Personal Finance Advice and Financial News

A boat bill of sale is used to transfer the ownership of a boat or boat trailer from a seller to a buyer.

What must a proper boat bill of sale include and what are the pitfalls ?

Having a proper bill of sale would save both the seller and buyer head down the line. A proper boat bill of sale includes:

1. A proper boat bill of sale should first and foremost include the names, addresses of both the seller and the buyer.

2. The location of the boat of which the ownership is being transferred.

3. The dollar amount for the transaction.

4. The particulars of the boat make, model, year, length, Registration, CF or

Document #, Serial or Hull ID # (HIN), General Boat Type.

5. Description of Engine

6. Description of Equipment

7. Warranty of Ownership. The Seller warrants that the Seller is the true and lawful owner of the Boat, and that the Boat is free of any and all legal claims, encumbrances, and offsets by others. Further, the Seller warrants that the Seller will defend the Buyer against any and all lawsuits and claims whatever in relation to the bill of sale.

8. Any other agreed upon special conditions.

The most common pitfalls and how to avoid them?

It is prudent for any buyer to ensure that the written document matches what was promised verbally.

The most common problems buyers run into are listed below:

1. Failure to ensure that the Hull ID (HIN) on the boat is the same as on the title and registration.

2. Failure to inspect the equipment on the boat to ensure that it matches the description in the boat bill of sale.

3. Using a handwritten or improper boat bill of sale that does not include what is needed for maximum legal protection of the buyer.

4. Failure to include the warranty of ownership. This case holds the seller fully liable for any misrepresentation claims or claims whatever in relation to this sale.

Is a boat bill of sale a must?

Yes, it is a must to ensure that seller lives up to their verbal commitment and to ensure that they buyer's rights are fully protected legally. It also ensures that the seller will be liable to deal with any claims or claims relating to this sale.

This legal document simply renders both the seller and buyer worry free. It is always best to err on the side of caution.

Download your boat bill of sale now.

Many Americans think that Social Security and Medicare are one-size-fits-all programs that offer no opportunity for choice or customization. But in fact, taking the time to fully understand how these programs work and to consider the most effective ways to include them in a long-term financial plan can significantly expand their usefulness.

A common misconception about Social Security is that workers' taxes are held in personal accounts for the use of the workers who earned them. In fact, the taxes that today's workers pay into Social Security support the benefits of today's retirees, as well as other Social Security recipients such as disabled workers, survivors of workers who have died and dependents of beneficiaries.

When you work and pay Social Security taxes, you earn credits towards your future benefits. The number of credits you need to secure retirement benefits from Social Security depends on your birth year. As of 2014, workers receive one credit for each $ 1,200 they earn, up to a maximum of four credits per year. Assuming you were born after 1929, you will need 40 credits, the equivalent of 10 years of work, to earn retirement benefits.

How much you work also affects the amount of your eventual benefit payments. Higher lifetime earnings result in higher benefits later on. If there are years you do not work or earn very little, you may receive a smaller benefit amount than you would have if you'd worked steadily through your career. The age at which you begin collecting benefits can also affect the size of your benefit payments; I will discuss this more fully later in this article.

Medicare is also funded by salary taxes, in addition to monthly premiums from those taking advantage of the program. Medicare is a health insurance program mainly for people age 65 and older, although certain younger people with specific disabilities can also qualify. The program helps with health care costs, though it does not cover all medical expenses or the cost of most kinds of long-term care. Medicare comes in four parts:

• Part A helps pay for inpatient care at hospitals or skilled nursing facilities following a hospital stay, as well as some forms of home health care or hospice care.
• Part B is basic medical insurance, which helps pay for services from doctors, outpatient care, home health care, durable medical equipment and certain preventative services.
• Part C is also known as “Medicare Advantage;” These plans are available from private companies in certain areas. People with Medicare Parts A and B can choose to receive all of their health care services through a Part C provider organization. These plans combine coverage for hospital stays and doctor visits.
• Part D helps cover the cost of prescription medication.

Many people expect to take advantage of Social Security, Medicare or both one day. Taking time to integrate these programs into your overall financial plan can help you secure the greatest benefits available.

Social Security Planning

A common question about Social Security is when to start drawing benefits. You can start drawing benefits as early as age 62 but, as mentioned earlier in this article, drawing your benefit as soon as you can will reduce your benefit amount. Your benefit will be larger if you wait until full retirement age (FRA). Your FRA is determined by your birth year; for anyone born in 1960 or later, it is 67. If you take your benefit as soon as you turn 62, your benefit payment may be between 20 and 30 percent less than it would have been if you had waited until you reached your FRA.

For some, this tradeoff may be worthwhile. On the other hand, it is worth noting that your FRA is not a cutoff for approaching Social Security credits. If you work past your FRA, you can add up to four credits a year until you ever retire, and higher lifetime earnings ultimately mean higher benefit payments, since Social Security takes the average of your 35 highest years to calculate your benefit. Additionally, your benefit automatically increases each year that you wait from the time you reach FRA until your start receiving your benefit or reach age 70, whichever happens first. For many, the benefit can increase approximately 8 percent for each year you delay benefits after your FRA.

You can also receive benefits while you continue to work. However, your benefits will be reduced if your earnings exceeded certain limits in the months leading up to your full retirement age, so it is important to be mindful of the timing of your work income. If you start receiving benefits before your FRA but continue to work, $ 1 in benefits will be deducted for each $ 2 in salaries over the limit; in the year you reach your FRA, this amount changes to $ 1 for every $ 3 you earn over a higher annual limit, until the month of your FRA.

Because of this rule, if you have started benefits while not working but need to return to work before your FRA, you might want to pause your benefit payments. You may also want pause payments if you realized you should not have claimed as early as you did. Unfortunately, you can not stop your Social Security payments unless it has been 12 months or less since you began drawing benefits or you have already reached FRA. If you do not meet either of these conditions, you can not pause your benefits until you reach your FRA, so be cautious when deciding when to claim your benefit.

You may sometimes hear about an older “pay back” strategy. Formerly, you could effectively use your Social Security benefits as an interest-free loan. You could collect benefits early, pay them back and restart your benefit at a higher rate as you approached or reached your FRA. However, as of December 2010, the government imposed the 12-month limit on stopping benefits, greatly reducing Social Security's use as a loan mechanism.

Sometimes a married couple will decide that filing and suspending is the best strategy. For this to work, the person hanging must have reached his or her FRA. The strategy can allow the lower earning partner to collect a spousal benefit, for a total benefit payment up to 50 percent of the higher earning partner's benefit, while the higher income spouse expects benefits, accumulating delayed retirement credits. For example, John and Sue have both reached FRA. John is eligible to receive $ 2,400 monthly from Social Security; Sue will only receive $ 600. To use a file and suspend strategy, John files first, allowing Sue to collect $ 1,200 total between her own benefit and her spousal benefit. Once Sue files, John suspends his application. Sue can still receive the $ 1,200 every month, even though John has stopped collecting his checks. At age 70, when he no longer receives increased credit for delaying, John will reactivate his benefits.

For couples who need extra income, but who do not want to start Social Security all at once, the option of a restricted application might be helpful. In this strategy, one partner files for full benefits, while the other simply uses the spousal benefit to piggyback off the spouse's income. When the person receiving the spousal benefits reaches age 70, he or she can switch to a full benefit based on his or her own lifetime earnings. This technique provides a higher survivor benefit for the spouse who filed first, since the spouse who waived his or her benefit amount by doing so. Note, though, that this strategy only works if the partner applying for the spousal benefit has reached his or her her FRA. Otherwise, he or she is assumed to be filing for their individual benefit in addition to the spousal benefit, and the individual benefit is consequentially locked in at a lower rate, defeating the strategy's purpose.

As you can see, while Social Security benefits are primarily designed to benefit the worker who earned them, married couples receive special consideration. Even if your spouse has never worked, he or she can receive a spousal benefit up to one-half of your benefit amount. If both partners have worked, personal benefits are always paid before spousal benefits unless you employ one of the previously discussed strategies. Claiming a spousal benefit does not reduce the main earner's benefit amount.

Divorced spouses are often eligible for spousal benefits too, even if the divorced worker has remarried. If your ex-spouse remains unmarried and your marriage lasted 10 years or more, he or she is entitled to benefits as long as he or she is age 62 or older and the spousal benefit is greater than the benefit he or she would receive based on personal work history.

Survivors may be able to receive benefits if an individual who worked long enough to qualify for Social Security benefits dies. Survivors who may be eligible include:

• Widowed spouses age 60 or older, or age 50 or older if they are disabled;
• Widowed spouse of any age who care for the deceased's child, if the child is under 16 or disabled;
• Unmarried children who are under 18 (or up to 19 if they are students in elementary or secondary schools) or who have a disability that began prior to age 22;
• Stepchildren, grandchildren, stepgrandchildren or adopted children, under certain circumstances;
• Surviving divorced spouses who meet the criteria discussed above.

I have stated disability multiple times in connection with Social Security eligibility. In general, two different earnings tests together determine whether an individual is eligible for disability benefits. First, a “recent work” test is based on the individual's age at the time he or she became disabled. Second, a “duration of work” test must show that the individual worked long enough to be eligible for the benefits. If you qualify for disability benefits but are later able to return to work, Social Security disability benefits continue until you complete a trial work period, in which you earn more than $ 770 per month for nine months within a 60-month period. After the trial period, you can still work and receive benefits for any month your earnings are not “substantive.” In 2014, this is defined as over $ 1,070 for the month. This extended period of eligibility lasts for 36 months.

Social Security benefit payments may be partially subject to tax, no matter the circumstances under which you draw them. How much of the benefit is taxable will depend on your total income and your marrial status. For married couples filing jointly, if your combined income is over $ 32,000, between 50 and 85 percent of benefits will be taxable; for individuals, this threshold if $ 25,000. Whatever portion is taxable will be taxed at ordinary income rates. Since US citizens are taxed on worldwide income, these rules apply no matter where you live. If you do live abroad, your ability to receive benefits (and your potential to be taxed on them) will generally not be affected. There are a few countries where Social Security payments can not be sent, however, so be sure to be aware of these restrictions before relocating or planning intensive travel.

Medicare Planning

If you have already received Social Security benefits, the federal agency that runs Medicare will contact you a few months before you become eligible regarding enrollment. Otherwise, you should sign up three months before you turn 65, even if you are not retired and have no plans to retire in the immediate future. There are also certain special cases in which you can apply prior to age 65. These include government employees who become disabled before age 65 or anyone with permanent kidney failure. Once you are enrolled, you will receive a Medicare card that indicates which parts cover you.

When you first became eligible for Part A, you have a seven-month period, referred to as the initial enrollment period, in which to sign up for Part B. If you delay signing up, you will ultimately end up with delayed coverage and higher premiums. You will, however, have a chance to sign up in the general enrollment period each year, which runs from January 1 to March 31. Your Part B coverage begins on July 1 of the year you enroll.

Given the potential for higher costs, why would you not enroll right away? The most common reason is that you already have medical insurance you plan to keep. While hospital insurance (Part A) is free for almost everyone, medical insurance (Part B) comes with a monthly premium. You need to weigh wherever the additional coverage is worth the extra monthly cost. There is no one right answer to this question; it will depend on your personal situation and the sort of insurance you already have. Speak with an insurance agent to see how your private plan and Medicare Part B fit together. This is especially important for those covered under a family policy. It is also important to note that neither private health insurance policies nor Medicare typically covers nursing home or long-term care. These needs should be planned for separately. For those who choose to delay enrolling in Part B, a special enrollment period is available to those with employer plans. The special enrollment period allows you to enroll in Part B any time while you are still covered by the group health plan, and up through eight months after the employment or group coverage ends (whichever comes first), without penalty.

Should you choose to enroll in both Medicare Part A and Part B, you are eligible to purchase Medigap, which is a Medicare supplement policy. Medigap is private insurance that helps pay some of the health care costs Medicare does not cover, such as copayments and deductibles. Medigap is different from a Medicare Advantage Plan (Part C) and can not be used if you have Part C coverage. Medicare Advantage Plans are a way to get Medicare Part A and B benefits through private insurance, while Medigap supplements the costs of your original Part A and B benefits through Medicare. There are 14 Medigap policy options, named A through N. (Plan A offers the least coverage; Plan N offers the most.)

Medigap providers are generally allowed to use medical underwriting to decide whether to accept your application and how much to charge you for your policy. However, there is a Medigap Open Enrollment period, during which you can buy any policy the company offers for the price available to someone in good health, even if you have health problems. If you apply at any other time, there is no guarantee that you will be able to secure a Medigap policy or that it will not be prohibitively expensive.

What about Medicaid? While Medicaid and Medicare are often mentioned together, these are separate programs. Medicaid is income-based, not age-based, and it is administered by the states. Each state's rules about who is eligible and what is covered are different. If you suspect that you may qualify for both Medicare and Medicaid, it is important to make sure you understand what each program covers and what it does not.

Both Social Security and Medicare can introduce a host of additional financial planning issues beyond the scope of this article. By keeping the basics in mind, however, you can start integrating these programs into a balanced, big-picture view of your financial plan for the latter part of your working life and ultimate retirement.

You work hard for your money.

The last thing you want to do is see it slip through your fingers faster than you can get your hands on it.

But the cost of living, along with your other monthly obligations just does not make it easy to do.

As a matter of fact it's … easier said than done.

I've listed a few suggestions below that can help you to do two things:

1. Manage your expenses

2. Reduce your expenses

It's time you make your money work as hard for you, as you do for it.

Make sense?

So let's get right into it.

1. Create a budget – the easiest way to do this is to compare what you earn with what you spend every month. Once you've got an idea of ​​where you are financially then you can start chiseling away the non-essentials (what you do not need) from the essentials (what you really need).

2. Do not spend more money than you're expecting . – You would think that it would be just plain old common sense to do this, but it's very difficult for a lot of people. To do this you've really got to keep a close eye on your money.

3. Raise the deductible – A great way to lower the premiums on other insurance policies you have is to raise the deductible. Basically, the more you're willing to pay upfront, the lower the monthly premium will be.

4. Reposition your money – Another way to manage your expenses is to take a look at the interest rate you're getting on your savings account.

Is it lower than what competitors are offering? It might be a good idea to start thinking about switching to another banking institution to get a higher interest rate on your hard earned dollars.

5. Drop Your Private Mortgage Insurance – Once you have 20% equity in your home you can request to drop your PMI or private mortgage insurance. This is insurance that your lender takes out to make sure that in case you default on your loan … they still get paid.

6. Open an IRA – If you are in a position to, why not open an individual retirement account? Between your job income and the savings you'll see from employing the other suggestions, you can put that money into a tax deferred retirement account.

Right now your money is being taxed before you get it and when you use it to buy goods and services. Opening an IRA can help you to put away some of your income without getting taxed as you contribute to its growth.

As I mentioned in the beginning, you work hard for your money and because you work so hard for it, it does not make sense that you do everything you can to maximize every dollar you earn?

If you found this information useful, then I know you're going to want to download my free report entitled “Beat The Odds by Getting Even With The System” that reveals a 'dirty' little insurance secret that could leave you broke in the next twenty to thirty years even if you earn a six figure income now.

Traditionally the busiest time of the year for both horse racing and real estate, the spring investment property season is just around the corner. If you're looking to make a foray into the market, our form guide to property will have you buying both confidently and successfully.

Refine your top tips

Before you bolt out of your front gate, make sure you've thoroughly considered exactly what you're looking for. Define the property you're after and make a list of features, broken down into negotiables and non-negotiables. This will help you find what kind of properties to look at and the ones you need not bother with.

This list does not have to be set in stone; in fact it's likely to change once you've put in some time on the house hunting trail. Once you're more familiar with the market you'll probably find you need to – or are able to – adjust your expectations.

Size up the investment property market

To make sure you're backing a winner – and getting the best value – you've got to research extensively. Ensure you're across the investment property magazines and websites for general property purchase tips and strategies and then do as much investigation into the market / markets you're exploring as possible. Talk to local real estate agents and local residents and read as much about the local area as you can. The more you know, the more well-informed a purchase you'll be able to make.

Hunt like a pro

To make the most of your time and find the right property as quickly as possible, take a serious approach to your property pursuit. Plan your Saturdays thoroughly and set up a system for documenting the properties you've seen, the agents you've met and the sale prices of the properties you've been watching.

Get in front with a pre-approval

There's nothing worse than finding the right property only to miss out because you have not gotten your finances in order. Before you do anything this buying season, speak to us about your borrowing options and to get your pre-approval organized. Having a pre-approval also gives you a clear idea of ​​your price range, so you do not waste time looking at properties you can not afford.

Do not jump the gun

The weather may be warm up but when it comes to taking out gold in the property stakes, it pays to keep a cool head. Avoid getting cooked up in the exclusion of auctions and sales spiels and think any decisions through carefully before signing on the dotted line of your newly purchased investment property.

When you want to sell your possessions in gold, opt for a local reputed dealer. Since the market for this precious metal is very competitive, it is imperative to locate reputable buyers. Generally, you can expect the local buyers to buy it at a fair price in anticipation of getting additional business from you and others referred to them by you because of the verbal publicity you may do for them.

Do not ever sell gold through mail or through road shows or such like gatherings, offering to buy your gold items. These traveling buyers of gold have the reputation of buying gold at significantly lower prices. A local dealer, on the other hand, will give you a quote without any charge, and pay cash on the spot, whereas online companies buying gold would often make you wait for days before making the payment for your possessions. You should understand that such buyers are not keen to pay you a reasonable price, and they would have often vanished from the scene soon after having issued you a check.

Know the prevailing prices of gold. You would know that gold prices keep fluctuating at all times. Thankfully, there are online sources to keep you informed of the latest price of gold. You can check the price on various websites to get the best deal.

You should have a realistic approach and realize that no buyer can offer you the melt value of your possessions. Buyers of gold generally sell the gold procured by them to refiners, keeping with them some marginal profit for the services rendered. Most buyer will pay you anything from 40-70% of the final price. That is because these buyers have their overheads like wages to staff, rental for the awards and such like.

You should know the worth of your items. You should be aware of the weight of your items and their carat value. The more the value of carat, the higher is the price you can get. On knowing these two factors, you can assess the melt value of your items in gold, and get an accurate estimate of the cash you can expect to get. Since different pieces of jewelry in gold have different carat values, you should ensure that different items are weighed separately.

Make sure to get your gold items tested. A very common and trustworthy method of testing gold comes by way of acid testing. This is a highly accurate method that enables gold buyers to assess the genuine carat value of the items in gold in a matter of seconds. It is therefore important to inquire beforehand the buyer of the gold items as to how they check and confirm the content of gold in your items. Of late, with the introduction of electronic testers, consumers feel more confident of the results obtained on using these devices. Nonetheless, modern electronic testers are known to provide erroneous and contradictory results, resulting to undervaluing your items in gold. You can very well understand that, if the evaluation is lower, you will get less money for your possessions.

Reputable gold buyers use appropriate and accurate instruments for the testing and weighing of metal. These appliances do need a certification of compliance to the existing rules and regulations. So, do not hesitate to ask the buyer to produce relevant certificates and avoid getting cheated.

Property loss or damage following a disaster is always stressful for a homeowner. Adding to the stress, there is the hassle of filing the claim for property loss with your insurance carrier, which makes dealing with the entire situation even more difficult. This is where it becomes important to hire the assistance of a public insurance adjuster. A skilled adjuster ensures that your property loss claim does not end up being uncertain or critical. Additionally, they also take the effort to explain you the exact coverage of your policy and what you actually deserve as compensation. The professionals also go for detailed documentation and research of the loss occurred to your property, which helps estimating the compensation better.

Top Benefits of Hiring a Public Adjuster

Why do you need focus on hiring a public adjuster? The reason can only be best identified for the fact that a public adjuster solely works for the policyholder and ensures that the interest of the particular individual is best represented. Additionally, they also make sure that the insurance carrier offers a fair and positive settlement to the policyholder. Here's a quick look at the some of the key benefits of hiring a public adjuster:

Ensures Saving Time – By hiring a skilled adjuster, homeowners can look forward to settling issues without any worries. You no longer need to deal with the claims for documents and information from the insurance firm as the skilled public insurance adjuster will take care of everything from organizing to managing your claim theseby, reducing the time of handling claim issues.

Offers Expert Claim Processing – Insurance policies can be hard to understand and without proper knowledge you can easily misinterpret the information provided or give away wrong information. Having the assistance of a skilled adjuster by your side makes the entire process of filing a claim easy for you. From expert guidance for processing your claim right to documentation all the information, they help you with it all.

Provided Speedy Claim Resolution – This is another top benefit of hiring a public adjuster. From organizing your claim, processing the paperwork, to communicating with your insurance carrier, an adjuster does it all paving the road to faster claim resolution. When it comes to filing claims, seeking expert advice or help is always recommended to avoid any kind of loss.

Preserves your Rights at Best – Being a policyholder, you have some rights that should be protected and preserved. This is where it becomes important to seek the help of public adjuster who can best value your claims by understanding what the insurance company expects from you. In fact, having professional assistance by your side can help you reserve the rights at best.

Additional to these benefits, a skilled public insurance adjuster also ensures a fair claim value. With all these benefits coming together, you can well understand the importance of hiring a skilled public insurance adjuster. In fact, hiring an adjuster is not only considered a practical approach, but also a good financial approach.

The Federal Reserve recently announced the third round of “Operation Twist.” They'll spend $ 40 billion a month hiring to boost growth and reduce unemployment. Where will that $ 40 billion come from? Are they going to print more money? Are they going to borrow it? Will this decision weakened the dollar? And why is the market so happy about this announcement?

The Fed is not going to print more money or borrow it. They're going to buy long-term bonds. The Fed owns trillions of dollars in short-term bonds. They'll sell those bonds to the public-to you and me and everyone else-and use the proceeds to buy $ 40 billion in long-term bonds. Basically, they're reconfiguring their portfolio.

And they're going to keep buying and selling until they either run out of long-term bonds to buy (which would take a while) or they see the unemployment rate come down. In other words, this is an open-ended deal. It's huge.

Why would this help the economy? If the price of a bond goes up, the interest rate that it represents goes down. They have an inverse relationship. If you have a gigantic gorilla like the Fed buying $ 40 billion a month in long-term bonds, that demand drives the price of those bonds up and interest rates down.

By doing this “twist,” the Fed drives interest rates down and injects liquidity into the system, which will help our economy. The fact that the dollar is weak will also help our economy versus other economies for the time being. I'm not worried about the collapse of the dollar: It will strengthen the moment the Fed raises interest rates again.

The first two twists did not give the economy a bump. They also made the market go up at least five percent in the next three months after each decision -it went up 15 percent after the first twist. I think we'll see another gain, and that we're still in a bullish mode. I believe the market will continue to rise, and we'll end up with a very good year.

EUROBOND TO THE RESCUE?

For months, I've been saying that the European crisis would not get out of hand. Too many countries have a vested interest in Europe's stability. In July, the European Union (EU) overhauled their banking systems to alleviate their debt problems and avoid the runs on the banks that were brewing in Spain and Italy. They severed the relationship between banks and their countries, and created a banking union, a sort of Euro banking zone.

A problem still remained. If an indicted country like Spain wanted to raise money, it would have to approach the bond market on its own. Spain is high risk, so any money-lender would demand a high interest rate. And if Spain could not afford that interest rate, the country could go bankrupt and bring on an severe financial crisis.

No one wants that, especially the EU, so they've proposed another solution: the Eurobond. With the Eurobond in place, countries like Spain will not have to go to the bond market on their own. All the EU countries would go together, as one unit. We do business that way in this country. Individual states do not borrow money, the United States of America does.

When all the countries in the EU are combined, they present much less risk than one troubled country all by itself. The interest rate on a loan would be far lower. Countries like Spain will be much more likely to afford that rate, so the chances of any country going bankrupt are much lower.

On September 6th, the European Central Bank (ECB) announced that its members had agreed on the new bond-buying program. Everyone relaxed and the market shot up 240 points. Europe seems to be getting their act together. I think this recent step may not only solve some issues, but may even signal the birth of a new economy.

You have been employed for a period of time and you have access to a pension plan from your company. Can what you receive change from the time you commence working to the time of your retirement? It sure can. When you enroll in a pension plan, you are expecting a certain payout each month when you retire. If the payout is larger, that is wonderful, but what if it is less? If you are counting on living from this money, what can you do? The payout you receive can be defined by several components, so each of these will be highlighted. The first thing to find out is what type of plan you have and what you are entitled to.

What Type of Plan Do I Have?

There are two main types of pension plans as defined below. Some people may have both types of plans or a mixture of the two from different employers. If you had a pension plan with an employer and then transferred the money out into your own locked in account, this article would not apply in that case. You would be generating your own income and payments from your own investment returns, and this is a different set of circumstances.

Defined Benefit and Defined Contribution Plans Defined

A defined benefit plan is a pension plan where the future payout in retirement is defined by a set formula when you join the company. It is a calculation that usually includes your highest average salary, time working in the company, and how much money was contributed by you and the employer. The money is invested on your behalf and the firm is responsible for risk if something goes wrong. There is usually an expected rate of return that is guaranteed by your employer each year, which is the investment rate of return your money would earn if you could see your pension plan in a bank account.

A defined contribution plan is where the money you pay into the plan is defined: the amount contributed either by you or on your behalf by the company. It is a set dollar amount based on your salary in the year that you are working. You can think of it as the company (and sometimes you and the company) contributing to your pension account. This is similar to a Registered Retirement Savings Plan (RRSP) account, except that it is locked in. Locked in means that the money is in your name and you are owed to the money, but can not withdraw it unless there is a very exceptional circumstance (Ie this is the only money I have and I need to pay my bills). Also like an RRSP Account, you get to choose the investments in the defined contribution scenario, and you are taking the risks. If you invest in a fund and it loses money, you must deal with the consequences. It is for this reason that it is good to have a plan. If you are in a situation where you have a defined contribution account, you will have to make the decisions.

What Features Do I Have in My Plan?

Health Benefits

Many defined benefit pension plans have a provision for health insurance in retirement. This tends to come automatically with the pension money that is paid out. What is covered under this health insurance? What are the limits of what is covered? Is there a deductible or fee that should be paid each year? These fees come from your pocket, so they will reduce the amount of money that you are actually receiving for the health benefits. Can these requirements change over time? Definitely. Since pension plans are a long term idea, even small changes in coverage or higher deductibles can mean more expenses over time. There are instances when certain procedures are no longer covered, or the allowable amounts that can be claimed are reduced. These changes tend not to be very large, but taken as a whole over time they can add up to a lot of unforeseen expenses. Since health benefits are becoming very expensive no matter who pays for them; expect this to be an issue for years to come.

Indexing To Inflation

When most pension calculations are done, it is assumed that there is no inflation in the numbers. If you see the term “real rate of return”, this interest rate would include inflation, and would equal the nominal rate of return, or typical interest rate that is quoted, minus the inflation rate. As an example, if you received a 5% return on an investment last year, and the inflation rate was 2%, your real rate of return would be 5% -2% or 3%. Why does this matter? Typically pension payments are fixed – once a payment is calculated upon reaching retirement, it stays the same through retirement. The problem is that when you retire, you are supposedly to have enough money to pay for your expenses with this pension payout. If the rate of inflation increases 2% every year up to your retirement, this is like saying you can buy 2% less stuff every year. If the promised pension payment is $ 2000 per month today, and you retire in 20 years, this 2% inflation rate would reduce the amount of stuff you can buy by 40% (2% x 20 years). If this continues while you are retired, say another 20 years, this money will now buy 80% less stuff than today. Imagine paying bills with 80% less money! Indexing raises the payout calculations by the amount of the inflation rate to prevent this erosion of monetary value from happening. Inflation is actually a very personal thing – the price increases of the stuff you personally spend your money on, is what will impact you the most. The pension plans assume that you buy the same quantity of stuff and in the same proportions as the average or quoted inflation rate. This is probably not true, but it is better than no indexing at all.

Another thing to keep in mind is what level the indexing goes up to. Some plans will cap the indexing at a certain level each year to prevent explosive costs. Should there be a year of high inflation, this may cost you as your payment would not keep up with the cost of living for any amount above this cap. This has not been an issue for the last 20 years, but should inflation rise quickly, this should be watched closely. Check with your employer for the calculation to verify.

How Long Do My Pension Payments Last?

Some pension plans will pay you until you pass on, and will then pay your spouse your payment until they pass on. Other plans will pay for a certain amount of years to contain the length of time of their expenses. This is something that should be inquired about, and if there is a set age where the pension benefits expire, this should be incorporated into your financial plan so that you have some kind of income to replace the lost pension income at that time. In many cases, you will not reach the prescribed age, but since lifespans have been increasing slowly, and these pension plans were designed decades ago – this issue is bound to pop up everually. Many plans are struggling with funding issues and longevity risk of their members – which means that pension plans are not getting as much return as they used to get and underestimated how long people are living and receiving pension payments. The longer the pensioner lives, the more money the pension plan has to pay and the higher the longevity risk. The person receiving money living longer is not viewed in a favorable light by plan sponsors as it means your payments will cost them more. The amount of time the payouts will last can also be changed at any time.

What If I Separate or Divorce?

Many plans have provisions for making payments if you separate, divorce or your spouse dies. Over time, these provisions can be changed to not include these types of situations. Lack of coverage can also occur after so many years of service, a certain amount of time being married or under certain conditions of a separation. It is time to get your know your pension plan intimately in these cases so you can prepare for what to expect. In the case of a separation or dispute, splitting the value of a pension plan among spouses is a complex calculation, and it may hold up a dispute settlement that would otherwise have been simple. If calculations of the asset value are approximated, one of the spouses may feel as if they are not greatly appreciated, and this may lead to a longer battle in court which will be costly in other ways. If you have a financial plan counting on the value of a pension plan as part of your retirement scenario and it becomes known that you will not be receiving this money due to changes in the pension plan rules, this may not be pleasant either.

What If I Am Laid Off Before Retirement?

If you are laid off or reorganized as an individual, there likely will not be many issues with pension plan changes. If there is a company-wide layoff affecting many employees, the pension should be examined for special provisions due to attrition or reorganization. If the company is winding up or going bankrupt, this is another situation where everything should be examined before signoff. Obtaining legal counsel and / or a pension specialist may be useful to make sure the termination contract is in your best interest.

What Can I Do About These Changes?

Most of the time, these changes are inevitable because pension plans will claim that they do not have the money to sustain the gold plated promises of the past. This may or may not be true, but it does not affect your strategy. The first thing to do is to be aware of any such changes. Be aware of which ones apply to you. Sometimes the changes are in effect depending on what year you joined the pension plan, what age you are, how many years of service you have or what seniority you have. If you see a change that is affecting you, explore what can be done about it. Take your current financial budget or financial plan and adjust the numbers for the change to see what the final result is. Not all changes will result in a worse situation for you, but it does not hurt to find out. Your pension plan should be reviewed every so often – either after each union contract negotiation or with annual annual report or budget. Changes occur slowly with pension plans – but checking frequently is a precaution to keep you aware.

If the change is happening to a large number of people and you have enough people and a strategy to fight the change, it may be worth it to band together and lobby to have the plan sponsor reverse the changes. In many cases, these battles are expensive and time consuming. If you are aware of a change that is affecting you and there is nothing you can do to revise it, make changes in your financial plan to account for it. This may mean leaving the job sooner, planning retirement under different terms like attrition, or putting more money as for higher expenses. In other cases, the changes may not be a big deal and you can just move on with your life – but you will not be surprised when your payouts are not what you expected in the past.

Much of the information regarding any changes is with the plan sponsor or pension plan administrator. If you are in a unifiedized environment, talk to your steward about the pension plan and try to find documentation to clarify exactly what the current state of your pension plan is. The Human Resources department is another good place to ask questions, particularly in a non-unionized environment. Lastly, keep the documents you receive form the plan sponsor so that you will actually have in writing what is changing if anything. This will keep the facts straight for you and minimizeize miscommunication.

What's the best way to leave your hard-earned savings to your friends, family, and charity? What should you do if you come into an inheritance? On a recent interview on NPR's Morning Shift (a link to the NPR interview is provided at the end of the article), I explained how you can easily leave assets to your children and others while keeping the fighting to a minimum when you pass away. I also give some ideas on what to do with an inheritance if it comes your way.

As sad as it was, hopefully after hearing Eric's story (the caller) you'll be motivated to take some basic steps and get your estate planning in order. HERE'S AN ESSENTIAL ESTATE PLANNING CHECKLIST:

1. Review and update the beneficies of ALL your accounts

• Your 457 deferred compensation plan, old 401 (k) or 403 (b) plan, Traditional and Roth IRAs, banking and investment accounts, life insurance policies, and any other account that you want to pass on to someone hassle-free

2. A will

• You can write a will for absolutely no money at all so quit making excuses if you do not have one! For example, here in Illinois if you write a will and have your signature witnessed by two people, you'll probably have a valid will. I would make the will “self-proving” by having those signs witnessed by a notary.
• Name an executor: This is the person that will wrap up your legal and financial affairs after you pass away. Where do you want your money to go when you die? The kids? Charity? Your officer should follow through on your orders.
• Name a guardian: This person will take care of your kids and can be the same person that handles their money

3. A trust

• Do you want your assets to pass to family, charity, and others when you die without any hassles? Do you want your kids or grandkids to get your money, but not until they are more mature, let's say at age 30? Then a trust will take care of this for you.
• What's the difference between a will and a trust? Very basically, a will is written instructions given to someone to pass your assets on to others when you die, among other things. A trust can do this either while you're living or after you pass away but unlike a will, the title to your assets is transferred outside of probate court (which can cost a lot of $$$). Plus, your wishes are kept private – it's just between you, the trustee, and the beneficiaries.

4. Healthcare power of attorney (HCPOA)

• This is a very important document so have an experienced attorney draft one for you. What if you're in a terrible car accident and can not make healthcare decisions because you're in a coma? With an HCPOA, you name someone (usually your spouse) to make those decisions for you. Instead of letting the state decide who will call the shots for you, you're doing this before bad luck hits. This is one of the most important but least-used documents.

5. Power of attorney for loans (POA)

• This is another important but way underused estate planning document and it does not cost that much to draw up. A good hand of you in the public sector are in the rental business, especially firefighters. But what if something happens to you and you're not able to collect the rent, pay the bills, etc? Would not it be nice to have someone automatically step into your shoes and handle your business affairs?

6. Living will (this is different than a normal will)

• If you get really sick or have a bad accident and do not want to be kept alive if there's really no chance of surviving or coming out of a coma, your living will give clear instructions to your doctors when to not sustain your life any more . The living will keeps your family from unnecessarily suffering and also preserves your wealth by not being treated for something that you have no reasonable expectation to survive.

So much of the estate planning that you can do is very basic and costs little to no money at all, so just start the with the basics; update things like your 457 plan and write a will. If you have more specific directions for your assets, then talk to a qualified attorney about drafting a will. You'll DEFINITELY want your lawyer to draft a healthcare power of attorney and power of attorney for finances for you and your spouse – it will save a lot of headaches and heartache during tough times.

If you do a simple Web search for “bizarre and unique holidays” you'll be entertained by what's out there. For example, there's National Welding Month, National Picnic Month (this should not apply to ants), National Sleep Comfort Month, and of course, National Fight the Filthy Fly Month. For those that are curious about how babies are made, there's Romance Awareness Month. On a trip through Nashville last year, my wife and I discovered that September is National Biscuit Month.

After looking through the various holidays out there, I never came across a month dedicated to beneficiaries, so I'm unofficially declaring April as National Beneficiary Month. I'm doing this as a public service because early on in my career, I happened to take a call from a customer who husband had just passed away. The widow was calling in because she thought that she was the beneficiary of her husband's 457 deferred compensation plan. Sadly, her husband forgot to update his beneficiary design on the account, and a very large sum of money went to his ex-wife. As hard as she tried to get access to the money, the last I heard, the court could not help her. The judge simply could not make claims and the woman wound up with nothing.

Now that your taxes are done, please take some time to make sure that your preference designsations are up to date on your 457 plan and other saving accounts. Accounts like your checking, savings, and retirement plan, along with life insurance, should be carefully reviewed from time to time. Although some jurisdictions are forgiving when it comes to unintended beneficies, do not leave things to the courts.

And while we're on the topic of beneficiaries, make sure that you put together a valid will. Here are some handy things to keep in mind when it comes to wills:

• You can write a will for absolutely no money at all so quit making excuses if you do not have one! For example, here in Illinois if you write a will and have your signature witnessed by two people, you'll probably have a valid will. I would make the will “self-proving” by having those signs witnessed by a notary.
• Name an executor: This is the person that will wrap up your legal and financial affairs after you pass away. Where do you want your money to go when you die? The kids? Charity? Your officer should follow through on your orders.
• Name a guardian: This person will take care of your kids and can be the same person that handles their money

At some point, we all have to check out for good; it's simply the way of all flesh. For those we leave behind, the least we can do for them is make things a little bit easier when we're gone. One surefire way of doing this is to update your 457 plan and other account beneficiary designations.