This is college commencement season, with thousands of new graduates starting their lives.

Many will be facing some significant challenges, such as trying to find a job in a very difficult market, renting an apartment or buying a home and maybe purchasing a new car. If there is a graduate in your life, you may want to pass along some of the following suggestions. continue reading »

A report was released last week by the OASDI Trustees Report that showed that the Social Security trust fund would be exhausted by 2033, which is four years earlier than the original projections.

This news did not receive much attention with the primary elections being held last week. This is yet another wake-up call to all of us that we cannot continue to kick the Social Security and Medicare cans down the road any farther.

Failing to address these issues will make the eventual corrective action much more dramatic and painful. As the report outlines, failure to address the Social Security underfunding problem will result in automatic benefits cuts and possible permanent restructuring of the system as we know it today. Baby boomers will not experience benefits reductions, but the generations to follow probably will. continue reading »

Mother’s Day is fast approaching and what do you plan to do for your wife or mother? Can I suggest something unconventional? Put a plan in place to help fund your retirement, educate your kids and take care of your family in the event of your premature death.

“Failure to plan is planning to fail,” as coined by Benjamin Franklin, is a phrase that we all need to take to heart.

Time passes quickly, and unfortunately, too many people are not taking the steps they should to provide for their future. It is never too late to plan and is certainly better the longer lead time you have. You can even help your parents plan too, especially to protect your mother, in the event of your father’s death (assuming he was the breadwinner, as is the case among most in that generation). There are a few basic steps that we will review below. continue reading »

To Roth or not to Roth?

As part of the process, I get to see how people are preparing for the eventual retirements. When it comes to retirement savings, many people are still saving exclusively on a pre-tax basis. This may not be the most advisable strategy, especially if you are in your 20s or 30s.

Contributing to retirement accounts on a pre-tax basis has become the most common approach to saving for retirement, whereby you get a current year tax break on the income you are saving in your 401k, 403b or traditional IRA. Then down the road – 20, 30 or 40 years from now – you will pay taxes when you begin withdrawing the money during retirement. This money would grow tax deferred over all these years. The only trouble is that you could be paying taxes at a much higher rate when the money is withdrawn.

If instead you were to make your retirement plan contributions with after-tax dollars, you could be helping yourself immensely. You would forfeit a current year tax benefit but your eventual withdrawals would be completely tax- free. This means that all the growth you could experience would be tax-free. continue reading »

With so many baby boomers moving into retirement, this is a good time to get the conversation started around Medicare. Unfortunately, this area of retirement planning can be complex and results in a lot of confusion.

First, boomers who reach age 65 are required to sign up for Medicare unless they are covered by a qualified employer plan. If you do not sign up during the designated period, you may have to pay higher premiums for the remainder of your life. This is important to keep in mind, because many people may be delaying taking Social Security until 66, but they still may need to register for Medicare.

Second, Medicare is broken down into four key parts: continue reading »

There have been a number of stories in the news for months about the issues that Greece is facing.

The country has been living way beyond its means for years. The impact of spending more than they bring in and creating a system of entitlement programs is having a horrific impact on the economy there. Unemployment has soared, wages have fallen, pension program benefits have been restructured and a result there is significant unrest in the country.

Similar things are going to happen in some of the other European Union countries like Italy, Spain, Portugal and France. The European Union is trying to deal with this with Germany leading the way. Germany has the largest economy in all of Europe and is in the best financial shape. The trouble is that the German citizens do not want to be the backstop for all the countries in the Union.

The reason I bring all this up is that we are headed down the same disastrous path as Greece and the other countries if we do not start making some difficult decisions. The challenge is that these decisions will have an impact on our economy in the short run. Here is a summary of the things that we have deal with. Regardless of your political affiliation, these things must be dealt with – and soon – so that our kids and grandkids do not have to pay for 60 year’s worth of mistakes. continue reading »

Time is zipping by us quickly. As you contemplate getting your tax return done, there may be a few deductions that you can take advantage of. Here are a few that you may want to make note of.

Student loan interest – with the plethora of student loans out there, some folks are not aware that you can deduct student loan interest on your return. There are income limitations, but for many young people this deduction will be allowable.

 Mileage deduction – If you have a second job, you can deduct mileage for travel from one job to the other. You cannot travel from home to the second job, only from your primary job. The miles that you travel add up quickly. The tax code requires that you keep a log of the mileage for audit purposes. continue reading »

The markets have risen over the past few weeks, but many strategists and economists think that this market does not have legs. While we have seen positive earnings, seemingly lower unemployment and a small improvement housing starts, we have a long way to go globally.

The troubles in Europe have not added a lot of volatility to the market over the last few weeks, but the same problems still persist. It seems probable that there will be some amount of default (probably in Greece first) based on the fact that the countries cannot cut their spending enough to reduce their debt levels.

The market has already priced this in with yields as high as 7 percent in Italy, which is very high for the debt of a sovereign country. Due to this pressure, many experts are predicting a European recession. The downgrades by S&P this week just added fuel to the fire. continue reading »

With the start of the new year many people would like to get their financial house in order. One of the challenges is that you may not know where you stand at any given time.

What if you could go to one place to see what your account balances were, what bills were coming due, where you are spending your money and how your investments are performing?

That place is Mint.com. The first step in the process is to set up the linkage to your bank accounts, investment accounts and credit cards. Then, every time you have a financial transaction, Mint will categorize the expense based on the name of the company/store where you made the purchase. continue reading »

2011 seemed to fly by and if you did not do any planning this year, it is not too late. Some of the opportunities are related to taxes, while others are more retirement estate planning oriented.

I usually counsel folks that if they are going to do anything, it is really important that they make their 401k and/or IRA contributions. For many, it may make sense to make Roth IRA contributions, as these contributions will grow tax free into the future – and any distributions will be completely tax free. The benefit of making these contributions will be significant over time and this money will be their primary means of support in retirement. continue reading »