Archives for May 10, 2019

Billionaires feel at home in the Big Apple.

New York has the largest billionaire population globally (105 individuals), followed by Hong Kong (87), San Francisco (75), Moscow (70), London (65) and Beijing (55). To put that in context, San Francisco has over 860,000 residents. New York has over 8.6 million.

That’s according to data released Thursday by global wealth consultancy Wealth-X. San Francisco has more billionaires per inhabitant in the world — with one billionaire for approximately every 11,600 residents — followed by New York, Dubai and Hong Kong.

Facebook CEO FB, -0.47% Mark Zuckerberg, Twitter CEO TWTR, +0.54% and other Silicon Valley titans are among the very few billionaires who are still in their 30s. Over half of all billionaires are between 50 and 70 years of age, and only a 10th of them are below 50.

The wealth of the world’s richest people declined by 7% to $8.56 trillion in 2018, Wealth-X said, citing global trade tensions, stock-market volatility a slowdown in economic growth. The number of billionaires fell 5.4% to 2,604, the second annual fall since the financial crash a decade ago.

The Americas fared the best of the three main regions, recording a slight rise in the number of billionaires of 0.9% to 892, but their wealth fell by 5.8% to $3.54 trillion. It was helped by a stronger U.S. dollar, interest rate hikes by the U.S. Federal Reserve and President Trump’s tax reform.

Last year’s tepid performance followed a year of “unprecedented” wealth creation in 2017, when the global billionaire population surged to an all-time high, Wealth-X said. Billionaire wealth remains well above the levels of two years ago.” But there was a loss of momentum in the second half of 2018.

Wealth-X uses a proprietary database. It provides insights into their financial assets, career history, known associates, family background, education, philanthropic endeavors, hobbies, real-estate holdings and business dealings. Their assets include both privately and publicly held businesses.

Billionaires in the Asia-Pacific region saw their wealth fall by 8.7% on the year to $2.23 trillion and their numbers fall by 13.4% to 707. While Asia’s gross domestic product grew by more than 8% in 2018, its stock markets plunged by more than 11% last year.

The wealth of billionaires fell by 7.1% to $3 trillion in Europe, the Middle East and Africa; their number fell 4.6% to 1,005. Nearly all of the top 15 countries by billionaire population saw a decline — except the U.S. and three European countries: the U.K., Russia, and France.

The interest rates on federal student loans will go down next academic year.

The government sets the annual rates on those loans once a year, based on the 10-year Treasury note, which has also been on the decline.

The interest rate on new undergraduate Stafford loans will be 4.5% for the 2019-2020 academic year, down from 5% last year. For graduate students, Stafford loans will come with a 6% interest rate, compared with 6.6% now. Rates on Plus loans for graduate students and parents will fall to 7%, down from 7.6% last year.

Undergraduate students can borrow between $5,500 and $12,500 a year, depending on what year they’re in and whether they’re dependents or independent. Graduate students can typically borrow more.

Who is affected?

All federal education loans issued after July 1, 2019, will be subject to the new rates.

Don’t worry about loans you’ve taken out for previous academic years: Federal student loan rates are fixed, meaning the rates on those existing loans won’t change.

The rate changes apply only to federal student loans. Private loans come with their own rates.

How can I calculate what I’ll wind up owing?

Student debt expert Mark Kantrowitz’s website, PrivateStudentLoans.Guru, features a calculator that you can plug your loan details into and learn what kind of bill you’ll face post-graduation.

Credible.com also has a handy loan cruncher, which will break down how much you’ll owe in principle and interest.

How much should I borrow?

Students shouldn’t take out more than they expect to earn in their first year of employment, Kantrowitz said. The Georgetown University Center on Education and the Workforce has a pretty thorough breakdown of salaries by major.

“Borrowers should assume the lower end of the income range,” Kantrowitz said. “That way, they are less likely to over-borrow for their field of study.”

Every worker Opens a New Window. at some point starts to think about retirement and applying for Social Security benefits Opens a New Window. . The big question is: When should you start collecting Social Security?

Generally, the key to that answer lies in what is considered your “full retirement age” because that is the age at which you can collect your full benefit. But the answer is not the same for everyone.

Deciding when to start collecting Social Security is a personal decision that should be based on your individual and family circumstances.

It used to be that you could retire “early” by collecting reduced benefits starting at age 62 or you could wait until you were 65. But now, depending on the year you were born, you will not reach full retirement age until between 65 and 67.

What is the full retirement age in 2019?

Today, full retirement age is 67 for those born in 1960 or later. If you were born in 1937 or earlier, your full retirement age is 65. The FRA rises two months every year after that until it caps out at age 67.

You even have the option of delaying your benefits past your full retirement age, thereby locking in an even higher monthly check. If you plan to work during retirement, you may want to delay collecting Social Security because your earnings could have a negative effect on your benefits.

However, there are also instances where taking benefits before you reach full retirement age most likely will pay off.

If you start collecting at the earliest opportunity, which is age 62, you’ll receive a permanently reduced benefit, but you could make out better overall if you live long enough to offset the reduction. If you wait until your full retirement age, you can collect 100 percent of your benefit.

Here’s what to consider to determine when you should start collecting Social Security benefits.

When should I start collecting Social Security benefits?

Optimum strategy: put it off. Generally, it’s best to postpone Social Security benefits at least until you reach full retirement age, which is determined by the Social Security Administration.

Collecting Social Security early will cost you

If your full retirement age is 67, your Social Security benefit is reduced by:

• About 30 percent if you start collecting at 62.
• About 25 percent if you start collecting at 63.
• About 20 percent if you start collecting at 64.
• About 13.3 percent if you start collecting at 65.
• About 6.7 percent if you start collecting at 66.

“Social Security is like longevity insurance,” says Brent Neiser, a certified financial planner and senior director at the National Endowment for Financial Education. “It’s a stream of payments that will not stop throughout your life, so delaying your benefits to keep those payments as large as possible forms a helpful base to your retirement plan.”

Neiser urges those who have not saved enough for retirement to use whatever means possible to postpone their Social Security benefits until after their full retirement age to help boost their future income.

For example, if your full retirement age is 66, but you delay getting Social Security until 67, you’ll receive 108 percent of your monthly benefit. If you wait until age 70, it jumps to 132 percent.

“You can use personal savings to help bridge the gap, but ideally you should plan to work a little longer (and delay Social Security),” Neiser says.

Another benefit of working longer? Medicare. Aging Americans become eligible for federal health insurance coverage at age 65.

“If you stop working at age 62 and lose health insurance, you have to get supplemental insurance to bridge the gap until you turn 65 and Medicare kicks in,” Neiser says.

If you plan to work during retirement, you have another incentive to delay collecting Social Security. Earning too much at a job after you begin collecting Social Security can negatively affect your benefit.

If you are under full retirement age for the entire year, the government deducts $1 from your benefit payment for every $2 you earn above the annual earnings limit. For 2019, the earnings limit is $17,640.

In the year you reach full retirement age, your benefit is reduced by $1 for every $3 you earn above $46,920 (in 2019) until the month you reach full retirement age.

You will also owe Social Security and Medicare tax on your earnings, even if you are already receiving benefits.

Early benefits can pay off

There are instances where taking early benefits pays off despite the reduced monthly check, Neiser says.

“No one can predict how long you’ll live, but if you’re facing a potentially significant reduction in life expectancy and are short of income, taking Social Security early may be appropriate,” he says.

Just be sure you budget for a reduced benefit.

If your full retirement age is 67 and you begin collecting Social Security at age 62, for example, your benefits are reduced by about 30 percent.

The reduction drops to 25 percent if you wait until you’re 63, and so on. The Social Security Administration provides a chart of retirement benefits by birth yearOpens a New Window..

Married women are also good candidates for claiming early benefits because they are likely to outlive their husbands. Those widows then become eligible to receive the greater of either their benefit or their late husband’s benefit.

However, this scenario is valid only if the husband does not claim his benefits early. By not claiming early benefits, the husband effectively increases the monthly benefit his wife eventually receives.

What’s your break-even?

Calculate your break-even age to better determine when you should start drawing Social Security. Your break-even age occurs when the total value of higher benefits (from postponing retirement) starts to exceed the total value of lower benefits (from choosing early retirement).

Here’s an example: If you are eligible to collect a reduced $900 benefit at age 62 plus 1 month, and your benefit would increase to $1,251 at age 65 and 10 months, your estimated break-even age is 75 years and 5 months.

If you expect to live beyond that age, it would be financially worth your while to delay drawing benefits.

When it comes to calculating a start date for Social Security benefits, however, there’s not an age that’s appropriate for everyone. Consider your own financial need, health and post-retirement plans before making the call.