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Tough Love on Saving for Retirement (for Millennials)

Periodically, I read articles that appear antithetical to the premise of paying yourself first and saving as much as you can, as early as you can to have enough saved for retirement. In the last few weeks, I’ve read two articles – one saying that traditional retirement savings for millennials is useless, and the other saying that it was ok that you’re not saving enough for retirement. Both articles mention their collective disdain for the recent tweet by Jean Chatzky saying that by the time you’re 30, you should aim to have 1x your salary saved, 3x at 40 and so on. I happen to agree with Ms. Chatzky. In fact, you should aim to have more if possible. In my opinion, both articles disagreeing with Ms. Chatzky (as well as the replies to her tweet) seemed befitting of excuses – which are easier to agree to, and may encourage […]

There is No Free Lunch (or Dinner)

A few days ago my mailbox was graced with the postcard you see at the top of this post. In case the print is too small it’s essentially an offering for a free dinner at a local restaurant while the dinner’s hosts plan to offer a seminar on achieving more retirement income. My initial reaction was to laugh at the card, and then my laughter changed to concern. How many individuals were sent this malarkey? Here are some of the “finer” bullet points from the list of discussion topics: Avoid the long delays and costs of probate Opportunities and solutions to help protect your assets for the future Avoid significant tax losses when passing on your assets It became apparent that this free dinner seminar was nothing more than a sales pitch for a company to sell life insurance and annuities to unsuspecting individuals. A search on the Internet provided […]

The Dog Ate My Tax Receipts Bill

Now here’s some legislation that I could get behind! Recently, House Representative Steve Stockman (R-TX) introduced a bill in response to the IRS’ lame excuse of a “computer glitch” that purportedly erased all of the incriminating evidence from the agency’s computers.  This was part of the testimony offered by former IRS Exempt Organizations Division director Lois Lerner in response to the accusation that her division targeted organizations critical of the current administration. Stockman’s bill provides that if the IRS can use lame, flimsy excuses to avoid prosecution, taxpayers should be allowed to use similar excuses.  The actual text of the bill follows below: 

Take Dave’s Advice With a Grain of Salt

Dave Ramsey gives advice to millions of people, but you should always take it with a grain of salt – it’s likely that it doesn’t apply to you.

Why Designations Matter

Throughout my career I have had the occasion to talk with several financial advisors, planners, insurance agents, brokers, and other industry professionals about some of the reasons why people choose to pursue or not to pursue designations. I have heard differing views on the topic and thought I’d share some of my insights as to why I chose and still choose to pursue designations and degrees. Before I do, let me start by talking about some of the reasons why the advisors I have spoken to decide not to earn a designation. More often than not, the typical answers that I receive are not having enough time, not sure which designation to pursue, lack of funding to afford the designation, and lack of support on earning the designation – either from their employer or family. On the latter two points, some companies may not be able to “support” the designation […]

Review of 2011 Stats

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 8th year of publication for this blog. I’ll be back to regular programming with the next entry. – jb Over the past year, this blog has seen continued growth. This year has been all about Social Security as much as anything. As you know, in October I released A Social Security Owner’s Manual, and many of you have picked up copies, thank you! Through your comments and email questions I have come to meet literally hundreds and hundreds of you over the years – 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 […]

Book Review: Saving Capitalism from Short-Termism

How to Build Long-Term Value and Take Back Our Financial Future This is a great book. I got a lot out of the sections that bring to the surface a lot of the issues that we’ve been seeing in our economy.  These issues have been written about in countless places, but author Alfred Rappaport also proposes workable options that could be put into place to resolve these issues, a step that has been lacking in other places I’ve seen these issues discussed. But I’m getting ahead of myself.  The issues I’ve referenced above are the sort of systemic issues we’re seeing in economy in general and specifically the financial services industry.  Included in these issues are the wild short-term fluctuations we have been seeing in the markets, in part due to the ways that CEOs are compensated, how investment managers are compensated, and how those compensation systems influence behaviors and […]

What Can Be Done to Save Social Security?

Image by Lady_Helena via Flickr This is, of course, one of the most volatile questions on the political landscape these days.  We have some constituencies claiming that the whole plan is a Ponzi scheme and we should get rid of it altogether – and many others aiming to make radical tax increases in the system to improve solvency, or pushing back the age(s) for receiving benefits to reduce drag on the system. True, the system is in dire straits – not bankrupt, but needing attention.  Current projections indicate that at current pace, funds allocated to the system will run out sometime around 2036 unless something changes. Increasing taxes is never popular, and current political winds have shown just how far the dream of no increases in taxes will be pushed.  In addition, extending the age limits during a time when unemployment is at record highs only exacerbates that issue – […]

Lifetime Income Disclosure

There is a piece of legislation hanging around in the Senate that makes a good deal of sense, and really shouldn’t cause too much grief to implement in the long run. This particular bill, introduced by Senators Bingaman (D-New Mexico), Isakson (R-Georgia), and Kohl (D-Wisconsin), is called the Lifetime Income Disclosure Act, and it proposes that the administrators of ERISA-approved retirement plans provide for their participants a disclosure of the “annuity equivalent” of the total benefits that each participant or beneficiary has accrued within the retirement plan. What this means is that, for likely the first time for most folks, an estimate would be provided to them with their statement that outlines what that lump sum means in terms of real, annualized income replacement in retirement. Specifically, the government would establish certain assumptions about the annuity value of a lump sum, given the participant’s age, and from those assumptions a […]

Was BP Just Being Nice?

Remember back when the oil spill first started to get really ugly, and BP announced their efforts to start the cleanup, by whatever means were necessary? BP even went so far as to hire some 2,000 people to assist with the effort – 2,000 people who lived in the gulf coast area.  BP also very publicly announced that they’d only consider people who had been out of work for 60 days or more – under the auspices that they were altruistically working to improve the lot of these folks who had been impacted by the economy, and further by the spill itself. I’m not going to address the spill or the cleanup, this has been discussed in many forums to great length.  Regardless of the effort put in and the emotional ramifications of BP’s cleanup effort – I found it interesting that BP specifically indicated they’d only consider folks who […]

Advisor or Salesman?

Recently I came across an article in the New York Times blogs section by Andrew Ross Sorkin that once again underscores the scary situation that many consumers of financial services face.  As I have mentioned here on several occasions, it’s important to know the source of any “advice” you might receive. This particular article includes comments from former brokers who have either retired or switched over to independent financial advisory firms.  One comment in particular gave me the shudders: The difficulty I had in the brokerage industry is that you don’t get paid for the delivery of financial advice absent the sale of a financial product.  That is not to say the advice I rendered was not of professional quality, but in the end, I always had the sales pitch in the back of my mind. This is not to construe that brokers cannot provide good advice – but rather, […]

Coming Soon: No Change For the Financial Services Consumer If FatCats Get Their Way

We talked about this issue of the accountability standards for financial professionals some time ago (click here to get the background).  Unfortunately, it seems that the big money and best interests of the large brokerages, banks, and insurance companies is turning the tide against the proposed fiduciary standard for all financial professionals. The fiduciary standard has long been sought after by consumer advocates, as the great majority of financial professionals are held to a much lower standard of care – one that often leaves the consumer of financial services exposed to higher costs and a low likelihood of advice being in his or her best interests.  Last year, proposals were offered in Congress to require the fiduciary standard of all regulated financial professionals – which is a step in the right direction. However, intense lobbying efforts by the fatcats, the heavyweights of the financial services industry (think banks, brokerages, and […]

Where to Get Your Annual Credit Report

As a smart consumer, you have likely heard that it’s a good idea to get your credit report every year from all three services: Experian, Equifax, and TransUnion.  You’ve probably also seen the ever-present “Free Credit Report” commercials on the television (unless you TiVo everything and skip past the commercials!) – so you may be wondering:  is that the place to go to get the credit reports? While the service in the commercials will likely provide you with the reports you need, since that service is a “for profit” venture, you’re also likely to get more than you bargained for along with your reports.  There are a lot of add-ons that can mysteriously show up, like hidden fees, credit score monitoring, identity theft protection, etc., all of dubious benefit. The Real Answer The ONLY authorized source for requesting your credit reports from all three agencies FOR FREE, with no strings […]

401(k) – Good For Many, But Not Necessarily the Employee

Okay, the title might be a little misleading in regards to how I really feel about 401(k) plans… I do think that these plans are (or can be) good for a lot of folks, as long as they use them correctly and follow sound investing principles.  But that’s not what this post is all about. I recently read a very good article that echoes a sentiment I’ve written about before:  this article speaks to how the 401(k) plan is one of the places that the average Joe Employee is getting ripped off – you can see the actual article here, and I’ll summarize below. The 401(k) Dirty Little Secret Without getting too technical about all this, the problem is that most 401(k) providers are able to get away with supplying a plan that is high in cost when compared to the rest of the marketplace, with no one but the […]

The Bright Side of H1N1

All around us are some pretty ominous signs:  this has been a wetter than normal year (at least here in the Midwest), flu seems to have started earlier than normal (seasonal influenza, that is), and last Spring we saw a lot of signs pointing to the influx of H1N1 influenza – globally.  If this is as bad as some folks are predicting, it could get to be as widespread as the 1918 Spanish flu pandemic – when over 600,000 folks in the US alone died. Of course, many advances have occurred since 1918, and as such it is expected that the death rate will be dramatically less than the 2.5% of the infected rate that occurred then. First of all, these days we have vaccines available, albeit fewer doses than we’d hoped for by now.  Secondly, we have quite a few advance plans ready to go – school closings, business […]

401(kids)? A Rehash of the Coverdell

With much fanfare, Illinois congressman and US Senate candidate Mark Kirk (R-Illinois) has pushed his plan, adorably referred to as 401(kids) (see news story here).  But what is this plan he’s referring to?  Unless I’m missing something, this is the Coverdell ESA (Education Savings Account) that has been in existence for quite some time now. Kirk’s primary beef is with the Illinois-based BrightStart 529 plan – which is mostly a swipe at one of his main opponents in the Senate race, Illinois’ Treasurer Alexi Giannoulias, since BrightStart falls under Giannoulias’ responsibility.  Last year, one of the funds in the BrightStart plan, managed by Oppenheimer, was severely impacted by the fallout in the bond market due to overexposure in the derivatives market.  Negotiations between Oppenheimer and Giannoulias’ office are continuing, and investors are expected to receive some sort of remuneration soon. So anyhow, as is often the case, in the heat of […]

ARRA Projects – More Waste?

In my travels last week, I came across the inevitable road construction that one finds every year at this time.  One thing that stood out for me was the effort that was made to ensure that you knew the project at hand was funded by the American Recovery and Reinvestment Act of 2009 (ARRA).  Something else stood out for me about those projects, though. ARRA Waste? Now, I’ve mentioned before that I’m no botanist.  For today’s message, I’ll point out that I’m also no civil engineer (nor a boorish engineer, for that matter).  But as I was driving alongside a resurfacing project, I noticed what seemed to me like an awful lot of asphalt being applied – as in, nearly a foot of asphalt.  So much that it was being applied in multiple passes. Perhaps this much asphalt is appropriate when the road is unlevel or low – but this […]

Random Thoughts and Links

Here’s an excellent blog post over on the Keener Financial blog from a colleague, Jean Keener, who is a fellow Garrett Planning Network member.  This post is about 10 Tools to Build an Emergency Fund – and contains some very good tips on this important subject. Also, my friend Helen Maynard over at Affine Financial Services just wrote about a unique way that Bostonians can utilize a grass roots effort to stimulate local business as well as to benefit along in the process.  Her post can be found here. Along those lines, I recently became aware of a project going on here in Central Illinois, called the Capital Area Independent Business Alliance.  This group is promoting a “Buy Local” initiative, and challenges us during the week of July 1 to 7, to spend at least 50¢ from every dollar at local (truly local, not franchises or chains) businesses.  Interesting campaign, […]

Credit Card Industry Reform

. By now you’ve likely heard about the reforms planned for the credit card industry.  Mr. Obama has come in and saved the day for us poor, disheveled credit card users.  Why, we’re all going to benefit from these changes… right? . . Wrong (or at least that’s how I’m reading it). So here are the major tenets of this legislation: cc companies must give 45 days’ notice before increasing rates on an account new limits on the penalties and fees that the cc company can charge an account must be 60 days behind in payments before the cc company can increase rates after 6 months at an increased rate (due to late or non-payment) if the account has maintained good standing, the rate can be reduced What’s not said in this legislation is how the cc companies are going to pay for this imposed largesse.  How about: new, higher […]

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