United States Capital Corporation Blog

Credit cards have become highly used in the last 10-20 years, but the idea of credit has been around for centuries. Here’s some surprising information about how credit has changed over the years to become what it is today.

 

 

The closer you get to retirement, the more you fantasize about it. It gives you a well-earned break from a lifetime of hard work, and the relaxation that you deserve and need as you get older.

But in reality, retirement is rarely as tranquil as expected– it comes with a lot of expenses that people don’t anticipate. Here are the top five surprise retirement costs to be ready for:

1. Health care costs — Medicare is actually much more expensive than people expect, and the need for health care increases as you get older.

2. Higher spending — With more free time, it can often be tempting to spend money on things that you simply never had the time for. A lot of retirees, for example, want to travel, but that gets expensive.

3. Social Security taxes — Most Social Security benefits are taxable, and many people don’t know that they’re getting taxed as they receive those benefits– not just when they’re paying into it.

4. Taxes on nest-egg withdrawals — IRAs and 401(k) accounts are often hugely taxed upon withdrawal, depending on your age and the account. Make sure you know everything there is to know about your accounts, and be aware of how much of the money you take out is getting taxed.

5. Loss of income for a surviving spouse — This is something that people never want to think about, but it’s important to prepare for the worst. In case you or your spouse passes away, the other needs to be able to live independently. There are several ways to go about this, so weigh the options and pick what’s right for your situation.

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There’s a fine line between pessimism and paranoia, but it’s always a good idea to be prepared for the worst. With the way the economy has been, this is especially true when it comes to your finances.

So without going overboard about it, we all need a financial back-up plan. Here are some tips from DailyFinance.com that can help you be more secure in these unsure times.

1. Invest in yourself — Job security is all about making yourself a clear asset to your company. Even if you’re not an entrepreneur, think of yourself as the individual seller of a unique service: your labor. Just in case, you still might want to have an idea of other jobs you could pursue if worst came to worst.

2. Prioritize your expenses — Many of the things we think we need, we really don’t need. Look at your budget and ask yourself critical questions: “Do I really need to go out to eat? Do I really need new clothes this month? How much do I actually watch cable TV?” If you have a lot of expenses you don’t need, it may be a good idea to get rid of it.

3. Put your home to work — If you’re a homeowner, chances are your mortgage is your biggest expense, but your home is your biggest asset. Make this work for you in terms of equity, and live below your means.

4. Sell what you don’t need — A lot of people have items in their homes that they don’t need, and most of the time, you can turn those items into money. If all they’re doing is taking up space, the money is probably worth more to you.

5. Know where your money will come from — Make sure you know what investments your money is going into. From there, prioritize where you would take money from in case of an emergency. Some investments penalize you for pulling funds, and you want to save those for last.

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There are a lot of ways to consolidate debt, but not all of them are good. This infographic explains some of the things you want to keep in mind when you’re trying to get out of debt.

 

Here’s the second and final part of our series on tax scams. To read the first part, click here.

7. Filling false forms — There are a lot of extra forms you can fill out  for credits and deductions, but they usually only apply to a small group of eligible people. If you’re caught filling such forms with false information, the penalties could be huge.

8. Picking a bone with the IRS — At this point, the IRS has seen just about everything. They’re very used to people arguing with their policies and taking them to court after trying to find loopholes. If you try this and it’s not for a good reason, chances are it’s not going to end well for you.

9. Falsely claiming zero wages — Money people think it’s easy enough to lie about their amount of taxable income, but it’s quite easy for the IRS to catch.

10. Exaggerating charitable donations — Instead of claiming to have less taxable income, some people take a different approach and lie about how much money they’ve given to charity. The IRS is on the watch for donations that seem suspiciously high, so unless it’s real and you have the documentation to back it up, don’t try it.

11. Disguising corporate ownership — Some people are committing tax fraud by not reporting entire businesses. This often happens when the owner uses a third party with its employer identification number, and it’s illegal.

12. Misuse of trusts — Don’t listen to anyone who tries to convince you to lower your taxable income by transferring money to a trust. This is an improper use of trusts and the IRS is aware of people doing it.

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