Nov. 25 Dec. 1, 2010 Pane 2 Ms. Perrv's Free Press The 401K Divide Can You Afford to Retire? Are you saving enough for retire- ment? Apparently not. according to a new study by Ariel Mutual Funds and Charles Schwab Corp. The two investment companies say African- Americans save far less money in their 401K plans than Whites. And they are saving no more than they did 10 years ago. In fact. despite the stock market boom of the last sev- eral years. blacks are no more like- ly to be investors, preferring more cautious plans that offer less risk and much less reward. And even when offered company-matched 401K plans. African-Americans invest in them at a much lower rate. Truth is most Americans are not saving enough for retirement, but for African-Americans who often have fewer family resources and who are often responsible for sup- porting an extended family, the consequences can be dire. In addi- tion, Ariel Mutual Funds President Mellody IIobson says blacks tend to invest more in less liquid real estate, so this foreclosure mess may have even graver consequences. Hobson says we should follow the flight attendant's rules: Put the oxygen mask on your face first before helping others. Here are some of the highlights from Ariel-Schw ab Black Investor Sun ey: Of the 500 Blacks and 500 Whites earning more than $50.000 annually, the median amount of money saved by Blacks is less than half of their White counterparts ($48.000 versus $100,000). On a monthly basis, median savings is $182 for Blacks vs. $261 for Whites. In 1998, when 57% of Blacks and 81% of Whites said they owned individual stocks or stock mutual funds. A decade later, still just 57% of Blacks are stock investors, com- pared to 76% of Whites. During the past ten years, the number of Blacks who own stocks or mutual funds rose as high as 74% (in 2002) only to fall again, while White par- ticipation has consistently hovered within a few percentage points of 80%. Retired Blacks have median sav- ings of just $73,000 compared to $210,000 for Whites. Blacks, on average, also retired earlier than Whites (59 vs. 61) and are more likely to rely on a pension or Social Security rather than a defined con- I Y --W tribution plan. such as a 401(k). Fewer Blacks than Whites have gone through some of the basic steps of retirement planning, such as calculating the amount of money they need to live comfortably in retirement. However, those who consulted with financial profession- als were much more likely to have saved more than $100,000 by the time they retired, and were much less likely to have retired early. For more information, visit www.arielmutualfunds.com or www.aboutschwab.com to read the entire report. Don't let spending fears ruin your holiday cheer By Jason Alderman At this time of year. most people fall into two types: Those who look forward to the holiday season, and those who dread it. Many people end up in the latter camp because of money worries. You know how easy it is to overspend on holiday gifts, travel and entertainment and how long it can take to recover. These tips might help move you from apprehension to anticipation: Know your budget. First calcu- late what you can afford to spend overall and then decide how you'll spend not the other way around. If you haven't been saving for a fami- ly getaway or a big-screen TV, those purchases could put you in debt for months to come. It's far better to arrive at a figure you can comfortably pay off. and tailor your purchases accordingly. Don't forget the other 11 months. If property tax is due in February or you'll owe income tax in April. you should be setting aside money right now, not racking up holiday debt. It's challenging, but if you budget all year for recurring expenses, you won't be caught off guard when your car insurance comes due. Banish Santa guilt. Somehow many of us have bought into the myths that our kids will be disap- pointed if they don't get a mountain of toys and that neighbors and coworkers expect pricey gift certifi- cates as a measure of friendship. Think of all the unnecessary pres- ents you receive each year. Would you like someone any less without these gifts? Would they? Along the same lines, ask your family (and your friends) about holding a gift lottery, where you Saft is one of the world's largest developers and '_ ." :,- '... manufacturers of Lithium Ion batteries with oper- .. :' nations in 17 countries around the world and is ..'.----.- headquartered in Paris, France. 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Probate Contact Law Office of Reese Marshall, P.A. 214 East Ashley Street Jacksonville, Florida 32202 904-354-8429 Over 30 years experience of professional and courteous service to our clients A r draw names from a hat and concen- trate your time, effort and money on getting just the right gift for that special person. Comparison shop online. Even if you decide to buy your gifts in per- son. websites like www.shopping.com and www.shop- ping.yahoo.com can supply creative ideas and help you find great deals. A little planning and a disci- plined approach to holiday spend- ing can help ensure holiday cheer, not holiday fear YIOIR MOJ EY MATTERS Year End Tax Sav by Michael G. Shinn, CFP Contributing Writer There are just a few weeks left ]before the end of 2010, but there are ;still some opportunities to success- :fully manage your tax burden. "The general rule of deferring income and accelerating deductions ;at year-end is good tax planning ;strategy and still applies for 2010. SFor most people, procrastination is their biggest tax enemy," states .James W. Oliver, Jr., a tax consult- ant and financial planner.If you ,used a tax advisor in the past, you should meet with your advisor to assess your tax situation and dis- :cuss how the following tips apply to you. . #1- Determine where you are? Start by taking out last year's tax returns, your most recent pay stubs ;and your investment account state- ments. Make a copy of your Form 1040 and pencil in estimates of your 2010 income. Look at your invest- iment account statements to estimate :your interest and dividend income. If you have a business, estimate :your business income for 2007. :Using your investment account ,statements, determine whether you have investment capital gains or losses. If you have rental property, estimate your full year income and expenses. 1 Estimate your itemized deductions ;for 2010. These include: allowable :medical expenses, all state and local taxes, allowable interest, char- :itable contributions, allowable loss- .es and miscellaneous deductions. iPencil in your total deductions on :your Form 1040 and subtract it from your adjusted gross income to have to be securities that you are determine your Taxable Income. Use the tax tables to deter- mine your estimated tax. Subtract any applicable credits from your total tax. Using your pay stubs, esti- mate your withholding for the year and add quarterly tax payments. Subtract your payments from the total to determine the amount of your tax due. #2- Accelerate Deductions Allowable deductions reduce your taxable income and your tax bill. The following is a sample list of actions that you can take before year-end to help reduce your tax burden: -Pay state and local estimated income taxes before the years' end n addition to property taxes. -Pay your January, 2011 mortgage payment in December-The interest will be deductible this year. -Be charitable- Make contribu- tions to your favorite charities. Additionally non-cash contribu- tions such as clothing, household goods and appreciated securities can be deducted at their fair value. #3- Dump the Losers Analyze your investment portfolio with the objective of balancing out capital gains and losses. If you have stocks that have "paper" losses, try to sell enough losers to offset your realized capital gains for the year. Additionally, you can deduct an additional $3,000 ($1,500 for mar- ried filing separately) of losses from your regular income. Two words of caution: Be careful to avoid a "wash sale" that is re-buy- ing the same security within 30 days before or after you sold shares. Additionally, losers that you dump r E- r. in u ar t i:-" r ,r. . ' *a ^^ Cal 8 6 -2 *:F' - ,-- .. -.. Ib- ~J I ing Tips comfortable selling at this time. Tip #4 Defer Income The basic intent of deferring income is to lower your taxable income for the current year. This is limited for most wage earners, however there are some opportuni- ties. Deferring a year-end bonus to January 2008 will escape taxation in 2010. Investment property, such as real estate, which is being sold near the end of the year, could have the closing delayed until 2010.. #5- Get Ready First, setup a tax filing system for all of you tax related receipts and statements. Keep a copy of your tax returns forever. If you anticipate receiving a large refund because of over withholding, consider filing a new W-4 to reduce your payroll withholding. Plan ahead for your 2008 IRA, 401K, and similar retire- ment account contributions. If you have a medical or child-care flexi- ble spending account, make sure you use the full balance this year and plan ahead for next year. Watch out for the AMT You might be subject to the alternative mini- mum tax, (AMT) if your income is above $75,000, had significant write-offs, exercised incentive stock options or had significant capital gains. When it applies, the AMT is an "add-on" tax that is over and above your "regular" tax. To determine your AMT exposure, get the most recent version of Form 6251 and make the calculations. The information provided here is a basic guideline to get you started. It is recommended that you consult a qualified tax professional to assess your personal situation.