Thursday, December 30, 2010
Sunday, December 26, 2010
Thursday, December 23, 2010
Tuesday, December 14, 2010
Here’s one of them …
Bart C., 78, from Philadelphia, PA writes:
I’m a veteran. The VA will pay for my care.
My reply: I’m all for helping vets, Bart. And as far as I’m concerned we don’t do enough. But let’s be practical … the facilities are government-run, and there’s a waiting list to get in.
Plus, the VA doesn’t give out long-term care benefits unless you:
• Have a 70 percent service-connected (SC) disability, or
• Are rated with a 60 percent SC disability and are unemployable, or
• Are rated with a 60 percent SC disability and are permanently and totally disabled.
So this tells me that if you’re a vet without a severe service-connected disability, you won’t get VA LTC benefits.
However, you might be able to get Aid and Attendance (A&A) benefits or Housebound benefits.
A&A is a benefit paid in addition to monthly pension. So you first must be eligible for the pension.
A veteran may be eligible for A&A when:
• The veteran requires the aid of another person in order to perform personal functions required in everyday living, such as bathing, feeding, dressing, attending to the wants of nature, adjusting prosthetic devices, or protecting himself/herself from the hazards of his/her daily environment, or …
• The veteran is bedridden, in that his/her disability or disabilities requires that he/she remain in bed apart from any prescribed course of convalescence or treatment, or …
• The veteran is a patient in a nursing home due to mental or physical incapacity, or …
• The veteran is blind, or so nearly blind as to have corrected visual acuity of 5/200 or less, in both eyes, or concentric contraction of the visual field to 5 degrees or less.
ike A&A, Housebound benefits may not be paid without eligibility to pension.
A veteran may be eligible for Housebound benefits when:
• The veteran has a single permanent disability evaluated as 100-percent disabling and, due to such disability, he/she is permanently and substantially confined to his/her immediate premises, or …
• The veteran has a single permanent disability evaluated as 100-percent disabling and, another disability, or disabilities, evaluated as 60 percent or more disabling
You can find more information, including how to apply, on the Veterans Affairs Web site at: http://www.vba.va.gov/bln/21/pension/vetpen.htm#1.
And for more tips on how to protect your wealth from the skyrocketing costs of long-term care, pick up a copy of A Boomer’s Guide to Long-term Care.
Thursday, December 9, 2010
Thursday, December 2, 2010
Tuesday, November 30, 2010
Saturday, November 6, 2010
Thursday, October 28, 2010
Tuesday, October 26, 2010
Sunday, October 10, 2010
Thursday, September 23, 2010
Tuesday, September 14, 2010
- Fifty-seven percent say they could not afford more than three months of in-home care. One in three say they could not afford even one month of in-home care.
- Sixty-six percent say they could not afford more than three months of nursing home care, while 42 percent say they could not afford even one month of care.
- Thirty-five percent of Republicans, 38 percent of Democrats and 26 percent of independents say they would not be able to pay for even one month of in-home personal care; 43 percent of Republicans, 48 percent of Democrats and 33 percent of independents say they could not afford even one month of nursing home care.
- Only 15 percent report having long-term care insurance.
- Just 20 percent were aware that Medicare does not cover ongoing in-home personal care; similarly, only 30 percent knew that Medicare does not cover prolonged nursing home care.
- Ninety-five percent say they prefer having affordable care options in the community in order to avoid going to a nursing home.
You can click here to read the complete findings. So what should all this mean to other Boomers? You need to ask yourself: Are you as ill-prepared as these Californians, but you stick your head in the sand? You better have a plan of action in case your health changes during retirement, which it almost certainly will. Otherwise you could end up somewhere you don’t like and be flat broke, too. Best wishes, George P.S. To understand your options, check out my book A Boomer’s Guide to Long-Term Care.
Monday, September 6, 2010
- The Minimum Distribution Method is calculated the same way as required minimum distributions when account owners reach their required beginning distribution date. This method will generally produce the lowest annual 72(t) payments since it is based on the longest life expectancy.
- The Fixed Amortization Method consists of an account balance amortized over your life expectancy. Once an annual distribution amount is calculated under this fixed method, the same dollar amount must be distributed in subsequent years. This produces higher payments than the Minimum Distribution Method and gives some security in that the payments are fixed. But the calculation is complicated and there is the risk that the payments will not keep pace with inflation.
- The Fixed Annuitization Method consists of an account balance, an annuity factor, and an annual payment. Once an annual distribution amount is calculated under this fixed method, the same dollar amount must be distributed under this method in subsequent years. This method may at times provide the largest payments, depending on the size of the account and interest rates used. And like amortization method, the payments are fixed.
Is taking advantage of Rule 72(t) a good idea? It could be. After all, it gets you out of paying the 10% penalty. But remember: You’ll still have to pay ordinary income taxes on the distributions, and money you withdrawal from your IRA means that much less for your future needs. And in case you don’t stay with the plan, or modify the payments in any way, you will no longer qualify for the exemption from the 10% penalty. Furthermore, the 10% penalty will be reinstated retroactively, to all prior years.
So before you take advantage of Rule 72(t), I suggest you get a second or even third opinion before signing on the dotted line. Best wishes, George
Thursday, August 5, 2010
Tuesday, August 3, 2010
Tuesday, July 27, 2010
Thursday, July 22, 2010
Monday, July 5, 2010
Sunday, June 27, 2010
Tuesday, June 15, 2010
Tuesday, June 8, 2010
Saturday, May 29, 2010
Tuesday, May 25, 2010
Tuesday, May 18, 2010
Thursday, May 13, 2010
Saturday, May 8, 2010
Thursday, April 29, 2010
Are you one of the scores of homeowners who are considering walking away from a mortgage you can’t afford? Or maybe your lender has agreed to a short sale as a way to get the property off their books. Before you make either of these moves, you better understand the tax ramifications. Otherwise, you could end up with a big, fat bill from the IRS. In a nutshell, here’s the rule: If you borrow money from a commercial lender and the lender later cancels or forgives the debt, you may have to include the cancelled amount as income for tax purposes, depending on the circumstances. For example, suppose you borrow $10,000 and default on the loan after paying back $2,000. If the lender is unable to collect the remaining debt from you, there is a cancellation in debt of $8,000, which generally is taxable income to you. Meaning if you’re in the 20% tax bracket, you’ll have to cough up another $1,600 for taxes. But thanks to the Mortgage Forgiveness Debt Relief Act of 2007, there are exceptions that might apply to you. The most notable is that the amount forgiven on a mortgage for a principal residence is exempt up to $2 million or $1 million if married filing separately. So for most people, they won’t have a tax problem. However, before you breathe a sigh of relief, make sure the home is your principal residence. Because borrowers who don’t live in the house they’ve mortgaged could find themselves in a real pickle. Let me give you a real life example: I have a close friend who got caught up in the real estate frenzy back in 2004 and 2005. He and his growing family lived a small house that was complete paid for and probably worth $75,000 before the bubble hit. In a few years, it had shot up to over $300,000. That’s when they decided to buy a bigger home in a nicer neighborhood. They got hooked up with a mortgage broker who conned them into a couple of suicide loans. And like magic, they were in the new home with nothing down and without selling the old house! What happened next could be the plot for a Stephen King novel ... His interest rates skyrocketed, now he can barely make the payment on the new house. And as far as the old house goes: His tenant moved out, and he’s stuck with a $300,000 mortgage on a house that’s worth about $90,000. He’s trying to get the bank to reduce the principal owned. But they won’t budge. The best they’ll do is stay with the original teaser interest rate. So there the place sits … no one living in it and the mortgage not getting paid. Mail them the keys, and forgetting about the whole thing is one option he’s considering. But look at the potential tax liability since the house is not their primary residence: $300,000 owed minus the $90,000 selling price = $210,000 forgiven At a 30% tax rate, he might have to come up with $70,000 to pay the IRS. He doesn’t have that kind of money. And if he did, he sure wouldn’t want to use it to pay taxes. I told him that he needs to get in touch a good tax attorney to see if there is anyway to cut a deal with the IRS. Bankruptcy is always a last resort. So if you find yourself in similar jam, be sure to get expert advice before you drop the key in the mailbox. Otherwise you may find Geithner’s posse at your doorstep. And for the complete story on canceled debts, go to IRS Publication 4681. Best wishes, George P.S. I’m now on Twitter. Follow me at http://twitter.com/efinancialwrite for frequent updates, personal insights and observations on how to have a healthy retirement. If you don’t have a Twitter account, sign up today at http://www.twitter.com/signup and then click on the ‘Follow’ button from http://twitter.com/efinancialwrite to receive updates on either your cell phone or Twitter page.
Thursday, April 22, 2010
You’ve probably had about all you can stand of listening to the politicians and talking heads on TV going on and on about health care reform. And you may have even thought you had a basic understanding of what they were up to. But have you taken a look at some of the ways they’re going to pay for it? For example, The threshold for you to claim an itemized deduction for unreimbursed medical expenses has rocketed from 7.5% to 10%, Do you frequent tanning salons? Expect to pay a 10 percent excise tax, And if you buy devices such as wheelchairs, you’ll pay a 2.3 percent excise tax. There is, however, a provision that should really get your blood boiling: Effective December 31, 2012, there will be a 3.8% excise tax on net investment income for single filers reporting income over $200,000 and joint filers reporting income over $250,000. Net investment income is defined in the Bill as: “The excess (if any) of the sum of (i) gross income from interest, dividends, annuities, royalties, and rents, other than such income which is derived in the ordinary course of trade or business…” This the first time ever that Americans will have to pay Medicare taxes on investment income. And interesting to note is that President Obama had asked for a 2.9% tax. So you can thank Congress for making it higher. Of course, for the time being this extra tax only applies if you make big bucks. But I think it’s just the beginning. The way I see it, taxing Roth IRA withdrawals or life insurance death benefits are a real possibility. How about reducing the threshold on taxable Social Security benefits? Or tacking a Social Security tax on annuity income? After that, the sky’s the limit, and middle-income Americans are bound to be the next targets. What ever it is, you can bet your bottom dollar that it won’t be the last time elected officials in Washington go after your retirement income to finance the soaring national debt. Best wishes, George
Tuesday, April 13, 2010
Thursday, April 8, 2010
By now you’ve surely heard about Spirit Airlines latest charge … up to $45 for a carry-on bag. And boy, are travelers upset. Here's what I say … it couldn’t have come at a better time! I really like traveling on Spirit.
- They fly direct from Ft. Lauderdale to my favorite destination, Costa Rica.
- Their prices are lower than other carriers.
- They offer extra wide seats and extra legroom for a few more bucks.
- Drinks and snacks are available at a reasonable price.
Now back to the carry-on bag uproar … I can understand people not wanting to check their luggage. Most airlines charge a fee, you have to wait for your things, and bags have been known to get lost. But you know what really fries me: When travelers bring so much crap with them that there’s no place to put it! A few weeks ago, I was on a Delta flight to Ft. Lauderdale. And it was packed. One of the last guys to get on had a roll-on bag. It was too big to fit under the seat in front of him, so he went searching for overhead space. Up and down the aisle he went trying to cram his bag in bins where there just wasn’t any room. The flight attendant offered to check his bag. But he wanted no part of that … “fragile items inside,” he said. The two of them went back and forward: He whined that they should make space for his bag; she calmly explained that the plane wouldn’t move until he let her take the bag. After a handful of other passengers yelled some obscenities at this guy, he gave in … bitching all the way. This was hardly an isolated case. I’ve seen it way too many times. So if Spirit can encourage travelers to stop bringing so much stuff aboard the plane by charging them a hefty fee for doing so — which helps keep my fare low — good for them! Happy traveling, George
Tuesday, April 6, 2010
Sunday, March 28, 2010
Sunday, March 14, 2010
And from the prospective of a seasoned landlord, there is one sector that I’ve always liked: Self-storage.
These are the places that rent space to people whose garages are overflowing with junk that they can’t bear to part with it.
Self-storage facilities have become more upscale looking over the years, with well-lit parking lots and attractive facades. So you probably thought they were just another office building when you drove past them.
They can be real cash cows without a lot of upkeep. Imagine, every month checks coming in like clockwork. And no clogged toilets, no broken water heaters and no pet-stained carpets to worry about.
Tenants are on a month-to-month lease. If they’re a few days late on the rent, you can stick a padlock on the door. After a few more days, you go in, sweep the place out, and throw all the stuff in the dumpster or sell it. Try doing that with a residential property, and you’ll be the one standing in front of a judge!
But you might not be interested in the hands-on experience of taking care of real estate, even something as simple as self-storage. Plus you might not have the bucks available to get in on one, yet you’d like to put some real estate in your portfolio.
Then you may want to take a look at a real estate investment trust (REIT). A REIT is not subject to federal income tax to the extent that it distributes at least 90% of its taxable income to its shareholders.
And one that I’ve owned for quite a long time is Public Storage (PSA). With over 2,100 locations totaling more than 135 million rentable space, it’s one of the largest landlords in the world.
They also have interests in renting out commercial and industrial facilities.
I’m not saying that Public Storage is the best stock in this sector. It just happens to be what I own. There are other companies in the same business, such as U-Store-It (YSI) and Sovran Self Storage (SSS).
PSA is trading for about $88 now up from $51 a year ago, which gives it a 65% return. Plus it’s paying a 3% dividend.
It avoided the tech bust at the beginning of this decade, and fared better than the general market during the recent crash.
So if you’re looking to add some real estate to your portfolio without getting your hands dirty, check out Pubic Storage.