PERSONAL FINANCE

Senior divorce seriously dents retirement plans

The number of divorces among people age 50 and older doubled from 1990 to 2010 creating problems for everyone involved. The pool of money that was going to fund retirement for a couple will be split in half. And retirement will cost more for two people living in separate homes.

Joe Duran, financial planner and author of The Money Code, says it will cost at least 50 percent more to retire for Boomers who divorce. They will have to delay retirement or reduce their current lifestyle spending.

Some recommendations:

• Hire a financial planner when you hire a divorce lawyer. He or she can work together with both parties to a divorce to ease the divorcing couple into retirement.
  
  
  
• If you divorce at age 50, you could work another 20 years or more to rebuild savings and investments.
  
  
  
• Don't try to support your adult kids. It's usually not possible. Tell them up front that you can't pay for a big wedding or a down payment on a house.
  

Susan Brown, a professor of Sociology at Bowling Green University and author of The Gray Divorce Revolution, says that today we have higher expectations for what constitutes a successful marriage than previous generations did, so gray divorce is probably here to stay.

Five factors that may raise your insurance premiums

When buying auto, home, life or health insurance, an insurance company calculates your premium based, in part, on some of these Six factors:

1. Your credit score. Actuaries have found that people with low credit scores tend to have more car accidents so they charge them more for car insurance. Some states, like California, don't permit the practice.

2. Your home's claim history. Companies check homeowner claims for the previous seven years when determining a premium for homeowner's insurance. If your home flooded before, for example, insurance companies presume it will happen again. The premium will be higher.

3. Your car's horsepower. If you bought a six cylinder car rather than a four- cylinder model you'll pay more for car insurance. Get a rough estimate of insurance costs for more than a thousand vehicles at kiplinger.com/guides/cars.

4. Your driving record. Moving violations can affect the rates you will pay for life and health insurance in addition to car insurance. More than two moving violations in the past three years is a typical cutoff for the best rates. At AccuQuote.com, they say some insurers permit three moving violations but others allow only one.

Your driving record can even affect health insurance. Some health insurers will reject you if you've had a DUI within the past three or five years, according to Kiplinger's Personal Finance.

5. Your co-workers. If you get company health insurance the cost is based on the average risk for the group of employees. This will change next year because of the health care law.

If your colleagues are older and prone to illness, you'll pay more. In this case, if you are a young person with few health problem you might be better off getting health insurance on your own. Get price quotes at HealthInsurance.com and a list of polices in your area at HealthCare.gov.

How to pay off credit card debt and save Interest by reducing W-2 withholding

Do you look forward to getting a big income tax refund? For many people it's the largest lump sum they will get during a given year. According to the National Foundation of Credit Counseling, people often say it's the only way they can save, and if so, they say go ahead and do it.

But it's still an interest free loan to the government. Though many will use the refund to pay down debt, the NFCC says there are better ways to use your money on a month to month basis. For example, say you have a credit card balance of $5,000 that charges 14 percent interest. If you pay the minimum monthly payment of $125, you will have paid $6,774 by the time you pay it off.

The credit card calculator at Bankrate.com (or www.irs.gov) shows it will take 213 months to get rid of the debt if you make minimum payments. If you adjust your W-4 withholding so you don't get a refund, using the same example, you could add $250 to the $125 for a total monthly payment of $375. In one recent year, the average refund was $3,000, or $250 per month.

Paying the $375 it will take just 15 months to pay off the debt. The total cost will be $5,467 resulting in a saving of $1,300. You pay off the debt by using your own money instead of making a loan to the government that results in a big payment once a year...as your credit card interest charges grow.

© 2013 TLC Magazine Online, Inc.