Government Retirement Traps Lurking for Seniors

Beware if you are retired! The Federal government is stealthily working to tax away the money one has saved for retirement.   And no elected official is working to protect seniors from this government ploy.

I retired early at 49.    I didn't become aware of many of the Retirement Traps until I started using some the retirement benefits at 64.    Yes, the federal government provides benefits to senior retirees.  However, the federal government also stealthily reduces the benefits or increases the cost.

Here are a few government retirement trap examples:

• Tax on Social Security Benefits.   Up to 85% of social security payments can be taxed above certain total income.   The threshhold income  number hasn't been adjusted for inflation since it was implemented in the 1980s.   First, the Federal government doesn't acknowledge that 100% of FICA payments made by an individual has already been taxed.  Thus, the Federal government is taxing the same income twice.  Seems this should have been corrected many years ago, but the Federal government allows this rip off of seniors to continue.
• IRMMA (income-related monthly adjustment amount).   This is the additional payment one is required to make for Medicare part B premiums based on income.   My response is, "Since when are any insurance premium payments based on one's income?"    Do I pay homeowner/renter insurance based on income?  Do I pay car insurance based on income?   No I pay based on benefits and risk assessment.   Thus, to me, and IRMMA is another stealth tax on Retired Seniors. 
• RMDs (Required Minimum Distributions from Retirement Accounts).   OK, Federal government expects individuals to save for retirement.  After the individual saves, the Federal government tells them they must withdraw a certain amount a year and pay taxes.   Yeah, the Federal government is so good at managing budgets, they should be allowed to tell all citizens how to manage their retirement accounts. 🤣
• New Non Spousal Inherited IRA rules.  Inherited IRAs used to have RMDs based the beneficiary's lifetime, which made sense to me.  Now,  most inherited IRA RMDs are based on the decedent's and must be withdrawn within 10 years.  How does that help the beneficiary for retirement.  It doesn't.   In fact, if the inherited IRA is large, the beneficiary will likely be put in a much higher tax bracket during that 10 years.   Who benefits, the Federal government for taxing beneficiaries earlier and at higher tax brackets.

I'm a big fan of maximizing income AND minimizing taxes (both Federal and local).   I do not consider the Federal government my friend when it comes to maximizing my benefits and reducing taxes paid.   More about how I will manage these traps in future posts.

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

This is not financial nor tax advice. Please consult a professional advisor.

Copyright © 2023 Achievement Catalyst, LLC

Regarded Investment Strategy - w/o 12/19/22

Sorry for the late post.   There was no change in the investment strategy.   Stay 100% invested in short term money market funds with yields at almost 4%.

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

This is not financial nor investment advice. Please consult a professional advisor.

Copyright © 2022 Achievement Catalyst, LLC

New Investment Strategy Principles

Here are the principles for developing the Regarded Investment Strategy:

• Simple to Use.   The strategy invests in 4-6 sectors using ETFs that have high volume trading.
• Low Cost.  Using ETFs with relative low expense ratios.
• Low Volatility.   Adjust positions weekly based on quantitative metrics to reduce downside risks.
• Good Returns.  Meet or beat total market returns on an annual basis.

The results have been back tested and are delivering against the principles.

We have started an in-market test with limited funds this week.

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

This is not financial nor investment advice. Please consult a professional advisor.

Copyright © 2022 Achievement Catalyst, LLC

New Regarded Investment Strategy

2022 has been a humbling investment year.  None of my investment strategies did particularly well.  The best returning portfolios were mostly in cash.  Even money invested in CDs lost market value due to interest rates going up, though I will recover principal value when the CDs mature.

It's time to try something new.

Still working on the specifics of the trading strategy.  An overview is the strategy will use groups of ETFs that cover the S&P500, Long Term Bonds, Gold, Real Estate and Commodities plus short term money market instruments.   The portfolio will hold 0 to 100% of each group and equal weighting of each group when more than one group is involved. 

Buys and sells will be executed weekly either Friday close/after hours or Monday open/premarket.  I will run a trial in both a taxable and non taxable account.   The taxable account will use a great number of ETFs to avoid wash sale issues.

Monday, December 12, 2022:   Buy 100% short term money market mutual fund, with yield at around 3.50%

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

This is not financial nor investment advice. Please consult a professional advisor.

Copyright © 2022 Achievement Catalyst, LLC

Higher Education Scam

For most students, a college education is not worth the cost they paid.

First, very few people can get a good paying job, i.e. support a family, with just a bachelor's degree in their major.   

Second, student loan debt payments far exceed what can be comfortably paid with a salary from an entry level job.

Third, the institutions that encourage the student to take or provide the loan have no vested interested in whether the student is able to pay back the loan.

Perhaps the government ought to pause the student loan program and address these issues before restarting the making student loans.

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

This is not financial nor education advice. Please consult a professional advisor.

Copyright © 2022 Achievement Catalyst, LLC

Stock Market No Longer in Easy Mode

Since the bottom in March 2020 until December 2021, the stock market was a money printing machine.   The overall market, especially growth stocks, only went up.   That ended with the start of 2022.

At first, I thought the market bottomed in late January, 2022.   I put additional funds in a Roth managed account.  That account is now down 16%.  In March 2022, I though the market had bottomed again and put additional funds into taxable managed account.   That account is now down 11%.    We have lost all of our gains from 2021 and starting to lose some gains from 2020.

At this point, I am making small trades based on earnings and make small buys on the dips and selling into the rallies.  Currently, I expect the market decline to continue for several more months, unless there is a major catalyst event to the upside, e.g. Russia ceasing the war with Ukraine.   In the meantime,  I am waiting for a further 10-20% drop before making any further large infusion of funds into stocks. 

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

This is not financial nor investment  advice. Please consult a professional advisor.

Copyright © 2022 Achievement Catalyst, LLC

Changing Car Rental Prices

Recently, I reserved a rental car for a trip a couple months in advance.   Before the trip, I checked the rental car prices and found that I could change to a lower price, for exactly the same rental period.   It seems that car rental prices change on a daily basis.   Several times, I was able to reduce our rental cost by $20 and up to $200 from the same rental car company.   It was worth checking every few days and learning if I could get a lower price.

For more on Ideas You Can, check back Tuesdays for a new segment.

This is not financial nor car rental advice. Please consult a professional advisor.

Copyright © 2022 Achievement Catalyst, LLC

Going to the Dark Side

After an unsuccessful stint at shorting stocks in 2012, I started shorting stocks again in the past two week.  So far all but one of my shorts have been successful.   I expect the one unsuccessful short to become profitable this week, if the market continues its downward trend.

Here's what seems to be working:

• Find stocks that have earnings reports during the week.
• From that list, choose the high growth stocks. 
• Choose stocks with higher prices, about 100 or higher.
• If there is an up day, short a few stocks.  I usually choose 2-3.
• On a down day, OK to short if it is the first down day.
• Close out immediately if stock drops after earnings as soon as possible, even in pre market or after hours.
• If the stock goes higher, I will hold for a few more days and may even short additional shares at a higher price.

So far, I have shorted AMZN, NET, DASH, SQ, ROKU and PYPL before earnings.   I shorted FB when it popped after earnings.    Most have fallen within a day, sometimes hours, after shorting.   Some fell by as much as 15%.   At this point ROKU is the only position in which I am losing money.  I could have closed it for 1.5% gain, but got greedy and waited for it to fall further, which it never did.   

To note, I am usually only shorting 1 share since I am learning.   Occasionally,  I will sort an additional share if the stock goes higher, as in the case of ROKU.

This week, I am considering shorting COIN, which has earnings after hours on Tuesday.  I will definitely short COIN if the market rallies on Monday, but a rally looks unlikely based on the current futures.

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

This is not financial nor investment advice. Please consult a professional advisor.

Copyright © 2022 Achievement Catalyst, LLC

Signal 30 Film for Potential Borrowers of Student Loans

When I took Driver's Ed in High School, we were shown a 30 minute film titled Signal 30.   It was produced -1959 by the Mansfield, OH police highlighting the severity of accidents when not driving safely.  Although it seemed extreme and unlikely, I remember thinking I never want to be in one of those accidents.

IMO, a similar type film ought to shown to potential student loan borrowers.  The film should feature the many student who complain that student loans have prevented them from a lifestyle they desired:  buying a house, getting married, having kids, taking vacations etc.   They also can talk about how they often have to make choices between food/rent and paying their student loan.

After watching this film, potential borrowers should be show what they can expect to earn after college and how much they will have to pay towards student loans before their other living expenses.  Students can then determine if they will be another story in the movie or if the loan will be worth it.

However, no higher education institution will do this since a majority of students would likely decide to not take the loan. That would reduce the number students able to attend college.   Conflict of interest.

 And if they do take the loan, they will know there won't be any forgiveness if they end up like students in the movie.

The mantra for student loans should be:  Just Don't.

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

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

Copyright © 2022 Achievement Catalyst, LLC

Forgiving Student Loans Rewards Poor Financial Decisions

"In politics, stupidity is not a handicap."  - Napoleon Bonaparte

AOC's latest comment on forgiving student loans, to those that paid off their loans:  "We can support things that we don't directly benefit from."   That is true.  But taxpayers shouldn't be asked to support the voluntary financial stupidity of others, whether they be individuals, banks or car companies.  

Here's the irony of AOC requesting that her own student loans be forgiven.   Even though AOC owns a earns $174,000/year, owns a Tesla and maintains two residences, she has chosen not to make regular payments on her approximately $19,000 outstanding student loan.   She just continues to advocate for $50,000 student loan forgiveness, which would benefit her.

Sorry, anyone that can afford a Tesla doesn't need me to support forgiving their student loan debt.

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

This is not financial, educational, nor political advice. Please consult a professional advisor.

Copyright © 2022 Achievement Catalyst, LLC