At Easter dinner, we were talking about how much things cost, namely healthcare. My good friend and mentor, Dean, had recently told me he purchased his first home for $12,000. Then my father-in-law chimed in and said their next door neighbor recently purchased a new sewing machine for $10,000. We all kind of chuckled and made comments like, “I wonder if you can drive that sewing machine to work?”
Isn’t it crazy to think how the purchasing power of the dollar has lost ground in the last 40 years? The Bureau of Labor and Statistics has an inflation calculator, and when I ran the calculator it said $10,000 in 1970 had the same purchasing power as $58,676 in 2012. read more »
Well, last year is behind us, and what is done, is done with respect to your annual income tax return. If you are retired, you should review these important line items on your 1040 tax return and make sure you understand how they impact your financial life. Get out your income tax return and circle the following:
Someone once taught me, “It’s not about how much money you make, but rather how much money you keep.” I’ve also learned that retirement is all about cash flow, not net worth, and to make sure that your cash flow is as tax efficient as possible. read more »
You won’t be able to withdraw an unlimited amount of money in retirement. So a retirement budget is a necessity. Some retirees forego one, only to regret it later.
Run the numbers before you retire. Often people need about 70-80 percent of their end salaries in retirement, but this can vary. So years before you leave work, sit down for an hour or so (perhaps with the financial professional you know and trust) and take a look at your probable monthly expenses. Online calculators can help. read more »
So, you’d like to make some major charitable contributions, but you don’t want to create a family foundation — with its paperwork and management commitment and the possibility of squabbles. Is there an alternative?
Yes, there is. You could consider a donor-advised fund (DAF).
How does a DAF work? A donor-advised fund is a private fund established to manage charitable donations of individuals, couples, families and institutions. It is sponsored by a 501(c)(3) non-profit organization. The process of gifting through a donor-advised fund works like this. read more »
Could you end up paying higher taxes in retirement? Do you have a lot of money saved in a 401(k) or a traditional IRA? If so, you may be poised to receive significant retirement income.
Those income distributions will be taxed. As federal and state governments are hungry for revenue, you may see higher marginal tax rates in the near future.
Poor retirees with meager savings may rely on Social Security as their prime income source. They may end up paying less income tax in retirement, as up to half of their Social Security benefits won’t be counted as taxable income. read more »
America’s got gold fever. Internet headlines inform you that gold settled at another record close today. Nightly news segments show you footage of excited sellers and beaming commodities traders. Radio commercials remind you that gold has outperformed stocks in the last decade. How should you respond to all this?
There’s no doubt that in recent history, the performance of gold is startling. Across the 2000s, gold gained 278.52 percent on the COMEX while the S&P 500 lost 24.10 percent. In 2010, the S&P 500 advanced 12.78 percent and gold notched a 29.76 percent gain. read more »
In late 2010, Congress reunified the estate tax, gift tax and generation-skipping tax (GST), giving them all top rates of 35 percent with $5 million lifetime individual exemptions.
In addition, the estate and gift tax exemptions are now portable between married couples. Upon the death of one spouse, the executor of the estate can elect to transfer any unused portion of the $5 million individual exemption to the surviving spouse.
At the moment, these tax rates and generous exemptions apply through 2012. In 2013, things may change. read more »
What would you do with an extra $1,000 or $2,000? The Tax Relief Act of 2010 will give many of us the equivalent of a two percent raise in 2011. Employee payroll taxes have been cut from 6.2 percent to 4.2 percent this year. So if you pay into Social Security, you are looking at a rise in your take-home pay.
What are your plans for that extra money?
How about directing it into your 401(k) or IRA? That two percent “raise” will show up in your paychecks throughout the course of the year — it will come to you incrementally rather than as a lump sum. Still, 2 percent is nothing to scoff at — if you make $50,000 in 2011, you’re looking at $1,000 of found money. read more »
A holiday gift for taxpayers? After a 277-148 passage in the House and an 81-19 approval in the Senate, President Obama signed the 2010 Tax Relief Act into law on Dec. 17, extending the Bush-era tax cuts. Here is the impact of the new legislation:
Current federal income tax rates are preserved for everyone. The federal income tax brackets will remain at 10 percent, 15 percent, 25 percent, 28 percent, 33 percent and 35 percent for 2011 and 2012. read more »
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