BY JULIA ANDERSON
Retirees are told to pay off their mortgage before they leave their jobs or at least soon after. But should you?  Does it make financial planning sense? Here’s my analysis of why or why not paying off your mortgage is a good move.
 
Pluses first.  You eliminate a big monthly loan payment, which increases your monthly income. You don’t have to worry about rising interest rates, if you have a variable or adjustable-rate loan that could take a bigger bite out of your income, if the Fed raises interest rates. You increase your net worth by eliminating debt. It feels good to pay off the house loan and be debt-free as you head into retirement.
 
But where will the cash come from to make this move? Will it leave you “cash poor” in case you face a financial emergency such as an early retirement buyout, a major illness or accident or an unexpected need to buy a car or one for your grandchild?
Paying off a mortgage is more complicated that it might first appear.  YOU WILL NEED A CALCULATOR AND POSSIBLY AT TAX ACCOUNTANT TO DECIDE WHAT’S BEST FOR YOU. 

With interest rates at historic lows, carrying a mortgage loan with a cheap 2.5 percent rate is not expensive. A 30-year fixed loan on $150,000 at less than 3 percent costs less than $1,000 in a monthly payment. On a $350,000 loan the monthly cost is $2,000 or less per month. It’s cheap money. You might want to put your cash to work elsewhere.
 
You get a deduction on your federal income tax for interest you pay annually on the loan. That reduces your taxable income. On the other hand, you no longer are making those interest payments, which will save you thousands over the life of the loan.

You might do better by investing the cash you would use to pay off the loan. Over the past 10 years, portfolios invested 60 percent in stocks and 40 percent in bonds have averaged roughly a 10 percent annualized return. With a $100,000 initial investment plus $1000 more a year invested over 10 years in stocks, your nest egg will grow to $276,905. BUT there are NO guarantees this track record will continue if interest rates go higher.
 
Once money is sunk into a house it is “illiquid.” In other words, you can NOT easily tap the equity in your house in an emergency. However, this could be a forced savings plan if you are not a saver.
 
But again, THERE ARE PLUSES: You are debt free. You eliminate a big monthly expense. You don’t have to worry about rising interest rates if you have a variable or adjustable loan. You are more financially secure without the debt.   You lose the tax deduction but you gain way more income from NOT having a loan payment!!

AARP - Paying off your mortgage. click here
AARP  mortgage calculator. click here
WSJ “Should Retirees Pay Off Their Mortgage or Invest the Money?” click here.
Bankrate.com "Does it make sense to pay off your mortgage early?   click here
Dave Ramsay: "Why Should I pay off the Mortgage?" click here
Bloomberg (For those 40 and under)  “The Opportunity Costs of Paying Off Your Mortgage Early,”  click here.

​Those who sold off stock investments in the 2020 panic were then faced with a tough decision – when to buy back in? Many didn’t. Several friends told me that they were bailing out of stocks. They were scared by what might happen next. As one said, “I want to be able to sleep at night.” Fear was in the air as we hunkered down, buttoned up and began hoarding toilet paper and hand sanitizer.
 
But what happened? This bear market sell-off was short-lived. Like other market selloffs. It ended sooner than later as the federal government cranked up the money printing press and began rescuing the economy.
 
While “all bear markets are inherently different, the common thread is that they always end,” said Peter Lazaroff in a WSJ report. “Investors must be willing to lose money on occasion – sometimes a lot of money – to earn the average long-term return that attracts most people to stocks in the first place…. if you can be a buyer in times of fear, your chances of earning above average returns improve,” he said.
 
Starting in late March 2020, the S&P 500 began a recovery that continued into 2021. By the end of the year, stocks were up 16.26 percent over 2019. That’s well above the annual average return of around 7 percent.
 
Hanging in there was among several lessons learned again by investors in 2020. In fact, buying when others are selling is almost guaranteed to reward the long-term investor. 

​A survey of investment managers by the Wall Street Journal ranked putting cash into an emergency fund as a top priority money tip. An emergency fund means that the blow of an unexpected layoff can be modified.
​Emergency money will save you from expensive credit card debt until unemployment checks kick in and you can figure out what to do next. At least six months of cash. Everyone tells us this. 

​At sixtyandsingle.com we have preached this forever. Since covid-19 began taking lives, it is even more clear that people need a will no matter what age they might be. A will spells out how you want your assets distributed. It makes sure your beneficiary designations are up to date on a 401(k)-retirement savings plan. A will can tell your heirs how you want your belongings distributed. This is a long-term but urgent item on your to-do list. Make a will! 

Surveys show that women can be more easily scared out of stock markets and are generally more conservative investors. They hate seeing the value of their investments decline when markets sell off. They tend to put more of their savings in low-earning money market funds at a time when they should be in equities. “A diversified portfolio that you can stick with regardless of the market environment should be the cornerstone of everyone’s investment strategy,” Jeff Mills, chief investment officer of Bryn Mawr Trust, told the WSJ.
 
The year 2020 taught us AGAIN that nothing stays bad forever, that what might feel new and scary is really a variation on what we’ve seen before. Disciplined investors hang in there for the long haul by riding out the drops and benefitting from recoveries..

FOR MORE: 
15 Personal-Finance Lessons We can All Learn from in the Year of Covid-19. Click here
Wills and Trusts: Needed Now More than Ever  Click here. 
Life and Money Lessons from the Pandemic  Click here

1. Determine what you’ve got – sterling or plated. Sterling silver usually has STER or .925 (925 parts per 1000) stamped on the bottom. Plate may not have a mark, or you might find EPNS or EP (Electroplated).  
​
2. Decide how much effort you will put into selling your silver. Two options:  Selling it for its antique/collectible value online or with a consignment dealer or selling it by the ounce (or gram) for the metal. Spend time online reading up on your options and prices. Don’t polish anything. Watch out for online scams or shady coin shops.

3. Get an appraisal in person for antique/collectible value but find a separate buyer. Consider selling online through eBay or another web site. Call around for the going local price for sterling and for silver plate if you want a quick sale. Know from the start that silver plate is near worthless. Giving it away is an option.

4. Check the current price of silver in ounces and in grams on the global spot market. Expect to be paid by the gram at less than market price for sterling silver --- likely 30 percent less. 

​5. Understand the offer. Get an invoice in writing. Your cash deal will be final.  

BY JULIA ANDERSON
When I married in the late 1960s, my mother’s friends gave me silver---serving trays, a fruit compote, and a set of silver plate goblets.  Eventually, my grandmother’s silver tea and coffee service came my way
 
In my mother’s mid-20th Century life, silver was a middle-class status symbol. Women were not working outside the home but instead managed the house, took care of children, cooked, and attended women’s club meetings. Hostesses provided tea, coffee, and maybe a light lunch. Silver serving trays, silver candleholders and silver luncheon forks and spoons were de rigor.
 
Why it struck me 50 years on that I should sell most of this inherited silver is not clear. I just decided the trays, the candy dishes and pitchers had to go. Maybe the burden of associated memories of my mother, my grandmother were no longer tolerable. They were proud of what they and their spouses had accomplished and their possessions.
 
I told myself that when I go, all of this will end up with Goodwill or be “rehomed” in a yard sale. “Why not let go, now, on my own terms,” I thought.
 
On a Thursday, I found myself headed to town with a cardboard box full of silver stuff -- trays, dishes, and a silver candelabra that my mother had with reverence given to me years ago.
 
There was not much research involved. That day I had checked the price of silver on the global spot market … $24.78 a troy ounce. I did not know that silver plate is nearly worthless.

​The coin and currency store people were nice. They explained that each piece would be evaluated for its silver content by the gram. That threw me off since I didn’t know how many grams were in a troy ounce of silver. (I learned that each troy ounce contains 31.1 grams of silver. That is slightly higher than the standard ounce, which has 28 grams).
 
The guy at the counter examined each item using a watchmaker’s eye piece. I later realized he was looking for tiny markings on the underside to help him determine if the item was silver plate or sterling silver.
 
There’s a big difference. Silver plate has a micro-thin layer of silver laid on over base metal such as copper, brass, or nickel. Sterling silver by definition is made with 92.5 percent silver and about 7.5 percent alloy.
 
Of the pieces I brought to the store, all but two were silver plate. Weighing a total of 14.82 pounds, I was offered $1 a pound for the lot, which came to a whopping $14.82.
 
Two Items --both candy-dish size bowls -- one weighing 940 grams, the other 291 grams, were sterling. I was paid 47 cents a gram for them, which totaled $580. I walked out of the store happy. A small burden was lifted. The money goes into a travel fund for the post-Covid day when I again can get on an airplane.

 
I was immediately confused at the store by the grams vs ounces payout issue. I was offered 47 cents a gram versus the expected $24-something an ounce. I could have cleared that up with a phone call in advance of my store visit. “How do you pay for silver, grams or ounces,” I should have asked.
 
Secondly, I could easily have figured out what pieces were sterling and what were silver-plate. Knowing that silver plate is worthless, I might have sold these items -- trays, a pitcher, and the candelabra – to an antique store or jeweler or on eBay or to another online antique silver buyer. But that would have required a bigger time commitment but worth it in dollars.
 
But don’t be fooled by prices you see online for silver collectibles – dinnerware, trays etc. -- but instead expect to be offered half those prices for your items.
 
Silver-plate looks good, but the veneer is micro-thin. The guy at the coin store told me, it is shipped by railcar-load to a smelter in New Jersey to be processed for the underlying metal – brass or nickel or whatever.
 
Maybe I should have given the silver plate away to unsuspecting children, stepchildren, or former stepchildren. Maybe some would have liked a small silver dish or tray? But I doubt it.
 
For more:
Appraisers Association of America
International Society of Appraisers
Kovels Antiques & Collectibles: Price guide and info.
Antiquesilver.org
Replacements.com
Kitco.com

​  1. Based on my age, work status and estimated taxable income in 2020 as well as my projected taxable income in 2021 what steps should I take before the end of this year to avoid a tax shock in 2021 or 2022?​

2. Is it worth my time (and money) to itemize my tax 2020 deductions rather than just take a standard deduction? What can I deduct?

3. Are there work- or business-related expenses worth itemizing.

4. When it comes to estate planning, are there steps I should take now while interest rates are low, and estate (death) taxes are unchanged?

5. Should I make a deductible charitable contribution this year to lower my taxable income?

6. If I operate a business, should I file a tentative refund claim on my taxes before Dec. 31, 2020? Can I claim “disaster” losses attributable to a Covid-19 shutdown? How should I handle the deferred worker payroll taxes related to Social Security?

BY JULIA ANDERSON
If there ever was a year when consulting with a tax accountant is a good idea, this is the year!
 
With the Covid-19 crisis and resulting economic turmoil, taxpayers of all ages may need help in navigating 2020 tax strategies by Dec. 31. Seniors, especially, might benefit.  The goal: Make sure you are paying just your fair share, no more, no less.
 
Remember, you will pay taxes in April 2021 on income you earned in 2020. While there are no major changes in tax law for 2020, there have been smaller adjustments. However, “emergency” provisions intended to stimulate the economy also may be a factor in your yearend planning.
 
Now is the time to figure out where you stand tax-wise and where you are going in 2021 and beyond with taxable income, deductions, retirement, and estate planning and (maybe) business losses.
 
Tax regulations worth mentioning:
 
In 2020, The federal CARES Act allows eligible individuals to withdraw up to $100,000 from qualified retirement plans during 2020 without incurring the 10 percent early distribution penalty. Income taxes on the distribution can be spread over three years.
 
Those who received stimulus checks do NOT have to pay income tax on the money.
 
Seniors, over 72 are NOT required to take taxable withdrawals (RMDs) from their Individual Retirement Accounts this year.
 
Seniors can sell their primary residence and avoid capital gains taxes on the net gain up to $500,000 for a married couple. (Check the details)
 
Income tax brackets changed this year with a higher standard deduction: $12,200 for singles, $24,400 for married couples filing jointly.
 
After age 50, people can contribute up to $26,000 a year to a qualified retirement account to catch-up on retirement savings. If you have a job and can make the contributions, do it.
 
What about tax credits (and refunds)? You may qualify for a child tax credit or credit for other dependents. You may qualify for an earned income tax credit or a retirement contribution savings credit, or a lifetime learning tax credit. Ask a tax expert about these options.
 
Should you itemize? This may be the year to itemize your tax deductions. That means NOT taking the standard deduction but instead adding up various deductibles and then subtracting them from your gross income. For instance:

Those working from a home office can deduct the related costs.

You can deduct the mortgage interest you have paid a lender.
 
You can deduct charitable donations made to qualified charities, just make sure you have the documentation.

If you own stock, dividends that certain stocks pay qualify for a lower tax rate. You also can deduct a loss on a stock sold at less than what you paid for it if you have owned it more than a year.

You can deduct your estimated state and local sales taxes you paid this year as well as property taxes.

Seniors can gift up to $15,000 without reporting or paying tax.
 
Do you have a will?  Is this the year you write a will spelling out how you want your assets distributed at your death. With the threat of Covid-19 hanging over us, having a will seems essential.

Many of us don’t think about federal income taxes until about April 15 when we have to pay them, but now (before the end of December) is the best time to develop a “tax strategy” that could save you hundreds, if not thousands of dollars in taxes, over the next several years. There is plenty of tax information on the internet. Study up on tax basics, then get outside help. One hour with a tax consultant likely will pay for itself in the tax savings you will earn.
 
SOURCES:
IRS.gov
Nerdwallet.com
MotleyFool. Com
Taxfoundation.org
Fidelity.com

​Famous Quote: "Congress can raise taxes because it can persuade a sizable fraction of the populace that somebody else will pay." - Milton Friedman (1912-2006) American Nobel Prize-winning economist.