The Rick Bloom
The Rick Bloom Newsletter
August 29, 2014
A Message from Rick Bloom
It is hard to believe that Labor Day has arrived. I have no idea where this summer went. However, one thing I do know is that before you know it we will be talking about 2015. In that regard, it's not too early to start thinking about certain moves that you may want to do before the year end. One of those moves may be to convert existing traditional IRA money into a Roth IRA. The advantage is that money in a Roth IRA is not subject to minimum required distributions and money grows tax free versus tax deferred. Not everyone should consider a Roth conversion; however, if the following items apply to you, it is something you should consider:
- It won't throw you into a higher tax bracket;
- you have money outside the IRA to pay the taxes; and
- you will not need the money for at least five to seven years.
Remember, Roth conversions must be completed before the end of the year and let's not forget that IRA custodians tend to be very busy in December; therefore, now is the time to determine whether a Roth conversion makes sense for you.
Talking about taxes, I'm sure you heard this week that Burger King is buying Tim Horton's. Typically, a deal like this wouldn't get much publicity, but this one has. The reason is that Burger King, (a U.S. company) as a result of the merger with Tim Horton's (a Canadian company), is changing the headquarters for their corporation from the United States to Canada. The reason for this is quite simple and that is, taxes. Burger King's tax liability will be significantly lower by changing their legal domicile. Many pundits have questioned whether it is legal and if it is right for Burger King to make this move. In fact, some people have even questioned their patriotism. I will leave the decision of whether it's right or wrong to you. However, what I will say is that the transaction is legal and unfortunately, I would expect that we will see more of these types of transactions. The reasoning is quite simple as U.S. corporate tax rates are amongst the highest in the world.
With regard to whether the move is patriotic or not, once again I will leave that up to you to decide. However, something you need to ask yourself is whether it is patriotic for Michigan residents to switch their residency to Florida upon retirement. Many of these people are doing it because they will pay significantly lower taxes in Florida versus Michigan. Are they unpatriotic?
It is important to remember that our tax laws are geared and are based upon the assumption that you should take advantage of every provision in the law in order to be more efficient with your taxes. I always tell individuals, and the same thing applies to corporations, it is not more patriotic to pay more taxes than you are legally obligated to pay. There is a big difference between tax evasion, which is illegal, and tax avoidance, which is legal.
It is Labor Day weekend and so it is important to address the state of the affairs of our labor market. Throughout the country, despite some improvement, the unemployment situation is still challenging. Our economy is not creating the number of new jobs that we need to sustain our economy. There are many reasons for the continued sluggish unemployment numbers but one of them is because of productivity. The American worker, whether it's in an office, a factory or outdoors, continues to be the most productive and efficient worker in the world. We all see it in our jobs and throughout our society. The American worker continues to be the gold standard of the world. There is a reason that despite our difficulties, that the American economy is still the envy of the world. We all know it's not because of our politicians; rather, it's because of the men and women in every walk of life, who go to work with the pride and dignity that truly defines the American worker.
In one of those stories you can look at as good news or bad news, for the first time in six months, consumer spending in the United States fell in July. Americans cut back on purchases of new cars as well as other retail goods. On the other hand, consumers saved more as opposed to spending. The U.S. savings rate climbed to its highest level in nearly two years. Obviously, the good news is that Americans are saving more as opposed to spending. The down side, let's not forget that our economy is based upon consumer spending.
As you may recall, Michigan is now a right to work state which means that you can no longer be forced to belong to a union in order to keep your job. For teachers, August is an important month. According to the Michigan Education Association, August is the only month when their members can opt out of their membership. Therefore, if you are a member of the MEA you still have a couple days to make your decision whether you resign from the union or not. I will leave it to you to decide whether being a member of the union is a good investment or not. However, be aware if you are going to resign, you must act now.
Just as an FYI, Michigan currently has about 630,000 union members which is about 16 percent of Michigan's work force.
Some good news for the economy, the U.S. economy grew at a rate of 4.2 percent in the second quarter. This is a better number than had previously been estimated. As you may recall the start of the year was relatively bleak as weather problems plagued the country. In the first quarter the economy shrank by two percent.
Football is back. That means summer is over.
Have a great weekend and once again, for all of us who go to work and make this country great, enjoy your day off!
With the aging of our society, more people are trying to figure out ways to remain in their homes as they age rather than selling it and moving to an assisted living facility. We talk with Robert Gurinowitsch, the Chief Operating Officer for HandyPro, a national senior home modification and handyman services company headquartered in Plymouth, Michigan, to find out more about what seniors need to know regarding modifying their homes as they age.
Q. After years of living in their homes, it seems senior citizens are trying to remain in them even as they may become more disabled. Is that a trend you are seeing?
A. Absolutely. More than 10,000 Baby Boomers reach retirement age every day, so the idea of being able to remain in the home they love after they retire is strong. Unfortunately, many older folks are unwilling to admit that they may need changes to their home in order to live comfortably and safely as they age. Often it is that they are embarrassed by the medical issues and disabilities they are facing or they are in denial and think they don't need to make changes. But in most cases, they do need to make changes to make their home safer to live in. Our philosophy is that with home modifications, we can make their house a home for life.
Q. I assume safety is a key for many seniors who want to age in place.
A. Yes. For many of them, there can be huge safety issues, so we find a lot of our modifications are meant to increase fall prevention.
Q. What type of modifications are we talking about?
A. Well, just like Rick Bloom tells people their investment strategy should be based on their personal situation, that same rule applies to senior home modifications. For example, some people may have lost strength in their hands due to arthritis, so adding touch-sensitive faucets and lever door knobs can make it easier to do everyday things like turning on and off a faucet or opening a door. On the other end of the spectrum, someone in a wheelchair may need solid surface flooring in their home to move around, a ramp to their front door or even a chair lift to their second floor. So again, it really depends on the person's situation. In many cases, it comes down to the basics of everyday lifegetting into the house and up and down stairs or being able to use the bathroom safely and easily to keep up one's personal hygiene.
Q. Are there some things you see more often than others?
A. Certainly, getting up and down stairs safely can be an issue for seniors, so we install a lot of extra railings on porches, entrances from attached garages and even stairs to make it easier and safer. And bathroom modifications, such as installing decorative grab bars in the shower, comfort height toilets and even baths to barrier free shower conversions are a big part of our business these days.
Q. How can a senior know what they need to do?
A. Well we will actually come out and do an assessment on their home and particular situation so they know what they should do. Sometimes it can be a very simple modification, such as widening a doorway so they can get their walker or wheelchair through it. Other times it could be a major renovation. But we aren't trying to sell people something; instead, we want to help them modify their home to fit their needs, no matter what that modification is. We use sort of a road map of things they can do over time as needs change and takes into account generational family aspects as well as cash preservation.
Q. What is the range of costs for these modifications?
A. They can be a low as a few hundred dollars all the way up to $15,000 to $20,000, depending on the need. Again, the goal for us is to help modify people's homes to make it easier for them to age in place, whether it is a small project or a major one.
Q. For people who may not be able to afford big modifications, where can they go for assistance?
A. There are a number of agencies and organizations where people can get assistance, such as the Center for Independent Living, the Area on Aging Agency, as well as home and community based service providers and life care planners.
Q. So if someone wanted to have an assessment of their particular situation, what should they do?
A. They should contact HandyPro at (800) 942-6394 or visit our website at www.handypro.com and let our call center know that you are interested in a free home modification assessment. In addition to our office, we have close to 40 locations throughout the U.S. that serve the Southeast Michigan area.
Robert Gurinowitsch is the Chief Operating Officer for HandyPro and a nationally-known expert on home modifications to help people age in place. Prior to joining HandyPro, he owned his own aging-in-place consulting firm. He can be reached via his email at firstname.lastname@example.org .