If you are retired and receiving Social Security benefits, you know that your benefits are increased each year to help you keep up with inflation.  This is called a cost of living adjustment, or COLA.  The COLA is announced in October of each year and is based on the CPI-W (the Consumer Price Index for Urban Wage Earners and Clerical Workers) from the 3rd quarter of the previous year to the 3rd quarter of the current year.  Changes announced in October go into effect in January of the next year.

In 2009, retirees saw their benefits increase by 5.8%, due mainly to the high cost of gas during 2008.  This was much higher than normal, with the average increase being around 2.8%.  Unfortunately, the Congressional Budget Office (CBO) is estimating that there will be no increase in Social Security benefits for the years 2010 through 2012.

The reason that there may not be any COLAs for the next few years is a law that says that no further COLAs may be given until the CPI-W exceeds the level on which the previous adjustment was based.  Since gas prices have gone back down, the CPI-W has also decreased and is not expected to get back to the level it was at (when the 2009 COLA was announced) until the year 2011.

If you’re already receiving Social Security, you probably are also aware that Medicare Part B premiums have also been rising.  Thankfully, there is good news for the majority of retirees who have their premiums deducted from their Social Security checks.  There is a “hold harmless” provision that says that Social Security retirement benefits will not decrease as a result of an increase in the Part B premium.  So even if Social Security benefits stay the same and Part B premiums increase, your Social Security check will not go down.

However, the “hold harmless” provision does not apply to new Social Security recipients, Medicare participants who are not yet receiving Social Security benefits and high income people.  If you are unfortunate enough to fall into any of these groups, you’ll pay higher premiums to make up for the participants who are covered under the “hold harmless” rules.  This may seem unfair, but this scenario (where Social Security does not receive a COLA but Medicare premiums are rising) was never expected to happen, because it was never expected that Social Security would not receive a cost of living adjustment since they were made automatic in 1975.

The reason high income earners will see higher Medicare premiums is due to the Medicare Modernization Act, which will be completely phased-in this year.  This act basically says that high income beneficiaries will pay a larger portion of the cost of Medicare, based on their income.  While this act is not the focus of this article, the combination of the Medicare Modernization Act with no COLAs for Social Security retirement benefits could mean smaller Social Security checks for people above certain income levels for the next few years.

Bottom line, if you’re collecting Social Security you’re going to learn the true meaning of “fixed income” over the next few years.  To prepare you should keep a close eye on your spending, and if you’re a high income earner you should be aware of tax and financial planning strategies that could cause a spike in income and thus a spike in your Medicare costs.  These strategies need to be carefully planned and coordinated so that your increase in Medicare costs don’t outweigh the benefits of the planning strategies.

Financial Advisors in Kansas City – Beacon Financial Advisors is a fee-only financial planning firm located in Lee’s Summit, serving the greater Kansas City area.  Services provided include retirement planning, investment advice, tax planning and comprehensive financial planning.

Will Social Security be there for me when it’s my time to collect benefits?

For a long time the media has been telling us that Social Security is going bust. Millions of Americans depend on Social Security to fund all or part of their retirement, so this is a huge concern in our country. So do we really need to worry about Social Security going under before we start collecting our retirement benefits?

The 2009 Social Security Trustees Report anticipates that Social Security benefits paid to retirees will exceed Social Security taxes paid in by workers (and earnings on the funds in the trust) beginning in 2016.  In addition, the trust fund could be exhausted by 2037.  Once the trust fund is gone, benefits will still be paid out, but the taxes collected from people still working will only be enough to cover 76% of the benefits promised.

We will probably see several reforms in the future, including a higher retirement age, decreased benefits for future retirees, etc.  Social Security may not look the same as it does now for future generations, but it’s too important to our country to let it fail.

How much can I expect to receive?

An important part of planning for retirement is knowing what resources you will have to help cover living expenses once you retire. For some people Social Security is their only retirement income; for others it’s a small part of their retirement, as they will have pensions and investment income in addition to Social Security. Whatever your situation is, you need to have a good understanding of how much income you will receive from all sources so you can adequately plan for your retirement years.

How much Social Security you receive will depend on several things, such as when you retire, how many years you worked and how much you earned, among other factors.

Generally, your benefits are calculated by applying a formula to your top 35 years of earnings, indexed for inflation. Once your benefit is calculated, it is reduced by up to 25% for people who retire before their full retirement age, and increased by 8% per year for people who wait until after their full retirement age to start collecting benefits. To estimate your benefits, you can use the retirement benefit calculators at the IRS website.

When should I sign up for Social Security?

Probably the most commonly asked question is “when should I sign up for Social Security”? By now, you’re aware that you will receive lower benefits if you apply for Social Security before your full retirement age. The question is, are you better off applying early and receiving benefits for more years, or will you benefit more if you wait until age 66 or later to apply?

How can I get the maximum benefits?

Your parents and grandparents probably never wondered how they could maximize their Social Security benefits, but you should. Because it’s an income stream for life, and because it is increased each year for inflation, Social Security is much more valuable than most people realize. There is nothing wrong with using the Social Security rules to your advantage.

Will my Social Security retirement benefits be enough to live on?
Social Security was never meant to fund 100% of your retirement. It was designed to supplement other income streams (pensions and annuities) as well as your retirement savings.  So you should not expect Social Security to be enough to cover all of your living expenses in retirement. On average, Social Security constitutes about 40% of their income.

Congress approved legislation this week that will provide some relief to Americans over 70 1/2 who have suffered significant losses in their IRA accounts.  The bill will temporarily suspend the excise tax that is levied when seniors fail to the the required minimum distribution (RMD) from their retirement accounts.

This penalty is waived for 2009, which means that seniors will not be required to take withdrawals from their tax deferred retirement accounts during 2009, which will hopefully give these accounts time to recover before the 2010 required distribution.  Unfortunately, this law does not apply to 2008 when it would have made the most difference to investors who have lost significant amounts in their accounts.

If you’re not familiar with the RMD, basically taxpayers who are age 70 1/2 must take annual required minimum distributions from their tax-deferred retirement accounts, including traditional IRAs, 401Ks and 403Bs.  The amount is based on your life expectancy and the prior December 31 balance of your account.  Failure to withdraw this amount and you will be levied a 50 percent penalty on the amount that you should have withdrawn… and this is in addition to your regular income tax!

Surprisingly, there is still talk that the RMD for 2008 will be suspended.  If relief is passed for 2008, taxpayers who have already taken their distributions will be allowed to re-contribute those funds so they don’t have to pay taxes on them.  We should know by mid next week if the 2008 RMD is also suspended.

Do an AMT sweep: One of the reasons why it’s wise to consult a tax adviser before you start accelerating deductions is that certain people over $75,000 find themselves more susceptible to the alternative minimum tax if they proceed. The AMT is an alternative taxation process that’s figured separately from your regular tax liability and you have to pay whichever tax is higher. State and local income taxes and property taxes, for example, are not deductible when figuring the AMT. Under the regular rules, medical expenses that exceed 7.5 percent of adjusted gross income can be deducted under the regular rules, but under the AMT, that threshold is 10 percent. Also, under regular rules, interest on up to $100,000 of home-equity loan debt is deductible no matter how the money is used, but under the AMT, the deduction holds only if the money was used to buy or improve a primary or second home. It pays to check your AMT risk before you execute any end-of-the-year tax-savings strategy.

Check investment gains and losses: After the market drops we’ve seen this year, it’s likely you have some capital losses in your taxable investment accounts.  It might make sense to sell and offset them against any capital gains you’ve realized this year. Such losses can offset 100 percent of capital gains plus up to another $3,000 in ordinary income. Any losses in excess of that number can be carried forward to the next tax year.  Note: According to Morningstar.com a lot of mutual funds are expected to distribute capital gains to shareholders, despite funds being down 30-40%.  Check your mutual funds to see if you are expected to receive a capital gain distribution; if so, it might make sense to do some tax loss selling before the December distribution to avoid another taxable event.

Prepay property taxes: If your income is higher in 2008 than in previous years (or higher than your expected 2009 income), it might pay to accelerate deductions.  If so, make sure you pay your property taxes before the end of the year.  If you typically pay property taxes early in the next year, consider pre-paying those expenses so you can deduct them on your 2008 tax return.

Prepay state taxes: Again, if it makes sense based on your tax situation, consider making your fourth-quarter estimated state tax payment in December instead of in January so you can take the deduction on your 2008 return.

Defer income if possible: Self-employed people and some business owners might elect to invoice customers in January so they don’t have to include that income on their 2008 return. Keep in mind that it only makes sense to defer income if you think you will be in the same or lower tax bracket next year.

Plan a stock donation to charity: If you have stock with a large unrealized capital gain that you’ve held longer than a year (Okay, I realize most stocks didn’t have a gain this year, but if you have stocks you’ve held for a long time, it’s possible you still have a gain), you can give that stock to a qualified charity and claim a deduction for the current fair market value of the security. If you have a stock with an unrealized capital loss, do the opposite – sell the stock, claim the capital loss, then donate the resulting cash proceeds to charity. This is actually better than just donating cash, because you get the same deduction and never have to pay the capital gains taxes from the appreciated security.

Make sure donations are documented: As of January 1, 2007, you now must have a either a receipt or a canceled check to back up any contribution, regardless of the amount. If you don’t have such a written record, the IRS will reject the write-off if the lack of proper record keeping is discovered in an audit.

Charitable giving is an important part of tax planning at year-end, so let’s look at the cash and noncash aspects of giving. It makes sense to contact a tax expert or financial planner to talk about what giving makes sense for you:

You have to itemize: Only individual taxpayers who itemize their deductions on Schedule A can claim a deduction for charitable contributions. This deduction is not available to people who choose the standard deduction, including anyone who files a short form (1040A or 1040EZ).  However, there has been talk about allowing “above the line” charitable deductions, so I’m hopeful that this tax law will change soon.

Get out the checkbook: Uncle Sam likes a record. To deduct any charitable donation of money, a taxpayer must have a bank record or a written communication from the charity showing the name of the charity and the date and amount of the contribution – and it definitely helps to have both. Bank records mean canceled checks, bank or credit union statements and credit card statements. Bank or credit union statements should show the name of the charity and the date and amount paid. Credit card statements should show the name of the charity and the transaction posting date. For payroll deductions, the taxpayer should retain a pay stub, Form W-2 wage statement or other document furnished by the employer showing the total amount withheld for charity, along with the pledge card showing the name of the charity. If you remember the IRS being satisfied with personal bank registers or scribbled notes to document the donation, they’re not anymore.

There are charities, and then there are charities: You need to make sure that organizations are qualified to make tax-deductible contributions to. IRS Publication 78, available online and at many public libraries, lists most organizations that are qualified to receive deductible contributions, but there’s an online version too. Just go to IRS.gov and type in “Search for Charities.” One key exception — it’s important to note that churches, synagogues, temples, mosques and government agencies are eligible to receive deductible donations, even though they often are not listed in Publication 78.

Giving away property: If you give away property, including clothing and household items, get a receipt that includes a description of the donated property. If a donation is left at a charity’s unattended drop site, keep a written record of the donation that includes a description of the property and its condition. For any kind of vehicle, boat or airplane, the deduction is now limited to the gross proceeds from its sale. This rule applies if the claimed value of the vehicle is more than $500. Form 1098-C, or a similar statement, must be provided to the donor by the organization and attached to the donor’s tax return.  (Note: I have a valuation guide to help you assign values to clothing, furniture and other items typcially donated to charity.  Please email me if you’d like a copy of this guide.)

You can’t deduct junk: Under a provision of the 2006 Pension Protection Act, contributions of physical items must be in good used condition or better to qualify for a deduction. That means that you can’t deduct ripped or discolored clothing or appliances that don’t work. Also, if you donate noncash property that is valued at more than $500, you need to report to the IRS how and when you acquired the property and your cost basis. You must file Form 8283, Noncash Charitable Contributions, for all donations of property valued at more than $500.

Use that digital camera: If you’re ever audited, it helps to have photographs or video of these items along with your detailed receipt.  A good idea is to take pictures of the items you are donating and staple prints to your written record.

Learn rules about giving away appreciated securities: This is where a financial planner or tax expert would come in handy.  When you donate stocks or mutual fund shares you have held for more than one year, generally you may deduct the stocks’ current fair market value. Additionally, you avoid paying capital gains taxes on the appreciated value.

Donate your RMD to charity: The Pension Protection Act of 2006 allows IRA owners who are over age 70 1/2 to make direct transfers of up to $100,000 per year from their IRA to a charity. The provision became available for IRA distributions taken after Aug. 17, 2006 and originally only applied to distributions through the end of 2007, but has been extended for 2008 and 2009 thanks to the Emergency Economic Stabilization Act of 2008.  Distributions can be made from taxable funds in an IRA or Roth IRA, but not from employer plans or SEP and SIMPLE IRAs. The distribution will not be taxable and there is no charitable deduction allowed on the tax return.

November 2008 — This column is produced by the Financial Planning Association, the membership organization for the financial planning community, and is provided (and edited) by Kristine McKinley, CPA, CFP, a local member of FPA.

Similarly, if you’re investing for long-term goals such as retirement, you will encounter some market volatility, probably several times along your journey.  While you may be tempted to pull over and wait out the rough times, it will delay or may even prevent you from reaching your goals.

So what should you do when the road to investing gets bumpy?

Buy Low, Sell High:  The whole premise behind investing is to buy low and sell high.  You can’t do that if you pull out of the market or stop investing when the market goes down.  If you’re investing for the long-term, you should be glad when the market is down, because then stocks are “on sale” and you can pick up more shares at a lower price.  Who doesn’t love a good sale?

Diversify: One of the best ways to defend your portfolio against market losses is to have a portfolio that is properly diversified.  If you review the history of the stock market, you’ll see that the best performing assets vary from year to year and that it’s not easy to predict which asset class will perform well in any given year.  Therefore, by having a mix of asset classes, based on your risk tolerance, your goals and your timeframe, you are more likely to meet your goals.  In addition, having a mix of asset classes reduces your risk of loss, since you won’t have all of your eggs in one basket.

Rebalance Once a Year:  Just like keeping your car maintained, you should review and rebalance your portfolio once a year.  You should have an asset allocation that is right for your risk tolerance, goals and time frame.  Once a year, you need to review your portfolio to ensure that your assets are still allocated properly to meet your goals.  Doing this periodic maintenance will help ensure that your portfolio performs well on a long-term basis, and will help you reach your investment goals.

Stay the Course: When the market gets volatile, your best bet is to stay the course. If you pull out of the market when it’s down, you could do more harm than good.  In addition, if you pull out of the market with the intent of getting back in when the market recovers, you will likely miss the best days, months or even years of the market, which could result in a much smaller nest egg than if you had just stayed in the market.

It’s normal to be nervous when the market gets volatile, but it’s important to continue to follow your long-term investment plan so that you remain on the road to reaching your financial goals.

While you may not be able to make the market go back up or keep banks from failing, there are steps you can take to make your finances as strong as possible in these tough times:

1.  Fund your emergency fund.  It’s more important than ever to have an emergency fund, in case you lose your job, have unexpected medical expenses, or have a major house repair, so that you don’t have to sell investments (while they’re down), or rack up credit card debt.  The general rule of thumb is to have three to six months of living expenses set aside for emergencies.

2.  Reduce debt.  If you have high interest credit card debt, the greatest return you can get right now is to pay off that debt.  Start by calling your credit card companies and asking for a lower interest rate (if you have a good credit score, you could get your rates down to 8-12%, which is much better than paying 20+ percent).  Then make the minimum payments on all of your credit cards except the highest interest rate card until paid off.

3.  Review your spending.  I’m always amazed at how many people have no idea where their money is going each month.  How can you reach your goals if you don’t know where your money is going?  If you aren’t already doing so, now is a great time to start tracking your spending using a software program (such as Quicken) or even spreadsheets that you create on your own.

4.  Increase your retirement contributions.  Many people panic and stop investing in their 401Ks or other retirement accounts when the market is down.  When the market is down is actually the best time to invest.  Remember “buy low, sell high”?  Well, the time to buy low is when the market is down!  Make sure that you are investing in a diversified portfolio that meets your risk tolerance, time frame and goals, and that you rebalance once a year.

5.  Refinance your mortgage or other debts.  Interest rates are at historical lows, so why not take advantage of these low rates to do something good for your checkbook?  Remember, you will pay closing costs anytime you refinance, so it’s best to refinance if you expect to be in your home for five years or more and only if you can get your interest rate reduced 0.75-1.0%.

6.  Check your credit report at least once a year.  With the rise in credit card fraud and identity theft, it’s crucial that you check your credit report periodically.  You should check your credit report at least once a year, but 2-3 times per year would be even better.  To check your credit report for free (doesn’t include your credit score) go to www.annualcreditreport.com.

7.  Review your insurance coverage.  Check your car, home, life and health policies to make sure you have the right coverage at the right price.  The last thing you want to do in a recession is to incur a financial loss because your insurance isn’t up to date, and you might even save a few dollars by raising your deductible or by discovering discounts that you are entitled to.

8.  Finally, turn off the news!  A CNBC reporter said it best, on one of the many volatile days we’ve experienced this year… “If you’re invested for the long-term, turn off the news, it doesn’t affect you today”.

Thankfully, there are safety measures in place for various types of accounts and investments.  Here is a rundown of the different safetynets in place for each type of account or investment you may have:

Banks:  Bank deposits are ensured by the Federal Deposit Insurance Corporation (FDIC).  Basically, the FDIC insures deposits up to $100,000 per owner, per bank.  If you have $100,000 or less in your name at any FDIC-insured bank or savings association, you have nothing to fear.   Since the limit is per owner, that means you could actually have more coverage than you think (for example, if you and your spouse have a joint account with $300,000 at one bank, $200,000 is insured – $100,000 for each “owner”).

In addition, if you have certain types of retirement accounts, such as an individual retirement account, you’re eligible for even more coverage – up to $250,000 per owner, per bank.  However, the FDIC does not insure money invested in stocks, bonds, mutual funds, life insurance policies, annuities and municipal securities, even if you bought those investments at an FDIC insured bank.

If you want to make sure that your deposits are below the FDIC limits, please visit EDIE The Estimator.   EDIE the Estimator can calculate your FDIC insurance coverage for each FDIC-insured bank where you have deposit accounts.

Credit unions have similar coverage through the National Credit Union Administration (NCUA).

Mutual Funds and Brokerages:  Some investors are wondering what would happen in the event that the mutual fund or brokerage company they hold their investments at would fail.  The funds that you own at a mutual fund company or a brokerage account are separate from the company’s assets.  So in the event of a company failure, your assets would not be liquidated to pay the company’s debts.  If the mutual fund or brokerage company failed, your assets would just be transferred to another brokerage company.

However, if any of your assets come up missing, whether it’s due to company failure, fraud or poor recordkeeping, you are protected.  The Securities Investor Protection Corporation (SIPC) is a non-profit corporation that protects investors if a broker/dealer defaults.  Investors are protected up to $500,000 per account, per brokerage company.

Note that the SIPC doesn’t cover all investments.  Some that aren’t covered includ annuities, commodity futures contracts, foreign currencies, limited partnerships and precious metals.  Also, the SIPC isn’t providing protection against market losses or bad investments. The purpose of the SIPC is to replace securities that are missing from customer accounts, up to the limits of its coverage.

Now that you are aware of the limits, both at banks and brokerage or mutual fund companies, the best way to protect yourself is to make sure that you are not above the insured limit at any of the financial institutions you do business with.  If you are, you may need to open different ownership type accounts or open new accounts at different institutions to ensure that your money is safe.  In addition, not all CDs and deposit accounts are FDIC insured.  Before you purchase an investment, make sure it is covered by the appropriate agency, and do your research to determine if you are investing with a reputable company.

(Lee’s Summit, MO) February 24, 2008 – After concluding their tax preparation activities, many people will see that they are entitled to a refund from Uncle Sam. “Whether you refund is large or small, you are wise to determine now what you will do when that check arrives,” says Sheryl Garrett, CFP®, author of Personal Finance Workbook For Dummies® (Wiley, November 2007) and founder of the Garrett Planning Network (www.GarrettPlanningNetwork.com). “Don’t fritter it away or spend it on a whim.”

On a recent teleconference, network members brainstormed thirteen ways taxpayers can put this “found money” to work:

1. Put the entire amount, up to the maximum allowed by law ($4000 for an individual in 2007 unless you are age 50+, then the maximum contribution is $5000; $5000 for an individual in 2008 unless you are age 50+, then the maximum is $6000), into a Roth IRA assuming your income falls below the government thresholds (the phase out for singles in 2007 is $99-$114,000 and in 2008 it’s $101-116,000; for married couples in 2007, the phase out is $156-166,000 and in 2008, it’s $159-$169,000).

If you are saving for higher education funding needs, withdrawals of regular contributions to a Roth IRA are not subject to tax or penalty and can be made at any time, and you can take a “qualified distribution” (one that is made after a 5 year holding period, beginning on the first day of the first year for which the contributions were made), if one of the following applies: (1) you are a first-time home buyer, (2) you are age 59 1/2 or older (3) the distribution is due to death or disability. If your earned income for 2007 is higher than the phase-out thresholds, put your “found money” into another qualified retirement plan such as a 401(k), 403(b) or 457 plan if your employer offers one. Consider contributing to a traditional IRA if you have maxed out contributions to your employer-sponsored plan or if a Roth IRA is not an option.

2. Give the money to charity and you can claim that amount as a tax deduction on your 2008 tax return, if you itemize using Schedule A of Form 1040

3. Sign up with www.kiva.org and provide micro-loans to budding entrepreneurs in third-world countries. If you’re feeling especially patriotic, you might consider investing in small business start-ups in the US, for instance: helping a relative by providing seed money for a local venture.

4. Start a tax-sheltered 529 college savings plan to fund your own or children’s/grandchildren’s educations. Consider funding an Education Savings Account (ESA), formerly called a Coverdell account, if you plan on paying private school tuitions through secondary school. (Coverdell phase outs in 2007 and 2008: Single- $95-$110,000; Married Filing Jointly – $190-$220,000)

5. Check that you have adequate insurance coverage on the following types of policies: property and casualty, life insurance, health insurance, long-term care and disability insurance. Use the tax refund money to pay the premiums.

6. Use the refund money to engage the services of an attorney. If you don’t have a will then have one drawn up. Without a will issues such as child guardianship and disbursements of assets will not be decided by you, but rather the laws at the time. For high net worth families, make sure your estate plan is up to date.

7. Use the money to purchase stock mutual funds at lower prices. Some funds offer lower initial purchase amounts, especially for IRA’s, or even lower if automatic transfers are made from your bank account or paycheck. While the market has been gyrating wildly, there’s never been a better time to invest. If you have cash sitting on the sidelines, you may miss the next market upswing. Time in the market matters more than trying to time when to get into the market. If you are investing for the long-term, you can’t afford not to be invested in stocks. Remember the old adage, “buy low and sell high.” Stock prices are low right now. Consider international as well as domestic opportunities.

8. If you have credit card debt, pay off as much as possible. For free credit reports go to www.annualcreditreport.com (the only authorized source for free credit reports). Use part of the money to obtain your FICO score from this site(the rating that shows how credit worthy you are). Correct any misreported items and work to keep your credit reports clean. Make your payments on time and don’t take on more debt than you should. Try to live within your means. Get help at the Consumer Credit Counseling center.

9. Mortgage interest rates are the lowest we’ve seen in years. If you have a good credit score, now is a good time to refinance your first mortgage and/or to wrap our Home Equity Line of Credit (HELOC) or second mortgage into a more attractive home loan. Consider a 15-year loan to accelerate the payout. Get out of variable loans now. Use your “found money” to pay points and loan costs.

10. During economic slowdowns, including a recession, job losses and/or business declines are inevitable. Take a course, add to your credentials and consider how you can improve your skill set to make yourself as attractive as possible in the marketplace.

11. Schedule your annual check ups with your doctor and your dentist. Use the tax refund money to pay the deductible and co-payments. Join the YMCA or the local health club, consult with a nutritionist, or buy a piece of exercise equipment (and be sure to use it!). Without your health, wealth is not important.

12. Schedule a financial check up for yourself. Annual trips to the dentist, the doctor – and your financial planner – are wise investments. A professional financial adviser can help you see tax loss harvesting opportunities, assess investment options, analyze insurance coverages, and plan for a secure retirement.

13. Purchase a gift certificate, for a set amount of professional financial advice, for a loved one. If you can’t afford or don’t want to pay for a complete financial plan, find a financial planner who works by the hour and will render as much help and advice in the time allotted by visiting www.GarrettPlanningNetwork.com.

About The Garrett Planning Network, Inc.

What: An international network of independent professionals who offer financial planning and advice on an hourly-as-needed, per-project and/or retainer basis. No commissions or third-party compensation is allowed. Now anyone regardless of income or net worth can hire an independent financial planning professional to help them make better financial decisions.

Network Founder: Sheryl Garrett, CFP® — author of several financial planning and investment books including her latest, Personal Finance Workbook For Dummies® (Wiley, November 2007). Recipient of numerous industry awards. Profiled in hundreds of national publications including Wall Street Journal, New York Times, Kiplinger Personal Finance, MONEY magazine and multiple times on the TODAY show, Bloomberg TV and Fox News affiliated stations. Named four times to Investment Advisor magazine’s annual list of the “Top 25 Most Influential People in Financial Planning.”

Headquarters: Shawnee Mission, Kansas (Kansas City metropolitan area)

Year Founded: 2000

Contact: (866) 260-8400 or info@garrettplanning.com

Web: www.GarrettPlanningNetwork.com

Membership Guidelines: Members pay an annual licensing fee in exchange for network training, support and participation. Members also must be CERTIFIED FINANCIAL PLANNER™ certificants or actively working toward that status, independently registered in the state in which they practice or with the U.S. Securities and Exchange Commission, and adhere to a strict code of conduct, ethics and compensation.

Number of Members: Approximately 300 across the United States and overseas, including Lee’s Summit, MO based Kristine McKinley.

Located in Lee’s Summit, Missouri, Kristine McKinley,CPA, CFP®, is a member of the Garrett Planning Network. Her firm is also a member of the National Association of Personal Financial Advisors (NAPFA) and the Financial Planning Association. Ms. McKinley offers a complimentary, no-obligation Get Acquainted meeting to discuss her services and help potential clients determine if there is a good fit. More information can be obtained at www.beacon-advisor.com, by phone at 816-739-4853 or by email at kristine@beacon-advisor.com.

Why you should check your credit report

• to check for errors
• to check for fraud and identity theft
• to get the best interest rates
• more and more people are relying on credit scores – car insurance, employers, etc.

When to check your credit report:

• Once a year if you have good credit and don’t anticipate any large purchases in the near future
• Before a major purchase, such as a new home, new car, etc. – should request your credit report 6 months ahead of a big purchase so you have time to correct any errors
• If you’ve been denied a credit card, loan or other product or service because of your credit (you are entitled to a free credit report if you have been denied credit based on information found in
  your report)
• If you suspect that your identity has been stolen
• If you are starting a plan to get out of debt or repair your credit.

How to check your credit:

There are three credit reporting agencies (Equifax, Experian and TransUnion), and they are required to provide you with one free credit report each year. The three agencies do not always share the same information, so it’s important to check all three.

You can order all three credit reports at one time, but it may be a better idea to check one company one month, wait a few months, then check another company, then the third company a few months later.
This way you are getting three free credit reports a year, and you are checking several times a year, so you are more likely to catch errors and/or fraud.

Go to www.annualcreditreport.com to request your free credit report online. This is the only authorized source for consumers to check their credit report online for free. There are commercials and websites for other companies who claim to offer your credit report online for free, but they are generally selling a service or they are a scam.

In addition, you can call 1-877-322-8228, or you can write for your free credit report at: Annual Credit Report Request Service, PO Box 105281, Atlanta, GA 30348-5281.

Finally, you can purchase a 3-in-1 report, which is basically getting all three reports from each of the credit bureaus. This is a good idea if you have never requested your credit report before, or if you suspect fraud. You can purchase your 3-in-1 credit report at www.myfico.com.