Ways to Make Sure You Can Pay for the Golden Years

"Both my husband and I are nearing retirement age and are concerned about having enough money for our golden years."

That's what Rebecca Raines of Alexandria wrote to me. But the Raineses aren't alone, as many of us know. Retiring these days is complicated. There are a lot of issues to figure out.

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To help people answer some of the concerns and questions about retirement, I hosted an online discussion recently with Jan Cullinane, co-author of "The New Retirement: The Ultimate Guide to the Rest of Your Life."

Time ran out, but Cullinane agreed to answer additional questions. Here are some:

Q I am 48 years old and have most of my retirement savings in traditional IRAs. Should I consider transferring these funds to a Roth IRA?

ASingletary: Just so you know, there are two types of IRAs (which, according to the tax code, stands for Individual Retirement Arrangements), traditional and Roth. Contributions to a traditional IRA may be deductible depending on your income and whether you participate in an employer-sponsored retirement plan. Roth IRA contributions are not deductible, but retirement distributions are not taxed the way distributions from a traditional IRA are.

Cullinane: The ability to compound earnings over a number of years and then distribute those earnings tax free using a Roth IRA is a powerful device for accumulating retirement savings. The downside to converting a regular IRA to a Roth IRA is that you will be taxed on the amount converted in the year of conversion. Holders of a regular IRA can convert it to a Roth IRA as long as their modified adjusted gross income (essentially total income with certain adjustments) does not exceed $100,000 (either joint or single, but not married filing separately) in the year of the conversion. However, the amount converted is fully taxable that year. (There is no such thing as a completely free ride!)

So, the decision to convert is based on a comparison of the cost of paying the tax now with the benefit of receiving tax-free distributions after retirement -- which involves the number of years the funds will grow in the Roth IRA before they are distributed, the rate of earnings on the invested funds and the expected tax rate in retirement compared with the tax rate on the conversion today. In general, the longer it is until your retirement distributions start, the more likely it is that a conversion makes sense. Since you are only 48 years old (assuming your income level qualifies), the odds are that it would make sense to convert your regular IRA to a Roth IRA, particularly if you expect your tax rate in retirement to be comparable to (or greater than) your current tax rate.

What are the relative merits of investing in a traditional IRA versus a Roth IRA?

Cullinane: To see which one could be better for you, check out the calculator at www.finance.cch.com(click on "Financial Calculators," then scroll down to "Roth vs. Traditional IRA"). This site allows you to enter your information (age, age of retirement, your tax rate, annual contribution, etc.) and compare how much money you'll have in retirement both pre- and post-tax with both a Roth and traditional IRA.

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'The Most Important Financial Number'

Anyone who uses credit ought to know what a credit score is. And surveys show that most people do.

But many still don't know what information is used to come up with their credit scores, according to a new survey by the Consumer Federation of America (CFA) and Fair Isaac Corp., developer of the FICO credit score used by most lenders to evaluate consumers looking for credit.

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If I were to tell you that as your income goes up your credit score will increase, would you agree?

If you answered "yes," you need to do some credit score basic training.

And you wouldn't be alone.

Almost one-half of consumers questioned in the CFA and Fair Isaac survey didn't know that increasing one's income will not increase one's credit score.

The fact is, credit scores reflect only your own past credit history and not your income, marital status, occupation or other personal characteristics.

"Despite all of the news coverage about credit scores over the past year, many consumers still do not understand important facts about these increasingly influential numbers," said Stephen Brobeck, CFA's executive director.

How would you answer this question: True or false, a married couple has a combined credit score?

It's false. You might be able to marry for money, but you can't marry your way into a good credit score. Debt that is jointly owed can affect your credit score as an individual. However, couples don't have a combined credit score.

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UK retail sales fall 1.4% in May

16 June 2011 Last updated at 16:04 The ONS said spending had been hit by worries over high fuel prices and job uncertainty UK retail sales fell 1.4% in May, official figures have shown, reversing the rise seen in April when sales were boosted by the royal wedding.

In April, sales had risen 1.1% on the previous month, reflecting a "spike" due to one-off factors, the Office for National Statistics (ONS) said.

However, May's sales figures were worse than analysts had expected.

The ONS said that food and fuel now accounted for more than half of all spending.

As well as the royal wedding, the warm weather, the timing of Easter and a run of bank holidays had helped to lift sales in April.

However, the ONS said that May's figures showed consumers were now cutting back because of the tough economic climate, worries about rising fuel prices and job uncertainty.

Various sectors had fared differently, with smaller retailers doing slightly better than larger ones, Joe Grice from the ONS said.

Food expenditure was down 3.5% in May - "a pretty direct result of the royal wedding and the April special effects," said Mr Grice.

This was the biggest monthly decline in food store sales since June 2008.

'Absolute stinker'

The figures chimed with warnings from major food retailers earlier in the week.

Tesco had said that UK sales were subdued, blaming high fuel costs and the "cautious consumer environment", while Sainsbury's also warned that rising fuel costs were reducing the amount of money people had available to spend.

Joe Grice of the Office for National Statistics reacts to the figures

Brian Hilliard, chief UK economist at Societe Generale, called the data "an absolute stinker".

"We were all expecting a pullback after the exceptionally strong month of April, but surveys hadn't prepared us for something quite this bad," he said.

"The basic story is clear: the consumer is not prepared to put their head above the parapet and the outlook is very soft.

"But the feature for growth this year is that we shouldn't be relying on the consumer. It's disappointing, but it's not the centre of anyone's forecasts on growth this year," he added.

Pressure

The British Chambers of Commerce (BCC) also said the figures were disappointing.

"On the basis of these figures we reiterate our forecast that GDP (gross domestic product) is likely to grow by only 0.3% in the second quarter of 2011, much less than the OBR [Office for Budget Responsibility] and other analysts are predicting," the group's chief economist David Kern said.

The Office for Budget Responsibility said in its March forecast that it expected the economy to grow by 0.4% in the second quarter.

Mr Kern also said that now was not the right time to raise interest rates.

"Given the pressures facing businesses and consumers, and with the government's fiscal austerity programme continuing to bite, it would be a mistake to raise interest rates in the near future."

Indebted households

Nida Ali, economic adviser to the Ernst & Young Item Club, said the figures reflected subdued consumer sentiment as real incomes were continuing to fall.

On Tuesday, ONS data showed that Consumer Prices Index (CPI) inflation remains at 4.5%, more than twice the Bank of England's target of 2%.

At the same time, research from Incomes Data Services suggests that pay settlements in the public sector are running at zero, while the median settlement in the private sector is 3%.

"Households remain heavily indebted and are eager to reduce, rather than add to their debt burden," Ms Ali said.

"These circumstances are unlikely to change in the near future and we would expect to see weak out-turns for retail sales in the coming months."

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Can't Be Sure of Credit Status, Even With a Scorecard

Humorist Mason Cooley once said, "Every path to a new understanding begins in confusion."

That quotation applies to e-mails I received from confused readers who recently ordered their credit scores to gain a better understanding of where they stood.

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In one case, a husband and wife paid for and got all six of their credit scores (one for each of them from the three major credit bureaus). The scores ranged from a low of 602 to a high of 712.

But when a mortgage lender pulled the credit scores not long after the couple did, some of their scores were significantly lower, ranging from 598 to 649.

"Why are our scores from the mortgage company different [from] the ones we pulled online?" the husband asked. "Shouldn't they be the same scores I pull from the three credit bureaus?"

A reader from Los Angeles wrote that his wife purchased her credit score online from TransUnion. The score she received was 864. Three days later, after applying for a home equity loan, the score the lender got from TransUnion was 775, a drop of 89 points.

"It doesn't seem plausible," the reader wrote.

There's nothing amiss here. Here's why.

Most of the credit scores you buy or get free online are not the exact ones used by lenders. The gold standard is what's called a FICO score, named after Minneapolis-based Fair Isaac Corp., which devised a mathematical model to predict the credit risk of consumers based on information in their credit report. FICO is the model most widely used by lenders.

Only in the past several years have consumers been able to purchase their credit scores, three-digit numbers that are generated using information from their personal credit files. The higher your score, the better credit risk lenders think you are. A high score often translates into better rates on the money you borrow.

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Car Buying Doesn't Have to Be Combat

I recently received an e-mail from Ryan Bachman, an operations manager at an automobile dealership in Louisville, who sincerely wanted to know the answer to some questions about car buyers.

Bachman, who hopes to become a fourth-generation owner of a car dealership, wondered why the relationship between car buyers and car sellers is so adversarial.

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• Car Resources: Find tips, resources, car reviews, special features and answers to your car-buying or selling questions.

For example, he was annoyed at me for encouraging consumers to demand to see the invoice for the car they want to buy.

"It bugs me that consumers feel it's their right to see the invoice price and to know exactly what profit you are making," said Bachman, who works at his father's dealership. "If we sell every car at invoice or under invoice, we obviously would not be able to stay in business."

Bachman then asked three questions that I think deserve an answer:

• Is there any other retail industry where customers know (or even care) how much profit the business is making on their purchase? Imagine purchasing a house, a TV or a gallon of milk and demanding to know what the seller paid for the commodity.

• Why is the perception of the car industry so different?

• Why does the word "profit" carry such a negative connotation?

These are good questions. Of course not everyone who sells a used or new car is an agent of Satan. There are many honest, hardworking people in the industry. Yet it is also true that there are lots of tricks to this trade, and an uninformed consumer can end up paying hundreds of dollars more for a car than is necessary.

Having said that, let me address the first two questions, which really ask the same thing.

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VIDEO: Fruit and food hit hard by inflation

14 June 2011 Last updated at 10:07 Help

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Watchdog targets landbanking firm

8 June 2011 Last updated at 15:55 The FSA has secured a number of injunctions for against unauthorised businesses Investors ploughed hundreds of thousands of pounds into plots of land that had little chance of being built on, the City watchdog has said.

Now the Financial Services Authority (FSA) has taken action against an unauthorised landbanking scheme which collected £3.9m from UK consumers.

But some victims are unlikely to get their funds back.

In the last year, the FSA has secured seven injunctions against unauthorised landbanks.

Action

The High Court has issued a winding-up order against Plott UK Ltd.

The business had been marketing plots of land as an investment opportunity. It promised investors a return of between 200% and 300% on their investment.

However, at least one of the sites was in a designated area of outstanding natural beauty, and so was highly unlikely to ever get planning permission to be built on.

Many customers invested a minimum of £10,000, with some investing hundreds of thousands of pounds. Plott collected £3.9m between May 2009 and April 2011, the FSA said.

The regulator was able to take action as Plott was operating an unauthorised collective investment scheme.

Freeze

Another operation, called European Property Investments UK Ltd, took over Plott's business once the FSA action against Plott began. It accumulated £639,000 in nearly two months from April.

The FSA was able to freeze £180,000 in the firm's account, but the rest was transferred out before the freezing order was obtained.

Meanwhile, the High Court issued an injunction that means the business will be breaking the law if it sells land or operates the collective investment scheme.

"Consumers are much better off not putting their money into these schemes since, by the time we can catch up with the operators, most of the money has disappeared and investors are left with land that has a value which simply does not reflect the money paid for it," said Tracey McDermott, of the FSA.

"In our experience, operators of unauthorised landbanking schemes do not work in isolation, they often work together and their schemes are evolving.

"Once the dust has settled, we hope to be able to repatriate remaining funds to customers of both companies, but it is likely that some people will not get any of their money back."

Investors are not covered by the Financial Services Compensation Scheme because the businesses were unauthorised.

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Warning over variable mortgages

22 June 2011 Last updated at 12:54 By Simon Gompertz Personal finance correspondent, BBC News Which? is concerned about the consequences when the Bank of England raises interest rates The consumer group Which? has accused banks and building societies of putting the squeeze on homeowners who have standard variable rate mortgages.

Which? warns that thousands will be pushed into financial difficulty when interest rates go up.

More than 40% of mortgage borrowers are now on standard variable rates, which kick in after cheap introductory mortgage deals expire.

The highest are around 6%, double the cost of the best value mortgages.

'Angry'

"They're just milking people," one homeowner from Peterborough, Mark Fellowes, complained to BBC News.

The interest rate on his Egg mortgage dropped by just 1.5% when the Bank of England cut official rates by 4.5% after the financial crisis, he said.

"I was very puzzled initially and then you just get angry."

Which? research suggested that 95% of lenders had failed to pass on cuts to standard variable rate customers in full when the Bank of England reduced interest rates.

Continue reading the main story Newcastle BS: 5.99%Birmingham Midshires: 4.84%Clydesdale: 4.59%Natwest: 4.00%Royal Bank of Scotland: 4.00%Nationwide: 3.99%Halifax: 3.99%HSBC: 3.94%

Source: Moneyfacts

Since then, 20% of lenders have actually put their rates up, while the Bank's rate has stayed at a record low of 0.5%.

'Recapitalising'

The Council of Mortgage Lenders said that the standard variable rate, or SVR, is dependent on the cost of attracting deposits from savers, rather than the Bank of England.

But its director general, Michael Coogan, told BBC News that lenders have been widening their profit margins after losing heavily during the crisis.

"I think what we have is the banks and the building societies trying to restabilise the system which was in shock in 2008," he explained.

"They are trying to recapitalise their organisations, deal with past losses, deal with the risk of future losses, and at the same time keep their customers as happy as possible through the economic cycle."

'Vulnerable' Mark Fellowes says he was initially puzzled that his mortgage interest rate did not go down

An increasing number of families with large loans are trapped on their lender's standard variable rate because other banks and building societies don't want their business.

These financially-stretched households could suffer badly if the Bank England starts to push interest rates higher.

David Hollingworth from the mortgage brokers, London & Country, said they should brace themselves for larger monthly payments.

"I think lenders will look to push up standard variable rates by more than any base rate increase," he warned. "That's where vulnerable borrowers really stand to lose."

Mark Fellowes' lender, Egg, said: "We strive to maintain good rates for all of our customers based on how mortgages are funded.

"Funding is based on wholesale market rates, specifically Libor, which are frequently at a premium to Bank of England base rates."

Mr Fellowes has managed to move to another lender, choosing a mortgage which does track the Bank of England's rate.

He is saving £120 a month.

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AUDIO: New jobs held back by red tape

5 July 2011 Last updated at 12:49 Help

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VIDEO: Paul Lewis explains pensions dispute

30 June 2011 Last updated at 10:15 Help

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Social care costs 'need capping'

4 July 2011 Last updated at 15:58 By Nick Triggle Health correspondent, BBC News Andrew Dilnot: "The government will be picking up a hefty bill"

Social care costs in England should be capped so people do not face losing large chunks of their assets, an independent review says.

Council-funded home help and care home places for the elderly and adults with disabilities are currently offered only to those with under £23,250 of assets.

The Dilnot report said the threshold should rise to £100,000 and a £35,000 lifetime cap on costs would be "fair".

But the Treasury is known to have doubts about the expense of the plans.

Just over £14bn a year is spent by councils on social care.

However, the changes would cost an extra £1.7bn a year if they were implemented now - and this figure could rise by 50% as the "baby boom" generation begins to retire.

Insurance

Last year the coalition government asked economist Andrew Dilnot to look into how the system of funding social care in England could be changed amid concerns it was getting harder for people to get access to state support.

The ageing population and squeeze on council budgets have led councils to impose stricter criteria on who can get help.

Continue reading the main story Ben Geoghegan BBC Political correspondent

"Now Gordon Wants £20,000 when you die".

That was the Conservative campaign slogan in 2010, the last time there was a serious attempt to sort out social care.

Then as now, the main political parties were talking about cross-party consensus.

Then as now, they insisted reform was needed so that old people didn't have to sell their homes to pay for their care.

However, their attempt to reach agreement failed and led to what Ed Miliband today described as "political bickering".

Might things end the same way this time round?

In Whitehall, officials are warning about the difficulties that lie ahead.

They insist this issue will "absolutely not be long-grassed", but politicians don't need reminding that - as one source put it - this will not be nice and easy.

It means while 1.8m are getting state funding, another 1m-plus either have to pay for support themselves or go without.

Mr Dilnot's commission has ruled out calling for care to be free.

Instead, it has recommended a partnership between the state and individual whereby the high costs are covered by the government - one in 10 people aged over 65 faces care costs of more than £100,000 over their lifetime.

But the individual should be liable for the first tranche of care with a cap in costs set at between £25,000 and £50,000, the report said.

It went on to suggest £35,000 as the ideal figure - a third of over 65s face sums above this amount.

Below the age of 65, the cap should be phased in. For young adults below the age of 40 to 45 it should be free - although in reality this makes little difference as hardly any pay now because those with care needs at that age have often not had time to accrue savings or buy property.

After that age, the cap should be gradually phased in by £10,000 each decade.

The hope is that with the state paying for the high-cost cases, the insurance industry would be encouraged to develop polices which would cover any care costs below the cap.

The cap will not include so-called "hotel costs" for food and accommodation. However, the report said there should be a standard charge which could be around £7,000 to £10,000 per year.

Means-testing should remain so that the poorest would not have to pay, the commission recommended, but the threshold increased to £100,000 for residential care to better reflect the rise in property prices seen over the last two decades.

The commission believes the cap and rise in the threshold will mean no-one will lose more than 30% of their assets paying for care.

Continue reading the main story Many councils in England have stopped providing support to those with low and moderate needsThe Dilnot Commission was set up in July 2010 to establish how to achieve an affordable care system for adults in EnglandWales and Northern Ireland both have means-tested systems which are similar to EnglandScotland provides free personal care, but in recent years has tightened the eligibility criteria for the same reasons as in EnglandMr Dilnot said the money would have to be found by making cuts elsewhere or raising taxes and he said any tax rise "should be paid, at least in part, by those of retirement age".

Launching the report, he added: "The issue of funding for adult social care has been ignored for too long.

"The current system is confusing, unfair and unsustainable. Individuals are living in fear, worrying about meeting their care costs.

"Putting a limit on the maximum lifetime costs people may face will allow them to plan ahead for how they wish to meet these costs."

The report also called for an end to the ever-tightening restrictions being placed on access, arguing there should be a national standard so everyone had the same access no matter where they lived.

The commission has already had talks with the Treasury about the proposals. It is understood that government officials voiced concerns whether extra money could be found in the current financial climate.

Social care is currently means-tested

Health Secretary Andrew Lansley acknowledged finding the money remained a challenge, saying such change would require "significant cost" and need to be balanced against other funding priorities.

However, he said despite this social care was still a "priority for reform" and the commission's report would be "carefully considered" before the government put forward its proposals next spring.

Labour leader Ed Miliband said he would be willing to have cross-party talks to try to reach a consensus on the issue.

The recommendations already have widespread support among charities and campaigners with many arguing it provided the blueprint for reform.

Michelle Mitchell, of Age UK, said action was long overdue: "Social care is at crisis point. Vulnerable people are going without care and that means their conditions are worsening and they are ending up in hospital and costing the government more. We cannot go on as we are doing."

Any overhaul of the system would take about four years to introduce.

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Tesco Bank 'unlocking accounts'

30 June 2011 Last updated at 13:58 Problems originated from an upgrade of computer systems Two-thirds of Tesco Bank customers who were locked out of their accounts throughout last week have now logged back in online, the bank says.

Some 1,650 of the 2,500 who were excluded owing to technical issues are now back in the system.

The remainder had been contacted and should be able to access their accounts using the information sent to them, a spokesman said.

The bank has already apologised after admitting it failed some customers.

The problems surfaced when the bank migrated all its online savings accounts from the Royal Bank of Scotland's system to its own computers.

Two technical failures last Monday and Tuesday left people who were online at the time unable to access their accounts until they took several steps to reset their security details.

Customers' frustrations were increased when many found they could not get through on the telephone to the busy customer service call centre.

"Tesco strive to deliver service of the highest standard and for a significant minority of customers we have failed to do that," Tesco Bank chief executive Benny Higgins told BBC Radio 4's Money Box on Saturday.

"We do apologise unreservedly. It's absolutely our focus to put this right."

Earlier in the week, the bank told the BBC News website that anyone who had incurred costs as a result of the problems would be refunded.

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VIDEO: Price rise for pay-as-you-go mobiles

1 July 2011 Last updated at 11:00 Help

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VIDEO: Number crunching public pensions

30 June 2011 Last updated at 19:06 Help

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VIDEO: Your Money: Hidden card charges

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Benefit tests 'not money driven'

8 June 2011 Last updated at 11:03 The assessments have been criticised by some charities A system of assessments to encourage more people on benefits back into work is "not a financially-based exercise", a minister has said.

Work and Pensions minister Chris Grayling said that work capability assessments were all about identifying people with the potential to work.

The government is seeking to reassess all 2.6 million people on incapacity benefit - and its successor, employment and support allowance (ESA) - by 2014.

Some charities criticised the move.

'Life-changing experience'

The assessments determine whether applicants are entitled to the highest rate of ESA - for those deemed unable to work at all due to sickness or disability - or are considered "fit for work", in which case they are put on jobseeker's allowance instead.

The test, first introduced by the last Labour government and being rolled out by the coalition, can also place applicants into a "work-related activity group", where they will be expected to take steps to prepare themselves for work in the medium to long term.

Continue reading the main story

[It is] a once in a lifetime opportunity to transform people's lives for the better”

End Quote Chris Grayling Work and Pensions minister Speaking to the Commons Work and Pensions Committee, Mr Grayling said the assessments were potentially "quite difficult" and a "life-changing experience" for some people on benefits.

However, he said it was the correct thing to do in the long term.

"[It is] a once in a lifetime opportunity to transform people's lives for the better," he said.

Earlier this year, six charities - including the MS Society and Parkinson's UK - said the assessments were declaring sick people fit for work, and called for changes to the system.

Earlier in June, campaigners - including charity Mind - strongly criticised the assessments, saying the changes were causing "huge" distress and had resulted in suicides.

Some changes have been made to make the assessments "fairer", following an independent review by Prof Malcolm Harrington.

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Rental costs 'will keep rising'

9 June 2011 Last updated at 11:34 Some potential first-time buyers have continued to rent because of mortgage rationing Rents are continuing to rise for tenants and more increases are expected in the coming months, a survey has suggested.

About 42% more surveyors reported a rise in rents than those who saw a fall during the three months to the end of April, the Royal Institution of Chartered Surveyors (Rics) survey said.

Tenants' rising costs are most marked in London and south-east England.

Some 33% more surveyors expect rents to go up than those predicting a fall.

"Although we are beginning to see more mortgages aimed at first-time buyers, many potential homeowners are still restricted from getting a foot on the property ladder, leading to increased demand in an already oversubscribed rental market," said Rics spokesman James Scott-Lee.

"There has been a small uplift in supply, but the imbalance between demand and availability can only mean rents will continue to rise."

First-time buyers

A separate survey, published last month, said that rental costs in England and Wales had reached a record high in April.

LSL Property Services, which owns a lettings agents network including chains such as Your Move and Reeds Rains, said the average rent stood at £692 a month.

However, there have been some signals that lenders are looking more favourably towards people looking to get on the property ladder.

There are now 183 mortgage products on the market aimed at first-time buyers, compared with 62 products two years ago, according to financial information service Moneyfacts.

There are also 31 different loans available for people offering a 5% deposit, although this was far lower than the 1,079 available at the height of the property boom in July 2007.

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Tax Prep Calls for Careful Steps

The time is coming faster than you think. Yes, it's tax crunch time.

I know I'm breathing a little better. For the first time in years, my husband and I aren't going to be up all night April 14 trying to gather our tax records. But if you're still not there yet, here are some last-minute tips, plus mistakes to avoid, courtesy of the Internal Revenue Service:

Got a Personal Finance Question? • Transcript: Personal finance columnist Michelle Singletary was online to talk about last-minute tax filing tips, getting your finances organized and any other personal finance topic on your mind.
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Memorable Changes
Many of this year's changes involve minor adjustments. But for taxpayers affected, they can be well worth knowing about.

Numbers Crunch
It's clear that taxpayers who don't use professionals to prepare their returns need to have up-to-date guides and/or software.
_____  Featured Columnists _____ A Big Refund Isn't Great
Michelle Singletary writes that come tax time, it's better not to receive a refund. Transcript: Michelle Singletary and Jim Dupree of the IRS Special Report:
Our coverage includes quick links to advice, federal and state tax forms, a guide to tax law changes that could affect your return this year, and information on getting help.

• Choose the correct filing status. Many people who are single, recently separated or divorced often make a mistake by either not claiming "head of household" when they can or claiming it when they don't meet the requirements for that status. For example, one of the requirements is that during the tax year you paid more than 50 percent of the costs of keeping up a home for yourself and qualified dependent(s), which by the way could be your child, a grandchild or parent.

For more information on your filing status, check out IRS Tax Topic 353 at www.irs.gov. Also, don't assume that if you're married it's financially advantageous to choose "married filing separately." Doing so could make you ineligible for some tax breaks. If you're married and you're not sure which filing status to use, compute your taxes separately and jointly and see which method results in a smaller tax liability.

• If you know you can't file in time, request an extension. You can get an extension to file by Aug. 15 by filling out IRS Form 4868, "Application for Automatic Extension of Time to File." Just keep in mind that you still have to pay any taxes you owe by April 15. I know that last piece of advice sounds nonsensical. If you have to pay your taxes, doesn't that mean you have to do some work to figure out how much you owe? Yup. But nonetheless pay up or risk a penalty.

• If you realize you have a huge tax bill this year, don't panic. You can apply for an IRS installment agreement. To request an installment agreement, submit Form 9465, "Installment Agreement Request," and send it with your return. You can also send a written request. Just attach it to the front of your return. In your letter you'll need to specify the amount you can pay and the day you wish to make your payment each month. The IRS says it usually responds to such requests within 30 days. You'll be told whether your request is approved or denied and whether additional information is needed.

If you can't pay, contact the IRS at 800-829-1040. There are other options. For example, if you're experiencing some unusual economic hardship you may qualify for an "Offer in Compromise." Under such an offer the IRS may accept less than what you owe (under certain circumstances). Whatever your situation -- you need more time to pay or you don't have the money at all -- it is better to initiate the call than to have the IRS chase you down.

• Did you write off all the points paid as a result of a refinance last year? If you did, you may have made a common tax mistake. Generally, points paid for an original home mortgage can be fully deducted in the year the points were paid. But points paid solely to refinance a home mortgage usually must be deducted over the life of the loan.

However (isn't there always a however when it comes to the tax code?), if you used money from your refinancing to make home improvements (and if you meet certain other requirements), you may be able to deduct more points. For more information on deductions related to refinancing, see IRS Tax Topic 504 or Publication 936, "Home Mortgage Interest Deduction."

And how do you figure out how much in points to deduct? Here's an example from the IRS: Let's say you paid $2,000 in points and your loan calls for 360 payments on a 30-year mortgage. You could deduct $5.56 per monthly payment, or a total of $66.72, if you make 12 payments in one year. In other words, if you have a 30-year mortgage, you don't divide what you paid by 30 but by the number of payments you have to make over the life of the loan.

• Many people incorrectly believe that you can't deduct the interest on a home-equity loan or line of credit unless the money was used for home improvements. The fact is you can deduct all of the interest on a home-equity loan of up to $100,000 ($50,000 or less if married filing separately).

• Finally, when you do file your return, there are several ways to check on its status. You can go to www.irs.gov and click on the link for "Where's My Refund?"

Don't have a computer? No problem. If it has been at least four weeks since you filed your return, you can call the IRS at 800-829-4477 to check on your refund. Before making the call, be sure to have the first Social Security number shown on your return, your filing status and the amount of your refund. The telephone refund system is updated each weekend, so if you can't get information about your refund you may need to wait another week.

Now, go and do your taxes.

Michelle Singletary discusses personal finance Tuesdays on NPR's "Day to Day" program and online at www.npr.org. Readers can write to her at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071 or send e-mail to singletarym@washpost.com. Comments and questions are welcome, but because of the volume of mail, personal responses may not be possible. Please also note that comments or questions may be used in a future column, with the writer's name, unless a specific request to do otherwise is indicated.

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You Can't Save 'Too Much' For Retirement

When I solicit comments or questions, I don't want you all to think they go into the abyss, never to be read. I do read your questions and comments and, while I can't respond to all, here are answers to some:

Q I make $50,000 a year. When I include my company's contribution to my 401(k), I'm saving around $525 a month for retirement. I'm getting a new apartment this month, on my own so I can finally be rid of roommates. But I find it's difficult to afford my own place. Am I saving "too much"? Is it possible to decrease the amount I'm saving for retirement in order to have more money to live on each month?

Got a Personal Finance Question? • Transcript: Personal finance columnist Michelle Singletary was online to talk about last-minute tax filing tips, getting your finances organized and any other personal finance topic on your mind.
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AHave you been reading all the controversy about Social Security? Since no one can say what will happen to Social Security benefits, I say you can't save too much for your retirement. Let's put that $525 in perspective. That's $6,300 a year, which is more than a lot of people are putting away. But will that be enough? You won't know without doing some calculations and making some assumptions (How long until you want to retire? What other retirement income will you have?). I suggest you use a few retirement calculators to help determine whether you are saving too much or not enough. But don't get scared off by the results. They are just estimates. You may need more or less depending on a lot of factors (your savings, if your job offers a pension, whether you plan on working in retirement, etc.). So here are a few calculators you might try:

• The Ballpark Estimate Retirement Planning Worksheet at www.choosetosave.org.

• Retirement calculators at www.bankrate.com/brm/calculators/retirement.asp.

• T. Rowe Price's at www3.troweprice.com/ric/RIC.

• Vanguard's at flagship3.vanguard.com/VGApp/hnw/RetirementSavings.

Finally, if your retirement saving is crimping your lifestyle (as in you're tired of eating canned soup), perhaps you weren't ready to get rid of your roommates. However, if you still want to live on your own, then you have just two other options: cut your expenses or make more money.

Here's the scenario: A parent has just sold a house (for under $50,000) and wishes to divide the proceeds equally among three grown children. Are there any tax considerations the parent (or the children) should keep in mind?

This is a situation where a gift tax might come into play. A gift tax is a tax on the transfer of property (or money) by one individual to another while receiving nothing, or less than full value, in return. The part that people often get wrong is who pays the tax. It is the donor (in this case the parent) who is generally responsible for paying any gift tax. The people who receive the gifts (the children) will not have to pay any federal gift or estate tax. Also, they don't have to pay income tax on the money.

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Investor Beware: The Con Is On

It's the season to scam.

I think I've used the phrase "low-life bum" more than I care to as I've read story after story this past year of investors being ripped off in new and old scams.

Most recently, the Securities and Exchange Commission filed civil charges against two Maryland businessmen, accusing them of bilking investors of $8.2 million with promises of risk-free returns of between 1 and 5 percent per month.

Got a Personal Finance Question? • Transcript: Personal finance columnist Michelle Singletary was online to talk about last-minute tax filing tips, getting your finances organized and any other personal finance topic on your mind.
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In its complaint, the SEC said people were told their money would be pooled with other investors' in $1 million lots to buy "debt obligations of the top 50 banks in the world." Investors were promised their money would be safe and secure.

But the SEC thinks this was a classic "prime bank" scheme. It alleges that the money collected from investors was in fact used to engage in highly speculative and expensive trading in the precious metals markets.

The SEC says that, in similar cases, investors are told their funds will be used to buy and trade "prime bank" financial instruments and are led to believe the investment, while low risk, will net high returns. But no such prime bank instruments exist.

With the ups and downs of the stock market (mostly down these days), investors, especially retirees, are becoming more vulnerable to fraud or, at the very least, open to putting their hard-earned money in inappropriate investments.

Con artists are diligent in gaining the trust of unsuspecting investors, in some cases even getting on their knees and praying with their victims to win them over.

In February, a federal jury convicted a Georgia man -- a preacher, no less -- of stealing nearly $9 million from 1,600 small, black churches and other nonprofit organizations by promising them big returns on small investments.

Prosecutors in the case said the minister told the faithful (who then told their friends and relatives) that he was developing Christian resorts around the country and that for a fee of a few thousand dollars, their churches could be "members" of his company. In return, he promised that in time, the churches would get a grant or a forgivable loan of up to $500,000.

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Youth Is Fleeting, But Debt Isn't

I had no idea I would touch off such a storm when I wrote that college students, who are racking up student loan debt that could take them two or three decades to pay off, can't afford to take spring break vacations.

Reader responses fell into two camps. In the far more financially responsible and conservative camp were those who agreed that being young isn't an excuse to spend unwisely.

Got a Personal Finance Question? • Transcript: Personal finance columnist Michelle Singletary was online to talk about last-minute tax filing tips, getting your finances organized and any other personal finance topic on your mind.
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Then there was the camp that argued college students should throw financial caution to the wind because they're only young once.

Here's a sampling of what folks in the "don't spend what you don't have" corner had to say (some writers asked that I not use their names):

• "Far too many people feel like they 'need' to indulge themselves," wrote a Scotch Plains, N.J., mother of two college students who have not taken spring break vacations. "I guess it helps that I never went on lavish vacations myself. My children knew I was saving for more important things -- like their educations."

• Karla Weigold of Minneapolis said: " 'I want what I want when I want it' is the perfect phrase and description for too many spending habits these days."

• "While in college I went on spring break once or twice, and of course I couldn't afford it," wrote a captain in the Marine Corps. "I was one of those who piled on the credit card debt and student loans while holding down two jobs. And I paid for all the 'fun' I had over the next five years as my wife and I struggled to pay off our credit cards."

Now here's a sample of the comments from the "you're only young once" crowd:

• From a college student who has amassed "a reasonable amount of debt" from trips: "My parents are always behind me in my decisions to go abroad. This includes for leisure [and] academic purposes. They never had the opportunity to venture off to these locations, and they see it as an advantage for me to have the privilege of expanding my horizon."

• David W. Pearlman, a certified financial planner from Lauderhill, Fla., wrote: "I would ordinarily agree with paying off debt before going on vacation, but in this instance, I must take exception to your article. The four years after a young person graduates high school and is in college are a very special time. While nobody should spend money frivolously, when will [college students] have this type of fun again?"

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