By Edward Leone Jr. DMD MBA CFP RFC
Contact Information: leonee@vzw.blackberry.net
It is time to do some 2013 income tax planning taking into account ATRA (American Taxpayer Relief Act) of 2012. This legislation made many of the tax laws by which we work permanent until the Congress determines that they are not and also added some considerable increases for some tax payers. The ACA legislation (Obama Care) will also add tax burdens for many of us. Work with your tax expert ( CPA) on these issues.
Many are challenged to generate cash flow in retirement from their investment portfolios which is consistent and reliable give the level of interest rates and the volatility in equity markets at this time. There are several ways to over come this challenge all of which have positive and negative aspects to their adoption. The following are all possibilities depending on the retires’ circumstances: Purchase of individual bonds held to maturity: Annuities; Reverse Mortgages; Rental Properties. Seek the advice of a Certified Financial Planner before engaging any of these suggestions.
It is clear that we are engaged in an economic recovery which has extended at a slow pace for a significant period and will continue to do so into the foreseeable future. Such issues as the true unemployment level which is calculated at over 13% by the Federal Reserve Bank when the unemployed, partially employed and those who have given up seeking employment are included in the calculation. The level of unemployment for youth and the black population are significantly higher for sure. The effects of inflation (CPI is extremely misleading if considering true inflation) on purchasing power of the population is a significant factor along with depressed income levels compared to historic data. 70% of economic activity is the result of consumer activity. Is it a mystery to any reader give the conditions I have describe, that economic recovery is slow and that the more assets government removes from the populous, the less resource the private sector has to invigorate the economy? Many benchmarks on which we depend to make judgments on our decisions regarding investment and consumption are faulty. How do we know what to do and how to plan? Credible economic statistics and government fiscal policy which is favorable to workers and businesses is the key along with a viable global economy. It is my judgment that the European Union is pulling out of it’s problems very slowly. Many emerging markets are advancing after experiencing some challenges and China is an unknown regarding its continuation of GDP growth. Our US assets revolve around energy, technology and innovation in my opinion. We need to exploit these advantages in order to maintain the global economic dominance which we have historically enjoyed. In addition, some discipline regarding the stewardship of our currency is imperative in maintaining our credible status as a global reserve currency and control of the inflation factor.
I am very concerned for the future well being of the retired and the potential for prosperity of following generations. Thing will have to change, the longer we wait, the more disruptive and painful it will be to society and business.
For The Record:
DJIA 15,746.88
NASDAQ 3,931.95
S&P 500 1,770.49
Suggested Reading: “Barbarians At The Gate” by Burroughs and Helyar
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