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Wednesday, December 7, 2016

Financial Focus

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Retirement Now vs. Retirement Then

Decades ago, retirement was fairly predictable: Social Security and a pension provided much of your income, you moved to the Sun Belt, played tennis or golf, and you lived to age 70 or 75. To varying degrees, this was the American retirement experience during the last few decades of the previous century. Those days are gone; retirees must now assume...

College Funding Options You can plan to meet the costs through a variety of methods

How can you cover your child’s future college costs? Saving early (and often) may be the key for most families. Here are some college savings vehicles to consider. 529 plans. Offered by states and some educational institutions, these plans let you save up to $14,000 per year for your child’s college costs without having to file an IRS gift tax...

Will You Avoid These Estate Planning Mistakes?

Will You Avoid These Estate Planning Mistakes?

Many people plan their estates diligently, with input from legal, tax, and financial professionals. Others plan earnestly, but make mistakes that can potentially affect both the transfer and destiny of family wealth. Here are some common and not-so-common errors to avoid. Doing it all yourself. While you could write your own will or create a will or trust from a...

Making and Keeping Financial Resolutions

How will your money habits change in 2016? What decisions or behaviors might help your personal finances, your retirement prospects, or your net worth? Each year presents a “clean slate,” so as one year ebbs into another, it is natural to think about what you might do (or do differently) in the 12 months ahead. Financially speaking, what New Year’s resolutions...

The Pros & Cons of Roth IRA Conversions

If you own a traditional IRA, perhaps you have thought about converting it to a Roth IRA. Going Roth makes sense for some traditional IRA owners, but not all. Why go Roth? There is an assumption behind every Roth IRA conversion – a belief that income tax rates will be higher in future years than they are today. If you...

The Long Ascent of the S&P 500

No one knows what will happen tomorrow on Wall Street. Even the most esteemed analysts can only make educated guesses. As the old saying goes: past performance is not indicative of future results. All that said, the market has had many more positive years than negative years. The history of the S&P 500 is worth considering in light of recent...

Riding Out This Volatile Market

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When will the stock market stabilize? As the last trading week of August began, worried investors wondered just that. Gains for the major indices were hard to imagine at Monday’s opening bell, but few imagined the Dow Jones Industrial Average would drop 1,089 points as trading began – a new record, as the blue chips had never before sunk...

Grandparents Raising Grandchildren

When many people hear the word “parents,” they picture a couple in their forties... not a couple in their seventies. The reality is that 6% of kids today live in households headed up by grandparents – a parenting situation that may lead to significant financial stress.1 How can grandparents protect their retirement savings? This should be a high priority, even...

Getting It All Together for Retirement

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Before retirement begins, gather what you need. Put as much documentation as you can in one place, for you and those you love. It could be a password-protected online vault; it could be a file cabinet; it could be a file folder. Regardless of what it is, by centralizing the location of important papers you are saving yourself from...

Are Your Kids Delaying Your Retirement?

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Are you providing some financial support to your adult children? Has that hurt your retirement prospects? It seems that the wealthier you are, the greater your chances of lending a helping hand to your kids. Pew Research Center data compiled in late 2014 revealed that 38% of American parents had given financial assistance to their grown children in the past...

Putting Your Tax Refund to Work

Should your refund be spent? In 2014, more than 109 million tax filers received federal tax refunds, with the average refund at $2,792. What happens to that money?1 According to H&R Block’s Tax Institute, little of it is saved or invested: last year, more people used their refunds to settle debts or pay for cars or vacations than anything else.2 As...

The Psychology of Saving Money

Financially speaking, saving is winning. Sometimes that lesson is lost, however. To some people, saving feels like losing – “losing” money that could be spent. So assert Ellen Rogin and Lisa Kueng, authors of a recently published book entitled Picture Your Prosperity: Smart Money Moves to Turn Your Vision into Reality. They cite a perceptual difference. If people are asked if they can save 20% of their income, the answer may be a resounding “no” – but if they are asked if they can live on 80% of their income, that may seem reasonable.

What should you bring to your preparer?

IRS filing season will start right on time in 2015, and there is wisdom in filing your 1040 well before April 15. You can get it out of the way earlier, and if you e-file, you can put yourself in position for an earlier refund.1 What should you gather up for your CPA? If you want to save time and...

What’s Your Financial Health Score?

In the future, will you become wealthier or poorer? Who knows, right? It seems like you would need a crystal ball to really answer that question given life’s up and downs. What if the answer is right in front of you? What if you can determine it from your present financial behaviors? Two economists present a brief questionnaire – and...

Getting Your Household Cash Flow Back Under Control

Where does your money go? If you find yourself asking that question from time to time, it may relate to cash flow within your household. Having a cash flow management system may be instrumental in restoring some financial control. It is harder for a middle-class household to maintain financial control these days. If you find yourself too often living on...

The Latest on Social Security: Recipients get a raise in 2015. Ideas for reform are numerous.

Social Security benefits are increasing 1.7% in 2015. This marks the fourth straight yearly cost-of-living adjustment, following a 1.5% COLA for 2014.1  The average monthly Social Security payment for a single retiree increases by $22 to $1,328. The average retired couple will get $2,176 per month in 2015 (a $36 monthly increase). A single retiree claiming benefits at the full...

New IRS Ruling on Rollovers of After-Tax Amounts

Do you contribute to a qualified retirement plan at work, such as a 401(k), 403(b) or 457 plan? Does your account have a large balance? If so, you’ll be glad to hear about a new IRS ruling that may give you a nice tax break in the future.    At some point in your life, you may want to roll...

Financial Considerations for 2015

2015 is less than two months away. Fall is the time when investors look for ways to lower their taxes and make some financial changes. This is an ideal time to schedule a meeting with a financial, tax or estate planning professional. How do economists see next year unfolding? Morningstar sees 2.0-2.5% GDP for the U.S. for 2015, with housing,...

An Estate Planning Checklist Things to check & double-check as you prepare

Estate planning is a task that people tend to put off, as any discussion of “the end” tends to be off-putting. However, those who die without their financial affairs in good order risk leaving their heirs some significant problems along with their legacies. No matter what your age, here are some things you may want to accomplish this year with...

The 401(k) Amendment Period Is Here

The clock is ticking. Between now and April 30, 2016, 100% of 401(k) plans, profit sharing plans, and other tax-qualified plans that use an IRS-approved prototype plan document must be amended and restated.1 If this doesn’t occur by the above deadline, these retirement plans risk losing their tax-qualified status and the corresponding tax advantages they offer to plan participants. Any amendments to the current plan document must be incorporated into a fresh “core” document.1,2 Here’s your chance to refine your plan – to possibly lower its costs, to get more out of it. A little analysis from a consultant (and perhaps a little surveying of your plan participants) may allow you to answer some crucial questions.

Bad Spending Habits That Can Be Corrected

Perhaps many of us want to save but can’t due to financial pressures. Perhaps the economic rebound is encouraging personal consumption over saving. Whatever the reason, Americans on the whole don’t seem to be saving very much. That’s the status quo; going against it might help you build wealth a little more easily.

When a Windfall Comes Your Way What do you do with big money?

A first-world problem, and nothing more? Not quite. Getting rich quick can be liberating, but it can also be frustrating. Sudden wealth can help you resolve anxieties about funding your retirement or your children’s college educations, and newfound financial freedom can lead to time freedom – greater opportunity to live and work on your terms. On the other hand, you’ll pay more taxes, attract more attention and maybe even contend with jealousy or envy from certain friends and relatives. You may deal with grief or stress, as a lump sum may be linked to a death, a divorce or a pension payout decision.

The Economy Heads for Normal: A look at the fundamentals affirms the hunch

The stock market may be up and down this year, but America’s economic recovery seems to be proceeding at a decent pace. Anyone who wants some evidence of that can find it in some key fundamental indicators. Pessimists may counter: didn’t the economy grow just 0.1% in the first quarter? Indeed, that was the federal government’s initial estimate – but...

The Inevitability of Risk: How do you contend with it? How do you avoid letting it unnerve you?

Anyone with a foot in the markets must recognize systemic risk – the potential that many or all market sectors may be riled by shocks such as a geopolitical crisis, an act of terrorism, a recession or a natural disaster. How do you cope with that?

The Importance of TOD & JTWROS Designations : A convenient move that could ward off probate on your accounts

TOD, JTWROS...what do these obscure acronyms signify? They are shorthand for transfer on death and joint tenancy with right of ownership – two designations that permit automatic transfer of bank or investment accounts from a deceased spouse to a surviving spouse.

Women, Longevity Risk & Retirement Saving: Statistics point out the need to save early, save consistently & stay invested.

Will you live to be 100? If you’re a woman, your odds of becoming a centenarian are seemingly better than those of men. In the 2010 U.S. Census, over 80% of Americans aged 100 or older were women.1 Will you eventually live alone? According to the Administration on Aging (a division of the federal government’s Department of Health & Human...

Do Your Investments Match Your Risk Tolerance: When was the last time you looked at the content of your portfolio?

When turbulence hits Wall Street, are you stressed out? If you have taken on too much risk in your portfolio – which can happen through intention or inattention – stock market volatility may make you anxious. So from time to time, it is a good idea to review how your assets are invested. Your asset allocation should correspond to...

IRS Announces New IRA Rollover Limitation: A tax court ruling raises eyebrows & leads to a decision that may affect you.

What was once allowed is now prohibited. In 2008, an affluent New York City couple made a series of withdrawals and transfers among contributory IRAs, rollover IRAs and non-IRA investment accounts, all with the long-established 60-day deadline for tax-free IRA rollovers in mind. As esteemed tax attorney Alvan Bobrow and his wife withdrew and rolled over a series of...

It’s Time to Review Your Life Insurance: Are you underinsured, or not insured at all?

When was the last time you looked at your life insurance coverage? Why not do it now? Life insurance can be a remarkable utility as an estate planning and tax-saving tool. Whether you have no life insurance, or you haven’t reviewed your policy in a while, it is always a good idea to be aware of your options and...

RMD Precautions & Options: A reminder about mandatory withdrawals from IRAs & other retirement plans.

Just what is an RMD? After you turn 70½, the IRS requires you to withdraw some of the money in most retirement savings accounts each year. These withdrawals are officially called Required Minimum Distributions (RMDs).1 You must take an RMD from a traditional IRAs after you turn 70½, even if you are still working. If you don’t, a severe financial...

Throwing Out the 4% Rule This 1990s retirement planning principle seems questionable today.

In 1994, a financial advisor named Bill Bengen published research articulating the “4% rule”, which became a landmark of retirement planning. The 4% rule postulates that a retirement nest egg can last 30 years if a retiree withdraws 4% of it per year (incrementally adjusted for inflation), given a portfolio of 50% stocks and 50% bonds. Bengen studied numerous...

Why Do We Save So Little? What’s good for the economy isn’t necessarily good for our future.

Our parents & grandparents saved much more than we do. Most people who have read up on the economy for any length of time have heard of the personal saving rate (PSAVERT), which the Commerce Department calculates as the ratio of personal saving to disposable personal income. The January personal spending report released by the Commerce Department in early...

Apply For Social Security Now … or Later? When should you apply for benefits? Consider a few factors first.

Now or later? When it comes to the question of Social Security income, the choice looms large. Should you apply now to get earlier payments? Or wait for a few years to get larger checks? Consider what you know (and don’t know). You know how much retirement money you have; you may have a clear projection of retirement income from...

Hanging on Through the Turbulence Patience & diversification matter in all manner of stock market climates.

Stocks rise, fall ... and rise again. Volatility certainly came back to Wall Street during the first several weeks of 2014 in the form of a 7.2% descent for the Dow Jones Industrial Average and a 5.9% retreat for the NASDAQ. The declines gave investors pause: was a correction underway? Would bulls be held back for 2014?1 As it turned...

Retire at 65 … Or Not? Your assets matter more than your age.

Isn’t 65 the traditional retirement age? Perhaps, but baby boomers are modifying the definition of a traditional retirement (if not redefining it altogether). The Social Security Administration has subtly revised its definition of the traditional retirement age as well. If you glance at the SSA website, the “full” retirement age for Americans born from 1943-1954 is 66, and it is...

Asset Location & Timing to Reduce Taxes in Retirement Read this if you want to preserve more of your nest egg & lower your tax bill

Location, location, location ... It matters when it comes to real estate, and it also matters when it comes to the way you hold and invest your retirement savings. You can’t control what happens with the tax code, but you can control how your savings are held. As various types of investments are taxed at varying rates, some investments are...

Tax Efficiency: What it means, why it counts

A little phrase that may mean a big difference. When you read about investing and other financial topics, you occasionally see the phrase “tax efficiency” or a reference to a “tax-sensitive” way of investing. What does that really mean? * The after-tax return vs. the pre-tax return. Everyone wants their investment portfolio to perform well. But it is your after-tax...

Ideas for Your 2013 Tax Refund What could that money do for you?

Is a tax refund coming your way? If you have already received your refund for the 2013 tax year or are about to receive it, you might want to think about the destiny of that money. Here are some possibilities. Start (or add to) an emergency fund. Many people don’t have a dedicated rainy day fund, only the presumption that...

Wise Decisions with Retirement in Mind Certain financial & lifestyle choices may lead you toward a better future.

Some retirees succeed at realizing the life they want, others don’t. Fate aside, it isn’t merely a matter of stock market performance or investment selection that makes the difference. There are certain dos and don’ts – some less apparent than others – that tend to encourage retirement happiness and comfort.  Retire financially literate. Some retirees don’t know how much they...

The MyRA, the USARF & Cash Balance Plans New & old concepts to address the retirement savings gap.

How many 401(k)s have more than $100k in them? According to the Employee Benefit Research Institute (EBRI), the average 401(k) balance at the end of 2012 was $63,929. Even with stocks rising last year, the average balance likely remains underwhelming.1 Is this enough money to retire on? No – and this is only part of America’s retirement dilemma. There is...

Why Don’t All Affluent People Become Wealthy? Perception, hesitation & poor decisions are factors.

Why do some people let their potential for lifetime wealth slip away? Some people are better off economically at 30 or 40 than they are at 50 or 60. In some cases, fate deals them a bad hand. In other cases, bad decisions and inaction are to blame. They buy depreciating assets, instead of allowing assets to appreciate. In 2012,...

Why Does Family Wealth Fade Away? A lack of vision is often the answer to that question

Many are the stories of family wealth lost. In the late 19th century, industrial tycoon Cornelius Vanderbilt amassed the equivalent of $100 billion in today’s dollars – but when 120 of his descendants met at a family gathering in 1973, there were no millionaires among them.1 Barbara Woolworth Hutton – daughter of the founder of E.F. Hutton & Company, heiress...

It Isn’t Too Late to Save for Retirement – If you’re 40 or 50 and haven’t begun, you must make the effort

Some people start saving for retirement at 20, 25, or 30. Others start later, and while their accumulated assets will have fewer years of compounding to benefit from, that shouldn’t discourage them to the point of doing nothing. If you need to play catch-up, here are some retirement savings principles to keep in mind. First of all, keep a positive...

Making Your Money Work Harder for Retirement Little things you could do that could help you leave work a little sooner.

Little things matter. When planning for retirement, people naturally think about the big things – arranging sufficient income, amassing enough savings, investing so that you don’t outlive your money, managing forms of risk. All of this is essential. Still, there are also little financial adjustments you can make at mid-life that may pay off significantly for you down the...

Why 2014 May Be a Very Good Year More improvement may be in store for the economy & the stock market.

Will the economy & the bull market make further strides next year? On both Wall Street and Main Street, 2013 has turned out better than many analysts expected. Will the recovery gain additional momentum in 2014, and will stocks climb even higher?   Optimism is widespread. Do you remember how gloomy things got at the end of 2012? Fears about...

A Market to Be Thankful For Could 2013 end up being the best year for stocks since 1995?

In financial terms, 2013 has been a very nice year – a year in which the economy, the housing and business sectors and the stock market have all improved. Looking back over the year to date, it is particularly amazing to see how stocks have soared in the face of many challenges – some of which proved tougher than...

Getting It All Together for Retirement Where is everything? Time to organize and centralize your documents.

Before retirement begins, gather what you need. Put as much documentation as you can in one place, for you and those you love. It could be a password-protected online vault; it could be a file cabinet; it could be a file folder. Regardless of what it is, by centralizing the location of important papers you are saving yourself from...

How Much Will Health Care Cost in Retirement?

In times like these, good decisions matter. And when you have a need for life insurance, you should consider whole life and its flexibility. To begin with, of course, there's the guaranteed death benefit, which can help give you peace of mind by assuring a legacy for your heirs. But there are other benefits as well. For example, the build-up...

How Much Will Health Care Cost in Retirement?

What is the sign of a good decision?® It’s managing health care costs and your retirement outlook. Health care costs rank as one of retirees’ biggest financial concerns. But the sooner you plan for this cost, the better you’ll feel about your retirement security. Keep in mind, too, that the chances of those costs being offset by retiree health care insurance...

Ten Questions When Planning for Financial Security

What is the sign of a good decision?® It’s clarifying what you want to achieve, what you value and how uncertainties affect plans and aspirations – turning plans into action and goals into reality. Ten questions and answers When thinking about how to protect your livelihood or build the financial resources you will need to live life as desired, answer these 10...

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