TIME Greece

Here’s What Greek Austerity Would Look Like in America

Putting Greece's economic catastrophe into perspective

Greece is in the middle of a fresh round of economic tumult as its leaders try to negotiate terms for a new bailout package to keep the country financially afloat. Since 2010, Greece has been receiving money from the European Union and the International Monetary Fund in exchange for agreeing to harsh spending cuts and tax increases. The steep cost-cutting measures, known as austerity, have become a common practice across Europe as the continent has struggled to regain its economic footing following the global financial crisis of 2008.

But Greece’s case has been especially extreme. With steep slashes to health funding, salaries and pensions along with huge tax increases, Greek unemployment has skyrocketed, as have the number of people in poverty. As of Tuesday night, Greece had defaulted on a $1.7 billion payment to the International Monetary Fund, and the financial future of the country is looking increasingly dire. Greece will have to agree to even more spending cuts to continue to receive funding.

To place the severity of Greece’s austerity measures over the last several years in perspective, here’s an idea for how the same types of cuts would impact the United States.

  • Greece’s minimum monthly wage was cut by 22% in 2012, from 751 euros to 586 euros. A similar cut in the U.S. would drop the hourly minimum wage from $7.25 to $5.66.
  • In 2009 and 2010 Greece implemented a variety of cuts to salaries for public sector workers that worked out to an average pay cut of about 15%. In the U.S. that would decrease the average government employee’s pay from $51,340 per year to $43,639, using 2012 figures.
  • Pension cuts have been an especially controversial pain point in Greece, and the combined cuts have lead to a 40% decrease in pension funding since 2009, according to the Associated Press. A similar drop in Social Security payouts in the U.S. would mean the average senior citizen’s monthly would mean a drop in Social Security payouts from $1,294 per month on average to $776 per month.
  • Greece’s national health budget has been slashed by about 40% since 2008, according to the New York Times. Using U.S. health spending figures from 2013, that would drop federal, state and local government spending on health care from $1.25 trillion ($3,980 per person) to $725 billion ($2,388 per person).
  • In 2010 Greece increased the tax on cigarettes by about 20 percent. That would increase the tax on a pack of cigarettes in New York from $6.86 to $7.89.
MONEY retirement income

3 Retirement Loopholes That Are Likely to Close

77867394
Design Pics/Darren Greenwood—Getty Images

The government has a knack for catching on to the most popular loopholes.

There are plenty of tips and tricks to maximizing your retirement benefits, and more than a few are considered “loopholes” that taxpayers have been able to use to circumvent the letter of the law in order to pay less to the government.

But as often happens when too many people make use of such shortcuts, the government may move to close three retirement loopholes that have become increasingly popular as financial advisers have learned how to exploit kinks in the law.

1. Back-door Roth IRA conversions
The U.S. Congress created this particular loophole by lifting income restrictions from conversions from a traditional Individual Retirement Account (IRA) to a Roth IRA, but not listing these restrictions from the contributions to the accounts.

People whose incomes are too high to put after-tax money directly into a Roth, where the growth is tax-free, can instead fund a traditional IRA with a nondeductible contribution and shortly thereafter convert the IRA to a Roth.

Taxes are typically due in a Roth conversion, but this technique will not trigger much, if any, tax bill if the contributor does not have other money in an IRA.
President Obama’s 2016 budget proposal suggests that future Roth conversions be limited to pre-tax money only, effectively killing most back-door Roths.

Congressional gridlock, though, means action is not likely until the next administration takes over, said financial planner and enrolled agent Francis St. Onge with Total Financial Planning in Brighton, Michigan. He doubts any tax change would be retroactive, which means the window for doing back-door Roths is likely to remain open for awhile.

“It would create too much turmoil if they forced people to undo them,” says St. Onge.

2. The stretch IRA
People who inherit an IRA have the option of taking distributions over their lifetimes. Wealthy families that convert IRAs to Roths can potentially provide tax-free income to their heirs for decades, since Roth withdrawals are typically
not taxed.

That bothers lawmakers across the political spectrum who think retirement funds should be for retirement – not a bonanza for inheritors.

“Congress never imagined the IRA to be an estate-planning vehicle,” said Ed Slott, a certified public accountant and author of “Ed Slott’s 2015 Retirement Decisions Guide.”

Most recent tax-related bills have included a provision to kill the stretch IRA and replace it with a law requiring beneficiaries other than spouses to withdraw the money within five years.

Anyone contemplating a Roth conversion for the benefit of heirs should evaluate whether the strategy makes sense if those heirs have to withdraw the money within five years, Slott said.

3. “Aggressive” strategies for Social Security
Obama’s budget also proposed to eliminate “aggressive” Social Security claiming strategies, which it said allow upper-income beneficiaries to manipulate the timing of collection of Social Security benefits in order to maximize delayed retirement credits.

Obama did not specify which strategies, but retirement experts said he is likely referring to the “file and suspend” and “claim now, claim more later” techniques.

Married people can claim a benefit based on their own work record or a spousal benefit of up to half their partner’s benefit. Dual-earner couples may profit by doing both.

People who choose a spousal benefit at full retirement age (currently 66) can later switch to their own benefit when it maxes out at age 70 – known as the “claim now, claim more later” approach that can boost a couple’s lifetime Social Security payout by tens of thousands of dollars.

The “file and suspend” technique can be used in conjunction with this strategy or on its own. Typically one member of a couple has to file for retirement benefits for the other partner to get a spousal benefit.

Someone who reaches full retirement age also has the option of applying for Social Security and then immediately suspending the application so that the benefit continues to grow, while allowing a spouse to claim a spousal benefit.

People close to retirement need not worry, said Boston University economist Laurence Kotlikoff, who wrote the bestseller “Get What’s Yours: The Secrets to Maxing Out Social Security.”

“I don’t see them ever taking anything away that they’ve already given,” Kotlikoff said. “If they do something, they’ll have to phase it in.”

MONEY

You’ll Never Guess the Latest Victims of the Student Loan Crisis

hand reaching out of hole using adding machine with rolls of paper
Renold Zergat—Getty Images

A fast-growing number of seniors are hitting retirement with a student debt burden. Even their Social Security is at risk.

Most debt you can get out of—painful as it might be. Credit card debt can be cleared in bankruptcy. A mortgage can end in foreclosure. But student debt is more sticky, and it turns out it can have big consequences in retirement.

Last year, Richard Minuti’s Social Security payments were cut by 10%.

The Philadelphia native was already earning only a bit over $10,000 a year, including some part-time work as a tutor. “I was desperate,” says Minuti. “Taking 10% of a person’s pay who’s trying to live with bills, that’s the cruelty of it.”

The Treasury Department was taking the money to pay for federal student loans he had taken out years before. Just before age 50, Minuti had gone back to college to get a second bachelor’s degree and a better job in social work and counseling. But the non-profit jobs he landed afterwards were lower paying, and he defaulted on the debt.

Student debt’s painful new twist

Minuti is one of the small but expanding group of seniors who are hitting retirement with a student debt burden. Over the past decade, people over the age of 60 had the fastest growing educational loan balances of any age group, according to the Federal Reserve Bank of New York. The total amount grew by more than nine times, from $6 billion in 2004 to $58 billion in 2014.

SeniorEduLoanGrowth

Only about 4% of households headed by people age 65 to 74 carry educational debt, according to a 2014 U.S. Government Accountability Office report. But as recently as 2004, student loans balances in retirement were close to unheard of, affecting less than 1% of this group.

Educational loans are very difficult to pay off when you are in or near retirement. Unlike a new college grad, there’s little prospect of years of rising salary income to help pay off the loan. That’s one reason older debtors have the highest default rate of any age group. (Also, most people who can’t pay off a loan will eventually age into being included among older debtors.) Over half of federal loans held by people over age 75 are in default, according to the GAO.

Student loan debts can’t be discharged in bankruptcy. And, as Minuti learned, federal tax refunds and up to 15% of wages and Social Security can be garnished.

This can be devastating, says Joanna Darcus, consumer rights attorney at Community Legal Services of Philadelphia.

“Most clients find me because the collection activity that they’re facing is preventing them from paying their utilities, from buying food for themselves, from paying their rent or their mortgage,” says Darcus, who works with low-income borrowers.

The number of seniors whose Social Security checks were garnished rose by roughly six times over the past decade, from about 6,000 to 36,000 people, says the GAO. Legislation from the mid-1990s ensured recipients could still get a minimum of $750 a month. At the time, this was enough to keep them from sliding below the poverty threshold. But to meet the current threshold, Congress would need to increase this to above $1,000 a month.

In other words, with enough debt, a Social Security recipient can be pulled into poverty.

“That’s pretty stressful for seniors when they understand that,” says Jan Miller, a student loan consultant who has seen a rise in his senior clients.

What’s behind the rise?

It’s not, despite what you might guess, only about parents who are taking on loans for their kids late in their careers.

Listen: How to decide if you should take out loans for your children’s education

In the GAO data, about 18% of federal educational debt held by seniors was from Parent PLUS loans for children or grandchildren. The remaining 82% was taken out by the borrower for his or her own education. (The GAO data differs from the New York Fed’s, showing lower total balances, so it may be missing some parental borrowing.)

SeniorLoansforOwnEdu

Darcus says many of her clients turned to education as a solution to unemployment and long-stagnant wages. Enrollment for all full and part-time students over age 35 increased 20% from 2004 to its recessionary peak in 2010, according to the National Center for Education Statistics.

“Among many of my clients, education is viewed as a pathway out of poverty and toward financial stability, but their reality is much different from that,” Darcus says. “Sometimes it’s their debt that keeps them in poverty, or pushes them deeper into it.”

And in recent years, both tuition and older debts have been especially difficult to pay, as home values and household assets took a hit in the Great Recession. Meanwhile, of course, the cost of higher education has soared. Tuition for private nonprofit institutions is up 78% in real dollars since 2004, according to the College Board.

What may be changing

New regulations and legislation this year may bring some relief to educational loan borrowers. The Senate in March introduced legislation to make private loans, but not federally subsidized loans, dismissible through bankruptcy.

For federal loans, more favorable income-driven repayment plans may be extended to up to 5 million borrowers this year. These plans, which have been growing in popularity since launching in 2009, adjust monthly payments according to reported discretionary income. The Department of Education is scheduled to issue new regulations by the end of 2015 that may allow all student borrowers to cap payments at 10% of their monthly income.

But it is unclear what percentage of that 5 million people are older borrowers who would benefit. Some borrowers have also complained that income-driven repayment plans require too much complex paperwork to enroll and stay enrolled. Borrowers who want to find out if they are already eligible for income-driven repayment plans can go here.

Parent PLUS loans would not be included in the new regulations. However, Parent PLUS loans can still be consolidated in order to take advantage of a similar, albeit less generous option, called the Income Contingent Repayment plan. This plan allows borrowers to cap their monthly payments at 20% of their discretionary income.

Still, some feel the best way to help seniors with student loan debt is to stop threatening to garnish Social Security benefits altogether. This spring, the Senate Aging Committee called for further investigations of the effects of student debt on seniors.

“Garnishing Social Security benefits defeats the entire point of the program—that’s why we don’t allow banks or credit card companies to do it,” said Sen. Claire McCaskill of Missouri in a statement.

Getting out from under

Richard Minuti was able to enroll in an income-based repayment plan last year with the help of a legal advocacy group. Because Minuti earned less than 150% of the federal poverty level, the government set his monthly obligation at $0, eliminating his monthly payment.

“I’m appreciative of that, thank God they have something like that,” Minuti says, “because obviously there are many people like myself who are similarly situated, 60-plus, and having these problems.”

But Deanne Loonin, director of the National Consumer Law Center’s Student Loan Borrower Assistance Project, says she doesn’t see the trend of rising educational debts ending any time soon. And some seniors will struggle with this debt well into retirement.

“I’ve got clients in nursing homes who are still having their Social Security garnished and they were in their 90s,” she says.

MONEY Social Security

This Surprising Sign May Tell You When to Claim Social Security

old woman facing younger woman in profile
Liam Norris—Getty Images

For aging Americans, the condition of your skin can be a barometer of your overall health and longevity.

Skin is in, and not just for beach-going millennials. For boomers and older generations, the condition of your skin, especially your facial appearance, is a barometer of your overall health and perhaps your life expectancy, scientists say. And as the population ages—by 2020 one in seven people worldwide will be 60 or above—dollars are pouring into research that may eventually link your skin health to your retirement finances.

What does your skin condition have to do with your health and longevity? A skin assessment can be a surprisingly accurate window into how quickly we age, research shows. Beyond assessing your current health, these findings can also be used as to gauge your longevity. This estimate, based on personalized information and skin analysis, may be more reliable than a generic mortality table.

All of which has obvious implications for financial services companies. One day the condition of your skin—your face, in particular—may determine the rate you pay for life insurance, what withdrawal rate you choose for your retirement accounts, and the best age to start taking Social Security.

Skin health is also a growing focus for consumer and health care companies, which have come to realize that half of all people over 65 suffer from some kind of skin ailment. Nestle, which sees skin care as likely to grow much faster than its core packaged foods business, is spending $350 million this year on dermatology research. The consumer products giant also recently announced it would open 10 skin care research centers around the world, starting with one in New York later this year.

Smaller companies are in this mix as well. A crowd funded start-up venture just unveiled Way, a portable and compact wafer-like device that scans your skin using UV index and humidity sensors to detect oils and moisture and analyze overall skin health. It combines that information with atmospheric readings and through a smartphone app advises you when to apply moisturizers or sunscreen.

This is futuristic stuff, and unproven as a means for predicting how many years you may have left. I recently gave two of these predictive technologies a spin—with mixed results. The first was an online scientist-designed Ubble questionnaire. By asking a dozen or so questions—including how much you smoke, how briskly you walk and how many cars you own—the website purports to tell you if you will die within the next five years. My result: 1.4% chance I will not make it to 2020. Today I am 58.

The second website was Face My Age, which is also designed by research scientists. After answering short series of questions about marital status, sun exposure, smoking and education, you upload a photo to the site. The tool then compares your facial characteristics with others of the same age, gender, and ethnicity. The company behind the site, Lapetus Solutions, hopes to market its software to firms that rely heavily on life-expectancy algorithms, such as life insurers and other financial institutions.

Given the fledgling nature of this technology, it wasn’t too surprising that my results weren’t consistent. My face age ranged between 35 and 52, based on tiny differences in where I placed points on a close-up of my face. These points help the computer identify the distance between facial features, which is part of the analysis. In all cases, though, my predicted expiration age was 83. I’m not taking that too seriously. Both of my grandmothers and my mother, whom I take after, lived well past that age—and I take much better care of my health than they ever did.

Still, the science is intriguing, and it’s not hard to imagine vastly improved skin analysis in the future. While a personalized, scientific mortality forecast might offer a troublesome dose of reality, it would at least help navigate one of the most difficult financial challenges we face: knowing how much money we need to retire. A big failing of the 401(k) plan—the default retirement portfolio for most Americans—is that it does not guarantee lifetime income. Individuals must figure out on their own how to make their savings last, and to be safe they should plan for a longer life than is likely. That is a waste of resources.

I plan to live to 95, my facial map notwithstanding. But imagine if science really could determine that my end date is at 83, give or take a few years. It would be weird, for sure. But I’d have a good picture of how much I needed to save, how much I could spend, and whether delaying Social Security makes any sense. I’m not sure we’ll ever really be ready for that. But not being ready won’t stop that day from coming.

Read next: This Problem is Unexpectedly Crushing Many Retirement Dreams

MONEY privacy

How Your State Is Helping Scammers Rip You Off

173017288
Steve Shepard—Getty Images

Unclaimed property records are easy targets for fraudsters.

As cybercriminals become more skilled, the privacy practices at many organizations have not kept apace. In the State Compendium of Unclaimed Property Practices that I’ve compiled, I found this to be the case at many state treasuries where the data exposed provides fraudsters with a crime exacta: claiming money that no one will ever miss and gathering various nuggets of personal data that can help facilitate other types of identity theft.

First, you have to understand what “unclaimed funds” are and how they work. Our states are responsible for ensuring unclaimed property makes it into the right hands. Twice a year, organizations like banks and insurance companies report uncollected payouts to their state’s Unclaimed Property Office. From there, the debt is published in a local newspaper, and if it remains unclaimed, the property (funds, stocks, commodities, etc.) has to be surrendered to the state for safekeeping until a claim is made.

Two years ago, there was a total of $58 billion in unclaimed property nationwide. In theory, it’s safe. You need to be able to identify yourself and go through a verification process to collect the money. However, because Social Security numbers and other personally identifiable information (PII) are increasingly easy to find on the dark web, consumers are faced with a potential fraud-frenzy not unlike the spike in stolen tax refunds of recent years. It takes a good deal of information for a fraudster to claim funds that rightfully belong to you, but the danger of PII on unclaimed funds sites cuts both ways – fraudsters can find out that you have unclaimed money and try to gather other information about you in order to claim it, or they can use the information from the unclaimed funds sites to build a dossier on you and target you for other scams.

This is not a hypothetical problem. Interestingly, the first explanations of the issue in a simple Google search (i.e., unclaimed funds identity theft) came not from a state treasury, but a site called Scambusters. One common scheme involves charging a fee to “locate” your unclaimed property. In the process, the swindler grabs personally identifiable information that can be used to commit identity theft. Stories about stolen unclaimed funds abound. In 2011, a Houston woman was convicted for stealing almost $500,000 in tax refunds and unclaimed funds. According to KHOU.com, “Officials said Thomas used public databases to locate the names of the people owed money, then used their personal information to claim the funds.” Texas scored a lone star in the compendium—the worst ranking here.

This has become an issue because of data breaches. News is still trickling out about the millions of federal employees whose personally identifiable information was exposed to hackers because of shoddy data security at the Office of Personnel Management. Between the breach at Anthem that leaked Social Security numbers and the Premera breach that leaked far more specific information (in addition to SSNs), almost 100 million records were stolen. The recent IRS revelation that fraudsters essentially walked through the digital front door and stole $50 million in tax refunds using information accessed in its “Get Transcript” application highlighted the need for more stringent processes at government agencies. That swindle, like so many others, was made possible by a seemingly never-ending string of breaches. The fraudsters had enough information to game the IRS verification process. The same approach could be used with unclaimed funds.

While I am focusing here on the state offices responsible for unclaimed funds, knock on any organization’s door these days and you will find data security and privacy issues.

According to some estimates, there are more (perhaps significantly more) than a billion records “out there.” Therefore, it is crucial that organizations entrusted with our personal information do everything possible to limit our exposure, especially when our money (as well as the integrity of our identities) is on the line.

The compendium found that more than half the country could be doing a better job. Thirty-six states had practices that exposed more personal information than was necessary—ranked “Not Good” (28) or “Bad” (8)—exposing various kinds of data that fraudsters can use to build the type of personal information dossier on an individual (or even a celebrity, we found) that facilitates the commission of identity theft.

What Can We Do About It?

For Consumers: Get your money now! Visit your state’s unclaimed property site as soon as possible to see if you have a claim, and if you do, go through the process before your evil twin does. And, as always, stay vigilant. Just because you don’t have unclaimed funds doesn’t mean a scammer can’t get to you other ways. Monitor your financial accounts regularly for unauthorized charges, and keep an eye on your credit reports and scores for signs of new-account fraud.

For States: Respect your fiduciary duty to protect us and expose less PII in the verification process.

How does your state measure up? Click here to read the full State Compendium of Unclaimed Property Practices.

More From Credit.com:

MONEY

4 Things All Americans Should Know About Social Security

157422696
Nick M. Do—Getty Images

How well do you understand our federal insurance program?

Two recent surveys show that Americans are severely lacking when it comes to even basic Social Security knowledge. For example, the majority of people don’t even know what the normal Social Security retirement age is. And knowledge of topics like citizenship requirements, ability to work while collecting Social Security, and the future ability of the U.S. to pay benefits isn’t much better. With that in mind, let’s clear up these four things Americans should know about Social Security.

1. What is full retirement age? (Hint: It’s a trick question)
According to a survey of 1,513 Americans conducted by MassMutual, 71% believe that the normal (or full) retirement age is 65. And while this may be the standard in much of the corporate world, Social Security is a little different.

In reality, the normal retirement age depends on when you were born, and it ranges from 66 for people reaching retirement age now to 67 for those born in 1960 and later. Here’s how to determine your own normal retirement age for Social Security purposes:

If you were born in… Your normal (or full) retirement age is…
1943-1954 66 years
1955 66 years and 2 months
1956 66 years and 4 months
1957 66 years and 6 months
1958 66 years and 8 months
1959 66 years and 10 months
1960 or later 67 years

Source: Social Security Administration

2. You don’t need to be a U.S. citizen to collect benefits
This is a topic that three-fourths of respondents to the same survey got wrong. Contrary to popular belief, resident aliens can be eligible for Social Security benefits, as long as they meet the criteria of a “qualified alien” and if one of the following statements is true:

  • They were receiving Social Security and legally residing in the U.S. as of August 22, 1996
  • They are a lawfully admitted resident alien and have 10 years (40 quarters) of work experience
  • They are currently on active duty in the Armed Forces, or are an honorably discharged veteran
  • They are blind or disabled, and were legally residing in the U.S. on August 22, 1996
  • They were granted immigration status in certain categories, such as refugee or asylum (maximum benefit period of seven years)

3. Relax, Social Security isn’t going to disappear anytime soon
According to a Pew Research survey of 1,692 American adults, 41% believe there will be no Social Security benefits when they retire. And the younger age groups are even more pessimistic, particularly those between 30 and 49 years of age — 47% of whom believe they’ll receive no Social Security benefits in their lifetimes.

However, this is simply not the case. According to the Social Security and Medicare Trustees’ 2014 report, all of the Social Security trust funds will run out of money by 2033. Still, the report claims that the incoming Social Security taxes will be enough to cover 77% of the current level of benefits at that time. Even as far out as 2088, there will still be enough money coming in to pay out 72%.

Furthermore, this assumes that Congress will do nothing to address the shortfall, which it has a good history of doing. For example, the last major changes made in 1983 gave the program an additional 50 years of solvency — this is the reason it is expected to make it to 2033 in the first place. Between now and then, Congress could decide to increase Social Security taxes on employers or employees (or both), increase the normal retirement age, or slightly decrease benefits in order to improve the program’s financial footing.

4. One more downside to claiming benefits early
Aside from receiving a reduced benefit amount, there is an additional consideration for those who may want to retire before reaching normal retirement age — how much you are allowed to earn.

In the MassMutual survey, 55% of respondents believe you can continue to work and collect your full benefit amount regardless of how old you are. However, this only applies to those who have reached their normal retirement age.

If you’ve claimed Social Security early (you can start receiving benefits as early as 62), any earnings you have will be subject to the “retirement earnings test” to see if they exceed a certain limit ($15,720 in 2015). For every $2 you earn over that amount, your benefit will be reduced by $1. During the year in which you will reach normal retirement age, your benefits will be reduced by $1 for every $3 you earn over a higher amount (currently $41,880) until the month of your birthday.

Once you reach your normal retirement age, you can work all you want and still collect your benefit. And, any benefit reductions will serve to permanently increase your benefit once you reach normal retirement age.

The more you know, the better you can plan
Knowing these four facts about Social Security won’t necessarily get you any more money, but they can certainly help you plan better. The bottom line is that with any area of personal finance, the more you understand about a topic, the better prepared you’ll be to make sound decisions for you and your family.

More From Motley Fool:

MONEY Parenting

15 Financial Must Dos for Anyone Having a Baby

545865273
Getty Images/Tetra images RF

That bundle of love is going to cost you plenty over a lifetime, so start planning now.

Preparing for parenthood isn’t just tiny clothes and heartwarming ultrasound photos; it involves a lot of financial preparation. This guide will lay out the most important financial tasks on your plate from pregnancy to baby’s first years, including:

  • Estimating your medical costs
  • Planning leave from your job
  • Budgeting for the new arrival

Some parenting preparations are best learned on the fly — how to effortlessly and painlessly change the messiest diapers, for instance. But the list of things to do before baby arrives and within his or her first several weeks is lengthy, so tackling certain tasks now is a smart idea.

Pre-Delivery Planning

1. Understand your health insurance and anticipate costs. Having a baby is expensive, even when you have health insurance. You should forecast your expected costs fairly early in the pregnancy. NerdWallet’s guide to making sense of your medical bills can help as you navigate prenatal care, labor and delivery, and the bills that will ultimately follow.

2. Plan for maternity/paternity leave. How much time you and your partner (if you have one) get off work and whether you’re paid during that period can significantly impact your household finances in the coming year. Understand your company’s policies and your state’s laws to get an accurate picture of how your maternity leave will affect your bottom line.

3. Draft your pre-baby budget. Once you know what you’ll be spending on out-of-pocket medical costs, understand how your income will be impacted in the coming months and have prepared a shopping list for your new addition, adjust your budget accordingly. Babies come with plenty of expenses, so set a limit on both necessary and optional buys (like that designer diaper bag or high-end stroller with the LCD control panel), and consider buying used to keep spending under control.

4. Plan your post-delivery budget. Recurring costs such as diapers, child care and extra food will change your household expenses for years to come. Plan for them now so you aren’t caught off guard.

5. Choose a pediatrician within your insurance network. Your baby’s first doctor appointment will come within her first week of life, so you’ll want to have a physician picked out. Talk to friends and family to get recommendations, call around to local clinics and ask to interview a pediatrician before you make your choice. In searching for the right doctor, don’t forget to double-check that he or she is within your insurance network. Ask the clinic, but verify by calling your insurance company so you’re not hit with unexpected out-of-network charges.

6. Start or check your emergency fund. If you don’t already have a “rainy day fund,” now’s the time to anticipate some emergencies. Kids are accident prone, and with the cost of raising a child there’s no telling if you’ll have the disposable income to pay for any unexpected expenses. Having at least three to six months’ worth of living expenses covered is a great place to start.

While in the Hospital

The main focus while you’re in the hospital is having a healthy baby. But there are a few loose ends that will need to be taken care of.

7. Order a birth certificate and Social Security card. Hospital staffers should provide you with the necessary paperwork to get your new child’s Social Security number and birth certificate. If they don’t or if you are having a home birth, contact your state’s office of vital records for the birth certificate and your local Social Security office to get a Social Security card.

Within Baby’s First 30 Days

8. Add your child to your health insurance. In most cases, you have 30 days from your child’s birth date to add him to an existing health insurance policy. In some employer-based plans, you have 60 days. Regardless, do it sooner rather than later, as you don’t want to be caught with a sick baby and no coverage.

9. Consider a life insurance policy on your child. No one expects the tragedy of losing a child, so many parents don’t plan for it. The rates are generally low because a child’s life insurance policy is used to cover funeral costs and little else. When it comes to covering children, a “term” policy that lasts until they are self-sufficient is the most popular choice.

10. Begin planning for child care. Finding the right day care or nanny can take weeks. Get started long before your maternity leave is over. You’ll need time to visit day care centers or interview nannies, as well as complete an application and approval process if required.

Beyond the First Month

You’ll be in this parenting role for years to come, so planning for the future is crucial. Estate planning is a big part of providing for your children, but it isn’t the only important forward-focused task to check off your list.

11. Adjust your beneficiaries. Assuming you already have life insurance for yourself or the main breadwinner in your household — and if you don’t, you should — you may want to add your child as a beneficiary. The same goes for your 401(k) and IRAs. However, keep in mind that you’ll need to make adjustments elsewhere to ensure when and how your child will have access to the money. A will and/or trust can accomplish this.

12. Disability insurance. You’re far more likely to need disability insurance than life insurance. Make sure you have the right amount of coverage — enough to meet your expenses if you’re out of work for several months. Remember, your monthly living expenses have gone up since the new addition.

13. Write or adjust your will. Tragic things happen and you want to ensure your child is taken care of in the event that one or both parents die. Designate a guardian so the courts don’t have to. Your will is only one part of estate planning, but it’s a good place to begin.

14. Keep funding your retirement. When a child arrives, it’s easy to forget your personal goals and long-term plans in light of this huge responsibility. Stay on top of your retirement plans so your child doesn’t have to support you in old age.

15. Save for his or her education. College is costly, but you can make it more manageable by starting to save early.

Adding a new member to your family comes with a lengthy list of responsibilities, so don’t try to do them all at once. Prioritize and tackle the most important items on your financial to-do list first. Because medical bills and insurance claims will be some of the first financial obligations you’ll encounter while expecting, start there. Move on to budgeting for pregnancy and the first several months of your baby’s life.

With 18 or more years until your little one leaves home, time would seem to be on your side. But — as the saying goes — blink and he’s grown. Now is the time to start taking the steps that will set your family up for financial success.

More from NerdWallet:

Read next: 3 Things Dads and Moms Don’t Need to Buy

MONEY retirement income

4 Ways to Bridge the Retirement Income Gap

Gregory Reid; prop styling by Renee Flugge

Think you can't afford to delay taking Social Security once you retire? These steps can help.

If you’re on the verge of retirement, you’ve probably heard this Social Security advice: Delay claiming your benefit as long as possible, and it will increase by 7% to 8% each year you wait.

Great idea, except for one problem. Once you retire, how do you come up with enough money to live on until benefits kick in? Two-thirds of workers file before full retirement age—currently 66—and only about 2% wait until 70, when benefits max out.

The good news is that you can make waiting easier, assuming you have money saved up or have other sources of cash. Even if you defer claiming your benefit for only a year or two, you’ll permanently boost your income and financial security. Here are four strategies for delaying.

Work … Just a Little

Because Social Security will come to only a fraction of your salary—typically $20,000 to $25,000 if you retire at $100,000 a year—you need work only a fraction of the time to replace it. Some companies have phased-retirement programs letting older workers cut their hours; if your employer doesn’t, maybe you can negotiate a schedule light enough to feel like retirement. Want a change? Start exploring part-time opportunities in new fields, suggests psychologist Robert Delamontagne, author of The Retiring Mind.

The upside is not just financial. “For many people,” says Delamontagne, “working part-time, especially if you are highly engaged, can increase health and happiness.”

Go Halfway

If you’re married, both of you can delay claiming retirement benefits on your own work records at the same time that one of you receives Social Security money—payments that can be equal to half of what the other spouse would be due at full retirement age.

To do this, follow what’s known as a file-and-suspend strategy, says Jim Blankenship, a planner in New Berlin, Ill. At full retirement age, the higher-earning spouse files for benefits, then suspends payments. Then the other spouse files for spousal benefits. If the primary earner is due, say, $2,500 a month at full retirement age, the spouse would receive $1,250. Meanwhile, the eventual monthly retirement benefits for each spouse—based on his or her own earnings—would continue to grow until he or she starts taking checks or reaches age 70. Wait until you’re both at full retirement age to do this, or your benefits will be trimmed.

Use the free Social Security calculator at FinancialEngines.com to see how this would work for you, or pay up for customized guidance at MaximizeMySocialSecurity.com ($40) or at SocialSecuritySolutions.com (starts at $20).

Take Bigger Withdrawls

Ideally, you would minimize the odds of exhausting your portfolio in retirement by limiting your initial annual withdrawal to 3% to 5% of your savings (then adjusting for inflation). If that’s not an option, you might try the riskier strategy of starting at a higher rate, then lowering it once you claim benefits.

Although this approach may seem counterintuitive, the longer you wait to claim, the lower your chances of running out of money—as long as you keep your inflation-adjusted income level until you claim, says Morningstar’s head of retirement research, David Blanchett. The gains to be had from a higher monthly benefit more than offset the increased drain on your portfolio (see the chart at left). But before you try this strategy, Blanchett advises testing it with a Social Security calculator or consulting a financial planner.

Start With Your 401(k)

Whatever your withdrawal rate, take advantage of your low tax bracket before Social Security and mandatory withdrawals from retirement accounts kick in. Pull money from your pretax accounts, such as your 401(k) or traditional IRA, where most of your investments likely sit, says Baylor University finance professor William Reichenstein, a principal at Social Security Solutions.

His reasoning: After age 70½ you’ll have to take required minimum distributions from those pretax accounts. Added to your Social Security checks, those RMDs may generate more income than you need—and more taxes. (For married couples filing jointly and making over $32,000, up to 85% of Social Security benefits are taxed.) By withdrawing pretax money in your sixties, before you have to, you’ll have smaller RMDs later, an easier time controlling your income, and a portfolio that—because you’ll lose less of it to taxes—is more likely to last you in retirement.

Read next:This Is the Maximum Benefit You Can Get from Social Security

Money
MONEY withdrawal strategy

Which Generates More Retirement Income—Annuities or Portfolio Withdrawals?

winners podiums
Getty Images

People's overconfidence in their investing ability makes them less likely to opt for guaranteed income.

New research by Mark Warshawsky, the retirement income guru who’s now a visiting scholar at George Mason University’s Mercatus Center, suggests more retirees should consider making an immediate annuity part of their retirement portfolio—and also highlights a reason why many people may simply ignore this advice.

When it comes to turning retirement savings into lifetime retirement income, many retirees and advisers rely on the 4% rule—that is, withdraw 4% of savings the first year of retirement and increase that amount by inflation each year to maintain purchasing power (although in a concession to today’s low yields and expected returns, some are reducing that initial draw to 3% or even lower to assure they don’t deplete their savings too soon).

But is a systematic withdrawal strategy likely to provide more income over retirement than simply purchasing an immediate annuity? To see, Warshawsky looked at how a variety of hypothetical retirees of different ages retiring in different years would have fared with an immediate annuity vs. the 4% rule and some variants. The study is too long and complicated to go into the particulars here. (You can read it yourself by going to the link to it in my Retirement Toolbox section.) The upshot, though, is Warshawsky concluded that while an annuity didn’t always outperform systematic withdrawal, an annuity provided more inflation-adjusted income throughout retirement often enough (with little risk of ever running out) that “it is hard to argue against a significant and widespread role for immediate life annuities in the production of retirement income.”

Now, does this mean all retirees should own an immediate annuity? Of course not. There are plenty of reasons an annuity might not be the right choice for a given individual. If Social Security and pensions already provide enough guaranteed income, an annuity may be superfluous. Similarly, if you’ve got such a large nest egg that it’s unlikely you’ll ever go through it, you may not need or want an annuity. And if you have severe health problems or believe for some other reason you’ll have a short lifespan, then an annuity probably isn’t for you.

Even if you do decide to buy an annuity, you wouldn’t want to devote all your assets to one. The study notes the advantage of combining an annuity with a portfolio of financial assets that can provide liquidity and long-term growth, and suggests “laddering” annuities rather than purchasing all at once as a way to get a better feel for how much guaranteed income you’ll actually need and to avoid putting all one’s money in when rates are at a low.

But there’s another part of the paper that I found at least as interesting as the comparison of systematic withdrawals and annuities. That’s where Warshawsky says he worries whether the “lump sum culture” of 401(k)s and IRAs will interfere with people seriously considering annuities. I couldn’t agree more. Too many people laser in on their retirement account balance—the whole, “What’s Your Number?” thing—rather than thinking about what percentage of their current income they’ll be able to replace after retiring. And when choosing between, say, a traditional check-a-month pension vs. a lump-sum cash out, many people still tend to put too little value on assured lifetime monthly checks.

Although the paper didn’t mention this specifically, I think there’s a related problem of people’s overconfidence in their investing ability that makes them less likely to opt for guaranteed income. I can’t tell you the number of times after doing an annuity story that I’ve gotten feedback from people who essentially say they would never buy annuity because they think they can do better investing on their own—never mind that that’s difficult-to-impossible to do without taking on greater risk because annuities have what amounts to an extra return called a “mortality credit” that individuals can’t duplicate on their own.

Along the same lines I’m always surprised by the number of people who pooh-pooh the notion of delaying Social Security for a higher benefit because they’re convinced they can come out ahead by taking their benefits as soon as possible and investing them at a 6% to 8% annual return (although why anyone should feel confident about earning such gains consistently given today’s low rates and forecasts for low returns is puzzling).

Clearly, we all have to make our own decisions based on our particular circumstances about the best way to turn savings into income that we can count on throughout retirement, while also assuring we have a stash of assets we can tap for emergencies and unexpected expenses. There’s no one-size-fits-all solution. That said, I think it’s a good idea for anyone nearing or already in retirement to at least consider an annuity as a possibility. If you rule it out, that’s fine. Annuities aren’t for everyone. Just be sure that if you’re nixing an annuity, you’re doing it for valid reasons, not because of a misplaced faith in your ability to earn outsize returns or because you’re unduly swayed by lump-sum culture.

Walter Updegrave is the editor of RealDealRetirement.com. If you have a question on retirement or investing that you would like Walter to answer online, send it to him at walter@realdealretirement.com.

More From RealDealRetirement.com:

MONEY Social Security

This Is the Maximum Benefit You Can Get from Social Security

If you're fortunate enough to earn a hefty salary throughout your career, a Social Security jackpot awaits.

If Social Security had a lottery jackpot, it would go to the small number of persons who collect the absolutely highest retirement benefits allowed under agency rules.

How high are the hurdles to claiming the maximum amount? Pretty darn high. A worker needs to have wage earnings large enough to equal or exceed the agency’s annual ceiling on earnings subject to payroll taxes for at least 35 years.

The earnings ceiling this year is $118,500. And that number has nearly doubled in the past 20 years from $60,000 in 1995.

Social Security bases your benefits on your highest 35 years of earnings after adjusting each year’s earnings to reflect wage inflation. In other words, your top 35 years, as documented via your payroll stubs, may not be your top 35 once they’re adjusted for wage inflation. Still, you can be certain that if you’ve earned at or above the annual payroll-tax ceiling for at least 35 years—lucky you!—a benefits bonanza awaits.

The size of that benefit check will also depend on wage inflation. This year’s top monthly benefit at 66, or full retirement age (which is the benchmark the agency uses), is $2,663 ($31,956 a year). By contrast, the average Social Security payout is a more modest $1,287 ($15,444 a year).

If you wait until age 70 to claim, delayed retirement credits will boost your payment to $3,515 in today’s dollars ($42,182 a year). The actual amount you’d receive in four years also would include accumulated cost of living adjustments.

If you haven’t already done so, open an online Social Security account to access the agency’s record of your earnings each year. By comparing what you have earned each year to that year’s earnings ceiling, you can see how close you are to being eligible for the benefit jackpot. For the uber-geeky, Social Security provides each year’s top benefit and the average inflation-indexed wages used in its calculations.

Clearly, few workers qualify for the highest payout. While claiming ages are rising, fewer than 2% of all Social Security beneficiaries wait to file for benefits until age 70, when they reach their maximum level.

The maximum benefit payouts in future years will depend on how much wage inflation there has been. This will determine the new ceiling for earnings on which payroll taxes must be paid, which in turn will drive a new jackpot number.

Even so, we do know that the top benefit won’t change much next year. Rates of general inflation have been so low that some people think the annual cost-of-living adjustment for 2016 benefits will be very small or even zero. Of course, you may be comforted that this also means your benefit dollars are not being eroded by inflation.

And if you’ve earned enough money to qualify for the highest payout, odds are you’re not too worried anyway about missing out on a few more benefit dollars.

Philip Moeller is an expert on retirement, aging, and health. He is co-author of The New York Times bestseller, “Get What’s Yours: The Secrets to Maxing Out Your Social Security,” and is working on a companion book about Medicare. Reach him at moeller.philip@gmail.com or @PhilMoeller on Twitter.

Read next: Are Social Security Benefits Taxable?

Your browser is out of date. Please update your browser at http://update.microsoft.com