Fiscal Fitness for the Rest of Us

It’s been three weeks now so it can’t be a fluke! A little inspiration and some mindfulness has saved us $250/month on our food budget. Recently I read about a woman who successfully lived on a $1/day food budget. She lost some weight and didn’t achieve optimal nutrition but, all things considered she did it successfully!  I have since learned that there are others taking on similar challenges.

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A couple of unrelated news stories caught my attention today. Advocate.com reports on the challenges photographer Annie Liebovitz has been facing due to the so called “gay tax” paid on her inheritance from Susan Sontag. We might all wish to have such problems which only begin with estates larger than the current exemption limit of $3.5 million. This is not a static number, however, and changes are possible under the current administration. It also doesn’t take long for an estate to reach the exemption limit when you add up assets such as life insurance benefits and when you consider that the total value of property owned jointly by an unmarried couple passes in each person’s estate…not 50% as one might assume. So if, hypothetically, Annie and Susan jointly owned $4milion dollars worth of real estate, when Susan died, the entire $4 million becomes part of her estate for the purposes of taxation. Married opposite-sex couples can pass any size estate to their spouse without consequence.

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Here is a story about the legal process working just as it should. What is news is the people it’s working for. In New York, a judge has ruled (and thus set precedent) on the first case of estate transfer for a married, same-sex couple. Recently NY, while still not legalizing same sex marriage in the state, has begun recognizing marriages that are legal elsewhere. In this case, Canada.

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There is a surprise new development in retirement benefit coverage for non-traditional couples and, for that matter, all non-spouse beneficiaries of qualified retirement plans (typically employer 401k, 403b, Profit Sharing Plans, etc). The Pension Protection Act of 2006 made it possible for qualified retirement plans to offer non-spouse beneficiaries the option to roll inherited benefits directly to an IRA, thus avoiding immediate taxation.  The new Worker, Retiree and Employer Recovery Act of 2008 (it just rolls off your tongue, doesn’t it?) makes it mandatory for these plans to offer the same rollover benefit to a non-spouse beneficiary if it offers that benefit to a spouse. Most plans these days do offer this benefit. Read more…

Well I admit it. I’m feeling gloomy about all the uncertainty in the financial markets and in our chosen leaders’ ability to navigate our way out of it.  As a financial advisor, I’m supposed to be the one reassuring everyone during this worldwide crisis of confidence but, darnit, I’m human too and I can’t quite control the pit in my stomach that grows larger as my retirement account shrinks. So being of this species human, I’ve set out to reassert control over the main aspect of my financial life under my power: my budget.

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There has been a lot of buzz lately about online banks. Interest rates are at an all time low and people are understandably searching for the best rates possible for their savings. Online banks can be a good alternative as they don’t have the high overhead of traditional “bricks and mortar” institutions. Personal finance bloggers have written quite a bit about online institutions comparing rates and services.  One in particular, the ING Savings Account, has been getting a lot of attention due to their $25 incentive for new accounts. Here is a sampling of blog posts on the topic:

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We recently decided to open a discount brokerage account to start wading back into the financial markets via ETFs. Our money is invested with Vanguard and we are true fans of the no load mutual fund giant but their brokerage commissions are through the roof. I had been considering both Scottrade and Zecco and started the application process with Zecco (the less expensive choice for basic trades) but found their application process overly exhaustive. Do they really need to know our income range, employment status and exact investment experience? Isn’t it enough that we have money (legally) and want to invest it?

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Let’s assume you are reading this blog because you are happily partnered or perhaps even a married non-traditional couple. You’re thinking “gosh I’d like to do something nice for my beloved but I don’t have a lot of spare cash at the moment.” Here’s an idea. Update or confirm your beneficiary designations on your employer 401(k)/403(b) plan and any IRAs or other investment accounts that you have. If you want your partner to receive some or all of your assets when you pass, this is the single best way to assure it happens exactly the way you want.

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Just as the popular dance show of similar name pits dancers’ view of themselves against the reality of their “talent” a couple of recent Bankrate articles present a stark contrast between retirement savers’ rosy view of the future and the reality of their preparation. According to one study, 70% of workers feel very or somewhat confident they’ll have enough money to afford a comfortable retirement. Sounds pretty good except when you read on to learn that 49% of this group haven’t saved a dime for retirement! I can’t help feeling a twinge of envy toward these optimistic folks who can engage in such wishful thinking.

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Last week I joined the Barack Obama campaign community. This was, of course, an open invitation for nearly constant donation requests. At least the requested donation was only $5. I can afford $5 despite feeling the effects of current economic conditions. Still I delayed making a contribution. The requests kept coming, almost daily, until finally I relented and clicked the link to take me to the donation page. Imagine my surprise to find a list of recommended donation amounts beginning with $25 and moving up from there. At the end of the list there was an “other” option where you could fill in the originally requested $5 donation amount. Mighty is the power of suggestion though and I convinced myself that I could donate $25 feeling all the while that I had been (tricked is too strong a word here) somewhat manipulated. I wonder how others responded.

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