The Hurrier I Go The Behinder I Get
July 23, 2008
The Hurrier I Go The Behinder I Get
by: Ken Morris
When are Social Security checks potentially loans and not benefits? Why, when you have “excess earnings” of course. In today’s economy, many senior citizens still work during their “retirement” either because they want to or, all too often, because they must to make ends meet. Retirees who want to work as well as collect social security retirement benefits must plan their compensation carefully if they want to avoid losing some or all of their social security benefits.
In order to collect social security “old age” benefits, you must be “retired.” Congress has reasoned that if you earn more than a specified amount, you are not “retired” and, therefore, are subject to having some or all of your benefits eliminated. Congress does allow you some earnings before your benefits are jeopardized.
The amount of allowable earnings depends on your age. If you are over 65, there is no limit on the amount you may earn and still collect your full benefit. If you are at least 62, but younger than 65, you may earn up to $12,480 in 2006 before your benefits are affected. The earnings limit is adjusted each year for inflation. If you earn in excess of the limit, you must repay some or, potentially, all of the benefits you receive. For every $2 you earn over the $12,480 limit, you must give up $1 of benefits.
Trading For A Living - Part 2
July 22, 2008
In part 1 of this article I started to look at the financial implications of giving up the day job to instead start trading full time for a living. There are more than just monetary considerations as we will see later, but for now, there are some more costs to ponder.
More Costs!
Let’s move on to equipment. Presumably you already have a PC and internet connection by virtue of the fact you are reading this on the internet. But are these both up to the job of trading full time? Again the specifications for both hardware and ISP will depend largely on your trading style, but if you’re relying on a 100Mhz Pentium II and a dial up service, you’re setting yourself up for failure. So budget for quality equipment, budget to keep it up to spec, and budget for some repairs too ? expect the unexpected.
Many traders make the mistake of saying "This will do me whilst I start out, and I’ll get something better when I make some real money". This is quite simply false economy, you are unlikely to ever make real money with a substandard setup (and this applies equally to substandard software and data feeds). This is a cut-throat business and 95% fail, you must give yourself every advantage you can. You wouldn’t enter the Indy 500 in a go-kart with the intention of buying a better car when you’ve won a few races, and the same thing applies here.
Feathering Your Retirement Nest
July 21, 2008
Feathering Your Retirement Nest
by: Ken Morris
What will you look for as you approach your “golden” years? Will it be an affordable condo on the golf course with room for the grandchildren to visit? Must it be close to friends and family or new “senior” friends living close by? Should it be near good medical facilities?
The average householder 65 or above earns only two-fifths as much as earners age 45-54 (who are at their peak earning years). Even though many “goldenagers” are now free from the encumbrances of children and work-related expenses, the costs of daily life must be planned. Income must be protected to assure its availability for household expenses and higher health care costs.
The “goldenagers” have even more than lifestyle questions to consider in choosing their retirement nest. You should take a look at the effect of state tax structures on your projected retirement income. It’s important to look at the following key tax areas:
TAXATION OF EARNED AND INVESTMENT INCOME
If you plan to continue working, you need to take a look at the way states vary in taxing your income. Some states do not make an exception for age, some give tax breaks and some do not tax earned income at all for “goldenagers.”
Traditional IRAs: Still A Good Idea for 2006
July 20, 2008
Traditional IRAs: Still A Good Idea for 2006
by: Ken Morris
Mark Twain once said, “The rumors of my death have been greatly exaggerated.” Like Mr. Twain’s rumored demise, the notion that the traditional Individual Retirement Account (IRA) is no longer a useful part of a financial plan has been greatly exaggerated. Contributions to a traditional IRA continue to be a viable financial and retirement planning tool despite non-deductibility for some individuals.
All you need to make a traditional IRA contribution are earnings as an employee or as a self-employed person. The amount that can be contributed for 2006 is the lesser of $4,000 ($5,000 if you have attained age 50) or your earnings from your work. There is no minimum age for making a traditional IRA contribution for tax purposes. If a 16 year old works for the summer, makes $4,000 and blows it all at the mall, the tax code permits Mom, Dad or whomever to give him/her $4,000 to contribute to a traditional IRA on his behalf. There is a maximum age for IRA contributions. No traditional IRA contributions may be made for people over 70 1/2, even if they are still working as hard as they were at 30 1/2.
Ten Things You Might Not Have Known About Social Security
July 19, 2008
Ten Things You Might Not Have Known About Social Security
by: Ken Morris
Social Security is a lot like the ozone layer–we all know it’s there now and we count on it being there in the future. Yet most people don’t know much more about it than that. Here’s a short list of interesting facts about Social Security.
(1) Social Security benefits do not automatically start coming in the mail the first day of Normal Retirement Age. They must be applied for. The easiest way is to set up an appointment with the local Social Security office or call 1-800-772-1213.
(2) To get an official statement of all the earnings recorded in your Social Security account, an estimate of your current disability and death benefits, and an estimate of future retirement benefits, fill out a Form #7004 Request for Social Security Statement, obtainable at your local office.
(3) If you do not find and correct errors in your Social Security record within 3 years, they become part of your permanent record. Therefore, you might want to check on them every 3 years or so.
Know How To Take Your Lumps
July 18, 2008
Know How To Take Your Lumps
by: Ken Morris
If you are about to retire or change jobs, or if your employer is terminating the company retirement plan, you may be eligible to receive a “lump sum distribution” as defined in the Internal Revenue Code. Such a distribution may be substantial and may represent the cornerstone of your retirement security. So it is important to consider your options carefully before making a decision regarding distributions.
Basically, you are faced with two main options. Should you take a direct distribution and pay your taxes now? Or should you roll your distribution over into a traditional Individual Retirement Account (IRA)?
If you decide not to roll the distribution over into a traditional IRA, you must pay tax on the distribution in the year you receive it. You will, of course, be able to invest the remainder as you please. The main benefit of paying taxes on your distribution now is that you may be eligible for special tax treatment. If you were born before 1936, you may be eligible for ten-year tax-averaging on your lump sum distribution. Or, if your distribution will include shares of your employer’s stock, a portion of your distribution may be eligible for the new lower capital gains tax treatment. If either of these situations exists, you may be able to pay a lower tax rate than usual on your distribution. If not, your distribution may be taxed at your ordinary income tax rate so you may want to consider your second option.
Losses, not Profits, will Stop You from Trading in the Market
July 18, 2008
Should the market turn against you, it is important that you design a system that will produce as much loss as you are prepared to take. This loss, known as drawdown, is the maximum amount by which your trading float will temporarily drop at anytime. Doing this in advance, will help you avoid nasty surprises in the future. This gives you the confidence to continue trading when the good times start once more.
It is very unlikely that you will stop trading if your system is trading profitably. However, if you are in a trading year that takes too big a loss, you are likely to stop trading, even if your system has been tested and shown to make a profit over a longer time period. Therefore, design a system based on the risk you are prepared to take which includes a budget for your drawdown.
So how does one pick the best formula for your drawdown time? I will rephrase this question. How many losses in a row should you allow for?
First, I will use the simple example of tossing a coin. If I tossed a coin and it landed “Heads Up” 10 times in a row, are you surprised? However, if I tossed the coin 800 times, your outlook on the results are different.
Don’t Knock Taking Your Employer Stock
July 17, 2008
Don’t Knock Taking Your Employer Stock
by: Ken Morris
Don’t Knock Taking Your Employer Stock
Given the growth of employee-employer savings to meet retirement goals, it is not uncommon for employees to have a significant amount of employer stock in their qualified retirement plans. When it comes time for employees to leave the nest, most are willing to directly rollover all qualified plan assets into a traditional IRA. A traditional IRA rollover offers avoidance of an immediate income tax consequence, the retiree remains in control of his/her retirement assets and the benefits of tax deferral can continue.
However, there may be another option available that should be considered, a type of combination approach. This option involves distributing employer stock to the retiree and directly rolling over the remaining balance of the plan assets into a traditional IRA. This combination approach, though not for everyone, may have significant advantages.
Retirement Tax Havens
July 16, 2008
Retirement Tax Havens
by: Ken Morris
Financial planning is really life planning. Choosing a home, particularly a retirement home, involves many factors. With state and local taxes on the rise, retirees should look closely at tax matters when formulating their retirement financial plan.
Retirees who plan on continuing to work in their “golden years” should know that state taxation of such income varies widely. Some states give retirees favored treatment on earned income, some treat retired seniors like everyone else, and some impose no tax at all on earned income. Taxation of investment income shows nearly as much variation between states. Retirees in a new domicile must also watch out for unexpected municipal income taxes.
Income from government, military, private pension and other retirement plans is growing increasingly important to the survival of retired individuals. Some states exempt all such pension income from taxation, while others exempt certain types or place limits on non-taxable pension income. Some states even tax former residents on retirement plan withdrawals, creating the possibility of paying income tax in two states. Some states follow federal tax formulas for taxation of Social Security benefits, others have their own formulas, and some tax benefits not at all.
Free Affiliate Programs - an instrument to earn money online
July 15, 2008
Free Affiliate Programs - an instrument to earn money online
by: Knut Holt
You can use free affiliate programs to earn money from your web-traffic.
If you have a website with some traffic, you can make money by having links to merchants’ online shops on your site. If someone goes through your links into the shop of the merchant, and buys something, you earn commission from the sale, between 5% and 40% depending on type of merchant. Some merchants also pay for each click or each lead. A lead is a new visitor to the shop that asks for more information or prize offers.
People or companies having these links on their web-sites, are called affiliates, and the links are called affiliate links. The administrative infrastructure by the merchant that the affiliate register into, in order to get the linking code, is called an affiliate program.
To register into an affiliate program is usually free, and through the program you get freely all you need to make the linking code, to monitor the traffic through your links, and to see what commission you have earned.
An affiliate program is not a MLM program, since the affiliates only earn from sales, leads or clicks.
