Need retirement income you can’t outlive? Have coffee with Meg. Take a video break and learn how Meg uses a single premium immediate annuity (SPIA) to alleviate concerns about outliving her retirement assets and being unable to meet monthly expenses.
Retire with Confidence
People are living longer than ever before, meaning that unpredictable market performance, higher healthcare costs and rising inflation could impact your retirement nest egg. Social Security is in question, and you may or may not have a pension.
The reality is, many individuals simply may not be able to maintain their standard of living — or worse — may run out of money during retirement.
Live Comfortably with Retirement Income- Consider the risks that can affect your retirement and life:
Lifespan - Living longer and outliving your retirement money.
Inflation – Cost of living increases that erode your retirement buying power.
Fluctuation – Market volatility that impacts your retirement assets.
Experience – Life events that require retirement plan flexibility.
At what rate can you safely withdraw from your portfolio to address these risks?
According to the Journal of Financial Planning the safe withdrawal is 2.52%.
Source: Giving USA Foundation™ – Giving USA 2013 Highlights
People give to charities for a variety of reasons. They give:
- Because they have compassion for the less fortunate.
- From a belief that they owe something back to society.
- To support a favored institution or cause.
- For the recognition attained by making substantial charitable donations.
- To benefit from the financial incentives our tax system provides for charitable gifts.
Regardless of your reasons for giving, a careful review of the various ways to structure charitable gifts can help make your gifts more meaningful, both to you and to the charities you choose to support.
A charitable gift is a donation of cash or other property to, or for the interest of, a charitable organization. The gift is freely given with the primary intention of benefiting the charity.
Whether given during lifetime or after death, charitable gifts are eligible for a tax deduction, but only if made to a qualified charitable organization. For example, you may have a relative who has fallen on hard times, someone you choose to help with gifts of cash. While you may be motivated by charitable intentions in making these gifts, you cannot deduct them for either income tax or estate tax purposes.
In general, qualified charitable organizations include churches, temples, synagogues, mosques and other religious organizations, colleges and other nonprofit educational organizations, museums, nonprofit hospitals, and public parks and recreation areas. Gifts to these types of organizations qualify for a federal income tax deduction if made during your lifetime or, if made after your death, can be deducted from the value of your estate for federal estate tax purposes.
On the other hand, examples of non-charitable groups include labor unions, social clubs, lobbying organizations, chambers of commerce, for-profit groups and individuals. Gifts to any of these are not eligible for a charitable tax deduction.
If in doubt about an organization’s qualified status, ask the charity for documentation of its tax-exempt status. Alternatively, the IRS provides a complete listing of approved charitable organizations in Publication 78, Cumulative List of Charitable Organizations (http://www.irs.gov). (search Pub 78)
Don’t forget to check how much of your contribution is used for the charity’s mission verses how much is paid out in other expenses such as administration, salary, employee benefits and fundraising. http://www.charitynavigator.org/ is a good site to research a charity.Continue Reading »
At this point in our lives we’ve raised our own kids and hopefully the values we struggled to impart before they left home have become part of their family lives. Now they’re raising our grandchildren and like us, when we were new parents our kids will try to bring all of their life lessons into the mix. The hard part, at times, at least for me, is to keep my mouth shut not give unasked for advice. Anyone else have that problem?
This narrows my options to – just setting the best example I can no matter the subject matter. When it comes to money and finances. Money does not grow on trees.
- Young children can understand the concept of money. When I take them out and we’re going to buy a little something like an ice cream I give them the money to pay for it. This teaches them money is exchanged for things we want.
- Save all my “change” for grandkids. I split up this money into 3 coin purses for each kid marked 20% for savings, 10% sharing, and all the rest for whatever they want. (with parent’s permission of course) The savings is used for their bigger desires/wants. The sharing can be used to buy things like ice cream, candy bars and other treats for family on outings or they will deposit it into Salvation Army kettles or other charitable containers found at the checkouts. Elementary school age is a good time to start.
- Demonstrate to the grandkids how to reach a savings goal. Show them how saving X amount of their money each month and in how many months this money will equal an amount needed to buy a computer game, book or whatever.
- When the grandkids are coming for a barbeque, a couple like to help cook. We plan a menu, make a list of needed ingredients, figure out the budget (money to purchase listed items) and go to the store. As we pick things out we discuss pricing, brand names and how to evaluate the best deal.
- Needs versus wants concept is very important throughout life for all of us. As they age and gain understanding there are things associated with my hobbies that reflect needs versus wants which make good subject matter for discussion with my grandkids. Particularly an activity they have an interest in, like fishing for example.
These are just few examples of actions and conversation points I use to demonstrate how to use money with my grandkids. Actually I did the same things with their parents as they grew up and remember how I appreciated any support from other adults. As a grandpa I just wait for the “teachable” moment or when the conversation flows that way. To be effective today’s kids are no different than yesterday’s kids- the brains shut off during “the talk”.
Need more ideas? Download my PDF booklet
“Money Doesn’t Grow on Trees… Teaching Kids about Money”
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What Are the Obstacles to Successful Retirement Planning?
There are a number of obstacles that you may face in planning for your retirement:
Discipline to Save
- Many people find it difficult to form the habit of “paying themselves first,” by making regular deposits to a savings plan.
Saving to Spend
- Money is saved for retirement purposes, but then is spent to make purchases.
- Income taxes can erode the growth of your retirement savings.
Longer Life Expectancies
- Longer life expectancies increase the risk of retirees outliving at least a portion of their retirement income.
Longer life expectancies also increase the risk of inflation eroding the purchasing power of retirement income.
- For example, if inflation increases at 3.5% a year, it would require over $1,400 in 10 years in order to maintain the original purchasing power of $1,000.
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Return of Money Trumps Return on Money
Gallup March 31,2014
“United States investors are generally a cautious group when thinking about risk versus return options for their retirement savings.”
Nearly 2 thirds (66%) of investors surveyed by Gallup said a guarantee that their initial investment was secure even if that meant lower growth potential; outranked having high growth potential that carried some risk of losing their initial investment.
The Takeaway – In 2013 – Interest guarantees and income guarantees increased annuity sales 5% higher, to 230,100,000,000 industry wide. According to LIMRA, 2/24/2014
Retirees who take income from an annuity are happier than those who adopt a different approach according to “Annuities and Retirement Happiness” (September 2012) The report from consultants Towers Watson, concluded-
“…while workers and retirees might have very different needs, almost all of them can benefits from annuitizing some portion of their of their retirement income (beyond Social Security).
Business partners? Yes. Father and sons? Yes. Charitable donors and donees? Yes. Non-spousal joint annuitant structuring provides added flexibility for income solutions.
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Long-term care insurance purchased today can help provide you with the financial security you need and deserve in your retirement years. By acting today, you will have protection to help pay for whatever long-term care needs a long life brings!
Long-term care refers to help with daily activities needed by people with disabilities or chronic, longer-lasting illnesses, such as help with eating, bathing and dressing. Long-term care also includes assistance for those suffering from cognitive impairments, such as Alzheimer’s disease and dementia. Other types of insurance, such as health insurance and disability insurance, do not typically pay for these services. Long-term care can be provided in a variety of settings, such as your home, an assisted living community or in a nursing home.
A typical long-term care insurance policy helps cover the cost of long-term care services, including:
- Assistance in your home with daily activities, such as bathing, dressing, meals and housekeeping services.
- Visiting nurses and/or home health aides who come to your home.
- Services available in your community, such as adult day care.
- The cost of an assisted living community.
- Nursing home care.
While the good news is that people are living longer, the bad news is that increased life expectancy also increases the odds of needing long-term care services, which can be expensive.
Without long-term care insurance to help meet the cost of needed long-term care services, you run the risk of depleting a lifetime of savings. With long-term care insurance, you’re in a better financial position to make the choice of what long-term care services you receive and where you receive them. PLUS, qualified long-term care insurance receives favorable income tax treatment…the benefits from qualified long-term care insurance, for the most part, are not taxable income to the recipient, up to a per diem limit ($330 for 2014).
Eligible premiums paid for qualified long-term care insurance can be applied toward meeting the 7.5% “floor” for medical expense deductions on your federal income tax return. The amount of eligible long-term care premium that can be applied to the 7.5% floor depends on your age:
|If you are this age by the end of the year:||This is the maximum eligible long-term premium for tax deduction purposes in 2014*:|
|40 or less||$370|
|41 – 50||$700|
|51 – 60||$1,400|
|61 – 70||$3,720|
|More than 70||$4,660|
* The maximum eligible long-term care premium is adjusted each year for inflation.Continue Reading »
Probate is simply the Latin word for prove, which means that the estate probate process is the process by which your will is brought before a court to prove that it is a valid will. The courts charged with this responsibility are generally known as probate courts, which may actually supervise the administration or settlement of your estate.
Supervision of the estate settlement process by the probate court can result in additional expense, unwanted publicity and delays of a year or more before heirs receive their inheritance. The publicity, delays and cost of probate motivate many people to explore ways in which to avoid or minimize the impact of probating a will, including:
- If specific requirements are met, many states have made provision for certain estates to be administered without the supervision of the probate court, resulting in less cost and a speedier distribution to heirs.
Form of Property Ownership
- The joint tenancy form of holding title to property allows ownership to pass automatically to the surviving joint tenant, who is normally the surviving spouse.
Transfer on Death
- Many states have enacted Transfer on Death statutes that allow a person to name a successor owner at death on the property title certificate for certain types of property, including real estate, savings accounts and securities.
- Unless payable to the estate, life insurance proceeds are rarely subject to the probate process.
- Gifts given during life avoid the probate process, even if made shortly before death.
- A “Totten” trust, which is a bank savings account held in trust for a named individual, can be used to pass estate assets at death outside of the probate process.
- A revocable living trust, created during the estate owner’s lifetime, can be an effective way to avoid the expense and delay of probate, while retaining the estate owner’s control of his or her assets prior to death.
Proper planning may serve to minimize the impact of the probate process on your estate and heirs.
Any potential method of avoiding probate, however, should be evaluated in terms of its income and/or estate tax consequences, as well as its potential impact on the estate owner’s overall estate planning goals and objectives.Continue Reading »
A married couple may file a joint tax return and be treated as one taxpayer, so that taxes are paid on the couple’s total taxable income. While a married couple may file separate returns, this usually results in higher taxes than filing jointly. The so-called “marriage penalty” results when the combined tax liability of a married couple filing jointly is greater than the sum of their tax liabilities calculated as though they were two unmarried filers.
Beginning with the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA 2001), various tax bills took steps to alleviate the marriage penalty through 2012. The American Taxpayer Relief Act of 2012 finally made the following marriage penalty relief provisions permanent.
Marriage Penalty Relief – Standard Deduction Increase
The following standard deduction schedule applies to a married couple filing jointly:
Calendar Year 2013 and later:
- Joint Return Standard Deduction as a % of Single Return Standard Deduction - 200%
- (in 2014, $12,400 married/$6,200 single)
Marriage Penalty Relief – Expansion of 15% Tax Bracket
The following schedule applies to the size of the 15% tax bracket for joint filers as a percentage of the 15% tax bracket for singles:
Calendar Year 2013 and later:
- Top of 15% Joint Bracket as a % of Top of 15% Single Bracket – 200%
- (in 2014, $73,800 married/$36,900 single)
With advances in medical treatment and technology, many people now survive critical illnesses that would have been fatal in the past. As a result of this increased life expectancy senior Americans have the opportunity to watch grandkids grow into adulthood and start families of their own. Enjoying some great grandkids is a real possibility.
Some unhappy news; many retirees will at some point become critically ill as the following statistics demonstrate. The need for planning in order to avoid becoming destitute is more important than ever.
- Men have a slightly less than 1 in 2 lifetime risk of developing some form of cancer. For women, the lifetime risk is a little more than 1 in 3.
- Between 2002 and 2008, the 5-year relative survival rate for all cancers was 68%, up from 49% in 1975 – 1977.
- It is estimated that over 1.6 million new cancer cases were diagnosed in 2013.
(Source: Cancer Facts and Figures 2013; American Cancer Society)
- An estimated 80 million Americans have one or more types of heart disease.
- Each year, an American will suffer a heart attack about every 34 seconds.
- The lifetime risk for cardiovascular disease at age 40 is 2 in 3 for men and more than 1 in 2 for women.
- It is estimated that the total costs of cardiovascular diseases in the U.S. was over $448 billion in 2008.
(Source: Heart Disease Facts, Centers for Disease Control and Prevention, July 2013)
- Someone in the United States has a stroke every 40 seconds.
- Stroke is a leading cause of serious, long-term disability in the U.S.
- It is estimated that Americans paid about $38.6 billion in 2010 for stroke-related medical costs and lost productivity.
(Source: Stroke Fact Sheet, Centers for Disease Control and Prevention, July 2013)
Will you have sufficient funds available to pay for:
- Any insurance co-payments and deductibles;
- Alterations to your home and/or automobile to meet any special needs;
- Out-of-town transportation and lodging for medical treatment;
- Treatments not covered by traditional health insurance; and/or
- Shorter-term home health care during your recuperation?
Surviving critical illnesses increase our life expectancies, we will live longer than ever before. At the same time, fortunately annuity ownership is rising An annuity is the only guaranteed financial hedge against longevity. More than ever a retiree’s goal should be lifetime income not just income for 20-30 years.Continue Reading »
At retirement, if you have a pension, you have to make a difficult decision that could negatively impact your future financial security and that of your spouse. Most people with company pension plans give this decision little thought and simply select the first payout option listed on their pension estimate; Joint and Equal Survivor Option.
For example, assume your maximum lifetime pension benefit is $2,000 monthly.
With the joint and equal survivor option, you’ll receive a significantly lower lifetime pension payment. Your surviving spouse, however, will continue to receive 100% of your pension benefit if you die first.
- For as long as you live, you receive 75% of $2,000 the maximum life income option benefit. Your benefit is reduced to $1,500 per month, for life.
- If you die first, your spouse will receive a lifetime monthly pension benefit equal to 100% of your benefit, or $1,500 per month.
- If your spouse dies first you will continue to receive $1500 per month. There is generally no going back to the maximum $2,000 benefit.
Second choice is – Joint and One-Half Survivor Option:
If you elect the joint and one-half survivor option, you’ll receive a lower lifetime pension payment. On the other hand, if you die first, your surviving spouse will continue to receive a lifetime pension benefit equal to 50% of your pension benefit prior to your death. For example:
- For as long as you live, you receive a monthly pension benefit of $1,700 or about 85% of the maximum life income option benefit.
- If you die first, your spouse will receive a lifetime monthly pension benefit equal to 50% of your benefit, or $850 per month.
- If your spouse dies first, however, your monthly pension benefit remains at $1,700.
Next choice is – Life Income Option:
If you receive your pension benefit under the life income option, you receive the maximum lifetime pension payment. If you die first however, your surviving spouse receives nothing after your death. For example
- For as long as you live, you receive a monthly pension benefit of $2,000.
- If you die first, however, your spouse will receive a monthly pension benefit of $0.
- If your spouse dies first, your monthly pension benefit remains unchanged at $2,000.
At retirement, you will have to decide how your pension benefit will be paid out for the rest of your life:
- If you elect to receive the maximum retirement check each month for as long as you live, with the condition that upon your death, your spouse gets nothing.
- If you elect to receive a reduced retirement check each month, with the condition that upon your death, your spouse will continue to receive an income.
- This pension decision is permanent.
- The decision you make will determine the amount of pension income you receive for the rest of your life.
- The decision is generally irreversible.
- In making this decision, many people unknowingly purchase the largest death benefit (life insurance) they will ever buy and one over which they have no control.
How Can Retirement Income Protection Help Solve the Pension Benefit Dilemma?
Federal law allows a pension plan participant to waive the “joint and survivor” annuity payout requirement, with the written consent of his or her spouse. This means that, with your spouse’s consent, you can elect to receive the MAXIMUM life income annuity payout at your retirement.
- However, what happens to your surviving spouse’s income and lifestyle if you should die first?
The solution, you maintain sufficient life insurance to replace the pension income lost at your death, assuring that your spouse will have an adequate source of income after your death. This is a death benefit you control and if your spouse predeceases you the life insurance can be surrendered paying you back part or all of your premiums; Depending on when death occurred.
In making this important decision, you should evaluate the risks associated with retirement income protection funded with life insurance:
- Your income after retirement must be sufficient to ensure that the life insurance policy premiums can be paid and coverage stay in force for your lifetime. Otherwise, your spouse may be without sufficient income after your death.
- If your pension plan provides cost-of-living adjustments, will upward adjustments in the amount of life insurance be needed to replace lost cost-of-living adjustments after your death?
- Does your company pension plan continue health insurance benefits to a surviving spouse and, if so, will it do so if you elect the life income option?
The federal government will not accept a percentage of your estate as payment for your estate tax bill. Instead, your estate tax bill must be paid in cash, and it must be paid within nine months after your death.
If your estate is subject to the federal estate tax, there are FOUR ways to provide your estate with the cash needed to pay your estate tax bill:
- You could accumulate enough cash in your estate to pay your estate tax bill outright. Rarely, however, does a successful person accumulate such large sums of cash. Instead, the reason for financial success is usually due to the investment of cash in appreciating assets, rather than accumulating it in a bank.
100% PLUS METHOD
- Your estate could borrow the cash needed to pay your estate tax bill. This, however, only defers the problem, since the money will then have to be repaid with interest.
ASSET LIQUIDATION METHOD
- Your estate could liquidate sufficient assets to pay your estate tax bill. This choice may make sense if your estate owns considerable assets that can be readily sold for a gain following your death. Keep in mind, however, that if a forced liquidation is necessary, it may bring only a small fraction of the true value of your assets. In addition, sales expenses are bound to be incurred.
- Assuming you qualify, you can arrange now to pay your estate tax bill with life insurance dollars. For every dollar your estate needs, you can give an insurance company from approximately one to seven cents a year, depending on your age and health. No matter how long you live, it is unlikely you will ever give the insurance company more than 100 cents on the dollar. In addition, the life insurance policy can frequently be structured to accommodate your unique premium payment requirements.
Do you own fixed annuities?
Do you wonder why so many retirees own fixed annuities?
The Top 3 Reasons to Own Annuities
46% own annuities to Supplement Social Security and Pension Income
- Planning Tip
Do you receive interest earnings that you’re not using for income? Not only are you paying unnecessary taxes on this money, but those earnings may increase the amount of your taxable Social Security benefit. Repositioning certain assets into a tax-deferred annuity can reduce or eliminate excessive taxes
34% own annuities to Accumulate Assets for Retirement
- Planning Tip
One common way is to move assets into a tax-deferred annuity. This approach works because annuity earnings are excluded from provisional income until withdrawn, reducing provisional income — and taxes due — in the meantime. Remember, the real value of your Social Security benefit isn’t the amount you receive, it’s what remains after taxes.
27% own annuities to Receive Guaranteed Lifetime Income
- Planning Tip
Immediate annuities can offer retirement income for life.
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The purpose of an annuity is to protect against the financial risk of living too long…the risk of outliving retirement income…by providing an income guaranteed* for life.
In fact, an annuity is the ONLY financial vehicle that can systematically liquidate a sum of money in such a way that income can be guaranteed for as long as you live!
Here’s How an Income Annuity Works:
The annuity owner pays a single premium to an insurance company.
- Beginning immediately or shortly after the single premium is paid, the insurance company pays the owner/ annuitant an income guaranteed to continue for as long as the annuitant is alive. There are other payout options also available.
- With a cash refund provision the insurance company pays any remaining funds to the designated beneficiary after the annuitant’s death.
Seeking a secure life long retirement income? Click the video box to left of this post.
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You better pay attention because there is going to be a quiz and you might have to take it. This quiz must be passed before some tax refunds are sent out. In order to protect taxpayers expecting refunds some of them will be sent a letter from the Wisconsin Department of Revenue directing them to take a 4 question multiple choice quiz. This quiz should confirm the taxpayers identity.
What if the taxpayer fails the quiz?
- They get one do over.
- If the second quiz fails then the taxpayer must send identification proof to verify their identity.
- A taxpayer who refuses to take the quiz must send proof of identity.
Why a Quiz?
- The IRS estimates the current earned income tax credit fraud is about 23-28%.
- According the latest stats from the IRS identity theft is up 78% for tax years 2011 to 2012.
Wisconsin does not anticipate any more fraud prosecutions instead they hope for a reduction in identity theft and refund fraud.
Wisconsin Department of Revenue http://www.revenue.wi.gov/individuals/id_verification.html
I wonder how many state revenue departments will pick up on this idea. Or other government departments. Perhaps a quiz for a driver license, hunting or fishing license, dog license…
Identity theft is a growing problem so on a more serious note I hope this quiz helps. In meantime while you’re waiting for your tax refund if you think of any good one liners post them in the comments.
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8FACEBOOK PROFILES RAISE USERS’ SELF-ESTEEM AND AFFECT BEHAVIOR – a study by UW-Madison
Facebook profiles are a version of self; it is tailored for the eyes of family and acquaintances through the use of photos and posts. A new study by UW-Madison assistant professor Catalina Toma finds beneficial psychological effects and influenced behavior. Ms. Toma used the Implicit Association Test to measure Facebook users’ self-esteem. The test showed in 5 minutes of viewing their own Facebook profile participants experienced a significant boost in self-esteem. This is the first time this test has been
done on Facebook users.
Catalina Toma said-
“If you have high self-esteem, then you can very quickly associate words related to yourself with positive evaluations but have a difficult time associating words related to yourself with negative evaluations. But if you have low self-esteem, the opposite is true.”
“Our culture places great value on having high self-esteem. For this reason, people typically inflate their level of self-esteem in self-report questionnaires,” she says. “The Implicit Association Test removes this bias.”
In addition, Ms. Toma studied whether or not exposure to one’s own Facebook profile affects behavior.
“We wanted to know if there are any additional psychological effects that stem from viewing your own self-enhancing profile,” says Toma, whose work will be published in the June issue of Media Psychology. “Does engaging with your own Facebook profile affect behavior?”
After the subjects spent time viewing their own profile they attempted fewer answers during the allotted time than people in a control group, but their error rate was not any worse. Toma says the results are consistent with self-affirmation theory, which claims that people constantly try to manage their feelings of self-worth.
“Performing well in a task can boost feelings of self-worth,” Toma says. “However, if you already feel good about yourself because you looked at your Facebook profile, there is no psychological need to increase your self-worth by doing well in a laboratory task.”
Assistant Professor Toma discourages drawing broad conclusions about Facebook’s impact on motivation and performance based on this particular study because it examines only one facet of Facebook use.
“This study shows that exposure to your own Facebook profile reduces motivation to perform well in a simple, hypothetical task,” she says. “It does not show that Facebook use negatively affects college students’ grades, for example. Future work is necessary to investigate the psychological effects of other Facebook activities, such as examining others’ profiles or reading the newsfeed.”
Gerontology professionals have been concerned for a long time about the negative effects of senior’s feelings of isolation and consider social media a good health improving endeavor. This study seems to support this view. Also consider that medical staffs usually do whatever they can to keep a patience’s attitude and self esteem high in order to promote healing.Continue Reading »
Why would anyone want to restrict their Social Security payments?
Well, it’s not the payments being restricted it is the type of application that is filed. The restricted application is filed when, for example, a wife wants to receive her husband’s spousal benefit instead of her own Social Security benefit. The idea here is to allow the possibly still working wife or early retired wife to receive monthly SS payments from the spousal benefit of her retired husband. This allows her own SS benefit to accrue credits each year until age 70 when she would then stop the spousal benefit from her husband’s SS and begin drawing from her own benefit. For a middle income couple this could increase total Social Security payments by $40,000 to $50,000 depending on earnings during their working years.
This is one of many combinations of Social Security planning and these options have been around for a longtime, some of them since the very beginning of the program. What is different now? Retirees are coming to understand Social Security is a life income annuity with a cost of living feature built in requiring understanding and planning to maximize the benefits.
There at least 81 different Social Security combinations and options to consider when signing up for retirement benefits and it takes a computer program to calculate them all to determine the best one in an individual situation.
If you would like to explore your Social Security benefit options contact Tim Barton, ChFC for an analysis. List your SS estimated monthly benefit for both spouses and current age in the comment section.Continue Reading »
Cash: Cash gifts are the easiest to give to a charity, both in terms of substantiating the deduction and in determining the value of the gift.
Real Estate: Real estate that is owned outright and which has appreciated in value can be given to a charity. The donor can generally deduct the fair market value of the property, up to an adjusted gross income (AGI) percentage limitation. When a charity sells donated appreciated property, the capital gain then escapes taxation, up to AGI percentage limits.
Securities: The best securities to donate tend to be those that have increased substantially in value. As with real estate, the donor can generally deduct the fair market value of the security and the capital gain escapes taxation when the security is sold by the charity.
Charitable Gift Tax Implications:
- Gifts of cash and ordinary income property are generally deductible up to 50% of the donor’s adjusted gross income (AGI).
- The fair market value of gifts of long-term capital gains property (e.g., real estate, stock) is deductible up to 30% of AGI. There is, however, a special election through which a donor may deduct up to 50% of AGI if the donor values the property at the lesser of fair market value or adjusted cost basis.
- Charitable contributions in excess of the percentage limitations can be carried over and deducted for up to five succeeding years.
- The donor must itemize income tax deductions in order to claim a charitable deduction. A portion of itemized deductions is phased out for taxpayers with an AGI above certain limits.
Life Insurance: If a charitable organization is made the owner and beneficiary of an existing life insurance policy, the donor can deduct the value of the policy as of the date of the transfer of ownership. The donor may then deduct all future amounts given to the charity to pay the premiums. If a charity is named just the beneficiary of an insurance policy on the donor’s life, no current income tax deduction is available. At the donor’s death, however, the donor’s estate receives an estate tax charitable deduction for the full amount of the policy death benefit.
For help you may ask questions in the commentsContinue Reading »
Americans are uncomfortable with their financial situation and don’t want to talk about it.
According to AVIVA USA and the Mayo Clinic wellness survey. Aviva and Mayo Clinic surveyed 2,000 U.S. adults on their financial preparations and health habits to determine the affects on their overall well being.
“Many people choose to ignore rather than address their financial wellness” said Mike Miller, Aviva vice president.
Key Wellness Survey results:
- 2 in 3 are uncomfortable with their financial situation
- Only 1 of 3 think they are or will be prepared of retirement
- Only 1 out of 5 work with a financial advisor
- Twice as many who consult with a financial advisor feel comfortable with their finances
Why two thirds of American feel so much stress and choose silence rather than seeking help on one hand is a mystery and on the other a little understandable. This survey clearly finds that those who discuss their financial situation with a professional feel much better and this makes the rest of their lives more enjoyable too; some even lose weight.
For help you may ask questions in the comments
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This is a surprise considering 60% of women say they are the primary breadwinner in their household
- 54% of respondents describe themselves as the household CFO.
- 49% sometimes fear becoming a “bag lady”.
- 27% of those earning more than $200,000 per year share that fear.
Inside the study
- More than 2,200 women ages 25-75
- Minimum household income of $30,000 a year
- “Bag Lady” fear extends to all corners of life and affluence
- Was highest among single respondents at 56%
- Significant concern for divorced women 54%
- Widows 47%
- Married women 43%
Despite feeling more empowered about financial planning
- Forty-two percent said they believe financially independent women are intimidating to men and often end up alone
- (31%) said those women are hard to relate to and often don’t have many friends.
- This feeling was even higher among single women at 47% and 32%, respectively.
Allianz Life Vice President of Consumer Insights Katie Libbe comments-
“When Allianz Life conducted the initial wave of the Women, Money & Power Study seven years ago, we discovered that women everywhere – even well-educated, successful, financially independent women – have major gaps and unmet needs when it comes to achieving comfort and confidence with money,” “Today, women clearly feel more invested in financial planning, however, fears of fiscal failure still persist. The real message here is that the financial services industry needs to help women learn about money and prepare for their retirement.”
In the Age of the Financially Empowered Woman
- 57% of all women surveyed said they both “have more earning power than ever before” and also “handle major investment decisions and retirement planning.”
- 55% noted they take the lead in suggesting new investing or retirement ideas.
- 60% said they were responsible for handling tax preparation and planning.
- 90% of women surveyed agreed that in today’s world, women need to be significantly more involved in financial planning than in the past
- 96% of divorced women felt this way.
- 67% of women surveyed said that becoming more knowledgeable and involved in managing their finances has improved the quality of their life, 71% of single women agreed.
“Allianz Life is dedicated to the mission of achieving financial literacy and independence for every American, so we’re especially keen to design solutions that are relevant, responsive, and sensitive to helping women accomplish greater financial security,” noted Libbe.
Financial Crisis of 2008-2009 Drives Behavior Change
- 68% say they have increased their financial involvement since the crisis
- Women ages 45-54 (72%) and widows (75%).
- 43% of women surveyed said they don’t feel any smarter about how to manage their money than before the crash. That feeling was shared by 36% of women with the highest income (household income of $200,000+).
When asked what key issues will have the greatest effect on their retirement outlook
- “lack of adequate retirement savings”
- ”the future of Social Security,”
- ”rising health care costs,”
- “tax changes.”
Retirement is the worry that keeps most women up at night.
Second only to loss of spouse/significant other. “Running out of money in retirement” is a worry that keeps 57% of women up at night and is the number one worry for single and divorced women.
For help you may ask questions in the commentsContinue Reading »
At one time, there were only two ways to tap into the value of your home:
Sell your home
BUT… then you would have to move somewhere else.
Borrow against the equity in your home
BUT… then you would have to make monthly loan repayments.
Many people have retired with what they assumed would be a comfortable retirement income into the future, only to find that inflation, rising health care costs and unexpected expenses have worked to make their retirement less secure. These people may have substantial equity in their homes…equity they would like to convert to cash without having to move or assume debt that has to be repaid.
A reverse mortgage, which converts a portion of a home’s equity into cash without requiring that the home be sold or that the equity be repaid currently, may provide the answer.
What Is a Reverse Mortgage?
A reverse mortgage is a loan against the value of your home that does not have to be paid back for as long as you live in the home. Simply put, a reverse mortgage converts some of the equity in your home into income.
The proceeds from a reverse mortgage can be paid to you:
•In a single lump sum;
•As a regularly monthly income; or
•At times and in amounts of your choosing.
While reverse mortgages typically require no repayment while you are living in your home, they must be repaid in full, including interest and any other charges, at the earliest of:
•The death of the last living borrower (meaning that a surviving spouse may continue to live in the home without repaying the reverse mortgage);
•The sale of the home; or
•The last living borrower moves permanently away from the home, such as to an assisted living facility or nursing home.
Think long and hard before moving forward on a reverse mortgage while exploring other options such as an out right sale or finding a less expensive place to live.Continue Reading »