Tag Archives: Finances

WEBINAR – 5 Money Questions for Women

January 22, 2025 No Comments

Did you know that only 51 percent of women are confident they are saving enough for retirement vs 68 percent of men? In addition women are more likely to deal with an aging parent or children’s schedules which can result in women accumulating less money for retirement. Please join us as Gerard Raho from Edward Jones discusses the unique financial situation many women find themselves in and the actionable steps you can take to help meet your financial goals.

Gerard Raho is a financial advisor for Edward Jones with over 20 years of experience in financial markets. Before working at Edward Jones, Gerard ran a trading desk for JP Morgan and established his own NYSE floor brokerage firm. He works with clients to identify and address their most pressing needs to create custom-tailored strategies to help address their financial needs and goals. He earned a MBA from Duke University’s Fuqua School of Business and a bachelor’s degree in economics from Syracuse University.

Click Here to Register!

WEBINAR – Psychology of Spending

January 22, 2025 No Comments

Andrew Dauphinee

Ever wonder why you buy the things you do? Psychology has a big part to play in what we buy and our spending habits. Whether we struggle with the chemical reactions in our brain that make us feel better when we buy things or society/social media pressures us to feel the need to live a certain way, there are a wide-variety of influences that can impact what we buy. Amanda Griffith, Financial Well-being Impact Officer and a Certified Credit Union Financial Counselor for the Credit Union of New Jersey dives into this topic and shows you how to avoid unnecessary spending and become financially stable.

Click Here to Register!

10 Steps for Financial Success Program Recap

Andrew Dauphinee

Thank you to Amanda Griffith from the Credit Union of New Jersey for sharing 10 aspects regarding personal finances that are important to ensure a healthy financial future. Finances can be very difficult to navigate and master, especially if someone is struggling with debt or lack of income. However, there are steps we can all take regardless of our financial situation to make us more financially stable.

Please download a copy of the handout that includes worksheets to help you as you move through each step – https://www.njstatelib.org/wp-content/uploads/2025/01/Ten-Steps-for-Financial-Success-Handout.pdf.

Step 1 – Establish Goals

The first step on your financial journey is to determine what are your short and long-term goals. These can be personal as well as financial. Be sure to take into consideration your needs as well as your wants, but be specific and realistic. By understanding what you want to accomplish or prepare for, you can more easily identify the steps you need to take to accomplish those goals.

Step 2 – Take Stock

You can develop a starting point by taking stock of your current financial situation. Determine what you own, such as a house or a car, as well as what you owe, such as student loan debt, credit card debt, or taxes. You can use these categories to help calculate your net worth, or the sum of all of your assets. This can help you gain a sense of your current financial standing and how much you need to save or invest to meet your goals.

Step 3 – Create a Budget

Once you have a sense of your overall financial situation, you should create a budget to determine your monthly net gain or loss. Identify all sources of income with their amounts and then identify all of your monthly expenses. These can include fixed recurring payments, such as mortgages or student loans, as well as variable expenses, such as utility bills, food, and gas. By creating separate line items for each expense, you can more accurately determine how you are spending your money and if you have room to start saving or if you can commit more money to paying down your debt.

Many banking institutions provide online banking services that include a general breakdown of your expenses to get a rough idea of how you are spending your money on a monthly basis. Generally, your monthly expenses should equate to the following percentages of your monthly net income:

Housing (mortgage, rent, property taxes) – 35%
Other (child care, food, entertainment, retirement) – 25%
Outstanding Consume Debt (credit cards, personal loans) – 15%
Transportation (car loans, public transportation) – 15%
Savings (liquid assets rather than investments) – 10%

By creating your budget, you can calculate your bottom line by subtracting your expenses, debts, and savings from your income.

Step 4 – Live Within Your Means

One way to improve your financial situation is to increase your income through another job. Unfortunately, that can take time and finding the right job for your personal situation can be difficult. In order to make a more direct impact on your finances and increase your bottom line, try to limit your expenses by living within your means.

There are things that you need to have to survive; food, shelter, clothes. But there are also many other things that can be considered luxury or non-essential that take away from our available money. Prioritize your spending and look for ways to reduce, substitute, postpone, or forego certain expenses. For example, you can save a lot of money if you eat out less often or downsizing your residence to reflect your current household needs. Additionally, you can postpone long-distance vacations for shorter and less travel-intensive trips to save money while still spending quality time with yourself or family.

Step 5 – Pay Yourself First

While we are quick to pay others for goods and services, we often forget to pay ourselves first through savings. It is recommended to put 10% of your monthly income into some sort of savings, whether it is an envelop of cash in a safe or a savings account at a financial institution. If you can’t save 10%, start with a minimal amount; the important thing is to start and develop that habit. If you receive direct deposit, you can set it up to have a certain amount sent to a savings account automatically.

A great way to start saving is to create a 3-tiered savings plan:

Short-Term – create an emergency fund that is easily accessible (cash, savings account) and equal to 3-6 months of your essential living expenses.
Medium-Term – should be aligned your goals for the next 2-5 years and use semi-liquid assets such as CDs or a money market account. With these assets, your money is tied up for the duration of the asset, but it will grow in value through interest accumulation.
Long-Term – These tend to be investments in things such as stocks or bonds aimed at building wealth for the future, including retirement or education for children. If your employer offers a match to a retirement plan, always try to max out that match.

Step 6 – Delete Your Debt

We should all strive to live a cash lifestyle where we are free of any debt. There are many important reasons to take on debt, including transportation, buying a house, or improving one’s education. However, we can easily fall into bad debt by using high-interest loans to pay bills or credit cards for purchases that have no lasting value, such as food, gas, or vacations. By limiting the bad debt and paying off the most expensive debts first (often highest-interest), you can free up more money to put away or continue to pay off other debts to become debt-free faster.

There are a few strategies for paying down your debt, especially high-interest debt like credit cards. Talk with a certified credit counselor or your financial planner to determine the right plan for you.

Step 7 – Buy a Home

Homes can be a great investment as they generally appreciate in value over the long term. Additionally, home-owners receive extra tax breaks, including property tax deductions. While not everyone can or should buy a home, if it fits within your budget and your goals, it can be a great way to ensure income in the future. If you want to buy a home, start saving now to ensure you have roughly 20% of the purchase price for a down payment to avoid paying PMI, private mortgage insurance. Additionally, work to build your credit score by paying down high-balance debts to secure a low interest rate.

Step 8 – Diversify

Once you start accumulating wealth and planning for your long-term goals, it is important to make sure to diversify those investments to better guard against downturns in the economy. As with all investments, you should speak with a financial advisor or planner to figure out your goals and the best investments to meet those goals. Try to spread your money out over stocks, bonds, and liquid assets such as cash, so that you are better able to weather the storm should one of those assets become less valuable. As market and economic conditions change, adjust your money allocation to take advantage of those changing conditions, but always remember to weigh the risks versus the return.

Step 9 – Plan Ahead

Planning ahead often refers to retirement, but many people forget how insurance can help deal with unplanned events or inevitable life events such as death. Major insurance options include health, life, disability, homeowners/renters, and automobile. Some insurances are required, such as auto or homeowners, while others are recommended, such as health or life insurance, to ensure you or your loved ones are financially secure in the event of an unforeseen or life-changing event.

Eventually we all will die and it is important to plan ahead for that as well. Estate planning is important to make sure that all of your affairs are in order after you pass. Make sure to have a will that sets up an executor you trust to ensure your wishes are carried out. If you have insurance policies that provide payouts or transfers, make sure your beneficiaries are up-to-date. It is also recommended to memorialize in writing any medical directives, such as a DNR order, in the event that you are unable to make your own medical decisions.

Step 10 – Get Help

Very few people can do all of these things alone and it is important to get help along the way. You can use a professional financial planner or advisor to help you set your financial goals, develop a budget to identify areas of waste or saving, and plan for long-term events such as retirement. You can also speak with representatives at your financial institution about the best accounts for your money.

The internet has a wealth of information on managing your money effectively and can be a great starting point to learn about unfamiliar topics. You can also refer to printed materials such as books or magazines that cover a wide variety of financial topics. Many organizations also offer seminars or programs, sometimes for free, on important topics, such as retirement planning. An investment if knowledge is the best step forward.

More Information

If you have questions about the many topics covered in the presentation or information about your finances, please contact Amanda Griffith at agriffith@cunj.org. If you have questions specifically related to retirement or investments, please contact Britany Enelow at benelow@cunj.org. You can view a recording of the webinar at https://youtu.be/OUwXRJk21Ao. For more information on a wide variety of financial topics, please visit https://www.cunj.com/financial-wellbeing/financial-resource-center/.

Maximizing Social Security Program Recap

Andrew Dauphinee

Thank you to Larry Metzler from Apogee Financial Services, Inc. for a deep dive into the complexities of Social Security and how that income stream can be incorporated into your overall retirement plans. There are up to 9,000 potential combinations of claiming Social Security benefits based on your unique situation so it is important to speak with a financial planner to determine the best outcome for you. However, a good first step is knowing the basics and educating yourself. So let’s take a deep breath, take a long sip, and start unraveling the mystery of Social Security retirement benefits.

6 Fundamental Financial Planning Considerations

Since Social Security should be part of a larger and more comprehensive retirement strategy, let’s first look at 6 fundamental financial planning considerations that may influence when someone should start receiving their Social Security benefits.

Longevity – As individuals are living longer, their money needs to be able to meet those needs, especially long-term care. The costs of long-term care continue to rise and whether someone wants to pay for that themselves or have Medicaid pay for it, those considerations can significantly impact their retirement plans.
Liquidity – How much of your assets, currently and in retirement, are liquid? Do you have the ability to meet unexpected financial needs by being able to pull money out without tax implications?
Inflation – Is your retirement plan able to match or outpace inflation? Your dollar today will be less tomorrow so are you prepared?
Market – The market is volatile and unpredictable. A 5% withdrawal of your total investments may turn into a 20, 30, or 40% withdrawal if the market crashes; can you recover effectively?
Mortality – A spouse or partner may die before you. Are you able to withstand a potential drop in retirement income with their passing?
Taxes – One of the many things guaranteed in life to increase; are you financially secure to deal with a rise in taxes? Is it better to pay taxes on your contributions now or wait until later? Similar to inflation, a rise in taxes means that you dollar now is not worth as much later.

While Social Security is an important part of your retirement income, there are many other options that you should consider to meet your needs, including pensions, Individual Retirement Accounts (IRAs), employer contribution accounts (401k, 403b), annuities, and real estate. Speak with a financial advisor to determine what financial strategy is right for you.

What is Social Security?

Social Security is a government sponsored financial benefit program aimed to support those that are disabled or retired. Working individuals pay into Social Security through taxes on their income, which is then used to pay all eligible individuals who qualify for the government program. To be eligible for Social Security in retirement, you must have earned 40 work credits, or 10 years of working that paid Social Security taxes. You can also claim Social Security retirement benefits if your spouse met the work eligibility criteria. The amount of your Social Security benefit is based off of the highest 35 years of earning for you and/or your spouse. Social Security retirement benefits can be claimed starting at age 62, or survivor benefits earlier if you are caring for a child under the age of 16. When determining when to take Social Security, be advised that the Social Security Administration cannot give you advice and that rules and laws can change from year to year.

Important Definitions

There are few terms that are common when it comes to discussing Social Security that you should be aware of:

Full Retirement Age (FRA)- The age at wish you can start claiming your full Social Security retirement benefit amount. This age is dependent upon your birthday and can range from 65-67 at this time.
Primary Insurance Amount (PIA) – The amount of benefit that you can collect at your full retirement age.
Cost of Living Adjustment (COLA) – Periodically, Social Security will increase the PIA based off the Consumer Price Index. This is referred to as a Cost of Living Adjustment.

5 Common Decision Scenarios

Early vs. Later

When to claim Social Security benefits is one of the most common questions and is different for each person. If you decide to claim your Social Security benefits before your full retirement age, you will receive a reduced amount, up to 25% if you take your benefits at age 62. If you decide to wait and claim your benefits at age 70, you will receive a boost of 32% to your PIA. If you claim your benefits early, you cannot suspend those benefits at a later date to try and increase your benefit amount. However, there are some reasons to claim your benefits early and reduce your amount, including:

Immediate need for money
Poor health
Earn less than the annual income cap
Makes sense for spouse and children

Spousal Benefits

A spouse can claim Social Security benefits based off of their spouse’s earnings. The spouse must first file for Social Security benefits, but does not need to claim them. The claiming spouse must be nonworking and will receive no more than 50% of the other spouse’s PIA, including a reduced amount if claimed before FRA. The claiming spouse’s PIA is substracted from the spousal benefit to determine the spousal add-on amount; a spouse cannot collect the higher of the two amounts and cannot collection more than their PIA. If the nonworking spouse has already claimed their Social Security retirement benefit early, then the spousal benefit will be reflected as an add-on to their current benefits, up to the claiming spouse’s PIA. For example, if Judy claimed her benefit at age 62 and has a PIA of $1,000, her monthly benefit will be $750. If she also files for a spousal benefit ($1,200), her PIA of $1,000 is subtracted from $1,200, leaving Judy with a spousal add-on amount of $200. Since she claimed the spousal benefit before FRA, that amount is reduced from $200 to $140, leaving Judy with a total monthly benefit amount of $890.

Divorced Spousal Benefits

A divorced spouse can claim on their ex-spouses benefits provided that they are 62 years of age or older, marriage lasted at least 10 years and they have not remarried. The divorced spousal benefit is still a maximum of 50% of the ex-spouses PIA and must be higher than the claimants benefit amount. As with other benefits, if you claim before your FTA, the amount will be reduced.

Surviving Spousal Benefits

A surviving spouse or ex-spouse may be eligible for surviving spousal benefits if the deceased spouse was the higher income earner. The deceased spouse need not have already applied for Social Security benefits, but the surviving spouse must be at least age 60 (age 50 if disabled or until a dependent child reaches age 16) or a divorced spouse must be age 62, married for at least 10 years, and have not remarried after divorce. If claimed at FRA, the benefit will be 100%; if claimed earlier, the benefit will be reduced. In addition, dependent children can receive a survivor benefit until they turn 18 or 19 if they are enrolled full-time in school.

Guardianship (Grandparent) Benefits

Guardians, including grandparents, are also entitled to special Social Security benefits if both parents are deceased or disabled or the grandparent(s) legally adopted the child(ren). The child must have been living with the grandparent(s) before the age of 18. The grandparent must be providing at least half of the financial support for the child the month before the grandparent became entitled for Social Security retirement benefits. If the parents are alive, they cannot be making regular contributions to child support and if the grandparent is already receiving Social Security retirement benefits, they must adopt the child to qualify for additional benefits.

Taxation of Benefits

Yes, your Social Security benefits may be liable for federal income tax; NJ does not tax Social Security benefits. The IRS determines your Social Security tax amount based off of your Provisional Income, which is your Adjusted Gross Income + any tax-free municipal bonds + 50% of your Social Security benefit amount. If your tax filing status is “Single”, you will pay no taxes on your Social Security benefits if your Provisional Income is less than $25,000, taxable up to 50% if your PI is between $25,000 and $34,000, and 85% if your PI is above $34,000. If your tax filing status is “Married filing Jointly”, you will pay no taxes on your Social Security benefits if your PI is less than $32,000, up to 50% if your PI is between $32,000 and $44,000, and 85% if your PI is above $44,000. Please contact the Social Security Administration for any help determining what your tax liability may be.

Key Changes

Not all of someone’s earnings are taxed for Social Security. In 2024, that amount increased to $168,600; any income above that amount will not have Social Security taxes withheld. In 2024, the maximum monthly benefit amount is $3,822 and the surviving spousal benefit increased to $1,773. Even with the rises in these benefits, Medicare premiums also increased, which can offset the gains made in Social Security benefits. While receiving Social Security retirement benefits, you can still work an earn an annual income up to $22,320; if you make more than that, then your Social Security benefit is reduced by $1 for every $2 you earn over the annual income limit.

More Information

If you have questions regarding your Social Security benefits, please contact the Social Security Administration – https://www.ssa.gov/agency/contact/. If you would like to discuss your personal financial situation, you can schedule an appointment with Larry Metzler at https://calendly.com/lmetzler-1/60min or contact him at lmetzler@apogeefinancial.net. You can view recordings of the webinars at our YouTube channel:

Part 1 – https://youtu.be/EjNwLdY16pw
Part 2 – https://youtu.be/as7yEWjA5KA

You can download a copy of the workbook at https://www.njstatelib.org/wp-content/uploads/2024/12/Maximizing-Social-Security-Workbook.pdf.

WEBINAR – 10 Steps to Financial Success

January 21, 2025 No Comments

Andrew Dauphinee

Rising prices, increased expenditures, and more reliance on credit for purchases can make it more difficult to achieve financial stability. In fact, surveys suggest that roughly half of individuals believe that having a partner in debt is worthy of considering divorce and nearly half of 18- to 34-year-olds feel like they they are drowning in debt. Learning the basics of financial success are critical toward healthy relationships and mental well-being. Please join us as Amanda Griffith, Financial Well-being Impact Officer and a Certified Credit Union Financial Counselor for the Credit Union of New Jersey, teaches participants ways to financial control, including developing a spending plan, creating objectives, weighing insurance needs and other tools that will help get on the road to personal financial success.

Financial Aid Information Session Program Recap

November 20, 2024NJSL Presents Blog Research Library No Comments

Andrew Dauphinee

Thank you to Taira Holley-Mayfield from the Higher Education Student Assistance Authority (HESAA) for her presentation on essential financial aid information for students and parents as they prepare for college. Paying for college, especially the financial aid process, can be a complex and daunting aspect of the college admission process. However, Jamillah broke down many aspects of the different sources of funding as well as the process to apply for aid into manageable and easily digestible nuggets of information.

Sources of Aid

Sources of financial aid include the federal government, state of New Jersey, the individual college or university, or other outside organizations such as churches or community organizations. Any of these sources may make available one of more of the following types of financial aid – grants (free money), scholarships (free money), loans (must be repaid, often with interest), or employment opportunities. Some things that may influence institutional aid, particularly merit-based aid include:

Academics
SAT or ACT
AP Courses
Legacy
Gender/Ethnicity
Class Rank

Federal Aid

At the federal level, there are grants and loans available to students and their parents. Pell, SEOG, and TEACH grants are available in differing amounts and are generally awarded based on need. The max award for each grant is $7,395, $4,000, and $3,772 respectively. The federal government also provides all students with loan options, called the Federal Direct Loan Program. Split between subsidized (no interest accrual while in school and need based) and unsubsidized, undergraduate students can borrow up to a specified maximum amount each year, which increases based on your current year in school. The maximum for a freshman student is $3,500 subsidized and $2,000 unsubsidized. Graduate students can borrow up to and exceed the entire cost of a school years expenses. Interest rates will change from year to year, but the interest rate for 2023-2024 was 5.50% and a 1.057% origination fee. These rates have not been updated for 2024-2025.

State Aid

The state offers a wide variety of grants, scholarships and loans, most of which are administered by HESAA. TAG is a need-based grant for NJ residents who attend an institution in New Jersey and are enrolled full-time in a qualifying degree program. Additionally, there is a part-time TAG grant that is specifically for students enrolled in a community college. The award amounts range from $1,280 – $14,404 for full-time students and $320 – $1,047. There is also the Educational Opportunity Fund that is designed for educationally and economically disadvantaged students as well as the Governor’s Urban Scholarship, designed for disadvantaged students living in 1 of 14 designated areas and attending an institution in New Jersey.

The NJ STARS scholarship is designed for students who ranked in the top 15% of their high school class at the end of their junior or senior year and are attending community college full time. Students must have a cumulative GPA of 3.0 or higher at the start of the third semester at the county college to remain eligible. NJ STARS II is designed for those students in NJ STARS who move on to a 4-year state or private institution in New Jersey as a full-time student and have a family taxable income of less than $250,000; the annual amount is up to $2,500. Another state scholarship is NJ GIVS, specifically for women and minorities who enroll in a community college or technical school while pursuing a certificate or degree in a construction-related field. Lastly, the Community College Opportunity Grant offers free tuition and fees at a community college for a student who’s household Adjusted Gross Income is less than $65,000. If the household AGI is more than $65,000, the amount of assistance is less depending on your income bracket. There is a new pilot program, CCOG County Vo-tech Pilot, that provides funding for approved vocational technical programs at county vocational technical schools, county colleges, and certain tech schools with many of the same parameters of the general CCOG.

The Garden State Guarantee provides free tuition and approved fees for eligible students during their third and fourth years at a public, 4-year state academic institution. If the student’s household Adjusted Gross Income is less than $65,000, all tuition and fees will be paid; if a student’s household AGI is between $65,001 – 80,000, the total cost may not exceed $7,500 and if their AGI is between $80,001 – 100,000, the total cost may not exceed $10,000.

If you are looking for additional funding after all grants and scholarships, New Jersey does offer NJCLASS loans, designed to cover the rest of the costs of college not covered by other means. Your interest rate is based off of the term of the loan, which can be 10, 15 or 20 years. Each option has a 3% origination fee and interest rates ranging from 5.69 – 7.49% as of the 2023-2024 academic year; rates may change in May 2025.

If you are applying for any state-based grants, scholarships, or loans, you will need to file a New Jersey Alternative Financial Aid Application through NJFAMS.

The FASFA

In order to be eligible for most of these, as well as all institutional financial aid, the student must complete the FASFA each year. The FASFA is free and designed to take a snapshot of the student and their household’s financial status in order to better determine eligibility for financial aid, mainly need-based aid. As of this year, the FASFA will be available in December due to numerous changes that will be taking place. The Expected Family Contribution is now renamed the Student Aid Index since the formula for calculating that figure has changed. The SAI no longer looks at the number of children in school and business and farm will be considered as assets as well as child support payments.

Additionally, the term “parents” will be changes to “contributors”. This version of the the FASFA now requires students and any contributors to consent to having your tax information imported from the IRS. In addition to the FASFA, the student and all contributors will need to register for separate FSA ID’s in order to electronically sign the FASFA. If parents are married and fill jointly, only 1 parent needs a FSA ID; otherwise both parents or the parent and step-parent need to register for a FSA ID. The earlier you fill out the FASFA, the better and it is a good rule to complete all of your forms and documentation by the earliest date based on the dates listed by each school the student wishes to attend.

Components of the FASFA include:

student demographics
student income and assets
student dependency status
parent demographics
parent(s) income and assets
household size
federal means tested benefits

More Information

For more information on any of the financial aid options listed above or help navigating the process, please contact Taira Holley-Mayfield at Taira_Holley-Mayfield@hesaa.org or 609-588-3300 ext. 1426. To view a recording of the program, please visit https://youtu.be/kMfCym5kwf4.

WEBINAR – Maximizing Social Security Part 2

December 18, 2024 No Comments

Andrew Dauphinee

One of the most important and confusing income sources in retirement is Social Security. While many people will rely on Social Security to be the bedrock of their retirement, there are so many questions related to when to take, what the amounts will be, and the future of Social Security. Please join us as Larry Metzler from the Society of Financial Awareness discusses the fundamental working knowledge of the Social Security benefit program as it applies to retirement planning. You will gain access to information that will address the complexities of navigating the system, the potential cost of planning mistakes, common benefit decision scenarios, the treatment of inflation and taxes, and so much more.

Please download a copy of the workbook in advance of the presentation – https://www.njstatelib.org/wp-content/uploads/2024/10/Maximizing-Social-Security-Workbook.pdf.

Larry Metzler is the President of Apogee Financial Services Group, Inc., and Innovative Retirement Solutions, LLC, and the founder of the law firm of Metzler Law, LLC. His financial planning practice and his law practice are both located in Moorestown, New Jersey. Larry’s entire career has been focused exclusively on financial planning, estate planning, retirement planning, asset protection and wealth preservation planning, personal and business tax planning, and real estate matters. He is also a member of the New Jersey Bar Association, the Burlington and Camden County Bar Associations, the National Academy of Elder Law Attorneys (NAELA), and the Society for Financial Awareness and the International Association of Registered Financial Consultants. Larry is also The Society for Financial Awareness (SOFA) Chapter President for Burlington and Camden Counties.

WEBINAR – Maximizing Social Security Part 1

December 12, 2024 No Comments

Andrew Dauphinee

Introduction to Medicare Program Recap

October 23, 2024NJSL Presents Blog Research Library No Comments

Andrew Dauphinee

Thank you to Kelly Ott from the State Health Insurance Assistance Program for Mercer County presenting on the different aspects of Medicare and diving into some of the complexities that exist within each part. Each part of Medicare covers different aspects of physical medical care and as such, has different premiums, deductibles, cost sharing for services, and rules for enrollment. Therefore, it is important to be familiar with your options, as well as organizations that can help you ensure that you are properly enrolled and getting the best coverage for your personal medical needs.

Eligibility and Enrollment

Medicare is a federally funded medical insurance program that is funded by income taxes. Medicare eligibility begins at age 65 or if an individual has been receiving Social Security Disability payments for 24 consecutive months.

There are 4 enrollment periods that you can take advantage of:

Initial Enrollment Period – This is a 7-month period that starts 3 months before turning age 65. You will receive a mailed document in which you can enroll in Part A and B or, if you are currently employed and under an employer-sponsored medical insurance plan or under your spouse’s, you can delay enrollment. If you enroll after the month you turn 65, there will be a delay in Part B.
General Enrollment Period – This occurs every year from January 1 – March 31. If you enroll during this period, the coverage starts one month after you sign up.
Special Enrollment Period – This period is designed for individuals who were on a different medical plan at age 65 and deferred enrollment. If you fall under this category, you can enroll in Medicare without a penalty if you enroll within 8 months of the termination of your previous coverage.
Open Enrollment – From October 15th – December 7th, individuals enrolled in Original Medicare or a Medicare Advantage plan can change their coverage options. This includes switching Medicare Advantage plans or switching from Medicare Advantage to Original Medicare.

If you are collecting Social Security benefits, you will automatically be enrolled in Medicare.

Medicare Part A

Part A of Medicare is your hospital insurance and covers things like hospital stays (bed, board, general nursing care), skilled nursing care at an approved facility (rehab), home health care services, hospice care, and blood transfusions. There is a monthly premium for Part A, but that is waived if you or your spouse has “paid” into Medicare for at least 10 years (40 quarters) through federal tax withholding. There is not late enrollment penalty should you refuse to enroll in Medicare when your turn 65. There is a deductible of $1,600 for hospital stays if you do not have supplemental or Medigap insurance. There are also copays for each hospital stay after 60 days as well as for inpatient rehab stays after 20 days. It is worth noting that if you receive inpatient care at a hospital that can be provided elsewhere, that will be covered under Medicare Part B.

Medicare Part B

Part B of Medicare is often referred to as the medical insurance part. Part B covers doctor’s services, outpatient medical services, diagnostic testing, preventative health care services, and other services. It will also cover ambulance services only if other transportation would endanger your health. The monthly premium for Part B has yet to be released, but was $174.700 for 2024 and is based off of your last income tax return. If your annual gross income is more than $103,000 (single) or $206,000 (joint), you will pay a higher premium. If your monthly income is less than $1,695 (single) or $2,300 (joint) and assets less than$9,430 (single) or $14,130 (joint), you may be eligible for the SLMB program that will pay your Part B premium.

There is an annual deductible for Part B that has yet to be released but was $240 in 2024 and once that deductible is met, Medicare will pay 80% of the Medicare approved rate for covered services. If a provider accepts Medicare assignment, they cannot charge more than the Medicare approved rate; if a provider does not accept Medicare assignment, they may charge up to 15% over the Medicare approved rate.

Once you become eligible for Medicare, you must enroll in Part A, but you can defer Part B enrollment if:

You are still working and covered by health benefits from a large employer (20 or more employees)
Covered by your working spouse’s large employer

However, you MUST enroll in Part B if you:

Are on COBRA
Covered by a small employer
Have retiree coverage only
Have Marketplace coverage
Have no other healthcare coverage

Medicare Part C

Part C is often called Medicare Advantage and oftentimes includes a prescription drug plan (Part D). Medicare Advantage plans are offered by insurance companies contracted by Medicare. These plans are either HMO, which requires you to stay within a network, or PPO, which allows you to go out-of-network for a fee. Within these plans, specific doctors, hospitals or labs may be required, pre-approvals or referrals may be needed, and co-pays will differ. Be aware that doctors may leave a network at any time so be sure to verify that they are covered under the plan. All medical claims will be process through the insurance company rather than Medicare and you only need your Medicare Advantage card when visit a doctor or hospital. These plans may also offer additional benefits not found in traditional Medicare, including vision, dental, and hearing coverage as well as gym memberships.

Premiums with Medicare Advantage plans ranged anywhere from $0 to $157 per month in 2024; numbers for 2025 plans are still being finalized. Additionally, primary doctor co-pays ranged from $0 to $35 and specialist co-pays ranged from $5 – $50 in 2024; numbers for 2025 plans are still being finalized. The maximum amount of out-of-pocket expenses on medical for in network care is capped at $9,350 – $14,000 per year, depending on the plan, and after that, the Advantage plan will pay all medical costs. Each county will have different approved plans so it is important to review all available plans, especially during annual enrollment (October 15 – December 7) and use the Medicare Plan Finder tool to check your medications.

Medicare Part D

Part D is the prescription drug coverage of Medicare and although it is optional, once you become eligible for Medicare, you must have creditable drug coverage. Creditable drug coverage includes any Medicare Advantage plan or employer, union, or retiree coverage. Things such as prescription discount cards (Good RX), drug manufacturer programs, and pharmacy or supermarket programs are not considered credible drug coverage. All insurance companies contracted by Medicare include a prescription drug plan that covers at least 2 prescription drugs in each treatment class, covers insulin and supplies for injection (does not cover test strips), and covers most vaccines, including the vaccine and fee to administer. However, if a drug is not on formulary, you will have a pay the full cost of the drug.

Drugs on the formulary vary by tier and each tier comes with a different cost. The tiers are as follows:

Tier 1 and 2 – Generic medications
Tier 3 and 4 – Brand name medications
Tier 5 – Specialty medications
Tier 6 – Clinically effective, low cost medications, but not offered by all plans.

There is a penalty associated with late enrollment for Part D. If a Medicare eligible individual does not have credible drug coverage for any period over 2 months, that person will be charged a monthly penalty of 1% of the national Part D premium ($0.33 in 2020), recalculated annually, for as long as the individual remains without coverage. This penalty will be added to the monthly premium of a Part D plan and continues for the lifetime of the individual or as long as the individual is enrolled in any drug plan.

Premiums for Part D plans in NJ in 2024 will range from $0 to $130.80 per month, depending on the plan; the average premium is $62. Additionally, there may be a deductible, up to a maximum of $590 that must be met before any financial contribution from the prescription drug plan. After the initial deductible period, there are 3 different coverage period with different corresponding coverage amounts:

Deductible – Up to $590
Initial Coverage Period – You pay the percentage of the drug costs as defined in your plan until the total cost of your medication, including money paid by the plan, reaches $2,000. Things that do not count toward this cap include plan’s monthly premium, any drugs not on the plan’s formulary, and any drugs filled at a non-network pharmacy.
Catastrophic Benefit – You pay $0 for the remainder of the year; everything is covered by your plan.
Coverage Gap/Donut Hole has been eliminated!

It is important to make sure you find the most affordable plan based on your medications and financial situation, so it is highly recommended to use the Medicare Plan Finder tool to compare your options. Remember to look out for quantity limits, prior authorizations, and step therapy requirements that may require you to try other medications before the plan will approve and pay for one recommend by your doctor. It is recommended that you review your plan every year during the annual enrollment period between October 15 and December 7.

New Benefits

There are some new benefits that have come out of the pandemic and the Inflation Reduction Act. In regards to COVID, all initial vaccine and booster shots are completely covered. Testing for COVID is covered as well, but a prescription is needed for each test after the initial test; this occurs for each instance of COVID. Antibody testing is also covered as well as all related treatment. At home tests are NO LONGER covered by Medicare.

There is a new prescription payment program available called the Medicare Prescription Payment Plan that will allow prescription payments to be paid on variable installments throughout the year. This will not reduce the cost of any prescriptions, but will assist enrollees with high cost sharing early in the calendar year. However, the MPPP will not be available to those who are currently receiving assistance through any prescription assistance programs from the state of New Jersey, such as PAAD or Senior Gold.

Continuing Benefits

Starting January 1, 2023, all brands of injectable insulin were capped at $35 a month; insulin through DME pumps will be capped at $35 starting July 1, 2023. The $35 cap does not apply to disposable insulin pumps (ex Omnipod) or to non-insulin diabetic drugs such as Ozempic or Januvia.

All approved adult vaccines must be on the plan formulary with $0 cost sharing, which includes the shingles (Shingrix), flu and Tetanus-Diphtheria-Whooping Cough vaccines.

Extra Help

There are some programs, at both the federal and state levels, that can help pay for some or all of the costs of your Part D plan. At the federal level, there is the Federal Extra Help program, which you are automatically enrolled in if you are on Medicaid or receive assistance with your Part B premiums. At the state level, there is PAAD and the Senior Gold prescription discount program. PAAD will enroll you in a Part D plan and pay all premiums and any late enrollment penalties. There is a cap of $5 for generic and $7 for brand name covered medications, but you must meet certain income limits to qualify: less than $52,142 per year if single and less than $59,209 if married. The Senior Gold prescription discount program, while less comprehensive than PAAD, will enroll you in a Part D plan at any point in the year, but does not cover any penalties or premiums. You will only be required to pay $15 and then 50% of the remaining balance of your medication and the income requirements are less restrictive: $62,142 per year if single and $69,209 if married. You can apply for all of these programs by filling out the NJ Save application, available at https://www.state.nj.us/humanservices/doas/home/ap2.html.

Final Thoughts

Medicare can be a complex and difficult issue to navigation, especially when you add in Medicare Advantage plans that can change from year to year. It is highly recommended to review all of your Medicare information each year as the annual enrollment period approaches (October 15-December7). If you need help with enrolling in Medicare, Medicare Advantage plans, or government assistance programs, please reach out to your county State Health Insurance Assistance Program office. If you are having trouble locating your county SHIP office or live in Mercer County, please reach out to Kelly Ott at mercercountyship@gmail.com or 609-273-0588. You can find your county SHIP office by visiting https://www.nj.gov/humanservices/doas/services/q-z/ship/.

You can download a copy of the presentation slides at https://www.njstatelib.org/wp-content/uploads/2023/11/Presentation-Slides.pdf and view a recording of the webinar at https://youtu.be/inIuHjFQAwU.

WEBINAR – Financial Aid Information Session

November 20, 2024 No Comments

Andrew Dauphinee

Paying for college can be a complex and confusing process, from finding scholarships, to applying for financial aid, to determining which student loans are the best fit. Taira Holley-Mayfield, Financial Aid Workshop Facilitator, from The Higher Education Student Assistance Authority will help to clear the confusion through their Financial Aid Information Session. This session will provide useful information on all of the Federal and State grants, scholarships and loan programs available through the FAFSA (Free Application for Federal Student Aid). Key information and requirements on filing the FAFSA are covered. In addition, college cost of attendance, the expected family contribution and their combined role in determining aid will also be covered.

Estate Planning Bootcamp Program Recap

August 14, 2024NJSL Presents Blog Research Library No Comments

Andrew Dauphinee

Thank you to Larry Metzler for providing a nice overview of the many aspects of estate planning. From gifting, to wills and trusts, to taxes, to the general process of probating and dispersing assets, Larry discussed many important considerations that are involved in estate planning. Oftentimes, there are many myths surrounding estate planning and this can lead to many common mistakes. Let’s take a look at the 14 most common mistakes as it relates to estate planning.

1. Procrastination

The most common, and perhaps the biggest mistake people make when it comes to estate planning is procrastination. “What’s the rush?”, “I’m too busy right now”, and “I don’t like to think/talk about it” are all common responses to estate planning. While it doesn’t seem important at the time, we never know what may happen to us and making sure that our affairs are in order for the inevitable can save our loved ones time, money, and stress in the event of our passing.

2. Overconfidence

Once we have our estate plan, we may think that everything is finished. However, estate planning is an iterative process that should consistently be evaluated and, if necessary, changed depending on how our lives change. It is recommended that wills and trusts be reviewed no less than every 3 years to make certain that your estate plan is still in keeping with your dispositive wishes, changes in the law, changes in the tax code (both federal and state), and changes in your family relationships and/or composition. Power of attorney and living wills (advanced medical directives) should be reviewed every 2 years to make certain that these documents are in compliance with the current laws and are consistent with your wishes, the changes in your family relationships and composition, and the then current policies of banks and brokerage firms where you keep your investment assets.

3. Making a Will Disposes of All My Property

Many people think that what is contained in a will is the final say, including marital assets and financials such as retirement accounts or life insurance payouts. In fact, in a typical marital situation, at the death of the first spouse, less than 15% of the total dollar value of the married couple’s combined estates is controlled by the decedent’s will. There are different asset classes and each one is transferred differently upon death:

Probate – made up of your tangible (“stuff”, like jewelry, cars, furnishings), intangible (cash, bank accounts, money market accounts), and real (real estate) property. These assets are transferred based on what is written in your will. If there is no will, then they become the property of the estate.
Joint – made up of assets that are titled in more than 1 name or held jointly, such as a joint bank account or a residential property. This also includes residential property that 2 legally married parties are living in, even if the deed is only in the decedent’s name. The transference of these types of property are determined by state laws, irrespective of the directives in a will.
Life Insurance, Annuities, and Benefits (Retirement) – These types of financial assets require a contract and will only transfer ownership or provide monetary payouts to the beneficiaries listed in the contract.

The total value of the above assets represents the gross estate, which is used for Federal Estate Tax and New Jersey Estate and Inheritance Tax purposes.

4. Significance of How Assets are Titled

It is often assumed that everything should be titled in the decedent’s name or their spouse’s name, but that might not always be best. For example, if your life insurance goes to your spouse, and they decide to remarry, it could ultimately end up in the hands of your spouse’s new partner. Additionally, if your spouse has outstanding liens or debts, any money they receive may be subject to creditors. Perhaps most importantly, depending on how much money you or your spouse has, your estate might be liable for the payment of any state inheritance tax and federal estate taxes at a rate of 40%.

5. Failure to Take Full Advantage of the Federal Estate Tax Exemption

Every individual has the ability to shelter up to $13,610,000 ($27, 220,000 for married couples) from the imposition of Federal estate taxes as an exemption in 2024. However, if one spouse dies, the living spouse’s federal exemption still remains at $13,610,000 unless federal estate taxes are filed and the “portability” benefit is claimed. Portability allows for any unused exemption from one spouse to be transferred over to the other spouse. For example, if the decedent only had $1,000,000 for their estate, they can effectively “give” their remaining unused portion ($12,610,000) to their spouse, increasing their spouse’s individual exemption to $26,220,000. Be aware though, the current federal estate tax exemption will “sundown” on December 31, 2025; if Congress does not act to maintain the current level, the new exemption will be reduced significantly to $6,200,000.

6. Failure to Understand and Take Advantage of the Benefits of a Revocable Living Trust

A revocable living trust is a great way to safeguard your money and financial assets, both before and after your death. There are three parties to any trust – grantor, trustee, and beneficiary. You can designate yourself as all three should you choose to ensure your assets are handled exactly according to your wishes. Benefits of a revocable living trust include:

Avoids probate (and associated fees) as well as public disclosure of those assets
Avoids delays in your spouse’s and/or other beneficiaries’ access to assets and income from those assets
Provides a tax effective mechanism to capture the federal equivalent exemption at death of first spouse and maximizes both spouse’s federal estate tax exemptions
Provides a tax effective mechanism to create generation skipping trusts or dynasty trusts upon death of first or second spouse
Can provide protection of beneficiary’s assets from creditors, future spouses, divorce of children/grandchildren, and poor judgement by the beneficiary

7. Failure to Understand the Relationship Between Federal Estate Tax Exemption and Any State Estate Tax

Some people assume that there is congruency between the federal and state tax exemptions, but that is not always the case. As of 2024, New Jersey has eliminated the state estate tax, but this can change at any time. However, New Jersey still has an inheritance tax in which the transfer of any benefits at death to any non-exempt beneficiary (other than spousal our lineage beneficiaries) are taxed at 15%.

8. Failure to Understand the Federal Gift Tax Rules

A popular strategy to reduce the value of an estate to avoid paying any federal and/or state estate taxes is to give away assets periodically throughout one’s life. While this is certainly feasible, there is a federal gift tax exclusion that can change from year to year. All gifts that exceed (or in the past have exceeded) the annual gift tax exclusion in place in the year the gift was made will be added back to the value of the taxable estate upon your death. For 2024, the federal gift tax exclusion is $18,000 per year, per donee. For example, a married couple with 2 children can effectively gift up to $72,000 to their children ($18,000 gifted to each child from each parent) per year for as long as the federal gift tax remains at $18,000. This can occur even if the asset is only owned by one of the parents. Additionally, any time you place property in joint name with another person or persons, you are making a gift and depending upon the value of the property at the time of the gift, you may incur a gift tax liability. However, there is no limit on the transfer, or gifting, of property between spouses.

9. Failure to Properly Plan to Protect Your Assets from being Spent Down on the Cost of Long-Term Care

While we might like to think that we won’t need nursing care or long-term care, in reality 43% of seniors will require nursing home care and 70% will require long-term care prior to their death. Additionally, we may drastically underestimate the cost of that care, which can range from from $6,000-$7,000 a month for home care and increase to $10,000-$14,000 a month for nursing home care. This is a growing problem and depending on how you plan to pay for that care, you may have to start “spending down” your assets many years in advance to qualify for Medicaid.

In order to qualify for Medicaid in New Jersey and have that program pay for home/long-term care, an individual’s income can be no more than $3850.50 per month and they cannot have more than $2,000 in assets, including a home. Medicaid will look back 60 months to ensure that these qualifications have been met; if care is needed before the end of that 60 month period, the individual will have to continue to spend down any assets for the remainder of the 60 month period. Failure to do so can cause Medicaid to put a lien on a primary residence or deny care, causing the individual to pay for services already rendered out-of-pocket.

According to current rules, primary residences and IRA’s are NOT protected and will need to be spent down/transferred. Placing an asset in joint name with a child or children will not be protected, unless the child/children can prove contribution to that account. Additionally, you can no longer transfer assets to your spouse to avoid spending down any excess. The non-institutionalized spouse can only retain the greater of $30,828 or 50% of the couple’s joint assets, up to a maximum of $148,420 of countable assets, excluding the primary residence.

10. Failure to Properly Select Fiduciaries

Choosing who will act on our behalf can be extremely important to ensure that your wishes, both while alive and in death, are carried out correctly. Be sure to choose someone whom you trust wholeheartedly; oftentimes we choose a spouse or child, but those can be the wrong choices, especially if those individuals have problems such as addictions, debts, or trouble managing money. Fiduciaries you should consider include:

Guardian of the person and estate of a minor child or legally incompetent person
Executor named in a decedent’s Last Will and Testament
Trustee named in a trust
“Attorney-in-fact” named in power of attorney
“Medical decision attorney-in-fact” named in an advanced medical directive (living will)

When making your fiduciary decisions, make certain to inform the individuals you select, name several successors, and provide your personal insight into your expectations, instructions, etc. to make sure that everyone is on the same page.

11. Failure to Have a Power of Attorney and Have it Updated on a Regular Basis

Unless someone is specifically designated as your power of attorney, the management of your personal, financial, and business affairs is not transferred automatically to next of kin. If there is no power of attorney in place or it is invalid or out-of-date, someone will have to petition the court to be appointed as your guardian, which can take weeks, even months. This can tie up your finances and assets from being properly dispersed or your final wishes carried out. You should have your power of attorney updated every 2-3 years, even if it is the same designee, especially since most banks, brokerage firms, and insurance companies will not accept a power of attorney that is older than 2-3 years.

12. Failure to Have an Advanced Medical Directive and Have it Updated on a Regular Basis

Should you become incapacitated or unable to make your own medical decisions, an advanced medical directive is necessary to ensure your medical care wishes are carried out, such as a DNR (Do Not Resuscitate). This will ensure that all necessary parties clearly understand your wishes and are committed to carrying them out should the time come. Without an advanced medical directive, your care can be contested between concerned individuals and may be decided by a judge. As with a power of attorney, your advanced medical directive should be updated regularly, roughly every 2-3 years.

13. Failure to Properly Plan for the Eventual Income Taxation on the Transfer of IRAs and Other Qualified Assets

While is was legal for beneficiaries to stretch out payments from IRAs and other qualified assets over the course of their lifetime to escape any income tax liabilities, current law requires that all disbursements be withdrawn within 10 years from the date of death of the account owner. The IRS rules governing these accounts are some of the most complicated within the tax code so careful planning is needed to ensure that your beneficiaries are able to collect the totality of these accounts with the least amount of tax impact as possible. Additionally, improper planning of these assets could result in the entire value of these accounts being taxed in one year, creating a large financial problem for your beneficiaries.

14. Failure to Properly and Legally Name Guardians of the Estate and of the Person for Your Minor Children or Grandchildren

Care of children in the event that both parents are deceased or incapacitated does not automatically revert to next of kin, neighbor, or close family friend. Even if these parties are willing and able to care for your children, unless they are specifically named in a Kids Protection Plan, minor children can be taken from your home and placed in the care of child protective services, often for days or weeks until the proper parties can petition the court for their care.

If you have any questions, please reach out to Larry Metzler at lmetzler@metzlerlaw.net. To schedule an appointment with Larry, please visit https://calendly.com/lmetzler-1/60min. You can view the recordings at the links below:

Part 1 – https://youtu.be/HIhO_MnSGaA

Part 2 – https://youtu.be/P4Q3iUdzp7A

You can also download copies of the handouts below:

Copy of the Presentation
Estate Planning Questionnaire
LIFE Plan 2020
Sequence of Returns White Paper

WEBINAR – Estate Planning Boot Camp Part 2

August 14, 2024 No Comments

Andrew Dauphinee

Did you know that if you are married, only about 15% of the total value of all your assets will be controlled by the terms of your Last Will and Testament? Did you also know that according to various studies, over half of adults in the United States do not have a will? Estate planning, though seemingly complicated, tedious, and time-consuming, is an often overlooked aspect of our personal finances. Please join us for an estate planning boot camp where Larry Metzler will teach you how to:

• Plan and protect your estate and your children’s inheritance
• Minimize the impact of federal and state estate and inheritance taxes
• Protect your estate from the “spend down” of your assets on long term nursing home care
• Protect your estate from extended probate and legal entanglements
• Create a “Legacy Plan” to enable you to lower death taxes and pass more of your wealth to your loved ones