Friday, March 27, 2009

Short Takes: Retirement Crisis and Tax Software

1. John Bogle, founder of the Vanguard Group, testified before the U.S. House of Representatives about the coming retirement crisis. Bogle makes many strong points about failings of our financial system that threaten retirement. An additional point I’d make is that with people living longer and the retirement age remaining fixed, we are spending in increasing proportion of our lifetimes retired. This seems unsustainable. If life expectancy increases, maybe the retirement age has to increase as well.

2. Canadian Financial DIY rated web tax preparation software. TaxChopper investigated the inconsistent results among different tax packages, and gave a detailed response.

3. Canadian Money Review reports being charged for overpaying a Sears bill! (the web page with this article has disappeared since the time of writing). This is the first I’ve heard of this one. The few times I’ve forgotten to pay a credit card bill on time, I made a big overpayment to avoid ongoing interest charges. I’ve never been charged a fee for this, but apparently Sears wants to profit from this situation by more than just failing to pay interest on a credit balance.

4. Larry MacDonald reports that house prices continue to decline and gives a breakdown of declines by region.

5. Big Cajun Man has some financial advice for new grads.

6. Dividend Growth Investor explains the fees charged for variable annuities.

7. Million Dollar Journey discusses the importance of spending money to enhance your life. I find I agree with this philosophy, but I fear that most people will see what they want in this advice. It’s intended to make us think twice about overspending for minimal benefit, but I could definitely see someone using “life enhancement” to justify blowing a lot of money on an expensive new car. Of course the good feelings about a new car fade in a month, and the extra $20,000 of debt lingers for years.

8. Preet has some funny math to prove that the less you know the more money you’ll make.

3 comments:

  1. Thanks for the mention Michael - have a great weekend!

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  2. Hi Michael. Thanks for the link. Just to let you know the discussion of my taxes rages on! Who knew taxes could be a source of exctement?!

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  3. There are good financial reasons for people to consider working at an older age, but those aren't the only reasons. I believe many people benefit from having something to do, and would get bored if they avoided anything remotely difficult. Just this week I had to make myself concentrate and get things done even though I was sick - and although lots of people would think that's awful it probably made me feel better.

    Having investments that produce a certain level of income (and government old-age assistance) could make it a good time to try something different that might result in a lower income. Another option is having "mini-retirements" once in a while as Tim Ferris describes. If you save up enough to live in another country and do something interesting for 3-6 months that can give you more balance, without having delay it for a long time since you can go back to work after. As you build up an investment portfolio (which shouldn't be ignored) it will become easier and easier to save up for this.

    Personally this is the most interesting option to me. I'm sure that I'll always be interested in something that I can get paid for, so there's no need to stick to one thing for 30-40 years and then change everything at once.

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