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Greetings!
Four months of winter down and just a few weeks to go until finally, Spring! And don't forget, Daylight savings time-- spring ahead--is on March 14.
But it's not Spring yet; as I write this edition on Friday morning, February 26, the wind is howling outside--gusts up to 50 mph and it is snowing--sideways! A friend of mine sent me a single line email a few weeks ago, "Why do we live here?" Days like today make me wonder why, too.
In doing my part to move winter along I have planned a seminar in late March--whenever I plan one of these things it seems that the weeks and days before the event fly by. Anyway, this seminar is all about the DROP and is targeted to my former colleagues with the State Police--it's being held at the Pikesville Hilton on March 27, a Saturday at 1 PM. Attendees are encouraged to bring their spouses and should call Jenna at the office to register. For you retired Troopers, please pass this on to your still active friends.
As far as the Market goes for 2010--we are in the two-steps forward, then two-steps back pattern. We opened up 2010 with the DJIA at 10,430, the NASDAQ at 2,284 and the S&P500 at 1,116. At the close of February we are off on the Dow by 105, the NASDAQ by 52 and the S&P500 by 12.
All the teeth gnashing and hand wringing that went on during the first two months and we really didn't go anywhere. (Which is another reason I like stocks and funds that pay monthly dividends--it just feels good getting paid while standing still.)
So far this year the market reminds me of a little sign that used to sit on one of my former bosses desk, "When it is all said and done, there is more said than done."
By the way, I am thinking of having a Saturday morning Breakfast at the Imperial Hotel sometime soon--I'm thinking we could get a few people together who are getting to the age when they need to begin thinking about Social Security. I'm not sure we can get 20 people or not--I would be interested in any comments or thoughts you might have--Social Security Strategies are something I think a lot of people miss the boat on, and an hour or so talking about the possibilities could save a ton of money. Let me know what you think.
Marty
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1099's for Taxable Accounts
You should have already received your 1099's for your taxable accounts for 2009--they were required to be in the mail by January 15. These are only for taxable accounts or trusts and even CRUTS--but not for IRA's.
The arrival of the 1099 often causes some confusion so I'll try to help clear the waters a bit. The first block on the left is the big cause of confusion, it's titled, "Summary of Gross Proceeds and Regulated Futures Contracts." In this block you may see a pretty big dollar figure and suddenly visions of a tremendous tax liability dance in your head. No need to worry, all they are reporting here is the gross proceeds from the sale of an asset within your account.
The gross proceeds alerts the IRS that we sold something in your portfolio and as a result you may have earned a profit, and if so, darnit, they want some taxes paid! What we need to do is spell out for the IRS exactly what we netted from the sale of that asset--and then we pay a capital gains tax only on the profit. Now as many of you painfully know, here lately that net is usually not a profit, but a loss, and if we lost money we don't pay any taxes and in fact, we get to offset other capital gains plus up to $3,000 in income.
This is known as tax-loss harvesting--and often occurs at the end of a calendar year when we intentionally sell a losing position to book the loss--or realize the loss; while it's not the most exciting thing to do--it does save some tax owed and we are always looking to reduce our tax-bill.
When you receive your 1099 and there are gross proceeds you will need to call us and we will work up a "Cost Basis" so either you or your accountant can report the profit or loss to the IRS. Sometimes these Cost Basis calculations are very detailed and time consuming so please call as soon as you can. Thanks, Marty |
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Concept of the Month: Medicare
First of all, Medicare is for retirees and Medicaid is for those who need aid. Medicare is our nation's health insurance for people 65 years old and up or those on disability through Social Security.
If you are collecting SS you will be automatically enrolled in Medicare when you turn 65--and are covered on the first day of the month of your 65 birthday. If you are not collecting SS you must proactively apply yourself--if you do not apply you can be penalized 10% of your premium for each year you delay--and the penalty is for a lifetime. So if you or a family member is turning 65 gently remind not to forget.
Next, there are four parts to medicare--(you knew this wouldn't be easy):
Part A doesn't cost anything but it only "helps" pay for inpatient care in a hospital, or a skilled nursing facility following a hospital stay. I quoted helps since there is a substantial deductible that the patient must pay (a bit over $1,000 for the first 60 days and then $267 per day for days 61 to 90 and $534 per day for anytime after 90 days.
Part B--which cost somewhere between $96 and $238 per month depending on your income covers 80% of costs due to doctor visits, medical tests, preventive care, etc. Add this 20% co-pay to the hospital deductible in Part A and you can quickly wipe out some serious money.
Part C is optional and includes Parts A & B and is usually tied to an HMO or Preferred Provider Option (PPO). Premiums depend on the level of coverage and deductibles and whether you contract for vision, dental and wellness programs.
Part D covers prescription drugs but also carries a monthly premium. The details of Part D are very complicated and even include a donut hole, go figure. In 2009 the maximum out-of-pocket expenses from prescriptions was $4,350, so at least there is an upper limit--and with the costs of some prescriptions in the stratosphere--having a worst case limit is comforting.
Like Social Security, what each person really needs for Medicare is highly specific to them--it is best to start learning about medicare as you approach your 60's. A good place to start is the Government brochure, Medicare & You, Publication CMS-10050. You can get a copy by calling 1-800-medicare or go to their website at www.medicare.gov.
One last thing, Medicare does not cover Long Term Care expenses--that falls under Medicaid and even then only after the patient spends down their assets. Perhaps we'll talk about Long Term Care next month. I bet you can hardly wait.
Good luck. Marty |
Book I am reading now:
The Associate by John Grisham--orignally published, 2009, Random House, NY | |
