Asset Planning, Inc Blog

Neither a Democratic nor a Republican bill aimed at replacing the so called sequester was able to get enough support to win a test vote on Thursday. The budget cuts for fiscal year 2013 will not take effect all at once on Friday. Instead, they will go into effect gradually through the end of the fiscal year on Sept. 30. The sequester would cut about $1 trillion over nine years.

Beginning today:

-Across-the-board cuts under sequestration formally take effect today. The cuts amount to "only" 2.3% of total federal spending.

-Sequestratoin is likely to reduce real GDP growth in 2013 by 0.6%, with the effects concentrated in the second and third quarter.

-Having passed the March 1st deadline to avoid sequestration, the next date to watch will be March 27th when current spending authority expires.

-Social Security, Medicaid, veteran benefits are exempt from the sequester.

U.S markets on Thursday shrugged off the budget drama in Washington. Financial stocks held their ground Friday as investors, with plenty of time to adjust their portfolios, looked past looming federal spending cuts.

Click here to read a useful article explaining how you can stop companies, like Facebook, from tracking your online activity. 

Mortgage rates recently hit an all time low & if you haven't already refinanced your mortgage, now might be the time to do so. We have found a new mortgage resource that is very professional, timely, and offers competitive rates. If you would like a referral, please feel free to contact us.
 

Last year, to reduce costs, the Social Security Administration (SSA) stopped mailing annual paper statements to anyone under age 60. These statements are a great tool to use for retirement planning. The statements provide a history of your annual earnings and estimates of your social security benefits at various retirement ages, along with estimates for disability and survivor benefits.

Last week, the SSA added the ability to access your Social Security statements online. Here is the website to start the process to access your statement:
http://www.socialsecurity.gov/mystatement/

I recommend that you review this at least once a year to make sure that your income is recorded accurately in the Social Security database. Your future monthly benefit is based on your average earnings over your lifetime. If your earnings are incorrect, your benefit will most likely be wrong.

Discusses the impact of proposed regulation for the financial services profession in Financial Planning Magazine.Click Here to read the full article we are featured in. 

Follow this link, to read Sandy's feature in this month's Financial Planning Magazine. The print edition of the article Opportunistic Retirement Investing has pictures from the photo shoot the magazine did of Sandy at our office.
 

Changes for retirement contributions beginning in 2012:

• 401k, 403b, & 457 maximum employee contributions increase to $17,000 per year. The catch up contribution for those age 50 and above remains at $5,500 per year.
• IRA contributions remain unchanged at $5,000 plus $1,000 catch up per year for those age 50 and above.
  
• Adjusted Gross Income (AGI) phase outs increase for those that can deduct IRA contributions and still participate in a qualified retirement plan (QRP). All Fliers (except Married filing Separately) that don't participate in a QRP can deduct IRA contributions from their taxes regardless of AGI. Those participating in a QRP can only deduct IRA contributions if AGI is under $58,000 for Single Filers and $92,000 for Married Filing Joint. Partial deductions are allowed for fliers with AGI between $58,000-68,000(Single) and $92,000-110,000 (MFJ). For an IRA contributor who is not covered by a QRP but his or her spouse is, the deduction is phased out between $173,000-183,000 (MFJ). Remember if you make a deductible IRA contribution, always keep track of your basis by filing a 8606 with your tax return.
  
• You can make a full Roth IRA contribution if your AGI is under $110,000 (Single) or $173,000 (MFJ). Partial contributions are allowed for fliers with AGI between $110,000-$125,000 (Single) and $173,000-$183,000 (MFJ).
  

Many of us today enjoy the convenience of managing our finances via the world wide web. I personally enjoy the ease of record keeping, bill pay, and lack of trips to the bank that online banking, and the like, has brought. However, every benefit has it's cost. In the case of online account maintenance, the biggest potential cost is identity & monetary theft from hackers. One of the greatest protections from this risk is choosing a password that is difficult for a hacker to guess. Mashable Tech published a good article on the top 25 most vulnerable passwords of 2011 as well as tips on choosing a secure one. Click on this link to read the full article.

For the first time since 2009, social security recipients will get a 3.6% cost-of-living adjustment (COLA).  The COLA adjustment will also affect other areas:

1. The maximum amount of earnings subject to the social security tax will increase from $106,800 to $110,100.
2. The minimum amount a worker must earn to qualify for a quarter of coverage under social security is $1,130.
3. The amount a social security recipient can earn before having to forfeit social security benefits is increased to $14,640.  This only applies to people that are receiving benefits before their “Full Retirement Age” (FRA) and are also receiving wages.  For example, if you started to receive benefits at age 62 and your FRA is 66, you cannot earn more than $14,640 in wages without being penalized.  The income limit does not apply to investment or pension earnings.

Medicare also just announced their premium adjustments for 2012.  The new premium for part B will be $99.90/month.

1. If you were on Medicare in 2008, your premium was frozen at $96.40, due to a law that freezes part B premiums in years that there are no COLA increases if you also receive social security.
2. If you started Medicare in 2009 – 2011, the premium was $115.40, so the premium will be reduced to $99.90 for those recipients.
3. Medicare premiums are higher for recipients that have Adjusted Gross Incomes of more than $85,000 for single and $170,000 for married taxpayers.  Those premium adjustments have not been announced yet.

Medicare Part D prescription drug coverage and Medicare Advantage enrollment runs until December 7^th this year, which is earlier than in previous years when enrollment ran until the end of the year.  A great resource to help you decide is on the medicare website:

www.medicare.gov/find-a-plan

You just need to provide information about your prescription drugs and you will see what each plan in your area will cost in premiums and out-of-pocket expenses.

 August 2011- Asset Planning, Inc. is recognized in Advisor One's Top Wealth Manager report. The survey captures the largest and most successful independent wealth management firms – those that are owned and operated by advisors themselves. For 2010, Asset Planning Inc. experiences 20% growth in asset under management (AUM) compared to a12.8% return on the S&P and 18% average growth among peers. To view the rankings click here.