additionally, for couples with modified adjusted gross income (AGI) over $250,000, ($200,000 for singles) there is a new Medicare surtax of 3.8% on the lesser of net investment income or the excess of AGI over the threshold amount. This tax also begins in 2013.

Your premiums might rise.
Insurance policy pricing today is based on risk. So, sicker people pay higher premiums and healthier people pay less. The reform effort seeks to even out those premiums, which will help those at a higher risk, but it will hurt those on the lower end of the risk scale. Subsidies, and the ability to remain on a parent’s plan longer, will help offset the increased cost.

Other Implications.
Other ways that individuals may be affected is in the way plans may evolve to avoid being in the so-called Cadillac Plan tax. Plans may ask enrollees to share more of the costs for premiums, co-pays, and deductibles. The use of Health Savings Accounts (HSAs) where individuals save money for out-of-pocket health costs on a tax-advantaged basis may increase.

There is one sure thing: the reform bill will have an impact on the entire industry. So, no matter whether you remain with your employer-sponsored health plan or you take advantage of a new plan through your state’s insurance exchange, there will be changes. Changes worth watching.

The American Cancer Society is marking the 35th Great American Smokeout on November 18 by encouraging smokers to use the date to make a plan to quit, or to plan in advance and quit smoking that day. By doing so, smokers will be taking an important step towards a healthier life – one that can lead to reducing cancer risk. Quitting smoking is not easy, but it can be done. To have the best chance of quitting successfully, you need to know what you’re up against, what your options are, and where to go for help.

The single best step an older smoker can take to improve their overall health, add years to their life and keep money in their pocket is to quit – and it’s never too late! Fortunately, there are more tools and treatments available today that can help.

There are more than 45 million people in the U.S. who smoke cigarettes, about 13 million are age 50 or older, and a whopping 4.5 million are 65-plus. Research has shown that quitting, even after age 65, reduces risk for coronary heart disease, emphysema, lung cancer, osteoporosis, hearing loss, cataracts, impotence, poor circulation and Alzheimer’s disease. It also helps you breathe easier, smell and taste food better, not to mention saves you quite a bit of money.

According to the Center of Disease Control and Prevention (CDC), about 60 percent of older smokers indicate they would like to completely quit, but because of the nicotine, which is considered to be more addictive than cocaine or heroin, it’s very difficult to do. Here are some tips experts recommend that can help older smokers kick the habit.

The first step you need to take is to set a “quit date,” but give yourself a few weeks to get ready. During that time you may want to start by reducing the number or the strength of the cigarettes you smoke so you can start weaning yourself. Also check out over-the-counter nicotine replacement products (patches, gum and lozenges) to help curb your cravings. And just prior to your quit day get rid of all cigarettes and ashtrays in your home, car, and place of work, and try to clean up and even spray air freshener. The smell of smoke can be a trigger.

Studies have shown that you have a much better chance of quitting if you have help. So start by telling your friends, family and coworkers of your plan to quit. Others knowing can be a helpful reminder and motivator. Then get some counseling. Don’t go it alone. Free one-on-one telephone counseling, as well as coping strategies and referrals to local smoking cessation programs are available through the national tobacco “quitline” at 800-QUIT-NOW. The National Cancer Institute also offers a free smoking quitline at 877-44U-QUIT. You also need to make an appointment with your doctor to talk about prescription medications that are extremely helpful at reducing nicotine cravings.
It’s also important to identify and write down the times and situations you’re most likely to smoke and make a list of things you can do to replace it or distract yourself. Some helpful suggestions when the smoking urge arises are to call a friend or one of the free “quitlines,” keep your mouth occupied with some sugar-free gum, sunflower seeds, carrots, fruit or hard candy, go for a walk, read a magazine or take a hot bath. The intense urge to smoke lasts about three to five minutes, so do what you can to wait it out. It’s also wise to avoid drinking alcohol and steer clear of other smokers while you’re trying to quit. Both can trigger powerful urges to smoke.

For more tips on how to quit, including managing your cravings, withdrawal symptoms and what to do if you relapse, visit www.smokefree.gov. Medicare can also help (see www.medicare.gov/health/smoking.asp or call 800-633-4227). If you have Medicare Part B, smoking cessation counseling is covered if you’re diagnosed with a smoking-related illness or are taking medicines that tobacco use might affect. And if you have a Medicare Part D prescription drug plan, certain smoking-cessation medications are covered. Medicare does not pay for over-the-counter smoking-cessation products – patches, gum and lozenges.

Excerpts taken from The Savvy Senior, Jim Miller

When and How to Give

In the course of a year, most of us donate a certain percentage of our income to charitable organizations. The only real questions are “when?” and “how?” to give.  Like most things financial, you can increase the impact of your charitable donations if you have a plan in place.

Include charitable giving in your budget. Rather than giving when the mood strikes, make a commitment to giving in your monthly budget. After setting aside savings for your future, allocate an amount you can afford to give. Putting your giving goals on paper can help you be more intentional about your giving and allows you to increase or decrease your cash donations based on your financial circumstances.

Zoom in on nonprofits whose missions match your values. From saving the whales, to providing mosquito netting in malaria-prone areas, to funding a food shelf — there are countless worthwhile causes you could support. Focus first on one or two whose work is near and dear to your heart. Learn more about each charity to make sure you agree with the organization’s goals and activities.

Evaluate the financial health of your favorite charity. Not all nonprofit organizations are disciplined in their business practices. Take time to learn how your charity of choice is organized and run. How will your money be spent? Check to see that the organizations you support are doing their best to keep operational costs to a minimum so that the majority of the money they raise goes toward making a difference versus soliciting donations or paying the rent.

Stretch your giving. Giving that has an element of sacrifice tends to be more meaningful for the giver. Set a goal to increase your giving if you’re not where you’d like to be yet. Consider reducing spending in another area of your budget to increase your giving.

Give in more ways than one. It feels good to give — and even better when the giving is hands-on and personal. Get involved with the charities that matter to you. In addition to writing a check, consider giving your time and talents. You might also be able to donate stock or other items of value.

Get advice. Talk to your financial advisor about how your charitable giving fits into your overall financial plan. Your tax professional can also provide insight into tax advantages and other tax considerations related to charitable giving.

Mark S. Stegman, Financial Advisor
Learn more at:  ameripriseadvisors.com/mark.s.stegman

These are times that find many people moving on from their jobs, sometimes by their own choice and sometimes not. If you’ve left your job or may be doing so soon, you might be wondering what to do with the retirement savings you’ve accumulated through the plan sponsored by your employer (such as a 401(k) or 403(b) plan).

You have four basic options:
•  Take a cash payout
•  Leave the money in the former employer’s plan
•  Move it to the plan offered by your new employer
•  Roll the dollars into an IRA

Cashing in
Some are tempted to take the cash payout, and though enticing, this option should almost always be avoided.  The distribution will generally be treated as ordinary income and subject to mandatory 20% federal tax withholding, and, if you have not yet reached age 59-1/2, subject to a potential 10% penalty for early withdrawal of qualified retirement plan assets.  Unless you’re desperate for cash and all alternatives have been exhausted, cashing in on your retirement savings plan is costly and unwise.

Keeping money in an employer’s plan
If you feel comfortable with investment choices offered and familiar with how it works, you might consider leaving your money in your former employer’s plan.  Keep in mind that your money will be subject to the terms of provisions related to investment options and withdrawal options. In effect, you will probably have less control over your money than if the funds were rolled into your own IRA.  Some people like the idea of rolling retirement plan dollars with their new employer. This option offers the convenience of having all of your dollars in one plan. However, there still may be limitations with the plan. Be sure you are confident the new workplace plan gives you enough investment flexibility to make the most of your retirement savings.

Rolling it into an IRA
An alternative approach is to roll money from your former employer’s plan into your own IRA account. An IRA typically offers you the ability to put your money to work in a wide variety of investments, including individual stocks, and a fair amount of flexibility to move money from one investment to another.  If you decide to roll your savings from a workplace plan to an IRA, make sure the transaction is a direct rollover to the IRA custodian. A distribution paid to you raises a number of possible tax implications, such as mandatory 20% withholding.  If you are considering a rollover, you might also consider a Roth IRA, which creates the potential for tax-free withdrawals from your IRA savings in the future, which could greatly enhance your long-term financial security.  However, converting to a Roth IRA is generally taxable as ordinary income, so you have to weigh your options carefully to figure out what’s in your best interest. Talk to your financial and tax advisors to determine the best option for you.

Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC. Some products and services may not be available in all jurisdictions or to all clients.  © 2010 Ameriprise Financial, Inc. All rights reserved.

excerpts from “Plan Now For A Better Future” Much of today’s emphasis is on the need for aging Americans to take care of their physical well-being in order to ensure a healthy future; it can also apply to their financial well-being. Not only personal finances, but how older Americans help keep the overall economy alive. Money is a bit tight right now, but just a little extra effort today in financial planning can yield big dividends later on no matter what your age. Here’s why.

A study on retirement satisfaction by researchers at Boston College asked retirees this question: “All in all, would you say that retirement has turned out to be: very satisfying, moderately satisfying, or not satisfying at all?” They found that among retired couples, those who answered “very satisfied” or “moderately satisfied” had income in retirement replacing 72 percent of their pre-retirement earnings, while those who said that their retirement was “not satisfying at all” had income replacing only about 60 percent of their pre-retirement earnings.

If these numbers seem daunting to you, remember that Social Security provides about 40 percent of pre-retirement earnings replacement for the average wage earner, making Social Security the foundation upon which you can build your secure retirement. You also will need other savings, investments, pensions or retirement accounts to make sure you have enough money to live comfortably when you retire. And Social Security offers several tools to help you plan now for a better future.

Every year workers 25 and older receive a Social Security Statement in the mail about two to three months before their birthday. The Statement gives you an estimate, based on your current earnings, of what you might expect in Social Security retirement benefits. You can then visit the Retirement Planner at www.socialsecurity.gov/retire2 where you can personalize various financial scenarios to determine what your individual retirement plan should look like. You’ll also want to visit the Social Security Retirement Estimator. There, you can key in some basic information and get a quick and accurate estimate of your benefit amount using different scenarios. You can find the Retirement Estimator at www.socialsecurity.gov/estimator.

Once you know just what to expect from Social Security in retirement, you will know just how much you need to save to be among the “very satisfied” American retirees. And America will thank you for it, because Social Security payments don’t stop in the bank accounts of older Americans. From there, they venture into the economy, purchasing goods and services.

In early 1998, Dr. Deborah Rohwer, a professor of music education came to UNT, bringing with her the concept of sponsoring a “senior band,” entitled New Horizons Concert Band. They rehearsed at the Denton Senior Center, where they still reside. Quickly, the New Horizons Concert Band expanded to 25 musicians from several area towns. Some of the more accomplished musicians formed a “combo” to play more of the big band sound rather than the concert-oriented style, while continuing in the New Horizons concert band. The original members were Charley Hayes, Richard White and Jim Martin, shortly joined by Charlie Goodhue and Jim Staercke. After several discussions, they decided to call themselves “The Young At Heart Band.”

The current orchestra is comprised of: Gloria Ayers on alto sax, Mary Jane Bell on clarinet, George Holladay and Charley Hayes on tenor sax, Woody Wood on alto and soprano sax, Mary Wood on baritone, sax and piano, Terry Frushour, band leader, on baritone horn, C.A.Bell on trumpet, and Doug Ebersole on trombone. The rhythm section consists of George Williams on bass guitar, Ed Nachtweh on piano, Richard White on rhythm guitar and Peggy Morrison on percussion. Several of the members also help out with vocal arrangements.

Young at Heart Orchestra plays a variety of music, including waltzes, latin numbers, polkas, and country/western tunes. However, the primary focus is on the big band numbers that they sang, hummed and danced to while growing up. The mission is to bring enjoyment and memories as well as danceable music to their various audiences, in addition to having fun. They have played for churches, retirement homes, nursing homes, VFW’s, American Legion, Denton Country Club, parades, fundraisers, garden parties and rehab centers as well as the annual Denton Jazz Fest each April. While they are considered by many to be the resident band for the Denton Senior Center, where they rehearse on Tuesday and Thursday mornings, they often play outside gigs when possible, at reasonable fees when appropriate.

For additional information, please contact Terry Frushour at 940-383-4124 or George Holladay at 940-566-6515.