Looking For Work After 50

Many older workers are struggling to land on their feet after a layoff and having to settle for entry-level jobs. Some are starting their own business. If you're older than age 50, and looking for work for the first time in several years, know where to go for help because the job search process has changed (CNNMoney.com July 22).

Compounding the problem is a growing pool of older workers. According to AARP, one of six workers older than 65 is in the work force, compared with one of 10 in 1985.

If you're older than 50 and looking for work, be prepared to use new technology, social networking sites, virtual career fairs, advice blogs and more. Check out these resources:

• LinkedIn. Currently more than 40 million professionals use this site to network, get advice, and connect with recruiters.
• Careerbuilder.com. Look for local jobs, post your résumé, and get tips and advice about staying focused, organized, and flexible.
• Retirementjobs.com, yourencore.com (for scientists and engineers) and retiredbrains.com contain listings and databases for job seekers older than 50. Some of these sites may charge a fee.
• The Five O'Clock Club. For a $49 membership fee, you receive outplacement and career counseling. Visit fiveoclockclub.com for details.
• SCORE. More than 10,000 experienced volunteers help train and counsel small-business operators. Visit sba.gov for details.
• Entrepreneur.com. This site contains information for starting and growing your own business.
• aarp.org/money/personal/real_relief_aarp/. Find information about how to make ends meet while you're unemployed, how to find a job, and where to go for help with medicare and Social Security programs.

One upside to the down economy: More Americans are volunteering. Career counselors stress the benefits, such as broadening your résumé, filling unemployed hours with meaningful work, and making contacts in the community which may lead to full-time, paid positions.

Hybrid Vehicles: Benefits Beyond Gas Savings

As gasoline prices have plunged, so have sales of once hot high-mileage hybrid vehicles. Buyers concluded that the gas savings on hybrids would not recoup their premium prices. But if you have a secure job and think you might buy a car now, a combination of federal and state tax credits can make a hybrid choice more attractive. In addition, in many places hybrids get other perks such as using car-pool lanes and free or reduced-cost parking.

If you're interested in purchasing a hybrid, consider these factors:

* Some states offer their own tax credits, allow car-pool lane use with only one passenger, and provide free or reduced-rate parking for hybrids with stickers.

* Along with their sales volume, the selling prices of hybrids have fallen as well.

* Check out the trade-offs including tax breaks. For instance, you no longer can get federal tax credits for Honda or Toyota vehicles, but some other companies' hybrids still command credits. Depending on what vehicle you choose and where you live, the cost comparisons may vary. To check out the situation in your state go to go.ucsusa.org/hybridcenter/incentives.cfm, maintained by the Union of Concerned Scientists. Web sites of your state motor vehicles, energy, or tax departments also may list such incentives.

* Check for possible insurance savings. Insurance companies Travelers, Farmers, and GEICO are offering 5% to 10% discounts on auto insurance for owners of gas-electric hybrid vehicles.

* Don't assume gas will stay this cheap forever. After plunging from its $4-plus per gallon level to around less than $2 on average nationally, gas prices headed up again in January 2009. The government's Energy Information Administration, Washington, D.C., projects that gasoline will average about $2 a gallon over all of 2009. As gas prices rise, so do the weekly savings from high-mileage hybrids.

If you're lucky enough to afford the hybrid premium, you might want to buy one to help cut energy consumption and spew out less climate-changing gases. Then while feeling you are helping the planet, you also can enjoy stopping less often at the gas station. Visit the professionals at LifeWay Credit Union for all your auto financing needs. Stop by or call us today at 615-251-2089.

Disturbing Trend on the 401(k) Front

While the numbers indicate that workers still are stashing cash in their employer-sponsored 401(k)s, the news is not all good and requires many workers to take action now to catch up (Money August 2009).

A recent survey of 2.7 million eligible employees by Hewitt Associates revealed that 401(k) participation rates have increased from 67.2% in 2005 to 74.2% in 2008, thanks in part to auto-enrollment programs. And 15.4% of 401(k) participants increased their contributions in 2008. But that's the end of the good news.

Here's the bad news:

• Almost 15% of 401(k) participants decreased their contributions in 2008;
• Workers who cut their contributions did so by an average 6.3 percentage points; and
• About 5% of workers stopped saving money altogether in their 401(k) plan in 2008, compared with 3.6% on average each year from 2003 to 2007.

If you've voluntarily cut back on saving, or if you've experienced a reduction or loss in workplace retirement benefits due to stock market losses or company cutbacks, take action and start to play catch-up as quickly as possible:

• Boost your 401(k) contributions. Losing the company match doesn't mean you should stop contributing. Research from Hewitt Associates revealed that the average employee could bridge the gap caused by a 401(k) match suspension by increasing contributions just three percentage points a year.
• Redirect spending leaks to personal savings. Start--or beef up--an emergency fund. This is particularly important if your job is in jeopardy. Ideally, you want three to six months' living expenses handy in a liquid, interest-bearing account in case you need cash quickly. After you've built up a solid emergency fund and you're maxing out your 401(k), then consider an IRA (individual retirement account).
• Resist the urge to cash out. If you're in the 25% federal tax bracket, a $50,000 withdrawal before age 59 1/2 will cost you $12,500 in federal taxes, $3,500 in state taxes (assuming a 7% state tax rate), and $5,000 because of a 10% early withdrawal penalty, according to Fidelity. That means your $50,000 withdrawal from retirement savings shrinks to $29,000.
• Take another look at your retirement plans. As painful as it may be, rerun the numbers in light of lower balances and economic uncertainties. Use several retirement calculators to figure out how much more you need to save to reach your goals. Check out Choosetosave.org/ballpark/ and Bankrate.com (click the Retirement tab then scroll to Calculators).
• Know when you're vested. If your employer terminates your 401(k) plan because of bankruptcy, merger or acquisition, remember that any pre-tax contributions you made, plus earnings, are yours to keep. The company's vesting schedule, though, determines whether you're entitled to the employer contribution portion. If you're not sure when you're vested, contact your company's human resources department.

Do You Need to Purchase Travel Insurance?

With summer travel season in full swing, more vacationers are considering buying travel insurance as a way to relieve stress and gain some peace of mind. But ask questions first to know whether travel insurance is right for you.

A recent survey from staffing firm Randstad U.S. reveals that more than 40% of respondents feel stressed when preparing to be away from work for vacation (suburbanchicagonews.com June 29). And following 9/11, more travelers worry about whether travel plans will go off without a hitch.

Do your homework before purchasing travel insurance:

• Avoid redundancy. Check insurance policies, credit card agreements, automobile clubs, and other memberships for existing coverage. These may already provide adequate coverage for the trip.
• Double check. Review reservations and purchase agreements to see what contingencies are already in place. Airlines, for example, must reimburse travelers up to $3,300 per passenger for lost baggage on domestic flights (airconsumer.dot.gov/publications/flyrights.htm).
• Shop around. Look for coverage differences in competing policies. Read the fine print to understand exactly what is covered and how. For example, some emergency medical assistance policies provide for evacuation to a hospital of the policy holder's discretion, while other policies provide for evacuation to the nearest hospital.

To compare travel insurance plans and coverage options, and obtain pricing, visit insuremytrip.com.

Peer-to-Peer Lending? Credit Unions Do It Better

Lending Club, an online business that operates like a dating service to pair individuals who want to borrow money with people willing to lend it, reports more than 5,000 successful "marriages" worth more than $43 million since its launch two years ago. Credit Union National Association's (CUNA's) Center for Personal Finance reminds borrowers that credit unions remain a better option.

Peer-to-peer lending networks bypass the traditional lending industry by allowing consumers to appeal directly to other consumers for a loan. Peer lenders often can earn more interest lending their money to strangers than they'd earn on conventional investments such as certificates of deposit. Peer borrowers often can get loans at rates lower than banks offer.

Appeals found on peer-to-peer lending networks tend to be personal and emotional, often including photos of kids and pets in an attempt to make their requests for money more persuasive.

Peer lenders respond by offering amounts and interest rates based on their assessments of individuals' personal stories and credit report data that the networks provide. Peer borrowers who appear to be good risks get all the money they want at favorable interest rates. People with less attractive stories and credit histories might have to settle for high rates or no offers at all.

Overall, peer-to-peer networks have about $1.5 billion in loans on the books, a tiny fraction of outstanding bank consumer loans. Should you consider participating in peer-to-peer lending?

"If you have a credit union auto loan, credit card, or mortgage, you already take advantage of the best peer-to-peer network out there," said James A. Hanson, vice president of the CUNA's Center for Personal Finance.

"Ordinary consumers created credit unions more than 100 years ago by pooling their money to make loans to each other," Hanson explained. "Their motive was not profit, but the desire to lend to their peers at better rates than loan sharks and even banks provide."

Credit unions were the first peer-to-peer lenders. If you don't belong to one, you should, Hanson advises, for the significant advantages and safeguards they give members:

• Deposit insurance. Credit union members' savings, from which loans are made, are insured up to $250,000 per individual per account by the National Credit Union Administration, an agency of the federal government. Peer-to-peer lenders have no such insurance protection if a network goes out of business.
• Help to improve creditworthiness. Credit unions, which exist to serve members, go out of their way to help members with poor or new credit histories improve their credit scores and become eligible for better interest rates. Peer-to-peer borrowers are at the mercy of peer lenders' opinions, with no help to improve their chances of getting a loan.
• Professional oversight and other services. Credit union staff are trained to assess loan applications and approve them quickly and efficiently. Loan interest income funds other member services, such as revolving credit (credit cards and home equity lines of credit), checking accounts, debit cards and bill payment services. Peer-to-peer networks are strictly in the closed-end loan business.

Smarter Driving Habits Can Save You Money

If you've changed your driving habits - such as car pooling, combining errands, or driving "smarter" - to cut back on gas consumption, you might qualify for lower auto insurance rates. Estimate the number of miles you've saved each month and call your insurance agent to see if you might be eligible.

New Tax Credit Eases College Tuition Burden

If you want help financing college education, it could be as easy as filing your taxes.

The American Recovery and Reinvestment Act allows for a tax credit - a reduction in your tax bill - of up to $2,500 per student for the cost of tuition, fees and book expenses paid in 2009 and 2010. This amount is an increase over previous Hope and Lifetime Learning Credit limits and applies to tax years 2009 and 2010, so the earliest you'll get the credit is early 2010 for the 2009 tax year (MSN Money June 24).

You don't have to fill out any extra financial-aid applications to get the money - just file your tax return, whether you owe taxes or not. Note that the credit is phased out for individuals with modified adjusted gross income of between $80,000 and $90,000, or $160,000 and $180,000 for married couples.

To find out if you're eligible and learn what's covered, visit irs.gov. For example, the credit is available only for undergraduates attending college at least half time. And if you receive a grant or scholarship that covers tuition, fees and books, you can't get the tax credit. If you're ineligible, you still can apply for the lifetime learning credit of up to $2,000. Either way, you can take only one of the tax breaks for a particular college expense.

Many students pay their own college tuition, and this money will land back in their pockets. In addition, there's some nontraditional help for parents and relatives who are saving to pay for a child's tuition.

Some states, businesses and colleges are handing out free cash in the form of rebates and grants to help build up parents' college savings accounts (US News & World Report March 31). The amount is modest compared with the $2,500 money available immediately through the new economic stimulus bill. But if you collect the grants now, you could have an extra several thousand dollars when your child is ready for college.

Be diligent. Consider six sources of free cash for college savings via a 529 college savings account (irs.gov/taxtopics/tc313.html):

• States. Government agencies and charities offer grants for college savings to local residents. Use the map at Savingforcollege.com/529_plan_details/ to find your state and see what you're eligible to receive.
• Employers. Ask your employer about grants for parents who use the 529 account.
• Credit cards. If you typically pay your credit card bill in full and on time, ask about programs that will rebate a certain percent of your purchases directly to your 529. Some programs to consider: Fidelity, UPromise, Babymint, Freshmanfund, or Futuretrust.
• Websites. Websites such as Babymint, Littlegrad, Futuretrust, and Upromise will send cash back to shoppers who click through their sites to partner retailers.
• Colleges. Several hundred colleges offer matching grants for parents who save for their children. Use these programs if you're certain your child will attend a school that's signed up for this program. You could lose some or most of the rebate if your child chooses to go elsewhere.
• Relatives and friends. Freshmanfund makes it easy to ask relatives and friends to donate to your college savings account. The website will funnel the gift to any 529.

To get the tax credit, complete IRS Form 8863 next year when you file your 2009 return. In the meantime, make sure you keep good records for tuition, fees and book expenses throughout the year.

Protect Your Investments

Don't let your guard down. Even though Bernard Madoff received a 150-year sentence for a massive Ponzi scheme that bilked investors out of billions of dollars, other investment fraudsters are on the prowl. Look for warning signs to avoid being caught in a similar scheme.

In a Ponzi scheme, the operator, acting as a financial planner, promises investors steep returns--generally higher than those available through other investments. Instead of investing the funds, the operator uses money from those entering the scheme later to pay purported dividends to the earlier investors. Once the operator can no longer pay out to all investors, the scheme falls apart and victims are left stripped of their investments (FBI.gov).

In legitimate transactions, financial planners generally do not have access to their client's money directly. Instead, they buy, trade and sell investments on behalf of their client, but the planner never touches the actual funds--those are held in an outside custodial account, such as Charles Schwab, Fidelity Investments or T. Rowe Price. In the Madoff case, however, victims missed this safeguard and dealt directly with Madoff. Victims were unable to detect that he simply was paying them with investments stripped from other victims.

Use caution to avoid falling prey to a Ponzi scheme:

• Always write and receive checks through a third-party custodial account--not your money manager. Ask your planner if he uses a custodian, and who it is. Make sure it is a well-known, independent firm.
• Don't give in to guarantees of big returns on investments--no investment is ever a sure thing. Madoff's scheme claimed an average return of more than 10% a year, which defied market fluctuations (abcnews.com Jan. 4).
• Obtain confirmation of trades and check your mailed account statements against online account balances (Ohio Department of Commerce, June 30).
• Check out financial adviser records with the "BrokerCheck" tool on Finra.org. The site reports adviser qualifications, such as licenses, registrations and employment history for the past 10 years, and includes a disclosure section where you can access complaints and references from past and current clients.
• Find out how is your adviser paid? Some charge a flat fee; others have agreements with mutual fund or insurance companies and receive commission on products they sell. Find a flat-rate adviser to avoid this scenario.

Happy 4th!

The staff of LifeWay Credit Union would like to wish you a happy and safe 4th of July!