Member Blogs

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  • The recent market downturn could be a beneficial opportunity for some investors. Should you be taking advantage of today's bear market? We'll help make your decision easier with these 5 considerations.
  • It’s difficult to overstate the impact the global pandemic is having on all of us. Today, I focus on how recent changes to tax due dates and the stimulus bill might affect you. The due date to file and pay your Federal income taxes has been extended to July 15, 2020. Most but not all []
  • As the Coronavirus continues to spread Raleigh, Durham, NC and worldwide, so do phishing attacks disguised as helpful information on the outbreak. Security experts report an uptick in phishing messages being sent to businesses and individuals on the topic. Many appear to be checklists and fact-sheets PDFs with information on cleaning or remote work. Clicking on these links or attachments will instead download malware on your machine that can hold your data for ransom or act as spyware
  • You may have heard the advice about the importance of saving for retirement and you may know just how important it isto save and still not be able to really put aside money for retirement as you would like. MarketWatch published an opinion piece that asks: Why is it still so hard for women to [] ©Bring Clarity to Your Finances™. Women Face Challenges in Saving for Retirement is a post from Bring Clarity to Your Finances™
  • If you’ve received an IRMAA (Income-Related Medical Adjustment Amount) letter in the mail, warning you of higher premiums for Medicare Part B and Part D because of your income level, you might be wondering whether you can reduce, or even eliminate your IRMAA. One of the most common scenarios in which you could do this is if you’ve had a life-changing event. (Feed generated with FetchRSS )
  • The coronavirus is a pandemic and the market is in panic. This video describes ways of staying sane in this crazy investment time. After watching the video, you can dive into our three part article on creating resilient income from your portfolio. Tolerating Volatility. Time Eats Volatility. Retirement Example. The bottom line is we need… [Continue] (Feed generated with FetchRSS )
  • As the Coronavirus spreads, worldwide anxiety increases. Explore 4 ways that momentous events can affect investment decisions — and how to remain balanced amidst the fear.
  • When stocks started tumbling because of unprecedented, worldwide concerns over COVID-19, also known as the coronavirus, our firm started reaching out to our clients for two reasons. First, many of our clients had never been with us during a market downturn, and we wanted to give them assurance. Second, we wanted to see what questions people have about their portfolios. (Feed generated with FetchRSS )
  • Madam C.J. Walker, one of many women who blazed a trail in business and finance, is getting her own Netflix limited series that will be released on March 20, 2020. This woman, the child of enslaved parents, was an unlikely entrepreneur who faced a number of hardships before she found success selling a hair growth [] ©Bring Clarity to Your Finances™. The Inspiring Story of Self-Made Millionaire Madam C.J. Walker Comes to Netflix is a post from Bring Clarity to Your Finances™
  • Planning for your retirement income is an important process with many moving parts. There are different income channels that you will need to account for like your investment portfolio, designated retirement accounts, Social Security, and your pension benefits. Pensions are talked about less and less due to the diminishing supply of pension opportunities in the private sector. But for those of you who will benefit from this avenue of retirement income, it is important to understand the options you have for receiving your money. Today, we are going to take a look at the top four ways to take your pension benefits. Keep in mind that some of these options may be more beneficial than others, it just comes down to how the strategy fits into your financial plan. 1. Lump-sum payoutOnce you retire, your company will give you the option to take your pension benefits in one lump sum. By cashing out your pension, you would receive all of the funds at one time. At first, this idea may sound like the California gold rush. You’ll have an immediate increase in your financial resources and the autonomy to handle the money in the best way that you see fit. This could allow you to invest the money in other channels like an IRA, giving you more freedom in how your money is being invested. But more often than not, a lump-sum payment isn’t like striking gold at all, turning out to be fool’s gold instead. While a lump sum does offer immediate autonomy and freedom, that comes with a real financial risk. Many people have trouble managing that large of a sum and end up losing more than they gain. A lump sum also increases the amount of money you have access to which can lead to more recreational and temporal spending. These habits can start to eat away at your retirement budget and savings plan that you have spent years cultivating. It is also important to look at the tax considerations with a lump sum. By taking the funds from your pension all at once, you will be responsible for paying ordinary income tax on the money. This tax consequence can eat away at so much of the money you have spent years working for. If you rolled the funds over into an IRA within 60 days, for example, you wouldn’t need to pay taxes until you started taking distributions on the money. 2. Single-life annuityIf you don’t take your pension in a lump sum, you will take it in some form of an annuity. An annuity is a promise of money to be paid overtime, and in the case of your pension, it will be lifetime payments made in monthly installments. There are many types of annuity structures for pensions and we are going to start with one of the most popular options, single-life annuity. A single-life annuity offers the highest monthly payment of all pension annuity options, making it one of the most popular among retirees. With a single-life annuity, you would receive the largest monthly check based on your package for the rest of your life. Many people gravitate to this option without fully understanding it. This annuity is structured to pay you each month but after you pass away your payments stop, leaving your spouse or any dependents without any payments. This could present a problem if your spouse is dependent on those monthly checks and will continue to need some of that support if you are gone. It is important that you include your spouse in the decision-making process. Together you can assess your other streams of retirement income, cash flow, and budget to make the right choice for both of you. 3. Joint and Survivor optionsMany married couples select a joint and survivor option in order to take care of the remaining spouse when the other passes away. This option is a great way to ensure your spouse will still receive payments when you are gone. These plans offer two main options: 50% and 100% of benefits. Your choice between these two will decide how much you get paid each month and the portion of that money that your spouse is entitled to if you pass away. Let’s take a look at both options in a little bit more detail By selecting the 50% option, you will receive slightly higher monthly checks and when you pass away, your spouse would be eligible to receive half of your benefit. This option is great for couples who have multiple streams of retirement income. Take the hypothetical couple, Sam and Sandy as an example. Sam selects the 50% joint and survivor option and his monthly checks are $600. After 8 years, Sam passes away from health problems and under this plan, his wife, Sandy, will still receive $300 every month for the rest of her life, providing essential retirement income. Now, we will take a look at the 100% option. This plan will lower your monthly payments but it will allow your spouse to receive your full monthly benefit after you pass away. In the case of Sam and Sandy, this option would lower Sam’s monthly payments to $400 per month. But after passing away, Sandy would still get that same $400 per month. There is no perfect choice, rather the choice that makes the most sense for you as a couple. Retirement decisions are so important to make together and it is a good idea to think through your health, life expectancy, income sources, as well as your goals for retirement before making a choice. 4. Period Certain optionsThe last annuity structure we are going to look at today is period certain options. This is another great way to take care of your loved ones. With this option, you will have a built-in guaranteed payout for a set number of years ranging anywhere from 10 to 20 years. Like all of the other annuities we talked about today, period certain options provide monthly payments for life and guarantee that same payment for your spouse or dependents for a set number of years. We will bring back Sam and Sandy to help illustrate this point. Sam is in average health but still expects to live a long time in retirement, leading him to select a period certain plan for 15 years. This option allows Sam to receive his full monthly payment as long as he is alive. If Sam were to pass away 12 years into the plan, Sandy would be eligible to receive Sam’s full benefit for the remaining 3 years of the plan. Like a single-life annuity, when the period is over, benefits end. If Sam outlived his plan by passing away in 17 years, the benefits would stop and Sandy wouldn’t be able to receive them. Pension in practiceDeciding how to take your pension benefits is a deeply involved process that moves beyond just retirement planning. It includes estate and legacy planning and doing your due diligence to support the loved ones that you leave behind. When selecting the best option for you and your family, think through the following: Desired retirement lifestyle and the funds needed to support that Create and stick to a retirement budget Understand avenues for retirement income including changing cashflow Make a tax planning strategy Organize your estate planning strategy Offer support to loved ones and dependents. We are passionate about guiding couples to live the retirement they have worked so hard for. At Step by Step, we want to help you create a comprehensive retirement plan, designed just for you and your family. Are you interested in how your pension can impact your retirement income? Give us a call !
  • Fear is a much more powerful emotion than greed, which historically has led markets to drop much faster during tumultuous times than they rise during prosperous periods.
  • Understanding the nature of the stock market, what you are invested in and how performance may vary can help calm anxiety during a decrease in the market.
  • You're almost done with your federal income tax return, and you're already thinking of ways to spend your refund. Then, the unthinkable happens — instead of a refund, you find that you owe $3,000. Or perhaps you've just received an IRS notice in the mail claiming that you owe $9,000 for the retirement plan distribution you took two years ago. You thought it was tax free at the time. Whatever the reason, you're now in the unenviable position of owing money to the IRS — and you don't have the cash. What do you do now?
  • How often do you to check your finances? Someof the more diligent among us may do a mini-financial review every week or every month. The more avoidant among us may only check when certain occasions arise, such as tax season or the holiday season. If you never take stock of your financial outlook, we want [] ©Bring Clarity to Your Finances™. Consider a Quarterly Personal Financial Review is a post from Bring Clarity to Your Finances™
  • When reviewing the differences between Roth and Traditional IRAs, it’s important to ask yourself: “When is the most advantageous time to pay tax on my income?”
  • March is Women’s History Month and part of finding ways to help women find financial stability and use their resources wisely is recognizing the systemic biases that can get in the way of an individual woman’s financial planning. One of these things is the pink tax. If you didn’t know the pink tax is a [] ©Bring Clarity to Your Finances™. The Pink Tax Affects Womens Financial Planning is a post from Bring Clarity to Your Finances™
  • One of the most common services that we perform for our clients is Roth conversions, particularly for our recently retired clients. If you don’t mind how much you pay in income tax, it can be quite simple to do Roth conversions. However, if you’ve accumulated significant wealth in your retirement accounts, you might have a hefty tax bill if you decide to do this all in one year. If you want to keep your overall lifetime tax liability as low as possible, you’ll probably want to do your Roth conversions over time, and make annual adjustments depending on significant tax events that occur each year. In other words, you probably need to establish a Roth conversion plan. (Feed generated with FetchRSS )
  • If you or your partner are a part of the $1.51 TRILLION in outstanding student loan debt, this is a must-read before tying the knot.
  • African-American consumers spend $1.1 trillion a year. And as a consumer group, if it were a nation, would rank as the 16th wealthiest in the world. As consumers you can check the box. We have to unlock the economic and entrepreneurial power of black America.
  • What is your earliest memory of being happy? Do you remember that feeling being a kid on a warm summer night, the grass under your bare feet, and the freeing feeling of not having to go to school the next day? For me, being happy is being free like on those summer nights. We all want to be happy. It’s a full feeling. A feeling that connects us with others and deep into ourselves. Physiologically it’s pretty easy to understand – a chemical reaction happens in our brain, serotonin is released, and boom we feel great. Emotionally and spiritually it’s more complex. But how does money impact your happiness? Studies show that the correlation between your salary’s impact on your happiness up to $75,000, and then it peaks at $125,000. Meaning that people are increasingly happy until they make $125,000 and then they plateau. Join us for our discussion with Stacey Tisdale on Are You Happy?. Stacey Tisdale, a more than 20-year veteran TV broadcast financial journalist, and financial behavior expert, is one of the first women, and the first African-American to report from the New York Stock Exchange, in her role as a reporter/anchor for Dow Jones’ Emmy Award winning, Wall Street Journal Television.She then went on to become one of the first on-air reporters for CBS MarketWatch and business/personal finance correspondent for CBS News, The Early Show, CBS Evening News, and CBS Radio. Her latest book is The True Cost of Happiness: The Real Story Behind Managing Your Money Welcome to Mastering Your Money, Stacey Tisdale
  • In Raleigh-Durham NC area, people do the simple maneuver of converting your personal residence to a rental property. This maneuver brings with it many tax rules, mostly good when you know how they work
  • Money and More©  will be taking a break during Tax Season. Look for the next post in late April or early May when I come out of being tax comatose. In the meantime, if your situations merits it,  consider Roth Conversions while the market is down. (Feed generated with FetchRSS )
  • As a married couple, you have spent your lives building hopes and dreams together. You have worked tirelessly to raise a family and live your lives in accordance with your goals, values, and priorities. You have worked hard for yourselves, each other, and the community you live in. Each phase of your marriage has encountered changes and challenges which have helped you grow stronger, together. Another phase that signifies a big transition for spouses is retirement. Retirement marks a new season in life and a new season in your marriage. Preparing for this season takes time, strategy, planning, and grace to get right. Creating a retirement plan that will honor both of you is a tall order, but one that can be accomplished with the right professional help and by starting with the right conversations. Today, we would like to bring you a post that delves into the big questions that you and your spouse should talk about as you navigate your retirement plan. Remember, these conversations are merely starting points and their answers may change as you move in and through retirement. Financial conversations are ongoing. Establishing a foundation of trust, transparency, and honesty will help you both find the meaning and fulfillment you desire in your golden years. We are going to tackle 4 unique aspects of retirement planning today. Let’s start the conversation. 1. What kind of retirement do you both want?We love talking about the big questions here at Step by Step because they get you thinking in a broad context. It is important to understand the type of retirement that both of you want because the answers might surprise you. Maybe you are interested in pursuing an encore career or pursuing part-time work in your current field and your spouse doesn’t want to do that at all. Taking the time to talk about what you both want and how you envision retirement will help you create a plan that makes sense for both of you. As you navigate this big conversation, it will lead to many subsequent factors like Where you both want to live How you want to spend your time In what ways you will remain active both physically and mentally How you will find meaning and fulfillment How you can enhance not only your own lives but the lives of your family and community at large Your dream retirement may be to stay in the house you raised your family in, remaining in your home town, and dedicating time to family, philanthropy, volunteering, and passion projects. No matter what, be sure that you talk with your spouse about what your dream retirement looks like and how your visions can complement each other. 2. What financial decisions will help you both reach your ideal retirement?Now that you have a general idea of the type of retirement you as a couple is looking for, you will need to determine how you will be able to support those dreams. The first step will be to take a look at your existing savings plan. Have you created a concrete savings goal? Are you on track for your savings goal? If not, what adjustments can you make to get you back to where you need to be? If you are, how can you maintain motivation and inspiration to keep moving in that direction? Are you regularly contributing to your existing retirement accounts? (401k, IRA, etc.) Have you considered your investment strategy? Is it still serving your needs or does it need an adjustment? Have you factored in healthcare costs into your equation? Finances are such an important piece of your retirement plan and as you near retirement, taking another look at where you are and where you need to go can help you refine your plan. Working with a financial advisor who knows you, your family, and your retirement goals can help you create a customized plan to help you reach the retirement lifestyle you want. Lifestyle and financial goals work in tandem to help you build a retirement plan that works. As you near retirement, it is also important to start thinking about a retirement budget. Saving money is very important, but how you use that money is just as important. Take the time now to draft a retirement budget. What will your fixed expenses be? What expenses will fluctuate? How can you create a spending plan that gives you the freedom and flexibility to live your life the way you want? 3. How will you maintain your charitable efforts through retirement?Charitable giving has been an important part of your life together. Planning for how you want to optimize and maximize your charitable giving in retirement will help you put a workable plan in place. One excellent avenue to consider is a donor-advised fund (DAF). You can think of a DAF as a charitable investment account. You are able to set up the account and donate money whenever you want throughout the year and select which charities or organizations you would like the funds to support through a third-party manager. DAFs are a great way to establish an active practice of giving and provides you the opportunity to involve your family and loved ones in the process as well. By using a DAF in retirement, you will be able to include charitable giving as part of your regular retirement spending plan. This infuses charitable giving into how you structure your financial life. Another important strategy for retirees to give to charity is through a qualified charitable distribution (QCD). This strategy allows you to donate money directly from a Traditional IRA to a qualified charity. Donating through a QCD is another excellent way to build giving into your financial plan. Since a QCD is donating assets, new retirees won’t have to sacrifice immediate cash needs in order to donate the way they want. These vehicles also allow you to Include your kids and grandkids in this process and passing down your charitable inclinations to them. You can use your charitable efforts as a medium to help you establish your legacy . We are passionate about giving through your retirement and are happy to help you create the right giving strategy for you and your family. 4. How will you continue to establish and live your legacy?Legacy planning is so important and one that doesn’t have a start or stop time. Your legacy is embodied each and every day you live your goals, values, and priorities. It is teaching your grandkids the value of giving back, it is spending quality time with the ones you love, it is doing the things that bring joy and fulfillment to not only yourself but also others. Your legacy starts today. How will you continue to build that through retirement? Perhaps you will want to dig deep into philanthropy and volunteering. With the extra time you have, perhaps you will use your time and talents to serve your church and community in a more active way. The most important thing is that you use the gifts that you have to better serve the community. If you are a gifted speaker, perhaps you organize a presentation series or if you are savvy with finances, maybe you sit on the financial board of your church. No matter what, your legacy isn’t just about what is left behind, rather what you build each and every day. Retirement planning is a detailed process that takes proper time and attention to get right. At the end of the day, your retirement plan starts with building dreams with your spouse and getting the right plans in place to turn those dreams into a reality. Here at Step by Step, we seek to empower couples to create a retirement plan centered on meaning, fulfillment, giving, and enrichment and would love to help you find that. Schedule a call with us today to find out more.
  • Even before your children can count, they already know something about money: it's what you have to give the ice cream man to get a cone, or put in the slot to ride the rocket ship at the grocery store. So, as soon as your children begin to handle money, start teaching them how to handle it wisely.
  • The title of Zina Kumok’s Business Insider column says a lot, “I relied on my dad’s investment advice for years until a casual conversation with a friend showed me a better way.” It shows that even when you grow up in a household where money management is taught and discussed, you may still have a [] ©Bring Clarity to Your Finances™. Women: Take Time to Learn More About Investing is a post from Bring Clarity to Your Finances™
  • It’s crucial to understand how well prepared you are for retirement. There are hundreds of retirement planning software packages available claiming answer this question for you.
  • One of the most common things that our recently retired clients ask us to do is to help them convert as much of their traditional IRAs into Roth IRAs as quickly as possible. Our job is to help them build a strategy that allows them to pay as little in taxes over the course of their lifetime. Each year, as part of our tax planning appointment, we review that year’s tax projection to make sure that our Roth conversion amount is in line with expectations. (Feed generated with FetchRSS )
  • Valentine’s Day is over and many people have gone into stores to take advantage of discounts on merchandise that did not sell before February 14. CNN Business even wrote about “What happens to the Valentine’s Day flowers that don’t get sold?” in case you ever wondered what happens to surplus flowers. Unlike candy, which may [] ©Bring Clarity to Your Finances™. Planting New Seeds for Financial Freedom is a post from Bring Clarity to Your Finances™
  • Unless you’ve given up on your career or feel that you have plateaued, the idea of getting promoted remains a driving force behind your day-to-day performance. Conventional wisdom and some empirical data suggest that the first ninety days in a new job are critical in determining if you are going to experience a ‘hard or soft landing’. One arrives at a new place without the benefit of what I call ‘relationship equity’. Relationship equity is the value that comes from knowing and working with others. The problem is that ‘relationship equity’ does not transfer to your next company–you earn it. Again, per research, you have 90 days to start building this type of equity with your new colleagues. In addition to building relationship equity, figuring out how to efficiently transition from the old job to the new one is critical. Regardless of whether the promotion is internal or to another company, the crucial question is “Whose job are you working on?” Unless you’ve given up on your career or feel that you have plateaued, the idea of getting promoted remains a driving force behind your day-to-day performance. Conventional wisdom and some empirical data suggest that the first ninety days in a new job are critical in determining if you are going to experience a ‘hard or soft landing’. One arrives at a new place without the benefit of what I call ‘relationship equity’. Relationship equity is the value that comes from knowing and working with others. The problem is that ‘relationship equity’ does not transfer to your next company–you earn it. Again, per research, you have 90 days to start building this type of equity with your new colleagues. In addition to building relationship equity, figuring out how to efficiently transition from the old job to the new one is critical. Regardless of whether the promotion is internal or to another company, the crucial question is “Whose job are you working on?”
  • Sweeping legislative tax or retirement reforms typically happen every 10 years or so, but December of 2019 brought us the 2nd major piece of congressional action in 2 years! Just two years ago, we were busy deciphering the TCJA (Tax Cuts and Jobs Act) passed in December 2017. Congress must have hired a new CAO []
  • A Case For A Bull Market In 2020 What if the optimists are right? What if the glass is half full? Although no one can predict the next move in stocks, and you don’t want to bet your retirement on it, it’s not hard to see the case for a bull market in 2020 — even after a spectacular year for stocks in 2019. The Standard & Poor’s 500 index historically trades at a market multiple of 16 to 18 times its expected earnings. Put another way, the average share in the S&P 500 historically is priced at between 16 and 18 times every dollar of profit per share it’s expected to earn in the next year. Lately the price of the S&P 500 has been trading above the normal valuation band, at about 19 times expected earnings. Normally that would be a sign of overvaluation, but what if the market multiple continues to expand? The Standard & Poor’s 500 index historically trades at a market multiple of 16 to 18 times its expected earnings. Put another way, the average share in the S&P 500 historically is priced at between 16 and 18 times every dollar of profit per share it’s expected to earn in the next year. Lately the price of the S&P 500 has been trading above the normal valuation band, at about 19 times expected earnings. Normally that would be a sign of overvaluation, but what if the market multiple continues to expand? The latest economic data from The Conference Board on the leading economic indicators, the Census Bureau on housing starts, and the Bureau of Economic Analysis on real disposable income all confirmed The Wall Street Journal’s most recent consensus forecast of economists for an expected growth rate of just under 2% for the next five quarters and the S&P 500 index once again broke all-time high price records on the news. While you never make financial plans based on things going right, sometimes the glass indeed is half-full. Please contact us with any questions fulbrightteam@moneyful.com or to set up a meeting, and don't hesitate to share this video with people who might benefit from our work.
  • Retirement saving is an important and integral component of your financial plan. While there are many ways to save for retirement, one of the most popular and ubiquitous vehicles is a 401(k). Your 401(k) has allowed you, and your employer in the case of a match program, to facilitate and manage your retirement savings. But what happens to that money should you decide to change jobs? There are many options for securing the funds in your 401(k) to keep you on track to maintain your retirement timeline. Keep in mind that some of these options are more beneficial than others, but it is important to understand the full scope of your options. Let’s dive into the world of 401(k) plans. 1. Take a lump-sumAfter you leave a job, you always have the option to cash out the funds in your 401(k), but many advisors instill a great deal of caution around this choice. While you would have access to all of the funds immediately, it could lead to serious tax consequences that cut into your nest egg in a significant way. You are able to take qualified distributions from your 401(k) after you turn 59 ½ at which point you would avoid the 10% early-withdrawal fee. If you are younger than 59 ½, you would likely be charged the 10% penalty along with ordinary income tax on the full sum of the account, causing a windfall of tax burdens. The only time you wouldn’t face the 10% penalty is if you retire between the ages of 55 and 59 ½ at which point you could withdraw any funds from your 401(k). You will, however, still need to pay income tax on all distributions unless the money is in a Roth 401(k). Besides the tax considerations , a lump sum is often much too large of an amount of money for people to successfully invest and manage on their own, causing them to lose more money over time. 2. Leave it with your former employerMany people might be surprised to learn that your 401(k) could still be housed in a company that you have moved on from. Some employers will allow you to retain your 401(k) even after you leave which is excellent for people who are happy with their portfolio and investment options. If you have more than $5,000 in your account, most plans allow you to leave it in the account regardless of your employer. On the smaller end, if you have $1,000 or under in the account the employer may be able to force you to take the money elsewhere. Any account balance between $1,000 and $4,000 would force the company to help you set up an IRA to house the money. Retaining your plan with your former employer may make a lot of sense if you have a lot of money accrued in the account and you are pleased with the portfolio management. But if you are likely to forget about it or are unimpressed with your options, taking a different course of action may be best. 3. Rollover into your new company’s 401(k)Should you move to another company that also sponsors a 401(k) retirement plan, you can make arrangements to have the funds transferred from your previous account to your current account. Be sure that you work directly with the custodians of both your old and new plans to make a direct transfer from the accounts. By ensuring that the money goes from one provider directly to another, you avoid a tax consequence or missing a crucial deadline. You can also elect to receive the money from your old account in the form of a check and deposit that check into your new 401(k). If you do this, be sure to make that transfer within 60 days to avoid income tax on the full balance of the check. Most new companies require the employee to put in a set amount of time before they are eligible for retirement benefits. In this case, be sure that you know what that timeline is so that you don’t liquidate your old account without having access to your new plan. 4. Rollover into an IRAOne of the most lucrative options for your old 401(k) is to roll the funds over into an individual retirement account (IRA). An IRA offers a much wider and more flexible range of investment opportunities than a 401(k) which gives investors the opportunity to allocate their funds in the way that they see fit. IRAs are a flexible form of investing and gives you more opportunities to invest in. A 401(k) plan is more restrictive in terms of what you can invest in and the structure of your portfolio, so if you are looking for more flexibility an IRA is a great choice. This option makes a lot of sense particularly if you aren’t impressed by the investment options at your new company or if they don’t offer a good match program. Retirement & YouYour retirement savings plan is an important step on the path to living your ideal retirement lifestyle. Contributing to employer-sponsored plans like a 401(k) is an excellent tool to help you get there. But as you know, things change and it is important to be prepared for that change when it happens. If a new job opportunity will help you live a more fulfilling life then it is important that the hard-earned savings you have accrued will continue to work for you and support the life you deserve in retirement. Here at Step by Step, it is our goal to help you make your money work for you, empowering you to live a life that is true to your goals, priorities, and values . Are you ready to take another look at your retirement savings strategy? Give us a call . We would love to speak with you.
  • A good long-term care insurance policy is simply part of the answer to the question: “How can I afford long term care?” Long term care insurance (like everything else related to long term care) is not cheap, and it’s not for everyone. And the difference between a good policy and a bad policy is hidden in the details. (Feed generated with FetchRSS )
  • Massive computer hacks and data breaches are now common occurrences — an unfortunate consequence of living in a digital world. Once identity thieves have your information, they can use it to gain access to your bank and credit card accounts, make unauthorized transactions in your name, and subsequently ruin your credit.
  • Is there overlap between psychology and financial planning? Perhaps. While your Fee-only financial planner is not qualified to diagnose psychological issues and a psychologist will not be able to manage your finances, both experts may suggest that you have a talk with a romantic partner before you combine finances. In “3 Questions to Ask Before [] ©Bring Clarity to Your Finances™. Ask Questions Before Merging Finances is a post from Bring Clarity to Your Finances™
  • February 5, 2020 Between two professional credentials that each need a lot of continuing education, plus family vacation time, Im on the road a lot when its not tax season.  Most of the time Ill be able to get a voicemail/text/email and answer within a reasonable time frame, except for a week or two when [] The post Wendys Vacation Conference Schedule for 2020 appeared first on Wendy Marsden, CPA, CFP® .
  • If your employer offers a retirement plan, invest at least enough to get the employer match, if available. Most young adults can maximize their retirement funds by investing in the Roth option.
  • Tonight, the President of the United States will deliver a State of the Union address. This practice was first referenced in the Constitution, which states that the President will inform Congress “from time to time”. Over the years, the format has changed: our first two presidents addressed congress personally; Thomas Jefferson sent written messages and [] ©Bring Clarity to Your Finances™. Your Financial State of the Union is a post from Bring Clarity to Your Finances™
  • Investments are important tools to help you reach your financial goals. There are many pieces that comprise your investment strategy and today we are going to talk about one that doesn’t receive a ton of attention but can have a big impact on your net gain: asset location. I like to think of asset location like a house. Your house provides shelter and keeps you safe and warm. It is a place to rest your head and find comfort and security. Asset location seeks to provide that same idea of security for your investments. Asset location is a strategy to help maximize your return by housing your investments in accounts that will receive more favorable tax treatment. It is a way to maximize your return by coupling the right securities with their corresponding accounts. Today, we are going to take a closer look at this investment strategy and demonstrate how it could change your approach to investing. Breaking down asset locationAsset location aims to include tax-efficiency into your investment strategy by housing different securities (stocks, bonds, mutual funds, etc.) in accounts that will provide the most favorable tax treatment (tax-deferred, tax-exempt, or taxable). This tactic differs from its neighbor, asset allocation in key ways. Asset allocation is concerned with the type of securities that make up your portfolio and how they align with your goals, priorities, and risk tolerance. Once you have a portfolio that best reflects your goals as an investor, you can then start to think about putting those securities in a place to give them the best chance for success. Think about it this way, you probably don’t want to order a burger at a sushi restaurant. Not because the food would be terrible, but it isn’t what they are known for so it wouldn’t be nearly as good as the one at the steak house. This example illustrates that the same item (in this case the burger) can be housed in different places, but one place will ultimately be better and more profitable for you, the customer. Now, let’s take a look at how this idea translates to your investments. Housing your securitiesJust like you have many different choices for housing (apartment, condo, townhouse, single-family, etc.) you also have choices for where to house your investments namely in either a tax-deferred, tax-exempt, or taxable account. Let’s take a look at each of these a little more in-depth. A tax-deferred account is an account in which the securities contributed accumulate tax-free and are only taxed upon distribution. Key examples of tax-deferred accounts are a traditional IRA, 401(k) or another workplace account, and deferred annuities. A tax-exempt account doesn’t offer a tax benefit on contribution, rather, all contributions are made with after-tax dollars and the distributions remain tax-free. The two most common tax-exempt accounts are Roth IRA and Roth 401(k). A taxable account simply means that the investor must pay taxes on any investment income in the year it was received. Prime examples are investment accounts, brokerage accounts, high-interest savings account, and other bank accounts. While taxable accounts come with some flexibility, most interest and dividends are taxable immediately and gains are taxable at capital gains rates when the assets are sold. The first step is to have an understanding of how these accounts are taxed in order to give a better indication of where your different securities can best thrive. The next step is to have an idea for the tax-efficiency of each security. Securities through the eye of taxesThe tax-efficiency of each security will help reveal how the security will be taxed and which type of account will help give it the best return over time. This is just a general overview of securities, please make an appointment to discuss your particular situation. We are going to discuss three of the main assets you will come across along with their relative tax-efficiency. The first being individual stocks. In general, these assets are often quite tax-efficient, especially when held for at least one year because this allows for long-term capital gains tax whose tax percentage is lower than most ordinary income tax rates. Your particular tax bracket is indicative of the percentage of capital gains tax you will pay. Bonds, on the other hand, often fall into the tax-inefficient category namely due to the fact that the interest payments they accrue are taxed at the ordinary income rate. As a rule of thumb, the more tax-inefficient an asset is, the more money you will pay on it each year if it is held in a taxable account. The last types of accounts we are going to look at today are mutual funds and ETFs which can be both tax-efficient and inefficient. ETFs are often tax-efficient but their downfall can be the turnover rate, delivering short-term capital gains which are taxed at a higher rate. Volatility is the main factor that can contribute to making mutual funds and ETFs fall back and forth on the efficiency scale. Remember, these are generalizations to help you think about the way that your assets are viewed from a tax perspective. It is important to work with a professional to develop a unique strategy for your investment goals. Which security goes where?Now that you have an idea of the type of accounts available to you and the general tax-efficiency level of each security, it is time to get to the fun part: determining which securities to put in each account. Today, we are going to talk about a couple of strategies that could help. The first is to place the most tax-efficient assets in taxable accounts. This could include municipal securities and municipal mutual funds, ETFs, as well as tax-managed mutual funds and other managed accounts. The second strategy is to place the most tax-inefficient assets in tax-deferred or tax-exempt accounts. High turnover stock, for example, would be best suited in a 401(k) or IRA since they don’t trigger taxes while housed inside the account. The same holds true for taxable bonds and corporate bonds. Real Estate Investment Trusts are another asset that makes sense in this type of account. The bottom lineAsset location can be an important part of your investment strategy. Understanding how your investments are taxed can help maximize your return. Each person’s investing needs will be different. Be sure that you work with your financial advisor to help create a plan that will work best for you and your goals. Here at Step by Step, proactive tax planning is an integral component of what we do. Taxes impact your financial strategy in an important way and we want to ensure that you are empowered to make smart, confident choices with your financial future. Give us a call to learn more. We can’t wait to hear from you!
  • Selecting where to live later in retirement is a big decision that involves one new major consideration: our health care. The big question is: Will we each make the last housing decision on our own and ahead of time; or will we have a non-choice thrust upon us when a health crisis hits?
  • Next week (February 3-7, 2020)  is Tax Identity Theft Awareness Week and you need to know that you can fall prey to scammers whether they contact you directly or find some behind-the-scenes way to operate. A scammer can obtain your Social Security number illegally and file a tax return without your knowledge, The thieves will make [] ©Bring Clarity to Your Finances™. Arm Yourself with Information to Stop Tax Identity Theft is a post from Bring Clarity to Your Finances™
  • Having prepared taxes for almost a decade, I have learned what our best clients do to get ready for tax preparation.  US Income Tax law is quite complicated and can be intimidating if not overwhelming.  Before entering the financial planning profession,  I used outside preparers for my increasingly complex personal return.  At that time, I… [Continue] (Feed generated with FetchRSS )
  • After an initial sense of freedom, many retirees experience anxiety, fear and boredom. If you don’t replace your career with something meaningful you may miss the sense of accomplishment and achievement that comes from completing projects, getting raises, promotions, bonuses or landing a new account.
  • Recent changes signed into law at the end of 2019 through the Secure Act regarding 401(k) and IRA distributions may not only affect your retirement planning, these changes may create a need to review your estate planning as well. Barron’s (New Rules for Stretch IRAs and RMDs Have Raised Many Questions. Barron’s’ Found Answers) and [] ©Bring Clarity to Your Finances™. The Secure Act May Alter Your Retirement and Estate Planning is a post from Bring Clarity to Your Finances™
  • Essential Financial Strategies is pleased to announce a new service–The Strategic College Plan.   This service helps families figure out how to pay for college while minimizing  the future burden of college student loans.   Using a sophisticated knowledge base, Rorik Larson assists families to predict their Expected Family Contribution.  Then they can select colleges that fit… [Continue] (Feed generated with FetchRSS )
  • Evaluate your current situation and determine how well prepared you are for retirement. Calculate the value of your retirement nest egg and develop a retirement budget.