Friday Reading: Boomers vs. Millennials
Articles of Interest
Boomers vs. Millennials: The Fight of a Generation (or Two) from Kirk Victor at National Journal via The Atlantic
It’s an interesting topic, but I completely disagree with the economist interviewed in the article. I think Baby Boomers have the upper hand. I don’t see any signs of retreat. They will make sure the resources go toward their retirement income and health care.
*****
Magazines At 50-70% Off: The Atlantic, The Economist, Bloomberg Businessweek, Wall Street Journal
In this Internet age, do you still read print newspapers and magazines? I do. I find them easier on the eyes.
If you are like me, see if you can get your favorite newspapers or magazines on the cheap by using airline frequent flyer miles. Some airlines still expire miles if you have no activity for 18 months. Redeeming some miles will protect your accumulated miles. I usually check my airline miles accounts once a year to see if they are about to expire.
I just checked. The savings on some of the business and news related magazines are quite substantial if you use miles.
Medicare Doc Fix: An Interview with Austin Frakt
The Medicare "doc fix" is in the news again. I keep hearing if Congress doesn’t act, doctor’s fees for treating Medicare patients will be cut by 27% starting on January 1.
This is a complete mystery to me. What’s this evil force that’s trying to cut doctor’s fees? Why can’t Congress make it stop since they have all the power?
The best person to answer these questions is my friend and former co-blogger Austin Frakt. Austin is a health economist at Boston University. He blogs at The Incidental Economist. I interviewed Austin via email. He also sent me a bunch of reference articles. I listed them at the end of this post.
Friday Reading: Convert to Roth Or Realize Capital Gains
Articles of Interest
End of Year Roth Conversion Strategy: Fill Up the Bracket from Jim Blankenship at Getting Your Financial Ducks In A Row
If you are in a low tax bracket, should you fill up the bracket by converting traditional IRA or 401k to Roth, or should you take advantage of the special 0% capital gains tax in 2011? It depends on whether you are in a low tax bracket only temporarily or you will be in a low tax bracket for years to come.
If it’s only temporary, I would go with converting to Roth. If you will be in a low tax bracket for the foreseeable future, I would go with realizing long-term capital gains and resetting the cost basis.
2011 State of the Blog Report and Resolutions for 2012
A new year is just around the corner. To borrow something from Car Talk, that means you wasted another year reading my blog. To my long-time readers, thank you for your indulgence. To my new readers, welcome, I hope you will stay around.
It’s also time for me to look back and review how the blog did this year. This is my once-a-year State of the Blog report.
The state of the blog is, well, a mixed-bag.
What to Do When Interest Rate Is So Low
Princeton University professor emeritus Burton Malkiel and the author of the popular book A Random Walk Down Wall Street wrote in the Wall Street Journal The Bond Buyer’s Dilemma. Professor Malkiel suggested some reasonable alternatives to long-term U.S. Treasuries.
"The first is to look for bonds with moderate credit risk where the spreads over U.S. Treasury yields are generous."
Friday Reading: Count Social Security as Bonds?
Asset Allocation is Not a Goal from Oblivious Investor. Mike says we should come up with an asset allocation based on the gap between incomes and expenses, not by converting incomes or expenses to an asset or a liability. But John Bogle said on NPR we should count Social Security as bonds in the "age-in-bonds" formula.
"If you accept that $300,000 is the value of Social Security and you had $200,000, that could all be in stocks," Bogle says.
I’m confused.
Tax on Capital Gains While Receiving Social Security Benefits
I wrote last week about tax-free capital gains when you are in the 15% tax bracket or lower. I created this chart over the weekend to make it clearer what I’m talking about (click on the chart for a larger size).
Your gross income first goes toward the pre-tax deductions from your paychecks (401k, health care insurance premiums, flexible spending accounts). Then it fills the deductions (at least $5,800 single, $11,600 married filing jointly in 2011) and exemptions ($3,700 per person including dependents in 2011). Only the income above the gray line is taxable.
2012 Mileage Reimbursement Rate Unchanged From 2011
The IRS announced the 2012 standard mileage rate. It’ll stay the same as in 2011: $0.555 per mile. If you drive your own car for a business, most employers reimburse employees at this rate.
Beginning on Jan. 1, 2012, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
Virtual Banks: SmartyPig, PerkStreet, Simple
Ken at DepositAccounts.com reported that SmartyPig cut its interest rate from 1.1% to 0.7%. SmartyPig is this online service that lets you stash money in accounts designated for specific goals. Instead of identifying your account by a number, you label the account by a goal: vacation, Christmas, wedding, etc. When you reach a goal, you can withdraw the money or buy gift cards at a discount.
When SmartyPig first started, it offered a high interest rate with some serious fee traps. Later it got smarter and turned itself into a high yield savings account for up to $50k only to those who don’t mind the extra steps of opening and closing goals.
SmartyPig was able to keep its rate at the top of the leader board for 3-1/2 years, beating ING, Ally, and list of other high yield savings accounts. Now it’s signaling it can’t keep it up any more. For the first time, SmartyPig’s rate drops below ING’s, which isn’t the highest to begin with. Without the high rate, is SmartyPig becoming just a place to buy discounted gift cards? After all, you can open subaccounts for specific goals just as easily at ING.
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