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3 Ways Retirement Planning Has Gotten Trickier in 2017

By U.S. News & World Report

Individuals need a lot of knowledge and information in order to make informed decisions about saving and investing for retirement. However, due to several recent rule changes, workers who are making retirement preparations will receive less information and fewer guarantees that the information is accurate unless they carefully seek it out on their own. Here are several recent retirement benefit changes that could impact how you prepare for retirement and how to overcome these challenges.

[See: 9 Ways to Avoid 401(k) Fees and Penalties.]

No more paper Social Security statements. The Social Security Administration stopped mailing paper statements to people under age 60 in 2017. The agency expects to save $11.3 million in fiscal year 2017 due to lower processing and mailing costs. Paper statements will only be sent to people age 60 and over who are not yet registered for benefits and don’t have a my Social Security account where they can view statements online.

Social Security statements list your earnings history and how much you have paid into Social Security. They also provide an estimate of how much you will receive if you claim payments at various ages, what your benefit will be if you become disabled and how your family members will be provided for if you pass away. You can use your Social Security statement to make decisions about when to retire, the best age to sign up for benefits and how much you need to save for retirement.

Forthcoming research by Barbara Smith, a senior economist for the Social Security Administration, and Kenneth Couch, an economics professor at the University of Connecticut, found that receiving a Social Security statement resulted in statistically significant decreases in early claiming and corresponding increases in claiming at later ages. Retirees who start their benefit at older ages up until age 70 get bigger monthly payments going forward. “If you think you are going to live beyond the average life expectancy, then you are going to be better off delaying,” says Robin Sherwood, a certified financial planner for HTG Investment Advisors in New Canaan, Connecticut.

[See: 10 Ways to Increase Your Social Security Payments.]

The SSA has a history of starting and stopping paper statements. The agency previously sent statements to workers in the year they attained ages 25, 30, 35, 40, 45, 50 and 55 between 2014 and 2016, and mailed annual paper statements to all workers ages 25 and older between 1999 and 2011. In the absence of a paper statement, workers age 18 and older who want to check that their earnings have been recorded correctly or get an estimate of their future benefit for retirement planning purposes can create a “my Social Security” account and view their statement online at any time.

Delayed fiduciary rule. A Department of Labor rule requiring financial advisors handling 401(k)s and individual retirement accounts to act in the best interest of their clients that was scheduled to take effect on April 10 has now been delayed for 60 days until June 9. President Donald Trump issued a presidential memorandum directing the Labor Department to review the rule in February. As such, professionals who provide advice to retirement investors will be treated as fiduciaries and required to provide advice in the best interest of clients, charge reasonable compensation and refrain from making misleading statements beginning on June 9.

In the meantime, you can ask potential financial advisors if they are willing to act as a fiduciary and agree to recommend only investments that are in your best interest. Take care to find out how your financial advisor is paid and if he or she will make more money by steering you into specific investments that might not be the best possible fit for you. “Knowing how your advisor is compensated will give you some insight as to their potential conflicts of interest,” says Brian Schaeffer, a certified financial planner for ShankerValleau Wealth Advisors in Skokie, Illinois. “A fiduciary is required to put their client’s interests first.”

[Read: How to Get Reliable Retirement Planning Advice.]

Rule changes for state retirement accounts. Several states, including California, Connecticut, Illinois, Maryland and Oregon, have established state-run individual retirement accounts, often through a program called Secure Choice. Employees who don’t have access to a 401(k) plan or similar type of retirement account could be automatically enrolled and have money withheld from their paycheck and deposited in a personal retirement account unless they take action to opt out. The Department of Labor issued rules last year allowing states to set up retirement accounts for private-sector employees who don’t receive retirement benefits at work. However, the Senate recently voted to reverse a Labor Department rule that made it easier to set up state retirement accounts, and not all states want the responsibility of helping workers to prepare for retirement. “Regardless of any action on the resolution pending in the U.S. Senate, employees who work for employers who do not offer a retirement plan can most definitely plan on participating in Secure Choice,” says Katie Selenski, executive director of California Secure Choice. “Our goal is to open for business in late 2018, with phase-in over three years.”

In the absence of a state-run retirement program, people without access to retirement benefits at work can independently sign up for an IRA, Roth IRA or myRA. These accounts offer similar tax breaks to a 401(k) plan, but the contribution limits are much lower. For example, employees with access to a 401(k) plan can defer paying income tax on up to $18,000 that they save for retirement, and that amount jumps to $24,000 for people age 50 and older. The IRA contribution limit is a much more modest $5,500 each year, or $6,500 for older savers.

Emily Brandon is the author of “Pensionless: The 10-Step Solution for a Stress-Free Retirement.”

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3 Ways Retirement Planning Has Gotten Trickier in 2017 originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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