By Edward Leone Jr. CFP RFC MBA DMD
Contact Information: 303-478-6793 edleonedds@gmail.com
We are within a few days going to experience a new administration at the Federal Government level. For many this is a positive and for others, it is a threat. Time will tell just what direction social, economic, defense and regulatory issues will go.
Based on recent activity of the Federal Reserve Bank, it is likely that we will experience modest interest rate increases in this coming year. For the retired person this may be some what helpful in the provision of retirement income. A short-term liquid reserve held in a money market fund, along with investment in short-term and intermediate high-grade bonds should increase interest income while avoiding severe decline in bond principal since as interest rates rise, bond prices decline. It is expected that Social Security beneficiaries will see a .3% increase in benefit levels. The premium for Medicare Part B coverage averages $109 per month, but can be much higher for those in upper income levels, with surcharges–up to $370.80 per month. There will be no changes in maximum dollar contributions to qualified retirement plans. For the 401k, 403b and 457 $18,000 is the maximum with the opportunity for those over the age of the age of 50 to put in $6,000 more. For Simple IRAs the level of contribution is $12,500 and $15,500 for those over 50. The Traditional IRA level is $5,500 plus $1,000 for those over 50. For the SEP IRA and the Keogh Plans, the 2017 contribution limit is $54,000 or 25% of compensation which ever is less. Start retirement savings as early in life as possible to achieve a satisfying and affordable retirement experience.
Regarding pension benefits, an issue of which many of us should express concern, has to do with the funding of government pensions. We as tax payers are on the hook for these obligations. Many state governments are lacking in the pool of assets necessary to meet future pension benefit commitments: California, Kentucky, Minnesota, New Jersey, New Mexico, Oregon, Pennsylvania and Texas have less than 70% of the assets needed to meet these obligations. The case in New Jersey is the absolute worst condition with only 28% of the funds needed to meet future pension obligations available.
An issue which is in the news constantly but in a very political manner currently is hacking of digital information and identity theft. With the initiation of the tax season, this may be a concern for many of us. Please engage the following security protective steps:
- protect access to your Social Security number
- use antivirus and firewall software
- be careful over how and with what entities you communicate digitally
- check your credit report from time to time
- respond to IRS communication which are in writing and mailed only.
It will be very interesting to see, as the future unfolds, if lower tax rates, reduced regulatory burdens, higher interest rates and increases in worker compensation along with government investment in infrastructure rebuilding will stimulate economic growth and corporate profitability to a point which will over come the concerns of many over the state of the economy and investment possibilities.
Once Again, Happy New Year!!
For The Record:
DJIA 19,963.80
S&P 500 2,276.98
NASDAQ 5,521.06
Suggested Reading: “The Breaking Point” By James Davidson
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