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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 The first required minimum distribution must be withdrawn by April 1st of the year following the year that you turned 70 and a half.

Subsequent required minimum distributions must be withdrawn by December 31st each year.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.



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.



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.



How to Protect Yourself From Identity Theft

How to Protect Yourself From Identity Theft?

What is the real cost of identity theft? It goes beyond just financial loss.

In the past, identity theft happened when someone stole your wallet or picked through your trash or your mail. Today’s theft is much more sophisticated. Today, it’s cyber crime, and there are over 1.5 million victims daily.

The information targeted is your bank account information, Social Security number, or credit card information. Computers, smart hones, and even hacked ATM machines are sources under attack.
Sometimes it is beyond your control. Even big, reliable companies have their systems hacked.

Beyond the financial costs, there are legal costs and time needed to restore your good credit. It can take years to recover. In the meantime, your credit rating may be affected, disqualifying you for loans, or your employment may be affected.

There are several steps you can take to help protect yourself. You need strong online passwords that include upper and lower case letters, numbers, and symbols. Do not provide financial information on public networks and use only reliable websites to purchase goods.

Early detection is critical, so monitor your financial statements weekly. Freeze accounts if you suspect any irregularity and set up alerts when activity falls outside of set parameters.

We can help provide you with resources and guidance so that you can protect your accounts from identity theft.



Are There Any Education Savings Accounts That I’ve Never Heard of That I Should Know About?

Are there any Education Savings Accounts I’ve never heard of that I should know about?

Are there any special Education Savings Accounts that you should know about?

Coverdell Education Savings Accounts (Coverdell ESAs) allow for educational expenses.

Contributions are tax-deferred but are not tax-deductible.

Contributions are limited to two thousand dollars ($2,000) per year and are subject to Modified Adjusted Gross Income limits.

Contributions must be made prior to the student’s eighteenth (18th) birthday.

Unlike five twenty-nine(529) Plans, which are used for post high school education expenses, ESAs can be used for K through twelve (K-12) education expenses.

If established when a child is very young, a substantial investment can be achieved.

Examples of qualifying K through twelve (K-12) expenses aretuition, academic tutoring, books, supplies, equipment, computers, internet access, and required uniforms.

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



Reverse Mortgage – Is it Right For You?
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Reverse Mortgage-Is it Right for You?

In a “regular” mortgage, you make monthly payments to the lender. In a “reverse” mortgage, you receive monthly payments from the lender, and generally don’t have to pay it back for as long as you live in your home. You are basically taking equity out of your home in the form of monthly payments made to you. The loan is repaid in full when you die, sell your home, or when your home is no longer your primary residence. If you make more money on the sale of your home than was required to pay off your mortgage, you get to keep the proceeds. These proceeds are generally tax-free, and many reverse mortgages have no income restrictions.If you’re 62 years old or older – and looking for money to finance a home improvement, supplement your retirement income, or pay for healthcare expenses – you may want to consider a reverse mortgage. It’s a product that allows you to convert part of the equity in your home into cash without having to sell your home or pay additional monthly bills. These reverse mortgage loan advances are not taxable, and generally don’t affect your Social Security or Medicare benefits. Terms and conditions can vary widely among lenders.

A reverse Mortgage may help fill in the gaps of retirement income
shortfalls. Give us a call today to find out if a reverse mortgage is right for you.



How Dollar Cost Averaging Can Help You Make Smart Investments
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Dollar cost averaging is a stock market investing technique where you buy a fixed dollar amount of a particular investment on a regular schedule, regardless of the share price. More shares are purchased when prices are low and fewer shares are bought when prices are high. This can help reduce the impact of volatility or price swings on purchases of financial assets. For instance, say you plan to invest $500 over a five-month period. So that would be $100 per month.

Let’s say your stock’s price varies month to month as follows: $5, $8, $5, $3, $5. You would have bought this many shares each month: 20, 12.5, 20, 33.33, 20. Mathematically, the average share price would have been $5.20. With dollar cost averaging, the average per share cost would be $4.72. So you save $0.48 per share despite taking advantage of market variations.

This method does not account for the value of time or for long protected trends. Always seek a professional to develop an investment plan that fits you and your circumstances. Periodic investment plans, such as dollar cost averaging, do not assure a profit or protect against a loss in declining markets. This strategy involves continuous investment so the investors should consider his or her ability to continue purchases through periods of low price levels. We can help so give us a call today.



The Tax Ticking Time Bomb


The book goes in depth on how you can develop an investment strategy that will create success for you if you are new to investing, while how to refine your portfolio if you are a more experienced investor. By following an academic approach, you avoid the pitfalls of market timing, stock picking and track record investing.
The second half of the book is for those who are thinking about retirement or close to retirement. If you have been following the classic way of saving for retirement, namely using 401K(s), 403b(s) and IRAs, there are TAX TRAPS waiting for you in your retirement years. Read this book and you will learn how to be a successful investor and how to make your Golden Years as tax free as possible.






How Much do You Need to Retire Comfortably?

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shutterstock_1652142981-825x510Assuming you intend to retire at age 67, aim to accumulate savings equal to 8 to 10 times your annual salary. Together with Social Security benefits, that should be enough to replace about 85% of your pre-retirement income. If you have other sources of income — such as a traditional pension or a part-time job — or if you plan to significantly reduce your spending in retirement, you can get by with saving less.

 About 44% of workers take the benefit as soon as they are eligible, at age 62, and nearly 75% of retirees take benefits before full retirement age. It’s the big decision every retiree needs to make: Should you claim Social Security benefits early, at your full retirement age (currently 66, for workers born between 1943 and 1954) . . . or delay claiming until as late as age 70? If you take benefits as early as possible, you’ll see about 25% to 30% less each month than you’d get at full retirement age. If you wait, you’ll receive 8% more benefits for every year beyond your full retirement age.

Once you stop working, you won’t be paying payroll taxes or socking away income for retirement savings. Other expenses, everything from commuting to dry cleaning costs, may go down or disappear. You may even save money on food, because you’ll have more time to compare prices in the grocery aisles and to prepare meals at home. Retirement planners generally recommend saving enough to cover 70% to 85% of your pre-retirement income, but you’ll have to calculate your own retirement income and expenses to come up with a formula that’s right for you.

 Quite the opposite. Whether you take benefits early or wait until 70, you’ll end up with the same dollar amount before you die, assuming you die at your projected life expectancy (as determined by Social Security actuaries). Thus, if you claim benefits at 62, the earliest you are eligible, you’ll receive a 25% to 30% reduction to account for the actuarial reality that you’ll be receiving benefits for a longer stretch of time. If your full retirement age is 66 but you wait until 70, your benefit will be 32% higher because, actuarially, you’ll be collecting over a shorter period. Of course, if you die before you reach your projected life expectancy, you’ll collect a lower total payout either way, but if you delay claiming until 70 and live well beyond your life expectancy, the wait will be more than worthwhile.

Within 12 months of first claiming your benefit, you can withdraw your application by filing Form SSA-521. You’ll need to repay all of the money you received, including any spousal benefits. You can then restart benefits in later years, for a bigger amount.

Given today’s longer life spans (a 65-year-old man can expect to live another 18 years, on average; a 65-year-old woman can expect to live another 20), you’ll need to invest for growth well into retirement — starting with a mix of, say, 50% stocks and 50% bonds and gradually adjusting it to become more conservative as you age.

Social Security may eventually fall short of the money it needs to deliver full benefits, but it’s not likely to go broke altogether. Here’s the deal: Social Security is mostly funded by payroll taxes and taxes on Social Security benefits. In recent years, those revenues have not been enough to cover full benefits, so the system has used interest on its reserves to cover the gap. The reserves are projected to run out in 2034, at which point tax revenue will generate enough to cover only 77 cents for every dollar of scheduled benefits. Chances are strong that Congress will come up with a way to fix the system before that happens, but, even in a worst-case scenario, you would still receive more than three-fourths of your benefit.

 Medicare doesn’t cover everything — far from it. Recent estimates for total retirement health costs range from $245,000 to $264,000 for a couple who are each 65 and live to their average life expectancies — 82 for a man and 85 for a woman. The good news for retirement savers: Those costs are baked in to formulas for how much you need to save for retirement — say, eight times your final salary. Just be sure to keep those costs in mind as you plan how to spend your nest egg.

You may not be able to stay on the job even if you want to. Health problems are the biggest reason people find themselves retiring ahead of schedule, according to the Center for Retirement Research at Boston College, followed by involuntary job loss. Older workers generally have more trouble finding work after a layoff than younger workers. Changes in family circumstances also play a role in retiring sooner rather than later. If your spouse retires before you do or a parent moves into your home, the chances increase that you’ll leave the work force before your scheduled departure.

 According to this rule, you can safely take 4% of your total portfolio in the first year of retirement and the same amount, adjusted for inflation, every year afterward. But the rule, based on an analysis of returns over a series of 30-year periods starting in 1926, doesn’t reflect current and future conditions. Entering retirement in a bear market and taking 4% from your nest egg could cripple your portfolio. Rather than follow the rule blindly, consider lowering the percentage or skipping the inflation adjustment in years when the market performs poorly. On the flip side, you might want to increase the percentage of your withdrawal when the good times roll.



Should You Care What the Market Does Each Day?

A calm investor may realize better long-term returns than an overly concerned one.

 Investors are people, and people are often impatient. No one likes to wait in line or wait longer than they have to for something, especially today when so much is just a click or two away.

This impatience also manifests itself in the equities markets. When the S&P 500, Dow, or Nasdaq take a tumble, some investors grow uneasy. Their impulse is to sell, get out, and get back in later. If they give into that impulse, they may effectively pay a price.1

Across the twenty years ending in 2015, the annual return of the S&P 500 averaged 9.85%. During this same period, the average retail investor realized a yearly return of just 5.19%. (These numbers come from Dalbar, a respected investment analytics firm.) Why the difference? It could partly stem from impatience.1

Some investors may be worrying too much – and acting on those worries to their detriment. An investor who glances at a portfolio once per quarter may end up making more progress toward his or her goals than one who anxiously pores over financial websites every day.1

Too many investors make quick, emotional moves when the market dips. Logic often goes out the window when this happens, along with long-term perspective.1,2

Some long-term investors focus on buying shares of respected companies. Warren Buffett does. He has famously said that an investor should buy shares of a firm to own a piece of it, not merely in hopes that its share price will rise.2

Certain companies are so strong, their brands so renowned, that their shares weather downturns better than shares of other firms. In a raging bull market, “all boats rise” and many types of shares may perform well. Buffett often tries to invest in companies whose shares may perform well in both up and down markets. In especially bullish times, his returns have sometimes lagged the market, but chasing the return is not his objective.2

In contrast with Buffett’s patient long-term approach, investors who care too much about day-to-day market behavior may practice market timing, which is as much hope as strategy.2

To make market timing work, an investor has to be right twice. Ideally, he or she sells high, takes profit, and buys back in at some point of capitulation – a moment when bears throw in the towel and the market rallies off a bottom. How many investors can pull this off? This is hard even for Wall Street professionals. Mostly, retail investors buy high and sell low. Picture a shopper only buying an item at a department store when the price rises, then returning it when it goes on sale – but only getting the sale price back.1

Investors who alter their strategy in response to the headlines may end up changing it again after further headlines. While they may feel on top of things by doing this, their returns may suffer from their emotional and impatient responses.1

Nobel Laureate economist Gene Fama, Jr. once commented: “Your money is like soap. The more you handle it, the less you’ll have.” Anyone who has invested some of their money in equities would do well to keep his gentle warning in mind, especially at times when markets grow turbulent.1  

Bill Mullen MBA, CFP® may be reached at 435-655-0508 or

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

*This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This material was prepared by Marketing.Pro for Bill Mullen. Bill has been a Certified Financial Planner Practitioner™ for 24 years and is the Managing Member of Mullennium Finance LLC, a Fee Only Utah Licensed Investment Advisor. Bill works with individuals and small business owners to diversify their portfolios and reduce their taxes. Mullennium Finance LLC is located in Park City, Midway, Heber City and Salt Lake City in Utah. All investing involve risk. Always read the prospectus before investing. All investment involves risk. Past performance is no guarantee of future performance


1 – [8/28/16]

2 – [11/9/16]

Bill Mullen CFP®, MBA
Mullennium Finance LLC
1389 Center Dr Suite 200, Park City, UT 84098
Phone: 435-655-0508