November 6, 2018

I-bond rate increases to 2.83%

The current interest rate on I-bonds: 2.83% for bonds issued November 2018-April 2019.
This is an increase from 2.52% for the previous 6 months. 
Learn about I-Bonds: 
Rates & Terms

  • I bonds have an annual interest rate derived from a fixed rate and a semiannual inflation rate.
  • Interest, if any, is added to the bond monthly and is paid when you cash the bond.
  • I bonds are sold at face value; i.e., you pay $50 for a $50 bond.

Redemption Information

  • Minimum term of ownership: 1 year
  • Interest-earning period: 30 years
  • Early redemption penalties:
    • Before 5 years, forfeit interest from the previous 3 months
    • After 5 years, no penalty

Tax Considerations

  • Savings bonds are exempt from taxation by any State or political subdivision of a State, except for estate or inheritance taxes.
  • Interest earnings are subject to Federal income tax.
  • Interest earnings may be excluded from Federal income tax when used to finance education (see education tax exclusions).

November 5, 2018

Free Application for Federal Student Aid

It is essential to fill out the Free Application for Federal Student Aid (FAFSA) during your child's senior year in high school in order to be eligible for many student grants, loans, and scholarships. The earliest you can fill out the form is October 1 of the senior year.
However, you can get an estimate of aid eligibility with the FAFSA online estimating tool: Fafsa4caster at the U.S. Department of education website:

November 4, 2018

US slips in list of world's best places to do business

Under the Trump Administration with its pulling out of trade deals, boosting tariffs, and all around unpredictability, the US has fallen two places to eighth position in the World Bank's 2018 ranking of the world's best places to do business. New Zealand, Singapore and Denmark have retained the top three positions for the third consecutive year in the Doing Business Index.

Writing for The Wall Street Journal, Josh Zumbrun reports: "The World Bank’s rankings, which calculate the ease of opening and operating businesses, complying with taxes, and other aspects of an economy’s regulatory environment, are closely watched by businesses and policy makers around the world, with countries frequently orienting their domestic reforms around attempts to rise in the rankings."
“Sound and efficient business regulation is critical for entrepreneurship and a thriving private sector,” said Jim Yong Kim, the president of the World Bank Group.

The World Bank recently launched the Human Capital Index, which ranks countries on a number of health and education dimensions.  "While the U.S. scores eighth on the Doing Business Index, it ranked 24th in the inaugural Human Capital rankings, surpassed by much of Europe and a handful of East Asian nations, where child mortality is lower, fewer children are underdeveloped, and where students stay in school longer and test better.

We can and need to do better!

Compare popular retirement withdrawal strategies

Saving for retirement is hard enough but now comes the real test: how to spend the money to provide maximum enjoyment without living too long and running out of money. Andrea Coombes, writing for NerdWallet, review the most popular strategies:
  • The 4% Rule (really a guideline)
  • Dynamic Withdrawals
  • The Bucket Strategy
and provides tips for whichever strategy (or combination) you choose to follow. Her article provides a brief primer on the 3 strategies but this is a decision that requires careful consideration and perhaps the input from a professional (one who is a fiduciary).
Keep in mind that an immediate life annuity will insure against running out of money before your run out of breath. Check out my posts on annuities.
Read Andrea's article:

IRS raises caps on contributions to 401(k)s, IRAs

On November 1, 2018 the IRS announced cost-of-living adjustments to contribution limits for several types of retirement plans for 2019. The cap on contributions to 401(k), 403(b), many 457 plans and the Thrift Savings Plan rose to $19,000 from $18,500, while the limit for IRA contributions is $6,000, up from $5,500. This is the first increase since 2013. 
Other inflation adjustments were announced for retirement accounts. 
Start planning now to increase you retirement account contributions for next year. 
Reported by Richard Rubin for The Wall Street Journal, 11/2/18.

Create More Retirement Income and Cut Your Longevity Risk

When you retire, your monthly income stops unless you are one of the few retirees with a pension. "But there is a way to replace income no matter how long you live."

You can creat your own pension by buying an immediate annuity that pays guaranteed income for your life. 

A deferred annuity, which pays out in the future, lets your money grow tax-deferred until you start taking payments.

An immediate annuity provides "income that replaces your salary or self-employment income, an income annuity insures against the risk of living longer than average."

An immediate annuity is "the only type of true longevity insurance. You transfer the risk to an insurance company in exchange for a premium."

"Risk-pooling and guarantees are what make lifetime annuities so valuable. With lifetime annuities, the 50 percent of people who die earlier than average subsidize those who live longer." You don’t know which half you’ll be in.

"You can self-insure against longevity risk by investing in stocks, bonds, and savings."  BUT! "You’ll need to save 25 percent to 40 percent more than with an annuity because you won’t have the advantage of risk-pooling, according to a Wharton Financial Institutions Center study."

Get the details from Ken Nuss at:

Moody's says gap between rich and poor threatens U.S. Triple-A bond rating thanks to republican tax cuts

For all virtually all of the last 100 years, the U.S. government has had the lowest cost to borrow money (which is a continual process) of any country in the world. Now the wealth gap threatens to destroy that track record and make borrowing more expensive and thus increase the deficit. On Oct. 8 Bradley Keoun, writing for, reported that President Trump's $1.5 trillion of tax cuts are forcing the U.S. Treasury to cover the gap by borrowing money in unprecedented amounts. This huge increase in borrowing threa=tens our country's creditworthiness.

The tax cuts have blown a huge hole in the federal budget, increasing the deficit to the highest amount in 6 years and skyrocketing the national debt past $21 trillion.
Credit analysis firm Moody's Investor service concluded that the growing gap between rich and poor is threatening our nation's credit rating.

Remember when the Republicans used to be the deficit hawks? No longer.
U.S debt has been considered the safest investment. While the interest rate is low, the likelihood of getting repaid was always 100%. Now that certainty is at risk.

According to Moody's "the $1.5 trillion in tax cuts have made the rich richer, while forcing the less-wealthy to cover a bigger share of the cost of government."
Both income inequality and wealth inequality are growing. 
And guess who owns the lion's share of our debt... yup, China.

November 1, 2018

Countdown to Retirement: A Five-Year Plan

You're in your late 50s or early 60s (or older) and suddenly" retirement looms with terrifying urgency. Do you have enough savings? Is your money invested too aggressively — or not aggressively enough?"
Peter Finch, writing for The New York Times,  provides a suggested “five-year countdown to retirement” based on interviews with financial advisers, economists and retirees.
What are the key things to concentrate on each year? 5, 4, 3, 2, 1... retire!
Check out:

Trump administrationt seeks to overturn the ACA's protections for pre-existing conditions

Something to think about as you get ready to vote on November 6:
Over 15M people could lose coverage if ACA lawsuit succeeds
"More than 15 million people could lose health care coverage or face premium hikes due to their gender, age or pre-existing conditions if a federal lawsuit filed by 20 Republican states targeting the Affordable Care Act succeeds in court, according to a report released by Democratic staff on the House Oversight Committee. The Trump administration-backed lawsuit seeks to overturn the ACA's protections for people with pre-existing conditions." 

October 23, 2018

FICO changing how credit scores are calculated- may boost scores

"FICO will introduce a credit score next year that incorporates information about how consumers handle savings, checking and money market accounts. The model could help some of the millions of people who have poor credit or no credit." Writing for USA Today, Janna Herron explains: "This additional information could help boost the credit scores of some of the 79 million Americans who have poor credit histories, along with the 53 million who have no credit score at all under the traditional FICO model. That, in turn, could help them qualify for a credit card or loan."
Details at:
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