Too Many People Are Making This Social Security Mistake - The Motley Fool

You pay into Social Security throughout your working life and you understandably can't wait to start getting money back from the program when you're older, but too many people rush to sign up for benefits as soon as they turn 62 without considering the consequences. This might be the best move for some people, but if you expect to live into your late 80s or 90s, you're shortchanging yourself by signing up as soon as you're eligible.

When you begin claiming Social Security affects your benefits

You become eligible for Social Security at 62, but you don't have to start claiming benefits right away. In fact, during so could hurt you in the long run. The Social Security benefit formula bases your check size on your average indexed monthly earnings (AIME) during your 35 highest-earning years. But if you'd like to receive this amount, you must wait until your full retirement age (FRA) to begin claiming. This is 66 or 67 for today's workers. 

Image source: Getty Images.

Every month you claim benefits before your FRA, your checks decrease. If you begin right away at 62, you'll only get 70% of your scheduled benefit if your FRA is 67 or 75% if your FRA is 66. To put that in perspective, let's consider the average Social Security benefit check, which is $1,472 per month as of July 2019. If you were entitled to this at 67 and you begin claiming benefits at 62, you'd only get $1,030 per month. 

Your checks don't increase once you hit your FRA, so by starting early, you're permanently reducing the amount you receive over your lifetime. Let's return to our previous example. If you started Social Security at 62 and received $1,030 per month, that comes out to $12,360 per year. If you claimed benefits for 30 years -- which is not unreasonable, considering the Social Security Administration estimates that one in three 65-year-olds today will live past 90 -- you'd receive $370,800 over your lifetime. If you'd waited until 67 to claim benefits, you'd receive $1,472 per month, or $17,664 per year. Assuming the same life expectancy, you'd only claim benefits for 25 years in this scenario, and that adds up to $441,600. If you live even longer, the differences between the two amounts grow even more.

There's a third option we haven't discussed yet and that's delaying retirement benefits beyond your FRA. Doing so will increase your checks until you reach the maximum benefit at 70. This is 124% of your scheduled benefit per check if your FRA is 67 or 132% if your FRA is 66. If you intend to live a long life, this is probably the way to go if you want the most benefits.

How to decide the right time to start claiming Social Security

Claiming Social Security at 62 could be the right decision if you don't expect to live long, but you won't know until you estimate your lifetime benefit at different ages. Rather than working with averages like in the example above, create a my Social Security account so you can get personalized estimates of your benefits at 62, your FRA, and at 70. Estimate your life expectancy and figure high to be safe. Then, multiply your benefit estimates by the number of months you expect to receive benefits to figure out which starting age gives you the most overall. 

Waiting is usually better if you think you'll have a long life, but even if you'd like to wait, you may not be able to afford to. Delaying benefits places a greater burden on you in the early years of your retirement because you must cover all of your expenses on your own. You must weigh this as well and you may have to start benefits a little earlier than you'd like to help you cover your living expenses.

Another option for couples is for the lower earner to start claiming benefits right away at 62. This enables the higher earner to delay benefits until 70 when they'll receive more per month. The lower-earning spouse will automatically be switched over to a spousal benefit at this point if it's higher than what they're entitled to based on their own work record. This works well if one spouse makes significantly more than the other. If both spouses earn about the same, it makes more sense for both to delay benefits as long as possible.

Taking Social Security benefits at 62 isn't inherently wrong, but doing so without understanding the consequences of your choice could result in you losing out on tens of thousands of dollars over your lifetime. Choose your starting age carefully so you can get the most out of Social Security and ease the strain on your personal savings.

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2019-09-08 12:05:00Z
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3 Stocks to Buy With Dividends Yielding More Than 6% - Yahoo Finance

One definition of yield is to give up something. That definition is important to keep in mind when you're looking at high-yield dividend stocks. Always ask the question: What am I giving up to get that high yield? In some cases, the trade-off of a high-dividend yield is a higher risk that the stock could plunge or that the dividend itself could be in jeopardy.

But there aren't horrible trade-offs with all high-yield stocks. Three stocks I think you can buy right now with dividends yielding more than 6% are AbbVie (NYSE: ABBV), Enterprise Products Partners (NYSE: EPD), and Iron Mountain (NYSE: IRM). Here's what you need to know about these promising income picks.

Businessman drawing a line going up on a chalkboard beneath the word yield.

Image source: Getty Images.

1. AbbVie

AbbVie's dividend currently yields 6.5%. The company earns the distinction of being a Dividend Aristocrat thanks to its years of being part of Abbott Labs. Since being spun off from Abbott in 2013, AbbVie has boosted its dividend payout by an impressive 168%.

To be sure, AbbVie's dividend yield has been inflated by the stock's dismal performance over the last year. Investors have been worried about the future for AbbVie's top-selling drug, Humira, which already faces competition from biosimilars in Europe and will have biosimilar rivals in the larger U.S. market beginning in 2023.

However, AbbVie's valuation is now so low -- shares trade at less than seven times expected earnings -- I think it has a downside cushion. More importantly, the company has plenty of arrows in its quiver to help offset the revenue declines for Humira.

The biggest of those arrows is AbbVie's pending acquisition of Allergan, the maker of blockbuster drug Botox. AbbVie also recently won U.S. regulatory approvals for two new immunology drugs, Rinvoq and Skyrizi, that are expected to be huge winners. Market researcher EvaluatePharma ranked both drugs in its top five new products of 2019. AbbVie's existing drugs Imbruvica, Venclexta, and Orilissa should generate significant growth as well.

2. Enterprise Products Partners

Enterprise Products Partners offers a dividend yield of nearly 6.2%. The company focuses primarily on natural gas, natural gas liquids (NGL), and oil pipelines and storage facilities. These businesses generate a strong cash flow that should allow Enterprise Products Partners to keep the dividends flowing -- and likely growing.

It's encouraging to see a company that can thrive when many of its peers struggle. That's been the case for Enterprise, which has flourished in recent quarters while other midstream oil and gas companies haven't. One key to the company's success has been to slow its dividend distribution growth to fund more expansion projects. 

Despite Enterprise's solid stock performance in 2019, the stock is still a bargain. Shares trade at only 12.3 times trailing-12-month earnings and 12.6 times expected earnings.

There's a lot of volatility in the oil and gas industry that could impact Enterprise Products Partners. But with its investments in new projects, the company should be well-positioned for the future.

3. Iron Mountain

Iron Mountain is organized as a real estate investment trust (REIT), which means the company is required to distribute at least 90% of its taxable income to shareholders through dividends. And it's distributed plenty of money to shareholders thanks to strong earnings growth in recent years. Iron Mountain's dividend yield currently stands at a sky-high 7.4%.

The company isn't your typical REIT that focuses on retail, office, or housing properties, though. Iron Mountain reigns as the largest owner of data and records storage facilities in the world. It has also expanded into other types of properties to drive growth such as data centers.

If I could use only one word to describe Iron Mountain's business model, that word would be "solid." Iron Mountain's customer base includes 950 of the Fortune 1000. But it's not just large customers that use the company's storage facilities; Iron Mountain has around 225,000 customers across the world. These customers have little incentive to move their data and records to another provider, so Iron Mountain can count on a steady and reliable revenue stream.

Iron Mountain does face some risks. When interest rates rise significantly, REIT stocks tend to suffer. Iron Mountain has taken on a lot of debt to fund its expansions, so its interest expenses could especially rise if interest rates move higher. But I don't consider these risks overly worrisome. Neither does credit rating agency Moody's, which stated in June that Iron Mountain's "leverage and coverage metrics are considered solid relative to similarly rated companies and REIT peers." Like I said, Iron Mountain is solid.

More From The Motley Fool

• 10 Best Stocks to Buy Today
• The $16,728 Social Security Bonus You Cannot Afford to Miss
• 20 of the Top Stocks to Buy (Including the Two Every Investor Should Own)
• What Is an ETF?
• 5 Recession-Proof Stocks
• How to Beat the Market

Keith Speights owns shares of AbbVie. The Motley Fool owns shares of and recommends Moody's. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy.

This article was originally published on Fool.com

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2019-09-08 11:00:00Z
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How One Family Fell Into—and Dug Out of—an Insurance Scandal - The Wall Street Journal

By

Miho Inada and

Miho Inada
The Wall Street Journal
• Biography
• miho.inada@wsj.com

Megumi Fujikawa

Megumi Fujikawa
The Wall Street Journal
• Biography
• @megumifujikawa
• megumi.fujikawa@wsj.com

Sept. 8, 2019 5:30 am ET

Keijiro Nawata’s mother, Yaeko Nawata, who suffers from dementia, was sold multiple insurance policies by government-controlled Japan Post. Photo: Ko Sasaki for The Wall Street Journal

SANYO-ONODA, Japan— Keijiro Nawata, a 38-year-old truck driver, had finished the day’s deliveries and was changing his truck’s oil in the shop one day in June last year when an uncle called saying something was wrong. Mr. Nawata’s mother had received a letter urging her to pay $3,600 in overdue life-insurance premiums, the uncle said.

Mr. Nawata immediately called the insurance office and set up a meeting for the next day, where the news got worse. He discovered that salesmen had persuaded his mother, who suffers from dementia, to take out a dozen policies costing her $2,400 a month—twice her income. She had even been induced to get a $7,000 bank loan to cover payments when she ran out of money.

The company selling all those policies was no fly-by-night operator. It was government-controlled Japan Post Holdings Co. , one of the world’s largest financial groups, with trillions of dollars in assets.

“I couldn’t believe it, because I had absolute trust in the post office,” said Mr. Nawata as he showed the pile of contracts with his mother’s shaky signature. “This is very much like the work of gangsters.”

What happened to 71-year-old Yaeko Nawata and tens of thousands of other Japan Post policyholders has now ballooned into the biggest scandal since the company’s partial privatization a decade ago and highlighted the pressure that rock-bottom interest rates may be putting on institutions around the globe.

The family sifted through stacks of papers, noting each policy and each payment. Photo: Ko Sasaki for The Wall Street Journal 

When longer-term rates are negative—as in Japan and parts of Europe, including Germany—it is hard to profit from the difference between short-term and long-term rates, the bread and butter of banks and insurance companies. The U.S. is also experiencing near-record-low interest rates that some economists believe may last for years.

Japan Post said that over the past five years, it sold some 183,000 policies that may have gone against customers’ interests. The company is conducting an internal investigation of the matter.

Japan Post’s core life-insurance products are more like savings plans because they promise returns to policyholders even while they are living. When interest rates were 5% or 6%, Japan Post could offer attractive plans simply by investing in government bonds and letting the interest compound for decades. Today, savers might do as well stuffing their money under a mattress.

“Because of low interest rates, savings-style insurance is not very popular,” Japan Post Holdings President Masatsugu Nagato said at a news conference July 31.

“It’s now very hard” to sell policies, said Masahiko Suzuki, who has worked as a salesman for three decades at a central-Japan post office. Elderly people, he said, have good memories of the days when the products were more attractive, “so it’s easy to trick them.” Mr. Suzuki said he refused to do that and was a low performer.

One of the salesmen who sold policies to Ms. Nawata, Koichi Tokutomi, raised his voice when The Wall Street Journal called and asked about the case. “Why are you calling only me? I’m not the only person who does this!” Mr. Tokutomi said.

He is still employed at the post office in Sanyo-Onoda, an industrial seaside town with cement factories along the coast. Officials at the post office referred questions to Tokyo headquarters, where a spokeswoman declined to comment on the case.

The post office in Sanyo-Onoda, Japan. Photo: Ko Sasaki for The Wall Street Journal

Japan Post has apologized and said it would do its best to recover customers’ trust. At the July 31 news conference, Kunio Yokoyama, president of Japan Post Co., said, “I strongly regret” that unrealistic goals “put a lot of pressure on our employees.”

The 148-year-old financial behemoth has long been about more than just delivering the mail. With savings accounts and life-insurance policies, Japan Post brought modern finance to all corners of the nation with a network that now includes 24,000 post offices.

Japan Post Holdings Co. went public in 2015 along with its banking and insurance subsidiaries. The government now owns 57% of the holding company, which in turn owns 64.5% of the insurance unit.

As of last year, nearly 90% of Japanese households had insurance policies, with about four per household on average, according to the Japan Institute of Life Insurance.

But the industry has been through a rough period. Several insurance companies went bankrupt around the turn of the century, when the Bank of Japan ’s benchmark rate was headed to zero for the first time. Overall, industry revenue has fallen nearly 40% since 2011, and the number of policies held at Japan Post has fallen by nearly half over the past decade to 29 million.

The insurance institute’s surveys released last year found that while Japan Post’s policies are seen as less attractive, it still received top ratings for trustworthiness.

Many customers are hanging on to lucrative older policies sometimes known as treasure insurance.

Kyoko Okamoto, a 66-year-old who works part time at a parcel-delivery company, said she signed up for insurance when she was 20 and took out a loan from the post office to pay premiums when she was going through a rough patch. She said the terms were favorable by today’s standards and she has been collecting about $9,500 every five years, with the first payout coming at age 60 and the last to come at age 75. “I’m glad that I could manage to cling to it,” she said.

A poster inside of the Sanyo-Onoda post office advertising one of the products sold by Japan Post. Photo: Ko Sasaki for The Wall Street Journal

Some sales representatives try to persuade people to exchange their treasures for the insurance equivalent of trinkets: new policies with lower returns. Japan Post says its improper sales methods included charging policyholders twice for overlapping coverage.

Commissions account for 25% of annual income for the median postal salesperson, according to Japan Post, which cut salespeople’s base salaries in 2015 to emphasize incentive pay. Low performers have been sent to training where they were berated and humiliated with comments such as, “You’re useless!” said Kazuhiro Kamon, vice chairman of the labor union for the postal industry. Japan Post spokesman Hideo Murata said such training may have happened in the past but the company now offers proper training.

Share Your Thoughts

What lessons about consumer protection can be learned from Japan Post’s sales practices? Join the conversation below.

At her spacious traditional home, Ms. Nawata, still wipes the wooden hallway floors every day and feeds stray cats that come to her Japanese garden, despite advancing dementia. When her 38-year-old younger son visited on a recent Sunday with a reporter, she said happily to him, “Oh, my goodness, you have become taller!”

According to Mr. Nawata, two salesmen visited his mother in May 2017, a month after Japan Post Insurance raised some premiums to reflect lower expected interest rates. Among the policies she was induced to buy were two from Aflac Inc. The U.S. company declined to comment about Ms. Nawata and said it was looking into sales practices.

It took months for Mr. Nawata and his uncles to sort stacks of papers. They wrote down by hand each policy and each payment.

After half a year, the family managed to cancel all Ms. Nawata’s policies and get back the money she paid.

“I should have paid more attention to my mother. But the bonds with my family are now stronger,” Mr. Nawata said. He used to visit his mother only on weekends, but now stops by after work almost every day.

Keijiro Nawata and his mother, Yaeko Nawata, in her home in Sanyo-Onoda. Photo: Ko Sasaki for The Wall Street Journal

Write to Miho Inada at miho.inada@wsj.com and Megumi Fujikawa at megumi.fujikawa@wsj.com

Copyright ©2019 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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2019-09-08 09:30:00Z
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IFA 2019 Final Day: Everything we saw at Europe's largest tech show - CNET

Discuss: IFA 2019 Final Day: Everything we saw at Europe's largest tech show

Be respectful, keep it civil and stay on topic. We delete comments that violate our policy, which we encourage you to read. Discussion threads can be closed at any time at our discretion.

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2019-09-07 12:20:00Z
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IFA 2019 Final Day: Everything we saw at Europe's largest tech show - CNET

Discuss: IFA 2019 Final Day: Everything we saw at Europe's largest tech show

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2019-09-07 07:19:00Z
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New York City sues T-Mobile for violating consumer protection law, selling used phones - USA TODAY

Kelly Tyko USA TODAY

Published 11:22 PM EDT Sep 6, 2019

The Big Apple is suing T-Mobile and alleges the third-largest U.S. mobile phone company scammed consumers with tactics like selling used phones as new and using deceptive return policies.

The lawsuit filed in state Supreme Court in Manhattan Wednesday follows a yearlong investigation alleging the company and more than 50 of its Metro by T-Mobile stores around New York City violated the city's consumer protection law thousands of times, according to a news release.

“Companies that blatantly scam New Yorkers must be held accountable,” Mayor Bill de Blasio said in statement. “We are doing everything in our power to make sure that T-Mobile ends these deceptive practices and that customers who were taken advantage of get the restitution they are owed.”

Metro by T-Mobile is the wireless carrier's prepaid phone brand and previously was known as MetroPCS.

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In an email, T-Mobile said it was taking the allegations "very seriously" but couldn't comment on the specific claims. The company said the accusations are "completely at odds with the integrity" of its team and the commitment they have to taking care of its customers.

The city said in its news release that it wants T-Mobile to "stop all illegal activity, to forfeit the revenue gained from the deceptive practices so that the court can create a restitution fund for victims," pay penalties and to notify credit bureaus that the financing contracts were fraudulent.

What the lawsuit alleges

According to the city's lawsuit, T-Mobile’s deception practices include:

• Tricking customers into buying used phones. The city says it “received a stream of complaints from consumers who paid hundreds of dollars for new phones but were unknowingly sold used phones.”

• Deceiving customers about financing. The city alleges the terms of contracts “typically add hundreds of dollars to the advertised price.”

• Charging consumers illegal taxes, mystery fees, and fees for unwanted services.

• Deceptive return policy. The city said T-Mobile’s return policy is misrepresented on the Metro-branded website and claims phones have a “30 day guarantee,” while the fine print says phones bought in-store must be returned within seven days.

• Failing to provide legal receipts.

Contributing: Associated Press

Follow Kelly Tyko on Twitter: @KellyTyko

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2019-09-07 03:22:00Z
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Walgreens and CVS join Walmart in asking customers not to carry guns: Friday Wake-Up Call - AdAge.com

Just briefly
Brand-friendly: “The U.S. Open is evolving, and becoming more brand-friendly, by design,” Ad Age’s Brian Braiker writes. It’s got 21 official sponsors, including Emirates Airlines, J.P. Morgan Chase/Chase Bank and American Express. That’s up from 19 last year. And there are plenty of brands in the concession stands too; Grey Goose is selling something called a Frozen Honey Deuce for $20. 

New job: General Motors has named Cadillac marketing chief Deborah Wahl as its global chief marketing officer, “a position that hasn't been filled since 2012,” Automotive News reports. Wahl previously spent three years as CMO of McDonald's USA. 

Quote of the day: The Interactive Advertising Bureau’s Tech Lab doesn’t expect Apple to support its efforts to create new standards for tracking internet users. “They historically have shown that they don’t play well with others,” the IAB Tech Lab’s Jordan Mitchell says. Read more by Ad Age’s George P. Slefo.

Ad of the day: If you’re a fan of “Rudy,” the feel-good football movie from 1993, you’ll be happy to know that it’s getting a mini-sequel, courtesy of KFC and Wieden & Kennedy. As Ad Age’s Jessica Wohl reports, actor Sean Astin reprises the role of the title character in a KFC commercial, but he’s simultaneously playing Colonel Sanders. If you think it sounds wacko, you’re correct. Just watch it. 

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2019-09-06 10:00:00Z
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