Early Retirement Costs You Might Have Missed

Retiring early is the dream. You get to spend more time with your family and enjoy your hobbies while you’re healthy enough to do so. You can say goodbye to the workaday world and begin your permanent vacation.

Maybe it’s less of a dream and more of a necessity. Maybe health problems like chronic pain or arthritis, are forcing you to consider giving up your career before age 65. Perhaps your children need you to help with caring for your grandchildren.

Whatever your reason for retiring early, a new study released on 6/12/14 by Fidelity Investments warns it will cost you in ways you might not expect. According to the study, early retirees can expect to pay an extra $17,000 per year in medical expenses.

The reason? Medicare coverage gaps. You give up your employer-provided health insurance when you retire, and Medicare doesn’t kick in until age 65. This means you’re on your own at a time when your health care costs are near their peak. Insurance companies charge older policyholders higher premiums, which means they’ll claim a bigger chunk of your retirement money.

As a savvy credit union member, you know the advantages of planning ahead for your golden years. Let’s look at a few ways you can avoid sticker shock at your retirement party:

1) Short-term insurance

One popular option is to look for an emergency-only or high-deductible insurance plan (HDHP). These plans feature inexpensive monthly premiums, but offer little in the way of coverage. These budget-friendly insurance options are great if private health insurance is too expensive.

You can expect to pay for a variety of costs out-of-pocket. Routine, preventative, and non-emergency medical procedures will be your responsibility. A regular checkup will cost at least $75 and the costs can escalate if your doctor orders tests or other procedures. You may also pay full price for prescription drugs.

This option is best if you’re retiring just before age 65. You can afford a few months of risk before Medicare coverage starts. However, you’ll still want another savings option to help with massive medical bills.

2) Staggering your certificates terms, so that you always have something renewing can provide flexibility, accessibility and growth potential

You likely use savings certificates (similar to CDs at a bank) to keep an emergency fund on hand. These savings instruments are ideal for building up money in case of a rainy day. You may want to create one specifically for your health care costs.

You’ll want to keep this money separate since you’ll have different needs for it. A sudden, unexpected medical bill is different than needing a new car. You’ll likely have a little more time to pay your medical bill. Many hospitals are willing to work around your financial situation.

A 6- or 12-month certificate provides the perfect combination of accessibility and growth. Once you turn 65, you can add your remaining funds to your other retirement savings or even use it to finance a vacation!

3) Open (and use) a Health Savings Account

A Health Savings Account (HSA) is a special tax-advantaged account for your savings that allows you to defer taxation on the money. The idea is that the money you spend on health care costs shouldn’t be taxed. So, you can save money to pay premiums, deductibles, and other healthcare-related expenses.

These accounts have been growing in popularity this year. If your family insurance plan has a deductible of $2,500 or more, you can open an HSA at your credit union. You can contribute up to $6,450 to your HSA per year, tax-free. Many employers also provide matching contributions to HSAs as part of their benefits package.

While withdrawals from your HSA are allowed only for medical expenses, this rule is waived for people 65 or older. While non-medical withdrawals are taxed, the money still grows tax-free. Many financial planners are advocating the use of HSAs as a kind of “shadow IRA.” With them, you reduce your current tax burden while saving for retirement.

Planning for your future health care costs can be scary, but it’ll be much scarier to go into retirement unprepared. Sit down with a representative from your credit union today to discuss how you can save for your health care in retirement. You’ll thank yourself later.

3 Financial Decisions To Make Before Interest Rates Start To Climb

Interest rates are headed back up. Every economic indicator, from employment reports to bond market performance, points in this direction. If you’ve been watching financial news shows, you’ve definitely heard this prediction. Yet to most observers, it’s somewhat abstract and far away. Sure, interest rates are going up; so what? And when?

You’ve no doubt heard that if you’re thinking about refinancing your home or buying a new one, now is the key time. That’s true, but that’s not the whole story. Here are three other financial decisions that can save you money in the long run if you make them soon.

1.) Consolidating your unsecured debt

If you’re carrying unsecured debt (credit cards, personal loans, or payday loans), you might find yourself paying a lot more soon. Don’t assume you are locked into your current rate. Most often, these kinds of debts use an adjustable interest rate. How much it costs to service your credit card debt is determined, among other factors, by the prime rate as set by the Federal Reserve. As the interest rates that the central bank charges other financial institutions rise, the rate your credit card provider charges you will probably also rise.

If you owe $7,000 on your credit cards (the American household average), a one percent change in the interest rate would mean an increase of $70 to your balance every month. That could mean an increase of as much as $15 on minimum monthly payments. That’s a tough hit, and it will also just make it harder to dig yourself out of
debt trouble.

It’s best to pay off this debt as quickly as possible. If you have a large balance, though, consider a debt consolidation loan. These loans have fixed interest rates, so your debt won’t get more expensive in response to changes in the economy. Working with a representative from your local credit union can keep this cost from consuming a bigger portion of your budget.

2.) Buying a new car

If you’ve been on the fence about upgrading your personal transportation or getting another vehicle for a new driver, the coming interest rate rise might be the final push you need. The rates that lenders can offer on car loans are influenced by the prime rate, too. An increase in the prime rate means car loans are going to get more expensive, thus decreasing your buying power.

For a $20,000 car, a one percent increase in interest rates means paying $10 more a month on a 5-year car loan. It means paying $400 more over the lifetime of the loan. That’s a direct decrease in the amount of car you can afford. Worse yet, dealerships may run promotions promising no interest financing for a portion of the loan. These promotions almost always revert to an adjustable rate based, in part, on the prime rate.

As a credit union member, you can get access to fixed rate auto loans that allow you to get the most car for your money. You can also plan with confidence knowing the portion of your budget devoted to paying your car note. You can even negotiate from a position of power knowing you’ve got financing squared away with a lender who’s got your back.

3.) Self-directed retirement planning

If you take personal care of your retirement funds, you need to prepare yourself for the market changes that will result from rising interest rates. These rates will be coupled with a decrease in bond rates. This change will send brokerage investors running from long-term growth bonds into securities and commodities. This market shift will likely produce a great deal of short-term instability, as speculators try to time the shift in the market. The resulting market volatility can place your retirement savings at risk.

Earnings on deposits rise when the cost of loans increases. The rates you can earn on certificates and savings accounts will go up in response to changes in the prime rate. Best of all, money you put into these accounts will be safe from the volatility of the market as changes occur in the economy or as inflation rises. In most instances, you also have the option of moving funds to other types of accounts and investments when the time is right for you.

It’s easy to think of the decisions of the Federal Reserve as occurring in another separate world. The events of Washington, DC can seem far removed from your community. The truth is, in an increasingly interconnected world, timing your personal decisions to take advantage of changes in policy can save (or make) you money in the long term. This may not be enough motivation to buy a car you don’t need or consolidate a $100 credit card bill. But, if you’re making big financial decisions, you need to be smart about your timing and act fast. Stop into your local credit union office to see how they can help you before it’s too late!

Do MORE of Everything this Summer

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With a Home Equity Line of Credit at an Unbeatable APR* until 2016!

With a home equity line of credit from NASA FCU, you’ll be able to take that special summer vacation, spiff up the house, pay for those unexpected expenses—or all of the above! And, for a limited time, when you open a home equity line of credit with NASA FCU, you can lock in a low intro 2.99% APR* until January 3, 2016! After the introductory period, rates are variable and start as low as 4.00% APR.

With a low intro 2.99% APR until January 3, 2016, you can put your equity to work for you and save more—with no points, closing costs^ or fees! Plus, it’s never been easier to get more from the equity in your home. Use your credit line—anytime—through eBranch or handy convenience checks. And the interest you pay is potentially tax deductible.**

So what are you waiting for? Apply online or call 1-888-NASA FCU, ext. 802 today.

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OR the Smart, Affordable Signature Loan!

Have expenses or a major purchase on the horizon? Or maybe you’d like to roll your higher interest loans into one lower monthly payment. Whatever your case may be, you can now easily get the cash you need—and do more of what you want—with the NASA FCU Signature Loan.

The Signature Loan is a smart way to manage your money, offering an affordable and predictable payment plan. You can use loan proceeds to pay for upcoming expenses or consolidate existing balances—and rest assured knowing that your interest rate and monthly payment are fixed for the life of your loan.

Apply for a Signature Loan and do more today. Apply online, call 1-888-NASA-FCU (627-2328), ext. 200, or visit your local branch, to take advantage of this easy and affordable way to pay for expenses.

 

*APR=Annual Percentage Rate. Introductory APR is good until January 3, 2016. Upon expiration of the intro rate, all balances will accrue interest at the variable APR in effect for your account. APRs are based on evaluation of the applicant’s credit. Your APR may vary. Other conditions apply. 4.00% Floor Rate regardless of a temporary lower Prime Rate. The APR is a variable rate and is based on the Prime rate as disclosed in The Wall Street Journal plus or minus a margin based on your credit history. The rate is subject to change. Maximum APR is 18%.

^No closing cost offer available one time only per property and for primary residence only. Closing costs must be repaid if line is closed before 24 months. For loan amounts of $100,000, closing costs typically range between $1,200 and $2,100. Closing costs can vary based on the location of the property and the amount of the Loan. Fixed Equity Loan Example: A $100,000 loan at 2.99% APR for 20 years would have an estimated monthly payment of $554.22. A $100,000 loan at 4.00% APR for 20 years would have an estimated monthly payment of $606.15.

equal-housing-lender**Consult your tax advisor about the deductibility of interest. We do business in accordance with the Federal Fair Housing Law and the Equal Credit Opportunity Act.

Get MORE Benefits with Premier Checking

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  • Premier Checking is for members who want to be rewarded for their combined Credit Union balances.
  • Premier eChecking is for members who want to be rewarded for enrolling in Direct Deposit or using NASA FCU Online Bill Pay (at least 3 times per month) with eStatements.
  • Premier Preferred Checking is for members who want to be rewarded with dividends for maintaining higher checking balances.

More Than a Traditional Account

  • Free Mobile Banking & Remote Deposit*—anytime, anywhere banking
  • Free use of 30,000 ATMs—surcharge-free cash withdrawals nationwide
  • Free Check Card with Cash Back—provides cash back with every purchase
  • Free EarlyAccessTM Payroll—gets all of your direct deposits in your account one day earlier
  • NSF FreePassTM—lets you enjoy a waived NSF fee for you once per year

Learn More

*Eligibility for Remote Deposit is subject to Credit Union approval.

2014 Mitchell-Beall-Rosen Scholarship Contest Concludes

2014 Scholarship

On Wednesday, May 21, 2014, the Credit Union officially concluded its 2014 Mitchell-Beall-Rosen Scholarship Contest by hosting the annual Scholarship Luncheon to recognize and honor the year’s Scholarship winners. The Scholarship, which is based on the quality of a 1,000-word essay and an in-person interview, is now in its 31st year and has awarded over $160,000 to more than 150 local students. Attendees received scholarships in amounts ranging from $1,000 up to the grand prize of $7,000.

Congratulations and best wishes go to these promising young members. For more information on the Mitchell-Beall-Rosen Scholarship Contest, visit nasafcu.com/scholarship.

Ransomware and Mobile Devices

One moment, you’re surfing the Internet. A minute later, a pop-up shows your files have been taken hostage and that you’re required to pay a $300 ransom to have them released back to you. You stare at the screen in disbelief. How is this possible, especially considering you are on your mobile device?

Ransomware – malware that accesses your computer system and blocks access to your files until a ransom is paid to restore access all while stealing your payment information – has been becoming more prevalent among PC users. While these attacks typically focused solely on PCs, they are now adapting to include mobile devices. That’s right, the very same mobile devices you use to access your credit union accounts for checking balances, transfer funds and make payments.

An example of a Russian-based mobile device ransomware is called “Svpeng.” It focuses on tactics for infecting mobile phones and mobile banking applications. It infects the device with a phishing window when the application is opened. This overlay attack is used to steal online banking information as the malware pretends to be the application’s login screen. The user enters login and password information, which is then stolen by the hackers. Once they have access to the account, they can control the account. Svpeng also phishes through Google Play if that is on the mobile device.

This tactic also involves SMS messages being sent to two Russian banks to determine if the phone number of the device is connected to any payment cards. If a card is indeed connected to a number, the hackers use commands through the device to transfer the victim’s money into their own accounts. While Svpeng has currently been seen only in Russia, it is expected to expand into other countries; one of the features of the ransomware checks the mobile device’s language settings to determine the appropriate language to use for the attack.

As time goes on, other PC-based ransomware programs may also be adapted for mobile devices or more ransomware programs that are specifically designed for mobile devices may be created. Hackers are always looking for ways to evolve their tactics in hopes of stealing more information and making immediate profits. Svpeng, for example, had 50 modifications to its malware within a three-month period.

How does this type of malware get onto a PC or a mobile device? It could be through a “drive-by download” where malicious software is downloaded without the user even knowing about it. This happens as the user surfs the Internet without a care, yet comes across a compromised Web page or clicks to a website through an HTML-based email. It could have been downloaded through a phishing email, which appears to be from a credit union, yet is a fake email linking to a compromised Web page. The ransomware could also come through an email attachment that is malicious.

After the infection occurs on the mobile device or PC, the overlay or ransomware tactics are used as was described with Svpeng. That way the hackers can either directly steal the login and password information when the credit union account is accessed, or the user is blackmailed by a direct ransomware attack to send money to unlock the mobile device.

Many of the ways ransomware can be prevented from infecting a PC are the same for preventing on a mobile device. Make sure data on a mobile device is regularly backed up. This will help with recovering information if the device is hijacked. Make sure an antivirus program is running on the mobile device. Follow safe Web browsing habits. Block suspicious emails.

Don’t download data or apps from questionable sources. Don’t “jailbreak” a device where built-in controls and security features are overridden; this removes an additional layer of protection against ransomware attacks.

If you think your mobile device has become a victim of ransomware, you can try to remove it by running a virus scan through mobile antivirus software. Don’t pay any ransom because it won’t guarantee the release of your data and you are giving additional payment information to the hackers. If none of these work, talk with your mobile device or cellular provider and/or their tech support. Of course, notify your credit union to monitor your accounts for any potentially fraudulent activity.