THE NEFF ZONE -- BY JIM NEFF
CADILLAC NEWS -- JUNE 23, 2018
I may be old school, but somehow the time-tested phrase “rolling in cash” has a better ring to it than ”rolling in bitcoin or blockchain.” Cash is something you can feel, see, and actually spread on the floor and roll around on. Try that with your bitcoin app.
One segment of society that is on a prolonged cash rollathon is the millionaires club. The World Wealth Report 2018 tells us: “The combined wealth of the world’s millionaires rose for a sixth straight year and topped $70 trillion for the first time ever in 2017. The world’s millionaires saw their wealth grow 10.6 percent. The United States, Japan, Germany and China are the four largest markets for millionaires, accounting for 61 percent of the world’s high net worth individuals.”
Clearly, times are good for the world's wealthiest. “Wealth is becoming even more concentrated as the ultra-wealthy...those with $30 million or more, saw the greatest growth...174,800 individuals grew 12 percent.”
Millionaires aside, one group of Americans is not doing quite as well – people over 75 years of age. This is because older people have more debt than ever before.
According to the Employee Benefit Research Institute: “The proportion of older people with debt has been rising over the past decade or so, especially among those 75 and up. Nearly 50 percent of retirees ages 75 and up now have some loans outstanding. That's up from 25 percent a generation ago, in 1992. The median debt owed by people 75 and up is at $20,900.” This is significant because most seniors, many of whom live on fixed incomes, have no way to increase their cash flow. (https://www.usatoday.com/story/money/personalfinance/columnist/2018/05/10/debt-retirement-past-age-75-become-new-normal/570321002/)
At the other end of the age spectrum an interesting retirement fund strategy is playing out. Millennials are developing investment portfolios quite different from previous generations.
Morgan Stanley observes: “The standard way of divvying up investments — such as the 60 percent stock/40 percent bond portfolio — doesn't get this younger set jazzed up. Instead, a menu of investments broken down by social causes and environmental friendliness — so-called socially responsible investments, or SRIs — is what attracts them. In fact, Americans in their 20s and 30s are twice as likely as the overall investor population to put their money in companies targeting SRIs.”
How will that affect retirement planning for these millennials? “When it comes to retirement, 90 percent of this generation wants sustainable investing options as part of their 401(k) plans.” (https://www.morganstanley.com/ideas/sustainable-socially-responsible-investing-millennials-drive-growth)
There may be a reason why millennials will have more money to invest. As a group they are the worst tippers. A Creditcards.com study revealed: “Ten percent of millennials do not tip at all when eating out. In contrast, only 3 percent of the older generations don’t tip.”
When millennials do tip, they are often skimpy. “The median gratuity is just 15 percent. This is under the national average, and significantly less than Gen-X, baby boomers, and the ‘Silent Generation,’ all of whom leave a median tip of between 18 and 20 percent. Older people are among the most generous, with close to 55 percent of those over 65 tipping 20 percent or more. Women also tend to leave bigger tips than men.” This may explain, at least in part, why older folks are carrying more debt. (http://fortune.com/2018/06/18/tipping-uber-millennials/)
If you think your wallet feels a bit thinner these days, it may be because a lot of your cash is flowing into your car's gas tank. Some of those petro-pennies wind up in government's coffers in the form of taxes and fees (which are taxes masquerading under a sneaky label). According to the American Petroleum Institute, when you pump a gallon of gas in Michigan the total of federal and state taxes is 60.82 cents.
Pennsylvania has the highest gas tax at 77.1 cents per gallon; Alaska the lowest at 32.7 cents per gallon. You can see an interactive map of all the states at: http://www.api.org/oil-and-natural-gas/consumer-information/motor-fuel-taxes/gasoline-tax. Think of where that money goes every time you hit a pothole that has not been repaired since the Lincoln administration.
Well, if you can't afford to drive this summer, perhaps sitting under a shade tree in your yard and enjoying a frosty adult beverage is an option. When it comes to beer taxes, you will be happy to know that Michigan is just 29th in the nation for taxing suds at 20 cents per gallon. You can compare this rate to other states on the Tax Foundation's beer tax map at: https://taxfoundation.org/state-beer-taxes-2018/.
You might want to avoid visiting relatives in Tennessee because they may not offer you a libation. Their tax rate per gallon is tops in the country at $1.29.
However, you will be happy to learn that the lowest rate in American is the District of Columbia at 2 cents per gallon. You know, DC is that place where Congress lurks. We wouldn't want our leaders to be subjected to overtaxed happy hours, now would we?