Index Funds Are Better Than You Think

Anyone who’s asked, knows that I recommend broad-based index funds for long-term investments.

It’s always nice to read an article written by another financial adviser who believes the same. These advisers are in the minority, because the adviser makes no money from a client’s index fund investments. BUT, the client makes ALL the money and has ALL their money working for them because they can make these investments on their own.


This information is not intended to, and should not, form a primary basis for any financial decision that you may make. Always consult your own legal, tax, and/or financial advisor before making any investment, tax, estate, and/or financial planning decisions.

This link will take you to a USA Today article that talks about how Warren Buffett recommends index funds:

I recommend Vanguard’s Total Stock Market Index Fund and Total Bond Market Index Fund to get you even more diversity than what Warren recommends.

But the idea is the same. Enjoy.

This information is not intended to, and should not, form a primary basis for any financial decision that you may make. Always consult your own legal, tax, and/or financial advisor before making any investment, tax, estate, and/or financial planning decisions.

Medicare Advantage Plans (Part C)

The following link will take you to an article that talks about Medicare Advantage Plans or Part C of Medicare. If you are investigating what to add to the traditional Part A and Part B of Medicare, either because you are new to Medicare or are looking at your options in open enrollment, this article will be of interest.

You can always go to and/or call your local SHIP office to look at your options. In Colorado Springs you can call 719-471-7080 to get a SHIP counselor.

Medicare Advantage Plans

This information is not intended to, and should not, form a primary basis for any financial decision that you may make. Always consult your own legal, tax, and/or financial advisor before making any investment, tax, estate, and/or financial planning decisions.

Social Security Survivor Benefits

Social Security, a seemingly simple benefit, has many rules and can be quite complex. The following is a good article about survivor benefits. As always, please check with your financial advisor, or check with Social Security, if you have any questions or concerns.

8 things to know about SSA survivor benefits

Jim Blankenship, AdviceIQ 12:18 p.m. EST January 9, 2016

Social Security survivor’s benefits become available when a Social Security recipient dies and leaves surviving dependents: a spouse, children and other dependent family members. For many, the benefits constitute a transfusion to diminished household budgets at a tough period of life. The devil’s in the details of these benefits, though, and here are some answers you and yours need ahead of time.

Q: What survivor benefits are available to my spouse?

If your spouse is at least age 60 (50 if disabled), he or she may qualify for a survivor benefit based on your benefit at death. Calculating the benefit factors in the age of your surviving spouse, the benefit status of the deceased spouse and when, if applicable, the deceased’s benefits began.

If your surviving spouse is at the Full Retirement Age (FRA) of 67 for anyone born after 1960, he or she receives 100% of the benefit you got at the time of your death. The minimum benefit is 71.5% of your primary insurance amount (PIA), the amount one receives when filing for benefits at FRA.

If your surviving spouse is younger than 60 and not disabled, the survivor benefit (75% of your PIA) becomes available only if your spouse cares for at least one child or dependent of yours younger than 16.

Q: What survivor benefits are available to my other dependents?

Survivor benefits are available to minor children if you, the parent or legal guardian, die while holding at least 40 quarters of coverage (a quarter being three months of the year when you made, for this year’s regulations, at least $1,200). For a child under 18, or age 19 for a full-time student, the benefit equals 75% of your PIA. If the child is disabled prior to age 22, this benefit last the child’s lifetime.

Parents, grandparents or other dependents to whom you provided 50% or more support also get your 75% benefit.

Q: What survivor benefits can I receive when my ex-husband dies?

If your marriage lasted for at least 10 years and you never remarried, you qualify for the same benefits as if you were married to your ex-husband when he died. In other words, you receive all the survivor’s benefits he was entitled to. As long as you are 60 or older, you file for benefits based on your late ex-spouse’s record.

Q: Are there any limits to the benefits paid on an individual decedent’s record?

A Family Maximum benefit (FMax) ranges from 150% to 180% of the primary number holder’s PIA. If the total benefits paying on an individual record exceeds the FMax, all benefits are reduced pro rata to the maximum. Survivor benefits paid to an ex-spouse of the deceased do not count toward the FMax limit.

Q: Are there any restrictions for a surviving spouse to receive survivor benefits?

If you are a surviving spouse who remarries before turning 60, you’re ineligible for survivor benefits from your deceased spouse. If you subsequently end your next marriage or your subsequent spouse dies (meaning you’re no longer married), survivor benefits once again become available to you. The same restriction applies to your ex-spouse.

Q: Does receiving a survivor benefit affect my own retirement benefit? I am 60 and will qualify for a larger benefit based on my own record when I reach FRA.

As long as you are or will be eligible for the benefits, you can take either the survivor benefit first and switch to your own benefit later or vice versa. Filing for a survivor benefit early has no impact on your later retirement benefit; filing early for a retirement benefit also has no effect on your future survivor benefits.

Q: Are there earnings limits on survivor benefits?

As with other benefits, if you earn more than the annual limit in any year before you reach FRA, Social Security withholds $1 for every $2 over the limit ($15,480 in 2014). During the year that you will reach FRA, the limit increases to $41,400 and withheld benefits drop to $1 out of every $3 over the limit. These withheld funds are credited back to you once you reach FRA.

These limits apply to any survivor benefits, whether to a spouse, dependents or ex-spouse.

Q: Are any benefits available if my late spouse lacked enough quarters of coverage?

For you, the surviving spouse caring for a child who’s younger than 16, reduced benefits are available if your deceased spouse earned at least six quarters of credit in the three years prior to death. Any number of quarters between the minimum of six and the maximum of 40 allows for a phased increase in the benefit amount.

AdviceIQ@adviceiq on Twitter — is a USA TODAY content partner offering financial news and commentary. Its content is produced independently of USA TODAY.

This information is not intended to, and should not, form a primary basis for any financial decision that you may make. Always consult your own legal, tax, and/or financial advisor before making any investment, tax, estate, and/or financial planning decisions.

Social Security Primer

An article that appeared in the USA Today follows my comments. Even though 2016 will be coming to a close in a few months, this article is a great primer on Social Security.

Now that Filw and Suspend and Restricting your application to Spousal Only has been eliminated for most (see a previous blog on for more information on this), I generally recommend waiting until 70 to apply for Social Security retirement benefits. This works out best for most. To get a more accurate and personal recommendation on when to claim your retirement benefit, please check with your financial advisor.

Your 2016 guide to Social Security benefits

Matthew Franke, The Motley Fool 6:34 a.m. EST January 2, 2016


(Photo: Getty Images/iStockphoto)

Social Security is an important part of most Americans’ retirement planning, so it’s important to know how it works. For instance, you need to know when you reach full retirement age, and how filing for Social Security before or after that time affects your monthly benefit. Here’s what you need to know about this, as well as several other Social Security topics.

How your Social Security benefit is calculated

Unlike many pension plans, which are based on just the top few years of your earnings, Social Security takes your 35 highest-earning years into account when computing your benefit. Each year’s income, up to the maximum taxable Social Security wages, is indexed for inflation, and averaged together. A formula is then applied to arrive at your full Social Security benefit — that is, the monthly amount you are entitled to if you retire at your full retirement age.

Once your average indexed monthly earnings are calculated, if your first year of eligibility is 2016, your benefit is calculated as:

•90% of the first $856 in monthly earnings

•32% of the amount between $856 and $5,157

•15% of the amount above $5,157

As an example, let’s say that your average indexed monthly earnings were $4,000. Based on the formula, your benefit would be 90% of $856, or $770.40, and 32% of the other $3,144, or $1,006.08. Adding these together produces a monthly benefit of $1,776.48.

Are you eligible for Social Security?

In order to be eligible for Social Security, you need to earn 40 “credits” during your working lifetime. Each $1,260 in earnings you have in 2016 will give you one credit, up to a maximum of four credits per year. This amount changes each year, but if you earn enough to get the four-credit maximum in each of 10 years, you’ll be eligible for Social Security benefits.

Your eligibility status is reflected on your annual Social Security statement, which I’ll discuss a little later.

What is your full retirement age?

For people born between 1943 and 1954, full retirement age is 66. For those born after that time period, the full (or normal) retirement age gradually increases to 67 for those born in 1960 or later.

Filing early or late can make a big difference

You don’t have to wait until full retirement age to start collecting benefits. In fact, you can file for Social Security as early as age 62, or you can choose to delay your benefits until age 70.

If you file early, your benefit will be reduced. Starting with your full benefit amount, your benefit is reduced by 6.7% for each year before full retirement age (up to three years), and 5% for each year beyond that. Conversely, if you choose to delay benefits, your monthly checks will increase by 8% for each year you decide to wait.

To illustrate this, here’s how your benefit could be affected if your full retirement age is 66.

How to estimate your benefits before you retire

You can obtain your Social Security statement by creating an account at Your statement contains lots of valuable information, such as

•Your estimated benefit amount at full retirement age.

•Eligibility for benefits.

•A detailed history of how much you’ve earned each year.

•Estimates for disability and survivors’ benefits, should you need them.

Keep in mind that the figures in your statement are just estimates, and your eventual benefit amount could be quite different, especially if you’re relatively young now.

Benefits are protected from inflation

While Social Security isn’t designed to be anyone’s sole source of retirement income, it is indexed for inflation — meaning that, unlike most other retirement assets, your purchasing power will remain the same over time.

Each year, the Social Security Administration (SSA) applies a cost-of-living adjustment to Social Security benefits, based on the consumer price index. The index that the SSA uses actually fell during its 2015 measuring period compared with the previous year, so there will be no cost-of-living adjustment in 2016; but there have been some substantial adjustments in the past. In 1980, inflation was so high that Social Security recipients received a 14.3% cost-of-living adjustment to keep up.

The point here is that you don’t need to worry about inflation — at least when it comes to your Social Security income. The system is designed so that, if goods and services eventually cost twice as much as they do today, you’ll receive double the Social Security.

When to file is an important question.

When to file is an important question. (Photo: Getty Images/Fuse)

How to file for Social Security

The easiest way to apply for Social Security benefits is online at The application takes about 15 minutes, according to the SSA, and there are no additional forms to sign, and usually are no additional documentation requirements.

If you don’t want to apply online, you do have other options. You can apply by phone from 7 a.m. to 7 p.m., Monday through Friday, or in person at your local Social Security office. If you choose to apply in person, the SSA advises you should make an appointment. You can look up the SS office closest to you here.

Spousal, disability, and survivors’ benefits

There’s more to Social Security than retirement benefits. In fact, there are three other types of Social Security benefits to be aware of:

• Spousal benefits: If you and your spouse both file for Social Security at full retirement age, each spouse is guaranteed a minimum of half of the other’s benefit. For example, if a retiree is entitled to a monthly benefit of $2,000, their spouse will receive at least $1,000, even if his or her own benefit amount would be much less.

• Survivors’ benefits: If a worker dies, his widow, children and other dependents could be eligible for benefits. Survivors’ benefits are an entire topic by themselves, so here’s a full discussion of this feature of Social Security.

• Disability benefits: If you become disabled and can no longer work, your Social Security record could entitle you to benefits. You can find your theoretical disability benefit amount on your Social Security statement.

Can you work and collect Social Security at the same time in 2016?

Sort of. There are three different categories of Social Security recipients, and there is a different “earnings test” for each.

•For SS recipients who will not yet reach full retirement age in the 2016 calendar year, the first $15,720 in earnings is exempt. Beyond that amount, every $2 in earnings will reduce Social Security benefits by $1.

•For SS recipients who will attain full retirement age during 2016, the first $41,880 is exempt, and the reduction is just $1 for every $3 in earnings beyond that. Plus, only the months before your birthday count toward the total.

•Finally, SS recipients who work past full retirement age will experience no benefit reduction, no matter how much they earn.

It’s also important to note that any reduction in benefits isn’t lost — rather, a reduction will increase your future benefit amount. For a thorough description of the rules about working and collecting Social Security, check out this article.

Isn’t Social Security going bankrupt?

While it’s true that, within a few years, money will begin flowing out of Social Security’s trust funds faster than it’s flowing in, it shouldn’t be cause for concern. Even without congressional action, Social Security will be able to cover 100% of benefits until 2033. After that, once the trust funds are depleted, the taxes coming in will still be enough to cover more than three-fourths of all benefits.

As I’ve written before, I’m confident that something will be done. Similar situations have come up in the past, and measures were taken to prolong the system’s solvency.

It’s a popular misconception that once the trust funds run out, benefits could stop coming altogether. Some retirees are even claiming benefits earlier than they otherwise would, fearing that they should get what they can while Social Security still has money to pay. Don’t make this mistake.

A major financial decision

Even if you have substantial assets when you retire, chances are that Social Security will still make up a large portion of your retirement income. The decision of when to begin collecting Social Security is one that can affect you and your family for decades, and should be taken seriously. If you’re approaching the age of eligibility, make sure to carefully consider all of the pros and cons before filing.

SPONSOR CONTENT: The $15,978 Social Security bonus most retirees completely overlook

If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known Social Security secrets could help ensure a boost in your retirement income. In fact, one MarketWatch reporter argues that if more Americans knew about this, the government would have to shell out an extra $10 billion annually. For example: one easy, 17-minute trick could pay you as much as $15,978 more… each year! Once you learn how to take advantage of all these loopholes, we think you could retire confidently with the peace of mind we’re all after. Simply click here to discover how you can take advantage of these strategies.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has adisclosure policy.

The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.

This information is not intended to, and should not, form a primary basis for any financial decision that you may make. Always consult your own legal, tax, and/or financial advisor before making any investment, tax, estate, and/or financial planning decisions.

5 Top Retirement Tips

The following is the text of an article published in the USA Today wherein the author talks about the top 5 tips he’s gathered from speaking to retirement specialists through the years. They sounded good to me, so I thought you may like them also.

Retirement: 5 best tips from my time at USA TODAY
Rodney Brooks , USA TODAY 11:29 a.m. EDT June 2, 2015

It’s really hard to believe. Has it really been 2½ years since I started writing this retirement column?

I’ve talked to hundreds of retirement planners, financial advisers and authors from just about every part of the country. I made sure I got the view from the heartland — in an effort to not focus on the so-called high net-worth clients.

It’s been a wonderful ride. And I’m sorry to say, the ride is coming to an end. (More on that later.)

But first, I’m going to give you some of the best retirement tips I’ve heard and written about over the last 2½ years.

Wait for Social Security (If you can). Only one topic generated more email than my columns on Social Security, and that was my columns on taxes. The big question: When should you take benefits? There’s no easy answer, but here’s my best shot: If you can afford to, wait until you’re 70.

I’m not naive. I realize most people take benefits early because they have to. In fact, according to Voya Financial, 75% of workers take Social Security before 70, and more than half start receiving benefits between the ages of 60 and 64.

But if you can, you should wait. For every year you wait after age 62, your benefits increase by about 8%. Even if you wait only till 67, there’s a big difference — you increase benefits by about 30% from what you would have received at 62.

2. Do a budget, hire a financial planner and get a retirement plan. Wow, that’s a mouthful. But they are all interrelated. Find a financial adviser you can trust. They will help you determine what your needs will be in retirement, and hopefully keep you from running out of money.

The first thing any financial planner will tell you is you have to do a budget. If you don’t know how much you’re spending, there’s no way to figure out what you need in retirement.

But the planner will get you and your spouse to sit down together and make sure you both have the same vision for retirement. A good planner will help you figure out if you want to stay in your house, how much it will take to travel (if that’s your goal) and when is the best time to take Social Security. But they also might tell you that you can’t afford to retire because you haven’t saved enough money. In any event, you’ll know where you stand.

3. Do not retire without a plan. Sometimes that means, delaying retirement for as long as you can. As I’ve written many times, it’s not your father’s retirement. You can’t retire without knowing what you will be doing for the rest of your life. Think about it. If you retire at 60, with longer life spans, you could live another 30 years.

And do you really think you can sit in that easy chair and watch movies for 30 years? Even those who thought they would love to play golf every day for the rest of their lives are in for a rude awakening. Most get bored within six months.

I talked with one 90-year-old college lecturer and author recently who retired from his teaching jobs, but he still continues to work on his other business ventures. He has absolutely no intention of retiring. And every day his friends tell him they retired way too early.

4. It’s never too late to start saving. I did a radio show not too long ago. A woman called in for some retirement advice. She was very proud to have put her daughter though an Ivy League college. But she was 60 years old and had saved nothing for retirement.

Sure, it sounds grim. But I talk to people every day who are in their 50s and 60s who have not saved a dime. In fact, most of us have not saved nearly enough for retirement. That’s one of the reasons many have to take Social Security early.

I’m not saying that everything is going to be fine. People who haven’t saved must adjust their way of thinking about what retirement is. They will most likely have to work longer, if they can. Even a part-time job will help. And they will likely have to reduce their standard of living in retirement. But they must start saving now, especially if they have a company-sponsored 401(k) with a company match. The power of compounding will make a big difference even over 10 years. And keep in mind that the longer you work, not only does it help you save, but it keeps you from having to draw down the little retirement savings that you do have. And you can delay Social Security for a little while longer.

5. Don’t be afraid of the stock market. When you have watched the daily travails of the market on television, it’s not hard to see why so many people are afraid of investing in stocks. And the big market crash of 2008 is still fresh on our minds. But any any financial planner will tell you that besides people not saving for retirement, one of their biggest gripes is people being too conservative with their investments. That can be huge over a lifetime of saving for retirement.
Consider this: $10,000 invested in stocks 20 years ago would have been worth $65,484 at the end 2014. The same amount invested in government bonds would have brought you $31,058. And Treasury bills would have returned a measly $16,905. Enough said.
And that brings me to my last column. Though I have been a columnist for the last two years, I have worked at USA TODAY for 30 years. They have been some of the best years of my life. I’ve watched the newspaper come a long way. My company has offered a buyout package for us veteran editors and reporters. I accepted.

I’ve made some great friends and worked with some of the best journalists in the world. Some of the best are leaving with me, but some of the smartest people I know will stay at USA TODAY. And most of all I want to thank our readers, especially the ones who have taken the time to call or email me to either compliment me or complain. I appreciated the engagement either way.

And I am taking my own advice. I am not really retiring. I will be writing a retirement column for The Washington Post, among others. You may find me elsewhere on the Web as well. And you can email me at
Thank you. It has been an honor and a privilege.

How long will it take to double your money?

Warren Buffett, the Oracle of Omaha, says that investors should expect a return of 6 to 7% in the aftermath of the financial crisis. (If you don’t know who Warren Buffett is, you should ask your financial advisor.)

My clients know that I recommend broad-based stock and bond index funds, specifically Vanguard’s Total Stock Market Index Fund and Vanguard’s Total Bond Market Index Fund. They have a very low cost ratio and this way all your money can work for you, instead of a money manager.

Although no one knows what the markets will do in the future (if anyone says they do, run from them as quickly as possible), I am estimating a 7% return for the stock index fund I recommend and a 2% return for the bond index fund I recommend. Your projected return would then depend on how much you put in each fund, which is affected by your age and tolerance for risk.

You subtract your age decade (i.e. if you are 46 years of age, use 40 until you reach 50 years of age, then use 50) from 120, 110, or 100 to get the percent you should put in the stock fund. You subtract from 120 if you’re feeling aggressive (even though using these funds is the most conservative way to put your principal at risk), you use 100 if you’re feeling conservative, and 110 if you’re in between. Subtract that result from 100% and that’s the percent you put in the bond fund.

Once you’ve done this, you multiply your stock percentage times 7% and your bond percentage by 2%. Add them together and this represents your expected rate of return.

Divide 72 by your expected rate of return and the answer is the number of years it will take for your money to double.

If you invest your money differently, then divide 72 by your expected rate of return to get your answer.

This information is not intended to, and should not, form a primary basis for any investment decision that you may make. Always consult your own legal, tax, and/or investment advisor before making any investment, tax, estate, and/or financial planning decisions.

Closing Credit Cards and Your Credit Score

I’m guessing by now you have some credit cards or a credit card that you’ve thought about closing. You may have even heard some conflicting information about whether or not you should close credit cards. Here is some advice on this issue, taking into account the effect your actions may have on your credit score.

First, a little primer on what affects your credit score.

The most important factor is your payment history. This counts for 35% of your score. So pay your bills on time, even if you are just paying the minimum payment on your credit cards.

How much in total you owe versus your total credit limit (credit utilization) counts for 30% of your credit score. An ideal credit utilization rate would be less than 10%, although less than 20% is still pretty good. Once your credit utilization rate goes over 40%, your credit score will be very significantly impacted.

The amount of time you’ve had credit counts for 15% of your credit score. This is why it’s typically best to keep your oldest credit card account open, even if it isn’t the main one you are using now.

Applying for new credit counts for 10% of your credit score. While applying for a new card or two won’t hurt, regularly applying for new credit cards or other loans will cost you. Also your average credit history (the longer, the better) is factored in here and every time you open a new account your average decreases.

10% of your score is based on the types of credit you have. The more diversity you have the better. Types include revolving (credit cards), installment (car loans), and mortgages.

Now on to closing accounts …

If you have a card with an annual fee that you aren’t using, this would be a prime candidate for closing. Before you close it you can ask your issuer to waive your annual fee or downgrade your card to a no-fee version. If you have a card or other cards from the same issuer (CitiBank, Chase, etc.) you can ask if they will add the credit limit from the card you are closing to one of your other cards, especially if one of those is the main one you are using. If your issuer will do any of the above, your credit utilization will not suffer with the closing. Your average length of time you’ve had credit and the total length of time you’ve had credit may be affected, but this is less significant than your credit utilization.

Also, if you have a card with unfavorable terms, it could be a candidate for closing. Make sure you are affected by the unfavorable term(s). Sometimes a card has some unfavorable terms that in your particular situation isn’t a problem, so there is no need to close the account for that reason.

As I mentioned above, it is best not to close your oldest credit card account since it has your longest credit history. If this card is no longer the one you carry with you and use often for purchases, set up an automatic billing (like Netflix, for example) so the account shows some activity and the issuer won’t be tempted to close it.

You should check with your financial advisor before you make any financial moves even those you see in this blog. They can help you determine an individual path that is best for you.

Financial tips for single adults

It’s just as important for a single adult to set themselves up for financial success, as it is for married couples and families.

The following are some areas for single adults to be concerned with:

  1. Estate Planning: Single adults need a basic will, a living will, and powers of attorney for finances and a proxy for health care. You want to make some decisions and legally represent them on paper before/if you become incapacitated and cannot make decisions for yourself. Check the beneficiaries on your retirement plans, such as your 401k or IRA(s), to make sure the funds are going to who you want them to go to. You don’t want the state making these decisions for you.
  2. Emergency Fund: Everyone should have an emergency fund, but it may be more important for single adults whose only income stream may come from their own wages. Having the equivalent of six months’ normal expenses in a liquid savings account should be enough.
  3. Credit Score: It’s important to establish credit in order to have a credit score and then to treat it well. Besides being used by institutions you wish to obtain credit from, your credit score is used by employers, insurers, utilities, and others as part of their evaluation to determine how trustworthy and responsible you are. I am a big fan of a young person getting a credit card and establishing credit, once they are paying for some expenses themselves. It may be as simple as putting gas in the family car. It is a good time for parents to instill in their young adult the importance of paying off their credit card every month. You don’t want to pay interest on your every day expenses. More and more credit cards, such as Discover, Citibank, and American  Express are showing their customers their credit scores as part of their service. I believe this trend will continue and paying to see your credit score will no longer be necessary.
  4. Disability Insurance: Disability insurance can usually provide up to two-thirds of your income should you become unable to work and earn an income. According to the Council for Disability Awareness, just over 1 in 4 of today’s 20 year-olds will become disabled before they retire. The council also reports that accidents are NOT usually the culprit. Back injuries, cancer, heart disease and other illnesses cause the majority of long-term absences. Check to see what coverage your employer provides for you. You should have short- and long-term disability insurance. For whatever your employer doesn’t provide, you should consider purchasing a policy yourself for the coverage you’ll need.
  5. Retirement Saving: Think 401ks and IRAs. The following advice applies to anyone regardless of their marital status. First, take advantage of any contribution match your employer offers for your 401k. (If it’s available select the Roth 401k.) Next, if your income allows, fund a Roth IRA for the year. Once you’ve contributed the yearly allowed maximum to your Roth IRA ($5,500 annually, $6,500 if you’re 50 or older), go back to your 401(k) and attempt to contribute the maximum ($18,000 annually, $24,000 if you age 50 or more). An IRA and a 401k can provide important keys to a  comfortable retirement if you invest early, often, and wisely.