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Show M -- THE WALL STREET JOIJRNAL DAILY NEIAID'" Security gets no monthly payment for dependents until they are age 18 or 19. But to get money for your dependents, you also hare to claim your Social Security benefit ' you retire, what's your most critical financial decision? Deciding when to claim Social Security retirement benefits has got to be near the top of the list. After all, for folks age 65 and up. Social Security accounts for 39 of income, far more than any other source. Yet the media, investment advisers and academics spend precious little time discussing the ins and outs of Social Security, so it's hard for seniors to make an informed decision. Want to get yourself an educa tion? Here are some key questions to consider. fawtff eajrV. If I retire at C, shouldn't I take getting Social Security? For purposes of Social Security, "the full retirement age ranges from age 65 for those born before 1938 to age 67 for those born after 1959. But no matter when you were born, you can claim reduced benefits as early as 62. Taking Social Security early, however, can be a hassle if you are still working. The reason: If you are under your full retirement age and earn more than $11,640 in 2004, you, will typically lose $1 of benefits for every $2 you earn above that threshold. You get credit for these lost benefits, resulting in a larger monthly check once you reach your full retirement age. But in the meantime, you will have to cope with fluctuations in your monthly Social Security income. Social Security right away? Some folks have to apply for Social Security as soon as they retire, because they need the money. But if you can, treat when you retire and when you claim Social Security as two separate decisions. The fact is, even if you quit the workforce at age 62, there are often powerful arguments for deferring benefits. For starters, waiting will ensure a larger monthly check. The precise increase depends on when you were born. For instance, if you were born between 1943 and 1954, your full Social Security retirement age is 66. By claiming benefits at 66 rather than at 62, you will get a benefit that is 33 larger. Waiting will also bolster the survivor's benefit payable to your spouse, assuming you were the family's main breadwinner. Upon your death, your spouse should be able to collect a monthly check equal to 100 of your benefit. If you delay Social Security beyond your full retirement age, that will further increase both your benefit and the benefit for your surviving spouse. Let's assume, once again, that you were born between 1943 and 1954. But this time, you delay Social Security until 70, the latest possible age. That will result in a benefit that's 32 larger than 76 at age larger than at age 62. Still, delaying Social Security Will my benefits get taxed? If you work while receiving ben- efits, you also boost the chances that your Social Security benefits will get taxed. n To figure out whether the will snag part of your benefit, you have to take your adjusted gross income and add both interest and also half of your Social Security benefit. If the resulting figure is more than $25,000 and you are a single person, or above $32,000 and you are married filing jointly, you could.be taxed on as much as 85 of your benefit. tax-ma- As rights when applying for a job than you do when applying for a loan or credit card. Under the Fair Credit Reporting Act, a prospective employer must obtain your permission in writing before he can access your credit history. If the employer denies your application based on this credit history, he must give you a copy of the report and materials explaining how you can dispute with the credit bureaus anything yod feel is inaccurate. The Federal Trade Commission enforces this requirement In Jury, for instance, two Las Vegas casinos enough experience, you now have this to worry about: Is your credit up to par? That's because an increasing number of employers are 'using applicants' credit history to help gauge-horesponsible they are, particularly for any jobs that involve handling sur" money-- ON THE vey by the So- - JOB ciety for Hu- man Resource Management found that 35 of employers checked applicants" credit reports in 2003, up from just 19 in 1996.. "If something you do have more However, in your background implies that you are not able to handle money or that you can't be trusted when you're not being ob- . served, employers will take that into account," says Gerry Crispin, principal of CareerXroads, a Kendall Park, N.J., consulting firm on recruiting. You Have Some Rights Some consumer activists and bankruptcy lawyers decry the use of credit reports for this new purpose, because they think it hurts histopoor people whose ries may be marred for almost no fault of their own. But there arent laws preventing employers from using credit reports to deem a candi- Questions Security? Head to the Social Security Administration's Web site at wwiuu.gw. Near the top of the home page, look for the search engine labeled "Questions about' Explain 'Sticky Stuff If you do have a credit ical care problem-stemm- ing, say, from uninsured medthe best thing is to ex- plain it upfront "It's much better to be real, and date irresponsible. not to worry about It too much,' f a recent afternoon, Robert sat down in front of his computer, pulled out the sleek black box he'd ordered over the - temet and for unlimited local and service. Rates for interna- ( tional calls are also a bargain: just $1.20 for 20 minutes to Ireland, to China. $3 for a half-hou-r Such savings already have led 350,000 consumers to Install local Internet phone lines in their homes. By year end, the figure is expected to hit a million, fueled by the surge in U.S. households with broadband access already more than 22 million. The promise of VOIP has led to a stampede of companies into the market new- SMART MONEY Plugged it into his cable mo-dem. Then he , attached an ordinary telephone to the box, picked up the phone and dialed his daughter's number. "Heather, can you hear me?" Her response came back pretty clear, if not perfect But one thing was for sure: The call was cheap. Internet phone service, known as voice over Internet protocol or VOIP, is trie latest thing driving down prices for phone rails. The 'Industry may not want to admit it "but the future of telecomrriunicatioos'lhay well be five-cephone calls everywhere or, as some analysts suggest voice service that's free, like But how cheap is It right now? Very, Most Internet phone services charge flat monthly fees, say, $20 comers like pioneers Vonag and entrants NettPhoM; like BraadVox, VofcoPutao and 8x8. The cable Industry, too, Is making a big push. Cablevislon offers VOIP to all subscribers; Time Warrior, Cox tomnunlcatJofW and Coanaat serve some markets and are racing to expand. Even phone companies have opted to embrace VOIP rather than fight It Verizon's more-rece- . new service is known and Km as Voice-Win- www.ncpuoi.orgcontactask, the Web site for the National Committee to Preserve Social Security and Medicare. has CairVantage. We to the wrong people. m credit bureau, The bureau Is required to conduct an Investigation into any disputed Items. If that doesn't resolve the matter, you can have a statement put on your report explaining your side of the story. . i By Andrew Stockman Before you cut the cord oh your , landline, be aware of the draw-- ! backs to VOIR Your phone won't work if your Web connection Is down or If power goes out Some services don't offer basic functions like caller ID or 911. Most adapters have only one or two phone Jacks, so you can't easily connect multiple phones. Though VOIP companies talk about how easy It Is to plug the adapter Into your DSL or cable modem to start service, it's a lot more work than having a . phone technician install a line. And ' help lines can get jammed. ' ' , The biggest issue may be the quality of calls. The sound Is much better than in VOfi early yearsbut consumers say they still experience the occasional garbled call, and providers acknowledge that hiccups, or brief Interruptions, can occur. ByVmtimMmOdht contact the editors of Smart- - ' Money magazine, you may send an to: odtlmsvMiuM tmooajtcont news, sales ; , Arthur Andersen etc. etc etc., the big blackout war in Iraq, colleagues leaving and others joining, and, so far, another close and unspeakably uncivil election campaign. What a time. What an adventure. And what an honor to have been here for this period and to have worked with such terrific and our 86 partjournalists-ou- rs deliver to ner newspapers'-- to you, our 10.5 million subscribers, the best, most timely personal-financ- e journalism anywhere. We appreciate the support of our partners, our colleagues at the daily Wall Street Journal and our corporate parent Dow Jones & Co. But we are always most grateful for the support we receive from you, our readers. Our various writ-ereceive hundreds Of letters each week, and your responses go far to sustain us in our work and push us to improve Sunday Jour- Not Looking Back That's our story, and we're sticking to I'd put this week's edition up against any previously published by us or any of our competitors: Gregory Zuckerman's timely report on rising energy stocks, Kelly K. Spors' insightful piece on insurance and Andrew aruue uu oiauuuan s employers using credit reports to check out potential new hires. All that plus our regular weekly columns: Tom Herman's "Ask Dow Jones," Jonathan Clements's "Getting Going," Jeff Opdyke's "Love & Money," SmartMoney and Bar- it home-Owne- n. We hope that our constant shouldn't 8 or 9 articles, investment and career advice that. leader. the world's business-new- s Sunday Journal is, we like to think, the place where Mam Street : meets Watt Street , "It's a place where you can expect every week, the most timely and helpful news and commentary anywhere about managing your money-whet- her you keep It in the bank, mutual funds, stocks, an IRA, a 40100. real estate, collectibles or even stuffed in your mattress. It's a tough, new economic world out there.... We need all the help we can get to figure it out and . stav ahead.- .' "We want Sunday Journal to help you cut through the noise that, too often, passes as investment or career advice today. We hope that you, like readers of the daily Wall Street Journal, come; to trust us as a fearless and unbiased source of news and information about business and finance.'' bear market in advertising-drought Enron-Ty- long-slo-g f sonal-finan- , like many other enterprises born in 1999, The. Wall Street Journal Sunday came into this world to help change it Remember the New Economy? Remember how the market was making everyone effortlessly wealthy? Remember Pets.com? Remember peace and prosperity? :. Unlike many other enterprises barn in 1999, The Wall Street Journal Sunday has survived. I'm happy and proud to report in this annual birthday note that we survived the Internet bubble, a muddled presidential election and a constitutional crisis, a recession, Sept U, war in Afghanistan, the ron's Insight And remember: You can always read everything in our issue on Our free Web site, at uMtey.wsJ. com online. So we're not looking back today. Fifth birthdays are for and that's what we plan on doing. Just after we wrap up this week's edition. Thanks for reading. See you next year. . -- DmU Crook soHor 7n Wat Sutat Journal Sunday ef- forts to meet your needs and live up to your expectations come through week after week. . g, Stilly Committed But we hope, above all, that we have honored the commitment we made to you in our very first issue: "The Wan Street Journal Sunday is a weekly collection of per Personal Business Group. The survey found people with accounts that didn't belong to them, : payments marked as late when they weren't and even things like tax liens and judgments attributed We're five old today. By Kelly $ problems who could find themselves denied jobs. A quarter of all credit reports contain serious errors, according to a recent survey by U.S. Public Interest Research it made nal.' Jonathan.clenwntovwsJ.Goifi says Mr. Crispin. 'If you do have some sticky stuff, the critical thing is: What do you have on the plus side indicating your performance?" It isn't only people with credit To and Jonathan Clements also writes the 'Getting Going' column that appears Wednesdays in The Wall Street Journal. Write to him at Internet Phone Calls Are Cheap, Not Perfect On 8 "Retirees overestimate their likely returns,'' Mr. Hebeler says. "I think they'll do well to keep up with inflation." Check out "Ask Mary Jane at www.tran-tunlon.co- at 7, 6, 5, 91 at 9. But you probably count on clocking 7, annual gains. 86 Want to team mora about Social the kiss of death for any job application, says Ed Mierzwinskl, consumer program director for the nonprofit research group. So what to do? The first step is to check your credit report before applying for any jobs. The three mabureaus all . jor make reports available online for $9. Some states also let you get one free report per year. The sites are www.expeftan.com, and www.attiiitax.com. If you find a mistake, contact the Crispin says. 3, n Age-Ol-d "That kind of thing is basically paid $325,000 in civil penalties after the FTC sued them for denying jobs to people based on their credit reports, without informing them of their rights under the federal law. Of course, these rights only go so far. A company could say that its decision was based not on your credit history but other factors. "The standard line is, 'We hired someone who is a little stronger in the skill areas we were looking for, and you came in second," Mr. ; What's the advantage of applying early? Waiting will get you a larger benefit. But it also means you may miss out on Social Security for, say, the first three or four years of your retirement As a result, you will have to fund those three or four years entirely out of your own pocket. Moreover, by waiting, you will miss out on benefits for any children who qualify as your dependents. Uncle jam provides a 66-- and wasn't a ilytog early may make sense if you have young kids, 'while waiting could be a smart move if jwi were the main breadwinner and you think your spouse win outlive you. But for most folks, the key factor will be their own longevity.' The longer you think you will five, the smarter it is to wait Take the example above, where you got a 33 boost in benefits by delaying from 62 to 66. Is it worth holding out for the larger check? Here's how to think about the tradeoff. If you retire at 62 but claim Social Security at 66, you will have to run down your retirement savings much more quickly during , your initial retirement ' . years. ' Moreover, you will miss out on the investment gains that these savings could have earned. But eventually, the bigger monthly check you get at age 66 will compensate for this early hit to your portfolio. Suppose inflation runs at. 3 a year. If you reckon your savings will earn merely matching inflation, it is worth postponing benefits until 66 if you believe you will live beyond age 77, calculates Henry Hebeler, who runs a Web site devoted to retirement issues at wwwjuialyzenow.com. Think you can do better than a portfolio return? The break-eveage rises to 79 at a 4 83 at 81 at return, 80 at beyond your full retirement age may not be the smartest decision. Sure, you will get a farter check. But if you run the numbers, you find that, to justify the wait, you need to be confident you will collect a bunch of those fatter checks. Depending on what assumptions you use, that might mean living until your mid-80-s or beyond. : Job Seekers Keep an Eye on Your Credit if a job interview r SosJumUIdda)irskouldIap-- if I work while yeariH-ftuifi- f , What happens Sunday. September 11 2004 Editor's Noto Mr Get the Most from Your Social Security Social v - Miff. By Jonathan Clements Getting Going ' . k. Spon v Weatherproof Your Home Insurance if you don't live near Florida, all the about hurricane damage lately probably has you thinking about insurance. It should. As many as 60 of U.S. homeowners wouldn't be adequately insured if disaster struck and their home was totaled, some insurance-industr- y executives say. Consumer groups put the figure as low as But there's no doubt that some homeowners would face an insur-anc- e gap of more than 20 in what they'd need to completely rebuild and refurbish their homes. Unlike a decade ago, most insurance companies no longer guarantee replacement of your home if you don't carry enough coverage; now, they generally shell out no more than 120 or 125 of the poll, cy's face amount So if you have a $200,000' policy on a home that costs $400,000 to rebuild, the insurer might pay out $250,000. You'll be stuck covering the rest--or rebuilding a sive abode. How much coverage do you Mod? Experts recommend getting a policy big enough to cover 90 to 100 of the estjtaated cost to reconstruct your borne, assuming the 20 to 25 buffer provided by the insurer, will cover arijr miscalculation. .' 'i v How much you need often depends on where you live, "Unless you live on a barrier island or in a tornado zone," where entire neighborhoods could be wiped out in minutes, you probably only need coverage for about 90 of the cost of rebuilding, says Boh Hunter, director of insurance for the Con- -, sumer Federation of America, "If your biggest risk is fire and you're in a city with a good fire department your risk of having a total ' '" loss is low." ;" f five However,-iin a high-ris- k you area such as a coastline or Oklahoma's tornado alley, you Even 5. . . less-expe- ; may want to get 100 coverage, since construction costs often rise sharply after a natural disaster because of a surge in demand. Policies generally Include up to 50 of your total coverage amount for contents inside the home. So unless you have many valuables, you don't normally need to worry about that. And remember: The cost of rebuilding isn't the same thing as ."market value" of a home, because you don't need to insure the value ' of the land. "Too many people make that mistake" and end up buying more insurance than they need, Mr. Hunter says. Each extra $1,000 in coverage usually costs about $3 to $5 in extra annual premium. Why tho big gap? The primary reason many people aren't adequately Insured, says Robert Hartwig, chief economist of the Insurance Information Institute, is the refinancing boom of the past five years. In the past four quarters alone-- , Americans spent an estimated $126 billion on home improvement and repairs, according to the Joint Center for Housing at Harvard University. Many owners used thousands of y dollars from refinancing and loans to remodel homes. But few people notched up their homeowners' coverage to account for the surge in replacement cost ' "It's as simple as a phone call, and yet many, many people neglect to Mr. Hartwig says. ' do r What about inflation? v On top of the remodelfirg boom, building-materiand labor costs have risen at an annual 2 to 4 clip. So If a policy's' coverage amount isn't regularly adjusted for inflation, some policies quickly become Inadequate. Happily, most insurers how build inflation adjustments into policies, so coverage levels increase each quarter or year based on construction-infJa- . . home-equit- if ' d. , HOW TO CONTACT US KarraVikHtaBt The Wall Street Journal Sunday 4300 Route 1 North South Brunswick, 08852 - sunday03c)wsj.com Im t tkiwy Jeff Opdyke kvemorieyew5j.com ' ' ,', Eaooni . - to. Ourt-aa- l: ' maliebarrons.com J ; ArtDowJoawTom Herman aslox)wones.sunday03ewsj.com etlkwj Cilng Jonathan Clements Jcf)atnan.clernentsewsixom Greene; erKreewsj.com Kelly -- . : :' , ; To : editorsesrMrtrnoney.com ' cfDrum4urKiay03ewsj.com tion estimates. But you'll want to make sure yours does, so you aren't underinsured if 10 years pass and you haven't changed , your policy amount Of course, these inflation estimates also can be inaccurate. So you'll want to periodically double-chec- k how much your policy is increasing, to make sure it's in line with building costs in your area. Some insurers, including Chubb and MetLife, still sell policies that cover the total cost of rebuilding a home, regardless of the policy's face amount However, these policies can be pricey-cost- ing up to 25 to 40 more a year than a normal policy. They often are marketed to owners of expensive homes. Youll save a good deal by simply getting an accurate estimate of how much replacing your home would cost . How can you determine fobuUoV kuj cocta? A good first step is calling at least a few insurance companies to get estimates of how much insurance you need. Expect these kinds of questions: What is the home's total square footage? How many rooms are there? How many closets? Are there custom cabinets? Granite countertops? Any special design features? ' Make sure to ask for each insurer's estimate of average construction costs per square foot so you can see if they're using an appropriate figure for your area. To verify the insurance company's cost estimate, you might call a local builder or two and ask for estimates of average building costs. They might give you a range, so you should then calculate your policy size based on whether your home's construction is average or high-enAn appraiser also can give you' an estimated rebuilding costs, if you're willing to spend a few hundred bucks. Very important: Keep your pol- icy updated as you make home improvements. But if you put in a $50,000 new . kitchen, you don't have to bump up your policy by $50,000. Increase the value of your coverage by the cost of the improvements minus the original value of what you replaced. contact Kelly K. Spors, you may send an to: kallyjaonwwej com v . |
