Friday Financial Five – May 13, 2016

Friday, May 13, 2016

Dan Forbes, GoLocal Contributor

Treasury rejects pension cuts

The Treasury Department rejected a proposal to severely cut retiree payments from the Central States Pension Fund, one of the largest in the country. This provides temporary relief for hundreds of thousands of retirees who faced payment reductions. The fund overseers project that the pension will run out of money in roughly ten years if drastic measures aren’t taken, citing a need of $11 billion. The proposal was an attempt to take advantage of the Kline-Miller Multiemployer Pension Reform Act of 2014 for pensions expected to run out of money. The board of the fund will consider submitting another rescue plan.

Social Security and the presidential candidates

While none of the three remaining presidential candidates would dare suggest a reduction in Social Security benefits, there are some differences between them when it comes to the program. As compiled by the Center for Retirement Research at Boston College, Hillary Clinton and Bernie Sanders both favor raising the payroll tax cap, which currently sits at $118,500. Senator Sanders would go a step further by increasing payments, including the minimum. Donald Trump hasn’t referenced any significant changes. Social Security will require meaningful change over the next decade, so candidates will have to explain how the current shortfall and any benefit increases will be paid for.

Comparing college costs and graduation rates

A helpful tool for measuring the return on college investment is “College Completion." Prospective parents and students can use to site to compare the percentage of enrollees that graduate from different colleges in the United States. The search can be separated between public and private, where private institutions traditionally have a higher four-year graduation rate. The search will also differentiate based on ethnicity and gender and allow a comparison of different states.

Health Savings account updates for 2017

Like retirement planning, health planning is shifting to more user responsibility. As companies shift to high deductible plans, users that are contribution to health savings account should be aware of maximum yearly contributions and try to meet that maximum. The IRS has released the updated figures for Health Saving Account funding for next year. For individuals, the annual contribution to an HSA can’t exceed $3,400, while the annual deductible will still need to be a minimum of $1,300. For families, the total annual contribution to a health savings account can’t be more than $6,750.

Trustee seeks millions from Madoff sons’ estates

There is an ongoing battle to recover money from the estates of Bernie Madoff’s sons. Andrew and Mark Madoff have both died, with Mark committing suicide and Andrew falling to cancer in 2014. The person entrusted with recovering funds for investors, trustee Irving Picard, insists the sons had to be aware of the fraud while running units funded by the scam. Both sons claimed to be ignorant of their father’s scheme until his confession.

Dan Forbes, a CFP Board Ambassador, is a regular contributor on financial issues. 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.