Gregory:

Roberta, you're clearly an astute student of the market.  What's your best guess as to where dividend tax rates are headed?

It would not surprise me to see them taxed at marginal income tax rates.

Are muni's the course of last resort? :-)

 

Greg

 

Greg,

I'm sorry.  I totally missed this question addressed to me.  I didn't just ignore it.  All of my planning assumes that taxes go up.  I think they promised me that SS would never be taxed.  Now my medicare insurance is being means tested.  I have benefited greatly Bush but believe it's wrong.  I'm seeing the bait and switch about taxes going on in my state with property taxes.  People are seeing the propaganda like changing the inheritance tax to death tax and buying into the fear mongering that  it applies to them  and ignoring the loss of the step up basis which applies to many more of us.

There is no such thing as a free lunch; somebody has to pay for infrastructure, education, police, etc.  There is a great deal of work going into separating us into classes and getting rid of the middle class and all that means about people being able to become anything in this country.

Before this degenerates into a political discussion - both sides lie.  Both sides use sound bites not reason.  The arguments about our health care system clearly show this.

The only thing I'm really sure of is that I'm going to be sc*wed and I do the best I can to cover all the bases.

Roberta 

Bruce,

I spent a lot of time trying to investigate both wiser and paycheck for life w/o success.  This is a sales brochure and my investigation revealed that a number of companies such as metlife and genworth use it.  You're looking at a generation, retiring now, who's real lifetime choices were essentially teaching, nursing or marriage.  The working ones had 403b's from insurance companies and their agents are now coming in and selling them new annuities.  The agents have the access and get the retirement lists.

They did include the fact that this route may run into problems with  inflation and should be for non-qualified money but it was a kind of throw away CYA.  They also pushed that this was a route for a lump sum like selling a house, a life insurance payout, an inheritance but I'll send you a box of doughnuts if this is how it's sold.

The most important aspect of the brochure, and their real hooker is:

Third, annuities preclude the need to make difficult decisions on how much to withdraw each year. Many people choose to take a sum of money, invest it on their own and take regular withdrawals. This may work for certain individuals, but it carries great risk. Some may take out too much money and then run out of funds when they are older and have few other financial resources. Conversely, others may be overly cautious and take out too little, resulting in an unnecessary drop in their standard of living. A lifetime annuity takes out some of the guesswork and worrying by guaranteeing a steady lifetime retirement income.

They also use a lot of statistics that derive from a lot of woman who lived pink collar or house cleaning or nurse's aides lives and who would not have the  assets to be purchasing such products to begin with.

Except for high net worth individuals, the advisor's best interest is in selling an annuity and the brochure gives the impression we're talking about SPIA's but they keep calling it a lifetime annuity and I'll bet another box of doughnuts that variable annuities or equity indexed annuities will be sold with their teaser of higher income possibilites with GUARANTEED benefits and in 10 years, when the back end load goes away, they'll be sold a replacement product producing a new commission.

Doing taxes this year, particularly with the supplement bringing all kinds of people who don't normally file out of the woodwork, we saw a tremendous increase in the numbers and amounts of reverse mortgages.

What did P.T. Barnum  say about one born every minute?

Roberta 

Roberta, thanks for taking the time to respond to my post. 

 
I for one think that retirees should have their dividends taxed at only 15% (or lower); 40% of people who receive LTCG's have incomdes of $50K/ year as well (that covers lots of retirees as well), so it's not as though the lower CG rates help only hedge fund managers.

You're right, infrastructure, etc. don't come free.  I just wish our tax dollars were used in the most efficient ways possible.  Higher taxes provide little incentive to work harder and longer; a CPA friend of mine (he's your senior by many years, born in the mid-1920s and still very active) tells me of the harrowing top rate taxes on returns he prepared in years gone by. 

Greg

Roberta

Good assessment.

When you capitalize 'GUARANTEED', just for giggles I went back and did a text search on the following with the number of times its mentioned:

Guaranteed - used 5 times

Security - used 27 times excluding when used in conjunction with 'Social Security'

Safety - used 4 times

What kind of surprised me is that this sales brochure didn't use the word 'protection', a popular marketing term for this kind of stuff.

BruceM

statsguy:

Twinlabs... I am unsure of what you are asking... but I think it is confusion over the way that ACAS reports their increases.

ACAS (www.american-capital.com) paid 1.01 for first quarter; and will pay 1.03 Q2, and expect to pay 1.05, and 1.10 in Q3 and Q4, respectively.

ACAS calculates their dividend increase as year-over-year.  Thus 1.03 is a 13% increase from Q2 last year, 0.91 to 1.03, the Q1 increase was 13% increase also, 0.89 to 1.01.

Stats

That's it! I misinterpreted the announcement. I thought the increase was since last quarter, not 2nd quarter of last year. Not used to seeing it published that way.

Greg,

I'm not Roberta, but since it will take an act of congress and a willing President to extend or make the current dividend tax rate permanent, I'm afraid that there is not much hope.

Roberta,

My oldest son works and lives in the Netherlands. Holland has a 16% sales tax and the highest income tax bracket is 60%, yet their dividend tax is 15%. 

Taxes on dividends and capital gains have been proven to be detrimental to tax revenue. 

It is not politics, it is economics that tell us the higher dividend and CG tax, the less money there is for infrastructure, education, police, etc. 

helmut 

orygunduck:

Roberta

Good assessment.

When you capitalize 'GUARANTEED', just for giggles I went back and did a text search on the following with the number of times its mentioned:

Guaranteed - used 5 times

Security - used 27 times excluding when used in conjunction with 'Social Security'

Safety - used 4 times

What kind of surprised me is that this sales brochure didn't use the word 'protection', a popular marketing term for this kind of stuff.

BruceM

It's a gender and generational thing.  I used guaranteed as a broad brush for all of the synonyms. The imply it but use it sparingly b/c that particular word may have legal implications or provide grounds for a suit.  In that generation, males protected and provided.  Females were taken care of.  You went to college to get a husband, not a degree.  We were the first woman permitted to remain in the work force after marriage.  We didn't have to quit when we got pregnant b/c we might corrupt innocent children by displaying our growing bellies and make them think of sex.  We were expected to remain in abusive, loveless marriages b/c if we left who was going to take care of us?.  The openly stated rationale for not permitting us in places like grad school and med school was that we'd get married and have children and waste all that education and keep a man from that seat in school which would then allow him to provide for his family.

The man handled the money.  You got an allowance for the house and yourself.  To question your husband about money and finances was to question his manhood.  You see the results of this upbringing and acculturation in the complaints by some of the   men that their wives aren't interested in this finance thing and won't pay  attention to  their grand financial plans and orders.  That's why all these salesmen want to talk to my husband.

This changes significantly starting with the boomers and pre war babies 

Roberta