Tag Archives: Retirement

Can you reach the max?

Retirement is coming, if it is not already here for you.  If you have income for which to fund a 401k or to contribute to an IRA, I would like you to think about these three questions I answered in this article, and the list of tips I also present in this article.

If you already have a 401k or IRA for retirement savings, you should read carefully, because a “game plan” concerning how you are going to use your retirement savings- or not use your retirement savings- is a very important foundational building block when it comes to retirement savings.  Decisions about your 401k and decisions about bankruptcy are intertwined for many people.

  • Question 1: Should I file for chapter 7 bankruptcy to wipe out debts? Or in the alternative should I not file for bankruptcy but instead cash out my 401k to pay off debts?
  • Answer:  With only a few exceptions, I strongly recommend a bankruptcy filing over 401k withdrawals.
  • Question 2:  Should I file for Chapter 13 bankruptcy reorganization over cashing out a 401k account with the purpose of staving off a foreclosure or preventing vehicle repossession?
  • Answer:  With few exceptions, I strongly recommend a Chapter 13 bankruptcy reorganization over cashing out a 401k account with the purpose of staving off a foreclosure or preventing vehicle repossession.
  • Question 3: Should I take out a loan or cash out a 401k or IRA in order to pay Federal Income Tax debt?
  • Answer: You can almost always pay back the federal income tax debt interest and penalty free through a Chapter 13 bankruptcy reorganization, or alternatively you often can enter into a very reasonable tax repayment plan with the IRS.  Sometimes, very old Federal Income Tax debt is even erased by bankruptcy.  Thus, for many people tax repayment though chapter 13 plan can make more sense than a 401k loan or IRA cash out.  There is an additional benefit: although most people don’t realize it, if your income is not super-high, you still can often wipe out credit card debts, eliminate second mortgage obligation and write off medical bills without any repayment of these debts by filing a chapter 13 case, so in many regards, a chapter 13 case can wipe out debt much like a chapter 7 case, with the added benefit of an easy cheesy Federal Income Tax repayment plan- and state tax can be repaid easily though chapter 13 too!

These are some more very important tips about how to handle your 401k, IRA, VIP, TSP or other tax deferred retirement savings, courtesy of a great article from Forbes.com which you can find here:

http://www.forbes.com/pictures/lmf45ekmg/can-you-reach-the-max/

Retirement But Not Totally Overview

The economy has had a great impact upon those people facing retirement.  Many have lost jobs, or been forced to take jobs paying much less then pre-recession employment.  In addition, many people have lost homes due to foreclosure, feeling compelled to walk away because of mortgages balances which greatly exceed their home’s value.  Bankruptcy filings in the pre-retirement demographic are skyrocketing, and have been high for many years.

With rising medical costs, rising food costs and expensive gasoline, many people are worried whether social security and perhaps a small pension will provide a comfortable retirement.

One way to improve the quality of life in retirement is to continue to work, and some places in the country offer better working opportunities for retirement age people than do other locations.

Is retirement on the horizon for you?  Are you worried whether your retirement income will stretch to provide a quality lifestyle?  If these are concerns for you, consider relocating to one of these 25 havens for retirees who might wish to continue to work past retirement age.

Forbes magazine compiled a list of places to where a retiree or a person facing retirement might want to consider relocating if there is a need or desire to work past retirement age.  Below is the “James Magee short list” of the top three places for a quality retirement.

  •  1.  Iowa City, Iowa: With Iowa Medical School in its midst, Iowa City’s doctor count is six times above the national average.  Also unemployment is at 3.8% and job opportunities are growing.
  • 2.  Corvallis, Oregon: Corvallis is a college town which helps the strong economy, this city has a 5.8% unemployment rate and room for even more economic growth.  There’s no state sales tax, and has plenty of doctors and a low violent crime rate.
  • 3.  Pittsburg, Pennsylvania: Unemployment is at 6.6%.  Although the winters here are extremely cold, the cost of living is 6% below the national average and homes are going for $121,000. Also the doctors per capita ranks at one of the nations highest.

Retirement is a lot different then it was many years ago.  In this country’s current economy, it is much harder to retire and retirement occurs at an older age.  A wonderful alternative is to pursue a working retirement, keeping a job but still enjoying the retired life.  Any of the 25 cities on Forbes.com’s list are wonderful alternative cities to relocate to.  If you are so far in debt but you have bankruptcy as an option, it may be your best option.  Your debt can be taken care of by filing for bankruptcy and once debt free you can easily relocate and start a fresh retirement in one of these cities with low unemployment rates, nice climates and so many other perks.

The Forbes.com article can be found here:

http://www.forbes.com/pictures/mjd45idmk/retirement-but-not-totally/

Retirement But Not Totally Part Three

This is t he third installation of Retirement But Not Totally, finishing off the Forbes.com list of top 25 places to retire, here are numbers 8-1.

  • 8. Oklahoma City, Oklahoma: Oklahoma has a top-rated tax climate and an unemployment rate of 5.5%.  Housing prices are an average of $143,000 and cost of living is cheap.
  • 7. Pittsburg, Pennsylvania: Unemployment is 6.6%.  Although the winters here are extremely cold, the cost of living is 6% below the national average and homes are going for $121,000. Also doctors per capita ranks at one of the nations highest.
  • 6.  Provo, Utah:  Cost of living is average with homes going for $210,000 on average.  This town is Brigham Young University’s hometown and has a 5.5% unemployment rate and a favorable tax climate.
  • 5.  Rapid City, South Dakota: So close to Mount Rushmore, Rapid city has an excellent job growth track record and housing prices average $152,000.  Unemployment is down to 4.1%.
  • 4.  Salt Lake City, Utah:  This is Utah’s largest city and enjoys a 5.6% unemployment rate.  Ranking number six on Milkens Institute job and economic growth index, Salt Lake City’s cost of living is 5% below the national average.
  • 3.  San Angelo, Texas: Cost of living is far below the national average as is San Angelo’s unemployment rate.  Home prices average at barely $100,000 and this town’s diverse job base and colorful city make for a satisfying place to reside.
  • 2.  Shreveport, Louisiana:  With a 6% unemployment rate, Shreveport has a high job growth prospect.  Cost of living is below 4% the national average and this city sits close by a medical school ensuring plenty of doctors per capita.
  • 1.State College, Pennsylvania: 4.9% unemployment rate, $210,00 average housing prices and a high prospect for job growth, make this beautiful college town an ideal choice for living and enjoying the excitement and  economic advantages that Penn State provides.

Retirement should not be all about staying at home or going out and going on expensive trips.  With the right move and planning, everyday could be exciting and active.  But with debt holding you back from enjoying your retirement, bankruptcy may be your best option for a fun and fulfilling retirement.

With rising cost on just about everything, it is hard to go out and enjoy life, especially when burdened with debt.  But with bankruptcy, you are able to go back out and enjoy the things you may want to do.

 

The article can be found at:

http://www.forbes.com/pictures/mjd45idmk/retirement-but-not-totally/

Retirement But Not Totally Part Two

The second installation to Retirement But Not Totally cities numbered 17-9, is packed with nine more favorable options for a working retirement.   

  • 17. Fort Collins, Colorado: Cost of living and homes are at a national average in Fort Collins, and with Colorado State close by the economy is flourishing.  The cold winters here are easily bearable with the 6.2% unemployment rate.
  • 16. Great Falls, Montana: With an above average tax climate this small town enjoys many doctors and a small crime rate.  The job and economic growth are outstanding and the unemployment rate is at a below average 5.6%
  • 15.  Harrisonburg, Virginia: Near two colleges, Harrisonburg rank high on the Milken Institute job and economy rating. With and unemployment rate of 5.3% this quaint town has one of the lowest crime rate on the list.
  • 14.  Huntsville, Alabama: Alabama has a very favorable tax climate with an average economy, housing prices and unemployment rate and below average cost of living.
  • 13.  Iowa City, Iowa: With Iowa medical school in its midst, the doctor count is six times above the national average.  Also unemployment is at 3.8% and job opportunities are growing.
  • 12.  Jonesboro, Arkansas: An average home in Jonesboro sells for below $100,00 and the unemployment rate is at 6.4%.  Also cost of living is dirt-cheap and 13% below the national average.
  • 11.  Knoxville, Tennessee:  Knoxville has plenty of doctors, an unemployment rate of 6.6%, wonderful economic growth. And best of all the Smoky Mountains provide a pretty scenic aspect to this town.  One downside to Knoxville is that it has the highest crime rate on the list.
  • 10.  La Cruces, New Mexico:  Just $116,000 on average housing prices, La Cruces is another college town with wonderful economic growth.  40 miles from Mexico, La Cruces has an excellent tax climate, but the doctors per capita are sparse.
  • 9.  Lexington, Kentucky: Cost of living is 11% below the national average, and housing prices are at an average of $144,000.  Kentucky has a favorable tax climate, and a lot of doctors.

Is retirement on the horizon for you?  Are you worried whether your retirement income will stretch to provide a quality lifestyle? If these are some concerns that have popped into your head, you may want to consider relocating to one of these 25 havens for retirees who might wish to continue to work past retirement age.

Look out for the next post, which will continue with the next 1-8 cities.  Whether you are looking for a place to relocate with a warm climate, plenty of doctors, or a cheap housing, this list has many options to choose from.

The article can be found here:
http://www.forbes.com/pictures/mjd45idmk/retirement-but-not-totally/

Retirement But Not Totally

The economy has had a great impact on those facing retirement. Many have lost jobs or have been forced to take jobs that pay much less than pre-recession employment.  In addition, many people have lost homes due to foreclosure and high mortgages that greatly exceed their home’s value. Bankruptcy fillings in the pre-retirement demographic are skyrocketing, and have been high for many years.

With the growing costs of necessities such as food, gas, and medical care, many people worry whether or not social security can provide a comfortable retirement.

One way to help ensure quality of life in retirement is to keep working.  And there are many places in the country that can provide better working opportunities than others.

A recent Forbes.com article, highlights the 25 top cities for a working requirement.  What ever your preferences may be location, culture and climate wise, this article may help you choose a top location to enjoy a comfortable retirement.

Cities 18-25

  • 25. Athens, Georgia: This beautiful college town sits at a high-ranking on the Milken Institute’s Job and Economic Growth Index with a 6.9% unemployment rate which is a refreshingly low percent compared to the country’s average of 8.5%.  Not to mention that this town enjoys very favorable climate and weather, house pricing is an average of just $130,000.
  • 24.  Austin, Texas:  Perks to living in this city include low crime rate,  a cost of living 7% below the country’s average, and no state income tax.  House pricing is a little above the national average at $950,000, but still reasonable.
  • 23.  Bismarck, North Dakota: Doctors per capita are at an amazing 50%, which is above the country’s norm.  Winters here may be cold, but unemployment rates are at only 2.8%.
  • 22. Bloomington, Illinois: This city is the head of State Farm, which results in a steady economy.  Cost of living sits on the national average and unemployment is at 6.8%.
  • 21. Cheyenne, Wyoming: Crime rates are low and physicians are plenty.  It’s one of the least populated cities on this list and has a 6.5% unemployment rate. Winters here are cold, however.
  • 20.  College Station, Texas: This is a college town, and is leading in job and economic growth.  5.8% unemployment, plenty of doctors and a warm and sunny climate also make up this town.
  • 19. Columbia, Missouri: The physician per capita rate in this city is more than three times higher than the national average. The unemployment rate is 5.0% and this city is known for having great job and economic growth.
  • 18. Corvallis, Oregon: Yet another college town, Corvallis has 5.8% unemployment rate and room for strong economic growth.  There’s no state sales tax, plenty of doctors and low violent crime rate.

These are the top 18-25 finishers for cities offering a working retirement, so if you are looking for an economy that is more impressive than just “so-so” maybe one of these cities should be considered for your comfortable working retirement.  Stay tuned for a follow-up post detailing the next 9-17 cities .

Relocation may be a great retirement planning tool. Discharging or reorganizing your debt, as seen as possible through a bankruptcy proceeding, may also be a prudent step towards retirement planning.

After bankruptcy, you may well have funds to fortify your saving accounts and 401k/IRA account. This can help ease the financial crunch which often accompanies retirement.  Call us if you or a friend might like to invest in a bankruptcy filing.

 

Follow the link below to read the article in whole:

http://www.forbes.com/pictures/mjd45idmk/retirement-but-not-totally/

Public sector layoffs slow down recovery – private hiring slows – Nat’l official unemployment set at 9.6%

Companies added just 64,000 jobs in September 2010, down from 93,000 jobs in August and 117,000 in July 2010. Overall, though, the picture was more bleak for September 2010. The economy overall lost 95,000 non-farm jobs because there was a decline of 159,000 government positions.

"We need to wake up to the fact that the end of the stimulus has really hit hard on local governments," said Andrew Stettner, deputy diredctor of the National Employment Law Project. "There is much more of a slide in the job market than what we really need to clearly turn around."

With the waning of the $787 billion Recovery Act passed in 2009 and credited with increasing employment by millions of jobs, finding new policies potent enough to speed up the recovery has proved difficult, reports Catherine Rampell of the NY Times on October 9, 2010.

"We’re looking for companies to get more confident in the pace of recoery and start to hire around 150,000 jobs a month, which is what we need just to keep the unemployment rate flat," said John Ryding, chief economist at RDQ Economics. "But I just don’t see that happening between now and the end of the year."

Catherine Rampell reports: "Flat hourly wages, now at an average of $22.67, also threaten what fragile confidence American families may have in their household budgets. [] Government jobs have been disappearing the last few months as the census winds down. [ ](September), 77,000 Census Bureau employees were let go. But local governmetns cut 76,000 positions as well. State governments shed 7,000 workers."

For the 14.8 million people out of work, the picture is not brightening. The average duration of unemployment continues to hover at record highs. In september, the typical unemployed worker had been searching for a job for 33.3 weeks, reports Ms. Rampell.

See Ms. Rampell’s article at: http://www.nytimes.com/2010/10/09/business/economy/09jobs.html?scp=1&sq=Public+jobs+drop+amid+slowdown+in+private+hiring&st=nyt

Obama “pocket veto’s” robo-signer foreclosure bill – Interstate Recognition of Notarizations Act of 2009

According to the Wall Street Journal on October 8, 2010, Damian Paletta reporting: "The vetoed bill, written by Rep. Robert Aderholt (R., Ala.), moved through Congress without attracting much attention and appears aimed at a much broader target than the foreclosure process. It would have required state and federal courts to accept documents of many different kinds that are notarized by people or computers in other states. The House passed the bill in April 2010 by "voice vote" and the Senate passed it unanimously Sept. 27. The bill caught the attention of Ohio Secretary of State Jennifer Brunner, a Democrat who has battled banks in her state over foreclosure procedures. She raised concerns with the White House earlier this week, she said in an interview, and sent an email to supporters asking for help getting the White House to block it."

"The morgage-servicing process is a regulatory gray area in which dozens of state and federal agencies play a small rule but over which no one agency has primary responsibility. The new Bureau of Consumer Financial Protection, created by the financial industry overhaul law in July 2010, would have powers to act in this area, but it doesn’t ahve its full authority until next summer of 2011."

"The bill raised difficult policy decisions for government officials. Some argued it ought to be easier for banks and others to process documents electronically to help reduce the backlog of foreclosrues and aid the housing market’s recovery."

Insurable on parents’ health care policies until age 26? – Patient Protection and Affordable Care Act – Check with your insurance agent!

Harvard Law Professor and consumer advocate Elizabeth Warren has estimated that some 40%+ of family bankruptcies have a nexus with medical losses.

If you have young adult children struggling to make their way in the world, there may be a break for you and them.

The new health laws may enable to you add children to your policies up until they reach 26 years of age. Do not assume that such children are now "automatically" added – there is likely some paperwork that you will need to complete in order to ensure that your older children are on the policy. The older children may be eligible to be added immediately, but there may be a premium increase, so research the situation and be prepared.

This would end the policy of many insurers of booting children off of the policy once they reach 23 years of age.

Again, check with your insurance agent – the coverage may not be self-executing nor automatic – you probably have to affirmatively move in writing to extend or re-establish coverage for such adult children who have previously aged-out of coverage, but remain under age 26.

For more information, see the September 23, 2010, NY Times article by Jacob S. Hacker and Carl DeTorres, Jacob S. Hacker is a professor of political science at Yale University. http://www.nytimes.com/interactive/2010/09/23/opinion/20100923_opart.html?scp=1&sq=The%20Health%20of%20Reform%20Jacob%20S.%20Hacker&st=cse

See Also Kevin Sack’s NY Times Article of the same September 23, 2010: http://www.nytimes.com/2010/09/23/health/policy/23careintro.html?_r=1&scp=1&sq=For%20Many%20Families,%20Health%20CAre%20Relief%20Begins%20Today&st=cse

See Also Kevin Sack’s further articles – covers three "real life" stories about (1) the chronically ill, (2) lifetime healthcare caps and (3) insuring adult children to age 26 on parents’ policies: http://topics.nytimes.com/top/news/health/diseasesconditionsandhealthtopics/health_insurance_and_managed_care/health_care_reform/index.html?scp=2&sq=For%20Many%20Families,%20Health%20CAre%20Relief%20Begins%20Today&st=cse

Underemployment rate 18.1% – much more telling than “official unemployment” Washington statistic of 9.1%

Nearly one in five Washington workers are unemployed. Their plight is like that of Seattle administrative assistant Lorilee Lines, who applied for more than 200 jobs before landing a meagre 30 hour per week job. This statistic was provided by Sanjay Bhatt of the Seattle Times, November 18, 2009, for the 12 months ending September 2010, in a page one article.

The national unemployment stood at 9.6% and the U.S. Bureau of Labor Statistics placed the "underemployed" statistic at 16.8%, but this is regarded as a very restrictive interpretation of underemployed.

Underemployment rates capture part timers, but they still leave out those working in full time jobs for which they are overqualified.

Through approximately October 2010, Washington has seen a net gain of only about 6,000 jobs. Overall, about 10,200 jobs were added in the private sector, but these were offset by a loss of some 4,200 government and public sector jobs.

Contrary to national trends, jobs continue to contract in Washington. Washington had 8,500 fewer jobs in October 2010 than it had in October 2009 – a decline of 0.3%. By contrast, there was a 0.6% increase in jobs nationwide over the same period. As reported in the Seattle Times, November 18, 2010.

Economy slowing down again, and Federal Reserve Bank is running out of traditional stimulus options says UCSC Economics Professor Carl E. Walsh

The economy is slowing down again despite interest rates being lower than ever: What is the government going to do next? Here is the answer, by NY Times Reporter Sewell Chan:

“The challenges the Federal (Reserve Bank) faces aren’t going to get any easier in the coming months,” said Carl E. Walsh, a professor of economics at the University of California, Santa Cruz. “The choices ahead are only getting worse as the economy seems to be slowing down.” Professor Walsh was quoted in the New York Times Thursday, August 12, 2010 edition, Section B1

Sewell Chan’s August 12, 2010 NY Times article introduces us to a new term, “Quantative Easing”, and says that after lowering short term interest rates, about the only thing that the Federal Reserve can do is to pursue a policy of “Quantitative Easing”. According to Mr. Chan, Quantitative Easing is a controversial and uncertain central bank tactic. There is little modern historical precedent by which Quantitative Easing can be studied and analyzed by economists to predict results.

Mr. Chan explains that because short term interest rates are already close to zero, that now the Federal Reserve Bank’s last and final option is more “Quantative Easing”. Will it work?

What is “Quantative Easing”? Simply put, it is the printing of additional money to purchase financial assets in the market place, by using government money to buy instruments held by investors. The instruments purchased by the Government Treasury in “Quantitative Easing” are things such as (a) mortgage backed securities (b) buying/cashing out debts owed by the government such as Fannie Mae and Freddie Mac obligations/bonds and (c) buying Treasury Securities like government bonds.

How does “Quantative Easing” seek to help the economy? My understanding is that Quantitative Easing intentionally creates some inflation as it increases the money supply, and thus with more money rolling around, there is an incentive to invest it by lending it to others. People and investors who now have this freshly borrowed cash then go on spending sprees, and it is these sprees which are supposed to stimulate economic growth by more lending to people who buy things with the newly borrowed proceeds.

In short, more people buying things with borrowed money increases demand for goods and services and such. Increased demand keeps prices for goods and services higher, which is supposed to offset the deflation of prices of goods and services that is occurring in this recession. (See following blog post describing why deflation is “bad”)

Shortly put, deflation is supposed to be “bad” during a recovery from economic recession because deflation will result in a further economic slowdown as people conserve their cash and do not spend it in order to wait for lower prices on everything from TVs to cars to houses to ocean cruises.

This would be a “Second Wave” of “Quantitative Easing” as the Federal Reserve Bank already took a first “Quantitative Easing” step between January 2009 and March 2010 by printing money in the amount of $1.725 trillion (that is 1,000,000,000,000!) dollars to purchase $1.25 trillion in mortgage-backed securities (essentially buying mortgages from private investors), $175 billion in debts owed by government-controlled entities like Fannie Mae (more mortgages) and $300 billion in Treasury securities.

Here are the pros and cons:

Pros of “Quantitative Easing” to buy mortgages and investment instruments held by private investors when lowering interest rates doesn’t seem to be getting the job done to stimulate the economy: Sewell Chan of the NY Times writes that the Federal Reserve Bank’s Chairman Ben Bernanke is an astute student of the Great Depression and that Mr. Bernanke has long argued that the central bank (The Federal Reserve Bank) has the additional tool of Quantitative Easing which should be somewhat readily used to avoid deflation in prices, as deflation will slow, stop or reverse a recovery as people look at cash as an investment in and of itself instead of spending the cash. For example, if you know that the $500 TV set will reduce to $475 in six months (a mere 5.0% deflation in price) then you are more inclined to wait six months to purchase. If you know that your $300,000 home you are looking at buying will decrease 5.0% in one year to $285,000 then you will keep in renting one additional year and will not buy the home, thus stagnating the housing market.

Cons of “Quantitative Easing” More conservative voices (according to the NY Times Swell Chan) propose that the Federal Reserve Bank should not go out into the marketplace to buy mortgages, and that the most aggressive steps taken should be to lower short term interest rates (please note that short term interest rates are almost zero!)

Problem #1: Those economists wary of “Quantitative Easing” say that in a “perfect storm” of circumstances, Quantitative Easing can lead to 1970s style “stagflation” as the government floods the economy with too much available money when it buys out the debt obligations of (a) mortgage backed securities (b) debts owed by government entities to investors such as Fannie Mae bonds and (c) Treasury securities, in an atmosphere when the economy is operating at a reduced level, because there is a surplus or bumper crop of money floating around, but not so much to buy.

Problem #2: According to economists skeptical of “Quantitative Easing” say that further purchases of mortgages, government debts and treasury bills by the Federal Reserve will undermine faith in the US dollar as an accepted stable world currency and the safety of the US Treasury bill as keeping ahead of inflation because it fosters “perceptions of monetizing indebtedness,” according to Mr. Chan’s analysis of economist Kevin M. Warsh, in that it looks like it is the printing of money to pay off the public debt. “On a very simple level [with Quantitative Easing], the Federal Reserve Bank is printing money so the Treasury can spend more than it’s collecting in tax revenues…these are highly unusual circumstances, so no one is too worried about it [right now]. But it is always a temptation to use the central bank to finance government expenditures.”

Mr. Chan writes that economist Kevin M. Warsh notes that the Federal Reserve already has purchased 2.3 trillion worth of debt which includes vast sums of Treasury Bills, perhaps too much. The Treasury Bills are essentially a large share of the national debt. (Note that the Chinese probably now hold the remaining balance. That is a none too funny note for another day). Mr. Warsh notes that the Federal Reserve Bank’s institutional credibility is at stake, if it threatens the currency’s stability to pursue domestic growth.

Problem #3: Economists wary of Quantitative Easing relate that economists “don’t have a lot of good historical episodes in modern economies to know exactly what the effects of quantitative easing are.” Mr. Chan quotes Professor Walsh.