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Top Regrets For Parents

With students in the 10th grade and beyond wish they had:

         • Saved more each month
         • Opened a 529 savings plan earlier
         • Treated contributions to a college fund like a monthly bill
         • Boosted savings by 1% every year 
         • Prioritized college savings over impulse buys
         • Opened a cash back credit card with rewards tied to a dedicated savings account
 Fidelity College Savings Indication Survey.

Fleeing A High Tax State?

          If you fled a high tax state for one with lower or no income taxes, use caution.  Your former state may be watching to see if you really qualify as a resident of the low tax state or are just claiming that you do in order to avoid paying a higher tax bill.

          NY is a prime example, as evidenced by a case in which a taxpayer moved to TX for a job, but kept his NYC apartment and maintained other ties to NY.  The NY taxing agency claimed he continued to be domiciled in NY, but a state court disagreed after weighing all the factors.  One of the key elements supporting his change in domicile was the fact he moved his dog there!  Per the court, the move of items near and dear to one’s heart, such as the dog bolsters a taxpayer’s intent to change domiciles.  Blatt NY Division of Tax Appeals.  Kiplinger Tax Letter 3/10/17.

          We find the case to use faulty logic, since the movement of the dog can be construed to be temporary since the dog needs to be fed.  We find it hard to believe this case can be relied upon for anything other than you may need to pay legal fees if you do not cut all ties cleanly and in a timely fashion.

Study Finds New Retirement Realities

          There are major gaps in retirement readiness among pre-retirees, with half of them lacking a positive financial role model and may of them considering finance topics too taboo to discuss openly – even though financial decisions are the most second-guessed of major life decisions.  Those are the findings of a recent four-year 50,000 person study by Bank of America Merrill Lynch.

          Key findings from the study conclude:

  • While most Americans realize retirement will be the biggest purchase of their lifetime, costing 2.5 times an average home, 81% say they do not know how much money they will need to fund their retirement.
  • While most people say they want to live to age 90, only 27 percent of pre-retirees age 50 plus feel financially prepared to fund a retirement that lasts 10 years, let alone 20-30 years.
  • Americans are saving only a fraction of what they think they should; 5.5% v. 25% of their annual after tax income.More than 50% of millennials feel a secure retirement is beyond reach, compared to 30% of baby boomers.
  • The three biggest retirement related worries for Americans are (1) a costly health issue; (2) inflation and rising living costs; and (3) not having enough money to live their desired lifestyle.  
    Real Assets Advisor April 2017 p. 12.

          We are available for financial planning consultation as well as providing vehicles for investing that may mitigate or eliminate the reasons for worry

Parents Are Drowning In College Loan Debt

          Millions of U.S. parents have taken out loans from the government to help their children pay for college.  Now a crushing bill is coming due.

          Hundreds of thousands have tumbled into delinquency and default.  In the process, many have delayed retirement, put off health expenses, and lost portions of Social Security checks and tax refunds to their lender, the federal government.

          Student loans made through parents come from an Education Department program called Parent Plus, which has loans outstanding to more than 3,000,000 Americans.  The problem is that the government asks almost nothing about borrowers’ incomes, existing debts, savings, credit scores, or ability to repay.  Then it extends loans that are nearly impossible to extinguish in bankruptcy if borrowers fall on hard times.

          As of September 2015, more than 330,000 people, or 11% of borrowers, had gone at least a year without making a payment on a Parent Plus loan according to the Government Accounting Office.  That exceeds the default rate on US mortgages at the height of the mortgage crisis.  More recent Education Department data shows another 180,000 of the loans were at least a month delinquent as of May 2016.  Wall Street Journal 4/25/17 p. A1. 

Education Refinance Loans

          If you have greater than $10,000 in student loan debt, the American Automobile Association may have a solution for you.

          New for 2017, AAA has teamed up with Citizens One, a leading provider of student loans refinancing to offer members simple fast and hassle-free student loan refinancing.

          The potential benefits of refinancing student loans with Citizens One include: lower monthly payments, competitive rates, fixed or variable rate options with multiple repayment term choices, and zero application fees or prepayment penalties.  To check rates, terms and conditions, visit   AAA World May/June 2017 p. 11.

Recent Statement From A Satisfied Investment Client

          Putting the money in a 529 was one of the best financial decisions we made: thank you, thank you, thank you.

          As always, if you have any questions about these or any other matters, do not hesitate to call us.

          Remember, We’re Here For You!