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Healthcare Provider Update: Verizon collaborates with Aetna as its primary healthcare provider, offering a range of health plans and services to its employees and their families. Looking ahead to 2026, the healthcare landscape is poised for significant change, as record hikes in Affordable Care Act (ACA) premiums are anticipated. With some states facing increases exceeding 60%, many individuals could see their out-of-pocket premiums rise by more than 75%, particularly if enhanced federal premium subsidies are not extended. This scenario could create an additional burden for Verizon employees, emphasizing the importance of strategic planning for healthcare coverage amidst such dramatic shifts in costs. Click here to learn more
Verizon employees, considering home equity financing as a strategy, should understand their needs and the implications of home equity loans and lines of credit, advises (Advisor Name) of the Retirement Group, a division of Wealth Enhancement Group. This helps them choose the best way to leverage their home value, he said.
Home equity options can give Verizon employees significant financial leverage - but there are risks and benefits too, advises (Advisor Name) of The Retirement Group at Wealth Enhancement Group. 'I would suggest they compare terms and costs carefully to protect their financial position and maximize the value of their equity.'
In this article, we will discuss:
1. The Basics of Home Equity Financing: Understanding home equity loans and lines of credit - and how homeowners can use them if they need extra cash.
2. Comparative Analysis of Loans versus Lines of Credit: Learn about fixed home equity loans versus revolving home equity lines of credit - terms and conditions.
3. Financial Implications and Considerations: Experiencing costs, risks and taxes of using home equity for financial need.
And if you are leaving Verizon and need more emergency funds. Planning on renovating your shabby kitchen? You may be underwater on credit cards or you need to pay for college. Or perhaps you just want the security of having a cash reserve account when you search for a new job after leaving Verizon to cover your bills. Whether you have a home equity loan or line of credit is up to you - as a homeowner - then you may qualify for one.
Before you sign that dotted line, though, we suggest these Verizon employees conduct a little research to see if the product or service meets their needs.
But What Is Home Equity Financing Exactly?
Property equity financing is a loan secured by your house equity. That's why most lenders charge higher interest on secured personal loans than unsecured personal loans. You will usually borrow 80% of your equity.
Tip: Mortgage refinancing involves getting a new home mortgage loan and paying off an existing mortgage (or mortgages) on the property.
Caution: Since home equity financing is secured by your property, you risk losing it if you default on the contract.Home equity financing could be a loan or a credit line.
Home Equity Loans
A home equity loan is a loan of a fixed amount and term. A typical home equity loan:
The entire loan amount is advanced at the beginning of the term. A fixed interest rate. It requires equal monthly payments of equal amount to repay the loan (including interest) over the specified term.
Lines of Credit - Home Equity.
Some Verizon employees are curious about what happens when a home equity line of credit is granted. You get revolving credit up to a limit with a home equity line of credit (HELOC). In terms of the loan agreement, you borrow only what you need and pay for only what you need. Typically, a HELOC is:
Write a check or use a credit card against the available balance during the borrowing period. Carries a variable interest rate based on a public economic index plus the lender's margin. Monthly payments may be different based on your outstanding balance and/or the interest rate being charged.
HELOCs come in many flavors. For those Verizon clients who are considering one: What should they ask for:
How frequently is the interest rate changed? Which adjustment limit dictates the maximum rate change per adjustment? Where does the total interest rate ceiling (lifetime cap) lie? How long is the loan good for? Can it be renewed? Those monthly payments will be for interest only or principal will be paid as well? Is there a balloon payment due at the end of the loan term? Is the loan convertible to a fixed rate, fixed term loan?
Caution: Several HELOCs limit the required monthly payment amount, but not the interest rate adjustment. In such plans, Verizon clients must understand that payment limits can cause negative amortization in rising interest rate periods. Any monthly payment that would be less than the interest paid on that month would add the unpaid interest to your principal and your outstanding balance would grow despite your continued monthly payments.
What Are The Costs?
The cost is another common question Verizon customers ask. Oftentimes the fees associated with a home equity loan or line of credit are comparable to those of a mortgage. They consist of:
Application charge Fee for property appraisal Points (1 point equals 1 percent of the loan amount or lending limit) The costs of closing can include attorney, title inquiry, and mortgage preparation/filing fees.
Using a home equity loan or line of credit may be an option for 60-year-olds needing extra cash in retirement, according to an EBRI study in August 2022. Nearly three out of four retirees with a mortgage had outstanding mortgage debt, so drawing on home equity through loans or lines of credit could help them pay for their needs. And the EBRI study also showed that homeowners using home equity financing had greater retirement savings than non-users - indicating that leveraging home equity could be a smart financial move during retirement planning.
A HELOC could also charge an annual maintenance fee and/or transaction fee for each withdrawal.
These Verizon employees shop around before committing to a plan. Interest rates and other fees vary by lender. When comparing costs, you can not compare the annual percentage rate (APR) of two plans - especially if one is a home equity loan and the other is a HELOC. Points and financing fees are included on a home equity loan (second mortgage) but not on a HELOC annual percentage rate (APR). Compare total expenses.
Tip: The Truth in Lending Act gives you three days to cancel the contract if your primary home is collateral for the home equity financing plan. You must cancel the contract by writing. The lender then releases any security interest in your home and refunds the fees you paid.
Other Considerations
More Factors our Verizon customers Need to Know Before Taking a home equity loan or line of credit:
When you sell the property you repay the equity loan or credit line. If you sell soon after getting financing, the cost of financing might reduce your profit on the sale. A home equity line of credit can be pricey if only a small amount is withdrawn. A home equity financing agreement may prohibit you from leasing your home out.
What Is Best-A Loan or A Line of Credit?
Whatever works best for you, there is no magic number or formula - just a general rule of thumb. You could get a home equity loan if you need a fixed amount of money at once for something like kitchen remodeling or paying off other high-interest debts.
Example(s): Your contractor estimates USD 35,000 for remodeling your kitchen. You take out a home equity loan because you'll use the entire amount over the two-month project period. For 15 years at a fixed interest rate of 7.25 percent, you will pay USD 320 per month in whole dollars. Your interest expense is USD 22,510. Get a HELOC if you need an undetermined amount over a period of years (e.g., college fund or cash reserve account).
Example(s): You convert the HELOC to a USD 47,000 home equity loan at 7.25 percent with a 10-year term when your child graduates. Your monthly payment is USD 551, and interest will total USD 19,214 over the life of the loan. When you add this to the annual interest charges on your HELOC for the four years your child attended college, your interest payments total USD 26,103.
Example(s): When your child started college, you would have owed USD 429 on a USD 47,000 home equity loan at a fixed rate of 7.25 percent for 15 years - and paid USD 30,228 in interest.
The Tax Impacts of Home Equity Financing.
Some home equity financing plans let you deduct interest on up to USD 100,000 (USD 50,000 if filing separately) of the principal you borrow. Interest you pay is generally deductible regardless of how the loan or line of credit proceeds are used (unless used to purchase tax-exempt vehicles). That is, the loan or line of credit is not needed to purchase, construct or improve a home.
Imagine your house as an investment chest full of items you've accumulated over time. Like a chest, you can unlock its potential through home equity loans and lines of credit. Consider a home equity loan like a key to the chest that gives you access to a certain amount of money upfront to help you pay for big expenses like renovating your kitchen. In contrast, a home equity line of credit is like a magic wand that lets you withdraw money whenever you want to pay for something like college for your kid or unexpected expenses in retirement. As a treasure chest can provide financial flexibility and security, home equity financing lets you draw on the value of your home to meet your changing financial needs.
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- Medicare Open Enrollment for Corporate Employees: Cost Changes in 2024!
- Stages of Retirement for Corporate Employees
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- How Are Workers Impacted by Inflation & Rising Interest Rates?
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Sources:
1. Investopedia : 'Should You Use a Home Equity Loan for Retirement Savings and Investing?' Investopedia. Accessed [date]. https://www.investopedia.com .
2. Boldin : 'Should You Secure a Home Equity Loan Before You Retire?' Boldin. Accessed [date]. https://www.boldin.com .
3. HomeLight : 'Using Your Home Equity for Retirement Income: 5 Options to Explore.' HomeLight. Accessed [date]. https://www.homelight.com .
4. LendEDU : Kirste, Eric, CFP®. 'HELOCs for Seniors: Should You Tap Home Equity for Retirement?' LendEDU. Accessed [date]. https://www.lendedu.com .
5. Experian : Hayes, Marianne. 'How to Use Your Home Equity for Retirement Income.' Experian, 5 Feb. 2023. https://www.experian.com .
How does the Verizon Pension Plan facilitate retirement income for long-term employees, and what specific benefits can employees expect when enrolling in the retirement program provided by Verizon? What unique features does the Verizon Pension Plan offer compared to other retirement plans an employee might have encountered, and how can employees maximize the benefits of these features throughout their career at Verizon?
Verizon Pension Plan Benefits: Verizon's Pension Plan offers substantial benefits aimed at facilitating a secure retirement for long-term employees. Upon enrolling in the retirement program, employees can expect defined benefits that are based on their salary and years of service, ensuring a predictable and stable income after retirement. Unique to Verizon, compared to some other plans, may include options for early retirement under certain conditions and a choice between annuity payments or a lump-sum distribution upon retirement. Employees can maximize these features by planning for long-term service and considering their retirement income needs early in their careers.
In what ways can employees at Verizon strategize their rollover decisions when transitioning from the Verizon Pension Plan to other retirement savings plans upon leaving the company? What factors should be considered by Verizon employees to ensure they are making informed choices regarding rolling over funds to a traditional IRA or another qualified employer plan?
Rollover Strategies: When transitioning from the Verizon Pension Plan to other retirement savings options upon leaving the company, employees should strategize their rollover decisions carefully. Factors to consider include the tax implications, the investment options available in the rollover destination, and the timing of the transfer to avoid penalties. Verizon employees should evaluate the benefits of rolling over to a traditional IRA or another employer's plan, considering their future financial needs and retirement goals.
What are the implications of the recent IRS limits for 2024 concerning contributions to retirement plans for Verizon employees, and how does Verizon align its offerings with these federal regulations? Additionally, how can Verizon employees best take advantage of these limits to enhance their retirement savings while adhering to tax regulations?
IRS Contribution Limits: The implications of IRS limits for 2024 are critical for Verizon employees as these limits dictate how much can be contributed tax-deferred into retirement plans. Verizon aligns its offerings with these federal regulations by adjusting contribution limits in their plans accordingly. Employees are encouraged to maximize their contributions to take full advantage of tax-deferred growth, especially when IRS limits increase, thereby enhancing their retirement savings while adhering to tax regulations.
How does the special tax treatment for lump sum distributions from the Verizon Pension Plan affect employees who receive their benefits early or have specific circumstances, such as being born before 1936? What options do these employees have to manage their tax burden effectively, and how can they best navigate these complicated rules while planning for their retirement?
Tax Treatment of Lump Sum Distributions: The special tax treatment for lump sum distributions from the Verizon Pension Plan can significantly affect employees who opt to receive their benefits early or under specific circumstances like being born before 1936. These employees have options to manage their tax burden effectively by opting for ten-year averaging or capital gain treatment on eligible distributions, allowing for a potentially lower tax rate on their pension benefits.
For surviving spouses and alternate payees of Verizon employees, what are the specific benefits available under the Verizon Pension Plan? How do these benefits compare to those available to employees, and what steps must surviving spouses or alternate payees take to ensure they receive their entitled benefits without delays or complications?
Benefits for Surviving Spouses and Alternate Payees: For surviving spouses and alternate payees, the Verizon Pension Plan offers benefits similar to those available to employees, such as annuity payments or lump-sum options. These beneficiaries must take certain steps to ensure they receive their benefits without delays, such as providing necessary documentation and adhering to plan rules. The plan details and processes for claiming benefits should be clearly understood to avoid complications.
How can Verizon employees utilize the resources available through the Verizon Benefits Center to better understand and manage their retirement benefits? What specific tools and services does the Benefits Center provide, and how can these resources assist employees in making informed decisions regarding their pension plan options?
Utilizing Resources at the Verizon Benefits Center: Verizon employees can utilize various tools and services provided by the Verizon Benefits Center to manage and understand their retirement benefits. The Benefits Center offers personalized consultations, detailed plan documentation, and tools for estimating pension benefits and planning retirement income, assisting employees in making informed decisions about their pension plan options.
What challenges might Verizon employees face regarding eligibility and tax withholding when receiving their pension payments, and how can they mitigate these issues? It's crucial for employees to understand the mechanics of eligibility regarding rollovers and payment processing; what key pieces of information should they be aware of to avoid unexpected taxes?
Challenges in Eligibility and Tax Withholding: Verizon employees might face challenges regarding eligibility and tax withholding when receiving pension payments. Understanding the plan's criteria for eligibility, the implications of rollovers, and the impact of mandatory withholding on distributions is crucial. Employees can mitigate these issues by consulting with the Verizon Benefits Center or a tax advisor to ensure compliance and avoid unexpected taxes.
What is the process for Verizon employees wishing to initiate a direct rollover from the Verizon Pension Plan, and what documentation will they need to prepare? Can employees receive assistance from the Verizon Benefits Center during this process, and how does using a direct rollover benefit them compared to other forms of payment?
Direct Rollover Process: The process for initiating a direct rollover involves deciding the destination of the rollover (traditional IRA or another employer plan), completing necessary documentation, and potentially seeking assistance from the Verizon Benefits Center. A direct rollover helps in avoiding immediate taxes and maintaining the tax-deferred status of retirement savings.
In terms of retirement preparedness, how does the pension plan at Verizon accommodate employees’ needs for financial security in their senior years? What additional education or resources does Verizon provide to assure that employees fully understand their retirement options and the importance of planning ahead?
Retirement Preparedness: Verizon's pension plan is designed to accommodate the financial security needs of employees in their senior years. In addition to the pension benefits, Verizon provides educational resources and planning tools to ensure employees understand their retirement options and the importance of early and consistent retirement planning.
How can employees reach out to the Verizon Benefits Center for further information about the pension plan and other retirement benefits? What specific contact methods are available to employees, and how can these interactions enhance their understanding and management of retirement benefits provided by Verizon?
Contacting the Verizon Benefits Center: Verizon employees seeking more information about their pension plan and other retirement benefits can reach out to the Verizon Benefits Center through various contact methods such as phone, email, or online portals. These interactions are crucial for enhancing understanding and effective management of retirement benefits, ensuring employees make the most of the benefits available to them.
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