The Tax Man Cometh: Ever Wonder How He Spends Your Money?

 

The Tax Man Cometh: Ever Wonder How He Spends Your Money?

 

Every year you repeat the same tired task. You collect all your receipts forms, and related tax

information and either settle in for a marathon self-preparation session, or you hand it all over (along

with a few hundred bucks, give or take) to your tax preparer. When all’s said and done, you’ll see

exactly how much money the federal government took from your paychecks, but you certainly don’t

see an itemized list of where that money will go.

However, in his 2011 State of the Union Address, President Obama pledged to develop a new online

tool that would allow every American to see precisely how the government spends his or her annual tax

payments. The resulting and first-of-its-kind public website, “My Federal Tax Receipt,” launched last

year and was just recently updated to reflect current spending. The tool is an online calculator, located

on the a site called MyFederalTaxReceipt.gov. Once there, you simply enter your income tax, Medicare

tax Social Security tax, and a detailed calculation of how your tax dollars are allocated pops up on the

screen.

But you don’t actually have to do anything at all to satisfy your general curiosity — after all, you could

just simply scan the numbers and learn how much of the collective federal income tax is allocated

where, as it’s all broken into categories and subcategories and measured by percentage. While the

information on the site is incredibly informative, intriguing, and perhaps even a bit surprising, I’d be

less than honest if I neglected the site’s democratic political bent, but the information is still interesting,

despite the occasional overt partisan prose.

Exploring the site is a fascinating way to see where your national priorities lie when compared to those

of the government. How much goes to job development and education compared to health care? How

does health care rank when it comes to foreign policy and even foreign aid? Most of us don’t have a

clue, let alone how much tax money is allocated to each different cause.

 

The programs and services funded by your income tax, as well as the percentage of your total

 

income-tax payment they receive, are as follows:

 

National Defense 24.9%

Health Care 23.7%

Job and Family Security 19.1%

Education and Job Training 3.6%

Veterans Benefits 4.5%

National Resources, Energy, and Environment 2.0%

International Affairs 1.6%

Science, Space, and Technology Programs 1.0%

Immigration, Law Enforcement, and Administration of Justice 2.0%

Agriculture 0.7%

Community, Area, and Regional Development 0.5%

Response to Natural Development 0.4%

Additional Government Programs 7.9%

Net Interest 8.1%

In addition to these statistics, the site offers a great deal of interesting content. Curious about foreign

policy issues, for instance? You’ll easily find your way to a cache of information including everything

from the National Security Strategy, Obama’s National Strategy for Counter Terrorism, and short

pieces describing things such as “Refocusing on the Threat from al Qaeda in Afghanistan and

Pakistan,” to other stories that tout presidential achievements such as “Stopping a Massacre and

Supporting the Libyan People” or “Promoting Peace and Security in Israel and in the Middle East.”

In addition to these 12 major categories, there are an additional 34 subcategories to break the spending

down further into segments such as “Ongoing operations, equipment, and supplies,” which consumes

10.3 percent of the total slice of pie that goes toward National Defense, or “Child care, foster care, and

adoption support,” a subset of the Jobs and Family security category that sees only 0.6 percent of its

share of your tax dollars.

The site certainly warrants a visit, regardless of your political affiliation. Having a better understanding

of what we pay for and how makes us stronger citizens, and let’s face it, it’s information we deserve to

know.

IRAs/401(k)s/403(b)s

Could An IRA, 401(k), Or Any Other Qualified Plan Be Your Only Retirement Savings Solution?

Absolutely not, here is the problem…

The money in your IRA/401(k) or other qualified plans is not all yours!  As much as 40% of it (maybe more) belongs to the government because your invested money is ONLY tax-DEFERRED, not tax-EXEMPT.  And you eventually have to pay tax on every dollar in your account even if you leave it all to your family.

When it comes to retirement planning, simply starting is often the hardest part.  We can help you find the best retirement planning tools but also the motivation to begin.  We can help you determine how much to save and the best way to do so including IRAs, Roth IRAs, 401(k)s, 403(b)s, 457s, and Non-Qualified Plans.

Here is the Solution…

Take some time to get a Retirement Planning Analysis.  This will solve two problems (1) determine which retirement investments are the best for you, and (2) how much you need to save to reach your retirement goals.

Contact us at info@proinvestmentcoach.com to set an appointment or call us at 800-332-8327.

2012: New Year, Same Advice

We have all been conditioned by the financial services industry to ask the question, “What will the markets do in the new year?”  There is always someone in the financial services industry who will attempt to answer that question with some prediction.  Sometimes they guess right, but more often than not they guess wrong.  Our answer to that question remains the same:  WE DON’T KNOW WHAT THE MARKETS WILL DO THIS YEAR!

We are not fortunetellers.  We do not own and do not want to own a crystal ball.  The financial markets are controlled by over six billion people making daily buying and selling decisions.  One of our basic views is that no one knows whether the markets will go up, down, or remain unchanged over the short or long-term.  What we do is properly position our clients with well-diversified, efficient portfolios to take advantage of market conditions.  Our goal is to obtain market returns.

One of our most important responsibilities to our clients is to provide the coaching to keep you disciplined.  We can help you to stay focused on your long-term goals and not panic when markets go lower and not to become greedy when the markets rise.  Investing this way is not necessarily glamorous or sexy, but very prudent.  Fear and greed are the two most powerful emotions that destroy investors’ peace of mind and their investment returns.

As we enter 2012, we hope you have peace of mind on your investments and retirement goals.  This is accomplished by attending our Coaching classes where we teach you more about our Free Market Investment Philosophy, our Free Market Efficient Portfolios, and our Free Market Strategy for capturing Market Returns with lower volatility.

Our advice remains the same:  turn off the hype on TV, don’t listen to the talking heads and recognize that they have no idea what is going on in the future with the markets.  Finally, as a believer in our investment philosophy, invite a friend or relative who is not taking advantage our coaching to come to one of our seminars.  We truly want to “save the world one investor at a time!”

Five Basic Tips for Creating a Solid Retirement Plan

retirement planWe all know what the retirement picture is supposed to look like.  We spend our whole life working toward that magical retirement age when your golden years begin–the hobbies, the travel, spending time with your grandchildren.  However, with a rocky economy and volatility in the markets your picture might not be so clear.

Consider these basic tips to see to it that your retirement is spent doing what you love.

  1. Set your retirement goals:  Think about what you want your retirement picture to look like.  Does it involve living in a paid-off home, buying a motor home, or relocating to a house on the beach?  Do you want to donate to charities, or provide for your children and grandchildren?  What will it take to make it all come together?
  2. Start Planning now:  Whether you are just beginning or looking to retire in five years, start taking the steps to prepare now.  Establish IRA’s or participate in your employer-sponsored 403b or 401k plan and fund them with as much as you can.  One goal would also be to increase your contribution each year to help insure that you have enough money to retire.
  3. Reevaluate your life expectancy:  It is no secret that with medical technology and living a good healthy life we are living longer than ever.  According to the Society of Actuaries, a 65-year-old man has a 41% chance of living to age 85, and a 20% chance of surviving to age 90.  A 65-year-old woman has even better odds.  She has a 53% chance of living to age 85, and an impressive 32% chance of reaching age 90.  With these statistics in mind, ramping up your savings is more crucial than ever.
  4. Determine your Social Security benefits:  Did you know the longer you delay retirement, the larger your Social Security checks grow?  While you can officially start drawing funds at age 62, if you hold off until age 70, you’ll double your benefit amount.  Even if you wait until age 66, your Social Security checks will grow by one-third.  While working past age 65 might not appeal to you, the higher payout amount certainly should.  There are many more strategies to get the most from Social Security, especially if you are married.  To explore your options and determine when you will begin to draw Social Security benefits, visit www.SSA.gov.  They even have an online retirement estimator to help guide your decision.
  5. Work with a trusted Financial Coach:  If you really want to get the best out of your retirement plan, it’s best to place it in the hands of a capable retirement specialist who will coach you through the process, recommend appropriate investment tools, offer practical advice on savings, and keep an eye on your retirement portfolio.  For more information on working with a coach versus an planner click on the tab at the top of this page called Why You Need a Financial Coach.

We hope this has been helpful to you.  If you would like more information click on the contact button and we will send you more information or set up a time to meet with you.

By Jim Hancock