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5 Ways to Help Make Tax Time Easier

Tue, 05 Jul 2022 16:56:10 GMT

5 Ways to Help Make Tax Time Easier

Tax time is almost here again. Are you one of those filers who wait until the last minute? You’re not alone. Unfortunately, procrastination can be costly, especially in retirement when every dollar count. If you wait, you may rush and that may cause you to miss valuable deductions, credits, and other strategies.

The good news is you still have time to prepare. Below are five actions you can take today to get prepared for tax time and possibly save yourself some money. If you haven’t gotten started on your tax planning, now is the time to do so.

Get organized early.

Time is a valuable asset, especially when it comes to tax planning. Take time now to organize all your receipts for major purchases, especially for things that may be deductible like business expenses or health care costs.

You should also use this time to get all your 1099s, W2s, and other income documents in order. If you haven’t received some yet, call the appropriate administrator and ask for one. The earlier you can ballpark your total income for the year, the sooner you can start analyzing possible deductions and credits.

Track your medical expenses.

Did you have major medical expenses in 2019? If so, those expenses could save you tax dollars. You can deduct medical expenses that exceed 10% of your adjusted gross income in 2019. (1)

Of course, you need to know how much you had in medical expenses and be able to document those costs to take advantage of this deduction. Track down all statements and receipts to find a total. You also may want to contact your health care provider for documentation if necessary.

Make a retirement contribution.

Do you have a traditional IRA? If so, you still have time to make a contribution and potentially realize a tax deduction. In a traditional IRA, your contributions are tax-deductible, assuming you meet certain income restrictions. Growth is tax-deferred and your withdrawals in retirement are taxed as income.

You can make a deduction up to April 15 and count it as a 2019 contribution. In 2019, you can contribute up to $6,000, or $7,000 if you are 50 or older. (2) If you haven’t yet met the maximum, you can still do so and possibly see a deduction on your upcoming return.

Take your RMD.

If you’re age 70 ½ or older, your tax issues may not involve contributions but rather withdrawals. At age 70 ½, you are required to start taking minimum distributions from your 401(k), IRA, or other qualified accounts. These required minimum distributions (RMDs) amounts are based on your account balances and your age.

What happens if you don’t take your RMD? You could face a penalty of up to 50% of the required withdrawal amount. (3) Fortunately, you have until April to take your RMD for 2019. If you haven’t done so yet, now is the time to make that distribution.

Think about the future.

Tax planning isn’t just about your upcoming return. It’s also about your long-term future. What steps can you take now to reduce your tax exposure ion future returns?

For example, perhaps you could create tax-efficient income in retirement. Maybe you can take advantage of additional deductions and credits by planning ahead. You may be able to reduce your taxable income by delaying your Social Security filing. A financial professional can help you explore these options and develop the right strategy for your needs.

Ready to take control of your taxes this year? Let’s talk about it. Contact us at Advantage Retirement Services. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation.

1: https://turbotax.intuit.com/tax-tips/health-care/can-i-claim-medical-expenses-on-my-taxes/L1htkVqq9

2: https://www.irs.gov/

3: https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-required-minimum-distributions#9

Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.

19562 – 2019/12/16

Is There Any Benefit to Delaying Social Security Past Age 70?

Tue, 14 Jun 2022 14:52:26 GMT

Is There Any Benefit to Delaying Social Security Past Age 70?

If Social Security is on your radar, you’ve probably heard the conventional wisdom that it’s helpful to delay you filing as long as possible. The reason for delaying is that the longer wait to file, the higher your benefit will be.

You can file as early as age 62. However, your full retirement age (FRA) is probably between your 66th and 67th birthdays. If you file before your FRA, your benefit is reduced by up to 30 percent. The reduction is permanent, so it can have a big impact on your retirement income.

You can avoid the reduction by delaying your filing to your FRA. At that point, you can receive your full benefit with no reduction. However, there’s nothing that says you have to file at your FRA. By delaying your filing past your FRA, you can actually increase your benefit amount. Social Security gives you an 8 percent benefit credit for every year past your FRA that you delay your filing. The credit ends at age 70. (1)

But what happens if you reach age 70 and you’re still not ready to file? Is there any benefit to delaying your filing past age 70? Maybe you don’t need the income. Whatever the reason, you may be thinking about delaying your filing well past age 70. Below are some tips to consider as you make your decision:

Social Security at Age 70

As mentioned, benefit credits for a delayed filing stop at age 70. That doesn’t mean you have to file for Social Security at that time, but your benefit will no longer increase if you don’t file. Instead, your benefit amount at age 70 will stay level, and that’s the amount you will receive when you eventually do file.

However, there’s still one way in which you could increase your benefits after age 70 even though Social Security doesn’t offer annual delay credits past that age. Your Social Security benefit amount is based on your average earnings during your highest-earning 35 years of work.

If you continue to work past age 70, your earnings in those years could replace lower-earning years from earlier in your career. That could boost your average earnings for your career and potentially increase your benefit amount.

Social Security and Taxes

Taxes may be another consideration. Your Social Security benefits may be taxable, depending on your income in retirement. The higher your income, the greater the amount of your benefits that are taxable. However, no one pays taxes on more than 85 percent of their Social Security benefit. (2)

If you have significant retirement income, you may be hesitant to add another taxable income source, especially if your income crosses the threshold to be taxed on 85 percent of your benefits. You may be specifically concerned if you feel the income would push you into a higher bracket.

Generally, your Social Security benefit is likely to be a net positive in your financial picture. If you’re concerned about the tax implications, however, you may want to consult with a financial professional.

Not sure when you should file for Social Security? Let’s talk about it. Contact us today at Advantage Retirement Services. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation.

1: https://www.ssa.gov/planners/retire/1943-delay.html

2: https://www.ssa.gov/planners/taxes.html

The material is not intended to be legal or tax advice. The insurance agent can provide information, but not advice related to social security benefits. Clients should seek guidance from the Social Security Administration regarding their particular situation. The insurance agent may be able to identify potential retirement income gaps and may introduce insurance products, such as an annuity, as a potential solution. Social Security benefit payout rates can and will change at the sole discretion of the Social Security Administration. For more information, please consult a local Social Security Administration office, or visit www.ssa.gov

16767 – 2017/6/20

New to Retirement? Tips for an Easy Transition

Thu, 12 May 2022 17:01:54 GMT

New to Retirement? Tips for an Easy Transition

Retirement is supposed to be a joyous occasion. After all, this is the time when you get to leave the constraints of a busy career behind. You’re free to set your own schedule and spend your time as you wish. There’s no boss to report to. No clients to manage. No big projects to complete. You’re free to do whatever you like.

So why is retirement so difficult for many people? Very often, new retirees realize that this new phase of their life isn’t all they had expected. They miss socializing with their colleagues at work. Without a job, they feel a lack of purpose. They have trouble transitioning to life at home. In fact, a recent study showed that retirees were twice as likely to suffer from depression as those who are still working. (1)

The good news is you can take steps to ease into retirement and pave the way for a smooth transition. Below are a few tips to consider as you leave the working world:

Structure your day.

During your career, you likely had a set schedule. You had tasks, obligations, and goals you wanted to achieve. You may have even had a to-do list.

Just because you’re retired doesn’t mean you have to abandon that structure. If you get comfort from having a list of tasks or objectives, keep doing it in retirement. Set a schedule for the next day. Instead of focusing on work-related tasks, you can pursue a new hobby, meet with friends, or even do something nice for your grandchildren. A structured day could help you fulfill your need for productive activity.

Set short-term goals or milestones.

At work, you’re always looking forward to the next milestone. Maybe it’s landing a new client or finishing a big project. In retirement, you may not get that same feeling of achievement or success.

In retirement, you may feel depressed or anxious without a similar set of goals or objectives. Just because you’re no longer working doesn’t mean you can’t have goals. Plan a big vacation for you and your spouse. Take up a new activity or hobby and set goals for yourself. You could even volunteer for a favorite charity and take on a big fundraiser or similar project. You could coach your grandchild’s sports team. By setting short-term goals you can give your retirement a sense of purpose.

Make new friends.

Maybe you think of your coworkers as friends or maybe you think of them as merely colleagues and acquaintances. Either way, they may play a major role in your social life. They’re a source of adult interaction and socialization. After you retire, you may find that you miss your coworkers and the daily conversation you have with them.

Socialization isn’t just important for your mood and happiness. It’s also important for you health. A recent study found that retirees with large social networks had a 26% lesser chance of developing dementia. (2)

Look for opportunities to make new friends in retirement. You could pursue a hobby or join a group of like-minded people. You could volunteer. Many community centers offer outings and activities for retirees. Be proactive in expanding your social circle. It could make your retirement happier and even healthier.

Ready to plan your transition into retirement? Let’s talk about it. Contact us today at Advantage Retirement Services. We can help you analyze your needs and develop a strategy.

1: https://www.usatoday.com/story/money/2019/06/11/depression-during-retirement-how-cope-and-prepare/1416091001/

2: https://brainworldmagazine.com/friends-with-benefits-socializing-to-fight-alzheimers/

19535 – 2019/12/10

What Would You Give Up for a Stable Retirement?

Wed, 09 Mar 2022 17:50:01 GMT

What Would You Give Up for a Stable Retirement?

Do you make any sacrifices for lent? Perhaps sweets or some other unhealthy favorite food? Or are you trying to kick a more serious habit, like smoking or drinking? No matter what you’re giving up, lent is a great time to make a small sacrifice in your life and practice discipline.

Sacrifice and discipline are also important for retirement planning. It takes a significant amount of savings to fund a long, enjoyable retirement. In order to accumulate those savings, you may need to bypass some spending today.

A budget is always a helpful tool to manage spending. Unfortunately, many Americans don’t use one. According to a recent poll, a third of all Americans don’t use a budget. (1) If you’re among that group, now may be the time to make a change.

Budgeting isn’t the only way to save money though. By making some sacrifices in your current lifestyle, you may be able to reduce your spending and put more money away towards retirement. Below are a few examples of things you could give up to boost your retirement savings:

Large Home

If you’re like most people, your home is probably one of your largest expenses. It comes with a mortgage payment, but that’s not all. You also have insurance, property taxes, maintenance, repairs, and more.

When it comes to housing, bigger isn’t always better. Yes, a bigger house may offer more space and may be nicer, but a larger and more expensive home also usually leads to higher costs. The more your home costs, the higher the insurance and taxes are likely to be. A larger home often generates higher costs for maintenance and utilities.

If you’re in the market for a home in the near future, consider staying well under budget. By simply moving down to a lower price range, you could save yourself thousands not only on your mortgage, but also all the other associated costs.

Travel, Shopping, and Dining Out

Going out to eat and shop is always fun, as are the occasional vacations. While the cost of a night out may not seem that significant as a one-time expense, those costs can certainly add up over time. A budget can help you manage your spending in these areas and more.

One way to manage these expenses is to simply cut down on the frequency. For example, if you go out to a nice dinner twice a month, try cutting back to once a month and putting the savings into your IRA. Instead of going on a few big trips a year, try taking one large vacation and some smaller trips over a long weekend. You don’t have to cut these items out of your life altogether. However, reducing the frequency of these discretionary types of spending could help you boost your savings.

Yearly Raises

Do you get an annual raise at your job? Does the raise make an impact on your finances or does it seem to just disappear?

One way to make that raise more impactful is to put it in your 401(k) or other retirement savings plan. As you get a raise, simply increase your contribution to match the raise amount. The increased salary will go straight into your retirement rather than into your pocket. Over time, those contributions could compound and add up to a substantial amount of additional savings.

Ready to develop your retirement budget? Let’s talk about it. Contact us at Advantage Retirement Services. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation.

1: https://www.prnewswire.com/

19634 – 2020/1/13

How Can You Have a “Second Act” in Retirement?

Fri, 07 Jan 2022 17:44:54 GMT

How Can You Have a “Second Act” in Retirement?

Thinking of launching your next career after you retire? You’re not alone. The phenomenon has become so common that it’s inspired its own name – the “second act.”

Over the past three decades, the amount of people working past age 65 has doubled. Nearly 20 percent of adults over age 65 work in some capacity. By 2024, the Bureau of Labor Statistics expects 13 million people in that age group to be in the workforce. (1)

Some of those individuals are working because they need to financially. However, others are doing it because they’re simply not ready to retire, at least in the traditional sense. Fidelity estimates that the average 65-year-old man will live to age 87, and the average woman will live to 89. That’s more than two decades in retirement for many people, which could be plenty of time to have a fulfilling second career. (2)

In order to launch a successful second act, though, you’ll need to have a stable financial foundation. Below are a few tips to make sure you’re on solid ground before you start the next chapter:

Take care of healthcare.

Often in a second act, the reward is personal fulfillment, not necessarily financial compensation. While you may get compensated for your time, it’s possible that your new career may not come with benefits like health insurance.

Fortunately, if you prepare in advance, you may not need health insurance from your new pursuit. Start by estimating your healthcare needs. You become eligible for Medicare at age 65. However, there are many different types of Medicare options, especially in Medicare Advantage. As you approach retirement, start exploring the different options and find the one that best aligns with your budget.

Also, consider out-of-pocket expenses. Many services and treatments aren’t covered by Medicare. Even those that are covered often require copays and deductibles. Fidelity estimates that the average 65-year-old couple will spend $285,000 out-of-pocket in retirement. (3)

You can prepare for health care costs by putting away money today. One effective way to do so is with a health savings account (HSA). You can make tax-deductible contributions to an HSA and then allocate the funds according to your needs and goals. All growth is tax-deferred, and withdrawals for medical expenses are tax-free. By having a solid healthcare plan in place, you can give yourself the freedom to find the role that is most fulfilling for you rather than the one that provides the best healthcare.

Guarantee your income.

Again, this is about having the flexibility to find the role that is right for you without having to worry about financial issues. If you have sufficient income in retirement, you can focus on charting the path you want.

You’ll likely get Social Security in retirement. Maybe you even have a defined benefit pension or other income sources. You also may have to rely on your savings to generate income.

However, there are risks associated with taking retirement income from your savings. What if you live longer than expected and run out of money? What if the market suffers a downturn and threatens your retirement income?

One way to minimize these risks is to create a guaranteed stream of income. You can use financial vehicles like an annuity to create additional sources of lifetime income, which could reduce risk and uncertainty in retirement. That certainty could give you the flexibility you need to pursue your second act.

Ready to prepare for your second act? Let’s talk about it. Contact us today at Advantage Retirement Services. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation.

1: https://www.aarp.org/work/employers/info-2019/americans-working-past-65.html

2: https://www.fidelity.com/viewpoints/retirement/longevity

3: https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/press-release/healthcare-price-check-040219.pdf

2 Retirement Rules Made to be Broken

Fri, 19 Nov 2021 17:40:09 GMT

2 Retirement Rules Made to be Broken

What’s your strategy for retirement? Is it based on your unique needs and goals? Or is it based on general ideas and conventional retirement wisdom?

There are plenty of “experts” online offering retirement wisdom for the masses. In fact, if you search “retirement” on Google, you’ll find more than 880 million results with retirement tips and strategies.

The problem with retirement advice for the masses is that it’s not customized to your unique goals. There are plenty of pieces of conventional retirement wisdom that aren’t right for every person or situation. Below are two examples of common retirement income rules and tips that may not be right for you:

You should plan on taking 4% withdrawals from your savings to fund your retirement.

There are many “back-of-the-napkin” formulas meant to simplify retirement planning. One of the most common is the idea that you can take 4% of your assets as income in retirement. The idea is that if you withdraw 4% each year, your assets will last at least 25 years.

There are a few problems with this idea. The first is that not everyone will spend money the same way in retirement. You may want to travel or pursue other activities in the early years of retirement. Some people may need to provide support to children or grandchildren. And some will face costly healthcare issues. Not everyone’s spending is the same.

This rule also doesn’t account for inflation. It’s unlikely that your spending will stay the same year after year, making it unlikely that you can take the same withdrawal each year.

A better approach is to develop a custom budget and spending plan and then implement a strategy to meet your income needs. You also may want to consider financial vehicles like annuities that can provide guaranteed* income to help you meet your goal.

You will spend less in retirement than you do now.

Another common piece of retirement advice is that your spending will go down after you retire. Perhaps you’ve heard the idea to plan on spending 80% of your current spending in retirement.

Again, the problem with this advice is that your spending will differ from others. Many retirees see their spending increase after they stop working. They fill their free time with travel, shopping, dining out, and other activities that cost money. In the later years of retirement, you could see your medical expenses rise as you face healthcare issues.

You may see your spending in certain areas decline after retirement, but that doesn’t mean your overall spending will go down. Consider building a retirement budget that is specific to your goals and your plans. That will give you a better idea of how much you may spend in retirement.

Ready to develop a retirement income plan that is specific to your needs and goals? Let’s talk about it. Contact us today at Advantage Retirement Services. We can help you estimate your income need and implement a strategy. Let’s connect soon and start the conversation.

*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.

Do you know about these 4 sources of retirement income?

Thu, 09 Sep 2021 15:49:57 GMT

Do you know about these 4 sources of retirement income?

What’s your biggest retirement fear? If it’s running out of income in retirement, you’re not alone. According to a recent study from Transamerica, the number one fear for Baby Boomers is outliving their assets and running out of income. (1) Boomers aren’t alone. Generation X is also projected to be far behind on their retirement savings, with an average balance of only $64,000. (2)

These numbers may explain why 52% of workers expect to work beyond age 65. Among Boomers, that figure jumps to 68% who expect to or are already working past age 65. (3)

Continuing your career into your late 60s or even early 70s is one way to accumulate more savings and protect your retirement income. However, it’s not the only option. Depending on your goals and needs, you may just need slightly more income to reach your objectives.

Below are four creative ways to stabilize your income in retirement:

Participate in the sharing economy.

The sharing economy is based on individuals sharing their own goods and services with others. Uber is an example. Airbnb is another. There are a growing list of websites and apps that allow you to earn money simply by sharing your own goods, such as your car or extra space in your house.

Granted, you may not want to drive an Uber around town. However, that’s not the only option. If you’re an empty nester with extra space, you could rent bedrooms to guests. There are some services that let you rent out storage space. There are even services for renting out tools or other useful goods.

The best thing about the sharing economy is that you can participate as much or as little as you like. You set your terms, prices and schedule, so it doesn’t come with the commitment of actual employment. Be creative and research opportunities to generate extra income in a way that fits your lifestyle.

Be a coach or consultant.

After a career that spanned decades, your most valuable asset may be your experience and knowledge. Why not use that knowledge to generate income after you retire?

You could use your industry contacts to become a consultant. Or you could coach or mentor younger individuals in your industry who want your advice. There are plenty of websites that offer a platform to do this.

Another option is to talk to your former employer about consulting opportunities. They may want to retain your experience and knowledge and may be willing to do so in a flexible way. Don’t assume that retirement means completely walking away from your career, contacts and experience.

Tap into your life insurance.

Do you have life insurance that has a significant amount of cash value? Did you know you can tap into that cash value for supplemental retirement income?

You can take withdrawals from your life insurance policy. If you’re withdrawing your own premiums, the distributions are tax-free. If you withdraw earnings, the distributions are taxable.

You also may be able to take tax-free loans from the policy, assuming you have enough cash value after the loan to support the death benefit. You repay the loan over time. If you pass away with a remaining balance, that amount is deducted from the death benefit. A financial professional can help you determine if your life insurance makes a good source of supplemental income.

Guarantee your income.

Your concern may not be the amount of your income but rather the certainty of it. You may have to rely on withdrawals from your savings to provide retirement income. Market volatility could make those withdrawals unpredictable. There’s also the risk that you could run out of income if you have a long retirement.

One way to minimize those risks is to guarantee your income using a tool like an annuity. You can take up to a certain withdrawal amount every year. Assuming you stay within the policy’s withdrawal limits, your income is guaranteed for life, regardless of how long you live or how the market performs.

We can help you develop your retirement income strategy. It starts with an analysis of where you are today and where you want to go. Contact us today at Advantage Retirement Services. Let’s connect soon and start the conversation.

1: https://www.kenoshanews.com/business/investment/personal-finance/these-are-baby-boomers-top-3-retirement-fears/article_b5d4a1e0-f853-5beb-9ce6-392d0bd1aa70.html

2: https://www.fool.com/retirement/2020/06/16/gen-xers-are-alarmingly-behind-on-retirement-savin.aspx

3: https://www.kenoshanews.com/business/investment/personal-finance/more-than-half-of-workers-expect-to-work-past-65-heres-why-you-should-plan/article_3789fd58-82d9-57c0-bfeb-73900f3cb27e.html

What Would Your Social Security be Worth If You Viewed It as an Asset?

Wed, 07 Jul 2021 15:15:49 GMT

What Would Your Social Security be Worth If You Viewed It as an Asset?

How much is your Social Security benefit worth? Social Security can provide you with an estimate of your benefit at retirement, but that’s in terms of how much income you’ll receive each year. How much would that income be worth if it were valued as a lump sum asset, like your 401(k) or IRA balance?

There’s no easy answer to that question. It depends on a few factors, like the amount of your benefit, when you file for benefits, and how long you live. A writer from the Washington Post recently attempted to estimate the value of Social Security benefits.

He assumed a monthly benefit amount of $1,500 dollars, which is pretty close to the average benefit of $1,503 in December 2019. (1) According to the Social Security Administration, a $1,500 monthly benefit for a 65-year-old man with typical life expectancy, has a value of $200,910. For a 65-year-old woman, the value is $218,085. (2)

These values increase when you include Social Security cost-of-living adjustments, also known as COLA. These are annual benefit increases to help seniors keep up with inflation. When you factor in historical COLA, the value of a 65-year-old man’s $1,500 monthly benefit increases to $266,105. For a woman, the value increases to $295,350. (2)

Social Security provides a helpful foundation to fund your retirement, but you’ll likely need additional assets, like a 401(k), IRA, annuity, or even a pension. Fortunately, there are steps you can take to increase your Social Security income, such as:

Work longer. Your Social Security benefit is based on an average of your highest-earning 35 years of compensation. By working longer, you may be able to replace some of your lower-earning years from earlier in your career with higher-earning years. That could significantly increase your benefit amount. (3)

Delay filing. You get your full benefit if you file at your full retirement age (FRA), which is between 66 and 67 for most people. (4) However, you can increase your benefit by delaying your filing past your FRA. You can delay all the way to age 70, and you receive an 8% credit for each year you wait. That means if you delay your filing from age 66 to age 70, you could increase your benefit by 32%. (5)

Ready to plan your Social Security strategy? Let’s talk about it. Contact us today at Advantage Retirement Services. We can help you analyze your needs and options, and implement a plan. Let’s connect soon and start the conversation.

1: https://www.ssa.gov/news/press/factsheets/basicfact-alt.pdf

2: https://www.washingtonpost.com/business/2020/05/14/thanks-social-security-you-are-probably-better-shape-retirement-than-you-think/

3: https://www.ssa.gov/oact/progdata/retirebenefit1.html

4: https://www.ssa.gov/benefits/retirement/planner/agereduction.html

5: https://www.ssa.gov/benefits/retirement/planner/delayret.html

Leveraging Your IRA

Wed, 12 May 2021 15:16:17 GMT

Leveraging Your IRA

If you’re like most Americans approaching retirement, you’ve been busy contributing to your IRA or qualified plan. You have successfully pushed your income taxes into the future, but the tax collector is knocking on your door and you can’t ignore him any longer. Remember that at age 70 ½, required minimum distributions (RMDs) must begin, and Uncle Sam finally gets his share. Once the process of withdrawing from your IRA begins, one of three things will happen: “You will live on it, leverage it, or not benefit from it”.

Some retirees must live on their IRAs. These IRAs will be completely tapped out and nothing will be left over and they will not be able to leverage their IRA because every bit of it will be used.

Some seniors do not need to live on their IRAs and if they weren’t required take their RMD’s would opt to pass the asset on to their loved ones and charitable causes.

Multi-generational wealth transfer of a traditional IRA can only be accomplished through the implementation of a strategic plan. The unfortunate truth is that the majority of IRA owners in America have no plan in place that will allow them to optimize their retirement savings and help them mitigate taxes. They will take out their RMD each year and upon their death, without proper planning, they will LOSE their IRAs to taxes, spendthrift heirs, and lost opportunity.

Lack of planning for the inheritance of an IRA not only hurts the owner, but it creates a host of problems for the inheritor. Most IRAs are cashed in at death, this value is added to the heir’s taxable income in that year. Realize that the new tax rate is applied not only to the inherited IRA money, but also to all of their earned income for that tax year. Add to that state income taxes, and you have a tax nightmare.

The typical inheritance is spent anywhere from 93 days to 17 months. A lifetime of your accumulation and earnings can be gone in a flash. However, losing the IRA to taxes and spending can be avoided through proper planning and leverage.

Family is the most precious commodity and concern for the welfare of children and grandchildren is at the front of most parents’ minds. This generation and future generations are in a tough situation. The turbulent financial horizon promises increased taxes, market volatility, low interest rates, skyrocketing health care costs, and greater longevity. What will retirement look like for your children and grandchildren? If you could be the solution to their troubled financial future, wouldn’t you want to know how?

Your IRA, 401(k) retirement plans are valuable assets that can be positioned to not only meet your financial needs, it can also meet the future retirement needs of your children and grandchildren. With leverage, you can make one dollar do the work of many. Instead of Uncle Sam being the largest recipient, why not create a legacy that will impact your family for generations to come?

There is no getting around the RMD. You must take it every year and pay the tax, based on your current tax bracket. But, with proper positioning, your after-tax RMD can become a valuable financial tool. By using this income, there are ways to create a substantial family legacy that provides a tax-free inheritance for your loved ones.

Another form of leverage for your IRA is to extend the payout over multiple generations. Upon your death, proper structuring creates an asset that keeps giving and giving. Imagine what it would be like for your children and grandchildren to receive a check from you on their birthday every year for the rest of their lives.

There’s no better time than now to create a well-defined plan for your IRA.

Retirement – The Transition

Tue, 16 Mar 2021 15:03:01 GMT

Retirement – The Transition

Retirement doesn’t just happen, it’s a transition.

Transitioning into post-career life takes intentional thought, planning, and important decisions that will shape your future for better or for worse.

One such decision is possibly the most pressing, how are you going to generate income?

Maybe you’ve got a stock broker, and you plan to work the stock market.

The stock market can generate dividends, but it can also change at the drop of a hat. It’s a volatile source with a lot of risk. Better options exist than putting all of your eggs onto the roulette wheel.

Another problem – brokers normally don’t deal in retirement planning. They aren’t worried about short term volatility, preferring to ride out the storm. Retirement is no time to be weathering financial downturns.

We’ve been in retirement planning for 17 years.

We strive to help you create guaranteed streams of income to get you through retirement. Annuities are fully insured and safer than trying to get a steady return from the stock market, and provide absolute guarantees.

Consider annuities if you want something more secure than the risk of the stock market.

If you plan to travel overseas or tour the west coast in the States, you want guaranteed income. Imagine landing in Madrid to the news that your cash cow has been laid out to pasture.

If you have grandchildren and you want to spoil them rotten, it’s best to have a steady stream of money flowing in to match the goodies going out.

Are you a collector? You want to make sure you’ve got a secure source to draw from as you grow your collection bigger and bigger.

It’s important to have these guaranteed streams of income, and it’s every bit as important to have the right help when setting them up.

As you transition into retirement, you’ll find that everyone has an opinion about the perfect plan. The problem is, what worked for them may not work for you.

We’ll say it again: We’ve been in retirement planning for 17 years.

Let us use our knowledge and experience to help you understand all of the options so you can choose the retirement plan that’s best for you.

4 Milestones to Hit Before You Consider Retirement

Fri, 01 Jan 2021 15:57:06 GMT

4 Milestones to Hit Before You Consider Retirement

Thinking about retiring in the next year? If so, this is an exciting time. After a career that has likely spanned decades, you can now look forward to the next chapter of your life.

While you’re probably excited to retire, it’s important that you don’t make the leap too early. It’s not uncommon for retirees to realize that they weren’t quite ready to leave the working world. The result is that they return to work in some capacity.

You can avoid that outcome by making sure you’re fully prepared before you pull the trigger on retirement. Before are four financial milestones that could indicate you’re ready for retirement. This list isn’t comprehensive, but if you meet these four major markers, retirement may be in your near future.

You have a retirement budget.

A budget is always a valuable financial tool, but it’s especially important in retirement. A budget helps you control your spending and make sure you’re on-track to hit your financial goals. Without a retirement budget, it can be easy to fill your newfound free time with costly activities like travel, dining, and shopping. If you spend too much in the early years of retirement, you may not have enough assets left in the later years.

Unfortunately, many Americans don’t regularly use a budget. In fact, according to a 2019 poll from Debt.com, nearly a third of all households don’t use a budget. (1) If you’re among that group, now may be the time to start using one. A budget could be the key that helps you maintain your assets and your income through a long retirement.

You have an emergency fund.

Emergencies happen. There is always the potential for a home repair, costly medical procedure, or other unplanned expense. As you get older, the possibility of a costly medical bill may be even more likely. While Medicare may cover most of your care, it doesn’t cover everything. In fact, Fidelity predicts that the average 65-year-old couple will spend $295,000 out-of-pocket on health care in retirement. (2)

An emergency fund can help you handle medical costs, home repairs, or any emergency bill that may pop up. When you’re working, it’s often advised to have a few months worth of living expenses in an emergency fund. However, in retirement you may want to plan for a longer period of time. After all, you no longer have a salary to replenish the emergency fund.

You have little revolving debt.

For many of us, debt is a fact of life. From mortgages to car payments to student loans and credit cards, debt is often a necessity. As you reach retirement though, debt can be a serious financial burden. Every dollar you spend servicing debt is a dollar that isn’t used to cover living expenses or to grow your assets. Debt could force you to drain your retirement assets more quickly.

If you have significant levels of debt, especially high-interest credit card debt, you may want to rethink retiring soon. Develop a plan to tackle that debt and free up cash flow. A financial professional can help you implement a strategy.

You have a retirement income plan.

Finally, perhaps the most important question to answer is where your income will come from in retirement. You’ll likely receive Social Security benefits, and you also may have retirement savings in a 401(k) or IRA. Perhaps you also have a pension, annuity, or other source of income.

A retirement income plan maps out exactly how your income will be generated and how much income will come from each source. A financial professional can help you develop a plan that protects your assets and maximizes your income. They also may be able to help you generate income that is guaranteed for life, no matter how the market performs or how long you live.

Think you’re ready to retire? Let’s talk about it. We can help you analyze your needs, goals, and concerns and implement a strategy. Contact us at Advantage Retirement Services today and let’s start the conversation about your next chapter.

1: https://www.prnewswire.com/news-releases/fewer-americans-are-budgeting-in-2019—-although-they-think-everyone-else-should-300824384.html

2: https://www.fidelity.com/viewpoints/personal-finance/plan-for-rising-health-care-costs

*Guaranteed lifetime income available through annuitization or the purchase of an optional lifetime income rider, a benefit for which an annual premium is charged. Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. 20416 – 2020/9/17