Friday Financial Five—May 17th, 2013
Friday, May 17, 2013
Last month, the country ran a $113 billion surplus, the biggest monthly surplus in five years. We have taxes increasing with a slowly improving economy, and April is when most people pay their taxes, so the surplus isn’t a huge surprise. Keep an eye out to see how any continued surpluses affect budget and debt ceiling discussions down the road. If history tells us anything, it’s that regardless of who is in charge, all good surpluses go to waste.
CollegeBoundfund Baby program
For those that became parents this year and live in Rhode Island, don’t forget to collect $100 from the Rhode Island Higher Education Assistance Authority. The CollegeBoundfund Baby program provides this contribution to begin the college savings process. A signed application and birth certificate is all that’s needed to collect the money. If baby was born in 2012, apply for the grant before their first birthday.
Health costs in retirement
It can be scary to look at possible health care costs in retirement, but it’s essential for proper planning. Various reports can have total costs ranging anywhere from $100,000 to $500,000, but each person needs to take personal health issues into consideration. The cost for women tends to be higher, due to longevity. In preparing a budget, prepare for health costs to consume upwards of 30 percent of retirement expenses.
Jumbo loan financing options
Borrowing more than $417,000 to buy a single family home presents an interesting decision. Should the entire amount be borrowed at “jumbo” rates as opposed to combination of first mortgage for $417,000 and a second form of financing for the rest? Jumbo rates can add one percent to the standard 30 year interest rate, depending on the bank. If the combination route is chosen, the second line of financing can be fixed at a higher rate or a variable rate, often tied to prime. This decision comes down to a side by side comparison, amortizing both payment plans to figure out which proves most beneficial.
The NFL’s financial obligations
The Washington Post recently ran a sad story on the plight of retired NFL players and their lack of health coverage. The NFL makes billions of dollars, and the least they can do is take care of those that give their bodies and minds to make the league what it is. Fans support the absence of guaranteed contracts in NFL, as no one wants to see an underperforming player get paid millions of dollars. Perhaps there should be more support for covering medical costs on the guaranteed injuries that befall many of them.
Dan Forbes is a regular contributor on financial issues. He is a CFP Board Ambassador. He leads the firm Forbes Financial Planning, Inc in Providence, RI and can be reached at email@example.com .
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