Would euro departure help or hurt Europe's currency union?-By David Mchugh

Up-front losses would be large for Greece, long-term consequences uncertain for Europe

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A demonstrator shouts slogans during a rally organized by supporters of the Yes vote in Athens, Friday, July 3, 2015. A new opinion poll shows a dead heat in Greece's referendum campaign with just two days to go before Sunday's vote on whether Greeks should accept more austerity in return for bailout loans. (AP Photo/Emilio Morenatti)

FRANKFURT, Germany (AP) -- With aid negotiations off and ATMs running out of money, it's not speculation any more. Greece could leave the euro. And soon.

What would that mean for the Greek people and for the European Union's 16-year-old shared currency — the crown jewel of a six-decade-old project in binding Europe's countries closer together?

For Greece, the short-term pain and turmoil could be extreme whereas the currency union would likely survive the initial shock.
The longer-term costs — and any possible benefits — could take years to become apparent.
Ironically, a few experts think one of the most devastating outcomes for the euro would be if Greece leaves and, against all expectation, thrives. That would undermine claims for the euro being a key to prosperity.
On Sunday Greeks are asked to vote on the painful demands made by creditor countries for desperately needed bailout loans. The vote could be the turning point. A "no" could mean no more loans, leaving Greece little choice but to print its own currency after running out of euros needed to pay government wages and pension and to refloat troubled banks.
Here is a look at some of the possible damage — and any benefits — of a Greek-euro divorce.
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FORTRESS EUROZONE?
There's a widespread view among analysts that the eurozone would not collapse in the short term if Greece left. There would be turmoil. Stocks would fall. Borrowing costs for the weaker eurozone members, such as Portugal or Italy, might rise for a while.
But, this view has it, the European Central Bank could handle it. The ECB is already pouring 1.1 trillion euros ($1.2 trillion) of monetary stimulus into the economy through regular bond purchases and stands ready to do more. Since the Greek crisis started in 2009, the governments that use the euro have come up with crisis backstops. Those include tougher banking supervision and a pot of money to bail out troubled governments.
Other voices say the short-term implications are scarier. U.S. Treasury Secretary Jacob Lew has persistently warned that the global economy, currently enjoying an uneven recovery, doesn't need the uncertainty of a Greek euro exit, or "Grexit."
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THE HOTEL CALIFORNIA
For the long term, a Greek exit would disrupt the euro's "Hotel California" principle: that, as the Eagles put it, you can "check out any time you like, but you can never leave." It is supposed to be permanent.
But if it turns out that one country can leave, investors might think, so can others.
They might demand more interest for the risk of lending to countries such as Portugal and Italy. A market crisis could drive another country out.

Some think such higher rates would be beneficial, by forcing countries to shape up their finances. The euro would in fact be stronger. Greece was an anomaly, a backward economy that didn't belong in the club in the first place, the thinking goes.

A number of economists, however, think a Greek exit could cause long-lasting damage to the euro.

As analysts at Standard & Poor's put it, "the permanence of the monetary union will have been proved false, and this could throw into question assumptions underpinning more than two decades of economic and political policy."

Ben May, chief European economist at Oxford Economics, says that the worst blow Greece could deal to the eurozone "would be if Greece left and its economy quickly started to grow strongly."

The example would not be lost on other weak members of the currency union.

"For perennial slower growers such as Italy and Portugal an exit, devaluation and default strategy would now become a credible alternative option."

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THE BILL AT THE TAVERNA
There's little doubt that leaving the euro means imminent disaster for Greece.
"In the short term, which may in fact last a couple of years, the process of exit would be extremely messy," said Zsolt Darvas, senior fellow at the Bruegel research institute in Brussels. The start would be a banking collapse that would make normal commerce impossible. Greece's new currency would plunge, meaning default on its bailout loans denominated in euros.
The economy would plummet — some say by 10 or 20 percent. That's on top of a fall of 25 percent in the six years, about the drop the U.S. suffered during the Great Depression.
And there's more. Greece imports energy and medicine, so those essentials could double in price. Greek companies that owe money to foreigners would be unable to pay. Many would go bankrupt. With no lenders and tax revenue plunging, the government would have to slash spending even more sharply than under the hated bailout deal. Greece might even need humanitarian aid.

Inflation could run out of control, especially if the central bank has to print money to rescue banks and fund the government.

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A BETTER FUTURE?

The larger question is whether Greece would benefit much from a sharply devalued national currency, which in theory helps exports. To do that, you have to have something valuable to export and sell — and to be able to do so efficiently. Olives and nice vacation beaches aren't enough.

Economist Darvas says the demands of Greece's lenders have pushed the country to reform some aspects of its economy, making it somewhat more competitive. Labor contracts are more flexible now, for instance.

Greece has risen from 108th before the crisis on the World Bank's ease of doing business index to 62nd — not great, but progress. If it cuts excessive regulation and bureaucracy, that might improve further.

But that might prove more difficult if Greece was no longer a part of the euro — and did not face external pressure from fellow eurozone states to modernize its economy.

Culled from AP

UK sells more of Lloyds bank stake, 12.5 billion pounds raised so far-By Matt Scuffham

A man walks past a sign outside Lloyds Banking Group's headquarters in the City of London 27 February, …

LONDON (Reuters) - Britain has cut its stake in Lloyds Banking Group to below 16 percent, taking the total raised through the sale of the government's shares in the bank to more than 12.5 billion pounds ($19.5 billion).
Lloyds said on Thursday that Britain's finance ministry had reduced its stake to 15.9 percent, from 16.9 percent, in a further step towards its full privatisation which is expected next year.
The bank was rescued during the 2007-9 financial crisis at a cost of 20.5 billion pounds, leaving taxpayers with a 43 percent stake. Britain's finance ministry began selling its stake in September 2013.
The government mandated Morgan Stanley to sell its shares and its stake has been cut from 24.9 percent through the plan, which was launched last December and is due to carry on until the end of 2015.
In the past 4-1/2 months alone the government's holding has been reduced by 9 percentage points.
"I am determined to build on this success, and to continue to return Lloyds to the private sector and reduce our national debt," said finance minister George Osborne.

The government's remaining stake is worth 9.9 billion pounds at current share prices. It is expected to offer retail investors the chance to participate in an offer of several billion pounds worth of Lloyds shares next year.

(Editing by Sinead Cruise and David Holmes)

Culled from Reuters

6 money mistakes that newlyweds make Kiplinger- By Lisa Gerstner

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After getting married last year, I've become familiar with the complexities of merging my finances with those of another person. Everything from filing a joint tax return to figuring out how to manage checking accounts together is a new challenge to tackle. And let's call it like it is: Most newlyweds would rather spend their free time socializing or snuggled up in front of Netflix than plotting out a financial plan.
But money affects your marriage in a big way, in terms of meshing your financial personalities and creating a secure future together. It's a downer to bring up the d word as wedding season blooms, but 56% of divorcees say that money issues contributed to their split, according to a Credit.com report. "If people talk about money as newlyweds, they may avoid some of those major issues down the line," says Aaron Hatch, a certified financial planner and co-founder of Woven Capital, in Redding, Calif.

I talked with several financial planners and other experts about money mistakes they see newlyweds make. Here are common problems, as well as tips on how to conquer each.

1. Avoiding basic money conversations.

All the experts agree that communication is crucial--and that couples should start talking about money before they tie the knot. Yet many couples focus far more on planning the wedding than mapping a financial strategy. Some questions you and your spouse should discuss: What was your family's attitude toward money as you were growing up? How do you feel about taking risks with your investments? What are your short-term and long-term financial goals? How comfortable are you with merging your bank accounts and investments? What should the budget look like?

2. Failing to address divergent attitudes about money.

If your views toward money are on opposite ends of the spectrum, take steps to meet in the middle. If one spouse prefers to save every extra penny and the other is willing to drop hundreds of dollars on gadgets or clothes without a second thought, agree on a budget that outlines how much money you'll save each month and how much is for fun. Working toward common goals--say, saving enough for a vacation to Europe--can help you stick to your budget. Keeping separate pots of money that each partner is free to use as he or she sees fit can also relieve tensions about spending.
Even if your attitudes about money are well-aligned, designate a maximum amount that each of you can spend without consulting your partner, suggests Susan Carlisle, a certified public accountant in Los Angeles. If you're on a tight budget, maybe that amount is $50 to $100; if cash is more readily available, the threshold may be a few hundred dollars or more.

3. Leaving one partner in the dark about household finances.

If you love crunching numbers and your spouse cringes at the sight of a spreadsheet, then it makes sense for you to manage the budget and fill out the tax return. But that doesn't mean your spouse should be clueless. If one partner pays the bills and makes trades in the brokerage accounts, the other should review those accounts and actions, says Marcio Silveira, a certified financial planner and founder of Pavlov Financial Planning, in Arlington, Va.
Make a regular appointment--say, every month or quarter--to go over your finances together and discuss whether you're staying on track. Give yourselves a reason to look forward to it by going out for coffee or cracking open a bottle of your favorite wine, suggests David Weliver, founding editor of finance blog Money Under 30. It's also a good idea to keep a master list of account information, such as usernames and passwords, that both partners can access in case the person who usually manages an account is unable to do so.

4. Spending too much on a house.

When you and your spouse combine incomes, your newly increased purchasing power may tempt you to shop for the priciest house (or car or other big purchase) you can afford. (You deserve to have a swimming pool!) But instead of dropping most of each of your paychecks on a new home, aim for a monthly payment that's about 25% of your monthly income, suggests Andrew McFadden, a certified financial planner and founder of Panoramic Financial Advice, in Fresno, Calif.
If you spend a lot more than that on your home, "you lock yourself into a lifestyle that doesn't give you much flexibility down the road," says Kitrina Wright, a certified public accountant and cofounder of UniteWright, an Indianapolis financial planning firm for young couples. Think about the future. Do you plan to have kids? Do you or your spouse want to pursue a graduate degree or start a business? Will your hypothetical kids wind up going to college? If you want to keep any of those options open, you need to have the cash flow available to support them.

5. Hiding or ignoring credit and debt issues.

Whether couples purposely veil information or simply forget to grant full disclosure, they often neglect to share information about their debts, says Charles Donalies, a certified financial planner and founder of Donalies Financial Planning, in Washington, D.C. Though it can be uncomfortable to tell your partner that you're paying off a pile of credit card debt or that your credit score is in the doldrums, getting it all on the table is best both for your finances and for building trust in your relationship.
Review all your debts, and decide how you'll repay them. Some financial experts say that although one person may be bringing debts into the relationship, they become the responsibility of both partners once they marry. And it may make the most sense for your overall balance sheet to direct as much of both of your incomes as possible toward shrinking the debt. For example, paying off credit card debt with an 18% interest rate is more beneficial than investing money in the stock market and getting a return of 8% to 12%, says Silveira.
Check your credit reports together to get a handle on what accounts each of you has and to spot any problems, such as debts listed that aren't yours (it could be a sign of fraud or an error on the lender's part). You can each get a free credit report from each of the three major credit agencies--Equifax, Experian and TransUnion--once a year at www.annualcreditreport.com. Check your credit scores, too. Credit.com, CreditSesame.com and CreditKarma.com all offer free credit scores that will give you an idea of where you stand.

6. Being underprepared for the worst.

Few of us want to think about what would happen if we died or became incapacitated. But preparing for such situations can save a lot of headaches during a difficult time. After they get married, couples often forget to update the beneficiaries on retirement accounts, such as IRAs and 401(k)s, as well as any life insurance policies they have. By law, a spouse is the automatic beneficiary for most 401(k) and other workplace plans, unless you indicate otherwise. But you'll have to designate your spouse as an IRA beneficiary. Whether you want the money to go to your spouse when you die, make sure you update the accounts and policies, as necessary.
Couples should also compose wills and advance medical directives (such as living wills and health care powers of attorney) that state their wishes. It's often best to consult an attorney, but online templates at such sites as Nolo.com and LegalZoom.com may do the job if your estate plan is simple.

Culled from Kiplinger

How to time your Medicare enrollment-By Philip Moeller

Thinkstock

Q: When should I sign up for Medicare?

A: Most pre-retirees know that Medicare coverage kicks in when you turn 65. But that’s not the whole story. If you want to enroll in Medicare without hassles and costly penalties, you need to know exactly when to sign up for the program you want. There are different enrollment periods, so it’s trickier than you might think. Many older Americans fail to sign up at the right time, which can lead to higher premiums or leave you with coverage gaps, studies have found .
First, though, there are exceptions to the age 65 sign-up date. You may still be covered by your employer’s health care plan, for example, or if you are eligible for Medicare due to a disability, you can sign up earlier .
Initial Enrollment Window : Medicare has established a seven-month Initial Enrollment Period , which includes the three months before you turn 65, your birthday month, and the three months afterward. This window applies to all forms of Medicare—Parts A (hospital), B (doctor and outpatient expenses), C (Medicare Advantage), and D (prescription drugs).
Medigap Enrollment: There is a separate six-month open enrollment period for Medicare Supplement policies (also called Medigap), which begins when you’ve turned 65 and are enrolled in Part B. During this period, insurers must sell you any Medigap policy they offer, and they can’t charge you more because of your age or health condition. This guaranteed access may be crucial because if you miss this window and try to buy a Medigap policy later, insurers may not be obligated to sell you a policy and may be able to charge you more money.
General Enrollment: If you missed enrolling in Part A or B during the Initial Enrollment Period, there is also a General Enrollment Period from January 1 through March 31 each year. Waiting until this period could, however, trigger lifetime premium surcharges for late Part B enrollment, which can end up costing you thousands of dollars. And your coverage won’t begin until July.
Part D drug coverage is not legally required. But if you don’t sign up for it when you first can, and later decide you want it, you will face potentially large premium surcharges. For example, if you missed enrolling during your initial enrollment period and then bought a policy, a premium surcharge would later take effect if you were without Part D coverage for 63 days.

Special Enrollment: There are lots of special conditions that can expand your penalty-free options for when you sign up for Medicare. And there also are what’s called Special Enrollment Periods for people who’ve moved, lost their employer group coverage or face other special circumstances. These special periods may have enrollment windows that differ in length from the standard ones.

Culled from Money.com:

Making retirement money last to 103: An expert's plan for himself-By Suzanne Woolley

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Americans worry about affording retirement, but that doesn't usually translate into hard-core financial planning. Then there's David Littell, the 61-year-old director of the retirement income planning program at the American College of Financial Services, a nonprofit that educates financial advisers. If anyone ought to have a well-thought-out plan, it's this guy.

So we asked him what's in it.
It's a little intense—this is one well-prepared pre-retiree, and one who knows his insurance products, since the college's focus has historically been on educating insurance agents.   While the challenge of ensuring he won't outlive his money isn't unique, his attitude may be. "I find this fun," he said. A sign of how into this stuff he is? Before a follow-up call, he e-mailed a three-page, 1,500-word, bullet-pointed outline of his thinking.
More from Bloomberg.com: Greece Stumbling to Euro Exit as Talks End in Frustration
Here's how a retirement income geek puts theory into practice.
The situation
Matching increasing longevity with increased savings is among the biggest challenges facing retirement savers. It's not an abstract one for Littell, whose father retired at 75 and is 103. His father has managed his own finances well and, when he started spending down assets at 84, bought an annuity with some of his money. "It let him sleep better at night," Littell said.
Littell's doing well on the savings side. He earns a salary in the low six-figures and has saved throughout his career, putting 10 percent, on average, into a defined contribution plan.
He said he's an example of how the defined contribution environment—that's 401(k) territory, an environment without defined benefit plans, the traditional pension—can work "as long as you contribute, roll the money into an IRA when you change jobs, and invest for the long haul." A $20,000 rollover made years ago has more than quadrupled and is his biggest retirement asset. Most of the money is in a variety of low-cost stock mutual funds. He also has a small defined benefit plan, which was frozen.
More from Bloomberg.com: EU, Greece in Behind-Scenes Diplomacy to Avert Default
Littell and his 70-year-old husband, Edward Selekman, have been together for 30 years; they married about a year ago. They own their home and have long-term care policies. Edward, a psychotherapist who worked out of their suburban Philadelphia home, just retired. They have no children as a couple; Edward has three children from a prior marriage. If Edward hadn't retired, Littell said, he probably wouldn't be thinking about retirement himself. Now he's thinking he'll retire in about three years, rather than five or 10.
The vision
After training financial reps on the importance of getting clients to really plan what their retirement will look like, Littell is realizing it's not so easy. "This idea that somehow you have this clear picture of what you want as you approach retirement is kind of a fantasy," he said. "Life's more fluid than that."

For example, the couple might want to move somewhere warmer, but haven't decided where yet. You have to know the details of housing costs to figure out how much you need to retire comfortably. There's a "crazy expensive" continuing care retirement community in California they're interested in, but if they move there, it means much higher expenses than for other options.
Littell's main retirement objective is one many people share: having the financial freedom to choose how he spends his time. He expects to work in retirement, educating consumers, but work won't be the highest priority, if his planning works. And he doesn't want to worry about that work being compensated.
Littell, who was a fencer in the 1988 Olympics in Seoul, would also like to coach fencing; he coached the men's and women's varsity teams at Haverford College from 2000 to 2006.
The first consideration
The wisdom of waiting as long as possible to take Social Security is one of the personal finance Ten Commandments . Here's how that works in Littell's situation.

The Social Security benefit paid at the full retirement age of 66 is 100 percent of what's called the primary insurance amount (PIA). Edward took Social Security at 70, so he got four years of what's called deferral credits. At 8 percent a year, those credits add up to a 32 percent increase, so he gets 132 percent of his PIA.
When Littell turns 66, he will make a "restricted filing for a spousal benefit." Doing that gets him half of Edward's PIA (not half of his enhanced benefit for waiting). Spousal benefits are based on the PIA and age of the partner whose benefit the filing is being made to access, and—surprise, surprise—are complicated. Doing the restricted filing lets Littell get some benefit for four years while deferring his own benefit. At 70, he'll get 132 percent of his own PIA.
What's it like living with someone who knows how to make a restricted filing for a spousal benefit? Great, apparently. "He's not so geeky that it bores me," said Edward. "He explains it beautifully and brings it right down to the consumer level." Once in a while, Edward finds his eyes glazing over if an explanation has been going on for a while, "but it's been very beneficial to me, and I feel very secure knowing that he knows so much about it."
The balancing act
Lots of people like the idea of guaranteed income in retirement, in theory. But who wants to lock up the bulk of their money? "For me, the real, visceral experience was about how much money I was willing to part with," Littell said. "It was more about a percentage—15 percent to 20 percent of assets—than trying to get a specific income."
He definitely does want eventually to create a greater stream of income, but wants to buy it over a period of years. He can eliminate some of the risk of being heavily in equities as he nears retirement by locking in some income now—but doing it gradually means he won't have locked up his assets and be in a bind if a big health or other issue comes up.
Traditionally, investors nearing retirement with a lot of money in equities would move money into bonds. But low interest rates, which can make buying a future stream of income in an annuity expensive, and the fact that we're living longer is changing that calculus.
Littell wants the certainty of a floor of guaranteed income from annuities, and he's particularly concerned about longevity, which bonds don't really protect against. Another reason he's not choosing bonds is that when you self-insure, "the uncertainties of the market mean you have to be very conservative in taking withdrawals," he said, "and you have to avoid making big mistakes when the market is down."
What keeps him up at night

 

He knows he's missing something in all of the planning. He just doesn't know exactly what it is.
The simpler products
The simplest annuity Littell and his husband own is a deferred income annuity on Edward's life. They paid $60,000 for it when Littell started focusing on retirement planning late last year, and it will start paying a little more than $500 a month when Edward turns 74, and keep paying as long as he lives. They chose an annuity that doesn't provide a benefit after Edward's death because it provides the largest lifetime income payout.
Another somewhat serendipitous element of his plan comes thanks to a low-cost variable annuity. He bought it long ago with money from a small inheritance, less because he wanted guaranteed income than to defer taxes on the account's growth. The account balance is invested in low-cost stock mutual funds.
Littell originally figured he'd cash out the old product and buy a deferred income annuity. But the variable annuity uses older mortality tables and has guaranteed interest rates built into it that you can't get today—its payout of 7.5 percent for a 65-year-old man made it a far better deal than he could find elsewhere. (If the amount you put in is $100,000 and the payout is 7.5 percent, you get $7,500 a year.)
"If you have an older life insurance or annuity product, you might have something of tremendous value, so hang on to it," he said.
The not-so-simple product
Then there's Littell's most complex product, an indexed annuity with an income rider. The account balance is indexed to the stock market.  It will never appreciate as much as the market, but the account balance will never drop below zero.
The income rider promises a minimum monthly payout when turned on, depending on the buyer's age. The guaranteed minimum income payment is comparable to that of a deferred income annuity, Littell said. But the income payments could be higher, since there's exposure to equities. He also likes that he has flexibility in deciding when to start receiving income.
Unlike a regular income annuity, with this one you still own the account balance even after you turn on the rider. So at your death, there may be money left for a beneficiary. If you live a long time, the balance could go to zero, since each payment reduces the account. The rider ensures that the income stream will continue even if the account balance is zero. Littell pays about 1 percent of the balance, annually, in fees.
Littell will invest more in annuities  over time. "The older you are, the cheaper it is to buy income, for the lovely reason that the payout period is shorter for the insurance company," he said. He'll get more income when he takes his $1,000-a-month pension (the frozen one) as an annuity. "If you have a defined benefit plan that promises an annuity payout, you'll probably get a better rate with that than if you took a lump sum and bought an annuity from a commercial provider," he said.
The house
Littell and his partner own their home free and clear. At 62, he plans to open up a reverse mortgage letter of credit. That allows him to lock in the ability to borrow against their home. If the stock market goes down, it can be a good way to supplement income without having to sell investments in a down market, or having to take money out of a retirement account early and pay taxes and penalties on it.
The bottom line
"We're all products of our environment, and having a 103-year-old father affects how I think about planning," Littell said. "I want to be really, really, really ready." He is "acutely aware that the costs of retirement are tremendously uncertain, and you can be ready for the average costs—or be really ready for whatever happens."
He views his plan as conservative in some ways and aggressive in others—aggressive, for example, in how he keeps a significant exposure to equities as he ages. "With the annuities and the long-term care insurance, I can afford to take more risk with my investment portfolio," he said.

If something goes wrong in retirement, his flexibility means he has options, Littell said. And if things go well? "I look forward to writing bigger checks to my favorite charities each year." 

Culled from Bloomberg.com