Find Out More: Viaticals Resource Guide

This week, we chatted with WISER Senior Policy Analyst Laurel Beedon about Viaticals. If you still have questions on viaticals or you're just looking for more information, here's WISER's list of Viaticals resources:

American Council on Life Insurance
1001 Pennsylvania Avenue, N.W.
Washington, DC 20004-2599
www.acli.org

National Association of Insurance Commissioners
444 North Capitol Street, N.W.
Washington, DC 20001
www.naic.org

National Association of People with AIDS
1413 K Street, N.W.
Washington, DC 20005
www.napwa.org

National Viatical Association
1200 G Street, N.W., Suite 760
Washington, DC 20005
www.nationalviatical.org

For more information, you can also contact your state insurance commissioner or state attorney general. The National Association of Insurance Commissioners has state-by-state contact information for insurance commissioners here.

WISER Celebrates America Saves Week!

This week is America Saves Week. All over the country, individuals and organizations are using this week to rededicate themselves to saving and paying down debts. Many are worried about their retirement. These issues are especially important for single women. Women live longer and earn less than men; they are also more likely to remain single, to be widowed or divorced and vulnerable to poverty.

For America Saves Week, WISER has new resources for women who are going through a divorce or who have been widowed. WISER’s guide, “Divorce and Retirement: Take Control of the Retirement Benefits,” helps women navigate the complicated world of dividing retirement benefits at divorce, while “WISER’s Report on Widowhood” offers financial tips for widows of all ages.

Spare Change: Stimulus Act Offers Premium Assistance COBRA Beneficiaries

Beginning March 1, 2009, the government will subsidize 65% of the cost of COBRA premiums for eligible workers and their dependents who were/are involuntarily terminated between September 1, 2008 and December 31, 2009 for up to nine months. The subsidy is available as long as the person's adjusted gross income is $125,000 or less ($250,000 or less for joint filers). It is phased out as adjusted gross income increases from $125,000 to $145,000 ($250,000 to $290,000 for joint filers), so that there is no subsidy at all above those levels.

For those who did not initially elect COBRA coverage, the legislation also provides an additional 60 day election period.

Q&A: Viaticals

This week, the WISER blog writers had a Q&A session with WISER's Senior Policy Analyst, Laurel Beedon, on Viaticals. A viatical is a legal document that sells your life insurance policy to a third party.

Q:Why would I sell my life insurance?
A: A viatical can provide needed money if you are terminally or chronically ill and in a difficult financial situation.

Q: Who is involved?
A: You, as a terminally or chronically ill person sell your life insurance policy to an investor in return for a lump-sum payment. The investor then takes over payments on the policy and is the beneficiary of the policy upon your death. Usually, a viatical broker arranges the agreement between you, the seller of the policy, and the buyer using a viatical purchase agreement. The broker is paid a commission.

Q: What should I find out?
A: If you are considering a viatical, it is important to ask some questions and learn about all the options on your life insurance policy before you make your decision.

Here are some questions to ask and people to check with before you decide on a viatical:

• Do you have any cash value in your life insurance policy? If so, you may be able to use some of the cash value to meet your immediate needs and still keep your policy in force for your beneficiaries without having to sell it to a third party.


• Does your life insurance carrier offer accelerated death benefits? Those benefits could pay you a substantial portion of your policy’s death benefit and you wouldn’t have to sell your policy to a third party.


• Will your receipt of cash from a viatical agreement be taxed? Check with your financial or tax advisor.


• Will you lose any public assistance or social service benefits such as food stamps or Medicaid if you receive a cash settlement?


• Will buyers of your policy be able to learn your identity and will they know certain medical and personal information about you, such as your address and life expectancy?

Before you make any major decisions, you may also want to consult your own financial advisor or attorney. Shop around. Talk with several companies and/or brokers to find the best arrangement. Don't fall for high pressure tactics. You don't have to accept an offer, and you can change your mind. Check with your state insurance department to verify the company or broker you are considering is licensed. Check with your state attorney general’s office for complaints against the company.

Tomorrow: Find Out More: Viaticals Resource Guide

Financial News You Can Use

-On February 17, 2009, President Obama signed the American Recovery and Reinvestment Act of 2009. This new legislation provides a one-time payment of $250 to Social Security and Supplemental Security Income beneficiaries. Over 60 million beneficiaries will receive a one-time payment. Social Security expect all payments to be delivered by late May 2009. To assist Social Security in issuing these payments as quickly as possible, beneficiaries should not contact Social Security unless they do not receive their payment by June 4th.

-A new law may make it easier for some Americans to allow their retirement funds to recoup losses. That’s because mandatory withdrawals from certain retirement accounts have been waived for tax year 2009. Usually, anyone age 70 1/2 or older is required to withdraw funds from their retirement plans each year, even if the money isn’t needed. These plans include 401(k)s, 403(b)s, some 457(b)s as well as IRAs and IRA-based plans such as Simple IRAs and SEPs.
However, The Worker, Retiree and Employer Recovery Act of 2008 waives the requirement to withdraw funds in 2009. To learn more, visit www.irs.gov/pub/irs-drop/n-09-09.pdf.

-For people who want to save, Social Security offers online planning tools such as the Retirement Estimator. The Estimator allows people to try out different retirement scenarios. Just plug in some quick information and you’ll get estimates of your future benefits based on your personal earnings record. Try it out at www.socialsecurity.gov/estimator.

Facing Divorce? Be Sure to Protect Your Finances

In The Observer’s January 25, 2009 edition, an article entitled “Men become richer after divorce,” written by Amelia Hill, a social affairs correspondent, exposed truths regarding the financial well-being of divorced spouses who have children. In a study conducted by Stephen Jenkins, director of the Institute for Social and Economic Research and chair of the Council of the International Association for Research on Income and Wealth, findings reveal a father’s income rose by one third after divorce, and a woman’s income fell by more than one fifth after divorce regardless of whether the female is a mother. In concordance with the findings, Ruth Smallacombe, a family consultant at Resolution and Family Law in Partnership (Flip) stated, “The general belief that men get fleeced by their divorces while women get richer and live off the proceeds has long been due for exposure as a pernicious myth.” While 27% of separated women are impoverished, less than 9% of separated men face this challenge. Women need to be prepared for the obstacles they may face after divorce. Remember, marriage is a shared partnership. To learn more about how to ensure that you receive your share of the marital property, read WISER’s newly published report entitled, “Divorce and Retirement: Take Control of Retirement Benefits.”

New WISER Release: Divorce and Retirement: Take Control of Retirement Benefits

The Women's Institute for a Secure Retirement (WISER) today released Divorce and Retirement: How to Take Control of Retirement Benefits, a short, commonsense guide on a complicated topic: splitting the financial assets -- all of them -- during a divorce. For hundreds of thousands of couples, this Valentine's Day is only another reminder of the fraught financial reality that divorce presents.

"Divorce is complicated enough without having to worry about retirement benefits," says Cindy Hounsell, President of the Women's Institute for a Secure Retirement. "Our goal is to arm women against their biggest enemy, and it's not the husband -- it's a lack of information."
Written by WISER staff, including D.C.-based divorce attorney and expert Anne E. Moss, Divorce and Retirement claims that what you don't know -- and don't ask about -- can and will hurt you in a divorce. WISER urges readers to get as much information as possible prior to the divorce because "it's nearly impossible to go back to court and ask about a share of your ex-husband's benefit that you learn about after the fact."
The booklet includes Moss's "10 Ways to Avoid Losing the Pension During a Divorce," -- a harsh wakeup call to anyone who currently trusts her lawyer completely. As Moss says, "Ask your lawyer these questions!"

Hounsell agrees. "Knowing what to ask your lawyer can save you from additional heartache during a divorce," she says. "Trust no one -- and never assume that your attorney is an expert on the many federal and state laws in place for splitting retirement benefits."
Because pension and retirement benefits are not automatically split in a divorce, they are often overlooked, and women especially can end up losing big. Divorce and Retirement reiterates the importance of these benefits and breaks down the legal jargon that usually accompanies information on marital property, negotiating an agreement, and getting a qualified domestic relations order (QDRO). WISER also points readers to additional resources, such as AoA-funded Pension Rights Projects across the country, and fact sheets that go into further detail.
"This booklet is not about getting more than your share, or getting back at your former spouse," says Hounsell. "It's about money -- your money -- and how to make sure an innocent oversight (or not-so-innocent) doesn't prevent you from receiving extra help when you'll probably need it most -- in retirement."

Divorce and Retirement is available for free online at www.wiserwomen.org, or in hard copy for $4. Contact WISER at info@wiserwomen.org or call 202-393-5452 for more information.

Government Gives Retirement Funds Room to Recover

A new law may make it easier for some Americans to allow their retirement funds to recoup losses. That’s because mandatory withdrawals from certain retirement accounts have been waived for tax year 2009.

Usually, anyone age 70 1/2 or older is required to withdraw funds from their retirement plans each year, even if the money isn’t needed. These plans include 401(k)s, 403(b)s, some 457(b)s as well as IRAs and IRA-based plans such as Simple IRAs and SEPs. However, The Worker, Retiree and Employer Recovery Act of 2008 waives the requirement to withdraw funds in 2009. To learn more, visit www.irs.gov/pub/irs-drop/n-09-09.pdf.

[Government Gives Retirement Funds Room to Recover] IRS.gov

Do You Qualify for the EITC?

Do you:

1. Possess a valid Social Security number.
2. Meet certain residency and filing criteria, including following guidelines for a qualifying child.
3. Have an investment income that's no more thatn $2,950.
4. Have a total earned income of at least $1 and and an earned income and adjusted gross income (AGI) that's less than:

• $12,880 with no qualifying child ($15,880 if married, filing jointly)
• $33,995 with one qualifying child ($36,995 if married, filing jointly)
• $38,646 with more than one qualifying child ($41,646 if married, filing jointly)

If you meet the criteria above, you may be eligible for the Earned Income Tax Credit (EITC). The EITC is a refundable credit for low and moderate-income taxpayers. If you qualify, you could pay less federal income tax, pay no tax or receive a refund. To find out if you're eligible for an EITC this year, visit the IRS website and use their eligibility tool. If you know you're eligible, find out how much your EITC will be for 2008.

Legislative Update: Paycheck Fairness Act

With the Lilly Ledbetter Fair Pay Act passed, the pay equity community turns its attentions to the Paycheck Fairness Act. This legislation was introduced with the Lilly Ledbetter Fair Pay Act and was approved by the House, but has yet to reach the Senate.

The Paycheck Fairness Act would strengthen the Equal Pay Act (EPA) and allow it to fulfill its promise that women would receive equal pay for equal work, a promise that has remained unfulfilled now for forty five years. The EPA narrowed the wage gap, which previously had women earning 59 cents to a man's dollar, but so far it still has not been able to close it. Women now make 78 cents to a mans dollar, an negligible increase from 2006 when women made 77 cents. The Paycheck Fairness Act would prohibit employers from retaliating against workers who share salary information. This information is often key to uncovering instances of pay discrimination. The bill would also ensure that if there are pay-disparities, they are based on legitimate work-related reasons rather than gender. Essentially, it would close the loopholes that riddled the EPA and create systems and tools that would offer women legal protection from pay discrimination.

We will continue providing you with updates on the Paycheck Fairness Act. For more information, check out these resources:

• How the Paycheck Fairness Act Will Strengthen the Equal Pay Act from the National Women's Law Center
• The Paycheck Fairness Act, H.R. 1338, is Essential to Combating Pay Discrimination Against Women in the Workplace from the National Partnership for Women & Families

Savvy Saver: Savings Tips and Tricks

America Saves week is just around the corner, making it a perfect time to talk about how to save. Money may be tight these days, but there are tips and tricks that can help you continue to contribute to your savings plan. Whether your putting away money for retirement, creating an emergency fund, or just trying to create a tighter day to day budget, these resources can help you work towards your savings goals.

Learn about the Savers's Tax Credit: The Saver's Tax Credit is a non-refundable tax credit for contributions to qualified retirement plans such as 401(k)s, IRAs and others. This credit is for low and middle income taxpayers and provides a credit between 10% and 50% of your retirement plan contribution each year, up to $2,000.00. Think you might qualify? Find out more by dowloading WISER's new fact sheet "The Saver's Tax Credit."

Consider a $50 a month – or more – automatic deduction from your paycheck or checking account to invest in a mutual fund or to buy U.S. Savings Bonds: The sooner you start the better! Investing early pays off because the interest compounds for more years.

Find out if you qualify for an Earned Income Tax Credit (EITC): Locate the Volunteer Income Tax Assistance office near you for free in-person tax help by contacting the IRS at: 800-829-1040 or visiting www.irs.gov.

Young Women and Social Security

Social Security has a present this year for young workers. If you're between the ages of 25 and 35, you will receive a new insert in your annual Social Security statement. "What Young Workers Should Know About Social Security and Savings" provides valuable information on how Social Security works with tips and resources on how to save. It also answers the age old question "Will Social Security still be around when I retire?" If you can't wait for your annual statement, download the insert here.

Still looking for more resources on Social Security? Check out the Social Security section of the WISER website for more information.