3 Reasons People Retire Broke

An easy read Dave Ramsey article points out a couple key pointers.woman_piggy_bank_000009343524

  1. Zero % ROI brings in nothing, in fact, inflation will eat it alive. You must invest.
  2. Jumping in or letting panic make you jump out…well, we just hear a sermon on this today. Read all of Mark chapter 13, then realize that there will be ups and downs but don’t run about in sky is falling mode. I know, easier to understand and you get older (ps, I’m older).   http://biblehub.com/mark/13-7.htm
  3. Stupid Decisions. A good read is The Millionare Next Door. Those that stay the course don’t tend to make impulse buys. But on the flip side, if your investment has seen good appreciation, evaluate it for some profit taking. What does that mean ?

When clients accumulate more than one investment property, I show them how they compare against others they own. If they own only one, I’ll give regular feedback on others that are available and how they might compare (ROI). When I was in my 20’s, I was about to make about $10k on a flip that I had $3k into. Dad said, “so you’ll get this much out of it, then rent will stop, and what will you do with the $x’s ?” He’d been trained as a teacher

On-duty

with an Economics masters degree so it was a straight forward question. I’ve used this approach each time I or a client has cleaned up a house. There are +’s and -‘s to a. selling, b. renting it out, c. ?….you get the idea. I prefer to get investors – and home owners as well – thinking more, jumping off cliffs of optimism less. At the same time, if your $50k house bought as a rental has now shot up to $120k in value and we can get that same rent from a another $75k house, well, I can lead you to water but I can’t make you drink.

 

  1. http://www.daveramsey.com/blog/reasons-people-retire-broke?ectid=10.34.637


History of income tax rates

See if you notice any trends. If so, please comment what you see.4372605-Render-Unto-Caesar-Newspaper-ficititious-headlines-about-Income-Tax-Time-Also-includes-image-of-flag-Stock-Photo[1]

History of income tax rates adjusted for inflation (1913–2010)[70][71]
Number of First Bracket Top Bracket
Year Brackets Rate Rate Income Adj. 2016 Comment
1913 7 1% 7% $500,000 $12 million First permanent income tax
1917 21 2% 67% $2,000,000 $36.9 million World War I financing
1925 23 1.5% 25% $100,000 $1.35 million Post war reductions
1932 55 4% 63% $1,000,000 $17.3 million Depression era
1936 31 4% 79% $5,000,000 $85.3 million
1941 32 10% 81% $5,000,000 $80.4 million World War II
1942 24 19% 88% $200,000 $2.9 million Revenue Act of 1942
1944 24 23% 94% $200,000 $2.69 million Individual Income Tax Act of 1944
1946 24 20% 91% $200,000 $2.43 million
1964 26 16% 77% $400,000 $3.05 million Tax reduction during Vietnam war
1965 25 14% 70% $200,000 $1.5 million
1981 16 14% 70% $215,400 $561 thousand Reagan era tax cuts
1982 14 12% 50% $85,600 $210 thousand Reagan era tax cuts
1987 5 11% 38.5% $90,000 $187 thousand Reagan era tax cuts
1988 2 15% 28% $29,750 $59.5 thousand Reagan era tax cuts
1991 3 15% 31% $82,150 $143 thousand Omnibus Budget Reconciliation Act of 1990
1993 5 15% 39.6% $250,000 $410 thousand Omnibus Budget Reconciliation Act of 1993
2003 6 10% 35% $311,950 $401 thousand Bush tax cuts
2011 6 10% 35% $379,150 $399 thousand
2013 7 10% 39.6% $400,000 $406 thousand American Taxpayer Relief Act of 2012

Pastors look at Social Security

(Good advise for the rest of us too)……

Things You Must Have If You Opt Out

If you are going to opt out, there are some things you must do for the rest of your life from a common sense perspective to make sure you and your family are taken care of. They are things you should be doing anyway, but you definitely should not opt out without having these things in place. Otherwise, you’re signing up for major risks that are just not worth taking.

  • Term life insurance—You must have a level term policy that covers about 10 times your income. (That’s the average amount, but check with a professional who will take factors like age, income and specific aspects into consideration.) That way, if something happens to you, your family will be taken care of. If you die with children under 18, they would receive a Social Security check, so you’ve got to have a life insurance policy in place if you’re going to opt out, and you must keep it—period—because Social Security is not going to be there for your family to count on.
  • Long-term disability insurance—If you become disabled and have opted out, you will not receive anything from the S.S.I. at all. Do not opt out without having a good long-term disability policy in place. Once you have it, keep it!
  • Retirement savings – a 403(b) and Roth IRA—You will not be receiving a Social Security check at retirement if you opt out. So what?! If you take the thousands and thousands of dollars you’d be paying into Social Security and put that into a Roth IRA in a good growth stock mutual fund, you’ll retire with dignity times 20!
  • Long-Term Care Insurance—Dave recommends long-term care insurance the day you turn 60. So if that’s you, add that to your list of must-have coverages!

ACA: Affordable ? Care ?

Affordable Care Act changes for individuals

The individual mandate penalty increases to the higher of 2 percent of yearly household income or $325 person per year, with a maximum penalty per family for those using this method of $975.

New forms to contend with

The Form 1095-B and Form 1095-C, which were optional for calendar year 2014, must be filed by any person that provides minimum essential coverage to an individual

Also, taxpayers must receive a payee statement (1098-T) before they can claim an American Opportunity, Hope, or Lifetime Learning Credit or take the deduction for qualified tuition and related expenses