Depending largely on age and income, between 4 percent and 14 percent of Americans who otherwise would have had adequate income to cover basic expenses in retirement became “at risk” of running short because of the housing and financial crisis of 2008–2009, according to a new report by Employee Benefit Research Institute (EBRI). The EBRI analysis, based on its retirement income adequacy models, notes that the likelihood of becoming “at risk” because of the economic crisis depends to a large extent on the size of the retirement account balances the household had in 401(k)-type plans and/or individual retirement accounts, as…
A new mortgage product is making "reverse" mortgages more affordable. Reverse mortgages typically have high fees, but the new Home Equity Conversion Mortgage (HECM) Saver allows borrowers to get a reverse mortgage with lower upfront costs as long as they are willing to borrow a smaller amount. A reverse mortgage allows homeowners who are at least 62 years old to borrow money on their houses. The homeowner receives a sum of money from the lender, usually a bank, based largely on the value of the home, the age of the borrower, and current interest rates. The loans do not have…
If you have substantial assets in an IRA – whether a Roth or a traditional IRA – you’re wise to pay attention to how those assets might pass to your spouse or other heirs in the event of your death. Christine Benz of Morningstar Advisors last week wrote a small cache of common wisdom on the subject in the forms of “do’s and don’ts.” What should you do with your IRA? Check with your estate planning attorney before naming your beneficiaries. Remember, your beneficiary designation(s) trump whatever might be in your will, so make sure your estate planning documents and…
Americans hold nearly $4.2 trillion in traditional IRAs. That money has yet to be taxed, so it’s small wonder that the government requires you to take your money out and start paying taxes on it. Required Minimum Distributions generally apply once you turn 70-1/2 years old. The required distribution amount is determined by a formula based on your account balance and your age. Bloomberg reported last week, however, that the Obama administration proposes to do away with minimum distributions on IRAs worth $50,000 or less. If this measure passes, it could impact a lot of people. The median amount of…
Most people regard elder abuse as physical harm i.e abused in nursing home etc. However, financial elder abuse is the exploitation of seniors to gain access to their property, investments, cash, or real estate. Elder abuse includes identity theft, telemarketing cons, stealing Social Security checks from outdoor mailboxes, and fraud by unscrupulous contractors and financial advisers. However, it is not only the stranger but family members also are involved. Here are some signs of exploitation: Your parent has a new "best friend," becomes socially isolated, hesitant to contact unless the “best friend” is present. Unpaid bills – although someone…
Tax avoidance is a legitimate undertaking, no one is obliged to pay more in taxes than they legally owe. But as Al Capone discovered, the difference between tax avoidance and tax evasion is the thickness of a prison wall. Hiding assets in off-shore bank accounts in order to evade taxation is an increasingly risky business. The U.S. government is stepping up efforts to crack down on offshore accounts and tax evasion. In fact, the IRS is urging taxpayers to disclose their accounts now, before new reporting requirements for overseas banks and changes to tax treaties give the government more information…
The New Year is well underway, and we’re two months into a new estate tax law as well. Now is a good time to review your estate plan, and Forbes.com provides some “motivation” for proper legal planning by recounting tips we could all learn from last year’s highly-publicized celebrity estates. Familiarize Yourself with 2011 Estate Tax Laws. George Steinbrenner, as you may recall, timed his death well by passing away in 2010 when there was no estate tax. Of course, while his estate was highly publicized, other wealthy people died last year, too – and now their heirs can elect…
If you participate in a 401(k), you may be surprised to learn that your employer could actually over-ride your investment choices if they think you’re not making appropriate decisions yourself. It’s called a “re-enrollment,” and employers say they are doing it for your own good. You might want to pay attention, though, because your employer’s choices may not be right for you – especially if you are older, female or have other unique circumstances. Re-enrollment is different than “auto-enrollment.” Auto-enrollment is a fairly common practice, in which employers automatically enroll workers in a 401(k) plan and defer a certain percentage…
As the old saying goes, “If you’re giving while you’re living, then you’re knowing where it’s going.” But the new tax legislation passed in December makes gifting even more attractive for wealthy families. A recent article in the Wall Street Journal, “The $5 Million Tax Break,” points out why lifetime gifting is suddenly so attractive under the new laws. It’s a good article, worth reading, but here are the high points, in a nut-shell: For the next two years, the gift-tax exemption jumps to $5 million from $1 million for individuals, and to $10 million (up from $2 million) for…
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