How Financial Literacy Changes Once You’re Retired

How Financial Literacy Changes Once You’re Retired

John Csiszar  Tue, April 4, 2023

Financial literacy covers a wide range of topics, from budgeting and saving to investing and planning for retirement. Once you retire, however, financial literacy broadens to include scenarios that may not have been as relevant during your working life. For example, income typically drops in retirement, while expenses may remain the same or even rise, depending on the type of lifestyle you lead and the condition of your general health. Financial Literacy Month is a great time for both seniors and those about to retire to review their planning and make sure they're prepared for the changes encountered in retirement.

Here are seven topics that are important to understand if you want to avoid any financial landmines in retirement.

Social Security

From the time you start receiving your first paychecks, you've been paying into the Social Security system. But as you approach retirement, it's time to start planning your Social Security withdrawal strategy instead. Before you hit retirement, it pays to maximize your income in any way possible, as your Social Security payout is based in large part on how much you earn during your working career.

You'll also want to sit with a tax or financial advisor and determine whether you should initiate your payments early, at full retirement age or as late as age 70.

Medicare

Medicare is a health insurance program for seniors, but it's a complicated system with various parts. To use it effectively, you'll have to become literate on how it works. In a nutshell, Medicare consists of two original parts, A and B, which cover hospital and medical expenses, respectively. Part B requires a monthly premium. You can also add Part D if you require prescription drug coverage.

Medicare Advantage, also known as Medicare Part C, is an alternative to Original Medicare that is run by a private company. As the choices can get complicated, you'll likely need to speak to an expert to get financially literate when it comes to Medicare. Note that neither Original Medicare nor Medicare Advantage are likely to cover care outside of the United States.

Required Minimum Distributions

Just like you've paid Social Security taxes your whole working career, hopefully you've done the same in terms of contributions to your retirement plans. But you can't keep your money in those accounts forever. At a certain point, accounts like traditional IRAs and 401(k) plans require you to begin taking annual distributions to avoid a steep 50% penalty tax.

Congress granted a slight reprieve by extending the time at which you must begin RMDs to April 1 following the year you turn 72. Note that as Roth IRAs are funded with after-tax contributions, you're never required to take minimum distributions from them.

Stimulus 2023: Updates To Know Now

Taxes

If you work at a salaried job, your life can be pretty simple when it comes to taxes. Generally, your employer will take out the requisite taxes from your paycheck and all you'll have to do when you file your taxes is include your W-2 information.

To continue reading, please go to the original article here:

https://finance.yahoo.com/news/financial-literacy-changes-once-retired-110012547.html 

New Government Report Says Social Security Will Be Broke In 10 Years

New Government Report Says Social Security Will Be Broke In 10 Years

April 3, 2023  Simon Black  Sovereign Man

Paris. Such a romantic city.  Sip coffee at a sidewalk bistro, while you take in the wafting smell of burning rubber from the street fires.  Take a picture with the Eiffel Tower, as you dodge incoming tear-gas canisters.  Enjoy the ambiance as you stroll the alleys between 5,600 metric tons of garbage currently rotting on the sidewalks.

See, the sanitation workers’ union is one of several currently on strike in Paris.

They and over a million protesters have lit fires in the streets, destroyed property, and sparred with riot police over the past weeks.

All in an effort to stop the government from raising the retirement age from 62 to 64 by 2030. (Or from 57 to 59 for professions considered dangerous, such as garbage collectors.)

Like essentially all Western countries, France’s population is aging. And the retirement system depends on more workers paying into the system than retirees collecting.

In 1950, four French workers were paying for just one retired French pensioner.

Today, the ratio is less than two workers for each retiree— and by 2040 it could be about 1:1.

Now, it’s understandable that people are angry over broken promises.

But the public refuses to understand or accept basic financial realities.

They exist in a world where all this stuff is free, and they simply shouldn’t have to worry about things like saving for retirement.

And of course, France is far from unique. It is simply a mild preview of the social chaos that is coming to the US...

Three days ago (last Friday March 31st) the Board of Trustees for Social Security released its annual report.

According to the report, Social Security has been paying out more than it takes in since 2021, and “Social Security’s total cost is projected to be higher than its total income in 2023 and all later years.”

And at that rate, “reserves become depleted in 2033, one year earlier than projected in last year’s report.”

So the situation is actually getting worse.

Keep in mind these aren’t some random fringe economists writing this. The Board of Trustees of Social Security include, for example, US Treasury Secretary Janet Yellen.

So what happens when Social Security’s trust funds run out of money?

Well, the program won’t disappear entirely; there will still be incoming payroll tax revenue to partially fund the program (FICA taxes that are paid by workers).

But just like the situation in France, there simply aren’t enough workers in the system to keep paying full benefits to the program’s 51+ million retirees

This means that, even factoring in payroll tax revenue, Social Security recipients are going to have to take an enormous cut in their monthly benefit of around 25%.

And that might be wildly optimistic; in their annual report the Social Security lists the key assumptions of their projections... and those assumptions look like they could be grossly incorrect.

For example, the agency assumes that inflation in the US will return to 2%-3%, and basically stay there forever. Fat chance.

They also assume that the US fertility rate (which is a critical indication of the number of future taxpayers) will be 2.0; this is another outrageously bad assumption, given that the US fertility rate hasn’t consistently been above 2.0 since the late 1960s!

The trustees are clearly making bad assumptions... so even when they say the trust fund will run dry in 2033, but that they’ll still be able to make roughly 3/4 of the payments, the reality is likely much, much worse.

But right now, with all these obvious problems rapidly approaching, politicians are promising voters that they WON’T touch Social Security.

Even the ones talking about balancing the budget vow not to touch Social Security...

(To balance the budget without touching the sacred cows of Social Security, Medicare, and Defense would require cutting 85% of ALL other federal spending.)

Of course, reality is reality, and places like France show us the inevitable outcome:

*The retirement age will go up

*Benefits will be cut substantially

*Payroll taxes will increase

We might also expect the same, or worse, reaction as in France— massive protests, strikes, riots, property destruction, and social chaos.

And all that will do nothing.

Because there are really two institutions which Americans could realistically expect to solve this problem:

One, the US government, currently saddled with $31.5 trillion of debt and rapidly increasing, with a total net worth (assets versus liabilities) of NEGATIVE $34 trillion.

Two, the Federal Reserve, which last year reported ‘unrealized losses’ of more than $330 billion against just $42 billion in capital, making it completely and totally insolvent.

So there are really only two plays left to make...

The US government could raise taxes to cover the gap.

The Federal Reserve could print money to cover the gap, creating massive inflation.

Without responsible leadership willing to make tough decisions, this is their default option.

There are a few takeaways here.

1. Prepare to fund a portion of your own retirement.

Between inflation and benefit cuts, you simply cannot rely on the promises the government has made to you about your retirement.

It’s probably not going away entirely, but you should consider Social Security as a supplement to your retirement, and not the primary source. You certainly won’t be any worse off if by some miracle Social Security manages to pay the full benefits.

2. Prepare for a future with higher taxes.

And take every legal step at your disposal to reduce what you owe.

3. Prepare for a future with higher inflation.

Again, the government’s inevitable solution is to go deeper into debt, and print the money to fund it. As we’ve already seen, more money printing means more inflation.

That doesn’t necessarily mean inflation will be at 10-15% levels for years to come. But it probably won’t be the 2% average we’ve gotten used to over the past two decades.

The good news is you can control your own fate by having your own retirement funds, which puts you in the driver's seat.

And at the same time, you can lower your taxable income significantly by, for example, contributing to a Traditional 401(k) retirement account.

As of 2023, you can contribute up to $22,500 per year, or $30,000 per year if you're over 50.

For those who are self employed, earn money through a side businesses, or own a business without any employes, using a Solo 401(k) is even more beneficial.

In 2023, the tax-free limit for contributions rises to $66,000 (or $73,500 for those age 50 and older) because you can make both the employer and employee contributions.

A self-directed Solo 401(k) also provides a wider range of investment options such as real estate, foreign investments, private equity, and more.

And this barely even scratches the surface of the options you have available to shore up your retirement, beat inflation, and legally reduce your tax rate.

You don’t have to protest, or vote harder. You simply have to understand the magnitude of the problem, and use the tools at your disposal to fix it.

To your freedom,  Simon Black, Founder  Sovereign Man

After SVB, are you worried about that your bank could be the next one to collapse suddenly?

Download our new FREE 28-page report entitled "How To Tell If YOUR Bank Is Safe". Packed with eight steps you can take to ensure your money is safe today, it's essential reading for these uncertain times.

https://www.sovereignman.com/trends/new-government-report-says-social-security-will-be-broke-in-10-years-146647/

Why is it so Essential to Learn Money Skills?

Why is it so Essential to Learn Money Skills?

August 5 2021  Financial Imaginer

Do you know how to take care of money? Did you learn about money in school? From family? From friends? Have you ever wondered how some people seem to have more money than others? Some even have more than they would ever need. This is not just because they’re lucky, it’s because they’ve learned how to take care and manage their money!

If you want to feel confident about your financial future, then there are some things you can learn about money. I can be your teacher. If you invest your time to improve your financial literacy, I promise you here and now this will be one of the best decisions of your life!

This article aims to show you how the first steps to a better life must be to improve your financial literacy. Why earning, saving, and investing more money are the key to a better life.

Are you ready to learn how it all goes together and take control of your financial future?

Get yourself a cup of coffee or tea first.  Let’s get started!

Learn How to Make Money Work for You

The best time to get started learning money skills is when you’re a child, the second-best time is right now!  It’s time to learn how money works and how you can make the most out of it.

Most people work very hard for their money, but why not become the person that makes its money work very hard for yourself? Work on becoming the latter!

Invest in Your Financial Literacy

Before you get started investing into capital markets, invest in your own financial literacy. There are a lot of things you can learn about money. And yes, it isn’t always easy. However, it’s also not rocket science!

What is Financial Literacy?

Financial literacy is the knowledge how money works. It’s the combination of skills and attitudes needed to make sound financial decisions and participate in the full range of money management activities throughout life.

In short: the knowledge and skill to make money work for You! Understanding how money works helps not only financially but also emotionally. Once you know how to make money work for you, the next steps will become easier: from budgeting to saving to investing.

The Most Important Investment of Your Life

To continue reading, please go to the original article here:

https://www.financial-imagineer.com/learn-money-skills/

How to Avoid Financially Destructive Revenge Spending

How to Avoid Financially Destructive Revenge Spending

March 4 2023   Financial Imaginer

It’s no secret that revenge spending has become a [post-pandemic] phenomenon, as people try to make up for what they believe they might have missed out on during the pandemic.  People are playing catch-up, trying to even the score on their deferred consumption. However, while revenge spending can be cathartic and temporarily rewarding, it can also have serious financial consequences if not managed properly.

Revenge spending can take many forms:

Such as catching up for yourself, getting even with your partner or family, or simply YOLO’ing your way through life.

Unfortunately, revenge spending doesn’t just lead to heightened inflation across the globe but it can also lead to serious financial consequences if not managed properly. It could even destroy potential generational wealth in families.

In this article, we’ll explore the implications of revenge spending and provide some tips on how to overcome it.

Are you ready to talk about revenge spending?

What Is Revenge Spending?

Revenge spending is a phenomenon characterized by impulsive and often excessive spending in an attempt to make up for what people believe they may have missed out on.

It is essentially an act of attempting to fill emotional voids with material items or experiences.

Revenge spending can take form in expensive vacations, luxury purchases, extravagant dates, etc., and it has become increasingly popular over the past year [mainly due to the uncertainty caused by the pandemic].

“This attitude can fuel a habit: “revenge spending,” which, as the name says, is shopping to get back at someone or something that wrongs us — like a job layoff, slumping economy, relationship strife, even a global trauma like the pandemic.”

Dr. Juli Fraga

Revenge spending has both short and long-term implications for not just individuals but for entire economies as well.

Inflation anyone?

Revenge spending can contribute to inflationary pressures in an economy [if it goes unchecked] especially when such expenditures are not backed by income stability or wealth.

In addition, revenge spending also has long-term implications for affected individuals.

It can turn into monetary downward spirals!

Post Pandemic Revenge Spending

In the past two years, revenge spending has become some sort of “post-pandemic phenomenon” that has been popping up around the world.

People are indulging in revenge spending on all kinds of things in an attempt to catch up on what they believe to have missed out on during the pandemic.

It’s almost like the big Marshmallow Test unwind!

To continue reading, please go to the original article here:

https://www.financial-imagineer.com/revenge-spending/

The Money Lessons Grief Teaches Us

The Money Lessons Grief Teaches Us

 By Kara

I recently I lost my grandmother. It’s been a really hard time and it’s really sad. But today, I don’t want to talk about her. I actually want to talk about how my pursuit of financial independence and frugal living has impacted my ability to grieve.

We don’t make space for grief in the U.S.

There is no federal law that guarantees paid time off for bereavement, including funeral time. Right now it’s a sad time, nationally speaking. 1,117,054 Americans have died from COVID. And 72% of Americans either know someone who died from COVID or was hospitalized because of COVID.

Several of our peer nations, including France, Japan, and New Zealand all do have guaranteed paid time off for grieving. But here in the United States, only three states guarantee that same thing.

The Fair Labor Standards Act, the foundation of US labor policy, does not require employers to provide paid leave, including vacation time, to convalesce or time to plan or attend a funeral. In the United States, just three states have passed their own policies. Oregon requires employers to provide 12 unpaid weeks of leave, two of which can be used for bereavement after the death of a family member. Illinois offers two weeks of unpaid bereavement leave, but only after the death of a child.

 Maryland recently extended its flexible leave act to require that employers who offer paid leave allow it to be used for bereavement. So even the states that do offer this don’t really offer it right. It’s under very specific circumstances that you are allowed to have mostly unpaid time off to feel sad after the loss of a family member or a loved one.

Since I work for myself, I took four days completely off work after my grandma passed. And that’s a luxury that most Americans do not have. It’s a luxury that I have only because of the fact that I do work for myself and the specific ways that I’ve structured my business.

Frugality has helped me have time to grieve

 If you’re more of a visual learner or want to hear more, I talk about my upbringing and my road to FIRE in this video:

https://www.youtube.com/watch?v=313sjuPK8NA

To continue reading, please go to the original article here:

https://bravelygo.co/the-money-lessons-grief-teaches-us/?utm_source=rss&utm_medium=rss&utm_campaign=the-money-lessons-grief-teaches-us

What Is a Power of Appointment For a Trust or Will?

What Is a Power of Appointment For a Trust or Will?

Ashley Kilroy   Sat, April 1, 2023

Establishing a trust or will is vital to a well-designed estate plan; you might even use both. However, even the best estate plans can't anticipate changes in the future or head off new tax legislation. Fortunately, a power of appointment can help your beneficiary take control of your estate to minimize taxes and keep the property from falling into the wrong hands. Here's how it works.

Consider working with a financial advisor if you need help setting up an estate plan or managing inherited money.

What Is a Power of Appointment?

A power of appointment is an ability a grantee or beneficiary receives from the grantor or creator of a trust. The power of appointment allows the beneficiary to change a trust in specific ways in specific contexts. For example, a grandparent might place his or her assets in a trust and give their grandchildren the power of appointment over the trust once the grandparent passes away.

In addition, a power of appointment affects irrevocable trusts – which, as the name implies, are not easy to change. Fortunately, a power of appointment means beneficiaries can modify a trust within the boundaries the trust's creator sets.

Types of Powers of Appointment

There are two types of powers of appointment: general and limited. General power of appointment allows the appointed individual to change and direct the trust however he or she wishes. In essence, a general power of appointment gives over complete control of the trust, and the person who has that power can allocate the trust's assets how that person sees fit.

On the other hand, a limited or special power of appointment has boundaries the holders must follow.

Powers of Appointment and Ownership

Depending on appointment type and state law, powers of appointment have varying effects on ownership. For example, your state's laws may allow you to immediately own property within the trust as the holder of a general power of appointment. However, such ownership also exposes the property to your creditors.

Therefore, if you're in debt or serious financial trouble, the ownership you receive through a power of appointment could mean losing the property altogether. That said, state law may prohibit creditors from seizing the property until the power holder dies. On the other hand, a limited power of appointment typically doesn't grant property ownership.

Power of Appointment Tax Treatment

A power of appointment can affect your tax circumstances, even if you don't exercise the power. Specifically, tax law declares that a general power of appointment designated after Oct. 21, 1942, will add the related trust's value to the power holder's estate upon that person's death. As a result, a general power of appointment usually exposes a trust to federal estate taxes.

To continue reading, please go to the original article here:

https://finance.yahoo.com/news/power-appointment-trust-130014490.html

The 8 Most Eye-Opening Money Attractions in the U.S.

The 8 Most Eye-Opening Money Attractions in the U.S.

By Dr Penny Pincher

Some of my most memorable vacations have centered around money — and didn't require spending much of it at all. I had my photo taken next to a $1 million stack of bills at Binion's on a recent trip to Las Vegas. Another memorable experience was visiting the Bureau of Engraving and Printing in Washington, D.C. to see millions of dollars of being printed on the production floor.

If you get excited about money, check out these unique attractions across the U.S.

1. U.S. Mint

See the coin manufacturing process up close by taking a free tour at the Philadelphia and Denver facilities of the U.S. Mint. Learn about the process of minting coins from the design to the striking of coins. You'll be able to see how billions of coins are produced each year, and learn the history of coin-making. (See also: Where Are They Now? The Forgotten Dollar Bills (and Coins))

2. Binion's Gambling Hall and Hotel

Get a free souvenir photo of yourself standing next to $1 million in cash at Binion's Gambling Hall and Hotel in Las Vegas. Stop by to have your photo taken and come back about an hour later to pick up your free printed copy. It's pretty incredible to see that much cash up close.

3. U.S. Treasury

The main building of U.S. Treasury is the third oldest building in Washington, D.C. and has been renovated to preserve its impressive Greek Revival architecture. Some historical highlights at the U.S. Treasury include the offices of Salmon P. Chase, Secretary of the Treasury during the Civil War, and the offices used by President Andrew Johnson following Abraham Lincoln's assassination. The stately marble Cash Room has been restored to appear as it was at Ulysses S. Grant's inaugural reception in 1869. You can tour all of these sites by setting up a reservation ahead of your visit.

4. Wall Street

If your travels take you to New York City, check out the attractions of Wall Street, an area of New York City that has been focused on finance for over 200 years. Highlights include:

New York Stock Exchange: On the corner of Wall Street and Broad Street

Federal Hall National Memorial: On the corner of Wall Street and Broad Street

Museum of American Finance: Located at 48 Wall Street

You can take self-guided tours on foot, or there are other tour options available for free or under $40. (See also: 6 Confidence-Inspiring Facts About the Stock Market)

To continue reading, please go to the original article here:

https://www.wisebread.com/the-8-most-eye-opening-money-attractions-in-the-us?utm_source=apexmoney&utm_medium=dailynewsletter&utm_campaign=what-youtube-hustle-gurus

How to Organize Your Tax Documents for Your Accountant

How to Organize Your Tax Documents for Your Accountant

January 7, 2023 Last Updated on March 8, 2023 by Carolyn

Though this post is directed at US taxpayers, It still should be useful to non-US taxpayers but keep in mind that form references such as 1099’s, Schedule C and US tax rules may not apply. Investment advice published here is of a general nature only as disclosed here.

You have received all your tax slips (w-2’s, 1099’s, etc.), and you have records of your other income and expenses, but now what? How do you organize your tax documents so that your accountant can prepare your taxes with ease?

Hiring a Professional Accountant

This may be a bit biased considering I am a professional accountant but hiring a professional to prepare your income taxes can be a really smart idea.

Not only can it save you a lot of time preparing your taxes in lieu of doing it yourself in Turbo Tax or Tax Act ( many people tell me it takes them 8-10 hours to prepare their own returns) but it can actually save you money and give you peace of mind that you haven’t missed something.

It’s a tax professional’s job to know what deductions you are eligible for and to provide tax planning advice to maximize deductions and minimize income tax liability.

A good accountant will get to know you, your family, and your business so they can spot potential deductions whether it be that your eldest has started university and might have tuition credits or perhaps you have undertaken home renovations and can take advantage of some energy credits. Expect to answer some questions and be perturbed if you’re not asked any!

What Your Tax Preparer Needs to Know

How to Organize Your Tax Documents for Your Accountant?

First of all, be aware that just because you’ve hired an accountant to prepare your taxes doesn’t absolve you of any tax preparation work.

Gone Are the Days of Handing over A Box Full of Receipts

Gone are the days of plunking a shoebox full of receipts on your accountant’s desk and saying “call me if you have any questions”. Do this and you will most surely be shown to the door. Continue reading to find out how to organize your tax documents for your accountant.

Most accountants don’t want to see any receipts at all. What they do want to see is a summary of income by type as well as a summary of deductions by type, followed by another page with a detailed list of those same income and deduction items, whose totals ties into the figures listed on the summary.

Income

I recommend listing out all income reported on forms in this order: W2s, 1099-int, 1099-div, 1099-r, SSA-1099, 1099-B, 1099-G and K-1s. Use 2 columns, one for taxable income, and one for federal tax withheld ( if you have state tax withheld add a 3rd column).

If you have rental income or self-employed income list the income and expenses on a separate page and then just list the property address or business name on your summary and cross-reference to the detailed schedule.

Rental Income and Expenses

You need to separately list income and expenses for each rental property you own.  Income will include all rent received including last month’s rent deposits but not damage and pet deposits.

Expenses that you might have include:

 To continue reading, please go to the original article here:

https://tucandream.com/how-to-organize-your-tax-documents-for-your-accountant/

How to Stop Being Broke: Change Your Money Mindset

How to Stop Being Broke: Change Your Money Mindset

March 14, 2023 Last Updated on March 23, 2023 by Carolyn

How to Stop Being Broke?

Are you tired of living paycheck to paycheck, and having nothing to show for it? You have a good-paying job but still, it’s a financial squeeze to get through the month and make ends meet. You want to stop being broke but don’t know where to start. More than likely. it’s your money mindset that’s keeping you broke. Before you can change your money mindset you need to know what exactly it is.

What is Money Mindset?

Let’s start with what money mindset is not. For many people who hear the phrase “money mindset” an image of a person like Charles Dickens “Ebenezer Scrooge” counting his coins pops into their head, a person obsessed with money. This is not what money mindset is.

Money mindset is your personal relationship with money; how you feel about it, your beliefs about money, and its role in the world.

Believe

Believe..positive thoughts will yield positive outcomes (image by Nini kvaratskhelia of Unsplash)

Your money mindset is somewhat akin to the law of attraction, how you feel and relate to money will dictate whether you have no money, just enough money, or an abundance of money. Being an extreme left-brain type I’d love to say the path to financial success is to simply work hard and spend less, but sadly this is not the truth, money mindset comes into play and it’s amazing how much it controls the outcome.

Different types of Money Mindsets

Scarcity Mindset VS Abundance Mindset

I’m sure you’ve noticed that some people are inherently spenders while others are savers. These spending habits aren’t related to having an abundance of money or lack thereof, they are a reflection of that person’s individual money mindset.

There are basically two basic types of money mindsets: scarcity mindsets and abundance mindsets. These can be further broken down into different sub-types. Do you identify with any of the following scarcity mindsets? Don’t worry, identifying the problem is the first step in your journey to stop being broke.

Scarcity Mindsets

Scarcity mindsets are based on the belief that there are limited resources in the world, and if someone takes more, you’ll get less. This mindset cultivates fear, jealousy, and selfishness.

I Have Enough Mindset

This is the mindset; “I’m comfortable with what I have. I can pay my bills, I have a roof over my head, why do I need more?”

This kind of mindset is dangerous, it’s a mindset of avoidance. You will never have more than enough and the loss of a job, or a sudden emergency expense, can push you over the edge where you don’t have enough.

Money more than likely causes you stress after all you believe, “ money is the root of all evil”.

Money Grows on Trees Mindset

My husband used to justify additional expenses by saying “I’ll just shoe another horse” (he was a horseshoer). The problem is did he really just shoe another horse? No, he didn’t actively go out and look for another horse to shoe. If not reined in, he had a habit of spending every dollar twice.

 This is the “money grows on trees” mindset, I can always earn another dollar so it’s OK to spend it today. It can also be considered a debt mindset or a spenders mindset. You try to buy happiness, and instead, end up with debt and stress.

This mindset will most likely get you into a lot of financial trouble.

“Never spend your money before you have it.” –Thomas Jefferson

To continue reading, please go to the original article here:

https://tucandream.com/how-to-stop-being-broke-change-your-money-mindset/?fbclid=IwAR0lNjGu_Oz7fRLLcRtwvWyGm0QdhbPI5i60S7YPtcuZ9usSiIjH1K5iYwA

How To Be Proactive About Protecting Your Savings Account

Banking 2023: How To Be Proactive About Protecting Your Savings Account

Heather Taylor  Wed, March 29, 2023

With recent bank failures headlining the news cycle, many customers might be worried about their funds.  The good news is there is a lot of protection provided to banking customers, no matter the dollar amount of your financial assets. Here are a few proactive steps you can take to protect your savings account and insure your deposits.

Review FDIC Coverage and Resources

You might have noticed the fine print for your bank states it is FDIC insured. What does this mean?

Glen Goland, CFP and senior wealth strategist at Arnerich Massena, said FDIC (Federal Deposit Insurance Corporation) coverage has ensured depositors for 90 years that their funds would be available. This is regardless of what is happening in the financial world or to one’s bank.

FDIC coverage applies to up to $250,000 in deposits. This is per depositor, per insured bank. Different coverage amounts are afforded to trusts and other legal entities.

For those who want to insure their deposits, Goland recommends visiting FDIC: Resources. The resources page provides a listing of ownership categories and applicable coverage amounts. Goland said this should give banking customers a sense of how much coverage they have and how much may be outside this coverage and at risk.

Open Accounts With More Institutions or Put Assets in an Investment Portfolio

There are a few moves banking customers can make if they are holding more than $250,000 in bank deposits.

Goland recommends opening accounts with multiple institutions. This can help keep deposits under the $250,000 threshold. Banking customers also can look into using a Cash Management Account (CMA), which functions like a traditional bank account but spreads your deposits across several partner banks for additional protection.

To continue reading, please go to the original article here:

https://finance.yahoo.com/news/banking-2023-proactive-protecting-savings-190439034.html

I Love How Everyone Pretends The Bank Crisis Is Over...

I Love How Everyone Pretends The Bank Crisis Is Over...

March 29, 2023  Simon Black  Sovereign Man

Practically on cue, politicians began their public hearings yesterday about the recent banking crisis.

This was so predictable; every time there’s a major crisis, Congressmen book a committee meeting to express their shock and outrage. They pass new laws to prevent a future crisis. Then their new laws fail to work properly, so they hold another public hearing to express more outrage.

This is the cycle of political problem solving, and yesterday was no exception.

The Senate Banking Committee summoned key officials from the Federal Reserve, FDIC, and US Treasury Department. And the tone was quite angry.

Senators were flummoxed that their thousands of pages of banking legislation had once again failed to provide adequate protection to the US financial system. And they were looking for someone to blame.

This, too, quite predictably, fell along partisan lines. The people on the left somehow found reason to blame everything on Orange Man, while describing bank regulators as “gutsy” and “courageous”. It was bewildering.

Most absurd was how the officials in the hot seat (who, again, represent the primary bank supervisors in the United States) managed to avoid any culpability whatsoever.

The Fed’s Vice-Chairman for Banking Supervision admitted that his agency’s supervisors had rated SVB as a poorly managed bank. And the Fed was further aware of several material weaknesses in SVB’s risk compliance.

They acknowledged that they had advanced knowledge of the banks’ problems.

They acknowledged they should have done something about it. They acknowledged they had the tools and authority to do something about it.

Yet they did absolutely nothing… and somehow ended up being praised as gutsy and courageous.

It’s natural to blame the bank executives for making such idiotic decisions with their customers’ money. But culpability is not mutually exclusive. It’s not either/or. And the regulators had a major role to play in this crisis.

Not only did they escape culpability at yesterday’s hearing, but the regulators even managed to pat themselves on the back for their swift and decisive response to the crisis.

After SVB’s failure a few weeks ago, government officials invoked what’s known as the “systemic risk exception”. This exception essentially gives them sweeping power to deal with a crisis by whatever means necessary.

And all the key officials unanimously agreed that SVB, First Republic Bank, etc. posed systemic risk, and that justifies the massive bailout response.

Isn’t it interesting, though, that “systemic risk” only seems to apply to banks?

You never heard these officials say that baby formula shortages pose systemic risk. Or that inflation itself is a systemic risk. Or that dwindling US oil production is a system risk.

Yet whenever the banks and their somnambulant regulators fail, they call it “systemic risk” and pull out all the stops to save them.

Energy companies, on the other hand, which produce the very thing that all economic activity requires, are tossed out in the cold and demonized at every available opportunity by the President of the United States. It’s bizarre logic.

The biggest falsehood of yesterday’s hearing, however, was the continued insistence by all that “our banking system is strong and resilient”. Coincidentally they presented zero evidence to support that assertion.

In fact most evidence would support the opposite conclusion-- that there are still a number of major problems in the banking system.

The FDIC itself reported that banks across the US have a total of $620 billion in unrealized losses; this is due primarily to the steep decline in bond prices, which are a result of the Federal Reserve’s aggressive interest rate increases.

And bear in mind that the FDIC’s estimate was before the most recent rate hikes. So the updated estimate on unrealized losses right now is most likely higher than $620 billion.

But risks in the banking system go way beyond these unrealized bond losses.

Commercial real estate is an obvious one; Fed data show that banks across the US have loaned out nearly $3 trillion of their customers’ money against commercial property, including office space. Other estimates go up to $5.5 trillion including commercial mortgage-backed securities.

But thanks to new, pandemic-related remote work policies, companies across the US are using less space.

Moody’s Analytics recently reported office utilization rates at roughly 50% of pre-pandemic levels based on security-badge swipe data at office buildings.

Workers simply aren’t showing up to the office like in the past, and office occupancy rates have been steadily deteriorating as a result.

Office vacancy now stands at 12.5% nationwide according to the National Association of Realtors. That’s about a third worse than in 2019.

To make matters worse, the economy is slowing, which will likely trigger additional cuts in office space.

All of this is bad news for banks. They have trillions of dollars of exposure to a rapidly declining commercial real estate market, so even a small increase in loan defaults could spark another panic.

The Wall Street Journal recently reported that estimates of total unrealized bank losses right now, including commercial loans, is a whopping $1.7 TRILLION. That’s the vast majority of all bank capital in the United States… so this is still an enormous problem.

But everyone keeps playing the same chorus again and again: “the banking system is strong, the banking system is strong.”

Even sophisticated Wall Street investors have joined the sing-along, given that bank stocks are once again on the rise.

As of this morning, shares of financially uncertain banks with enormous unrealized losses are now trading at fairly rich, double-digit valuations as measured by Price/Earnings and Price/Free Cash Flow metrics.

(Meanwhile, valuations of high quality, well-managed real asset businesses in the energy, mining, agriculture, and productive technology sectors are tiny by comparison.)

Everyone seems happy to close their eyes and pretend that the crisis is over despite so much evidence to the contrary.

To your freedom, Simon Black, Founder  Sovereign Man

https://www.sovereignman.com/trends/i-love-how-everyone-pretends-the-bank-crisis-is-over-146615/