What a year this has been. The questions I’ve received have gone through an interesting evolution since last January, focusing on pretty much every area of personal finance.
A year ago, readers were extremely concerned about their finances and the future of financial institutions. They were still reeling after the Lehman Brothers and AIG shake-ups in September 2008, and they wondered whether they could count on any financial institutions. Would their insurers, annuity companies and banks go out of business and take their money with them?
After the Bernie Madoff story started to unfold, readers also had a lot of questions about whether they could trust their brokers and advisers. Scam artists came out in full force to try to take advantage of the economic downturn, and readers asked about many suspicious come-ons they received at the beginning of the year. I wrote several columns warning about scams, as well as ones explaining how to research an adviser, when to dump a bad one, and how to make sure your money is protected.
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I also received a lot of questions about devastated portfolios over the first few months of 2009, as some readers wanted to know whether they should continue to invest in the stock market or pull out their money. They were searching for some form of safety. And retirees wrote in with questions about how to deal with retirement savings that were cut in half.
The next wave of questions focused on job loss -- what to do about health insurance and employee benefits after a layoff, how to pay the bills without a regular income, how to navigate the unemployment-insurance system, how to deal with mounting credit-card debt and the importance of building an emergency fund.
A few months later, readers’ questions took on a less-panicked tone. A lot of them were related to tax laws for the self-employed as laid-off people started their own businesses or did freelance work on the side to help make ends meet. Then, as the government started to pass rescue laws, readers asked about strategies for making the most of the new rules.
Retirees were relieved to discover that they wouldn’t need to take required minimum distributions from their shrunken accounts in 2009, and people who lost their jobs wanted to know how to make the most of the 65% COBRA subsidy for health insurance that was included in the February economic-stimulus bill. Readers also asked about the stimulus’s first-time home-buyer tax credit, the tax break for new car purchases and the expanded tax credit for college expenses, as well as who would get extra money in their paychecks and what retirees needed to do to get their benefit checks. Instead of foundering, people started focusing on how to make the most of these new rules and the new reality.
They also started to think about ways to profit from the downturn. Many readers asked whether it would be a good time to convert their traditional IRAs to Roth IRAs because their tax bill would be lower while their account values were down, or undo a Roth conversion they made when their accounts were worth more money.
Then the market started to turn around, and the questions gradually shifted from concerns about financial safety and long-term savings to a renewed focus on current expenses. A lot of people asked about health-care reform and health insurance, especially as job losses continued during the summer. Readers wanted to know how to make the most of new credit-card laws -- some took effect in August, and the rest will take effect in February -- and how to deal with changes to rates and rules that their card companies were making in anticipation of the new laws. Members of the military were excited to learn all they could about the new, expanded GI bill. And readers asked a lot of questions about taking advantage of the “cash for clunkers” program and other auto-buying incentives in late summer.
In the fall, routine financial decisions took on a greater sense of urgency. People paid particularly close attention to their open-enrollment choices for health insurance and Medicare prescription-drug coverage as health-care costs continued to rise while paychecks and Social Security benefits did not increase. Readers were looking for ways to stretch their limited incomes as far as possible. And as some of the stimulus benefits started to expire near the end of the year, many readers scrambled to take advantage of them -- and were relieved to discover that the first-time home-buyer credit was extended and expanded to include some buyers who already own a home. The COBRA subsidy was extended as well.
Now many readers ask about issues that they focused on before the meltdown: how to take advantage of tax laws and other strategies that can save them money, protect their assets and lead to future benefits. I continue to receive a ton of questions about pretty much every nuance related to the 2010 Roth IRA rollover rules, and I think that's a good sign. The panic seems to be over. Even though people continue to lose jobs and deal with lower incomes, they're once again asking how to make the most of the system -- not whether the system is going to disappear entirely. Many people can finally look beyond their current struggles to the future.
Here are a few of my favorite columns from 2009 that are still timely as we look ahead to 2010. As always, thank you for sending me your questions throughout the year. I’ve learned so much from all of you, and I hope that the information we’ve provided on Kiplinger.com has helped some of you make it through a very difficult year. Please continue to e-mail me at askkim@kiplinger.com with your questions and comments in 2010.
The New Roth Rollover Rules Explained
401(k) Rollovers
2010 Retirement Account Contribution Limits
How to Tap an IRA for a Home Purchase
What to Know If You Rent Out Your House
Get a Bigger Tax Break for College Expenses
How You Can Use 529 Plan Money
Expanded Education Benefits for Military Members
How Credit Score Affects Insurance Premiums
Get the Best Rate on Health Insurance
New Credit-Card Rules Take Effect Soon
Early Warning Signs of Credit Trouble
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Focus on These Five Critical Areas in Retirement PlanningWorried about how you'll pay for your retirement? It can help to structure your finances around five key areas: taxes, income, medical, legacy and investments.
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Is Downsizing Right for Your Retirement?The lower costs of a smaller home in retirement might sound appealing, but be ready for the trade-offs that come with making this big decision.
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Credit Report Error? They All Mattercredit & debt Don't dismiss a minor error. It could be the sign of something more serious.
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Insurance for a Learning Driverinsurance Adding a teen driver to your plan will raise premiums, but there are things you can do to help reduce them.
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Getting Out of an RMD Penalty
retirement When your brokerage firm miscalculates your required minimum distributions, you have recourse.
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529 Plans Aren’t Just for Kids529 Plans You don’t have to be college-age to use the money tax-free, but there are stipulations.
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When to Transfer Ownership of a Custodial Accountsavings Before your child turns 18, you should check with your broker about the account's age of majority and termination.
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Borrowers Get More Time to Repay 401(k) Loans
retirement If you leave your job while you have an outstanding 401(k) loan, Uncle Sam now gives you extra time to repay it -- thanks to the new tax law.
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When It Pays to Buy Travel Insurance
Travel Investing in travel insurance can help recover some costs when your vacation gets ruined by a natural disaster, medical emergency or other catastrophe.
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It’s Not Too Late to Boost Retirement Savings for 2018
retirement Some retirement accounts will accept contributions for 2018 up until the April tax deadline.
