Fiscal Cliff Indeed

According to former Congress members Chris Cox and Bill Archer, writing in the Wall Street Journal:

Why $16 Trillion Only Hints at the True U.S. Debt

The actual liabilities of the federal government—including Social Security, Medicare, and federal employees’ future retirement benefits—already exceed $86.8 trillion, or 550% of GDP. For the year ending Dec. 31, 2011, the annual accrued expense of Medicare and Social Security was $7 trillion.

That is roughly double the entire annual Federal budget.

They go on to note that “to collect enough tax revenue to avoid going deeper into debt would require over $8 trillion in tax collections annually.”  Expropriating the entire income of the top 25% of households that pay almost 90% of the tax and all corporate taxes would only bring in $6.7 trillion.

I don’t know it’s kind of like saying “well if I ignore a few credit card bills I really don’t have the debt.”  I feel like the creditors don’t feel the same way.

Here again a little perspective goes a long way to give us some insight on this whole “Fiscal Cliff” situation.

Doug Hendee, CFP^®

(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp.  The author’s opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).

A Bit of Help with IRS Inflation

The IRS will be adjusting many dollar limits and benefits due to inflation. Here are some of the changes starting January 1 , 2013:

• Deduction for business use of Auto will be 56.5 cents per mile, medical miles increase to 24 cents and charitable miles remain at 14 cents.
• The annual exclusion for gifts increases to $14,000 per person.
• Foreign earned income exclusion increases to $97,600.
• Social Security benefits will increase by 1.7%.
• The wage base for computing Social Security tax will increase to $113,700.
• Threshold for unearned income regarding “kiddie tax” rises to $1,000.
• The maximum IRA contribution will increase to $5,500.
• The maximum contribution to 401K and 403B plans will increase to $17,500, for those over 50 years old the catch up amount remains $5,500.
• The maximum contribution to a SIMPLE IRA plan will increase to $12,000.
• For those covered by a pension plan at work, the income phase out for deductible IRA contributions increases as follows;  $59,000 to $69,000 for singles and $95,000 to $115,000 for married filing joint.

Now we wait for the fun part…How much will they raise our taxes??

Joe Arena

(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp.  The author’s opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).

IRS CIRCULAR 230 NOTICE:

As required by U.S. Treasury Regulations, please be advised that any written tax advice contained in this communication was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.

Time to review Social Security

Last year the Social Security Administration (SSA) stopped mailing statements to taxpayers to reduce their costs (by about $70 million).  Earlier this year they resumed mailing to people 60 or older who have not yet started drawing social security.  Now they have launched a new online version of your social security statement, available at www.ssa.gov.

If you are doing any retirement planning this SSA tool will provide useful information.  The tool will show your estimated benefit amount at early retirement age (62), full retirement age (typically 66-67) and if you wait until 70.  The estimates are based on your current earnings rate.  You are also provided with a history of your prior years’ earnings.  Since benefits are based on your 35 highest earning years, it would be wise to verify that yours have been posted accurately in Social Security’s database.  This tool will also show estimates for disability and survivor benefits, including the amount your spouse and children would receive if you pass away.

If you have not started your retirement planning, now would be a great time to start.

Joe Arena

(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp.  The author’s opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).

IRSCIRCULAR 230 NOTICE:

As required by U.S. Treasury Regulations, please be advised that any written tax advice contained in this communication was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.

Women Need Financial Planning

Time for some startling statistics…

According to research by Wells Fargo, affluent women are significantly less confident about retirement than men. The least confident of all are single women, and the most confident are married men.

About 700,000 women will lose their husbands this year.  The median age when a woman is widowed is 59.

So…women are less confident than men, they are often widowed at a young age, they live on average longer than men and they control more and more of our nation’s wealth. 

What to do?  Women must take charge of their own financial lives.  This means-

1. Selecting a competent Financial Advisor who is willing to take the time to explain investing and insurance concepts and options to you, with patience and in terms that you can understand.  They should also be able to concisely explain to you the ways in which they are compensated by fees and / or commissions.
2. Doing a budget and understanding your spending and cash flow needs.
3. Where possible, spending less and saving more.  You really cannot save enough money for retirement.  Social Security might not be around in its current format for younger people, most of us no longer have pensions, we have to worry about historical inflation of 3-4%/year, we are living longer / being kept alive longer and the costs of college, healthcare and long term care are all skyrocketing. 
4. Defining your important financial goals, both short and long-term.
5. Gathering up your financial account statements and making folders or a binder for them, so you have records of all of your accounts and know where to find them.
6. Taking the time to work with your trusted advisor to develop a living, comprehensive financial plan that (minimally) addresses retirement, survivor and estate planning.

If you would like assistance with determining what your important financial goals are and how to achieve them, please feel free to contact me at (585) 340-2229.  Thank you.

Susie L. Light
Financial Advisor

(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp.  The author’s opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).

Are my social security benefits taxable?

This is a common question with a somewhat confusing answer …. (maybe).

You should receive a Form SSA1099 which will show the total amount of your benefits.  Generally, if Social Security benefits were your only income, your benefits are not taxable and you probably do not need to file a federal income tax return.

 If you have other sources of income, up to 85% of your social security income could become taxable.  Below is a guideline to help determine whether you may be paying tax on your benefits

• First add one half of your social security benefits to all of your other income, including your tax exempt interest and other excluded income.  This is your modified adjusted gross income.
• If you are single and your modified adjusted gross income exceeds $25,000 (base amount) your benefits will be taxable.
• If you are married filing a joint return and your modified adjusted gross income exceeds $32,000 your benefits will be taxable.
• If you are married filing a separate return and did not live with your spouse at all during the year you each use the $25,000 base amount.
• If you are married filing separate and did live with your spouse during part of the year the base amount is “0” and your benefits are taxable.

 Now, if you are still confused, you can feel free to give me a call.

Joe Arena

(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp.  The author’s opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).