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.