by Joe
on January 9, 2008
I recently read Richistan, by Robert Frank and found it somewhat entertaining, although maybe not too surprising. Back in September when I wrote “You are Rich!” I talked a bit about U.S. income, and followed up with a post, “But the 400 are Really Rich” which focused more on the world’s poor. Now, in Richistan, I learned that the Richistanis are broken out into three Net Worth ranges:
- $1 million to $10 million – 7.5 million households
- $10 million to $100 million – more than 2 million households
- $100 million to $1 billion – thousands of households
Beyond my amazement regarding this concentration of wealth, I was intrigued by some of the anecdotes this book offered. The middle richistanis don’t consider the lower richistanis rich at all, they are merely affluent. Other stories contained detains of the lives of the middle to upper richistanis, and talked about how many people were employed just to run the households of these people, a hundred in some cases. But just like (some of) the anecdotes of “The Millionaire Next Door” I suspect this book doesn’t necessarily reflect ‘typical’, but those whose stories were most interesting.
I was also reminded of the CNBC interview with Warren Buffet during which he was asked if he had a boat. He replied that he did need one, he had enough invitations to go on the boats of others, he didn’t need the hassle a boat brought, the need for a crew, and all the other headaches. This book had no examples such as this, the people interviewed were from the big spending club.
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by Joe
on January 7, 2008
I don’t know, but I can offer one strange symptom.
A friend showed me the receipt from his HMO. He had gone for a test recommended when one passes age 50, and received the statement advising his copay. The bill from the hospital was $1200. The HMO allowed only $200, and so they paid the hospital $180, leaving my friend with a $20 copay. What’s wrong with this picture? If someone with no insurance received the same test, they would be stuck with the original $1200 bill. Worse, they might not get tested at all, and potentially face a life threatening illness that could have been avoided.
I’m used to seeing HMOs discount a $150 doctor visit to $120 or other bills reduced by 10-30%, but this just seemed to be over the top. I don’t have the answers on this issue, I just recognize the system is broken.
JOE
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by Joe
on January 5, 2008
Starting in 2008, you are no longer required to first roll your 401(k) to an IRA to then convert it to a Roth IRA. You should still be in tune with the taxes that will be due upon conversion and do the math to see if converting makes sense. See Fairmark‘s website to understand the tax bracket you fall into and at what rate the conversion will be taxed. The Roth conversion works best when you are in a lower bracket at conversion than you will be in upcoming years, or when the extra income from 4019k) or IRA withdrawals will force you into the Phantom Social Security Tax brackets.
JOE
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by Joe
on January 3, 2008
Last year (2007), the IRS permitted the company controlling a 401(k) to allow a non-spouse beneficiary to roll it over to a beneficiary IRA. Now that option is mandatory. If you are the non-spouse beneficiary of a 401(k) you may demand that it be rolled to a beneficiary IRA and you may then stretch out the withdrawals over your lifetime. This is an important option for those whom it impacts. Prior rules allowed a forced withdrawal within 5 years of the account holder passing on.
JOE
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by Joe
on January 1, 2008
I’ve updated my main site with an article titled “Can you save too much, pre-tax?” The topic can use a bit more analysis, but in general, it’s tough to save your way to the next tax bracket at retirement.
May 2008 bring you health, happiness, and wealth, in whatever order you prefer.
JOE
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