Resident Lunch and Learn Key Aspects of Financial Wellness - PowerPoint PPT Presentation

Resident Lunch and Learn Key Aspects of Financial Wellness

Financial Wellness Financial decisions (or lack thereof) made now last forever o Higher rates on loans (including mortgages) o Denial of loans o Stress o Lowered productivity on the job o Lowered credit score o Denial of housing or employment o Future relationship problems

Financial Definitions • A qualified plan established by employers to which eligible employees may make salary deferral (salary reduction) 401(k) contributions on a post-tax and/or pretax basis. Employers offering a 401(k) plan may make matching or non-elective contributions to the plan on behalf of eligible employees and may also add a profit-sharing feature to the plan. Earnings accrue on a tax-deferred basis. 403(b) • The nonprofit’s equivalent of a 401(k). Because of that status, the fees associated with managing the program are less.

Financial Definitions Roth IRA • A Roth IRA differs from a traditional IRA because you pay (Individual the taxes now at your current tax rate. This means you do not pay taxes on it when you are eligible to make Retirement withdrawals from the account (because it was already taxed). Account) Traditional IRA • A Traditional IRA is one where your contributions are not taxed until you retire. Contributions are also tax (Individual deductible, so if you contribute the maximum ($5,500 for the 2013 tax year; $6,500 if you're older than 50) your Retirement income is reduced by $5,500/$6,500, which, along with other deductions, could reduce the amount of taxes you Account) have to pay this year.

Financial Definitions • Stocks: When you buy a stock of a public company, you become a partial owner of the company. In some cases, you can even vote on company rules. You can buy stock in any company that is publicly traded on exchanges (such Stocks /Bonds as the New York Stock Exchange or the NASDAQ). • Bonds: When you buy a bond, you basically lend money to a government or business, and they pay you back with interest. Bonds can be bought at all levels: national, state, county, municipal, and even from private businesses. • Groups of stocks (or bonds) that financial management companies might choose to diversify your investments and Mutual Funds lower your risk. However, there can be hefty fees associated with managing these accounts.

Financial Definitions • A tax-advantaged savings plan intended to help save for college. A 529 can act like an IRA, compounding interest 529 Plan year after year to help families set aside funds for their children's college education. There are additional advantages in some states. APR (Annual • The interest rate and expenses for the whole year, Percent representing — in a single number — the fees associated with paying back a loan. In general, the lower the number, the better. Rate)

Managing Your Money Do Your Homework • Loans • Benefits Make a Budget • Fixed Expenses • Variable Expenses Goals • Savings • Emergency Fund • Retirement Savings • Specific Project Be Proactive • Work with your lenders

Managing Your Money 1. www.mint.com 2. Excel templates (like the one below) 3. www.quicken.com

Managing Your Money Federal Loan Resources  Toll-free telephone: 800-4ED-AID (1-800-433-3243)  StudentAid.ed.gov - U.S. Department of Education Federal Student Aid student gateway – find information on federal student aid, the office of the Ombudsman, and repayment plans for federal loans  Studentaid.ed.gov/publicservice – PSLF Employment Certification Package  Fafsa.ed.gov - FAFSA (Free Application for Federal Student Aid)  NSLDS.ed.gov – National Student Loan Data System – the U.S. Department of Education’s central database for student aid

Managing Your Money Federal Loan Resources  www.PIN.ed.gov – retrieve the pin you need to complete the FAFSA or access NSLDS  StudentLoans.gov – information from the U.S. Department of Education about managing your Federal Direct Loans  Loanconsolidation.ed.gov - information from the U.S. Department of Education about consolidation loans  Myedaccount.com – manage your Federal Direct Loans online  Don’t know who services your Federal Student Loan any more? http://www.accessgroup.org/servicers

What affects your credit score Get your Lock up Watch credit cards, but how many Keep your Pay on report at don’t “hard balances time least once cancel inquiries” low a year them you have

What affects your credit score  Get a credit card if you don’t have one  Add an installment loan into the mix  Pay down your credit cards  Use less than 25% of your available credit  Check your limits  Dust off an old card  Get some goodwill  Dispute old negatives  Fight significant errors

What affects your credit score  Paying late  Not paying at all  Having an account charged off  Having an account sent to collections  Defaulting on a loan  Filing bankruptcy  Having your home foreclosed  Getting a judgment

What affects your credit score  High credit card balances  Maxed out credit cards  Closing credit cards that still have balances  Closing old credit cards  Closing cards with available credit  Applying for several credit cards or loans  Having only credit cards or only loans

What affects your credit score  Bank overdrafts  Your income  Insurance payments  Child support and alimony  Utility and cell phone payments  Rent payments  Checking your own credit  Your interest rate  Credit counseling  Your age

What Products Should You Consider  Life Insurance  Disability  Personal Lines (Auto & Renters)  Dental Insurance  Travel Insurance  PDA Insurance  Medical Insurance  Pet Insurance  Debt Consolidation  ID Theft

Insurance Definitions • The process of selecting risks for insurance and classifying Underwriting them according to their degrees of insurability so that the appropriate rates may be assigned. It also includes rejecting applicants. Guarantee • The right to purchase insurance without physical examination; the present and past physical condition of Issue the applicant are not considered. • An insurance offer that only requires the applicant to Simplified Issue answer a small number of medical and/or lifestyle questions to determine eligibility to purchase. On occasion, additional underwriting is required. • Insurance salesperson or company that searches the marketplace in the interest of clients, not insurance Broker / Agent companies. An agent can represent either the insurance company or the insured.

Understanding Insurance Individual • Coverage issued to and underwritten for an individual. Coverage • A policy issued through a group entity, usually an Group Coverage association. Individuals cannot be singled out for an increase in rates (aka a rate action). • A demand made by the insured, or the insured's Claim beneficiary, for payment of the benefits as provided by the policy

Insurance Definitions • The MOST significant term to understand. Own Occupation • IF you are unable to do your specific job, then you are eligible for benefits. • This means that once you are able to return to Any Occupation work in ANY capacity, your benefits may reduce or stop. • The length of time before benefits are payable on a Waiting Period claim. Residual/Partial • The ability to continue receiving part of your monthly benefit while returning to work after a Disability Benefit disability. Cost of Living • Protects your monthly benefits against inflation by steadily increasing it at scheduled intervals. Adjustment

Insurance Definitions • The person who you designate to receive the proceeds of the policy if you were to die. Beneficiary • May help with avoiding certain estate taxes or probate depending on state laws. • This means you are not liable to pay the premium should Waiver of Premium you become disabled, however the coverage remains active. Accelerated Death • If you are terminally ill under the policy provisions, you are eligible to receive part of your death benefit early to help Benefit cover costs/expenses. Accidental Death and • If a claim occurs due to an accident, AD&D coverage will provide additional benefits in addition to your life Dismemberment insurance face amount.

Understanding Insurance Ensure your Make sure Cover your children have the mortgage student loan funds for and other debt college bills get paid

Understanding Insurance Universal Term Life / Whole Life Coverage for a Coverage for your specific length of entire life time Builds cash value, Life insurance can borrow only, no cash against the policy value – lower cost – higher costs Much like buying Much like renting a house – return on investment an apartment can vary

Understanding Life Insurance http://www.aapinsurance.com/insurance-calculator.html How Much Do you Need?

Who is The AAP Insurance Program  A resource to members for over 60 Years  Insurance product offerings with discounts and plans only available to members and their families  A partnership between the AAP, New York Life and USI Affinity  New in 2013: An educational resource for financial wellness