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Posted: 14 Feb 2011

Survey: Retirement Confidence Recovers for Those With Retirement Plans

The Employee Benefit Research Institute's (EBRI) annual Retirement Confidence Survey found a marked increase in retirement confidence among workers with higher household incomes who also participate in one or more retirement plans -- including defined contribution plans, defined benefit plans, and/or IRAs.


Specifically, more than half (55%) of survey respondents are now very or somewhat confident about having enough money to live comfortably in retirement. The number of workers who are "very confident" rose from 13% in 2013 to 18% this year, while 37% said they were "somewhat confident." The number of workers who are "not at all confident" stayed statistically unchanged from last year at 28%.


Confidence Tied to Retirement Plan Participation

Not surprisingly, the level of worker confidence seems to have a direct correlation to retirement plan participation. Commenting on the trend in a press release, Jack VanDerhei, research director at EBRI said, "workers reporting they or their spouse have money in a defined contribution plan or IRA or have a defined benefit plan from a current or previous employer are more than twice as likely as those without any of these plans to be very confident (24% with a plan vs. 9% without a plan)."


In keeping with past results, current retirees' confidence in their ability to have a financially secure retirement exceeds worker confidence levels, with 28% saying they are very confident, up from 18% in 2013.


Debt: A Major Obstacle to Saving

Citing reasons why they are not saving (or not saving more) for retirement, workers pointed to their current level of debt as a key obstacle. Among those who indicated debt was a problem for them, just 3% said they were very confident that they would have enough money to live comfortably throughout retirement, compared with 29% of workers who said that debt was not a problem for them. Overall, 58% of workers and 44% of retirees reported having issues with debt.


Other Survey Findings

Among the other findings in this year's survey:


Worker confidence in their ability to pay for various aspects of retirement has increased. More workers are "very confident" (29%, up from 25% in 2013) in their ability to pay for basic living expenses. In addition, the percentage of workers who are "not at all confident" about their ability to pay for medical expenses declined (24%, down from 29% in 2013), as did the percentage who were concerned about paying for long-term care services (32%, down from 39% in 2013).


Most workers have not done a retirement needs calculation. Just 44% of workers have tried to determine how much they will have to have saved by the time they retire in order to live comfortably in retirement. This statistic has remained relatively unchanged for the past decade.


Workers are far more likely to say they will work for pay in retirement than retirees actually work. Far more than half (65%) of current workers expect to work for pay after they retire, while in reality, just 27% of today's retirees actually are working for pay.


Few workers seek financial advice. Just 20% of workers report than they have obtained financial advice from a professional. Of those who did consult with a pro, 27% said they followed all of the advice, 36% followed most of it, and 29% followed some of it.


For more in-depth analysis of the study, visit the Employee Benefit Research Institute's website.


Source: Employee Benefit Research Institute press release, "EBRI's 2014 Retirement Confidence Survey: Confidence Rebounds--for Those With Retirement Plans," March 18, 2014.
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© 2014 Wealth Management Systems Inc. All rights reserved.


Posted: 17 Apr 2014

Washington Hotline - April 15, 2014 - Happy Tax Day!


Washington News

Washington Hotline

Tax Freedom Day on April 21

Each April the nonpartisan Tax Foundation publishes the Tax Freedom Day.  For 2014, Tax Freedom Day will be April 21.  This is three days later than the April 18 Tax Freedom Day of last year.  Those three days are primarily the result of higher taxes for upper incomes under the American Taxpayer Relief Act.

Tax Freedom Day is determined by adding the $3 trillion dollars in federal taxes to $1.5 trillion in state taxes.  The total $4.5 trillion in taxes represents 30.2% of the U.S. economy.  Dividing this into the entire year results in the first 111 days being required to support federal and state taxes.

Other Washington organizations have observed that Tax Freedom Day is an average that represents all taxpayers.  Because a larger percentage of taxes are paid by upper-income taxpayers, the Tax Freedom Day for middle or lower income taxpayers would be earlier.  With their higher taxes, the Tax Freedom Day for upper-income taxpayers would be later than April 21.

The Tax Foundation also publishes Tax Freedom Day for specific states.  Those states with fewer upper-income persons will typically have an earlier Tax Freedom Day.  The date for Louisiana is March 30, for Mississippi it is April 2 and Tax Freedom Day for South Dakota is on April 4.

States with larger numbers of upper-income persons typically have a later Tax Freedom Day.  The Tax Freedom Day for New York is on May 4.  Both New Jersey and Connecticut will have a May 9 Tax Freedom Day.

The Tax Freedom Day was April 1 in 1950, but has generally been in mid to late April for the past three decades.  The latest Tax Freedom Day was May 1 in year 2000.  Since then Tax Freedom Day generally ranges from April 15 to April 22.

The Tax Foundation also compares total expenditures for food, shelter and clothing with that for taxes.  For 2014, the projected expenditure by Americans for food, shelter and clothing will be $4.25 trillion.  The federal and state tax bill of $4.5 trillion is larger than the amount spent for food, shelter and clothing.

Editor’s Note:  As mentioned in this article, Tax Freedom Day will change according to your tax bracket.  However, it is a very useful and recognizable way of understanding how tax burdens vary over the years.  If other organizations decide to publish a Tax Freedom Day for specific brackets, this publication will share that information.

IRS Campaign Against Identity Theft

As the April 15 filing deadline approaches, IRS Commissioner John Koskinen and U.S. Attorney General Eric Holder are both moving forward on the campaign to reduce identity theft.

The IRS Criminal Division reports that it has initiated over 200 new investigations for identity theft.  The current number of active identity theft cases is now over 1,800.

IRS Commissioner Koskinen stated, “Identity theft is one of the fastest growing crimes nationwide, and refund fraud caused by identity theft is one of the biggest challenges facing the IRS.  The investigative work done by Criminal Investigations (CI) is part of an aggressive effort by the IRS to combat this issue on all fronts.”

A key strategy has been for the IRS to issue an Electronic Filing Identification Number (EFIN) to tax preparers.  However, some individuals have stolen an EFIN and then used that to file fraudulent returns.  Based on investigations, the IRS has revoked nearly 400 EFINs this year.

The center of identity theft is Miami and South Florida.  A Miami man stole an EFIN and filed 52 false returns.  He was convicted on March 27, 2014 of aggravated identity theft.

A Tampa couple was convicted and the court assessed a judgment against them for $790,421.  The wire fraud and aggravated identity theft convictions resulted in sentences of 121 months and 192 months.  The couple had filed numerous fraudulent refund claims and requested prepaid debit cards.

A Georgia man obtained names of individuals from homeless shelters and prisons.  He advertised “free government money” and filed approximately 15,000 returns with $7 million in fraudulent refunds.  On February 12, 2014, he was convicted and sentenced to 21 years in prison.

Attorney General Eric Holder appeared in a video discussing identity theft on the Department of Justice website.  Holder stated, “This is an increasingly urgent problem.  Its impact can be devastating to families that are counting on legitimate tax refunds that are diverted by identity theft.  And especially in recent years, the Justice Department has seen the scale, scope, and execution of these fraud schemes grow significantly.”

Editor’s Note:  The Attorney General also noted that he has “personal experience” with identity theft.  An individual attempted to use his name and Social Security number to obtain a fraudulent tax refund.  Attorney General Holder now has a high level of interest in reducing identity theft.

Ways and Means Start Tax Extenders Hearings

The House Ways and Means Committee held the first of several hearings on tax extenders.  Chairman Dave Camp (R-MI) opened the hearing and discussed the seven business tax extenders from his recently introduced tax reform bill.  He proposed that these seven tax extenders be made permanent in the “Tax Reform Act of 2014”:

1.  Research credit under Sec. 41.
2.  Horses classified as three year property.
3.  Small businesses permitted to expense assets.
4.  Active financing income exceptions.
5.  Payments between related controlled foreign corporations.
6.  Basis rule for Subchapter S appreciated property gifts.
7.  Timing for built-in gains of Subchapter S corporations.

Chairman Camp indicated that the focus should be on making a limited number of extenders permanent.  He plans to discuss extenders in a series of hearings and may introduce bills that are limited only to the extenders from specific hearings.  Camp noted, “These policies must still be evaluated in the context of pro-growth tax reform and how making those permanent will help grow the economy, simplify the tax code and lower tax rates.  Making some tax policies permanent now will open the door for the economic growth we need by giving consistency and stability to businesses small and large.”

The Ranking Member of the House Ways and Means Committee is Sander Levin (D-MI).  He noted that the permanent passage of tax extenders should involve offsets or tax increases.  The seven business extenders in the first hearing would involve a potential cost of $125 billion.  Levin stated, “Fiscal responsibility cannot simply be a talking point that is set aside when it comes to providing tax incentives for the chosen few.”  He also emphasized that other tax extenders were “important provisions” and must be reviewed.

Editor’s Note:  The Senate Finance Committee has passed a comprehensive tax extenders bill with approximately 60 provisions.  Senator Reid indicates that he will proceed to a vote by the full senate on the IRA charitable rollover and other tax extenders in early May.  It now seems probable that Chairman Camp will proceed with separate bills and plans to make a limited number of tax extenders permanent.  The charitable community hopes that the individual provisions and the IRA charitable rollover will be in the second hearing of the House Ways and Means Committee on tax extenders.

Applicable Federal Rate of 2.2% for April -- Rev. Rul. 2014-12: 2014-15 IRB 1 (19 Mar 2014)

The IRS has announced the Applicable Federal Rate (AFR) for April of 2014. The AFR under Section 7520 for the month of April will be 2.2%. The rates for March of 2.2% or February of 2.4% also may be used. The highest AFR is beneficial for charitable deductions of remainder interests. The lowest AFR is best for lead trusts and life estate reserved agreements. With a gift annuity, if the annuitant desires greater tax-free payments the lowest AFR is preferable. During 2014, pooled income funds in existence less than three tax years must use a 1.4% deemed rate of return. Federal rates are available by clicking here.

Posted: 15 Apr 2014

AAM Weekly Market Wrap - April 11, 2014

Weekly Market Wrap: Stocks dropped this week as tech and biotech stocks led the markets lower on little economic data.


For The Week

  • The S&P 500 fell 2.65% to 1,815.69
  • Oil jumped 2.57% to $103.74
  • Gold added 1.15% to $1,318.12
  • The US Dollar dropped 1.16% to $79.49 against other major world currencies.


2014 Year-To Date for the major indexes:


  • The S&P index -1.77%
  • The Dow Jones Index -3.32%
  • The NASDAQ Index -4.25%
  • The Russell 2000 Small cap Index -4.49%
  • EAFE International Index -0.88%
  • 10 Year Treasury Yield is 2.63%, lower for the week and lower for the year
  • 30 Year Treasury Yield is 3.48%, higher for the week and lower for the year
  • WTI Crude Oil Index +5.41%
  • Bloomberg Gold Index +9.69%
  • The Dollar Index -0.85% against other major world currencies




Monday the S&P 500 fell 20 points on moderately-heavy volume as consumer credit rose.

Tuesday stocks rebounded 7 points on moderate volume as small business optimism gained.

Wednesday the S&P index increased 20 points on moderate volume as the Fed notes indicated that the unemployment rate no longer will be factored into future interest rate decisions, wholesale invesntories rose and mortgage applications declined.

Thursday stocks dropped 39 points on moderately-heavy volume as jobless claims fell and beat expectations while import prices gained.

Friday the S&P 500 lost another 17 points on moderate volume as consumer confidence hit a 9-month high and US producer prices rose more than expected.


Takeaways from this week:

  • Investors sold stocks this week despite any real negative economic data.  Momentum and tech stocks were hit the hardest.  Jobless claims dropped to their lowest level in 10 years.
  • Bond yields moved lower for the week.



Mortgage rates moved lower last week.  The national averages as reported by Bloomberg indicate a 15-year rate of 3.26% and a 30-year rate of 4.24. These rates are as of 04/11/2014 and may include points.


What to watch for on the economic calendar this week:

Monday –Retail Sales / Business Inventories

Tuesday – Consumer Price Index / Housing Market Index / NY Manufacturing

Wednesday – Mortgage Applications / Housing Starts / Industrial Production

Thursday – Weekly Jobless Claims / Philadelphia Manufacturing

Friday – Leading Indicators



Ronald J. VanSurksum, CFP®
Advanced Asset Management, LLC

April 11, 2014



Posted: 14 Apr 2014