March 18, 2014

What You Need to Know about the Amount of Health Insurance Reported on Form W-2

"You may be wondering if you have to report the value of your employer-sponsored health insurance coverage, which may appear on your W-2, Wage and Tax Statement when you file your 2013 federal income tax return. Here is what you need to know about the value shown on your W-2." (Source: IRS)
  • The health care law requires certain employers to report the cost of coverage under an employer-sponsored group health plan.
  • The amount of employer-sponsored health insurance coverage appears in Box 12 of the W-2, and has the code letters “DD” next to it.
  • Reporting the cost of health care coverage on the Form W-2 does not mean that the coverage is taxable or that it needs to be reported on your tax return.
  • The amount is only for information, and shows the payments made by you and your employer and is not included in the amount shown in Box 1, which is the amount of taxable earnings. 

Advising Married Women on Investing—in Themselves

by Jerry A. Miccolis, CFP®, CFA, FCAS, CERA; and Marina Goodman, CFP®, CFA
The authors make a good case for why married women need to maintain labor force participation even if the short-term financial costs of working (child care, commuting, work-related expenses, wardrobe costs, etc. are low or negative). “A married woman’s human capital is a source of wealth that often has been overlooked, or the short-term costs given outsized emphasis.” Read the details in the Journal of Financial Planning at:

Why aren't we saving enough for our old age?

I've quoted from "Retirement Roadblocks." You can read the full article at the link below.
"Three ways behavioral finance experts are trying to reroute our cerebral circuits to do the right thing."
"Economists, journalists, and financial-services companies love to pile on the subject of why most Americans aren't saving enough for retirement. But aside from the issue of not having enough disposable income to save, what if retirement saving is a behavioral issue?"
"We can do all sorts of mental backflips to avoid saving money. Can we reroute our cerebral circuits to do the right thing? Many specialists in the area of behavioral economics think so, and their research and discoveries are pointing the way to a more secure retirement. One of the main problems is that most people can't emotionally frame the idea of living for decades past retirement age, nor can they project (without the use of calculators) how much they need to sustain their lifestyle."
"In many cases, there are behavioral obstacles to saving, although they can be overcome.
Going Automatic
There are myriad reasons to delay saving. Many people will want to spend the money now while they have it. Others may be too deep in debt, while some may not have enough disposable income. There are always behavioral barriers to saving."
It's simple: sign up for automatic saving through work or on your own with an IRA.
Pre-Selected Portfolios
"Another bugaboo in retirement savings is the sheer complexity of creating a portfolio--particularly in 401(k)-type plans. How much do you put into a stock fund? What kind of stock fund should you choose? How do you properly diversify?"
It's simple: choose the target retirement date fund.
Identifying Biases
"The most pernicious emotional stumbling block, however, is our aversion to loss. Profiled by psychologists Amos Tverksy and Daniel Kahneman, their "prospect theory" posits that people go out of their way to avoid a loss. Kahneman later won the Nobel Prize in economics for his part in this research.
In this framework, contributing to a retirement plan today is viewed as giving up something--we'd rather spend that money now while we have it.
One of the best ways to overcome loss aversion is to "reframe" it as a gain. Money saved now will be worth more in the future. It's not a loss; it's a step ahead.
Financial planner Michael Kitces says that another reframing exercise is to project current savings as increased future spending.
"The concept is rather straightforward," Kitces writes. "Just commit to saving most of next year's raise, instead of cutting your spending now--yet the simple elegance is backed by a number of important behavioral finance concepts, including aversion to a loss of current lifestyle and taking advantage of our tendency towards hyperbolic discounting to make (future) saving less painful."
Another way to reroute anxiety over setting aside money from a paycheck is to see how much it can compound over time. Try Morningstar's calculator here"

Habits of the Wealthy

Thanks to financial planner Lon Jeffries for this info from his blog:
As published by Thomas Corley in Rich Habits: The Daily Success Habits of Wealthy Individuals, 2010:

  • 44% of the wealthy wake up at least three hours before work
  • 80% are focused on accomplishing some single goal
  • 81% maintain a to-do list, and 67% write down that list
  • 88% of the wealthy read 30 minutes or more each day for education or career reasons
  • 78% network five hours or more each month
  • 76% exercise aerobically four days a week
  • 70% eat less than 300 junk food calories per day
  • 67% watch one hour or less of TV per day
  • The wealthy show self-restraint: only 6% always say what's on their mind
  • Only 23% gamble
  • Only 6% admit to gossiping

March 3, 2014

You are invited to a conversation with a financial planner

Join FPW on Wednesday, March 5 (first Wednesday) for conversations (Q&A) with SLC-based planner Lon Jeffries. I was attracted to his sensible, level-headed blog posts. Check out his excellent blog: and join us Wednesday 11:30-12:30 in USU Taggart Student Center 336 or 7-8:30 pm at the USU Family Life Center (496 N 700 E). Free parking is available next to the FLC building. Bring your questions for Lon, your spouse, partner, child, parent, friend, or colleague. Please leave your pets at home. See you Wednesday!

Investing for Retirement is Higher Priority than College Saving

I've repeatedly stressed that people should place retirement investing ahead of college savings and this New York Times article agrees.  Families who must simultaneously save for retirement and upcoming college costs should make retirement the priority, experts advise. Parents cringe at the thought of burdening their kids with student debt. But the ultimate costs could be even higher if a young person must leave the workforce to care for an elderly parent who didn't save enough for retirement” (Retirement Security Smartbrief). I’m sure thankful that my parents ensured their retirement security with annuities. Remember that your children can borrow money for post-secondary education but you only have your home to borrow against in retirement.  I strongly encourage parents and grandparents to start 529 college savings plans for their children and urge the children to help fund the accounts with their jobs and money they may receive as gifts. You can save for both simultaneously but retirement should be the top priority. Read the NYT article:
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