RSSCategory: Blogs

Sep

5

Is Tax Planning Missing In Your Retirement Planning?

Is Tax Planning missing in your Retirement Planning?

Too many retirees believe that they don’t have to do any planning in retirement. They spent years saving for their retirement and now they think they can coast. WRONG!

There are hidden tax traps waiting for the unsuspecting. For instance, If you want $75,000 per year in retirement, is that before or after taxes? If it’s after taxes, that could mean withdrawing $90,000 per year before tax.

Will your portfolio last for 35 years if you withdraw $90,000 each year adjusted for inflation? After 15 years, to keep your purchasing power of $90,000 at 3% inflation you would need to withdraw $140,217!

Contact me to get a 50% discount for my book “The Ticking Tax Time Bomb” How to Recognize & Manage Tax Traps in Retirement.   (435) 655-0508

Aug

23

Don’t Let Timing Ruin Your Retirement

Did you know that one of the greatest risks to your retirement portfolio can happen in the first years you retire?

The timing of when you begin withdrawing money from your investments can dramatically impact your long-term wealth. It’s called sequence-of-return risk, and the danger is very real.

When you make regular withdrawals from investments while market returns are down, your portfolio shrinks faster because the investments are worth less. If that happens early in retirement, it’s more difficult to rebuild your assets and get back on track – you could even deplete your portfolio before the good returns show up.

But there are ways to protect yourself from negative returns in the early years of your retirement, including reducing risk in your portfolio and modifying spending in down market years.

Find out more in my White Paper on How to Achieve a Successful Retirement Even if Your Portfolio Suffers Negative Returns in the early Years of Your Retirement, by calling (435) 655-0508 or visiting my website www.savinginvestors.com.

Aug

8

Is a Tax Free Retirement Possible?

A question we’re commonly asked is, “Is it possible to drastically reduce taxes in retirement, or even eliminate them?

It’s possible, but you must start planning before you retire.Many people don’t realize that Traditional IRAs and 401(K)s are fully taxed upon withdrawal, so the key is to diversify your retirement income.

You can do that by saving and investing in tax-advantaged and non-taxable accounts, such as a Roth IRA, while you’re still working.

Once you’re retired, it’s all about monitoring your adjusted gross income to control your tax bracket. You can limit the amount of taxable income you need to withdraw by pulling income from your tax-free accounts.

Also, by withdrawing from non-taxable accounts, instead of selling investments that trigger taxable income, you reduce the amount of your Social Security benefits subject to income tax.

To find out how you can reduce your taxes in your retirement years, call (435) 655-0508 or visit my website www.savinginvestors.com.

Jul

20

Are you Aware that Health Savings Accounts can be Retirement Assets?

Are you aware that Health Savings Accounts can be retirement assets?

Health Savings Accounts are used in conjunction with high deductible medical plans.

HSAs are not just for paying doctor and prescription bills. HSA contributions are deductible above the line so they reduce taxes in your earning years.

Contributions made to your account remain until withdrawn. The interest earned in the account is tax-deferred.

Once enrolled in Medicare, contributions to HSAs are not allowed BUT…

Funds left in the account can be used during retirement to pay for Medicare parts B & D with tax free money.

We Can Help. Call us TODAY at (435) 655-0508!

Jul

6

What are some examples of Tax Traps in Retirement Years?

What are some examples of tax traps in retirement years?

One, not understanding that eighty-five percent (85%) of your Social Security benefits can be subject to income taxes.

Two believing that there is no way to minimize taxes in retirement.

Three, withdrawing funds from different accounts in the wrong order.

Four, making a lot of taxable money within two years of the retirement age (66) or in one year during retirement.

Five, failing to understand that costs for Medicare Parts B and D are subject to increased premiums based on crossing certain Modified Adjusted Gross Income (MAGI) amounts.

Some of the increased premiums are draconian. Not understanding the tax code can be detrimental to your financial health in retirement.

We Can Help. Call us TODAY at (435) 655-0508!

Jun

21

Tax Planning: How to Prepare for Taxes at the End of the Year

Here are some tips to help you lessen your tax burden at the end of the year:

First, Be aware of any tax changes that will take place in the new year so you can use them to your advantage. Review your cost basis so you can make informed decisions about the sale of your assets. Realign your portfolio for the best overall after-tax return. Accelerate losses to offset gains. You can take up to a loss of $3,000 in excess of gains each year, but avoid wash sale rules. Or you may want to consider a delay in using loss carry-over if your bracket will be higher the next year. Be aware of additional taxable income available yet stay within your current tax bracket. Consider either accelerating or delaying deductions to arrive at the best tax strategy for you. Consider paying state estimated and real estate tax installments early, if it works to your advantage.

Tax and financial planning involve complex calculations, so seek a professional to maximize your overall tax strategies.

Jun

6

What is the Best Strategy to Withdraw Funds in Retirement?

What is the best strategy to withdraw funds in retirement?

Conventional wisdom would suggest withdrawing funds from accounts in the following order:

First, from taxable accounts. Second, from tax deferred accounts. Third, from tax free accounts. Fourth, from non-qualified accounts.

Is Conventional Wisdom always correct? Not all the time! Why?

Maximizing Social Security benefits is always the goal because it’s often the only source of income with a cost of living adjustment, thus increasing the benefit each year.

Increased benefits often translate to increased benefits for a surviving spouse.

Achieving lower taxes while postponing Social Security benefits could make withdrawing funds from tax free accounts first, not third, the best decision!

We Can Help. Call us TODAY at (435) 655-0508!

May

30

What are Required Minimum Distributions and How are They Determined?

What are required minimum distributions and how are they determined?

Beginning at age 70.5, you must begin to withdraw money from your retirement accounts every year. The amount is determined based on your life expectancy as contained in the IRS tables. Required minimum distributions are computed by dividing the account balance at year-end by the life expectancy factor.

Assuming a husband and wife are about the same age, then this factor at age 70 is 26.4 years. Alternatively, you can multiply your account balance by 3.65%, which is 100 divided by 26.4. The first required minimum distribution must be withdrawn by April 1st of the year following the year that you turned 70 and a half.

Subsequent required minimum distributions must be withdrawn by December 31st each year. Every year, your required minimum distribution will increase over your lifetime.

If you want an estimate of your required minimum distributions each year, let us do the math for you and help you develop a winning strategy.

May

16

How Will Divorce Affect Your Finances?

How Will Divorce Affect Your Finances?

Divorce has a psychological, emotional and financial impact on an entire family. The financial impact can be considerable as income changes and costs for support rise. Be prepared. Statistics show that only 42% of custodial single parents who are awarded child support in 2011, for instance, received all of the child support money that was due.

Nine states are community property states, which means assets acquired during the marriage by either spouse will generally be divided equally. The remaining states are based on equitable distribution, which does not necessarily mean an equal distribution. The court will consider many tangible and intangibles in coming to a decision on how to divide your assets. People facing divorce sometimes don’t get all they deserve because they’re anxious to get it over with.

But don’t rush through this. Don’t willingly give up what you have a right to, especially if you have custody of children since your financial situation impacts them as well. If you and your spouse can’t come to an amicable agreement about the terms of your divorce, you will each most likely consult an attorney. Be sure to also consult a financial advisor to seek investment planning advice prior to a divorce settlement.

You’ll want to assess the real value of your assets and take tax consequences into consideration. For help with this difficult situation, give us a call today.

May

2

What’s the Difference Between a Will and a Living Trust?

A “Living Trust” is a trust you created that is active while you are alive versus a Testamentary Trust which becomes active at your death. When you create a Living Trust, you ensure that your assets will be disbursed efficiently to the people you choose after your death.The big advantage to a Living Trust is that the trust doesn’t have to go through probate court like a will does.Probate can be expensive in attorney and court costs while also causing long and frustrating delays.

A Living trust is an arrangement under which one person, called a trustee, holds legal title to property for another person, called a beneficiary.You can even act as your own Trustee if you’d like.When you create a trust, the titling of assets is changed into the trust’s name, as if it was a living entity. Specific details of your wishes upon death can be provided for in the trust.But not everyone needs a trust. Transfer of assets at death may be handled through a beneficiary designation on some holdings and investments.If you’re using beneficiary designations, make sure all your paperwork is up to date. For instance, if you get divorced, be sure to remove your ex-spouse as a beneficiary.

For more information about how to plan well for your family’s future, give us a call today.