Rich Habits Blog

Tom Corley city_compressRich Habits is all about unlimited opportunity, achieving the American Dream and ending poverty.

It is the by-product of  a 5-year study I conducted on the daily habits of wealthy people and poor people.

Follow me on this blog and I will share with you many of the secret strategies that I uncovered in my research.

The discoveries I have made will dramatically improve your life!

Rich Habits Tax Tips

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At the very end of December, 2019, President Trump signed into law the Secure Tax Act. The purpose of this law was to update certain tax rules surrounding retirement plans.

Here are the highlights:

  • RMD Age Change – Required Minimum Distributions (RMDs) from IRA’s and Retirement plans had been set at age 70 1/2 for quite some time. This law increases the age for RMD’s to 72.
  • Goodbye Stretch IRA – In the past anyone who inherited an IRA, other than a spouse, could cash out the IRA or take RMDs over their life expectancy. This law now required non-spouse beneficiaries to distribute 100% of an inherited IRA within ten years.
  • $5,000 Special Distribution – Anyone under the age of 59 1/2 who withdraws money from their IRA, must pay a 10% penalty as well as income tax on the distribution. This law allows individuals under age 59 1/2 to withdraw up to $5,000 from an IRA, penalty-free, if those funds are used for either the Adoption or Birth of a Child.
  • Use 529 Plan to Pay Down Student Loans – 529 plans are tax-advantaged college savings plans. You can withdraw the money from a 529 Plan to pay tuition, fees, room and board for college, graduate school or trade schools. This law now allows you to withdraw up to $10,000 from your 529 to pay down student loans.
  • $15,000 Retirement Plan Credit – Employers who establish a new retirement plan were previously entitled to a $500 tax credit that could be used to reduce income tax on business income. This law increases this credit to $5,000 a year for three years, or $15,000.
  • 500 Hour Rule – Previously, if you wanted to participate in your company’s retirement plan, you had to work a minimum of 1,000 hours. This law now allows part-time employees who work 500 hours a year, for three consecutive years to participate in their company’s retirement plan

My mission is to share my unique research in order to help others realize their dreams and achieve their goals. If you find value in these articles, please share them with your inner circle and encourage them to Subscribe. Thank You!

Passionate About Parenting Interview – Enable Your Kids to Conquer Fear

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I wrote the book, Rich Kids in order to help parents teach their children the Rich Habits the self-made millionaires in my Rich Habits Study said they learned from their parents.

I was recently interviewed by Passionate About Parenting and shared some of those habits with host, Samantha Kirkegaard.

Here is a link to the site: https://passionate-about-parenting.app.virtualsummits.com/

You’ll have to register, but after you do you’ll have access to my interview, which is scheduled to be released January 23.

My mission is to share my unique research in order to help others realize their dreams and achieve their goals. If you find value in these articles, please share them with your inner circle and encourage them to Subscribe. Thank You!

 

My Story

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I grew up in a family of eleven. There were 8 kids in our family, my Aunt Peg and my Mom and Dad.

My Dad had been a very successful entrepreneur. He was the #1 distributor of tools along the east coast. Sears, Woolworth’s and many other big-brand companies were my Dad’s customers.

We lived in a big house on Todt Hill, the most affluent area on Staten Island, a suburb of New York City. We all attended St. Joseph Hill Academy, the most prestigious primary school Staten Island had to offer and among the best primary schools in New York City.

It’s a much more complicated story, but in 1970 my Dad’s warehouse burned to the ground and his business soon went under and, almost overnight, everything about our lived changed forever.

I was nine years old when we became poor. I don’t remember much about being rich, but I remember almost everything about being poor.

My family had no money for college, so I had to work 20 hours a week as a Janitor at Curtis High School, while going to college full-time at St. John’s Universtiy. I graduated college in four years in 1983 and, after a few minor bumps, began my CPA career working for Arthur Andersen, at the time the largest Accounting firm in the world.

I muddled along in my career as a Tax Accountant and then, in 2004, I took over the helm of a CPA firm I had just acquired. Two months into my tenure I received an urgent call from an owner of one of the firm’s long-time business clients. I met with my client late that night. His bank had just termed his $300,000 line of credit and shut it down. He didn’t have enough money to meet payroll at the end of the week and he was desperately looking to me to help him get a line of credit, asap.

I told my client it would be impossible to secure a new line of credit so quickly. I told him it took years to build relationships with bankers. My client broke down and started crying. In between his sobs, he asked me what my successful clients were doing that he wasn’t doing and he also wanted to know what he was doing wrong.

I had several meetings with my client, in an effort to figure out what he was doing wrong. At one of our lunch meetings, several months later, I confessed that I could not diagnose the cause of my client’s financial problems. I told my client that they only thing I saw that was different was the fact that he paid himself about $40,000 more per year than my other clients were paying themselves in the same business.

My client was not happy. I was not happy. We sat in silence at our table for a few long minutes. In an effort to break the uncomfortable silence I asked my client what he did when he went home at night, after work. There was an immediate shift in my client’s demeanor. An almost impish look took hold and he asked me, “Which night?”

“Pick your favorite night,” I replied.

My client told me that would be Wednesday.

“What do you do on Wednesday nights?” I pressed my client.

My client leaned in, eyeing the restaurant and said ever so quietly, “I get a couple of ladies of the night, a few bottles of wine and…”

My client, in response to my obvious look of shock, stopped mid-sentence. “I’m sorry,” he said. “I should not have shared that with you. I talk way too much sometimes. I started doing it after my divorce about seven years ago. I was lonely.”

I told him that I was an Irish Catholic New York boy from a family of eleven and that there was very little I had not seen in my life. My shock was not from moral indignation, but from the realization that I had been asking my client all the wrong questions these past months. The epiphany I had was that there was much more to financial problems than meets the eye and that I needed to ask the right questions.

I asked my client how much he paid for those Wednesday night trysts. He said about $600 a night. When I did the math, that Wednesday night habit worked bout to a little more than $30,000 a year or about $300,000 over a seven-year period. I then realized why my client needed to pay himself that extra $40,000  a year.

That aha moment spurred me on. Over the next several months of 2004, I came up with a list of 144 questions in 20 categories that I asked 361 rich and poor people over a five-year period. I called it my “20 Question List”. The purpose of my 20 Question List was to find out what the rich and poor did from the time the put their feet on the floor in the morning, to the time they put their head on the pillow at night.

The data I gathered from those 144 questions seemed to be predominantly habit-related.

After I was done compiling the data, I formatted it into something I called my “Research Summary”. This “Research Summary” gave me the ability to easily compare the various data points from my “Rich Group” to the data points from my “Poor Group”. I was astonished by the differences between the habits of both groups and realized that there was a difference the size of the Grand Canyon in the way rich people and poor people in my study lived their daily lives.

This one client unknowingly took me down a path toward the discovery of the secret to financial success – your daily habits.

I documented over 340 of these habit differences and wrote several books about my findings. Due to the success of my books, my Rich Habits have received international attention in the media, newspapers, magazines, online sites, nation-wide and international TV and podcasts in 27 countries.

I now travel the world speaking to audiences, sharing my precious Rich Habits research. I have become a mentor to millions and I owe it all to a failing business owner-client.

My mission is to share my unique research in order to help others realize their dreams and achieve their goals. If you find value in these articles, please share them with your inner circle and encourage them to Subscribe. Thank You!

Health Savings Arrangements Are a Rich Habit

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A Health Savings Arrangement (HSA) is a tax planning tool that offers many tax advantages.

Why Would You Set Up an HSA?

  • The amounts you contribute to an HSA, every year, are tax deductible. You have up to April 15 to make your HSA contributions for the prior tax year.
  • You can also make pre-tax contributions to an HSA, if you are a participant in an employer-eligible HSA plan. These pre-tax employee contributions are not subject to income tax, social security tax or unemployment tax.
  • You can invest your HSA money in mutual funds, bonds, annuities, stocks, etc. Investment gains within the HSA are not taxed.
  • You can make tax-free withdrawals from your HSA for the following:
      • Qualified Medical Costs
      • Qualified Dental Costs
      • Qualified Vision Care Costs
      • Qualified Long-Term Care Costs
      • Health Insurance Premiums
      • Employee Health Insurance Premiums
      • Medicare Part ! Premiums
      • Medicare Part B Premiums
      • Medicare Part D (Prescription Drugs) Premiums
      • Medicare HMO Premiums
      • Medicare Advantage Premiums
      • Long-Term Care Premiums

How Much Can You Contribute to an HSA each year?

The amount you can contribute to an HSA can change every year, due to inflation.

For 2020, the maximum contribution amounts are as follows:

  • Single HSA Plan – $3,550
  • Family HSA Plan – $7,100

One More Benefit

Once you reach 65, you become ineligible to contribute to an HSA. However, you can make non-qualified withdrawals without being subjected to the 20% penalty. The non-qualified withdrawal, however, will be subject to income tax.

In effect, you can use HSAs as a supplemental retirement plan.

Penalties

There are certain penalties to be wary of with respect to HSAs:

  • Non-Qualified Withdrawals – If you are under age 65, any non-qualified withdrawal is subject to a 20% penalty and the withdrawal is also subject to income tax.
  • Non-Qualified Contributions – If you make non-qualified or excess contributions, you will be assessed a penalty of 6% each year until you cure the violation. You cure it by withdrawing the disallowed or excess contribution.

Tax-Financial Planning Update 11.11.19

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Everything is constantly changing in the world of tax.

2020 CHANGES

  • Standard Deduction = $12,400 for single taxpayers.
  • Standard Deduction = $24,800 for Married Couples.
  • Estate Tax Unitary Exclusion = $11,580.
  • Social Security Benefits increased 1.6%.
  • Additional Standard Deduction for single filers who are blind or over age 65 = $1,650
  • Employee Deferred 401k Contribution = $19,500.
  • Employee Deferred 401k Catch-up Contribution = $6,500
  • IRA Contribution = $6,000 (unchanged from 2019).
  • IRA Catch-Up Contribution (age 50 or older) = $1,000 (unchanged from 2019).
  • Combined Employee & Employer 401k Contribution = $57,000.
  • Health Savings Account Contribution Amount for Individuals = $3,550.
  • Health Savings Account Contribution Amount for Families = $7,100.
  • Flexible Spending Arrangement Contribution = $2,750.
  • Annual Gift Tax Exclusion = $15,000 (unchanged from 2019).

Tax Tip

As a general rule, you are not allowed to receive distributions from a qualified retirement plan until you reach age 59 1/2. If you do, you will be subject to a 10% penalty.

There is an exception, however – If you age 55 or older and get laid off, fired or quit your job, you can begin collecting 401k plan distributions without incurring the 10% penalty. Called the Age 55 Rule.

My mission is to share my unique research in order to help others realize their dreams and achieve their goals. If you find value in these articles, please share them with your inner circle and encourage them to Subscribe. Thank You!

Understanding Social Security Benefits

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BASIC BENEFITS

  • An individual’s Primary Insurance Amount = the amount you would collect at Full Retirement Age.
  • Normal Retirement Age, for those born after 1959, = age 67.
  • Earliest age you can collect Social Security Benefits = age 62, for most individuals.
  • Every year you delay collecting Social Security benefits, increases your benefits by 8%. This is known as Delayed Retirement Credits. This 8% Delayed Retirement Credit increase stops at age 70. If your Full Retirement Age is 67, for example, you can accrue a full 24% in Delayed Retirement Credits. This means that the amount of benefit that you would normally receive at Full Retirement Age (which is also known as your Primary Insurance Amount) would be multiplied by 124% at age 70.
  • Anyone born before 1954 is eligible to file a Restricted Claim for Spousal or Divorced Benefits. What? If married or divorced, you may file and suspend Social Security Benefits on your own account and then file for Social Security Benefits using your spouse’s account. Why do this? While you are collecting Social Security Benefits on your spouse’s account, you own account continues to grow 8% a year, until you reach age 70. Then you may switch and start collecting Social Security Benefits based on your own account.
  • Medicare is mandatory in order to collect Social Security Benefits, unless you are still working and still part of your employer’s health insurance plan. For everyone else, you must enroll in Medicare, in order to collect Social Security Benefits. Enrollment for Medicare begins three months before and after you reach age 65.

SPOUSAL BENEFITS

  • Spouses receive the greater of:
    1. Their own individual Social Security Benefit Primary Insurance Amount, which is based off of their account OR
    2. 50% of their spouses Primary Insurance Amount. Important: This Primary Insurance Amount is fixed for the spouse collecting their 50%. Which means, it cannot be increased by any Delayed Retirement Credits tied to the account of the spouse from whom you are receiving the 50% benefit amount.
  • Generally, to be eligible for a Spousal Benefit, both spouses must be collecting Social Security Benefits.

SURVIVOR BENEFITS

  • Surviving Spouses may collect the greater of:
    1. Social Security Benefits based on their own account OR
    2. Social Security Benefits based on their deceased spouse’s account.
      • Loophole #1: If your deceased spouse delayed collecting their Social Security Benefits, and thus were receiving higher Social Security Benefits, surviving spouses will receive their deceased spouses higher Social Security Benefits if such benefits are greater than their own account. In other words, surviving spouses are entitled to the Delayed Retirement Credits of their deceased spouse.
      • Loophole #2: While you are drawing your survivor benefit, your own benefit, based on your own account, grows every month you delay filing for it. So, the strategy would be to take Social Security Benefits based on your deceased spouses account and at age 70, start collecting Social Security Benefits based on your own account (assuming those benefits are greater than the benefits you’re collected off of you deceased spouse’s account).
  • Earliest age you can collect Social Security = age 60, for surviving spouses who were married for 10 years or more.
  • Surviving Spouses can switch to collecting Social Security Benefits on their deceased spouses account, to their own account beginning at age 62.

My mission is to share my unique research in order to help others realize their dreams and achieve their goals. If you find value in these articles, please share them with your inner circle and encourage them to Subscribe. Thank You!

I need a New Title For My Upcoming Book

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As you may know, I am in the process of publishing my latest book, Guaranteed Wealth.

Using a narrative (fictional story) format, this book focuses on the Saver-Investor Path to accumulating wealth (4 Paths to Becoming a Self-Made Millionaire – http://richhabits.net/4-paths-becoming-self-made-millionaire/).

The Saver-Investor Path requires that you follow certain Smart Money Habits during your entire life. It is the Guaranteed Path to Wealth because it does not require any particular skills, knowledge or significant risks. Just saving 20% of your income every year and prudently investing those savings.

Because I am a Certified Financial Planner, with various securities licenses, everything I publish has to go through compliance with my financial planning firm.

Unfortunately, the title Guaranteed Wealth did not pass compliance. They want me to change the title.

I have some alternate titles and was hoping you might weigh in on which title you like the most. In the order of MY preference, below are the alternate titles I am considering:

  1. Middleclass Millionaires
  2. Undercover Millionaires
  3. Unremarkable Millionaires
  4. Unexceptional Millionaires
  5. Wealthy on Purpose
  6. Deliberate Wealth
  7. Intentionally Wealthy
  8. Wealthy By Choice
  9. The Wealth Game Plan
  10. Unavoidable Wealth
  11. Inevitable Wealth

If you have ideas for alternate titles, please share them with me.

My mission is to share my unique research in order to help others realize their dreams and achieve their goals. If you find value in these articles, please share them with your inner circle and encourage them to Subscribe. Thank You!

Thank You – Endorsements

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I received an overwhelming response to my request for 10 endorsements. Due to space limitations, I had to limit it to 10. I am very grateful and honored at the incredible response I received.

Tom

My mission is to share my unique research in order to help others realize their dreams and achieve their goals. If you find value in these articles, please share them with your inner circle and encourage them to Subscribe. Thank You!

Thank You! Would You Like to Provide an Endorsement For My Book?

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My sincerest thanks to all of you who responded to my offer to read the raw manuscript of my upcoming book. I received an overwhelming response from my readers and my manuscript is now in the trusted hands of five readers who have graciously agreed to provide valuable feedback on my new book.

One of the standard practices of authors is to secure endorsements or testimonials for their book from famous, celebrity-types. These endorsements typically wind up on the front and back covers of their books as well as the first few pages inside their books.

Instead of following the herd, I would like the endorsements for my upcoming book, Guaranteed Wealth, to come from my devoted readers.

So, I have another request to make.

Who would like to provide me with an endorsement that will be featured in my new book?

I will send the first 10 who accept my offer, a copy of my manuscript.

In return, I am hoping you will provide me with an endorsement, which my publisher will incorporate into my book.

Real endorsements, by real people who are committed to improving their lives and the lives of their inner circle.

Thank You for your help!

My mission is to share my unique research in order to help others realize their dreams and achieve their goals. If you find value in these articles, please share them with your inner circle and encourage them to Subscribe. Thank You!

 

Who Wants To Read My Upcoming Book – Guaranteed Wealth?

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I just put the finishing touches on my latest book, Guaranteed Wealth – Smart Money Habits For Every Stage of Your Life.

I will be sending my manuscript over to my publisher this week.

Who would like to review my book and provide me with feedback?

I will send the first 5 who respond, via email, a copy of my manuscript.

TOM@RICHHABITS.NET

My mission is to share my unique research in order to help others realize their dreams and achieve their goals. If you find value in these articles, please share them with your inner circle and encourage them to Subscribe. Thank You!