-
Congress Again Falls Short in Fiscal Cliff Talks
Tweet Share on Facebook December 31, 2012 CommentYesterday was nail-biting time in Washington. Well into the night, the outcome was unclear. But the Redskins finally pulled out a victory, beating the Cowboys 28-18 and securing a home playoff game for what seemed the first time in ages, or at least since Congress last reached a meaningful bipartisan agreement.
There was, of course, no such drama surrounding the second most important story yesterday in the nation's capital. Despite the appearance of doing the public's business, including a rare Sunday session, Congress still could not agree on even a minimal spending and tax package. Fiscal cliff, here we come!
[Read: Economy to Grow in 2013, but Fiscal Cliff Drags Down Promise.]
-
Healthy Seniors Found to Retain Financial IQ
Tweet Share on Facebook December 27, 2012 CommentIn one of the nicest imaginable holiday gifts to seniors, a new study backed by MetLife finds that healthy people who age successfully during their 50s, 60s, and 70s—and that's most of us—retain their abilities to make complex financial decisions and, in some cases, may improve skills as they age.
Many academic studies of aging populations have concluded that there is an inevitable decline in financial aptitude and decision-making skills as people age. This finding, in turn, has supported the view that aging seniors are increasingly vulnerable to scams and elder financial abuse.
In sharp contrast, the new MetLife study found that this might be true of seniors who were not mentally healthy in older age, but is not applicable to healthy older people.
-
8 Important Retirement Money Questions for 2013
Tweet Share on Facebook December 26, 2012 CommentAs 2012 draws to a close, people in or nearing retirement face a stunning set of uncertainties about their finances and even basic health and retirement benefits. Congress has left Washington for the Christmas break without passing any measures to delay or soften the effects of the so-called fiscal cliff. Perhaps it might still act before the end of the year, but don't count on it. Odds are that the new Congress that takes office next year will take action to prevent the very worst outcomes. But after years of gridlock, should we really expect things to get better?
Here are eight pressing money and benefit issues that are barreling down on seniors. All of them are bad news. And while there aren't a lot of places to hide, it's important for anyone trying to build or conserve a retirement nest egg to develop contingency plans.
-
How Chained CPI Affects Social Security COLA
Tweet Share on Facebook December 19, 2012 CommentAs the fiscal cliff negotiations head toward actual changes in federal tax and spending laws, the White House is reportedly willing to accept some cuts in Social Security benefits. This is part of the cost to secure Republican acceptance of higher taxes on the wealthy and spending plans that would support other traditional Democratic causes, including maintaining extended unemployment benefits, which are set to expire at the end of the year.
The impact on Social Security would occur by using a different measure of consumer price changes to determine the program's annual cost of living adjustment (COLA), which is announced each fall and takes effect the following year. Extremely low rates of inflation meant there was no COLA in 2010 and 2011. The COLA was 3.6 percent in 2012 and will be 1.7 percent in 2013.
-
Digital Stories Preserve and Share Memories
Tweet Share on Facebook December 18, 2012 CommentUsing smartphones, iPads, and other digital devices to help us create and preserve our life stories, voices, and legacies for children and grandchildren will one day be commonplace. Along with the hugely popular rise of online genealogy services, we will be able to capture individual and family histories, share them with others, and link them to an increasingly rich digital structure of historical information. In digital terms, living history is a killer app.
A bunch of fledgling efforts to develop such personalized histories already exists, but we're just taking baby steps for the most part. Older people have been slow to embrace much more than the basic capabilities of these powerful digital tools. But as the hardware becomes more common and software tools become easier to use, expect storytelling to grow
-
Take a Look at Your Fiscal-Cliff Tax Exposure
Tweet Share on Facebook December 17, 2012 CommentAt the national level, the contentious debate over the fiscal cliff is about figuring out politically acceptable ways to use the tax code to raise federal revenues, slow the growth of healthcare spending, and begin bringing down unsustainable federal deficits. And it also would be nice if we could do this without tipping the nation back into a recession.
Citizens care a lot about these issues, of course. But on a personal level, we really need to know how our taxes might change in 2013. The Tax Policy Center (TPC), a joint program of the Urban Institute and Brookings Institution, has created an online fiscal-cliff tax calculator that does exactly that.
Lower-income taxpayers will not face higher federal income-tax bills because they usually pay no income taxes now and will not face tax bills next year regardless of what happens. They will pay higher Social Security payroll taxes.
-
How Proposals to Raise Medicare, Social Security Ages Can Harm Americans
Tweet Share on Facebook December 14, 2012 CommentProposals to raise the eligibility ages for both Medicare and Social Security keep surfacing in news accounts of the ongoing fiscal-cliff negotiations. The idea has "first blush" appeal—Americans are, on average, living longer and societal longevity gains have added 30 more years of life in just the past century. Among mankind's many achievements, this one deserves far more accolades than it receives.
Averages, however, are just that. And there are few places where not being average exacts a higher toll than in looking at human longevity. Social scientists have assembled an increasingly powerful record that shows longevity gains have not been doled out equally. Well-educated and higher-income people of all races are, indeed, living longer. But despite major gains in treating and even preventing life-shortening diseases, lifespans among Americans with low levels of education and income have been moving in the opposite direction.
-
Learning How to Make Solid Retirement Choices
Tweet Share on Facebook December 12, 2012 CommentThe purpose of a retirement plan is to live the good life, or at least as much of one as you can. The goals are positive—having enough money to enjoy leisure time, travel, meet new people, and learn new things. Successful retirements should include being able to see family members and friends regularly and help them out if they need it. A successful retirement might include estate plans. And most of all, it should include freedom from fear and stress.
These are the things we strive for, and they should be emphasized heavily in our discussions and plans. Too often, however, they're not. Instead, these positive goals are expressed in terms of our fears should we not achieve them. The language of retirement turns negative. We worry about making poor investment choices, outliving our money, devastating illnesses, healthcare expenses, and being a burden on our families.
-
Defensive Money Moves to Counter the Fiscal Cliff
Tweet Share on Facebook December 11, 2012 CommentThere is not enough digital ink to fully explore all the problems with Washington's dysfunctional debate about the fiscal cliff. But websites (and journalists) need to be fed. So we're seeing an outpouring of stories about what might happen, what should happen, and what will happen if nothing happens. Going over Niagara Falls pales in terms of excitement and suspense.
Underneath all the positions and reactions coming from politicians, advocates, and subject-matter experts, it is a safe bet that their public posturing is more extreme than their private negotiating positions. You'd think people would be more reasonable and nuanced in private than their public positions would indicate. I hope that's the case and stand ready for some fiscal shock and awe should workable and bipartisan solutions emerge.
Until those puffs of white smoke are visible over the U.S. Capitol, people have little choice but to play financial defense. Concern that dividends will lose their preferred 15 percent tax treatment and be taxed as ordinary income has already compelled numerous companies to declare special dividends this year, when favorable tax rates are assured.
-
How to Build a Fiscal Cliff Scorecard
Tweet Share on Facebook December 10, 2012 CommentAs the fiscal-cliff soap opera reaches its climax, there will be a corresponding surge in partisan spin efforts to frame the debates and results. This exercise in defining winners and losers often obscures more important issues about the actual impact of federal tax and budget changes. Beyond higher tax rates, which no one likes, here are five questions you should be asking to build your own scorecard to evaluate what happens during the next month or two.
1. How much of the reduction is through higher revenues (more taxes, generally) and how much through reduced spending? Compromise argues for a balance, but those concessions are not yet forthcoming. Liberals lean toward higher taxes; conservatives toward spending cuts. Perhaps the greatest achievement of the extended reform process has been to put serious tax reform on the agenda. Our federal budget may be badly wounded, but our tax system is DOA.
