Tag Archives: tax code

Your Retirement Health

Each week we consider ways to improve your retirement health. This week we look at the right things for each phase to maximize your savings and optimize your retirement.

Your Retirement Health – use the tools they give you during the accumulation phase.
We will harp on HSAs (Health Savings Accounts) until you have one…it will improve your retirement health, both ways. 4 Things You Should Know About Health Savings Accounts
Don’t miss an opportunity, either, especially those given to you. 3 Valuable Incentives to Save for Retirement
Plus, of course, maximize all those tools you are given. 3 Questions That Can Help You Get the Most from Your 401(k)

Your Retirement Health – the transition from wealth accumulation to distribution.
Not everyone has it made, especially when it comes to retirement savings. So, what can you do if you really are not prepared? A retirement plan for the working 99%
Even if you think you have enough, can you weather an extended period of low returns? Retiring Early in a World of Low Returns
One thing to be sure of is avoiding missteps anywhere in the process. Derailing the Plan: How Retirees Shoot Themselves in the Foot How Couples Screw Up Retirement Planning

Your Retirement Health – be creative when you do retire.
For the real adventurer … or simply someone who has not saved enough … explore your options beyond the borders. After this election, you may thank yourself as it improves your retirement health. 8 Countries Where $200K in Retirement Savings will Last 30 Years The World’s 10 Most Livable Cities A Breakdown of Costs for Those Who Want to Retire Overseas
If you are not that daring, there are always these great spots right here at home. 10 of the Prettiest U.S. Towns to Retire

Your Retirement Health – be aware of the investing/retirement environment.
These gems are exquisitely crafted, quick condensations of 50 years investment experience. These are data driven, data laden even, yet they are easy to grasp and worth remembering. Bob Farrell’s (Illustrated) 10 Investment Rules
Everyone knows how great the bull market has been since the bottom in 2009. You also know that central banks around the world have been stoking the fire constantly since 2008, or before. How do the two relate? Are they doing your retirement health any favors? Deutsche Bank Calculates How Much of the S&Ps Value is Due to Central Banks


Two days on from the historic vote, start considering the Brexit impacts on global geopolitics. This week has been an embarrassment of riches, with the Brexit, House Republicans tax proposal, and much more.

Geopolitics: The most important story of the week, Britain’s Brexit vote.
Here is a great collection of subject matter experts giving their prognostication on the geopolitics landscape in five years. The surprising quasi-common theme is a still smaller EU and a smaller UK, too. How Brexit Will Change the World
This is a freestanding take on the Brexit impacts, painting David Cameron as the bad guy in all this. Sure seems like Scotland and Northern Ireland are ‘in play’ now and likely to switch teams. David Cameron could go down in history as the man who lost Europe, Scotland and Northern Ireland
Inasmuch as we like to focus on your retirement and relevant investing ideas, Brexit may present a golden, short term opportunity. The Brexit Vote is a Buying Opportunity – Here’s Why

There was more consequential news this week.
House Republicans released their long awaited tax reform plan on Friday, purposely in the shadow of Brexit? Regardless, they threw in some surprises, and it is worth considering because, forget what presidential candidates say, their plan is most likely the foundation for anything that might actually happen. The Surprising Evolution of House Republicans on Taxes

Geopolitics aside, life goes on, consider this:
Say what you will about self-driving cars, it appears they are only accelerating (pun intended). This article puts it into perspective. The last driver license holder

Retirement Security

What strategies can you use, beyond patience, to better ensure your retirement security after a brutal January?

One way of thinking we have not covered much here is using dividend paying stocks to generate income and provide retirement security. Retirement Strategy: Hopefully, This Will be Easy Enough for Even a Novice Investor to Understand Scrap the 4% Retirement Rule, Buy Dividend Stocks with a 4% Yield Instead
On that note, here is a long, but useful article about the “4% rule.” It’s a good read if someone is selling you on the concept. Why 4% Could Fail
If you want to step out there on your own (which I don’t advise), this is an interesting template of an idea. Earn 6.7% on cash with a decent chance to buy ExxonMobil under $60
Here is some more clarity on tax and Social Security law changes for 2016, too. Tax Law Changes Affecting Your Clients 2 Social Security changes and their effect on retirement income The impressive income tax benefits of $5M+ lifetime gift exemptions

So, what are the tea leaves saying? Let’s take a quick cruise around the web on that topic.
We have looked at this before, and it has not gotten any better. Baltic Dry Index falls to lowest level in history Thoughts on Maritime Trade and the Global Economy What if the Imploding Baltic Dry Index Really Does Reflect Global Trade After All
Then, of course, there is China. China’s banking crisis looms like Banquo’s ghost in Davos and China PMI Misses Some of the biggest hedge fund names in the world are loading up on bets against China’s currency
South Korea’s economy is sputtering, too. South Korea’s Exports Dropped the Most Since the Global Recession
Still one of our biggest trading partners, Japan, joined the negative interest rate club, too. BOJ Shock to Pressure Central Banks
Now here’s one you probably have not heard in a while, Venezuela. Of course, Venezuela, like many others, is an oil driven economy. This is What the Death of a Nation Looks Like: Venezuela Prepares for 720% Hyperinflation
Then, there’s US. The Chart That Explains Everything

Robots and AI … Scary?

Promising, but scary, robots and AI are here to stay. Of course, I give you some retirement leads, some bad news on the economy, and some things to take your mind off all that heavy stuff.

Notice a lot of talk about robots and AI lately? Here are some interesting perspectives:
On the plus side, and really in tune with my ongoing focus on your retirement, there are the so-called Robo Advisors. Forbes tells you what to know and reviews the best of the lot … today. 7 Robo Advisors That Make Investing Effortless
Here you will read about how Ray Kurzweil, director of engineering at Google, tells us robots will be as smart as humans by 2029. That’s only 14 years from now. Rise of the robots: how long do we have until they take our jobs
Going one rather logical step further, this article looks at the notion of the human-less corporation. It is a really interesting article, worth your time. Are we ready for companies that run themselves?

Your weekly dose of retirement reading, don’t forget this:
Morningstar gives you a nice, disciplined way to give yourself a retirement check-up in five days. Mind you, their fifth step is a bit of a sales pitch. Still, a worthwhile read. Morningstar’s 5-Point Retirement Portfolio Checkup
I cannot harp on this one enough, since I started pushing to develop these products back in the early 2000’s. Longevity annuities … ones that pay you when you are starting to run out of reserves … are the most important thing to learn about. Longevity Annuities: Their Time Has Come
If you are lucky enough to worry about trusts and estates, this is a good read. 10 top trusts and estates trends for 2015

A couple of quick economic points:
Okay, don’t want to ruin your weekend, but it is a valid data point. The index that timed the 2008 crash perfectly just slumped to a 3-decade low
I have noted this anomaly here before, but another perspective on the US labor market. Beyond this point, I saw recently that Texas and North Dakota combined to create more than all the “job creation” since the downturn. Mind you, Texas and North Dakota are ground zero for the oil boom. CEO of Gallup calls jobless rate ‘big lie’ created by White House, Wall Street, media

Diversions for your weekend:
I love articles that put things into perspective, simply. This one does two things, gives you a sense for the speed of light and the distances just within our solar system. Across the solar system at the speed of light: Breathtaking video takes viewers from the Sun’s surface to Jupiter in 45 minutes
Another piece in the same vein as the last that creationists may not like, an infographic that parses time. Time is Put Into Perspective in this Infographic

Living in the time of the sound bite

Living in the time of the sound bite

It always amazes me how our politicians, in particular, seek refuge in the sound bite. With the magnitude of issues and depth of discord in Washington, the citizenry should hope for meaningful dialogue. Yet all we see is the perpetual distillation of issues into easily digestible, meaningless prattle. The examples are seemingly limitless, but the latest one to irk me is “economic patriotism” and its cohort “tax inversion.” The problem, of course, is the intersection of an endlessly complex corporate tax code and the wholly appropriate incentive systems designed by public and private corporate boards. Yes, corporate boards will incentivize their leadership to optimize shareholder returns, and yes, corporate leaders will find and leverage tax provisions as one of the ways to deliver those optimized shareholder returns. That is our basic economic construct. Doing so generates shareholder wealth, and, presumably, conflicts with no laws.

It all gets back to the notion of treating the symptom or the cause. While most accept that the nominal US corporate tax is among the highest in the world, critics are quick to point out that the real corporate tax is far more in line. Both statements are true, but how Congress has chosen to bridge the two, with a series of incentives, artificially manipulates corporate behavior and, in turn, markets. Whether it is energy or farming or any other incentive, Congress pushes (helps, if you will) corporations in a certain direction, introducing bias into the system. One can dispute whether this system, arguably far too manipulated by so-called special interests, is good or bad, but one cannot deny that it is what it is. Consequently, corporations, especially those not benefiting from the incentives and ‘in line’ real tax rates, find it beneficial to redomicile outside the US – tax inversion. Sure, at a sound bite level that seems economically unpatriotic, but then we ask shareholders to forgo higher returns for this notion of “economic patriotism.” Surely, some would willingly pay that price; others would not, presumably shifting their investments accordingly. This movement from a company’s stock is a steep price for corporate leaders and boards to pay because Congress and the White House are unwilling to address the underlying issue, an overly complex, burdensome and biased corporate tax code.

Some Commentary on Tax Inversions:
Interesting British perspective, you may notice that Boots, beneath the Walgreens angle on this topic, already abandoned Britain for Switzerland … something the Brit’s don’t seem to have liked, either Obama doubles down on threat to act against ‘tax inversions’ by US firms
Superseding the US-Africa Leaders Summit to identify the villains behind tax inversions: accountants Obama Joins Blame Game as Companies Flee US for Lower Tax Rates