Punish the savers

Barry has a plan to do a mega refinance of mortgages and he plans to end run the congress.  It will take from savers to give to the borrowers.  Here are the details:

http://www.financialsense.com/contributors/bruce-krasting/2011/09/12/more-on-the-mega-refi

Hold on to your wallet

I told you in one of my very first posts - If you are retired (or soon will be) and have funds for that - that they would come after you - because that is where the money is. 

Here is a long and detailed article telling you how.  It is long, but worth the read:

http://www.financialsense.com/contributors/daniel-amerman/2011/09/12/the-2nd-edge-of-modern-financial-repression

Benanke impoverishes seniors

“A system of capitalism presumes sound money, not fiat money manipulated by a central bank. Capitalism cherishes voluntary contracts and interest rates that are determined by savings, not credit creation by a central bank.” - Ron Paul

The Fed has told us interest rates will remain exceptionally low for an extended period.  This is bad for those seniors whose savings are invested in CDs and savings at the bank.  The banksters who created this mess are being bailed out on the backs of seniors who can least afford it.  How does Bernanke sleep at night knowing what he is doing.  Yes he knows, but he seems to be void of humanity.

This data sets the scene for the crime of the century committed by Ben Bernanke and his co-conspirators on the Federal Reserve Board. The easiest way to understand how Ben has impoverished seniors and savers to pay off his Wall Street and K Street benefactors is to use a real life example.

A seventy five year old widow living in her paid off row home, bought in 1955, gets by on her annual social security income of $17,000 and the income generated from the $125,000 in retirement savings left from her husband’s forty years working as a truck driver. She is a child of the Depression, financially unsophisticated and risk averse. This describes most senior citizens. The widow and her late husband were only comfortable investing their money in CDs and money market funds. In 2007, before the Wall Street created financial collapse, savers and risk averse senior citizens could earn 5% in a money market fund, 5.5% in a 2 year CD and 6% in a 5 year CD. The widow could supplement her meager social security income with an additional $6,000 of interest income. This money was used to pay the ever increasing real estate taxes, medical insurance premiums, upkeep on the old house, and necessities like food, fuel, insurance and heating.

Fast forward four years to 2011. Savers and seniors are getting average interest rates on 6-month CDs this week of 0.58% nationwide, according to Bankrate.com. Rates on one-year CDs fell this week to 0.86%, while 5- year CDs fetched 2.04%. Money market funds are paying a pitiful 0.16% on average. The widow that was able to generate a risk free $6,000 only four years ago has only been able to generate less than $500 per year for the last three years. In addition, the government manipulated CPI, as calculated by the drones at the Bureau of Labor Statistics, was used to deny senior citizens an increase in their Social Security payments for the last two years. Meanwhile, the prices of food, fuel, clothing, insurance, medical care, and local taxes have been skyrocketing due to Federal Reserve created inflation. Do you think the number of Americans on food stamps surging from 26.3 million in 2007 to 45.8 million today has anything to do with Bernanke’s zero interest rate, inflationary policies?

http://www.financialsense.com/contributors/james-quinn/2011/08/15/bernanke-impoverishing-grandmothers-to-benefit-wall-street-bankers

Dec 20 I asked - can you live without Social security?

I told you this was something to consider in your survival planning.  Now I know most have not had time to implement any plan, but in 3 days you may get a trial run at what it could be like if there was no Social Security payments coming in or if they came in at at lower levels or not every month. 

Do I have a crystal ball?  No, I don't.  But, when you look at SS and its financial situation you know. There is NO trust fund - that is just another Government lie.  If business did what the government does somebody would go to jail.

So while the RePukecons and DemoRats put on Kabuki theater many people may not be able to buy groceries or meds come August 3.  Yet the DemoRats are telling you how they are protecting you from the RePukecons.  Give me a break!!!  What good is a solvent SS system if you can't get you meds and die next week because of political gamesmanship?  Not a damn bit of good to you.

So figure out a way (some way) to set aside some money for situations like this.  Bum it from the children?  Hell - if you have to bum it on the street corner and have it when you need it.

http://boomerfinancialsurvival.blogspot.com/2010/12/can-you-survive-retirement-without.html

Stop wasting money - 5 big wasters

Lottery Tickets
Going to win the lottery? If you doin't play you can't win. That's the pitch. So let's say you spend just $5 a weeki on the Super Mega Power Ball because you want to be a multi-millionaire. Well, I got news for you - the states love lotteries because of all those winners. NOT!!! They raise millions every week based on all the losers. The chances of winning the lottery is right up there with "Rapture" happening at 6PM on Saturday May 21.

So save that $5 a week, $22.50 a month or $260 a year.

Informercial Impulse Buys
Those gadgets are soooo tempting. That sealant will seal anything. They should have used it on the levees in New Orleans during Katrina. Let's face it - most of the things depicted on Informercials are never used (or at most used once or twice). Older people seem especially suspect to Infomercials. Learn to say NO. Change the channel. That $10-20 a month could be a nice meal out every month.

Brand Name Groceries
Sure Kellogs corm flakes tase better than the generic brand (or do they?). Truthfully, I have never been able to tell the difference. Does Del Monte can cream corn tase better than the generic brand? Not that I can tell.

OK, maybe you are picky about your food - how about paper products, cleansers, etc - you don't eat them.

You can find many generic substitutes for products you use every day. Often they are 10-20% cheaper than the name brand. So where acceptable substitute generics for name brand products. and save.

Unused Gym Memberships
Have trouble finding time to getting to to the gym. The bill will still come in every month. Maybe it is time to cancel that membership, use the money to buy some weights, etc that are there in the rec room at home when you find 5-10 minutes to exercise. Just a thought - It could save you $300-400 a year.

Bundled Cable, Internet and Phone Services
 You know a good deal when you see it. That cable/internet/phone bundle at $100 is a steal. Or, is it. You rarely use the phone services because you have a great cell phone service. So maybe that phone service is a waste of money?

And all those cable channels - most of which you never watch - maybe you are overpaying for what you need. A basic service may cost less than the bundled price.

And that superfast internet service. Do you use the internet at home that often? Maybe a cheap dial up plan is more suitable based on you use habits.

So how good a deal is that bundled cable/internet/phone service?

The house is on fire - pour gasoline on it to put it out

That seems to be the thinking of politicians in Washington.  Here is the headline:  Social Security TF – “We lost $1.1 Trillion last year!”.  What this means is the Social Security trust fund is $1.1 trillion dollars more underfunded that it was 1 year ago.  They use something called NPV (Net Present Value - a finance term) to determine how many $s is needed today to meet future obligations.  And Social security is $1.1 trillion worst off that it was a year ago as boomers are retiring in larger numbers than anticipated (IMO - largely due to the economic situation).

So what do the DemoRats and RepukeCons do?  They give workers a holiday on the payroll (translated FICA/SS) taxes.  That is the gasoline they are using to put out the fire.  The number of idiots per thousand people in Washington must lead the nation.  I suppose it is a good thing that many of the members of congress got fired in November.  We will see - the new crop may be as big idiots as the old crop.

Retirement tax planning

Tax season is over. No time like now (while the facts are fresh) to look at what you paid in taxes and the source of those tax hits. What should retirees (or soon to be retirees) consider? Time to plan and implement strategies for 2011 and the future.

Can you answer this question: Will you get a refund or not next year? I won't (but then I plan it that way - I won't owe a lot either). If you don't know the answer now is a good time to answer that question. You can owe up to $1,000 without penalties so you want to make sure that you meet that threshold (make quarterly payments if needed). Be proactive. Look at last year's return. Where did all your tax liability come from? Stop being a victim to taxes and take control of how you pay your taxes to Uncle Sam. Make sure next April is not a huge surprise.

If you feel incapable of analyzing your return maybe it is time to consult a financial planner to go over your most recent tax return and explain in detail where all the tax liability originates. You want to make your cash flow as tax efficient as possible.
　
We spend a lifetime planning and accumulating funds for retirement and little or no time in planning the distribution of those funds. Do you have a pension? Are you collecting or planning to collect Social Security? How much additional cash flow are you going to need to draw from your assets to maintain an acceptable lifestyle?

What assets are making you Social Security mare taxable? You need to look at sources that are taxable and assets that are non-taxable. For example you pension is probably taxable in part (or all). Withdrawals from regular 401Ks and regular IRAs are taxable. Withdrawals from Roth IRAs (Roth 401Ks) are not taxable. Money from savings (IE CDs) are not taxable (the interest is). So maybe you want to draw down savings generating taxable interest (not that that is a problem with current low interest rates - another reason you may want to reduce the assets in this bucket) . Maybe you have investments you can turn into cash with little or no taxes (sell losers to offset gainers?).


You may want to tap sources of cash flow that will limit the taxes on your Social Security benefits. See prior posts on tax planning and Social Security:


http://boomerfinancialsurvival.blogspot.com/2011/02/retirement-doesnt-mean-no-tax-planning.html

Other strategies may be to take advantage of tax credits by installing solar panels or a wind turbine to generate a tax credit (and reduce future utility costs). Or you need to replace a washer or dryer get one that qualifies for an energy savings tax credit?


Whether to file itemized (or standard deduction) may depend in large part on medical expenses. Planning those expenses into one year to maximize them is a strategy to maximize the benefit especially if a procedure is needed but optional.


This is not meant to be a complete tax guide, but a starting point. At age 70 1/2 you face RMD (Required Minimum Distributions) from IRAs and 401Ks. This RMD needs to be considered in your tax planning today - especially if that minimum is substantial. It might make sense to transfer a sum each year to a Roth and pay the taxes now?