PLANNING FOR LIFE'S DIFFICULTIES

Planning for life is very difficult.  There is a saying, "Life is what happens as we plan other things."

There are uncertainties in how long you will live.  For example no male on either side of my family lived to 75, and here I am 86 and age.   I never dreamed of attaining in my wildest dreams!

And then there is the economy.  Yes we know the economy goes up and down, but will it be down when you need some money?  Who would have thought we would have another financial collapse like 1929; yet, we did in 20008-2009, and during my retirement at that.  Our assets dropped in half.  Fortunately I wasn't hurting for money so we came through that all right.

So how do you plan for inflation, deflation, financial collapse, runaway inflation, and possible sickness.  I never took out long-term care insurance because I never expected to live to 75, though I hoped to live to 70.  So I developed financial modules one for safe money (CDs) that couldn't be touched until desperate, one for runaway inflation (stocks and some bonds, and precious metals).

But what really gets me is our government.  We live in a land of push and shove and anything goes so what is true today may not be true tomorrow.  In the period of Reagan tax cuts and his reworking the tax code, I ended up paying more taxes because of the closing of certain "loopholes."  For just one example, you used to be able to take interest on time purchases off your income, but no longer.

Now you have to finagle taking out a home construction loan to get money for such things and deduct the interest, but I no longer have a home.  At one time, you used to be able to deduct health insurance from you income.  Then it became health costs over 5%.  Then it became health costs over 7.5% of your income (That happened just in my paying for Medicare and my backup plan.).  Now it is more than 10% of AGI (adjusted gross income).*

You should tremble when congress talks of "reforming the tax code" because you are very likely to be among those who get hurt.  For one example there is talk of drastically reducing what you can put into a 401K plan to $2,500.  At  $2,500/yr, 401K's are no longer a retirement plan.  For another there is talk of elimination deductions of state and local taxes from your Federal taxes.  Watch out!

* https://turbotax.intuit.com/tax-tips/health-care/deducting-medical-expenses-for-a-major-illness-or-injury/L5fSkrd6C
https://www.cnbc.com/2017/10/25/gop-shouldnt-raid-401k-retirement-plans-to-fund-tax-cuts-commentary.html