No mortgage , auto or credit card debts and saving more each day is our motto.    Do not take out unnecessary college loans when there is community college and degrees with higher return on investments.

  1. Live small always. Diversify investments all over the place. When you retire, or are laid off, be ready to relocate anywhere that makes fiscal sense – inside or outside the US.
  2. Do not buy a car when there are buses and you live near your school or job.
  3. Try paying out yourself first, add more deductions in your tax withholdings (see last section about claiming more tax withholding allowances) and save monthly and not wait for a tax refund.
  4. Do not buy a house you cannot afford, save in long-term savings such as Index Universal life Policy, accumulation and distribution tax-free.
  5. Four ways we are taxed: income, capital gains, estate taxes and sales tax
  6. Four ways we can save: save early at young age even at $100 per month in an indexed annuity or index universal life policy and follow the lists listed in this post (see 1-4).
  7. Buy only what you need and not what you want, decent car and cell (service plan of $40 per month), decent house and have only two children.
  8. Find experiences that gives you more pleasure without spending thousands on vacation hot spots.
  9. Take care of your health each day so you won’t spend more when you age and your body is slowly giving up.
  10. Marry a man or woman who have the same savings values as you are, living small and wisely saving away for retirement.

If you are not terrified of inflation, wait until you see what that does to your retirement.    This money printing from Washington overspending may not destroy you today, but if you expect to retire in the future, you should wake up to this. Of course, if you plan to work until the year of your death, then you can disregard this.

If you have substantial income besides Social Security in retirement, not only will you pay tax on it, you’ll pay tax on more of your Social Security. Your Medicare premiums will be higher and your property taxes may well be higher, since you’ll be disqualified from the tax abatements offered to seniors by many local governments. Republicans aren’t satisfied with these disincentives, and want to means-test Medicare, which is just another way of saying they intend to tax your retirement savings even more. In fact, every government program for seniors that has a means test is, in effect, a tax on savings.

Live small always. Diversify investments all over the place. When you retire, or are laid off, be ready to relocate anywhere that makes fiscal sense – inside or outside the US.

When did the recession first hit? A little over 6 years ago? We earn a little more money these days, because we went into debt for college. We haven’t defaulted on those loans, and don’t plan to….but they changed the rules creating all kinds of financial woes. We’ve moved, too, with the new line of work, but due to the housing market crash, we have a house that we can neither rent nor sell – so we pay both rent and mortgage every month. That effectively means we live on less money now than we did 7 years ago when we earned less and saved more. We took a risk, things didn’t quite work out the way we’d hoped. So, we can pay for day to day living, we can keep up with our debt OR we can save for retirement…. but we can only manage one and a half of those three.

Many Americans are on course to struggle financially in retirement even though the overall amount of money being set aside for retirement is growing. As of mid-2013, Americans had more than $20 trillion in retirement assets through 401(k)-type plans, traditional defined benefit pensions, IRAs, and annuities, according to a report released earlier this month by the Investment Companies Institute, which represents mutual funds, and the American Benefits Council, and the American Council of Life Insurers.

But that money, while growing, is not distributed equally, many argue. Most of the money is being saved by higher income Americans, while many working class and low-wage workers are struggling to even earn regular full-time hours at work.

The NIRS report said that among households headed by blacks and hispanics between the ages of 55 and 64, the average retirement savings account balance was $30,000. Among whites on the verge of retirement, it was $120,000. Meanwhile, investment and human resource firms typically recommend that retirees have assets worth anywhere from eighth to 11 times their annual wages in order to adequately prepare for old age.

“One of the big issues here is a gap in access,” Oakley said. “We have what is essentially a voluntary retirement system and what we know is when we look at minority households, their access to retirement plans on the job is much less than that for whites.”


Disregarding Your Withholding Can Be Taxing

Calculating a level of withholding that is “just right” can sometimes take as much time as preparing a tax return. As a result, some people are inclined the skip the math. For those who want to keep things as simple as possible, the easiest course of action is for taxpayers to claim either Single or Married with one withholding allowance on Form W-4 (pdf). This usually results in a refund for most people. However, there are situations in which claiming one withholding allowance is not sufficient to cover tax liabilities. This seems to be the case in which a person has significant investment income or higher taxes due to the Alternative Minimum Tax. So even people who want to keep things simple and count on a refund should review their withholding at least periodically.

Calculating Withholding More Accurately

The more accurate way to adjust your withholding is to create a projected tax return for this year. You can do this by using the same tax forms you used last year, but substitute the current tax rates. For example, you could calculate your income and deductions based on what you expect for 2013, and use the 2013 tax rates to find out what your projected tax will be. You can also use the worksheet found in Form 1040-ES (pdf), which has formulas for calculating taxes for the current tax year.

After figuring out the tax liability, I then use the withholding calculator found on the IRS Web site to see what the suggested withholding allowances might be. You can also do the math by hand by using the worksheets provided with Form W-4.

What’s a Withholding Allowance?

Withholding allowances do not solely pertain to dependents or to the personal exemption amount, though withholding allowances are related. A withholding allowance is a way for your payroll department to use the look-up tables provided by the IRS to figure out how much tax to withhold from each paycheck. Roughly, a withholding allowance represents your total tax deductions divided by the personal exemption amount. This results in a ratio, and this ratio is how many withholding allowances you should claim. For further explanation please refer to the example below:

Example: Mary is a single parent, qualifies as head of household, and has one dependent. Let’s further assume that her deductions will consist of the standard deduction and two personal exemptions (one for herself and one for her child. The math for her withholding allowances would look like this (all figures below are for the 2013 tax year):

  • Standard deduction: 8,950
  • Personal exemptions: 2 x 3,900 = 7,800
  • Total tax deductions: 8,950 + 7,800 = 16,750
  • Deductions divided by personal exemption amount: 16,750 / 3,900 = 4.295

In this example, Mary would claim Single and four withholding allowances on her W-4 Form. (It’s advisable to round down the ratio to avoid having too little tax withheld from your paycheck.) In other words, Mary would check the Single box on line 3 of the Form W-4 and would write “4” on line 5 of the Form W-4 where it asks for “Total number of allowances you are claiming.”

This is a simplified method for finding withholding allowances. For a longer method, see the document, How to Fill out Form W-4.

Seeing How Your New Withholding Allowances Will Impact Your Future Pay Checks

Now that you have figured out your withholding allowances, you can use this figure to see what the tax impact is on your next paycheck will be. You just take the newly calculated withholding allowances and plug them into a payroll calculator. Be sure to have your recent paystub handy so you can use your actual income amounts.


Call Connie Dello Buono , 408-854-1883, (in 50 US states) to save $350 per month towards your long-term retirement savings growing up to $13.5% at an index universal life policy with access to funds during health threats at no added cost. CA Life Lic 0G60621. 1708 Hallmark Lane, San Jose, CA 95124 . No age limits. No limits to yearly contribution like an IRA does. No market risk like the 401k. No taxes during accumulation, distribution and withdrawal.

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