Ed. Note: As in past years, I’m taking a break from my normal business of posting retirement, tax and other personal financial planning topics to report on the blog itself and the statistics we’ve seen in this, the 7th year of publication for the blog. I’ll be back to regular programming with the next entry. – jb Over the past year, this blog has seen a huge amount of growth – you could call this the year of the tax law change more than anything, as you’ll see from the stats below. Through your comments and email questions I have come to meet literally hundreds of you – and we’ve learned a lot together. I’ll take this opportunity to thank you for your tremendous support by reading, asking questions, and making comments on what I have written. I hope these interactions have been as fulfilling for you as they have […]
December, 2010:
Your 2% Opportunity in 2011
By now you’ve heard the news from the 2010 Tax Act – one of the provisions is that during calendar year 2011, the Social Security withholding tax is reduced from 6.2% to 4.2%. This means that you have an additional 2% of your income, up to the $106,800 limit, available to you to do with as you wish. This is your opportunity to make a splash! I think it would be a very good idea to bump up your 401(k) deferral by 2% if you aren’t already maxed out. If you have maxed out your 401(k), you could use the extra money to contribute to your Roth IRA, or put some money into your taxable investment account. No matter what, since this money was originally intended to be for retirement (if it had been withheld for Social Security, it would have gone to *someone’s* retirement), you should put it toward […]
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Tax Filing for 2010 Returns Will Start A Little Late for Some
Since the 2010 Tax Act was passed so late in the year, the IRS is having to delay the start of processing for some returns, since their systems have to be updated. While most returns can begin being processed pretty much immediately in January, there are some that will have to be delayed for processing until sometime in mid- to late-February. The three specific areas that will cause the delay are: Taxpayers claiming itemized deductions on Schedule A. Itemized deductions include mortgage interest, charitable deductions, medical and dental expenses, as well as state and local taxes. In addition, itemized deductions include the state and local general sales tax deduction extended in the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. The primary benefit is for folks who live in areas without state and local income taxes and is claimed on Schedule A, Line 5. Taxpayers claiming the […]
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Tax Act 2010 Provisions
As you are likely aware, two major bills enacting tax cuts for individuals will expire at the end of 2010: the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA); and the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA). The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (Tax Act 2010) extends quite a few provisions from EGTRRA and JGTRRA for an additional two years, most through 2012. It also extends a number of provisions enacted as part of EGTRRA that were modified in the American Recovery and Reinvestment Act of 2009 (ARRA). fyi – you can find the technical explanation at jct.gov – in the document JCX-55-10. Below is a summary of some of the more important provisions that will be extended: Reduction in Employee Payroll Tax The 2010 Tax Act provides for a temporary reduction, for 2011 only, of the employee-paid Social […]
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Charitable Contributions From Your IRA in 2010 and 2011
With the passage of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (Tax Act 2010 or 2010 Tax Act), Congress retroactively reinstated the ability to make direct qualified charitable distributions (QCDs) from your IRA, in amounts up to $100,000 by IRA owners who are at least age 70½ years of age. This provision expired at the end of 2009, but is once again available, retroactive to January 1, 2010, through December 31, 2011. The provision allows the individual, age 70½ and thus subject to Required Minimum Distributions (RMDs), to make contributions directly from an IRA to a Qualified Charity, in an amount of up to $100,000 per year. Since the 2010 Tax Act was passed so late in the year, there is a special provision for 2010 only, which allows the IRA owner to make such a QCD for the 2010 tax year as late as […]
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Social Security by the Numbers
Here are some Social Security numbers I recently ran across that I found interesting. The figures are from the current information available as of October, 2010: The average retired worker receives $1,172 in monthly Social Security retirement benefits, and the average couple receives $1,892. The average disabled worker receives $1,066 in Social Security disability benefits each month, and this amount increases to $1,803 for a disabled worker with a spouse and child. The average widow or widower receives a total of $1,106 in Social Security survivor benefits per month, whereas a younger widow or widower with two children receives an average monthly benefit of $2,391. Each month, over 34 million people receive Social Security retirement benefits, and over 4 million are receiving survivor’s benefits as a widow or widower. Over 8 million people are receiving disability benefits from the Social Security system each month, as well. Photo by Pink Sherbet […]
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SSA Revises Withdrawal Policy
On December 8, 2010, the Social Security Administration published a revision to their “withdrawal policy”. It’s important for you to know what has changed about this rule, especially if you have been counting on this in your planning for Social Security benefits. You can see the actual text of the SSA’s announcement 20 CFR Part 404 by clicking here. What’s Changing? Essentially SSA has decided that this rule, as it stood, represented a little too good of a deal, even though very few people ever took advantage of it. The rule, in brief, allowed an individual to begin taking retirement benefits at any age, and then at any point in the future the individual could pay back all of the benefits (without interest) and re-set his or her beginning date for receiving benefits. This strategy allowed the individual to receive benefits and invest them, then pay back the entire amount […]
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New Book: “Can I Retire?”
My friend Mike Piper at Oblivious Investor recently published a new book Can I Retire? Managing a Retirement Portfolio Explained in 100 Pages or Less. The book is available for sale on Amazon. As the latest addition to Mike’s “…in 100 Pages or Less” series, this book answers two questions: How much money will you need to retire? How should you manage your retirement portfolio to minimize the risk of outliving your money? What Makes This Book Unique? How does this book hope to be better than, for example, The Bogleheads’ Guide to Retirement Planning or Jim Otar’s Unveiling the Retirement Myth? It doesn’t. It’s not better. It’s shorter. Can I Retire? is written for the person who might not be able to find the time to read Otar’s entire 525-page book or the 370-page Bogleheads’ Guide. If you’re considering reading a more in-depth guide to retirement planning, I wholeheartedly […]
Sterling Raskie, MSFS, CFP®, ChFC®
The latest in our Owner’s Manual series, A 401(k) Owner’s Manual, was published in January 2020 and is available on 
A Medicare Owner’s Manual, is updated with 2020 facts and figures. This manual is available on 
Social Security for the Suddenly Single can be found on Amazon at 
Sterling’s first book, Lose Weight Save Money, can be 
An IRA Owner’s Manual, 2nd Edition is available for purchase on Amazon. Click the link to choose the 
Jim’s book – A Social Security Owner’s Manual, is now available on Amazon. Click this link for the 
And if you’ve come here to learn about queuing waterfowl, I apologize for the confusion. You may want to discuss your question with Lester, my loyal watchduck and self-proclaimed “advisor’s advisor”.