The Most Wonderful/Stressful Time of the Year

December 1, 2021

Welcome to what is referred to as both the “most wonderful” and the “most stressful time of the year.” During the second year of the COVID-19 pandemic, you may be experiencing stress and depression—unwanted emotions that can ruin your holidays and impact your physical and mental health.

Although you can’t control inflation, high gas prices, food and toy shortages, and shipping delays, you can be realistic, plan ahead, and seek support to overcome holiday stress and depression. You may even end up embracing the “most wonderful time of the year.”

Tips to Deal with Seasonal Pressures

Be realistic. COVID-19 cases are on the rise in some areas and even if you’ve been vaccinated, you may decide not to gather with friends and relatives in person. You can opt for a virtual celebration or increase efforts to share photos, texts, emails, phone calls, or videos with loved ones.

Avoid overspending, especially if you’re already feeling financial stress. Consider alternatives to expensive gifts by donating to charities in giftees’ names or by making and giving homemade presents.

Strive to decorate your home, create meals and desserts, and select gifts that will be appreciated not because they are “perfect” but because they are heartfelt and sincere.

Plan ahead. Compile lists of recipients and specific gift ideas; don’t go to browse in busy stores, hoping for inspiration. Save time and frustration caused by traffic and parking congestion by shopping online for items on your gift list. Schedule specific times to shop, bake, and attend social events. Plan menus and then create a detailed grocery list to prevent forgetting needed ingredients.

Acknowledge your feelings. Stress about gatherings with family and friends, or feeling grief about missing loved ones, may result in sadness and grief. Take time to acknowledge and express your feelings. You can’t force yourself to be happy just because it’s the holiday season. If you celebrate in person or in other ways as described above, set aside differences and controversial topics and concentrate on positive conversations.

Practice mindfulness by bringing your attention to the present moment and avoid getting stressed about past or future events.

Reach out. If you feel lonely or isolated, seek out community, religious or other social events, or communities. Many helpful organizations have websites, online support groups, social media sites, or virtual events that can offer support and companionship.

Volunteering your time and doing something to help others also are good ways to lift your spirits and broaden your friendships. Consider dropping off a meal and dessert at a friend’s home or to a community center that serves less fortunate individuals during the holidays.

Learn to say no. Set priorities based on preserving your well-being and don’t overextend yourself or you may wind up feeling resentful and overwhelmed. Learn to feel guilt-free when you decline invitations and recognize that you sometimes need to allow yourself to say no to demands on your time.

Maintain healthy habits. Get ample sleep, eat well—even at holiday events—and stay physically active in your daily routine. Maintaining healthy habits during the holiday season will be one of your best defenses against stress. When you feel a bout of stress coming on, have a healthy snack before a holiday party to curb your desire for high-calorie food and drink. Try deep-breathing exercises, meditation, or yoga. Avoid excessive tobacco, alcohol, and drug use.

Take a breather. Make time for yourself. Find an activity you enjoy like taking a walk, listening to calming music, or reading (or listening to) a book. Disconnect temporarily from social media and electronic devices.

Seek professional help if you need it. Even after following all the tips listed above, you may find yourself feeling continuously sad or anxious, beset by physical complaints and lack of sleep,  and unable to face daily chores. If these feelings last for a while, talk to your doctor or a mental health professional. If you rely on medications to maintain your physical and mental health, make sure your prescriptions are up-to-date and that you have an adequate supply when your doctor’s office or pharmacy may be closed or have reduced hours during the holidays.

Death (of a Spouse) and Taxes

November 16, 2021

In a “normal” year, about 1.5 million Americans become widows and widowers, but the COVID-19 pandemic has significantly increased that annual statistic. According to a recent article in The Wall Street Journal, the National Center for Family and Marriage Research at Bowling Green State University estimates that about 380,000 of the more than 700,000 people in the United States who have died from COVID-19 were married.

Under “normal” circumstances, it may be difficult to comply with tax requirements and deadlines; filing as a widow(er) presents additional challenges. This is a complex topic with the following issues to consider.

Filing the First Year

The IRS stipulates that the year that your spouse dies:

• You can still file a joint return if you didn’t remarry and the executor approves the joint return.
• If either spouse was a nonresident alien at any time during the year, the surviving spouse can’t file a joint return.
• If you do file jointly, include all your income and deductions for the full year, but only your spouse’s income and deductions until the date of death.
• If the deceased spouse owes any taxes that the estate can’t pay, you as the surviving spouse may be liable for the amounts owed.

Filing in the Next Two Years

For two tax years after the year your spouse died, you can file as a qualifying widow(er). This filing status gives you a higher standard deduction and lower tax rate than filing as a single person. You must meet these requirements:

• You haven’t remarried.
• You must have a dependent (not a foster) child who lived with you all year, and you must have paid more than half the maintenance costs of your home.
• You must have been able to file jointly in the year of your spouse’s death, even if you didn’t.

Notifying the IRS
If you are a widow(er) who qualifies to file a joint return, take the following steps:

• Across the top of your IRS Form 1040 tax return for the year of death—above the area where you enter your address, write “Deceased,” your spouse’s name, and the date of death.
• When you’re a surviving spouse filing a joint return and a personal representative hasn’t been appointed, you should sign the return and write “filing as surviving spouse” in the signature area below your signature.
• When you’re a surviving spouse filing a joint return and a personal representative has been appointed, you and the personal representative should sign the return.
• A decedent taxpayer’s tax return can be filed electronically. Follow the specific directions provided by your preparation software for proper signature and notation requirements.
• The deadline to file a final return is the tax filing deadline of the year following the taxpayer’s death.
• If you are a surviving spouse filing a joint return alone, you should sign the return and write “filing as surviving spouse” in the space for your deceased spouse’s signature.
• If a refund is due, there’s one more step. You also should complete and file with the final return a copy of Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer. Although the IRS says you don’t have to file Form 1310 if you are a surviving spouse filing a joint return, you probably should file the form to prevent possible delays.

Other forms and documents you may need include:

• W-2s, 1099s and other tax forms for the year of death, reporting income or expenses paid before the person died.
• Death certificate to prove the date of death in the tax year being reported.
• Form 56 filed by a trustee, executor, administrator, or other person to let the IRS know who is responsible for the person’s estate.
• Form 1041, “U.S. Income Tax Return for Estates and Trusts” reports receipt of more than $600 in annual gross income (such as dividends, interest, proceeds from the sale of assets) after the person died.
• IRS Publication 559, “Survivors, Executors and Administrators” provides more information about legal requirements.

Note: You can’t file a final joint return with your deceased spouse if you as the surviving spouse remarried before the end of the year of death. The filing status of the decedent in this instance is married filing separately.

Filing an Estate-tax Return

The current estate- and gift-tax exemption is $11.7 million per individual, so not many estates owe tax—only about 1,900 did for 2020, according to the Tax Policy Center. Executors don’t need to file a return if the decedent’s estate is below the exemption.

They may want to file one, however, because then the surviving spouse can have the partner’s unused exemption and add it to their own in many cases.

Estate taxes are normally due nine months after the date of death. But the IRS allows executors to claim the unused exemption for the spouse up to two years after the date of death, in many cases.

Selling a Home and Resulting Exemptions

Survivors who sell a home may take up to $500,000 of home-sale profit tax-free if they haven’t remarried and sell within two years of the partner’s date of death. If they sell later, the exemption drops to $250,000, the standard amount for single filers.

Dealing with Retirement Accounts

Surviving spouses can roll over inherited retirement accounts such as 401(k)s and IRAs into their own names, and financial advisers routinely recommend this move.

A new widow(er) should carefully consider options. It’s possible to divide retirement accounts such as IRAs, and to roll over some but not all assets into the survivor’s name. This would leave the remainder in an inherited IRA available for penalty-free payouts to younger spouses.

Either way, heirs of retirement accounts should be sure to name new heirs of their own.

Heirs of these accounts who will face higher taxes as single filers may also want to convert assets to Roth IRAs, which can have tax-free withdrawals—especially if they can convert while still eligible for joint-filing rates and brackets.

Cashing U.S. Savings Bonds

There’s a special rule for U.S. Savings Bonds, from which income generally accrues tax-free until the bonds are cashed in. When the bond owner dies, the accrued interest may be treated as income in respect of a decedent.

In that case, the new owner of the bonds becomes responsible for the tax on the interest accrued during the life of the decedent. (The tax isn’t due, however, until the new owner cashes in the bonds.)

Alternatively, the interest accrued up to the date of death can be reported on the decedent’s final income tax return. That could be a tax-saving choice if he or she is in a lower tax bracket than the beneficiary. If that method is chosen, the person who gets the bonds only includes in income the interest earned after the date of death.

Reporting Deductions

All deductible expenses paid before death can be written off on the final return. In addition, medical bills paid within one year after death may be treated as having been paid by the decedent at the time the expenses were incurred. That means the cost of a final illness can be deducted on the final return even if the bills were not paid until after death.

If deductions are not itemized on the final return, the full standard deduction may be claimed, regardless of when during the year the taxpayer died. Even if the death occurred on January 1, the full standard deduction is available.

Inheriting Property and Money

For deaths that occurred in years other than 2010, the tax basis of any property a taxpayer owns at the time of his or her death is “stepped up” to its date-of-death value. Since the basis is the amount from which any gain or loss will be figured when the new owner ultimately sells the property, this means that the tax on any appreciation that occurred during the taxpayer’s life is essentially forgiven.

The person who inherits the property—a house, say, or stocks and bonds— would owe tax only on appreciation after the time of death. It’s important that you pinpoint date-of-death value as soon as possible—the executor should be able to help—to avoid hassles later on when you sell it. If assets have lost value during the original owner’s life, the tax basis is stepped down to date-of-death value.

Money you inherit is generally not subject to federal income tax. If you inherit a $100,000 certificate of deposit, for example, the $100,000 is not taxable. Only interest on it from the time you become the owner is taxed. If you receive interest that accrued but was not paid prior to the owner’s death, however, it is considered income in respect of a decedent and is taxable on your return.

InsureYouKnow.org

The death of a spouse not only presents emotional distress resulting from the loss of a loved one, but it also forces a widow(er) to deal with income tax issues never before faced. By keeping at insureyouknow.org, copies of a spouse’s death certificate, medical bills, income records, property assessments, and wills, you’ll be able to access required documents when you file your income tax return following the death of a spouse.

Medicare Enrollment: Open Until December 7

October 28, 2021

Medicare is a national health insurance program administered by the federal government for people 65 or older. You’re first eligible to sign up for Medicare three months before you turn 65. You may be eligible to get Medicare earlier if you have a disability, End-Stage Renal Disease (ESRD), or Amyotrophic lateral sclerosis (ALS)—also known as Lou Gehrig’s disease. 

From October 15 through December 7 every year, depending on your circumstances, you are allowed to enroll in or switch to another Medicare Advantage plan or Medicare Part D prescription drug plan, or to drop your plan and return to Original Medicare. View a complete list of Medicare enrollment dates.

If you qualify for Medicare coverage or know someone who may need your help to learn about Medicare, coverage options, and how to apply, keep reading for a quick course in Medicare Basics.

Medicare Basics

Medicare and Medicare-approved private insurance companies offer the following options for you to get health care coverage:

• Part A (Hospital Insurance): Helps cover inpatient care in hospitals, skilled nursing facility care, hospice care, and home health care.

• Part B (Medical Insurance): Helps cover:
  • Services from doctors and other health care providers
  • Outpatient care
  • Home health care
  • Durable medical equipment (like wheelchairs, walkers, hospital beds, and other equipment)
  • Many preventive services (like screenings, shots, or vaccines, and yearly “wellness” visits)

• Part C (Medicare Advantage): Medicare-approved private insurance companies that provide all Part A and Part B services and may provide prescription drug coverage and other supplemental benefits.

• Part D  (Prescription Drug Coverage): Medicare-approved private insurance companies that provide outpatient prescription drug coverage.

• Medicare Supplemental Insurance (Medigap): Extra insurance you can buy from a private company that helps pay your share of costs in Original Medicare. Policies are standardized, and in most states named by letters, like Plan G or Plan K. The benefits in each lettered plan are the same, no matter which insurance company sells it.
  • You need both Part A and Part B to buy a Medigap policy.
  • Some Medigap policies offer coverage when you travel outside the United States.
  • Generally, Medigap policies don’t cover long-term care (like care in a nursing home), vision, dental, hearing aids, private-duty nursing, or prescription drugs.
  • If you’re under 65, you might not be able to buy a Medigap policy, or you may have to pay more.
  • Medigap policies are standardized, and in most states named by letters, like Plan G or Plan K. The benefits in each lettered plan are the same, no matter which insurance company sells it.
  • Find a Medigap policy that works for you.

Medicare Options

When you first sign up for Medicare and during open enrollment periods, you can choose one of the following two ways to get your Medicare coverage.

• Original Medicare (Includes Part A and Part B)
  • With Original Medicare, you can go to any doctor or hospital that takes Medicare, anywhere in the United States. Find providers that work with Medicare.
  • Join a separate Medicare drug plan (Part D) to get drug coverage. If you choose Original Medicare and want to add drug coverage, you can join a separate Medicare drug plan. Medicare drug coverage is optional. It’s available to everyone with Medicare.
  • If you have other insurance you also may have other coverage, like employer or union, military, or veterans’ benefits, learn how Original Medicare works with your other coverage.

• Medicare Advantage (Part C)
  • Medicare Advantage is a Medicare-approved plan from a private company that offers an alternative to Original Medicare for your health and drug coverage. These “bundled” plans include Part A, Part B, and usually Part D.
  • In most cases, you’ll need to use doctors who are in the plan’s network.
  • Plans may have lower out-of-pocket costs than Original Medicare.
  • Plans may offer some extra benefits that Original Medicare doesn’t cover—like vision, hearing, and dental services.
  • Most Medicare Advantage Plans include Part D coverage.
  • Below are the most common types of Medicare Advantage Plans:
  • Health Maintenance Organization (HMO) Plans  
  • Preferred Provider Organization (PPO) PlansPrivate Fee-for-Service (PFFS) PlansSpecial Needs Plans (SNPs)
  • Find a Medicare Advantage Plan for 2022.

Medicare Costs

Generally, you pay a monthly premium for Medicare coverage and part of the costs each time you get a covered service. There’s no yearly limit on what you pay out-of-pocket, unless you have supplemental coverage, like a Medicare Supplement Insurance. Get Medicare costs for current premium rates.

Health Insurance Assistance

Contact your local State Health Insurance Assistance Program (SHIP) to get free personalized health insurance counseling. SHIPs aren’t connected to any insurance company or health plan.

Sign Up Process

When you’re ready, contact Social Security to sign up for Medicare coverage:

• Apply online (at Social Security): This is the easiest and fastest way to sign up and get any financial help you may need. You’ll need to create your secure my Social Security account to sign up for Medicare or apply for Social Security benefits online.
• Call 1-800-772-1213. TTY users can call 1-800-325-0778.
• Contact your local Social Security office.
• If you or your spouse worked for a railroad, call the Railroad Retirement Board at 1-877-772-5772.
  

Note: Medicare provides your coverage, but you’ll sign up through Social Security (or the Railroad Retirement Board) because they need to see if you’re eligible for Medicare, including whether you (or another qualifying person) paid Medicare taxes long enough to get Part A without having to pay a monthly premium. They also process requests to sign up for Part B for Medicare.

InsureYouKnow.org

After you’ve met all the requirements to apply for Medicare coverage, have made your choices, and have signed up online, keep track of your decisions and copies of your Medicare, Medigap, and Medicare Advantage Plan membership information at insureyouknow.org.

Processing Passports

October 15, 2021

If you’re ready to start planning an international trip that you’ve postponed during the COVID-19 pandemic, first on your checklist should be to find your passport and see when it expires. Or, if you’ve never applied for a passport, cool your jets because your journey may be delayed due to current slow processing times for passport services.

The COVID-19 pandemic caused myriad service disruptions and delays, and while most services are relatively back to normal, obtaining a passport remains lengthier than it was prior to the pandemic. Passport adjudicators, who are essential to processing passports, can’t work from home; they must work within federal offices to process passports since passports are intended to be among the most secure documents a citizen will carry.

Officials recommend applying for a passport at least six months ahead of planned travel to avoid last minute complications. Individuals who do not have plans to travel abroad but have a passport that will expire within a year, are encouraged to apply now by mail or at an acceptance facility, such as a post office or library.

Effective October 8, routine service can take up to 14 weeks for new passports and passport renewals from the day an application is submitted to the day a new passport is received according to the State Department website. Information on passport fees can be found online here. Expedited service (for an additional $60) can take up to 10 weeks from the day an application is submitted to the day a new passport is received. These door-to-door timeframes include both processing and mailing times.

Here are a few suggestions from the State Department:

Select trackable mail

Send your application via USPS Priority Mail Express and pay an extra $17.56 for 1-2 day delivery of your completed passport. These services provide the fastest turnaround and protect your important documents.

Use self-service tools online

Get your questions answered immediately by using one of the available online self-service tools. Check online for your passport status. Customer service representatives will not give status updates over the phone. 

Apply early

Apply at least 4-6 months before your planned travel. Due to limited availability for urgent travel appointments, you can’t be guaranteed to receive in-person service at a passport agency or center. Customers with life-or-death emergencies are prioritized. You won’t be charged a fee to make an appointment. Visit the Passport Agency and Center page to learn more.

Schedule a limited appointment by phone

Call 1-877-487-2778 or 1-888-874-7793 TDD/TTY from 8 a.m. to 10 p.m. ET, Mondays through Fridays. The appointment line is closed on weekends and federal holidays. The online appointment booking system has been temporarily disabled to ensure that very limited appointments go to applicants who need them for urgent travel. Learn more to see if you qualify for an appointment.

Renew by mail

Adults with 10-year passports can renew them by mail instead of appearing in person.   

Respond to request for more information

If you applied more than 14 weeks ago for routine service or 10 weeks for expedited service and have not received your passport, the State Department may have sent you a letter requesting more information and can’t continue processing your application until you respond to this letter. Learn more on the Respond to a Letter or Email page. 

If you’re applying for a first-time passport

Children under age 16, first-time applicants and applicants who had their passports lost or stolen must apply in person and cannot renew by mail. But due to staffing shortages and other COVID-19-related issues, it can be tough to get an appointment at a local acceptance facility, which is typically a post office, library, or city clerk’s office.

Appointments are required at some, but not all, locations. Once you’ve applied at an acceptance facility, expect those same lengthy processing times that the renewal folks will experience as well.

Make time to gather your application materials, which includes evidence of U.S. citizenship for new passports. If you need time to track down your birth certificate or need to request one from an authorized issuing agency, your international trip may be even further than 18 weeks out.

Allow at least six months’ validity remaining

A valid passport that’s set to expire soon might be insufficient to assure international travel. Some countries require passports to be valid at least six months beyond your trip dates. So, even if your passport doesn’t expire until 2022, your 2021 holiday travel plans may be in jeopardy if your passport expires within six months of your trip. Some airlines won’t even let you board with a passport set to expire within that window. See which countries have such requirements via the State Department’s Country Information page.

Download passport forms

If you need to renew your passport or apply for one for the first time, you can download forms on the State Department website.

InsureYouKnow.org

At insureyouknow.org, you can keep track of your passport application or renewal journey. Here, you also can file copies of your valid passport, driver’s license, and birth certificate for safekeeping in case you lose them or need to refer to them while traveling.

What’s New for Flu?

September 30, 2021

During flu season last year, a record-low number of flu cases was linked to face mask wearing, remote work and school attendance, and physical distancing. But this year, experts fear that the reopening of schools, decreased adherence to pandemic precautions, and surging breakouts and Delta variant infections could result in a serious flu and COVID-19-season.

Take note of differences for 2021-2022 flu season

The Centers for Disease Control and Infection (CDC) pinpoints a few things that are different for the 2021-2022 influenza (flu) season including:

• The composition of flu vaccines has been updated.
• All flu vaccines will be quadrivalent (four component), meaning designed to protect against four different flu viruses. For more information: Quadrivalent Influenza Vaccine | CDC.
• Licensure on one flu vaccine has changed. Flucelvax Quadrivalent is now approved for people 2 years and older.
• Flu vaccines and COVID-19 vaccines can be given at the same time.
• Guidance concerning contraindications and precautions for the use of two flu vaccines – Flucevax Quadrivalent and Flublok Quadrivalent – were updated.

Take time now to get a flu vaccine

You can get your flu vaccine as you normally do, whether that’s through your health care provider or your local pharmacist. CDC has been working with health care providers and state and local health departments on how to vaccinate people against flu without increasing their risk of exposure to respiratory viruses, like the virus that causes COVID-19, and has released Interim Guidance for Immunization Services During the COVID-19 Pandemic.

• CDC recommends a yearly flu vaccine as the first and most important step in protecting against flu viruses.
• Flu vaccines help to reduce the burden of flu illnesses, hospitalizations, and deaths on the health care system each year.
• This season, all flu vaccines will be designed to protect against the four flu viruses that research indicates will be most common.
• Everyone 6 months and older should get an annual flu vaccine, ideally by the end of October.
• Vaccination of people at higher risk of developing serious flu complications is especially important to decrease their risk of severe flu illness.
• People at higher risk of serious flu complications include young children, pregnant women, people with certain chronic health conditions like asthma, diabetes or heart and lung disease, and people 65 years and older.
• Vaccination also is important for health care workers, and other people who live with or care for people at higher risk to keep from spreading flu to them. This is especially true for people who work in long-term care facilities, which are home to many of the people most vulnerable to flu.
• Children younger than 6 months are at higher risk of serious flu illness but are too young to be vaccinated. People who care for infants should be vaccinated instead.

Take preventive actions to reduce the spread of flu

• Avoid close contact with people who are sick.
  • If you are sick, limit contact with others as much as possible to keep from infecting them.
• Cover coughs and sneezes.
  • Cover your nose and mouth with a tissue when you cough or sneeze. Throw the tissue in the trash after you use it.
• Wash your hands often with soap and water. If soap and water are not available, use an alcohol-based hand rub.
• Avoid touching your eyes, nose, and mouth to prevent the spread of germs.
• Clean and disinfect surfaces and objects that may be contaminated with viruses that cause flu.
• For flu, CDC recommends that people stay home for at least 24 hours after their fever is gone except to get medical care or other necessities. Fever should be gone without the need to use a fever-reducing medicine. Note that the stay-at-home guidance for COVID-19 may be different. Learn about some of the similarities and differences between flu and COVID-19.
• In the context of the COVID-19 pandemic, local governments, or public health departments may recommend additional precautions that you should follow in your community.

Take antiviral drugs if prescribed

• If you are sick with flu, antiviral drugs can be used to treat your illness.
• Antiviral drugs are different from antibiotics. They are prescription medicines and are not available over-the-counter.
• Antiviral drugs can make flu illness milder and shorten the time you are sick. They may also prevent serious flu complications.
• Studies show that flu antiviral drugs work best for treatment when they are started within 2 days of getting sick, but starting them later can still be helpful, especially if the sick person has a higher risk factor or is very sick from flu.
• If you are at higher risk from flu and get flu symptoms, call your health care provider early so you can be treated with flu antivirals if needed. Follow your doctor’s instructions for taking this drug.

Flu symptoms include fever, cough, sore throat, runny or stuffy nose, body aches, headache, chills, and fatigue. Some people also may have vomiting and diarrhea. People may be infected with flu and have respiratory symptoms without a fever. Visit CDC’s website to find out what to do if you get sick with flu. Learn about some of the similarities and differences between flu and COVID-19, and the difference between flu and the common cold.

InsureYouKnow.org

After you have gotten your vaccine for the 2021-2022 flu season, keep a record of the date of and description of your injection at insureyouknow.org. On this secure website, you also can keep copies of your insurance cards and driver’s license that could be helpful when you fill out medical forms at your doctor’s office or neighborhood pharmacy.

Saving with a 529 College Plan

August 30, 2021

As college students return to campuses this fall, they (and in many cases, their parents) face costs that have tripled in 20 years, with an annual growth rate of 6.8 percent.

Melanie Hanson at educationdata.org reports that the average cost of college (considered to be any postsecondary educational institution that offers an undergraduate degree program) in the United States is $35,720 per student per year. Current college cost data also reveal:

• The average in-state student attending a public 4-year institution spends $25,615 for one academic year.
• The average cost of in-state tuition alone is $9,580; out-of-state tuition averages $27,437.
• The average traditional private university student spends a total of $53,949 per academic year, $37,200 of it on tuition and fees.
• Considering student loan interest and loss of income, the ultimate cost of a bachelor’s degree may exceed $400,000.

In the academic world, the cost of college is generally referred to as the cost of attendance (COA). Each college has its own COA consisting of five items:

• Tuition and fees
• Books and supplies
• Room and board
• Transportation
• Personal expenses

Twice per year, the federal government recalculates the COA for each college and then adjusts the figures for inflation to determine students’ financial needs when they apply for financial aid.

Planning in Advance

Advance planning for education costs is advisable to keep ahead of college inflation.

Regular investments add up over time. By investing even a small amount of money on a regular basis in a college fund, you have the potential to accumulate a significant amount if you start when your child (or grandchild) is young.

Once you have a sense of your college savings needs, make sure you are investing the money appropriately. Among several available college savings options described by Fidelity, a great place to start is to open and contribute to a 529 college savings plan account. It’s popular with parents and grandparents because there are few restrictions and the benefits are plentiful. You can potentially reduce your taxes and retain control over how and when you spend the money.

Education savings plans were first created in 1986, when the Michigan Education Trust established a prepaid tuition plan. More than a decade later, Section 529 was added to the Internal Revenue Code, authorizing tax-free status for qualified 529 tuition programs. Today there are more than 100 different 529 plans available to suit a variety of education savings needs.

To make sure you are on track with your savings goals, and to ensure you have an appropriate investment mix, revisit your plan at least annually. Over time, you will likely need to update the costs of schools you are considering, your financial aid situation, your child’s school preferences, school location, and your investment performance. When you’re ready to start paying for school, withdrawals are federal income tax-free when used for qualified education expenses.

Setting Up and Using a 529 Savings Account

• The requirements to open a 529 savings account are simple. You must be a U.S. resident, at least 18-years old, and have a Social Security or tax ID number.
• 529 plan savings can cover a range of educational expenses, in addition to college tuition. You can use up to $10,000 from a 529 account each year per beneficiary on elementary, middle, or high school tuition. At the post-secondary level, money saved in a 529 plan account can be used for a variety of higher-education-related expenses: tuition and fees, room and board, books and supplies, and computers and related equipment.
• Money saved in a 529 plan may have only a small impact on financial aid eligibility.
• You don’t have to be related to the beneficiary on the account to open a 529 account for them. Friends or family members can open a 529 college savings account regardless of their income or relationship to the student—and can even name themselves as the student beneficiary on the account. Anyone can contribute and you can encourage donations to a college savings account as a birthday or holiday gift.

Reaping Tax Benefits

A 529 savings plan works much like a Roth 401(k) or Roth IRA by investing your after-tax contributions in mutual funds, ETFs (exchange-traded funds), and other similar investments. Your investment grows on a tax-deferred basis and can be withdrawn tax-free if the money is used to pay for qualified higher education expenses. Contributions are not deductible from federal income taxes. 

You may also qualify for a state tax benefit, depending on where you live. More than 30 states offer state income tax deductions and state tax credits for 529 plan contributions. 

Choosing a 529 Plan 

Nearly every state has at least one 529 plan available, but you’re not limited to using your home state’s plan. Each 529 plan offers investment portfolios tailored to the account owner’s risk tolerance and time horizon. Your account may go up or down in value based on the performance of the investment option you select. It’s important to consider your investment objectives and compare your options before you invest. 

Withdrawing from a 529 Plan 

You can use your education savings to pay for college costs at any eligible institution, including more than 6,000 U.S. colleges and universities and more than 400 international schools. 

Once you’re ready to start taking withdrawals from a 529 plan, most plans allow you to distribute the payments directly to the account holder, the beneficiary, or the school. Read “How to Pay Your Tuition Bill With a 529 Plan” to learn more. 

Remember, you will need to check with your own plan to learn more about how to take distributions. Depending on your circumstances, you may need to report contributions to or withdrawals from your 529 plan on your annual tax returns.

Dealing with Leftover Funds

If your child doesn’t go to college or gets a scholarship, you won’t lose the college fund you have accumulated. Generally, you will pay income tax and a penalty on the earnings portion of a non-qualified withdrawal, but there are some exceptions. The penalty is waived if:

• The beneficiary receives a tax-free scholarship
• The beneficiary attends a U.S. Military Academy
• The beneficiary dies or becomes disabled

The earnings portion of the withdrawal will be subject to federal income tax, and sometimes state income tax.

If you have leftover money in your 529 plan and you want to avoid paying taxes and a penalty on your earnings, you have a few options, including:

• Change the beneficiary to another qualifying family member
• Hold the funds in the account in case the beneficiary wants to attend school later
• Make yourself the beneficiary and further your own education
• Roll over the funds to a 529 ABLE account, a savings account specifically for people living with disabilities
• Since January 1, 2018, parents also have the option to take up to $10,000 in tax-free 529 withdrawals for K-12 tuition
• Since January 1, 2019, qualified distributions from a 529 plan can repay up to $10,000 in student loans per borrower for both the beneficiary and the beneficiary’s siblings

You can withdraw leftover money in a 529 plan for any reason. However, the earnings portion of a non-qualified withdrawal will be subject to taxes and a penalty, unless you qualify for one of the exceptions listed above. If you are contemplating a non-qualified distribution, be aware of the rules and possible tactics for reducing taxes owed.

InsureYouKnow.org

If you’re interested in setting up a 529 college savings plan, do your homework on the benefits, qualified uses for account balances, and the low impact on financial aid. File your findings and, once you start receiving account statements, keep track of your college saving account as it prospers.

Retirees Face the Rising Cost of Living

August 14, 2021

Have you noticed this year that your grocery bill has been rising and the price of gas is higher each time you fill up at the pump? You also may have been shocked by sticker prices on new and used cars and trucks resulting from inflation in recent months.  

Consumer Price Index

On July 11, 2021, the Labor Department reported its consumer price index (CPI) rose 5.4 percent in July from a year earlier, in line with June’s figure and matching the largest jump since August 2008. White House officials are cautiously optimistic that the current increase in prices will be transitory, citing a continued drop in forward prices for lumber and other goods that experienced sharp increases because of supply chain bottlenecks. Steel capacity also had risen substantially over the past few months, they said.

The Federal Reserve has been keeping a close eye on inflation reports since it’s the central bank’s job to maximize employment and keep prices stable. Chairman Jerome Powell and other officials acknowledge the recent acceleration in prices but believe that the inflation is “transitory” and that prices won’t continue to increase at their current pace for too long.

As one of the most-cited inflation gauges, the CPI measures changes in how much American consumers pay for everyday goods and services including groceries, gasoline, clothes, restaurant meals, haircuts, concerts, and automobiles.

The CPI and other price measures have been on the rise in 2021 in large part because of a comeback in consumer spending and U.S. gross domestic product (GDP) as COVID restrictions eased.

Economic activity as measured by GDP rose at an annualized rate of 6.5 percent in the second quarter as Americans frequented restaurants, took summer vacations, and resumed other activities that COVID-19 had hindered.

Consumer Spending

Consumer spending, bolstered by the nationwide rollout of vaccines, jumped 11.8 percent during the three months ending June 30, the second-fastest rate since 1952.

At the same time, the pent-up demand for travel, retail, and restaurants has left many businesses scrambling to keep up and led to several setbacks on the supply side of the U.S. economy.

Employers who have struggled to find workers have hiked pay or offered signing bonuses to help fill the record 10.1 million job openings across the economy at the end of June. The leisure and hospitality sector, which includes restaurants, bars, and hotels, has one of the highest levels of job openings at more than 1.6 million.

But instead of absorbing higher labor and material costs, some businesses have begun to pass on the impact of higher wages to their consumers.

Inflation and Retirees

Higher prices take a significant toll on retirees. Social Security benefits rise only once a year. “Those with modest Social Security benefits are the ones who really have trouble,” reports Mary Johnson, Social Security and Medicare policy analyst at The Senior Citizens League, a non-partisan advocacy group. “Other retirees have had to tap more of their savings than they had planned because the Social Security benefit didn’t keep up with 2021’s hot inflation,” she says.

Inflation could prompt largest Social Security cost-of-living adjustment in decades. Retirees could see a 6.1 percent  bump to their Social Security benefits in 2022. That would be the biggest increase since 1983, according to The Senior Citizens League, which calculated the figure.

The Social Security Administration typically announces the amount of the annual cost of living adjustment (COLA), if any, in October. The increase in benefits typically goes into effect in January.

You might not see all the increase in your benefit payment. If your Medicare Part B premiums are deducted from your Social Security (as is the case with 70 percent of Part B enrollees), a Medicare rate increase could offset all or part of the COLA.

The Social Security COLA for 2021 was 1.3 percent. For many retirees, that meant just $20 more per month. Over the years, the increases have led to a loss of buying power for seniors, according to research from The Senior Citizens League.

The amount your Social Security check will increase will be based on a combination of your underlying benefit and the Social Security COLA.  Assuming the Social Security COLA  is at the 6.1 percent level for 2022, and you are receiving the maximum Social Security benefit of $3,895, you would get an additional $237.60 per month. This would mean an increase of $2,851.14 per year. 

The jump in benefits will be a bit more modest for those receiving the average Social Security benefit in 2021. Social Security benefits averaged just $1,543 per month in 2021. Again, assuming a 6.1 percent Social Security COLA, you could see your retirement benefits increase by $94.12 per month. When living on a fixed income, an additional $1,129.48 can go a long way.

If you are still working, make sure you have other retirement income to help maintain your standard of living. Even at the maximum Social Security benefit, you will have a tough time keeping your standard of living on Social Security alone. Work with a trusted financial planner to help determine the optimal time to claim your Social Security  benefits and to set up a monthly payment schedule.

Currently, 69 million Americans are collecting Social Security benefits. So, a significant increase in the COLA to Social Security will be significant for the budgets of many retirees. Before the announcement is made in October, the Today show offers hints to help you save money at the grocery store, including keeping track of your grocery spending, taking inventory of what you already have and using it, and meal planning to reduce food waste and save on your food bill.

Smart shoppers will also watch for sales, comparison shop, and consider buying useful, non-perishable items in bulk and even making use of an extra freezer whenever possible. When it comes to saving money, cheap and healthy can go hand in hand.

InsureYouKnow.org

If you currently collect Social Security benefits or plan to in 2022, you can track at insureyouknow.org your monthly spending patterns, file copies of your Social Security and Medicare statements, as well as savings accounts you may have set up for vacations, rainy days, or emergency contingency plans.

August = Back to School

July 30, 2021

Back to School Month has been observed in August since the 1960s to help parents, students, and teachers prepare for a new academic year. In addition to shopping for back-to-school supplies, backpacks, and clothes during the month, parents also will need to address how the coming academic year could look different, especially if their children attended virtual classes exclusively during the 2020-2021 school year.

In reaction to the COVID-19 pandemic, physical arrangements in schools could result in the placement of desks far apart from one another, maintenance of physical distance by teachers and students, the possibility of students and teachers staying in their classrooms for lunch, and the wearing of face masks.

COVID-19 also can affect children and young people socially, emotionally, and mentally. These issues also need to be addressed when students return in person to school.

COVID-19 Prevention in Schools

To help students return to school in person, the Centers for Disease Control and Prevention (CDC) provides Guidance for COVID-19 Prevention in K-12 Schools, that includes the following key takeaways.

• Students benefit from in-person learning, and safely returning to in-person instruction in the fall 2021 is a priority.
• Vaccination is currently the leading public health prevention strategy to end the COVID-19 pandemic. Promoting vaccination can help schools safely return to in-person learning as well as extracurricular activities and sports.
• Masks should be worn indoors by all individuals (age 2 and older) who are not fully vaccinated. Consistent and correct mask use by people who are not fully vaccinated is especially important indoors and in crowded settings, when physical distancing cannot be maintained.
• CDC recommends schools maintain at least 3 feet of physical distance between students within classrooms, combined with indoor mask wearing by people who are not fully vaccinated, to reduce transmission risk. When it is not possible to maintain a physical distance of at least 3 feet, such as when schools cannot fully re-open while maintaining these distances, it is especially important to layer multiple other prevention strategies, such as indoor masking.
• Screening testing, ventilation, handwashing, and respiratory etiquette, staying home when sick and getting tested, contact tracing in combination with quarantine and isolation, and cleaning and disinfection are also important layers of prevention to keep schools safe.
• Students, teachers, and staff should stay home when they have signs of any infectious illness and be referred to their healthcare provider for testing and care.
• Many schools serve children under the age of 12 who are not currently eligible for vaccination. Therefore, this guidance emphasizes implementing layered prevention strategies to protect people who are not fully vaccinated, including students, teachers, staff, and other members of their households.
• COVID-19 prevention strategies remain critical to protect people, including students, teachers, and staff, who are not fully vaccinated, especially in areas of moderate-to-high community transmission levels.
• Localities should monitor community transmission, vaccination coverage, screening testing, and occurrence of outbreaks to guide decisions on the level of layered prevention strategies.

COVID-19 Stress and Coping

According to the Child Mind Institute, “Children who are heading back to the classroom this fall are facing unusual challenges, and one of them is anxiety about being separated from their families after months of togetherness. For some kids it will trigger separation anxiety, in addition to the anxiety they may feel about leaving their safe harbor from the pandemic.”

“Kids are just really used to being home with their parents now,” notes Jennifer Louie, PhD, a clinical psychologist at the Child Mind Institute. Even kids who had comfortably adjusted to being in school before the pandemic are finding it stressful to be separated now. And, she adds, “there is the added fear that other people are not as safe as we thought they were.”

For some children, the excitement of going back to school after so many months stuck at home will outweigh potential anxiety, Dr. Louie notes. “But I think the kids who already have anxiety are more prone to being more anxious going back.”

So, parents have a complicated mission dealing with all this anxiety and uncertainty: reassuring children that it’s safe to be away from them, while also encouraging them to be careful and preparing them to be flexible in case the situation changes. How do you do that?  Here are some pointers from the Child Mind Institute.

• Validate their feelings: Parents should stay calm and positive. If your child lets you know that he’s worried or is having negative feelings about going back to school, reassure him that his feelings are normal. The knowledge that he is not alone in this experience will help your child feel he’s being heard and understood. Kids appreciate knowing what you’re doing to manage the situation and are willing to work together to ask and answer questions that can help them stay calm.

• Set the tone: Try to keep your own anxiety at bay so you don’t fuel your child’s apprehensiveness about returning to school in person. If your child has questions that you can’t answer, work together to find guidance from school or medical authorities.

• Help them think positively: Try to help your children focus on positive features about returning to school. What are they looking forward to? What do they hope they will enjoy each day at school with their friends and favorite teachers?

• Practice separation: For children who are anxious about being apart, experts suggest practicing separation, starting in small ways and building tolerance for more independence. Encourage your children to play independently and not rely on the constant presence of a parent.

• Have a routine: Making sure that your child has a predictable routine leading up to school can help kids, especially younger ones, feel more secure. Before the school bell rings on the first day of school, your children can practice getting up early and participating in morning routines, discussing homework expectations, and adhering to bedtime rituals.

• Emphasize safety measures: Review with your child the measures that her school has taken to put safety rules in place to minimize risk and keep everyone safe.

• Encourage flexibility: Since there is a possibility that children who start school in person may be expected to switch back to remote learning, at least for some periods of time, it’s helpful for kids to know that you’re prepared for changes that may occur.

Going back to school this year will have a new set of challenges when students return in person to campuses nationwide. Parents should review the safety rules and regulations for their children’s specific school and actively participate in keeping everyone safe.

InsureYouKnow.org

At insureyouknow.org, you can keep your family’s COVID-19 vaccination records, immunization documentation, and lists of prescriptions in a safe place.

Get Ready, Get Set, Go Electric!

July 13, 2021

Electric vehicles (EVs) are becoming more popular, practical, and affordable, but they aren’t new additions to the transportation industry. The first electric car was invented in 1832 by Robert Anderson and this mode of travel became popular beginning in 1889 when William Morrison made the first successful EV in the United States. Originally, EVs could only travel up to 100 miles on a single charge and were more expensive to purchase than vehicles that relied on combustible engines.

Mass production of EVs as we now know them started in the 1990s. During the past few years, EVs have experienced a rise in popularity as battery-powered technology has progressed and costs have declined. Climate and environmental awareness have prompted support for clean transportation, increased charging opportunities, and EV adoption.

In the United States, the Biden administration has pledged to cut the pollution driving global warming by 50 percent from 2005 levels by 2030. If you are committed to this goal that requires a radical transformation of the nation’s economy away from fossil fuels, you may want to consider the costs, insurance coverage, and benefits associated with owning an EV with zero emissions.

Costs and Incentives

Powered by a battery pack, EVs are in demand because of their quieter, simpler, and less-polluting driving experience. According to Car and Driver, “Basic electric models start at around $30,000 with luxury model prices climbing to $80,000 and more. Usually, a car buyer will pay at least $10,000 more for an electric car than they would for the same type of car in a gas model. As technology continues to evolve, this price gap is likely to close.”

Some models can travel more than 370 miles with a single charge. Installing a home charging station costs between $200 and $1,000 and allows you to charge your vehicle at home. You can find locations of public charging stations and associated fees at Plugshare.com.

You may be eligible for rebates or incentives offered by utility companies. For example, the California Clean Vehicle Rebate Project pays rebates up to $4,500 to Californians who purchase an eligible electric battery vehicle. The federal government offers tax credits up to $7,500 for purchasing certain makes and models of electric cars and SUVs.

Insurance

Electric vehicle owners may face higher insurance rates, but owning an EV becomes more affordable all the time. If you shop around, you may be able to find car insurance rates comparable to insuring conventional cars.

Follow these steps to save additional money on insuring your EV:

• File your claims wisely. Car insurance companies may raise your rates once you file a claim. These claims stay active on your account for three years, but the rate increase varies by state.
• Look for discounts.  Ask your current licensed insurance company if there are discounts not presently covered on your policy. Examples may include discount programs for EVs, multiple policies to insure more than one vehicle, remaining claims-free, taking a defensive driving course, using alternative fuel, or paying your premium in full.
• Compare insurance rates.  Compare rates from several companies to make sure you’re getting the best price to insure your EV.
• Find companies that reward you. Certain insurance companies offer discounts specifically for people who drive EVs. The amount depends on the company, but premium reductions typically are about 5 percent for a six-month policy.

Benefits

Over the past decade, the popularity of EVs has spiked. Many consumers buy them to save money at the gas station, while others want to help the environment. Some of the more appreciated reasons to switch to an EV include:

• Energy independence
• Reduced environmental impact
• Lower inhaled emissions
• Reduced maintenance expenses
• Reduction of fuel expenses 
• Extended battery life
• Quieter driving experience
• Availability of highway lanes dedicated to EVs  

InsureYouKnow.org

When you’re ready to buy an EV, your due diligence should include comparative shopping for your ideal vehicle and insurance coverage to meet your commitment to a cleaner environment and your future driving adventures. After you’ve made your decisions, keep track of your EV purchase, insurance, driving log, and maintenance expenses at InsureYouKnow.org.

The Call to Return to the Office

June 28, 2021

Has your employer notified you that the time has come for you to return to your office? Are you ready, hesitant, or determined to seek an alternative option to keep you at home, or at least closer to home if you also would face the return of a long daily commute?

Employees’ Reactions

With the coronavirus pandemic receding for everyone who has received the vaccine, some employers are pushing employees to get back to work in office buildings. But some people have moved during the pandemic; others have concerns about the virus and vaccine-hesitant colleagues; and working parents would have to quickly find childcare options for youngsters out of school for the summer.

According to Bloomberg News, a May survey by Morning Consult of 1,000 U.S. adults showed that 39 percent would consider quitting if their employers aren’t flexible about remote work. Some workers are leaving for new jobs, with better pay or remote-friendly working conditions. Others have decided to start their own businesses rather than collect a steady paycheck. Still others are quitting with no firm plans, confident they can get a better deal elsewhere as the economy rebounds from the pandemic recession. Some people are seeking happiness and are rethinking what work means to them, how they are valued, and how they spend and balance their time at work and home.

Increase in Resignations

All these factors are prompting a dramatic increase in resignations—a record 4 million people quit their jobs in April alone, according to the U.S. Bureau of Labor Statistics. More than 740,000 people who quit in April worked in the leisure and hospitality industry, which includes jobs in hotels, bars and restaurants, theme parks, and other entertainment venues. Many workers in these fields are burnt out after enduring conditions during the pandemic that may have put their personal health at risk.

At the same time, white-collar workers are feeling empowered too; resignations also are up in professional services. In March, about a quarter of all workers told Morning Consult they were considering switching employers.

Employers’ Reactions

Faced with mass resignations, employers are scrambling to keep their talented workforce on board. Some employers have announced plans to raise pay, be flexible, and make employees’ well-being and safety top priorities when they return to their companies’ offices. A compromise of allowing employees to choose to work remotely part of their workweek is being considered by concerned employers. With work teams composed of both in-office and remote employees, businesses will need to offer collaboration tools and innovative techniques so employees can continue to work together effectively, regardless of location. No one solution will work for every company, but a reintroduction to office life without a well-thought-out plan can be risky and dangerous.

Post-COVID-19 Working Conditions

Although some companies have decided to remain fully remote and have gone as far as selling their office buildings or not renewing lease agreements, other businesses want their entire staff to return to the office. Most organizations will be somewhere between a fully remote and a fully in-place workforce. Global Workplace Analytics, a research firm that specializes in remote work trends, predicts that 25–30 percent of U.S. employees will work from home multiple days per week by the end of 2021, up from 3.6 percent prior to the COVID-19 pandemic.

Hybrid Work Model

A hybrid work model is made up of both remote and in-office workers and gives employees the ability to choose how, where, and when they perform their job duties. This often includes office spaces designed with flexible work arrangements where employees come and go from the office based on preference and as project work dictates.

Several large enterprise companies have formally announced new policies designed to embrace a hybrid work model that gives employees the option to voluntarily return to the office or continue to work remotely for an indefinite period.

Returning to work after the COVID-19 pandemic will look different for every organization and will require a solution that works best for the safety and welfare of a specific group of employees.

Lifesize.com offers 10 Tips for Companies Returning to Work after COVID-19 under the following bullet points.

·      Embrace a hybrid work model

·      Implement a rotational work schedule

·      Take a phased approach

·      Restructure your offices

·      Create a sanitary workplace

·      Encourage good hygiene and self-isolation

·      Have a contingency plan

·      Get employee feedback

·      Review your communication tools

·      Maintain team-building efforts

Following the COVID-19 pandemic, employees and employers will face monumental work-related decisions that will affect the future of a productive workforce returning to physical offices, choosing a hybrid model of in-place and remote work, or abandoning the traditional workplace to seek alternative career options not bound to pre-pandemic conditions.

InsureYouKnow.org

If you are armed with a new contract from your employer that lists enhanced perks, including health and dental insurance benefits, an amended retirement package, remote work options, or a guaranteed raise, keep these records on file at InsureYouKnow.org. Also keep online your up-to-date resume if you are actively looking for a new work arrangement that meets your definition of a satisfying career choice.