Upward revisions in consumer spending; home prices climb; the week ahead

After faltering in the first quarter, the U.S. economy expanded at a pace not seen in more than a decade in the subsequent six months, according to data released this week. That performance stands in contrast to many developed economies', including the euro zone and Japan, which have been treading water or worse recently.

Other reports out this week, however, which included housing and consumer confidence and spending, painted a more nuanced picture of the domestic economy.

To read more, click here.

Consumer prices flat; housing starts down; the week ahead

Now that the U.S. economy appears headed on the right track, the Federal Reserve debated whether to refine its guidance on interest rates. The Fed's word choices about potential changes in interest rate policy get closely scrutinized by investors, and Fed officials discussed recently whether they need to tweak the message they're sending to the market. Economic indicators, meanwhile, were generally positive, although industrial production was down slightly. 

To read more, click here. 

Early Distribution from 403(b)

A reader sent in this question:

Hello George – I have been trying to get to bottom of a question in layman's terms involving 403(b) and real-estate investment.

My wife and I have a 403(b) and would like to buy a condo in So FL. Can we do so using the 403(b) without penalties and/or taxes etc. We not at retirement age yet; 59 for me and 55 for her.

Please advise... Thank you very much for your time... S.D.

And my reply: 

Hi S.D, 

Generally if you withdraw money from a 403(b) plan you will pay ordinary income tax on the distribution. On top of that, if you are under 59½ you will face a 10% penalty. 

A retirement plan may, but is not required to, provide for hardship distributions. Many plans that provide for elective deferrals provide for hardship distributions. Thus, your 403(b) plans may permit hardship distributions.

If it does allow early withdrawals, it must provide the specific rules used to determine the hardship.
For example, a plan may provide that a distribution can be made only for medical or funeral expenses, but not for the purchase of a principal residence or for payment of tuition and education expenses.

I suggest you check with your plan’s administrator to see if there is a provision for buying a home. Usually, though, when such a provision exists, it is only for the first-time purchase of a primary residence — not a vacation or rental property.

You can read more about withdrawals from retirement plans here: http://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-Hardship-Distributions

So if I were you, I would not take this money out of your 403(b).

Have you looked into getting a mortgage? With interest rates extremely low, you might consider it.

Good luck,

George

Looming Crisis for Elderly and Their Caregivers

A must-read article in today’s Pittsburgh Post-Gazette on the alarming reality facing aging baby boomers: There will not be enough caregivers – from family members or professionals – to accommodate the 70 percent of baby boomers that the Department of Aging estimates will require long-term care.

You can read it by clicking here.

How to Find In-Home Care

This PBS story gives a good overview of options you might consider if you need to find help caring for a parent or spouse.