Smart Strategies for Sticking With Your Financial Resolutions This Year

Have you already forgotten about your New Year’s resolutions? Like many of us, we start the new year with good intentions. The question is, how do we keep our New Year’s resolutions from faltering? Often, our New Year’s resolutions fail because there is only an end in mind – a clear goal, but no concrete steps toward realizing it. Mapping out the incremental steps can make the goal seem more achievable.

Here are my 6 tips for making and keeping your financial resolutions this year:

TIP# 1
MAXIMIZE YOUR PLAN CONTRIBUTIONS

Contribution limits are set by the federal government each year so be sure to find out what the limits are for your retirement plan. If you will be 50 or older you’ll be able to make an additional catch-up contribution. Here’s a link to our key financial data report for 2017 which includes the dollar amounts for contribution limits: 2017 Key Financial Data.

TIP #2
SET UP AUTOMATIC CONTRIBUTIONS

There are two excellent reasons for doing this. One, time is on your side – in fact, time may be the greatest ally you have when it comes to succeeding as a retirement saver and an investor. An early start means more years of compounding for your invested assets. It also gives you more time to recover from a market downturn. Two, scheduling regular account contributions makes saving for retirement a given in your life.

TIP #3
REVIEW & REDUCE YOUR DEBT

Look at your debts, one by one. You may be able to renegotiate the terms of loans and interest rates with lenders and credit card firms. See if you can cut down the number of debts you have – either attack the one with the highest interest rate first or the smallest balance first, then repeat with the remaining debts.

TIP #4
REBALANCE YOUR PORTFOLIO

Many investors go years without rebalancing, which can be problematic. Rebalancing is crucial for the smart investor.

TIP #5
SOLIDIFY SOME RETIREMENT VARIABLES

Accumulating assets for retirement is great;  doing so with a planned retirement age and an estimated retirement budget is even better. The older you get, the less hazy those variables start to become. See if you can define the “when” of retirement this year – that may make the “how” and “how much” clearer as well.

TIP #6
SOLIDIFY YOUR COLLEGE PLANNING

If your child has now reached his or her teens, see if you can get a ballpark figure on the cost of attending local and out-of-state colleges. Even better, inquire about their financial aid packages and any relevant scholarships and grants. If you have college savings built up, you can work with those numbers and determine how those savings need to grow in the next few years.

Good luck with your financial resolutions. If you need help feel free to reach out, or download a copy of my free eBook, The Pre-Retirement Toolkit.


Sources:

  1. This material was prepared in part by MarketingPro, Inc.

5 Smart Money Moves to Make When You Are in Your 50’s

So you are in your 50’s? Here are the smart financial moves you should be making right now:

RETIREMENT RED ZONE

At this point in your financial life you’re in what I would call the Retirement Red Zone. You are getting close, but you’re not quite there yet and you still have some important work to do.

SMART MOVE #1

PICK A DATE

TIP: Start Thinking About an Approximate Retirement Date

Will you work 5 more years? 10 years? 20? You need to have a rough idea of when you may stop working so you can plan accordingly. The longer you work the less you’ll need in retirement savings and vice versa.

SMART MOVE #2

RAMP UP SAVINGS

TIP: Take Advantage of Catch-Up Contributions

Ramp up your savings if you can and take advantage of catch-up contributions. For the current catch-up contribution allowances click here.

A Catch-Up Contribution is a type of retirement savings contribution that allows people over 50 to make additional contributions to their 401(k) and/or individual retirement accounts.

SMART MOVE #3

REDUCE DEBT

TIP: Retiring With Major Debt Isn’t Good for Your Financial Health

Aim to reduce your debt as much as possible by the time you retire. Retiring with major debts won’t be good for your retirement and can prove to be extremely stressful for both you and your spouse.

SMART MOVE #4

CONSIDER LONG TERM CARE INSURANCE

LTC = Long Term Care Insurance

Long Term Care Insurance is coverage that provides nursing-home care, home-health care, personal or adult day care for individuals above the age of 65 or with a chronic or disabling condition that needs constant supervision.

LTC is a smart move for most of us, but can be too costly for many to purchase. If you have the means to purchase it, now is the time to do it.

If you buy a policy in your 40’s you risk paying too much over the life of the policy. On the flip side if you wait until 60’s or later the premiums skyrocket and you may not even get the coverage. So, your 50’s is the sweet spot to make that purchase.

SMART MOVE #5

UPDATE YOUR WILL

Nearly ½ of All Americans Over 50 Don’t Have a Will!

According to AARP nearly half of all americans over age 50 don’t have a basic will, so make sure you have one.

For more info on the importance of having a will watch this video:


Sources

  1. This material was prepared, in part, by MarketingPro, Inc.
  2. http://www.investopedia.com/

3 Smart Financial Tasks to Start Off The New Year Right

Here are 3 things to do in January to help keep your financial life on track this year:

TASK #1

Set Up Your Budget

Set up your budget for the new year. Review your spending habits from the previous year and create a saving and spending plan for the current year. You can use online tools to help with this. I use http://bit.ly/FirstStepCashManagement when working with clients but you also check out http://www.YouNeedABudget.com or http://www.Mint.com

TASK #2

Get A Credit Report

Get a copy of your credit report. You should be checking this three times throughout the year. You are entitled to one free report every year from all three agencies Experian, Transunion, Equifax. So, spread out your requests over the year. Pick one agency to obtain report from now. You want to look for anything that doesn’t seem right on the report and take action if you need to. Go to http://www.annualcreditreport.com

TASK #3

Review Retirement Plan Contributions

If you aren’t already maxing out your retirement plan contributions consider increasing the amount you contribute by 1% this month. Since you’ll be looking at your budget this month make sure you work savings into your plan. Keep increasing your contribution by 1% every 6 months until you’ve at least reached the 10% mark.


Sources:

  1. http://www.learnvest.com/knowledge-center/your-january-2016-financial-to-dos/
  2. http://money.usnews.com/money/personal-finance/articles/2014/12/02/your-end-of-year-financial-checklist
  3. http://www.forbes.com/sites/learnvest/2013/01/04/your-financial-to-dos-for-every-month-in-2013/#14fe6d3d41d4

3 Things To-Do in December to Keep Your Financial Life On Track

Here are 3 great year end tasks you should seriously considering doing this month:

TIP #1

Review Your Accounts

The end of the year is a great time to take a look at all your investment accounts to determine if you need to rebalance in the new year. Over time your portfolio can deviate from your intended allocation due to market fluctuations. If you are working with and advisor they will most likely be doing this for you.

TIP #2

Tax-Loss Harvest

Determine if you should do any tax-loss harvesting. What’s that? Tax-loss harvesting is the practice of selling a security that has experienced a loss. By realizing, or “harvesting” a loss, investors are able to offset taxes on both gains and income. In your taxable accounts, if you sold any capital assets for a gain this year, now may be a good time to sell off some of your investment dogs so that you can offset those gains with losses. If you are working with an advisor they can help with this. TIP: Your accountant can help you determine if you should take any capital gains or losses

TIP #3

Reflect on the Year

Take this month to reflect on your financial life this year. What went right and what went wrong? Make note of the good things and try to keep that going. For the things that didn’t work out see if there is any room for improvement next year.


Sources:

  1. http://www.learnvest.com/knowledge-center/your-january-2016-financial-to-dos/
  2. http://money.usnews.com/money/personal-finance/articles/2014/12/02/your-end-of-year-financial-checklist
  3. http://www.forbes.com/sites/learnvest/2013/01/04/your-financial-to-dos-for-every-month-in-2013/#14fe6d3d41d4

5 Smart End-of-the-Year Money Moves You Could Make Right Now

As the year comes to a close, here are 5 things you can do to help keep your financial life on track:

Ask yourself these 5 questions and then take action!

Question #1

What has changed for you in 2016?

Did you start a new job or leave a job behind? Did you retire? Did you start a family? If notable changes occurred in your personal or professional life, then you will want to review your finances before this year ends and the new year begins. Even if this year has been relatively uneventful, the end of the year is still a good time to get cracking and see where you can plan to save some taxes and/or build a little more wealth.

Question #2

Do You Practice Tax-Loss Harvesting?

Tax-loss harvesting is the art of taking capital losses (selling securities worth less than what you first paid for them) to offset your short-term capital gains. If you fall into one of the upper tax brackets, you might want to consider this move, which directly lowers your taxable income. Keep in mind this strategy should be made with the guidance of a financial professional you trust.(1)

Question #3

Do You Itemize Deductions?

If you do itemize deductions, great! Now would be a good time to get the receipts and assorted paperwork together. Besides a possible mortgage interest deduction, you might be able to take a state sales tax deduction, a student loan interest deduction, a military-related deduction, a deduction for the amount of estate tax paid on inherited IRA assets, an energy-saving deduction. There are so many deductions you can potentially claim, now is the time to meet with your tax professional to strategize to claim as many as you can.

Question #4

Are You Thinking of Gifting?

How about donating to a charity or some other kind of 501(c)(3) non-profit organization before 2016 ends? In most cases, these gifts are partly tax-deductible. Keep in mind, you must itemize deductions using Schedule A to claim a deduction for a charitable gift.(2)

Question #5

What Can You Do Before You Ring in The New Year?

Talk with a financial or tax professional now rather than in February or March. Little year-end moves might help you improve your short-term and long-term financial situation.


Sources:

  1. fool.com/retirement/2016/11/09/1-smart-tax-move-to-make-before-the-end-of-2016.aspx
  2. irs.gov/taxtopics/tc506.html
  3. This material was prepared, in part, by MarketingPro, Inc.

How Trump’s Proposed Tax Changes Could Affect You

Trump has been pretty clear about wanting to simplify our tax code. I sat down with CPA Steven Stern to help explain these proposed changes. So, here are where things currently stand and how they might affect you:
Here’s list of the of the items discussed in the video, but be sure to watch the video for to learn how these changes specifically affect you:

CHANGE #1 

Shift From 7 Income Tax Brackets To 3

Current (Married Filing Jointly):

  1. 10% bracket: $0 to $18,550
  2. 15% bracket: $18,550 to $75,300
  3. 25% bracket: $75,300 to $151,900
  4. 28% bracket: $151,900 to $231,450
  5. 33% bracket: $231,450 to $413,350
  6. 35% bracket: $413,350 to $466,950
  7. 39.6% bracket: $466,950 or more

Proposed (Married Filing Jointly)

  1. 12% bracket: $0 to $75,000
  2. 25% bracket: $75,001 to $224,999
  3. 33% bracket: $225,000 or more

CHANGE #2

Increasing the Standard Deduction

Trump proposes increasing the standard deduction from $12,600 to $30,000 for joint filers (from $6,300 to $15,000 for singles), and capping itemized deductions at $200,000 (joint) or $100,000 (single) and scrapping AMT.

CHANGE #3

Eliminate 3.8% Affordable Care Act Tax

The 3.8% Affordable Care Act tax on the lesser of net investment income or the amount by which your AGI exceeds $200,000 would also be eliminated.


Source: Bob Veres

7 Important Ages To Be Ready For In Retirement

Getting ready to retire or have you just started your retirement? Here are 7 important ages you should to be ready for:

 

AGE  55

Can Make Withdrawals Without 10% Penalty if Retired

At age 55 you can withdraw from your 401(k) or 403(b) plan without the 10% penalty if you retire or get fired. Also, if your employer offers a pension you may be eligible for full retirement benefits, if you meet the plan requirements.

AGE  59 1/2

Can Make Withdrawals Without 10% Penalty

This is an important age to remember. Once you turn 59 ½ you can withdraw money from IRA’s and deferred annuities without paying the 10% penalty for early withdrawal.

AGE 62

Can Start Reduced Social Security Benefits

This is another big year. At age 62 you can start receiving Social Security benefits. However, keep in mind your benefits will be reduced since you will not have reached full retirement age. The other thing is that at age 62 you may be eligible for full pension benefits if applicable to your situation.

AGE 65

Qualify for Medicare Benefits

This is when you qualify for medicare benefits. Also, with most pension plans you become eligible for your full benefits.

AGES 66 & 67

Eligible for Full Social Security Benefits

Ok, I have two ages here. But, they are pretty much for the same thing so I lumped them together. At age 66 you become eligible for full social security benefits, if you were born between 1943-1954. Everyone born after 1954 follows this table:

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AGE 70

Your Social Security Benefits Max Out

Once you hit 70 you should start collecting your social security benefits if you haven’t already done so because your benefits will be maxed out. Waiting to collect benefits until age 70 can actually be a great strategy if you are trying to max out social security benefits or are concerned about longevity.

AGE 70 1/2

Must Start Your Required Minimum Distributions (RMD’s)

Finally, age 70 ½ . When you turn 70 ½ you will be required to start withdrawing specified amounts from your 401(k)’s and IRAs. This is called your Required Minimum Distribution or RMD for short. You must begin these withdrawals once your turn 70 ½ but you actually have until April 1st of the year following the year you actually turn age 70 1/2 . I know, confusing right? Let me give you an example. Let’s say you turn 70 ½ in January 2016, you will need to take your RMD by April 1st, of 2017. Now, you can take it in 2016 but you don’t have to. Going forward, every year after your first RMD you will be required to take the distribution buy December 31st.


Source:

  1. Planning Retirement Income

 

 

What a Trump Presidency Means For Your Retirement Accounts

With the election of President Donald Trump, we should be prepared for volatility in the investment markets. Since he has provided less detail about his policy positions than a traditional campaign, it may take some time for markets to sort out his priorities. Although, for the time being the market has digested the news positively.

[CLICK TO WATCH]

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What’s Happened So Far

Donald Trump’s surprise presidential election victory led to extreme market volatility in overnight trading since the market had already priced in a Clinton win. Futures were down over 800 points while votes were being counted and it was becoming clearer that Trump would win. But, we bounced back and ended the following day up over 250 points, hitting all time market highs. What we can be sure of is that markets are likely to remain unsettled in the near to medium term.

The Intrinsic Value of Stocks

In the end, the intrinsic value of stocks don’t change with the occupant of the White House.

What To Do Now:

In times of uncertainty, remember that panic is not a good investment strategy, and that it’s important to stick to your long-term investment plan.  The very worst thing you could do, over the next few days and weeks, is make a temporary loss permanent by selling into the general panic or buying into over excitement. Follow this advice:

  • Have an investment plan
  • Be prepared for volatility
  • Remember, the market will move up and down but it won’t always be in the direction you want

Accumulating Retirement Assets?

If you are accumulating assets for retirement with a long term time horizon the key is to stick to your proper allocation regardless of what is happening in the markets.

Preserving Your Assets?

If you are preserving your assets and approaching retirement, again make sure you are allocated appropriately and taking on the appropriate amount of risk.

Drawing on Your Assets?

If you are drawing on your assets, consider using a bucket approach and having your short term needs in cash so you are not forced to take money out if the market is down.

Use This Tool

To make sure your portfolio is matched with your comfort for risk you can use this tool: http://bit.ly/YourRiskNumber. It’s a good first step to help steer you in the right direction if changes are needed in your portfolio.

 

What We Learned at Schwab IMPACT 2016 That Impacts YOUR Financial Life

Every year we trek to the Schwab IMPACT conference to learn the latest developments in financial planning and investment management so we can better serve you.

Day 1&2: The Election PLUS Tips For Your Kids 18+

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The Market & The 2016 Presidential Election

Greg Valliere, Schwab’s Chief Political Strategist had this to say:

  • If Trump wins the markets may not respond favorably
  • On the flipside, if Hillary wins there may not be much in the way of volatility
  • Valliere anticipates Hillary winning by a 5-7 point lead spread
  • However, if Hillary wins by a wider margin we could see strong volatility along with potential changes to the house (not good historically for the markets)

Tips for Your Kids Heading To College

  • Consider having them sign Power of Attorney form (POA) before going off to school since you may not have access to their accounts.
  • Fill out the HIPAA release form at the college your child is attending. If something were to happen to your child the college could then release the information to you.

Day 3: Malcolm Gladwell PLUS Balancing Retirement & College Saving

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Insights from Malcolm Gladwell

This year was packed with thought provoking commentaries from the likes of Malcolm Gladwell and political insight from Greg Valliere, Ian Bremmer, Alan Simpson and Robert Reich, plus MUCH more.
For those of you that don’t know, Malcolm Gladwell is the author of the Tipping Point, Blink, and Outliers.
He coined the phrase “Tipping Point” which is that magic moment when an idea, trend, or social behavior crosses a threshold, tips, and spreads like wildfire.

The Internet of Things

In his session he predicted that the internet of things is going to be as big as the industrial revolution. That’s a bold statement, but one to take notice of. We are beginning to see products like Amazon Dash, which is a Wi-Fi connected device that reorders your favorite product with the press of a button.The growth of internet connected “things” is expect to accelerated.

Playing Basketball vs. Playing Soccer

Gladwell also discussed how our country and economy has traditionally focused on making the best people even better. He illustrated that we operate like a basketball team. For a basketball team to be great, you really only need a few amazing players. It doesn’t matter how weak the rest of the team is so long as you have a few great players. And, if you work on making your best players even better, the team as a whole usually improves.
Soccer on the other hand requires that ALL players work together. Studies have shown that soccer scores can increase dramatically when time and energy is invested in coaching the weakest players on the team not the strongest players like in basketball.

Malcolm’s Advice: Improve The Weak Links

In the new world order, Gladwell suggests we invest in what he calls the weak links. He went on to explain that the best way to improve our economy is to invest in the weakest links.

College Planning vs. Retirement Planning

The balance between saving for college AND saving for retirement is difficult for most families. A study by JP Morgan reveals some useful guidance:

  • Only 0.3% of college student receive enough grants and scholarships to cover ALL costs
  • You need to to start saving now and seriously consider a 529 savings plan
  • The most important thing is to be saving for retirement
  • Saving for retirement should come BEFORE saving for college
  • The JP Morgan study says that saving 15% of what you make is the optimal number

Saving 15% is a great rule of thumb, however your situation could be different. What you need will depend on things like how much you have already saved, if are you planning on moving during retirement, if you will you work, or if you will receive an inheritance. So, there are lots of factors to consider which is where we can assist. At Weiss Financial Group we help figure out how much you NEED to save, how much you CAN save, and WHERE to invest the money.

For the Latest LIVE Videos Don’t Forget to Like Our Facebook Page 

I am live Wednesdays at noon answering your questions and providing smart tips.

Check it out here: http://bit.ly/WFGFacebook

3 Things You MUST Think About When Changing Jobs

Fall seems to be the time of year many people either willingly decide to change jobs or are forced to due to downsizings or restructuring. If you are changing jobs, here are the top financial considerations:
jobchanges-thumbnail

SWITCHING FROM ONE JOB TO ANOTHER CAN LITERALLY PAY OFF

Data from payroll processing giant ADP confirms that statement. In the first quarter of 2016, the average job hopper realized a 6% pay boost!

That’s a pretty significant jump in pay, so it’s definitely something to consider. We all get comfortable in our jobs, but as you can see it may pay to look elsewhere. You never know what opportunity may be out there for you if you are not looking.

Nevertheless, before you make that leap, be sure you address these matters:

CONSIDERATION #1

HEALTH CARE

How quickly can you arrange health coverage?

If you already pay for your own health insurance, this will not be an issue. If you had coverage at your old job you will need to figure out how to replace it.

If you were enrolled in an employer-sponsored health plan, you need to find out when the coverage from your previous job ends – and, if applicable, when coverage under your new employer’s health plan begins.

If the interval between jobs is prolonged, and COBRA will not cover you for the entirety of it, you may want to check whether you can obtain coverage from your alumni association, your guild or union, or AARP.

If you are leaving a career to start a business, confer with an insurance professional to search for a good group health plan.

CONSIDERATION #2

YOUR RETIREMENT SAVINGS

What Happens With Your Retirement Savings?

You will likely have four options regarding the money you have saved up in your workplace retirement plan: you can leave the money in the plan, roll it over into an IRA (this is the option we help with at Weiss Financial Group), transfer the assets into the retirement plan at your new job, or cash it out.

Keep in mind that the last option will be taxable and may incur a 10% early withdrawal penalty if you are not yet 59 1/2.

Here is a link to another blog post that goes into greater detail about what to do with your retirement account when you leave your job: 4 Options for Your 401(k) When You Leave Your Job

CONSIDERATION #3

YOUR CASH FLOW

Can you manage your cash flow effectively between one job & the next?

First, you’ll need to truly understand if you can make this work. I suggest taking pencil to paper and filling out a cash flow worksheet to figure out what your needs are.

Here is a link to our cash flow worksheet to make things easier for you: http://bit.ly/CashFlowWorksheet

Use can also online tools to help with this. We use first step cash management with our clients. In my opinion this is the best cashflow planning strategy available. If you are interested, as a thank you for watching the video and reading this post I will give you free access. Simply send a private message request to the Weiss Financial Group Facebook page and I’ll get you set up.

This all makes the case for having an emergency fund in place. Do you have one? Take a look at this blog post I wrote: How Big Should Your Emergency Fund Be?.

Finally, I recommend postponing big purchases, and avoid running up large credit card debts you will regret later.

BOTTOM LINE

  • Make sure you keep your household money needs top of mind
  • Make sure you address your insurance needs
  • Strive to keep saving for your future at your new workplace

Sources

  1. qz.com/666915/when-to-switch-jobs-to-get-the-biggest-salary-increase/
  2. money.cnn.com/2016/04/12/news/economy/millennials-change-jobs-frequently/
  3. healthcare.gov/quick-guide/dates-and-deadlines/
  4. lifereimagined.aarp.org/stories/14481-Financial-Checklist-for-Job-Changers
  5. This material was prepared, in part, by MarketingPro, Inc.