Getting It All Together for Retirement

Where is everything? Time to organize and centralize your documents.

Before retirement begins, gather what you need. Put as much documentation as you can in one place, for you and those you love. It could be a password-protected online vault; it could be a file cabinet; it could be a file folder. Regardless of what it is, by centralizing the location of important papers you are saving yourself from disorganization and headaches in the future.

What should go in the vault, cabinet or folder(s)? Crucial financial information and more. You will want to include…

Those quarterly/annual statements. Recent performance paperwork for IRAs, 401(k)s, funds, brokerage accounts and so forth. Include the statements from the latest quarter and the statements from the end of the previous calendar year (that is, the last Q4 statement you received). You no longer get paper statements? Print out the equivalent, or if you really want to minimize clutter, just print out the links to the online statements. (Someone is going to need your passwords, of course.) These documents can also become handy in figuring out a retirement income distribution strategy.

Healthcare benefit info. Are you enrolled in Medicare or a Medicare Advantage plan? Are you in a group health plan? Do you pay for your own health coverage? Own a long term care policy? Gather the policies together in your new retirement command center, and include related literature so you can study their benefit summaries, coverage options, and rules and regulations. Contact info for insurers, HMOs, your doctor(s) and the insurance agent who sold you a particular policy should also go in here.

Life insurance info. Do you have a straight term insurance policy, no potential for cash value whatsoever? Keep a record of when the level premiums end. If you have a whole life policy, you need paperwork communicating the death benefit, the present cash value in the policy and the required monthly premiums.

Beneficiary designation forms. Few pre-retirees realize that beneficiary designations often take priority over requests made in a will when it comes to 401(k)s, 403(b)s and IRAs. Hopefully, you have retained copies of these forms. If not, you can request them from the account custodians and review the choices you have made. Are they choices you would still make today? By reviewing them in the company of a retirement planner or an attorney, you can gauge the tax efficiency of the eventual transfer of assets.1

Social Security basics. If you have not claimed benefits yet, put your Social Security card, your W-2 form from last year, certified copies of your birth certificate, marriage license or divorce papers in one place, and military discharge paperwork and a copy of your W-2 form for last year (or Schedule SE and Schedule C plus 1040 form, if you work for yourself), and military discharge papers or proof of citizenship, if applicable. Take a look at your Social Security statement that tracks your accrued benefits (online or hard copy) and make a screengrab of it or print it out.2

Pension matters. Will you receive a bona fide pension in retirement? If so, you want to collect any special letters or bulletins from your employer. You want your Individual Benefit Statement telling you about the benefits you have earned and for which you may become eligible; you also want the Summary Plan Description and contact info for someone at the employee benefits department where you worked.

Real estate documents. Gather up your deed, mortgage docs, property tax statements and homeowner insurance policy. Also, make a list of the contents of your home and their estimated value – you may be away from your home more in retirement, so those items may be more vulnerable as a consequence.

Estate planning paperwork. Put copies of your estate plan and any trust paperwork within the collection, and of course a will. In case of a crisis of mind or body, your loved ones may need to find a durable power of attorney or health care directive, so include those documents if you have them and let them know where to find them.

Tax returns. Should you only keep your 1040 and state return from the previous year? How about those for the past 7 years? Have you kept every one since 1982 or 1974? At the very least, you should have a copy of returns from the prior year in this collection.

A list of your digital assets. We all have them now, and they are far from trivial – the contents of a cloud, a photo library, or a Facebook page may be vital to your image or your business. Passwords must be compiled too, of course.

This will take a little work, but you will be glad you did it someday. Consider this a Saturday morning or weekend project. It may lead to some discoveries and possibly prompt some alterations to your financial picture as you prepare for retirement.

I hope you found this helpful. Contact me at michael@caeducators or 818.206.1163 for a complimentary review of your retirement situation.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 – fpanet.org/ToolsResources/ArticlesBooksChecklists/Articles/Retirement/10EssentialDocumentsforRetirement/ [9/12/11]

2 – cbsnews.com/8301-505146_162-57573910/planning-for-retirement-take-inventory/ [3/18/13]

Are Your Kids Delaying Your Retirement?

Some baby boomers are supporting their “boomerang” children.

Are you providing some financial support to your adult children? Has that hurt your retirement prospects?

It seems that the wealthier you are, the greater your chances of lending a helping hand to your kids. Pew Research Center data compiled in late 2014 revealed that 38% of American parents had given financial assistance to their grown children in the past 12 months, including 73% of higher-income parents.1

The latest Bank of America/USA Today Better Money Habits Millennial Report shows that 22% of 30- to 34-year-olds get financial help from their moms and dads. Twenty percent of married or cohabiting millennials receive such help as well.2

Do these households feel burdened? According to the Pew survey, no: 89% of parents who had helped their grown children financially said it was emotionally rewarding to do so. Just 30% said it was stressful.1

Other surveys paint a different picture. Earlier this year, the financial research firm Hearts & Wallets presented a poll of 5,500 U.S. households headed by baby boomers. The major finding: boomers who were not supporting their adult children were nearly 2½ times more likely to be fully retired than their peers (52% versus 21%).3

In TD Ameritrade’s 2015 Financial Disruptions Survey, 66% of Americans said their long-term saving and retirement plans had been disrupted by external circumstances; 24% cited “supporting others” as the reason. In addition, the Hearts & Wallets researchers told MarketWatch that boomers who lent financial assistance to their grown children were 25% more likely to report “heightened financial anxiety” than other boomers; 52% were ill at ease about assuming investment risk.3,4

Economic factors pressure young adults to turn to the bank of Mom & Dad. Thirty or forty years ago, it was entirely possible in many areas of the U.S. for a young couple to buy a home, raise a couple of kids and save 5-10% percent of their incomes. For millennials, that is sheer fantasy. In fact, the savings rate for Americans younger than 35 now stands at -1.8%.5

Housing costs are impossibly high; so are tuition costs. The jobs they accept frequently pay too little and lack the kind of employee benefits preceding generations could count on. The Bank of America/USA Today survey found that 20% of millennials carrying education debt had put off starting a family because of it; 20% had taken jobs for which they were overqualified. The average monthly student loan payment for a millennial was $201.2

Since 2007, the inflation-adjusted median wage for Americans aged 25-34 has declined in nearly every major industry (health care being the exception). Wage growth for younger workers is 60% of what it is for older workers. The real shocker, according to Federal Reserve Bank of San Francisco data: while overall U.S. wages rose 15% between 2007-14, wages for entry-level business and finance jobs only rose 2.6% in that period.5,6

It is wonderful to help, but not if it hurts your retirement. When a couple in their fifties or sixties assumes additional household expenses, the risk to their retirement savings increases. Additionally, their retirement vision risks being amended and compromised.

The bottom line is that a couple should not offer long-run financial help. That will not do a young college graduate any favors. Setting expectations is only reasonable: establishing a deadline when the support ends is another step toward instilling financial responsibility in your son or daughter. A contract, a rental agreement, an encouragement to find a place with a good friend – these are not harsh measures, just rational ones.

With no ground rules and the bank of Mom and Dad providing financial assistance without end, a “boomerang” son or daughter may stay in the bedroom or basement for years and a boomer couple may end up retiring years later than they previously imagined. Putting a foot down is not mean – younger and older adults face economic challenges alike, and couples in their fifties and sixties need to stand up for their retirement dreams.

I hope you found this helpful. Contact me at michael@caeducators or 818.206.1163 for a complimentary review of your retirement situation.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.
1 – pewsocialtrends.org/2015/05/21/5-helping-adult-children/ [5/21/15]
2 – newsroom.bankofamerica.com/press-releases/consumer-banking/parents-great-recession-influence-millennial-money-views-and-habits/ [4/21/15]
3 – marketwatch.com/story/are-your-kids-ruining-your-retirement-2015-05-05 [5/5/15]
4 – amtd.com/newsroom/press-releases/press-release-details/2015/Financial-Disruptions-Cost-Americans-25-Trillion-in-Lost-Retirement-Savings/default.aspx [2/17/15]
5 – theatlantic.com/business/archive/2014/12/millennials-arent-saving-money-because-theyre-not-making-money/383338/ [12/3/14]
6 – theatlantic.com/business/archive/2014/07/millennial-entry-level-wages-terrible-horrible-just-really-bad/374884/ [7/23/14]

How Can Women Save More for Retirement?

Suggestions to accelerate & maintain the pace of the effort.

Numerous articles have mentioned the obstacles women can face as they save for retirement. Turning from the negative, here are some positive factors that may help women save more.

Financial literacy. Learning about investing, retirement topics and the markets is step one. An appreciation and understanding of the potential of equity investment, a recognition that a six-figure or seven-figure sum may be needed to retire – a retirement savings effort proceeds from these understandings.

When you have knowledge, you have more confidence and your money decisions feel empowering. A 2014 TIAA-CREF survey found that 81% of women who had obtained knowledge from a financial professional reported feeling informed about retirement planning and retirement saving, and 63% of women who had received financial advice felt confident about their retirement saving progress.1

Debt reduction. Less debt leaves more money to save. One recent survey suggests that women amass less debt than men: in reviewing credit trends for 2013, Experian found women were 4.3% less indebted than men overall and that female borrowers missed fewer mortgage payments and took out smaller home loans. As for handling a student loan burden while saving for retirement, most federal college loans are eligible for at least one of the new income-based repayment plans which cap monthly payment levels based on family size and income.2,3

Estimating high. Here are seven words you will rarely (if ever) hear from a financial professional: “You are saving too much for retirement.” Most people save too little, and here is a case where erring on the side of caution is no error at all. Building your retirement nest egg through multiple vehicles (an IRA, a workplace retirement plan, an equity portfolio, savings accounts) can contribute to the generation of a larger-than-necessary retirement fund.

Saving 10% or more of your income as soon as you can. Starting early allows you to take advantage of the considerable power of compounding. Putting away 10% or 15% of your annual income into retirement accounts is not excessive; it is quite reasonable, even necessary.

As a hypothetical example, 35-year-old Christina has already saved $30,000 for retirement with the idea of retiring at 65. She currently earns $70,000 annually. A retirement income of $100,000 seems like a nice idea for 2045 and the 20 years stretching beyond that date.

Assuming a 6% return before and after retirement, Christina would need to save 17.61% of her income, or $12,329 a year, to reach her goal under such parameters.4

At age 45 she has built $152,000 in retirement savings and earns $120,000 a year. To get that $100,000 retirement income for a 20-year retirement, she still has to save 14.9% of her income ($17,928) at a hypothetical 6% consistent return to realize that objective. The lesson: save, save early, and save more.4

 Asking for raises or creating new income streams. It can be hard to ask for a raise, but it is harder to live on a substandard salary or risk positioning yourself for a retirement savings shortfall. Your employer will not likely give you one out of thin air, so initiate the conversation and assert your value. Also, look for opportunities to make more money outside of the 8-to-5 or 7-to-4: speaking engagements, home organizing, direct sales, consulting and other methods.

Owning your financial life. That is to say, keep control over it. If a relationship is wonderful and intense, great, but avoid being seduced into a passive financial role in the long term. That was the default role for women decades ago when they married, but even today, when one person makes most of the financial decisions in a relationship, the other person risks moving forward in life with inadequate financial knowledge. That problem plagues widows.

Actively managing your finances also means straightforwardly addressing spending issues, debt and any other financial problems or dilemmas that must be resolved as you pursue your retirement savings goal.

Thinking positive. Saving for retirement begins by pairing the right outlook and the right actions. Stay positive; stay consistent; run the numbers and make sure you are saving enough. To find out just how much is enough, consult a financial professional who can help you assess your saving potential.

I hope you found this helpful. Contact me at michael@caeducators or 818.206.1163 for a complimentary review of your retirement situation.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 Citations.

1 – tiaa-cref.org/public/about/press/about_us/releases/articles/pressrelease534.html [10/29/14]

2 – experian.com/blogs/news/2013/05/22/women-vs-men/ [5/22/13]

3 – studentaid.ed.gov/repay-loans/understand/plans/income-driven [4/9/15]

4 – msn.com/en-us/money/tools/retirementplanner [4/9/15]

Are You Retiring Within the Next 5 Years?

What should you focus on as the transition approaches?

 You can prepare for your retirement transition years before it occurs. In doing so, you can do your best to avoid the kind of financial surprises that tend to upset an unsuspecting new retiree.

How much monthly income will you need? Look at your monthly expenses and add them up. (Consider also the trips, adventures and pursuits you have in mind in the near term.) You may end up living on less; that may be acceptable, as your monthly expenses may decline. If your retirement income strategy was conceived a few years ago, revisit it to see if it needs adjusting. As a test, you can even try living on your projected monthly income for 2-3 months prior to retiring.

Should you try to go Roth? Many pre-retirees have amassed substantial retirement savings in tax-deferred retirement accounts such as 401(k)s, 403(b)s and traditional IRAs. Distributions from these accounts are taxed as ordinary income. This reality makes some pre-retirees weigh the pros and cons of a Roth IRA or Roth 401(k) conversion for some or all of those assets. You may want to consider the “Roth tradeoff” – being taxed on the amount of retirement savings you convert today in exchange for the ability to take tax-free withdrawals from the Roth IRA or 401(k) tomorrow. (You must be 59½ and have owned that Roth account for at least five years to take tax-free distributions.)1

Should you downsize or relocate? Moving to another state may lessen your tax burden. Moving into a smaller home may reduce your monthly expenses. In a perfect world, you would retire without any mortgage debt. If you will still be paying off your home loan in retirement, realize that your monthly income might be lower as you do so. You may want to investigate a refi, but consider that the cost of a refi can offset the potential savings down the line.

How conservative should your portfolio be? Even if your retirement savings are substantial, growth investing gives your portfolio the potential to keep pace with or keep ahead of rising consumer prices. Mere gradual inflation has the capability to erode your purchasing power over time. As an example, at 3% inflation what costs $10,000 today will cost more than $24,000 in 2045.2

In planning for retirement, the top priority is to build savings; within retirement, the top priority is generating consistent, sufficient income. With that in mind, portfolio assets may be adjusted or reallocated with respect to time: it may be wise to have some risk-averse investments that can provide income in the next few years as well as growth investments geared to income or savings objectives on the long-term horizon.

How will you live? There are people who wrap up their careers without much idea of what their day-to-day life will be like once they retire. Some picture an endless Saturday. Others wonder if they will lose their sense of purpose (and self) away from work. Remember that retirement is a beginning. Ask yourself what you would like to begin doing. Think about how to structure your days to do it, and how your day-to-day life could change for the better with the gift of more free time.

Many retirees find that their expenses “out of the gate” are larger than they anticipated – more travel and leisure means more money spent. Even so, no business owner or professional wants to enter retirement pinching pennies. If you want to live it up a little yet are worried about drawing down your retirement savings too fast, consider slimming transportation costs (car and gasoline expenses; maybe you could even live car-free), landscaping costs, or other monthly costs that amount to discretionary spending better suited to youth or mid-life.

How will you take care of yourself? What kind of health insurance do you have right now? If your company sponsors a group health plan, you may as well get the most out of it (in terms of doctor, dentist and optometrist visits) before you leave the office.

If you retire prior to age 65, Medicare will not be there for you. Check and see if your group health plan will extend certain benefits to you when you retire; it may or may not. If you can stay enrolled in it, great; if not, you may have to find new coverage at presumably higher premiums.

Even if you retire at 65 or later, Medicare is no panacea. Your out-of-pocket health care expenses could still be substantial with Medicare in place. Long term care is another consideration – if you think you (or your spouse) will need it, should it be funded through existing assets or some form of LTC insurance?

Give your retirement strategy a second look as the transition approaches. Review it in the company of the financial professional who helped you create and refine it. An adjustment or two before retirement may be necessary due to life or financial events.

I hope you found this helpful. Contact me at michael@caeducators or 818.206.1163 for a complimentary review of your retirement situation.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 – turbotax.intuit.com/tax-tools/tax-tips/Retirement/The-Tax-Benefits-of-Your-401-k–Plan/INF22614.html [5/7/15]

2 – investopedia.com/articles/markets/042215/best-etfs-inflationary-worries.asp [4/22/15]

9/20/2013 – Weekly Email – “Our actions are the results of our intentions and our intelligence.” -E. Stanley Jones

“News And Information To Keep You Informed”

California Educators
Financial & Insurance Services
Michael Snowhite, Founder/CEO

21550 Oxnard Street
Suite 460
Woodland Hills, CA 91367
O 818-206-1163
TF 800-880-4141
www.safe403b.com

In This Issue

Opening Thoughts

Good News

Planning Tips

California Educators

Weekly Report

 

Friday, September 20, 2013

 

Our goal is to provide you with exceptional service. If there is anything we discuss in this week’s email that you would like to visit about, or if there are any questions you have, please call our office and let us know. We’re here to serve you. 

Quote of the week:
“Our actions are the results of our intentions and our intelligence.”
-E. Stanley Jones

Remember: Please don’t keep us a secret… We’re never too busy to see if we can help your friends or a family member.

 

 WE HAVE MOVED!

 

OUR NEW ADDRESS:

21550 Oxnard Street

Suite #460

Woodland Hills, CA 91367

 

Opening Thoughts…

In the Headlines

Stackable Farms – Agriculture Moves to the City

 

Steve Fambro, the founder and former CEO of electric car startup Aptera, has a new venture. Famgro Farms aims to grow organic produce more efficiently, more quickly, with no pesticides, and in urban areas. He was inspired to start the business while standing in the checkout line of a local natural food grocery store with a handful of organic produce thinking about how expensive his purchases were. The company makes stackable farm units, each about the size of a Prius. The firm also operates the farms and sells the produce—like sweet kale and microgreens—to retailers such as Whole Foods.
 

Famgro’s farm pods use ultra-efficient light emitting diodes (LEDs) to deliver the exact amount of light needed for the plants to hit a hyper-growth stage. All of the photons are captured in the controlled environment of the farm and none are lost.
 

The Famgro team actually spent two years designing and figuring out how to make the thin, wide, flat LEDs the company uses in its units. The LEDs had to produce the right light wavelengths to optimize the crops, but they had to be robust enough to work under moist growing conditions. In addition, Famgro had to figure out how to cool the lights in an efficient manner, which is a challenge for all LED developers.
 

Hydroponics in the farm units enable the delivery of the exact amount of water needed for quick growth in a small space. Automation tools inside the units harvest the crops in a few seconds, and replace the need for laborers to perform this task.
 

Famgro has 12 of its farm units now producing crops in Southern California. The company is seeking additional funding to expand the market for these urban- efficient farms.  Another option for Famgro’s growth is selling or licensing its technology to bigger farm companies that have the resources needed to cost-effectively manufacture and market Famgro’s product. 

 

Sources:

1.http://money.cnn.com/news/newsfeeds/gigaom/articles/2013_09_07_from_the_founder_of_aptera_tiny_and_stackable_ultra_efficient_organic_farms.html


 

Check this out #IPO – @Twitter Going Public

 

Twitter’s announcement that it has filed for a public offering of its shares is causing quite a stir among technology companies and their backers. Venture capitalists say it could go public at as much as a $15 billion valuation.

 

Over the past year, other venture-backed companies, including SurveyMonkey, Eventbrite, and WordPress-publisher Automatic have chosen to raise money from hedge funds and mutual funds rather than tap public markets. But a strong Twitter IPO could spur these and other technology based businesses such as Uber, Airbnb and Dropbox, all considered IPO candidates for 2014, to rethink their options.

 

Thanks to Twitter, with its endlessly scrolling sequences of 140-character messages, the voices of friends, celebrities, and strangers now flood incessantly across our phones and computers and inside our heads. It is an always entertaining source of news, opinion, jokes, conversations, and confession, punctuated every so often by the egregious public misstep. In a sense, Twitter is an endless cacophony of human voices that never goes quiet, even in the middle of the night.

 

The remarkable thing is that it has all seemed somewhat accidental. Speaking broadly, there are two kinds of companies. The first kind of company springs directly from the ingenuity of its founders. Examples include Google, Wal-Mart Stores, and Amazon.com. Their creators give old ideas new twists and then almost single-handedly seem to will their creations to success. The second kind of company is built around a principal idea that is strong and original enough to power a good deal of the company’s achievement, perhaps despite the founders—a company such as Twitter.

 

In 2007, Twitter was conceived as a side project within the podcasting startup Odeo Corp. It coincided perfectly with the rapidly growing use of smartphones, devices with limited bandwidth and screen space. The service then grew despite plenty of uncertainty among its creators about how to transform their powerful idea into a revenue-generating business.

 

In its formative years, Twitter survived infighting among the founding team, an almost comically unstable technical infrastructure, the emergence of a chaotic secondary trading market for its stock, and its own indecisiveness about whether to support a community of third-party developers. Even under the steady leadership of CEO Dick Costolo over the past three years, Twitter’s central challenge has been to open a window for advertisers without interfering with the energetic conversations among its users.

 

Over the next few months, as Twitter is required to make its financial details public, investors will learn more about its progress toward solving these challenges. Can Twitter become a new kind of technology/media company that keeps its users engaged while giving advertisers new ways to sell their wares? Is Twitter succeeding in its quest to make its service compelling for those Internet users who may not necessarily want a new kind of online soapbox? For these users, Facebook may be a more compelling way to stay connected.

 

Twitter has become a cultural icon. One need only witness the parade of big brands and celebrities who now repeat their Twitter handles and hashtags incessantly, as a way to publicly identify themselves. In the relatively short span of seven years, Twitter has evolved from a simple experiment into something fundamental—a tool that gives people an unfiltered voice in a near-global conversation.

 

Sources:

1. http://www.businessweek.com/articles/2013-09-13/the-twitter-ipo-the-accidental-revolution-hurtles-toward-payday#r=nav-f-story

2. http://www.cnbc.com/id/101034540

3. http://management.fortune.cnn.com/2013/09/06/advertising-digital-disruption/?iid=SF_F_River 

 

Some Good News

Everywhere you look, you see nothing but doom and gloom in the headlines. So let’s see if we can find any good news out there…

Here are a few bits of information…

  • The National Federation of Independent Business (NFIB) reported that several key indicators in its Small Business Optimism Index including planned hiring, capital spending, inventory accumulation, and sales all advanced in August, suggesting improved optimism within small businesses for the months ahead. The increase in capital spending and inventory investment plans could help spur growth in the nation’s GDP (gross domestic product) according to the NFIB. 

Sources:

1. http://www.cnbc.com/id/101020053

  • Williams-Sonoma, Inc., the specialty retailer of products for the home, reported earnings of $0.49 per share, a 13.9% increase over last year’s earnings of $0.43. The company’s earnings topped the consensus analyst estimate of $0.47. The company also reported that revenues grew 12.3% to $982 million. Management attributed the solid performance to strong demand for its brands and investments in its infrastructure. 

Sources:

1. http://www.cnbc.com/id/18080780/

2. http://www.williams-sonomainc.com/files/press-releases/WSM-Q2FY13ER.pdf 

  • Disney said Thursday it will buy back $6 to $8 billion of its stock beginning next year. The company has benefited from the strength of advertising at ABC and fees paid to carry ESPN. Over the past several years, Disney, like other media companies, has experienced steady increases in profits and sales. This trend has countered the idea that content producers would struggle in the age of portable electronic devices and new sources of programming. 

Sources:

1. http://www.thestreet.com/story/12035909/1/disney-buyback-reflects-strength-of-media-stocks-media-roundup.html

Don’t you ever wonder why the media can’t spend more time focusing on the good news that happens?

Planning Tips…

Tips for Saving on Bank Fees

Rising banking fees can be a problem if you are on a fixed monthly income or are trying to stick to a budget. Here are some tips for avoiding unnecessary bank fees.

 

Overdraft protection -The median overdraft fee is $35. Such fees can be triggered in four ways: using an ATM, writing a check, making a purchase with a debit card, or making other electronic transactions, such as online bill payments. To avoid high overdraft fees, instruct your bank to decline any transaction when you do not have sufficient funds in your account. Alternatively, seek out banks with consumer-friendly policies. For instance, banks which do not impose overdraft fees for debit card use or ATM transactions.

 

Designer checks -Designer checks are expensive. If you use checks regularly, opt for the basic checks your bank offers; many institutions provide those free of charge. Many people find it much more convenient to pay with a debit card or cash, or to pay bills electronically, where no check is needed.

 

ATM fees -Move your checking account to a bank that has a large ATM network with branches near your home and work. Use only Automated Teller Machines (ATMs) that do not charge fees. If you withdraw $20 from an ATM and are charged $1.50 by the ATM owner, you have in effect paid a 7 1/2 % surcharge for access to your own money. Your bank may also charge you an out-of-network transaction fee, doubling the actual cost to you.

 

Credit reports -Checking your credit reports regularly is a good idea. You can spot any mistakes that may be in your credit files and keep tabs on your credit score. However, under federal law, every adult in America is entitled to one free copy of his or her credit report once every 12 months from each of the three main credit bureaus: Equifax, Experian and TransUnion. To get your free credit report, go to www.annualcreditreport.com , the government-mandated website that the credit bureaus must maintain for U.S. consumers.

 

Online bill payment services -Having the ability to pay your bills online can help staying within your budget and keep your finances organized. However, online bill payment services should not come with a fee. Some banks and institutions do impose fees for certain types of accounts, so make sure you are aware of the cost of those transactions before you authorize payment. Talk to a bank representative to find out if any accounts have free online bill pay options.

 

Copies of checks or image copies -Many banks post image copies of checks in your transaction history so you can see exactly which checks have posted and review your deposit slips after making the deposit. Just make sure you are not paying an extra fee for this service. At the very least, the bank should be able to give you an electronic copy of the front and back of a canceled check for your records. This service might only be offered to longtime or privileged customers, so find out if you are eligible.

 

Mobile banking options -More people are using their smartphones or tablet computers to take care of bill payments and manage their finances. Many banks have created mobile websites and apps for streamlined mobile banking. These services should be free, so before enrolling in any type of mobile banking service, speak with a bank representative to ensure you will not incur unexpected fees.

 

Please don’t hesitate to give us a call if you need help with any component of your financial planning.

 

Citations

1. http://money.cnn.com/magazines/moneymag/money101/lesson3/index.htm

2. http://www.dummies.com/how-to/content/how-to-save-money-on-your-banking-fees.html

3. http://www.aarp.org/money/budgeting-saving/info-09-2013/what-you-need-to-know-about-banking-fees.html

4. http://financialplan.about.com/cs/saving/a/SaveOnBanking.htm

5. http://www.mint.com/blog/how-to/how-to-avoid-rising-bank-fees/

 

Your Team

Thank you for taking the time to read this week’s issue of “California Educators Weekly Report.” We hope you found it to be insightful as well as entertaining. Please remember that our goal is to provide you with impeccable service. Please feel free to contact anyone on our team should you have questions or would like to discuss your goals or concerns.

We may be reached by using the following:
818-206-1163
www.safe403b.com
michael@safe403b.com
darren@safe403b.com
gaby@safe403b.com

Michael Snowhite, Founder/CEO

   

Weekly Newsletter

“News And Information To Keep You Informed”

California Educators
Financial & Insurance Services
Michael Snowhite, Founder/CEO

21550 Oxnard Street
Suite 460
Woodland Hills, CA 91367
O 818-206-1163
TF 800-880-4141
www.safe403b.com

In This Issue

Opening Thoughts

Good News

Planning Tips

California Educators

Weekly Report

 

Friday, August 30, 2013

Dear ,

Our weekly email is aimed at keeping you up to date on important topics and changes. We hope you find these weekly emails informative and enjoyable. Each week we will bring you important updates and useful information, in an easy to understand format. Enjoy!

We’re Here to Help

Our goal is to provide you with exceptional service. If there is anything we discuss in this week’s email that you would like to visit about, or if there are any questions you have, please call our office and let us know. We’re here to serve you.

Quote of the week:
“Don’t give up. Don’t lose hope. Don’t sell out.”
-Christopher Reeve

Remember: Please don’t keep us a secret… We’re never too busy to see if we can help your friends or a family member.

We Moved!

 

WE HAVE MOVED!

 

OUR NEW ADDRESS:

21550 Oxnard Street

Suite #460

Woodland Hills, CA 91367

 

Opening Thoughts…

In the Headlines

Coming Soon – The Great Rotation?

Many on Wall Street are anticipating a “Great Rotation.” They expect that much of the $1.7 trillion that poured into bond funds and exchange-traded funds since the beginning of 2008 is now about to make a U-turn into equities.

 

U.S. bond funds saw $30.3 billion in redemptions through August 19, the third-highest on record. While the Standard & Poor’s 500-stock index is up 16% this year, dollar-denominated corporate and government bonds are down 3.4%.

 

There hasn’t been much evidence of a rush to purchase shares. After putting a record $39.2 billion into U.S. stock funds in July, investors pulled out $11.3 billion midway through August. At best, it seems investors are cautiously testing the equity waters rather than plunging in.

 

This has not stopped Wall Street from speculating on the timing and unfolding of the Great Rotation. For example, at Bank of America Merrill Lynch, whose strategists coined the phrase, brokers are pushing retail clients into equity funds to the tune of $23 billion, while simultaneously redeeming $21 billion from funds invested in bonds and cash. The firm’s hedge fund and institutional clients, however, have not followed suit. Even so, Michael Hartnett, the bank’s chief investment strategist, confidently declared that the idea of a Great Rotation has moved from a controversial view to consensus.

 

JP Morgan Chase also sees a Great Rotation underway in the U.S., but other firms are skeptical. Pimco, the bond giant most invested in a rotation not happening, argues that it is hard to see retirement-bound investors (no small constituency) embrace the volatility of stocks. Société Générale sees a Great Rotation on the order of $100 billion-only to European equities and out of U.S., Japanese, and emerging-market stocks.

 

Regardless of whether the hype about a Great Rotation pans out, the consequences of rising interest rates could be dramatic. Investors have binged on bond funds in recent years without necessarily appreciating the risks. According to a recent survey by Edward Jones, 63% of Americans do not know how rising interest rates will impact investment portfolios; one-third of respondents aged 18 to 34 replied they have “no idea” how interest rate changes will impact a portfolio. As the bond market feels the impact of higher rates, they could learn the hard way that even their ‘safe’ bond funds can experience losses.

 

Source:

1. http://www.businessweek.com/articles/2013-08-23/in-search-of-the-great-rotation#r=nav-fs 


 

The Part Time Recovery

 

Hiring by U.S. businesses is moving at a stronger pace. The only problem is that three out of four of the nearly 1 million hires this year are part-time and many of the jobs are low-paid.

 

Part-timers offer employers flexibility. If the economy picks up, they can quickly offer full-time work. If orders dry up, they know costs are under control. It also helps curb costs they might face under the Affordable Care Act (ACA).

 

This can have a negative impact on the economy. New employees who are mainly in lower wage businesses such as retail and food services do not have the disposable income to drive demand for goods and services. Some economists, however, say the surge in reliance on part-time workers will fade as the economy strengthens and businesses gain more certainty over how they will be impacted by the ACA.

 

According to staffing and payroll executives, the law, which requires employers with 50 or more full-time workers to provide healthcare coverage or incur penalties, was a frequently cited factor in requests for part-time workers. A decision to delay the mandate until 2015 has not made much of a difference in hiring decisions.

 

The ACA appears to be having the most impact on hiring decisions by small- and medium-sized businesses. Although small businesses account for a smaller share of the jobs in the economy, they are an important source of new employment. Some businesses are holding their headcount below 50 and others are cutting back the work week to under 30 hours to avoid providing health insurance for employees.

 

Under the ACA, any employee working 30 hours or more is considered full-time. An effort to trim hours might have helped push the average work week down to a six-month low in July. For example, a memo that leaked out from teen and young adult retailer Forever 21 last week, showed it was reducing the hours for a number of full-time staff to no more than 29.5 hours a week, just below the ACA threshold. The surge in part-time employment also reflects an economy that has struggled to maintain growth, leaving many business owners reluctant to take on full-time staff.

 

Automatic spending cuts by the federal government are also causing uncertainty. In a paper published last month, the San Francisco Federal Reserve Bank said uncertainty over fiscal and regulatory policy had left the U.S. unemployment rate 1.3 percentage points higher at the end of last year than it otherwise would have been. That translates to about 2 million jobs below where the economy should have been in 2012 because of policy uncertainty.

 

Economists and staffing companies are cautiously optimistic that part-time hiring and the low wages environment will fade as the economy regains momentum. But businesses now accustomed to functioning with fewer workers might not be in a hurry to change course. Profitability per employee has improved significantly since 2008; the lesson businesses learned during the recession was to keep operations lean.

 

Sources: 

1. http://www.cnbc.com/id/100977130

2. http://www.cnbc.com/id/100980411

 

Some Good News

Everywhere you look, you see nothing but doom and gloom in the headlines. So let’s see if we can find any good news out there…

Here are a few bits of information…

  • Sales of existing U.S. homes rose in July to the highest level in over three years. The National Association of Realtors said on Wednesday, August 21, that existing home sales jumped 6.5% to an annual rate of 5.39 million units. The reported home sales were well above the expectations of analysts and marked the fastest pace of sales since November 2009. The data suggest that the recent sharp increase in borrowing costs is having only a limited impact on the housing market’s recovery.

Source: http://www.cnbc.com/id/100977873 

  • PetSmart, Inc., the nation’s largest pet supplies retailer, reported earnings of $0.89 per share, up 25.4% over the previous year. The per share earnings topped the consensus estimate of analysts of $0.86 per share. The company also reported that revenues grew 5.3% to $1.7 billion. The company cited improving sales of its merchandise and services, and lifted its earnings outlook for the year. 

Source: http://www.cnbc.com/id/18080780/

  • Amgen, Inc., appears close to buying Onyx Pharmaceuticals, Inc., for $125 per share, a deal valued at more than $10 billion. The acquisition will require board approval from both companies and would represent the fifth largest biotechnology deal in history. The acquisition of Onyx would give Amgen full rights to Kyprolis, the new multiple myeloma drug that analysts expect to reach annual peak sales in excess of $2 billion. Amgen would also gain a revenue stream from the liver and kidney cancer drug Nexavar that Onyx shares with Bayer AG, as well as royalty payments on Bayer’s much newer colon cancer drug Stivarga. The firm could also realize potential future royalties on an experimental breast cancer drug being developed by Pfizer. 

Source: http://www.reuters.com/article/2013/08/24/onyx-deal-idUSL2N0GP0I220130824

Don’t you ever wonder why the media can’t spend more time focusing on the good news that happens?

Planning Tips…

Tax Tips for Family Caregivers

Many in the baby boomer generation now find themselves in the position of providing extensive care for elderly parents. If you are paying all or part of the cost of caring for a parent or another relative, you may qualify for some federal tax breaks.

 

As more boomers take on caregiving responsibilities for their aging relatives, it is important to understand the tax ramifications and benefits of their financial support. Below are some ways family caregivers can save money on their taxes.

 

How a relative qualifies to become a dependent -Relatives are eligible to become a dependent on a caregiver’s tax return if they earned less than $3,800 a year, excluding nontaxable Social Security and disability payments, and if the caregiver provided more than 50% of the relative’s support. In that case, caregivers can take a $3,900 tax exemption for each dependent. However, a word of caution is in order. Pensions, interest on bank accounts, dividends, and withdrawals from retirement plans are counted as income. Your relative does not have to live in your home to be considered your dependent.

 

Tax benefit for a dependent’s medical costs -If you claim a relative as your dependent, you can claim medical deductions if you are providing more than 50% of their support and if these costs represented more than 10% of your adjusted gross income. For caregivers over 65, the cost threshold is 7.5% of adjusted gross income.

 

Tax deductions for non-relatives -Non-relatives can also qualify as a dependent but only if they are part of the caregiver’s household for the entire tax year.

 

Deductions for other kinds of dependent expenses -The cost for food, housing, medical care, clothing, transportation, and even bathroom modifications all qualify for tax deductions. The IRS allows caregivers to deduct the costs not covered by a health care plan for a relative’s hospitalization or for out-of-pocket costs for prescription drugs, dental care, copays, deductibles, ambulances, bandages, eyeglasses, and certain long-term care services. Other items include acupuncture, adapters to TV sets and telephones for those who are hearing impaired, smoking cessation programs, weight-loss programs (if part of a treatment for a specific disease or condition) and wigs if hair loss is due to a medical condition or treatment. If a caregiver works but pays for care for a relative who cannot be left alone, those costs may also be tax-deductible.

 

How to file when more than one sibling wants to take the parent as a dependent on their tax form -You can file a multiple support agreement on form 2120 with your tax return if more than one sibling is sharing the cost of the parent’s upkeep. Alternatively, you may want to consider creating a written agreement with your siblings that would allow each of you to take the dependent deduction every other year.

 

Using a flexible spending account to pay for a relative’s eligible medical expenses -A caregiver’s tax-free flexible spending account may be used to cover expenses for both dependent and independent relatives, as long as you are responsible for at least 50% of their support. The FSA is a tax-advantaged account that allows an employee to set aside a portion of earnings to pay for qualified medical expenses. Caps for FSAs were typically set by employers over the years. However, a $2,500 federal cap was put into place for 2013. Keep all of your records to prove these expenses in the event of a tax audit.

 

Please do not hesitate to contact us for help with any component of your financial planning.

 

Sources

1. http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Family-Caregivers-and-Self-Employment-Tax

2. http://www.care2.com/greenliving/tax-tips-for-caregivers-claiming-a-parent-as-a-dependent.html

3. http://www.aarp.org/home-family/caregiving/info-02-2013/6-tax-tips-for-family-caregivers.html

4. http://blog.mensliberty.com/blog/bid/275978/Tax-Tips-for-Caregivers-to-Maximize-Your-Return

5. http://www.agingcare.com/Articles/Tax-Tips-for-Caregivers-Can-I-Claim-My-Elderly-Parent-as-a-Dependent-109238.htm

6. http://www.aplaceformom.com/senior-care-resources/articles/tax-tips-for-seniors

 

Your Team

Thank you for taking the time to read this week’s issue of “California Educators Weekly Report.” We hope you found it to be insightful as well as entertaining. Please remember that our goal is to provide you with impeccable service. Please feel free to contact anyone on our team should you have questions or would like to discuss your goals or concerns.

We may be reached by using the following:
818-206-1163
www.safe403b.com
michael@safe403b.com
darren@safe403b.com
gaby@safe403b.com

Michael Snowhite, Founder/CEO

“Big shots are only little shots who keep shooting.”

Image

 

“News And Information To Keep You Informed”

California Educators
Financial & Insurance Services
Michael Snowhite

21550 Oxnard Street
Suite 460
Woodland Hills, CA 91367
O 818-206-1163
TF 800-880-4141
www.safe403b.com

In This Issue

Opening Thoughts

Good News

Planning Tips

California Educators

Weekly Report

 

Monday, July 29, 2013

Dear Michael,

Our weekly email is aimed at keeping you up to date on important topics and changes. We hope you find these weekly emails informative and enjoyable. Each week we will bring you important updates and useful information, in an easy to understand format. Enjoy!

We’re Here to Help

Our goal is to provide you with exceptional service. If there is anything we discuss in this week’s email that you would like to visit about, or if there are any questions you have, please call our office and let us know. We’re here to serve you.

Quote of the week:
“Big shots are only little shots who keep shooting.”
Christopher Morley

Remember: Please don’t keep us a secret… We’re never too busy to see if we can help your friends or a family member.

We Moved!

 

WE HAVE MOVED!

 

OUR NEW ADDRESS:

21550 Oxnard Street

Suite #460

Woodland Hills, CA 91367

 

Opening Thoughts…

In The Headlines

Facing the Abyss: Fallout from Detroit’s Bankruptcy

 

In 2009 General Motors and Chrysler zipped through government-sponsored bankruptcies. The final details were negotiated in a matter of weeks. With fewer employees, dealers, brands, and lower debt, both companies got a fresh lease on life. In a stroke, their cost structures had been made competitive and, with their basic engineering and design skills intact, both were re-launched with a much higher probability of success.

 

Getting the city of Detroit through bankruptcy will take time. Retired city workers are fighting over pensions and health care while local politicians cede power and privileges to bankers and creditors. It is doubtful that any future benefit will emerge from all the pain. So far, no one has presented an economic vision for a prosperous Detroit that seems remotely possible.

 

Since the riots of 1967, there have been several well-intentioned and solidly financed efforts to restore Detroit to its post-World War II prosperity as America’s Motor City. The city has been unable to stem the forces of industrial decline, dysfunctional government, and depopulation. Today, Detroit features a moderately attractive downtown that is surrounded by acres of decrepit or abandoned housing, abandoned factories, and empty lots. In all, the city has 20 square miles of vacant land, roughly equal in size to Manhattan. There are not enough visitors, commuters, or tax-paying citizens to blunt the perception that Detroit is on the verge of becoming a ghost town.

 

The vitality of Detroit’s few remaining viable neighborhoods will likely deteriorate as the city lays off employees and retreats farther from essential services like police protection and garbage pickup. The city faces a protracted process of forestalling creditors on the one hand and searching for new sources of revenue on the other, making it difficult to create a positive economic or social environment.

 

Detroit’s problems have implications far beyond its survival as a viable metropolis. Many investors worry that the city’s bankruptcy could set an unwelcome precedent by making holders of Detroit’s general obligation bonds move further back in the line of creditors, reducing the chance they will get what they are owed. Among the big questions is whether Detroit’s emergency manager, Kevyn Orr, will prevail with his plan to treat some classes of municipal bonds as unsecured debt. This comes atop concern that municipal bond prices, like those of many other bonds, could be hammered by rising interest rates after the Fed reduces its quantitative easing programs that have kept rates low.

 

As a result, municipal bond prices are falling, yields are rising and some investors are heading for the exits. Since early May, the yield on the 10-year AAA municipal bonds has gone from 1.66% to 2.75%. With these bonds looking riskier, investors have pulled more than $16 billion out of municipal bond funds in the past few weeks.

 


 

Millennial Homebuyers Get Spooked by a Mortgage Rate Uptick

 

Would-be homebuyers have been spooked by a small rise in U.S. mortgage rates, complicating forecasts for builders. The average for a 30-year fixed mortgage moved up from about 3.3% in May to 4.3% this week. Much to the dismay of those builders, younger consumers appear so transfixed by the historically low rates of recent years that they are failing to appreciate how favorably these rates compare to mortgage norms.

 

Recent surveys conducted by real-estate data company Trulia show that skittish buyers have become more worried about rising rates than they are about surging home prices. Some 41% of respondents cited interest rates as their primary concern, compared with 37% who pointed to prices.

 

Financing jitters are not just showing up on studies—those anxieties were abundantly evident in a round of reports from big U.S. homebuilders this week. D.R. Horton posted only a 12% increase in new orders for homes from the year-earlier period, less than half the amount expected, while PulteGroup saw its orders drop 12%. Analysts speculated that buyers were trying to pick the low in the pricing and the low in the interest rates.

 

Executives at homebuilder organizations have tried to downplay the fallout in their earnings, arguing that a lot of things are worse than rising rates; for example a supply shortage and a sluggish economy. They cited slow job growth as the number one drag on the housing market.

 

What can homebuilders do? Some analysts have suggested that homebuilders try giving their potential customers, especially first time buyers, a history lesson. These buyers are far more likely to balk at interest rates and have little experience with how steep rates can get. After all, they were just a few years old when mortgages flirted with 20% in the early 1980s.

 

The whole industry would do well to channel every crotchety grandfather who ever started a speech with “in my day,” only with a message that actually proves effective with millennials who might be in the market for a home. If they succeed, financing at 5¢ on the dollar will look like cheap money.

 


 

Are MOOCs the Future of Higher Education?

 

Higher education isn’t typically known for making swift changes to the way it does things. But less than two years after a trio of massive open online course (MOOC) provider startups—Coursera, edX and Udacity—began growing in popularity, every college in the U.S. News and World Report’s national university rankings is now embracing them.

 

The benefit of MOOCs for universities is two-fold. First, colleges and universities need to offer students the latest types of educational experiences available to keep them engaged. Second, is a desire to broaden their reach to individuals from all over the world.

 

SUNY and the University of Chicago are the latest in high-profile universities to join the MOOC trend. Harvard and MIT partnered in 2012 to create edX, which says it has enrolled more than 900,000 students from 192 countries in its MOOCs. Professors from Stanford University created the two other largest MOOC providers: Udacity and Coursera.

 

Not everyone is convinced, however, that colleges should rely on MOOCs to move into the future.

 

Harvard, which has 16 courses currently available on edX, came under fire recently by some professors for the way the university manages MOOCs. Its current system is based around HarvardX, an on-campus initiative that university spokesperson Michael Rutter said helps professors deliver online courses. Two faculty committees govern it: one to organize classes and the other to research the effectiveness of online-learning techniques.

 

Several schools are using a methodical approach similar to Harvard’s in their MOOC development. Instead of allowing professors to simply tweak traditional classes and post them online, universities are developing plans for maximizing their outreach. This often results in international exposure for the school.

 

Lawmakers in California are considering a proposal to allow students to replace some introductory courses with MOOCs in the state’s three higher education systems, which together have an enrollment of nearly 1 million.

 

Proponents of the plan, including California Gov. Jerry Brown and State Sen. Darrell Steinberg, say it could relieve stress from over-enrolled classes. It passed through the State Senate despite resistance from faculty leaders. Opponents say MOOCs cannot always replicate the engagement students receive in a physical classroom, and that the online classes are not the answer to years of budget cuts that have devastated state universities’ funding. But at the same hearing, Steinberg hinted at a different reason some professors might oppose his bill. He thinks they fear for their jobs.

 

MOOCs are also becoming popular for adult learning outside of the academic environment. Pluralsight is a company which markets video courses covering a wide range of IT and programming topics created by computer professionals. The company offers the videos to a base of 300,000 users from more than 100 countries. Each customer pays a monthly subscription fee of $30 to watch an unlimited number of classes, and the subscription money is divvied up among instructors based on the popularity of their videos. The company says its 125-plus instructors will take home an average of $40,000 each in 2013.

 

Citations:

1. http://features.blogs.fortune.cnn.com/2013/07/24/detroit-bankruptcy/?iid=F_F500M

2. http://www.cnbc.com/id/100917851

3. http://www.businessweek.com/articles/2013-07-26/can-home-builders-teach-mortgage-history-to-wary-millennials#r=nav-r-story

4. businessweek.com/articles/2013-07-26/striking-it-rich-on-no-budget-instructional-videos#r=nav-r-story

5. http://www.usatoday.com/story/news/nation/2013/07/11/moocs-top-colleges-and-universities/2509883/

6. http://www.businessweek.com/articles/2013-02-26/top-business-schools-embrace-moocs

 

Some Good News

Everywhere you look, you see nothing but doom and gloom in the headlines. So let’s see if we can find any good news out there…

Here are a few bits of information…

  • Starbucks Corp reported earnings of $0.55 per share, up 27.9% from year ago earnings of $0.43 per share, and $0.02 ahead of the consensus analysts’ estimate of $0.53 per share. Revenues were $3.7 billion, a 13.3% increase over the previous year. Growth in revenues and earnings was propelled by a 7% gain in global store traffic, as well as the launch of new products and updates to its food menu. 
  • Hanesbrands has agreed to acquire intimate apparel maker Maidenform Brands for $23.50 a share, or about $575 million. The price represents a 30% premium over Maidenform’s average closing price during the last 30 days. The all-cash deal has been approved by the boards of both companies and is subject to approval by Maidenform shareholders and regulators. Hanes said it expects the merger to add more than $500 million in incremental annual sales within three years.
  • U.S. corporations continue to be flush with cash. Cash held by companies in the S&P 500 set a record in the first quarter of 2013 at $1.093 trillion. Cash levels have set a record for 18 of the last 20 quarters. With 47% of S&P 500 companies reporting, this trend seems set to continue. The reasons for the buildup of cash appear to be lower rates of capital investment, decreased merger and acquisition activity, and a modest level of share buybacks and dividend increases. Technology firms held the most amount of cash, accounting for 41% of the total. 

Citations:

1. http://www.cnbc.com/id/18080780

2. http://www.cnbc.com/id/100917408

3. http://dealbook.nytimes.com/2013/07/24/hanes-to-buy-maidenform-for-575-million/?_r=0

4. http://www.cnbc.com/id/100911328

Don’t you ever wonder why the media can’t spend more time focusing on the good news that happens?

Planning Tips…

Tips for Donating Your Vehicle to a Charity

In the past few years, donating used automobiles to charity has become a way for Americans to help their favorite charities and themselves at tax time. To maximize the benefit for the charity and for yourself, keep these things in mind:

 

Find a charity that directly accepts car donations. If possible, avoid for-profit intermediary organizations that advertise so pervasively to handle your car donations. These organizations typically keep the vast majority of the dollars created from your donation. Even the most reputable of the agencies that handle these transactions keep nearly 50% of your vehicle’s value. A charity that handles the transaction itself can keep 100% of the profit.

 

Drive the car to the charity. Worthy charities are going to have to pay someone else to handle a pick-up or a tow. This is another cost that cuts into the amount that gets to that organization’s programs. If you can get the car to them yourself, do it.

 

Make sure the charitable organization is a 501 (c) (3). While many organizations can claim non-profit status, donations to 501 (c) (4) organizations are generally not tax-deductible. These are political organizations with permission to lobby the government. Make sure your intended recipient has 501 (c) (3) public charity status.

 

Transfer the car correctly to the charity. Some charities will ask you to leave the assignment of ownership space on the charity donation papers blank, so they do not have to re-title the vehicle. If this is the case, find another charity. If you do not formally sign your car over to the designated nonprofit, you will be held responsible for any parking tickets that are subsequently incurred, or liable if it is used in a crime. Remember, the charity you give the car to will probably not use your car to deliver meals to the needy, but will simply sell it as quickly as possible. When someone buys it from them at auction and does not bother to register that car, it is still yours in the eyes of the law.

 

Value your car correctly. You cannot deduct the published fair market value of vehicles worth more than $500. Your deduction will be determined once your car is sold and the charity sends you a receipt indicating the exact amount your car garnered at auction. If your car is worth more than $500, you must complete IRS Form 8283 and file it with your yearly taxes.

 

Know when to use Fair Market Value (FMV) for the vehicle. There are several exceptions which allow you to use the Kelley Blue Book or a NADA guide, but you must use the fair market value, not simply the highest value listed for the year and make of your car. Use the fair market value when:

 

• Instead of selling the vehicle, the charity keeps and uses it

• The charity makes improvements to the car before selling it

• Your car is sold at a discounted price to a person with a low income

• The car is worth less than $500

 

Keep good records. Be aware that non-cash donations are one of the most common triggers to an audit by the IRS. You will want to document the value of the car and keep records of it. Remember to always get a receipt when you donate the car. Take pictures of the car and save receipts for new tires or other upgrades to verify its value.

 

Please don’t hesitate to give us a call if you need help with any component of your financial planning.

 

Citations:

1. http://articles.latimes.com/2012/jul/22/business/la-fi-five-cars-donation-20120722

2. http://www.charitynavigator.org/index.cfmbay

=content.view&cpid=158#.UfWbLm1lhyM

3. http://www.bankrate.com/finance/money-guides/donating-a-vehicle-to-charity-1.aspx

4. http://www.cardonationwizard.com/tips.jsp

5. http://www.charitywatch.org/articles/car.html

 

Your Team

Thank you for taking the time to read this week’s issue of “California Educators Weekly Report.” We hope you found it to be insightful as well as entertaining. Please remember that our goal is to provide you with impeccable service. Please feel free to contact anyone on our team should you have questions or would like to discuss your goals or concerns.

We may be reached by using the following:
818-206-1163
www.safe403b.com
michael@safe403b.com
darren@safe403b.com
gaby@safe403b.com

Michael Snowhite