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Protecting Your Future, Today |
| Your Financial Planning Resource
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3rd Quarter 2008 |
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Greetings!
Thank you for your continued business. If you know of anyone that could benefit from my services, please feel free to forward this newsletter on to them.
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| What to Do to Survive This Market |
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As stocks flirt with bear-market territory, most investors, long schooled in the buy-and-hold philosophy, have ridden the market down.
There's a decent argument to be made for buy and hold. Aside from the absurdity of liquidating an entire equity portfolio - the tax headaches would be epic - investors ultimately end up better off than if they had tried to sell at the top and buy at the bottom.
But now that investors have lost 20% of their money, the next question is when can they expect to earn it back. The good news is stocks typically snap back from a bear market in relatively short order. Since 1945, according to Sam Stovall, S&P's chief equities strategist, bear markets lasted an average of 14 months, and took 12 months from their bottoms to regain the lost ground.
Of course there is no such thing as an average bear market, each one is different and these numbers exclude the two most painful, when the market lost more than 40% from peak to trough. The U.S., in the postwar era, has suffered only two of these, in the mid-1970s and the one earlier this decade. The last mega-meltdown began in March 2000 and ended in October 2002. The market took until mid-2007 to return to its March 2000 level. Nasdaq never came close to its old high.
Assuming the newly christened bear market is somewhere close to average, then investors can expect a reasonable period of solid gains to follow. The reason is that the U.S. has a powerful and vibrant economy, despite occasional sick days, and the market tracks this.
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Secret Ways to Boost Your Social Security |
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Some retirement decisions are irreversible. But many retirees will be happy to learn that choosing when to start collecting Social Security benefits is not one of them.
When John Rothenhoefer, 70, found out that he could increase his Social Security benefits by about $1,000 a month by taking advantage of a do-over strategy, he thought he'd struck gold. Out of the 32 million retirees who collect Social Security benefits, Rothenhoefer was one of just 71 people this fiscal year to take advantage of an obscure option that lets you halt your current benefits, pay back all you have collected interest-free, and restart your benefits at a new, higher rate based on your current age. | |
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This strategy is just one of four little-publicized ways we uncovered to help you maximize your Social Security benefits. Each tactic applies to a specific situation; if one of them is yours, you could be in the money.
A "Sweet Deal" - For someone like Rothenhoefer, who had been collecting monthly checks for eight years, the price of repaying Social Security benefits can be steep - $100,000 or more in some cases. But he thinks it's well worth it. Not only will his monthly check be about 75% larger than his previous benefit, but it will also increase with inflation each year for the rest of his life. And if John dies first, his wife, Charlotte, 67, will collect the same monthly amount as a survivor benefit for as long as she lives.
Tactics for Couples - A recent paper by the Center for Retirement Research recommends that the spouse who is eligible for lower benefits collect them early, while the higher-earning spouse delays taking benefits until they are worth more. Then, when the primary breadwinner dies, the spouse with the lower benefit will "step up" to a much higher survivor benefit as the smaller retirement payment drops off.
There's also a way for married couples with similar incomes to enhance their benefits. In that situation, once you reach your normal retirement age, you can apply just for spousal Social Security benefits and delay the start of your own, higher benefits.
See full story, located at Yahoo Finance, to read the other two strategies: Crunch the Numbers and Take Care of the Kids. |
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Should Parents Bail Out Their Kids? |
 They're always your children, even long after they're adults. Saying no might be one of the hardest things you could do - and possibly the smartest.
Kids who don't get their finances under control in early adulthood may never get their acts together. One bailout can lead to another, as children become dependent on their parents instead of economically self-sufficient.
A financial rescue can have emotional repercussions for the whole family as well. Parents can feel resentful, too, about being constantly hit up for cash. But sometimes they keep stepping in as a way to keep the apron strings firmly tied.
So how is a parent today expected to navigate these treacherous waters and figure out when to step in and when to hold back? The answers are as individual as families, but here are some thoughts to guide you:
Get real - Parents need to take a clear-eyed look at their emotional as well as financial situations. If the handouts are jeopardizing their own finances, their marriage or their relationships with their kids, something definitely needs to change.
Take your time - You usually don't have to respond to a request for help right away and you probably shouldn't. Knee-jerk reactions can obligate you to a course of action you might later regret, while planning your response can give you an invaluable opportunity to teach your progeny something about handling money.
Stick to your guns - Psychologists will tell you that anytime you change a behavior, members of your family may try to get you to revert to your old ways so that the comfortable status quo can be preserved. You can imagine how much more emphatic your kids' efforts may be if the change means they wind up with less money.
See full story, located at msnMoney, to read the other three points for parents who want to help. |
| IRS Flooded With Calls About Stimulus Checks |
In recent weeks, tens of millions of Americans have been flooding the Internal Revenue Service with questions about the government's economic-stimulus payments. Some callers want to know why their payment hasn't arrived and when it will. Others want to know why they didn't get as much as they had expected.
If you already got your stimulus payment and it didn't include money to reflect your kids, you have company. The IRS says it will mail out about 230,000 additional payments around mid-July after discovering some tax returns were "improperly filed and did not capture the information needed to generate the $300 in qualifying child payments."
Separately, the IRS in early May found a problem with 1,500 stimulus checks that were directly deposited into the wrong accounts. That was the result of a "programming error" that occurred during the initial computer payment run. All taxpayers affected have since been sent a check.
The IRS Web site ( www.irs.gov) has extensive information, including a list of answers to frequently asked questions. If the IRS made a mistake in computing the amount of your refund, consider contacting the IRS's Taxpayer Advocate Service. This unit can be especially helpful for people facing financial distress. For details, go to the IRS Web site and click on "Taxpayer Advocate" on the home page, or call 877-777-4778.
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STRIVING TO EDUCATE OUR CLIENTS IN THE EVER-CHANGING FACE OF THE
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Disclaimer
This eNewsletter is a digest of information published by a variety of web-based sources and is published as a service to our users. Horan Associates, Inc | Horan Securities, Inc. is not the author of the material unless specifically noted. We review each article to ensure that it is related to the interests of our subscribers. Horan Associates, Inc | Horan Securities, Inc. does not endorse the individual authors of these articles, although Horan Associates, Inc | Horan Securities, Inc. has reviewed these articles, for accuracy and completeness and your independent review for personal relevance should be undertaken. Reliance on this material should only be undertaken after an independent review of its accuracy, completeness, efficacy, and timeliness. All articles are copyrighted to their publishers. This publication is intended for general information only and not as legal advice. You should discuss specific details with your advisor.
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