Unable to Keep Current Health Care Plan

 "If you like your health care plan, you can keep your health care plan." ~ President Obama, August 11, 2009 town hall meeting in New Hampshire.

Effective January 1, 2013, Sears and Darden employees  will no longer be able to keep their health care plan.  Both Sears and Darden will move their employees away from employer provided health plans and provide fixed amount contributions which employees can use on insurance exchanges.  Over time, the increased costs of health care insurance will be borne more by the employee.

Some interesting observations I had were:

1. Commenters were calling this the Romney-Ryan voucher plan instead of acknowledging companies were making changes in anticipation of the implementation of Obamacare on January 1, 2014.  It's beyond me how people can blame Romney for events happening under President Obama's signature health care plan :-)
2. When I was in my twenties, I rarely used medical services.   In that situation,  I would take the company contribution, pay a fine for not having insurance and then keep the difference.  Since there is no restriction for pre-existing conditions, I could start my insurance when I definitely needed it.   To me, the availability of this option would contradict one of the basis premises that insuring healthy individuals would reduce health care costs.

Nevertheless, my main point is that the outcome was misrepresented by President Obama when trying to dispel concerns with Obamacare.  As has often turned out to be the case, what President Obama promises and what happens are very, very different.  (I guess that's why most of the Obama's signature legislation is implemented after his first term. :-)

I wouldn't be surprised if more companies more towards a plan similar to Sears and Darden.   I'm sure my company is considering such options, even for retirees such as me.  Soon, I expect that my health care insurance costs will go up, and benefits will go down, despite President Obama promising otherwise.

For more on  New Realities, check back every Monday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2012 Achievement Catalyst, LLC

Expecting Four More Years

“Insanity is doing the same thing, over and over again, but expecting different results.” ~ attributed to Albert Einstein

Despite the concerns of some Obama supporters, I don't see any outcome other than President Obama being re-elected.   This outcome is supported by several polls and consumer sentiment:

Forecasting the Election: Most Models Say Obama Will Win. But Not All. 

Obama Widens Lead as Romney Faces Challenges 

Consumer Confidence Jumps to Seven Year High

Economy's Worse But Obama Favored to Fix It

With his re-election, Obama has stated he will continue with his current economic policy.  Therefore, I also expect four more years of the same results: economic malaise, high employment, and increased government deficits.  In addition, I expect taxes to go up signficantly for all, leading everyone, not just the rich, to bear the pain of four more years.

For more on Reflections and Musings, check back every Saturday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2012 Achievement Catalyst, LLC

One Way I Will Fight Alzheimer's

Being on a sitcom stops me from getting Alzheimer's. ~ Jerry Stiller

I just completed doing my 2011 tax return by hand.  I used to agonize over doing our tax return because of the effort required and the lack of societal value from the task, even though there was usual some financial value of a refund.  However, this year I realized there may be a health benefit to doing my taxes manually :-)

Alzheimer's Disease Protection - How to Reduce Risk and Protect Your Brain offers the following mental stimulation tips to reduce the chances of getting Alzheimer's.  I've added how preparing our tax return can help.

Learn something new. Every year there is something new in the tax code: new or expanded credits, new deductions, or new qualifying criteria.   In the last 5 years, I don't think there is been any year similarity that would allow simply copying the current year's numbers into last year's return, which is how I used to do my taxes.

Practice memorization. I now know the various form numbers for various filing requirements:  8606, Nondeductible IRA contributions; Form 8283, Noncash Charitable Contributions; and 1116, Foreign Tax Credit, etc., etc., etc.

Enjoy strategy games, puzzles, and riddles. I enjoy evaluating different options to minimize my tax liability to Federal and State governments: itemized or standard deduction, Roth or Traditional IRA, and deductible or nondeductible IRA contribution.  

Use a “Who, What, Where, When, and Why” list. Keeping such documentation is required for charitable contributions, mileage and business expense claims for a deduction on a tax return.

Follow the road less traveled. I do my tax return by hand on an Excel spreadsheet.  This allows me to better understand the whys of the tax code as it affects my return.

Of course, some already think I'm crazy, and beyond help, for doing my taxes by hand when there are so many software resources available.   Hopefully, being a tax geek will help keep me from getting this dreaded disease in the future.

 For more on Reaping the Rewards, check back every Friday  for a new segment.

This is not financial, health or tax advice. Please consult a professional advisor.

Copyright © 2012 Achievement Catalyst, LLC

Inherited IRA for our Daughter

As a estate planning strategy, we asked my mom to make her grandchildren the beneficiaries of her IRAs.  Besides giving some assets to her grandchildren, a major benefit is the required withdrawal period is extended to the lifetime of her grandchildren.  This allows the savings a longer time frame tax free earnings.  To take advantage of the extended time for withdrawals, the beneficiary must strictly follow IRS rules.

I just completed the paperwork for our daughter and here's what I've learned:

First, the inherited IRA cannot be commingled with existing IRAs or IRAs inherited for others.  Doing so will revoke the option of taking required withdrawals over the lifetime of the beneficiary.   In addition, a taxable distribution would have been made when the funds were commingled.

Second, a separate inherited IRA account should be opened with both the beneficiary's and decedent's no.  No additional contributions can be made to this IRA account.

Third, the creation of the IRA and transfer of funds must be completed by December 31 of the year following the decedent's death.

Fourth, a custodian is needed for beneficiaries under 18.

The only downside I've discovered is that taxable IRA RMD withdrawals will create a tax return filing requirment for our daughter.  However, I think she will be below the $950 standard deduction for a dependent taxpayer with only unearned income.  So, her tax liability should be zero.

For more on  Crossing Generations, check back every Wednesday for a new segment.

This is not financial or IRA advice. Please consult a professional advisor.

Copyright © 2012 Achievement Catalyst, LLC

My Simple Test for Financial Presenters

I regularly receive invitations to dinner financial seminars.   I usually do not attend since they are marketing events for the presenter.  However, I will attend seminars when the topic or product is of interest to me.   Over the past two months, I've attended financial seminars for the following topics: annuities, managed investment accounts and Social Security. 

While the presenter uses the seminar as opportunity establish personal contact, I use the seminar as an opportunity to evaluate the financial advisor and the products. Here is what I look for from a seminar presenter:

• Substance.  I want to hear about a new or better idea I can use personally, whether or not I work with the presenter.  Also, I want to learn about the reasons for the presenter's perspective or better idea.  I like a presenter that provides details about why they are making a recommendation so that I can evaluate the logic.
• Knowledge.  I like to ask a question  on a topic which I've researched to confirm my understanding.  I don't have an issue if the presenter disagreeing with me.  However, I will not work with an advisor who doesn't have more knowledge than me on a topic that is supposed to be an area of expertise.
• No Pressure.  I like to invest according to my own timing, not the presenter's timing.  I'm OK waiting until I'm comfortable, even if I miss some gains as the market continues to rise.

I only consider a few of the dinner financial seminars offered to me.  I will usually attend seminars from advisors I currently use.  For the others, I only attending topics that are of interest to me and offer me an opportunity to evaluate the presenter.

For more on The Practice of Personal Finance, check back every Wednesday  for a new segment

This is not financial advice. Please consult a professional advisor.

Copyright © 2012 Achievement Catalyst, LLC

The Wealth Builder Carnival #93

Welcome to the ninety-third edition of The Wealth Builder Carnival. The purpose of this carnival is to collect articles from the blogosphere on building, preserving and keeping enough wealth for a comfortable retirement. For reference, I have tried to keep the carnival content tightly focused on wealth building and did not include submissions that were off topic. For reading convenience, the posts are listed with a brief summary or comment by the submitter and organized into seven categories: Earning, Insuring and Protecting, Investing, Living Frugally, Retiring, Saving and Taxes.

And now on to the Carnival.

Investing

John Schmoll presents How to Take the Emotion Out of Investing posted at Frugal Rules, saying, "This post is about removing emotions from your investing. It highlights doing your own research and setting a plan to help with your investments."

Michael presents Financial Planners and the Fiduciary Standard posted at FinancialRamblings.com, saying, "This post takes a closer look at the extent to which CFPs look out for the interests of their clients as well as the extent to which the CFP board cares."

Dividends4Life presents 6 Stocks Sending A Strong Message With Higher Dividends posted at Dividend Growth Stocks, saying, "One of the many reasons I like dividend stocks is because they provide continuous feedback. As time passes, dividend investors see their income grow steadily. You don’t have to wait five to ten years to determine if the strategy is working. Each dividend and dividend increase provides reassurance that the strategy is working..."

Living Frugally

Theresa Torres presents Beauty and Personal Grooming: How to Save Money on Spa Treatments posted at Beauty and Personal Grooming, saying, "There are plenty of ways that you can enjoy a spa treatment without paying a fortune. Check out these tips and see what will work for you."

Retiring

Super Saver presents Early Retirement Impact on Social Security Benefits posted at My Wealth Builder, saying, "Does retiring early reduce Social Security Benefits? It depends on two factors: years of participation and years at maximum contribution."

Taxes

anisha@nerdwallet.com presents I’ve heard the gift tax exemption is going to end soon—does that mean I should change my will? posted at NerdWallet, saying, "This article covers the rumors that the gift tax exemption will expire, and how you should adjust your finances accordingly."

John K presents Why are Small Businesses Still Paying for the War of 1812? posted at Wallet Blog, saying, "Earning is an important factor in obtaining money to invest - When 75% of business in the US economy are Small Businesses, you would think that ridiculous tax burdens wouldn't be imposed by local municipalities. But that just isn't so. Take a look at one of the factors that drives out small business and hinders job creation."

That concludes this edition. Submit your blog article to the next edition of The Wealth Builder Carnival using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

Technorati tags: the wealth builder carnival, blog carnival.  

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial, earning, insuring, investing, living, retiring, saving, tax, or wealth building advice. Please consult a professional advisor.

Copyright © 2012 Achievement Catalyst, LLC

Creating Streams of Retirement Income

In 2007, my plan was to use capital gains from stock investments to generate our retirement income needs.   Unfortunately, the stock market didn't cooperate with the 07-09 bear market :-(     It was fortuitous that the bear market occurred right at the beginning of my retirement. I now have an opportunity to adjust my plans to (hopefully :-)  enable a successful completion of retirement.

Originally, I had planned to keep non-invested cash in 5% CDs (really, they used to exist !) but the Fed's low interest policies have essentially eliminated this option.    I could have funded about 1/2 of our current retirement expenses by doing this, but not  at .05% interest rates that that is currently available.  So here's what I'm doing instead:

Dividend paying stocks.   I still have a significant amount of my company's stock in the company retirement plan. I plan to take an NUA when I am eligible.  I will only need to pay income tax on about 5-7% of the withdrawal and pay long term capital gains (whatever that may be) on the rest when I sell the stock.   My plan is to keep the stock since it pays about a 3% dividend, which is likely very safe. The dividend  would cover about 1/4 of our annual retirement expenses.

Rental property.  I am in the process of transferring over commercial rental property from my parent's estate.  The property is currently fully  rented with five tenants.  The main risk is vacancy, but we have a property management company that has done a good job to minimize vacancies over the past 20 years.   The rents will cover about 1/4 of our annual retirement expenses.

Social Security.  This is at least 8 years away as an option for me.  However, I am reviewing the options of taking it early, at full retirement age or at 70 1/2.   Provided it isn't modified for my age group, which is possible since I am under 55, Social Security would cover at least 1/4 of our current retirement expenses and up to 40% if I delay taking benefits.

Another option I am investigating is funding an annuity.  My current plan is to fund an immediate annuity about 20 years from now with the proceeds from selling our house.  Hopefully, by then our house will be worth more than we paid for it in 2003, enabling a profit that can be used to purchase an annuity.


For more on Strategies and Plans Ideas, check back every Monday for a new segment

This is not financial, retirement planning or investing advice. Please consult a professional advisor.

Copyright © 2012 Achievement Catalyst, LLC

I'm Not Feeling Wealthier from QE3

"Fool me once, shame on me, fool me twice shame on me." ~ proverb

A stated objective if QE3 was to increase the values of stocks, causing investors to feel wealthier and spend more.  Despite the market being up and my stocks being up, I don't feel one bit wealthier.  Why?   Simply, I don't feel the gains are permanent, sustainable nor certain.   I fully expect my stocks to lose their gains over the next few months as the effect of QE3 declines quickly.

My model for the stock market is the action of 2007, where the market peaked in Q4 just as the Great Recession started.  In late October 2007, I doubled my equity investments.  This time I'm holding back and will take advantage of a continued stock market rise by executing some company stock options that I still have since retiring.

For more on New Beginnings, check back every Sunday for a new segment.


This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2012 Achievement Catalyst, LLC

Trying to Correct a Social Security Earnings Error

In August 2012, I noticed an error in my earnings report: the amount earning taxed for Social Security and Medicare were different, which is not possiblessince my earnings were below the maximum earnings taxed for Social Security. I thought this would be a simple error to resolve.   NOT!

I called Social Security to explain the disceprancy and expected immediate resolution.   Unfortunately, my expectations were too high.   First, the representative told me that the number were different because Social Security and Medicare were taxed at two dfference rates.  With great self control, I explained that I agreed the rates were different, but the numbers were supposed to be my earnings that were taxed, which should not be affected by different tax rates.  After putting me on hold twice, the representative finally agreed that I was correct.

Second, she told me that the only way to correct the error was to fill out a form that would be sent to me.   It's been at least a month and I'm still waiting for the form.  So I will need to call Social Security again to get the form.

At this point, I still have several years to correct the discrepancy so I don't have a great sense of urgency yet.  Right now, I only have a great sense of disappointment in the ineffectiveness of the Federal government to resolve such a simple verifiable error.

For more on  Reaping the Rewards, check back every Friday for a new segment.
This is not financial or retirement advice. Please consult a professional advisor.

Copyright © 2012 Achievement Catalyst, LLC

Two Longevity Factors for Men

Someone once commented to me that there aren't many overweight old men.  There seem to be lots of overweight middle aged men.  However, it appears few of them make it to the senior years.  This qualitative observation is supported by this study, Body weight and Mortality. A 27-year follow-up of middle-aged men. In addition,  I learned that being lean isn't the only major factor based on the report Health benefits of leanness limited to fit men. According to the article, being fit is also important.  These results of this study were also summarized in a Time article.

The good news is that I've lost 15% of my weight since retiring in 2007 and am now below the weight at which I entered college.  The bad news is that my fitness is likely also lower.  Until I graduated from college, I estimate I exercised at least 2 hour a day between sports and walking to classes.   Nowadays, I'm lucky to get 1 hour a day for three times a week, which is my 2008 New Year's resolution goal.

Based on these studies, I guess I need to strive for 1 hour of physical exercise per day. 

For more on Crossing Generations, check back every Thursday for a new segment.

This is not financial or health advice. Please consult a professional advisor.

Copyright © 2012 Achievement Catalyst, LLC

The Fiscal Cliff and Sequestration: Good Personal Finance

The more I think about the fiscal cliff and sequestration, the more I like it.  It has all the elements of good personal finance:   a strategy for cutting spending, increasing income and a timing to execute.   Personally, I don't agree with some of the elements, but a strategy is better than no strategy, which is how the government has been operating the past 3.5 years.   Here is the strategy and its elements:

Strategy.   If no budget can be passed by Congress, then a set of predetermined spending cuts and tax increases will take place.  I have no reason to believe that Congress will pass a budget before 2013 and therefore.

Spending cuts.  With the exception of Social Security and Medicaid, there will be cuts in all other programs, including defense and Medicare.

Tax increase.  The Bush tax cuts and other tax breaks will expire at the end of 2012.   So there will be a tax increase for just about everybody, including the middle class and the rich.  

Everyone will bear some of the burden of reducing the deficit; everyone will feel some pain.   And everyone will benefit from making these tough choices.


For more on The Practice of Personal Finance, check back every Wednesday for a new segment.


This is not financial advice. Please consult a professional advisor.

Copyright © 2012 Achievement Catalyst, LLC

The Wealth Builder Carnival #92

Welcome to the ninety-second edition of The Wealth Builder Carnival. The purpose of this carnival is to collect articles from the blogosphere on building, preserving and keeping enough wealth for a comfortable retirement. For reference, I have tried to keep the carnival content tightly focused on wealth building and did not include submissions that were off topic. For reading convenience, the posts are listed with a brief summary or comment by the submitter and organized into seven categories: Earning, Insuring and Protecting, Investing, Living Frugally, Retiring, Saving and Taxes.

And now on to the Carnival.

Investing

Dividends4Life presents This Largely Unknown Tech Stock Just Announced A HUGE Cash And Dividend Increase posted at Dividend Growth Stocks, saying, "Tech companies are not usually known for dividend increases. Historically, most of them would pour every dollar back into the business to meet growth expectations. When growth slowed, they would purchase their stock with excess cash and eventually pay a dividend when all other uses of cash were extinguished. Not all tech companies follow this pattern..."

Living Frugally

Theresa Torres presents 6 Tips for Taking the Bite Out of Dental Costs posted at WorlDental, saying, "Your dental expenses can take a huge chunk out of your budget especially if you have poor dental coverage. If you're looking for ways to reduce your dental expenses, here are some tips for you."

Retiring

John Morrow presents I left my job, should I rollover my 401(k) into an IRA? posted at NerdWallet, saying, "This article is from NerdWallet, a comprehensive personal finance site dedicated to quantitative analysis and financial literacy. The article highlights the importance of switching from a traditional 401k to an IRA. It provides in-depth analysis and covers multiple scenarios to ensure financial fitness"

Wallet Hub presents Are We on the Verge of Another Mortgage Disaster? posted at Wallet Hub, saying, "Retirement, done right, and with careful financial planning, can and should be comfortable. But the lack of planning before retirement and the introduction of Home Equity Conversion Mortgages has opened up a whole new can of worms…and whose going to pay?"

Super Saver presents Retirement Preparation for the Young posted at My Wealth Builder, saying, "Here are some elements that help prepare for eventual retirement."

That concludes this edition. Submit your blog article to the next edition of The Wealth Builder Carnival using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

Technorati tags: the wealth builder carnival, blog carnival.  

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial, earning, insuring, investing, living, retiring, saving, tax, or wealth building advice. Please consult a professional advisor.

Copyright © 2012 Achievement Catalyst, LLC

QE3 - I'm More Positive but Not Spending More

One of the Fed's explicit goals for QE3 is to boost the stock market and create more perceived wealth.  This is expected to create a more positive attitude among holders stock which, in the Fed's perspective, will lead to more spending and an improved economy.

While the market advance has given me a much more positive attitude,  I'm definitely not going to spend my new found gains.  The last market boom-bust of 2007 to 2009 has made me much more cautious when the market rallies.  Instead, I plan to take some profit to protect the gains and keep the funds in cash, until a bust inevitably happens.
For more on Strategies and Plans, check back every Monday for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2012 Achievement Catalyst, LLC

Healthy Eating Becoming a Habit

Since my last blood test showed little improvement in my cholesterol, I've modified my diet significantly since early August 2012.    As I summarized in my recent 2008 resolution update , I'm eating at least 5 servings of fruit and vegetables per day.    In addition, I've cut down my servings of meat to less than 1 serving per day and for bread, less than 2 servings per day.  Finally, I've been taking Metamucil three times a day.

Eating more fruit and vegetables and less meat and bread has become a habit.   Yesterday, we were at a local amusement park and I chose the salad over pizza.   Also, I've been carrying coupons for a free large burger from a couple major fast food chains for a few months.  Finally, I've avoided buying any meat when shopping for groceries.

My secret to staying on my diet:  1) making great salads; and 2) being strict on weekdays and lax on weekends.

So far, I feel better and have lost additional weight.  Now if only my cholesterol comes down too, it will be worth it :-)   I'll find out in another month.

For more on New Beginnings, check back every Sunday for a new segment.

This is not financial or health advice. Please consult a professional advisor.

Copyright © 2012 Achievement Catalyst, LLC

QE - To Infinity and Beyond

"Insanity: doing the same thing over and over and expecting different results." ~ attributed to Albert Einstein

On Thursday, the Fed announced an unlimited mortgage security purchase program of $40 billion a month and continued low interest rates through 2015 with the stated intention of driving unemployment below the current 8+% level.  Buying mortgage security should continue to keep long term interest rates low also. 

Call me a skeptic, but I don't see the connection between continued low interest rates and growing jobs.  If low interest rate effectively created jobs, then the unemployment rate should be significantly below 8% by now given that interest rates have been low since 2009.  The main impact that QE1-2 delivered was a rally in the stock market and commodities, such as precious metals.    Unfortunately, previous QEs have not significantly helped housing.  Another impact was the punishing of savers, since interest rates on fixed income instruments, e.g. savings accounts, CDs and bond, are at record lows.

My gut tells me this is going to end badly due to unintended consequences of QE Infinity.  Hopefully, Mr. Bernanke is smarter than my gut :-)

For more on Reflections and Musings, check back every Saturday  for a new segment.


This is not financial advice. Please consult a professional advisor.

Copyright © 2012 Achievement Catalyst, LLC

Early Retirement Impact on Social Security Benefits

 A reader asked me if retiring early would reduce my social security benefits, since I would not be contributing for many years before starting Social Security payments.   I had done the research before I retired (over five years ago), and determined there would be a minor reduction.  However, before answering the question again, I decided to do some followup research.

First,  the topic was also discussed on the EarlyRetirement.org forum.  The posters concluded there were two factors that impacted whether early retirement reduced Social Security benefits:

1. Years of contribution.   Social Security uses the top 35 years of employment contributions to calculate benefits, no matter how many years are worked.  If working less than 35 years, contributions are counted as zero until year 35 is reached.  In addition estimated benefits are calculated by extrapolating the most recent year until retirement age.
2. Years at maximum contribution.   Each year a maximum level is set for Social Security contributions.  The closer contributions are to the maximum level the closer the benefit is the maximum level.

Social Security also has a benefits calculator  that allows estimating of benefits when taking early retirement. It allows the entry of zero for future year, versus the typical estimator that assumes the last annual income until full retirement. Unfortunately,  it is a little cumbersome to use since it requires manual entry for each year worked.  I used this calculator to estimate the impact of early retirement on my benefits prior to retiring.

Although Social Security doesn't explicitly share, it appears the relationship between the two factors and benefit payout is asymptotic   After a certain number of years and years at maximum, the benefits don't increase much for each additional year.   Similarly, not working the last few years doesn't reduce benefits much.

In my case, I had 31 years (including 4 years of only summer jobs during college) of contributions to Social Security and  half were at the maximum contribution level.  Not working, i.e. making zero contributions for 4 years to get to 35 years, seemed to reduce my benefits around 5% (based on my recollection), versus contributing at the maximum level for another 16 years.   The reduction seemed like a reasonable trade off for retiring early.

Since retiring, I have made contributions for four more years.  There has been a 15% increase in full retirement benefits, because Social Security expects that I will contribute at the same level as 2011 for another 12 years, which I won't be doing.

Based on this analysis, I estimate a maximum reduction of 15% in my Social Security benefits from retiring early versus working until full retirement age.   However, I expect my reduction to be lower since I will be receiving several more years of deferred compensation from which Social Security taxes will be withheld.

For more on  Reaping the Rewards, check back every Friday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2012 Achievement Catalyst, LLC

Retirement Preparation for the Young

7 Ways to Prepare for Retirement in Your 20s   offered an excellent strategy for preparing for retirement.  The seven elements were:

1. Avoid consumer debt.
2. Avoid lifestyle inflation.
3. Grow income.
4. Open a 401(k) and save.
5. Open a Roth IRA.
6. Open a taxable brokerage account.
7. Invest in income producing assets.

Based on my experience, I would add, "Pay yourself first" as the eighth element.

While there are no guarantees, following these 8 elements will improve the chances of having a success retirement.

For more on Crossing Generations, check back every Thursday  for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2012 Achievement Catalyst, LLC

Protecting Principal

Call me skeptical.  Despite the recent rally, I think there is still too much divergence between the market and economic data to put substantial funds into stocks again.   I do believe the Fed action to keep interest rates, whatever it may be, will cause the market to rise further.  My concern is the advance may be similar to the 2007 peak before the start of the recession.   At that time, I didn't see any downside to the market and put substantial funds into equities, which the declined 60% over the next year.

I learned from my 2007 experience.  This time, I will be more cautious.   If I decide to invest, I will  commit limited funds at what may be a near term peak and then waiting for a correction to add more funds.   In addition, I will offset some risk by exercising some stock options as my company stock (hopefully) advances with the rest of the stock market.  

For more on The Practice of Personal Finance, check back every Wednesday for a new segment.


This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2012 Achievement Catalyst, LLC

The Wealth Builder Carnival #91

Welcome to the ninety-first edition of The Wealth Builder Carnival. The purpose of this carnival is to collect articles from the blogosphere on building, preserving and keeping enough wealth for a comfortable retirement. For reference, I have tried to keep the carnival content tightly focused on wealth building and did not include submissions that were off topic. For reading convenience, the posts are listed with a brief summary or comment by the submitter and organized into seven categories: Earning, Insuring and Protecting, Investing, Living Frugally, Retiring, Saving and Taxes.

And now on to the Carnival.

Earning

Super Saver presents Escape Velocity Aids Wealth Builder posted at My Wealth Builder, saying, "Significantly growing earnings is an important element of wealth building."

Insuring and Protecting

Wallet Hub presents How to Manage Your Financial Records posted at Wallet Hub, saying, "We've all heard the phrase 'Get your financial house in order.' Well, it might be a good idea to start with cleaning up your documents. This minor physical action will make a huge difference in handling the intangible details of financial management."

Investing

Vytas presents 5 more key investment tips posted at Trend, saying, "I firmly believe that most rules of trading that are good for one financial market will also be good for all the rest. I came to this conclusion by watching various markets. Securities are securities and people are people! And when people go to securities you will notice the same price patterns, because people are the same and their expectations, fears and greed are reflected in any market. Check what the tips are."

Dividends4Life presents These Two Companies Are Shoving Mountains Of Cash To Their Shareholders posted at Dividend Growth Stocks, saying, "Some companies want to give their shareholders something special. When you have a mountain of cash sitting on your balance sheet you can make your shareholders really happy by sharing the wealth in the form of special dividend, and that's what these two companies decided to do this week..."

Living Frugally

thethriftywife presents Saving Money on Food Amongst the Rising Food Costs posted at The Thrifty Wife, saying, "How to cut food costs."

Theresa Torres presents Guest Post: 6 Tips for Buying Bulk Groceries at Costco posted at Addicted To Costco!, saying, "Buying in bulk when done properly and planned carefully can give a family big savings. Here are some good ideas to guide you in your next grocery shopping trip."

Retiring

Kristine McKinley presents Social Security’s Gift to Married Couples: The Spousal Benefit posted at Social Security Retirement Income, saying, "With Social Security making up approximately 40% of the average American’s retirement income, it’s important to maximize your lifetime benefits not only for yourself, but for your spouse also. The rules surrounding spousal benefits are very complicated. Making a wrong decision could mean a lower standard of living and could increase the chance that you will outlive your money."

Taxes

John K presents Is Mortgage Tax Relief On Its Way Out? posted at Wallet Blog, saying, "The mortgage forgiveness tax break is set to expire at the end of this year. Will this law that offers some relief for those unable to make payments or in possession of a property with diminished value be extended?"

That concludes this edition. Submit your blog article to the next edition of The Wealth Builder Carnival using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

Technorati tags: the wealth builder carnival, blog carnival.  

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial, earning, insuring, investing, living, retiring, saving, tax, or wealth building advice. Please consult a professional advisor.

Copyright © 2012 Achievement Catalyst, LLC

Progress on New Year's Resolutions from 2008

At the end of 2011, I still had not met my 2008 New Year's resolutions. Instead of making new resolutions for 2012, I decided to continue working on the 2008 resolutions and track my progress. Here's my latest report card on how I'm doing on the 2008 resolutions.

	2008 New Year's Resolutions and Status
Category	Category Activities	Status	Grade
Healthier Lifestyle	Lose 10% of weight	Have achieved a 13% weight loss and am within 2% of the weight of my sophomore year in high school. I am considering trying to achieve a 20% weight loss which would put me almost at my lowest weight in high school.	A+
	Better diet	Achieved a target of 5 servings of vegetables/fruit per day in July, 2009, and regressed back to 2-3 per day.  Since early August 2012, I have been eating at least 5 servings of vegetable and fruit per day.  In addition, I've been taking Metamucil three times a day which provides 1/3 of my daily fiber requirement.	A
	More exercise	In July, 2009, I had exceeded my target of 3 times per week by regularly exercising 6 times per week and then fell back to 2 times per week.  Since early August 2012, I've been averaging 3 times per week, above 3 some weeks and below 3 for others.    I still need to consistently be exercising at least 3 times a week.	A-
Tax Strategies	Identify five strategies to minimize taxes	Used Roth IRA contribution, Child tax credit, Roth IRA conversion , and 0% long term capital gains in 2008. Continued to benefit from these four tax strategies in 2009, and added a fifth of using accelerated itemized deductions and standard deductions in alternating tax years. In 2010, we  benefited from two additional tax strategies involving the saver's and making work pay credits.	A
Contingency income	Earn 20-40% of retirement income needs in first 3 years	Achieved 27% in 2008 due to deferred compensation. In 2009, 16% was achieved because our monthly expenses declined when we paid off our mortgage. In 2010, we earned 46% of our projected expenses.  In 2011, we earned 80% of our projected expenses since I took on a temporary full time job at a non-profit.  In 2012,  the temporary full time job ended and I decided cut back on part time jobs.  So 2012 earnings will cover about 30% of annual living expenses.	A
Have Fun	Family activities and vacations	Have attended 100% of our daughter's school activities for parents. We are doing several vacations a year and plan a major national parks vacation in the next couple years.	A
	Hobbies	Playing tennis, and some golf.  Doing coin collecting, tennis and golf with our daughter.	A

This report card is a significant improvement over the September 2010 report card which had a B+ average. My main opportunity area is exercise. I won't consider my 2008 resolutions successful, until I give myself an A in every category :-)

For more on Strategies and Plans, check back every Monday for a new segment.

This is not financial or personal development advice. Please consult a professional advisor.

Copyright © 2012 Achievement Catalyst, LLC

The Best President for the Stock Market

Guess Which President Has Been Best for the Stock Market? at CNBC.com reports that President Obama has presided over the greatest stock market advance among recent Presidents since 1976.   The results for the first 43.5 months of each term are:

Carter - 20%
Reagan - 23%
Bush 1 - 45%
Clinton - 51%
Bush 2 - -17%
Obama - 68%

The stock market has been great, for those that stayed invested in equities.  Guess my colleague was right when she told me that the stock market does very well under Democratic Presidents.   I should have listened to her :-)
For more on New Beginnings, check back every Sunday for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2012 Achievement Catalyst, LLC

Stock Market is Defying Gravity

Last week the stock market continued to amaze me.   Depending on the index, the market is either near or has surpassed 52 week highs, despite the disappointing numbers for the August jobs report and continued sovereign debt risk in Europe.  The only explanation I have is that traders are pricing in the initiation of QE3 by the Fed after the FOMC meeting on September 12-13 since the implementation of QE1 and QE2 created significant market rallies. 

For now, it appear the only direction the market wants to go is up.  I want to believe, since I would benefit from a significant market rally.  However, I remain skeptical given the the issues in the U.S., Europe and China.   We are only one Lehman event away from a major downturn.   I just don't know when it will happen.

For more on Reflections and Musings, check back every Saturday for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2012 Achievement Catalyst, LLC

Attitude Improvement

The recent market advance and equivalent advance of my company stock has improved our retirement  savings by about 14%, providing a 5.6% return for the year.  I am feeling positive about the retirement accounts for the first time this year.   Unfortunately, I know the gains may be fleeting since the potential of central bank intervention has been driving most of the market advances in 2012.

Hopefully, the market advance will continue past the September FOMC meeting and the German court ruling on the ECB bond buying proposal.   I would love the have the same positive attitude at the end of September :-)

For more on Reaping the Rewards, check back every Friday for a new segment.


This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2012 Achievement Catalyst, LLC

Being Patient With Our Savings

Low risk investments are paying historically low returns.  Savings account pay about 0.1%.  Even CDs up to two years are paying less than 1% interest.  The "experts" are encouraging savers to invest in riskier assets to increase returns.  They believe that low interest CDs/accounts may be the riskier asset due to inflation.

I remember the last time when savings and accounts were considered the riskier assets.  It was during the 80s and interest rates and inflation were in the double digits.  I recall being chastised for buying a five year 14% CD.  After all, many believed interest rates would continue to rise and that fixed rates investments would have negative returns after inflation.  As it turned out, interest and inflation did decline back to historical levels, resulting in an excellent return for the 14% CD.

Similarly, I believe that interest rates will return to historical levels since the Fed is targeting for a 2014 ending date, which may be extended to 2015.  Patience should eventually payoff. 

For more on The Practice of Personal Finance, check back every  Wednesday  for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2012 Achievement Catalyst, LLC

The Wealth Builder Carnival #90

Welcome to the ninetieth edition of The Wealth Builder Carnival. The purpose of this carnival is to collect articles from the blogosphere on building, preserving and keeping enough wealth for a comfortable retirement. For reference, I have tried to keep the carnival content tightly focused on wealth building and did not include submissions that were off topic. For reading convenience, the posts are listed with a brief summary or comment by the submitter and organized into seven categories: Earning, Insuring and Protecting, Investing, Living Frugally, Retiring, Saving and Taxes.

And now on to the Carnival.

Insuring and Protecting

Wallet Hub presents The Basics of Emergency Preparedness posted at Wallet Hub, saying, "Protecting your family and finances should start well before an emergency occurs. Not that we should dwell on the possibility of disaster, but, perhaps the old saying "prepare for the worst but hope for the best" shouldn't go unheeded."

Investing

Dividends4Life presents For Over 50 Years This Little Insurance Company Has Paid Big Dividends posted at Dividend Growth Stocks, saying, "Insurance helps you manage risk and provides you, and your loved ones, peace of mind. It is great when an insurance company can offer the same benefits to its shareholders. One insurance company in Ohio has provided its shareholders with a growing dividend for 52 years, and it just raised its dividend again..."

Vytas presents Top 8 stock trading tips posted at Trend, saying, "Investing in stocks is not gambling. There are rules that you have to follow. Nobody becomes a profitable stock trader over a night in the same fashion as nobody becomes a good doctor over a night. Good things have a good price tag on them. The article gives you 8 key stock trading tips that will help you to become a better investor."

S. B. presents Trailing and Forward Dividend Yield posted at Save Invest Give, saying, "The article discusses the advantages and disadvantages of trailing dividend yields and forward dividend yields, and recommends using both measures in your investment analysis."

Saving

Jonathan Milligan presents 3 Money Habits That Will Never Fail You posted at Simple Life Habits, saying, "Financial strategies come and go, but certain fiscal principles will be true with every generation. Here are 3 money habits that will stand the test of time."

Retiring

Super Saver presents Character Building posted at My Wealth Builder, saying, "Due to Great Recession and its aftermath, early retirement has been a character building experience for me."

That concludes this edition. Submit your blog article to the next edition of The Wealth Builder Carnival using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

Technorati tags: the wealth builder carnival, blog carnival.  

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial, earning, insuring, investing, living, retiring, saving, tax, or wealth building advice. Please consult a professional advisor.

Copyright © 2012 Achievement Catalyst, LLC

Bad News Causing Markets to Advance

The U.S. markets were up on Friday and followed by a rise in Asia and European markets on Monday.  Why?  Because the economic indicators are bad enough to cause traders to expect another of quantitative easing by the Fed (a.k.a QE3) and other central banks.  Since quantitative easing creates more liquidity and lowers interest rates, risk assets such as stocks and commodities increase in price.  Thus, the stock market rises due to quantitative easing.

In 2012, it seems that the market has been anticipating quantitative easing by the central banks and the stock market has been rising most of the year, with a brief pullback in May 2012.   With the economic news getting worse throughout the summer, the markets have been rising with the expectation of imminent quantitative easing.

At this point, I am still skeptical of a longer term rally.   I will try to profit in the short term by keeping our materials stocks and exercising some options in my company's stock.  In addition, I will sell some gold jewelry if spot gold prices exceed $1800.  However, if the stock market advances sharply or continues to rise into October, I will consider putting about 10% of our cash back into the market.

For more on Strategies and Plans, check back every Monday  for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2012 Achievement Catalyst, LLC