Money With Jim

Are Tax Refunds Up or Down?

Guest Article by Matt Herman for Herman & Company CPA’s, P.C.

It’s all over the latest reports.

Tax refunds are down 3-9 percent since last year, according to numbers released a couple of weeks ago. But just last week, the IRS reported that tax refunds are up 1.3% from last year. So which is it? The answer is, both.

Why are the numbers all over the place? It’s because both are true. While some Americans have gotten more back this year, other Americans are getting a much higher bill than expected, while others get smaller refunds.

The changes caused by the tax bill went into place on January 1, 2019. But there are a number of factors in play that could cause your tax refund or bill to be higher or lower than last year.

Some of these include:

Lower Taxes Overall

Lower overall taxes might mean that less is taken out of your paycheck each cycle. That means that overall, you may have had less taken out and so will be getting less overall as part of your return.

If your refund is lower than expected, take a look at your checks in 2018 and see if you got to keep a little more.

Changes in Income Brackets

In the new tax law, the tax brackets and the tax rate you pay will have changed.

To take a look at these changes, check out this resource.

Many Deductions Were Eliminated

A large number of common deductions were eliminated in this tax season. That includes entertainment expenses, which used to be deductible. You’ll have to check into your favorite deductions to determine which ones were eliminated.

Taxes are complicated and the latest tax bill represents the largest tax reformation in 30 years. So it’s no wonder that reports are all over the place. And if you still haven’t filed your taxes for this year consider visiting your local CPA.


Could Inflation Ruin Your Retirement?

Guest article by Gary Foreman

When I was a young stockbroker I remember an elderly client telling me that they didn't want to do long-range planning. In fact, he only bought ripe bananas. He didn't want the bananas to outlive him! And, while that might have been true years ago, if you're in your 50s or 60s today you need to re-evaluate that advice.

Here's what the Social Security Administration says about your life expectancy. "A man reaching age 65 today can expect to live, on average, until age 84.3. A woman turning age 65 today can expect to live, on average, until age 86.7. And those are just averages. About one out of every four 65-year-olds today will live past age 90, and one out of 10 will live past age 95."

So if you're married there's a 50% chance that one of you will live to see age 90 or more!

So what does that have to do with inflation? Glad you asked! Inflation slowly eats away at the purchasing power of your savings and income. And while 2 or 3% inflation isn't a big deal for a few years, if you live for another 20, 30 or more years, even a small amount of inflation can significantly affect your retirement lifestyle.

Let's take an example or two. How about something that most of us have known since childhood: a simple $2 loaf of Wonderbread.

We'll make a couple of assumptions. We'll assume that inflation is only 2% per year. It's been higher for years. The last decade it was that low were the 1960s (source: But we want to be conservative.(A higher rate would have an even great impact on prices.) And, we'll also assume you're 65.

So what happens to that loaf of Wonderbread? By the time you're 85 (about standard longevity) it'll cost you $3.03 at your local grocer. If you live to be 95 it'll be $3.70. Ouch! That's nearly twice what you're paying today. Or what about something more expensive? How about one month's rent in an assisted living facility. We'll use the national average of about $3,500 a month according to a Genworth's Cost of Care Survey quoted in

Same assumptions: you're 65 and inflation runs 2% a year. By the time you're 85 renting a month in assisted living will run $5,200 a month or $62,400 a year! If you should live to 95, you'll shell out $76,000 a year to keep a roof over your head and get a little help with daily tasks.

It's clear that even if you're in your 50s, 60s or 70s that you need to be aware of the damage that inflation can do to your retirement savings.

So what can you do to protect yourself?

Most people's first answer is that Social Security is indexed to increase along with inflation. And that's true. But remember that for most of us SS only replaces a little less than half of our income. The other half comes from pensions (if you have one) and from retirement savings.

Let's see how you can protect your retirement savings from the ravages of inflation. You'll need to consider two changes to the way you've probably been thinking about your retirement

Begin by re-evaluating the time horizon of your investments. Traditionally we've been advised to reduce our exposure to stocks (and stock funds) as we approach and enter retirement. The thought was that with a shorter lifespan that we wouldn't have time to recover any market corrections.

The stock market will suffer corrections. Many resulting in a 20 or 30% drop. But any 10 year period going back for over 100 years the stock market has had a positive return. So unless your life expectancy is less than 10 years you still need a reasonable amount of stocks in your retirement account.

There are two ways you can protect yourself against a market decline. One is to buy one of the funds that go up 2 or 3x when the market declines. Just a small investment can act as insurance for a market correction.

The other utilizes a strategy for distributing your retirement funds. Most people expect to sell and distribute a set dollar amount from their stocks each year. They use that money for everyday expenses. They get hurt especially bad if they sell after a market drop. They have to sell more shares to raise the money they need. And then when the market rebounds (as it always has), they have fewer shares to participate in the gain.

A balanced retirement account should have some guaranteed short term investments like CDs. Those can be sold and used to provide income if the market is depressed. Then replenished when the market recovers.

You'll also want to consider having some investments that will increase in value with inflation. If you still own a home that should track with inflation. (Remember the price of your first home?) Other inflation hedges like gold, silver, etc., should be a portion of your investments. Especially if you've sold your home.

Could inflation ruin your retirement? Yes, even a small amount of inflation could have a significant effect on your retirement lifestyle if you don't take the appropriate measures to protect yourself.

Gary Foreman is a former financial planner who began The Dollar in 1996. He also edits the free weekly newsletter After 50 Finances.