Monday, July 15, 2019

Could the "woke" left manipulate a coming debt ceiling deadline (before Congress returns in September) to demand means testing of the wealthy now?

Mnuchin warned that the US will run up against the debt ceiling before Sept. 9, 2019, when Congress returns from vacation.

Bloomberg warns that the “woke progressives” may try to hold the debt ceiling hostage to get their way, whereas in the past we worried that Trump could hurt people and send them to the shame of beginning on GoFundMe to get his way.

While most legal arguments seem to say that (despite Flemming v Nestor) the Social Security Trust fund is likely to remain protected and safe, there is a bit of a concern about people with inheritances. 

The Woke Left could try to raid them with rather sudden implementation of means testing as a stunt.  
  When you inherit something you didn’t earn it, so it can be taken away from you and you make not get it back. So much for the rule of Law with the radical Left.

Thursday, July 04, 2019

Anderson Cooper says he doesn't believe in inheritance -- could he use his to run for president?

Anderson Cooper, the meticulous and openly gay journalist who has a major evening show AC360 on CNN, and whose political views tend to be centrist and moderate (relative to the Democratic Party) has said that he doesn’t believe in inheritance, after learning he had inherited most of his late mom’s $200 million estate. 

Anderson can say he paid his dues as a journalist as a younger man by reporting from Southeast Asia.  Sebastian Junger can make similar claims with his own life.

In fact, Anderson’s knowledge of policy is so extensive that he could have been a logical candidate for president (joining Buttigieg?)   Could the fortune make him think about this? Should a journalist run for president? What if Sebastian were to run?

Market Watch, this morning, notes that most kids need their family inheritances to get through life, an unsustainable situation. 
Market Watch has another article showing how wealthier parents can help their kids earn inheritances.   Gloria Vanderbilt did it right with Anderson.
If you look at kids who do well (John Fish, Jack and Luke Andraka, Taylor Wilson-scientist) they all had parents who inspired them to be productive and think through their own goals, apart from tribes or the opinions of others – a bit of Ayn Rand individualism.  Fish has a video explaining that his father (in Canada) is a physics teacher, so that certainly gives him an edge.
I can remember, however, that some on the extreme Left want to expropriate and do away with inherited wealth.  I saw this with the People’s Party of New Jersey back in 1972.  It happened to Andy Ngo’s parents in Vietnam in the 1970s (as it went all communist in 1975). 

Saturday, June 08, 2019

Social Security Medicare premium processing error may leave seniors stranded; a financial planner explains Medicare premium means testing and how Roth IRA's can help

Retiree customers of some Medicare advantage programs may find out that they suddenly owe premiums because Medicare had not been properly deducting premiums from their benefit checks and sending them to insurance companies, typical story.

About 250,000 people are affected.  Some seniors might not have noticed and not have the money to pay the premiums.

The video above from Heritage Wealth Planning and Jack Scandlen warns about how Medicare premiums are means tested, which I remember hearing and had forgotten about.

He warns that if you are over 70-1/2 and don’t take out the required RMD (required minimum distribution) in time (your bank should to this for you automatically) with tax withholding, you can pay a 50% penalty.  The RMD is required except from any company you still work for.

Your RMD divisor goes down as you get older based on actuarial life expectancy. At 10:00 the video explains how the premium goes up with modified adjusted gross income. This is fairly complicated and may require a CPA to manage.  The speaker recommends Roth IRA’s

Saturday, June 01, 2019

Did you know you can work from home as a "virtual juror"?

To start out Pride month, well, a post for retirees:

Interesting list of telecommuting, work-from-home jobs for retirees. 

The Virtual Juror is interesting.  I didn’t know that lawyers hire them.

I do not want to be a fundraiser for a non-profit, because I’m staying away from playing favorites right now.

Thursday, May 23, 2019

Reason Magazine seems to have supported Social Security means testing for existing retirees

I saw this Reason article linked on Twitter, from Nic Gillespie and Veronique de Rugy, “Generational Warfare”, even with a cartoon picture of a gun (somewhat objectionable by today’s standards).

The writers maintain that wealthier seniors have more political clout and have convinced politicians to treat Social Security FICA contributions as like “annuity premiums” even though legally they are not.  They also see some seniors as almost sociopathic in stiffing the young with dead-ends and college debt, which is more like an argument from the Left. 

Flemming v. Nestor” had maintained that the FICA tax supports existing retirees, it is not your own savings.
So the authors seem to be calling for means testing even of existing retirements. 

I didn’t notice at first that this article dates back to 2012, sometime after the angry debt ceiling crisis in the summer of 2011 with all its partisan bickering.

I think that the article is an indirect argument for the privatization of social security benefits, even if that would be impossible without stiffing some retirees (Harry Browne had pointed that out in the 1990s).  And the political argument against privatization is, you guessed it, still about the Rich and the Poor (like the Tenderloin in San Francisco, shown above). 

Saturday, May 18, 2019

Be careful with working with inherited portfolios with old securities with no cost basis

I wanted to make note of another situation that may happen if you inherit part of an estate, and then decide to sell a security for cash.

I did that in 2017, and suddenly got a huge and incorrect tax settlement proposal yesterday, with about three weeks to answer.  

The problem is that the bond had been purchased before the person’s death and before it came to me. 
UBS showed “information not available” on the cost basis, and I didn’t see it in early 2018 when doing the taxes.

Bond funds earn interest, which is then reinvested.  This portion was OK and had been properly reported.  The newer reinvested portions did have a cost basis. But the portion that had been there before 2011 did not.

Most of this bill will go away when I supply a cost basis, which I think I can get from the transaction report when the fund came to me in 2011.  It’s supposed to be taken from a day about six months after the death of the person.

Here are a couple of references:  Motley Fool, Investopedia, Zacks.

You need to be careful when you inherit a fund to make sure it is unqualified (not a 401K). Otherwise you would have to pay all the tax on it (although you would need to redistribute it at 5% a year once you reach 70-1/2.  
There was also a problem in that the HRBlock system seems to have included only the basis amounts in building its totals, I don’t know why.

Tuesday, May 14, 2019

Doris Day's "no funeral" may be starting as a trend

Liz McNeil and Alexia Fernandez report for People that Doris Day had declared that she would not have a funeral, a marker, or memorial. 

She doesn’t like to  commemorate death.

I rather feel that way.  My own mother had an internment one week after her death (cremation) and a memorial service a month later.

I have said that this is the case were my death to be violent or the result of crime, war or terrorism.  I don’t think victimhood should be pimped. Sacrifice is just that. 

This view is becoming more common.  Other people have said this.

In the soap opera "Days of our Lives" EJ didn't get a funeral when he was murdered. 

Tuesday, May 07, 2019

On tariffs, Trump seems to be taking chances with retiree portfolios and getting away with it

Trump got away with it yesterday.   He announced probable large increases in tariffs to happen this Friday because he suddenly decided China was acting in bad faith on the trade deal.  Maybe something happens tomorrow.  The Dow-30 dropped over 471 points at opening and recovered to just a 66 point drop (CNN).  I still recall a pep talk at my job (ING-Reliastar) in Aug. 2001 (before 9/11) where a professional speaker predicted a 35000 Dow within one year of that time. 

Trump also may have nudged interest rates down?

Retirees are watching their portfolios, wondering when is a good time to convert more securities back to cash.  Be careful about bonds that mature and are tied to the SP.

In the meantime, the left wing rhetoric is blaming baby boomer seniors more. Young adults, except for the top 20% or so who are the most talented, can’t seem to hold their own when they leave home.  You can tell from what young adults say about themselves on YouTube, Facebook and Instagram why some are doing so much better than the pack.

Retirees with assets have to wonder about backlashes and means testing, as it will surely come up in the new House and after 2020.

One problem is that so many “second careers” turned out to be about “selling stuff” and joining pyramids.
Update: later today

I spoke too early.  The Dow closed down 473 today.  It seems the fear of China came back. 

Friday, April 19, 2019

A politicized Federal Reserve could wipe out retirees, and Trump acts tempted

Fareed Zakaria has a credible op-ed in the Washington Post today regarding the tendency for right-wing (or maybe left-wing too, like Chavez) populist politicians to try to bring their central banks under partisan control. 

He discusses particularly Trump, and his desire to appoint “loyalists” to the Federal Reserve, as well as Erdogan in Turkey.  In India, the national bank as “raided” to buy votes.

The article notes that this practice by politicians can be very dangerous to savings of retirees.

Monday, April 15, 2019

Tax day, and the "meta-moral" problem with the way state tax deductions work now

It’s a bit late on tax day, but the issue of how Trump’s tax law affects “blue states” by reducing the maximum state tax itemized deduction to $10000.  It was always true that you had to choose between income or sales taxes.  Here is a typical write-up.

Because there is no personal exemption but a larger standard deduction, many people loose “opportunity” from the change with respect to the state tax issue, and this will affect people in high state tax states, like New York and California.

I am in Virginia. HRBlock computed my federal tax assuming the standard deduction (without exemption) which now was more than the itemized deductions I had been claiming.

But it did not consider the state income tax, because the state hadn’t been computed yet.

So I may have been overcharged after all.

On the other hand, I underpaid the estimated tax this year because I did not expect an unusual gain on one bond fund in mom’s estate because of an unusual way it was handled.

I don’t know whether it will be worth my time to redo this.

I’ll talk to a financial institution to prevent this problem again.
It is very easy to pay overdue taxes electronically by HRBlock from your checking account.

Virginia now says that people with AGI’s over a certain amount must pay estimated taxes electronically.  I had never noticed that before.  I’ve already done 1Q 2019 by mail.

Tuesday, April 02, 2019

Sudden bond maturities tied to SP-500 can lead to surprising tax bills

I do my taxes on HRBlock, and I typically copy PDF’s of all my 1099’s from financial institutions into a typical directory in Windows.

This year, on one of the banks (Suntrust), I almost missed a 1099-B on the last page. It showed a bond fund maturing and showing an amazing $21000 long term gain since 2014 based on a $75000 basis.

The bond was tied to the SP500, which was near one of its max points the day it matured.
This possibility exists, although it’s unusual.  But typically investment accounts roll over the instruments and purchase something else. That could go down. It’s a good idea for a retiree to be told about this and put it in cash.

This year, the standard deduction swallows the personal exemption and in my case, the same deductions I took last year.  I don't like to stretch things by trying to add deductions.  This year real estate taxes are much lower after moving to a condo. 

Wednesday, March 27, 2019

Social Security 2100 sounds like a serious plan to make the program sustainable

Sean Williams has a detailed explanation of the Social Security 2100 Act on the Motley Fool, URL here. 

There are complicated reorganizations proposed to extend Social Security’s self-support, but the biggest boosts are toward the end of the article, and they are obvious:  an increase in FICA tax rate, and a resumption of wage base when it goes over $400000.  There are also some changes to taxation of Social Security benefits for those with other income (that 85% thing now).

People who earned less during their working lives will eventually get better benefits compared to high earners. There will be some fixes for problems with surviving spouses (who can include same-sex spouses).  There will be some reforms for the way the disability insurance is funded.
The HR number is 860 (link ). 

Don Beyer (D-VA, 8th district) 

Sunday, March 10, 2019

People with grantor trusts do need to pay attentiont to their "manifest observable behavior"

One other point of caution has come up recently for people who inherit money through trusts.

Of course, the portion that remains undistributed in trust is supposed to be held for the future use by beneficiaries, especially after the main trustee’s own death.

Trusts are often set up as grantor trusts for simplification of filing taxes with the IRS.  But often in practice trustees have the ability to move money around at will, which can get them into trouble. Some banks allow a limited number of moves a month (typically six).

It would seem logical that there could be a problem if the trustee runs a business predicated on asking for money from patrons (rather than having them pay for things – that is, normal subscriptions in the case of Internet channels).  This might even extend to running fundraisers for non-profits from one’s own social media account, which Facebook often prods users to do. It might be necessary to set up a blind trust first.

Because there have been a few cases where Internet personalities have suddenly had bank accounts closed, we wonder if this could be a factor – beyond just SJW activism against “conservatives”.

Tuesday, March 05, 2019

Atlantic article encouraged seniors to settle for 75-year life span

I don’t think I shared this Atlantic article before, back in September 2014, a piece by Ezekiel J. Emmanuel, “Why I Hope to Die at 75”. That’s my age.

  I think he was 57 at the time.  He will have a memorial service before that birthday while still alive.

People who can achieve much after their 60s are real outliers, he thinks.  The increasing lifespan are simply producing aged population with more disabilities.

On the young side, he doesn’t recognize the fact that some teenagers real are very accomplished very young (Jack Andraka and David Hogg, to name two;  I have a feeling Sandmann will pleasantly surprise us, too.)

On the old side, well, how about Jimmy Carter.  Or Bernie Sanders (whether or not you agree with their politics).

I rather agree that at 75 you don’t need to start colonoscopies (Cologuard is worth it, though.)  I don’t think you need to do emasculation for prostate cancer (my father died of it at 82 and lived well up to the last four weeks; he wouldn’t hear of some of the treatments).

But he doesn’t want old people to take flu shots, and that sounds wacky.

But he’s right that now we have more extended families with people in their 60s taking care of parents in their 90s.

Saturday, March 02, 2019

Experts diverge on how bad the retiree personal saving situation really is; maybe not so much

MSN has featured a lot of second-hand stories recently on how retirees should behave.

This one, by Maurie Blackman, says that retirees seriously harm their own stability by helping adult children buy their first houses (although mortgage companies frown on the practice).  It’s a little better if the adult kid had work experience in college (helping deal with the debt) – college students sometimes work in managing apartments, and that could be a good place to start in learning how to manage property.

On Feb. 28 Andrew Biggs (in the Wall Street Journal) wrote about the “phony retirement crisis”: private savings increase while the federal safety net weajebs and public pension plans get in trouble

Anne Tergen had written about the same issue in 2017 and gotten different interpretations, from two different subject matter experts. This is a matter of  "Economic Invincibility" (Martin is too young to do a video on retirement savings, maybe).

Tuesday, February 19, 2019

How many people can save ten times their final salary in a working career?

Christy Bieber rolls out the “economic invincibility” advice on MSN, with three questions that would test whether your retirement is in trouble.

Most of all, you need to save 10 times your final salary, and use dollar cost averaging.

I wondered, though, how most workers will be able to do this, unless they are talented enough.
People approaching retirement need to decide how they feel about the “individualism” v. “interdependence” question.  David Brooks spoke about this recently in Sarasota, FL, where he denigrated “tribalism” (based on common enemies) and recommended “community”.  But he warned that “unrooted” persons will find themselves becoming “unremembered” as their worlds move from competitiveness (the traditional workplace) much more toward cooperation and recognizing need in “retirement”.  People will pray for you.
In the meantime, “the young people will win”.  At competition. That includes "Martin".

Tuesday, February 12, 2019

Motley Fool gives a crash course on obscure facts about Social Security

Dan Caplinger of the Motley Fool (a favorite site when I worked at ING) lists ten quirky facts about Social Security you probably don’t know. MSN/Bing offered this today on Microsoft Edge on Windows signon.

A lot of them have to do with remarriages or unusual dependency situations, returns to school, even prison.

The article also gives the mathematical formula showing how your benefit amount is calculated.

Saturday, February 02, 2019

Some state government employees who did not have FICA deducted might have Social Security benefits further reduced

Congress reportedly is looking at reducing Social Security payments to retirees who held jobs (often with state or local governments) where social security tax was not withheld, according to the Massachusetts Retires site. 

I had about 19 months employment with the Navy Department from 1971 to late 1972 where Social Security was not withheld (but it would have been after 1983).  It helped me buy a new car.   However my own benefit already takes this into account.

Monday, January 21, 2019

How should trusts handle (implicit) special needs beneficiaries, especially after an unexpected political or natural disaster crisis (the federal shutdown may matter!)

Should executors of inherited trust money be concerned that they might be asked to become involved in helping federal employees (and contractors) tide over during the “partial” government shutdown?
It sounds like a preposterous, shocking question, but I’m not being facetious.  It’s true, many federal employees are well-paid and ought to have savings, but some (like TSA agents) are not.

Presumably, credit unions can help for a while, although some say they can’t handle it all. Banks and financial institutions are offering forbearance programs.  By February 1, many employees will have hefty rent or mortgage payments. The media really hasn’t covered landlord (at least large apartment complexes) attitudes toward this. People who own rental properties might well be asked to accept much later rental payments.  And there is the whole world of payday loan companies, which I know nothing about (but got calls about during my post-employment period of the 2000’s).
For Coast Guard active duty members, if deployed they may be OK, but their families might not. 

There are specialty insurance companies, most of all USAA, whom one would expect to help them. 

The company I used to work for, Voya (which was ING-ReliaStar then) has a subsidiary, USL (United Services Life) which caters to the military and which might have unusual products that can help.

I won’t get into detail about my own trusts here (check my WP site).  But I can say what is common in many trusts passed on as inheritances.  Typically there are declared beneficiaries, and the executor has some fiduciary responsibility to protect the money (beyond necessary personal living expenses like housing) for them. Sometimes there a provisions for small incremental distributions.  Often there is attention to special needs beneficiaries. 

Normally, being targeted in political extortion would, in my book, qualify as a “special need”.  So if that does happen to a member of a family of a beneficiary, it would be common that the beneficiary could request a grant of up to 1% of the estate value per year (with multiple beneficiaries it would only work until used up, and it might only apply to non-real estate)   It is also possible for a charity (a non-profit) to request this for a client (or minor child of a client), but the client has to have an unusual need with compared to others of the charity, in a way that is meaningful to the trustee. 
In a sense, the inherited estate is expected to act as a private micro insurance policy to back up those in need when other systems fail them.  This is not (from an ‘Economic Invincibility” perspective) a particularly good place to be, but inherited wealth is not as morally secure as earned wealth.
Another idea to look at is socially responsible investing.  Right now I’ve stayed in conservative stocks and bonds and notes (I have some Dominion Power because I want to keep an eye on the power grid security issue). Some people like to assist small businesses, especially overseas, with kiva or microloans.  I am not in the business of playing micro-bank, but I have wondered if any intermediaries exist that could help trusts make loans in the cases of sudden special needs, even from political or natural disaster issues.  The novel nature of the current crisis might preclude the likelihood that much exists now, because it wouldn’t have been anticipated. However, in my case, the trust language explicitly allows making loans personally, even for ventures like real estate or perhaps AirBnb.

Wednesday, January 16, 2019

How to choose (or replace) an executor of a trust

I am in the position of having two trusts (my deceased mother’s and my own) with a previous executor who passed away.

Here are some considerations in picking another one, from the ABA. 

It is possible to hire a professional (like a law firm) as an executor.
Courts will appoint a disinterested party (a law firm) when the trustee (me) passes away before a replacement can be named.

Thursday, January 03, 2019

Apple report alone stokes more market volatility, and then there is the shutdown

Business Insider, for whom I recently signed up for the premium subscription, reports that a major Wall Street credit hedge fund, Marathon Asset Management, has hired a “veteran distressed debt trader”. That means that many of these funds expect a recession, according to a story by Dakin Campbell. 

Apple CEO Tim Cook reported lower earnings than expected his behemoth company just after the market close Jan. 2, and got up early in California this morning. Much of the problem seems to loop back to the trade war with China; but Apple seems to have bet its fortune and much of the entire stock market on our relationship with a Communist, post-Marxist country (in the middle of implementing a social credit score on all citizens). CNN's story is here.  "Your" retirement is tied to Communism and Xi Jingping.
 Maybe he could run for president in 2020 as he can move markets.  (OK, we’ll lowkey that “no place on our platform” speech.)  That was the reason for the initial drop, rather than the intransigence over the border issue between Trump and Congress. But it’s hard to believe that a deal wouldn’t help the markets. This Yahoo! report suggests that stock market pricing already has a 2019 recession start factored in. 

Both parties should talk to ranchers and businesses in the southern border states and find out what kind of security is most cost effective.  Most of these businesses are in Trump’s base. But it’s probably not a wall everywhere.