Saturday, October 25, 2014

Combating a Flood of Early 401(k) Withdrawals

Raising the maximum contribution doesn't help most Americans since they spend all they make on rent, car payments, food and health care. QB

This week, the Internal Revenue Service announced that people under age 50 in 401(k) and similar workplace retirement plans will be able to deposit up to $18,000 in 2015, an increase of $500 from this year. Those 50 and over can toss in as much as $24,000, a $1,000 increase.

Which is all fine and dandy for the well-heeled and the frugal. But one of the biggest problems with these accounts has nothing to do with how much we can put in. Instead, it’s the amount that so many people take out long before they retire.

Over a quarter of households that use one of these plans take out money for purposes other than retirement expenses at some point. In 2010, 9.3 percent of households who save in this way paid a penalty to take money out. They pulled out $60 billion in the process; a significant chunk of the $294 billion in employee contributions and employer matches that went into the accounts.

These staggering numbers come from an examination of federal and other data by Matt Fellowes, a former Georgetown public policy professor who now runs a software company called HelloWallet, which aims to help employers help their workers manage their money better.

http://www.nytimes.com/2014/10/25/your-money/401ks-and-similar-plans/combating-a-flood-of-early-401-k-withdrawals.html?hp&action=click&pgtype=Homepage&version=HpSumSmallMediaHigh&module=second-column-region&region=top-news&WT.nav=top-news

7 things the middle class can't afford anymore

To be considered middle class it takes both parents working these days. There are still a few hanging onto middle class status, but the real question is "What makes you Middle Class?" When 1% own nearly 50% of the country's wealth that doesn't leave much of a middle class. QB

During debates and speeches, politicians often bring up the financial burden that's placed on the middle class. We talk about the middle class as though they are this singular entity, who used to thrive until they underwent persecution by the evil 1%. But, realistically speaking, the middle class and the 99% are not really synonymous. So, who are the middle class?

In its discussion of historical middle class societies, The Economist reports, "Their members are neither rich nor poor but somewhere in-between. . . . 'Middle-class' describes an income category but also a set of attitudes . . . An essential characteristic is the possession of a reasonable amount of discretionary income. Middle-class people do not live from hand to mouth, job to job, season to season, as the poor do."

Some argue that the most sensible income amount to attach to the middle class would be the median household income, of around $54,000. Perhaps, anyone who earns between the 25th percentile and 75th percentile is a member of the middle class.

http://www.usatoday.com/story/money/personalfinance/2014/10/25/cheat-sheet-middle-class-cant-afford/17730223/

Sears Has Passed The Point Of No Return

I think we all saw this coming. Of course they take K-Mart down with them as well as other brands and a few they can still spin off. I couldn't tell you the last time I shopped at Sears. QB

Wikimedia Commons Sears is closing hundreds of stores around the country. Sears will probably not recover from its decades-long decline. 
"As a retailer they're at the point of no return," said David Tawil, cofounder of Maglan Capital and an expert in distressed retail companies. "The real question now is when does it all end?" 
Sears recently confirmed reports that it was planning to close more stores and lay off workers. The company, which has currently has 800 namesake stores and 1,100 Kmart stores,  has lost $6 billion since 2012. Suppliers are growing concerned that they won't receive payments for merchandise. 
Sears is lacking the cash or vision to make a turnaround possible, said Tawil, who has invested in many struggling retailers.
"Sears hasn't invested any money into stores, which makes it difficult to retain or attract customers," Tawil said. "The company doesn't seem to have a plan to fix this, making a turnaround impossible." 

Huge Downward Revision In August New Home Sales

The numbers they give us are made up so they can revise downward two months later. Why bother? QB

New home sales were flat in September after a big downward revision to August's report.
New home sales rose 0.2% to an annualized pace of 467,000 in September, while August's blowout number was revised down to a pace of 466,000 from a prior report of 504,000. 
Expectations were for new home sales to fall 6.8% in September to an annualized selling rate of 470,000, down from August's 18% increase to an annualized rate of 504,000. 
According to the latest report from the Census, the median home sales price in September was $259,000 and the average was $313,200. 
The report also showed that the current rate of sales represents 5.3 months supply at the current sales rate.