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March, 2015:

Book Review: Get What’s Yours

This book, subtitled “The Secrets to Maxing Out Your Social Security” is written by Laurence J Kotlikoff (Professor of Economics at Boston University), Philip Moeller (of PBS NewsHour) and Paul Solman (also of PBS NewsHour). With this lineup of heavyweights in the Social Security commentary space, you are right to expect a very comprehensive, easy-to-understand, explanation of the subject – and that’s just what you get. This book covers every component of the Social Security retirement and disability benefit landscape with the aim toward taking action on those components that you have a degree of control over, in order to maximize your lifetime benefits. The authors are extremely well-versed in the ins and outs of the system, providing insights not found in many other texts. In addition to the authors’ own lifetimes of experience in covering the subject, every fact in the book has been reviewed by former Social Security […]

I Have the CFP®, Now What?

This week, several anxious individuals will sit in front of a computer screen at a testing center and will answer 170 questions over a six hour span. These folks are sitting for the national CFP® exam that’s given every March, July, and November. Question topics range from life insurance and annuities to taxation, investment planning, estate planning and ethics. Successful exams takers will be allowed to use the prestigious marks (assuming all other requirements are met). If you’re one of these folks – first of all congratulations! You put in a lot of hard work, studying, and relinquished personal time in order to be successful. You should be proud. But I would also encourage you to not fall to the temptation of thinking, “you’ve made it.” In other words, I hope the exam has taught you that there’s so much we don’t know as planners and the CFP®  is merely […]

Analyze your assets to avoid missing the mark

When we talk about financial fitness, one of the measures that is most important to the conversation is the value of our assets. There are really five different kinds of assets that we should consider: Personal Assets. Clothing, furnishings, and jewelry fit into this category. Most of this “stuff” decreases in value to less than half what we paid for it before we even get it home. Household Assets. This includes real estate, cars, and appliances. Most of these items either appreciate in value over time or provide a fair value over their life (in relation to renting the service). The total value of these assets must be reduced by any loans that we have against them – such as mortgages and auto loans. This will produce a net value of Household Assets. Employment Assets. Some employers still provide for a pension for their employees’ retirement. This pension has a […]

Should You Delay Retirement?

The question of delaying retirement may arise as you get closer to your “goal year” of when you want to retire. For some individuals’ fortunate enough to be covered under a company or state pension, it can be tempting to retire as soon as possible and collect the pension benefit. The same may be true for folks wanting to start taking Social Security at age 62. Before making the decision to retire or retire early an individual should consider the effects on delaying retirement and continuing to work. This is assuming that they can accrue extra pension benefits for the extra years of service. For Social Security, this would be delaying past an individual’s normal retirement age as long as to age 70. For example, let’s say an individual has the opportunity to be eligible to retire at age 55 and receive a pension of $5,500 per month. However, if […]

Get your billion back, Americans – time’s running out

Oftentimes folks with low incomes don’t see the need to file a tax return. Much of the time this is the correct way to go – after all, why go through the hassle and expense of filing a tax return for no purpose? Unfortunately, many of these folks who didn’t file a tax return are actually due a refund of withheld tax, and possibly even tax credits that they weren’t aware of. The IRS has compiled a list of approximately 1 million taxpayers who didn’t file a tax return in 2011, and this group is due a total of approximately $1 billion in refunds. The problem is that in order to claim these refunds, the tax return for 2011 has to be filed by April 15, 2015 – 3 years after the original filing date. If you don’t file by then, the refund is lost to you forever. Recently the […]

Missing your SSA-1099? Here’s How to Get It

The Social Security Administration has a lot on their plate. Along with handling the tax rolls from some 150 million-plus wage earners, servicing around 50 million retirees and surviving spouses and 11 million-plus disabled workers and dependents, there are 10,000 baby boomers reaching retirement age each day. These folks (current recipients of benefits and newly-eligible) are generating nearly half-million phone calls a day to SSA’s 800 number, and nearly 200,000 per day visiting the local offices. Every day. And they’re doing all this on administrative expenses of less than 1% of all the money they handle. Much has been written about what the SSA is not capable of doing – such as advising folks on the best way to file – but little has been written about what they are doing well. One of those things is their website.  

Should You Invest Dollars or Percentages?

In many employer sponsored plans such as a 401k, 403b, 457, or SIMPLE employees are generally given the option of deferring a fixed dollar amount or fixed percentage of their income. The question becomes which category to choose when initially enrolling in the plan and whether or not to change the original decision. Generally, the wiser decision is to choose (or switch to) the fixed percentage. The reason is that by choosing a percentage, you really never have to worry about increasing your contributions. For example, an individual starts a job earning $50,000 annually and decides to contribute 10% annually to his retirement plan which is $5,000 per year.

Book Review: Finance for Nonfinancial Managers

This recently-released Second Edition is a wonderful book for folks who find themselves in the position of needing to understand financial reports, when the last time you looked at a balance sheet was in your first year of high school accounting. Author Gene Siciliano has produced an excellent guide to the primary concepts of finance, written from the point of view that you have no background at all in finance or accounting. Managers of all levels in today’s business organizations need to have at minimum a basic understanding of financial systems in order to be effective. Day-to-day decisions are influenced by information found in financial reports, and without being able to interpret these financial reports, you’re flying blind. Maybe you’ve been thrust into a management position without any training – and you need to have an understanding of financial reports to do your job. Gaining a better understanding (after you’ve got the […]

The Most Important Factor in Retirement Saving

We’ve all been there: making decisions about the ol’ retirement savings account. It doesn’t matter if it is a Roth IRA, a traditional IRA, a 401(k), or a deferred comp plan, there are many different decisions that you need to make. It can be overwhelming, until you step back and realize that there are actually only three primary decisions to make about retirement savings: How much to contribute How to allocate between asset classes (stocks and bonds; as well as within the sub-classes like large-cap, mid-cap & small-cap stocks; corporate bonds, government bonds, etc.) Which funds/investments to choose

Where to Keep Your Emergency Fund

Ask any qualified financial planner and they’ll generally tell you to have at least 3 to 6 months of living expenses set aside in order to fund a “rainy day” in the future. This emergency fund is there to help you pay bills such as your mortgage, utilities, and groceries in the event you lose your job, become disabled, or to pay for an unexpected emergency (such as a car or home repair). Some folks may need greater than 6 months expenses if they lose a job that may be hard to find again or a single income family that relies on one individual’s income.

Why Social Security Decisions Are So Tough

If you’re facing the decision of when to file for your Social Security benefit, you’ve probably noticed just how confusing it can all be. There are so many decision-points in the system, it’s no wonder folks are confused.  Depending on your point of view and how you count the decision-points, each person facing this decision has thousands of possible combinations to consider as they decide when to pull the trigger and file for benefits. Recently I was going over a decision tree that I had built to describe the decision-making process for filing, and within this review I have counted that for a single, there are 14 decision-points and a total of 96 months in which a filing decision can be made, for a total of 1,344 combinations.