Eight Important Retirement Money Questions for 2013

by Philip Moeller

As 2012 draws to a close, people in or nearing retirement face a stunning set of uncertainties about their finances and even basic health and retirement benefits. Congress has left Washington for the Christmas break without passing any measures to delay or soften the effects of the so-called fiscal cliff. Perhaps it might still act before the end of the year, but don't count on it. Odds are that the new Congress that takes office next year will take action to prevent the very worst outcomes. But after years of gridlock, should we really expect things to get better?

Here are eight pressing money and benefit issues that are barreling down on seniors. All of them are bad news. And while there aren't a lot of places to hide, it's important for anyone trying to build or conserve a retirement nest egg to develop contingency plans.

1. Tax rates. The Bush tax cuts expire December 31. All income tax brackets will shift upward--the 10 percent bracket disappears and the new lowest tax rate will be 15 percent. The 25 percent bracket becomes 28 percent; 28 percent becomes 31 percent; 33 percent moves to 36 percent, and 35 percent will be 39.6 percent. The capital gains tax rate will rise to 20 percent from 15 percent, and dividend taxes will soar, moving from being taxed as capital gains to being treated as ordinary income.

2. The Alternative Minimum Tax. The AMT was aimed at preventing wealthier taxpayers from using deductions and other tax benefits to escape their fair share of taxes. However, the qualifying income levels were not indexed for inflation. Congress has thus had to enact an AMT "patch" each year to help millions of taxpayers avoid extra taxes Congress never intended for them to pay. There is now no patch in place for 2012 income taxes. That's right: the taxes that are due on this year's income. Even if Congress does something soon, tax-filing season likely will be delayed. If Congress does not approve a patch, the number of taxpayers hit by AMT payments will rise from 4 million to 34 million.

3. Social Security COLA. Fiscal-cliff negotiations between the White House and Republicans reportedly included the Obama administration's acceptance of a new formula for setting the annual cost of living adjustment (COLA) for Social Security beneficiaries. Called the chained CPI, it may, as supporters and many economists claim, represent a more accurate cost of living measure than the index now used to set each year's COLA. But it would also cut effective Social Security benefits by more than $20 billion a year after it has been in place for several years. It would also raise income-tax bills by reducing the size of the automatic inflation adjustments the tax brackets use to determine different income tax rates.

4. Estate taxes. Estate and gift tax rules are now unusually generous. Individual estates up to $5.12 million (double that for a couple) avoid all estate taxes, and amounts above these levels are taxed at 35 percent. This is also the rate for gift taxes. Without action by Congress, the estate-tax exclusion will plunge to only $1 million in 2012, and the tax on larger estate values will be 55 percent.

5. Medicare taxes. Medicare taxes will rise on wealthier wage earners in 2013. This change is part of the Affordable Care Act and not part of the fiscal-cliff impasse. Medicare payroll taxes, now set at 1.45 percent of payrolls, will rise another 0.9 percent on wage incomes above $200,000 in 2013 ($250,000 for couples). These same income limits will be used to trigger a 3.8 percent annual tax on net investment income. The proceeds will be used to help fund health-reform changes.

6. State insurance exchanges. When health reform is fully implemented in 2014, older people not yet eligible for Medicare will have guaranteed access to health insurance regardless of any preexisting conditions, at rates that are held down by rules limiting age-based premium hikes. These benefits will be delivered in large measure through new state-based insurance exchanges. These exchanges are supposed to be set up in 2013 so they can be fully operational before the end of the year. However, most states have decided not to build their own exchanges but to let the federal government do it for them. Odds of this work being done in time, let alone being done well, are seen as very small.

7. Medicaid expansion. In 2014, health reform would provide expanded healthcare to currently uninsured, lower-income Americans through a massive expansion of Medicaid at the state level. The federal government would pay all added expenses for three years and states would never pay more than 10 percent of the expenses from the expansion. Still, many states have spurned the act's offer of expanded coverage, saying they do not like the potential for higher state expenses and the rules that come with the expanded services.

8. The doc fix. In a 1997 law, Congress tied Medicare's payments to physicians to the growth of the economy. Medicare cost increases, including physician expenses, regularly exceed overall economic growth. Under the law, Medicare payments to physicians would have to be cut each year were it not for periodic Congressional action to override the cuts. Without another fix, doctors will see a 27 percent cut in their Medicare payments next year, and an unknown number of them would stop taking Medicare patients. Like much else in Washington, the doc fix has become part of the broader fiscal-cliff debate.

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Six Tax Issues to Watch in 2013

With the "fiscal cliff" and tax hikes looming, Americans are facing a number of insecurities about their tax lives in 2013.  Market Watch's Christopher Noble looks at what tax issues will affect you the most and what you can do about them right now.

Your One-Week Year-End "Fiscal Cliff" Money Plan

by Linda Stern

By now, we thought the path forward would be clear and the usual six-day flurry of tax-focused check writing and income-shifting could commence.

But we're still in wait-and-see mode; watching to see what happens next. Either Washington will rush through a year-end package of tax and spending cuts or we will plunge over the so-called "fiscal cliff" of tax increases and sharp spending cuts. Even if that happens, President Obama and Congress could agree on a retroactive package early next year that would limit the repercussions of the over-the-cliff scenario.

So, what do you do now? Avoid placing huge bets and consider these moves while you're watching your government in (in)action.

Stash cash for January. It's probably going to be a rough month. Even if there's an 11th hour cliff plan, it is unlikely to reinstate the 2 percentage point cut in Social Security payroll taxes that all workers have been benefiting from for the last two years. That means families with median household income of $50,500 will take home $84 less a month in 2013 than they did in 2012.

Furthermore, January is always a month of reckoning with holiday bills, high heating costs, a resetting of health insurance deductibles and scant balances in flexible spending accounts. So, you're going to need cash. You may even hold on to some money you don't need to disburse until April (like Roth individual retirement account contributions), just to make sure you will have enough on hand to get through January.

Shift income based on your income. If you live in a high-tax state, have kids and make between $33,750 and $49,500 ($45,000 to $76,000 for couples), you are a sitting duck for the alternative minimum tax. Originally conceived as a method of insuring that rich people don't get out of paying taxes altogether, the AMT has morphed into an extra tax that penalizes large families and those who pay high local taxes. Congress usually mitigates that by "patching" the AMT rules so they only apply to higher incomes; in 2011 the AMT hit singles earning more than $48,450 and couples earning $74,450. Without a patch moving those numbers up by roughly 2 percent for 2012, they will fall all the way back to $33,750 for singles and $45,000 for couples. It's not entirely clear that a patch can be passed to be effective retroactively for tax year 2012. That is true even though the Internal Revenue Service and TurboTax are already acting like the patch will emerge.

To play that cautiously, don't race to pay your state property taxes before the end of the year. While that could cost you money in April because you will have lower deductions, it will secure your deductions for next year and perhaps protect you from the AMT in 2012, should the patch fail to materialize.

Feel confident that you'll get patched? Write the check now.

Sell. If you have not been part of all the selling on Wall Street, there is still time. Your capital gains will be taxed at a rate of 15 percent or less if you sell before the end of the year. In 2013, that rate stands a decent chance of going up to 20 percent. There's no harm in taking the gain now; you can re-buy the same security right away if you want to keep holding it.

Write the charity checks. If you itemize deductions they will offset income taxes for 2012, and there's certainly plenty of need wherever you look now. If you are wealthy, you stand a decent chance of having your deductions clipped next year, so you might as well write the checks now.

If you're retired, don't itemize deductions and have been turning over your required minimum IRA distribution to a charity, don't expect the same tax break you got last year. That provision - to allow non-itemizers a tax-free IRA withdrawal if it goes to charity - expired at the end of last year. Maybe it will come back, but that's a very long shot now. Write the check anyway, if you just want to be charitable, but not if you can't afford it without the write-off.

Plan to be frugal. There's no version of a "fiscal cliff" resolution that ends with a more expansive government fiscal policy. Either your benefits will be clipped -- in the form of less college financial aid, curtailed Social Security benefits and the like -- or your taxes will go up. Over the long term, items like deductions for mortgage interest on second homes and employer write-offs for health insurance could be in play. Consumers already have shown themselves to be more frugal than they used to be -- holiday-linked retail sales growth slowed significantly once the fast-track "fiscal cliff" fix went off the rails. Households have been paying down debt for much of the last five years. It couldn't hurt to keep that up for a while.

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Nine Daily Habits That Will Make You Happier

by Geoffrey James



These minor changes in your daily routine will make a major difference in your life and career.

Happiness is the only true measure of personal success. Making other people happy is the highest expression of success, but it's almost impossible to make others happy if you're not happy yourself.

With that in mind, here are nine small changes that you can make to your daily routine that, if you're like most people, will immediately increase the amount of happiness in your life:

1. Start each day with expectation.

If there's any big truth about life, it's that it usually lives up to (or down to) your expectations. Therefore, when you rise from bed, make your first thought: "something wonderful is going to happen today." Guess what? You're probably right.

2. Take time to plan and prioritize.

The most common source of stress is the perception that you've got too much work to do.  Rather than obsess about it, pick one thing that, if you get it done today, will move you closer to your highest goal and purpose in life. Then do that first.

3. Give a gift to everyone you meet.

I'm not talking about a formal, wrapped-up present. Your gift can be your smile, a word of thanks or encouragement, a gesture of politeness, even a friendly nod. And never pass beggars without leaving them something. Peace of mind is worth the spare change.

4. Deflect partisan conversations.

Arguments about politics and religion never have a "right" answer but they definitely get people all riled up over things they can't control. When such topics surface, bow out by saying something like: "Thinking about that stuff makes my head hurt."

5. Assume people have good intentions.

Since you can't read minds, you don't really know the "why" behind the "what" that people do. Imputing evil motives to other people's weird behaviors adds extra misery to life, while assuming good intentions leaves you open to reconciliation.

6. Eat high quality food slowly.

Sometimes we can't avoid scarfing something quick to keep us up and running. Even so, at least once a day try to eat something really delicious, like a small chunk of fine cheese or an imported chocolate. Focus on it; taste it; savor it.

7. Let go of your results.

The big enemy of happiness is worry, which comes from focusing on events that are outside your control. Once you've taken action, there's usually nothing more you can do. Focus on the job at hand rather than some weird fantasy of what might happen.

8. Turn off "background" TV.

Many households leave their TVs on as "background noise" while they're doing other things. The entire point of broadcast TV is to make you dissatisfied with your life so that you'll buy more stuff. Why subliminally program yourself to be a mindless consumer?

9. End each day with gratitude.

Just before you go to bed, write down at least one wonderful thing that happened. It might be something as small as a making a child laugh or something as huge as a million dollar deal. Whatever it is, be grateful for that day because it will never come again.

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How to Play the 2013 Housing Market

Retirement Tax Deadlines for 2012

by Emily Brandon

In order to get tax breaks for saving for retirement in a 401(k) or IRA, you need to meet certain deadlines. Retirees also need to pay attention to specific dates to avoid tax penalties. Here are some important dates to keep in mind for tax year 2012:

Dec. 31, 2012. Contributions to 401(k)s, 403(b)s, 457s, and the federal government's Thrift Savings Plan are generally due by Dec. 31, 2012. Workers can defer taxes on up to $17,000 in their 401(k) in 2012, or $22,500 for workers age 50 and older.

Retirees older than age 70 1/2 generally must take required minimum distributions from their traditional 401(k)s and IRAs by the end of the calendar year and pay the resulting income tax on the withdrawal. The tax penalty for failing to withdraw the correct amount is a 50 percent excise tax on the amount that should have been distributed. People who are still working after age 70 1/2 and don't own 5 percent or more of the business sponsoring the retirement plan can delay distributions from their current 401(k), but not IRA, until they actually retire.

Feb. 1, 2013. Survivors of Hurricane Sandy may be allowed to take 401(k), 403(b), 457, and Thrift Savings Plan hardship distributions and loans to pay for storm-related expenses or to assist a son, daughter, parent, grandparent, or other dependent who lives or works in the disaster area until Feb. 1, 2013. The usual six-month ban on new 401(k) contributions after a hardship distribution will also be temporarily suspended for people impacted by the storm. However, regular income tax, and for people under age 59 1/2, the 10 percent early withdrawal penalty will still apply to these hardship distributions.

April 1, 2013. If you recently turned age 70 1/2, you have until April 1 to take your first required minimum distribution from your retirement accounts. For example, a retiree whose 70th birthday was on July 1, 2011 and who reached age 70 1/2 on Jan. 1, 2012 must take his first required minimum distribution by April 1, 2013. However, if you delay your first distribution until 2013 you will need to take two distributions in the same year, because the second and all other subsequent distributions will be due Dec. 31. Two required withdrawals in a single year can result in a significant income tax bill for some people.

April 15, 2013. Retirement savers have until April 15, 2013 to make 2012 IRA contributions. Workers can contribute up to $5,000 to a traditional IRA, Roth IRA, or combination of the two accounts in 2012, and employees age 50 and older can deposit $6,000. For contributions made between Jan. 1 and April 15, 2013 you will need to specify which tax year you want the deposit to count toward. If you fail to select a year, the financial institution may automatically apply the transaction to the calendar year in which payment was received. You can claim an IRA contribution on your tax return before the money is actually in your account, but the deposit needs to take place by April 15, 2013 at the latest.

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WSJ's David Wessel tells you everything you need to know about the "cliff" but were afraid to ask.

What Fiscal Cliff May Mean To You - Risk To The Economy And Stocks Are High If All Tax Hike And Spending Cuts Take Effect

Without congressional action, up to $600 billion of expiring tax cuts, new taxes, and automatic spending cuts are set to take effect at the end of 2012 or beginning of 2013. If they hit all at once, the impact could amount to as much as 4%-5% of GDP, according to our research, the equivalent of falling off a “fiscal cliff.” Some experts anticipate the economy would experience a significant slowdown and there would be major consequences for financial markets.

What are the odds that Congress will fail to act? And what could the range of possible congressional actions mean for the economy, and the financial markets? Could we experience a repeat of last year’s debt ceiling drama and credit rating downgrades?

We gathered four Fidelity experts to answer these questions and more.

Capitol scenarios

Federal Reserve Chairman Ben Bernanke and a number of observers have used the term “fiscal cliff” to describe several big fiscal events set to occur in the U.S. at the end of this year and in early 2013. Among them:

• The expiration of the Bush-era tax cuts at the end of 2012, including current lower tax rates on capital gains, dividends, income, and estates, as well as number of other measures.
• The expiration of fiscal stimulus measures, such as the payroll tax cut and extended unemployment benefits.
• Spending cuts scheduled to be triggered automatically in January 2013 as a result of the failure of the deficit reduction super committee last year.

Depending on estimates, the impact of all these actions taken together would be a fiscal shock on the order of $300 billion to $600 billion in just one year. Such policies would reduce the budget deficit and begin to address the nation’s increasingly worrisome debt situation. However, economists generally agree that allowing the fiscal cliff to take effect in full, at the same time, could have a substantially negative impact on the economy in 2013. But that isn’t necessarily going to happen. I see four possible scenarios.

Scenario 1: punt

A likely scenario is that Congress and the president agree to punt the issue into 2013. If this occurs, the tax cuts will not expire, tax increases won’t take effect, and the spending cuts will be delayed until after the presidential inauguration and new Congress arrives in 2013.

Scenario 2: modest compromise

Congress and the White House reach compromises on some tax and spending provisions, with the election having a significant impact on what those compromises might be.

Scenario 3: over the cliff

A less-likely scenario, I think, is that Congress and the White House fail to reach any compromise whatsoever and are unable even to agree on how to delay the looming measures. The economy goes over the cliff.

Scenario 4: grand bargain

In my view, the chance of a grand bargain taking place after the election and before the end of the year is a long shot. In this scenario, Congress and the White House would reach a deal addressing tax, spending, and fiscal issues for the medium to long term.

In addition to the fiscal cliff, the U.S. will again approach the debt ceiling early next year. While the sequence of events puts the debate over the fiscal cliff before the debt deadline, the two issues are likely to be intertwined.

The outcome of the 2012 elections matters, but the resolution of these issues is tough regardless of whether Democrats or Republicans are in control. That’s because they reflect longstanding philosophical differences between the parties about the proper role and size of the government, and how to grow the economy.

Debt ceiling dynamics

The debt ceiling is once again going to be a line in the sand. While it may be reached shortly after the elections, Treasury has a number of tools to postpone an actual showdown this year. The Treasury has signaled the debt ceiling wouldn’t be hit until early 2013, but there may be potential market disruptions before then. More importantly, we’re going to have to first address the proposed tax increases and spending cuts by December 31.

Normally, the debt ceiling is simply a blame game between Congress and the incumbent president about spending cuts and tax increases. It usually comes down to the wire, but there’s resolution. Last year, however, was different. New members of Congress wanted spending cuts; others openly talked about the prospect of defaulting on debt.

The market ramifications were quite disruptive. Long-term interest rates rose on fears of default while the cost for investors to insure against a default increased as well. We also saw dislocations in the stock markets. Then Standard & Poor’s unexpectedly downgraded U.S. debt from its premier Triple A status - something that Moody’s has said is a possibility as we approach the fiscal cliff.

Perhaps I’m an optimist, but I believe between now and early 2013 certain back-channel discussions probably will take place to address tax reform, spending cuts, and revenue increases. Perhaps, in early fall, we might see proposals coming from Washington that may actually prove to be positive steps forward rather than the worst-case scenario.

Best for bonds

If the government does nothing and the spending cuts and tax increases take effect, we get a big fiscal contraction. As painful as that is, I think it’s a very good scenario for the bond market. That's because the fiscal contraction likely means slower growth and lower inflation, which means lower bond yields. Furthermore, this scenario would likely lead to considerable policy uncertainty as market participants would expect some sort of policy U-turn in the near future; that uncertainty could lead to a flight to quality, further supporting Treasuries.

The worst scenario for bonds would be the grand bargain between the White House and Congress because that presumably would result in less abrupt fiscal adjustments, with a softer impact on the economy. In that scenario, you could get a sell-off in bonds, but it might be healthy, as it would unwind some of the risk premium already priced into Treasuries.

The other two scenarios - punting decisions into 2013 or muddling into a compromise - will have a far more nuanced impact. If there is a sense that Washington is kicking the can down the road, then we could see downgrades by the rating agencies, which in turn could lead to forced selling by certain investors. But that isn’t a foregone conclusion. Last year, for example bonds actually did quite well after S&P cut the U.S. debt rating.

Remember that there’s a difference between getting a downgrade by investors, which could lead to higher yields, versus a downgrade by a rating agency. The downgrade from investors comes when they decide that there’s no credible way to get the ratio of debt–to-GDP on a sustainable path in the long run; we haven't had that yet. What we’ve had is a downgrade by one rating agency, which was a shock to consumer and investor confidence. So, it led to a sell-off in stocks and other risk assets and a flight to quality, namely bonds, whose downgrade ironically had sparked the whole selloff.

Whether that happens again depends on how the markets read these events, especially in the case where a negotiated outcome is muddled.

Stock market fallout 

In the worse-case scenario - if we fall off the fiscal cliff - the impact will be quite large. The more fiscal austerity that kicks in, the bigger the effect it has on economic growth. Depending on how you measure it, the automatic spending cuts and tax hikes would cut as much as 4%-5% of GDP. If you consider that the economy is growing around 2% a year, that would be enough to throw us back into recession.

According to our research, corporate earnings could decline by double digits, perhaps as much as 20% or more. If this happened, it would have a tremendously negative impact on the stock market and other riskier asset categories.

Keep in mind, any time you move from a very large deficit back to a path of sustainability, it is going to require the government to eventually shore up its balance sheet. The key here going forward is the balance -  trying to get a gradual reduction in government spending that allows for the private sector to fully resume its role as the primary growth engine of the economy.

The most likely political scenarios would push off most of the fiscal pain beyond the beginning of 2013. That would obviously be a lot more manageable from an economic standpoint, but it’s important to keep in mind how they go about it. If it looks like we’re just kicking the can down the road and have no plan of ever addressing the problem, it will be very negative from a confidence standpoint. We need to at least have an appearance of progress toward grappling with it early on in 2013.

We have to remember, the debt problem has been a dark cloud over investor psychology, and business and consumer sentiment, for a while now. So the closer we can get to a medium term, long-term resolution, the more we have the opportunity to remove that dark cloud.

What I’m looking for are some main attributes of a deal. First, is it truly sustainable over the long term? Are we addressing things like entitlements, which are really the 800 pound gorilla? Second, is it something that can get us a more efficient tax system? Does it include some tax reform that could actually make our economy more productive, broaden the base, and simplify the tax code? Third, we also have to be careful that we’re not balancing the books at the expense of undoing positive infrastructure, research, and other things that governments historically have funded and are important for the long term trajectory of the U.S. economy.

I think anything that moves us toward a resolution that has some of those attributes can turn the sentiment around, and possibly even improve the long-term outlook for the U.S. economy.

Social Security Claiming Tricks to Maximize Payout

by Robert Powell

With nearly 10,000 people turning 65 every day over the next 20 or so years, it’s not hard to imagine a new reality show called “Extreme Social Security Claiming Strategies and Tactics”, especially in the wake of news that beneficiaries will be getting just a 1.7% increase in their benefit in 2013. That show, sadly, is not yet a reality.

But what is real is this: There are a dozens of lesser known, often overlooked Social Security claiming strategies and tactics that are worth sticking in your back pocket, just in case there’s an audition call.

And case in point No. 1 is what Bill Meyer refers to as the “rat holes,” the ages at which a single retiree should never, ever, ever claim Social Security. Or at least not claim Social Security if they want to maximize the present value of their Social Security benefits.

Single retirees whose full retirement age (FRA) is 66 and who aren't affected by the earnings test should not claim Social Security in any month near FRA nor three years prior to FRA, according to Meyer, who is the co-author of “Social Security Strategies: How to Optimize Retirement Benefits,” and CEO of Social Security Solutions, Inc.

And the reason, according to Meyer, has to do with the pattern of reductions in benefits for beginning benefits before FRA and delayed retirement credits for delaying benefits until after FRA.

Ten Things You Must Know About Medicare

Heading into your retirement years brings a slew of new topics to grapple with, and one of the most maddening may be Medicare. Figuring out when to enroll, what to enroll in and what coverage will be best for you can be daunting. To help you wade easily into the waters, here are ten essential things you need to know about Medicare.

Medicare Comes With a Cost

Medicare is divided into parts. Part A, which pays for hospital services, is free if either you or your spouse paid Medicare payroll taxes for at least ten years. (People who aren't eligible for free Part A can pay a monthly premium of several hundred dollars.) Part B covers doctor visits and outpatient services, and it comes with a monthly price tag -- for most people in 2012, that monthly cost is $99.90. Part D, which covers prescription drug costs, also has a monthly charge that varies depending on which plan you choose; the average Part D premium is $30 a month. In addition to premium costs, you'll also be subject to co-payments, deductibles and other out-of-pocket costs.

You Can Fill the Gap

Beneficiaries of traditional Medicare will likely want to sign up for a medigap supplemental insurance plan offered by private insurance companies to help cover deductibles, co-payments and other gaps. You can switch medigap plans at any time, but you could be charged more or denied coverage based on your health if you choose or change plans more than six months after you first signed up for Part B. Medigap policies are identified by letters A through N. Each policy that goes by the same letter must offer the same basic benefits, and usually the only difference between same-letter policies is the cost. Plan F is the most popular policy because of its comprehensive coverage; it has a wide range of prices, from an annual $934 to $5,590 for a male, according to PlanPrescriber.com.

There Is an All-in-One Option

You can choose to sign up for traditional Medicare -- Parts A, B and D, and a supplemental medigap policy. Or you can go an alternative route by signing up for Medicare Advantage, which offers comprehensive coverage through private insurance companies. Technically Part C, Medicare Advantage has a monthly cost, in addition to the Part B premium, that varies depending on which plan you choose. With Medicare Advantage, you don't need to sign up for Part D or buy a medigap policy. Like traditional Medicare, you'll also be subject to co-payments, deductibles and other out-of-pocket costs, although the total costs tend to be lower than for traditional Medicare. In many cases, Advantage policies charge lower premiums but have higher cost-sharing. Your choice of providers may be more limited with Medicare Advantage than with traditional Medicare.

High Incomers Pay More

If you choose traditional Medicare and your income is above a certain threshold, you'll pay more for Parts B and D. Premiums for both parts can come with a surcharge when your adjusted gross income (plus tax-exempt interest) is more than $85,000 if you are single or $170,000 if married filing jointly. In 2012, high incomers pay from $139.90 to $319.90 per month per person, depending on their income level, for Part B coverage. They also pay extra for Part D coverage, ranging from $11.60 to $66.40 per month, on top of their regular premiums.

When to Sign Up

You are eligible for Medicare when you turn 65.

If you are already taking Social Security benefits, you will be automatically enrolled in Parts A and B. You can choose to turn down Part B, since it has a monthly cost; if you keep it, the cost will be deducted from Social Security if you already claimed benefits.

For those who have not started Social Security, you will have to sign yourself up for Parts A and B, or Medicare Advantage. The seven-month initial enrollment period begins three months before the month you turn 65 and ends three months after your birthday month. To ensure coverage starts by the time you turn 65, sign up in the first three months.

People still working may want to delay signing up for Medicare, but they will need to follow the rules carefully to avoid significant penalties when they do eventually enroll.

A Quartet of Enrollment Periods

There are several enrollment periods, in addition to the seven-month initial enrollment period. If you missed signing up for Part B during that initial enrollment period and you aren't working, you can sign up for Part B during the general enrollment period that runs from January 1 to March 31 and coverage will begin on July 1. But you will have to pay a 10% penalty for life for each 12-month period you delay in signing up for Part B. Those who are still working, though, can sign up later without penalty during a special enrollment period, which lasts for eight months after you stop working (regardless of whether you have retiree health benefits or COBRA). If you miss your special enrollment period, you will need to wait to the general enrollment period to sign up. Open enrollment, which runs from October 15 to December 7 every year, allows you to change Part D plans or Medicare Advantage plans for the following year, if you choose to do so. (People can now change Medicare Advantage plans outside of open enrollment if they switch into a plan given a five-star quality rating by the government.)

Costs in the Doughnut Hole Shrinking

One cost for Medicare is decreasing -- the dreaded Part D "doughnut hole." That is the period during which you must pay out of pocket for your drugs. For 2012, the coverage gap begins when a beneficiary's total drug costs reach $2,930. Catastrophic coverage, with the government picking up most costs, begins when a patient's out-of-pocket costs reach $4,700. Because of the health care law, the amount a beneficiary pays while in the doughnut hole is gradually shrinking, so that by 2020, beneficiaries will pay just 25% of the costs of their generic and brand-name drugs while in the coverage gap. For 2013, the discount on brand-name drugs in the coverage gap will rise to 52.5%, from 50% in 2012, and the federal subsidy for generics will rise to 21%, from 14%.

You Get More Free Preventive Services

Besides shrinking the costs that beneficiaries will pay for prescription drugs in the Part D doughnut hole, health care reform also increased the number of free preventive services available to Medicare beneficiaries. You get an annual free "wellness" visit to develop or update a personalized prevention plan. Beneficiaries also get a free cardiovascular screening every five years, annual mammograms, annual flu shots, and screenings for cervical, prostate and colorectal cancers.

What Medicare Does Not Cover

While Medicare covers your health care, it generally does not cover long-term care -- an important distinction. Under certain conditions, particularly after a hospitalization to treat an acute-care episode, Medicare will pay for medically necessary skilled-nursing facility or home health care. But Medicare does not cover costs for "custodial care" -- that is, care that helps you with activities of daily living, such as dressing and bathing. To cover those costs, you will have to pay out of pocket or have long-term-care insurance. Traditional Medicare also does not cover routine dental or eye care and some items such as dentures or hearing aids. For more on tests, items or services that Medicare doesn't cover, check www.medicare.gov/coverage/your-medicare-coverage.html.

You Have the Right to Appeal

If you disagree with a coverage or payment decision made by Medicare or a Medicare health plan, you can file an appeal. The appeals process has five levels, and you can generally go up a level if your appeal is denied at a previous level. Gather any information that may help your case from your doctor, health care provider or supplier. If you think your health would be seriously harmed by waiting for a decision, you can ask for a fast decision to be made and if your doctor or Medicare plan agrees, the plan must make a decision within 72 hours.

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Finding Jobs, But Working For Less Pay

by Anjali Athavaley

Kecia Hawkins used to make $82,000 a year as an accountant for a health insurer before she was laid off two years ago. Earlier this week, the 47-year-old Bronx resident landed a part-time job installing computers. The pay: $10.25 an hour.

Welcome to the job market in New York City, where the burgeoning ranks of the unemployed are grappling with a grim prospect: settling for lower-paying jobs than they once had.

"Really discouraging," Ms. Hawkins said of her job search.

Economists and business leaders are increasingly troubled by a trend in New York City employment statistics: The lion's share of job growth has come in high-wage and low-wage industries, while middle-income work has lagged.

How to Avoid Going Broke in Retirement

by Steve Vernon

With average U.S. life expectancy still rising, if you look after your health it's quite possible you might live into your late '80s or beyond. As a result, people who retire in their 60s could be retired for at least two or three decades. That should be a good thing - except if you run out of money in your 70s or 80s!

If you're like most baby boomers, you haven't put enough away in retirement savings to maintain your current lifestyle, so you'll need to squeeze as much income as possible from what you did sock away. And unless you'll be receiving significant benefits from a traditional pension plan, which provides a lifetime monthly income, you should be certain to manage your retirement savings so you don't outlive it.

Unfortunately, research suggests many people simply "wing it" when it comes to retirement planning and drawing down their savings. They simply withdraw what they need for living expenses and hope the money lasts.

Hope is never good strategy! If you spend your retirement savings without planning, there's a good chance you'll go broke in your retirement years.

Let me instead introduce you to a better strategy to draw down and invest any type of retirement savings you have, whether a straightforward savings account with no special tax features; a 401(k), 403(b), 457 or cash-balance plan; or a traditional or Roth IRA.

Tax Breaks for Refinancing Your Mortgage

by Bill Bischoff

Serial refinancers should take note.

With mortgage interest rates at historical lows, refinancing might be an attractive proposition–even if your last refinancing deal was not too long ago. For instance, if you refinanced in 2010 or earlier, it could be time to do it again. While you’re at it, don’t forget to collect your rightful tax deductions. Here’s what you need to know about tax write-offs when refinancing your principal residence.

Deducting Mortgage Interest After Refinancing

Say your mortgage balance is $300,000, and you decide to refinance and take out some cash by signing up for a new $335,000 15-year loan at a significantly lower interest rate. You use the extra $35,000 from the new mortgage to eliminate credit-card balances, pay off a car loan and cover some other expenses.

Assuming your home is worth at least $335,000 when you refinance (your lender will almost certainly require that to be true) and assuming you paid at least $300,000 to buy the home and make improvements over the years, your new mortgage is considered to have two separate parts for tax purposes.

The first part has an initial balance of $300,000, which equals the refinanced balance from your old loan. This $300,000 part is treated as so-called home-acquisition debt for tax purposes. All the interest on up to $1 million of home-acquisition debt can be written off as an itemized deduction on Schedule A of your Form 1040 (use Line 10). Interest on home-acquisition debt in excess of the $1 million cap is generally nondeductible.

The second part has an initial balance of $35,000, which equals the cash you took out when you refinanced. This $35,000 part is treated as so-called home-equity debt for tax purposes. Interest on up to $100,000 of home-equity debt can also be written off on Schedule A (use Line 10 here too). It doesn’t matter how you use the loan proceeds. Interest on home-equity debt in excess of the $100,000 cap is generally nondeductible.

Warning: If you’re a victim of the dreaded alternative minimum tax (AMT), you can deduct interest on up to $100,000 of home-equity debt for AMT purposes only to the extent you use the loan proceeds to pay for home improvements. In our example, you used the $35,000 of home-equity debt proceeds to pay for other stuff, so you won’t get any AMT deduction for the interest paid on the $35,000 part of the new loan.

Five Financial Moves Not to Make at 50

by Liz Davidson

Turning fifty used to be a milestone for retirement - you could plan to sock away much more money. That reality has changed dramatically. It is no longer true that:

• You’ll be in your peak earning years at age 50. Baby boomers may not enjoy their fifties as their top wage earning years after all with the fiscal crisis and the recession hitting right at the same time.
• Your kids will be out of the house. With 15.8 million adult children currently living with their parents, and 59% of Baby Boomers providing financial support to adult children who are no longer in school, Baby Boomers are not experiencing an empty nest.
• Your wealth will be higher than it was a decade ago. The “lost decade” of the 2000s continues, with $19.2 trillion of household wealth lost according to the U.S. Treasury.
• You can count on your company pension. Even if you have a pension in place, it doesn’t mean it will be there forever. Ford Motor Company wants to get out of the pension business altogether. They announced earlier this year that they were giving retired workers a choice to either keep their pension or take a lump sum payout. Ford was the first major company to make an offer like this—other companies may follow suit or change payout options altogether.
• You can count on Social Security. Social Security for those under age 55 is up in the air. In order to make sure Social Security is funded for everyone, we could see means testing or pushing out the minimum Social Security ages even further.
• Your expenses will decrease in retirement. Health care expenditures have increased over tenfold since 1980 to $2.6 trillion dollars. Many companies have stopped offering retiree medical benefits, and even discontinued retiree medical benefits for workers who were already retired. This trend of cutting back on retiree medical benefits is even spreading to cash-strapped state governments like Illinois.

Times have certainly changed. In today’s economic environment, once you pass the milestone of your fiftieth birthday, you have to be very careful not to make financial mistakes that you can’t correct. There are a few seemingly benign financial and lifestyle moves that can actually derail your retirement plans – watch out for these:

Protecting Your Deductions

by Laura Saunders

Never mind your income-tax rate for next year—what will happen to your deductions? 

Presidential candidate Mitt Romney twice has raised the possibility of imposing caps on tax benefits to help lower tax rates. Instead of simply cutting the home mortgage-interest deduction or the write-off for charitable donations, lawmakers could allow each taxpayer one overall allowance to use as desired. Mr. Romney suggested options ranging from $17,000 to $50,000. 

President Barack Obama, meanwhile, has repeatedly suggested capping tax benefits in the administration's budget proposals. 

Of course, the outcome isn't up to either candidate but rather to Congress, which faces many tough decisions about taxes next year. Still, taxpayers trying to plan for 2013 would be wise to take a hard look at their deductions as well as their income. 

"It might be a good idea to accelerate large write-offs as well as income while the law still allows them," says Robert Gordon of Twenty-First Securities in New York, an investment firm specializing in tax strategies. 

The idea of limiting tax breaks in order to raise revenue or lower rates, or both, isn't new. Taxpayers who owe alternative minimum tax, or AMT, already lose benefits such as the deduction for state and local taxes. 

The three biggest tax breaks are for employer-provided heath insurance, the mortgage-interest deduction and retirement savings. There is real revenue in capping such breaks—and real pain for those who lose them.

"In practice, it's not an easy thing to do. These benefits are how we buy homes, get health insurance, save for retirement and give to charity," says Michael Graetz, a former top Treasury official who now is a professor at Columbia University's Law School. 

Experts note that cutting tax breaks is often highly progressive, hitting higher earners more than people earning less. That is because upper-income taxpayers are more likely to make greater use of benefits by "itemizing" deductions and listing them separately. 

According to the Tax Policy Center in Washington, only about 12% of taxpayers making less than $63,000 itemize, versus more than 90% of taxpayers earning above $150,000. The top 5% of taxpayers, who earn about $200,000 or more, on average have itemized deductions of 13% of income. 

Mr. Romney hasn't released details of which benefits he would cap or how. Elsewhere he has proposed across-the-board income-tax rate cuts of 20% (not 20 percentage points), while maintaining or lowering current rates on capital gains. He has vowed as well to preserve deductions for the middle class and avoid tax increases on it. An aide said Mr. Romney defines "middle class" as married couples with adjusted gross income up to $200,000. 

President Obama's proposed limits on tax breaks are both specific and expansive. They would affect joint filers with adjusted gross income of $250,000 or more ($200,000 for singles). In addition to cutting the value of itemized deductions to 28% or below for upper-bracket taxpayers, he calls for limiting breaks for municipal-bond interest, retirement savings, health insurance, moving expenses and more. 

Taxpayers should prepare to act later this year if the situation becomes clearer. Some possible moves: accelerating state income- and property-tax payments; paying medical-insurance premiums or other deductible costs, if they are large enough to surmount the 7.5% hurdle; and making large purchases if you will be deducting state sales tax from your federal return, assuming Congress renews this break for 2012. 

Also, pay special attention to investment-interest deductions and large charitable contributions, neither of which is currently limited by the AMT. 

Proponents of continuing the current deduction for investment interest say a cap could distort investment decisions. "Leveraged investments will suffer, because their tax rate might rise just when the deduction drops," Mr. Gordon says.

Charitable contributions, which are backed by a powerful coalition of nonprofits, are highly favored. Donations are fully deductible within certain limits, and givers also often get a full deduction for donations of appreciated stock or other property without first paying tax on the gains. 

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Best Buy’s Price Matching: Good for Consumers, but What About Profits?

by Chris Nichols

Wal-Mart's not the only retailer that's had about enough of Amazon.com.  Now Best Buy is fighting back against the Jeff Bezos-run merchandising juggernaut.

The Minnesota-based electronics and games seller, apparently tired of hearing how its stores are serving as a physical testing ground for goods that later will be purchased online, is planning to match the prices on items sold by the ever-growing Amazon empire and other Web-based under-cutters in the weeks ahead.

According to a report in The Wall Street Journal, the pricing plan will take place during the holidays. Best Buy is also aiming to provide free home delivery for products that aren't currently stocked in stores. It's doing so, the WSJ points out, even as new CEO Hubert Joly contends the "showrooming" idea isn't as big of a deal as Best Buy's doubters would have you believe.

Consumers and Shareholders

It's a daring move by Best Buy, which has been going through a significant executive makeover and has been pursued this year in a buyout offer by founder Richard Schulze. Additionally, it comes just as the company gets a new online head settled into his office and says goodbye to Chief Financial Officer James Muehlbauer. Very interesting times around the Twin Cities.

Seven Valuable Benefits You May Not Even Know You Have

by Erik Carter

Most of us know about Social Security, Medicare, our employer's retirement plan and IRAs, but if you're like many Americans, you could be eligible for other benefits worth tens or even hundreds of thousands of dollars that you might not even be aware of. These are benefits that you've paid for either by working for a particular employer or through your tax dollars. Here are some of the most common:

1) Lost Pension Benefits

Just like bank accounts are insured by the FDIC, pension plans are partly insured by the Pension Benefit Guaranty Corporation or PBGC. In a recent blog post, my colleague Linda Robertson, details how 37,000 people have claimed $252 million in missing pension benefits from the PBGC since 1996. However, there are still over 36,000 people with almost $197 million in unclaimed pension benefits, ranging from $1 to as high as $676,436! If you were you in a terminated pension plan, you may want to check out the PBGC's Pension Search to see if you're one of them.

2) Retirement Accounts from Previous Jobs

Just as there are lost pension benefits, many people have retirement plans from previous jobs that they've left "out there." A recent survey showed that half of Americans left a retirement plan with a previous employer and almost 20% of them left accounts worth $50k or more. This usually just entails neglecting to manage the investments and keep the beneficiaries updated, but sometimes it can even mean completely forgetting and essentially losing the account altogether, especially for beneficiaries who may not even know the account ever existed. To make sure this doesn't happen, consider consolidating your previous retirement accounts into an IRA or your current employer's plan. Here are some of the pros and cons of your options.

Four Medicare Enrollment Mistakes to Avoid

by Amanda Gengler

When Houston attorney Barbara Quackenbush retired at age 67, she decided to stay on her company health plan through COBRA rather than sign up for Medicare. But as her COBRA coverage neared expiration, she learned that this choice will saddle her with a Medicare penalty requiring her to pay 20% higher premiums.

Even scarier, she'll be left without coverage for 10 months. When Quackenbush found out, she says, "I was so upset I nearly dropped the phone."

Reaching the big six-five is your ticket to guaranteed, affordable insurance via the Medicare system - provided you comply with a byzantine set of rules.

Getting the sign-up process right can be tricky for anyone, but it's become a major headache for the growing number of folks working past 65, say advocates, particularly now that Medicare enrollment no longer comes at the same time people start collecting full Social Security.

"There are pitfalls you must watch out for," says David Lipschutz, a policy attorney at the Center for Medicare Advocacy. Here are four big ones to avoid.

Mistake no. 1: Not enrolling because you're employed.

If you're still working, and have coverage from your job, you don't have to sign up at 65. Many workers, though, benefit from enrolling, especially when you consider that you can take parts A and B at different times.

Who should sign up?

Part A, which covers hospitals, is a no-brainer for most people. It's usually free and may pick up costs your job does not.

If you work for a small company, your firm may require that you take Part B, which covers doctor visits, so that Medicare can start paying most of your expenses. Anyone with a high-deductible plan can also benefit from Part B, since it often picks up costs before you've met the deductible.

A caveat: If you have a health savings account, you must stop making deposits.

Who should hold off on Part B?

Workers at large companies. The plan costs at least $100 a month and often provides little benefit beyond what their job covers.

Latest Jobs Report Shows Persistent Economic Growth

by Catherine Rampell

The American job market is looking a little stronger than had been feared just a few months ago, according to the government’s final labor snapshot before the presidential election.

Whoever wins the election on Tuesday might even inherit an accelerating economy in 2013, if (and that is a big if) Congress is able to smooth over that pesky fiscal cliff in the few weeks after the election.

The nation’s employers added 171,000 positions on net in October, the Labor Department reported on Friday, and more jobs than initially estimated in August and September. Hiring was broad-based, with just nearly every industry except state government adding jobs. The unemployment rate ticked up slightly to 7.9 percent in October, from 7.8 percent in September, but for a good reason: more workers joined the labor force and so officially counted as unemployed.

None of this makes for a game-changer in the presidential race, analysts said. But it appeared to provide some relief for President Obama, whose campaign could have been sideswiped by bad news from the volatile monthly jobs report. With the latest numbers, the economy finally shows a net gain of jobs during his presidency. His record had previously been weighed down by huge layoffs in his first year in office after the financial crisis.

Ten Million U.S. Households Do Not Have Bank Accounts

by Blake Ellis

The number of people who don't have bank accounts is on the rise, as many households turn to alternative ways of getting cash -- like prepaid cards, payday loans, pawnshops and check-cashing services.

About 8.2% of U.S. households, or nearly 10 million, lack a bank account, according to survey results released Wednesday by the Federal Deposit Insurance Corporation. That's up from 7.7%, or about 9 million households, in 2009.

Most commonly, households reported that they don't have a bank account because they don't have enough money to open and fund one, with 33% of respondents saying this is the case.

Greg McBride, senior financial analyst at Bankrate.com, said that checking accounts can be costly for some consumers - especially for those living paycheck-to-paycheck who can't meet minimum balance requirements and get hit with fees or those who are chronic overdrafters.

U.S. Poverty Rate Unchanged in 2011, While Household Income Takes a Dip

by Lisa Scherzer

The poverty rate in the U.S. saw a slight dip last year from 2010, according to a report released by the Census Bureau Wednesday. There were 46.2 million people in poverty in 2011, down from 46.3 million in 2010. After three consecutive years of increases, neither the poverty rate (15%) nor the number of people in poverty were statistically different from the 2010 estimates, the report said.

Household income fared worse, however. For the second year in a row real median household income declined; between 2010 and 2011 it dropped 1.5% to $50,054.

Here are some other highlights from the report:

• The West experienced the sharpest decline in real median household income - down 4.1% - between 2010 and 2011 compared with the other regions.

• In 2011, the percentage of people without health insurance decreased to 15.7% from 16.3% in 2010. (In 2010 48.6 million people were uninsured, down from 50 million in 2010.)

• The percentage and number of people covered by employment-based health insurance in 2011 was essentially the same as 2010, at 55.1% and 170.1 million.

• The uninsured rate was statistically unchanged for those age 26 to 34 and 45 to 64. But it declined for people age 19 to 25 (likely because under the Affordable Care Act of 2010 19- to 25-year-olds are eligible for coverage under a parent's health plan), and those age 35 to 44 and 65 and older.

• In 2011, the median earnings of women who worked full time, year-round ($37,118) was 77% of that for men working full time, year-round ($48,202) - not statistically different from the 2010 ratio.

• Real median earnings of both men and women who worked full time, year-round declined by 2.5% between 2010 and 2011.

Source: Census.gov

Ten Strategies to Maximize Your 401(k) Balance

by Emily Brandon

At a time when most people don't have a traditional pension, growing and then protecting your 401(k) balance is essential to a secure retirement. Pay close attention to 401(k) rules to make sure fees, taxes, and other mistakes don't unnecessarily reduce your 401(k) balance. Here are 10 ways to make the most of your 401(k) plan:

Don't accept the default savings rate. New employees are increasingly likely to be automatically signed up for a retirement account at work, most often by having 3 percent of their pay deposited in their company's 401(k) plan. But saving 3 percent of your salary, while certainly better than no savings, may not be adequate to maintain your current lifestyle in retirement. "For a lot of people, that is not going to be enough," says Michele Clark, a certified financial planner for Clark Hourly Financial Planning in Chesterfield, Mo. "When you get a raise, save 1 percent more every year until you can get up to hopefully 20 percent of your pay."

Get a match. The most common 401(k) match is 50 cents for each dollar saved up to 6 percent of pay. If your employer offers a 401(k) match, make sure you save enough to take advantage of it. Capturing a 401(k) match is one of the fastest and most painless ways to boost your 401(k) balance.

Stay until you are vested. You won't get to keep the 401(k) match from your employer until you are fully vested in the 401(k) plan, which can sometimes take as long as five or six years of service at the company. Some employers allow people who leave before they are fully vested to keep a portion of the match based on their years of service, while other companies require workers to forfeit the entire match. It can sometimes be worth thousands of dollars to continue to work for a company until you are fully vested in the 401(k) plan. "If you are in a miserable employment situation or have a life-changing opportunity to go somewhere else, maybe you have to sacrifice the unvested portion," says Joel Kelley, a certified financial planner for Woodstone Financial in Asheville, N.C. "If you are considering a lateral move career-wise, you should definitely take that into account."

Will Your Income Needs Trend Down as You Age?

by Christine Benz

The 4% rule for safe portfolio withdrawals during retirement is a widely cited rule of thumb, probably because it's easy to use and remember. But it also has its share of detractors, who have reasonably pointed out that it is an overly simplified take on an exceptionally complex problem.

Under the 4% rule, retirees withdraw a fixed dollar amount of their portfolios per year, adjusting that amount upward each year with inflation. The trouble is, that static spending rate ignores the fact that the portfolio's value is fluctuating underneath the surface. By turning a blind eye to market conditions and portfolio performance and sticking with a fixed dollar amount withdrawal, the retiree may be taking out an outsized share of the portfolio in bad years and too little in good ones.

The other big problem with static spending rates is that they don't jibe with real life. Emergency expenses and planned splurges cause all of us - whether retired or still working - to spend more in some years and less in others.

Ten Businesses That Will Boom in 2020

by Rick Newman

It's hard to predict the future, especially if you're still struggling to figure out what's happening in today's economy. But predicting the future is exactly what you need to do if you're enrolling in college, starting a fresh career, or investing in new skills.

The pace of change in the business world is faster than ever these days, thanks largely to globalization and digital technology. One way to zero in on fields that will be hot in the future is to stay away from those that are not. The government's Bureau of Labor Statistics (BLS) publishes an annual list of declining industries that follow a few common trends. They tend to involve work that can be done more cheaply overseas, such as low-skill assembly-line work, or technology that's rapidly replacing human workers, as in call centers. Fields vulnerable to cost-cutting and downsizing--such as government--are vulnerable too.

Employers themselves sometimes provide useful hints about the kinds of skills they want. In the latest annual survey for the National Association of Colleges and Employers, companies planning to hire were most interested in grads who had majored in engineering, business, accounting, computer science, or economics. Unfortunately, many students prefer majors such as social sciences, history, education, and psychology, which aren't in high demand.

To develop a more thorough list of fields likely to offer plenty of jobs and good pay, I analyzed data from a variety of sources, including BLS and the industry-research firm IBISWorld, which projects future employment levels in dozens of fields. A couple rules of thumb: First, it still pays to have a college degree, even if you're worried about the expense. Consulting firm McKinsey & Company predicts that by 2020, there will be a shortage of 1.5 million college grads, which means employers will continue to place a high premium on better-educated workers.

Another important point: The most successful people tend to be lifelong learners who develop new skills long after they graduate from college or complete a training program. In fact, building multiple skill sets--such as analytical expertise combined with a liberal-arts background, or scientific knowledge with a law degree - can be a terrific way to differentiate yourself in a cluttered job market. Plus, the most lasting skills are often those that can be transferred from one field to another, as the economy ebbs and flows.

But you have to anchor your career somewhere, so here are 10 fields that are likely to flourish in 2020:

1. Data crunching. The era of big data is just getting started, with many firms eager to tap vast new databases to gather more info on their customers, their competitors, and even themselves. The challenge isn't just crunching numbers; it's making sense of them, and gaining useful insights that can be translated into a business edge. Marketing and market research are two growing fields where the use of data is exploding.

2. Counseling and therapy. There's now widespread recognition that mental health is as important as physical health, which is likely to increase demand for professionals in this field. The BLS expects the need for marriage and family therapists, as one example, to grow 41 percent by 2020.

3. Scientific research. New technology will continue to generate breakthroughs in medicine, manufacturing, transportation, and many other fields, which means there will be strong demand for workers schooled in biology, chemistry, math, and engineering. Some areas that show particular promise: biotechnology and biomedicine, nanotechnology, robotics, and 3D printing, which allows the manufacture of physical products from a digital data file.

4. Computer engineering. A lot of software development is done overseas these days, but the need for high-level computer experts able to tie systems together is still strong. In finance and investing, for instance, high-speed computing is increasingly a prime competitive advantage. And most big companies will need networks that are faster, more seamless, and more secure.

5. Veterinarians. Pets are more popular than ever, and some of them get medical care that's practically fit for a human. The BLS expects the need for vets to rise 36 percent by 2020.

6. Environmental and conservation science. Making better use of the planet's resources will be essential as population growth strains existing infrastructure. Green energy, despite some political controversy, still seems likely to boom. Developers need more efficient ways to heat and cool buildings. And dealing with global warming may require new technology not even on the drawing board yet.

7. Some healthcare fields. It's well-known that the aging of the baby boomers will require more caregivers in many specialties. Some healthcare jobs tend to be low-paying, with a lot of workers flocking to what are supposed to be "recession-proof" fields. And the need to lower overall healthcare costs could pinch some doctors, hospital workers, and diagnosticians. But demand should be strong for nurses, optometrists, audiologists, dentists, physical therapists, and some doctor specialists.

8. Management. The boss earns a lot for good reason: His job isn't as easy as it might seem. Effective management in the future will require basic business knowledge plus the ability to oversee operations in many locations and countries, and some technical know-how. Anybody who can improve a unit's performance while lowering costs should rise quickly. The BLS and IBISWorld also expect growing demand for some support fields such as human relations, benefits administration, and event planning.

9. Finance. The movement and management of money is technically complex, and integral to most companies. Plus, nontraditional investing firms such as hedge funds and private-equity firms are likely to grow as the traditional banking sector complies with new regulations and reins in risk-taking. That means there will be more need for finance experts. There may even be a shortage as students once interested in finance veer into other fields, turned off by the 2008 financial crisis and the vilification of banks.

10. Entrepreneurship. It's often overlooked, but the need for innovators running their own businesses could be more important than ever in 2020. Forecasters expect strong growth in traditional businesses such as used-car dealers, hair and nail salons, pet grooming, and office services, which means anybody able to come up with better, cheaper ways to serve customers will reap a windfall. Technology startups will no doubt keep changing the way consumers work and live. And nobody really knows what the next iPad, Twitter, or Pinterest will be--except, perhaps, some entrepreneur who's dreaming about it right now. He or she may have a bigger impact on life in 2020 than anything the forecasters see coming.

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Unexpected Tax Breaks

by Farnoosh Torabi

Taxes - They’re one of the few things that are certain in life. And as we aim to make the most of our annual returns, you may be pleasantly surprised to hear about some of these strange but true tax deductions that get the thumbs-up from Uncle Sam.

Pets

First, man’s best friend or furry feline could earn you a tax break under certain conditions. Examples include animals related to medical or security needs such as guard and special needs dogs.

“You cannot deduct a pet if it’s just a household pet,” says Wilma Hayes, a tax professional with H&R Block. "But you can deduct pets that are a part of your business. You have to register that pet with an agency declaring that it is a service animal. The animal can be used for a guard or can be used for medical purposes,” she says. In these cases you can write off expenses such as pet food, training, medication and vet bills. Just make sure you have an official doctor’s note.

Weight Loss Plans

Speaking of health, there are quite a few more medical expenses that, oddly enough, can be deducted. Out-of-pocket costs that exceed 7.5% of your adjusted gross income can help to lower your tax bill. For example, the membership fee to a weight loss program. Just don’t forget to get a doctor’s letter with specific details and instructions to back up the claim.

“The doctor’s note actually has to be a plan,” says Hayes. “You just can’t say ‘I want to join Weight Watchers and lose a few pounds.’ It has to specify that the weight is causing you problems and you very well could lose your life from it.”

Swim Lessons

If a doctor prescribes an alternative healing treatment or therapy for your illness, such as swim lessons, that’s also an eligible tax deduction. In fact, you can even deduct the cost of building a pool or spa at your home, as long as it’s deemed medically necessary.

Charity-Related Expenses

Finally, expenses related to helping out a charity carry some tax benefits of their own. For example, hiring a babysitter while volunteering, the ingredients you purchased to prepare meals for a local soup kitchen and even the mileage getting to and from. Just remember to keep a paper trail.

“What you need to do is make yourself audit-proof,” says Hayes. “The documentation is extremely important. The IRS could very well deny you the right to have a deduction if you don’t the documentation.”

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The Riskiest Places to Use Your Credit Card

by Constance Parten

Even if you use the utmost caution, you can still be a victim of credit card fraud. Credit card companies and banks are more and more often putting the onus of catching phony or incorrect credit card charges on the consumer.

The most important thing is to check your billing statment, of course. And there are organizations like Creditcards.com that offer tips on how to keep your cards safe as well. Here, we take a look at 10 of the riskiest places you might use your card, according to Creditcards.com , and what you can do to avoid the dangers.

Non-bank-owned ATMs

Encryption at these ATMs is often not as good as at bank ATMs, meaning some locations are just not as safe. These ATMs also are more likely to be hacked. And in some cases, people have put up devices that look like ATMs but don't give out cash. Instead, they are just card-skimming devices aimed at stealing your credit card or debit card information.

Flea Markets

Flea market merchants are often transient and can be difficult to locate if there is a problem with charges. It's especially true for vendors who don't have online credit card terminals and instead make carbon copies of your credit card.

That doesn't mean those vendors are necessarily fraudulent, but it makes the transaction less secure. The credit card company might have trouble doing a charge back. If you're going to the flea market, take cash. It's also easier to negotiate that way.

Small Shops/Cafes in Foreign Countries

These smaller merchants have a significantly higher percentage of credit card fraud as reported by large banks and credit card companies. Many of these transactions end up being written off by the banks because the merchants simply can't be located. There's just a higher chance of fraud when you get outside of the mainstream, so when in doubt, use cash.

Non-Secure Online Checkout

General common sense. Any safe, reputable e-commerce site is going to have a secure checkout page, like the one shown at left. If that doesn't appear, it should be a red flag. You can almost be sure it's not legitimate, and even if it is, you're opening yourself to that transaction being seen by others.



Wi-Fi Hotspots and Public Computers

If you're going to be making online transactions over an unsecured wireless connection like in cafes, parks and other hot spots, data can be compromised or seen while in transit, even if you're on a secure page while you're checking out. The same goes for public computers like in libraries. It's not advisable to ever transmit personal data when you're in a public connection environment, especially on non-secure wireless.

Social Security Errors That Can Cost You Thousands

by Steve Vernon

Social Security benefits are the bedrock of most Americans' retirement security. So it's well worth your time to learn how to get the most from these valuable benefits - and avoid making mistakes in how you collect them.

To help you in this endeavor, I checked with two of the nation's foremost experts on Social Security: Andy Landis, author of "Social Security: The Inside Story," and Jon Peterson, who wrote "Social Security for Dummies." Between Andy, Jon and I, we came up with four common errors that you should avoid and that will help you optimize your Social Security benefits.

Mistake #1: Starting retirement benefits too early

Half of all Americans claim Social Security at age 62, the earliest possible age with the lowest monthly benefit. But most workers can significantly boost their lifetime payout of Social Security income by delaying the start of their monthly benefits. By how long? At least until age 66, and to age 70 if you can wait that long. For many married couples, this strategy will also improve the financial security of widows who, when their husband dies, will step up to the Social Security income their husband was receiving before he died.

I realize that many people lose their jobs and claim Social Security benefits early to make ends meet. But personally, I'd take any job that would pay me an amount equal to my Social Security benefits in order to reap the advantage of delaying my benefits as long as possible. I'd work at Wal-Mart, Starbucks or any other part-time job that pays enough to replace my Social Security benefits, while giving me enough free time to look for a better-paying position. In the long run, it's a financially smart move.

What's the Best Age to Retire?

by Robert Powell

If you are going to do it - retire, that is - you might as well do it at the right age.  And doing it at the right age, according to the authors of a soon-to-be published paper, involves a bit of homework.

Retiring at the optimal age should not be left to chance, according to Kenn Tacchino, a professor of taxation and financial planning at Widener University, and Patricia Tacchino, co-authors of a soon-to-be-published paper in Benefits Quarterly .

Rather, choosing a retirement age needs to be a rational decision that accounts for a variety of confusing and competing consideration, the Tacchinos wrote. And to reach a rational decision, the authors say, would-be retirees would benefit from using a systematic checklist of issues to make the optimal choice.

Not surprisingly, the Tacchinos have created such a checklist. But it’s no ordinary checklist. It’s a checklist of some 25 factors that would-be retirees can use to reach what the authors say would be a logical and rational decision about the optimal retirement age.

This approach considers financial feasibility of retiring, a would-be retiree’s ability to continue working, the psychological factors surrounding the retirement decision, and the would-be retiree’s personal situation.

So what’s on the checklist? Well, the whole paper is 5,500-plus words and 25 pages long, but we’ll do our best to capture the essence of it (in a manner edited for average would-be retirees).

By the way, by applying weight or attaching value to each item in the checklist, you can hone the decision process to its logical conclusion (retire by choice, keep working by choice, retire by necessity, or keep working by necessity) and avoid irrational choices, the author wrote.

Also, the Tacchinos recommend that you use this checklist at various stages of your life: in the middle of your career, 10-15 years away from retirement, and when retirement is imminent.