Retirement can be an exciting time in one’s life. Unfortunately, some find themselves in less than favorable circumstances due to unwise real estate moves. Avoid these mistakes if you are planning a move in your retirement.
5. Have a plan for the proceeds—If you make a nice profit from downsizing, consider what you will do with that extra money. Although purchasing a new car, or taking lavish vacations sound good, investing your proceeds may be just what the doctor ordered to be confident you have the retirement nest egg, you are looking for.
Check with the professionals before making your move. Contact Brien L. Smith, CFP® or Sarah D. Buenger, MPAS®, MSPFP, CFP® at 979-694-9100 or visit our website at www.TraditionsWealthAdvisors.com
(Kathy Massey 2020 BCSRAOR president)
1. We should have 15% pre-tax in our retirement plan but how much should we save post-tax in our IRA or saving accounts?
There is no single percentage that works for everyone but if you can save 15% in pre- and post-tax you are doing good. Other things to consider are to make sure you are contributing enough to get your employer’s full retirement match if you have a 401(k). Next, I would make sure you have three months worth of an emergency fund. Then I would max out your Roth IRA contribution. Finally, if you have any extra money left, then I would put it in savings.
2. In our volatile market, what is your suggestion for those that are already retired to make their retirement last longer?
Make sure you are meeting with your financial advisor to discuss this more in detail. Based on your age, you should be invested correctly to get you through the ups and downs of the market. Also, making sure that your expenses are low is the best way to make sure your retirement lasts. Even getting a part-time job so you don’t have to pull money from savings is another option.
3. My employer is no longer contributing to my 403(b) or 401(k). Should I stop contributing to my 403(b) or 401(k) and move those funds to an IRA instead?
The only way to roll over your 403(b) or 401(k) to an IRA is to leave your job or reach the age of 59 ½ (called an in-service distribution). You should keep contributing to your 403(b) or 401(k) even though you are frustrated that your employer is no longer contributing.
4. In January of 2020, I contributed the max of $7,000 to my Roth IRA. Now I won’t have enough earned income to contribute that amount. Is there a penalty? What should I do?
You’ll need to withdraw the excess amount plus their earnings, and you’ll want to do so before you file your taxes for 2020 next year to avoid a 6% penalty on the excess contribution. You’ll owe income taxes on the earnings (but not the amount you contributed). If you’re under 59 ½, you may owe a 10% early withdrawal penalty on the earnings, but again, not on your contribution.
5. I make less than $35,000 annually, have little in savings, and am 39 years old. What is the best IRA for me?
A Roth IRA is probably best for you. You won’t be able to deduct your contribution when you do your taxes, but all the money you put in there AND all the money you earn will be all yours tax-free when you retire. As far as choosing an account, look for low fees (aim for 0.25% annually or less) and no minimum deposit.
6. Does your IRA contribution affect how much you can contribute to an employer-sponsored account?
The $6,000 contribution limit (or $7,000 if you’re 50+) is the total limit for all IRAs that you have. Your IRA contributions don’t affect how much you can save in an employer-sponsored account, like a 401(k). So if you have both a traditional IRA and Roth IRA, you can only contribute $6,000 or $7,000 total between the accounts. If you have a 401(k), you can still contribute up to $19,500 in 2020 (or $25,000 if you’re over 50).
For questions or concerns regarding this article, contact Brien L. Smith, CFP® at Traditions Wealth Advisors Brien@TraditionsWealthAdvisors.com or 979-694-9100.
Source: Hartill, Robin. 29 September 2020. https://www.thepennyhoarder.com/retirement/retirement-questions/?aff_id=128&aff_sub3=/retirement/retirement-questions/_20201002_social-organic_Twitter
Richard W. Paul/Kiplinger Consumer News Service
The dot.com crash in 2000. The 9/11 terrorist attacks in 2001. The collapse of the housing market in 2008. And now the coronavirus pandemic of 2020. Over the past two decades these events—which had huge financial repercussions—have all been labeled as “black swans.” Can you draw comfort from the thought that each of these crises was considered so random, so rare and so difficult to predict that no one saw them coming? Investors, there is always something coming!
Myth #1: You must claim social security at age 62.
The earliest you can claim SS is at the age of 62 but waiting until at least 70 can have more benefits. To get started, you need to figure out your full retirement age or 'FRA' by visiting SSA.gov. If you claim SS prior to your FRA, you will permanently reduce your monthly income. If you delay claiming SS after the age 62, there is roughly an 8% additional monthly income per year for each year you delay (up to age 70).
Myth #2: You will never get back the money you put in.
Everyone's situation is different, but if you live a long time, you may actually get more money from the program than you contributed. One great feature of Social Security is that it provides an inflation-protected guaranteed income stream in retirement. Therefore, even if you live to 100 years old, you will continue to receive your monthly income. If you predecease your spouse, your spouse also receives survivor benefits until his/her death.
Myth #3: My Ex's actions could negatively impact my benefits.
If you were married for 10 consecutive years, have not remarried, reached your FRA, than you are entitled to your own benefit or to 50% of your ex's SS benefit, whichever is higher. There is no need to discuss with your ex-spouse and your claim does not reduce your ex's benefits.
Myth #4: Your benefits are based on income prior to age 65.
Your benefits are calculated based on 35 years of earnings (not consecutive or before the age of 35). If you don't have 35 years of income (even part-time income counts), than zeroes will be calculated.
Myth #5: You can claim benefits early and get added income once you reach FRA.
This is a misconception. There is no ‘bumping’ up of income once you have claimed your social security benefit.
Claiming your social security is an important part of your retirement plan, but start planning early. Questions about your Social Security benefits? Don’t hesitate to reach out to Brien@traditionswealthadvisors.com or 979-694-9100. We are here to serve you!
Source: Fidelity Viewpoints. 24 August 2020. https://www.fidelity.com/viewpoints/retirement/social-security-myths
7 Tips on how to detect phishing e-mail scams:
1. Read the e-mail address carefully and don't trust the 'display' name. It is easy to make a false e-mail address with the same display name as someone you know and trust.
2. Trust your instinct! If something in the e-mail looks off even when the e-mail address is correct, don't reply.
3. Don't click links in e-mails you are concerned about.
4. Check for grammar and spelling errors as a sign of a false e-mail.
5. Don't download attachments as those could lead to a virus on your computer.
6. An immediate 'call to action' such as 'update password immediately' is a red flag for a phishing e-mail.
7. Don't send your personal information through e-mail. Instead, login to the website and update through a secure site.
A critical member of the TWA team is Bentley class of '21! In her role as Accounting Intern, Bentley serves as Traditions Wealth Advisors’ Chief Financial Officer (CFO). She assists Brien Smith (CEO) in managing the book keeping, cash flow, and tax related facets of the Traditions Wealth Advisors business.
Bentley is hardworking, organized, and very passionate about anything she gets herself involved in. She is a junior accounting major at Texas A&M University. Bentley was recently accepted into Group 29 of the Professional Program in Accounting (PPA) at Mays Business School. She is super passionate about accounting and eager to receive her CPA and work at a Big 4 Accounting Firm in the future.
Along with working at Traditions Wealth Advisors and studying, Bentley has loved being a Fish Camp Counselor at Texas A&M. Fish Camp is an incredible organization that has given her the opportunity to give back to the University that has given her so much. Bentley is hopeful to return as a second-year counselor this summer! In addition, she loves spending time with friends, traveling, and exploring new places.
As a Financial Analyst Intern, Anthony engages in investment research and portfolio modeling to aide and support portfolio management decisions made by Brien and Sarah for the TWA clients. His primary scope of analysis is ensuring that investments our clients hold are optimal given their risk level through diligent quantitative and qualitative research and assigning them buy, sell, and hold ratings. Anthony is especially interested in observing and evaluating macro-economic factors and projecting performance in the long-term through valuation research and technical analysis.
Anthony is entering his senior year at Texas A&M University in the Petroleum Ventures Program and will receive his Bachelors of Business Administration in Finance with Minors in Economics and Computer Science. Upon graduation, Anthony aspires to become a financial analyst for an investment bank.
Outside of school and work, Anthony is an active member of Kappa Alpha Order fraternity and is on the executive committee of the Petroleum Ventures Program. He enjoys spending his time outdoors with friends, going to Texas A&M athletic events, and playing tennis and golf.
With many summer vacations canceled due to COVID-19, you may find you have some spare time at home. This is the perfect time to do a financial goal checkup. It can help ease your mind reviewing your finances, retirement goals, savings for children’s education, or a house investment. Here are some tips for your midyear review:
1. Goals: Make sure you are saving enough for retirement or could you increase your paycheck deduction? Have you checked college tuition fees lately to calculate if you are saving enough? Interested in saving for a new house? Make sure and check the latest real estate market. Are your beneficiaries up-to-date? It is important to update these goals for 2020.
2. Taxes: Make sure you are benefiting from a tax break. For example, are you on a high deductible health plan and contributing to a health savings account? Are you contributing to your company’s 401K enough that your employer is matching the amount or should you increase your contribution? Have you revisited your decision about whether to make Traditional or Roth contributions to your IRA and company retirement plan? If you received a big tax refund or wrote a sizable check for taxes due with your 2019 return, or experienced any life changes, you should evaluate whether you’re having too much or too little in taxes withheld from your pay.
3. Insurance: Evaluate your insurance needs annually to make sure you have the right amount and type of insurance for unforseen circumstances that might arise. A good place to start is life insurance. Life insurance is used to replace income. If you have a growing family you might want to increase your life insurance. If you are getting older with less years of income, then you might want to decrease life insurance and use that money towards retiree health care savings. Checking out disability insurance in case anything prevents you from earning a paycheck is also a good idea.
4. Estate planning: Review this important paperwork to make sure you are covered legally in a will, health care proxy, and power of attorney. Marriage, divorce, birth, and death are 4 big events that can affect estate plans.
While a mid-year financial checkup might not be a beach vacation, it is well worth the effort to make sure your finances are organized and will put your mind at peace. Plus it is not too early to start dreaming of those 2021 vacations!
If you have any questions while you are evaluating your midyear review, please don't hesitate to reach out to TWA at 979-694-9100 or Brien@TraditionsWealthAdvisors.com
Source: “Mid-Year $ CheckUp: 5 Things to Review Now.” Fidelity Viewpoints, 14 July 2020, https://www.fidelity.com/viewpoints/personal-finance/midyear-checkup?ccsource=email_weekly
One of the first steps in getting your financials in order is hiring a financial advisor. They can help you plan and get organized during your working years so that you have plenty of years in retirement too.
How do you pick a financial advisor?
A financial advisor who has worked hard to earn a Certified Financial Planner (CFP®) designation exhibits experience and quality. They will ask the tough questions in pursuit of meeting your financial goals. They have the experience of wealth management that many of us lack. Depending on a financial advisor’s expertise and experience is key in letting them do the hard work for you.
When first meeting with a financial advisor, a good relationship begins with them interviewing you as much as you are interviewing them. A financial advisor wants to make sure you are on the same page as them in meeting your financial goals.
Further, financial advisors can help put you in a good taxable income situation. Let them use their expertise to make sure you have less tax exposure. In the end, make sure your financial future is in your hands and that your choices feel comfortable for your unique situation.
What does a financial advisor do?
Financial Planning organizes your cash flow, investing, and savings. Financial advisors will help you plan for these needs and find the best investment approach to meet your individual situation.
Estate Planning is not easy to think about what will happen to your assets when you are gone. However difficult it may be, it is important to make sure you have clear beneficiaries and everything is in order for when that time comes.
Retirement Planning is important to plan for the years you will no longer have a monthly paycheck. How will you pay your expenses? Finding a financial advisor with a retirement focus is critical so that you can trust them as you plan for your future.
In the end, hopefully you find value in finding a dependable financial advisor that you can trust to meet your financial goals. If you have any further questions as to why you need a financial advisor or to begin your individualized financial plan, please call 979-694-9100 or e-mail Brien@TraditionsWealthAdvisors.com
Source: Lewis, Allen. “Why do I need a financial advisor?” Wimple, 27 May 2020, https://www.wimple.com/article/when-advisors-make-sense.html