Fong Law Group

Which Business Debts Are Discharged in Chapter 7 Bankruptcy?

People who have debts can declare bankruptcy and get a new beginning through liquidation or reorganization. Specific debts can be discharged by the bankruptcy proceedings in both cases. The debt collector can no longer speak up against the borrower, like trying to collect payment or seizing any collateral, once the loan has been expelled. However, not all loans can be discharged, and some are exceptionally hard to discharge.

Is It Possible for a c to Be Denied by the Courts?

It's possible. The majority of personal debtors are discharged under Chapter 7. The entire bankruptcy situation may be rejected if the court determines that individual hidden money or even other resources, fraudulently acquired assets that must have been used to repay loans, or otherwise violated the rules.

Business Debt and Bankruptcy

You can release the following types of debts in bankruptcy Chapter 7:

• bills from credit cards
• a few court rulings
• medical expenses
• a sole proprietor's unprotected debts
• obligations arising from sole proprietorship leases and agreements

Debts that are secured are handled differently. If you don't pay your bill, the creditor can seize the collateral used to secure the loan, even though you declare bankruptcy.

Personal Bankruptcy and Business

In Chapter 7 bankruptcy, some forms of debt are not dischargeable.

Non-dischargeable debts include:

• back child benefit and alimony
• court-ordered fines, punishments, and restitution
• assumptive fraud
• student loans only if paying back them is a severe hardship
• debt incurred as a result of potential fraud

A bankruptcy Chapter 7 may stay on the credit reports for ten years, while a Chapter 13 bankruptcy will stay on the credit file for seven years. This can make borrowing money at some point, like for a home loan or car loan, or obtaining a credit card, more costly or even impossible. It will have an influence on insurance rates. You can contact Fong Law Firm if you residing near Monterey Park California and surrounding areas.

So, before filing bankruptcy, you should look into other alternatives for debt relief. Debt relief usually entails negotiating with the lenders to make the debts more tolerable, like lowering interest rates, canceling a part of the debt, or extending the repayment period.

The Impact of Bankruptcy on Investors

No one expects a company to go bankrupt when they invest in it, whether through equities or debt equipment. Once you venture beyond the risk-free domain of government-issued equities, you understand this additional risk.

When a company files for bankruptcy, its equities typically continue to trade, albeit at very low prices.

Shareholders are even further down the ladder during Chapter 7. Usually, a business's stock becomes valueless during the Chapter 7 trial, and shareholders lose all their money. You may even get a fraction of the full price of a bond unless you hold one. What you'll get is determined by the number of investments available for allocation.

Secured lenders have a better chance of recovering their preliminary investments' value. Before receiving any compensation, unprotected creditors should wait until protected creditors have been properly compensated. Stockholders generally get very little, if anything at all.

Call Fong Law Group at (626) 289-8299 for a FREE consolidation, and talk to an attorney today. We are here to help you get through this difficult time in your life, and help you with a Fresh Start.

Annuities and Medicaid Planning

In some circumstances, immediate annuities can be ideal Medicaid planning tools for spouses of nursing home residents. Careful planning is needed to make sure an annuity will work for you or your spouse. 

An immediate annuity, in its simplest form, is a contract with an insurance company under which the consumer pays a certain amount of money to the company and the company sends the consumer a monthly check for the rest of his or her life.

In most states the purchase of an annuity is not considered to be a transfer for purposes of eligibility for Medicaid, but is instead the purchase of an investment. It transforms otherwise countable assets into a non-countable income stream. As long as the income is in the name of the community spouse, it's not a problem.

In order for the annuity purchase not to be considered a transfer, it must meet the following basic requirements:

1. It must be irrevocable--you cannot have the right to take the funds out of the annuity except through the monthly payments.
2. You must receive back at least what you paid into the annuity during your actuarial life expectancy. For instance, if you have an actuarial life expectancy of 10 years, and you pay $60,000 for an annuity, you must receive annuity payments of at least $500 a month ($500 x 12 x 10 = $60,000).
3. If you purchase an annuity with a term certain (see below), it must be shorter than your actuarial life expectancy.
4. The state must be named the remainder beneficiary up to the amount of Medicaid paid on the annuitant's behalf.

Example: Mrs. Jones, the community spouse, lives in a state where the most money she can keep for herself and still have Mr. Jones, who is in a nursing home, qualify for Medicaid (her maximum resource allowance) is $128,640 (in 2020). However, Mrs. Jones has $238,640 in countable assets. She can take the difference of $110,000 and purchase an annuity, making her husband in the nursing home immediately eligible for Medicaid. She would continue to receive the annuity check each month for the rest of her life.

In most instances, the purchase of an annuity should wait until the unhealthy spouse moves to a nursing home. In addition, if the annuity has a term certain -- a guaranteed number of payments no matter the lifespan of the annuitant -- the term must be shorter than the life expectancy of the healthy spouse. Further, if the community spouse does die with guaranteed payments remaining on the annuity, they must be payable to the state for reimbursement up to the amount of the Medicaid paid for either spouse.

All annuities must be disclosed by an applicant for Medicaid regardless of whether the annuity is irrevocable or treated as a countable asset. If an individual, spouse, or representative refuses to disclose sufficient information related to any annuity, the state must either deny or terminate coverage for long-term care services or else deny or terminate Medicaid eligibility.

Annuities are of less benefit for a single individual in a nursing home because he or she would have to pay the monthly income from the annuity to the nursing home. However, in some states immediate annuities may have a place for single individuals who are considering transferring assets. Income from an annuity can be used to help pay for long-term care during the Medicaid penalty period that results from the transfer. In such cases, the annuity is usually short-term, just long enough to cover the penalty period.

In short, immediate annuities are a very powerful tool in the right circumstances. They must also be distinguished from deferred annuities, which have no Medicaid planning purpose. The use of immediate annuities as a Medicaid planning tool is under attack in some states, so be sure to consult with a your attorney before pursuing the strategy described above.

Second Time Around Money Tips

“Constant negotiating about who pays what bill or how household costs will be split, is enough to stress any couple. Instead, find a systematic way to cover regular costs.”

Whether your second spouse is the complete opposite of the first or a new and improved version of the original, second marriage finances are usually different than the first. Keeping things separate may be more comfortable at the start, but AARP Magazine wonders if that is still the right way to go after a decade in the article “4 Money Tips for Second Marriages.”

Did you have a prenup before your second marriage? It’s not a big deal. You can also do a post-nuptial agreement. You can have either one one drawn up and put in a drawer. Chances are you came to the marriage with different incomes, assets and children. Talk about what is fair and come up with a document that works for both of you.

Do you have a system for paying ongoing household costs? One solution is a household account to which both partners contribute, with both contributing a certain amount, depending on income and asset levels. Some couples have a joint credit card, just like first-time marrieds, so every time you use the card, you’re not negotiating all over again about who is paying for what.

You might need help with managing your finances. If one of you is going to retire in the near future, how will that impact your finances? Can the person who is retiring first, wait to tap retirement savings before claiming their Social Security benefits? You need a strategy that will work for both spouses, and it must take into account your ages, retirement dates, assets and any health issues.

Different investment portfolios may be needed, if you have different investment comfort levels. Women are traditionally more conservative than men. Talk about your comfort levels with stock purchases and other kinds of investments. If you came to the marriage with a significant portfolio and a financial advisor, did you stay with your advisor or switch to your spouse’s? After 10 years, are you ready to combine accounts? Or, if for estate planning purposes, does it make sense to keep them separate?

If your second marriage has made it past the 10-year mark, when was the last time you reviewed your estate plan and your designated beneficiaries? We hope you updated your wills and reviewed all  your accounts with named beneficiaries shortly after you were married, but if not, now would be the time to do this important task. You don’t want anyone’s ex receiving a large IRA or the proceeds from a life insurance policy.

This may be the time to consider your attitudes towards “mine and “ours.” For some people, the 10-year mark gives them the security that their marriage is a keeper and they begin to let go of some of the separated assets. For others, there’s no need to blend assets or accounts and it’s not a reflection of their feelings about the marriage, but just what they are comfortable with.

Reference: AARP Magazine (January 2019) “4 Money Tips for Second Marriages”

Retirement Planning Tips For the Coming Year

“Are you ready for retirement? There are steps you should take to ensure you’re able to live the life you desire, once it’s time to pass the management reins to the next generation.”

On average, American men today will live to 84.3 years, says the U.S. Department of Social Security. That means you can expect to enjoy at least 20 years of retirement or muddle through two decades of financial worry, depending on your level of preparation.

Consider that the average monthly income for a couple receiving Social Security benefits is $2,176. That’s about $26,000 a year, says Farm Journal’s Ag Pro in the article “5 Retirement Investment Tips.” If that’s an average benefit, then farm couples should expect to receive less than that. Why? Because farmers are very good at avoiding taxes, said David Marrison, Ohio State University Extension specialist. Even if they receive the average amount, he asks, where’s the rest of the household income?

When it comes to retirement income, about $26,000 is just not enough. To allow for a comfortable retirement and limit negative impact on the family farm, or any family business for that matter, planning must be done in advance. Here are a few tips that are simple, direct and can make a difference for your retirement.

When are you going to retire? Many people retire at 65.  However, the decision often needs to be made from a financial perspective and not based on age. If you can work a little longer, that may give you a better chance of building up enough finances to retire comfortably.

What’s your budget? This is where so many people fail. How much money are you going to need when you retire, starts with knowing how much money you are spending now. For farm and business owning families, some expenses can get co-mingled, such as fuel or utilities. Get into the details and make sure you are not missing any expenses.

Inflation. Recent years have seen a very low impact of inflation but that may be changing. Once you’ve identified your target savings goal, build in inflation. Here’s one way to do it: take the number 72 and divide it by an interest-rate factor. Many experts use 4%, which is the average inflation rate for the last five decades. Using this rule, you can expect your living expenses to double what they are today because of inflation. Sounds scary? That’s why planning is so important.

Make a plan for savings. View retirement as both a means to an end and a way to reduce tax liability. For farmers, good times used to translate into mitigating taxes, by purchasing equipment. However, it’s likely that putting away money in a 401(k) may have been a better idea.

Start saving today. Even if all you are doing is setting aside 10% for the future, if you are young enough that can be a good start.

Add to these tips getting your estate plan done or updating your estate plan. Your estate plan is a critical piece for farm families, who want to pass the farm down to the next generation. In addition to a will, you also need Power of Attorney for your finances and documents for health care. Make an appointment with a local estate planning attorney to get this done.

Reference: Farm Journal’s Ag Pro (Dec. 24, 2018) “5 Retirement Investment Tips”

Would You Be Generous, If a Windfall Came Your Way?

“A majority of Americans would be in a sharing mood, if they were to have a big fortune fall into their lap, according to a new survey.”

A majority of Americans say that if they hit it big, they would be likely to be generous, reports Financial Advisor in the article “In U.S., Instant Wealth Spawns Philanthropy Boom.” When asked what their first move would be, if they suddenly found themselves with a lot of money, slightly more than half said they would share the wealth with family, friends, and charities.

When asked what they’d do after sharing, one thousand people who took part in a survey from BMO Wealth Management in Chicago knew exactly what they’d do:

A total of 51% said they’d pay off their debts after sharing the wealth. After that, they’d invest in the stock market, buy a business or purchase some real estate (49%). They also said they would keep their financial goals basically the same (43%).

A total of 22% said they’d buy big ticket items, and only 18% said they would splurge and go on a wild spending spree.

Their main concern for their estate and legacy would be helping others, learning how to create a legacy with their windfall and avoiding family conflict over the money.

More than a third of those surveyed (36%) said that a big concern would be to have some help with investment and retirement planning. That was followed by concerns of how this new money would impact their retirement plans, and equally concerning, how they would know who to trust now that they were in a position of wealth. They also said they would have to decide whether to work and wondered if the new wealth would cause any stress.

Anyone who receives a large amount of money with no prior notice, faces a challenge with their new-found wealth. People who win large amounts in the lottery, for instance, are often ill equipped to manage the money. They need help getting their money managed, so that the cash does not overwhelm them—or evaporate.

Today’s new-found wealth doesn’t just come from lottery winnings. With the transfer of wealth between the Boomer generation to their children surpassing the amount of money transferred from the “Greatest Generation” to the Boomers, estimated at $12 trillion, the next few years will see a huge transfer of wealth from one generation to another. Being prepared for that wealth and managing it well, requires advance planning and financial education.

Reference: Financial Advisor (Dec. 10, 2018) “In U.S., Instant Wealth Spawns Philanthropy Boom”

How Much Will You Really Spend in Retirement?

“It’s the question at the heart of so much retirement planning: How much money will I need in savings when I’ve stopped working?”

To get at this number, people look at a few different sources, including online calculators, and articles like this one from The New York Times titled “The Myth of Steady Retirement Spending, and Why Reality May Cost Less.”

Sooner or later, they learn about the 4% rule, a popular rule that says if you invest in a mix of 40% bonds and 60% stocks, your retirement will be fine, if you just spend 4% of your savings every year. Your nest egg will stay intact, and you will be financially fine for three decades. That’s assuming you retire at age 65 with $1 million and you withdraw $40,000 every year, until you run out of money at age 95. It also assumes that you’ll supplement your own retirement savings with money from Social Security and any other income sources. If you need any more than that, cut your spending or keep working.

Could it be that simple? No, not really.

The truth is, retirees don’t always spend the same amount of money every single year. Having to keep working for several years after you would have liked to retire, just so you can get to that magic $1 million number may not be necessary for everyone.

Some retirees find that they spend a lot more in the early years of their retirement. They may need to help their own aging parents, or adult children. Others spend big on travel, seeing the world while they still have their health and mobility. However, those expenses usually slow down as we age.

There are different phases of spending in retirement, just as there are different phases of spending in your younger years. Statistics from the Bureau of Labor Statistics confirm this spending decline. The mean spending for households headed by people ages 55 to 64 in 2017 was $65,000. For those between the ages of 65 to 74, spending declined to $55,000. After 75, it dropped to $42,000. That is with housing costs remaining the same and health care costs increasing. The categories of entertainment, transportation, clothing, food and drink all dropped.

A study by Morningstar contends that retirement spending resembles a smile: starting off high, then declining, then increasing towards the end of life. The increases at the end of life are directly related to health care costs. However, generally speaking, retirees in their 70s and 80s tend to spend less.

Whether you follow the 4% rule are not, there are always unexpected costs to be considered in retirement. Your retirement may last more than two or three decades. Withdrawing too much from investments during a sharp market downturn, could cause your overall portfolio to shrink and possibly never recover. A retirement budget that takes inflation and market fluctuations into consideration, is necessary at any asset level.

Reference: The New York Times (Nov. 29, 2018) “The Myth of Steady Retirement Spending, and Why Reality May Cost Less”

Do You See Yourself in Any of These ‘Seven Deadly Sins’?

“All of these retirement planning sins can set you back from achieving important goals. If you have a nagging feeling that you could be doing a better job of retirement planning, check out these seven offenses and learn how to get back on track.”

We’re only human, and we don’t always do exactly what we’re supposed to do. That applies to retirement planning, according to the article “The 7 Deadly Sins of Retirement Planning” from The Reader’s Digest. Take a little time to reflect on these sins and see if any of them are getting in your way of reaching your retirement goals.

Pride. Sometimes we think retirement planning should be simple, and when it gets complicated, our knee-jerk reaction is to be prideful and refuse to allow anyone to help us. If you’re not a professional retirement planner, how will you know what to watch out for? You won’t. A mistake could make the difference between a heavenly retirement and one that is delayed or never arrives. Swallow that pride about the difficulties of building a portfolio or investment strategy and be open to getting help.

Envy. If you spend 30 years trying to keep up with the Jones’ extravagant spending, who knows if you’ll ever be able to retire? Just because a neighbor, friend or relative spends on new luxury cars, or sends their kids to pricey private schools, doesn’t mean you need to do that, unless you can afford to—all while saving for retirement. Live below your means and save for the future.

Wrath. This is a dangerous emotion. If you’re angry about a situation at work, for instance, and you leave without good financial planning, you could put your retirement savings at risk. It often takes longer than you think to find a new job. Leaving voluntarily makes you ineligible for unemployment benefits. Paying for COBRA insurance is usually a lot more expensive than an employee group benefit plan. Hate your job/boss/co-workers? Wait until you have a new job lined up before leaving.

Greed. Chasing investment trends or listening to your brother-in-law’s latest get-rich quick scheme rarely leads to success. A professional advisor with a long-term plan will almost always yield a better return.

Sloth. Lazy about retirement planning? You have to do the planning, the savings, track your expenses and keep an eye on your money and your taxes. Have you made the effort to have a will, power of attorney and health care directive made for you and your spouse with an estate planning attorney? A missed step could doom your retirement and create a crisis for your family.

Gluttony. This is kind of like greed’s younger, sloppier cousin. Are you being greedy about making money, to the detriment of any other goals? A goal-oriented investment plan will serve you better.

Lust. Are you yearning for a billionaire’s lifestyle, with an income that is more middle class? Leave the lust for the jets, diamonds and furs behind and focus instead on a realistic plan.

Make sure that your retirement doesn’t fall victim to these deadly sins and prepare for the real retirement that’s in your future.

Reference: The Reader’s Digest (Nov. 2018) “The 7 Deadly Sins of Retirement Planning”

Almost Retired? Worried About A Bear Market? Here’s How To Prepare

“For each year in which a bull market persists, workers become likelier to retire. However, those who leave the workforce now—the ninth year of the longest U.S. bull market—are potentially setting themselves up for a tough stretch that could test their portfolio’s long-term resilience.”

Live long enough and you’ll get to experience the ups and downs of the market. If you’re about to retire, or newly-retired, you may be concerned about how long this bull market can maintain its pace. There is a way to deal with this, says The Wall Street Journal in its article “Retiring Soon? Plan for Market Downturns,” with steps that you can take to minimize the damage from losses in early retirement.

A little history first. When the stock market is historically expensive, as some say it is right now, it’s often a sign that future returns won’t be able to keep up. If you live for two or three decades after retirement, a combination of withdrawals and poor returns will mean there’s less in your accounts to compound.

Let’s say you’re a 65-year-old retiree with $1 million in your retirement funds. If you withdraw 4%, or $40,000 in the first year of retirement, and then your portfolio sinks by 40% shortly after that, you’ll have just $576,000 left to fund a retirement that could last decades. It won’t be easy to recover from that early first hit.

Returns in the first five to 10 years of a retirement matter the most.  However, that doesn’t mean you should cancel your retirement. For one thing, you can never time a market. If that was possible, we’d all be zillionaires. If you are ready to leave your job, extending your work life could make you mentally and physically ill. There are steps you can take.  However, remember that there are also trade-offs.

Build a cash cushion. A one to five-year cushion of living expenses in cash gives you more flexibility when markets tank. You don’t want to have to sell into a down-market. Retirees with cash buffers tend to panic far less than those who are completely vested in equities.

The trade-off? Low returns on cash will reduce your long-term returns. Some advisors suggest using bonds as a buffer, but if you need to liquidate the bonds to compensate for living expenses, the buffer will also shrink.

Rebalance. Some experts say that a better strategy is to invest in a truly diversified portfolio and rebalance after all market swings. You can then use your winnings to cover a portion of living expenses. This approach gives you the opportunity to sell holdings that have appreciated the most, while buying things that have declined and are relatively cheap. When the turnaround arrives, your portfolio will recover faster.

Try another kind of buffer. Some advisors recommend using home-equity lines of credit or reverse mortgages to create a cash buffer that doesn’t tie up your portfolio.  However, both have costs. Reverse mortgages are still expensive and with a home equity line of credit, you must make monthly payments. Both charge interest. You could also tap the cash value of your permanent life insurance.

The idea is to build yourself a comfortable financial zone that protects your portfolio, thereby reducing your risk and panic attacks at the same time.

Reference: The Wall Street Journal (Sep. 21, 2018) “Retiring Soon? Plan for Market Downturns”

 

You Can Avoid Elder Financial Abuse, but How? 你可以避免老人經濟虐待，但如何？(中英對照)

“While a longer life is a good thing, it will also present challenges – and unfortunately, sometimes financial predators.”

The prospect of a long, healthy and active life is a wonderful thing to consider. However, one in 10 seniors have suffered financial abuse, according to The Kansas City Star’s article “Five ways to avoid elder financial abuse.” The grandson of Brooke Astor spoke at a conference about how his grandmother’s last years were spent living in squalor, as a result of her son and guardian stealing from the estate and cutting the amount of money available for her care. The grandson and his brother sued their father to protect their beloved grandmother, a leading philanthropist and one of New York’s high-profile society figures.

However, elder financial abuse is not limited to the super wealthy or socially prominent. One report noted that one in ten seniors suffers some form of financial abuse.

Why does this happen?

As we age, our brain also ages making us more susceptible to making poor decisions. Even high-functioning retirees with no outward sign of dementia, find it harder to distinguish safe investments from risky ones. The probability of dementia also rises as we age: only 7% of people over 60 have dementia, but nearly 30% of people over age 85 have some degree of dementia.

Here are some suggestions to minimize the likelihood of financial elder abuse:

Communicate. Talk with your loved ones on a regular basis, so you know how their health is and what they are doing. If they don’t want to talk about money, you can start the conversation by sharing something about your own situation. Remind them about safe practices like shredding receipts, bills and account statements. Remind them not to open emails from people they don’t know and not to give their Social Security number or account numbers on the phone or online to people they don’t know.

Stay involved. Know how your loved ones are spending their time and money, by staying involved in their lives. If they are hiring people to do work on or in the house, know who those people are and check their backgrounds. Get to know their home healthcare aides. Review their bank statements to ensure no unusual activity is taking place. If you see that they are starting to decline, offer to take over tasks for them.

Check and balance. Make sure that the correct estate planning documents are in place to allow trusted family members to help, if the need arises, such as power of attorney and medical directive. Divide up responsibilities; consider having one person in charge of bank accounts and another in charge of investment accounts. Trade responsibilities every few months.

Have a relationship with their professionals. Attend meetings with their estate planning attorney and their financial advisor. If there is any hesitation on the part of the professional, push back: any qualified estate planning attorney or financial advisor or CPA should welcome family involvement.

Streamline accounts. Fraud is harder to see, when there’s money in multiple financial institutions with multiple advisors and life insurance policies from several different brokers. Spend the time to do a complete inventory of all accounts. If you can, consolidate accounts.

Reference: The Kansas City Star (Sep. 8, 2018) “Five ways to avoid elder financial abuse”

“雖然長壽是一件好事，但它也會帶來挑戰 - 不幸的是，有時也會帶來財產掠奪者。”

長壽，健康和積極的生活前景是一個值得思考的好事。然而，根據 The Kansas City Star的文章“Five ways to avoid elder financial abuse”，十分之一的老人正遭受經濟虐待。Brooke Astor的孫子在一次會議上發表講話，談到他的祖母過去幾年如何生活在惡劣環境中，她的兒子和監護人偷了她的資產並減少用於照顧她的錢。這位孫子和他的兄弟起訴他們的父親，以保護他們心愛的祖母，她是一位慈善家先鋒和紐約一位備受矚目的社會人士。

然而，老人的經濟虐待並不僅限於超級富豪或傑出人士。一份報告指出，十分之一的老人遭受某種形式的經濟虐待。

為什麼會這樣？

隨著年齡的增長，我們的大腦也會退化，使我們更容易做出糟糕的決定。即使是沒有癡呆症跡象的高能力退休人士，也很難將安全投資與風險投資區分出來。隨著年齡的增長，癡呆症的概率也會上升：60歲以上的人中只有7％患有癡呆症，但85歲以上的人中有近30％患有某種程度的癡呆症。

以下是一些建議，以盡量減少老人經濟虐待的可能性：

溝通  定期與您的親人交談，讓您知道他們的健康狀況以及他們正在做的事。如果他們不想談論金錢，你可以通過分享一些關於你自己的情況來開始。提醒他們關於撕碎收據，賬單和月結單的安全做法。提醒他們不要打開他們 陌生人的電子郵件，也不要在手機或網上向他們陌生人提供社會安全號碼或帳號。

保持參與  透過保持參與去了解親人是如何花時間和金錢。如果他們正在僱用人在家里工作，要知道那些人是誰並查他們的背景。了解他們的家庭醫療助理。查看他們的銀行月結單，確保沒有發生異常動靜。如果您發現它們開始下降，請接手管理。

檢查和制衡   確保制定正確的資產規劃文件，以便可信賴的家庭成員在需要時能幫助，例如財務授權書和醫療授權書。分工負責;考慮讓一個人負責銀行賬戶，另一個負責投資賬戶。每隔幾個月交換一次。

與專業人士建立關係   與他們的資產規劃律師及其財務顧問一起參加會議。如果專業人士有任何猶豫，請挻回去：任何合格的資產規劃律師或財務顧問或註冊會計師都應該歡迎家庭參與。

簡化帳戶   當錢在多個金融機構中, 而金融機構中有多個顧問及人壽保險單來自幾個不同經紀時，欺詐就更難看到了。花點時間去完成所有帳戶的完整清單。如果可以，合併帳戶。

參考: The Kansas City Star (Sep. 8, 2018) “Five ways to avoid elder financial abuse”

A Completely Different View of 401(k)s and Retirement Savings

“A 401(k) plan ensures that you have money to spend during your retirement years. However, there are reasons why a 401(k) stinks.”

It’s almost always enlightening to hear from a different perspective, even in finance. This article from Born2Invest, “Retirement planning: The downsides of your 401(k),” takes a somewhat contrarian view of retirement accounts in general and the use of 401(k)s in particular. We may not agree. However, it’s worth the read.

The article notes that historically, retirement as a concept is relatively new. People just worked as long as they were able to. In 1881, Otto Van Bismarck petitioned for the creation of a government system to support the elderly and the concept of a social security system was created. Their retirement age was 70—the same as life expectancy. In 1935, the American Social Security system was created. For a few generations we worked, we saved, we got pensions from employers and when we celebrated our 65^th birthday, we retired.

That world has passed. The Revenue Act of 1978 created the 401(k) and defined benefit plans went away as corporations passed the burden of saving and investing for retirement to employees. There is now a huge industry of employer-sponsored, employee-funded retirement plans with assets of more than $7.7 trillion. IRAs hold more than $8.6 trillion.

Why does that stink? One of the benefits marketed by 401(k) providers is that they allow owners to defer income and taxes. However, “defer” doesn’t mean they are tax free. You’ll pay taxes when you take the money out. To be sure that you do, there are Required Minimum Distributions (RMDs). You’re taxed not just on the distributions but also on the investment gains.

The traditional thinking is that you’re going to retire, your income will decrease and so you’ll be in a lower tax bracket. But will it? If your combined income from Social Security, pensions and RMDs send you into a higher tax bracket, you may be paying more in taxes. This is especially true, if you have lost the deductions: kids growing up, no mortgage and no pre-tax contributions.

Your retirement funds are supposed to be just for retirement. However, sometimes there are bumps along the way and, if you have no other assets, that’s where you’ll go at a high price.

401(k)s have limited investment options and you’re typically limited to mutual funds and sometimes to Exchange-Traded Funds (EFTs).

Those retirement plans are not free. A 401(k) has high administrative costs and underlying investments have fund fees, based on the companies and their management activity.

Is the 401(k) the best plan for you? The article says to consider your options, so you are not just following the herd. Workplace related retirement plans could be the best option, but you should be aware of the costs, taxes and restrictions.

Reference: Born2Invest.com (Sep. 13, 2018) “Retirement planning: The downsides of your 401(k)”