Friday Financial Five – April 17th, 2015

Friday, April 17, 2015

Dan Forbes, GoLocalPDX Contributor

A Good year for the Government

Those celebrating tax week can rejoice that the federal government has taken in roughly $1.5 trillion dollars since October 2014, making fiscal year 2015 the biggest in government history. According to the Bureau of Fiscal Service, a division of the U.S. Treasury, the majority of those revenues come from income withheld and employment taxes. The next largest source of revenue is income taxes from corporations. The lowest revenue source is comprised of estate and gift taxes, an area that some Republican members of Congress are looking to eliminate completely.

Shift for Housing Affordability

It appears the housing pendulum has indeed swung the other way. According to RealtyTrac, purchasing a house is more affordable than renting in over 75 percent of the country. The analysis considers median priced homes in 461 counties nationwide, all with a population of at least 100,000. In 351 of those counties, payments on a home were lower than renting for the first quarter of this year. Wage and down payment considerations factor into the equation, but it appears those paying rental dollars should look long and hard at home ownership.

Department of Labor Unveils New Fiduciary Plan

The DOL released the plans allowing a fiduciary standard for advisors working on retirement plans. The new proposal contains exemptions that will allow advisors to get paid via commissions and 12b-1 fees but also includes a “best interest contract exemption” that requires advisors to commit to putting clients’ best interests first. Under the proposal, the IRS would be able to impose an excise tax for transactions based on conflicted advice.

CFP Board Releases Study on Financial Stress

A majority of people are suffering financial stress of one form or another, according to the CFP Board’s recent survey. The top three stresses stemmed from debt, daily budgeting, and health costs. Only fourteen percent of the thousand people surveyed reported no stress relating to financial issues. Interestingly, women were more stressed than men, and those younger than 45 were more stressed than those 45 and older.

Means Testing for Social Security Pushed by Christie

Presidential candidates are trying to bring distinguishing ideas to the table, as Governor Chris Christie discussed changes to Social Security involving means testing and a higher retirement age. Those making over $200,000 in other income would be ineligible for Social Security benefits, while the normal retirement age would increase from 67 to 69 for those born in 1960 or later. Medicare eligibility would incrementally rise from the current age of 65 to age 67. According to campaign projections, this would save $1 trillion over a decade.

Dan Forbes is a regular contributor on financial issues. He is a CFP Board Ambassador. He leads the firm Forbes Financial Planning, Inc in East Greenwich, RI and can be reached at [email protected].