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2012 Calendar Year

Increase Your Retirement Savings by At Least 1% in the Coming Year

Several financial bloggers (20 at last count!) have been diligently writing articles of encouragement for people to consider increasing their savings rates by at least 1% in the coming year. Since many employees are going through annual benefit elections right about now, it’s also a very good time to put in an increase to your annual contributions to your retirement savings plans. Small steps are the easiest to take, and the least painful – so why not set aside an additional 1% in your retirement plan in the coming year? The list below includes a boatload of ideas that you can use to help you with this increase to savings. I’ve heard from several more bloggers who are going to put their posts up soon. If you’re a blogger, see the original post for details on how to join the action: Calling All Bloggers! Listed below are the articles in […]

Student Loan Interest Rates Won’t Increase, For Now

On June 29, 2012, Congress approved legislation to stop the interest rate on federal subsidized Stafford Loans from increasing from the current 3.4% to 6.8% on July 1, 2012, for new college borrowers.  The rate had been scheduled to increase under provisions in the College Cost Reduction and Access Act of 2007. The rate freeze is effective for one year – and will (unless extended) increase to 6.8% on July 1, 2013. Under the new legislation: Rates on subsidized Stafford Loans will remain at 3.4% for undergraduates for one more school year, until July 1, 2013. As of July 1, 2013, undergraduate students with a subsidized Stafford Loan will have a maximum of six year of in-school status when the federal government will pay the interest on the loan while the student is in school.  Previously, the government paid the interest for as long as it took a student to […]

The “Fiscal Cliff”

What is the “fiscal cliff”? It’s the term being used by many to describe the unique combination of tax increases and spending cuts scheduled to go into effect on January 1, 2013. The ominous term reflects the belief by some that, taken together, higher taxes and decreased spending at the levels prescribed have the potential to derail the economy. Whether we do indeed step off the cliff at the end of the year, and what exactly that will mean for the economy, depends on several factors. Will expiring tax breaks be extended? With the “Bush tax cuts” (extended for an additional two years by legislation passed in 2010) set to sunset at the end of 2012, federal income tax rates will jump up in 2013. We’ll go from six federal tax brackets (10%, 15%, 25%, 28%, 33%, and 35%) to five (15%, 28%, 31%, 36%, and 39.6%). The maximum rate […]

2012 Bend Points for Social Security Retirement

Image via Wikipedia For those of you who aren’t quite up to snuff on the carnage that makes up the Social Security retirement benefit calculation, there are a couple of figures that are important to the calculation process called Bend Points.  Bend Points are the portions of your average income (Average Indexed Monthly Earnings – AIME) in specific dollar amounts that are indexed each year, based upon an obscure table called the Average Wage Index (AWI) Series. They’re called bend points because they represent points on a graph of your AIME in calculating the PIA, and they actually bend. If you’re interested in how Bend Points are used, you can see the article on Primary Insurance Amount, or PIA. Here, however, we’ll go over how Bend Points are calculated for each year. To understand this calculation, you need to go back to 1979, the year of the Three Mile Island […]

2012 Social Security Earnings Limits

For the Earnings Test, there is a limit to the amount of income that can be earned if you’re under Full Retirement Age (FRA).  The limits for 2012 were recently released: For years in which the recipient of Social Security retirement benefits is younger than FRA, Social Security benefits will be reduced by $1 for every $2 greater than $14,640, or $1,220 per month. For the year in which the recipient reaches FRA (but prior to reaching FRA), Social Security retirement benefits will be reduced by $1 for every $3 over the limit of $38,880 or $3,240 per month. After reaching FRA, there is no limit on earnings.