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What Would You Do with $384?

E-mail|Link Posted by Jamie Downey May 26, 2009 08:17 AM

The ability for individuals to generate wealth hinges on their ability to save money as well as earn a decent return on that investment. Most financial advisors believe that saving ten percent per year should be adequate to create long term wealth and a comfortable retirement. The Massachusetts Senate last week passed a bill which will make it more difficult for individuals to execute that plan. The bill will increase taxes by $1.003 billion on residents of the state, which in turn will drain the financial coffers a little more from all of us residents.

A $1 billion dollar tax increase will increase taxes on the average Massachusetts household by $384 (approximately 2.6 million households). If you did not think the average $9,023 that your household was already paying in taxes to the state of Massachusetts was significant (source: Taxpayer Foundation), it will be increasing by 4.3 percent. These numbers do not include local real estate taxes.

There are a whole lot of things that I would like to use that $384 dollars on including: funding my daughter’s 529 plan, funding my 401(k) plan (unfortunately I will not be graced with a pension in my late 40’s), paying about four months of my electric bill, paying my water bill for the year, or making a car payment. Apparently the Massachusetts Senate and House think they can spend it more wisely – and have a veto proof majority to prove it.

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Local finance professionals share insights and advice on issues such as budgeting, managing debt, and retirement planning.

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About the contributors

Jill Boynton is co-founder of Cornerstone Financial Planning in Newington, N.H. Along with traditional financial planning services, Boynton provides analysis specifically for divorce.

Andrew Chan is the founder of Integrative Financial Advisors in Framingham. He provides comprehensive financial planning advice and investment management services. He has been an adviser for over 12 years and works with clients to integrate all aspects of their finances including investments, retirement, education funding, and tax planning.

Cheryl Costa is a managing director at AFW Wealth Advisors, which has offices in Natick and Purchase, N.Y. She advises clients on investing, education funding, and estate planning. She holds a master’s in business administration from Boston University.

Jamie Downey has been an accountant for more than 14 years. He's a partner at Downey & Co. in Braintree. Prior to joining the firm, he served as a manager in the audit department of accounting firm KPMG.