By Edward Leone Jr. DMD MBA CFP RFC
Contact Information: leonee@vzw.blacberry.net
According to a Pew Research Center study, 40% of all households with children under the age of 18 have the mom as the primary source of income. This compares to 11% in 1960. 5.1million of these ladies are married and have higher income than the spouse, while 8.6 million are single mothers. There has clearly been dramatic changes in the work force over these past 52 years. It is also evident that social changes regarding the marriage commitment are a strong trend. Families lead by a single mother have a median income of $23,000. What does the future hold for these families and for our society in general?
The argument over growing the economy by instituting government austerity or allowing government to stimulate the economy by increasing spending goes on. By my observation, increasing government spending has not worked well in Japan for 2 decades. This stagnant economy had a national debt of 67% of GDP in 1990. It is now 212% of GDP. The countries known as the PIIGS have increased government spending by 6% in the period between 2008 and 2011 and are still struggling. Is the U.S. approach to economic problems going to increase economic activity or produce further head winds against economic growth? The dollar has experienced a 30% decline against foreign currencies from 2002 to 2008. It is now stabilizing due to the fact that the U.S. is viewed as a safe haven along with a very slow but positive direction in economic growth. It is important to note that the planned U.S. deficit for 2013-2014 will be at about $650 billion which is much less that it has been in recent years. We are doing better that most national economies, but should we embrace the status of best of the worst or be a leader in stimulating economic growth?
For those looking for some good news, Cabela’s, the sporting goods store chain has seen shares of stock increase in price by 95% in 2012. It appears that an increased volume of firearm sales has been a strong contributor to the company’s performance.
It is clear now that the Congress is in a summer recess, that not much regarding budget issues, tax reform and debt limit issues can be worked out prior to coming deadlines. In addition, Social Security continues to be ignored regarding its financial staying power. Those born between 1946 and 1964 (Baby Boomers) are retiring and becoming qualified for Social Security benefits at a rate of 10,000 per day. This trend will extend on for some 17 years. By, 2040, the total portion of the U.S. population over the age of 65 will increase from 40 million to 80 million. We also recognize that longevity is increasing. When will we address these matters or is it too late? It is clear that many who are retired or are contemplating retirement in the near future understand that creating an extended comfortable retirement environment revolves around saving more, spending less or working longer.
Be aware of the impact that tax law changes established earlier in 2013 will have. Do your tax planning early. You may be subject to some of the following:
1. 39.6% marginal tax rate over $400,00 income ($450,000 filing jointly)
2. capital gains rate of 23.8% not 15% for this same group
3. many will experience lower phase out levels for deductions if income is over $250,000 ($300,000 filing jointly)
4. 3.8% surtax on investment income for those earning over $250,000/$300,000.
For the Record:
DJIA 15,658.36
NASDAQ 3,689.59
S&P 500 1,709.67
Suggested Reading:
“On the Other Hand” by Herbert Stein
Leonesmoneymonitormonthly's Blog 