Secrets of Social Security: Real Life Changer

Featured

Posted on January 26, 2012 by jmh

Geece and the problems with Greek austerity mandates may be a foreboding insight for the USA. Today many Seniors and Baby Boomers are planning on working much later in life due to many reasons, with “need” being the most common. The past twleve years has not been easy or kind to retirment plans; 401ks and IRAs have been decimated. Seeking local help and advice for boosting your personal budget and income is where My Money Track excels; Hope is not an investment plan. Vision without action is a dream and action without direction or vision is a waste of time; especially in planning for future income. However; using a combination of little known tricks in maximizing your social security retirement income benefit along with tax free income alternatives will net you more money now and later. What are they; the double dip and file and suspend strategy. Here’s how it may work if you’re married:

The longer one delays filing to take their own Social security benefit, the larger it will be in the future. At age 70 the amount of income will max out; thus no need to wait past this age. Assuming that you and your spouse are both at least “full retirement age,” (aka FRA) and both work but one spouse earns more. One spouse that has worked enough to earn their own social security benefit may still be allowed to choose between taking their own benefit or take instead an amount equal to half of their spouses benefit. For simplicity let’s assume that both spouses are the same age (high school sweethearts perhaps) and each of their monthly social security income benefit today at age 66 is $2,000 but by waiting until age 70, their individual benefit increases to $2,700 monthly.

The extra $700 per month by delaying is an extra $8,400 per year for them! That’s a lot of extra money but one must consider the “lost monthly” income from social security for the past four years while waiting. The Secret is you can have you cake and eat it too!

One spouse will file for social security benefits and then immediately the other spouse files for the spousal benefit. Waiting for one month, the first filer will then “suspend” their social security payments and the clock for increasing the benefit later until age 70 begins again.

Even though both spouses are still working (full or part time) an “extra” free check is now coming monthly from social security. If you spouse earns much more than the other, the higher earning spouse should be the one to file and then suspend. This is a no brainer. Even better, if for some reason this strategy doesn’t suit you, you are allowed up to 12 months to re-pay the money received and get a completely free “100% DO OVER!”

Few times in life are we given a “Free Look” or opportunity to use the systems and its rules to our advantage and have a guaranteed out to reverse our decision if our circumstances change. The key to turbo charging or catching up in your retirement plan by continuing to work into what was once the “classic” rocking chair years, and taking full advantage of the “double dip” combined with the file and suspend strategy. To figure out what your full retirement age is, go to this link at social security: http://socialsecurity.gov/pubs/ageincrease.htm and be sure to check back her on our blogs for more ways to save money, plan your investments and learn more about annuities, index annuities and life insurance.

Contact us to help you determine the most approriate time for you to begin receiving your social security retirement income benefit.

When you need the best local financial advice or budget help available, contact My Money Track to help you get your life back on track. Your IRA or rollover is just too important of an investment to ignore. Local professional advisors are willing and able to help.

Does Gold Make My Butt Look Big?

Posted on January 19, 2012 by jmh

Gag me with a spoon, bite me, barf me out. Yep, those were the most popular or cool vernacular in 1980. Lots of color in Fashion and big hair along with window pane jeans too. You know what else was super popular in 1980? The video game Pac Man. It was invented in Japan but called Puck Man there (referring to their slang word for “munching” which is what the little hungry video guy did to dots on the screen) but decided to convert to avert potential association with similar “sounding” four letter word(s).

Pac Man was instantly and insanely popular with people of all ages (people even played the video game in Disco’s). Those who could get to level five or six before being consumed by the villains were impressive. As crazy popular as Pac Man was, it took nineteen years for it to be mastered and all 255 levels completed by a 33 year old male (go figure) in a game that took six hours of continuous play!

Simultaneously in 1980, Gold was (as in precious metal) was mania style popular as well. History repeats itself and last year Gold touched an all time high price on 8/22/11, hitting $1,889 per ounce. However, compared to its lofty price in 1980 of $850, that’s “cheap.” Factoring in “inflation,” prices back in 1980 would make Gold’s’ price then equivalent in today’s dollars of $2,472. So while Gold may be gaining more popularity in these nerve racking economic times, it still hasn’t kept up with the basic level of inflation. Think about the cost of the “basics” in 1980; Gallon of Milk = $1.60, Postage Stamp = $.15, gallon of gasoline = $1.30, movie ticket = $3.00, Disneyland Park Pass = $7.50.

Today in 2012, a One Day Pass to Disneyland is $90.53, gallon of milk or gasoline cost nearly $4 bucks, and a ticket to see a 3D Movie in Dallas, Tx will set you back $15. And we needn’t get too depressed over price increases; ergo I’ll avoid mentioning the cost comparisons of education (tuition) healthcare and prescriptions. So while Gold has increased from its price in 1980, its really only doubled compared to its price today. Yet, the cost of food, energy, education, healthcare and entertainment have all increased thrice fold or more since “Valley Girls,” Michael J. Fox and shoulder pads were popular.

Saving and budgeting for retirement income (especially tax free income) then must include protection from eroding purchasing power. Why doesn’t a precious metal such as Gold make a great path to future income? Well, Strike #1; Gold really hasn’t done a great job in this arena and Strike #2; it’s not truly very liquid. And Strike #3; recently buying or selling Gold is on the Feds radar screen for potential money laundering abuses… which is an automatic introduction to your local IRS auditor/agent if their suspicion is triggered.

The solution for “liquid,” reliable and dependable cash flow always seem to bring us back to equities or equity index based investments. Using annuities or other vehicles that pay a monthly stream of income (such as Social Security or a pension; both of these are types or examples of an annuity) is the key or secret to maximizes income in the future for retirement planning.

All that glitters surely is not gold. Timeless security of one’s money is just as popular now as it was in 1980. And be certain not to overlook the importance of tax advantaged or income tax deferred ways to save and invest in such type investments. Learn all that you can about IRA’s and ROTH IRA’s along with alternative ways to have income tax free retirement income. Tread carefully and keep it simple for yourself and seek the help of a CPA and local investment advisor. Waka waka waka…. GAME OVER.

For those of you who are too young to recall the Pacman craze, below is a video of exactly how the mega hit appeared in bars, restaurants and video halls in malls all across the United States…

Valentine’s Idea; Love or Money?

Posted on January 17, 2012 by jmh

Love always begins well but can turn choppy in an instant. With Valentine’s Day less than one month away, does Money help or hurt a relationship? The real key is not how much money one has; instead it’s how much debt.

Geece and the problems with Greek austerity mandates may be a foreboding insight for the USA; and it illustrates how debt is a squall storm that will turn the happiest of couples into miserable, raging people instead of the happy go-lucky smooth sailing “perfect pair.” Romance may temporarily financially blind most, but once they get serious about their relationship, they will open their eyes and assess how well they are going to be able to sail their lives together. Many relationships sink prematurely just because of the financial problems of one or both of the partners. Most people are reluctant to accept the debts of their partners for many reasons. And this very knowledge makes the other person hide their actual financial situation from their loved ones for fear of being “found out” and breaking up.

The culprit in ruining relationships is not debt alone. Trust and a breach of trust is the deal breaker. The strength of your trust is more important than the money you owe creditors. Don’t lie about your financial situation or how much debt or taxes you owe. You needn’t talk about it on your first few dates either. But communication has a major role to play in a healthy relationship. Sooner rather than later, be clear and transparent to one another. Nothing should stop you from disclosing something you want your life partner to know.

Once you live together or get married, there is not much you can hide from each other. One day or the other, he or she will know the truth. So being truthful to each other will save you from an embarrassing moment later in your life. Use the following four secrets to help ensure your successful long term romance:

1. Reviewing Credit Scores and Reports: If you are living together or going steady with someone for quite some time and all of a sudden you come to know that your partner owes a huge sum of money, it could harm your relationship. Although you will not be legally responsible for debts like credit card debt or student’s loans as they are considered the responsibility of that person alone; it still distracts from the joy of romance. Get an updated credit report and a list of assets for both of you and review these together. They are totally free and easy to obtain.

2. Knowing what you owe and own: At the same time, it’s good to know how much the other person owes so that you can avoid unpleasant surprises when you try to get a joint loan for a home or a car. You should know what your partner owns. Sit down and make a simple inventory list of assets and liabilities. This will give you both a clear idea of your present financial circumstances.

3. Get A Budget and Assign Expenses: Talking about finance may not look very romantic while your relationship is in a budding stage. But if both of you have your own sources of income, it’s better to come to an understanding on how you want to spend your earnings way before you take the marriage plunge. In addition to your incomes and earnings you should also discuss sharing bills and expenses. You can either divide equally all the possible expenditure you will have to deal with in future when you start living together or decide on who is going to pay the bills and who will handle the savings for the common necessities like children’s education, down payment for a home, vacations and so on.

4. Get a CPA and Compare income tax returns: Income tax is not just a fine imposed for reckless spending. You two will be filing joint tax returns after you’re married. A CPA can analyze your previous individual tax returns and help create a strategy to minimize your future income taxes. Setting up an IRA or ROTH IRA and fully utilizing 401k or 403b plans available to you through your employer are almost always very wise choices. You never want to get behind with the IRS. And learn about tax free income alternatives.

It also greatly helps if you two can openly discuss your dreams and aspirations, financial ambitions and personal ideas and plans to achieve them. If you’re both unsure, seek out the help of professional financial planners or budget coaches. Search the internet for resources on self help books and support groups. Ask you friends and relatives who they use to help them with their financial planning. It’s usually best to get a local “fee based” professional; as they will tend to be unbiased and not pushy to sell you anything. Then schedule a reoccurring meeting with them; quarterly or even monthly in the beginning will help you get started and stay on track.

Investing is often confusing for baby boomers and seniors. Money management was something that wasn’t taught in school or college. Don’t feel like you’re the only “dummy.” When you need the best local financial advice or budget help available, contact My Money Track to help you get your life back on track. Your IRA or rollover is just too important of an investment to ignore. Local professional advisors are willing and able to help.

Love is blind but you don’t have to be. XOXO

Learning to Dance with your life jacket on

Posted on January 16, 2012 by jmh

The inadvertent sinking of the Italian cruise ship by running aground on jagged rocks on the coast of Italy, reminds us again how fragile and unpredictable is life. Apparently the Captain of the mega liner was doing a bit of “show boating,” by cruising the behemoth unnaturally near the coastline and blowing its mega horns to amuse the passengers and attract attention to the ship. Sort of like the Tom Cruise “fly by” the flight tower in Top Gun.

But hey, that was a movie for Goodness sake; this is real life with precious cargo onboard. Just a few meters away was safe deep waters versus the treacherous rocky shallows the Captain decided to navigate; unsuccessfully. The cruise line owners are apparently not sparring the Captain either; instead they’re perplexed at how little caution their Captain exercised and claim human/pilot error as causing the ships sinking.

Unlike the Titanic, where the crew had hours to get off the doomed shipped after it hit the iceberg, the passenger of Costa Concordia had less than an hour to make way to safety. Still, the similarities between the two tragedies are stunning. Both were in extremely cold water and hit an avoidable large object, each tearing long gashes in the hull below the waterline. Both ships were thought very safe, “unsinkable” and too large to fail ocean liners. How unlikely did the tourists on those ships think such a catastrophe could occur?

And such is life. Two Americans are still missing after several days from the Italian cruise liner and many more deaths are confirmed. It is events such as these that remind us to have current valid Wills and sufficient life insurance. Insurance isn’t solely for the rich or wealthy. It is extremely affordable. Semi-perm automatic renewable 20 year Term insurance in the face amount of $1 million for a 44 year old healthy male cost less than a thousand dollars per year.

In addition, there are simple but sophisticated ways to employ life insurance that will potentially provide

And converting the term to permanent coverage when financial conditions improve or when a windfall such as inheritance or settlement or winning the lottery, can protect future incomefrom rising income taxes, predators and creditors. Why wouldn’t anyone simply check into the cost and availability of life insurance; regardless of one’s perceived financial assessment? A few dollars a day could mean the difference long term in tens of thousands or even millions of dollars tomorrow.

Investing is often confusing for baby boomers and seniors. Money management was something that wasn’t taught in school or college. Don’t feel like you’re the only “dummy.” Do yourself and your family a huge favor; look into getting yourself and/or your spouse more life insurance. It’s never been more affordable and there’s never been a time when it’s needed more than today.

Is this simple but costly mistake lurking in your IRA?

Featured

Posted on January 13, 2012 by jmh

They were married for 31 years and managed to raise and educate four children through college. He retired from his first career early due to heart disease and then began a second one as an accountant. Years later she also retired and was ready to enjoy life with her husband, as a homemaker. Unfortunately, he died unexpectedly while doing the job he really loved; suffering a massive heart attack literally at his desk while working with clients.

She was devastated and had the most difficult time coping with this sudden tragedy. Luckily, they had put away some money over time but most of it was acquired through IRA’s (also called Individual Retirement Accounts) established years ago. And their IRA’s had actually grown nicely. One of the great things about IRA’s is that they can easily be transferred to family members without going through a timely and expensive probate process when someone dies. Simply naming a beneficiary and contingent beneficiaries will allow the heirs in your family to legally receive the money saved when another family member passes away.

But this couple never named a beneficiary for their IRA’s. They just assumed that each other would inherit the deceased’s money. The reality of this costly mistake hit home. Unless the spouse or child is named as the beneficiary, the money must go through the probate court. Thus, his IRA’s cannot simply be rolled over into hers. The result? Income taxes are now due on the entire amount instead of being able to defer paying them until much later. And those taxes due now on the entire IRA, will cut dramatically into what she had hoped to receive to help provide income for her grandchildren and her own living expenses.

Investing is often confusing for baby boomers and seniors. Money management was something that wasn’t taught in school or college. Don’t feel like you’re the only “dummy.”

This often happens when parents forget to update their IRA beneficiaries and Wills. Money that could now be inherited with no current taxes due is being snared in the probate process. Parents or grandparents whose bank and IRA accounts still carrying the beneficiary designation of “per stirpes” or left to “the estate” of the deceased will cause headaches and potentially cost hundreds or thousands of dollars unnecessarily. Big mistake!

Few parents would want their children to suffer due to the unnecessary early payment of income taxes on their hard earned savings. Even worse, there are often cases where after a divorce, beneficiary designations are forgotten about… when death occurs; money may actually go to the “ex” and their new spouse instead of the children of the deceased!

And the worse nightmare awaits those who do not have a Will at all. Even if you believe that you do not have much to leave to your children, the State (not your children) will be assigned control over what you do have, unless you have a Will. The solution; talk to you parents and grandparents about who they have named as beneficiaries on their IRA’s, annuities, and bank accounts that are transferable at death (TOD). Ask if they have a current Will and have it reviewed by an attorney. And for divorced or single parents, check who you’ve named as beneficiaries for your money. It’s a simple precaution that will save your heirs major headaches.

Monthly Archives: January 2012

Does Gold Make My Butt Look Big?

Valentine’s Idea; Love or Money?

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