March 24, 2019

5 Boring but Important Financial Chores for the New Year

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I would like to wish you and your family a Happy New Year – Cheers to a prosperous, healthy, and happy 2019!

The beginning of the year is a good time to take care of some financial housekeeping chores. These chores are somewhat boring but essential to maintaining good financial health.

1. Get Your Social Security Statement

Get a copy of your Social Security statement that will show your estimated retirement benefits at age 62, at your full retirement age, and at age 70. The statement also shows whether you have earned enough credits to qualify for Medicare at age 65. Your earnings record is listed in the statement and you should double check the information each year because your retirement benefits are calculated based on your earnings record. 

You can get your Social Security statement online at

https://www.ssa.gov/myaccount

You will need to create an account the first time you try to access the website.

For many people, Social Security will be the only guaranteed pension they will receive in retirement. The Social Security Administration reports that the average benefit replaces about 40% of pre-retirement income. This is just an average though, and each person’s circumstances will vary.

The age you start taking your Social Security benefit will also affect the amount you receive. Taking your benefit early at age 62 will reduce the amount you receive by about 30% as compared to what you would get at your full retirement age. Full retirement age for those born in 1960 and later is 67. For those born between 1955 and 1960, full retirement age ranges between age 66 and 2 months (born in 1955), and age 66 and 10 months (born in 1959). For those born between 1943 and 1954, full retirement age is 66.

You can choose to delay taking your Social Security benefit past your full retirement age and get a higher benefit. Your benefit increases by about 8% per year for each year you delay up to age 70. For example, if your full retirement age is 67 and you delay taking your benefit until age 70, then your benefit will be 24% higher than what it would have been at age 67.

Another positive feature of Social Security is that your benefit is adjusted annually for inflation. This is called the cost-of-living adjustment or COLA. In some years, the COLA may be insignificant but in other years, it may be substantial. For example, the increase was 0% for 2016, .3% for 2017, 2.0% for 2018, and 2.8% for 2019.

2. Get Your Credit Reports

By law, everyone is entitled to a free copy of their credit reports from the three major credit bureaus (TransUnion, Equifax, and Experian) each year. You are also entitled to a free credit report from a fourth bureau that you may have never heard of by the name of Innovis. Many financial experts recommend getting a copy of your Innovis report as well.

You can get your reports online from the three major bureaus at

https://www.annualcreditreport.com

The website will walk you through a process of obtaining your free report from each of the three credit bureaus. To start, you will enter some personal information, and then you will be taken to each bureau’s website one at a time. Each bureau will verify your identify by asking personal questions. Be sure to download or print your report from each bureau before moving on in the process. If you fail to download a report, you will not be able to go back again and retrieve it.

You can request a report from Innovis by filling out a form at

https://www.innovis.com/personal/creditReport

The Innovis report is not made available online and will be mailed to you instead.

Review your credit reports to ensure the correct information has been reported for your credit cards, car loans, mortgage loans, and any other loans. Make sure address information and other personal information is correct. If you find errors, follow the instructions given by each bureau for reporting and correcting errors.

Be prepared that you may run into some problems verifying your identity with the credit bureaus. While I did not have any problems getting my reports from Equifax, TransUnion, and Experian, my wife was unable to verify her identify with Equifax. She was informed that she had to request the report by mail. She has to fill out a form and mail it along with additional documentation proving her mailing address and Social Security number.

3. Consider Freezing Your Credit Reports

One way to safeguard your identity and prevent someone from opening new accounts in your name is to place a credit freeze on your credit reports. Most creditors require that they see your credit report before granting new credit. If there is a freeze on your report, the creditor will not be able to access your report and will likely not grant the credit.

By law, everyone is now entitled to freeze and unfreeze his or her credit for free. Note that some credit bureaus refer to it as a security freeze.

You can learn more about freezing your credit at

https://www.consumer.ftc.gov/articles/0497-credit-freeze-faqs

Use the following links to freeze and unfreeze your credit at each of the bureaus.

Equifax: https://www.equifax.com/personal/credit-report-services

Experian: https://www.experian.com/freeze/center.html

TransUnion: https://www.transunion.com/credit-freeze

Innovis: https://www.innovis.com/personal/securityFreeze

Again, be prepared that you may run into problems verifying your identity when trying to freeze your credit. My wife and I both had problems with freezing our credit at Experian. We were told that our identity could not be verified and now we have to fill out forms and mail them along with additional documentation.

4. Reduce Unsolicited Credit Offers in the Mail

Under current rules, credit-reporting companies may share your information with creditors and insurance companies. In turn, the companies use these lists to prescreen credit worthiness and mail you unsolicited offers for additional lines of credit and insurance. In addition to the annoyance of this junk mail, these pre-approved offers can pose an identity theft hazard. Thieves often steal these offers from your mailbox, complete the address, and open accounts in your name.

As part of the Fair Credit Reporting Act (FCRA), you are allowed to opt out of credit card offers, either for 5 years or permanently. By doing this, you prevent your name from appearing on these lists.

You can make your opt out or opt in choices at

https://www.optoutprescreen.com

5. Reduce Annoying Telemarketing Calls

Are you tired of annoying telemarketing calls? If so, register on the national Do Not Call registry. You can register landlines and cell phones. Once you have done this, most telemarketers should stop calling within 31 days. As of February 2008, numbers put on the national Do Not Call list will remain on permanently.

Get on the Do Not Call registry at

https://www.donotcall.gov

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