Here are the final five axioms for personal finance.
The first five appear here, and can be summarized as:
- Spend less than you make
- Planning precedes every activity
- Systematically monitor your progress
- Save early and as much as possible
- Diversify, diversify, diversify
Reading or remembering them isn’t required to grasp the ones that follow.
There are many core principles that each of us regularly follow throughout our lives. These principles help us navigate through the many decisions we make daily.
I have 10 favorite axioms that I follow — and share with my college classes and clients — to make personal financial life more satisfying and effective. Sometimes, many years after the class or meeting, former students and business acquaintances reflect upon the axiom and remark how it positively influenced their lives.
Here are the first five:
Capaldi Reynolds & Pelosi, (CRP) is pleased to announce Lavinsky, Horowitz & Pollard (LH&P), CPAs and Business Advisors have agreed to join our team to form the largest locally based accounting, tax, audit and business advisory firms in South Eastern New Jersey. Jointly the new firm will have 36 CPA’s and along with our sister company CRA Financial Advisors will have over 70 employees.
Change in Tax Rates
Beginning in 2013, the American Taxpayer Relief Act of 2012 imposes new higher 39.6% and 20% tax rates on ordinary income and long-term capital gains, respectively. The new top ordinary income tax rate of 39.6% is imposed on taxable income over $400,000 for single filers, $425,000 for head-of-household filers and $450,000 for married taxpayers filing jointly ($225,000 for each married spouse filing separately). The 20% capital gain tax rate applies to capital gains and dividends for individuals above the top income tax bracket threshold.
Finding the right age and correct strategy to claim Social Security retirement benefits can have a substantial impact on a retiree’s financial security. It is essential for CPA personal financial planners to educate clients about the options and run the numbers pertaining to different claiming scenarios assuming different life expectancies. Traditionally, the Social Security Administration’s (SSA) default position has been to recommend the option that provides recipients the largest benefit today, which may be a good idea if you are in ill health and without sufficient assets. However, after considering early retirement penalties, delayed retirement credits, survivor benefits, inflation cost of living adjustments, two-income households, the tax advantage of Social Security and longer life expectancies, it may make sense for one or both spouses to delay to age 70.