Links of Interest – WSJ edition

by   |  03.05.13  |  links of interest

1) Young adults now saving more.  Not coincidentally, young adults are also now more debt-averse.

2) Is the retirement income rule-of-thumb no longer viable?

Dealing with debt

by   |  01.17.13  |  links of interest

Two interesting and related articles.  The first, from the Memphis Commercial Appeal, says one in four workers are now tapping “retirement funds” for current expenses.  The second, from the New York Times, relates the story of one single mother who dropped off the fast-track into a large amount of debt and discusses some of the psychology behind the choices made by those with scarce resources.

h/t Marginal Revolution

Tax Changes for 2013

by   |  12.18.12  |  estate planning, financial planning

Some things to be aware of, should Congress not change the tax laws before December 31.

Income tax rates will increase across the board.  The lowest rate will go from 10% to 15%.  The highest rate will move to 39.6% from 35%.  All other rates will also go up.

The capital gains tax rate will go back to 20%, up from 15%.  Dividends will once again be taxed like ordinary income (between 15 and 39.6%, depending on your marginal tax rate).

For higher income earners, there will be limitations on itemized deductions (mortgage interest, state income tax, property tax, charitable deductions, etc).  There will also be a phase out on personal exemptions for higher income earners.

The Patient Protection and Affordable Care Act brings two new taxes.  The first is a 0.9% Medicare surtax for earned income in excess of $200,000 for single taxpayers and $250,000 for married taxpayers.  There will also be a new 3.8% Medicare surtax on unearned income (dividends, interest, capital gains, annuity income, royalties, and rental income), again for those in the $200,000+ (single) or $250,000+ (married) income levels.

One other notable PPACA effect: deductions for out-of-pocket medical expenses are allowed when they are greater than 10% of your adjusted gross income (currently this is set at 7.5% of AGI).

Finally, the estate tax exemption will go down to slightly more than $1 million per individual (from the current $5.12 million), and the tax rate on estates in excess of $1 million will be 55% (up from 35%).  Keep in mind that your estate is comprised of any real estate you own, your retirement accounts, life insurance that is held in your name, investment account, bank accounts, automobiles, and more.  You may be over the $1 million limit without even realizing it.

Now might be an excellent time to begin working on an estate plan, if you haven’t got one.  If you’ve made a will and an estate plan in the past, now is also an excellent time to review that plan and make sure it still accomplishes your goals.


(thanks to Stephanie Buckley at Pepperdine for her summary of the upcoming tax changes, from which I drew these notes)

Americans and Charities

by   |  08.20.12  |  links of interest

The Chronicle of Philanthropy has a fascinating new study on American’s charitable giving habits.  The data is broken down by from the state to the ZIP code levels, examine political leanings and religious affiliation, and the difference in giving between the wealthy, the middle class, and low-income families.  Here is the Chronicle’s own summary of the data.

It’s Probably Going to Be Less Than You Think

by   |  06.11.12  |  financial planning

If you’re thinking that you’ll get an inheritance someday and don’t have to save for yourself now, think again.

“There are way too many adult children I see who are looking at Mom and Dad’s estate as their ticket to a secure retirement,” says M. Holly Isdale, an estate planner in Bryn Mawr, Pa. “But with people living longer, much of the money is likely to be spent.”

Oh, and this:

Even the affluent are pulling back. Among those with $250,000 or more in investible assets, only 41% said preserving inheritances was a top concern, down from 54% in 2009, according to a Merrill Lynch survey released earlier this year.

Plus, the whole “sandwich generation” thing.  Here’s the full article.

College Majors and Employment Rates

by   |  01.06.12  |  links of interest

From the Washington Post:


(click to embiggen)

A few things I see regarding this:

1) From a market perspective, it looks as though the smallest return (measured as “likelihood of employment”) on investment in an advanced degree is in the arts, law, business, ag, and health.  I do realize that measuring return as “lifetime investment” instead of as “higher likelihood of employment” on an investment in an advanced degree would result in a much different list.

2) Note the bottom of the chart: “experienced college grads” and “graduate degree holders” are both defined as between 30-54 years of age.  Someone 54 years old hasn’t been in college for a very long time and in fact probably has multiple children that are college graduates themselves.  That skews the perspective of this chart somewhat, considering that the unemployment rate of 20-somethings is significantly higher than the unemployment rate for those in their 40s and 50s.

3) Note the fields with the lowest unemployment (sub-3%) among those with graduate degrees and experience.  Health.  Education.  Ag/Natural Resources.  Science.  Recreation.  All those fields seem to be pretty secure areas.  If you can get a job there in the first place (not hard in health and education), you’ve probably got one for life.  In health care, you apparently don’t even need an advanced degree.

So, unsurprisingly, the field your kids or grandkids major in matters quite a lot when it comes to job opportunities.  It’s one thing to follow your passions.  It might be quite another thing to be able to support yourself and a family while doing so.

Elements of Charitable Planned Gifts – Charitable Gift Annuities

by   |  01.03.12  |  planned giving

This week I want to start a short series of posts on some of the ways you can make a gift to ACU or most other non-profits without tapping your bank account.  We call these types of gifts “planned gifts” because they take more planning and thought than just reaching for your checkbook or pulling the credit card out of your wallet.

The planned giving work we do with each of our donor families attempts to accomplish at least one of the three things we have written on the sidebar of this blog under the heading “Who We Are”.  Planned gifts can be a part of your estate plan.  They can be vehicles for making gifts that are transformative to you as well as to the University.  They can be a great way to pass on your legacy to future generations.

And all of these things can happen without, generally speaking, taking cash out of your pocket.  In many cases, planned charitable gifts are not just one-way gifts to your favorite non-profit.  They can actually give back something tangible to you and your family.  The first post in this series on the elements of charitable planned gifts talks about just such an instrument.

More »

Links of Interest

by   |  12.21.11  |  links of interest

1) Biggest tax stories of 2012

2) The 25 documents you need before you die – some good things to think about, but not all are applicable to everyone

3) How much money would it take to consider yourself “rich”?

4) Will your finances survive a chronic illness?

The Charitable IRA Rollover

by   |  12.05.11  |  financial planning

With the arrival of December, the holiday season is in full swing and for those of you over 70 1/2 years old, that means it’s about time to take your Required Minimum Distribution from your IRA if you haven’t already.

This year, you have the opportunity (again) to skip your Required Minimum Distribution by making a Charitable IRA Rollover.  As with the past three years, the Charitable IRA Rollover allows you to make a distribution from your IRA directly to a charity of your choice, which counts towards your Required Minimum Distribution. This rollover does not increase your taxable income, but does not qualify for a charitable income tax deduction for the year.  It is important to note that rollovers of this sort are required to go directly between your IRA administrator and the charity of your choice.  If you take the distribution yourself and then gift it to a charity, the IRS counts that as a normal distribution and the amount will be added to your taxable income for the year.  (In this circumstance, the gift to charity would qualify for a tax deduction which would partially – but not completely – offset the taxable income.)

If you are interested in making a charitable gift via your IRA and would like more information on how to accomplish it, please email me at chris.sargent (at) or call The ACU Foundation office at 800-979-1906.

PSA – Charitable Gift Annuity Rates to Decrease Jan. 1

by   |  11.30.11  |  estate planning, financial planning


The American Council on Gift Annuities (ACGA) board of directors held its semi-annual meeting on November 7, 2011. As part of a continual monitoring process, the board reviewed the current assumptions that underlie the rates schedules.  Given the significant changes in the economic environment, the board approved a new schedule of suggested maximum gift annuity rates which will become effective January 1, 2012.  At ages older than 60, when the majority of gift annuities are issued, one-life rates will decline by 0.5% to 0.8%.

You have probably heard from ACU or others about the benefits charitable gift annuities can offer.  (See here for a concise explanation.)

  • Backed by the full assets of Abilene Christian University
  • Increases income, sometimes significantly, over a maturing CD or a savings account
  • Provides a current charitable income tax deduction to you
  • Can help you avoid capital gains taxes
  • A significant portion of your annuity payment may be income tax-free
  • Provides you with fixed income for your life, or jointly for your and your spouse’s lives
  • Upon your passing any remainder will go towards funding life-changing opportunities for future students at Abilene Christian

But as the announcement from the ACGA (the group that sets recommended gift annuity rates, to which ACU adheres) makes clear, those rates are being lowered effective January 1, 2012.  Depending on your age and whether you create a single-life or joint-life annuity, your rate will drop between 0.4-0.8%.

As an example, for a husband and wife both aged 70, the gift annuity rate until December 31 is 5.2%.  Beginning January 1, 2012, that rate will be 4.6%.

For a single individual aged 75, the current gift annuity rate is 6.5%.  Beginning January 1, that rate will be 5.8%.

For a husband and wife both aged 80, the current gift annuity rate is 6.3%.  Beginning January 1, that rate will be 5.7%.

It is important to note that if you have already created a gift annuity with ACU or any other non-profit, the contractual rate and payment you currently receive will not be changed.  This rate change is effective only for new gift annuities created after December 31, 2011.

If you have ever considered a charitable gift annuity and you have a low-yielding savings account, a recently-matured CD, or a CD that will mature prior to December 31, we encourage you to call The ACU Foundation (800-979-1906) and we will be happy to provide specific information for your situation with no obligation.

Our offices will be closing at 5pm on December 23 and remain closed through January 2 for the Christmas holiday, but we can complete transactions postmarked and funded by December 31.