WISE Conference September 2006

I had the privilege to do a live financial makeover for the Women Investing in Security and Education conference. This is an annual event and approximately 400 women attended. There were three candidates and three financial planners. My makeover candidate was a teacher, age 63, whose husband left her at age 40 with three children and a bankruptcy. She had 13 different jobs over the next 15 years. She is a delightful lady and the entire makeover will be covered in the Orange County Register in December. My candidate, Val, is on the far right of our Oprah style stage.

Gold is the best form of insurance when you're not sure what you're insuring against Fred Sturm, Ivy Global Natural Resources Fund, New York Times

The Market

The Dow passed the milestone high it set in January, 2000. The S&P 500 is still 13% under the high of 2000 and the NASDAQ is 58% below the high. The market has responded to the possible end of interest rate increases by the Federal Reserve Board and the falling price of oil.

Is it time to buy gold? Is it time to buy or sell real estate? Is inflation in check or is it roaring back? Is the economy going to grow at 5% a year, hit a soft patch or have a rough landing? Is Ben Bernanke doing a good job? Will 2006 end with a market high?

I believe the Fed is doing a good job right now and is engineering a correct path. I do not see the same warning signs of inflation and soft recession I saw at the beginning of the year. I still believe real estate should not be purchased until fall, 2007. I believe that housing prices will continue to fall an average of 9%. Consumers with adjustable rate mortgages and those that purchased homes with interest only loans as the down payment, may implode in 2007 and 2008. Their monthly payments may increase beyond what they can afford, they will be forced to sell their homes, putting more properties on the market and thus lowering home prices. Foreclosures will rise and it will be an optimal timing to purchase property. This is my opinion only, not an economic forecast.

New changes to Social Security and Medicare

The 2007 Social Security wage base will be $98,400, an increase of $4,200.

For the first time, the government will start determining the Medicare Part B premium based on a person�s income. This will begin January 1, 2007. Assuming that the base Medicare premium continues to grow at 11.6% since 2002.For individuals income under $80,000 and joint income under $160,000, the premium will only subject to the annual rate of increase. Any income at higher level will subject to the income level increase. For more infomation, please contact our office.

The Pension Bill

You may now transfer up to $100,000 tax free from your IRA directly to a charity. The donor must be at least 70.5 and this applies to 2007 and 2008. A tax deduction is not taken for the charitable contribution. Look at this as a tax savings and an estate planning strategy for those already gifting large amounts to church, etc.

Non-spousal heirs can now inherit qualified plan accounts and roll the monies into their own IRA. In the past, only spouses were allowed to roll over inherited plans.

Income limits on deductible IRAs will be indexed to inflation beginning in 2007. This will allow more taxpayers to deduct their contributions.

Higher contribution limits for IRAs, 401k, catch up provisions, etc are now permanent. They had been scheduled to expire in 2010. 529 plans will remain tax free after 2010 also.

Worried about an IRS audit? Avoid what's called a red flag. That's something the IRS always looks for. For example, say you have some money left in your bank account after paying taxes. That's a red flag.
�Jay Leno

Kiplinger's Magazine "Jump Start your Retirement"

Kiplinger's magazine offered a six hour window to call in and speak to a financial planner for free. The offer was nationwide and the financial planners were all NAPFA registered members. I volunteered for three hours and answered questions on many different subjects. Some calls were about the new pension law, self employed retirement plans, 529 plans, estate taxation, and IRA contribution levels. I was very surprised at how many of the callers were multiple property owners and new landlords. Several had recently purchased rental properties with large mortgages and they believe their retirement is now based on the equity appreciation of these properties.

Holiday Schedule

We will be doing our normal buying and selling to match realized capital gains and losses in late November and December. We will be taking time off for the Holidays and year end so plan ahead if you need us for year end planning. SIMPLE IRA and 401k contributions are due in the accounts by Dec 29, 2006 so if you send the payment to us, we must receive the contribution by December 15th.

It's All About Goals And Working Out

Clients always ask what I have been doing so here is my sports update. Since last quarter, I raced the one mile Seal Beach Rough Water Swim, the one mile Santa Barbara ocean swim, and the Santa Barbara Triathlon with my daughter. Nikki and I ended up on the front page of the Santa Barbara Newspaper because they loved that we finish the event hand in hand and Nikki was wearing a tiara. We are prissy girls.

The hardest event I did was called the Vineman Aquabike race in Santa Rosa. It was a 1.2 mile swim and a 56 mile very hilly bike ride through the vineyards of Napa valley. I was so happy when that was over! Next I raced the 2.4 mile Waikiki Rough Water Swim in Hawaii on Labor Day. The last event was the Long Beach Triathlon just last Sunday.

Holidays are just around the corner! Daylight savings time is almost gone and fall weather will soon be here.


Sandra C. Field, MBA, CFP
Asset Planning, Inc.