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INVESTING Powered By Docstoc
					Retirement Advisor
A monthly resource for protecting your income
October 2009

By Your Name, Editor

INVESTING                                                   percent of your gross salary to be earmarked for
                                                            saving and investing. But the most effective version
Spending Vs. Saving in a Down Economy                       requires 30 percent.
                                                                 The first 10 percent should be placed in liquid
     n terms of financial disciplines, saving and           accounts (short-term savings). This should be the top

I    investing are frequently lumped into the same
     category. But some experts say they are very
     different disciplines. Understanding the
differences between the two is the key to future
                                                            priority and should be maintained at a level equal to at
                                                            least three months of take-home salary. Short-term
                                                            savings are for emergencies, vacations and other
                                                            expenses that people usually put on credit. Another 10
financial security.                                         percent should go into IRAs, 401(k)s or other
     The relationship between saving and investing is       retirement vehicles, and the remaining portion should
critical. When an individual fails to save, then he or      be set aside for investing.
she has no resources to invest. Saving is the art of             But even the 10%-10%-10% strategy is called a
building a strong foundation for our personal financial     good starting point. In fact, most people need to set
structure, according to financial expert Patrick            aside at least 15 percent of their pretax salary for their
Catania. It is the discipline to control spending in        investments to replace 50 percent or more of their
order to allow for money to be set aside for future         current salary in retirement, according to one study.
needs.                                                      And that is based on the assumption that Social
     Investing is putting savings to work. Unlike           Security and pension payouts will provide an extra 20
saving, which requires only the will power to set aside     percent or more of their preretirement income.
a portion of each paycheck for the future, investing is          Ultimately, the best allocation strategy for
a more complicated task. It involves knowing the            financial security and growth depends on the
various investment products available on the market         individual’s unique situation.
and which ones match a particular financial objective
(buying a house, funding a college education or early
retirement).                                                TAX AND LEGAL
     It also requires understanding one’s investment
horizon and risk tolerance. Whereas saving is a do-it-      Tax Breaks for Jobseekers
and-forget-it deal, investments must be regularly
monitored and adjusted to ensure maximum growth                         ith climbing unemployment rates, an often-
and minimize losses.
     There are many rules of thumb when it comes to
allocating money for saving and investing. Many
personal financial experts recommend systematically
                                                             W          overlooked tax break can provide some
                                                                        financial relief for many jobseekers. The
                                                                        IRS treats job-hunting expenses as tax
                                                            deductible under certain circumstances.
putting away a specified amount — a dollar amount or            These expenses include local and long-distance
a percentage of income — every month or each pay            phone calls made to prospective employers; the costs
period, even before paying bills, taxes and deductions.     of preparing, copying and mailing resumes; and
This strategy is commonly known as the Pay Yourself         airfare, mileage, meals and lodging related primarily
First approach and often suggests starting with 10          to searching for a job. Trade, business or professional

                                 Your Company Name * Address * City, State, * Zip
licenses and regulatory fees, and employment agency,         response is to put pressure on the insurer. They
career counseling and other related legal fees also may      suggest that patients should enlist the help of their
qualify as tax write-offs. These tax breaks also apply       doctor in providing the reasoning for why the
to currently working employees looking for better            procedure was performed. If this doesn’t help,
opportunities. Jobseekers can claim these tax                consumers also can enlist the help of their employer’s
deductions whether or not they land jobs.                    benefits department.
    However, there are several IRS restrictions that              Treatments that are deemed “experimental” and
can invalidate these tax breaks. One condition is that       therefore not covered are another gray area. Many
jobseekers must look for work in the same field in           policies can be ambiguous about which treatments are
which they are employed or that is similar to their          classified as experimental and which are standard.
most recent job. For instance, a computer programmer         This is where the attending physician who ordered the
who lost his job and is applying for work at another         treatment becomes a major player. He or she should
high-tech company can file those deductions. He is           help the patient to justify these treatments.
not allowed to do so if he decides to pursue a career in          In one case, an insurer refused to pay for a
a totally different industry. However, a person              migraine sufferer’s stay at the Mayo Clinic because
temporarily working in another field in order to pay         the treatment the patient required was ruled
the bills can legitimately make those claims while           experimental. The insurer reversed its decision after
looking for a job in his or her own field.                   the doctor proved that the treatment he ordered was
    Another condition for employment-search costs to         considered routine in 49 other states.
be valid is that there should not be a “substantial               Another basis for claims denial is that the
break” between the last job and when a person starts         insured’s doctor’s charges are too high and exceed the
looking for a new one. First-time job hunters also are       “usual and customary” fees for the service in an area. \
disqualified from these tax deductibles, except for          Patients should call their doctor’s billing manager and
new grads with college internships or valid jobs while       find out how much other insurance companies have
in college.                                                  paid for the same procedure. This will effectively
    It is important to keep a careful log of all             counter an insurer’s judgment.
expenses, mileage, receipts and records of money paid             In some cases, multiple procedures may have been
directly related to job hunting. They are classified as      billed as a single procedure, making it appear
miscellaneous itemized deductions on line 21 of              excessively expensive. Clarifying the bill often can
Schedule A.                                                  rectify the situation and force the insurer to pay up.
    The miscellaneous itemized deductions, which can              If an insurer turns down a written appeal,
be added to other miscellaneous deduction items like         consumers have a right to a formal meeting with the
tax-preparation fees and investment expenses, must           insurance company. If that fails, the Patient’s Right to
exceed 2 percent of the taxpayer’s adjusted gross            Independent Review Act of 2000 gives consumers the
income. For many jobseekers who took a pay cut or            option of initiating an external review of the situation
have been out of work, these tax write-offs can give         through the state appeals office.
them a much needed break.                                         Generally, the success rates for insurance appeals
                                                             are 70 to 80 percent, according to Connecticut-based
                                                             Advocacy for Patients With Chronic Illness.
HEALTH AND WELL-BEING                                        Additionally, most insurance companies are willing to
                                                             work with consumers on claim denials, said a
Fighting a Denied Health Claim                               representative of AHIP, which represents about 1,300
                                                             health insurance providers.
          bout 10 to 15 percent of claims are denied

A         across all types of medicine, and not all of
          them should have been refused. So
          consumers should not give up easily when
their legitimate claims are initially limited or
                                                             The legal and tax information contained in these articles is
                                                             merely a summary of our understanding and interpretation of
                                                             some current provisions of tax law and is not exhaustive. Consult
dismissed.                                                   your legal or tax advisor for advice concerning your particular
    Sometimes an insurer may rule a medical                  circumstances.
procedure “unnecessary.” Experts say the correct

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