As a member of “Generation Y,” you are a young adult in your late teens, 20s, and early 30s, born between 1980 and 1994. Also called “Millennials” or “Echo Boomers,” you grew up amidst booms in the stock and real estate markets, only to see each of those “bubbles” burst. More educated than any prior generation, you attained those credentials during a time of skyrocketing educational expenses.
We are adults in our 30s and 40s, born between 1965 and 1980 (Generation X). As children of the Baby Boomers, we benefited from our parents’ desire for us to go to college and further our education, even if they had not gone to college themselves. However, when the first Gen-Xers entered high school, America was in a recession, unemployment and inflation were high, and interest rates were in the double digits. By the time we started graduating from college, the stock market crashed and left us wondering if we had any financial future at all.
The past week’s fiscal cliff deadline has been averted, at least for now. The last-minute compromise — the American Taxpayer Relief Act (ATRA) — extends the majority of tax cuts scheduled to expire at the end of 2012, in addition to retroactively reinstating some rules that had expired in 2011. However, the legislation also introduces a number of changes as well — including a new top tax bracket and an increase in the top long-term capital gains and qualified dividend rates. Some old rules that had lapsed have returned, such as the phaseout of itemized deductions and personal exemptions, and a new rule will allow 401(k) participants to complete intra-plan Roth conversions.
The 2012 election is over, and Americans find themselves in an unsure financial environment. The country is heading toward a “fiscal cliff” — a series of significant tax increases and automatic spending cuts that will be triggered at the end of the year. Congress and the President are negotiating a compromise solution to prevent that, but no one knows what it will involve, or if they’ll be successful at all.
The almost annual decision regarding the Alternative Minimum Tax (AMT) is back. In December 2010, Congress and the current Administration gave us a two year extension on the “AMT Patch,” but that only included tax years 2010 and 2011. The Tax Policy Center estimates that without intervention, the number of American households impacted by the Alternative Minimum Tax will leap from 5 million in 2011 to nearly 30 million in 2012.
Our primary mission at Pinnacle Advisory Group is to give our clients the peace of mind to enjoy the things in life they find most fulfilling, including not only relationships, activities, and hobbies, but also philanthropic endeavors. Contrary to popular belief, support for charities and causes isn’t a one-way financial street – there are several charitable giving instruments that will actually help you streamline your cash flow and reduce your taxes. By using them, you can experience the joy of giving while also receiving a financial benefit.
Florida is one of the most desirable retirement destinations in the world, and with good reason. It boasts a wonderful climate, miles of beautiful beaches, and many tourist attractions. But probably the greatest motivation for obtaining Florida residency is the range of tax advantages that it brings.
Martha’s husband of almost 60 years passed away shortly before I started working with her. There were a number of financial issues to address after his death, and I was able to help take those off her shoulders so she could focus on coming to terms with her great personal loss.
For years, the Social Security Administration has mailed out annual statements to inform you of the benefits you or your loved ones will receive upon your retirement, disability, or death. It has been a great service to have this mailed regularly so that you can stay up to date on what to expect under the three different benefit formulas.
I just returned from the Financial Planning Association’s Retreat Conference where I was an invited speaker on the topic of “Investing Outside the Box: Modern Insights Into Portfolio Management.” Now that I’m back in the office, it’s time to catch up on my reading. Here is a review of today’s homework.