5 Ways to Help Manage Multiple Goals 

Retirement is a huge goal, but it probably isn’t your only financial objective. 

Other significant milestones in your future might be buying a second home, taking your dream trip or helping your kids or grandkids with college. 

How do you manage – and make progress toward – multiple goals?

  • Establish your goals: Before you worry about managing all of your financial goals, take the time to define them clearly. Understanding what you want (and when you want it) will help you plan appropriately.
  • Calculate your earning potential: Determine your earning potential from your career and your investments. How much do you expect to earn during your remaining working years? What about your investments? 
  • Set a realistic timeline: Now that you’ve established the foundation for your plans, you can start crunching the numbers to set specific savings goals and even dates for when you’d like to reach each of your objectives. 
  • Stay flexible: As essential as it is to plan, it’s just as important to stay flexible. Remember, your returns and salary could change, inflation could come into play, and life events could cause you to recalibrate and adjust at any time. The steps you take today may end up being a guide rather than an exact blueprint.
  • Reach out for assistance as needed: You know your finances, but we can still help you plan for your short-term and long-term goals by creating a plan tailored to your risk appetite and vision.

Do you have questions or want to check in? Reach out today.

6 Retirement Costs to Keep in Mind

No matter how much you’ve thought about retirement already, it can be easy to overlook some of the details that will make your post-employment years run smoothly.

You probably have the basics covered, but be sure your plans and projections factor in everything you need for a streamlined, enjoyable transition.

Want to make sure you’re on track? Here are a few specifics to keep in mind.

Home and living expenses — Of course, housing, food and utility bills are all regular expenses you can expect to continue paying during retirement. Take the time to come up with accurate projections for each of these (and don’t forget to factor in inflation).

Taxes — Taxes will still be a significant expense in retirement. Consider income taxes, property taxes and any taxes related to your investments.

Health care — Health care is one of the biggest expenses to expect in retirement. Medicare premiums and out-of-pocket payments are important budget line items.  

Long-term care — As we grow older, long-term care might become necessary. Purchasing long-term care insurance can help with the costs, but it’s wise to prepare for out-of-pocket care costs as well.

Emergencies — Does your budget have room for surprise expenses? An emergency fund can help you manage costs associated with unexpected events, like a major home repair, without seriously impacting your investments or your long-term financial goals.

The fun stuff — Your retirement years are all about enjoying what makes you the happiest: travel, hobbies, family and friends. Setting aside money for vacations, your favorite activities and spoiling your loved ones can be the fun part of budgeting.

Would you like to connect? Reach out with your questions today.

4 Ways to Help Prepare for the Unexpected

Are you and your finances prepared for a rainy day? Major fluctuations in the market, new legislation, unexpected health issues and more can put stress on your budget. 

But, planning ahead can help you handle the unforeseen if and when it does arrive.

Here are a few steps to consider in these early weeks of 2022.

Check up on your finances. It’s tough to plan ahead if you don’t have an up-to-date view of your finances. If you haven’t done so in a while, review your portfolio, evaluate any debt you have, keep a pulse on your spending and know how much you have in savings.

Review your insurance coverage. Insurance is designed to help us through unexpected events in life, whether it’s major damage to your home or getting sick. Review your home insurance and health insurance. Do you have enough coverage for the future? Taking a look at your life insurance coverage can also help to put your mind at ease. 

Think about health care. As we grow older, health care becomes a more important consideration. Do you have plans in place in case you need long-term care later in life? Do you have medical and financial power of attorney in place in case you need someone trusted to make medical and financial decisions on your behalf?

Embrace estate planning. Estate planning is an important tool for planning your future. Think about your assets and your family’s needs. Keep your beneficiaries up-to-date, regularly review your plan and adjust it as needed.

Thinking about your financial future can help you stay on track and bring peace of mind for yourself and your family. 

Have questions? Reach out if you’d like to discuss anything.

Tax Season: What to Keep in Mind This Year

Careful planning for tax season can help to make the process as easy and stress-free as possible.

What do you need to know about getting your 2021 taxes in order? Note that there are a few recent updates and changes that may affect you.

Here are a few key details to keep in mind for this year. And, as always, reach out if you would like to check in.

Tax brackets — The tax brackets for 2021 are different from those for 2020. For example, the tax rate is 37% for individuals making more than $523,600 and for married couples filing jointly who make more than $628,300. In 2020, the tax rate was 37% for individuals making over $518,400 and for married couples earning more than $622,050.

Capital gains taxes — Capital gains tax rates change each year based on inflation. For the 2021 tax year, the capital gains tax rate is 20% for individuals making more than $445,850 and for married couples filing jointly who earn more than $501,600.

Deductions — When getting ready for tax season, keep in mind all of your potential deductions. Have you made any charitable contributions? Can you claim the child tax credit?

The necessary documents — Gather all pertinent documents ahead of filing, including expense and deduction documentation and any forms related to other sources of income, such as a trust.

Please reach out if there is anything we can help with.

Estate Planning Isn’t One-Size-Fits-All

Estate planning is important for everyone, but when you start to do your research, it seems like many resources assume you’re married with children. 

Many people lead their lives differently, thus different approaches are in order. 

For example, find out how you might plan for the future if you’re single, have no heirs, or have a blended family.

If You Are Single

Estate planning helps you protect yourself as you grow older. Selecting someone as your healthcare proxy and someone to hold power of attorney ensures that people you trust will be able to make decisions on your behalf if you cannot. Single people might choose a sibling, close friend, niece or nephew to take on these roles.

If You Have No Heirs

While their children and spouse are the clear choice for some people, many others do not have apparent heirs for the division of assets. In this situation, one option is to leave your assets to charitable organizations that align with your values and interests.

If You Have a Blended Family

Merging families can be a beautiful but complex process. If your marriage entails welcoming stepchildren into your life, you’ll have some estate planning decisions to make. For example, do your estate planning documents need to be updated? How would you like to include your stepchildren in your plans for the future?

If You Want to Plan for Your Pet’s Future

Pets are beloved family members, and it’s common for people to consider a pet’s future. If an animal companion may outlive you and you want to ensure they’re taken care of, you can establish a pet trust with funds and a designated caregiver.

Regardless of your situation, estate planning is an in-depth process that takes time. Get in touch if you have any questions or if you’d like some assistance.

Parents: Watch Out for 5 Common Mistakes

When it comes to finances, it can be challenging to find the right balance as a parent. How much should you talk about money with your children, and what information should you share?

If you want your kids to become financially savvy adults, you may want to start discussing a few basics with them when they’re younger, or at the very least, don’t avoid the topic altogether.

Want to help set your kids up for success? Here are a few best practices to keep in mind and five things to watch out for. 

5 Common Mistakes to Avoid

1. Never discussing money. Money can be a sensitive topic, even within a family. Never talking about income, budgeting, savings or expenses can make it difficult for kids to get started when it comes to managing their finances effectively later in life.

2. Setting a less-than-great example. Do you regularly set goals and track your progress? Do you have life insurance? Making strategic financial decisions for the future can help set a good example for your kids.

3. Splurging too often or failing to set limits. Spending money on your kids is a natural desire, but it can be a mistake not to set limits. For example, some parents end up overspending on their child’s wedding at the expense of their own retirement goals. 

4. Lifestyle creep. Lifestyle creep can happen to anyone. In families with children, it’s possible to fall into the habit of “keeping up with the Joneses” and purchasing expensive items and activities for kids that might stretch the budget.

5. Not planning for financial independence. Being able to provide for your kids financially is a wonderful feeling, but some parents find themselves in the position of paying for their child’s lifestyle indefinitely. Having upfront conversations about money and timeline expectations can help build a bridge for your kids to become financially independent.

Have questions or need to check in? Reach out today.

What High Earners Should Know About HSAs

Health savings accounts (HSAs) can be a potentially advantageous option for high-income earners considering tax-saving strategies.

Planning for the future? Get to know more about HSAs and why they could be a good fit for people with high incomes.   

How do HSAs work?

HSAs are a type of federally tax-exempt savings account specifically for health care costs. When you have an HSA, you are able to contribute to the account annually. In 2022, individuals can contribute $3,650 and families can contribute $7,300. People who are 55 and up are eligible to contribute $1,000 more per year.

Who qualifies for HSAs?

HSAs are for people who have high-deductible health insurance plans. Each year, the IRS announces the minimum deductible amount for health insurance plans to be considered high-deductible. In 2022, the minimum deductible for individual high-deductible health plans is $1,400 and $2,800 for families.

What are the tax benefits?

HSAs are known for their triple tax benefits. First, you are able to make contributions to the account pre-tax. The money in the account grows tax-free. Finally, the money you take out of the account to pay for qualified medical expenses is also tax-free.  

How much can you save? 

Thanks to its tax-free contributions, growth and withdrawals, an HSA can help account holders realize substantial tax savings over time. How much you save will depend on factors like how much you contribute and how you use the funds in the account to cover qualified medical expenses.

How are HSAs different from FSAs?

Flexible spending accounts (FSAs) are another type of account that can be used for healthcare costs, but they typically offer less flexibility. FSAs are owned by employers and can be lost when an individual changes jobs. An HSA carries over regardless of employment status.

Reach out today if you have questions we can help with.

What to Know About Selling a Property

Do you have an investment property you’re thinking of selling? Or are you thinking of downsizing soon?

It’s important to understand the costs associated with selling a property. Specifically, how will this step impact your taxes?

If you’re planning to sell soon or just wondering how it will work when you do, here are a few things to keep in mind.

Preparing to Sell

Whether you’re selling your primary residence or an investment property, gearing up for sale has a price. Some properties may need maintenance and repairs before you list them. You also may need to invest in professional staging to attract buyers.

Capital Gains Taxes

Short-term and long-term capital gains taxes have the potential to come into play, depending on how long you have owned the investment property. If you are flipping the property, you will likely pay a short-term capital gains tax on the profit from the sale. Any short-term capital gains from your investment property sale are taxed as regular income.

If you own the property for more than a year, you can expect to incur long-term capital gains taxes; the rate will be determined by your tax bracket.

Depreciation Recapture

When you own an investment property, you have the option of claiming a depreciation deduction when you file your taxes each year. The IRS can recapture those deductions when you sell; the rate of this tax will vary and depends on several factors.

While the sale of your investment property does come with tax implications, you can take a few different paths to reduce or defer your taxes. For example, you can defer capital gains taxes by rolling the proceeds of the sale into a similar investment via a 1031 exchange.

Do you have questions or need assistance? Reach out today.

Creating Your Retirement Withdrawal Plan

After years of careful saving and investing, you’re finally ready to retire. And as you enjoy your post-working life, you’ll need to determine how to maximize your retirement funds.

While certain retirement accounts, like IRAs, 401(k)s and 403(b)s, come with required minimum distributions, you also likely have discretion over how much to withdraw overall and when.

What are some of the common retirement distribution strategies? Here are a few to know.

Fixed-amount withdrawals: You can determine how much money you need on an annual basis and withdraw that amount each year.

Income withdrawal: An income-based withdrawal strategy means that you withdraw income generated by your retirement portfolio, leaving the principal untouched.

The 4% rule: The 4% rule is designed to provide enough funds for a 30-year retirement. If you go this route, you can withdraw 4% from a fund in your first year of retirement, followed by set percentages adjusted for inflation in subsequent years.

Bucket strategy: The bucket strategy separates funds into different categories based on when you plan to spend. The first bucket could have cash that you plan to use in the next few years. The second bucket could hold invested funds that you won’t need to touch until, say, 10 years down the road. The final bucket can focus on investment growth.

Mix and match: Of course, you don’t have to pick one option and stick with it. Different options might make sense for different accounts. And, you might find that remaining flexible and changing your approach makes sense at different points during your retirement.

Do you have questions about which approach is right for you? Reach out with your questions today.

Financial Topics for Spouses to Discuss

Have you and your spouse ever disagreed about money? You’re not alone. Shared finances can be tricky, and many couples run into a conflict or two. 

While there is no single formula for sharing finances successfully, communication is essential in every partnership.

Not sure where to start? Discuss these four big financial topics to help keep you and your spouse on the same page.

Budget

Knowing how much money is coming in and going out each month can help couples steer clear of many misunderstandings and arguments. Sit down to discuss your joint income, how much money needs to be spent on bills, and how much of the leftover is earmarked for fun and for savings. It’s also important to determine if you are splitting expenses and savings equally or proportionally based on income.

Real Estate

Do you and your spouse have plans to upgrade your home, buy a vacation home or move?  Talking about your property goals can help to guide budgeting decisions and give you something to unite behind.

Savings

How much of a financial cushion do you need to meet the comfort levels of both partners? Do you want to save for anything in particular? If you have kids, you’ll also want to decide how much to put away for their education and their futures.

Retirement

How do you and your spouse want to handle investment accounts, like 401(k)s, in preparation for retirement? Also, be sure to discuss whether you will retire together or at different times and what spending will look like during retirement. For example, do you have similar visions for travel and activities during your retired time together?

It’s often helpful to get some objective third-party expertise. Reach out if you’d like assistance with managing your finances and planning for the future.

Changing Your Mind After Retirement

Retirement is a milestone achievement, and it’s often a challenge to settle on the right time to leave the workforce.

Many people even change their minds and decide to “unretire” after a few months or years, whether to find fulfillment from working or add to their income stream.

Of course, coming out of retirement comes with particular financial considerations. If you decide to take this step, be sure you know what to expect.

For example, going back to work could impact your:

Taxes — When you go back to work, you will be taking home more than your passive income. This additional money could bump you up a tax bracket, which would mean paying more in income taxes.

Insurance — Depending on your age, you may already have Medicare coverage. If you accept a full-time position, you might have access to company-sponsored healthcare. If you decide to opt into employer-sponsored insurance, you’ll need to figure out how the coordination of benefits works. Also, keep in mind that you cannot contribute to a Health Savings Account (HSA) if you have Medicare.

Social Security — If you’re considered below full retirement age, going back to work may result in part of your Social Security benefits being withheld. If you decide to return to work within a year of retiring, you have the option of paying back any benefits you have received and applying for full Social Security benefits later.

Retirement Accounts — Going back to work may allow you to contribute to a current employer-sponsored retirement account. And don’t forget about your required minimum distributions (RMDs). Just because you go back to work does not mean you can skip taking RMDs on certain types of retirement accounts. If you do, you could face a tax penalty. 

Do you have questions about managing your finances before and after retirement? Reach out today.

Passing Down Property: What to Know

Passing family property down through the generations is a wonderful way to honor all the memories made in your home. Plus, your kids will get to keep making new memories in this well-loved space. 

If you want to leave your heirs property — whether a year-round home or a vacation property — you will have some estate planning decisions to make.

What should you know about passing down property? Here are a few options you may consider.  

Sell your property. You have the option of selling your home to your kids at fair market value. If you decide to discount the house, you will need to consider the gift tax implications.

Designate new homeowners in your will. You can leave your heirs your home in your will, but this option means the document will need to pass through probate before ownership officially transfers to your heirs.

Set up a trust. A trust can allow you to pass that property to your kids while you are still living or after your death. If you opt to transfer the property while you are living, keep in mind there may be tax issues involved. If the property passes to your heirs after death, a trust will help them receive the home without having to go through probate.

Execute a deed transfer. Many states and the District of Columbia allow you to pass down property through a transfer-on-death deed. This process also occurs without probate.

The best way to pass on property depends on your needs and your family’s needs. Remember, it’s important to communicate with your children (and any other heirs) as you go through this process. 

If you want to think through your options, reach out for assistance today.

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