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A Retirement Planning Strategy Goes Away




With little fanfare, Congress has put an end to a valuable Social Security planning technique for married couples.

President Obama has now signed the Bipartisan Budget Act of 2015. As the law’s name suggests, it is mainly a federal budget deal, but it also included some major changes to Social Security. The update with arguably the largest impact is the termination of the “file and suspend” strategy, which had gained popularity with many married couples for retirement planning purposes.

It is common knowledge that waiting until age 70 to collect Social Security benefits will lead to higher monthly payouts than claiming benefits immediately upon turning 62. The file and suspend tactic allowed married couples to effectively have their cake and eat it too.

Say two spouses had become eligible for Social Security, with the higher earner having reached full retirement age (FRA). With file and suspend, the higher-earning spouse would file, but “suspend” his or her benefits – that is, stop drawing benefits in order to continue accruing deferral credits. Meanwhile, the lower earner would file and begin collecting spousal benefits for up to 50 percent of the higher earner’s benefit amount, less any early election reduction if applicable, as opposed to collecting the smaller net benefit to which the spouse would be entitled on his or her own record. At age 70, the higher earner would reactivate his or her benefits, since she or he would no longer benefit from delaying.

Under the new rules, this strategy will no longer work. That’s because, once the provisions go into effect, filers who suspend their benefits will also cut off any spousal or dependent benefits based on their record, known as auxiliary benefits. While the ability to suspend benefits is not disappearing altogether, it seems obvious that lawmakers only want filers to make the election if there is a material change to their situation after submitting their Social Security application.

The file and suspend tactic is not the only Social Security strategy to go; the new law also puts an end to the practice of filing what was known as a “restricted application” for spousal benefits. In the past, filers who had reached FRA could start collecting only spousal benefits, leaving their own earned benefits to grow until age 70. Now applicants who file for benefits are automatically deemed to have filed for both retirement and spousal benefits concurrently, and will automatically receive the greater of the two amounts.

Why the change? It is no secret that Social Security is struggling, and has been for some time. Social Security’s disability program was in the worst condition, with its cash reserves scheduled to be depleted sometime next year. This would have resulted in roughly a 20 percent cut in disability benefits, which Congress and the White House were eager to avoid.

Last week’s budget deal diverted funds from Social Security’s retirement program to help plug the disability gap until 2022. In turn, the changes to the rules for claiming retirement benefits should help reduce the overall impact on the Social Security retirement program. The Center for Retirement Research has estimated that file and suspend added $9.5 billion in annual costs that Social Security will now mostly avoid. (1)

Is $9.5 billion a year a lot of money? Sure. Is the change enough on its own to keep Social Security afloat for very long? Probably not. As Taylor Swift eloquently puts it, “Band-Aids don’t fix bullet holes.”

From the government’s point of view, the law is simply a matter of closing “unintended loopholes,” as is stated in the text of the legislation. But while it may appear to be a fairly straightforward attempt to stave off the inevitable as far as Social Security funding is concerned, lawmakers and individuals alike need to remember that nothing in the world of Social Security is truly straightforward. In a system with so many moving parts, this kind of rule change is likely to have a variety of consequences, not all of them intended.

For instance, Laurence Kotlikoff, an economics professor at Boston University and director of the Fiscal Analysis Center, has suggested that the rule change could lead to a spike in divorce rates in the next few years. In an op-ed column, he explained that long-time couples who no longer have access to file and suspend could theoretically get divorced no later than two years prior to their FRA and become eligible to collect a full spousal benefit based on one another’s records. Once they reach age 70, they can start collecting their own retirement benefits and remarry. (2)

While Kotlikoff’s point is valid, I don’t think this divorcing strategy will be widespread in practice, since there are other factors at play, such as the costs of divorce and remarriage, income tax consequences, insurance complications and estate planning concerns. Not to mention that a lot of people would probably prefer to stay married, regardless of the financial implications. However, Kotlikoff’s column does illustrate the kind of unintended consequences Social Security updates can create.

The budget deal also gives higher-earning ex-spouses an avenue for vindictive action. If a lower-earning ex-spouse files for a divorced spousal benefit on the higher earner’s record, the higher earner can elect to file and suspend, thereby cutting his or her ex-spouse off from spousal benefits for the duration of the suspension and leaving them to make do. Even someone with the purest of intentions may suffer from the updated rules. For instance, a filer who might have preferred to wait to collect benefits until age 70 will now face the choice of taking the benefit earlier or being unable to offer auxiliary benefits to family members who may have planned on them.

The real reminder these rule changes offer is that Social Security is, and has long been, frustratingly complex for the average person. Fortunately the law grandfathered in those who are currently taking auxiliary benefits in a file and suspend arrangement. The law also leaves a six-month window for anyone who has reached FRA to enact such a strategy under the old rules, with a May 1, 2016 cutoff.

For everyone else, the old file and suspend strategy is off the table, despite its previous place as one of many tools in the retirement planning toolbox. If you are nearing retirement age, or if you had planned to employ the file and suspend strategy but are no longer eligible to do so, this change is a call to action. You will need to reevaluate your Social Security planning, and overall retirement planning for that matter, and make any necessary adjustments. Meanwhile, those who continue to be eligible should avoid rushing out to file and suspend just because they are about to lose the chance; as with any Social Security approach, careful planning is key.

If you have not yet taken the time to devise your Social Security strategy, this change is just one of a variety of factors that you, and potentially your financial adviser, will need to bear in mind. Depending on your age, Social Security may look quite different by the time you approach retirement. The only guarantee is that it is unlikely to become simpler anytime soon.


1) Reuters, “How the budget deal changes Social Security for couples”

2) PBS Newshour, “Column: This is not how you fix Social Security”


Source by Laurie Samay


Where to Find Those Efficient and Hardworking Affiliates?




Everyone wants a hardworking affiliate, employee, associate, partner, or even spouse, and why not? It’s the next best thing to doing the work yourself. However with the massive outbreak of work and income opportunities available online, how can you beat everyone else and find that one (or more) ideal person who will make your online business explode with success? Here are some of the most ingenious and uncommon ways to snag the idea affiliates for your affiliate program

Direct Sales Agents

Direct sales people are really one of the most enterprising, hard-working individuals in business. They mostly work on commissions or rebates and are willing to literally go door-to-door offering their products to anyone and everyone they bump into. Imagine how much easier their job would be if they could be an affiliate and simply work via the Internet and a mobile device or desktop.

Also, most direct sales people tend to carry more than one brand in their product arsenal so signing up as an affiliate would be almost the same type of work but using a different approach.

Colleges and Universities

Many college kids would be interested in a part-time income opportunity if it would mean funds to help pay for their education, loan, or partying. All you have to do is make sure to offer them products they can endorse as a student.


Did you know that the U.S. Census Bureau’s latest annual report show that 75% of U.S. businesses used freelancers in 2011? Freelancers earned a whopping US$990 billion in 2011 which is a 4.1% increase from the previous year. The only industries where the number of freelancers decreased were in insurance, finance, and construction. Most probably your affiliate program isn’t a part of these 3 industries.

Furthermore, online business and finance experts are predicting the growth to increase incrementally every year even with an economy that is improving. People just want income security and more control over their earnings. With the spate of lay-offs, it’s understandable why many would prefer to work as an affiliate than as an employee.

Scout For Them At Affiliate Conventions

There are annual affiliate conventions held in different cities around the country. You should try to catch one when it is held somewhere near your location. The average turn-out for these types of conventions has increased regularly over the years. Last year, many of them were sold out weeks before the event.


The US Census Bureau has said that as of 2012, 15% of Americans are poor, 43% of young adults depend on their parents to some extent for money. Even more surprising is that the median income of young adults in 1982 was $31,583 and last year it was $30,604 for the same age group! Income is dropping and people are looking for ways to earn additional income outside of their 9 to 5 jobs. That’s where you can come in playing the hero and helping others realize their dream income.

Finally, go online and talk about your product. Make the affiliate marketers come to you and have the luxury of picking the best candidates. You will need some help in marketing your affiliate program so target a marketer who’s experienced in affiliate program and SEO.


Source by Lina Stakauskaite

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Recession Is Here… Six Costly Mistakes Home Sellers Make During Recessions And How To Avoid Them




The U.S. is officially in a recession. What is a recession? A recession is a business cycle contraction or general economic decline due to significant drop in spending and other commercial activities. Most pundits and politicians will blame Covid-19 crisis for the recession, but even pre-Covid-19 the proverbial writing was on the wall.

The U.S. had over 120 months of economic growth, which was the longest expansion in the modern history. Other indicators, such as negative yield spread on treasuries (long term bonds having lower interest rates than short term T-notes), were pointing to an imminent change of the economic cycle and an impending recession. The only real question was: when and how bad?

Then Covid-19 came… If the cycle was going to change anyway, Covid-19 acted as a huge and unexpected accelerant to make the recession much more immediate and severe.

Inevitably during recessions all classes of real estate, including residential homes and condominiums, will be negatively impacted as lower consumer spending and higher unemployment rates affect real estate prices and marketing times.

Here are the six costly mistakes home and other real property sellers make during recessions and how to avoid them:

Mistake #1: This will pass and real estate market will be hot again soon

First thing to remember is that real estate cycles are much longer than general economic cycles. Even if the general economy recovers, which eventually it always does, a typical real estate cycle takes as long as 10 to 15 years. The cycle has four key stages: Top, Decline, Bottom and Rise.

Let us consider the last real estate cycle, which lasted approximately 14 years:

  • 2006 – Prices hit the Top
  • 2006 to 2012 – Prices Decline
  • 2012 – Prices hit the Bottom (Trough)
  • 2012 to 2019 – Prices Rise*
  • 2020 – Prices hit the Top
  • 2020 to? – Prices Decline

*NOTE: In 2016 the national residential real estate price index reached its pre-recession 2006 peak levels. It took 10 years for the real estate market to recover.

The way to avoid this mistake is to recognize that real estate cycles take years to run and plan accordingly. Additionally, nobody knows for sure when the prices will hit the top or bottom until after the fact.

Mistake #2: Low interest rates will make the economy and real estate market rebound

Between 2006 and 2011 the interest rates (Fed Funds) were continuously cut by the Federal Reserve Board and went from low 5% to almost 0%. However, that did not stop the real estate recession and depreciation of property values.

Undoubtedly, low interest rates made the economic decline and real estate recession less severe and saved some properties from foreclosures, but it still took six painful years for the real estate market to hit the bottom and then four more years for the prices to go back to their pre-recession levels.

Some markets had never fully recovered. For example, residential home prices in some parts of California, Arizona and Nevada are still below their 2006 highs.

To avoid this mistake, one needs to realize that although low interest rates help stimulate the economy and the real estate market, they do not cure them.

Mistake #3: I don’t need to sell now, so I don’t care

If you do not need to sell until the cycle plays out, which typically is over ten years, then you will not be as affected, especially if you have a strong equity position, limited mortgage debt, and solid liquid assets.

However, it is good to keep in mind that “life happens” and either professional or personal circumstances can change and we may need to sell property before the downturn runs its course.

Furthermore, if a property has a mortgages and its value declines to the point being “upside down,” meaning the mortgage loan balance exceeds the value of the property, then the options of selling, refinancing or even obtaining an equity line of credit, will be significantly limited.

This does not mean that everybody should be rushing into selling their real estate if there is no need to do so, just keep in mind that circumstances may and often do change and property options will be affected, so plan in advance. As one wise proverb says: “Dig your well before your thirst.”

Mistake #4: I’m selling, but I won’t sell below my “bottom line” price

This is a common and potentially very costly mistake. Generally speaking, every seller wants to sell for the highest price and every buyer wants to pay the lowest price. That’s nothing new. When selling real estate, most sellers want to achieve a certain price point and/or have a “bottom line.”

However, it is important to understand that the market does not care what the Seller, or his/her Agent, think the property value should be at. The market value is a price a willing and able buyer will pay, when a property is offered on an open market for a reasonable amount of time.

Overpricing property based on Seller’s subjective value or what is sometimes called an “aspirational price,” especially in a declining market, is a sure first step to losing money. When a property lingers on the market for an extended period of time, carrying costs will continue to accumulate and property value will depreciate in line with the market conditions.

Additionally, properties with prolonged marketing times tend to get “stale” and attract fewer buyers. The solution is to honestly assess your selling objectives, including the desired time-frame, evaluate your property’s attributes and physical condition, analyze comparable sales and market conditions, and then decide on market-based pricing and marketing strategies.

Mistake #5: I will list my property for sale only with Agent who promises the highest price

Real estate is a competitive business and real estate agents compete to list properties for sale which generate their sales commission incomes. It is not unusual that Seller will interview several agents before signing an exclusive listing agreement and go with the agent who agrees to list the property at the highest price, often regardless if such price is market-based.

Similarly to Mistake #4, this mistake can be very damaging to Sellers, as overpriced properties stay on the market for extended periods of time costing Sellers carrying expenses such as mortgage payments, property taxes, insurance, utilities and maintenance.

Furthermore, there is the “opportunity cost” since the equity is “frozen,” and it cannot be deployed elsewhere till the property is sold. However, the most expensive cost is the loss of property value while the real estate market deteriorates.

During the last recession, we have seen multiple cases where overpriced properties stayed on the market for years and ended up selling for 25% to 40% below their initial fair market values.

The solution is to make sure that your pricing strategy is based on the market, not empty promises or wishful thinking.

Mistake #6: I will list my property only with Agent who charges the lowest commission

Real estate commission rates are negotiable and not set by law. A commission usually represents the highest transactional expense in selling real properties and is typically split between Brokers and Agents who work on the transaction

Some real estate agents offer discounted commissions, in order to induce Sellers to list their properties with them. But does paying a discounted commission ensure savings for the Seller? Not necessarily.

For example, if the final sales price is 5% to 10% below property’s highest market value, which is not that unusual, due to inadequate marketing, bad pricing strategy, and/or poor negotiation skills, it will easily wipe out any commission savings and actually cost the Seller tens of thousands of dollars in lost revenues.

The solution is to engage an agent who is a “Trusted Advisor,” not just a “Salesperson.” A Trusted Advisor will take his/her time and effort to do the following: 1) Perform Needs Analysis: listen and understand your property needs and concerns; 2) Prepare Property Analysis: thoroughly evaluate your property and market conditions; 3) Execute Sales and Marketing Plan: prepare and implement custom sales and marketing plan for your property; and 4) Obtain Optimal Results: be your trusted advocate throughout the process and achieve the best possible outcome.

Finding such a real estate professional may not be always easy, but it certainly is worth the effort and will pay off at the end.

In conclusion, this article has outlined six costly mistakes real estate Sellers make during recessions and how to avoid them. The first mistake is not understanding that real estate cycles are long and take years. The second mistake is a misconception that low interest rates alone will create a recovery. Another mistake is not realizing that circumstances may change and not planning in advance. Mistakes number four, five and six pertain to understanding the market value, proper pricing and selecting the right real estate professional.

By understanding and avoiding these mistakes, real estate Sellers have significantly better chances of minimizing the negative impact of a recession while selling their properties.


Source by Robert W. Dudek

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Useful Tips To Build The Best Gaming Computer




Every gamer will want their computer to be the best gaming computer among their peers. Sometimes, with a little knowledge and tips and tricks, it is possible to build the best gaming computer and show it off to your peers. This article will show you how:

1) You can’t get the best gaming computer from computer retailers

If you want to get the best gaming computer, you have to build your own. Different gamers have different requirement for their gaming machine. Unless you are willing to pay a high price, you will not be able to buy a commercial computer that fulfills all your gaming needs. The only option you have is to build your own gaming computer.

2) You don’t have to be rich to build the best gaming computer

It is not necessary to burn a hole in your pocket to build the best gaming computer. With some due diligence, do some market research and compare prices around the marketplace. Merchant such as TigerDirect and NewEgg give regular discount to their products and you could save a lot of money if you catch them during their promotional period.

3) Most expensive parts do not have to be the best part

Sometime, the latest model or the most expensive model does not have to be the best part for your computer. It requires various components to work together to form the best computer system. When choosing a computer part, what matters is how well it can integrate with the rest of the components. Compatibility is more important than individual performance. What use is there if you spend lot of money on the latest quad-core processor and find that your motherboard doesn’t support it?

4) You don’t need to change the whole PC to own the best gaming computer

It is a misconception that you have to change the whole gaming machine to build the best gaming computer. If you already have a good barebone system, what you need to do is to upgrade the necessary parts and your gaming computer can roar back to life instantly.

5) Brand is important

Unless you want to see your computer system malfunction every few days, it is important that you purchase the parts from branded manufacturers with strict quality control. Motherboard brand such as Gigabyte, ABIT, ASUS are some quality brands that you can consider

If you follow diligently to the tips stated above. You will be on your way to build the best gaming computer. While price can be an issue, it is better not to scrimp on important computer parts such as motherboard, CPU, RAM and graphics card as it will cost you more to upgrade in the future.


Source by Damien Oh

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