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If you are one of the millions of working Americans who hope to be able to retire before your coworkers carry out your corpse, I hope you were paying attention when Alan Greenspan recently began publicly lobbying Congress to cut your Social Security benefits.
It wasn't that what he had to say was new or shocking. We have known for a long time that the current Social Security system will not generate enough in taxes to support 77-million baby boomers at the same level today's retirees enjoy.
The problem is that few of us are prepared for the potential fixes, which have serious ramifications for your retirement dreams (and mine). Greenspan's suggestions include raising the retirement age and cutting back cost-of-living adjustments. Others have made even more drastic proposals, such as paying benefits only to the truly needy.
None of us, not even Alan Greenspan, knows for sure what Social Security will look like 10, 20 or 30 years down the road. However, it is a pretty safe bet that the system will be less generous than it is today.
That means if you have a financial plan to guide your retirement savings, it probably is time to revisit it. How much are you counting on from Social Security? What adjustments would you need to make if you could not collect full retirement benefits until age 68, 69 or even 70? What would it do to your plan if there were no cost-of-living adjustments?
The point of all this is to make sure your retirement plans tilt toward the realistic rather than the rosily optimistic. Planning to work more years and scaling back your lifestyle are two ways to deal with a shortfall. Another is to start saving more right now. Don't wait to find out what Congress has in store for you.
And if you are inclined toward political activism, here is an opportunity to become an informed voice on a critical issue facing boomers and the generations following them.
Q. Where on the Internet can I find copies of a living will and a durable power of attorney? I would like to read the forms before consulting a lawyer.
Forms for a living will and designation of a health care surrogate are available for free on the Florida Bar web site (www.flabar.org) Many companies sell legal forms online, but I cannot vouch for their quality. Keep in mind that requirements for legal documents such as powers of attorney and wills vary from state to state. A lawyer can help you design your document to achieve whatever it is you want to accomplish.
Q. I own DaimlerChrysler stock on which I paid $794 in foreign taxes to Germany, which has to be claimed as a deduction or credit on our U.S. tax return. However, we cannot claim a deduction as we do not have enough deductions to itemize and we cannot claim a credit because we don't owe any taxes. Have you any idea how we can claim this money?
No.
The IRS offers taxpayers a break on their U.S. taxes for foreign taxes paid on investments. It is not a refund from the foreign government that collected the taxes in the first place. Think of it as similar to the deduction for real estate property taxes. If you do not itemize deductions, you lose out on that benefit.
Reader responsesIn response to a recent column, several readers offered suggestions for avoiding improper credit card charges. Here are comments from two of them:
"Several times my Visa bill had late fee charges. Either it was the post office's fault or they lied. I solved the problem by getting my Visa from a local bank so I could bring my check in person for payment. I can wait until the due date to make the payment and I have no worries about being late."
"I compare my credit card receipts to my monthly statement and keep them all for one year in case of either returns or discrepancies. Every time I make a charge, I view my electronic transactions online. That is how I caught an outside charge on my credit card before the closing of that month's statement. I quickly closed my account and contacted the merchant. On my credit card with my signature there is a statement "verify ID,' and I thank the customer service representative when I am asked to show show proof of who I am. I wish all banks would put the user's photograph on the front of its credit cards so there is no question who is using the card."
- Helen Huntley writes about investing and markets for the Times. If you have a question about investments or personal finance, send it to On Money. We'll try to answer those we think are of greatest reader interest. All questions must be submitted in writing, but readers' names will not be published. Send questions to huntley@sptimes.com or to Helen Huntley, Times, P.O. Box 1121, St. Petersburg, FL 33731.