CNN Money has some ideas on how to survive if we go over the so-called “Fiscal Cliff.”
What’s going to happen?
The average household will face a total tax increase of $3,500, according to the Tax Policy Center.
Income tax rates would revert to higher levels if the Bush tax cuts expire. Gift and estate tax rates are slated to soar to 55% for anything worth $1 million or more next year — up from the current 35% tax and exemption of $5.12 million.
What about the stock market? the fact is that no one can be sure. If your portfolio is too stock heavy and you are older, a more balanced portfolio may be appropriate.
For those particularly worried about investment losses, Levin has been shifting their stock and bond holdings. While a typical portfolio has 70% stocks and 30% bonds, he said in some cases he will scale back the stock investment to as little as 55%. …
Otherwise, planners are telling clients not to panic.
And here’s good advice, Fiscal Cliff or not:
Even if Congress reaches a deal and their taxes don’t end up rising, this is still a good way for people to make sure they’re living within their means and their finances can sustain an emergency or future tax code changes.