Skip to content

Social Security

According to the Board of Trustees for Social Security (which includes the US Treasury Secretary, the US Secretary for Health & Human Services, and the US Secretary of Labor), the Social Security trust funds, “become depleted and unable to pay scheduled benefits in fusocsecll on a timely basis in 2034.”

That’s only 16 years from now.  Do you hear your elected representatives talking about this, much less, are they taking any action to avoid this eventuality?  The answer is a resounding NO.

The US national debt is careening toward $21 trillion (that’s $170,000 per taxpayer) with an increase of perhaps $1 trillion per year in the near future.  Think about this:  In order to just not grow the debt higher we would have to either cut annual spending or increase federal revenue by almost $1 trillion per year.  And yet your elected representatives are mute on this topic as well.  In fact, they just passed a tax cut that will add to the annual deficits.  Meanwhile, they stumble and lurch from week to week not able to agree on even the most basic of issues, ie. funding the government for already approved spending.

Ask yourself or ask an economist:  What is the outcome of our ever increasing debt?  The annual spending for interest alone is already the 5th largest component of the budget.  As the debt grows, the interest expense grows which requires more debt to pay the interest.  Do you see any solution?  More income (higher taxes)?  Less spending (dramatic cut to government services)?  Ultimately, no one will buy our debt.  That has truly dire consequences.

We need to let our elected representatives know that we expect them to own this problem.


Financial Fraudsters

There are a great variety of financial fraud schemes.  One of the most common in recent years is that you will receive a call from someone who claims to represent the IRS.  They will tell you that you owe taxes either as a result of a recent review of your tax filing or from an alleged tax fraud on your part.  They will encourage you to pay immediately by giving them your bank information or a debit/credit card number.  By paying immediately you will avoid additional penalties and/or possible criminal charges.  They can be quite aggressive by saying that your accounts will be frozen, property seized or subjected to immediate arrest.

I recently received a call that seems to be some variant of this scheme.  It was a voicemail left by a “caller” that was not a live human voice but a synthesized voice, possibly from text to speech.  I have transcribed the details of the message left for me which follows:

8146 The nature and the purpose of this call is regarding an enforcement action which has been executed by the US Treasury Department regarding a tax fraud against your name.  Ignoring this will be an intentional attempt to avoid initial appearance before a magistrate judge or a grand jury for a federal criminal offense.  So before this matter goes to federal claims court house or before you get arrested kindly call us back on our number as soon as possible.  The number to reach us is 281-226-9001.  Let me repeat the number it is 281-226-9001.  Hope to hear from you soon before the charges are pressed against you.  Thanks.

I have no idea what the significance of the number at the beginning might be, it was the first part of the message.  There was no identification given for who was calling or the agency being represented.  Simply the message references an enforcement action by the Treasury Department.  I did not call the number provided.

The most important thing to know about this type of scam is that the IRS does not contact taxpayers in this manner.  If there is some issue, the first action is to send you a letter giving the details of whatever they wish to bring to your attention.  Clearly, the fraudster’s intent is to jolt you into calling them by using terms to shock you like, “federal criminal offense”, “grand jury” and “enforcement action”.

If you find yourself on the receiving end of one of these calls, it is important to take a breath and consider that you are getting an unsolicited call from someone without context.  You are not going to be arrested.  If you have any doubts, call the IRS and ask if they have any record of taxes owed or other issues alleged by the caller and explain to them about the call you received.

I’m Starting Social Security at 62

I turned 62 this month.  I know what you’re thinking.  I don’t look a day over 61 and a half.  Thank you.  If you Google anything related to the topic of when to take Social Security you must be prepared to wade through a massive amount of articles discussing whether it is better to start retirement benefits at 62 or wait until your full retirement age or until you reach age 70.  I’m not going to pretend that I can adequately address all of the various scenarios, some of which can be quite complex, that come into play when people address this question.  I can only give you my view.

Read more…

Financial Freedom – There’s an App For That

This recent article appeared on the website, entitled, “How to declare your financial independence”.

The first part of the article talks about the views of Jonathan Chevreau, a Canadian financial writer, about how to reach financial independence.  The article rightly points out that financial freedom is not about wealth in the traditional sense, simply it implies freedom of choice regarding work, leisure and retirement.

Later in the article, the author, Richard Eisenberg, starts talking about “a nifty new iPhone app”, called Freedom$, which you can use to calculate your Freedom Score: an estimate of how many years until you’ll achieve financial freedom, purportedly using only your age, your total assets and your total consumer debt.

Wow, just slide this app alongside your daily step counter and you’ve got it covered:  good health and financial planning.  I consider it worse than useless to offer someone the illusion of such a simple solution.

Achieving financial freedom is a little more involved than plugging a couple of numbers into this app.  And it’s not simply about finding your “magic number”.  The key ingredient is, what will be your spending needs if you choose to curtail or eliminate your paycheck?  What other sources of income do you have or can you develop?  But, spending is at the heart of it.  You must start there.  This requires you to actually look at what you spend and figure out how that will change going forward or how you will alter your spending.  Once you know your spending you now have a target.  At the point where you can construct the income sources to support that spending, you have financial freedom.

Put that in your app.


Americans were told that they would be able to keep their private health insurance, if they chose to, once the Affordable Care Act took effect.  Reports of millions of cancellation letters made it clear that this was not the case.  Initially, the White House tried to deflect blame to the insurance companies, essentially saying that they could not control the actions of the insurance companies.  Yet, the ACA contains thousands of rules and regulations regarding the insurance plans to be offered under the new insurance exchanges which insurers are required to comply with.

On November 14, 2013, the pressure became too much so the President announced a “fix” meant to address this issue.  There are several interesting aspects to this announcement. Read more…

My “Affordable Care Act” Story

When talking about the Affordable Care Act, the President has said on many occasions:

“If you’re happy with your current health insurance, you can keep it.”

He even ended some of these comments with emphasis such as, “Period.” and “It’s that simple”.

Apparently it’s not that simple. Read more…

Sold Half of Apple Position

Today, I sold one half of my position in Apple at $460 per share.  Why did I sell and why only half?

AAPL Chart

If you have followed the news regarding Apple stock in recent months, you will know that it is down significantly from the high reached in September of last year.   This is a very interesting study in how investor sentiment can change and how it can dramatically alter the fortunes for a stock.  On the way up, everybody loved Apple and the Wall Street  analysts were beating up each other in order to be the next one to up their price target for the stock.  Then after the iPhone 5 became available, the doubts started creeping in.  The new mapping application was disappointing.  Why didn’t they give it a larger screen?  Apple has lost its innovation.  Margins are being compressed. Read more…