Lakehouse Family Wealth Blog

What’s New for Social Security in 2024?

Fri, 23 Feb 2024 04:28:43 GMT

How Social Security Changes in 2024 May Affect Retirees

Social Security will boost benefit checks in 2024 by 3.2% beginning January 1, 2024,as stated in a recently published Social Security Fact Sheet .* This is over 50% lower than last year’s cost-of-living adjustment (COLA). The good news is that inflation is down to 3.2% as of the end of October 2023 and the expected 3.2% COLA is the 3rd largest COLA increase in the past twelve years. The COLA will apply to veteran’s disability benefits and retirement pay, also.

What Does This COLA Increase Mean for Retirees?

While the average monthly Social Security benefit will increase by $59, the increase to the Part B Medicare premium of $9.90 per month will eat into this monthly benefit increase. Still, inflation is lower and that is good news for retirees, especially since at least 14% rely solely on Social Security for 90% or more of their income and at least another 21% rely on Social Security for 75% percent or more of their income. As a group, 75% of all retirees rely on Social Security for at least 50% of their income.

Higher Maximum Benefits

Retirees who were higher earners while working and previously hit the maximum benefit amount, will likely see their benefit increase as the maximum Social Security benefit for someone retiring at full retirement age will increase in 2024 from $3,626 to $3,822. This maximum applies to people who begin their Social Security benefits at the full retirement age, 67 or slightly greater, for anyone born after 1960. About 2% of retirees qualify for the maximum monthly benefit of $3,627, a monthly increase of $282.

Inflation and Your Social Security Benefits

Recent inflation, combined with Medicare cost increases means that most retirees may need to rethink their budgets and make adjustments to their expectations. Workers near retirement may need to postpone retirement a bit longer. Retirees who need to take required minimum distributions (RMD’s) from 401(k)’s, may need to consider not taking an amount beyond that minimum, however tempting it may be. Reinvesting a portion of RMD’s may be prudent for many retirees and it will help them keep up with future inflation.

Retirees who have investments and savings need to remain partially invested in the stock market they are already doing so. If current investments tend to be in fixed income, then investing partially in equities is likely to be a smart move for many retirees. Retirees cannot afford not to be in the stock market to some extent. That is the best way to stay ahead of inflation. For some retirees, working part-time during retirement will be part of their strategy. For others, reduced spending or a combination of solutions will be the answer.

Whatever you have invested now will impact what you have in 5, 10, even 20 years out. So, minimizing spending when the market is down and inflation is up - while painful – is likely to pay off in the long-run for those whose retirement income is more modest. If bigger withdrawals from your investments and savings happen now, those actions will erode the amount of money you have in the long-run.

Lakehouse Family Wealth believes retirees need to keep their eyes on a long-term horizon and remain invested in equities, to some extent, as appropriate for each client. We work with each client to create a portfolio that makes sense for their given situation and that usually includes investments for the long-term that will help clients stay ahead of inflation and minimize effects of other headwinds in retirement.

How Do You Find Out the Amount of Your 2024 Social Security Check?

You will receive a COLA notice from the Social Security Administration during the month of December. This applies to retirees and those receiving survivors, disability, and SSI payments. Or you may log into My Social Security to view your information online.

More of Employee Income Will Be Subject to Social Security Taxes

The amount of your paycheck subject to the maximum Social Security taxes will go up to $168,600 in 2024. That is an increase from $160,200 based on an increase in the average wage in the U.S. Typically, workers paying into Social Security are taxed at the 6.25 rate. This means that workers with higher incomes will continue to pay more into Social Security.

What If You Work During Retirement?

The amount you earn through work during retirement can limit your Social Security benefits if you earn over a certain amount. This is known as the retirement earnings tes t . You will forfeit $1 in benefits for every $2 you make over the earnings limit - this limit is $22,320 in 2024 for retirees younger than their full retirement age. During the year a retiree reaches their full retirement age, the earnings limit will increase to $59,520. This means that $1 from benefits is withheld for each $3 of earnings during that year in excess of the earnings limit, and then no amount is withheld beginning the month you reach full retirement age.**

Plan for What Does Not Change with Social Security

Some estimates say that Social Security will be able to pay full benefits through about 2034. Assuming that Congress does not correct the shortfall by then, and if the estimates are correct, suggest that benefits will drop to about 75-80% of current levels starting in 2034. While Congress may find a solution, it is known that Social Security is a spend-as-you-go program and may have an uncertain future.

Lakehouse Family Wealth firmly believes that a sound financial plan, built around your family can be the key to financial success in retirement. We want our clients to achieve their goals during their working years and in retirement. We develop and revisit their long-term plans while considering the most common challenges retirees face such as inflation, investment risk, death of a spouse, longevity, long-term care needs and more. We work with clients early in their careers as well as those who are near or already in retirement to develop and refine their plan as it is appropriate for their situation. Contact us for a free assessment.

Sources:

*2024 Social Security Changes, Fact Sheet, Social Security Administration .

**Cost-of-Living Adjustment (COLA) Information for 2024, Social Security Administration .

Beyond Dollars and Cents: Understanding the Essence of Wealth Management

Sun, 18 Feb 2024 23:38:47 GMT

In the realm of financial planning, the term "wealth management" often conjures images of spreadsheets, stock tickers, and investment portfolios. While these elements certainly play a crucial role, true wealth management extends far beyond the realm of dollars and cents. At Lakehouse Family Wealth, understanding the essence of wealth management means embracing a direct approach that encompasses not only financial assets but also personal values, aspirations, and legacies.

True wealth is not just about accumulating dollars; it's about earned choice and time. And choice + time allow you to pursue your goals and values.

But how do you get there?

It's about crafting a comprehensive strategy that takes into account your financial objectives, risk tolerance, time horizon, and lifestyle preferences. At Lakehouse Family Wealth, we recognize that your wealth is more than just numbers on a balance sheet – it's a reflection of your life's work, your hopes for the future, and the legacy you wish to leave behind.

Central to our approach to wealth management is the concept of comprehensive financial planning. Rather than focusing solely on investments, we take a holistic view that helps you keep more of what you make, and reduce the likelihood of losing the wealth you have worked so hard to earn. That means addressing your whole financial situation, including areas such as retirement planning, tax optimization, estate planning, insurance coverage, risk management, and charitable giving. By integrating these various aspects of your financial life, we strive to create a cohesive strategy that supports your long-term financial well-being.

But wealth management is not just about numbers; it's also about relationships. At Lakehouse Family Wealth, we understand that every client is unique, with their own set of values, priorities, and concerns. That's why we take the time to build deep, meaningful relationships with each of our clients, listening carefully to their needs and aspirations, and providing personalized guidance every step of the way.

Another crucial aspect of wealth management is education. We believe that informed clients are empowered clients, which is why we place a strong emphasis on financial literacy and education, not just with our clients, but also their children. We work closely with our clients to help them understand the complexities of the financial markets, the importance of diversification, and the potential risks and rewards associated with various investment strategies. By arming our clients with knowledge and insights, we empower them to make informed decisions and take control of their financial futures.

At Lakehouse Family Wealth, we also recognize the importance of flexibility and adaptability in wealth management. The financial landscape is constantly evolving, and what works today may not necessarily work tomorrow. That's why we take a proactive, dynamic approach to wealth management, regularly reviewing and adjusting our strategies in response to changing market conditions, regulatory developments, and life events.

Ultimately, wealth management is about more than just growing your portfolio – it's about enriching your life, protecting your loved ones, and making a positive impact on the world around you. At Lakehouse Family Wealth LLC, we are committed to helping our clients achieve not only financial success but also fulfillment. We work to help alleviate the stressors that can come with planning your financial future. Because when it comes down to it, true wealth is measured not just in dollars and cents, but in the richness of life's experiences, relationships, and accomplishments.

Lakehouse Family Wealth LLC is a wealth management firm dedicated to helping individuals and families navigate the complexities of financial planning with personalized strategies tailored to their unique goals and values. We are happy to help empower our clients and create lasting relationships that extend from generation to generation. We want you to live a life beyond your working years. Call us today for a free portfolio analysis or to learn more about the services we offer. Visit our website to request a consultation or give us a call at (440) 589-7700 .

For important disclosures, click here .

Navigating the Path to Financial Freedom: Essential Steps in Retirement Planning

Fri, 19 Jan 2024 23:34:59 GMT

Having enough retirement savings is a constant worry for many adults. Benefits like Social Security currently help people finance their lives after leaving the workforce, but adequate retirement planning is beneficial to help families have a growing nest egg for their future.

Not everyone who's planning for retirement may understand the right steps to financial freedom. Consider the guide below to learn important retirement planning steps and tips to pursue a more secure financial future and live comfortably in your golden years.

How To Create a Financial Retirement Plan: Important Steps and Considerations

Though many people view retirement as a time for relaxation, for others, it's a time to live life to the fullest without the demands of a career. Everyone's lifestyle, needs, and financial situation are different. As such, it's necessary to create an individualized financial retirement plan that's suitable for how you intend to spend your years as an aging adult.

Retirement planning is a multi-step process that helps you work towards saving sufficient income to fund your ideal lifestyle once you stop working. It's a long-term plan that can help you avoid running out of funds or relying solely on Social Security Benefits, which usually isn't enough.

Here, you'll find the top steps for retirement planning to aid in your future income strategy development.

Understand Your Life Goals

Financial freedom looks different to everyone. On the surface, it's a vague goal that doesn't explain how you intend to live the lifestyle you want or how to fund it. So, the first step in creating a retirement income strategy is understanding your life goals.

Someone who intends to live their golden years in a booming city won't have the same financial goals as someone who prefers simple rural living. Consider these questions to help determine your future goals as it pertains to your retirement:

What lifestyle do you want, and what will it require?
How much will you need annually to fund that lifestyle?
What is the latest age you want to have the passive income or savings to fund your lifestyle as a retiree?

The more details you have about how you want to spend your golden years and the money it will take to fund it, the easier your retirement planning will be.

Start Retirement or Pension Planning as Soon as Possible

Investing in stocks and bonds is a great way to earn passive income that you can use later in life. Yet, it takes time to grow your funds through investments. You must also consider volatile markets that cause fluctuations in how much investors earn or lose.

For these reasons, it's often beneficial to start investing and planning your retirement as soon as possible. Early investing provides more time for compound interest to build. Also, if the stock market dips, you'll have time to reorganize your investments to minimize your losses.

Getting personalized retirement advice from a respected agency that offers retirement investment planning can help you create a diverse investment portfolio that grows according to your financial needs.

Consider Your Healthcare

Sometimes, people forget about their healthcare needs when planning for retirement. Short- and long-term medical care is often necessary later in life due to age-related physical and mental health conditions. Without careful planning, you may not have enough money to cover medical expenses like at-home nursing, hospitalizations, and prescription drugs.

Medicare is available for older adults. However, this federal health insurance program may not accommodate all of your healthcare expenses or needs after you retire. You must also pay Medicare premiums.

When planning for retirement, be sure to consider your medical expenses and long-term care. Living comfortably as a retiree should include not worrying about your healthcare needs or leaving your family to carry that burden.

Keep Track of Your Credit Score

The future is uncertain for everyone. Still, a good credit score will generally open more doors for you and your family now and later in life.

Your credit score determines your ability to take out loans, get credit cards, and refinance a home. It also influences your interest rates for everything from mortgages to life insurance premiums.

A poor credit score indicates reckless consumer spending habits to financial institutions. It carries a lot of weight. Monitoring your credit score now and addressing negative markers like delinquent payments or excessive credit utilization is a beneficial way to ensure your score is in good standing in the future.

Choose Retirement Investment Accounts

Retirement savings plans come in many forms. For many people, having a 401(k) plan from their employer is ideal. With a 401(k) retirement plan, your employer will deduct a percentage of your pay to save and invest. Many businesses also match employee contributions, boosting the plan's growth up to a certain limit.

Still, a 401(k) isn't the only type of retirement savings plan you could have. Another option is an individual retirement account that you can contribute to over the years. Roth IRAs offer tax-free qualified withdrawals when you retire.

No matter which retirement investment account you prefer, try to contribute at least 10% of your monthly pre-tax income to build the account. If 10% isn't feasible, contribute what you can and adjust as your financial situation improves.

Don't Forget Estate Planning

Retirement planning should also include estate planning to assist with your family's financial future upon your passing. Estate planning and drafting a will gives your loved ones a detailed outline of your final wishes and how you wish to disperse your money, property, and other assets. You may also set up a trust to control and monitor your beneficiaries' inheritance.

Start Planning for Your Future Today

Our financial advisors work with other professionals, like attorneys, to help our clients plan their retirements according to their needs. Contact Lakehouse Family Wealth at ( 440) 589-7700 today to request a consultation about retirement planning.

The content provided in this post is meant for educational purposes only and should not be taken as legal advice. Our professionals offer financial planning but cannot offer legal assistance. Click here for a full list of disclosures.

Navigating Wealth Management Options for Financial Success in Ohio

Fri, 22 Dec 2023 23:29:41 GMT

Many people dream of long-term financial security. Achieving that dream can sometimes feel like a difficult prospect — but it doesn’t have to be. Wealth management can help Ohio residents prepare for the future and pursue financial stability. Lakehouse Family Wealth is here to help you explore your options and create a customized strategy that suits your life circumstances.

Make a Long-Term Financial Plan

Preparing for the future is a must. Financial planning is crucial to wealth management in Ohio, as the right plan will allow you to create strategies to increase your wealth and minimize risks.

Take the time to speak to a professional financial planner. They’ll help you create a customized financial plan that takes into account your current income, financial goals, existing expenses, and other concerns. Your financial plan may help you find ways to reduce your debt, identify other income streams, and create monthly budgets to help you save.

Your financial planner may also suggest retirement planning and estate planning so that you can preserve your wealth into retirement and beyond. Take the time to consider your options carefully to create a water-tight strategy that will reduce financial strain.

Manage Your Investments

Making smart investments can be an excellent way to build wealth. Proper investment management involves examining your current investments to determine how to get the most out of them. You’ll also want to explore additional investment opportunities. Consider which options best fit your current situation and plan how they can integrate into your financial strategy.

Take Steps To Reduce Risks

Unexpected financial hardships, poor investments, and job loss can all have drastic effects on your finances. Risk management is key if you want to protect your wealth long-term.

You’ll want to take the time to think about what may cause undue financial strain and take steps to protect yourself. For example, say you’ve made several investments in stocks. Should the stock market crash, those investments would lose their value. Diversifying your investment portfolio can mitigate the risk of one investment failing, helping you protect yourself.

Think About Your Taxes

Everyone has to pay taxes. However, you can reduce their effect on your finances by utilizing tax optimization.

Reach out to a tax planning professional to discuss your options. A tax planner can identify useful tax credits, explain tax law and how to navigate it, and help you make investments to reduce your overall financial burden. Tax planners tailor plans to each individual, helping them find solutions to suit their situations.

Speak to a Financial Professional

Proper wealth management can help you worry less about the future. However, trying to navigate things on your own can be difficult, so consider working with a financial professional.

If you need help with wealth management in Ohio, reach out to Lakehouse Family Wealth. We’re here to provide you with the resources and assistance necessary to preserve your wealth for years to come. Call (440) 589-7700 to learn more about what we do.

November Is National Family Caregiver Month: What Do Caregivers Need to Know About Retiring Early?

Fri, 24 Nov 2023 22:49:45 GMT

November is National Family Caregiver Month, an opportunity to honor the physical, mental and emotional effort caregivers put into their role every day. When looking after a loved one, it’s important to understand the financial challenges this life milestone can create.

Whether by choice or necessity, many caregivers may find themselves retiring early. If you’re exiting the workforce, there are a few things to consider to make sure you and your family are supported.

How to Plan for Becoming a Caregiver

As part of the “sandwich” generation, you have a lot on your plate. You may be raising children, taking care of aging parents and managing your other personal responsibilities. For many people, juggling all of these tasks might include retiring early to become a full-time caregiver. Here are a few things to consider if you find yourself leaving the workforce to care for a loved one.

1. Understand Your Resources

When faced with the responsibility of becoming a full-time caregiver, you might think that your only option is to leave the workforce. But there are a few other resources available that may be useful in your situation.

The Family Medical Leave Act allows for “eligible employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons.” ¹ Check with your company if they offer this coverage.

You may also be eligible to receive Medicaid, which can allow qualified individuals to manage their own home-care services. Medicaid differs by state, so contact your state’s Medicaid program to see if you or your loved one qualify. ²

2. Have an Income Plan

Planning for retirement takes careful strategizing and becoming a caregiver adds a new wrinkle. By retiring early, you may miss out on ongoing contributions to an employer-sponsored retirement plan. In addition, you may not have access to Social Security, Medicare or pensions yet. You may also be hit with withdrawal penalties if you want to access your retirement funds early.

However, even with these additional complications, it’s still possible to prepare ahead for any income gaps. Working with a qualified retirement planning financial professional is key to making this transition a smooth one.

3. Consider Your Future

Every caregiving situation is different and it’s important to consider both your short-term and long-term goals. Do you plan to take on a part-time job if you have the time and capacity? Do you want to re-enter the workforce? Are there other options available so you can still work while your loved one is taken care of? Having a clear sense of what you want for yourself can help you plan for your financial situation in the coming years.

4. Plan for the Emotional Changes, Too

While it’s important to plan for the financial changes of becoming a caregiver, it’s important to consider the emotional changes as well. Being a caregiver can be hugely rewarding, but can also take a toll on your mental health.

Consider ways to maintain your connections to your community while being out of the workforce. This could include joining a support group with other caregivers, picking up a new hobby or making time to connect with friends and family more often. There are also mental health professionals who specialize in working with caregivers. You don’t need to trade your own mental health for the health of your loved one. A healthy, happy caregiver is a confident caregiver.

You’ve Got This and We’ve Got You

There’s a lot to consider when becoming a caregiver, especially if you plan to retire early to focus on your new role. Be sure to consider all your available resources to help close any income gaps and account for the financial and emotional changes you’ll likely undergo, from income planning to finding a support system.

And remember, your financial professional is here to help with life’s big transitions. If there’s anything we can do to support you, please reach out .

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

Empowering Women in Ohio: Managing Your Wealth During A Recession

Fri, 17 Nov 2023 23:25:21 GMT

In today's fast-paced world, managing wealth requires a strategic and resilient approach, especially during economic downturns. While Ohio may not currently be in a recession, it's essential for women to proactively empower themselves financially. We at Lakehouse Family Wealth believe in empowering women to take control of their finances and navigate through challenging times with confidence.

It’s always good to be prepared. Although we may not be in a recession right now, we don’t know what the future can hold.

Let’s explore five effective strategies for managing wealth, emphasizing the importance of a solid financial plan.

Bucket Strategies: Short, Medium, and Long-Term Financial Goals

A well-structured bucket strategy is a cornerstone of effective wealth management in Ohio. By dividing your wealth into different buckets based on time horizon—short term, medium term, and long term—you can tailor your investments to match specific goals.

Short-term buckets can consist of cash and low-risk investments, ensuring liquidity for immediate needs.
Medium-term buckets may include a mix of diversified investments with moderate risk.
Long-term buckets can be allocated to more aggressive investments.

This strategy not only safeguards your wealth but also aligns it with your unique financial objectives.

Focus on Your Financial Plan, Not Just Account Balances

In times of economic uncertainty, it's crucial to focus on your financial plan rather than fixate on account balances. At Lakehouse Family Wealth we encourage women to establish a robust financial plan that considers short-term needs, long-term goals, and risk tolerance. If your plan is well-constructed and aligned with your aspirations, it serves as a guide during market fluctuations.

By staying true to your financial roadmap, you can weather market storms with confidence, knowing that your investments were selected to endure both prosperous and challenging times.

Markets Are Down, But Your Investments May Not Be

It's essential to recognize that the markets and your portfolio may not move in lockstep. Different investments react differently to market conditions. While markets may experience heightened volatility, a well-diversified portfolio can mitigate the impact on your overall wealth.

Stay informed about the composition of your investments, and don't be disheartened by market fluctuations. A long-term perspective can help you ride out short-term market turbulence.

Guardrail Strategies: Adjusting Retirement Spending

Guardrail strategies involve adapting your retirement spending based on portfolio performance. During economic downturns, it's crucial to be flexible and make adjustments to ensure you don't outlive your savings. It’s beneficial to do periodic assessments of your retirement spending in response to portfolio performance. This proactive approach helps you maintain financial stability and make informed decisions to safeguard your wealth throughout your Ohio retirement.

Stay Informed and Seek Professional Guidance

Empowering yourself financially involves continuous education and seeking knowledgeable advice. Stay informed about economic trends, investment options, and legislative changes that may impact your financial well-being. Additionally, collaborating with a financial advisor can provide personalized insights and strategies tailored to your unique circumstances. Professional guidance can enhance your financial literacy and empower you to make informed decisions during both prosperous and challenging times.

Empowering women in Ohio to manage their wealth during a recession, or any economic uncertainty, requires a combination of strategic planning, resilience, and ongoing education. By implementing bucket strategies, focusing on your financial plan, understanding the nuances of market movements, adopting guardrail strategies, and staying informed, you can navigate through financial challenges with confidence. Staying invested leads to better success, attempting to time the market is like chasing shadows; true success lies in the steady commitment to one's financial path, not in the unpredictable dance of market timing. At Lakehouse Family Wealth we are dedicated to supporting women on their financial journey, ensuring a secure and prosperous future. Call us or visit our website for a consultation or to get a free assessment!

How Ohio Tax Laws Affect your Money and Investments

Tue, 07 Nov 2023 01:06:36 GMT

Are you aware of recent and upcoming changes to Ohio’s tax brackets and laws? Recent changes in the Ohio tax laws, as well as scheduled changes to federal estate taxes may have significant effects on you and your family.

First, let’s look at what you should expect from Amended House Bill 33 in Ohio . The recent changes may impact your finances – you may need to adjust your financial strategies. Lakehouse Family Wealth’s team consistently works with professionals who understand financial, tax, and estate issues. Below we break down how the new and current laws may influence your wealth management strategies.

Home Ownership Savings

Ohio tax changes beginning January 1, 2024, include an income tax deduction available for amounts contributed to home ownership savings deposit accounts. This Ohio tax deduction is allowed up to a maximum of $10,000 per year for married couples filing jointly and $5,000 per year for individuals, with a lifetime maximum of $25,000. Interest earned on the savings and contributions to those accounts are also eligible for deductions. You may be able to include contributions from participating employer programs. Be careful - earmarked savings in home ownership accounts that are removed and used for other purposes will incur state income taxes.

How Tax Laws Influence Personal Income Tax

First , let’s examine how the new tax laws could affect your personal income. Your income

sources may include:

Earned income – W2 type income from employment.
Passive income – income from rental property, for example
Portfolio income from savings and brokerage accounts – interest, dividends, and short and long-term capital gains
Social Security income
Pension income

Earning money from almost any activity counts as part of your income in Ohio. Therefore, you pay taxes on your total annual income called a personal income tax. Learn about whether you’ll notice recent Ohio tax changes, described below, in your tax payments.

Ohio Tax Bracket Changes

Ohio adjusted income tax rates were signed into law July 3, 2023. These changes affect the 2023 and 2024 tax years. Many taxpayers are likely to find the changes favorable. In 2023, the brackets are reduced from four to three. Also, the highest and lowest tax rates are reduced. In 2024, the top two brackets will be combined into a single bracket with the rate lowered to 3.5%.

The changes are outlined in the chart below.

The Significance of Estate Taxes on Wealth Management

The State of Ohio repealed estate taxes in 2013 having a profound impact on how Ohio residents manage their assets and engage in estate planning. Many state governments collect a tax, known as an estate tax, following a person’s death prior to any inheritance transfers to loved ones named in the deceased person’s will.

Since Ohio no longer collects an estate tax, this means less planning for state taxes for most people. There are exceptions. While you do not have to worry about the State of Ohio claiming a portion of your estate for taxes, you may have beneficiaries living in other states. Those states could require a portion of the value of inherited assets be paid as taxes to that state. Similarly, you may be a beneficiary and owe estate taxes if the deceased person was a resident of a different state. Pennsylvania, for example, requires heirs in other states to pay an estate tax to Pennsylvania

Federal Estate Taxes

You may have heard about some taxes being referred to as “death taxes”. Federal and state estate taxes are paid from the assets of your estate before remaining assets can be distributed to your heirs.

Estate taxes are charged against the value of your estate – what you own – when you die. This is a tax for the right to transfer your property to someone else at your death. The value of your estate is based on the total value of your cash investments, property, and other assets. This value may vary from what you expect based on how accounts are titled, types of investment accounts and other factors.

Generally, inheritance taxes are usually not considered taxable income by the federal government. Your relationship to your heirs may affect their tax situation depending on how an asset held and how it is transferred. Surviving spouses are usually exempt from estate taxes. However, widows and widowers may face several tax challenges, in tax years after the death of their spouse, that relate to their own ongoing income taxes and Medicare premiums.

The federal government has an estate tax, unlike Ohio. A federal inheritance tax is due when an estate’s value exceeds $12.92 million per individual. While this amount may lead many to believe an estate tax will not be levied on their estate, this higher exemption threshold is set to expire at the end of 2025. It is unknown how tax laws may change in the future. It is never too soon to consider estate taxes in your financial planning. Many families who take the wait and see what happens approach may lose the ability to make appropriate financial and investment plans and thus save on estate taxes.

Holding assets in a trust may make sense in some situations. There are multiple types of trusts, each with varying tax implications and advantages and disadvantages. Financial advisors and attorneys should be consulted before deciding to put any assets into a trust.

Many individuals and families can experience tax benefits now and after the death of a family member when tax considerations are part of financial planning. Investment considerations, including the following and others, all go into creating a tax efficient financial plan.

types of accounts,
how accounts are titled,
tax efficient investments,
use and timing of Roth conversions and Roth IRA’s,
beneficiary designations,
use of employer retirement plans and health savings accounts,
charitable giving strategies,
use of 529 plans for college planning,
how to use stock options and other employer benefits,
how to plan for and afford retirement
how one spouse can afford to live after the death of the other spouse
when to begin receiving social security, and
how to pay for long-term care

A licensed financial advisor, who is a fiduciary, can help you navigate tax challenges and plan for your financial future.

What the Ohio Tax Law Changes Mean for Wealth Management in Ohio

Ohio’s tax bracket reductions mean that many people may save money when filing and paying state taxes. Your benefits from these changes may allow you to explore investments appropriate to you and your family that provide strategies to increase your savings and wealth – either actively or passively.

The deductions for holders of home ownership savings accounts represent a unique opportunity to build your legacy and estate further – even if you do not currently own property. These accounts provide benefits that can translate to years of future stability and financial security. The tax savings further provides you with opportunities to improve your wealth and retirement planning, whether through Roth IRA contributions or other investment strategies.

Remain vigilant of the changes in 2024 as well as the expected expiration of federal estate tax thresholds at the end of 2025. Seek advice from a trusted tax planning service to identify ways you can minimize your taxes. Also, seek advice from a trusted investment or wealth management advisor to customize your financial plan and grow your wealth. Everyone’s situation is different. A trusted wealth management firm can help you tailor your plan for life’s major events – whether retirement, a college tuition plan, a home purchase, or long-term care – all while considering what is most appropriate for you and your personal goals.

Finally, make sure you understand the implication of estate planning in Ohio and other jurisdictions that may affect you. Whether you recently purchased a home, inherited an estate, or intend to alter your will, it is important to understand how federal and state taxes influence your assets and your future.

Lakehouse Family Wealth Helps You Manage Your Retirement Plan Lakehouse Family Wealth’s team of experienced financial professionals is ready to help you build a stable financial foundation. We understand that wealth management in Ohio requires personalized solutions and services that consider your unique situation, family, assets, and goals.

Our philosophy for financial planning takes a holistic approach. Lakehouse Family Wealth professionals look at the big picture for you – not just one investment account -- to help you and your family achieve your goals throughout your life, including retirement. We remain active with our clients to continually monitor and tailor investment and other financial strategies that make sense for them. Contact us for a free financial assessment.

Understanding the Impact of Ohio Tax Laws on Wealth Management

Fri, 27 Oct 2023 22:10:40 GMT

Are you aware of recent and upcoming changes to Ohio’s tax laws? These shifts may significantly impact your strategy for wealth management in Ohio. What should you expect from Amended House Bill 33 ?

What do the new and previous changes mean for your financial strategy? Our firm’s team at Lakehouse Family Wealth consistently works with attorneys who understand financial matters. Together, we broke down how the new and current tax laws might influence your asset management strategy.

How Tax Laws Influence Personal Income Tax

First, examine how the new tax laws could affect your personal income. Your income sources may include:

Regular employment
Passive income sources like property rentals
Profits from investments and shares
Social security withdrawal
Company equity interests

Essentially, earning money from any activity counts as part of your income. Therefore, you pay a tax on your total annual income sources called a personal income tax. Learn whether you’ll notice these changes reflected in your tax payments below.

Bracket Reductions

One main Ohio tax law change involves limiting the state’s defined tax brackets. Tax brackets identify various personal income ranges and the rates at which the government taxes the applicable earners. The Ohio government adjusted income tax rates by eliminating one of its four income tax brackets.

The taxation rates for the highest and lowest income brackets diminished. Thus, the 2023 brackets and tax rates appear as follows:

Income above $155,300 owes $2,958.58, and 3.75% of the total income.
Income at or below $115,300 but not under $100,000 pays $2,394.32, with 3.688% of the total income exceeding $100,000.
Income exceeding $26,050 that meets or falls below $100,000 owes $360.69 in addition to 2.75% of any amount above $26,050.

Changes will continue into 2024, with the two higher income brackets fused into a single bracket. Personal incomes over $100,000 will owe $2,394.32 in addition to 3.5% of any income over $100,000. These changes reflect an effort to consolidate tax collection through 2025.

Home Ownership Savings Accounts

The Ohio State government aims to stimulate homeownership interests among state residents via a significant tax deduction for contributions to homeownership savings accounts. Starting January 1st, 2024, you can take advantage of this deduction. If you file taxes alone, deposit up to $5,000. If you file jointly with a spouse, you must contribute up to $10,000 between the two of you.

Some added benefits of earmarking income for opening a homeownership savings account include:

Above-market interest rates from any financial institution participating in the program
Contributions from participating employers

If you remove any earmarked savings from this account for other purposes, you will incur state income tax rates accordingly.

The Significance of Estate Taxes on Wealth Management

In 2013, the Ohio State government repealed estate taxes, influencing how residents managed their assets and legacy following their deaths. A government collects an estate tax following a person's death and before the inheritance transfers to any loved ones named in the estate holder’s will. Previously, Ohio allowed a beneficiary to file an estate tax return within nine months after the benefactor's death.

Below, you will learn more about how this repeal applies to your estate and wealth management in Ohio.

What Is an Estate Tax?

Before a person passes away, they typically name one or many beneficiaries in their will and life insurance policy. These beneficiaries will receive the estate and other assets after their passing. The federal and many state governments take a portion of that income as taxes.

The amount typically depends on the consolidated worth of the benefits and varies from state to state. Since the Ohio government eliminated estate and gift taxes, you no longer have to plan your benefits around its estate tax. However, you should still consider other government filings.

How Does It Affect You

While you don’t have to worry about Ohio claiming part of your estate in taxes, you should still consider the federal government and other local estate tax laws. The federal government still requires a percentage of the estate from its beneficiaries. Federal estate taxes can change yearly, depending on your estate worth and any recent laws passed.

Additionally, you might have beneficiaries living in other states. For example, you wrote a beneficiary living in a southeastern state into your will. Their state government could require a portion of the benefits even if they come from out-of-state.

Similarly, as a potential beneficiary, you may owe estate taxes if the benefactor was a resident of a different state. Pennsylvania, another example, requires heirs in other states to pay an estate tax to its government. Taxation and law differences make wealth management cross municipal and state borders.

What the Laws Mean for Wealth Management in Ohio

Ohio’s bracket reductions mean many people may save money when filing and paying state taxes. If you reap significant benefits from these changes, you might explore secure investment methods to help increase your money either passively or actively.

Remain vigilant of the changes in 2024. Seek advice from a trusted tax planning service provider to identify ways you may grow your wealth.

The deductions for holders of home ownership savings accounts represent a unique opportunity to build your legacy and estate further — especially if you currently own no property. The account and all it encompasses offer an added avenue for your loved one’s future stability and financial security.

Finally, ensure you fully understand the implications of estate taxes in Ohio and other jurisdictions. Whether you recently inherited an estate or intend to solidify your will, you must understand how federal and state taxes will influence your assets altogether. Although Ohio requires no taxable contributions, other municipalities do.

Lakehouse Family Wealth Helps You Manage Your Assets Accordingly

Lakehouse Family Wealth’s well-rounded team of experienced financial professionals is ready to help you build a stable financial foundation. We understand that wealth management in Ohio requires personalized solutions and services that consider your unique assets and capabilities. Contact us for a free financial assessment.

October is National Cybersecurity Awareness Month

Mon, 09 Oct 2023 23:58:03 GMT

Did you know that October is National Cybersecurity Awareness Month? We're using this month as a chance to highlight how you can keep yourself and your information safe online. From using complex passwords to being wary of suspicious emails, here we talk about the importance of cybersecurity and provide some tips on how you can protect yourself.

What is Cybersecurity?

To protect yourself online, you first need to understand what cybersecurity is and why it's important. The good news is that cybersecurity is likely more straightforward than you may think.

According to the Cybersecurity & Infrastructure Security Agency (CISA), cybersecurity is "the art of protecting networks, devices, and data from unauthorized access or criminal use and the practice of ensuring confidentiality, integrity, and availability of information." This is a long way to say, "protect yourself and others online." Cybersecurity can come in many forms, from complex codes and cloud software to the passwords you set and the websites you visit. ¹

This year's theme for National Cybersecurity Awareness Month is "See Yourself in Cyber." CISA explained that this theme "demonstrates that while cybersecurity may seem like a complex subject, ultimately, it's really all about people."

Let's look at how you can be an essential part of cybersecurity and make smart decisions online.

How to Protect Yourself Online

As you work to "See Yourself in Cyber" and recognize your role in cybersecurity, here are some things you can do to protect yourself online.

Enable Multi-Factor Authentication

Multi-factor authentication (sometimes called 2FA or two-factor authentication) is when you set up more than one way to verify your identity when logging into sites like your email account. First, you type in your password. Then, you have to verify your identity on another device, such as a smartphone, to confirm that it's you trying to log in. In addition to this extra layer of protection, you will also get notifications anytime someone tries to log into your accounts. If you get a notification that someone is trying to log into your accounts and you didn't authorize this activity, report it right away.

Use Strong Passwords

Creating a strong password is one of the best things you can do to protect your online accounts. Two of the most common ways hackers try to get your passwords are by credential stuffing or password spraying. ²

Credential stuffing is when hackers use common or known passwords that have appeared in a data breach to see if any of these passwords work with a particular email address. Password spraying is when hackers test common passwords across multiple user accounts until they gain access. ²

Because of this, you should always use unique passwords for every site, and your passwords should have a combination of uppercase and lowercase letters, numbers, and special symbols. They should also be at least 12 characters long. ³

Update Your Software

You may be tempted to always click "Update Later" on those annoying software update notifications, but software and app updates contain important security fixes that can help keep you safe. These software updates protect your laptop, your smartphone, and any other device you may use to connect to the Internet. Software updates are a critical measure you can take to protect your digital devices because they defend against attackers exploiting patched vulnerabilities. CISA shared a few important tips about software updates: ⁴

To minimize your risk, consider setting up automatic software updates.
Only download software updates from trusted vendor websites. Don't trust a link in an email message, especially if you don't know the sender.
Avoid software updates while using untrusted or unsecured networks (such as the WiFi at the library or a coffee shop).

We all play a role in keeping each other safe online. This year, for National Cybersecurity Awareness Month, take these steps to protect yourself online, and don't forget to share these tips with friends and family to help them stay safe.

This content is developed from sources believed to be providing accurate information. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

The Role of Social Security in Your Ohio Retirement Plan

Tue, 19 Sep 2023 23:55:39 GMT

Welcome to our blog from the professional team at Lakehouse Family Wealth. In this article, you’ll find information about the pivotal role that Social Security plays when considering retirement planning in Ohio.

Why Lakehouse Family Wealth?

Before we dive into the significance of Social Security in your retirement plan, let's briefly discuss why Lakehouse Family Wealth is your ideal partner for financial success.

Our firm's mission is to further your family's financial goals, promote quality family time, and foster a foundation for financial education that lasts for generations.

We offer a range of services, including:

Retirement planning
Charitable contribution strategies
Income planning
And more, all tailored to your unique needs

Understanding Social Security & Retirement Planning in Ohio

Social Security is a federal program that contributes essential retirement income for many Americans. However, in Ohio, its importance is magnified due to the unique financial landscape.

Below we’ve outlined why Social Security is a critical component of your Ohio retirement plan:

Supplementing Retirement Income: Social Security serves as a reliable source of income during retirement. Lakehouse Family Wealth integrates your Social Security benefits into a comprehensive retirement plan, considering how Social Security can complement other income sources like pensions and savings.

Navigating Ohio's Financial Landscape: Ohio retirees face specific financial challenges, such as changing tax regulations, healthcare costs, and inflation rates. Our expert advisors are well-versed in Ohio's financial environment and will help you leverage Social Security benefits effectively within this context.

Maximizing Benefits: Our team assists you in optimizing your Social Security benefits by determining the best age to start claiming, ensuring you receive the maximum amount throughout your retirement.

Mitigating Longevity Risk: Ohio retirees face the uncertainty of how long their savings need to last. Social Security acts as a safety net, reducing the risk of outliving your savings. We incorporate this safeguard into your retirement plan.

Estate Planning: Social Security benefits can also be a part of your estate planning strategy. Lakehouse Family Wealth helps you explore options for passing on benefits to loved ones, ensuring your legacy benefits future generations.

Unlock Your Financial Freedom With Lakehouse Family Wealth

Social Security plays a pivotal role in any Ohio retirement plan, and Lakehouse Family Wealth is here to guide you through the process.

As a premier Ohio wealth management firm, we possess the expertise and unwavering commitment to elevate your financial success and help safeguard your retirement.

Together we can craft a tailored retirement strategy that optimizes Social Security benefits and aligns with your distinct financial objectives.

Contact Lakehouse Family Wealth today to embark on a path toward a secure and prosperous retirement. Your financial future in Ohio starts with us.

The Top 4 Best Baking Podcasts for Fall

Tue, 05 Sep 2023 23:54:00 GMT

As the leaves turn golden and the cool breeze sets in, there’s no better time than the start of fall to indulge in baking and all the cozy aromas it brings.

Whether you’re a seasoned baker or a novice looking to improve your skills, listening to podcasts is an excellent way to get inspired, learn new techniques, and explore the world of baking. In this blog, we dive into some of the best baking podcasts to elevate your fall baking game and fill your kitchen with delicious delights.

The Bake Down: Bake Off Reviewed

If you’re a fan of the beloved TV show “The Great British Bake Off,” this podcast is an absolute treat. The Bake Down recaps each episode of the show, discussing the bakes, challenges, and inevitable drama that unfolds in the iconic tent. Listening to The Bake Down is a delightful way to relive the show’s magic and pick up some baking tips and inspiration from the talented bakers competing in the series. ¹

The Crumb

The Crumb, presented by Baked From Scratch magazine, is a delectable audio journey into the heart of baking. Hosted by passionate bakers and editors from the magazine, this podcast is a delightful blend of inspiring stories, expert tips, and mouthwatering recipes. Each episode takes listeners on a flavorful exploration, uncovering the secrets behind the world’s most beloved desserts and breads. With so many delicious treats, The Crumb is the perfect accompaniment to fall baking. ²

Baking with House of Bread

Step into the world of professional baking with the Baking with House of Bread podcast. Hosted by Sheila McCann, the owner of the renowned House of Bread bakery, this podcast delves into the nitty-gritty of artisanal baking. Sheila shares her expert knowledge on a range of topics, from choosing the best ingredients to perfecting classic bread recipes. As the weather turns cooler, there’s nothing more comforting than filling your home with the aroma of freshly baked bread! ³

Knead to Know

If you like your baking podcasts with a touch of gossip, the Knead to Know podcast is for you. Not only does the podcast share helpful baking tips, but it also serves up the freshest news, entertainment, gossip, and trends in baking.4 Join celebrity chefs Gina Brazão and Gemma Stafford as they navigate the world’s obsession with baking. With so many great reviews and over sixty episodes, you’ll be a baking (and baking news) expert in no time. ⁴

These four baking podcasts are a treasure trove of inspiration, knowledge, and entertainment. With their own unique charm, each of these podcasts provides insight into the world of baking, whether it be through cozy banter or practical tips. So, grab your apron, preheat your oven, and let these baking podcasts accompany you on your delicious fall baking endeavors.

How To Be Prepared To Protect Your Family And Your Wealth - National Preparedness Month

Tue, 29 Aug 2023 23:52:09 GMT

September is National Preparedness Month, a reminder to individuals and families to take proactive steps in preparing for the unthinkable.

The reality is that a financial plan is only as good as the preventative measures insuring against sabotage from disasters. Mother nature and other disasters will always happen. The question is whether or not our preparedness allows us to forge ahead, or sets us back ten years, or worse, causes injury to a loved one.

Much of financial planning is actually about protecting our wealth from the things that seek to take it away from us, like taxes, accidents, and natural disasters.

When a natural disaster strikes or when we are faced with unforeseen circumstances, having a preparedness plan can make an enormous difference to the outcome. In this blog, we explore the significance of National Preparedness Month and provide practical tips to help you and your loved ones be better prepared for any emergency that might arise.

The Importance of National Preparedness Month

National Preparedness Month was established by the Federal Emergency Management Agency (FEMA) and aims to promote disaster readiness among communities across the USA. ¹ This annual campaign promotes proactive planning, education, and communication to enhance resilience during emergencies.

If you wish to participate in National Preparedness Month, here are a few tips to keep yourself and your family safe in the case of an emergency.

Assess Your Risk

The first step in any emergency preparedness plan involves understanding the potential risks and hazards that exist in your region. Depending on where you live, you might be at greater risk of experiencing hurricanes, floods, earthquakes, wildfires, or extreme weather events. Conduct a thorough risk assessment for your area and take note of the types of disasters that could affect you.

Create a Family Emergency Plan

Developing a comprehensive family emergency plan is essential to ensuring everyone’s safety. Make time to sit down with your family members and discuss various scenarios that may occur. Outline the necessary steps to take in each case.

Some key components to include in your emergency plan are:

Communication Protocols

Establish an out-of-area contact person that everyone can contact if local communication lines are down or overloaded. Ensure every family member knows how to reach this contact and agrees on a designated meeting point in the event that you must evacuate.

Evacuation Routes

Identify primary and secondary evacuation routes from your home and neighborhood. Practice these routes with your family to familiarize everyone with the process.

An Emergency Kit

Prepare a well-stocked emergency kit that contains essentials, such as non-perishable food, water, first aid supplies, flashlights, batteries, blankets, and important documents. Customize the kit to cater to the specific needs of each family member. For example, specific medications and/or baby supplies may need to be included. Ready.gov has a comprehensive list of things to include in your emergency kit. ²

A Pet Care Plan

If you have pets, make arrangements for their safety too. Include food and water for your pets, as well as their medication and necessary documents, in your emergency kit. Identify pet-friendly emergency shelters or boarding facilities in your area. ³

Any Special Considerations

Be sure to consider any special needs or accommodations that your family members may have, such as individuals who are elderly or disabled. Ensure that your plan adequately addresses their requirements.

Stay Informed

Keeping yourself informed about potential disasters is crucial. Register for local alerts and warnings through government agencies or reliable apps. Stay updated on weather forecasts and emergency information, especially during stormy seasons. Social media and community apps can also be valuable sources of real-time information.

Practice Your Emergency Plan

A plan is only effective if everyone knows what to do. Schedule periodic emergency drills with your family to reinforce everyone’s knowledge of the plan and to keep everyone well-versed in its implementation. Remember to update the plan as needed, particularly when changes in family dynamics and health conditions arise or when there is new information related to disaster preparedness.

National Preparedness Month is an important reminder that being prepared for emergencies is not just a choice but a responsibility. By taking proactive measures and engaging in thoughtful planning, you can significantly increase the chances of safeguarding your family’s well-being during unexpected situations.

Securing Your Future: Navigating the Ohio Retirement System for a Comfortable Retirement

Tue, 15 Aug 2023 23:48:58 GMT

Are you well-prepared for a comfortable retirement? Your personal savings and investment earnings are essential for securing the lifestyle you want after you finish working. However, the Ohio retirement system is a critical third component that all residents need to understand.

Below, you can learn more about Buckeye State's retirement program and how to successfully navigate it to build your wealth portfolio.

What Is OPERS?

The Ohio Public Employees Retirement System is the state's official retirement system that has been in place since 1935. The main components of this system include the following:

Providing retirement contributions through a Defined Benefit (DB) pension
Giving employees their survivor benefits
Providing disability benefits to qualifying workers

OPERS provides these benefits through either a traditional pension plan, a member-directed plan, or a combined plan. With this structure in place, eligible employees in Ohio are more likely to secure a steady retirement. Why not look into taking advantage of the OPERS pension program and supplementing it with individual savings or Social Security benefits if you’re eligible?

What Is a Defined Benefit (DB) Pension?

Much like a 401(k), a Defined benefit, or DB pension, is a collection of funds that both an employer and employee contribute toward. These contributions accrue throughout the employee's tenure at a job, and a professional asset manager invests them.

Once you reach retirement age, you can start collecting DB pension benefits. The funds should grant you a reasonable monthly income for the rest of your life, so it has alot to offer.

How the Ohio Retirement System Impacts Various Workers

If you're an OPERS member, you do not pay into Social Security but rather make an employee contribution toward the system (your employer contributes too). Over 350,000 public employees contribute to OPERS. However, small differences exist between the type of retirement benefits each worker will receive.

The total contribution toward OPERS also varies between the state and local government divisions, the law enforcement division, and the public safety division. The public safety division has the highest employee contribution and employer contribution across the three categories.

The Ohio retirement system may not permit you to collect Social Security unless you previously paid into it at another job, but it does not prevent employees from opening other types of investment and retirement accounts like an IRA, ROTH IRA, or Individual Borkerage accounts.

While OPERS is the official State Teachers Retirement System, a separate program exists for all school employees who retain a non-teaching position, such as administrators or school custodians. This School Employees Retirement System of Ohio provides eligible workers with a defined benefit pension as well as access to healthcare benefits.

One Of The Best Ways To Invest in Your Future

The OPERS system provides great benefits, but what about when it is paired with IRA accounts, and other tools for building retirement assets? As long as you qualify for these benefits and act wisely with your accumulating investment earnings, a steady income throughout retirement is possible. And this is where a retirement planning professional can help take an existing benefit from an employer, and pair it with other account types for creating retirement income.

Do you have concerns about saving up for retirement? You’re not alone. Contact Lakehouse Family Wealth at (440) 589-7700 to speak with a retirement planning specialist or request a free assessment online today!

Keeping Independence Day Safe: Pool and Spa Safety Tips for Summer 2023

Thu, 29 Jun 2023 23:47:00 GMT

The backyard pool can be great summer fun, but it can also be a source of danger for children. Drowning kills nearly 4,000 people a year in the United States. It's also the leading cause of preventable death among children aged 1 - 4. ^1,2

If you have a pool or spa, here are seven simple tips to keep your children and their friends safe during swimming season.

1. Adult Supervision

Always be present when children are using the pool. As any parent knows, it takes only moments for children to place themselves in dangerous situations. Stay attentive.

2. Keep a Life Ring Nearby

Have something that can quickly pull someone out of the pool. Always check that it is in good condition.

3. Fence and Alarms

Make sure your pool is protected by a fence. You may even want to add an alarm system that warns you of unauthorized use of the pool.

4. Rope or Float Line

This distinguishes between the shallow and deep ends and serves as a visual reminder to young children not to pass.

5. Lock Your Hot Tub Cover

Young children may not be tall enough to stand up in a hot tub or fully appreciate how quickly heated water can lead to dehydration and/or other accidents.

6. Safely Store All Pool Chemicals

These chemicals represent a danger not only to children but also to the adults who use them. Find a safe storage area and handle them properly.

7. Cover Pool Drains

Suction entrapment can lead to death. Make sure all drains are properly installed with certified covers. Periodically check to ensure that they are not damaged.

With these simple steps, you can increase the safety of your pool and/or hot tub without decreasing the fun and joy they bring.

https://www.cdc.gov/drowning/index.html?CDC_AA_refVal=https%3A%2F%2Fwww.cdc.gov%2Fsafechild%2Fdrowning%2Findex.html https://www.cdc.gov/healthywater/swimming/safe-swimming-week/feature.html
The information in this material is not intended as legal advice. Please consult legal or insurance professionals for specific information regarding your individual situation.

How To Prepare For Wildfire Season - Summer Is Here

Thu, 08 Jun 2023 23:45:13 GMT

4 Tips to Prepare for Wildfire Season

Summer will be here before you know it. Besides planning those summer trips, you’ll need to prepare for the possibility of wildfires. Wildfires can spread very quickly and be difficult to contain, but there are a few things you can do to prepare and keep yourself and your family safe.

Here are four tips you can use to be ready in the event that you’re affected by wildfires.

Have a Wildfire Action Plan

One of the best things you can do to prepare yourself and your family for a wildfire is to create a wildfire action plan ahead of time. Every family’s plan will look a little different, but all of them should include: ¹

A designated meeting location outside of the hazardous area. Should you and your family need to evacuate separately, having a designated meeting place will help keep everyone accounted for. It will also help emergency personnel know who has safely evacuated the area or whether someone might be stuck in the affected area.
Several different escape routes from your home and community. Make sure everyone in your family is familiar with these routes and that you can navigate them in an emergency.
Create an action plan for any pets or livestock on the property. You’ll want to make sure you have the equipment, food, and water necessary to evacuate any of your furry friends.
A point of contact who can be a single source of communication if something happens or someone gets separated. Ideally, this point of contact person is out of the area, so they can serve as the single communicator to help keep everyone safe.

In addition to having a wildfire action plan, you should make sure your home is fully equipped with fire extinguishers and that everyone knows where to find the shut-off controls for the gas, electric, and water. ¹

Keep Track of Current Wildfire Conditions

Thanks to today’s technology and social media platforms, it’s easier than ever to track the movement of wildfires to help you stay informed.

You can track wildfires using the Google Maps app on your phone. There are many layers you can add, including wildfires. With this filter, you can see all the wildfires in your area and how big they are. To access this layer, click on the button on the top right of the map below the search bar, which has a diamond logo layered over another diamond.

Digitize All Important Documents

Another smart thing to do when preparing for wildfire season is to make digital copies of all your important documents. This includes financial statements, birth certificates, mortgage paperwork, and any other documents that are difficult to replace. You can scan these into your computer or use your phone to make digital copies. Digitizing these documents will make it easier to access important information should something happen to your home. ¹

Prepare Your Emergency Supply Kit

Put together emergency supply kits for everyone in your family and keep them easily accessible. Your kits will vary depending on your needs, but here are some general things that Cal Fire suggests you include:

face masks or coverings (respiratory masks, such as N95 and KN95 masks, provide the best protection from the small particles in wildfire smoke)
a three-day supply of nonperishable food and three gallons of water per person
a map marked with at least two evacuation routes
prescription drugs or special medications
a change of clothing
extra eyeglasses or contact lenses
an extra set of car keys, credit cards, cash, or traveler’s checks
first aid kit
flashlight
battery-powered radio and extra batteries
sanitary supplies
copies of important documents (birth certificates, passports, etc.)
pet food and water ¹

Medications are especially important to have on hand. You may be able to get a prescription for an emergency inhaler or other prescriptions to add to your kit, so you don’t have to worry about keeping your daily medication in your kit. ¹

It’s best to be prepared for a wildfire even before you need to be. By taking just a few precautions ahead of time, you’ll be ready, regardless of what Mother Nature throws at you.

https://www.readyforwildfire.org/

Keep vs Shred? What To Do To Clean Up Your Financial Documents

Tue, 09 May 2023 23:42:42 GMT

It’s easy to throw up your hands in exasperation when it comes to filing papers and documents at home, and you’re likely tempted to shred everything to be done with it. Still, keeping good records will reduce clutter, prevent identity theft, and reduce stress. No more searching for needed paperwork!

The principles of good record management for businesses also pertain to personal recordkeeping. They are accountability, transparency, integrity, protection, compliance, and accessibility. Consider the following principles (and time frames) when deciding what to keep or shred for your document management plan.

Documents to Shred Immediately

The following are documents that you should shred immediately to protect your personal information:

ATM receipts and reconciled paper bank statements
Old credit card bills (after charges have been verified)
Paid utility bills
Expired warranties
Canceled and voided checks
Junk mail
Store receipts (after the return period is over)
Any statement with your credit card number, social security number, phone number, or other personal information

Documents to Shred After 7 Years

While you should shred some documents immediately, some should be kept for about seven years to refer to their information. ¹

Here’s a list of what to shred after seven years:

Paperwork related to an estate settlement or a loved one’s death
IRS tax returns (the IRS has three years for an audit, which can be extended to six years if an investigation is warranted) ²
Tax-related receipts
Other tax forms and tax records
W-2s and 1099s
Investment records (shred them seven years after you’ve sold the securities or closed the investment accounts)

Documents to Shred After 10 Years

You should keep some documents for reference for up to ten years, including:

Medical records, such as hospital discharge papers, prescriptions, and medical tests
Receipts for home repairs (kept receipts until you sell your home and need them to calculate potential capital gains taxes)
Purchases with a warranty (i.e., major appliances)

Documents You Should Never Shred

Of course, there are some important documents you should never shred, such as:

Legal records
Birth certificates
Social security cards
Divorce decrees
Death certificates
Wills or living wills
Marriage licenses or prenup agreements
Passports
Insurance documents
Mortgage documents
Vehicle purchase or lease documents (until you sell the vehicle)
Stock and bond purchase documents (as long as you own them)

In addition to the lists above to help you decide which documents to keep or shred, the Federal Emergency Management Agency (FEMA) has compiled an Emergency Financial First Aid Kit for paper documents to have handy in an emergency. ³ Storing these documents in a loose-leaf binder with plastic sleeves is an excellent way to keep them easily accessible:

Legal records
Birth certificates
Social security cards
Divorce decrees
Death certificates
Wills or living wills
Marriage licenses or prenup agreements
Passports
Insurance documents
Mortgage documents
Vehicle purchase or lease documents (until you sell the vehicle)
Stock and bond purchase documents (as long as you own them)

Once you know what documents to shred and systematically file the rest, you’ll be ready to file taxes, manage your budget, and easily locate the required papers in case of legal actions or audits. You can rest easy, knowing your paperwork is all in order—safe and secure.

Does the 4% Rule Hold Up?

Wed, 05 Apr 2023 23:38:37 GMT

One of the biggest challenges of planning for retirement is figuring out how much you can spend during your golden years. Retirement income planning requires careful preparation, and budgeting.

A popular retirement income planning guideline is the 4% rule, which suggests that you live off 4% of your total investments during the first year of retirement. Then, you readjust every year in retirement based on your changing needs and inflation.

But does this rule hold up? Is the 4% rule a good strategy for you as you plan for living in retirement? Let's dive into this rule a little deeper and consider whether it's right for you.

What Is the 4% Rule?

The 4% rule is a guideline for managing your retirement income and suggests only withdrawing up to 4% of your savings each year of retirement. For example, if you have $1,000,000 saved for retirement, you will withdraw $40,000 the first year.

The idea behind this rule is that it's easy to calculate and provides a benchmark for how much you should spend in retirement. The goal of retirement income planning is to make your money last as long as you do, and the 4% rule is designed to help retirees do that.

Economists calculated 4% by considering both average returns on investments and potential market corrections. They also considered the average life expectancy of retirees. In 1990, when the rule was established, the average American man was expected to live 15 years after age 65, and the average woman just under 20 years. Using the 4% rule, retirees could expect to have about 35 years of living expenses.

So, the question remains: Does the famed 4% rule hold up today? Let's take a look.

Does the 4% Rule Hold Up Today?

Because the 4% rule is so popular among economists, it's fair to wonder whether or not it's still relevant today. The short answer: maybe. Every retirement is different, so it's impossible to have one “rule” that works for everyone. While the 4% rule offers good insight into retirement income planning, it's more helpful to look at it as a guideline than a rule. ¹

Today's retirees face so many factors that everyone can't subscribe to a concrete “rule,” even if it is popular. When planning out your retirement income, some things to consider include your investments, expenses, health, longevity, and goals.

Your Investment Portfolio

According to Prudential, the 4% rule assumes that “you have about 60% of your investments in equities and 40% in fixed income assets,” and it's based on a tax-deferred portfolio like a traditional IRA or 401(k) and “assumes that you'll owe tax on withdrawals.” If you're spending from a Roth, where withdrawals aren't taxed if you meet essential criteria, “your calculations may be different.” ²

Your Expenses

Everyone's expenses will look a little different in retirement, depending on where you live, how much money you have saved for retirement, your health care expenses, your hobbies, and whether you work part-time.

Your Healthcare Expenses

It's no surprise that healthcare costs have gotten more expensive since the 4% rule was established in the 1990s. Today, the average 65-year-old couple can expect to spend over $300,000 on doctor's appointments and medical bills in retirement. Healthcare expenses are a significant part of your retirement income planning. ³

Your Life Expectancy

In addition to having increased healthcare expenses, today's retirees live longer than they did 30 years ago. The average life expectancy in 1990 was 75.19 years; in 2022, it was 79.05 years. ⁴

As you can see, many factors go into your retirement income planning, and properly preparing for retirement requires much more consideration than just sticking to a blanket guideline like the 4% rule. Every retirement is going to look a bit different.

Teaching Children Financial Literacy

Wed, 08 Mar 2023 00:36:24 GMT

Parents share a lot of private things with their children in the hope that the information will help them grow into successful adults. But there is one topic most parents try to avoid talking about at all costs. And no, it is not what you are thinking.

For many parents, the idea of having the "money talk" with their kids is a terrifying thought. The biggest reason parents avoid the topic is they don't believe they know enough about money themselves and fear they will give their children the wrong information.

Although discussing the topic of money with your kids can be uncomfortable, it is a necessary step in their development. Few schools teach courses on how to handle money the right way. Without learning money management skills at home, your kids are going to be in for a few nasty surprises when they get older.

Are you worried about your children's money skills? Start with the following four tips for teaching financial literacy to your kids.

1. Let Kids Experiment

One effective way to help kids learn how to make budgets is to give them a chance to make mistakes on their own. A small allowance each week is the perfect incentive for children to learn how to budget. Do they want to blow this week's money on candy and a cheap toy or save up a few weeks to get something they really want? Of course, some children will still be impulsive and want to spend their funds right away, but better they learn to make mistakes with $10 than $10,000.

2. Include Children in Household Budgeting

Do you have a shopping or entertainment budget each month? Try including an older child in budget planning for the next month. Kids learn quickly when they have to stay home bored for two weeks because they blew the entertainment fund during the first half of the month. Another great idea is to set a grocery budget for an upcoming trip, make your week's list, and then take your child to the grocery store with you. As you place items in your cart, have your child add up the cost of each item until you hit your limit. This is another great exercise in making choices based on limited funds.

3. Gameify It

Turn budgeting and saving money into a game. Give your shopping lists to your younger kids and let them search online or in the newspaper for coupons and sales. Maybe you could promise to put a percentage of the money they save into a bank account for them to purchase something special down the road. You could even encourage older children to learn lifelong investment skills by participating in a stock trading simulator such as The Stock Market Game .

4. Make Them Earn It

Knowing how to save, invest, and spend money is important, but one of the best things you can do for your children is to instill a good work ethic in them by letting them earn money on their own. Whether your teen works part-time at the movie theater or you help your little ones start a lemonade stand, the willingness to work hard and be rewarded is one of the best financial lessons you can pass on to them.

These tips are only the start. Use the opportunity of teaching your kids about financial literacy to learn more about it yourself!

What Is Systemic Risk?

Wed, 08 Feb 2023 00:34:16 GMT

We all remember the 2008 financial crisis and recession, as millions of people lost their jobs, homes, and ways of life. While a lot of factors contributed to this economic disaster, one term can cover nearly all of them: systemic risk. Let's look at what systemic risk is and how it can impact your behavior as an investor.

What is Systemic Risk?

According to the CFA Institute, systemic risk is "the risk of a breakdown of an entire system rather than simply the failure of individual parts." This could mean a lot of different things, but in finance, it refers to the risk of a cascading failure in the financial sector. ¹

Any financial system has some level of systemic risk, but policymakers seek to limit this risk by closely monitoring the market, analyzing global trends, and creating reforms to help protect people and their finances.

For example, the Obama Administration signed the Dodd–Frank Wall Street Reform and Consumer Protection Act into law in July 2010 as a response to the 2008 financial crisis. The idea behind this legislation was to make the US financial system safer for consumers and taxpayers by establishing new government agencies to oversee our financial system. While it's impossible to limit all systemic risk, there are steps that the government and consumers can take to prevent something like the 2008 financial crisis from happening again. ²

How Systemic Risk Impacts Investors

While individual investors can't protect themselves from systemic risk completely, looking at the concept does teach us a lot of important lessons about investing and risk tolerance. For example, you can use current events or your personal research to diversify your portfolio and hedge against potential risks.

In addition to analyzing current trends and market conditions, we can use systemic risk as motivation to diversify our assets. Most financial professionals will always recommend a diversified portfolio that's aligned with your personal risk tolerance.

Systemic risk and market risk aren't equivalent, but they do raise the question, "How much risk is too much?" The answer to this question depends on your own personal risk tolerance.

Looking at systemic risk also makes us more skeptical of companies that are "too big to fail." For example, Lehman Brothers' "size and integration" into the US economy made it a source of systemic risk. When the firm collapsed, it "created problems throughout the financial system and the economy." ³

This risky "too big to fail" ideology is one of the reasons why the financial crisis of 2008 happened, prompting individuals to do research on their own investment decisions. It's dangerous to blindly trust any company, big or small, without doing the proper research.

As an investor, it's important to understand our economy as a whole and how things like systemic risk impact our daily lives and investments. The 2008 financial crisis was a big wake-up call for Americans and politicians, as we realized that without the proper checks and balances in place, things can go horribly wrong.

But with diligent oversight, responsible companies, and educated investors, we can begin to protect ourselves from systemic risk. Understanding systemic risk is a good way for investors to understand the overall impact of risk on their portfolios.

Four of the Worst Celebrity Investments

Wed, 11 Jan 2023 00:32:40 GMT

Investing can be tricky, even if you’re a celebrity (in fact, maybe even more so when you’re rich and famous). Everybody makes mistakes, but some mistakes are bigger than others. Here, we share five of the worst celebrity investments.

Stock Market Shenanigans

Bernie Madoff is undoubtedly a celebrity, for better or for worse. He gained notoriety when his $65-billion Ponzi scam went bust in 2008. Mr. Madoff ran a highly successful and legitimate Wall Street investment firm for many years, but he also ran a fraudulent operation that took in millions of investors’ money to buy nonexistent stocks in nonexistent companies. New money was used to pay earlier investors handsome returns on their investments. ¹

This classic Ponzi scheme turned sour during the 2008 financial meltdown, when worried investors wanted to cash out their positions, but there was no money to return. Some of the unfortunate celebrities who were scammed included Kevin Bacon and his wife Kira Sedgewick, Steven Spielberg, John Malkovich, and Zsa Zsa Gabor, among others. ²

Risky Real Estate

Owning real estate can be a sound investment choice. However, many celebrities have poured their profits into elaborate and risky real estate ventures only to liquidate for pennies on the dollar when funds became tight and foreclosure loomed.

Hollywood legend Debbie Reynolds put millions of dollars into her Las Vegas hotel and resort casino, where she performed nightly. The location was a bit off the bustling Strip, and that, along with bad management, caused the venue to consistently lose money. Eventually, she filed for bankruptcy protection, and the casino was sold at a huge loss. ³

Kim Bassinger spent $20 million buying a whole town in Georgia to bring new fortune to the dying community. Unrealistic expectations and poor planning doomed the project, forcing her to file for bankruptcy and sell for a loss of over $16 million. ⁴

Nicolas Cage, a prolific real estate investor, bought two castles, one in Germany and one in the US. These iconic landmarks needed untold amounts of cash for renovations and upkeep. When the financial crisis loomed, Cage had to sell his properties for cheap before they lost all their value. ⁵

Crazy Crypto

Many celebrities jumped on the cryptocurrency bandwagon, only to lose huge amounts of money. Most recently, the collapse of FTX, a cryptocurrency digital exchange, brought to light how many celebrities lost fortunes in the crash.

Many famous investors, including Tom Brady, Madonna, Jimmy Fallon, and Kim Kardashian, are being sued by other investors for promoting these risky investments on their social media sites. With all this crazy crypto news, the mantra “buyer beware” should be a reminder to invest only in what you research and understand. Plus, cryptocurrency markets still lack regulation to protect investors. ⁶

Not-So-Smart Art

Many celebrities own impressive art collections. This asset appeals to those who want to diversify their investments with high-quality tangible assets. Investing in art is not for beginners, though. As with any investment, there are scammers out there looking to make a quick buck from unsuspecting buyers.

Jack Nicholson, Barbara Streisand, and the band Kiss were taken for $1.9 million in a shady art deal. Robert de Niro lost over a million dollars when a New York art dealer sold 50 of de Niro’s late father’s paintings and never paid a dime to the de Niro estate. John McEnroe lost $2 million when the same art dealer who defrauded de Niro sold him a painting that had liens against it. When it comes to investing, we all need to be careful about who we trust. ^7,8,9

Just like everyone else, celebrities want to keep their money safe and grow their wealth over time. Unfortunately, these celebrities fell victim to shady investments that cost them. Learn from these mistakes by only working with financial professionals you trust, and do your research before investing in an unknown asset.

5 Classic Rags-to-Riches Books

Wed, 04 Jan 2023 00:30:08 GMT

Stories have a magical power over us. They can entertain, enlighten, frighten, or inspire us. Great stories can send us on a rollercoaster of sensations, but when it comes to feeling inspired, nothing does it quite like a rag-to-riches tale. These can generate a kind of euphoria—a delight from seeing someone rise from nothing to become someone great. As Christopher Booker says in his excellent book The Seven Basic Plots, "In all these scenes [from Rags-to-Riches stories], someone who has seemed to the world quite commonplace is dramatically shown to have been hiding the potential for a second, more exceptional, self within." The idea of rising to the challenge draws many to this genre. If you want to dig into the transformative power of rags-to-riches tales and grab some inspiration, start with the following classics. ¹

The Great Gatsby

When many think of rags-to-riches stories, the first book that comes to mind is The Great Gatsby. F. Scott Fitzgerald's peerless work centers on the enigmatic and powerful Gatsby, who, although he began life with humble origins, drives himself to become the embodiment of the success of his era. Like many characters in this genre, Gatsby's rise to glory involves many external changes; however, deep down, he is still the same person who cares about the same people from his previous life. The story of his rise and his attachments to those he loves are at the center of this phenomenal book.

Great Expectations

Next comes one of the greatest novels of all time: Great Expectations. Charles Dickens tells the story of Pip, a lowly orphan who rises to incredible heights of wealth. However, unlike Gatsby, Pip is seduced by the luxury surrounding him and grows proud and arrogant, forgetting where he was from. This work warns us to be humble, no matter how profound our success. We also learn from Pip that morality and loyalty are important, no matter where we are in the social order.

The Fountainhead

The following classic tale is a more radical, modern take on success. Love her or hate her, Ayn Rand excelled at telling tales of characters that readers, well, love or hate. Howard Roark, in The Fountainhead, is precisely such a character. Cold, aloof, and arrogant from the start, he uses his uncompromising brilliance to rise from being a construction worker to a wealthy and influential architect, despite criticism from all sides. A testament to hard work and the individual will, Howard Roark has provided a model for many ambitious people ever since the book's publication—just be prepared for your friends to stop answering your phone calls.

Jane Eyre

For our fourth recommendation, we rewind the clock to Victorian England with Charlotte Bronte's Jane Eyre. This story differs from our others in that Jane does not rise to wealth and standing due to her hard work or success; rather, she does it through finding love with the right person. However, to believe that she does not earn her success would be to misunderstand the novel. Jane teaches us that while there are moments in our lives that can catapult us to a higher social status, those moments are won with heart, sincerity, and understanding. Jane learns and changes throughout the tale, but she retains the goodness that makes her who she is, which leads to her reward.

The Count of Monte Cristo

The final book in our list combines nearly all our heroes into one: The Count of Monte Cristo. Edmond Dantes is a good, kind person who is betrayed and suffers terribly by the one person he considers to be his closest friend. Instead of accepting his fate, he uses his experiences to learn, grow, and overcome his challenges, emerging as a wealthy, powerful individual. Like Roark, he is single-minded and uncompromising, but like Gatsby, he never forgets where he came from. He rises obscurity to a position of comfortable, almost arrogant, power; however, like Jane, he tries to balance his good nature with the events around him. But if you decide to inspire yourself based on Dantes, pick another motivation besides revenge.

Rags-to-riches tales remind us that it is possible to change our fortunes through luck or hard work, but usually both. However, their real power lies in the idea that Booker hinted at: in each of us is an "exceptional" person waiting to emerge. Grab one of these books, lose yourself in it for a few hours, and encourage the exceptional in yourself.

The Seven Basic Plots: Why We Tell Stories, Christopher Booker, 2004.

Giving Season Has Arrived! Here's 5 Ways to Maximize Your Year-End Giving Strategy

Wed, 07 Dec 2022 00:27:33 GMT

Wondering if you’re best prepared for the upcoming giving season?

The holidays will be here before you know it, and in order to minimize stress and maximize your gifting abilities, it’s important to keep in mind a few details that you may or may not be aware of.

If you’re not sure how your finances match up with your upcoming year-end giving strategy, now is the time to prepare yourself by making your lists and checking them twice. Organization is key in order to properly give this holiday season. Follow the five tips below to maximize your charitable giving strategy this year.

1. Do Your Research

By using sites such as Guidestar or the Better Business Bureau’s Wise Giving Alliance, you can learn more about the groups you’re interested in offering donations to.

The organization you’re involved with should also be able to provide registration information, including 501(c)(3) status and tax identification number. You may also use the tax-exempt organization search tool available on the IRS website to obtain more specific information about the organization.

2. Bundle Your Donations

As deductions have increased over the years, you may choose to save money over time and donate every few years as opposed to consecutively each year. By doing this, you may receive your itemized deductions over the limit one year and take the standard deduction the next.

If you’re interested in accomplishing this, you might consider a donor-advised fund, which allows you to make a charitable donation and immediately receive a tax break. You’ll then receive recommended grants from the fund to your preferred charities over time.

3. Donate Appreciated Stock

By donating stocks or other appreciated assets, such as artwork or antiques, you might reduce capital gains taxes on investments. ¹

In particular, high-income earners might consider a non-cash donation specifically because of the tax advantages they may be awarded. Even those who have what they might consider to be small holdings could benefit by making a donation of appreciated investments this holiday season.

4. Utilize Your IRA

If you’re a retiree over the age of 70½, you might consider transferring money from your IRA to a qualifying charity. These distributions can be a tax-efficient way of meeting any required minimum distribution. Additionally, there’s no need to itemize your deductions in order to benefit.

You may distribute up to $100,000 per year, per taxpayer. This increases to an acceptable $200,000 for married couples if they both have IRAs. ² Although this strategy has existed for some time, it only recently became a part of the permanent tax code.

5. Monitor and Evaluate Your Portfolio

No matter the size of your seasonal contributions, it’s always important to keep up with your portfolio in order to give properly and confidently. Staying up to date on newsletters, annual reports and CEO updates can be an important factor when it comes to understanding the operations of various organizations.

It’s important to set personal reminders, at least annually, to re-evaluate your financial and personal priorities and update them if need be. Your interests and priorities are bound to change over time and so will the causes you choose to support. Being aware of these fluctuations is key, and maintaining a thoughtful attitude is what makes the holidays meaningful.

End-of-the-Year Money Moves in 2022

Wed, 09 Nov 2022 00:25:13 GMT

What has changed for you in 2022?

For some, this year has been as complicated as learning a new dance. Did you start a new job or leave a job behind? That’s one step. Did you retire? There’s another step. If notable changes took place in your personal or professional life, then you may want to review your finances before this year ends and 2023 begins. Proving that you have all the right moves in 2022 might put you in a better position to tango with 2023.

Even if your 2022 has been relatively uneventful, the end of the year is still an excellent time to get cracking and see where you can manage your overall personal finances.

Keep in mind that this article is for informational purposes only and is not a replacement for real-life advice. Please consult your tax, legal and accounting professionals before modifying your tax strategy.

Do you engage in tax-loss harvesting?

That’s the practice of taking capital losses (selling securities for less than what you first paid for them) to manage capital gains. You might want to consider this move, but it should be made with the guidance of a financial professional you trust. ¹

In fact, you could even take it a step further. Consider that up to $3,000 of capital losses in excess of capital gains can be deducted from ordinary income, and any remaining capital losses above that amount can be carried forward to offset capital gains in upcoming years. ¹

Do you want to itemize deductions?

You may want to take the standard deduction for the 2022 tax year, which has risen to $12,950 for single filers and $25,900 for joint. If you think it might be better for you to itemize, now would be a good time to gather the receipts and assorted paperwork. ²

Are you thinking of gifting?

How about donating to a qualified charity or non-profit organization before 2022 ends? Your gift may qualify as a tax deduction. For some gifts, you may be required to itemize deductions using Schedule A. ³

While we’re on the topic of year-end moves, why not take a moment to review a portion of your estate strategy? Specifically, take a look at your beneficiary designations. If you haven’t reviewed these designations for some time, double-check to see that these assets are structured to go where you want them to go in the event that you pass away. Lastly, look at your will to make sure it is still valid and up-to-date.

Check on the amount you have withheld. If you discover that you have withheld too little on your W-4 form so far, you may need to adjust this withholding before the year ends.

What can you do before ringing in the New Year?

New Year’s Eve may put you in a dancing mood, eager to say goodbye to the old year and welcome 2023. Before you put on your dancing shoes, though, consider speaking with a financial or tax professional. Do it now, rather than in February or March. Small end-of-year moves might help you improve your short-term and long-term financial situation.

Retirement Hobbies You Never Knew Existed

Tue, 04 Oct 2022 23:22:16 GMT

We all know about standard retirement hobbies such as golf, gardening, or woodworking. But now that you have time to fill, why not think outside the box? Here, we share some retirement hobbies you never knew existed that can help spice up your golden years.

Beekeeping

Beekeeping is an age-old hobby but one that most people might not think of during retirement. When you think of bees, you might think of painful stings or honeycombs; in fact, bees are complex creatures and extremely important to our entire ecosystem.

Beekeeping is an interesting hobby because in tending to your bees, you will learn how the colony interacts, how not to get stung, how bees pollinate and forage, and many more things about these amazing creatures. Plus, you will get benefits from your hives, such as honey, propolis, and honeycomb. Finally, you will be doing the planet a favor!

Scuba Diving

Age is just a number when it comes to scuba diving! Even if you've never dived before, retirement is the perfect time to start. There are two main certification agencies, NAUI and PADI, and both offer scuba certifications all over the world. Even if you don't live near the ocean, you can get certified in a lake, a river, or even a pool. Once you have your certification, you can discover the amazing underwater worlds of some of the planet's most beautiful waters. Plus, it's great exercise and will keep your mind and body sharp.

Sailing

Sailing is another great retirement hobby that you might not have considered. Even if you've never sailed before, you can still jump right in and enjoy the sport. The first way to enjoy sailing in retirement is to learn how to sail yourself. The American Sailing Association (ASA) makes it easy to find a sailing school near you. There are over 300 ASA sailing schools across the United States. ¹

If you don't want to maintain your own boat, another way to get involved in sailing is to join a racing team. There are many leagues throughout the country, and lots of boats are looking for crew, even if you have little to no experience. Search for "sailing crew pool" among the Facebook groups in your area to see if there are any opportunities to get out on the water!

Kombucha Brewing

You've likely heard of brewing beer and making wine, but have you ever heard of making kombucha? Kombucha is a beverage made of fermented tea that is full of probiotics and other vitamins. You can make all kinds of wonderful flavors of kombucha and experiment to find your favorite. All you need to get started is your own SCOBY, which stands for Symbiotic Culture of Bacteria and Yeast. The SCOBY is the "mother" bacteria that gets the whole process started. You can buy a ready-made SCOBY or make your own. ²

One of the best things about retirement is that you have the time to try new things and possibly discover a new passion. These are just a few unique hobbies to consider. Which one will you try?

8 Legal Documents Parents and College Students Should Sign

Tue, 06 Sep 2022 23:13:34 GMT

Your child is getting ready to head to college. Between making sure they have their textbooks and everything needed to furnish their dorm, there are some legal documents that you should have in place. Many of these documents will be handy to have should a medical or other emergency occur and you need to make decisions on behalf of your college student.

Family Education Rights and Privacy Act (FERPA) Waiver

Because your child is now a legal adult, you don’t have automatic access to information about them regarding their education. This includes access to information about their grades, academic records or disciplinary actions. Even if you’re paying your child’s tuition, the FERPA Waiver is needed to have access to any of their school records. Ask your child’s university to see if they have the forms on hand. If not, you can easily find a copy of this waiver online.

There are a few notable exceptions where a FERPA Waiver is not needed: ¹

Underage drinking: If the student is under 21 years of age and is in violation of any federal, state or local laws or college rules concerning the use or possession of alcohol or a controlled substance.
Medical emergency: If information needs to be communicated regarding an emergency health or safety situation, to protect either your student or other individuals.
Dependents: If you list your child as a dependent student on your Federal income tax return. There are some notable conditions, however; your child must be under 23 years of age, be unmarried, live with you for more than half of the tax year, and your child must not be supporting their own life by more than half.

Regardless of these exemptions, you may want to get a FERPA Waiver signed just to make sure your bases are covered.

Medical Documents and Authorizations

Medical documents and authorizations are easy to overlook when it comes to your child. They may still be your baby, but once they reach the age of 18 they’re considered an adult. Should your child have a medical emergency, having the necessary documents on hand will make sure you can focus on their care and recovery.

HIPAA Authorization Form

This is one of the most important medical forms to have for your college student. A HIPAA authorization allows doctors and medical facilities to keep you updated regarding your child’s medical condition and health in the event of an emergency.

Medical Power of Attorney

A Medical Power of Attorney allows your child to designate someone (typically a parent or legal guardian) to make medical decisions for them should they become incapacitated. It’s recommended that your child choose a primary and secondary agent, just in case one of them isn’t available.

Durable Power of Attorney

A Durable Power of Attorney allows your child to designate someone (typically their parents or legal guardians) to handle their financial affairs should they become unable to. College students can also use this document to designate someone to handle their tax returns and other financial matters while they’re away at school.

Living Will

A living will allows your child to designate end-of-life care should they wind up in a persistent, vegetative state, unable to make their own medical decisions. It’s also vital for them to communicate these wishes to their family members so that everyone is on the same page.

Health Insurance

Most students are on their parents’ health insurance, but it’s important to confirm before they leave for college, especially if they’re attending school out-of-state or in another country.

Medical and Dental Appointments

It’s a good idea to make sure your child has any medical and dental appointments taken care of at least a month before they leave for college. Get copies of their prescriptions so they can fill them while they’re away, and make sure they have a copy of their medical records, especially if they have a chronic medical condition.

Coverage For Your Child’s Belongings

No one wants to think about dorms being vandalized or property being stolen, but it does happen. You’ll want to check your homeowners insurance policy to determine if your child’s belongings are covered while they are away at school. It’s especially important to make sure that their laptop or tablet is covered so they’re still able to do their schoolwork. If your child is living off-campus, they may need to obtain renter’s insurance.

It’s an adjustment to think of your college student as a legal adult. As your student heads off to college, having these important legal and medical documents on hand gives you peace of mind and allows you to focus on the school year ahead.

https://www2.ed.gov/policy/gen/guid/fpco/ferpa/students.html

Evidence-Based Investing: What Is It?

Mon, 11 Jul 2022 23:09:34 GMT

Some avid investors will say that there’s an art and a science to investing. But when it comes to choosing an investment style that works for you and your specific needs, you’ll likely come across terms such as passive investments, active investments, emotional investing and evidence-based investing without much knowledge of what they are or how they differ. As you’re deciding which types of investments you’re interested in pursuing, we’ve provided some helpful information to help you learn more about evidence-based investing and how it differs from other types of investment styles.

Actives Versus Passive Investing

To start, you’ll want to understand the difference between active and passive investments. It’s important to note that there are many different types of portfolio strategies that incorporate both active and passive investments. Experts may at times recommend a mixture of both in an effort to help investors create an appropriate portfolio for their specific needs and tolerance for risk.

Active Investing

As the name implies, active investing tends to be a more hands-on approach. With this type of investing, you or your money manager is looking at more short-term fluctuations in the prices of stocks and bonds to decide when the best time is to sell or buy. In many cases, active portfolios are looked after by an analyst or a team of analysts who use various factors to decide when and what to buy or sell.

Passive Investing

If we think of active investing as being a hands-on approach, consider passive investing more hands off. Taking a longer-term look at the market than its counterpart, passive investing strategies typically involve less buying and selling and more buying and holding. With passive investing, a certain amount of discipline is often needed to resist the urge to buy and sell based on current market conditions or economic climates.

What Is Evidence-Based Investing?

With this approach to investing, investors make decisions about buying and selling based on what they know to be factually true. Instead of basing decisions on current market trends or conditions, investors turn to research, education and historical data to guide their decision-making process.

Evidence-Based Versus Emotional Investing

Emotional investing is, as it sounds, investing with your emotions. As you hear unsavory news about a company’s CEO, your first reaction could be to quickly sell your stock before it tanks. But what happens if say, one month later, news breaks that the company’s new CEO has plans to double the company in size by the end of next year. Suddenly, their stock could be on the rise once more. Making your investment decisions based on your emotional or behavioral reaction to news, political changes or shifting economic climates is considered emotional investing.

Unlike emotional investing, the decision to buy or sell with evidence-based investing is not made based on current shifts in climate or news. Instead, it remains steadfast through trends and climate changes because it is based on predetermined factors and considerations.

Whether you choose to take a do-it-yourself approach to portfolio management or you select an investment advisor to help you along the way, you’ll want to consider which types of investing will work best for your portfolio and unique needs. Understanding the difference between popular investment terms including active, passive, behavioral and evidence-based is the first step to making informed decisions about your investment strategies.

The Importance of Creating a Will

Wed, 01 Jun 2022 23:06:57 GMT

We mere mortals all know we will die someday, yet discussing end-of-life matters is extremely difficult for many people. Thus, creating a will is one of those matters that many Americans put of discussing, let alone actually getting done. A will, however, is crucial in helping your wishes to be clearly understood once you are gone, and can even make it easier for your loved ones to handle day-to-day affairs once you are gone. Because these issues can be complex, it is important to discuss your wishes and the will you create with your family members, a lawyer, and a financial planner.

The Will

A will is a document that specifies how your estate, including all property and assets, will be distributed after your death. For your will to take effect, a court must recognize it as legally enforceable. If you die without a will, a judge will apply the laws of your state regarding the distribution of your assets.

Stuck in Court

Dying without a will forces the probate court to make decisions about how to distribute your assets, which may take a good amount of time. Thus, your family may be unable to utilize the fruits of your labor for some time while the courts make their decision on your assets. This is a top reason financial advisors recommend that you create a will.

Many people will have insurance policies, retirement funds, and even checking accounts with a named beneficiary. The beneficiary – let’s say your spouse – won’t have to wait for probate to make decisions regarding the distribution of those assets. If you have other property or assets, a will allows you to name a beneficiary for them, as well.

Will or no will, a probate court judge still has to validate the document, so no one completely avoids probate. Your family just won’t be bound by process for a significant period of time if you take the time to create the appropriate legal documentation.

Simple Solution for Complex Situations

Complexity is how we live these days. Many of us have complex portfolios or complicated family situations. A will allows you to reduce the complexity of the estate distribution process for your family’s benefit. An experienced wills and trust attorney can, with the help of a good financial advisor, create a “designer will” that will best fit your circumstances.

If you have a large enough estate that your family will face paying the estate tax on what the assets they receive, you can help them avoid it through a will. Your lawyer and financial planner could help fashion the will so that you significantly reduce your heirs' tax liability.

Difficult Discussions Made Easy

Another type of will is perhaps the most difficult to talk about – the living will. This document will inform family members how to care for you should you become unable to speak your wishes due to some form of illness.

While these issues may be difficult to broach with family members, everyone will benefit in the long run from your planning. We recommend discussing your wishes and creating a will with a good financial advisor and estate planning attorney. It may be the most important discussion you will ever have regarding your family’s future.

Starting a Business in Retirement

Sun, 01 May 2022 23:03:12 GMT

You’ve retired and are ready to start celebrating those golden years...or are you? Many people who retire may feel as if they are just starting their lives. They welcome the opportunity to do the things they never thought they could, or never found time to do, like start a business. This gives them something to do, and keeps the purpose in their lives thriving.

According to U.S. News, baby boomers have redefined retirement, and older Americans between the ages of 55 to 64 accounted for 25.8% of businesses started in 2014. That number is continuously increasing.

Why Is Starting a Business In Retirement So Popular?

Retirees still have a skill set that is useful, and they relish the opportunity to work on their own terms and showcase their abilities without having to report to someone else. Additionally, they may be able to finance these businesses with some of their savings. This could actually help increase the amount of retirement income they have access to when they finally decide to call it quits.

Taking a few courses in entrepreneurship, working out a financial plan, and determining how this could affect your retirement income are some good first steps. A financial planner should be able to provide insight on whether or not it’s wise to use some savings, how to readjust your income and tax strategy for a new business, and help set new financial goals.

Tips For Starting a Business In Retirement:

Assess your skills: This is very important. You may have to do all the jobs in your office until you build up your staff. Can you handle it?
Assess your time: Starting a business is very time-consuming. Make sure you’re ready to invest your time, energy, and resources into this venture.
Assess your finances: Do you need capital? How are you going to finance this venture? Maybe using your savings is not a good idea. Can you afford to take on any debt? These are all important questions to consider.
Know your technology: Technology drives the business world. Learn the ins and outs of technology, and use it to your advantage.
Protect your assets: Incorporate and do what you need to do to avoid affecting your personal assets through this venture.
Know when to quit: Even if your business is successful, know when to let your employees run the business. You may get to a point where you feel you’ve worked hard enough. Have an exit strategy in your overall plan.

It’s an exciting thought to be able to do what you’ve always dreamed. Retiring doesn't mean your life is over – consider following your heart and bringing your ideas to fruition.

How Much Do You Need to Buy a House?

Wed, 02 Mar 2022 00:00:20 GMT

The answer to this complex question involves not only the initial costs of buying a home, but also your ability to keep up with the long-term financial responsibility of owning it. The process starts with making a list of the features you want in the home. Next, look at the neighborhoods and the surrounding amenities. Then, research the location’s listings and the final selling prices. The information provides a good view of the market’s activity and the cost of the homes in the area.

How Much House Can You Afford?

The typical industry formula is to calculate your potential mortgage against your annual income and current debt. This is called the 28/36 rule, and it determines how much of a mortgage you can qualify for.

The "28" (known as the front-end ratio) means your monthly mortgage payment (including taxes and insurance), shouldn't exceed 28% of your pre-tax income.

The "36" (known as the back-end ratio), means your entire debt load, which includes your mortage as well as car payments, credit cards, student loans, and other monthly debt payments shouldn't exceed 36% of your pre-tax income.

Having a formula is nice, however what you can actually afford to buy will vary depending upon where you are buying (your geographic area), your spending habits, the cost of living in your region, and your overall financial health.

Out of Pocket Costs

Most homebuyers have no idea of the additional costs not covered in the mortgage loan. The out-of-pocket costs include the down payment, home appraisal, cash reserves and a home inspection.

Down payment percentages range from 3-20% depending on the loan type.
Appraisals average from $300 to $600. The purpose is to confirm the purchase price does not exceed the market value of the home. The seller may pay this fee. If the home appraisal comes in lower than the purchase price, it may be time to renegotiate.
Cash reserves in the bank are dependent on the loan conditions. It's a safety net for the bank, preventing early defaults on a new loan.
Home inspection cost is $200 to $400 and worth the expense before closing, since the seller may be obligated to pay for the repairs.

Total Cash Needed

The numbers may change depending on the lender, your credit and the seller. Let’s say you found a home and made an offer to purchase it for $400,000.

You’re approved for a 30-year fixed loan with 20% down – no private mortgage insurance (PMI).
Reserves may include the loan principle and interest, annual real estate taxes, and insurance, along with two months of mortgage payments.
Total cash to buy this $400,000 home could reach $95,000.

Closing Costs

Rolled into the loan are closing costs at 2-3% of the loan amount. Using the above sample – at 3%, fees could reach $10,000 dollars. You could negotiate with the seller to pay all or a portion of the closing costs.

Conclusion

Before you buy, make sure you run your numbers to make sure you will be 100% comfortable with your new mortgage payment. Also ensure you understand the terms and conditions of your loan, as they could significantly increase your out-of-pocket expenses. In addition, try to avoid closing delays, which could cost you prorated interest.

6 Ways to Start Helping Your Kids Manage Their Money

Sat, 01 Jan 2022 23:56:56 GMT

Helping your children learn to manage money at a young age can provide them with a solid foundation and teach them the true value of money. Remember, teaching your child about finances at a younger age will provide them with a better understanding of the role that money plays in their everyday lives. If you are looking for ways to help your children start managing their money, consider the tips listed below.

1. Be a Good Financial Role Model

Children learn best by modeling the behavior that they see from their parents. This means the first step is examining your own attitudes about money and how you handle it, especially in front of your children. Always be mindful to set a good example and make sure to take advantage of teaching moments that you encounter along the way.

2. Provide Your Child With an Earned Allowance

Your child needs to know that they receive money by working for it. For younger children, you can provide them with an allowance for simple tasks such as making their bed, clearing their dishes, etc. As they get older, you can assign them more difficult household tasks. This allowance should be their spending money, and they should be allowed to spend it on what they choose. Use the allowance as a teaching tool and let them know if they plan for what they want, they can save up their money and buy it.

3. Help Your Child Start Their Savings

A crucial part of learning to manage money is understanding the value of savings and how to save to meet your wants and needs. Teaching your child to put their money aside to build until they have what they need to to make their purchase can not only show them how saving their money can result in them getting what they want and need but also teaches them patience and discourages impulse spending.

4. Teach Your Child About Credit Early

Credit problems are one of the biggest financial issues that young adults have to deal with. This is often due to a lack of understanding of how the credit process works. When credit is misunderstood, it is often viewed as free money, and young adults fail to realize how much it costs them both regarding their ability to borrow and how much they will really end up owing. When your child enters their teen years, considering loaning them money for something they need. Then structure a repayment schedule as a deduction from their allowance, having them also keep track of the balance each week until the debt is fully paid.

5. Show Your Child the Benefits of Being a Wise Consumer

One of the biggest parts of managing money is controlling spending. This can mean making the best choices when it comes to making purchases and also deciding whether or not the value of the item is worth it. When your child wants something, discuss with them if they think they need the product or will use it for a while or see if they were perhaps just swayed by heavy advertising. The why behind a purchase is very important in determining if it is a wise purchase. Once they have decided the product is worth buying, help them to learn to comparison shop to get the best price.

6. Set Budgets and Stick to Them

While every parent loves to spoil their children, buying them what they want all the time is setting them up for failure in the future. You should always set budgets and limits when you can and stick to the budget so your child can learn to make choices and understand that staying in budget is important. Budgets can be used for special occasion outfits, back to school shopping, or when planning a party.

Even though it is your job to provide for the needs of your child, it is also your responsibility to teach them about finances and money so that they can have a successful future. By following the six tips above you can set a good foundation that helps your child understand how to manage their money as well as the importance of doing so.