Financial Hide and Seek: Finding the Stealth Taxes that Congress Missed

Good afternoon!

The financial sector greeted 2013 with a collective sigh after spending a nail-biting few weeks unsure of how the potential Fiscal Cliff would affect us all in the new year.  I received many emails and phone calls during this tenuous time; most clients wanted reassurance that their investments were safe.  Keep in mind, the Fiscal Cliff sounds confusing because it is.  While the most obvious premises of the deal are more easily researched, there are stealth taxes that could be costing you money at this very moment.

As a Retirement Income Specialist, it’s my job to seek out these hidden taxes that could potentially hurt my clients.  I want to provide you with a brief synopsis of these stealth taxes, but to learn more you can set up an appointment to discuss current financial trends and how they affect your personal finances.  Set up an appointment by visiting us at

There are two provisions that were previously dormant from the 1990 tax increase that, as of this week, are re-enacted.  The Pease and PEP will now limit deductions and exemptions for taxpayers in a higher income bracket.  Those who make above $250,000 will potentially suffer the steepest tax increases under this new law.

Of that bracket, married couples with two kids could see a 4.4 percentage point rise in their marginal tax rate.  Americans with incomes topping $1 million could lose up to 80% of itemized deductions, which includes mortgage payments, healthcare, local and state taxes, and charities.

While missing from the main coverage of the Fiscal Cliff deal, Congress has allowed the Social Security Payroll Tax Cut to expire.  Over the past two years, wage earners have enjoyed a 2-percentage-point-cut in the payroll tax.  By allowing this to lapse, that percent now returns to 6.2%, earning the government about $115 billion a year in revenue.  This means the average taxpayer now loses approximately $740 a year.

There are also other stealth taxes that are not covered by the Fiscal Cliff deal.  Things like Phantom Income Taxation, Social Security Taxation, and IRA losses you can’t deduct.  Have you ever heard of Phantom Income Tax before?  Are you paying taxes on your Social Security?  Do you have losses in your IRA?  These are great indicators that you could benefit from a simple review process.

All of these stealth taxes have variances, depending on income bracket, etc.  Don’t start 2013 in the dark about tax policies.  Meet with Warren before going to see your CPA or completing your tax return to learn what questions to ask your CPA to cut your taxes now and avoid tax problems in your future.

Make sure you have all the facts necessary to make the right decision with your financial future by calling us today! Speak with us now at 877-476-5051, email Warren at, or go to to learn more about Warren Elkin and his unique process to make sure your financial decisions are made in your best interest.

Have a great day,
Warren Elkin

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Five Things You Didn’t Know About Ford’s Pension Buyout

Much of the financial news this summer has revolved around Ford’s new pension plan, which sprung into action in August.  The plan offers lump sum buyouts to about 98,000 people, mostly Ford retirees or surviving spouses, as well as former employees vested in the plan or salaried workers in the union, from their current pension plans.  The plan is being rolled out among small portions of this group, about 15,000 people at a time, allowing them to opt out of their long term pensions for a more immediate sum.  As these offers arrive in the mailboxes of more and more people, there is a growing need for these people to understand the facts and figures behind this offer and their life altering decision. Knowledge is power, and this case is no different.

Here are 5 things people need to consider before making this crucial decision.

  1. Ford’s Motivation: They aren’t offering this lump sum out of the goodness of their hearts for the benefit of the retirees.  Ford Motor Company is sitting in a 50 billion dollar pile of pension liability and this new plan allows them clear out about a third of hat tand create some breathing room moving forward.  This isn’t to say that Ford is hanging its retirees out to dry, as many will benefit from accepting the sum, but the decision to accept isn’t as much of a no-brainer as it has been in years past.
  2. Calculated Sum: There is no set sum offered to everyone, and the numbers given to each individual are far from arbitrary.  The dollar amount offered to each retiree is based on a variety of factors in a set calculation.  These factors include things like age, years with the company, years retired from the company, interest rates and so on.  This is one of the things that makes the decision so difficult.  Your characteristics that comprise  your formula are very different than anyone else’s, which makes each situation unique.  Keep in mind, this plan was created to save Ford money, which means with those calculations they plan on the average lump sum being less than the average life-time worth of pension payments.
  3. Interest Rates: Years from now people will be looking back on their decisions, judging whether they went the right route.  One of the biggest determinants of this success is based on interest rates.  If you are certain you can do better than the rate of return used to calculate your lump sum amount, than you should take the money and run.  On the other hand, if you take the offer, and your investments have a lower rate of return, than you will have lost money on the deal.  Right now, we are sitting a low rate environment, which makes the pension itself worth more, but for the future, it’s something of a guessing game.
  4. Personal Health: One of the biggest factors effecting whether the lump sum is a good or bad choice is a person’s life expectancy.  This factor is also one of the hardest to determine.  If you die tomorrow, the lump sum would be the wise choice.  If you live to be 120, the pension payments is the way to go.  Chances are, your reality will be somewhere between the two.  By knowing your personal health situation, you can make a better decision in terms of calculating the value of each.  This is especially important for women.  Pension lump sum calculations are not allowed to take gender into account, so the longer life expectancy for women puts a point on the “pro” side of long-term pension payments.
  5. Investment Plans:  If you go the lump sum route, the hard work isn’t over once you get the check.  Actually, it’s just beginning.  If  you take the lump sum, only to go bury it in the backyard, you won’t being doing yourself any good.  Last I checked, Mother Earth didn’t offer much of an ROI.  Have plan of action in terms of what you plan to do after you receive the payment.  Get professional advice and make a wise decision based on your finances, your portfolio and the level or risk you wish to take on.

Ford retirees are facing a difficult decision, but knowing the factors that affect that choice and their success with it, can make it much more simple.  The most important asset in this scenario is time, and the ability to use that time to weigh all the options and all the repercussions, both positive and negative.  Time is money and knowledge is power, and if you take your time and  gain the right knowledge, you may just find yourself with both.

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The Key to Solving Your Retirement Problems

“There are no guarantees in this life”. That’s what we have always been told, and many people have adopted that mantra into their retirement planning.

In recent years, it seems as if there are no guarantees in retirement investments and retirees are learning that lesson first hand. With pensions seemingly becoming a thing of the past, 401(k) fees rearing its ugly head, and the future of Social Security up in the air, the retirement landscape is becoming more and more questionable every day. With so many uncertainties, there seems to be one “safe” option surfacing more frequently: an annuity.

Annuities are a fundamentally different type of investment from many of the more traditional options. With rising insecurity about the ability to fund a happy and healthy retirement, people are turning to the security of annuities because annuities often solve the most pressing problems and fears that retirees face.

Afraid of Outliving Your Money?

It’s no question that people are beginning to live longer and healthier lives. This news should have people celebrating all the extra experiences they will have and additional memories they will be able to make, but instead they are worrying about how they will afford those extra golden years. The structure of an annuity eliminates worry and allows retirees to focus on how to spend their time instead of how to save their money. Annuity products can provide income to retirees for as long as they live, even if their account balance is zero. This is true even if they enter a nursing care facility; where often times the monthly payments from the annuity will double to help cover the costs of care. This means there is never a threat of outliving a life savings and that allows seniors to enjoy every minute of their retirement.

Afraid of the Market Crashing Again?

Market instability is a fear on the minds of nearly everyone approaching retirement, especially considering the recent beating that many portfolios endured. This is why more retirees are adopting the “fool me once, shame on you, fool me twice, shame on me,” mentality by protecting themselves from another market crash. How are they doing this? Annuities. Annuities are state regulated, so retirees can have security and confidence knowing their money is safe from anything the market will throw at them.

Afraid of Low Interest Rates Stalling Your Investments?

Interest rates have taken a downward tailspin in the past few years, and many retirees are unhappy with the new lower percentages. Annuities defy these depressing digits, giving retirees 6, 8, and even 10% return on their investments. Some people see those numbers and think that it’s not possible, or that pages of fine print are hidden behind those percentages, but more and more people are finding that 10% interest isn’t too good to be true. They can earn 10% interest on their annuity, and have that rate guaranteed for years to come. Gone are the days of having to settle with one or two percent interest on your hard earned money. Annuities offer a way to make your hard earned money work for you.

The anxieties surrounding funding a retirement lifestyle are an unnecessary evil for retirees. Annuities can give you the money, and the peace of mind, that you want so you can enjoy your retirement. The thought that there are no guarantees in retirement is a thing of the past and annuities seem to be the key to the future.

For more information on annuities, click here to receive a free informational booklet in the mail or call 1-877-476-5051 to learn how you can earn 10% interest toward your retirement future today!

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Why You Should Care About Interest Rates

The Federal Reserve recently announced that it has decided to keep interest rates low—in fact, they’re at an all-time low of 1.46 percent. And it doesn’t look like it will change any time soon, with Chairman Ben Bernanke mentioning that rates may stay low through 2014. This is great news for borrowers, but it means that savers will not only NOT gain interest, but they’ll lose purchasing power because of inflation.

Let me explain. Today, money funds yield on average about 0.03 percent. The best-case scenario for a one-year bank CD is a mere 1.1 percent. If inflation stays at 3 percent, well—it doesn’t take long to realize that money in a CD or in a savings account is losing its value faster than it can grow at these low rates.

In an article in USA Today, Ronald Fatoullah, a New York elder law attorney, said that he sees some seniors who have been pushed into riskier investments, such as stocks. He added, “”I’m personally fearful for older clients to invest in this market,” he says. “It could tank.”

So what do you do with your savings? How can you enable it to grow safely so that it is outgrowing inflation but isn’t in a risky place, such as stocks?

The proper type of annuity can be a vital tool, because it’s guaranteed and stable but still provides the growth necessary to surpass the rate of inflation. Annuities are similar to a company’s pension plan, but it’s an individual, not a company, that provides the initial funds to make future, lifelong payments possible.

There are many different annuities out there so it’s imperative that you select the one that’s right for you and your family. If you’d like more information, I’d be happy to guide you. I have more than 30 years in the industry and an A+ rating with the Better Business Bureau. Contact me at 877-476-5051 to see how your savings can safely and securely beat inflation and keep its purchasing power for your future well being.

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