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MoneyWise Matters is a weekly blog published each Wednesday by the Office of the Indiana Secretary of State. Here we discuss money related topics including; debt reduction, budgeting, saving strategies, scam alerts, investment fraud prevention and investor insights. You don’t want to miss out on this helpful information, hit subscribe for email updates (above) so you’ll be notified when we publish a new post.

Please note that the statements made in the posts are solely the opinions of the writer and do not represent the opinion and/or position of the Indiana Securities Division. The Division assumes no responsibility for the content presented by the authors.  

The Things We Get Wrong Planning for Retirement

The Things We Get Wrong Planning for Retirement

 

By Kylee Hale

Wednesday, September 16, 2020

Guest Post by: Kerry Hannon Kerry Hannon

It's always a pleasure to share posts with like-minded people. Kerry Hannon is a respected advocate  of financial empowerment for women. When she accepted my invitation to share her wisdom with our readers, I was thrilled. I know you will be too.

The Things We Get Wrong Planning for Retirement 

5 ways to get them right for a more financially secure future

Lots of retirees have regrets about their retirement choices. The primary problem: they were too optimistic about their anticipated retirement benefits, which led to them not saving enough during their working years.  If they could go back in time, they’d have postponed retiring, paid off debts before leaving the workforce and learned more about personal finances.  Those are some of the findings in the recent intriguing study, “Subjective Expectations, Social Security Benefits, and the Optimal Path to Retirement,” by University of Southern California researchers María J. Prados and Arie Kapteyn, who culled data from more than 4,632 adults. 

21% said the Social Security benefits they got were substantially different than what they expected; most expected more.

The USC researchers also found that women were more likely than men to have been overly optimistic about retirement-benefits expectations. As a result, men “are more likely to save more and reach retirement better prepared,” the authors wrote.  And lower-educated people were more likely to be overly optimistic, too. 

“What’s concerning about these findings is that the more vulnerable groups (lower-educated people and women) are the ones who seem to be more optimistic about their future retirement benefits,” says Prados, an economist at the Center for Economic and Social Research at USC.  “Being mistaken in this way is costly for these groups because it makes it more difficult for them to realize they need to prepare to be appropriately ready for retirement,” she notes. “Given the complexity of how benefits are determined, it is not surprising to see an educational and socioeconomic gradient in these misperceptions.”   

About 20% of the retirees in the survey regretted claiming Social Security benefits as early as they did and 21% said the Social Security benefits they got were substantially different than what they expected; most expected more.  Alarmingly, more than 50% of the non-retirees said they don’t have a good estimate of their future Social Security benefits.  It doesn’t have to be that way.  There are a number of things you can do before you retire to avoid making these mistakes. (More on them shortly.)

Part of the gender differences in retirement-benefits expectations are “explained by differences in levels of financial literacy. Improving financial literacy among women would be helpful,” Prados says.  Bolstering the need for more retirement planning knowledge are three other reports released this summer.  A U.S. Government Accountability Office report to the U.S. Senate’s Special Committee on Aging found that all of the 190 women (most over 70) who participated in its focus groups said their lack of personal finance education negatively affected their ability to plan for retirement.  A study called The Four Pillars of the New Retirement, from the AgeWave think tank and the Edward Jones investment firm, surveyed 9,000 people in the U.S. and Canada and uncovered serious ignorance regarding future expenses in retirement. (Full disclosure: I was interviewed for the report.) 

“Almost 70% of those who plan to retire in the next 10 years say they have no idea what their healthcare and long-term care costs will be in retirement,” the study said.  Finally, new research from Morningstar Investment Management, Estimating ‘The End’ of Retirement, found that investors often misestimate their average lifespan, which could have a detrimental effect on their ability to successfully retire.  According to Morningstar, a retirement period of 30 years (to age 95 or so) is a reasonable assumption for the average 65-year-old heterosexual couple retiring today. But, the authors say, households with higher incomes have longer life expectancies than those with lower incomes, an effect that has been widening in recent years.

Here are five ways to avoid getting big things wrong when planning for retirement:

1. Ratchet up your expected life span for planning purposes. “A big issue is forgetting that you may live to be ninety-eight and then starting to run out of money,” says Cindy Hounsell, president of the Washington D.C.-based Women’s Institute for a Secure Retirement (WISER) and a Next Avenue Influencer In Aging.  “People also forget about inflation-increased property taxes, chronic health costs and caregiving out-of-pocket costs.”  To estimate your life span, try out the Longevity Illustrator online tool from the American Academy of Actuaries and the Society of Actuaries.

2. Get an estimate of your future Social Security benefit. You can do that by signing up for a free mySocial Security account on the Social Security Administration site. It will give you personalized estimates of your future Social Security retirement benefits based on your earnings history as well as a way to correct any errors in Social Security’s data for your earnings.  “Your statement’s an essential financial planning tool to help estimate income in retirement and figure out how much money you will need to supplement your Social Security benefits to pay bills and future costs,” Hounsell says. 

“I like clients to start preparing for retirement at least ten years out,” Braxton says.

And, she adds, getting the Social Security benefits estimate will give you a better idea how much you’ll need to save between now and retirement to supplement those benefits.

3. When reviewing your Social Security estimated benefits, learn how much more you could receive by delaying claiming benefits past your Full Retirement Age (which is between 66 and 67 depending on when you were born.)  Pushing them back can bump up your benefits by 8% annually, until age 70.  Lazetta Rainey Braxton, the Brooklyn, N.Y.-based co-CEO of the financial planning firm 2050 Wealth Partners, says many people don’t understand that working a little longer to be able to afford delaying Social Security can wind up paying off.

4. Create a retirement lifestyle budget plan. Braxton says, ask yourself: What is your budget? What expenses will you carry into retirement and what new expenses can you expect to incur?  “I like clients to start preparing for retirement at least ten years out,” Braxton says. “Five years at the minimum.” That way, you can factor in where you’ll want to live in retirement, the cost of living there and your likely streams of retirement income.

5. Women: take an active role in financial planning if you’re not doing so. “The finding from the USC researchers indicating that men are less likely to overstate their retirement benefits than women may also be because of traditional gender roles in many marriages and coupled relationships where men do the financial planning,” Hounsell says.  Thankfully, she notes, “This may be changing as more women are primary breadwinners and have equal financial planning roles.” 

For unbiased guidance, look for a fee-only financial planner with the Certified Financial Planner designation. You can find one by visiting sites of The National Association of Personal Financial Advisors, The Financial Planners Association and The Certified Financial Board of Standards.

The three key takeaways from these recent retirement studies, says Hounsell: “Plan for more income than you think you will need; get better informed and retire later.”

 

Kerry Hannon is the author of Great Pajama JobsYour Complete Guide to Working From Home (cover image to right, that's Kerry and her pooch). She has covered personal finance, retirement and careers for The New York Times, Forbes, Money, U.S. News & World Report and USA Today, among others. She is the author of more than a dozen books including Never Too Old to Get Rich: The Entrepreneur's Guide to Starting a Business Mid-LifeMoney Confidence: Really Smart Financial Moves for Newly Single Women and What's Next? Finding Your Passion and Your Dream Job in Your Forties, Fifties and Beyond. Her website is kerryhannon.com. Follow her on Twitter @kerryhannon.


Blog Topics: 
BudgetingInvesting 

Recent Posts

Recent Posts

The Things We Get Wrong Planning for Retirement

The Things We Get Wrong Planning for Retirement

 

By Kylee Hale

Wednesday, September 16, 2020

Guest Post by: Kerry Hannon Kerry Hannon

It's always a pleasure to share posts with like-minded people. Kerry Hannon is a respected advocate  of financial empowerment for women. When she accepted my invitation to share her wisdom with our readers, I was thrilled. I know you will be too.

The Things We Get Wrong Planning for Retirement 

5 ways to get them right for a more financially secure future

Lots of retirees have regrets about their retirement choices. The primary problem: they were too optimistic about their anticipated retirement benefits, which led to them not saving enough during their working years.  If they could go back in time, they’d have postponed retiring, paid off debts before leaving the workforce and learned more about personal finances.  Those are some of the findings in the recent intriguing study, “Subjective Expectations, Social Security Benefits, and the Optimal Path to Retirement,” by University of Southern California researchers María J. Prados and Arie Kapteyn, who culled data from more than 4,632 adults. 

21% said the Social Security benefits they got were substantially different than what they expected; most expected more.

The USC researchers also found that women were more likely than men to have been overly optimistic about retirement-benefits expectations. As a result, men “are more likely to save more and reach retirement better prepared,” the authors wrote.  And lower-educated people were more likely to be overly optimistic, too. 

“What’s concerning about these findings is that the more vulnerable groups (lower-educated people and women) are the ones who seem to be more optimistic about their future retirement benefits,” says Prados, an economist at the Center for Economic and Social Research at USC.  “Being mistaken in this way is costly for these groups because it makes it more difficult for them to realize they need to prepare to be appropriately ready for retirement,” she notes. “Given the complexity of how benefits are determined, it is not surprising to see an educational and socioeconomic gradient in these misperceptions.”   

About 20% of the retirees in the survey regretted claiming Social Security benefits as early as they did and 21% said the Social Security benefits they got were substantially different than what they expected; most expected more.  Alarmingly, more than 50% of the non-retirees said they don’t have a good estimate of their future Social Security benefits.  It doesn’t have to be that way.  There are a number of things you can do before you retire to avoid making these mistakes. (More on them shortly.)

Part of the gender differences in retirement-benefits expectations are “explained by differences in levels of financial literacy. Improving financial literacy among women would be helpful,” Prados says.  Bolstering the need for more retirement planning knowledge are three other reports released this summer.  A U.S. Government Accountability Office report to the U.S. Senate’s Special Committee on Aging found that all of the 190 women (most over 70) who participated in its focus groups said their lack of personal finance education negatively affected their ability to plan for retirement.  A study called The Four Pillars of the New Retirement, from the AgeWave think tank and the Edward Jones investment firm, surveyed 9,000 people in the U.S. and Canada and uncovered serious ignorance regarding future expenses in retirement. (Full disclosure: I was interviewed for the report.) 

“Almost 70% of those who plan to retire in the next 10 years say they have no idea what their healthcare and long-term care costs will be in retirement,” the study said.  Finally, new research from Morningstar Investment Management, Estimating ‘The End’ of Retirement, found that investors often misestimate their average lifespan, which could have a detrimental effect on their ability to successfully retire.  According to Morningstar, a retirement period of 30 years (to age 95 or so) is a reasonable assumption for the average 65-year-old heterosexual couple retiring today. But, the authors say, households with higher incomes have longer life expectancies than those with lower incomes, an effect that has been widening in recent years.

Here are five ways to avoid getting big things wrong when planning for retirement:

1. Ratchet up your expected life span for planning purposes. “A big issue is forgetting that you may live to be ninety-eight and then starting to run out of money,” says Cindy Hounsell, president of the Washington D.C.-based Women’s Institute for a Secure Retirement (WISER) and a Next Avenue Influencer In Aging.  “People also forget about inflation-increased property taxes, chronic health costs and caregiving out-of-pocket costs.”  To estimate your life span, try out the Longevity Illustrator online tool from the American Academy of Actuaries and the Society of Actuaries.

2. Get an estimate of your future Social Security benefit. You can do that by signing up for a free mySocial Security account on the Social Security Administration site. It will give you personalized estimates of your future Social Security retirement benefits based on your earnings history as well as a way to correct any errors in Social Security’s data for your earnings.  “Your statement’s an essential financial planning tool to help estimate income in retirement and figure out how much money you will need to supplement your Social Security benefits to pay bills and future costs,” Hounsell says. 

“I like clients to start preparing for retirement at least ten years out,” Braxton says.

And, she adds, getting the Social Security benefits estimate will give you a better idea how much you’ll need to save between now and retirement to supplement those benefits.

3. When reviewing your Social Security estimated benefits, learn how much more you could receive by delaying claiming benefits past your Full Retirement Age (which is between 66 and 67 depending on when you were born.)  Pushing them back can bump up your benefits by 8% annually, until age 70.  Lazetta Rainey Braxton, the Brooklyn, N.Y.-based co-CEO of the financial planning firm 2050 Wealth Partners, says many people don’t understand that working a little longer to be able to afford delaying Social Security can wind up paying off.

4. Create a retirement lifestyle budget plan. Braxton says, ask yourself: What is your budget? What expenses will you carry into retirement and what new expenses can you expect to incur?  “I like clients to start preparing for retirement at least ten years out,” Braxton says. “Five years at the minimum.” That way, you can factor in where you’ll want to live in retirement, the cost of living there and your likely streams of retirement income.

5. Women: take an active role in financial planning if you’re not doing so. “The finding from the USC researchers indicating that men are less likely to overstate their retirement benefits than women may also be because of traditional gender roles in many marriages and coupled relationships where men do the financial planning,” Hounsell says.  Thankfully, she notes, “This may be changing as more women are primary breadwinners and have equal financial planning roles.” 

For unbiased guidance, look for a fee-only financial planner with the Certified Financial Planner designation. You can find one by visiting sites of The National Association of Personal Financial Advisors, The Financial Planners Association and The Certified Financial Board of Standards.

The three key takeaways from these recent retirement studies, says Hounsell: “Plan for more income than you think you will need; get better informed and retire later.”

 

Kerry Hannon is the author of Great Pajama JobsYour Complete Guide to Working From Home (cover image to right, that's Kerry and her pooch). She has covered personal finance, retirement and careers for The New York Times, Forbes, Money, U.S. News & World Report and USA Today, among others. She is the author of more than a dozen books including Never Too Old to Get Rich: The Entrepreneur's Guide to Starting a Business Mid-LifeMoney Confidence: Really Smart Financial Moves for Newly Single Women and What's Next? Finding Your Passion and Your Dream Job in Your Forties, Fifties and Beyond. Her website is kerryhannon.com. Follow her on Twitter @kerryhannon.


Blog Topics: 
BudgetingInvesting 

Social Security and Disability

Social Security and Disability

 

By Kelly Griese

Wednesday, September 9, 2020

This week, I’m continuing to learn about financial issues related to disabilities, and as with my previous post, I’m attempting to share this information with all of you in a simple, easy-to-understand way. This is no small feat. Navigating this large and complex subject takes time, applying for these benefits takes time, and as I often tell folks who attend my presentations: time is money. When you need financial assistance, you need it ASAP. 


Compassionate Allowances

Enter the Compassionate Allowances program from the Social Security Administration (SSA), which seeks to expedite the process by quickly identifying severe medical conditions and diseases that meet Social Security’s standards for disability benefits. (My last blog post discussed both Social Security Disability Insurance and Supplemental Security Income.) 

Just last month, Social Security added five new Compassionate Allowances conditions. The list currently includes 242 conditions, including certain cancers, adult brain disorders, and a number of rare disorders that affect children. The list of conditions that qualify continues to grow, and you can even submit a condition for consideration. 

The purpose of the Compassionate Allowance program is to reduce the waiting time to reach a disability determination, which is necessary for you to start receiving benefits. Regardless of your condition, there is a waiting period between when you apply for benefits and when you begin receiving them. 


How Long Does It Take?

There are numerous factors that determine how long it takes to begin receiving disability benefits.  SSA breaks it down in their Frequently Asked Questions, but big factors include the nature of your disability and how long it takes to get medical evidence of your disability. All that said, if you are eligible to receive disability benefits, there is a five-month waiting period. SSA will pay your first benefit for the sixth full month after the date they find out your disability began. That means if your disability began today, September 9, 2020, your first benefit would be paid for the month of March, 2021. 


How Much Will You Receive? 

To figure out how much you will receive, SSA recommends you start by creating a My Social Security account. It’s pretty easy to create an account. I just did it myself online, and it only took a few minutes and some basic information, such as my driver’s license number and a few pieces of information from my last W-2. Creating a My Social Security account allows you to access your statement online. It will provide you with your estimated benefits and earnings record. It also has a retirement calculator to help you make the most of your earning years. You can even use the site to request a replacement Social Security card. But what’s important for the purposes of this blog post is the Social Security Statement. You can download a PDF of this document once you’ve created a My Social Security account. The statement tells you if you have earned enough credits to qualify for disability benefits and what your payment would be right now if you became disabled. I’ll go ahead and use myself as an example. I’m currently eligible to receive $1,937 per month if I were to become disabled. 


How to Apply

Before I explain how to apply for Social Security disability benefits, I recommend you check out SSA’s Disability Starter Kit. It includes a fact sheet with answers to common questions about disability benefits, a checklist of all the documents and information you will need to provide to SSA, and a worksheet to help you gather and organize everything. There are adult and child versions of this starter kit, and it’s available in English and Spanish. SSA also offers free interpreter service if English is not your primary language. 

Now back to applying for disability benefits. Remember, as I said before, there’s a waiting period for receiving disability benefits, so you should apply as soon as you become disabled.  You can apply online, or you can apply by calling 1-800-772-1213. SSA stresses that you should not delay applying for benefits if you don’t have all the necessary documents. They will help you get these documents. 

You are going to need to provide Social Security with a LOT of information when applying for disability benefits. This will take time, and you may want to ask for help. A friend or family member is allowed to apply on your behalf, and SSA will then follow-up with you to sign necessary documents. Additionally, there are numerous social service workers, disability advocates, and organizations who can assist you in this process. 


More Information

SSA has published a lot of information on the subject of disability. I recommend bookmarking this link to a search of the word “disability” on their publications page. 


Blog Topics: Budgeting

What Your Credit Score Says About You

What Your Credit Score Says About You

 

By Kylee Hale

Wednesday, September 2, 2020

Many people do not monitor their credit or know much about the credit scoring system until they attempt to make a big purchase. Buying a home or starting a business can require a large amount of money and often a loan. Each individual has a credit score. This is a three digit number that lenders use to determine how likely it is that an individual will pay back the loaned amount. A person’s credit score is also used by the lender to determine the interest rate. To the lender, a credit score is like a report card reflecting a person’s success of being financially responsible.

If you are married you and your spouse each have your own credit score. If you co-sign on a large purchase together, both individual’s score will be checked. Credit scores range from approximately 300 to 850. The lower the credit score the riskier it is for a lender to loan money, and it’s less likely the lender will grant the loan. If a loan is approved on a lower credit score, the loan will cost more overall. When it comes to locking in an interest rate, the higher the score, the better your terms of credit will likely be.

To obtain your own credit score you can request your score (for a small fee) and your credit report (for free) from annualcreditreport.com. Many credit card suppliers will provide you a free estimate of your credit score as a benefit. A credit report shows details about the lines of credit that you have established or have had within the past few years. A credit report is available for you to request without charge, once a year, from each of the three main credit bureaus. So you can monitor your credit on a regular basis if you space your request out obtaining one report each quarter of the year.

The most well-known credit scoring system was developed by Fair Isaac Corporation and is called the FICO score. The three major credit bureaus, Equifax, TransUnion and Experian, use the FICO scoring model for their proprietary systems. Since each scoring system uses a slightly different statistical model, your score from each of the three will not be exactly the same. This is because lenders and other businesses report information to the credit reporting agencies in different ways, and the agencies may present that information through their proprietary systems differently. Because different lenders have different criteria for making a loan, where you stand depends on which credit bureau your lender turns to for credit scores.

Composition of a Credit Score

Each individual’s credit score is determined by taking five components into account. Below is a chart of the components and the corresponding percentage of how much each component affects the overall credit score. 

Component Component Weight
Payment history 35%
How much you owe 30%
Length of credit history 15%
Type of credit 10%
New credit (inquiries) 10%

Payment History pertains to an individual’s track record of paying back debts on time. This component encompasses payments on credit cards, retail accounts, installment loans (such as automobile or student loans), finance company accounts and mortgages. Public records and reports detailing such items as bankruptcies, foreclosures, suits, liens, judgments and wage attachments also are considered. A history of prompt payments of at least the minimum amount due helps your score. Late or missed payments hurt your score.

Amounts Owed or Credit Utilization reveals how deeply in debt you are and contributes to determining if you can handle what you owe. If you have high outstanding balances or are nearly "maxed out" on your credit cards, your credit score will be negatively impacted. A good rule of thumb is not to exceed 30% of the credit limit on a credit card. Paying down an installment loan is looked upon with favor. For example, if you borrowed $20,000 to buy a car and have paid back $5,000 of it on time, even though you still owe a considerable amount on the original loan, your payment pattern to date demonstrates responsible debt management, which favorably affects your credit score.

Length of Credit History refers to how long you have had and used credit. The longer your history of responsible credit management, the better your score will be because lenders have a better opportunity to see your repayment pattern. If you have paid on time, every time, then you will look particularly good in this area.

Type of Credit refers to the "mix" of credit you access, including credit cards, retail accounts, installment loans, finance company accounts and mortgage loans. You do not have to have each type of account. Instead, this factor considers the various types of credit you have and whether you use that credit appropriately. For example, using a credit card to purchase a boat could hurt your score.

New Credit (Inquiries) suggests that you have or are about to take on more debt. Opening many credit accounts in a short amount of time can be riskier, especially for people who do not have a long-established credit history. Each time you apply for a new line of credit, that application counts as an inquiry or a "hard" hit. When you rate shop for a mortgage or a car loan, there may be multiple inquiries. However, because you are looking for only one loan, inquiries of this sort in any 14-day period count as a single hard hit. By contrast, applying for numerous credit cards in a short period of time will count as multiple hard hits and potentially lower your score. "Soft" hits—including your personal request for your credit report, requests from lenders to make you "pre-approved" credit offers and those coming from employers -will not affect your score.

Good credit management leads to higher credit scores, which in turn lowers your cost to borrow. Living within your means, using debt wisely and paying all bills on time, every time are smart financial moves. These lifestyle choices help improve your credit score, reduce the amount you pay when you need to borrow and put more money in your pocket to save and invest.

Some information in this article was extracted from a FINRA publication.


Blog Topics:
Credit

Disabilities and Finances

Disabilities and Finances

 

By Kelly Griese

Wednesday, August 26, 2020

This week, I’m doing a lot of learning… or at least trying. I started researching the subject of finances as they relate to persons with disabilities after seeing something I didn’t understand on my Facebook feed. It was a meme about income and asset limits for someone receiving disability assistance from the government. As an investor education coordinator, my mind first turned to investing, so I Googled “SSDI and investing income.” The search hurdled me through a rabbit hole of results and more questions. 

Allow me to pause for a moment and stress that I am non-disabled, and I do not have any immediate family members with disabilities, so I’m not a special needs expert. 

I intend for this week’s blog to be an introduction to the topic of finances as they relate to persons with disabilities. I also intend to write additional posts that take a deeper dive into some specific issues, and these future posts will include interviews with caregivers, persons with disabilities, and experts. Here are some of the issues I hope to explore: 

  • Working and income 
  • Investing and saving for the future 
  • Social Security and Medicaid 
  • Financial planning 

Statistics 

Now for some statistics regarding employment, income, and financial stress. These findings from FINRA’s national financial capability study of adults with disabilities are eye-opening. Keep in mind, these stats are from a 2017 survey – nearly a decade after the Great Recession of 2008 but before the current Coronavirus pandemic. 

  • 1 in 9 working-age adults (18-65) have a disability. Of those, only 1 in 3 are employed. 
  • Persons with disabilities are almost 2 times more likely to have an income less than $35,000, and 26 percent of survey respondents with disabilities had household incomes below $15,000. 
  • Less income equals more financial stress. Persons with disabilities are almost 3 times more likely to have extreme difficulty paying bills, and 55 percent of survey respondents say they wouldn’t be able to come up with $2,000 to cover an emergency expense. 

Resources

It’s not all bad news. There are resources available that can help. Programs like Section 8 housing vouchers, Supplemental Nutrition Assistance Program (SNAP), and Low-Income Home Energy Assistance Program are available to qualifying low income families, but they can also help alleviate some of the financial strain of having a disability. Other programs are specifically designed to assist Americans with disabilities. 


SSDI and SSI

Social Security Disability Insurance (SSDI) provides benefits to people who have made contributions to the Social Security Trust Fund but are now unable to work due to a qualifying disability. Currently, the average disabled worker receives $1,258 per month. The amount received is based on average lifetime earnings, not on household income, financial resources, or how severe your disability is.  To receive SSDI, you must be deemed disabled and unable to work. 

SSDI is different from Supplemental Security Income. SSI provides monthly cash assistance to disabled or elderly people who have financial needs regardless their work history. Currently, SSI’s maximum monthly payment is $783 for an eligible individual, $1,175 for an eligible individual with an eligible spouse, and $392 for an essential person.

Investopedia did a great job of explaining these two types of benefits in an easy-to-understand way, and their blog post walks you through the evaluation process. I highly recommend you give it a read if you or someone you know might be eligible to receive these benefits.

The National Council on Disability has a LOT of content related to financial assistance and incentives. You can find their publications here


ABLE Savings Accounts

An “inability to work” is required for both SSDI and SSI benefits. That means earning too much money can endanger someone’s ability to receive critical financial support. Plus, SSI has asset limits that serve as a disincentive to save. 

Enter ABLE savings accounts. The name ABLE comes from the Achieving a Better Life Experience Act of 2014. ABLE savings accounts allow qualified individuals with disabilities to save money and not risk losing vital public benefits, such as SSI or Medicaid. And these savings accounts are tax-advantaged. I asked the Indiana Treasurer’s office for some more information, and they told me about INvestABLE Indiana, our state’s 529A savings option. 

Persons with disabilities can use ABLE accounts to save money and pay for disability-related expenses, including education, transportation, housing, and medical needs. Similar to 529 education savings plans, 529A contributions can be made by anyone, including the account owner, family, or friends. To be eligible, the account holder must have the onset of disability prior to age 26 and be receiving SSI or SSDI. If the account holder is not receiving SSI or SSDI, they will need to receive a doctor's diagnosis of significant functional impairment. The staff at the Indiana Treasurer's office can answer any questions you might have. 

I plan to write a lot more about ABLE savings accounts in a future blog post. 


I've barely scratched the surface when it comes to financial resources for persons with disabilities. It's a complex subject, and there's no one-size-fits-all assemblage of resources to address the needs of this large and diverse community. There's a lot to navigate when it comes to living with a disability, and not all of it is easy to understand. Financial planning can be difficult for caregivers and those who are differently abled. Based on the statistics outlined in this post, it's clear that persons with disabilities and their families are impacted more significantly than many of us may know. I will continue to educate myself and in turn educate you. Hopefully, through future posts, I can provide you with a starting point for addressing financial issues related to disabilities. If you believe I’m missing anything or have thoughts on future topics for discussion please reach out.   


Blog Topics: Budgeting

Working Hoosiers Beware of Identity Theft

Working Hoosiers Beware of Identity Theft

 

By Kylee Hale

Wednesday, August 19, 2020

ID Theft

When the pandemic hit, we pretty much entered a new recession, cancelling out most of the employment gains from the last 10 years. An improvement from April, the United States unemployment rate in June was 11%. That is higher than it’s been any time in the last 70 years. Whether returning to work or finding a new way to make an income, there is one thing we all still need to worry about: identity theft.

Thousands of Hoosiers have been impacted by thieves using stolen information to cash in on funds from the federal CARES act passed by Congress. The CARES act money is supposed to help those who are unemployed during the pandemic. An investigation by 13News  reveals three Indiana residents who were caught off guard and alarmed to find their information had been used to make an unemployment claim.

 "I was shocked," said Lola Best, as she found out her personal information had been registered under someone else’s account with the Department of Workforce Development (DWD). 

Rosemary McQueary of Noblesville also stated that she no idea how her information ended up in the system as she is very careful. 

Another Indiana man found out he was a victim of identity theft when he received a letter from the DWD requesting he pay back a ten thousand dollar overpayment. He tried to make an account on the Department’s website and was notified his social security number was already in use.

To the average Hoosier, it may be concerning to find that the DWD may not have cross-referenced data to confirm matching birthdates and legitimate information for claims filed. However, there is no system for the Department to verify employment information for claims made under the Pandemic Unemployment Assistance fund. In times of emergency when there is pressure to help those in need as quickly as possible, it’s likely for some errors to occur.

Be Alert Identity Theft

The Department has taken a number of steps to combat the issues and is now cross-checking the applicant’s contact information that is provided when a claim is filed. In August, the Department sent an email to claimants to update their password and check their account status in the system. Additionally, the DWD does not hold victims of identity theft liable for any overpayment.

A recent FBI article expressed the increased amount of fraud reports regarding stolen personally identifiable information used for unemployment insurance claims during the COVID-19 pandemic. Buying stolen information online, data breaches, cold-calling impersonations, email phishing, and obtaining data from public websites are all ways for fraudsters to get their hands on personal information.

There are a few things that can tip you off to a scam. Any type of communication regarding unemployment insurance or payout, if you have not filed a claim, should be a red flag. Be sure to monitor your bank and credit card statements for suspicious transactions related to unemployment benefits. Unsolicited inquiries in any form should be ignored or reported.  Lastly, beware of links and fake look-a-like sites made to mirror government agency websites. You can check the resource by hovering over a link to see where it redirects to and/or directly looking up the agency to confirm you have the legitimate government website.

If you think you are a victim, report unauthorized transactions and contact the three major credit card bureaus: Experian, TransUnion, and Equifax. It’s best to regularly check your credit. Placing a freeze on your credit will protect you from identity theft. Activating a credit freeze is free and secures your information so no scammer can open a line of credit in your name.  The Indiana Attorney General has a website for helping Hoosiers set up security freezes, here is the link.  Fraud cases can be reported to Indiana State Police, DWD, the IRS, credit bureaus, and your human resources department. The FBI also encourages victims to report fraudulent or any suspicious activities to the Internet Crime Complaint Center at ic3.gov . Also, you can use the Federal Trade Commission’s resource, identitytheft.gov, for help reporting and recovering from identity theft.

It’s unfortunate that bad actors are taking advantage of a pandemic. Know that scammers will always try to play on a victim’s emotions. Taking protective measures, like putting a credit freeze in place will stop scammers in their tracks. Remember that if it sounds too good to be true it probably is, and if you think you’ve been a victim of fraud, report it to the authorities.


Blog Topics:
Fraud Prevention

Government Impostor Scams

Government Impostor Scams

 

By Kelly Griese

Wednesday, August 12, 2020

“I’m from the government, and I’m here to help.” President Reagan called those the nine most terrifying words in the English language. And when it comes to government impostor scams, I agree.

According to our friends at the Better Business Bureau (BBB), one of the most common scams in the U.S. and Canada involves callers pretending to be government officials. They claim to be tax officials, representatives from the Social Security Administration, police officers, and even Centers for Disease Control and Prevention (CDC) officials. The criminals demand money and personal information. They often threaten legal action and imprisonment. We’ve talked before about con artists using fear and intimidation to manipulate their victims. Such tactics often cause us to stop thinking logically and react quickly on instinct. 

The Federal Trade Commission produced a video about how government impostor scams work and offers examples. 

Reports of government impostor scams fluctuate, but BBB says they’re growing more diverse and more sophisticated. BBB just released a new investigative study on government impostor scams that you can read by visiting BBB.org/FakeGov. According to a recent AARP survey, 44% of Americans say they’ve been contacted by fraudsters posing as government officials. And the FTC says victims of government impostor scams report losing $450 million since 2015. 


Remember, if the call is really from a government official, they will NEVER: 

  • Threaten you
  • Demand immediate payment over the phone or via email
  • Require payment by cash, gift card, pre-paid card, or wire transfer

There are several ways to report government impostor scams, depending on who the con artist claims to be:

  • IRS - Fill out the “IRS Impersonation Scam” form on the Treasury Inspector General or Tax Impersonation’s website, tigta.gov, or call TIGTA at 1-800-366-4484.
  • Social Security - The Office of the Inspector General, Social Security Administration (SSA IG) has its own online form to take complaints about frauds impersonating the SSA.
  • Federal Trade Commission - 877-FTC-Help or ftc.gov.
  • Internet Crime Complaint Center - https://www.ic3.gov/complaint/splash.aspx.

Blog Topics: Fraud Prevention

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