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We all think we know the basics about Social Security, but do we really know how different the benefits can be? The standard retirement age is between 65 and 67, depending on your birthday. Your monthly income, also called your PIA, is determined by your highest 35 years of indexed earnings. You can start taking benefits as early as age 62, but your monthly income will be reduced by at least 25%. Or, you can delay until age 70, and your monthly income will be 32% higher. Your strategy needs to be based upon a number of factors: like how much retirement income you need, other sources of income, income taxes and your general health condition. Other factors also weigh in, like survivor needs, divorce, dependent children, and available liquid assets. Proper planning requires attention to all these details. Give us a call today for help with planning your Social Security strategies.

As life expectancy has grown, your retirement now can last between 20 and 30 years. So Social Security planning is critical, no matter how much money you have. It can make a difference of hundreds of thousands of dollars. For example, if you retire at age 62 and pass away at age 86, you’ll receive at least 25% less for 24 years. But, if you wait to retire at age 70, you’ll receive 32% more for 16 years. If your retirement income at age 66 was $2,000 per month, this could be a difference of over $200,000 during your lifetime. Arriving at a decision on when to retire is not easy. If you retire early, it could affect your spouse’s benefits. And wages and other taxable income could cause up to 85% of your Social Security benefits to be exposed to income taxes. Proper planning takes all of these factors into account to determine a Social Security strategy. For instance, a repositioning of assets could reduce taxable income and provide for more reliable monthly income. With over 500 different combinations of factors affecting benefits, it makes sense to talk to a financial advisor and get it right.

What are required minimum distributions and how are they determined? Beginning at age 72 and 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’s end by the life expectancy factor. Assuming a husband and wife are about the same age, then this factor at age 72 is 25 point six years. Alternatively, you could multiply your account balance by three point six five percent, which is 100 divided by 25.6. The first required minimum distribution must be withdrawn by April first of the year following the year that you turn 72.
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.

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.

If you’re nearing retirement, you may need to consider asset allocation in a different way. Be aware that asset allocation cannot eliminate the risk of fluctuating prices and uncertain returns. When you were younger, you may have invested in stocks and mutual funds for the growth and perhaps the diversification offered. You had time on your side. You invested for the long haul and could weather the ups and downs of the stock market. But when you’re nearing or in retirement, the ground rules change. Losses are difficult to recover and your income stream could suffer just when you’re counting on it. Often, a balance between stocks and bonds is used because these investments usually move in opposite directions. This is where asset allocation comes into play. Because investments may go up and down, and your financial needs may vary, your planning must allow for contingencies. Various types of investments can help accomplish this. By allocating investments for growth potential, guaranteed income, risk management, and taxes, we can develop a strategy to help you meet your financial goals. Please give us a call today to find out how you can allocate your assets for your retirement.

What are annuities and how do they work? Annuities are both a savings and an income investment that pays out over a period of time. It’s actually a steam of income you can’t outlive. An annuity is a flexible insurance contract that allows retirement savings to grow income tax deferred and then payout to you in a lump sum, income for life, or income for a certain period of time. There are two basic types: Fixed and Variable. The Fixed Annuity earns a set yield and payout set by the contract. The Variable Annuity is invested in stocks and bonds. The growth value and potential income stream will depend on the investment returns and losses could occur. In both annuities the growth is income tax deferred and the contract terms control growth and income. In today’s market there has been a blending in the qualities of these two kinds of annuities to generate the best return for investors yet maintain the guarantees needed in retirement. There are a lot of choices and your personal situation needs to be considered. We can help you develop a plan to meet your specific needs towards a comfortable retirement, so please give us a call today. For an explanation of Variable Annuities visit http://www.sec.gov/investor/pubs/varannty.htm.

You’ve worked so hard to build your net worth, but it could fall into a sinkhole if you don’t do estate planning. Estate planning isn’t just for the rich, it is a necessity for everyone, and estate plan will allow you to pass along what you own to whom you want to receive it, the way want them to receive it, and when you want them to receive it. A will is a good start. Seventy percent of Americans with children under 18 in the household don’t have wills. If you don’t make a will, the courts may decide the distributions of your assets for you. The will should take into account all you own and all the potential beneficiaries. One element of the will should be the living will, where you specify medical directions for life support by artificial means.
Another element of the will should be durable power of attorney; this allows someone else to act on your behalf in case you are incapacitated. It’s important that all investment titling and beneficiary designations are working in concert with your will or other estate planning documents. Speak with your estate and tax planning professionals to evaluate any potential tax ramifications and call us today to learn more about strategies and resources that may help you preserve your nest egg.

What are the three stages in your financial life? The first stage is preparing for life’s uncertainties. The second stage is managing your net worth and the third stage is managing retirement and your estate. The base of the pyramid is preparing for life’s uncertainties. Insurance is the most cost-effective way to deal with this. Insurance can include life and health insurance, disability insurance, long-term care insurance, home and auto insurance and insurance against other perils. Adequate liquidity in your investments or in cash to cover emergencies along with a will is important. The next level involves managing your money. Investment strategies should include diversification and risk management. The best option is to review you goals with a professional. The top tier addresses retirement and estate planning. The ultimate goal is to ensure that you have income and assets for as long as you live. Your investments should be in line with your specific situation, goals and risk tolerance. An estate planning professional can provide you with documents necessary to ensure a planned distribution to beneficiaries. The three stages sound simple yet few people adequately prepare for any of them. We can work with your tax and legal professionals to develop a plan to help you reach your financial goals. So please give us a call today.

People often ask, “What is a Rider and why do I need one”? A rider is a provision in an insurance contract, either life insurance or an annuity, that is purchased separately and provides additional benefits beyond the basic policy. Riders help meet your specific needs. Here’s an Example. An Accelerated Death Benefit rider on a life insurance policy would provide the insured with a payout while he or she is still alive, in the event of a terminal illness. The proceeds could be used to pay medical bills. Riders assist insurance and annuity contracts to increase benefits to the policy holders when they need them the most. And riders have helped traditional insurance policies meet new consumer needs that were not covered in the past. Because riders meet specific needs, they are often very affordable. Always carefully review and understand the benefits of riders. We can help you evaluate solutions and strategies to meet your needs, so please give us a call today.

When you buy certain insurance or annuity products, you’ll notice a Mortality and Risk Expense Charge. This charge is to compensate the insurance company for various risks it assumes under the contract. The insurance contract offers certain guarantees to you – perhaps for your entire lifetime. They must gage your life expectancy and the risk of any uncertain events. In exchange they provide you with peace of mind through the guarantee that they will perform all the provisions of the contract. Essentially, the Mortality and Risk Expense Charge is the payment you make to the insurance company for the risk they take. They are able to shoulder this risk based upon the thousands of people who own these contracts. Because of governmental regulations life insurance companies maintain reserves to make the payments, guaranteed. Got questions? Give us a call today. We’d love to talk with you about how you can successful manage your risk.

A Living Will can also be called an Advance Health Care Directive. It is a legal document instructing what actions should be taken if you are unable to make decisions due to illness or incapacity. Medical intervention can unnecessarily prolong life, pain, expenses and emotional stress for patients and family members. You can reduce this stress by planning well. A living will can be very specific or very general. You can express desires regarding pain relief, antibiotics, hydration, feeding, and the use of ventilators or cardiopulmonary resuscitation. A recent version called a Medical Directive presents various scenarios for you to choose from. The forms and procedures can vary by state and country. Health Care Directives are often combined with a Durable Power of Attorney. Regardless of your current health or finances, it’s important to plan for your long term health care with a Living Will. Give us a call today to find out more.

The durable power of attorney is a legal document that allows a trusted person to act in your place if you’re incapacitated. If you are unable to act on your own due to accident or illness, they can step in to take action for you. They can pay bills, or control investments, or even make decisions about health care issues. Many people prefer to keep their medical and financial directives separate. The durable power of attorney is different from the power of attorney. The durable power remains in effect after you become incapacitated. The person acting for you is then called your agent. Your agent does not have to be a financial expert. They’re just someone you trust completely. They could even take care of daily things for you, like opening mail and making bank deposits. We believe everyone needs an estate plan and a durable power of attorney is one of the instruments you may want to consider as part of your plan. And be aware, if you do not make preparations for your future, the courts may have to make important decisions for you. Let us help you prepare for the future. Give us a call today.

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.

Various financial industries strive to create standards of excellence through accreditation programs. When choosing a Financial Advisor, here are some designations you should look for. A CFP is a Certified Financial Planner who must pass stringent standards for Education, Examination, Experience and Ethics while providing financial planning to clients. A ChFC is a Chartered Financial Consultant and is very similar to the CFP except it does not require a comprehensive board examination. A CLU is a Chartered Life Underwriter. This is the most respected insurance designation for agents who specialize in life insurance and estate planning. A CPA is a Certified Public Accountant who has passed required college courses and has a bachelor’s degree. In addition, they have passed a 19hr-2 day exam. Their focus is taxes, auditing and bookkeeping. A CFA is a Chartered Financial Analyst who has passed a rigorous course of study. Their focus is investment analysis and portfolio management. There are many new designations that have developed recently. But most are not as rigorously tested as CFP and CPA. Designations are an important part of your selection process. Always chose someone who understands your situation and focuses on providing for your needs. Ask us about our experience and our methodology to provide for your needs today.

Written goals are your road map to financial success. Be specific, simple, and realistic and include time frames and dollar amounts. Have some big goals and some small ones. Include a savings plan and an emergency fund. Pay off high-interest debt and control the amount of your debt. Then, take action to achieve your goals. Review your goals often and remember it takes time to achieve goals so be patient. Without a plan, your path waivers and valuable time is lost. So don’t wait. Let us help you create an investment plan for your future today.

The average American household debt is increasing. Some debt is good, but some debt is bad. Good debt includes borrowing for a home or college education. Good debt is often defined as debt that can help you generate additional income or increase your future net worth. Bad debt includes buying things you use that won’t generate money in the future, like a boat or a high priced car. Save up and buy these kinds of things with cash, not with debt. Set aside a certain amount of savings each month just for this purpose. Here are some other tips to help you control your debt. Always pay a bill when it’s due and don’t incur interest or late charges. Start paying off your most expensive debt first. For instance, if you’ve two credit cards and one has a higher interest rate, pay that one off first. Don’t fall into the monthly minimum payment trap. It will take many more years to pay it off. If you’re refinancing, just aim at reducing your interest rate and not consolidation of debt. Let us help you develop a debt management strategy as part of your overall investment plan. Give us a call today.

People often ask us, “How long will it take to double my money?” You can find the answer with the rule of 72. Here’s how it works. Compounding interest is the interest you earn on a growing amount of money. To find out how long it will take your money to double, take the number 72 and divide it by the interest rate earned. This will give you the number of years it will take to double your money. For instance, If you can earn 6% it will take 12 years to double. This is because 72 divided by 6 equals 12.If you want your money to double in 9 years you would have to earn 8%, because 72 divided by 9 equals 8. This rule gives you a good rule of thumb to find out what interest rate you need to double your money in the time you want, and it’s easy to calculate. How fast do you want to double your money? Give us a call and we’ll help you get there.

A credit score is a 3 digit number based upon a number of factors from your financial activities. It is used to determine your creditworthiness for a mortgage, auto loan or credit card. A company called FICO creates what is called a FICO Score. It is based 35% on payment history, 30% on amount owed, 15% on length of credit history 10% on new credit and 10% on types of credit used. The importance of any factor is measured against the others. FICO scores range from 300-850, with 850 being the highest and best score possible.90 of the top 100 U.S. financial institutions use the FICO score for credit decisions. Know your Credit Score and protect it by making wise financial decisions. We can help! Give us a call today.

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.

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.

You might be thinking, “Since I don’t need the required minimum distribution from my retirement accounts in order to live on, can’t I just leave it in my retirement account?” If you do not withdraw the required minimum distributions, the IRS will impose a penalty of 50%. Further, after imposing the penalty, you are still required to make the withdrawal. You must make the withdrawals so that you can pay taxes to the government. The remainder of the withdrawal after taxes can be invested with the goal of building wealth outside your IRA. Let’s discuss strategies to help you invest money both inside and outside of your IRA. Give us a call today.

One way to plan for your children’s college education is through a 529 plan, which is an education savings plan operated by a state or educational institution. The name 529 comes from section 529 of the Internal Revenue Code, which created these types of savings plans in 1996. Although your contributions are not deductible on your federal tax return, your investment receives tax-deferred treatment and qualified distributions to pay for the beneficiaries’ college costs come out federally tax-free. Non-qualified withdrawals are subject to state income tax and a 10% penalty. College savings plans offered by each state differ significantly in features and benefits. The optimal plan for each investor depends on his or her individual objectives and circumstances. In comparing plans, each investor should consider each plan’s investment options, fees and state tax implications. State tax deductions vary by the state of issuance. Plan assets are professionally managed either by the state Treasurer’s office or by an outside investment company hired as the program manager. But you have some control over how your investment is managed. You may be able to change to a different option in a 529 savings program every year, although plan restrictions may apply. Everyone is eligible to take advantage of a 529 plan and the amounts you can put in are substantial. The availability of tax or other benefits may be conditioned on meeting certain requirements. 529 plans are subject to enrollment, maintenance, administrative and management fees and expenses. Per beneficiary plans can vary greatly and care should be given to fully understand your 529 plan before you invest. Let us help you decide which 529 plan is right for you. Give us a call today.

Statistics say there is a seventy percent chance that you or your spouse will experience a need for long-term care! Long-term care includes a range of services and supports you may need to meet your personal care needs. Most long-term care is not medical care, but rather assistance with the basic personal tasks of everyday life, sometimes called Activities of Daily Living (or ADLs). These include Bathing, Dressing, Using the toilet, Transferring to or from bed or chairs, Caring for incontinence, and Eating. Other common long-term care services and supports are assistance with everyday tasks, sometimes called Instrumental Activities of Daily Living (or IADLs) These include Housework, Managing money, Taking medication, Preparing and cleaning up after meals, Shopping for groceries or clothes, Using the telephone or other communication devices, Caring for pets and Responding to emergency alerts such as fire alarms. The cost of Long-Term care varies with the amount of coverage, length of care, and deductibles. The initial premium level will increase based upon the age at which you apply. Like all insurance, most people wait too long before applying. 1 in 4 who apply between the ages of 60 and69, don’t qualify. You owe it to yourself and family to know the options and prepare well today. Call us to find out more.

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.

A fixed indexed annuity is a contract between you and an insurance company that may help you reach your long-term financial goals. In exchange for your premium payment, the insurance company provides you with income, either starting immediately or at some time in the future. Most fixed index annuities have two phases. First, there’s an accumulation phase, during which you let your money earn interest. This is followed by a distribution or payout phase, during which you receive money from your annuity. Your annuity can earn a fixed rate of interest that is guaranteed by the insurance company or an interest rate based on the growth of an external index. With a fixed index annuity, you defer paying taxes on your contract’s interest until you receive money from the contract. This tax deferred growth in your asset can really add up. These annuities provide for additional growth in value by sharing in stock market growth, often without market risk. Fixed index annuities vary in their benefits depending on the company offering them. To understand which fixed index annuity may be right for you, give us a call today.

Here’s how laddering works. This strategy is based on the investment principle that the longer you commit your money, the higher your rate of return will be. For instance, A 5 year CD pays more than a 1 year CD. A ten year surrender annuity pays more than a five year. But you don’t want to tie up all your money for a long period in case you need that money. Or maybe interest rates rise and you could get a better return elsewhere. Laddering is a strategy where you split your money between, for instance, 5 and 10 year surrender period annuities. This allows you to earn the higher rate for longer periods with the10 year annuity, but still get the benefit of liquidity beginning in year 5.This money could be used as income or reinvested again at a higher rate. The ladder concept has been used for years with CDs and bonds. And now it also works well with annuities. These are complex issues and terms change regularly. Give us a call to find out how this laddering strategy could work for you.

A 1035 exchange is a provision in the tax code that allows you, as a policyholder, to transfer funds from a life insurance, endowment or annuity to a new policy, without having to pay taxes. The IRS allows holders of these types of contracts to do this in order to replace outdated contracts with new contracts that have improved benefits, lower fees and different investment options. A 1035 exchange is limited to the following situations: You can replace one annuity contract for another annuity contract that has identical annuitants; You can replace one life insurance policy for another life insurance policy, endowment policy or annuity contract; And you can replacing one endowment policy for an identical endowment policy or an annuity contract. The IRS has provided strict guidelines that the owner, insured and annuitant must be the same on the new contract as listed on the old in order to qualify for the tax-free treatment. The IRS has ruled in several previous cases that if an owner cashes out of a current contract and immediately applies the proceeds to a new contract it will not be treated as a tax-free event or Section 1035 Exchange. The funds must pass directly from one insurance company to the other. Contact us today to make sure you take advantage of this tax strategy correctly.

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.

A retirement income plan is needed because life changes in retirement. Your retirement plan should account for every year in retirement, even past your life expectancy. For each year, make a list for you and your spouse that include social security income, pensions and annuity income. Also list earnings from investments and working part-time. List any other fixed and regular income sources. For each year, list your desired gross retirement income need. Be sure to include taxes, the effects of inflation and potential medical expenses. Then for each year, determine the gap or surplus by subtracting expenses from income. If you see that you have gaps in your retirement plan, give us a call today. We can make sure you have a strategy to help you reach your retirement goals.

With a traditional IRA, you may qualify for a tax deduction when you invest your money. But later, when you take the money out in retirement, all those distributions are taxed. The Roth IRA is the opposite. It has no deduction when you put the money in, but later, all distributions are tax-free when you take the money out during retirement. By converting from a traditional IRA to a Roth IRA, future gains become tax-free. But when you convert funds from a traditional IRA to a Roth IRA, you must pay taxes on the converted amount that year. You can choose to convert all or just part of a traditional IRA to a Roth IRA. Timing should be based upon when you are in a lower tax bracket or have other offsetting deductions. We can help you gauge the costs and benefits of a Roth conversion in your situation. Beware of penalties if you may need to tap into your Roth IRA funds in the next five years and you are or will be younger than age 59.5 when you need these funds. Give us a call today and we’ll help you evaluate your options. It’s important that all investment titling and beneficiary designations are working in concert with your will or other estate planning documents. Speak with your estate and tax planning professionals to evaluate any potential tax ramifications and call us today to learn more about strategies and resources that may help you preserve your nest egg.

Tax efficient investing involves strategies to help reduce the impact of taxes. Investments have three tax flavors: taxable, tax-deferred and tax-exempt. Taxable requires gains to be paid as they are earned each year. These include investments like CDs and money market funds. Tax-deferred gains remain sheltered from taxes until withdrawn for retirement at age 59 ½ like 401(k)s or IRAs. Tax-exempt gains are not taxable either by federal or state taxes. To determine the tax effect of your investments, you must know which tax bracket you’re in and if capital gains rules apply. The highest investment income minus the lowest taxes due is your investment goal. So focus on placing fully taxable investments in tax-deferred accounts. Don’t make the common mistake of putting investments that have tax benefits into an IRA. You will lose those tax benefits since all distributions from traditional IRAs are 100% taxable. Let us help you make tax efficient investments in your portfolio. Give us a call today.

If you’re like most people, most of the time, you focus your financial efforts on maximizing your current income. But it’s also important to plan ahead for the benefit of your spouse if you should pass away. Here are some tips for how to do that. First, Carefully consider joint vs. single life payouts from pension and investment distributions. Next, consider Waiting to take Social Security until age 70 instead of age 62,This could increase your survivor benefit by 76%. As life situations may change, update your beneficiary designations. These designations will take precedence over what’s written in your will or trust, so it’s important to keep these current. Investments like annuities have a guaranteed lifetime benefit. These can be a great way to ensure that your spouse is taken care of, even after you’re gone. Be sure to Keep your wills and trusts up to date and your assets properly titled. And Keep your spouse fully informed about all financial details. We can help you make sure that your spouse is taken care of. Please give us a call today.

The death of a spouse is one of the most devastating events of a person’s life. During this difficult time, do not make any major financial decisions right away. Allow yourself time to only deal with the emotions of your loss. Then, get 10 to 20 copies of your spouse’s death certificate to document ownership changes. Be sure to keep all payments current to avoid late and interest charges. Don’t sell your house, sell investments, or give money to charity right away, and don’t immediately invest proceeds from insurance until your financial picture is clear. Verify your survivor benefits from pensions, Social Security and investments. Gather and organize all financial documents and statements. Then assess your current financial needs. We can help you through this difficult time. Please give us a call today. We’re here for you.

Life insurance has two values: a death benefit and a cash value. If you no longer need or can afford a policy it may be sold to a third party. It may be worth more than the cash value but less than the death benefit. As the policy owner you can change beneficiaries, use it as collateral, or sell it to another party. The third party becomes the new owner and beneficiary of the policy, pays the premiums, and receives the full death benefit when the original insured dies. The new owner is betting that the policy will pay more than what it cost them to take over ownership. Life Settlement providers must be licensed in the state where the policy owner resides.41 states have regulations in place regarding the sale of life insurance policies to third parties. Somewhat like real estate, a broker is used to solicit offers for a sale. Be sure to Seek the advice of a financial professional to assist in determining values and terms. Give us a call today to determine if a Life Settlement is in your best interest.

For every Life insurance policy, there is an owner (which is usually the insured) and a beneficiary. At death, the proceeds are included in the owner’s estate for Estate Tax consideration. If proceeds pass to the spouse they could become estate taxable in the spouse’s estate. The Life Insurance Trust is irrevocable and non-amendable and thus is an entity unto itself. There are several benefits to an Irrevocable Life Insurance Trust: the trustee of the trust can control the distributions from the trust. And it provides added liquidity without having to liquidate assets for the survivor. When transferring a policy into an Irrevocable Life Insurance Trust , the insured must survive for three years. If not the policy value will be included in the estate. Most Irrevocable Life Insurance Trusts are funded by annual gifts for gift tax purposes. The Irrevocable Life Insurance Trust can purchase assets from the estate or loan money to the estate. Complex tax rules apply so professional financial help will be needed. Call us today to learn more about how an Irrevocable Life Insurance Trust can Benefit You.

As we near retirement, the ability to recoup investment losses becomes critical. Therefore a strategy to reduce risk as you near retirement should be targeted. Target Date Funds, which are usually mutual funds, self-adjust their portfolio based upon a fixed date. As time passes, exposure to stocks is replaced with an increasing use of bonds. Each fund has a designed Glide path to allocate funds. Think of an airplane coming in for a landing. Most of the flight is high (meaning it has more risk) and as the target date approaches the plane takes a steep glidepath to approach the landing. These funds relieve you the task of frequently reallocating your investment as you approach retirement. They should be used over a long investment horizon. Call us today to determine if this strategy might be appropriate for you.

You might be asking yourself, “When should I retire? Should I retire early or defer it?” Deciding when to retire may not be just one decision, but a series of decisions and calculations. For example, you’ll need to estimate not only your anticipated expenses but also what sources of retirement income you’ll have and how long you’ll need your retirement savings to last. You’ll need to take into account your life expectancy and health, as well as when you’ll want to start receiving Social Security or pension benefits. You’ll also want to consider when you’ll start to tap your retirement savings. Each of these factors may affect the others as part of an overall retirement income plan. Contact us today to get help to determine the best time for you to retire.

Many people believe Social Security will pay for their retirement, but Social Security was designed to be just a complement to a pension and investments. So don’t rely only on Social Security for your retirement because it probably won’t be enough to maintain your current lifestyle. However, planning for your Social security benefits is important. Many retirees decide to wait until age 70 to draw on Social Security benefits because you can increase your benefits significantly by delaying the age at which you retire. However, remember, at age 72, you must begin taking the required minimum distributions from an IRA, which also adds to your taxable income. Be aware that in retirement, tax deductions may be reduced, resulting in more taxable income. You can plan for your Social Security, investments and pensions to all work together to reduce your tax burden. Sustainable lifetime income is the goal so you need to have a plan for all sources of income to work together in your retirement. Need help with your plan? We can work with your tax professional in order to help you develop a Social Security strategy. Call us today. We’re here to help.

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 us, or visit our website today.

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. For more information on how to achieve a successful retirement, call or visit our website today.

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! To find out more about planning during your retirement years, give us a call or visit our website today.

The medical profession refers to high blood pressure as the silent killer. In investing, the silent killer is INFLATION. The minimum return on any retirement investment must be at least equal to inflation. Here’s why. Suppose your retirement goal is to withdraw $90,000 per year from your IRA. To maintain your purchasing power you must adjust your withdrawal amount for the inflation factor. That means that to get $90,000 per year at an inflation rate of 3%, your withdrawal amount in year 15 would be $140,217. Are you on track to manage inflation during your retirement? To learn more, give us a call today, or visit our website.

Are you planning for retirement and wondering how to get the most out of your 401k or other retirement funds? (show mature couple with question marks over their heads) What many people don’t know is that Life Insurance can provide a wonderful vehicle for a tax free retirement. Here’s how it works. When you put money into a 401K, you get a tax deduction, and the money grows tax deferred. When you withdraw the money in retirement, you pay taxes on it. But when you purchase a life insurance policy, it’s different. You don’t receive a tax deduction at first. The money grows tax deferred, just like a 401K. But when you withdraw the money, it’s tax free! This could add up to a savings of 400% on taxes over a 30 year period. To learn more about smart retirement saving strategies, give us a call, or visit our website today.

Choosing a retirement plan is a great step toward financial security. There are several types available, but here are the most common: 401(k)s and 403(b)s are plans offered by employers. 401(k)s are offered by for-profit companies, and 403(b)s are offered by public schools and some non-profit organizations. Contributions are deducted from your paycheck, and are often matched by employers. They’re deducted pre-tax, grow tax-deferred and are taxable on withdrawal. Traditional IRAs, or Individual Retirement Accounts, are opened by individuals through an investment firm or bank. They may be tax deductible, grow tax-deferred and you pay tax when you take the money out. A SIMPLE IRA plan is similar to a traditional IRA, but these accounts are set up by a small business owner, and usually permit larger contribution amounts. And lastly, when you open a Roth IRA, you contribute after-tax dollars, the money grows tax-free, and you pay no tax on withdrawals. All these types of accounts have their own set of rules on eligibility, contribution amounts and withdrawals. For more information on retirement plans – give us a call today, or visit our website!

Most Americans who turn 65 are eligible for Medicare, a federal program that covers many health expenses for seniors. But the program is complicated. Here are 5 important facts you need to know: First – Medicare is not free. Of the 4 parts, Part A – Hospital Insurance – is the only one that normally has no premium. Parts B, C and D have premiums that vary. Second – Enrollment is not automatic – you have to sign up for Medicare benefits. The exception is for those already receiving Social Security benefits. If you’re already receiving Social Security benefits, you will automatically receive Medicare Parts A and B. Third – Late enrollment can mean expensive, and permanent, premium penalties. You have 7 months, starting 3 months before your 65th birthday month, to sign up penalty-free. Fourth – Medicare covers a lot, but not everything. Services like long-term care, dental and vision care are not covered. People often purchase additional private coverage for these types of services. And fifth, if you’re rich you’ll pay more. High-income seniors pay surcharges on premiums for both Parts B and D. Let us help you with your important Medicare decisions – give us a call or visit or website today!

Many pre-retirees are uncertain about their choices when it comes to enrolling in Medicare. There are 2 main ways to get your coverage – you can choose the traditional fee-for-service Medicare, known as Original Medicare, or A Medicare Advantage plan. Medicare Advantage plans are similar to an HMO, which stands for Health Maintenance Organization or a PPO, which stands for Preferred Provider Organization. Original Medicare consists of Part A – Hospital Insurance for in-hospital care, and Part B Medical Insurance for outpatient services like doctor visits and lab tests. Medicare Advantage, known as Part C, is a managed care option that rolls all the different parts of Medicare into one. There may be extra coverage like dental and vision. And everyone on Medicare is eligible for prescription drug coverage either from a Part D plan or a Medicare Advantage Plan offering drug coverage. There are many considerations that can factor into the Medicare planning process. Let us help you with your important Medicare decisions – visit our website or give us a call today!

A question we hear often is “Is it possible to increase my Social Security benefits?” The answer is yes, there are 3 basic ways you can boost your benefits; work more years, earn more in annual income, and claim benefits later. [1 – Work More Years]- Social security benefits are based on an average of your 35 highest earning years. By working more years, you can replace any zeros from missed years, or lower wage years, to create a better base for your benefit calculations. [2- Earn More Income] The Social Security formula is based on earnings, up to a designated limit, each year. That limit can change. In 2003, for example, that limit was $87,000. In 2016, the limit was $118,500. If you’re earning less than the annual limit, a higher working income will help you increase your benefit. Working overtime, extra hours, or taking a second job are all ways to boost that annual income. [3- Claim Later] You can claim benefits as early as age 62, but the longer you wait, the higher your monthly benefit will be. The difference in income when added up over a lifetime can be enormous. For more information on how to maximize your Social Security benefits, please call or visit our website today.

Many people overlook the importance of benefits for the surviving spouse when they initially file for Social Security. Postponing collection of benefits can earn workers 8% in delayed retirement credits every year from full retirement age to age 70. Since survivor benefits will reflect any delayed credits, this is a very important strategy for the higher earning spouse.
If the higher earning spouse dies first, the higher benefit transfers to the survivor and continues for the rest of their life. Even if the higher earning spouse dies before ever claiming a benefit, those credits earned will still boost the survivor benefits. To be eligible for survivor benefits, the survivor had to have been married for at least 9 months, or be a caregiver of the deceased’s child under age 16. The surviving spouse can claim survivor benefits as early as age 60, 50 if disabled, but the benefit will be reduced. By waiting until full retirement age, the surviving spouse can collect 100% of the late worker’s benefits, including any delayed credits. Decisions on when to begin receiving Social Security benefits have a lifelong impact for you and your spouse – so call us today for more information.

A question we frequently ask our clients is whether they’re protecting their financial accounts from hackers. We recommend starting with secure password practices. Once a hacker steals just one password, they can potentially steal your entire identity, mainly because most people use the same password for multiple online accounts. Creating different passwords for your accounts is one way to keep them out of the hands of hackers. Strong passwords are also important; a combination of upper and lower case letters, numbers and symbols makes your passwords more secure. Make sure to review your credit card statements for unauthorized activity and take advantage of any card usage alerts offered. And monitor your credit report for suspicious activity through the three major reporting agencies: Equifax, Experian and TransUnion. For more information on protecting your financial accounts, give us a call today.

Small businesses are increasingly under attack from cyber thieves. Adopting cybersecurity policies will help keep your company safe from fraud. First, educate employees on using strong passwords, and avoiding suspicious emails, links and downloads. Second, put up a firewall to protect your network by controlling internet traffic flowing in and out of your business. Third, install anti-virus and anti-malware software. Fourth, consistently update all hardware and software for important security fixes. Fifth, secure company smart phones and laptops with encryption software, password protection and remote wiping capabilities. Sixth, back up company data consistently to a secure off-site location. And lastly, create an incident response plan outlining how staff can detect and contain a cyber breach. For more information on how to protect your business and financial accounts from fraud, call us or visit our website today.

Many people are unsure about the differences between a traditional IRA and a 401(k). Both have accounts that provide tax-deferred growth on the money in the account. Withdrawals from the accounts are taxed at ordinary income tax rates. But IRAs and 401(k)s differ in terms of eligibility, contribution limits and how you can access your funds. A 401(k) is an employer-sponsored plan offered only to employees. An IRA is an individual retirement account and can be set up by anyone. You can contribute more to a 401(k) each year than you can to an IRA; the same applies to the “catch up” provisions for those over 50 – you can add more to a 401(k) than to an IRA. 401(k)s can provide loan provisions, but IRAs cannot. You can’t contribute more than you earn with either an IRA or a 401(k) account, but must refer to the annual IRS publication to determine the maximum contribution amounts for both. For more information on choosing retirement plans for your financial situation, please give us a call today or visit our website.

You can’t control if or when disaster will strike, but you can minimize the damage and economic impact with some basic planning. For example, create a family disaster plan and review it so everyone will know what to do in case of an emergency. Always keep an emergency cash reserve of 3-6 months expenses – this will serve you through job loss as well as if banks and ATMs are not functioning. Make sure you have adequate insurance for your needs, such as homeowner’s, renter’s, flood and earthquake insurance. Keep a central record of all essential household information, including personal identification and licenses, financial and legal documents, and medical information. Consistently review your financial documents and insurance policies for accuracy. Protect your records by storing copies of important documents in safe locations; use password protection for e-files or hard-drive backups and keep both electronic and paper files in a fireproof and waterproof box or a safe deposit box. For more information on how to be financially prepared for emergencies, give us a call today.

Too many young people can’t afford college, and many more leave college under a mountain of debt. Here are 5 ways to plan for a debt-free education. First, invest early in college savings plans like 529s or state prepaid tuition plans – parents and grandparents can participate. Second, avoid loans if possible – they’re easy to obtain but difficult to get out from under after graduation. Third, start your scholarship search early – you’ll have time to learn the requirements and boost your chances through academics or other activities. Fourth, dual enroll or take advanced placement courses in high school – you’ll get college credits for free or very low cost. Fifth, stay local – attend a state community college and then transfer. The tuition is lower than most private schools, and you’ll save money if you can live at home for a few years. Also, while relocating may not be an option, keep in mind that some cities and states, like San Francisco and New York, offer free college tuition – although restrictions apply. Everyone should have a chance to attend college – to find out more on how to fund a college education, give us a call or visit our website today.

If you’re changing jobs or retiring, it’s important to know the rules regarding moving funds from your employer sponsored retirement plan. The wrong move could cost you in income taxes and early withdrawal penalties. You typically have four options, and you may engage in a combination of these options. You can leave the money in your former employer’s plan, if permitted. You can also cash out the account value, but you should research the tax implications first. There are two basic ways to move retirement plan assets from one retirement plan into another with no tax consequence. With a direct rollover, your financial institution or plan directly transfers the payment to another plan or IRA; no taxes are withheld and your account continues to grow tax-deferred. With an indirect rollover, a check is made payable to you. You have 60 days to deposit it into a Rollover IRA – after that the entire amount is considered income, and subject to taxes. You could also face a 10% early withdrawal penalty, depending on your age. And, indirect rollovers are subject to 20% withholding. For example, if you had $10,000 eligible to rollover, your employer would withhold $2000 and you’d get a check for $8,000. The $2000 withheld counts as income taxes paid, but in 60 days you still have to deposit the entire $10,000 in a rollover account _ the $8,000 from your employer plus $2000 from your own resources. To learn more about your retirement plan options, give us a call today.

To keep your investment portfolio on target for financial goals, you want to balance risk and diversify your assets. That’s the purpose of asset allocation – the process of dividing your portfolio among major categories like cash, stocks and bonds. Historically, the returns of these three major asset categories have not moved up and down at the same time – so including a mix of these assets in your portfolio can protect against losses. There is no perfect formula for asset allocation – it differs with each individual depending on their risk tolerance and time horizon. Risk tolerance is the amount of your investment you’re willing, or able, to lose in exchange for greater possible returns. Risk tolerance is closely tied to time horizon, or the amount of time you have to invest. An investor saving to make a down payment on a home in 5 years might choose less risky investments than someone saving for retirement in 20 years. A longer time horizon allows more time to recover from loss. Asset allocation may be one of the most important investment decisions you make with your portfolio – call us today to learn more.

Risk tolerance is the level of risk, or market ups and downs, an investor is willing and able to tolerate. An aggressive investor, one with a high risk tolerance, is willing to risk greater loss to potentially maximize returns, while a conservative investor prefers investments that have a lower risk of negatively impacting the portfolio’s value. It’s important to understand your own risk tolerance when building an investment portfolio so that you won’t over-react during market swings. The first step toward gauging your risk tolerance is to outline your financial goals, such as saving for college, a car or a new home. Then create a timeline for when you’ll need the money – lower-risk investments are best for short-term goals, since there’s little time to recover from loss. Keep in mind that investments with very low risk will grow more slowly, and could even lose purchasing power due to inflation and taxes. Also consider your personal comfort level in investing – can you sleep at night with the choices you’ve made in times of market volatility? To learn more about how risk tolerance affects your investment strategy, please call or visit our website today.

Stocks and bonds are two of the most common investment asset categories. When you invest in more than one category, you reduce your overall investment risk, so many people add a mix of both stocks and bonds to diversity their portfolio. The right mix depends largely on your financial goals, because these two asset classes play different roles. Stocks are a form of ownership – a company sells shares to raise money. When you purchase a share of stock, you’re purchasing an ownership stake in the company. Bonds represent debt – a government or company issues a bond, or an I.O.U., to raise money with the promise to pay back your original investment, along with regular interest payments. The volatility of stocks makes them riskier than bonds, but they also offer the greatest potential for growth, especially in the long term. Bonds may offer more modest returns, but are typically less volatile than stocks and are also advantageous for their income from the interest payments. For more information on the right investment mix for your financial goals, please give us a call or visit our website today.

Spreading your investments over different asset classes like stocks and bonds is one way to diversify your portfolio. But you can also diversify through different types of stocks, such as large cap and small cap. Cap stands for capitalization, or the company’s market value, which is determined by the number of outstanding shares times current share prices. Large cap companies, often called ‘blue chip” are worth $10 billion or more, and tend to be household names like Apple, IBM and Walt Disney. These companies are likely to be more stable, offer conservative growth and usually issue steady dividends. They are often the mainstay of a portfolio. Small cap companies are usually valued at under $2 billion. Often called “growth stocks”, they can gain profit quickly in particular industries, but they also represent greater risk. Adding a mix of both small and large cap stocks can help create a diverse portfolio seeking to conserve capital, provide income and build wealth over the long term. For more information on the right asset mix for your portfolio, give us a call or stop by our website today.

If you own investment property, you need to know how the IRS Section 1031, commonly referred to as a 1031 exchange, can work for you. A 1031 exchange is a strategy that allows an investor to defer capital gain taxes by selling a property and then reinvesting the proceeds into a new, like-kind property. Here are the basic rules of the 1031 exchange: First, the taxpayer who sells must be the same taxpayer who buys; Second, you must identify the new property within 45 calendar days after closing on the first property; Third,- you must purchase the replacement property within 180 calendar days after closing; and fourth, the replacement property price must be equal to or greater than the old property. If the new property price is less than the old one, the difference may be taxed. A 1031 exchange can be a powerful tax-deferment strategy offering many opportunities to investors. To learn more, give us a call today.

You’ve been saving for your retirement for decades. Don’t undermine your own plans by making these 5 common mistakes when you retire. First, don’t retire too soon. Lifespans are increasing and many retirees underestimate their life expectancy when calculating the money needed to live on. The second mistake to avoid? Spending too much in the first years. It’s easy to overspend while playing with your newfound freedom, but it can cause shortfalls later in life. Budget accordingly and stick to your plan. The third mistake is underestimating medical expenses – and overestimating Medicare benefits. Avoid surprises by factoring in enough money to supplement Medicare and consider buying added health insurance to fill in any gaps. Another mistake is taking Social Security benefits too early. You can claim benefits at age 62, but the longer you wait, the higher your monthly benefit will be. Lastly, don’t fail to do estate planning. An estate plan and a will maximizes the chances that your wishes will be followed and your assets will go where you dictate. It’s easy to make mistakes in the beginning stages of retirement – for more information, please give us a call or stop by our website today.

Today’s longer lifespans have left some baby boomers in the difficult position of planning for retirement, helping their children and caring for aging parents simultaneously. Giving advice to aging parents on their finances and other matters can cause conflict. To ease the way, start the conversation long before a crisis occurs by asking for copies of documents you might need someday such as property deeds, birth certificates and insurance policies. Also keep updated information on retirement plans and pensions, Social Security and health insurance. Ask your parents to create a living will, outlining their health care wishes, and appoint a health care proxy, or person, to carry out those wishes in case they’re unable to communicate. They may want to also have a living trust, which is a legal document that places their assets into a trust for their benefit while alive, and transfers them to beneficiaries when they die. If your parents become ill or incapacitated, the trustee can immediately take over financial decisions. For more information on caring for aging parents, call us or stop by our website.

If you faced sudden evacuation of your home, would you be prepared to grab all your important documents and items on your way out the door? Few of us would be clear headed enough to know what we need, and where to find it, in a time of crisis. Here are two important steps to take well in advance of any possible emergency: First, create an inventory of your home possessions, inside and out. Document this in a formal list, and take photos or videotape for insurance purposes. Include values, model and serial numbers, receipts and appraisals whenever possible.
Second, assemble an Evacuation Box to store key documents and items like cash, wills, bank account numbers, computer backups and medical information. Make sure your box is durable and lockable, and store it near an exit for quick access. Preparing for an emergency can help lessen its financial impact. For more information, call us or drop by our website.

If you’ve become the beneficiary of an IRA or other retirement account, it’s important to know your options.
You can take the money out in one lump sum. This requires opening an account called an Inherited IRA in your name for correct IRS reporting. That lump sum may be taxable depending on whether the original contributions were pre or post-tax. Or you can open an Inherited IRA and leave it alone to grow tax-deferred. You can’t make additional contributions and must start taking Required Minimum Distributions based on when the deceased would have turned 72. You must also liquidate the account in ten years. With this option, you can name your own beneficiary to pass it on. If your spouse left you the account, you’re allowed to roll those assets into your own retirement account and follow your account’s distribution rules. You could also disclaim the account, or not accept it. The assets can then pass on to alternate beneficiaries. If you disclaim, it must be done before taking possession of the account, and within nine months of the original owner’s death. To learn more about what to do with an inherited retirement account, please give us a call today.

Whether you’re saving for a new car, home or retirement, compound interest is your friend. By definition, compound interest is interest earned on the principal amount plus the interest that was paid earlier. Let’s say you put one thousand dollars into a bank account or investment product offering 5 percent interest per year. By the end of year one you’d have one thousand fifty dollars. At the end of year two you’d earn interest on the entire one thousand fifty dollars, bringing your balance to one thousand one hundred and three dollars. All this happened because your interest received interest – in other words, it compounded. If you left that thousand dollars to compound for ten years – your balance would be one thousand six hundred and twenty nine dollars. And that’s the power of compound interest – you build wealth with very little effort. Another bonus is that the more frequently compounding occurs, the more interest is earned. For instance, if your bank paid interest monthly instead of annually, that year two balance would be one thousand one hundred and five dollars. By year 10? One thousand six hundred and forty seven dollars. While it may not seem like a huge amount, the longer you have to save, the more compounding can help grow even small sums into significant savings. To learn more about how to harness the power of compound interest – give us a call today!

Under the right circumstances, taking on debt can positively affect your finances. The secret is in knowing the difference between good debt and bad debt. Good debt is debt used to finance something that will create value. One example of good debt is a student loan because an advanced degree can improve your future earnings. Another example of good debt is a home mortgage. When you’ve paid the loan off in 15, 20 or 30 years, the home could be worth much more than the purchase price. While good debt is a type of investment, bad debt is financing something that won’t go up in value or generate income. Cars, clothes and consumables are examples of bad debt – it’s better to pay cash for what you need than to pay interest fees on these items. Probably the worst kind of debt is credit card debt, especially if you don’t pay your balance in full. You’re charged interest on the outstanding amount and it’s typically a higher rate than on any consumer loan. However, if you pay off your credit cards each month, it can help you to establish a good credit rating for future purchases like a home – just never take on more debt than you can afford. For more information about how to handle credit and debt, stop by our website or give us a call today.

Many people tend to avoid the “b” word – Budget! But a budget is really a spending plan that gives you control over your finances by tracking what comes in and what goes out. It’s that simple, and it doesn’t need to be fancy. It could be just two columns titled Income and Expenses. Start by tracking all your expenses. Include essential costs like rent, groceries and medicine, as well as non-essential expenses, like cable TV, entertainment and travel. Next, add up all your income, such as your salary or paycheck after taxes, and any other income including child support, investment or rental income. Then subtract your expenses from your income. A breakeven or negative number means it’s time to take a closer look at cutting non-essentials, or trimming where you can. With a clear picture of your income and expenses, you can adjust your spending to begin saving for important financial goals like an emergency fund, college or retirement. Review your budget every few months and adjust accordingly. Your budget should be flexible enough to change with your needs.
To learn more about saving for your financial goals, give us a call or stop by our website today.

Financial upheaval can happen at any time; maybe you experience an unexpected lay-off or a sudden illness that keeps you from work. The best way to weather that type of financial stress is to have an emergency fund already in place. The emergency fund rule of thumb is to set aside three to six month’s worth of living expenses in an easily accessible, liquid account. If you already work from a budget, you’ll have a good idea of what you’ll need to save. If not, now’s the time to chart your income and expenses. Use that information to set an emergency savings goal and develop a plan and a deadline to achieve it. Some ways to achieve your goal are to save more aggressively, and to trim discretionary spending on items like movie tickets, clothing and dining out. No one knows what the future holds, and having an emergency fund will help you be prepared for some of what life throws your way. For more information about saving for your financial goals, give us a call or stop by our website today.

Roth IRAs are funded with money that you’ve already paid tax on, and then they grow tax-free. This is different than traditional pre-tax funded retirement accounts. Roth IRAs offer many advantages that other traditional retirement accounts don’t. First, you can withdraw your money tax-free during retirement, which allows you to manage your taxable income. And second, with no annual distribution rules, you’re free to take your money out only when you want to. There are two ways to put your funds into a Roth IRA; through contributions and conversions. Contribution rules include contribution limits. And to contribute money to a Roth IRA, you must earn compensation, or income, but remain below IRS mandated income levels. High earners can’t contribute. Conversions have very few limitations. Anyone can convert an account such as an IRA, 401(k) or SEP IRA into a Roth IRA. You don’t need to have income, but if you do, there’s no income limit and there are no restrictions on the size of the conversion. You can convert one million dollars if you like! You will, however, owe income tax on any amount that you convert, so conversions should be scheduled when your tax rate is lowest. To learn more about Roth conversions and contributions, give us a call today.

If you’re struggling under a load of federal student loan payments higher than your income, there is some relief. The US government offers four income-driven repayment plans that can change your monthly payments based on your income and family size. Generally, your payment amount under each one of these plans is a percentage of your discretionary income, or income after paying taxes and for personal necessities. With the REPAYE Plan, you pay about 10 percent of your discretionary income. With the PAYE Plan, your payment amount would also be 10 percent of your income, but never more than the 10-year Standard Repayment Plan, which is a basic repayment plan of fixed payments for 10 years. The IBR Plan offers the same payment arrangement as the PAYE if you’re a new borrower starting on or after July 1, 2014, and 15 percent payments if borrowed before that date. With the ICR Plan you pay the lesser of either twenty percent of your discretionary income, or what you would pay on a repayment plan with a fixed payment over 12 years. This plan is also an option for Parent Plus Loans borrowers. Since all plans have different eligibility requirements and payment periods, it’s important to check with your loan servicer to find out which one is right for you. If you would like to learn more about managing your debt, please call our office today.

When deciding on asset allocation for a retirement portfolio, investors often begin by analyzing the most optimal equity glide path. An equity glide path refers to the projected changes in asset allocation throughout retirement. A declining equity glide path is where you gradually reduce your portfolio’s exposure to the volatility of stocks and increase your allocation to bonds. A static equity glide path is where you stay with a specific allocation, such as 60/40 stocks to bonds, and annually rebalance your portfolio to keep that allocation. A rising, or inverse, equity glide path is the opposite of a declining glide path. The portfolio starts out conservative with less exposure to stocks and becomes more aggressive as retirement continues. The objective of a rising glide path is to reduce volatility in the early years of retirement when the portfolio is largest and at risk of losing the most wealth in a market drop. While investors can’t foresee what market or economic conditions they’ll encounter upon retirement, analyzing glide path is one tool for determining asset allocation. To learn more about retirement portfolio allocation, give us a call or stop by our website today.

Just like the old warning against putting all of your eggs in one basket, if you put all your money in one company stock and it dropped like a rock, you’d lose everything. Diversification can help protect your portfolio from that scenario. Diversification is the practice of spreading your money among different investments to reduce your risk of losses. A portfolio should be diversified at two levels; both between asset categories, such as stocks, bonds and cash; and within those asset categories. Ideally, if one investment is losing money, another will be making gains. To diversity between asset categories with stocks holdings, for example, you’d invest in a wide variety of industry sectors, such as energy, technology, financials, health care and utilities. Then you would diversify again, within those sectors. There are many ways to diversify within sectors: invest by company, such as Google or Apple in the tech sector; by geographical market, like domestic or international or by company size, large-cap, mid-cap or small-cap. Many people choose to diversify their portfolios with mutual funds or Exchange Traded Funds. These funds hold shares in a variety of companies, making it easier for investors to own a small portion of many investments. For more information on how to achieve a diversified portfolio, give us a call or stop by our website today!

When looking for cash to cover a major expense such as home improvements, a child’s college education or high interest debt, some people consider tapping into the equity of their home. Home equity is the market value of your home, minus any mortgages outstanding. For example, if your home’s market value is three hundred thousand dollars and you have a mortgage of two hundred thousand dollars, your equity is one hundred thousand dollars. Your home will be used as collateral to secure the financing. This is known as secured debt, and lenders tend to charge lower interest rates than with unsecured debt like credit cards. This makes home equity financing a more attractive source of funds. But, failure to pay the lender puts your home at risk. A lender will offer home equity financing in one of two ways; as a loan or a line of credit. With a home equity loan, the lender advances you a fixed amount of money upfront. You repay the loan with monthly payments over a fixed term, or risk foreclosure on your property. A home equity line of credit, or HELOC is a revolving line of credit, with similar terms to a credit card. You have a credit limit and can borrow what you need, when you need it, and only pay off what you’ve borrowed. A home equity loan or line of credit can be a good source of funds in the right situation, just remember that the loan is secured by your home and puts your home at risk. To learn more, give us a call today.

You may be thinking about making a big purchase in the next few years, like a house or a car. If you’ll need a loan, know that prospective lenders will be checking your credit score. A good score tells lenders and others, like insurance companies, that you’re credit worthy, and it may help the terms you’re offered or the rate you’ll pay for the loan. Scoring systems are complex and vary among lenders, but here are some things they’ll consider: • Do you pay your bills on time? Always pay your bills on time, as late payments could negatively affect your score. • How many accounts do you have? A few established accounts tally in your favor, but too many can hurt your score. • How long have you had credit? Your credit score relies on the number of credit lines you have open in good standing and the length of time they’ve been open. • Are your accounts are maxed out? Try not to carry balances of more than 50 percent of your credit limit on any account or it might lower your credit score. Your credit report is a key part of many credit scoring systems. That’s why it is critical to make sure your credit report is accurate. You can order a free report each year from the three reporting agencies, Equifax, Trans Union and Experian. (access them all at once on annualcreditreport.com) To learn more about credit reports and managing your score, give us a call today.

Medical identity theft is a serious, and growing, business. One study reports that over 2 million cases are identified each year and the number keeps rising. When thieves steal your medical identity it can endanger not only your finances but also threaten your health. They may use your name or health insurance to see a doctor, get prescription drugs, file phony claims with your insurance provider, or illegally acquire government benefits such as Medicare or Medicaid. If their health information is mixed with yours, your medical treatment, insurance and credit report may be adversely affected. Some warning signs of medical identity theft include a bill for services you didn’t receive, a debt collection company calling for money you don’t owe or your insurance company telling you you’ve reached your limit on medical benefits. Here are some steps to avoid medical identity theft: Protect your Medicare and other health insurance cards and review your medical bills regularly for suspicious charges. Beware of offers of free medical goods or services in exchange for your Medicare number. Shred all papers with your medical identity, and, destroy labels on prescription bottles before throwing them away. For more information on how to protect yourself from identity theft, please give our office a call today.

Most people start to think about life insurance once they’ve married and had children. That’s because the main goal of buying life insurance is usually to replace income if the buyer’s earning power is taken away by death. The industry standard on how much life insurance you need is five to ten times your annual salary. But it really depends on several factors such as your age, the ages of your spouse and dependents, your income, and your debts. [Your age] Premium rates go up as you age, so it’s more cost effective to buy life insurance when you’re young, and also allows you to purchase more coverage. [Your dependents age] You can use the ages of your dependents and spouse to judge the amount of income replacement they’ll need if you die. This will vary per individual as some dependents may need support temporarily but others could have special needs that require support for life. [Your income] If you’re just starting out, there will be many years of income to replace versus someone who’s near retirement, or has no debts. A 50 percent income replacement is a starting point suggested by some experts. [Your debts] Your mortgage, car loans and any other debts should be included in your insurance planning. Also factor in future education for your children. Life insurance is an important investment that can help substitute your income and maintain your family’s current standard of living upon your death. If you’d like to learn more about the right life insurance policy for your family’s needs, give us a call or stop by our website today.

A life insurance policy protects your loved ones against the loss of your income after your death, and helps to preserve their standard of living. You’ll name a beneficiary to receive the proceeds, and in exchange, you’ll pay premiums as outlined in the policy terms. Once you’ve determined how much you need, factoring in future expenses and current debts, you need to decide on one of the four types of life insurance: term, whole, universal or variable. Term life insurance covers you for a specific period of time, like one, two, ten or twenty years. The death benefit is paid only if you die within the policy term. Premiums generally start out lower, depending on your age, which allows you to buy more coverage. Whole life or “permanent” insurance covers you as long as you pay your premiums. The policy accrues a cash value that you can collect if you terminate the policy. It pays a fixed amount on death, and premiums are usually higher than for term insurance. Universal life insurance is also “permanent” but this option offers greater flexibility than whole or term. You can increase or decrease the cash value and death benefit if your needs change, with a related rise or drop in premiums. Variable life insurance is another type of permanent life insurance, but with an investment component. The cash value is invested in sub-accounts similar to mutual funds. Variable life is considered a security because of its investment risk. If you’d like to learn more about the pros and cons of different insurance policies, call us or visit our website today.

People buy bonds for three basic reasons: safety, income and diversification of their portfolio. [Safety] Bonds are generally considered to be safe investments, and buyers expect to get their principal back intact. But all bonds carry some risk, with the exception of government Treasury bonds, which are considered default risk free. The investment risk depends on the financial strength of the issuer and current market conditions. [Income] Due to the steady income that comes from a bond’s interest payments, they’re called fixed-income securities. The income is set at time of issue and remains the same, which makes them good investments for planning and budgeting. [Diversification] Purchasing bonds is also a good way to balance out the cash segment of a portfolio. And interest rates can be higher than money-market funds or CDs, making them attractive to investors. Just like with stocks, you don’t have to purchase individual bonds, but can buy a variety through an index or exchange-traded fund, limiting your risk and increasing your diversification. For more information on the role bonds play in a diversified portfolio, visit our website or give us a call today.

Thousands of Baby Boomers are retiring each day, and many are wondering about the possibility of having to pay for expensive long term care. Long term care insurance was created to cover the costs of skilled nursing, assisted living and other types of care as you age. Long term care policies, are expensive and should be considered carefully. The expense is determined by some of the features you choose such as: Inflation protection. One of the main reasons to buy long term care insurance is to protect against rising prices. Inflation riders can be automatic, and are usually 5 percent annually, which is the most expensive. They can also be periodic, which means they’re set at increments of every couple of years. Another factor that determines the cost of long term care insurance is the elimination period – most policies require you to pay for yourself for the first 20 to 100 days of care. The shorter the period, the higher the premium. Medicare pays for up to 100 days of skilled care following a hospital stay, so check to make sure the policy day count includes the days when Medicare pays. Long term care insurance pricing varies with the Level of care provided. The three levels of care, are skilled care, or fulltime nursing care, which is the most expensive; Then there’s intermediate care, which is regular skilled care but not full-time; and lastly is custodial care, or assistance with daily living by non-medical personnel. This is the least expensive type of care. There are many other features to consider when shopping for long term care insurance. Give us a call today or stop by our website to learn more.

As a woman, you may feel you lack the confidence to manage your money, but in reality you have all the skills and tools you need. Since the beginning of time women have been caring for others, managing families, paying bills, building careers and making life altering decisions. All of these skills add to your ability to make smart financial decisions with your money. The key is understanding what you want your money to do for you. Being able to define your purpose for your money and recognize how your money can help you live the life you want is the first step.
Let us help you use your natural skills to create a purposeful plan for your money. We look forward to talking with you!

For many women, understanding your purpose for your money can be the key to becoming more engaged in managing your investments. While financial goals are important, they are often too linear, impersonal and can feel restrictive. When you understand the purpose for your life, the things that are most important to you, the purpose for your money becomes clear. This clarity creates incredible motivation, inspiring you to become more engaged in your financial life.
Consider this scenario:
If you were given 50 million dollars and you had to spend it all, but you could only spend it in 3 to 4 ways, how would you spend it?
Now list the four ways you would spend your money in order of priority, with #1 being the most important.
This simple list is your foundation to turning your financial affairs into an intentional journey toward living a purposeful life.
We’d love to see what you uncovered, so please give us a call if you’re willing to share.

Performance is not the only issue when working with a financial advisor. Without the right relationship, your experience may turn you off and cause you to avoid managing your money well. The financial industry was created to appeal to men, and as a result, women have endured and often just tolerated their experience working with a financial advisor. But those days are over.
Today women are controlling more wealth and are rising up, and they want their voices heard. Women today want to understand their investments and how those investments will help them achieve their purpose in life. You deserve to work with an advisor who encourages you to learn and supports you in your desire to take more control over your financial future.
Are you getting what you deserve and want? Or are you simply tolerating the financial experience? We want to make your journey towards financial confidence one that is positive, enjoyable and empowering where you learn to thrive as a women full engaged in her financial life. Please get in touch, we’d love to chat.

You don’t have to be a math whiz or know how to pick stocks to become savvy about money. Being savvy about money is more about being engaged, understanding what you want and having a plan designed for your life. And it all starts with your experience with your advisor.
Take this quiz right now to rate your experience with the financial advisor in your life. I’ll read 5 questions, and you write down a score of 1 to 5, with 1 being non-existent, and 5 being absolutely yes. Total the points to determine if you are getting what you need and want from your advisor:
Number one: I understand the purpose for my money and feel totally confident about my progress.
Number two, I am financially organized and know what I have and how it will support me.
Number three, I enjoy meeting with my advisor and am constantly learning more about my money.
Number four, I have a financial plan that is designed around my life and helps me track my progress.
Number five, My financial knowledge has increased measurably since working with my advisor.
If you scored a 25, congratulations! You are fully engaged in planning for your financial life. If you scored less than 25, perhaps it’s time you engaged in a new experience.
Our mission is to help every woman become fully engaged in her financial affairs, understanding the process and enjoying her journey to financial confidence.

If you’re like most women today, you are managing a multitude of responsibilities, constantly balancing the demands of work and family, health and exercise, and even squeezing in a personal life. As multitaskers, women have learned that having a plan and learning to delegate are essential to accomplishing the things that are important to you. But sometimes when women delegate their financial life to others they trust, that can leave them highly vulnerable when life events occur that force them into the financial driver’s seat. Understanding what you have, why you have it and how it will support and provide for you going forward is critical to your ability to manage life’s inevitable events with confidence.
You do not have to be good with math, economics or investments in order to be financially prepared for what’s coming. Don’t wait until you are forced into the driver’s seat. Let us help you build your confidence now.

You might have heard about the Infinite Banking Concept and wondered what it’s all about.
Infinite Banking Concept isn’t a product or an investment. It’s a cash-flow management system that uses dividend-paying whole life insurance to create your own bank.
Life insurance is a valuable planning tool for families and businesses. It provides a financial safety net for the unknown.It’s a useful financial instrument for preserving your estate or securing the future of your business.
And its tax-favored status and easy accessibility makes it an ideal location to stash cash that you can borrow whenever you need it.To learn more about achieving financial independence through the Infinite Banking Concept, give us a call or visit our website today.

There’s a lot of misinformation out there about Social Security. People receive information from a variety of different sources and often don’t know which information applies to their specific scenario. That’s why it’s critical to use a Social Security Optimizer to help you maximize your retirement benefits. It should take into account all applicable Social Security laws, you and your spouse or ex-spouse’s birthdays, and life expectancies. To optimize your custom filing strategy, consider three key variables: First, consider your Primary Insurance Amount, also called your PIA This is calculated from your top 35 years of working at a job that paid into Social Security. Second, consider any non-covered pension amount from working at a job that did not pay into Social Security. Having a non-covered pension amount will reduce the amount of retirement benefits that you receive from the Social Security Administration. And third, consider Delayed Retirement Credits, also called DRC’s. Postponing collection of benefits can earn you an additional 8% in DRC’s every year that you delay filing until age 70. When choosing a filing strategy, we’ll work with you to help bridge the gap in income that may result from a delay in filing. It’s not only about when and how to file, it’s about all the layers of your retirement income working together to get you a tax-smart retirement paycheck.

“Householding” is about getting a complete view of all your accounts and holdings. But what’s a view without action? “Smart-householding” takes this view a step further by coordinating all these accounts so they work together to minimize your investment taxes and maximize your after-tax rate of return. This is done through a technique called asset location optimization. By taking all the assets within your household and distributing them to the correct accounts, you’ll avoid paying unnecessary investment taxes. While so many investors have tried to “beat the markets” in their quest to achieve investment goals, they’ve learned the hard way this approach doesn’t work. Aggregating and coordinating accounts can reduce costs, manage risk consistent with your comfort level and increase your portfolio’s overall tax-efficiency. This approach has helped investors save as much as 33% on taxes over time according to a study by Ernst and Young. Investments taxes are complicated to explain, so we use tools that benchmark the overall tax-efficiency of a portfolio and show you the steps being taken to decrease your investment taxes and increase your after-tax rate of return. After all, it’s not about how much money you make— it’s about how much you get to keep.

If you receive employee stock options or restricted stock units from your employer congratulations! These forms of equity compensation can create wealth and help you achieve your financial goals. However, this wealth is at risk due to stock price fluctuations and employment changes. To manage these risks, there are 5 things you should know about your employer stock and options that aren’t included in your stock plan education resources.
Number one is Forfeit Value. This is the current equity value lost by leaving your company to work elsewhere prior to retirement. This amount includes the time value of your vested and unvested options and the value of any restricted shares. Number two is Leverage. This is the upside and downside values of your options and shares at hypothetical price increments. This illustrates potential versus risk. Number three is Option Ratios. These are the time value of your options as a percentage of the full value. They help determine the order and urgency for exercising and selling your stock options. Number four would be Concentration. This shows the values and percentages of your company stock and options holdings compared to your diversified investments. This is important because concentrated equity compensation holdings are risky. And the fifth, Financial Goal Attainment. This is the current status your equity compensation plays in achieving a financial goal. Once you have secured your financial goal in a diversified portfolio, you can take more risk holding your stock and option. Equity compensation is complicated, but we can provide you with these insights and information that aren’t available from your company. Give us a call today. We’ll help you make informed decisions to get the most out of your company stock and option holdings. NOTE: Assisting clients to diversify and reinvest their equity compensation is an extremely lucrative opportunity for financial advisors that can provide unique insights regarding these holdings. The analytics illustrated in this video were calculated by StockOpter.com from Net Worth Strategies, Inc. Unlike general financial planning tools that are designed for retirement planning, StockOpter determines when and why clients should diversify their company stock and options. For more information and a short overview video visit: https://stockopter.com/