Many people are confused about the recent debt deal and how it will affect them. The details of the deal raise a lot of questions and offer few answers. Federal spending will face huge cuts over the next 10 years and about one third of all cuts will come from defense and security.
One of the bills main feature is the establishment of a committee whose aim is to find a further $1.5 trillion in cuts. There are no guidelines as to where these funding cuts will be made and some commentators expect to see significant reductions in Social Security and increased taxation. However if this committee fails to come up with a comprehensive spending reduction plan then a series of automatic cuts will come into being. These cuts will hit Medicare, Medicaid, and military spending the heaviest.
There are a few things that savers and investors can do in order to protect themselves in these uncertain times. Investors should investigate how dependent the companies they hold shares in are on government contracts. These contracts will surely dry up in the coming years.
Anyone close to retirement should hold off on stopping work in order to defer their Social Security retirement plan. This will add 8% to your benefits, which is a lot more than you’ll get by putting that money in the bank.
If you are not already doing so you should do your own tax. You’ll save money by doing 2011 taxes yourself instead of hiring a professional. Once you have done your own tax for one year, you will be able to continue to make this saving for many years to come.
- Do Your Own 2011 Taxes To Affect Tremendous Personal Economic Recovery (2011taxes.org)
- TurboTax Voted the Best Online Tax Software (2010taxes.org)