Insurance Commissioner Warns of Phone Scam

Female hands holding credit card and making online purchase using mobile phone. Shopping consumerism delivery or internet banking concept. Anti-fraud and financial security concept

Connecticut insurance policy holders are getting an unwelcome holiday gift; credit card fraud. The State Insurance Commissioner is warning of a phone scam in which callers pose as insurance company representatives telling victims their policies are being cancelled. They will ask for credit card numbers in order to reinstate the policy.

If you get a call from anyone stating a policy is expired or cancelled, call your insurance company or agent to confirm. Then, renew or settle the issue with them. Don’t give out credit numbers over the phone unless you initiate the call and are intending to make a purchase.

If you think you may have already been a victim of this, report it to your local law enforcement and your state insurance commissioner.

Currently, this is only being reported as happening in Connecticut. However, no one is immune to phone scams with similar scams continually running across the nation. Always be aware of who is on the other end of the phone when providing sensitive information. This is particularly true during the holidays. Unfortunately, some are more in the taking spirit than the giving one.

© Copyright 2016 Stickley on Security

Sharing Money Problems with Kids

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Kids are surprisingly resilient in the face of a crisis. But even so, serious family money troubles can potentially affect a young person’s home life, education and outlook on money management down the road.

Children under the age of 10 who are particularly mature – and particularly observant – often can immediately pick up on a parent’s stress over money or other issues.

How can you be honest about your finances with a child under the age of 18 without spreading confusion or stress? The American Psychological Association points out (http://www.apa.org/helpcenter/children-economy.aspx) that kids can often deal with a crisis fairly well but most aren’t yet keenly aware of tension in the household. When sharing money problems with your kids, here are a few ideas from the APA and other resources you can use:

  • Tell the truth, but watch how you tell it. You want to spare your child from hardship and worry, but it’s important not to say things are great when they’re clearly not. Try to explain in brief but truthful detail about what’s happening and leave time for questions. Any child, no matter how sophisticated, can become worried if his or her parents reveal extreme fear about money concerns. Keep in mind there’s a great opportunity in these conversations to understand your child’s thoughts and attitudes. Make it a kind, understanding conversation, and listen for clues.
  • Keep the discussion age-appropriate. Teens may be more aware of general financial circumstances because they can spot different behavior at home or because their friends’ parents might be going through similar circumstances. However, younger kids generally have less knowledge and experience to process what’s going on. Tell kids what they need to know, but don’t overload them with information.
  • Set an example. It may be difficult, but demonstrate grace under pressure. Be calm and reasoned. If you are looking for work, discuss that with your children and even share what that process is like. Remember, kids learn by example. If they see their parents dealing sensibly with adversity no matter how long it takes to right the ship, that’s a very important lesson. Communicate behaviors that they will need to learn if they’re going to successfully deal with money problems as adults.
  • Introduce or reinforce money lessons. Whatever the problem, reinforce smart spending and savings behavior no matter what the child’s age. However old they are, (http://www.practicalmoneyskills.com/EducateKids/) kids should get regular lessons in the relationship between money and the things in their life.
  • Make it educational. Communicate behaviors that kids will need to successfully manage money in the future. Whatever the problem, reinforce smart spending and saving behavior no matter what the child’s age. Teaching kids about money can be fun by introducing educational games. The Practical Money Skills website offers a collection of games (http://www.practicalmoneyskills.com/games/) kids can play to learn how to save money. Talk to them about important financial concepts such as budgeting – and bring them to life using real-life examples like planning an affordable family vacation or outing.
  • Introduce the emergency fund. One of the essential building blocks of personal finance, the emergency fund exists to protect savings and keep borrowing to a minimum. Older children might embrace the value of an emergency fund as a way to offset the financial loss of a lost bike or smartphone or some other personal item. For adults, the general rule of thumb on emergency funds is to have at least three to six months of savings on hand in case of a lost job or expensive repair. The key is to talk with the teen about the parallel financial risks in their lives that might benefit from the existence of emergency savings.
  • Focus on things more important than… things. Parents can use a tough financial stretch to focus on the positive, such as time spent enjoying family, friends and pets, which doesn’t cost much at all. Good health and healthy behaviors are essential elements of correcting problems, overcoming tough times and living a full life. In short, use this moment in time to help your child put money in the proper perspective.

Bottom line: A money crisis can truly test the strength of a family. Should you find yourself in a financial bind, use it to teach your kids some very important money lessons.

By Nathaniel Sillin

 

ABCs of Financial Aid

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It’s hard to talk about college without mentioning financial aid. Yet this pairing isn’t a marriage of love, but one of necessity. In many cases, financial aid may be the deciding factor in whether your child attends the college of his or her choice or even attends college at all. That’s why it’s important to develop a basic understanding of financial aid before your child applies to college. Without such knowledge, you may have trouble understanding the process of aid determination, filling out the proper aid applications, and comparing the financial aid awards that your child receives.

But let’s face it. Financial aid information is probably not on anyone’s top ten list of bedtime reading material. It can be an intimidating and confusing topic. There are different types, different sources, and different formulas for evaluating your child’s eligibility. Here are some of the basics to help you get started.

What is financial aid?

Financial aid is money distributed primarily by the federal government and colleges in the form of loans, grants, scholarships, or work-study jobs. A student can receive both federal and college aid. An ideal financial aid package will contain more grants and scholarships (which don’t need to be repaid) and fewer loans.

Financial aid can be further broken down into two categories: need-based aid, which is based on a student’s financial need, and merit aid, which is based on a student’s academic, athletic, musical, or artistic talent. Both the federal government and colleges provide need-based aid in the form of loans and grants. For merit aid, colleges are the main source, and they often use favorable merit aid packages to attract the best and brightest students to their campuses.

It’s worth noting that colleges can vary significantly in their generosity when it comes to merit aid; merit awards are typically related to the size of a college’s endowment and its unique objectives. College guidebooks and marketing materials generally provide statistics on the size of a college’s average aid award (both in dollar amounts and as a percentage of the typical aid package) and the family income thresholds necessary for different aid amounts. If you’re a family researching college options, you can help your bottom line by targeting colleges that offer significant merit aid packages. For example, some colleges have made it a policy to replace loans with grants in their financial aid packages.

In addition to colleges, many businesses, foundations, and associations offer smaller merit scholarships with specific eligibility criteria and deadlines. Various scholarship websites allow your child to input his or her background, abilities, and interests and receive (free of charge) a matching list of potential scholarships.

How is my child’s financial need determined?

Financial need is generally determined by looking at a family’s income, assets, and household information. The federal government uses the FAFSA, which stands for Free Application for Federal Student Aid; colleges generally use the PROFILE form, or their own institutional form. The FAFSA uses a formula known as the federal methodology; the PROFILE uses a formula known as the institutional methodology. The general process of aid assessment is called needs analysis.

Under the FAFSA, your current income and assets and your child’s current income and assets are run through a formula. You are allowed certain deductions and allowances against your income, and you’re able to exclude certain assets from consideration. The result is a figure known as the expected family contribution, or EFC. It’s the amount of money that you’ll be expected to contribute to college costs before you are eligible for aid.

A detailed analysis of the  formula is beyond the scope of this discussion, but generally here’s how it works: (1) parent income is counted up to 47% (income equals AGI plus untaxed income/benefits minus certain deductions); (2) student income is counted at 50% over a certain amount ($6,400 for the 2016/2017 school year); (3) parent assets are counted at 5.6% (home equity, retirement assets, cash value life insurance, and annuities are excluded); and (4) student assets are counted at 20%.

Your EFC remains constant, no matter which college your child applies to. An important point: Your EFC is not the same as your child’s financial need. To calculate your child’s financial need, subtract your EFC from the cost of attendance at your child’s college. Because colleges aren’t all the same price, your child’s financial need will fluctuate with the cost of a particular college.

For example, you fill out the FAFSA, and your EFC is calculated to be $25,000. Assuming that the cost of attendance at College A is $65,000 per year and the cost at College B is $35,000, your child’s financial need is $40,000 at College A and $10,000 at College B.

The PROFILE application (or the college’s own application) basically works the same way. However, the PROFILE generally takes a more thorough look at your income and assets to determine what you can really afford to pay (for example, the PROFILE looks at your home equity and money you may have contributed to medical and dependent care flexible spending accounts).

What factors count the most in needs analysis? Your current income is the most important factor, but other criteria play a role, such as your total assets, the number of children you’ll have in college at the same time, and how close you are to retirement age.

Estimating aid eligibility ahead of time

Getting a ballpark estimate of financial aid ahead of time can be very helpful for planning purposes. There are two ways you can do this.

First, the federal government offers an online tool called the “FAFSA4caster” that you can complete to get an estimate of your EFC. Second, every college offers a tool called a “net price calculator” on its website that you can complete to get an estimate of how much financial aid your child might be eligible for at that particular college based on your family’s financial and personal profile.

Submitting financial aid applications

The best way to complete the FAFSA is to fill it out and submit it online (it can also be completed manually and mailed to the address listed on the form). The online route is best because mistakes are flagged immediately and electronic FAFSAs take only one week to process (compared to two to four weeks for paper FAFSAs).

The FAFSA is filed as soon after January 1 as possible in the year your child will be attending college. You must wait until after January 1 because the FAFSA relies on your tax information from the previous year. (The official federal deadline for filing the FAFSA is June 30, but many colleges have an earlier deadline.) You should try to submit the FAFSA as close to January 1 as possible because some financial aid programs operate on a first-come, first-served basis. Even if you haven’t completed your federal income tax return, you can submit your FAFSA with estimated tax numbers and then update it later.

Starting with the 2017/2018 school year, families will be able to file the FAFSA as early as October 1, 2016, using their prior year’s tax information. This earlier timeline will be a permanent change.

The PROFILE (or individual college application) is usually submitted at the same time as the FAFSA, but it can be filed earlier, especially if your child is applying to college early decision or early action. The specific deadline is left up to the individual college, so make sure to keep track of it. In addition to the form itself, the CSS Profile will typically require you to submit tax returns, and possibly other financial documents, at a later date. If so, you’ll receive instructions on how to do this.

After your FAFSA is processed, your child will receive a Student Aid Report highlighting your EFC; the colleges that you list on the FAFSA will also get a copy of the report. When your child is accepted at a college, the college’s financial aid administrator will attempt to craft an aid package to meet your child’s financial need. This is done using a combination of the following (typically in this order):

  • Federal Pell Grant (for students with exceptional financial need)
  • Federal Direct Stafford Loan (subsidized for students with financial need)
  • Federal Direct Stafford Loan (unsubsidized for all other students)
  • Federal Perkins Loan, Supplemental Educational Opportunity Grant (SEOG), and work-study (funds for these programs are allocated to colleges by the federal government for distribution to students; whether a student receives any of these funds depends on timing of application, financial need, and availability of funds)
  • College grant, scholarship, or tuition discount (at the college’s discretion)

Keep in mind that colleges aren’t obligated to meet all of your child’s financial need. In fact, it’s not uncommon for colleges to meet only a portion of a student’s need, a phenomenon known as getting “gapped.” If this happens to you, you’ll have to make up the shortfall, in addition to paying your EFC.                    

On the flip side, if a college says it is meeting “100% of your demonstrated need” keep in mind that the college is the one who determines your need, not you, and that you’ll still have to pay your EFC.

Comparing aid awards

In late winter or early spring, your child will receive financial aid award letters that detail the specific amount and type of financial aid that each college is offering. When comparing aid awards, read each award letter carefully and make sure you understand exactly what the college is offering.

The goal is to compare your out-of-pocket cost at each college. To do this, look at the total cost of attendance for each college and subtract any grant or scholarship aid the college is offering. If the grant or scholarship is merit-based, find out if it’s guaranteed for all four years and what requirements must be met in order to qualify for it each year. If the grant or scholarship is need-based, find out whether you can expect a similar amount each year as long as your income and assets stay roughly the same (and you have the same number of children in college), and ask the aid office whether it increases to keep up with annual increases in tuition, fees, and room and board.

The difference between the total cost and any grant or scholarship aid is your out-of-pocket cost or “net price.” Compare this figure across all colleges. Once you determine your out-of-pocket cost at each college, determine how much, if anything, you or your child will need to borrow. Then multiply this figure by four to get an idea of what your total borrowing costs might be. Armed with this information, you’ll be in a position to make the best financial decision for your family.

If you’d like to lobby a particular school for more aid, tread carefully. A polite letter to the financial aid administrator followed up by a telephone call is appropriate. Your chances of getting more aid are best if you can document a change in circumstances that affects your ability to pay, such as a recent job loss, unusually high medical bills, or some other event that impacts your finances. Your chances of getting more aid by asking one college if they’ll match a favorable aid offer from another college is a less reliable strategy, but may be worth a shot if the colleges are direct competitors.

How much should our family rely on financial aid?

With all this talk of financial aid, it’s easy to assume that it will do most of the heavy lifting when it comes time to pay the college bills. But the reality is you shouldn’t rely too heavily on financial aid. Although aid can certainly help cover your child’s college costs, student loans make up the largest percentage of the typical aid package, not grants and scholarships.

As a general rule of thumb, plan on student loans covering up to 50% of college expenses, grants and scholarships covering up to 15%, and work-study jobs covering a variable amount. But remember, parents and students who rely mainly on loans to finance college can end up with a considerable debt burden.

IMPORTANT DISCLOSURES

Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information resented here is not specific to any individual’s personal circumstances.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. NASA Federal Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.

Skewed Cupid

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Valentine’s Day conjures up images of hearts, flowers and a double-decker box of chocolate, nougat and nuts. But, metaphorically speaking, what happens when that stupendous bouquet of roses you got turns out to be a pile of weeds?

Love might cloud our vision, but that doesn’t mean you have to turn a blind eye to consumer pitfalls. If you know what to look for, you can avoid some big missteps. While these are probably the least romantic Valentine sentiments ever, they just might save you some heartbreak down the road.

Can we talk? Experts suggest engaged couples have a frank and free-ranging discussion about money before tying the knot. Can you establish joint priorities and a budget? If one or both of you are carrying a lot of debt into the marriage, do you have a plan to deal with it? Who will manage paying the bills? Before saying yes to the dress, should you say nyet to the debt? Bottom line: to live in “har-money,” talk to each other, early and often.

My not-so-funny Vile-entine. Online dating has brought millions together. But some scammers create fake profiles to trick you into sending money in the name of love. Is there an online love interest who asks you for money – or personal financial information? Swipe left – it’s almost certainly a scam artist. Don’t let an imposter pester you.

Hey baby, what’s your sign? What do you do if your special friend – online or in person, or even a buddy or relative – asks you to co-sign a loan? That means you’re promising to pay the debt if they don’t. There may be times you want to co-sign for someone but before you do, think about it long and hard. Remember, it’s an obligation that can affect your finances, too.

by Carol Kando-Pineda
Attorney, FTC’s Division of Consumer & Business Education

The Benefits of Tax-Advantaged Savings Vehicles

Source: Broadridge Advisor Solutions

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Taxes can take a big bite out of your total investment returns, so it’s helpful to look for tax-advantaged strategies when building a portfolio. But keep in mind that investment decisions shouldn’t be driven solely by tax considerations; other factors to consider include the potential risk, the expected rate of return, and the quality of the investment.

Tax-deferred and tax-free investments

Tax deferral is the process of delaying (but not necessarily eliminating) until a future year the payment of income taxes on income you earn in the current year. For example, the money you put into your traditional 401(k) retirement account isn’t taxed until you withdraw it, which might be 30 or 40 years down the road!

Tax deferral can be beneficial because:
• The money you would have spent on taxes remains invested
• You may be in a lower tax bracket when you make withdrawals from your accounts (for example, when you’re retired)
• You can accumulate more dollars in your accounts due to compounding

Compounding means that your earnings become part of your underlying investment, and they in turn earn interest. In the early years of an investment, the benefit of compounding may not be that significant.

But as the years go by, the long-term boost to your total return can be dramatic.

Taxes make a big difference

Let’s assume two people have $5,000 to invest every year for a period of 30 years. One person invests in a tax-free account like a Roth 401(k) that earns 6% per year, and the other person invests in a taxable account that also earns 6% each year. Assuming a tax rate of 28%, in 30 years the tax-free account will be worth $395,291, while the taxable account will be worth $295,896. That’s a difference of $99,395.

This hypothetical example is for illustrative purposes only, and its results are not representative of any specific investment or mix of investments. Actual results will vary. The taxable account balance assumes that earnings are taxed as ordinary income and does not reflect possible lower maximum tax rates on capital gains and dividends, as well as the tax treatment of investment losses, which would make the taxable investment return more favorable, thereby reducing the difference in performance between the accounts shown. Investment fees and expenses have not been deducted. If they had been, the results would have been lower. You should consider your personal investment horizon and income tax brackets, both current and anticipated, when making an investment decision as these may further impact the results of the comparison. This illustration assumes a fixed annual rate of return; the rate of return on your actual investment portfolio will be different, and will vary over time, according to actual market performance. This is particularly true for long-term investments. It is important to note that investments offering the potential for higher rates of return also involve a higher degree of risk to principal.

Tax-advantaged savings vehicles for retirement

One of the best ways to accumulate funds for retirement or any other investment objective is to use tax-advantaged (i.e., tax-deferred or tax-free) savings vehicles when appropriate.

Traditional IRAs — Anyone under age 70½ who earns income or is married to someone with earned income can contribute to an IRA. Depending upon your income and whether you’re covered by an employer-sponsored retirement plan, you may or may not be able to deduct your contributions to a traditional IRA, but your contributions always grow tax deferred. However, you’ll owe income taxes when you make a withdrawal.* You can contribute up to $5,500 (for 2015 and 2016) to an IRA, and individuals age 50 and older can contribute an additional $1,000 (for 2015 and 2016).

Roth IRAs — Roth IRAs are open only to individuals with incomes below certain limits. Your contributions are made with after-tax dollars but will grow tax deferred, and qualified distributions will be tax free when you withdraw them. The amount you can contribute is the same as for traditional IRAs. Total combined contributions to Roth and traditional IRAs can’t exceed $5,500 (for 2015 and 2016) for individuals under age 50.

SIMPLE IRAs and SIMPLE 401(k)s — These plans are generally associated with small businesses. As with traditional IRAs, your contributions grow tax deferred, but you’ll owe income taxes when you make a withdrawal.* You can contribute up to $12,500 (for 2015 and 2016) to one of these plans; individuals age 50 and older can contribute an additional $3,000 (for 2015 and 2016). (SIMPLE 401(k) plans can also allow Roth contributions.)

• Employer-sponsored plans (401(k)s, 403(b)s, 457 plans) — Contributions to these types of plans grow tax deferred, but you’ll owe income taxes when you make a withdrawal.* You can contribute up to $18,000 (for 2015 and 2016) to one of these plans; individuals age 50 and older can contribute an additional $6,000 (for 2015 and 2016). Employers can generally allow employees to make after-tax Roth contributions, in which case qualifying distributions will be tax free.

Annuities — You pay money to an annuity issuer (an insurance company), and the issuer promises to pay principal and earnings back to you or your named beneficiary in the future (you’ll be subject to fees and expenses that you’ll need to understand and consider). Annuities generally allow you to elect to receive an income stream for life (subject to the claims-paying ability of the issuer). There’s no limit to how much you can invest, and your
contributions grow tax deferred. However, you’ll owe income taxes on the earnings when you start receiving distributions.*

Tax-advantaged savings vehicles for college

For college, tax-advantaged savings vehicles include:

529 plans — College savings plans and prepaid tuition plans let you set aside money for college that will grow tax deferred and be tax free at withdrawal at the federal level if the funds are used for qualified education expenses. These plans are open to anyone regardless of income level. Contribution limits are high–typically over $300,000–but vary by plan.

Coverdell education savings accounts — Coverdell accounts are open only to individuals with incomes below certain limits, but if you qualify, you can contribute up to $2,000 per year, per beneficiary. Your contributions will grow tax deferred and be tax free at withdrawal at the federal level if the funds are used for qualified education expenses.

• Series EE bonds — The interest earned on Series EE savings bonds grows tax deferred. But if you meet income limits (and a few other requirements) at the time you redeem the bonds for college, the interest will be free from federal income tax too (it’s always exempt from state tax).

Note: Investors should consider the investment objectives, risks, charges, and expenses associated with 529 plans. More information about specific 529 plans is available in each issuer’s official statement, which should be read carefully before investing. Also, before investing consider whether your state offers a 529 plan that provides residents with favorable state tax benefits. The availability of tax and other benefits may be conditioned on meeting certain requirements.

Bottom line

Though tax considerations shouldn’t be your only investing concern, by putting your money in tax-advantaged savings vehicles and investments when appropriate, you’ll keep more money in your own pocket and put less in Uncle Sam’s.

IMPORTANT DISCLOSURES

Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information resented here is not specific to any individual’s personal circumstances.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. NASA Federal Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.

Making Phased Retirement Work for You

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Phased retirement – a catchall term that describes a variety of part-time and reduced-hour work arrangements before leaving an employer for good – is gaining steam. But before you sign on, it’s important to understand how “phasing out” may affect your long-term finances.

Washington is leading the way. The federal government authorized the move for its own employees several years ago and began accepting applications in late 2014 from workers aged 55 and up with a desire to switch to half-time employment in exchange for receiving half their salary and annuity.

For employees with a long-term view, phased retirement can offer significant benefits, but it requires due diligence and planning. Among the advantages, phased retirement means that there doesn’t need to be a hard stop on a successful career. In fact, a 2014 study said that 72 percent of pre-retirees over the age of 50 report that their ideal retirement will include working “often in new, more flexible and fulfilling ways.” The study also noted that 47 percent of current retirees were already working or planning to work during their retirement years.

If your company is talking about phased retirement or may do so in the future, here are some key questions to consider:

What exactly do you want to phase into? For some workers, retirement really will mean a classic vision of travel and leisure leading into old age. But for others, the picture may be different. Some retirees will want to work and some retirees will have to work. Such decisions will summon a host of personal finance and tax issues based on your personal situation – read heavily and consult qualified experts before you make a decision.

What options will my employer offer over time? While the federal government is in the lead with phased retirement, most private employers are moving at a slower pace. This gives you time to plan. For example, in a 2013 benefits study, the Society for Human Resource Management noted that only 6 percent of employers had a formal phased retirement program that provided a reduced schedule and/or responsibilities prior to full retirement. Watch how your employer’s plan evolves and ask questions.

Phased or not, do you have a retirement plan in place? The decision to make a full or transitional exit from one’s employer should come after years of saving and investing both at home and at work. Years before deciding how you want to leave your career, talk to qualified retirement experts about your personal financial circumstances and what you want to do in the next phase of your life. If it’s a new career, volunteer work or full retirement, develop a plan first.

Have you talked to your senior colleagues? There’s nothing like direct advice from individuals closer to retirement to help you with your own set of pros and cons. Even if there’s no phased retirement program at your organization right now, it’s still worth talking about retirement preparation with senior colleagues willing to share what they’re doing. Also, start your own retirement planning in earnest with qualified retirement and tax experts.

How will phased retirement affect your overall benefits? If you’re working at a lower salary level at the end of your career, ask how that might affect your future retirement benefits. Make a list of all the benefits and perks you now receive as a current full-time employee and investigate how every single one could be affected by phased retirement. And if you leave the company permanently before qualifying for Medicare, know how you’ll pay for health insurance. This is a particularly important issue to discuss with a qualified financial or tax advisor.

Bottom line: Phased retirement can offer the opportunity to adjust to full-time retirement or set up a new career once you finally leave your current employer. However, before you leap, fully investigate how such a transition will affect your overall finances and future retirement benefits.

By Nathaniel Sillin