Just Buy Low Cost Index Funds

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“The less you spend on investing, the more you get to keep.”. Rick Ferri

When investors who don’t manage their costs, they pay a significant price for their inaction and inexperience. As John Bogle has famously said, “In investing, you get what you don’t pay for.” The primary issue is that investment product providers, especially annuities and actively managed funds, and financial intermediaries are selling commission-based products that take advantage of unsophisticated investors by marketing high-fee, high-commission funds that earn low returns. 

Cost Matters Hypothesis.

It costs money to try to beat the market, according to Bogle, and you pay whether or not the manager succeeds. When a group of financial people try to out perform the market, some will win and be successful, some will lose, but collectively they will get the market’s return—before fees. After fees, they will get much less. Bogle once calculated that “active stock investors lose close to 3% a year in fees, trading costs and taxes.”

“Costs matter. They matter more than past performance.” John Bogle

Occasionally, you might get lucky for a year or five or ten. Eventually, though, your luck will run out. With each passing year it becomes more likely that you will be overtaken by the law of averages.

Buffet advice to investors

Billionaire investor Warren Buffett recommends that most investors should buy low-cost index funds. In his sage opinion, buying index funds would go a long way toward solving this serious problem of overpaying for investments. Buffett’s recommends inexperienced investors and investors without time or inclination to conduct research buy index funds. His view is that index funds, such as those that mimic the S&P 500 benchmark, are a smart investment that almost anyone can follow.

“Costs really matter in investments,” Buffett says in a CNBC interview. “If returns are going to be 7 or 8 percent and you’re paying 1 percent for fees, that makes an enormous difference in how much money you’re going to have in retirement.”

The appeal of index investments is their low cost compared to most actively managed mutual funds and ETFs. With active funds and ETFs, according to Fidelity Investment, a manager attempts to deliver performance that outpaces a chosen index, often referred to as a benchmark. Passive ETFs and mutual funds, on the other hand, try to match the performance of a benchmark.

Benchmarks may include familiar indexes such as the S&P 500, as well as custom benchmarks created by a fund’s managers. Passive investments may not offer the potential to outperform an index, but they typically offer lower costs than active funds managed against a similar index or benchmark.

When evaluating cost, most investors focus on the expense ratio—the annual percentage of assets that mutual funds and ETFs charge investors to cover services such as investment management, recordkeeping, compliance, and shareholder services. In general, these costs are much lower for passive strategies than for active ones. And, even this expense that can vary dramatically even among seemingly similar passive index funds and ETFs.

Labor Secretary Thomas Perez said during a Senate panel meeting: “The problem with our [financial] system in the U.S. is it incentivizes complexity when simplicity is all too frequently what’s called for. … It incentivizes complexity because complexity generates more fees.”

The solution and best defense against those who prey on investor ignorance, according to Rick Ferri, is investor education and requiring financial literacy in our schools and colleges. Perhaps we need to scream continuously, “Just buy low-cost index funds!” every time an investor is pitched a hyped-up mutual fund advertisement or a high-cost fund.

Investing in index mutual funds and ETFs can be an outstanding low-cost strategy. And, like any other investment strategy, investing in index funds requires that you understand what you are investing in. You need to ensure that you are investing in a low-cost product that tracks a benchmark that fits with your investing strategy.

References:

  1. https://rickferri.com/forewarned-is-forearmed-on-investment-expenses/
  2. https://www.cnbc.com/2018/01/03/why-warren-buffett-says-index-funds-are-the-best-investment.html
  3. https://www.fidelity.com/viewpoints/investing-ideas/how-to-shop-smart
  4. http://johncbogle.com/wordpress/

Defense Secretary Lloyd Austin III

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Austin has broken racial barriers throughout his four decades in the U.S. Army.

Newly confirmed Defense Secretary Lloyd Austin III took office Friday as the first Black defense chief. Retired Army General Austin, 67, is a 1975 graduate of the U.S. Military Academy at West Point. He helped lead the invasion into Iraq in 2003, and eight years later was the top U.S. commander there, overseeing the full American troop withdrawal.

General Austin was only the sixth African-American four-star general in Army history. Austin gained confirmation after clearing a legal hurdle prohibiting anyone from serving as defense chief until they have been out of the military for seven years. Austin retired less than five years ago, but the House and Senate quickly approved the needed waiver, and President Joe Biden signed it Friday.

President Biden said he chose retired Gen. Lloyd Austin III for defense secretary because of his experience and integrity, calling the retired soldier “the definition of a patriot.”

The top Democrat on the Senate Armed Services Committee said that Austin is an “exceptionally qualified leader” who pledged to uphold civilian control of the military during his confirmation hearing.

The retired four-star Army general told senators that the Pentagon’s job is to “keep America safe from our enemies. But in the wake of the deadly insurrection at the U.S. Capitol, where retired and current military members were among the rioters touting far-right conspiracies, we can’t do that if some of those enemies lie within our own ranks.”

He said that military leaders must set the right example to discourage and eliminate extremist behavior. They must get to know their troops, and look for signs of extremism or other problems, he said.

But Austin — the first Black man to serve as head of U.S. Central Command and the first to be the Army’s vice chief of staff — also knows that much of the solution must come from within the military services and lower-ranking commanders. They must ensure their troops are trained and aware of the prohibitions.

“Most of us were embarrassed that we didn’t know what to look for and we didn’t really understand that by being engaged more with your people on these types of issues can pay big dividends,” he said, recalling the 82nd Airborne problems. “I don’t think that you can ever take your hand off the steering wheel here.”

Austin describes himself as the son of a postal worker and a homemaker from Thomasville, Georgia, who will speak his mind to Congress and to President Biden.

References:

  1. https://www.militarytimes.com/news/your-military/2021/01/24/for-1st-black-pentagon-chief-racism-challenge-is-personal/
  2. https://www.militarytimes.com/news/pentagon-congress/2020/12/08/biden-heres-why-i-chose-lloyd-austin-for-defense-secretary/

Never too Late to Become healthier

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“We’re experiencing a health care crisis that no one talks about, and it’s not the second wave of the pandemic: We are a nation of couch potatoes, and it’s literally killing us.” James P. Owen, Founder and CIO of the Center for Cowboy Ethics and Leadership and bestselling author of The Try: The Secret to Success in Life and Career, Cowboy Values: Recapturing What America Once Stood For

In a study published in The New England Journal of Medicine, researchers predicted that nearly half of Americans will be obese by 2030, up from .

Health experts have long known that being physically fit substantially reduces the risk of serious chronic illnesses such as Type 2 diabetes, heart disease and cancer, and Americans have much more control over the aging process than we think.

How you age is largely up to you

While you can’t help getting older, you don’t have to get old.  It is important that you make wellness a personal priority.  Remember that you can take charge of the aging process and make your life the best it can be.

“It’s never too late or too difficult to become healthier, but there are no shortcuts. No matter what shape you’re in or what your physical condition, there is something you can do to lead a healthier, more rewarding life.” James Owen

Healthy living gives you a sense of purpose that can motivate you every day.

With determination, you can slowly and gradually take control of your health,  Through a systematic approach, you can begin with daily 10-minute walks, moderate strength-building exercises and eating healthier.

With persistence, your ultimate goal might be to create a body that’s a decade younger than one’s actual age.  There is a payoff from regular exercise. Regular and deliberate exercise can really boost your health and confidence.

The motivation can be as simple as to get rid of aches and pains, and develop a mind-set of training one’s body, mind and spirit. Adults, especially older adults, need to take care of themselves in body, mind and spirit.

“Most people think the payoff from regular exercise is physical—look younger, live longer, feel better,” James Owen says. “All that is true, but by far the most profound change I experienced was mental. For example, every time I met a goal I’d set for myself, like going from two pull-ups to three, it was another boost to my confidence. And I’d think, ‘I did it! Now what else can I do?”

“Everybody is going to die someday. The quicker you understand that, the sooner you can get on with the business of living”, Owen explains. Thus, “it’s imperative you prepare for the next phase of life.  And, try to ignore all that noise and enjoy life.”

Make time for your loved ones. You are not promised tomorrow so make the most of today.

At the end of the day family is all you really have. Stay in close contact with siblings and other family members. And if you have been at odds with a family member, make peace with them now. It doesn’t matter how it all started or who was to blame. Carrying grudges is bad for your health and it makes family gatherings like Thanksgiving unpleasant.

Don’t interfere with something that ain’t bothering you.  There is no need to elevate your blood pressure any more than you have to over things you can’t control or do anything about.

Live a good honorable life. Then when you get older and think back you’ll enjoy it a second time.

Maintain your health and boost your wealth. Since health is the most important thing here and we’ve all learned just how dangerous to your health COVID can be.

Regardless of your age, it’s important to schedule regular medical and financial checkups to assess where you are and what you may need to change to reach your health and wealth destination.

It is suggested that you develop metrics for your physical fitness; and rather than fear those numbers, welcome a signal that it’s time to switch to a healthier lifestyle or make financial course corrections.

Cherish your memories. Look back and see how far you have come and give yourself a pat on the back. It may not have always gone the way you wanted but if you lived an honorable life and always strived to do the right thing you should feel justly proud.

Staying active and having a positive, youthful attitude builds up resilience to face any health crisis.  “With a little creativity and commitment to do something, each of us can find some way to make a difference, however modest …. when we get involved in a personal, hands-on way, it sets up a completely different dynamic: one in which whatever time and energy we give yields a rich dividend in terms of the satisfaction and expanded awareness we get back.”  James Owen, Cowboy Values: Recapturing What America Once Stood For (Connecticut: The Lyons Press, 2008)

References:

  1. https://www.marketwatch.com/story/anyone-can-make-money-this-retired-wall-street-investor-wants-to-motivate-americans-to-get-off-the-couch-2020-09-30
  2. https://www.nejm.org/doi/10.1056/NEJMsa1909301
  3. https://www.foxnews.com/opinion/a-cowboys-guide-to-aging
  4. https://carolynmappleton.com/cowboy-ethics-ten-principles/
  5. https://theartofagingwell.com/wellness-checklist-a-10-point-survival-guide/

Financial Literacy and Positive Future Financial Outcomes and Behaviors

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Financial Literacy Is Significant Indicator of Positive Future Financial Outcomes and Behaviors

The first step for Americans to achieve a financially stable and secure tomorrow is to measure and manage your current personal financial situation. You can do this by taking a proactive approach to managing your money and controlling your spending.

Furthermore, it important to recognize the warning signs that a financial hardship may be in your future. If you’ve fallen behind in your credit card payments, are receiving calls from collection agencies, or financial issues are affecting your home life, financial literacy can provide you the skills and knowledge to help you take control of your finances.

Only 17 U.S. states require a financial literacy course in high school which might explain why U.S. adults averaged an “F” on a recent survey about financial literacy.

Taking control of your financial future and start building wealth

If you’re like most Americans, you’ve thought about financial literacy, saving, investing and building wealth.  Maybe you’ve already started. Or maybe you’re still behind the financial curve. All that matters now is that you’re heading down the responsible path of financial illiteracy and building your wealth. Because this isn’t just about making your money work for you – it’s about ensuring your current and future quality of life.

And whether that means retiring early, supporting your family, or simply having the financial safety net to pursue your long-forgotten dreams, financial literacy and getting started investing are critical.

“Achieving financial literacy for all Americans has always been an important goal”, said Harvey L. Pitt, Chairman, U.S. Securities and Exchange Commission in testimony before an U.S. Senate Committee.  “With so many individuals and employees, through their employer’s 401K plan, invested in  markets, financial literacy is now not only important but an essential skill and goal.”

Budgeting, saving and investing for retirement.

All Americans should have the opportunity and the wherewithal to participate in financial markets. Financial literacy is a crucial foundation for participation and being successful. People need to be able to “read, write and speak” basic financial concepts in order to make informed investment decisions.

Beyond basic fairness issues, there are significant economic and social benefits of financial education. People of even modest means can realize financial peace of mind and financial security and all that it promises — such as buying a home, pursuing educational opportunities and retiring with dignity. As a society, we should want all Americans to have the opportunity and the ability to focus on building up their savings accounts and to invest in financial markets. Historically, investing in the market has resulted in returns superior to other savings strategies and financial assets.

References:

  1. https://www.sec.gov/news/testimony/020502tshlp.htm
  2. https://www.nfcc.org/resources/client-impact-and-research/2019-consumer-financial-literacy-survey/#:~:text=The%202019%20Consumer%20Financial%20Literacy%20Survey%20was%20conducted,overview%20of%20financial%20literacy%20statistics%20in%20the%20U.S.
  3. https://militaryfamilyadvisorynetwork.org/milcents/

We’re passionate about teaching financial literacy advising others how to save for the future, invest for the long term and build wealth for those who want to achieve financial security and comfortable retirement.

“Once you find the thing that you will do for free, then that’s the thing that you’re going to end up doing for a lifetime.’”

Financial Literacy: Saving for Retirement

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“We teach our kids everything in high school: sex education, geography, math, reading, etc. We do not teach them anything about credit cards, or debt, or investing. Then we ask ourselves why we end up in a situation as we are today, which has been highlighted by the pandemic a bit: There’s 100 million people in America that have set nothing aside for their retirement.” Kevin O’Leary

The retirement crisis in America is an ongoing worry for most Americans. As companies have shifted away from offering traditional (defined) pension plans to employees, much of the responsibility in planning for financial life after work now relies heavily on individuals. Unfortunately, the crisis is mostly due to a lack of financial literacy and consumer spending on new shiny things, and as a result, most are struggling to keep up.

A March 2019 Bankrate survey found that more than 1 in 5 working Americans aren’t saving any money for retirement, emergencies or other financial goals. Major barriers as to why respondents said they weren’t saving included not making enough money, financially helping adult children, and large credit card and other personal debt payments.

Financial assistance to adult children

Parents are helping their adult children financially and the majority of those parents say that financially supporting their adult children is hurting their savings for retirement and their financial futures, according to Bankrate. In total, 50 percent of respondents to a Bankrate survey say they have sacrificed or are sacrificing their own retirement savings in order to help their adult children financially.

Living and remaining in the workforce longer

American baby boomers are healthier and are living longer; as a result, they’ll need a bigger nest egg to fund their retirements, especially since the number of employers providing pensions has been steadily shrinking. As some reach retirement age and realize they don’t have enough saved, it’s keeping them in the workforce longer. Workers older than 55 years young filled almost half of all new jobs in 2018 even though they make up less than a quarter of the nation’s labor force, according to an analysis of Labor Department data by The Liscio Report.

“Many seniors are having a hard time making ends meet and find they have to work when they had not planned to.” Dean Baker, cofounder of the Center for Economic and Policy Research.

“Most Americans haven’t made saving [for retirement] a priority”, says Nick Holeman, CFP at Betterment. “Most people don’t like to admit that, but we live in a consumer culture and it can be difficult to turn down the new shiny gadgets.” Saving for retirement is your largest and most important financial goal. Even if it feels very far away, it’s important to start saving early.

Holeman recommends that Americans wanting to retire to take three steps:

  1. Create financial goals and a financial plan. At a minimum, you should have these two financial goals: Create an emergency fund and save for retirement. SoFi calls these “bookend goals”—your primary short-term and primary long-term goal. Your financial plan should consist of small, achievable goals; they’ll help you see your finish line and empower you to stay on track. Start by determining how much you need to retire comfortably.
  2. Come up with a strategy to execute. Selecting an investment strategy depends on your financial goal amount (how much you want to save each month or year) and the time horizon (when you’d like to use that money). Decide how you plan to save that amount.
  3. Get creative. For those struggling to save, consider retiring later or working part-time during retirement. Holeman says there are tons of other options out there, which he refers to as “levers,” like moving to a low-cost state or downsizing your home. Engaging them can help get your retirement savings back on track.

Investing

It has been regularly reported that billionaire investor Warren Buffett made 99% of his current wealth after his 50th birthday.  At an age when most Americans give up hope achieving financial independence, Buffett was just getting started on the capital assets he controls today.  Building wealth could mean financial peace, taking a spur-of-the-moment international travel.

Many older Americans are advised to sell or significantly reduce their stock holdings and frankly, this advice is antiquated, shortsighted and wrong.  Buffett built his incredible level of wealth by continuing to buy stocks despite his advanced age.

References:

  1. https://www.bankrate.com/personal-finance/financial-independence-survey-april-2019/
  2. https://www.bankrate.com/retirement/baby-boomers-unable-to-retire-gig-economy/
  3. https://www.usatoday.com/story/life/allthemoms/2019/04/24/adult-children-robbing-parents-retirement-savings-study-finds/3559812002/
  4. https://d32ijn7u0aqfv4.cloudfront.net/wp/wp-content/uploads/20170718165706/Guide-to-Investing-Intelligently_V5-1.pdf

COVID Vaccine and Return to Normal

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Public health officials say that even after you get vaccinated against COVID-19, you still need to practice the pandemic precautions. That means steering clear of crowds especially indoors, continuing to wear a mask in public, maintaining 6 feet or more of physical distance from people outside your household and frequently washing your hands.

It takes time for the vaccine’s effectiveness to build up after getting a shot. Effectiveness is defined as not getting sick with COVID-19.

The objective of these first-generation vaccine candidates wasn’t to prevent COVID-19 transmission entirely. Instead, researchers were hoping the vaccines would prevent severe COVID-19 and deaths, and that’s exactly what Phase 3 trials showed. The Pfizer/BioNTech, Moderna, and AstraZeneca/Oxford vaccines can all prevent severe COVID-19 with varying degrees of efficacy.

People immunized against COVID-19 will have a high chance of avoiding a severe case of the illness after an actual infection, but infection with the novel coronavirus would be possible even after a person acquires immunity.

A new study from Israel indicates that the immunity developed from the Pfizer/BioNTech vaccine is so strong that it might prevent COVID-19 transmission. Researchers from the Sheba Medical Centre in Tel Aviv studied the immune response in 102 hospital staff members who received both Pfizer/BioNTech vaccine shots. They found that 100 people developed up to 20 times more neutralizing antibodies within a week of the second dose than COVID-19 survivors who went through severe COVID-19 cases. These higher levels of antibodies that would neutralize the actual virus upon actual encounter are believed to also prevent transmission.  With the higher the number of antibodies, the harder it would be for the virus to infect cells and replicate enough for vaccinated people to become infected.

https://twitter.com/RolandBakerIII/status/1351934025120714753?s=20

In order to put this pandemic in the rearview mirror, a large percentage of the population needs to either be vaccinated or gain immunity via an infection with the virus (a much riskier route that would include many more deaths).

When a large portion of the population has immunity to the virus because of this sort of “herd immunity,” it’s unlikely to keep spreading. Even people who haven’t been vaccinated (such as very young babies and those with compromised immune systems) are protected once this level of immunity in a population is achieved, because the illness has little opportunity to spread within the community — most people who run into the virus in this scenario are immune.

What is herd immunity?

Herd immunity (or community immunity) occurs when a high percentage of the community is immune to a disease (through vaccination and/or prior illness), making the spread of this disease from person to person unlikely. Even individuals not vaccinated (such as newborns and the immunocompromised) are offered some protection because the disease has little opportunity to spread within the community.

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Herd immunity depends on the contagiousness of the disease. Diseases that spread easily, such as measles, require a higher number of immune individuals in a community to reach herd immunity. Herd immunity protects the most vulnerable members of the population.

COVID-19 is a very contagious disease.

A large percentage of the population will need to be immune against COVID (through infection or vaccination) before herd immunity will be achieved. It is not known when that will happen, but it will depend on how many people develop immunity after COVID-19 infection, how soon a COVID-19 vaccine is widely available to the general public, and how many people get vaccinated. Throughout this time period until herd immunity is achieved, it is very important to continue to wear masks in public, to wash or sanitize your hands, and to maintain social distance to slow the spread of COVID-19.

References:

  1. https://www.npr.org/sections/health-shots/2021/01/12/956051995/why-you-should-still-wear-a-mask-and-avoid-crowds-after-getting-the-covid-19-vac
  2. https://www.nejm.org/doi/full/10.1056/NEJMoa2034577
  3. https://www.msn.com/en-us/health/medical/study-says-pfizer-vaccine-immunity-is-so-strong-it-might-prevent-covid-19-transmission/ar-BB1cTAkA?ocid=uxbndlbing
  4. https://apic.org/monthly_alerts/herd-immunity/

Hurting long before Pandemic, failing companies took stimulus money then closed anyway

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Stein Mart Inc. was in desperate financial shape long before COVID-19 forced closures at its discount department stores. During the past several years, the retailer had hemorrhaged tens of millions of dollars. Like many struggling businesses, the company in June 2020 turned to the federal government’s Paycheck Protection Program, or PPP, as a possible savior. The $10-million loan didn’t last long.

Within two months, Stein Mart filed for Chapter 11 bankruptcy protection, citing more than $500 million in liabilities. The company closed all 280 stores and 9,000 workers lost their jobs. And, the company will never repay American taxpayers the $10-million.

Nothing prevented Stein Mart from taking the PPP handout on its way under.

Lenders participating in the Small Business Administration relief program shelled out more than $520 billion last year to millions of companies searching for a lifeline to stave off the economic impacts of COVID-19. Like Stein Mart, USA TODAY found that some were failing long before the pandemic hit.

Josh Salman from USA Today explains how failing companies were able to take stimulus money and close anyway. USA Today

To read more, go to: https://www.usatoday.com/story/news/investigations/2021/01/13/recipients-stimulus-funds-went-bankrupt-fired-workers-and-closed/3960382001/

Habits for a more Abundant Life

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Two most important:

  • Read at least thirty minutes everyday
  • Know and pursue a goal your passionate about

Intelligence, talent and charm are great, but more often than not these aren’t what separate the wealthiest among us from the poorest.

Instead, the differences are in our daily habits.

Do you realize that these subconscious, second-nature activities make up 40 percent of our waking hours? That means that two out of every five minutes, all day and every day, we operate on autopilot.

It’s true: Habits are neural pathways stored in the basal ganglia, a golf ball-size mass of tissue right in the center of our brains, in the limbic system.

This neural fast lane is meant to save the brain energy: When a habit is formed and stored in this region, the parts of the brain involved in deeper decision-making cease to fully participate in the activity. However, we all know there are good habits and bad habits.

5 habits

We know that habits can either help or hurt your success in life. Bad habits can fester and grow into a lifestyle that takes you away from the things you want to do—and good habits can help you create a life that’s full of action and accomplishment.

If you were to look at someone you respect, someone who’s successful, you would see that they spend each day doing the things that help them accomplish their biggest goals. This isn’t to say they’re perfect—because no one is—but despite the things that are not perfect in their lives, they continue to make moves that have a positive impact. And it starts with their daily habits.

Now, while we can all study successful habits, it’s meaningless if we don’t implement that knowledge. So, according to Kimanzi Constable, here are five daily habits you can adopt to create the life you truly want to live:

1. Plan out your day the night before.

It’s easy to get off track when you don’t have a plan. Without planning what your day will look like, you wake up not knowing what you want to do or accomplish. Spend a little time the night before giving yourself clear goals for the next day. Life rarely works out as planned, but with a plan, you can adjust without losing momentum.

2. Read books and novels to get inspired.

Reading is an essential element in success—books contain so much knowledge. Forming a daily reading habit will expand your knowledge, allow you to learn more about your profession and help you on your journey to success.

3. Make your health and fitness a priority.

What you eat and how much you exercise affects every area of your life. Successful people use their exercise as a time to reset and reinvigorate. And they make smart food choices that will give them the energy they need to accomplish everything on their daily to-do list.

4. Don’t get distracted by what other people are doing.

Other people’s journeys to success can be inspiring; you can learn so much—about their mistakes, their victories, what to do, what not to do. But if you start comparing your progress to theirs, instead of using their stories as inspiration, you can lose focus and fail to keep your eyes on your own mountain top. Realize your journey is unique and can’t be compared. So don’t get stuck in the comparison trap—stay focused on your why.

5. Live each day as if it were the last.

Life is busy, it’s chaotic, and so you tend to want to focus on the future—we all do it, worry about what’s next. But while planning is important, so is living—being fully present.

Life is short, and there’s no guarantee as to when it will end. Successful people live each day as if it were their last and make the most out of each moment—and so should you.

When you look at a big goal, it’s common to get frustrated at the enormity of what you’re trying to accomplish. If you wake up each day determined to spend it forming good habits, you give yourself a better chance at success. So use these five habits as a starting place to build whatever a successful life means to you.

Read more:

  1. https://www.success.com/16-rich-habits/
  2. https://www.moneycrashers.com/productive-habits-wealthy-successful-people/

Martin Luther King (MLK) Day of Action

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“The time is always right to do what is right.” Dr. Martin Luther King, Jr.

With respect towards Martin Luther King Day, this is a terrific time to think of his words and vision, and try to employ them in our daily lives at home and at work.

“Let this holiday be a day of reflection, a day of teaching non-violent philosophy and strategy, a day of getting involved in non-violent action for social and economic progress”, wrote Coretta Scott King in The Washington Post in 1983.

The day is more than a day of celebration of the civil rights leader.

“Too many Americans would rather celebrate than follow Dr. King”, as Marian Wright Edelman, President, Children’s Defense Fund, commented. “Many celebrate Dr. King the orator, but ignore his words about the need for reordering the misguided values and national investment priorities he believed are the seeds of America’s downfall.”

“We must learn to live together as brothers or perish together as fools.” Dr. Martin Luther King, Jr.

“Dr. King’s greatness lay in his willingness to struggle to hear and see the truth; to not give into fear, uncertainty and despair; to continue to grow and to never lose hope, despite every discouragement from his government and even his closest friends and advisers” Edelman advises.

Dr. Martin Luther King, Jr., in his last Sunday sermon at the National Cathedral in Washington, D.C. in 1968, said:

“It may well be that we will have to repent in this generation. Not merely for the vitriolic words and the violent actions of the bad people, but for the appalling silence and indifference of the good people who sit around and say, ‘Wait on time.’ Somewhere we must come to see that human progress never rolls in on the wheels of inevitability. It comes through the tireless efforts and the persistent work of dedicated individuals who are willing to be co-workers with God. And without this hard work, time itself becomes an ally of the primitive forces of social stagnation. So we must help time and realize that the time is always ripe to do right.” Dr. Martin Luther King, Jr.

The “time is ripe right to do what is right” and reject the ugliness, bitterness and greed that have permeated too much of our political discourse. For example, the two U.S. Senate runoff races in Georgia that determined control of the U.S. Senate laid bare the depths of despicableness and hatefulness both conservative and liberal operatives would venture to win those seats for their respective side. The political discourse over linear and social media forced many Georgians to silence their media and not answer their phones.

” We may have all come on different ships, but we’re in the same boat now.” Dr. Martin Luther King, Jr.

Moving forward

We need to move forward and not backward and relearn for ourselves and teach our children we can disagree strongly without disagreeing wrongly. “We have a voice, and we are powerful”, said Jennifer Lockwood-Shabat, President and CEO, Washington Area Women’s Foundation. “It’s how we choose to harness our voice and power in the days, weeks, months, and years ahead that matters. We cannot be overwhelmed by the tasks at hand. There are actions each of us can take in our daily lives to make a difference.” Lockwood-Shabat states that you can:

  • “Make an effort to understand opinions and beliefs that are different from yours. Read books and articles that explore different opinions and perspectives. Seek out media outlets and journalists that you may not necessarily follow. Have meaningful conversations with the friend, neighbor, or colleague with whom you may disagree.”
  • “Get involved locally. Feel passionate about an issue in your community? Get involved and learn more. Find the organization leading the charge on the issue and get connected. Attend local government meetings or hearings on the issue you care about. Volunteer.”
  • “Become politically active at the local level. Regardless of your political affiliation, become informed about races happening in your own backyard. Learn more about the candidates and their positions. Attend events and voice your opinion and concerns. Support the development of the next generation of political leadership. Consider running for office.”
  • “Use your voice. Speak up when you see a wrong that needs to be righted, whether it’s in your neighborhood, your school or your workplace. Write your local political leaders. Write a letter to the editor or an op-ed.”

MLK Day brings with it a sense of optimism and hope, whether that means you resolve to help others, spend more time taking care of yourself, learn something new. You can be more resolved and committed to fighting for a fairer and more just and equitable community for all Americans.

“Whatever your life’s work is, do it well. A man should do his job so well that the living, the dead, and the unborn could do it no better.” Dr. Martin Luther King, Jr.

It maybe unrealistic to burden you with the country’s problems, but if you can do something positive for someone or within your community, it’s a start.

The hope is that Dr. King’s words are as powerful today as when he first said them and that they will inspire positive change and development in the world. For example, he exclaimed, “Lightning makes no sound until it strikes.”

What he meant was that “Apathy cannot be tolerated by an individual, a leader or an organization. If you see something happening, don’t wait for the negative ramifications to occur. Respond to the issue and act. If nothing is said or done, then silence connotes complicity — and that’s what people remember.”

References:

  1. https://www.cnbc.com/amp/2021/01/18/martin-luther-king-jr-life-leadership-lessons.html?__twitter_impression=true
  2. https://www.huffpost.com/entry/the-time-is-always-right_b_9592976
  3. https://thewomensfoundation.org/2017/time-always-right-whats-right/
  4. https://www.wsj.com/livecoverage/trump-biden-election-day-2020/card/csOMnlXFihSgJ256gUwI

Social Security Retirement Benefits

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Achieving the dream of a secure, comfortable retirement is much easier when you plan your finances.

Social Security is part of the retirement plan for almost every American worker. It is considered to be one of the three “legs” of retirement finances (retirement plans and savings being the other two), and for some it may be the only source of retirement income. It provides replacement income for qualified retirees and their families.

Planning is the key to creating your best retirement. You’ll need to plan, save and invest for decades to achieve your retirement goals. While many factors affect retirement planning, it is important that you to understand what Social Security can mean to you and your family’s financial future.

As you make your financial and retirement plan, knowing the approximate amount you will receive in Social Security benefits can help you determine how much other retirement income you’ll need to reach your goals.

Social Security replaces a percentage of a worker’s pre-retirement income based on their lifetime earnings. The portion of your pre-retirement wages that Social Security replaces is based on your highest 35 years of earnings and varies depending on how much you earn and when you choose to start benefits.

How Social Security system works

The theory behind the concept of Social Security was that taxes assessed on the wages, up to a statutory limit, of those who are gainfully employed will be used to pay the benefits to those who have left the work force due to old age. This, when you work, you pay taxes into Social Security. Social Security Admission (SSA) use the tax money to pay benefits to:

  • People who have already retired.
  • People who are disabled.
  • Survivors of workers who have died.
  • Dependents of beneficiaries.

The money you pay in taxes isn’t held in a personal account for you to use when you get benefits. SSA uses your taxes to pay people who are getting benefits right now. Any unused money goes to a Social Security trust fund that pays monthly benefits to you and your family when you start receiving retirement benefits.

You can work while you receive Social Security retirement or survivors benefits. When you do, it could mean a higher benefit for you and your family. But, if you’re younger than full retirement age, and earn more than certain amounts, your benefits will be reduced. The amount that your benefits are reduced, however, isn’t truly lost.

Your benefit will increase at your full retirement age to account for benefits withheld due to earlier earnings. (Spouses and survivors, who receive benefits because they have minor or disabled children in their care, don’t receive increased benefits at full retirement age if benefits were withheld because of work.)

Each year, Social Security Admission (SSA) reviews the records of all Social Security beneficiaries who have wages reported for the previous year. If your latest year of earnings is one of your highest years, they recalculate your benefit and pay you any increase you are due. The increase is retroactive to January of the year after you earned the money.

When you begin receiving Social Security retirement benefits, you are considered retired for SSA purposes. You can get Social Security retirement or survivors benefits and work at the same time. However, there is a limit to how much you can earn and still receive full benefits.

If you are younger than full retirement age and earn more than the yearly earnings limit, we may reduce your benefit amount.

If you are under full retirement age for the entire year, SSA deducts $1 from your benefit payments for every $2 you earn above the annual limit. For 2020, that limit is $18,240.

In the year you reach full retirement age, we deduct $1 in benefits for every $3 you earn above a different limit. In 2020, this limit on your earnings is $48,600. They only count your earnings up to the month before you reach your full retirement age, not your earnings for the entire year.

When you reach full retirement age:

  • Beginning with the month you reach full retirement age, your earnings no longer reduce your benefits, no matter how much you earn.
  • SSA will recalculate your benefit amount to give you credit for the months we reduced or withheld benefits due to your excess earnings.

To Receive Benefits

The age you begin collecting your retirement benefit affects how much you will receive. There are three important things to know about age when thinking about when to start your benefits.

  • Full Retirement Age – Full retirement age is the age when you will be able to collect your full retirement benefit amount. The full retirement age is 66 if you were born from 1943 to 1954. The full retirement age increases gradually if you were born from 1955 to 1960, until it reaches 67. For anyone born 1960 or later, full retirement benefits are payable at age 67. You can find your full retirement age by birth year in the full retirement age chart.
  • Early Retirement Age – You can get Social Security retirement benefits as early as age 62. However, your benefit is reduced if you start receiving benefits before your full retirement age. Understand how claiming retirement benefits early will affect your benefit amount.
  • Delayed Retirement Age – When you delay collecting benefits beyond your full retirement age, the amount of your retirement benefit will continue to increase up until age 70. There is no incentive to delay claiming after age 70.

In 2020, if you’re under full retirement age, the annual earnings limit is $18,240. If you will reach full retirement age in 2020, the limit on your earnings for the months before full retirement age is $48,600.

Starting with the month you reach full retirement age, there is no limit on how much you can earn and still receive your benefits.

Let’s look at a few examples. You are receiving Social Security retirement benefits every month in 2020 and you:

  • Are under full retirement age all year. You are entitled to $800 a month in benefits. ($9,600 for the year)
    You work and earn $28,240 ($10,000 over the $18,240 limit) during the year. Your Social Security benefits would be reduced by $5,000 ($1 for every $2 you earned over the limit). You would receive $4,600 of your $9,600 in benefits for the year. ($9,600 – $5,000 = $4,600)
  • Reach full retirement age in August 2020. You are entitled to $800 per month in benefits. ($9,600 for the year)
    You work and earn $63,000 during the year, with $50,718 of it in the 7 months from January through July. ($2,118 over the $48,600 limit)
  • Your Social Security benefits would be reduced through July by $706 ($1 for every $3 you earned over the limit). You would still receive $4,894 out of your $5,600 benefits for the first 7 months. ($5,600 – $706 = $4,894)
  • Beginning in August 2020, when you reach full retirement age, you would receive your full benefit ($800 per month), no matter how much you earn.

When SSA figures out how much to deduct from your benefits, they count only the wages you make from your job or your net profit if you’re self-employed. They include bonuses, commissions, and vacation pay. They don’t count pensions, annuities, investment income, interest, veterans, or other government or military retirement benefits.

References:

  1. https://www.ssa.gov/benefits/retirement/planner/whileworking.html
  2. https://www.ssa.gov/benefits/retirement/learn.html
  3. https://www.aaii.com/journal/article/13102-a-primer-on-social-security?via=emailsignup-readmore
  4. https://www.ssa.gov/benefits/retirement/learn.html#h2