Raising your living standard

By Scott Burns and Laurence J. Kotlikoff

The patient suffered a cardiac arrest. A dangerous amount of time has passed. Although the heart may be restarted, most cardiac arrest patients suffer severe brain damage after such delay. But we are perversely fortunate.

This patient is not human. It’s our banking system. It will be restored to full functionality simply by restarting its heart and getting money to flow again. Brain function is irrelevant because the patient is brain-dead and always has been.

By ROBERT D. HERSHEY Jr.

SELDOM in life is it possible to change your mind about a major financial decision. With a house purchase, for example, you’ll probably lose at least your earnest money or your down payment — if you don’t get sued. And good luck getting the Lexus dealer to redo the deal if your new car proves to be a lemon.

by
Laurence J. Kotlikoff

I’m with you. I’m 57, face two college tuitions, spend time and money helping an older parent, and worry, particularly of late, where my investments are heading. But I’m also an economist with all the answers, right? Wrong. But I can suggest a few things.

by Laurence J. Kotlikoff

Social Security’s handbook contains 2,728 rules. One of these — Rule 1516 — permits Social Security recipients to repay all benefits received in the past on their earnings records and reapply for much higher benefits from scratch.1 Social Security charges no interest on the repayment, and the IRS allows the recipient to deduct the repayment or take a tax credit for the extra taxes already paid because of past receipt of Social Security benefits.

The Washington Post

By Nancy Lloyd
Sunday, June 15, 2008; Page BW11

SPEND 'TIL THE END The Revolutionary Guide to Raising Your Living Standard -- Today and When You Retire By Laurence J. Kotlikoff and Scott Burns | Simon & Schuster. 319 pp. $26

by
Janet Kidd Stewart
The Associated Press

May 11, 2008
Q: I am 63, my wife is 61, and we both still work. Our goal is simple: We want to maximize our net retirement income. If we have too much income, our Social Security will be taxed, and our Medicare payment increased. After 70 1/2, there are mandatory withdrawal rules for our IRAs. The IRS, Social Security and Medicare all provide calculators, but none includes all these rules. Can you recommend a calculator that includes all these rules so I can determine my actual retirement income? -- B.L.

Economics’ Approach to Financial Planning
by
Laurence J. Kotlikoff, Ph.D.

Executive Summary

• Economists long have shown that when it comes to consuming lifetime economic resources, households seek to neither splurge nor hoard, but rather to achieve a smooth living standard over time. Consumption smoothing not only underlies the economics approach to spending and saving, it is central to the field’s analysis of insurance decisions and portfolio choice.

Laurence Kotlikoff on Financial Malpractice, Economic Thinking, and
Pricing Out Passions

by Shelley A. Lee

He’s been a vocal critic of financial planning, even writing that “the financial institutions and advisers conveniently match our needs to the securities they’re peddling,” that “most professional advice is not worth the taking,” and that conventional financial planning “makes outrageously bad saving and insurance recommendations…putting a pretty face on risk and sell[ing] it.”

by Scott Burns

Does it pay to go to college?

That's a rude question, of course.

It's a question parents don't want to ask if they've just written the big checks. Nor do students want to ask it if they've just borrowed the money for their next semester.

At www.collegeboard.com, you'll find a reassuring study showing that education really does pay.

Without considering the intangibles, the study shows that each additional level of education draws a higher lifetime income.