The CARD Act of 2009 Takes Effect Today!

The Credit Card Accountability, Responsibility, and Disclosure Act takes effect starting today. This act will work to increase the amount of information clearly presented to consumers about their bills, interest, and changes to their account. This is good news for consumers, but you still need to understand these changes and pay attention to your credit card agreements and activity! Some of the changes include:

▪ Credit card companies must notify you at least 45 days before they can increase your interest rate or change certain fees applicable to your account.
▪ Your bill will have a table showing how long it will take you to pay off your balance if you make only the minimum monthly payments. Here is an example of a credit statement provided by the Federal Reserve:

New Balance $1,784.53
Minimum Payment Due $53.00
Payment Due Date 4/20/12

If you make no additional charges using this card and each month you pay the minimum payment,you will pay off the balance shown on this statement in about 10 years and you will end up paying an estimated total of $3,284.

If you make no additional charges using this card and each month you pay $62, you will pay off the balance shown on this statement in about 3 years and you will end up paying an estimated total of $2,232 (Savings= $1,052)

▪ Credit card companies cannot increase your interest rate for one year after you open the account. Be sure to read the fine print, as there are some exceptions to this rule.
▪ Credit card companies must mail you your bill at least 21 days before your payment is due. You must have the same due date each month and your payment must be deemed “on-time” if it is received before 5:00pm on that date.
▪ When paying your bill, if you make more than the minimum payment, the company must credit the extra amount to the balance with the highest interest rate.
▪ Credit card companies are prohibited from imposing “two-cycle billing,” meaning they can only charge interest on balances in the present billing cycle.

While these changes are encouraging and will help to protect you as a consumer, you should still carefully look at any information your credit card company sends to you and be aware of your plan’s details. For more information on the CARD Act and its provisions, read WISER’s newsletter.

Social Security Benefits Update!

A major victory for individuals with disabling diseases and other medical conditions has been won through the addition of new Compassionate Allowances by the Social Security Administration. Compassionate Allowances allow SSA to offer benefits quickly to applicants whose medical conditions are so serious that they obviously meet disability standards. This update marks the first addition to the Compassionate Allowances list since its creation, and includes diseases like Tay Sachs Disease, Mixed Dementia and early-onset Alzheimer’s disease. The list is used to give individuals with those diseases access to benefits within days, as opposed to months or years, which has often been the case for people with more complicated applications.

Commissioner Michael J. Astrue asserted, “There can be no higher priority than getting disability benefits quickly to those Americans with these severe and life-threatening conditions.”

This victory has been celebrated by Alzheimer’s disease advocates, who have been fighting for streamlined benefits since 2003. Individuals with early-onset Alzheimer’s disease often have difficulties when applying for benefits which can take years to gain through appeal.

To see the full list of Compassionate Allowance Conditions that have been added, visit Social Security’s Compassionate Allowances webpage. Check out WISER’s website for information about Social Security benefits and why they are especially important for women.

What is the Earned Income Tax Credit and how EITC can benefit you?

The Earned Income Tax Credit (EITC) is a refundable federal income tax credit designed for low to moderate income working individuals and families. It was originally approved by Congress back in 1975 as a means to offset the burden of social security taxes and to provide an incentive to work, however currently this credit has the ability to lift many struggling American families above the poverty line.

To find out if you qualify for the EITC ask yourself if you meet the following IRS listed requirements:

· You must have a valid Social Security Number

· You must have earned income from your job, working for yourself or another source.

· Your filing status cannot be married, filing separately.

· You must be a U.S. citizen or resident alien all year, or a nonresident alien married to a U.S. citizen or resident alien and filing a joint return.

· You cannot be a qualifying child of another person.

· Cannot file Form 2555 or 2555-EZ (related to foreign income)

· You can have only limited amount of investment income

Preview of 2010 Tax Year

Additionally in order to qualify you must be within the following income brackets:

Earned income and adjusted gross income (AGI) must each be less than:

• $43,352 ($48,362 married filing jointly) with three or more qualifying children
• $40,363 ($45,373 married filing jointly) with two qualifying children
• $35,535 ($40,545 married filing jointly) with one qualifying child
• $13,460 ($18,470 married filing jointly) with no qualifying children

Tax Year 2010 maximum credit:

• $5,666 with three or more qualifying children
• $5,036 with two qualifying children
• $3,050 with one qualifying child
• $457 with no qualifying children

*The American Recovery and Reinvestment Act (ARRA) provides a temporary increase in EITC and expands the credit for workers with three or more qualifying children. These changes are temporary and apply to 2009 and 2010 tax years.

To learn more about the EITC and how you might qualify for a tax credit please visit the IRS' EITC home page at http://www.irs.gov/individuals/article/0,,id=96406,00.html

Did You Know...

• The older population (65+) numbered 38.9 million in 2008, an increase of 4.5 million or 13% since 1998.
• The number of Americans aged 45-64 - who will reach 65 over the next two decades - increased by 31% during this decade.
• Over one in every eight, or 12.8% of the population is an older American.
• Persons reaching age 65 have an average life expectancy of an additional 18.6 years (19.8 years for females and 17.1 years for males).
• Older women outnumber older men at 22.4 million older women to 16.5 million older men.
• Older men were much more likely to be married than older women - 72% of men vs. 42% of women. 42% of older women in 2002 were widows.
• About 31% (11.2 million) of noninstitutionalized older persons live alone (8.3 million women, 2.9 million men).
• Half of older women (50%) age 75+ live alone.
• About 471,00 grandparents aged 65 or more had primary responsibility of their grandchildren who lived with them.
• The median incom of older persons in 2008 was $25,503 for males and $14,559 for females. Households containing families headed by persons 65+ reported a median income in 2008 of $44,188.
• Major sources of income for older people in 2007 were: Social Security (reported by 87% of older persons), income from assets (reported by 52%), private pensions (reported by 28%), government employee pensions (reported by 13%), and earnings (reported by 25%).
• Social Security constituted 90% or more of the income received by 35% of all Social Security beneficiaries (21% of married couples and 44% of non-married beneficiaries).

*Statistics provided by the Administration on Aging's 2009 Profile - principal sources of the data are the U.S. Bureau of the Census, the National Center on Health Statistics, and the Bureau of Labor Statistics. To read more on AoA's 2009 profile click here.

Is the long term care component of the health care bill really a “CLASS Act?”

The healthcare debate continues to be controversial and complex, and the CLASS Act seems to fall into both of those categories. The Class Act is one of the health reform components receiving a lot of attention—it is short for “Community Living Assistance Services and Supports” Act, and it would provide a voluntary system of long-term care insurance for Americans.

The way it works is that individuals would automatically be enrolled in the program through their employer unless they choose to opt out. The employer would take out monthly premiums from pay and send the funds to a “Life Independence Account.” After employees pay into the account for five years, they would be eligible to receive funds if they become disabled -- meaning they are unable to perform two or more daily activities like bathing, or dressing. Those eligible to receive benefits would receive at least $50 per day in assistance for the remainder of their lives.

Arguments in support of and in opposition to the new program:

Supporters emphasize that there is a huge population in need of care who would rather stay in their communities, but are forced to spend down their savings to qualify for Medicaid and enter nursing homes, or they require family members to provide unpaid caregiving assistance. Approximately one-fifth of Americans provided care for others, according to the National Alliance for Caregiving. Elderly spouses, most often wives, provided care for relatives for more than 30 hours each week.

If the CLASS Act (the Act) was in place, care-providing women might have access to paid help for a few hours each day. Two thirds of working caregivers are forced to take time off from work to provide care, so this benefit could help family caregivers to improve and maintain their own job security. Finally, Community living is much less expensive than living in facilities and the Act could help limit long-term care costs.

Opponents are not as much opposed to the rationale for the program, as they are focused on the financial details -- the program’s administration and its long-term impacts on the federal budget. Whether the program would be financially sustainable also remains debatable. The short-term financial outlook for the program is good, because individuals will pay premiums without receiving benefits. However, once participants start to become eligible for benefits, the trend is expected to turn in the opposite direction.

Another related concern is that only people who are prone to long-term illness may stay enrolled in the program, which would make higher premiums necessary to support the high-need participants. Finally, some opponents believe that this program will lead Americans to develop a false sense of security in terms of their long-term care insurance needs. While the Act is not meant as a substitute for private long-term care insurance, the concern is that people enrolled in the federal program will think they have all of the coverage they need.


If you wish to educate yourself about long-term care insurance further, WISER’s website has several informative fact sheets on the subject.

Get Your Ducks in a Row

It is never too early, or too late to start saving for your retirement. The first step is understanding your current budget. Once you know how much you are spending in a month, you can figure out how much you can afford to save, or ways to increase your savings.

WISER’s retirement income worksheet, called Get Your Ducks in a Row, will help you to organize each of your sources of retirement income, so there is no guesswork as to how much retirement income you will receive each month. It is an easy-to-use tool that considers all of your benefits, such as Social Security, Employer Pensions, as well as contributions from part-time work. The worksheet also distinguishes which sources will keep up with inflation, and which will not.

This useful tool, as well as many other financial and retirement planning resources are available on WISER’s website.

Test Your Financial Prowess

How much do you know about retirement security? Find out by taking this quiz from the Wall Street Journal:

1) What percentage of surveyed workers said that—in the wake of the financial crisis—they still plan to retire on their original schedule?

a. 21%
b. 31%
c. 41%
d. 51%

(ANSWER: b. Only about one-third of workers, according to a survey in September by Bankrate Inc., said the recession hasn't affected their planned retirement date. One in five said they anticipated leaving the office between one and five years later than planned.)

2) An analysis of trading behavior over a two-year period in 401(k) plans found that the greatest percentage of workers made a change in their accounts:

a. Once during the two years
b. Twice during the two years
c. Once each quarter
d. Twice each year
e. Never made any change

(ANSWER: e. Looking at a group of 1.2 million workers in more than 1,500 retirement plans, a report from the University of Michigan found that 80% of workers initiated no trades in their accounts during the two-year period. Eleven percent made only one trade."For the overwhelming majority of retirement savers," according to the report, "there is no evidence of portfolio rebalancing, shifts in risk tolerance with age, or tactical portfolio changes.")

3) What percentage of participants age 55-64 in employer retirement programs made the maximum contribution to their accounts in 2008—and what percentage of workers age 50-plus took advantage of catch-up contributions?

Maximum Catch-up
a. 10%a. 13%
b. 20%b. 23%
c. 30%c. 33%
d. 40%d. 43%

(ANSWERS: B (maximum) and A (catch-up). Vanguard Group, in a survey of its defined-contribution plans, with more than three million participants, found that only one in five workers approaching retirement made the maximum contribution to their employer savings accounts—and only one in seven workers took advantage of catch-up contributions. )

4) What percentage of workers and/or their spouses have tried to calculate how much money they will need to save for a comfortable retirement?

a. 34%
b. 44%
c. 54%
d. 64%

(ANSWER: B. Fewer than half of surveyed workers in 2009, according to the Employee Benefit Research Institute, had put pencil to paper—a fundamental step in any effective retirement plan. The same percentage said they simply guessed at how much money they will need in later life.)

5) In retirement, Social Security will likely replace what percentage of your pre-retirement income?

a. 23%
b. 33%
c. 43%
d. 53%

(ANSWER: b. Thus, the question: If Social Security, according to the agency's board of trustees, will provide approximately one-third of the amount needed for retirement, will your savings and assets be sufficient to generate the balance?)

6) The single best cure for a battered nest egg is to:

a. Invest more aggressively
b. Save more money
c. Work longer
d. Plan to withdraw less money from retirement savings

(ANSWER: c—for many people. There is, of course, no single best answer for patching a nest egg. A combination of two or more of these tactics probably would help many current and would-be retirees.)

* WISER has many resources to help you plan for your secure retirement, including a worksheet to help you add up your sources of retirement income as well as a general budget sheet to help you get on track today!

Source: Ruffenach, Glenn. “Have You Learned Your Lessons?” 14 Nov. 2009. The Wall Street Journal, Personal Finance. .