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Connie and I were out to dinner recently with two other couples – longtime friends.
During the conversation one of the wives asked the other if they had received their $1200 state property taxes rebate. Yes, we got it yesterday was the reply. Connie looked at me and asked if we received it. I tried to give her a visual high-sign, but she asked again. I said no. “I guess you forgot to apply, right? I was silent and tried another “look” to signal “cool it” on the conversation. Finally, there was a new topic.
On the way home in the car I asked Connie if she realized why we didn’t get the rebate check. You forgot to apply? No, because we are not eligible, our gross income was more than the limit allowed under the state plan. If the conversation had continued at the table, I may have had to say that as the reason were didn’t get a check and that would be embarrassing to all.
The thing is all three couples are similar ages, all of the men worked for large corporations with pensions and equity compensation. All three have two homes and/or rental property and we all lived in the same town for decades in modest houses. All our children went to school together. There was no reason to think retirement incomes were very different.
Actually, the incomes may not be that different. Given the eligibility cap amount is fixed, the income difference may only be a few dollars – kind of like the IRMAA cliff. I do know the only reason we went over the limit was our RMD, interest and dividends so we lost out on the $1200 … or did we?
The state has another program for seniors with an eligibility cap so high ($500,000) none of us come close. That refunds 50% of a seniors property tax bill up to $6,500 a year. But here’s the kicker. That $6,500 includes refunds from other state tax relief programs-including the $1,200. So, while we get $6,500 next year, the other couples receive $6,500 minus $1200. Makes you wonder why bother applying for the $1200.
Perhaps you are thinking, why do people earning $500,000 in retirement need or deserve a $6,500 tax rebate. I wonder too and would rather see more help for lower income people. The states logic is to keep higher earners living in the state. Then I have to ask, if I wanted to move to Florida and earned $500,000 or even $300,000 a year, would $6,500 keep me in place. I doubt it.
And there is more. Because the other couples itemize deductions, including property taxes, the rebates tied to those property taxes most likely makes them taxable income, whereas my $6,500 is not taxable because I don’t itemize.
There are lessons here. Don’t discuss money or taxes with friends. It may be a sticky wicket. And don’t attempt to figure out government tax logic either. 😎
Most of my acquaintances approach money discussions as if it were a hand of poker. They keep their cards close. None have apparent money issues, but might have some preferences which are beyond their means. Relocation, or expensive travel, for example.
Some of this is I think because of rigidity and wanting to be “right”. I broach a variety of money matter subjects but most prefer to avoid the topic. There is a modest amount of concern in the air, what with the S&P in the stratosphere. I can appreciate a desire to avoid the specter of a downturn.
I tend to keep discussions when they occur as general. I don’t make specific recommendations or opine about what’s better or potentially worse. If treasuries are discussed I have reminded friends of the I-Bond option. We tend to forget that they are available.
I do enjoy discussing alternatives as well as pros and cons. I’ve always found such discussions to be helpful when sorting out financial matters. Such discussions can be an aid to overcoming inertia. But interest being what it is, most discussions revolve around increasing resort fees, etc. I can only discuss this infrequently; it is like the weather. For example, for those living in manufactured homes there is a 10-year lease, and it stipulates annual resort fee increases of up to 5%. If I were to live in an RV, there is an annual site lease, and annual resort fee increases are usually up to 5%. (I haven’t researched the RV leases for a couple of years).
If I was really, really interested I’d go to the sales and rental office and talk to Steve. He’d give me all of the current information. But I’m not driven to do so, and my current lease has another 8 years. A lot can happen between now and then. With a lack of information there is a tendency to speculate in such discussions.
So, in fact, most money discussions are time fillers. For example, the “happy hour” group will sometimes stray into an area of interest. That happened recently and one of the group expressed a concern about taxes. The ball got tossed around for a few minutes. I went to my Android phone and pulled up the pertinent government website. I read aloud a short paragraph with the specific answer. One half of the couple with the question didn’t accept what I read and she began an argument.
At that point I stopped and decided to give that group a rest for a while. When I return I’ll be asked where I have been, and around the merry-go round we’ll go, yet again.
I wish I could have financial conversations with my wife, but she is “hands-off” with our financial stuff. I occasionally share financial information with my children, primarily that our income is greater than our expenses and that our travel bug is our way of spending down their inheritance. No specific figures. They both say “we don’t need your money”. I do have a “time’s up” document for wife and kids to access and manage the financial stuff.
Because those closest to me respond in those ways, I have no inclination to share financial info with friends. Will this change as I age???
I can relate. Connie is also hands off with money except for her checking account. She just has no interest. Although when she comes home after playing mahjong she is eager to tell me she won $1.25. I too have a final instruction letter.
I have told our four children they may have to help us at some point but it won’t be about money.
Three of our four will need our money for retirement because in their mid fifties two have young children years from college. One has a son in college and another close behind.
Illness and divorce have hampered their ability to save even though they work nearly every day with two jobs.
My old men’s Friday group is pretty frank about our finances, and we all know each other’s financial situation. We’re all pretty well-off, and we argue a lot about investing. However, no one has been convinced by anyone else’s argument – well, I may have pushed one guy to sell his position in BABA. It helps that there are no ladies present.
When you say frank, do you mean you know someone has $2,000,000 in investments and another retirement income of $230,000?
Yes, in some cases. I know one guy has $500K in a retirement account, and another guy has $125 million in stocks. Those are the two extremes. The guy with $500K has a very sizable pension.
P.S. I wouldn’t be saying any of this if I weren’t completely anonymous here!
I hope the guy with $125 million buys coffee😎
He buys the cake and supplies the coffee – it’s a $60 cake, too. I make the tea for the tea drinkers.