Middle America Takes A Hit, (again)

The Federal government is poised to make several changes to the rules for the "working man's" investment, the IRA. 

One of the changes is to raise the minimum amount required to open an IRA.  Currently anyone can open an IRA with an initial deposit of $250.  The government wants to make the minimum amount $25,000.  That is correct.  If the rule goes into effect you can't open an IRA unless you are one of those few that happen to have $25,000 just "laying around".  The average middle class wage earner will have to save up for several years, just to get started on their retirement program.

Right now you can open an IRA account with $250 and deduct that and ongoing deposits from your income**.  If you have to save up for several years to get enough money together for the initial deposit, you have to pay taxes on that money, and the interest it earns, until you are able to get enough to open an IRA. (no, you don't get "retro" deductibility) 

This simply is a scheme to allow the Federal Government to impose more taxes on the lower and middle class.

Some of the other proposed changes will require the company that manages your IRA to provide additional, (and unneeded), services that will add to the cost of the management fees charged to the depositor, (you).  This means that your money probably won't grow as fast as before because more of your investment "profits" are going to be eaten up in fees.

It almost looks like the Federal Government is trying to fix it so that more people are dependent on Social Security rather than encouraging them to become financially independent.

I urge you to contact your representatives in Washington, DC and express your displeasure about the proposed changes.

** (Consult your tax professional for deduction rules and tax return preparation assistance.)

The True Cost of a Guarantee

Risk is a part of our lives.  But understanding risk and knowing how to use is something that few people are willing to learn.  Coming next will be a series of posts discussing risk and how most peoples faulty perception of risk can affect your financial health.

The article: The True Cost of a Guarantee talks about one component of risk, the impression that we need to have a guarantee to "protect" us.