MONEY AND PERSONAL FINANCE

Moneywise

Internet phone service advertising is coming

If you think popup ads on the Internet are annoying, wait until you hear an advertisement before your Internet phone service connects to the number you called.

The Internet service Jajah is one of the first. Instead of connecting to your party, it plays you a 15 second ad before dialing the number. The service promises discounts to customers who agree to the "opt-in" service.

Long-distance carrier IDT already plays short ads before it connects some international calling cards.

The "in call advertising" industry is eager to take advantage of a few sellable seconds on your phone. Ad execs say the spots will be targeted to callers' interests, but they don't say how they know what your interests might be.

Term life insurance to cover a mortgage balance

Some homeowners whose mortgage is not covered by private mortgage insurance (PMI) take out a term life insurance policy to protect their families.

According to The New York Times Real Estate Q&A, laddering such policies could be a money saving step.

For the first 10 years of a $300,000 mortgage, the policy would be for $300,000. For the second 10, a policy would be for $200,000, and for the last 10 years, it could be for $100,000.

Considering the low rates being offered on $500,000 term life policies, however, a young person in good health might do better with one of those.

Coupon fantasy

If you have been chiding yourself for not cutting coupons so you can save at the grocer's, the Food Network's Dave Lieberman has some comforting news for you. He says most coupons are used to promote new, more expensive items you wouldn't otherwise buy.

Decide if the coupon is for something you really need.

Those who retire early but live long lose a bundle in Social Security benefits

Only about 5 percent of retirees wait until full retirement age to claim Social Security benefits.

Retiring early can cost dearly, according to the Social Security Administration (SSA), especially if you live a long time.

The SSA calculates that retirees who live to age 90 would lose $39,000 in benefits if they retire at age 62.

Some financial analysts say retiring early would cost far more because of the cost of-living increases that boost Social Security checks. They figure the loss would be $83,000 for those who take benefits at 62 and live to age 90 and nearly $149,000 for those who live to age 95. The reason: Cost of living adjustments would apply to larger sums if a person retires at age 66.

Age 77 is the SSA's estimated break even point. If you think you will die before age 77, retire early. If you think you will live past age 77, delay retirement as long as possible.

People are, in fact, living longer. There is a 41 percent chance that a 62 year old woman will live to age 90. A 62 year old man has a 29 percent chance.

For a married couple, there's a 58 percent chance that one of them will live to age 90, and a 29 percent chance that one will reach 95.

If you don't think you'll live very long, taking benefits early could hurt your spouse. A married beneficiary can continue receiving his or her own benefits or the deceased's benefit, whichever is more. So spouses who take benefits early also reduce the amount the surviving spouse could receive.

People who want to retire early and can afford to live on their retirement savings until age 66 may also save on income tax.

Married couples with $32,000 in combined income face income tax on half of their Social Security benefits.

The state or the store gets the money if you don't

Use your gift card

In cartoons, we see rich people lighting their cigars with a $20 bill or even a $100 bill. They have "money to burn," but the friend or relative who gave you a gift card probably doesn't.

Not using the gift card is almost the same as burning money, but this year $8 billion in gift cards bought in 2007 have not been redeemed. Though no one has the exact total, this estimate was made by researchers at TowerGroup of Needham, Mass.

In a few cases (very few) gift card money is returned to the purchaser after up to one year, less some significant service charges.

What happens to the rest depends on individual states. About half of all states say all or at least part of the unspent balances should go to them under unclaimed property laws. New York claimed $19 million in three years.

Other states let the unclaimed money ultimately go back to the stores. Those that allow it have a number of conditions that stores must meet.

Retailers would rather have the card recipients spend the face value of the card as soon as possible. They can't claim the revenue from selling it until the customer uses it.

In any case, not using a gift card shows disrespect for the giver. You should not only use the card but call or send a note telling what you bought.

Not using it or letting the card expire is a mistake financial analysts say is "not valuing all money equally." Would you pick up a $20 bill from the sidewalk?

© 2015 TLC Magazine Online, Inc.