News

6
Mar

Taxes in Retirement: What You Need to Know

Taxes in Retirement: What You Need to Know

Life after retirement is full of changes and challenges, not the least of which is trying to understand how taxes will impact your income and deductions in retirement. Many wonder how big their tax bill will be in retirement and how long their retirement will last.

The average American can expect to spend roughly 20 to 30 years in retirement. However, several unsettling facts about retirement savings were revealed in the 2016 Retirement Confidence Survey.1 In 2014, 30 percent of workers with access to a defined contribution plan, such as a 401(k) plan, did not participate. Of workers with some retirement savings, 54 percent had less than $25,000 and 26 percent had less than $1,000.

The survey also found that less than half of Americans have calculated how much they need to save for retirement. These reports show a considerable gap between workers’ expectations and retirees’ experience about leaving the workforce. Retiring earlier than planned may be due to unexpected downsizing, health issues, or caregiving choices.

So what can you do? Be sure to start preparing now for retirement, if you haven’t already done so. Preparing for retirement can become a great habit. To promote this, the IRS has incentives such as tax credits.2

With a 401(k), 403(b) and most government plans, the limits for 2017 stayed the same as the previous two years: $18,000, plus a $6,000 catch-up contribution for those 50 and older. If you’re lucky enough to have a generous employer matching your 401(k)-type plan or are self-employed, the maximum that can be contributed annually rose to $54,000 a year from $53,000.

For a traditional IRA, you can deduct contributions if they were not covered by a retirement plan with your employer up to $5,500 and $1,000 for catch up amounts.

The IRS has income limits2 for those who contribute to both a traditional IRA and a workplace retirement plan (or those whose spouses have access to a workplace plan), as well as the income limits for those who contribute to Roth IRAs.

If you contributed up to $2,000 in your retirement plan or IRA in 2016 or will in 2017, middle and low income earners could qualify for a Saver’s Credit.3 For 2017, plan ahead for this by including regular amounts automatically deposited into your retirement accounts, depending on your Adjusted Gross Income (AGI).

Take the time to understand your retirement plan tax credits for filing your 2016 income tax return and consider your future goals. Tax time is also a good time to do a financial check-up, including your overall retirement planning. Be sure to talk to your financial professional about your taxes in retirement and how to best plan for a bright financial future.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments or products may be appropriate for you, consult with your financial advisor.

Sources:

1The 2016 Retirement Confidence Survey, Employee Benefit Research Institute (EBRI)

2Internal Revenue Service (IRS) website, Retirement Topics – Contributions

3Internal Revenue Service (IRS) website, Save Twice with the Saver’s Credit

The post Taxes in Retirement: What You Need to Know appeared first on Smart Money Advisors.

Source: Newsletters

Taxes in Retirement: What You Need to Know

1
Feb

Insure Your Love

Insure Your Love

Why do people really buy life insurance? For most it comes down to love. They love someone and want to make sure their family or loved ones wouldn’t suffer financially if something happened to them.

A life insurance policy is the ultimate gift of love. It’s less expensive than many other standard gifts like jewelry, yet provides a tremendous value that your family will need, should they lose you.

Life insurance also delivers added benefits that can help you and your family through a very difficult time, including advanced payments for terminal illness and long-term care riders to help you pay for non-medical assistance when you can no longer dress or feed yourself. Some life insurance policies have cash values that grow and can be borrowed against to help pay for college tuition, retirement and more.

 

Protect the ones you love with life insurance

It’s never too early to have a discussion about life insurance with your significant other so you’re both on the same page. Life insurance can be less expensive than you think. In a recent survey, 35% of Americans said that they wish their spouse or partner had life insurance.1

Every adult in your family needs coverage, whether they have an income or not. Many people think only the income-contributing spouse needs coverage, but that’s a dangerous assumption to make. While the working spouse definitely needs a policy to replace his or her income after death, the non-working spouse has duties within the house that can be expensive to outsource and impossible for a single parent to complete. Imagine how difficult it would be to lose a stay-at-home spouse and find a way to work, do all the shopping, cooking, cleaning, driving, and more. Additionally, the working spouse may need to take an extended leave from work, to comfort the kids and grieve, something they might not be able to do without the financial cushion of a life insurance benefit.  

When you realize that life insurance doesn’t provide income replacement but lifestyle maintenance, you can better appreciate the far-reaching application of a life insurance death benefit.

 

Determining How Much Insurance to Buy

When buying an engagement ring, the traditional advice is to get a ring that costs two months’ salary. But with a life insurance benefit, securing two years’ salary is a better starting place. Still, that only gives your family two years to maintain their lifestyle and find a way to replace your income. It doesn’t address any added concerns such as debt, college tuition and retirement savings.

Before making a decision, it’s a good idea to sit with your spouse or significant other and decide what you want the life insurance policy to accomplish. Consider your salary and any anticipated raises, including cost-of-living increases, and other financial goals you hope to achieve together but would struggle to achieve alone. Finally, think about the non-financial contributions each of you make to your family and the cost of outsourcing those.

Valentine’s Day is right around the corner and that means shopping for gifts that show your love to all the important people in your life. This year, instead of buying some chocolates and a card, consider securing a life insurance policy that will help your loved ones maintain their current lifestyle after you’re gone. Be sure to contact your financial advisor to help you with your life insurance needs.

 

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments or products may be appropriate for you, consult with your financial advisor.

1Source: 2016 Insurance Barometer Study, Life Happens and LIMRA

The post Insure Your Love appeared first on Smart Money Advisors.

Source: Newsletters

Insure Your Love

7
Jan

Make Saving More Money for Retirement Your #1 New Year’s Resolution

Make Saving More Money for Retirement Your #1 New Year’s Resolution

It’s that time of year when we all make New Year’s resolutions, such as eating better, working out more, and getting into better shape.

But what about your financial future? What kind of shape is your portfolio in? How much are you currently saving for your retirement? You may want to consider saving more money for retirement as your number-one resolution for 2017.

Since many New Year’s resolutions tend to be broken by January 2nd, here are some simple suggestions to keep you on track and to avoid that happening to your retirement savings resolution.

1. Be sure you’re enrolled in your workplace’s 401(k) plan.
If your employer offers a 401(k) benefit plan, you should contribute as much as you can possibly afford in order to take advantage of all matching benefits. That’s as close to free money as you can get. You should also consider funding a Roth 401(k), if available, as tax-free sources of retirement income may become increasingly important.

2. Start saving early.
If you don’t have an employer who offers a benefit plan, open your own IRA or Roth IRA as soon as you can. Even small amounts put away earlier in life can have significant benefits. The earlier you start saving the better—not only to help grow your accounts, but also to help make saving for retirement a priority.

3. Create a realistic plan.
Too many people either don’t know or don’t take the time to research how much money they will need at retirement until it’s too late. Assess your needs realistically. Think about how you would like to spend your retirement years and then sketch out your expected costs for that lifestyle — and then double them. After you double them, you’re probably in the ballpark of your actual needs, because people rarely ever plan for the unexpected such as medical costs, nursing home fees, and long-term care expenses. For example,
a 65-year-old, healthy couple can expect to spend $266,600* over the course of their retirement on Medicare premiums alone, according to HealthView Services.

4. Take a long-term view.
It’s important to remember to keep a diverse portfolio that balances your needs, as you grow older — you may want to consider a higher ratio of stocks and riskier investments in your youth, but then slowly shifting to more conservative investments as you near retirement. Buying hot stocks, trying to time the market, panicking after losses and dropping out of the market entirely, concentrating your investments with no diversification… these can all work against your retirement goals.

One example of a conservative retirement product is a fixed indexed annuity. An annuity serves as a complement to other retirement income sources, such as Social Security and pension plans. Fixed indexed annuities can offer principal protection with stable retirement income. The biggest advantages annuities offer is that they allow you to sock away a larger amount of cash and defer paying taxes.

The problem with New Year’s resolutions is that they’re so hard to keep. That’s especially true for resolutions associated with saving money and finances. But if you can find a way to keep this as your number-one resolution, you’ll not only improve your financial situation, you’ll be more optimistic about your retirement and your future.

Be sure to make retirement planning a priority for 2017 by contacting your financial advisor and setting up a meeting to discuss your options and the best financial tools for your portfolio.

*HealthView Services’ 2015 Retirement Health Care Cost Data Report

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments or products may be appropriate for you, consult with your financial advisor.

The post Make Saving More Money for Retirement Your #1 New Year’s Resolution appeared first on Smart Money Advisors.

Source: Newsletters

Make Saving More Money for Retirement Your #1 New Year’s Resolution

6
Dec

Retirement Planning for Procrastinators

Retirement Planning for Procrastinators

You’ve probably heard that you’re never too young to start saving for retirement. However, many of us have procrastinated or have had other priorities and debt come up that prevented us from putting more money aside for our future. Or maybe you tried to save but got hit with unexpected setbacks like a job loss or medical emergency.

You’re not alone. In a recent survey by GOBankingRates,1 1 in 3 Americans has saved $0 for retirement. And 23% have less than $10,000 saved.

screen-shot-2016-12-06-at-4-15-11-pm

Unfortunately, you can’t make up for lost time. But don’t give up — you do have options.

Any money you can set aside can help you make retirement more comfortable. Here are some suggestions for what you need to do to get back on track:

1. Stick to a Routine

The first step is to start saving regularly. Consistent savings, even in just small amounts, is the best way to ensure a retirement fund is growing. If money is put into high-yield accounts or invested wisely, compound interest on small savings can help produce a sizable nest egg.

2. Prioritize Changes That Have Long-Term Benefits

Upping retirement savings contributions is also necessary to catch up. If permitted by their 401(k) plan, people age 50 and over can make catch-up contributions of $6,000 to a traditional 401(k), for example, in addition to the regular $18,000 annual 401(k) contribution limit, according to the IRS.2 Other retirement vehicles such as fixed indexed annuities can be good long-term investments with the potential for growth and protection of principal. Income annuities are specifically designed to create ongoing income for you in retirement.

Those nearing retirement can also help prepare for retirement by reducing spending and paying down debt, which will trim monthly expenses and enable them to stretch their savings further once they retire.

3. Save Like You’ll Retire Tomorrow

People who view retirement as something that is just around the corner can help themselves stay on top of their retirement contributions so that they don’t fall behind. By keeping retirement at the top of your financial priority list, it can become less of a far-off dream and more of a soon-to-be reality.

If you’re already near retirement, you may also need to adjust your expectations—having to work harder to set aside more savings and maybe even working longer.

Even though retirement may seem far away and you think that there is still plenty of time to begin saving, be sure to make retirement planning a priority. Take the first step to a comfortable retirement by contacting your financial advisor and setting up a meeting to discuss your options and the best financial tools for your portfolio.

1GOBankingRates Survey, March 2016

2IRS: Retirement Topics – 401(k) and Profit-Sharing Plan Contribution Limits

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments or products may be appropriate for you, consult with your financial advisor.

The post Retirement Planning for Procrastinators appeared first on Smart Money Advisors.

Source: Newsletters

Retirement Planning for Procrastinators

3
Nov

5 Things You Need to Know About Long-Term Care Insurance

5 Things You Need to Know About Long-Term Care Insurance

Chances are you’ll live well into your 80s, your 90s, and possibly even longer. When you live a long life, the likelihood you’ll need long-term health care is greatly increased.

That’s why over 10 million Americans have purchased long-term care insurance.1 Here are just a few things you should know:

  1. You can decide where care is received. Long-term care insurance doesn’t just provide nursing home care. It can also provide home care for those who prefer to “age in place,” as well as adult day care, assisted living facilities and hospice centers.
  2. The benefits can be flexible. Most long-term care insurance policies offer greater flexibility in the types of services available, such as covering the costs for installing grab bars or a wheelchair ramp, or purchasing a lift chair or hospital bed.
  3. Family caregivers can be covered. Most policies provide caregiver training for family members. Other policies recognize family caregivers as informal caregivers, making their time and services reimbursable under the policy.
  4. Couples can share coverage. Many long-term care insurance policies offer an optional benefit commonly known as “shared care,” which allows couples to share their coverage and maximize their benefits. It typically also includes a built-in protection to ensure a surviving spouse can still receive long-term care insurance benefits.
  5. It’s not “just for older people.” While it’s a critical part of retirement planning and important protection for your later years, younger people also need long-term care as a result of accidents or illnesses. Plus, the younger you are when you apply for long-term care insurance, the better—making it more affordable.

Given that the cost of long-term care can quickly deplete your life’s savings, you should seriously consider adding long-term care insurance to your financial plan. Plus, there’s about a 70% chance you’ll need some type of long-term care after age 65.2

Be sure to learn more about long-term care insurance and why it’s a critical piece of retirement planning. Ask your financial advisor about these and other features and how it has helped their clients like it helped 250,000 families last year.3

1Estimate from the American Association for Long Term Care Insurance (AALTCI)

2Genworth 2015 Cost of Care Survey

3Estimate from the American Association for Long Term Care Insurance (AALTCI)

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments or products may be appropriate for you, consult with your financial advisor.

The post 5 Things You Need to Know About Long-Term Care Insurance appeared first on Smart Money Advisors.

Source: Newsletters

5 Things You Need to Know About Long-Term Care Insurance

13
Oct

Getting Your Affairs in Order

Getting Your Affairs in Order

10 Steps for Creating a Smart End-of-Life Plan

End-of-life planning sounds like something you do towards the end of your life. But the reality is, no one knows what tomorrow will bring. If the worst were to happen, you wouldn’t want your family to be burdened with financial, legal and logistical problems. These 10 steps will help you get your affairs in order.

  1. Have a will and update it periodically. The will designates executors, guardians and trustees. Your executor’s first task is to locate your will. To facilitate that, put the original in an envelope with your name and “Will” written on it. Then place the envelope in a fireproof metal box, file cabinet or home safe.
  2. Have a health care directive (living will). A living will is a medical directive written in advance that sets forth your preference for treatment in the event of your inability to direct care. The document may be drafted to include when the directive should be initiated and who has the decision-making responsibility to withdraw or withhold treatment.
  3. Have powers of attorney. The person you select as your financial and/or healthcare power of attorney should be your spouse or close friend or relative. Whoever you designate will be authorized to manage your affairs, typically financial ones, if you’re not able to handle them yourself.
  4. Have life insurance. Having the right amount of life insurance coverage will help ensure that the dreams you have for your family will be realized even if you’re not there. Determining how much to buy can be complicated, so it’s important to seek assistance from an insurance professional.
  5. Review beneficiary designations for your various financial accounts, including group and individual benefits like life insurance and 401(k)s. Check annually to ensure those named in your insurance policies and retirement plans are still relevant to your needs and wishes. Many people think that if they have a will, they are covered. However, beneficiaries designated in documents generally fall outside the scope of a will, so it is critical that you keep your policies and records updated.
  6. Specify where important financial account information is located. It may sound like an obvious thing to do, but few people keep a list of where important records pertaining to their savings, retirement plans, college-funding plans, mortgage, and insurance reside. Keep a master list and review it annually.
  7. Specify where important non-financial information and valuables are located such as marriage certificates, birth certificates, titles/deeds for the house/cars, passports, jewelry, safe deposit box key, items in storage facilities, etc.
  8. Specify your final arrangements such as burial or cremation, where you want to be buried, whether you want to be an organ donor, etc.
  9. Have a list of professionals who assist you with your family’s legal and financial affairs (insurance professional, attorney, accountant, etc.).
  10. Explain to heirs how your trust works. Trusts are often a useful legal and estate-planning device for protecting assets from estate taxes and providing a vehicle to be sure survivors get proper administrative and investment advice and counsel. An attorney is the best source of information about the proper use of trusts and whether one would be appropriate for you.

To get a sense of your “end-of-life” needs, talk to your financial advisor. He/she can make sure you have the plans in place that you need to get your affairs in order.

Information for this article was provided by Life Happens, a nonprofit organization dedicated to helping consumers make smart insurance decisions to safeguard their families’ financial futures: www.lifehappens.org.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments or products may be appropriate for you, consult with your financial advisor.

The post Getting Your Affairs in Order appeared first on Smart Money Advisors.

Source: Newsletters

Getting Your Affairs in Order

29
Sep

Life Insurance 101 for Retirees

Life Insurance 101 for Retirees

According to a recent 2016 Insurance Barometer Study by Life Happens and LIMRA, having enough money for a comfortable retirement continues to be the top financial concern among most American consumers (66 percent). Next on the list are two related, and just as troubling, retirement concerns—paying for long-term care (58 percent) and medical expenses (58 percent).

It’s important to recognize that when you retire your accumulated wealth is probably at its peak. Retirement these days can last decades, and age can bring on many potential threats to your financial health. In addition to staying active, eating well and seeing your doctor regularly, you can take some proactive financial steps to help make sure a health concern doesn’t ruin your retirement.

Life Insurance

It may seem counterintuitive that empty nesters or retirees need life insurance, but some still have dependents, such as disabled adult children. Many also still have financial obligations, such as the mortgage on a home or second home, that could become a burden if a spouse died or becomes disabled. More importantly, if you died today, your spouse could outlive you by decades. Would they have to make drastic lifestyle changes to make ends meet? Your death could reduce the Social Security benefits they’d been counting on. It could also bring unplanned medical and funeral expenses.

Life insurance coverage can preserve the retirement plan you worked so hard to put in place and ensure your estate will be passed on, intact, to your survivors. A policy’s death benefit can help foot the estate tax bill from Uncle Sam and provide a legacy for your children and grandchildren, even if you use up most of your assets during your lifetime. For all these reasons, if you’ve been thinking about dropping your life insurance coverage, you may want to reconsider.

Long-Term Care Insurance

Long-term care insurance usually takes effect when you cannot perform at least two activities of daily living such as bathing, eating or dressing. The cost of this insurance rises as you grow older, but if you don’t have it and can afford it, you should consider it. The cost of home health care aide, an assisted living facility or a nursing home can quickly deplete your life’s savings. Medicaid, a government program, only kicks in once your assets are significantly depleted, and you may not get exactly the care you’re hoping for.

Annuities with Long-Term Care Benefits

Insurance companies have recently come up with “hybrid,” or linked, policies. These vehicles allow you to obtain a fixed annuity and to then attach a long-term care rider. Should you have a qualifying need for long-term care services, you could access a monthly benefit for a set number of months or, in some cases, for the remainder of your life.

 

The purchase of a fixed annuity with LTC benefits can be less expensive than buying a stand-alone LTC insurance policy. And when you deposit funds into the annuity, that money is yours to spend regardless of whether you need long-term care or not.

Whether you’re an empty nester or already in retirement, it’s always a good idea to reevaluate your insurance coverage and needs. To find out more about life and LTC insurance and if you need additional coverage, be sure to contact your financial professional.

Information for this article was provided by Life Happens, a nonprofit organization dedicated to helping consumers make smart insurance decisions to safeguard their families’ financial futures: www.lifehappens.org.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments or products may be appropriate for you, consult with your financial professional.

The post Life Insurance 101 for Retirees appeared first on Smart Money Advisors.

Source: Newsletters

Life Insurance 101 for Retirees