Friday Financial Five – April 10, 2015

Friday, April 10, 2015

Dan Forbes, GoLocalWorcester MINDSETTER™

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Most affordable and overpriced cities

For those looking at retirement or living destinations, Erin Carlyle of Forbes (no relation) has compiled a list of the most affordable cities and another list of the most overpriced cities for 2015. Using median income, housing affordability and cost of living measures, Birmingham, AL and Knoxville, TN top the list for most affordable. Buffalo surprises by placing third, the sole affordable northeast location. On the overpriced side, Honolulu places first, as it did last year. New York City places fourth and San Francisco places sixth, including the worst ranking nationally in terms of housing affordability.

Collegians fear the job environment

For college students, roughly 7 in 10 are afraid that there won’t be a good job waiting when they graduate. Everfi conducted the survey of roughly 42,000 collegians, mostly freshmen. Next on the list in terms of concerns is the increasing cost of tuition. Consistently, graduates have a lower unemployment rate and higher salary on average than non graduates. The numbers tell us that a college degree is a worthy investment, but try telling that to current students or some recent graduates.

Deloitte identifies a skills gap in manufacturing

The discussion about revitalizing the economy and a sluggish job market usually focuses on the manufacturing industry. “The United States doesn’t build anything anymore” is a common refrain. The problem, according to Deloitte Consulting, doesn’t stem from a lack of jobs but rather a lack of qualified applicants for those jobs. The projection for the next decade is 3.5 million jobs in the manufacturing industry. Due to the skills gap, 2 million of those jobs will go unfilled. The country has the capacity to build plenty, but the workforce has to meet the skill requirements for the next decade.

Stretch IRA may face limitations

A popular strategy for those with IRAs that don’t have beneficiaries in financial need is to name grandchildren as heirs. A beneficiary IRA’s dispersal rate is based on the mortality of the beneficiary, so having younger recipients will draw the payout over a longer period of time. As all IRA dispersals are taxable at the time they are sent, this helps keep more money tax deferred in the IRA and minimizes the yearly tax. This strategy is another tax beneficial tactic on the government radar and may eventually face a limitation on payouts regardless of beneficiary to five years or less.

NFL may mean “Need Financial Literacy”

National Football League players, one former and one current, have recently been involved in financial transactions that have resulted in legal action. One involves a former player, Will Allen, who is accused of running a loan pyramid scheme where he gathered investor money and promised 18% interest. The other involves perennial All-Pro player, Dwight Freeney, who filed suit against Bank of America (http://www.utsandiego.com/news/2015/mar/31/chargers-dwight-freeney-lawsuit-bank-of-america/ ) for fraud losses totaling $20 million. There’s still a glaring need for professional athletes, as high profile, high net worth individuals, to get proper financial guidance from the outset of their careers.

Dan Forbes is a regular contributor on financial issues. He is a CFP Board Ambassador. He leads the firm Forbes Financial Planning, Inc in East Greenwich, RI and can be reached at [email protected].

Related Slideshow: Massachusetts Business Rankings

See how Massachusetts stacked up.

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WalletHub

Massachusetts has 2015's 28th highest insurance premium penalties for high risk drivers, according to a WalletHub report.

Mass is behind Colorado and New Mexico who come in at 26 and 27 spots respectively while Mass is ahead of Tennessee and the District of Columbia who rank 29 and 30 respectively.

Massachusetts ranks 14th overall in the category of DUI conviction annual premium increase with an amount of $756.

Massachusetts ranks 20th overall in the category of speeding over 20 mph annual premium increase with a total of $261 while ranking 21 overall in the category of two accidents annual premium increase with a total of $1,364.

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WalletHub

Massachusetts has been ranked as the 5th most eco-friendly state in the country, according to a recent study by WalletHub.

Mass ranks tenth in environmental quality and fourth in Eco-Friendly Behaviors landing them in 8th overall.

Mass is behind Minnesota and New York who are in the fourth and third spots respectively, and in front of Washington and New Hampshire who come in at the six and seven spots.

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The Economist

Small Business Friendliness Grade: D+

The Economist grades states on an A+ to F grading scale for its small business climate. Massachusetts ranks near the bottom of the nation, joining New Mexico and New York in receiving D+ grades. 9 states scored worse than a D+ in the Economist rankings.

Overbearing bureaucracy and excessive licensing is stifling small business in America.

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CNBC

#25 CNBC

CNBC ranks each state in cost of doing business, economy, technology and innovation.

Massachusetts' unemployment rate as of May 2014 was 5.6 percent. The state added 9,100 jobs in the month of May.

Forbes

#13 Forbes

Forbes ranks each state in business costs, economic climate, and growth prospects.

The most damning in the commentary:

Massachusetts’ business costs, including labor, energy and taxes, are the highest of the 48 contiguous states—only Hawaii is higher—at 20% above the national average.

ChiefExecutive.net

#47 ChiefExecutive.net

ChiefExecutive.net ranks each state in taxations and regulations, workforce quality, and living environment.

The most damning in the commentary:

Taxation and regulation are always the key barometers. Massachusetts and Oregon are the worst.

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Tax Foundation

#25 Tax Foundation

Tax Foundation ranks each state in corporate tax rank, sales tax rank, and unemployment insurance tax rank.

Massachusetts ranked #49 in unemployment insurance tax.

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Wallet Hub

#10 Wallet Hub

Wallet Hub ranks each state in ROI rank, state tax rank, and overall government services.

Massachusetts ranked #49 in worst roads and bridges, but ranked #7 in overall government services.

ALEC

#41 ALEC

ALEC ranks each state in economic performance and outlook.

Although Massachusetts ranked low in economic performance, a forward-looking forecast is based on the state’s standing in 15 important state policy variables. Some of these variables include top marginal personal income tax rate and sales tax burden.

Kauffman Foundation

#29 Kauffman Foundation

Kauffman Foundation ranks each state in entrepreneurship.

Entrepreneurial activity generally is highest in Western and Southern states
and lowest in Midwestern and Northeastern states.

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Free Enterprise

#18 Free Enterprise

Free Enterprise ranks each state in performance, exports, innovation + entrepreneurship, business climate, talent pipeline, infrastructure.

Massachusetts's reputation as a hotspot for science and technology endures in this year's rankings. The commonwealth is a center for STEM jobs and university research and development, ranking 4th and 2nd, respectively, in those two categories. It also ranks 6th as a center for high-tech establishments. Massachusetts is taking aggressive steps to bolster economic activity with high-impact university-industry R&D projects and new tools for tech-based startup companies.