2 New Year’s Resolutions You can Take to the Bank

2 New Year's Resolutions You can Take to the BankHere are two New Year’s resolutions you can take to the bank.

1) Make sure that your bank and/or credit union is strong
2) Ensure that your CDs are earning as much as possible.

Keeping both these resolutions won’t cost you a penny and is as easy as visiting www.bauerfinancial.com.

Based on BauerFinancial’s independent analysis, over 70% of the nation’s federally-insured banks and credit unions are currently earning recommended ratings (5-Stars or 4-Stars). While the numbers vary by state, fewer than 10% nationwide are “Troubled or Problematic” (rated 2-Stars or below).

Some states were hit particularly hard by the “Great Recession” and have not turned the corner quite as quickly. This makes checking your banking relationships even more important. (You know who you are.) Even so, there is a large pool of recommended institutions from which to choose. And it’s simple!

Just click on “Bank Star Ratings” or “Credit Union Star Ratings” at bauerfinancial.com, select your state and choose from the abundance of recommended institutions. (All institutions rated by BauerFinancial are federally insured.)

While you’re on the site, click on “CD Rates”, then select “Consumer CD Rates”. You will see some of the best consumer CD rates in the country. You can choose to open a CD with any of the banks listed there, or use the page as a negotiating tool to get a better rate locally.

Two painless resolutions that will help you sleep better and help your wallet get fatter. And both are absolutely FREE.

…because peace of mind matters.

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Increase for Veterans Benefits in 2014

Increase for Veterans Benefits in 2014Washington DC – Veterans, their families and survivors receiving disability compensation and pension benefits from the Department of Veterans Affairs will receive a 1.5 percent cost-of-living increase in their monthly payments beginning January 1, 2014.

“We’re pleased there will be another cost-of-living increase for Veterans, their families and their survivors,” said Secretary of Veterans Affairs Eric K. Shinseki. “The increase expresses in a tangible way our Nation’s gratitude for the sacrifices made by our service-disabled and wartime Veterans.”

For the first time, payments will not be rounded down to the nearest dollar. Until this year, that was required by law. Veterans and survivors will see additional cents included in their monthly compensation benefit payment.

For Veterans without dependents, the new compensation rates will range from $130.94 monthly for a disability rated at 10 percent to $2,858.24 monthly for 100 percent. The full rates are available on the Internet at www.benefits.va.gov/compensation/rates-index.asp.

The COLA increase also applies to disability and death pension recipients, survivors receiving dependency and indemnity compensation, disabled Veterans receiving automobile and clothing allowances, and other benefits.

Under federal law, cost-of-living adjustments for VA’s compensation and pension must match those for Social Security benefits. The last adjustment was in January 2013 when the Social Security benefits rate increased 1.7 percent.

In fiscal year 2013, VA provided over $59 billion in compensation benefits to nearly 4 million Veterans and survivors, and over $5 billion in pension benefits to more than 515,000 Veterans and survivors.

For Veterans and separating Servicemembers who plan to file an electronic disability claim, VA urges them to use the joint DoD/VA online portal, eBenefits. Registered eBenefits users with a premium account can file a claim online, track the status, and access a variety of other benefits, including pension, education, health care, home loan eligibility, and vocational rehabilitation and employment programs.

For more information about VA benefits, visit www.benefits.va.gov, or call 1-800-827-1000.

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A1A Wealth Management, Inc. Moving to 
River Capital Advisors, L.C.

Mark Dennis Transitions to River Capital Advisors

Press Release: Mark Dennis of A1A Wealth Management

One of the challenges associated with running a solo financial planning practice is deciding when and how to expand operations while keeping in mind the best interests of my clients and preserving the personal touch along the way. With this in mind, I am pleased to announce that my independent financial planning services will soon expand substantially, offering access to an experienced multi-disciplinary team of Certified Financial Planner™ professionals, Certified Public Accountants, Chartered Financial Analysts, and more.

Effective December 9, 2013, I will begin transitioning my solo financial planning practice at A1A Wealth Management, Inc. into the independent registered investment advisory firm of River Capital Advisors, L.C. located in Jacksonville, FL, where I will join their team as a wealth manager. Our two firms have much in common, including an independent fee-only approach to asset management and a dedication to fiduciary responsibility where we keep the best interests of clients ahead of our own. More information about River Capital Advisors, L.C. is available at their web site:  www.rcawealth.com

In addition to their team of financial planning and asset management professionals, River Capital Advisors is an affiliate of the locally-owned public accounting firm, Smoak, Davis, and Nixon LLP. Organized in 1924, this esteemed accounting firm is one of the oldest in Northeast Florida.  The current financial services team has over 150 years of combined professional experience with which to assist clients across a variety of investment, tax, and financial planning needs.

Mark Dennis who is also this year’s Sunrise Rotary Club president sums the transition up as very complementary: “Combining my business with River Capital Advisors now gives my clients access to a team of financial planners (instead of just one), along with a group of local tax experts and investment managers.”

If you would like to know more about this exciting development or wish to touch base regarding your current financial planning and investment management needs, please give Mark a call at 904-583-1887.

Six Simple Ways to Value a Stock

Six quick and easy ways to determine stock values

Investors are always searching for methods to help them determine whether a company is worth investing in. There are many means of stock valuation, some simple, some more complex.1

Why is stock valuation so important? If the market price of the company’s stock is greater than the company’s intrinsic value, an investor might choose to stay away. If the market price of the company’s stock is less than the company’s intrinsic value, the investor may choose to buy the stock.

Here are six key valuation methods:

• Price-to-Earnings Ratio (P/E)

The price-to-earnings ratio (P/E) is a valuation method used to compare a company’s current share price with its per-share earnings. Its formula is calculated by dividing its market value per share by its earnings per share. The P/E is one of the most widely used ratios, and it is used to compare the financial performance of different companies, industries, and markets. The company’s forecast P/E (its P/E for the upcoming year) is generally considered more important than its historical P/E.

• Price-to-Earnings Growth Ratio (PEG)

The P/E ratio is a snapshot of where a company is, and the PEG ratio is a graph plotting where it has been. The PEG ratio incorporates the historical growth rate of the company’s earnings. This ratio also tells you how your stock stacks up against another stock. The PEG ratio is calculated by taking the P/E ratio of a company and dividing it by the year-over-year growth rate of its earnings.

• Price-to-Book Ratio (P/B)

The price-to-book ratio measures a company’s market price in relation to its book value. Its formula is calculated by dividing the company’s stock by its book value per share. Book value can be found in the company’s balance sheet, usually listed as “stockholder equity.” It represents the value of a company’s total assets subtracted by its total liabilities. The P/B does not consider the actual value of the assets, only the nondepreciated portion of the assets. Like most ratios, it’s best to compare P/B ratios within industries. For example, tech stocks often trade above book value, while financial stocks often trade below book value.

• Price-to-Sales Ratio (P/S)

The price-to-sales ratio helps determine a stock’s relative valuation. Its formula is calculated by dividing the company’s price per share by its annual net sales per share. Price-to-sales ratio is considered a relative valuation measure because it’s only useful when it’s compared with the P/S ratio of other firms. The P/S ratio varies dramatically by industry, so when comparing P/S ratios, make sure the firms are within the same industry.

• Return on Equity (ROE)

The ROE is calculated by dividing a company’s earnings per share by its book values per share. The ROE is a measure of how well the company is utilizing its assets to make money. Understanding the trend of ROE is important because it indicates whether the company is improving its financial position or not.

• Dividend Payout Ratio

This ratio is calculated by dividing the dividends paid by a company by its earnings. The dividend payout ratio can also be calculated as dividends per share divided by earnings per share. A high dividend payout ratio indicates that the company is returning a large percentage of company profits back to the shareholders. A low dividend payout ratio indicates that the company is retaining most of its profits for internal growth.

Supermarket Shelves Reflect Paycheck-to-Paycheck Society

The Beauty of the Midnight Sun

Dear Readers. Today in this weekend bulletin I was going to talk a bit about ‘the dos and donts‘ with crypto currencies such as Bitcoin, why gold is still being kicked in the balls by an stupendously exuberant Wall Street and why you should consider having your website hosted in an overseas territory, considering all the limitations and restrictions to be expected out of Washington. But after reading that Norway’s Army is battling Global Warming by going vegetarian, while the GOP is planning to cut alternative energy subsidies in half, I figured that it is all hog wash anyway. And if you don’t think so you should read Hugh Gusterson’s insightful article about “Which Drone Future Will Americans  Choose?” and still believe that we actually do have a choice.

So instead I decided to talk about reflections from my 3 times weekly grocery trips as well as some Festive information about the Holiday Season and some Sunday Morning Humor.

A Paycheck to Paycheck Society

As we are going into the last four week dash of grocery shopping and gift hunting, I would like to share a little secret with those of you, who always shy away from buying the larger bottle of ketchup in favor of the smaller one because of cash flow considerations. American grocery stores offer interesting reflections of financial irony, enticing (allowing) the poor to buy higher priced smaller packaged items, while the more prosperous among us take the advantage of buying those same products in larger volumes, but at substantially lower prices. Is this news to you?

There’s some real irony in this as often the stereotype of someone making bulk purchases is a person down to his last penny and watching every cent. But in reality, larger purchases at discounted pricing are for the better off; while buying the tiny packages at higher pricing is for the poor.

Of course I’m familiar with the economic law that states “the more you purchase of a product, the better the price you purchase at.” What rational person would prefer to pay more for a product when the same product in a larger packaging is staring them in the face for 30% less? But that’s only one side of the equation. The other side presents a real economic conundrum.

Imagine finding yourself in the condiments row of a supermarket where you notice that two bottles of ketchup – one larger and one smaller, same brand-name with the per-ounce price of each clearly labeled for the shopper. After doing some quick math in your head, the bigger bottle turns out to be about 30% cheaper than the small one per ounce of product. You quickly verify that you’re “comparing apples with apples” and this isn’t some special sale, but just the normal price, the only difference being packaged in a different size. According to any financial markets theory, this opportunity shouldn’t exist.

Designed Around Paycheck to Paycheck

Yet, whether it’s ketchup or just about anything else at the grocery store, one can save money by simply purchasing a larger package these days. And no I’m not even talking about bulk discount retailers like Costco, Sam’s Club or Restaurant Depot, but just your regular neighborhood grocery store. For people like me this advantage is in reality an earning, rather than a saving, but for the average American in the grocery store, the sad truth is that the pricing system of our entire society is based on people living paycheck to paycheck. It is designed around shoppers with near zero dollars in their checking accounts and that is why there are so many people buying the smaller packaged quantities? For many Americans the difference between a weekly $100 grocery bill and a $200 bill is enormous, which directs not only the purchase behavior from brand-name to store brand, but also the packaged sizing of products purchased.

I had a friend down in St.Maarten who bought a pack of cigarettes every day. Cost $2. A carton of 10 packs was only $12 or $1.20 per pack. $0.80 savings per day is $5.60 of earnings per week, had he bought a carton. Per year he would have had earned $292 in risk free income. His reason for purchasing one pack a day was: “Maybe I quit tomorrow.” He never did.

Next time I’m going to the grocery store and earn 5% to 10% riskless return on my groceries I know it’s great for me, but it’s disheartening to know that these savings are essentially the result of a paycheck-to-paycheck society. Either people can’t afford to make their ends meet with their paychecks, or they have completely lost control of their spending. But then again, there is something virtuous about these prices as well. In the free market, the price system actually rewards one for earning a greater income by offering cheaper prices for larger purchases. The same is true of other pricing as well. With a bigger down payment and more income, one pays lower interest rates on the mortgage – again, a reward for doing better. When it comes to government however, it’s the complete opposite. We are actually punished for earning greater incomes by paying higher taxes. Funny, isn’t it?

And while talking about government, here is a WARNING

After a recent wave of identify thefts, the FBI estimates there are over 500 fake ACA (Obamacare) websites set up for the sole purpose of stealing your personal information. So protect yourself and remember: the real one is the one that doesn’t work!

Restaurants Open on Thanksgiving Day

Courtesy of the Amelia Island Tourist Development Council

Following Restaurants are open and take reservations for Thanksgiving:

• Amelia Island Coffee – 207 Centre Street – (904) -321 2111

• Barbara Jean’s – 960030 Gateway Blv – (904)-277 3700

• Café 4750 (Ritz Carlton-Amelia Island) – 4750 Amelia Island Pkwy – (904) 277 1100

• David’s Restaurant – 802 Ash Street -(904) 310 6049

• Horizons – 4828 First Coast Highway – (904) 321 2430

• Huddle House – 1855 South 8th Street – (904) 261 2933

• Jack and Diane’s – 708 Centre Street – (904) 321 1444

• Marché Burette – 6800 First Coast Highway – (904) 491 4834

• Merge – 510 South 8th Street – (904) 277 8797

• Pablo’s Mexican Grill – 12 North 2nd Street – (904) 261 0049

• Slider’s Seaside Grill – 1998 South Fletcher Ave – (904) 277 6652

• Salt – (Ritz Carlton – Amelia Island) 4750 Amelia Island Pkwy – (904) 277 1100

• The Surf – 3199 South Fletcher Ave. – (904) 261 5711

• The Verandah – 6800 First Coats Highway – (904) 321 5050

Some Sunday Funday Impressions

Hunting Season has started here in North Florida so I thought you might like this one:

Click on Photograph for 360° tour

Daily I receive loads of great stories and beautiful pictures, but I was very happy to receive one last week with a 360° photograph one of our guests at the Amelia Oceanfront B&B took last June. Amazing technology. If you’re interested in finding out more about this contact Suburban Video directly.

In Closing for Today I’ll leave you with some of my favorites for this week. Click on them to enlarge.

This is a tattoo I would wear


Looking for Income? Consider REITs

Income from REITs is still quite attractive

Income from REITs is still quite attractive

For most Americans, an investment in real estate begins and ends with the purchase of a home. Yet investments in commercial real estate — including shopping centers, office buildings, and hotels — may be available to investors.
Real estate investment trusts (REITs) allow individuals to invest in large-scale, income-producing real estate. REIT performance has varied historically, with a total annualized return of 11.78% over the past 10 years, and a 19.70% return in 2012

Types of REITs

There are more than 100 publicly traded REITs, according to the National Association of REITs (NAREIT).
•   Equity REITs, which directly own real estate assets, make up most of the market.
•   Mortgage REITs loan money to real estate owners or invest in existing mortgages or mortgage-backed securities.
•   Hybrid REITs combine the investing strategies of both equity and mortgage REITs.

REITs resemble closed-end mutual funds, with a fixed number of shares outstanding. REITs are also traded like closed-end funds, offering a price per share. Unlike a closed-end fund, however, REITs measure performance by funds from operations (FFO) rather than by net asset value. FFO is defined as net income plus depreciation and amortization, excluding gains or losses from debt restructurings and from sales of properties. REITs’ growth benchmark is FFO growth, while valuation is reflected in an FFO multiple (share price divided by FFO) rather than in a price-to-earnings ratio.

The REIT Appeal

REITs offer a number of potential advantages, including the following.
•    Diversification: REITs can help to diversify an equity portfolio weighted to stocks in other industries. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a nondiversified portfolio. Diversification does not ensure against market risk.
•     Built-in management: Each REIT has a management team, sparing investors the effort of researching each property’s management team.
•    Liquidity: Because REIT shares are traded on the major stock exchanges, they are more readily converted into cash than direct investments in properties. Like direct property investments, REITs may lose value.
•    Tax advantages: REITs pay no federal corporate income tax and are legally required to distribute at least 90% of their annual taxable income as dividends, eliminating double taxation of income. Investors can also treat a portion of REIT dividends as a return of capital, although those classified as dividends are taxed at ordinary rates.

Weighing the REIT Risks

As with all investments, REITs have specific risks that are worth considering.
•    Lack of industry diversification. Some REITs limit diversification even further by focusing specifically on niche developments such as golf courses or medical offices.
•    Potential changes in the value of underlying holdings. These changes can potentially be influenced by cash flow of real estate assets, occupancy rates, zoning, and other issues.
•    Concern about performance metrics. Critics contend that FFO could be misleading because it adds depreciation back into net income. NAREIT counters that real estate values fluctuate with the market rather than depreciate steadily over time, making FFO a realistic performance measure. Also, REITs may average the rent they will receive over a lease’s lifetime rather than report actual rent received, which critics say can further cloud performance figures.
•    Interest rate sensitivity. If rates and borrowing costs rise, construction projects with marginal funding may be shelved, potentially driving down prices across the REIT industry.
•    Environmental liability. Companies in the real estate industry are subject to environmental and hazardous waste laws, which could negatively affect their value.

REITs can be a way to add total return potential to a diversified, long-term portfolio. Your financial advisor can help you decide whether an allocation to a REIT could help you pursue your financial goals.

The information in this communication is not intended to be financial or tax advice and should not be treated as such. Each individual’s situation is different. You should contact your financial and/or tax professionals to discuss your personal situation.

What Are Your Rights as the Beneficiary of a Trust?

Put the Magnifying Glass on the Small Print

If you have been named as a beneficiary of a trust, you probably have many questions about what comes next. Trust beneficiaries are usually entitled to income from the trust. The trustee who is in charge of the trust is responsible to make sure that assets from the trust are invested well and productively.

The following are some of your rights as a beneficiary.

¥ The right to an accounting of investments: Trustees typically decide how the principal of the trust will be used. As a result, the law requires that trustees act prudently with investments, diversifying so that all the assets of the trust are not in one place, which would put them at risk and could limit returns. If you have questions or concerns about the trustee’s decisions for the investments, you have the right to request an accounting of investments. This accounting report will detail every investment and its gains and losses.

¥ The right to receive annual trust reports: Trust reports contain information that includes the income that was produced by the trust and expenses and commissions paid out. Traditionally, these reports should be mailed out annually.

¥ The right to request a new trustee: If a trustee is being difficult, uncooperative, or refusing to do the job, you can request a new trustee. This typically requires a legal filing and a ruling by the court. If the reason for the request is because of large losses of principal, the trustee also may be required to repay the trust if he/she was found to be liable.

¥ The right to sue the trustee: The trustee can be held liable for loss of trust assets and for income that would have been earned but for the wrongful conduct by the trustee. The trustee has a fiduciary duty to manage the trust with due care and caution and must be loyal and impartial to the beneficiaries.

¥ The right to terminate the trust: If all the beneficiaries on a trust are “adults of sound mind,” the trust can be terminated if the court determines that the intent of the creator of the trust has either already been accomplished or cannot be accomplished for reasons such as impossibility. All the trust beneficiaries must agree, including those beneficiaries of the trust that are entitled to the remainder of the trust assets after the trust would have naturally ended. Some trusts are difficult to terminate, such as spendthrift trusts where the settlor clearly intended that the trust assets be withheld and protected from the beneficiaries and their creditors.

Being named as a beneficiary of a trust is indeed a welcome event, but not without its complications and, if handled improperly, unfortunate consequences. For help understanding your rights and protecting your inheritance, it may be wise to engage the services of an experienced trust attorney.

The information in this communication is not intended to be legal advice and should not be treated as such. Each individual’s situation is different. You should contact your legal professional to discuss your personal situation.

Divorcing Later in Life? What to Know

Who gets to cut up the divorce cake?

Who gets to cut up the divorce cake?

Divorce can be a complicated and challenging process in which details are easily overlooked. It is important to know the laws that shape divorce proceedings and to understand the impact they have on your assets. This is especially true for those aged 50 and older. Why? Because this group is getting divorced at a greater rate than other age groups. In fact, according to a recent study, the divorce rate for those aged 50 and older has doubled since 1990.


Typically, everything you and your spouse acquired from the day you were married is subject to division. Exceptions include individual inheritances, gifts to an individual spouse, and assets acquired before marriage. When assets are divided, the court considers each spouse’s earning potential, the length of the marriage, and each spouse’s contribution to building household assets.
The exception to this is the nine community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Under the laws of these states, almost all assets are divided equally.


If you live in a community property state, debt, like your assets, will be divided with your former partner. You will be responsible for half of all debt in jointly held accounts and, in some cases, half of a former spouse’s debt as well.
If you do not live in a community property state, you remain responsible for your individual debt (but not your spouse’s) and any debt in jointly held accounts. Many couples include debt payment as part of the settlement.
If you and your spouse own a home that has appreciated in value, consider whether you want to sell it before the divorce is finalized. Federal tax rules offer an exclusion of up to $500,000 in realized capital gains for married taxpayers. This amount is cut in half for single filers. Be sure to consult a tax advisor for additional information about these rules.

Retirement Assets

Money in your defined contribution or pension plan may legally be divided during a divorce. The divisible amount begins to accumulate on the day you are married and ends on the day you are divorced.
To claim a share of a spouse’s plan benefits, you need to obtain a court order called a Qualified Domestic Relations Order (QDRO) and provide it to your spouse’s plan sponsor before distributions are completed. You and your spouse have the option of deciding to not divide retirement plan assets. Note that traditional and Roth IRAs do not have to be covered by a QDRO, but should be addressed in any settlement.

Estate Planning

You may want to review you will as it may be beneficial to review and amend your estate plan at the same time you commence a divorce proceeding. Also review beneficiary designations for pensions, retirement plans, and life insurance policies.

Social Security

A divorced person is eligible for Social Security benefits based on his/her ex’s earnings record if he/she meets all of the following requirements:
•    He/she is at least 62 years old.
•    He/she was married for at least 10 years.
•    He/she didn’t marry someone else before age 60.

In order for a person to file for spousal benefits before his/her ex does, he/she must be at least 62 years old and they must have been divorced for at least two years.
If you find yourself faced with divorce, it is essential to protect your financial future. Enlisting the help of an attorney and carefully monitoring the process can ensure that your interests are considered and that you will not need to revisit the proceeding at a later time.

Income from Real Estate as a Lazy Landlord

Income from Real Estate as a Lazy LandlordThe purchase of a family home represents a typical investment in real estate for most Americans, but one that rarely generates income. Others may purchase second homes and rent them out to earn extra income, but they endure the hassle and challenges of life as a landlord in return. Some real estate investors prefer to invest in commercial real estate, that is, shopping centers, office buildings, etc. While the average investor may not have the cash or credit line to purchase an entire shopping center or apartment building, there is a simpler – and cheaper – way to invest in those types of properties and benefit from the income they generate, without having to endure the headaches a landlord may face.

According to independent Certified Financial Planner™, Mark Dennis of A1A Wealth Management, Inc., “Real estate investment trusts, or ‘REITS,’ operate similar to mutual funds and enable the average Joe or Jane to invest in large-scale real estate projects relatively inexpensively. A typical REIT pools the money of many investors in order to purchase these properties outright, or to invest in mortgages or even lend money outright to property owners.”

The National Association of Real Estate Investment Trusts (NAREIT) reports more than 100 REITS are traded publicly, with annualized returns of 11.78% over the last 10 years, and return of 19.70% in 2012. Dennis further states that REITS can be an attractive addition to one’s investment holdings because each REIT comes with a built-in management team, provides additional diversity among investments, and unlike individual real estate, they are highly liquid. Shares of REITS are traded on stock exchanges, making them much easier and quicker to sell than direct investments in real estate. Of course, like direct real estate, REITS can, and do, lose value, as with any investment. “REITS allow you to be a ‘lazy landlord’ without being an irresponsible landlord,” says Dennis. REIT investors enjoy the ownership and income from the real estate investment without the burden of maintenance, excessive amounts of paperwork, and dealing directly with tenants.

REITS may also offer tax advantages to investors. According to the tax code, REITS are required to distribute at least 90% of their annual taxable income as dividends to shareholders, which means the REIT pays no tax itself. This avoids the double–taxation of dividends that occurs with corporate stock dividends, which are taxable to the corporation first, and again to stock investors when dividends are distributed. Investors may also treat a portion of REIT income as a return of the individual investment, which reduces the potential tax burden. Otherwise, dividends are taxed as ordinary income to the investor, and REIT investors should consult with their tax advisors for specific tax advice. Before investing in REITS, individuals should also consult with their personal financial planners regarding the suitability of these investments for their investment portfolios.

For more information about this topic, contact Mark Dennis at 904-491-1889 or email mark@A1Awealthmanagement.com (mailto:mark@A1Awealthmanagement.com) .

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When Should You Collect Social Security?

Social Security, when to start collecting

Even timing the start of social security payments requires expertise

A growing number of Americans have been forced to delay their planned retirement date due to job and savings losses suffered during the most recent recession. According to a survey, nearly one-quarter of workers said they have resolved to retire later due to concerns about outliving their savings and fears of rising health care costs.1

Postponing retirement not only means working longer, but also delaying when you start collecting Social Security. Currently, workers can begin collecting Social Security as early as age 62 and as late as age 70. The longer you wait to start collecting, the higher your monthly payment will be. Your Social Security monthly payment is based on your earnings history and the age at which you begin collecting compared with your “normal retirement age.” This normal retirement age depends on the year you were born.

Here is a handy schedule to determine the Normal Retirement Age

Those choosing to collect before their normal retirement age face a reduction in monthly payments by as much as 30%. What’s more, there is a stiff penalty for anyone who collects early and earns wages in excess of an annual earnings limit ($15,120 in 2013).

For those opting to delay collecting until after their normal retirement age, monthly payments increase by an amount that varies based on the year you were born. For each month you delay retirement past your normal retirement age, your monthly benefit will increase between 0.29% per month for someone born in 1925, to 0.67% for someone born after 1942.

Which is right for you will depend upon your financial situation as well as your anticipated life expectancy. Consider postponing taking your Social Security benefits if:

• You are in good health and can continue working. Taking Social Security later results in fewer checks during your lifetime, but the credit for waiting means each check will be larger.

• You make enough to impact the taxability of your benefits. If you take Social Security before your normal retirement age, earning a wage (or even self-employment income) could reduce your benefit.

• You earn more than your spouse and want to ensure that spouse receives the highest possible benefit in the event that you die before he or she does. The amount of survivor benefits for a spouse who hasn’t earned much during his or her working years could depend on the deceased, higher-earning spouse’s benefit — the bigger the higher-earning spouse’s benefit, the better for the surviving spouse.

Consider taking your benefits earlier if:

• You are in poor health.
• You are no longer working and need the benefit to help make ends meet.
• You earn less than your spouse and your spouse has decided to continue working to help earn a better benefit.

Whenever you decide to begin taking your benefit, keep in mind that Social Security represents only 36% of the average retiree’s income. So you’ll need to save and plan ahead — regardless of whether you collect sooner or later.

Nassau County Seniors May Receive Additional Exemption

Nassau County Seniors May Receive Additional ExemptionNassau County, FL – Some qualifying senior citizens are now eligible for an additional tax break. Amendment 11, voted on by Floridian’s last year, now makes it possible for low-income senior citizen’s to receive an additional property tax exemption.

Seniors who are 65 and older, have a household income of approximately less than $28,000, own a home with a market value less than $250,000, and have lived in the home for more than 25 years are eligible for the new exemption, which is equal to the assessed value of the homestead property.

“We currently have 605 seniors who qualify for the senior exemption,” said Public Information Officer Justin Taylor. “Based on our records, we anticipate about 150 properties would benefit from the additional exemption with a total impact to the County of roughly $80,000.”

If the other taxing authorities approve the ordinance, the estimated impact would be:
City of Fernandina: $20,000
Town of Callahan: $1,200
Town of Hilliard: $800

Nassau County Property Appraiser Mike Hickox believes this ordinance was much needed in assisting seniors. “I feel this would be a great benefit to those seniors on fixed incomes, struggling to pay taxes so they can remain in their homes,” said Hickox. “This saving will help those who need it most.”

The amendment originated in the Florida Legislature and passed by the Senate and House. The ordinance was brought forth to the Board of County Commissioners on October 14th and passed unanimously.

“Currently the BOCC is the only taxing authority to pass this ordinance, therefore, as of right now, this new exemption will be for the County portion of taxes only,”said Taylor.

The Property Appraiser’s Office will begin accepting applications the first of the year and the exemption will begin in 2014.

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Another Way How Government Facilitates Wealth Transfer

A Bear in Teddy Clothing

Beware When the Real Bear Chases the Bull Away

I hate to be the turd in the punch bowl, but all this over the top spin-doctored crap about real estate being back in full swing, needs to be exposed for what it mostly is; some Wall Street players itching on a large stack of “hot money” buying up everything that can be converted into a massive rental REIT structure.

Oh sure on the local level there are many opportunities to purchase or sell to both parties’ satisfaction. A good realtor can make a great living right now and probably for the foreseeable future of 2-3 years, if well connected and hard working. Actually if you are in the end phase of a lifelong Real Estate  career, you are ‘awarded’ this time period to conclude your interests and get out.

The 2008 crash scared the bejesus out of many people while causing millions of homes to end up “under water” and countless millions of personal bankruptcies. Main Street Market investors lost their life savings and the aftermath of the bust and the ensuing great recession strangled the popular demand for housing to almost zero. But now five years later there is of course a slightly propped up demand from first time home buyers who desperately want their shot at the “Dream”, as population growth and family development cannot be put on hold forever. Combine that with another Federal Reserve promise to keep the interest rates historically low, and you have to see some excitement popping up in selected markets.

After the boom/bust however it pays to stay vigilant and realize that despite recent rip-roaring price action, the national average home price is still 21 percent below the 2006 peak.

Signs of Excess Popping Up Again

I was watching a HGTV House Hunter episode the other night, which conjured up images of 2005/2006 in my paranoid mind. The scenario unfolded around a single man who was looking as first time buyer to purchase a home in the $350,000 price range. He found a home that needed substantial TLC and close ups of the roof showed severe signs of wear and tear. A “professional” was called in for his opinion, which declared that the roof was still good for 8-10 years. With my layman street smarts, I would say the roof was dead but nobody had written the obituary yet. The whole scene reminded me of the “golden years” when bank appraisers enticed purchase with 125% of the purchase price, just to clinch the deal!. This guy on HGTV reportedly bought the house for $344,900 with $12,000 down and a mortgage payment of $2,300 a month!! That and other examples like the one below, tell me that we’re back at our old tricks of packaging loans that nobody can afford the moment interest rates go up a couple of points. And that they will go up…is inevitable!

Downside to Reversed Mortgage

The Federal Housing Administration FHA announced the desperate need to ask Uncle Sam for help to the tune of $1.7 billion to shore up its insurance fund. The hole in the FHA reserves comes entirely from losses in the agency’s reverse-mortgage program, a relatively new real estate product to accommodate seniors.

Aging celebrities like Fred Thompson (stack-em, pack-em and rack-em) and Henry “the Fonz” Winkler tell retiring baby boomers that the average reverse-mortgage borrower can obtain $130,000 in tax free cash with a government-insured reverse mortgage and use it to live the retirement of their dreams. A great way to make sure we do not outlive our money, isn’t it?

Well there is an interesting psychological downside to this reversed mortgage phenomenon which American Banker explains as follows:

Many seniors who received the loans in a lump sum were later unable/unwilling/uninterested to pay taxes and insurance, resulting in a wave of defaults. The reverse mortgage program was projected to have a $5.2 billion deficit this year.” A report issued last November from an independent actuary projected losses for the agency over the next 30 years that will put it $16 billion in the red.
Despite the housing market’s selective improvement, the FHA’s serious delinquency rate is still a whopping 8.47%. The agency insured 27 percent of all mortgages last year, and along with Fannie Mae and Freddie Mac, dominates mortgage finance post-crash.

At the end of the second quarter this year, nearly 24 percent of homeowners were underwater. In parts of Nevada, California, and Florida, the percentage is more than double that.

BUT, Wall Street is in love with Main Street’s houses again.

Not fancy structured financial products stuffed with mortgages of various quality this time; that would not fly too well.

This time, companies like Blackstone Group LP’s (BX) Invitation Homes are buying up homes by the dozen. Invitation has purchased 32,000 homes in 13 markets in recent time, focusing on locales like Phoenix, Las Vegas, and Orlando.
The company has invested $6 billion into single-family detached rental homes that it plans to sell when the market recovers. Blackstone believes housing prices are 22 percent below the 48-year trend line between 1951 and 1999. As William Cohan writes in the Atlantic, “It’s as if the run-up in the 2000s never happened.”

And that is an interesting trend as up until now, the landlord business has always been a mom-and-pop industry. Blackstone counts on technology to professionalize the business into predictable matrices, by for example offering excellent customer service such as 24-hour on-call maintenance. Of course that is not nearly enough for this venture to guarantee success.

Yesterday I wrote about the fact that late 20th and early 21st century governments have assumed and executed with great success their true reason for being (raison d’etre): Facilitating a massive wealth transfer from the Middle Class to the Ruling Elite. In 2008 that process was hugely expanded by “too big to fail” bank rescues. Since then enormous amounts of very cheap money have been pushed to Wall Street, so much actually that over time the money reserves have created an urgency called HOT MONEY, money with a time restraint, which now has made this rental proposition compelling for Wall Street, while tight money for everyone else has cleared the playing field for the big players.

Rental REITS have become a public trading attraction

In normal times, two-thirds of real estate activity is organic, as in people buying homes to live in them. Today, that ratio is reversed: more than two-thirds of all real estate activity in the country today is by either investors or first-time homebuyers. And friends that’s not a recovery of any healthy kind.

The statistic that investors and first-time homebuyers are driving two-thirds of all real estate activity is crucial, and here’s why: homeowners who actually live in the homes they own offer mental and physical support to the real estate market in tough times. They may improve and expand their home if real estate prices take a dip, but wouldn’t tell the wife and kids to pack up their things because they’re selling the house. Price bumps are largely irrelevant to organic owners.

Contrast that with an investor who views a house as a financial asset, like a stock. As long as prices are rising, he’s happy. But when prices take an inevitable dip, investors offer flimsy support to the neighborhood, because they’re the first to flee. You own next door to an investor’s property, the value of your property depends largely on the investor’s price moves when times get hot.

If you’re in the market for a home and your rationale for buying includes “riding the wave” of recovering home prices, put down the pen and step away from the mortgage application. The sturdy base of homeowners that historically supported US real estate ain’t what it used to be. Until the majority of homes are back in the hands of the families who live in them, there’s serious downside price risk. And if you’re ready to ride that train, a little excitement can lift life’s dull moments after all, be prepared for it to become another roller coaster in the next 2-4 years.

Ben Franklin Gets a Long-awaited Facelift

The Benjy, Hundy, C-Note, Big One may finally get its long promised update on October 8, if the Federal Bureau of Engraving and Printing gets its act together and stops blundering the $100 bill into another taxpayer debacle.

The new $100 bill was supposed to go into circulation on February 2011 and now 32 months later, another snag in the form of a printing error called “mashing” has send the initial batch of 30 million bills to the bonfire.

Remember Kindergarten when you were “forced” to paint within the lines of an object with water colors and too large of a paintbrush? Well that is what happens when “mashing” occurs, too much paint on the paper and lines become blurry instead of crisp where different colors meet. Kind of the Mistake 101 for a schooled printer.

In any case, $3 billion dollars in $100 bills went to the fire pit and the bill goes to the taxpayer. To add insult to injury, it turns out that another $30 billion in paper (300 million $100 bills) is awaiting examination and the Feds are adamant that they will not accept any hundred dollar notes from the Washington DC plant (the culprit) until further notice as the October 8 deadline rapidly approaches.

The financial ramification in terms of pure cost to the taxpayer is a bit hard to come by since both the Federal Reserve and the Treasury Department have little incentive to calculate this, but as an economist I have a keen interest in understanding that it is not really the direct cost of paper and printing that determines the cost of a $100 note, it is exponentially more effected by the cost of government incompetence as taxpayers pay for everything from inspecting, correcting, producing, transporting and securing/incinerating all the botched notes as well as the new notes to replace them, plus….the additional hours spent making up for mistakes by employees of the Bureau for Engraving and Printing. This of course is on top of the proud admittance by the Feds that more than a decade of research went into the new design!!!

Why does it take so long to correct things on Government levels?

We all have heard about the atrocities in filing at the Veteran’s Bureau and the enormous delays of Social Security claims, so much that Law Offices have made it a profit center. We know that any statistic coming out of the Bureau of Labor Statistics is massaged into a politician’s wet dream and we should know by now that Richard Nixon’s decision to take the US dollar off the gold standard in 1971 was going to make our currency value dependent on how much trust we “the People” have in government’s competence and honesty to serve and guide us in our pursuit for Life, Liberty and Happiness. Two things stand in the way of governments performing in the interest of the people: the power of institutionalized incompetence and the ingrained disrespect for opposing political views.

As I said, the new $100 bill, reportedly the most widely circulated note in the US currency system (inflation anyone?), was supposed to go into circulation on February 10 of 2011. A printing snafu that put a blank spot on the note prevented that and delayed introduction by apparently no less than 32 months. Then in October of 2012 thieves stole what was termed “a large amount” of newly designed $100 bills somewhere between Philadelphia and a Federal Reserve facility in New Jersey. Apparently these notes were printed correctly, but were not intended to go into circulation until October 8 this year.

Since no clarity was ever provided on the exact amount that was stolen- the FBI called it substantial-  and I can’t find any mention of catching the thieves or recovering the bills since, here is an assumption: In the bigger scheme of things the theft was indeed substantial but not big enough to trigger the need for a design correction. And some people are going to be very rich come October 8, which can easily be waved off as trickle up economics or unaccounted as “foreign aid”. I think it was Egypt desperately looking for $30 billion in aid from Russian President Putin earlier in April this year. Imagine the traitors, after all the billions we have given to support them over the years!

Lest we prefer to ignore current circumstances with our heads in the sand, we know that we have landed in a global scenario where everything Wall Street/Washington has become “way too big to fail.” The stake holders in the triad of power, politics and  pecuniary interests see no difference in Bernanke guaranteeing monthly treasury incentives of up to $85 billion in “QE infinity” to prop up a failing economy or organized theft of currency shipments to stake a ruling claim in another nation. Iran-Contra is just one historic example and a rather innocent one in the stakes currently facing the world.

But Anyway….with a nod to the Blues Traveler concert at TCP Sawgrass Friday evening, if you are interested in the looks and development of the new $100 note, there is an entire website devoted to it.

Custodial Accounts: A Way to Transfer Wealth

story from A1A Wealth Management.

A custodial account invloves giving money to minors.

Setting up a custodial account can be a savvy move for adults who want to gift their assets and help their children become financially independent. They are simpler to set up than trusts. But there are many considerations — and consequences — to weigh before opening an account. Here are some key points to keep in mind.


The two types of custodial accounts you can use to gift assets to your youngster are called a Uniform Gift to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA). Which one you use will depend on your state of residence. Most states — with the exception of Vermont and South Carolina — have phased out UGMA accounts and now only offer UTMA accounts. UTMA accounts allow the donor to gift most security types, including bank deposits, individual securities, and real estate. UGMA accounts limit gifts to bank deposits, individual securities, and insurance policies.
•    There are no contribution limits. Parents, grandparents, other relatives, and even non-related adults can contribute any amount to an UGMA/UTMA at any time. Note that the annual federal gift tax exclusion is currently $14,000 per year ($28,000 for married couples). Gifts up to this limit do not reduce the $1 million federal gift tax exemption.

•    The assets gifted are irrevocable. Once you establish an UGMA or UTMA, the assets you gift cannot be retrieved. Parents can set themselves up as the account’s custodian(s), but any money they take from the account can only be used for the benefit of the custodial child. Note that basic “parental obligations,” such as food, clothing, shelter, and medical care cannot be considered as viable expenses to be deducted from the account.

•    Taxes are due — potentially for both you and your child. Some parents may initially find custodial accounts appealing to help them reduce their tax burden. But it’s not that simple. The first $1,000 of unearned income is tax exempt from the minor child. The second $1,000 of unearned income is taxable at the child’s tax rate, which could trigger the need for you to file a separate tax return for your child. Any amounts over $2,000 are taxable at either the child’s or the adult’s tax rate, whichever is higher. Note that state income taxes are also due, where applicable.

•    Your child will eventually gain complete control. Once your child reaches the age of trust termination recognized by your state of residence (usually 18 or 21), he or she will have full access to the funds in the account. Be warned that your child could have different priorities for the assets in the account than you do. Money that parents had earmarked as paying for college tuition could instead be used to purchase a sports car or fund a suspect business venture.

Financial Aid Considerations

For financial aid purposes, custodial assets are considered the assets of the student. If the assets in the account could jeopardize your child’s chances of receiving financial aid, speak to your tax and/or financial professional. One of your options could involve liquidating the UGMA/UTMA and establishing a 529 account.
Before making any decisions about establishing a custodial account, be sure to talk to your tax and financial professionals.

This communication is not intended to be tax advice and should not be treated as such. Each individual’s tax situation is different. You should contact your tax professional to discuss your personal situation.

Baby Boomers and Social Security

Baby Boomers and Social SecurityJoin in on this rountable discussion, “Baby Boomers and Social Security,” a new generation of retirees prepares to collect benefits.

Certified Financial PlannerT Mark Dennis will lead an educational roundtable discussion titled “Savvy Social Security Planning: What Baby Boomers Need to Know to Maximize Retirement Income” at 6:00 P.M. on Thursday, September 26, 2013 in the conference room at the offices of A1A Wealth Management, Inc. in Fernandina Beach.

After being told for years that Social Security is “going broke,” boomers are realizing it will soon be their turn to collect. But the decisions they make now can have a significant impact on the dollar amount of benefits they stand to receive over their lifetime.

Questions boomers are asking include:

    Will Social Security be there for me?
    How much can I expect to receive?
    When should I apply for Social Security?
    How can I maximize my benefits?
    Will Social Security be enough to live on in retirement?

To help current and future retirees better understand the Social Security system, this roundtable discussion will cover:

-5 factors to consider when deciding when to apply for benefits
-When it makes sense to delay benefits — and when it does not
-Why you should always check your earnings record for accuracy
-How to estimate benefits
-How to coordinate benefits with your spouse
-How to minimize taxes on Social Security benefits
-How to coordinate Social Security with your other sources of retirement income

Seating for this roundtable discussion is limited and reservations are required. Reserve space online at https://a1asavvysocial.eventbrite.com/ or by calling Mark Dennis at (904) 491-1889.

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