by | | The Blog
It’s no secret the US Federal Government spends more than it brings in; nor is it news to anyone who’s been paying any attention this election season that the gap has increased exponentially within the last few years. In an ever ongoing attempt to reduce the trillion-dollar-plus deficits, politicians are always brainstorming new-fangled revenue sources to tap into instead of, God forbid, reducing their obscene spending of other people’s money. The latest government account yet to be pillaged is the $18 trillion or so in 401(k) accounts that are, at present, untaxed. According to a new proposal, all that may change.
Not only is there a plan under consideration to limit employer-employee 401(k) contributions to 20% up to a $20,000 ceiling, but the tax deductions would be replaced by an 18% credit sent directly to everyone’s retirement account; making any contributions to a 401(k) plan treated as taxable income. The credit is said to increase revenues by approximately $458 billion; another short term Band-Aid on a long term financial cancerous cliff, especially if programs like Medicare and Social Security are left rudderless.
What’s interesting to note here is the possibility of an unintended lesser-of-two-evils result for the taxpayer, assuming this outrageous and irresponsible proposal is given the green light. Who’s to say that your present tax deferral won’t wind up becoming a costly tax-procrastination when it’s time to retire, cash out and pay up? Getting it over with, a little at a time, one payment at a time, in order to enjoy a tax free harvest via ROTH plans and ROTH-LIKE plans, may very well be worth the temporary and immediate pain of taxable income you can’t spend. Not to mention the very real possibility that the tax rate, according to experts, will be higher at the time of the withdrawal than during the contribution process today. A possibility made ironically clearer by the very proposal laid out by a political system whose spending has reached a level of complete insanity.
Of course, none of this would be relevant if most workers opted out of the program and companies eventually eliminated the option all-together. Hopefully, someday they’ll finally realize you can’t simply tax your way out of a financial crisis.
Hopefully.
by | | The Blog
This week I read a story entitled…
“After FCAT Scores Plunge, State Quickly Lowers the Passing Grade”
The particular state, test, nor circumstances in the story were relevant to the all too familiar point that popped into my head. In this instance, the state may very well have had their reasons for doing so. Individual student aptitude, after all, is nearly impossible to accurately nail down by one all-encompassing standardized test. Nevertheless, I was troubled that the immediate response was not rising to the challenge of improvement, but lowering the minimum standard.
From the days of “Everybody gets a ribbon” in little league, to higher education today, it seems the mind-set of educators and parents alike has evolved (or devolved) from learning from one’s failure, to a perplexing and futile attempt to eliminate it from the curriculum altogether; thereby supposedly protecting their feelings and keeping self-confidence intact. The results, unsurprisingly, is a generation largely consisting of individuals who not only lack the mental capacity to handle real failure when they’re thrust into the unforgiving real world, but are also sadly unable to see the valuable opportunity failure presents itself as a tool to learn, improve, and grow as a human being.
Parents naturally want to protect their child from pain and suffering. And yes, failure does somewhat involve those experiences. But if you look at it as a case of instead of “protecting from”, to “building an immunity to”, it’s easier to understand. For instance, when you immunize your children from disease, what are you actually doing? You are giving them small harmless doses of the disease until the body incorporates it and develops the anti-bodies to protect itself from greater exposure to the disease in the future. Same concept. If you let your child deal with the painful loss of a basketball game or experience the repercussions of seeing a red “F” at the top of a math quiz when it’s not a matter of life and death, they’ll be better prepared as an adult when faced with the reality of a job layoff.
Is it any wonder why there are more and more stories about fired employees returning to the office with a gun?
by | | Financial Guides, Financial Independence Coach, The Blog
That’s right I said it…Fire Your Advisor! If you have one, pick up the phone right now and do a Donald Trump on him or her and let that person know “They’re Fired!” And if they ask you why, tell them Ike, The Financial Independence Coach told you to do so. That’s right I’ll take the blame for you. And you know why? It’s because I am convinced that the financial planning industry has failed you the consumer. And, since I am a part of the industry that failed you, I want to take the blame. (more…)
by | | Financial Guides, Financial Independence Coach, The Blog
I would like for you to view “retirement” as the dirty “R” Word. I know a lot of those in the financial services industry help clients plan for retirement but all of them are missing the boat. You should not be planning for retirement but instead should be planning for financial independence. (more…)
by | | Financial Guides, Financial Independence Coach, The Blog
Ever feel the weight of the world coming down on you? That’s the way anyone feels when they are buried under the rubble of what I call “bad debt.” So what is bad debt? Bad debt is any consumer debt that does nothing to increase your financial position but instead further deteriorates your financial position. (more…)
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