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Terry L. Jordan

Feb
15
Handling Market Volatility
Conventional wisdom says that what goes up must come down. But even if you view market volatility as a normal occurrence, it can be tough to handle when your money is at stake. Though there's no foolproof way to handle the ups and downs of the stock market, the following common-sense tips can help. Don't put your eggs all in one basket Diversifying your investment portfolio is one of the key tools for trying to manage market volatility. Because asset classes often perform differently under different market conditions, spreading your assets across a variety of investments such as stocks, bonds, and cash alternatives has the potential to help reduce your overall risk. Ideally, a decline in one type of asset will be balanced out by a...
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Jan
25
Medicare Prescription Drug Coverage
If you're covered by Medicare, here's some welcome news — Medicare drug coverage can help you handle the rising cost of prescriptions. If you're covered by Original Medicare, some Medicare Cost Plans, Medicare Private Fee-For-Service Plans, or Medicare Medical Savings Account Plans, you can sign up for a Medicare Prescription Drug Plan (Part D) offered in your area by a private company or insurer that has been approved by Medicare. Although prescription drug plans vary, all provide a standard amount of coverage set by Medicare. Every plan offers a broad choice of brand name and generic drugs at local pharmacies or through the mail. However, some plans cover more drugs or offer a wider selection of pharmacies (for a higher premium) than...
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Jan
18
Four things women need to know about Social Security
Ever since a legal secretary named Ida May Fuller received the first retirement benefit check in 1940, women have been counting on Social Security to provide much-needed retirement income. Social Security provides other important benefits too, including disability and survivor benefits, that can help women of all ages and their family members. 1. How does Social Security protect you and your family? When you work and pay Social Security taxes, you're paying for three types of benefits: retirement, disability, and survivor benefits. Retirement benefits Retirement benefits are the cornerstone of the Social Security program. According to the Social Security Administration (SSA), because women are less often covered by retirement...
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Jan
11
What to do after You've been automatically enrolled in your company's retirement plan
At one time, the only way you could join your company's 401(k) plan, 403(b) plan, or 457(b) plan was to put pen to paper and sign yourself up by filling out the appropriate forms. Now, though, in an effort to help participants increase their retirement savings, some employers have begun enrolling their employees automatically. With automatic enrollment, you don't fill out a form to opt into your company's retirement plan; you only fill out a form to opt out of it. At first glance, automatic enrollment sounds like a no-brainer--without doing anything, you're on your way to saving for retirement. But don't just assume that the investment decisions your employer has made on your behalf are right for you. Instead, take charge of your own...
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Jan
04
Robo Advisors have arrived, but life often calls for a human touch.
After years of development, numerous robo advisors have entered the world of investment management. Still, many investors may not fully understand exactly what robos do, or how they do it. A robo advisor is a digital platform that uses advanced algorithms (based on various financial models and assumptions) to select and manage investments. To keep costs relatively low, portfolios are typically composed of exchange-traded funds (ETFs) and mutual funds that track market indexes. The recommended allocations, available strategies, and various other features can differ significantly from one service to another. To start the process, the investor fills out a standard online questionnaire designed to determine his or her risk tolerance and...
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Dec
21
Taxation of Investments
It's nice to own stocks, bonds, and other investments. Nice, that is, until it's time to fill out your federal income tax return. At that point, you may be left scratching your head. Just how do you report your investments and how are they taxed? Is it ordinary income or a capital gain? To determine how an investment vehicle is taxed in a given year, first ask yourself what went on with the investment that year. Did it generate interest income? If so, the income is probably considered ordinary. Did you sell the investment? If so, a capital gain or loss is probably involved. (Certain investments can generate both ordinary income and capital gain income, but we won't get into that here.) If you receive dividend income, it may be taxed...
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Dec
18
Back to Basics: Diversification and Asset Allocation
When investing, particularly for long-term goals, there are two concepts you will likely hear about over and over again — diversification and asset allocation. Diversification helps limit exposure to loss in any one investment or one type of investment, while asset allocation provides a blueprint to help guide your investment decisions. Understanding how the two work can help you put together a portfolio that targets your specific needs. Diversification: Spreading out risk Diversification refers to the process of investing in a number of different securities to help manage risk. The theory is that if some investments in your portfolio decline in value, others may rise or hold steady. For example, say you wanted to invest in stocks....
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Dec
07
Five Questions about Long-Term Care
1. What is long-term care? Long-term care refers to the ongoing services and support needed by people who have chronic health conditions or disabilities. There are three levels of long-term care: Skilled care: Generally round-the-clock care that's given by professional health care providers such as nurses, therapists, or aides under a doctor's supervision. Intermediate care: Also provided by professional health care providers but on a less frequent basis than skilled care. Custodial care: Personal care that's often given by family caregivers, nurses' aides, or home health workers who provide assistance with what are called "activities of daily living" such as bathing, eating, and dressing. Long-term care is not just provided in...
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Dec
01
Maintaining Your Financial Records: The Importance of Being Organized
An important part of managing your personal finances is keeping your financial records organized. Whether it's a utility bill to show proof of residency or a Social Security card for wage reporting purposes, there may be times when you need to locate a financial record or document--and you'll need to locate it relatively quickly. By taking the time to clear out and organize your financial records, you'll be able to find what you need exactly when you need it. What should you keep? If you tend to keep stuff because you "might need it someday," your desk or home office is probably overflowing with nonessential documents. One of the first steps in determining what records to keep is to ask yourself, "Why do I need to keep this?"...
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Nov
21
10 Years and Counting: Points to Consider as You Approach Retirement
If you're a decade or so away from retirement, you've probably spent at least some time thinking about this major life change. How will you manage the transition? Will you travel, take up a new sport or hobby, or spend more time with friends and family? Should you consider relocating? Will you continue to work in some capacity? Will changes in your income sources affect your standard of living? When you begin to ponder all the issues surrounding the transition, the process can seem downright daunting. However, thinking about a few key points now, while you still have years ahead, can help you focus your efforts and minimize the anxiety that often accompanies the shift. Reassess your living expenses A step you will probably take...
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Nov
16
Should I sign a prenuptial agreement to protect my assets when I remarry?
Tags: divorce; women
Even if you never thought about signing a prenuptial agreement the first time you married, it's wise to consider it now, because marriage is often more complicated the second (or third or fourth) time around. You may have more assets now, or you may own a business or have children to protect. And because you've been through it before, you may be worried about the financial consequences of divorce or widowhood. A prenuptial agreement can ease your mind by spelling out what assets and liabilities each partner is bringing into the marriage, and by determining how money or property brought into the marriage or acquired during the marriage will be divided if the marriage ends either in death or divorce. A prenuptial agreement addresses...
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Nov
09
Social Security claiming strategies for married couples
Prepared for: Save New Client Subtitle: Social Security Claiming Strategies for Married Couples Deciding when to begin receiving Social Security benefits is a major financial issue for anyone approaching retirement because the age at which you apply for benefits will affect the amount you'll receive. If you're married, this decision can be especially complicated because you and your spouse will need to plan together, taking into account the Social Security benefits you may each be entitled to. For example, married couples may qualify for retirement benefits based on their own earnings records, and/or for spousal benefits based on their spouse's earnings record. In addition, a surviving spouse may qualify for widow or widower's...
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Nov
06
Will Social Security retire before you do?
People have traditionally seen Social Security benefits as the foundation of their retirement planning programs. The Social Security contributions deducted from workers' paychecks have, in effect, served as a government-enforced retirement savings plan. However, the Social Security system is under increasing strain. Better health care and longer life spans have resulted in an increasing number of people drawing Social Security benefits. As the baby boom generation (those born between 1946 and 1964) retires, even greater demands are being placed on the system. In 1950, there were 16.5 active workers to support each person receiving Social Security benefits. In 2015, there were only 2.8 workers supporting each Social Security beneficiary....
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Oct
26
What are my options of I inherit an IRA or an employer retirement savings plan account?
If you don't want the money, you can always disclaim (refuse to accept) the inherited IRA or plan funds. But if you're like most people, you will want the money. Your first thought may be to take a lump-sum distribution, but that's usually not the best idea. Although a lump sum provides you with cash to meet expenses or invest elsewhere, it can also result in a huge income tax bill (in most cases, due all in one year). A lump-sum distribution also removes the funds from a tax-deferred environment. Fortunately, you probably have other alternatives. If you are the designated beneficiary (i.e., you are named as beneficiary in the IRA or plan documents), you can take distributions over your remaining life expectancy, which spreads the income...
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Oct
20
Life Insurance Riders that Pay for Long-Term Care
Life insurance has many uses, including income replacement, business continuation, and estate preservation. Long-term care insurance provides financial protection against the potentially high cost of long-term care. If you find yourself in need of both types of insurance, a life insurance policy that combines a death benefit with a long-term care benefit may appeal to you. Here's how it works Some life insurance issuers offer life insurance with a long-term care rider available for an additional charge. If you buy this type of policy, you can pay the premium in a single lump sum or by making periodic payments. In any case, the policy provides you with a death benefit that you can also use to pay for long-term care related expenses,...
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Oct
11
Should you pay off your mortgage or invest?
Owning a home outright is a dream that many Americans share. Having a mortgage can be a huge burden, and paying it off may be the first item on your financial to-do list. But competing with the desire to own your home free and clear is your need to invest for retirement, your child's college education, or some other goal. Putting extra cash toward one of these goals may mean sacrificing another. So how do you choose? Evaluating the opportunity cost Deciding between prepaying your mortgage and investing your extra cash isn't easy, because each option has advantages and disadvantages. But you can start by weighing what you'll gain financially by choosing one option against what you'll give up. In economic terms, this is known as...
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Oct
05
Myths and Facts about Social Security
Myth: Social Security will provide most of the income you need in retirement. Fact: It's likely that Social Security will provide a smaller portion of retirement income than you expect. There's no doubt about it--Social Security is an important source of retirement income for most Americans. According to the Social Security Administration, more than nine out of ten individuals age 65 and older receive Social Security benefits. But it may be unwise to rely too heavily on Social Security, because to keep the system solvent, some changes will have to be made to it. The younger and wealthier you are, the more likely these changes will affect you. But whether retirement is years away or just around the corner, keep in mind that Social...
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Sep
27
Elven ways to help yourself stay sane in a crazy market
Keeping your cool can be hard to do when the market goes on one of its periodic roller-coaster rides. It's useful to have strategies in place that prepare you both financially and psychologically to handle market volatility. Here are 11 ways to help keep yourself from making hasty decisions that could have a long-term impact on your ability to achieve your financial goals. 1. Have a game plan Having predetermined guidelines that recognize the potential for turbulent times can help prevent emotion from dictating your decisions. For example, you might take a core-and-satellite approach, combining the use of buy-and-hold principles for the bulk of your portfolio with tactical investing based on a shorter-term market outlook. You also can...
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Sep
20
Leaving a Legacy
You've worked hard over the years to accumulate wealth, and you probably find it comforting to know that after your death the assets you leave behind will continue to be a source of support for your family, friends, and the causes that are important to you. But to ensure that your legacy reaches your heirs as you intend, you must make the proper arrangements now. There are four basic ways to leave a legacy: (1) by will, (2) by trust, (3) by beneficiary designation, and (4) by joint ownership arrangements. Wills A will is the cornerstone of any estate plan. You should have a will no matter how much your estate is worth, and even if you've implemented other estate planning strategies. You can leave property by will in two ways: making...
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Sep
13
How Grandparents Can Help Grandchildren with College Costs
As the cost of a college education continues to climb, many grandparents are stepping in to help. This trend is expected to accelerate as baby boomers, many of whom went to college, become grandparents and start gifting what's predicted to be trillions of dollars over the coming decades. Helping to pay for a grandchild's college education can bring great personal satisfaction and is a smart way for grandparents to pass on wealth without having to pay gift and estate taxes. So what are some ways to accomplish this goal? Outright cash gifts A common way for grandparents to help grandchildren with college costs is to make an outright gift of cash or securities. But this method has a couple of drawbacks. A gift of more than the annual...
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Sep
07
When I die, what will happen to my retirement plan benefits?
In general, your retirement plan benefits pass to the beneficiaries you designate on the plan beneficiary designation form. It is generally recommended that you designate beneficiaries, the percentage of the total that each will receive, and any backup beneficiaries on the plan beneficiary form. However, if you are married or have been married, your spouse or former spouse may have certain rights in your retirement benefits. If you have a large taxable estate (generally, over $5,490,000 in 2017), your retirement benefits could be subject to estate tax or generation-skipping transfer (GST) tax at your death. The GST tax may apply if you transfer your retirement benefits to someone who is two or more generations younger than you, such as...
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Aug
31
Decisions, Decisions: Choosing Among Retirement Plan Contribution Types
If your employer-sponsored 401(k) or 403(b) plan offers pre-tax, Roth, and/or non-Roth after-tax contributions, which should you choose? How do you know which one might be appropriate for your needs? Start by understanding the features of each. Pre-tax: For those who want lower taxes now With pre-tax contributions, the money is deducted from your paycheck before taxes, which helps reduce your taxable income and the amount of taxes you pay now. Consider the following example, which is hypothetical and has been simplified for illustrative purposes. Frank earns $2,000 every two weeks before taxes. If he contributes nothing to his retirement plan on a pre-tax basis, the amount of his pay that will be subject to income taxes will be the...
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Aug
24
Changing jobs? Know your 401k options
If you've lost your job, or are changing jobs, you may be wondering what to do with your 401(k) plan account. It's important to understand your options. What will I be entitled to? If you leave your job (voluntarily or involuntarily), you'll be entitled to a distribution of your vested balance. Your vested balance always includes your own contributions (pretax, after-tax, and Roth) and typically any investment earnings on those amounts. It also includes employer contributions (and earnings) that have satisfied your plan's vesting schedule. In general, you must be 100% vested in your employer's contributions after 3 years of service ("cliff vesting"), or you must vest gradually, 20% per year until you're fully vested after 6 years...
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Aug
17
Should I buy a home or continue renting?
Most people face this question at some time in their lives. Buying a home is part of the American dream. It's also one of the biggest financial investments you'll ever make. One of the main advantages of buying a home is that you build equity in your property. For example, if you paid rent at $1,000 per month for 10 years, you would have spent $120,000 on rent and have nothing to show for it. However, if you had purchased your home and made $1,000-per-month mortgage payments for 10 years, you would have paid off a sizable portion of your mortgage. And if you decided to sell your home, you might make a profit. Before buying a house, remember that your lending institution will want proof that you have money saved for the down payment...
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Aug
08
Deciding When to Retire: When Timing Becomes Critical
FINRA® Letter Prepared for: Save New Client Subtitle: Deciding When to Retire: When Timing Becomes Critical Deciding when to retire may not be one decision but a series of decisions and calculations. For example, you'll need to estimate not only your anticipated expenses, but also what sources of retirement income you'll have and how long you'll need your retirement savings to last. You'll need to take into account your life expectancy and health as well as when you want to start receiving Social Security or pension benefits, and when you'll start to tap your retirement savings. Each of these factors may affect the others as part of an overall retirement income plan. Thinking about early retirement? Retiring early means fewer...
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Aug
03
My husband is about to receive his pension. We've heard of "pension maximization". What is it?
If your husband is participating in a traditional pension plan (also known as a defined benefit plan), his benefits must normally be paid in the form of a "qualified joint and survivor annuity" (QJSA). A QJSA is an annuity that pays a dollar amount (usually monthly) to your husband while he is alive, with at least 50% of that amount continuing to you after his death, if you survive him. However, if you consent in writing, your husband can waive the QJSA and elect instead to receive a single-life annuity. With a single-life annuity, payments are made over your husband's lifetime but stop upon his death. For example, if your husband receives just one payment after retirement and then dies, the single-life annuity would end and the plan...
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Jul
26
How do I get disability benefits from Social Security?
Getting Social Security disability benefits is a two-step process. First, the Social Security Administration (SSA) determines whether you are eligible to receive benefits. This determination is based on the number of years you have worked and paid Social Security taxes. Second, you apply for disability benefits by furnishing information about your claim, including the names, addresses, and telephone numbers of physicians, hospitals, and clinics that have treated you for your disability. You will also be asked to provide a copy of your most recent W-2 form (or tax return if you're self-employed), as well as your Social Security number and proof of your age. If your claim is approved, don't expect to get your disability benefits right...
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Jul
19
Should I be investing more aggressively?
There's no way to know the answer to that without reviewing your individual circumstances and financial goals. However, if you are investing too conservatively, it can have a profound effect on your long-term financial security. That's particularly true for women. According to a U.S. Department of Labor study ("Women and Retirement Savings," October 2008), women often start saving later, save less, and invest more conservatively than men, which decreases their chances of having enough income in retirement. How you should be investing depends on many factors, such as: 1) How able are you to tolerate risk? 2) How soon do you hope to achieve your financial goals? 3) How much will you need to save for important goals such as retirement? 4)...
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Jul
12
I can choose a single life annuity for my pension or a joint and survivor annuity that makes payments to my spouse when I die. Which is better?
It depends on your circumstances. If you're not married, the single life annuity is clearly the best choice (and may be your only option). You'll receive the maximum payout from your pension during your life, and all benefits will cease when you die. This option may even make sense if you're married (assuming that you have other ways to take care of your surviving spouse, such as investments or retirement plan assets), and the difference between the higher-paying single life annuity and the joint and survivor annuity is very great. (The joint and survivor annuity benefits paid to you during your life will be smaller than if you elected a single life annuity, because they are payable as long as either person is alive.) One common...
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Jul
05
Can I deduct premiums paid for long-term care insurance (LTCI)?
It depends on several factors. Your LTCI contract must be a qualified one, you must itemize deductions on Schedule A of IRS Form 1040, and the total of your medical expenses (including your LTCI deduction) must exceed 10 percent of your adjusted gross income (AGI). Qualified LTCI premiums are deductible as medical expenses (subject to the 10 percent of AGI floor) within certain limits, based on your age. Note: Prior to 2013, the threshold to deduct medical expenses was 7.5 percent of adjusted gross income. The threshold remains 7.5 percent until 2017 for those age 65 or older. If you bought your policy before January 1, 1997, and it met the requirements of the state in which it was issued, it is automatically considered a qualified...
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Jun
21
Will Social Security be around for me?
With the news full of reports about Social Security's uncertain future, you might wonder whether you will ever benefit from the Social Security taxes you pay. Although this popular social insurance program faces financial challenges, and some reform is certainly likely, Social Security is not only likely to be there for you in the future, it's there for you right now. Social Security is not just for retirees. The program also provides valuable protection to younger people. For example, if you become disabled at any age and can no longer work, you may be eligible to receive Social Security disability benefits. If you have a family, your spouse and children may also be eligible to receive certain types of benefits based on your earnings...
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Jun
14
How much money should I save for retirement?
Generally speaking, as much as possible. You need to build a fund that you'll be able to draw on for much of your retirement income. Believe it or not, this may be possible if you start early and make smart choices. Contribute as much as you can to tax-advantaged savings vehicles (e.g., 401(k)s, IRAs, annuities). Then round out your retirement portfolio with other investments (e.g., stocks, bonds, mutual funds). As you're planning and saving, keep in mind that you may have 30 or more years of retirement to fund. So, you probably need an even bigger nest egg than you think. Before investing in a mutual fund, carefully consider its investment objectives, risks, fees, and expenses, which are contained in the prospectus available from the...
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Jun
07
I don't know much about investing. Should I let my husband make the decisions?
Even if your husband is a financial expert, it's a good idea to at least understand investing basics. For one thing, because women on average tend to live longer than men, the odds are extremely high that you could be responsible for making your own financial decisions at some point. If you suddenly had to make all the decisions yourself--and many women have found themselves in that position--you'd benefit from knowing enough to protect yourself from fraud and/or communicate effectively with a financial professional. Also, even if your spouse is more knowledgeable about finances than you are, understanding enough to consider the pros and cons involved in an individual financial decision can often produce a better outcome; it forces both...
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Jun
01
Will my children receive money from Social Security when I die?
Maybe. It depends on how old your children are, and how long you've worked in a job where you've paid Social Security taxes. To be eligible for Social Security benefits when you die, your children must be age 18 or under (19 if still in high school), and unmarried. However, if an unmarried child is disabled and was disabled before age 22, he or she can qualify for benefits based on your record at any age; benefits for a disabled child may end, though, if your child marries or is no longer considered disabled. In addition, you must have earned the required number of Social Security credits (generally 40, depending on your age at the time of your death). You earn credits by working in a job where you pay Social Security taxes on your...
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May
23
Is student loan interest deductible?
You may be able to deduct all or part of the student loan interest you've paid during the year, assuming you meet the requirements. You may be able to deduct up to $2,500 each year from your gross income if you've paid interest on a qualified education loan for qualified higher education expenses during the year. To be eligible for the deduction, your modified adjusted gross income (MAGI) must fall below a threshold figure. For 2017, the deduction begins to phase out as your MAGI exceeds $65,000 if you're single or $135,000 if you're married and file jointly. It phases out completely when your MAGI exceeds $80,000 ($165,000 for married persons filing jointly). These amounts are indexed for inflation. No deduction is allowed if your filing...
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May
16
How aggressive should I be when I invest for retirement?
It depends. The right answer in your case will depend on a number of key factors. These include, among others, your income and assets, your attitude toward risk, whether you have access to an employer-sponsored plan at work, the age at which you plan to retire, and your projected expenses during retirement. But it's possible to lay down some guidelines that may be of help to you. The conventional wisdom has traditionally been that you should invest aggressively when you're young and then move gradually toward a more conservative approach. By the time you retired, you would probably end up with a portfolio made up mostly of high-grade bonds and other low-risk investments. However, the retirement landscape has changed dramatically in the...
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May
09
I'm marrying someone with bad credit. How will this affect me?
You are not responsible for your future spouse's bad credit or debt, unless you choose to take it on by getting a loan together to pay off the debt. However, your future spouse's credit problems can prevent you from getting credit as a couple after you're married. Even if you've had spotless credit, you may be turned down for credit cards or loans that you apply for together if your spouse has had serious problems. You're smart to face this issue now rather than wait until after you're married to discuss it. Attitudes toward spending money, along with credit and debt problems, often lead to arguments that can strain a marriage. Order copies of both of your credit reports from one or more major credit reporting bureaus. Then, sit down and...
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May
03
Adjusting to Life FInancially after a Divorce
Tags: divorce; women
There's no doubt about it--going through a divorce can be an emotionally trying time. Ironing out a divorce settlement, attending various court hearings, and dealing with competing attorneys can all weigh heavily on the parties involved. In addition to the emotional impact a divorce can have, it's important to be aware of how your financial position will be impacted. Now, more than ever, you need to make sure that your finances are on the right track. You will then be able to put the past behind you and set in place the building blocks that can be the foundation for your new financial future. Assess your current financial situation Following a divorce, you'll need to get a handle on your finances and assess your current financial...
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Apr
25
I'm getting remarried. How will this affect my Social Security benefits?
If you're receiving benefits based on your own work record, your benefits will continue. If you're receiving spousal benefits based on your former spouse's work record, those benefits will generally end upon your getting remarried, but you may be able to receive benefits based on your new spouse's work record, or on your own. If you're a widow(er) under age 60, or you're disabled but under 50, remarriage ends any benefits based on the record of your deceased spouse. However, if you remarry after age 60 (or after 50 and are disabled), those benefits remain intact, unless you get spousal benefits through your new spouse (at age 62 or older) if those benefits are higher. If your second marriage ends as a result of death, divorce, or...
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Apr
18
Are Life Insurance Proceeds Income Taxable?
In general, life insurance proceeds paid to you because of the death of the insured are not subject to federal income tax. To qualify for such favorable tax treatment, the life insurance contract must meet certain IRS requirements. However, proceeds may be taxable in limited cases. For instance, if you receive the insurance proceeds in installments and interest is paid, the interest portion of the payment generated after the insured's death is treated as taxable income. This is taxed at your ordinary income rate. The part of the installment payment that is classified as investment in the contract is not taxable, however. If a life insurance policy is sold or otherwise transferred for valuable consideration before the insured's death,...
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Apr
11
Should I contribute to my 401K plan at work?
Yes. Unless you absolutely cannot afford to set aside any dollars whatsoever, you should contribute to your employer's 401(k) plan. A 401(k) plan is one of the most powerful tools you can use to save for your retirement. The first benefit is that your pre-tax contributions to a 401(k) plan are not taxed as current income. They come right off the top of your salary before taxes are withheld. This reduces your taxable income, allowing you to pay less in taxes each year. You'll eventually pay taxes on amounts contributed when you withdraw money from the plan, but you may be in a lower tax bracket by then. You may even qualify for a partial tax credit for amounts contributed. Furthermore, money held in a 401(k) plan grows tax deferred....
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Apr
03
Estimating Your Retirement Income Needs
You know how important it is to plan for your retirement, but where do you begin? One of your first steps should be to estimate how much income you'll need to fund your retirement. That's not as easy as it sounds, because retirement planning is not an exact science. Your specific needs depend on your goals and many other factors. Use your current income as a starting point It's common to discuss desired annual retirement income as a percentage of your current income. Depending on who you're talking to, that percentage could be anywhere from 60 to 90 percent, or even more. The appeal of this approach lies in its simplicity, and the fact that there's a fairly common-sense analysis underlying it: Your current income sustains your present...
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Mar
27
I Receive Disability Insurance Payments, Are They Taxable?
Federal income taxation of disability insurance benefits depends on what type of benefits you receive, whether the premiums were paid with pretax or after-tax dollars, and who paid the premiums (you or your employer). The disability proceeds are taxable to you if your employer paid all of the disability premiums for you and did not include the amount in your gross income, or if your employer paid you directly while you were disabled. If you paid all of the premiums with after-tax income, or if your employer made the contributions and included the amounts in your gross income, any disability insurance benefits paid to you are exempt from tax. If your employer pays part of each premium and you pay the balance with after-tax dollars, you...
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Mar
16
I'm getting remarried. How will this affect my Social Security Benefits?
If you're receiving benefits based on your own work record, your benefits will continue. If you're receiving spousal benefits based on your former spouse's work record, those benefits will generally end upon your getting remarried, but you may be able to receive benefits based on your new spouse's work record, or on your own. If you're a widow(er) under age 60, or you're disabled but under 50, remarriage ends any benefits based on the record of your deceased spouse. However, if you remarry after age 60 (or after 50 and are disabled), those benefits remain intact, unless you get spousal benefits through your new spouse (at age 62 or older) if those benefits are higher. If your second marriage ends as a result of death, divorce, or...
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Mar
14
Investment Planning: The Basics
Tags: retirement
Why do so many people never obtain the financial independence that they desire? Often it's because they just don't take that first step--getting started. Besides procrastination, other excuses people make are that investing is too risky, too complicated, too time consuming, and only for the rich. The fact is, there's nothing complicated about common investing techniques, and it usually doesn't take much time to understand the basics. One of the biggest risks you face is not educating yourself about which investments may be able to help you pursue your financial goals and how to approach the investing process. Saving versus investing Both saving and investing have a place in your finances. However, don't confuse the two. Saving is the...
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Mar
08
When I retire, how much will I receive from Social Sercurity?
That depends upon how much you have earned and how long you have worked under the Social Security system. Your retirement benefit will be based on your average lifetime earnings. Don't worry if you started out as a busboy and worked your way up to executive restaurant guru--only your highest 35 years of earnings will count. The amount you receive will also be affected by whether you start collecting benefits early (you'll get less), whether you collect benefits late (you'll get more), whether you work after you retire, whether other family members receive benefits based on your earnings record, whether you collect certain other government benefits, and whether the cost of living rises. You can estimate your retirement benefit online...
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Feb
27
Choosing an Income Tax Filing Status
Tags: Taxes
Selecting a filing status is one of the first decisions you'll make when you fill out your federal income tax return, so it's important to know the rules. And because you may have more than one option, you need to know the advantages and disadvantages of each. Making the right decision about your filing status can save money and prevent problems with the IRS down the road. The five filing statuses and how they affect your tax liability Your filing status is especially important because it determines, in part, the tax rate applied to your taxable income, the amount of your standard deduction, and the types of deductions and credits available. By choosing the right filing status, you can minimize your taxes. The five filing statuses are...
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Feb
24
My spouse and I are filing separate returns. Can we both itemize our deductions? If so, how do we split the deductions?
Tags: Women
When spouses file separately, both must use the same method of claiming deductions. That is, either both parties must itemize, or both parties must take the standard deduction. If you choose to itemize, it's important to know how to divide your deductions. If your filing status is married filing separately, you typically report on your income tax return only your own income, expenses, credits, and deductions. Therefore, if you paid for a doctor's appointment out of your separate checking account, you would claim that deduction on your return. Any medical expenses paid out of a joint checking account in which you and your spouse have the same interest are considered to have been paid equally by each of you, unless you can show otherwise....
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Oct
03
Social Security Claiming Strategies for Married Couples
Two popular claiming strategies that have been used to boost Social Security income were recently eliminated by new rules contained in the Bipartisan Budget Act of 2015. However, depending on your age, you may still have a limited window to take advantage of these strategies before the new rules take effect. For more information about your options and the benefit application process, contact the Social Security Administration at (800) 772-1213 or visitwww.socialsecurity.gov. Every situation is unique, so these strategies may not be appropriate for all couples. When deciding when to apply for Social Security benefits, make sure to consider a number of scenarios that take into account factors such as both spouses' ages, estimated...
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Sep
26
Should I be investing more aggressively?
Tags: women
Answer: There's no way to know the answer to that without reviewing your individual circumstances and financial goals. However, if you are investing too conservatively, it can have a profound effect on your long-term financial security. That's particularly true for women. According to a U.S. Department of Labor study ("Women and Retirement Savings," October 2008), women often start saving later, save less, and invest more conservatively than men, which decreases their chances of having enough income in retirement. How you should be investing depends on many factors, such as: 1) How able are you to tolerate risk? 2) How soon do you hope to achieve your financial goals? 3) How much will you need to save for important goals such as...
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Sep
19
Weighing the Choice between Taxable and Tax-Free Bonds
Tags: taxes
If you sell a municipal bond at a profit, you could incur capital gains taxes. Also, the principal value of bonds may fluctuate with market conditions. Bonds redeemed prior to maturity may be worth more or less than their original cost. And remember that municipal bond funds are subject to the same inflation, interest-rate, and credit risks associated with their underlying bonds. As interest rates rise, bond prices typically fall, which can adversely affect a bond fund's performance. If you're considering the purchase of an individual bond or even a bond mutual fund, one of your first concerns will be its yield. However, when comparing various yields, you need to make sure you're not comparing apples to oranges. The yield on a...
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Sep
12
Changing Jobs? Take Your 401(k) and Roll It
Tags: retirement
In some cases, you have no choice--you need to use the funds. If so, try to minimize the tax impact. For example, if you have nontaxable after-tax contributions in your account, keep in mind that you can roll over just the taxable portion of your distribution and keep the nontaxable portion for yourself. If you've lost your job, or are changing jobs, you may be wondering what to do with your 401(k) plan account. It's important to understand your options. What will I be entitled to? If you leave your job (voluntarily or involuntarily), you'll be entitled to a distribution of your vested balance. Your vested balance always includes your own contributions (pretax, after-tax, and Roth) and typically any investment earnings on those...
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Sep
06
Social Security Retirement Benefits
Today, though the scope of Social Security has been widened to include survivor's, disability, and other benefits, retirement benefits are still the cornerstone of the program. Social Security was originally intended to provide older Americans with continuing income after retirement. Today, though the scope of Social Security has been widened to include survivor's, disability, and other benefits, retirement benefits are still the cornerstone of the program. How do you qualify for retirement benefits? When you work and pay Social Security taxes (FICA on some pay stubs), you earn Social Security credits. You can earn up to 4 credits each year. If you were born after 1928, you need 40 credits (10 years of work) to be eligible for...
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May
31
Retirement Plan Is Key to Confidence, Survey Finds
Tags: retirement
Retirees tend to be more confident about having a financially secure retirement than current workers, according to the Employee Benefit Research Institute. Retirement confidence is highest among workers who say they or their spouse have a retirement plan, such as a work-sponsored plan or an individual retirement account (IRA), reports the Employee Benefit Research Institute (EBRI). In its 2015 Retirement Confidence Survey, EBRI found that 28% of those with a retirement plan said they were "very confident" about their ability to afford retirement, compared with just 12% of those without a plan. In addition, 34% of workers who said they or their spouse have a retirement plan had saved at least $100,000 for retirement, while 64% of...
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May
23
How Secure Is Social Security?
If you're retired or close to retiring, then you've probably got nothing to worry about--your Social Security benefits will likely be paid to you in the amount you've planned on (at least that's what most of the politicians say). But what about the rest of us? The media onslaught Watching the news, listening to the radio, or reading the newspaper, you've probably come across story after story on the health of Social Security. And, depending on the actuarial assumptions used and the political slant, Social Security has been described as everything from a program in need of some adjustments to one in crisis requiring immediate, drastic reform. Obviously, the underlying assumptions used can affect one's perception of the solvency of...
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May
16
Should my partner and I buy a house together even though we're not married?
Tags: women
Answer: If you want to buy a home with your partner, go ahead. Together, you may be able to qualify for a larger mortgage than if one partner alone applied for the loan. However, be aware that unmarried partners have some unique considerations that married couples don't have. The laws dealing with the distribution of property when a couple splits up or a partner dies are few and vague when the couple is not married. So it's crucial for unmarried partners to have a detailed written agreement regarding their respective ownership interests in the property and their intentions for distribution of the property if either partner should die or if the relationship ends. Both partners should also keep thorough and accurate records of their...
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May
09
Tax Benefits of Home Ownership
Tags: taxes
In tax lingo, your principal residence is the place where you legally reside. It's typically the place where you spend most of your time, but several other factors are also relevant in determining your principal residence. Many of the tax benefits associated with home ownership apply mainly to your principal residence--different rules apply to second homes and investment properties. Here's what you need to know to make owning a home really pay off at tax time. Deducting mortgage interest One of the most important tax benefits that comes with owning a home is the fact that you may be able to deduct any mortgage interest that you pay. If you itemize deductions on Schedule A of your federal income tax return, you can generally deduct the...
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May
04
401(k) Plans: The Basics
Tags: retirement
Retirement plans established under Section 401(k) of the Internal Revenue Code, commonly referred to as "401(k) plans," have become one of the most popular types of employer-sponsored retirement plans. What is a 401(k) plan? A 401(k) plan is a retirement savings plan that offers significant tax benefits while helping you plan for the future. You contribute to the plan via payroll deduction, which can make it easier for you to save for retirement. One important feature of a 401(k) plan is your ability to make pretax contributions to the plan. Pretax means that your contributions are deducted from your pay and transferred to the 401(k) plan before federal (and most state) income taxes are calculated. This reduces your current taxable...
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Apr
25
What happens if I start collecting Social Security after full retirement age?
Answer: You'll get a bigger check every month. However, how much bigger depends upon what year you reach full retirement age, and how long you postpone collecting benefits. If you were born in 1943 or later, you'll receive 2/3 of 1% for each month that you delay collecting retirement benefits (8 percent more per year), up until age 70. So, for example, if your full retirement age is 66 and you delay collecting benefits for 4 years, your benefit at age 70 will be 32% higher than at age 66. You can estimate your retirement benefit online based on your actual earnings record using the Retirement Estimator calculator on the Social Security website (www.ssa.gov). You can create different scenarios based on current law that will illustrate...
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Apr
18
I'm marrying someone with bad credit. How will this affect me?
Tags: women
Answer: You are not responsible for your future spouse's bad credit or debt, unless you choose to take it on by getting a loan together to pay off the debt. However, your future spouse's credit problems can prevent you from getting credit as a couple after you're married. Even if you've had spotless credit, you may be turned down for credit cards or loans that you apply for together if your spouse has had serious problems. You're smart to face this issue now rather than wait until after you're married to discuss it. Attitudes toward spending money, along with credit and debt problems, often lead to arguments that can strain a marriage. Order copies of both of your credit reports from one or more major credit reporting bureaus. Then, sit...
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Apr
12
Education Tax Credits and Deductions
Tags: taxes
Tax credit vs. tax deduction A tax credit is more valuable than a tax deduction of the same amount. Why? A tax credit reduces any taxes owed on a dollar-for-dollar basis, whereas a tax deduction simply reduces the total income on which your taxes are based. For parents and students trying to manage college bills and student loan payments, the federal government offers education-related tax benefits. The requirements for each are different, so here's what you need to know. American Opportunity credit The American Opportunity credit (formerly the Hope credit) is a tax credit available for the first four years of a student's undergraduate education, provided the student is attending school at least half-time in a program leading to a...
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Apr
06
Net Unrealized Appreciation: The Untold Story
Tags: retirement
All investing involves risk, including the loss of principal. This discussion explains the tax treatment that may be available when employer stock is held in a qualified retirement plan. While the examples used in the discussion show such stock increasing in value over time, it is important to understand that any shares of stock held in a retirement plan, including shares of employer stock, can lose some or all of their value over time. If you're expecting a distribution of employer securities from a qualified retirement plan, make sure you speak with your financial or tax professional before you take any action so that you can fully explore and understand all the options available to you. Only then can you be assured of making the...
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Mar
28
Women and Work: Why Salary, Benefits, and Work-Life Balance Count
Tags: women
As more and more women earn college degrees, change in the workplace may be inevitable. According to the National Center for Education Statistics, women now earn 57% of bachelor's degrees, 60% of master's degrees, and 51% of doctoral degrees.1 According to the Bureau of Labor Statistics, approximately 70% of women with children under age 18 are in the labor force.3 Sources 1U.S. Department of Education, National Center for Education Statistics, Digest of Education Statistics, 2013 2,3U.S. Department of Labor, Bureau of Labor Statistics, Women in the Labor Force: A Databook, December 2014 4U.S. Census Bureau, Current Population Survey, America's Families and Living Arrangements: 2014 As you progress along your career...
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Mar
21
Am I Having Enough Withheld?
Tags: taxes
If you fail to estimate your federal income tax withholding properly, it may cost you in a variety of ways. If you receive an income tax refund, it essentially means that you provided the IRS with an interest-free loan during the year. By comparison, if you owe taxes when you file your return, you may have to scramble for cash at tax time--and possibly owe interest and penalties to the IRS as well. When determining the correct withholding amount for your salary or wages, your objective should be to have just enough taxes withheld to prevent you from incurring penalties when your tax return is due. (You may owe some money at the time you file your return, but it shouldn't be much.) You can accomplish this by reading and understanding IRS...
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Mar
14
Understanding Investment Terms and Concepts
Tags: retirement
Below are summaries of some basic principles you should understand when evaluating an investment opportunity or making an investment decision. Rest assured, this is not rocket science. In fact, you'll see that the most important principle on which to base your investment education is simply good common sense. You've decided to start investing. If you've had little or no experience, you're probably apprehensive about how to begin. It's always wise to understand what you're investing in. The better you understand the information you receive, the more comfortable you will be with the course you've chosen. Don't be intimidated by jargon Don't worry if you can't understand the experts in the financial media right away. Much of what they say...
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Mar
07
Does my 16-year-old have to pay Social Security tax on her earnings?
Answer: Like most wage-earning employees, your 16-year-old will most likely have to pay Social Security tax on her earnings. Of course, every rule has its exceptions. In this case, there are three. She may be exempt from paying Social Security taxes if she (1) works in the family business, (2) works in domestic service, or (3) delivers newspapers. If you hire your child to work in your business, her earnings may be exempt from Social Security tax. She can take advantage of this exemption (up to her 18th birthday) only if your business is set up as either a sole proprietorship or a partnership where you and your spouse are the only partners. Child labor laws vary from state to state, though. Check with your state's department of labor...
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Feb
29
Women and Money: Taking Control of Your Finances
Tags: women
Even if you have a partner who traditionally manages household finances, it's important to be involved in the budgeting and investing decisions that have an effect on your overall financial picture. Some credit traps to avoid: When using revolving credit, avoid spending more than you can pay off at the end of each billing cycle Be aware of hidden interest and fees When transferring balances to take advantage of low interest rates, be sure to pay off outstanding balances before the teaser rate expires Be sure to make payments on time; otherwise it could negatively affect your credit report As a woman, you have financial needs that are unique to your situation in life. Perhaps you would like to buy your first home. Maybe you need...
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Feb
03
Women: Moving Forward Financially after the Loss of a Spouse
Tags: women
Becoming a widow at any age can be one of the most difficult challenges a woman must face. Not only is there the emotional loss of a husband, but also the task of handling everything--including all the finances--without the help of a spouse. Women may have a different set of expectations and requirements from their financial professional than men. As you work with a financial professional, make sure he or she is responsive to what you say you need. The loss of a spouse can be a devastating, life-changing event. Due to longer life expectancies, women are more likely to face this situation. According to the U.S. Census Bureau's 2014 Current Population Survey, approximately 35% of women age 65 and older are widows compared to...
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Jan
25
Help! I Can't Pay My Tax Bill
Tags: taxes
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? First, don't panic. You have several options. That said, however, don't put your head in the sand. The IRS won't go away, and the amount you owe will only grow larger if you procrastinate. If you ignore your tax bill entirely,...
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Jan
19
My company has a profit-sharing plan. How do these plans work?
Tags: retirement
Answer: A profit-sharing plan is a defined contribution plan in which your employer has discretion to determine when and how much the company pays into the plan. The amount allocated to each individual account is usually based on the salary level of the participant (employee). Your employer's contributions to your account, and any investment earnings, accumulate on a tax-deferred basis--the IRS will tax these benefits as part of your regular income only when you begin receiving distributions from the plan, typically after you retire or terminate employment. Whether you can make withdrawals while you are still employed depends on the terms of your plan. For example, some plans permit withdrawals after you've attained at 59½, or after...
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Jan
12
Social Security Retirement Benefit Basics
Signing up for Social Security According to the Social Security Administration, you should apply for Social Security benefits approximately three months before your retirement date. To apply for Social Security benefits, you can fill out an application online or call or visit your local Social Security office. You can also call the SSA at (800) 772-1213 to discuss your options or to get more information about the application process. Social Security benefits are a major source of retirement income for most people. Your Social Security retirement benefit is based on the number of years you've been working and the amount you've earned. When you begin taking Social Security benefits also greatly affects the size of your benefit. How do...
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Dec
28
A Woman's Guide to Health Care in Retirement
Tags: women
Health care in retirement can be an expensive proposition. How much you'll spend on health care during your retirement generally depends on a number of factors, including when you retire, how long you live, your relative health, and the cost of medical care in your area. Sources 1U.S. Department of Health and Human Services Centers for Disease Control and Prevention, "Trends in Health Status and Health Care Use Among Older Women" 2National Clearinghouse for Long-Term Care Information, "How Much Care Will You Need?" 3National Clearinghouse for Long-Term Care Information, "Services & Providers" At any age, health care is a priority. But when you retire, you should probably focus more on health care than ever before. This is...
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Jan
05
Income Tax Planning and 529 Plans
Tags: taxes
The income tax benefits offered by 529 plans make these plans attractive to parents (and others) interested in saving for college. Qualified withdrawals from a 529 plan are tax free at the federal level, and some states also offer tax breaks to their residents. It's important to evaluate the federal and state tax consequences of plan withdrawals and contributions before you invest in a 529 plan. Federal income tax treatment of qualified withdrawals There are two types of 529 plans--college savings plans and prepaid tuition plans. The federal income tax treatment of these plans is identical. Your contributions to college savings plans and prepaid tuition plans are tax deferred. This means that you don't pay income taxes on the plan's...
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Dec
21
Reaching Retirement: Now What?
Tags: retirement
1When considering a rollover, to either an IRA or to another employer's retirement plan, you should consider carefully the investment options, fees and expenses, services, ability to make penalty-free withdrawals, degree of creditor protection, and distribution requirements associated with each option. 2To qualify for tax-free and penalty-free withdrawal of earnings, a Roth IRA must meet a five-year holding requirement and the distribution must take place after age 59½, with certain exceptions. Rule of thumb Many investment professionals recommend you follow this simple rule of thumb when allocating your retirement assets: The percentage of stocks or mutual funds in your portfolio should equal approximately 100% minus your age....
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Dec
08
Social Security Figures At-a-Glance
2014 2015 Social Security Cost-of-living adjustment (COLA) For Social Security and Supplemental Security Income (SSI) beneficiaries 1.5% 1.7% Tax rate FICA tax--Employee 7.65% 7.65% Social Security (OASDI) portion of tax 6.20% 6.20% Medicare (HI) portion of tax 1.45% 1.45% Self-Employed 15.30% 15.30% Social Security (OASDI) portion of tax 12.40% 12.40% Medicare (HI) portion of tax 2.90% 2.90% Maximum taxable earnings Social Security (OASDI only) $117,000 $118,500 Medicare (HI only) No limit No limit Quarter of coverage Earnings required $1,200 $1,220 Retirement earnings test--exempt amounts Under full retirement age Benefits reduced by...
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Nov
30
Women: Living in the Sandwich Generation
Tags: women
The day-to-day demands of caring for an aging parent and children can put a tremendous strain--both emotional and financial--on the primary caregiver. Be sure to set priorities and encourage open communication with your entire family to figure out ways to share the burdens. According to the Alzheimer's Association report, 2014 Alzheimer's Disease Facts and Figures, the burden of caregiving is much heavier on women than on men: Women constitute 60 to 70% of all informal caregivers for seniors Women are 2.5 times more likely to care for a loved one at home, providing around-the-clock care Women caregivers are much more likely to have to switch to part-time work or give up work entirely At a time when your career is reaching a...
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Nov
23
Personal Deduction Planning
Tags: taxes
Taxes, like death, are inevitable. But why pay more than you have to? The trick to minimizing your federal income tax liability is to understand the rules and make the most of your tax planning opportunities. Personal deduction planning is one aspect of tax planning. Here, your goals are to use your deductions in the most efficient manner and take all deductions to which you're entitled. Deductions lower your taxable income Your first step is to understand how deductions work. You subtract certain deductions from your total income to arrive at your adjusted gross income (AGI); these deductions are commonly referred to as adjustments to income or as "above-the-line" deductions. Then, you subtract other deductions and exemptions from your...
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Nov
17
Six Keys to More Successful Investing
Tags: retirement
A successful investor maximizes gain and minimizes loss. Though there can be no guarantee that any investment strategy will be successful and all investing involves risk, including the possible loss of principal, here are six basic principles that may help you invest more successfully. Long-term compounding can help your nest egg grow It's the "rolling snowball" effect. Put simply, compounding pays you earnings on your reinvested earnings. The longer you leave your money at work for you, the more exciting the numbers get. For example, imagine an investment of $10,000 at an annual rate of return of 8 percent. In 20 years, assuming no withdrawals, your $10,000 investment would grow to $46,610. In 25 years, it would grow to $68,485, a 47...
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Nov
11
How can I get an estimate of my Social Security benefits?
Answer: One way to get an estimate of your future Social Security benefits is to use the benefit calculators available on the Social Security Administration's website, www.ssa.gov. You can estimate your retirement benefit based on your actual earnings record using the Retirement Estimator calculator, then create different scenarios based on current law that will illustrate how different earnings amounts and retirement ages will affect the benefit you receive. Other benefit calculators are also available that can help you estimate disability and survivor's benefits. You can also sign up for amySocial Security account so that you can view your online Social Security Statement. Your statement contains a detailed record of your earnings, as...
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Nov
05
Does it make sense financially for both me and my spouse to work after our child is born?
Tags: women
Answer: Following the birth of your child, you may feel that both you and your spouse need to work to meet household expenses and maintain your current lifestyle. However, you may discover that one of you can stay home without seriously affecting your net income. Though you would have to do without a second income, you need to factor in what you'd save: Child-care costs: The cost per child for a day-care facility, nursery school, or nanny Commuting costs: Gasoline, wear and tear on your car, tolls, and parking Clothing: Work clothes and dry cleaning Restaurant and take-out food: Prepared dinners you purchase because you have no time to cook Lunches out: You have more time to prepare your own House cleaning and gardening: Hired help...
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Oct
27
Taxation of Investments
Tags: taxes
It's nice to own stocks, bonds, and other investments. Nice, that is, until it's time to fill out your federal income tax return. At that point, you may be left scratching your head. Just how do you report your investments and how are they taxed? Is it ordinary income or a capital gain? To determine how an investment vehicle is taxed in a given year, first ask yourself what went on with the investment that year. Did it generate interest income? If so, the income is probably considered ordinary. Did you sell the investment? If so, a capital gain or loss is probably involved. (Certain investments can generate both ordinary income and capital gain income, but we won't get into that here.) If you receive dividend income, it may be taxed...
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Oct
19
Pay Down Debt or Save for Retirement?
Tags: retirement
All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful. The most important decision you can make is to take action and get started now. The sooner you decide on a plan, the sooner you can begin to make progress. If you decide to prioritize paying down debt, make sure you put in place a mechanism that automatically directs money toward the debt so you won't be tempted to skip or reduce payments. You can use a variety of strategies to pay off debt, many of which can cut not only the amount of time it will take to pay off the debt but also the total interest paid. But like many people, you may be torn between paying off debt and the need...
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Oct
12
How Earnings Affect Social Security
If you begin to receive Social Security retirement (or survivor's) benefits before you reach full retirement age, money you earn over a certain limit will reduce the amount of your Social Security benefit. In 2015, your benefit will be reduced by $1 for every $2 of earnings in excess of $15,720.* The chart below shows the effect of annual earnings of $10,000, $20,000 and $30,000 on a $12,000 annual Social Security benefit ($1,000 monthly) for someone who hasn't yet reached full retirement age. Source: Social Security Administration, 2014 *Special rules apply in both the year you reach full retirement age and the year you retire if you have not reached full retirement age.
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Oct
05
Women: Planning for the Financial Impact of Children
Tags: women
To work or not to work? The decision to go back to work after having a baby is a personal one. Whatever you decide, know that your decision isn't etched in stone. Whatever you do this year might not be what you're doing two, five, or ten years from now. Flexibility is key. Flexible work arrangements are the wave of the future as more women (and men) request them in order to balance work and family demands. *The cost and availability of life insurance depend on factors such as age, health, and the type and amount of insurance purchased. Women: Planning for the Financial Impact of Children Children are a special blessing and their arrival brings boundless love and joy into our lives that you can't put a price on. But adding a...
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Sep
28
Estate Planning Key Numbers
Tags: key numbers
Estate Planning Key Numbers You will find here some key numbers associated with estate planning, as well as the federal gift tax and estate tax rate schedules for 2014 and 2015. 2014 2015 Annual gift tax exclusion: $14,000 $14,000 Gift tax and estate tax applicable exclusion amount: $5,340,0001+ DSUEA2 $5,430,0001+ DSUEA2 Noncitizen spouse annual gift tax exclusion: $145,000 $147,000 Generation-skipping transfer (GST) tax exemption: $5,340,0003 $5,430,0003 GST tax rate 40% 40% Special use valuation limit (qualified real property in decedent's gross estate): $1,090,000 $1,100,000 1The basic exclusion amount 2Deceased spousal unused exclusion amount (for 2011 and later years) 3The GST...
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Sep
21
What are required minimum distributions and how are they calculated?
Tags: retirement
Required minimum distributions are the amounts that you must withdraw each year from your traditional IRA, employer-sponsored retirement plan, or tax-sheltered annuity. You must begin to take the annual distributions by April 1 of the year following the year in which you reach age 70½. This is known as your required beginning date. If you work for your employer past age 70½ and are still participating in the employer's retirement plan, you may postpone your first distribution from that plan until April 1 of the year following the year of your retirement (as long as you are not more than a 5 percent owner of the employer). Regardless of your required beginning date, you must take subsequent distributions by December 31 of each calendar...
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Sep
17
Are my Social Security benefits subject to income tax?
A portion of your benefits may be subject to income tax if your modified adjusted gross income (MAGI), plus one-half your Social Security benefits, exceeds specific limits. Your MAGI equals: Adjusted gross income (or the adjusted gross income of you and your spouse if married and filing jointly), including wages, interest, dividends, taxable pensions, and other sources, Tax-exempt interest income (e.g., interest from municipal bonds and qualified U.S. savings bonds), and Amounts earned in a foreign country, U.S. possession, or Puerto Rico that are exempt from tax Up to 50 percent of your Social Security benefits may be subject to income tax if your combined income (MAGI plus one-half your Social Security benefits) exceeds $25,000 for...
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Sep
10
Asset Protection for Women: Beyond Insurance
Tags: women
Generally, an asset protection strategy should dissuade potential creditors from pursuing an action against you, and protect your personal assets from being seized to satisfy a creditor's judgment. Many professionals, such as lawyers, doctors, dentists, and accountants, face liability for damages that result from the performance of their professional duties. Both an LLP and PC protect you from the professional mistakes of your partners. As women continue to work and earn money, become the main breadwinners, and run their own businesses, it's important to take measures to protect your lives, businesses, and simply the things you own. That's why asset protection planning has become so vital for women. Asset protection planning is...
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Aug
25
Staying on Track with Your Retirement Investments
Tags: retirement
All investing involves risk, including the possible loss of principal, and there can be no assurance that any investment strategy will be successful. And asset allocation and diversification alone cannot guarantee a profit or eliminate the possibility of loss, including the loss of principal. Note:Before investing in a mutual fund, consider its investment objectives, risks, charges, and expenses, all of which are outlined in the prospectus, available from the fund. Consider the information carefully before investing. Remember that an investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at...
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Aug
18
Sources of Retirement Income: Filling the Social Security Gap
According to the Social Security Administration, more than nine out of ten individuals age 65 and older receive Social Security benefits. But most retirees also rely on other sources of retirement income, as shown on this chart: Source:Fast Facts & Figures About Social Security, 2014,Social Security Administration Refer a friend To find out more clickhere
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Aug
11
Women and Asset Protection: How Insurance Can Help
Tags: women
Insurance is an important part of your asset protection plan. A good asset protection plan should attempt to: Recognize potential problems before they arise Shield your assets from potential legal liability, and Protect your property, possessions, and income from creditor claims Becoming disabled for any significant length of time can dramatically affect your finances. Yet it's not uncommon to underestimate the likelihood of becoming disabled and to overestimate your available resources. That's why disability insurance can play an important role in protecting your income and maintaining your financial well-being. Women are successful professionals, business owners, and knowledgeable investors. At some point in their lives,...
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Aug
03
Health-Care Reform: Insurance Marketplaces
Tags: health care
One of the functions of a Marketplace is to grant certifications to individuals who are exempt from the individual health insurance mandate penalty because they are not able to afford a qualified health plan offered through the Marketplace, and coverage is not available through the individual's employer. Basic state Marketplace functions include access to a toll-free hotline and website for providing information on plans to current or prospective enrollees. Besides plan descriptions, the website also calculates the actual cost of coverage, taking into account eligibility for premium tax credits and cost sharing reductions. The Patient Protection and Affordable C