We’ve Moved! 6121 Excelsior Blvd. St. Louis Park, MN 55416

Archives for March 2017

Are you counting on the luck of the Irish to get you through retirement?

by

Happy early St. Patrick’s Day!

Spring is in the air, and the spirit of new beginning has arrived with it. This is the time of year when possibilities are fresh and hope has sprung.

But are your retirement hopes and dreams based on the luck of the Irish?

Unfortunately, most of America’s pre-retirees are not only falling short of their planning and savings goals, they don’t even know it’s happening. Luck is great, and hope is wonderful, but they are not enough to grant you a financially secure and peaceful retirement.

A recent study by TIAA-CREF had 58% of surveyed Americans express confidence in their ability to turn savings into a reliable and sufficient income stream in retirement. So far so good? Not quite. The same study showed that fewer than half of respondents knew their retirement savings balance. Only 35% could say how much income they would receive every month in retirement. Many did not even know how much income they would need to generate in retirement to live comfortably! If that does not spell “cross your fingers and hope for the best,” I don’t know what does.

I can understand the desire to fall back on luck and have a positive outlook on the future. Humans are wired to focus on goals that feel most urgent, so you probably find yourself spending more time paying this month’s bills than reflecting on your long-term retirement needs. Think of it this way: a secure retirement is a considerable accomplishment. Like any other big endeavour, it does not “just happen” because of luck. Peaceful retirements take strategic planning, dedicated effort and plenty of technical expertise.

If that sounds like a lot of work that you don’t have the time for, you are absolutely right. The good news is that you don’t have to do it alone. A financial planner can help you objectively assess your readiness for retirement. An effective plan for financial well-being must be comprehensive and grounded in reality – and the only way to be sure is to work with a professional.

CALL 952-460-3260 TO BOOK YOUR COMPLIMENTARY VISIT WITH US NOW

What is a visit with us like? You’ll meet with a Certified Financial Planner™ who sit down with you and talk about your individual circumstances. We begin by estimating your retirement income needs. Then we look at your options for generating that income – for most of our clients, those options include Social Security, pension plans and personal retirement savings.

If we identify a gap between what you have and what you need, we brainstorm ways to close it. You walk away with actionable advice and the confidence that can only come from knowing (not hoping) that you have a plan. If that sounds valuable, I would like to invite you and your spouse to come in for a complimentary visit with us.

There is absolutely no obligation for you when you book this complimentary visit. However, spaces on our calendar can be limited.

So invest some time in something that will truly make a difference in bettering you and your spouse’s financial situation and book your complimentary visit with us today.

CALL 952-460-3260 TO BOOK YOUR COMPLIMENTARY VISIT WITH US NOW

Thank you for taking the time to read this.  

I look forward to meeting you and helping you achieve your financial goals.

 

As a leader in helping families in the twin cities area plan for their retirement and maximize their benefits, we have been interviewed by The Wall Street Journal, Fox Business News, Investor’s Business Daily, Newsweek, Market Watch, as well as many other local news channels.

Tax Strategies for Retirement Portfolios

by

Tax-deferred financial vehicles are an effective way to accumulate assets while you’re working. However, once retired, individuals should carefully consider how (and when) to position assets to help optimize growth and income while reducing their tax liability. The following are some points to remember about distributions.

Taxable Investment Portfolio

  • Short-term capital gains are taxed at ordinary income rates
  • Long-term capital gains (investments held one year or longer) are subject to capital gains tax of up to 20%, depending on your tax bracket

Traditional IRA

  • Tax-deductible contributions grow tax-deferred until withdrawn
  • Required minimum distributions begin at age 70 ½
  • All distributions are taxed at ordinary income rates

Roth IRA

  • Post-tax contributions are not subject to income tax
  • Earnings are generally tax-free after age 59 ½

Non-qualified Annuity

  • Post-tax contributions are not subject to income tax
  • Earnings are taxed as ordinary income

Qualified Annuity

  • Tax-deductible contributions grow tax-deferred until withdrawn
  • Required minimum distributions begin at age 70 ½
  • Distributions are taxed at ordinary income rates

Life Insurance Contract Cash Value

  • Generally, distributions in the form of policy loans are tax free
  • Interest earnings that are credited to your policy are generally tax free when paid in the form of a death benefit, but are taxed as ordinary income if the policy owner surrenders the policy.

Most retirees are in a lower tax bracket once they stop working. If a retiree is in the 15 percent tax bracket, earnings from a taxable investment portfolio will no longer be subject to a capital gains tax. Every individual’s situation varies, so it’s important to consult with a tax advisor and a financial advisor about the most tax-efficient ways to withdraw or reposition assets during retirement.

 

The content provided here is designed to provide general information on the subjects covered. It is not, however, intended to provide specific legal or tax advice.  Contact us at info@securedretirements.com or call us at (952) 460­-3260 to schedule a time to discuss your financial situation and the potential role of investments in your financial strategy.

How to Motivate Yourself to Exercise

by

Researchers believe one way to eliminate a bad habit is to replace it with a good one. For example, say you’d like to get out of the habit of watching too much television. At the same time, you’d like to motivate yourself to exercise every day.

To get started, identify three factors associated with the bad habit: Reminder, routine and reward. The reminder is the trigger that initiates the behavior. For example, perhaps you turn on the television every morning while eating breakfast. Breakfast, even that first cup of coffee, may be the reminder — the act that reminds you to turn on the TV.

Next, because you do this every morning, watching TV has become your routine. The reward? While that may differ for each person, it could range from catching up on the day’s news, laughing at the jokes of a morning talk show host, or having warm, nostalgic feelings while watching reruns of an old TV show.

In order to change the old habit, identify three new factors that correlate with the habit you want to develop. In the case of exercise, maybe going outside to retrieve the newspaper is your reminder. Instead of reading the paper right away, perhaps continue walking around your neighborhood block, and pick up the paper when you return. Your reward may be reading the paper upon your return, along with the knowledge that you’ve gotten some exercise for the day.

You may even consider enhancing both your reward and motivation by inviting your spouse or a neighbor to join you on this daily walk. The greater the reward, the more likely you are to continue until it becomes a habit. If this new habit breaks or even reduces the amount of time you spent on your bad habit, all the better.

Two of the key ingredients to changing (or developing) an ingrained habit are motivation and confidence. Consider how motivated you are to make the change and how confident you feel about your ability to do so. If you rate low on either of these fronts, try reducing the scale of the habit to something more achievable. For example, reduce the number of hours you watch TV each day, or simply walk half a block before retrieving the newspaper. The more success you achieve with the truncated goal, the more likely your motivation and confidence will grow to fully changing or developing a new routine.

Strategies for Paying for College

by

Even as college tuition continues to rise, more and more American families are paying less out of pocket than in previous years. During the 2015-16 academic year, grants and scholarships paid the largest portion of college expenses — 34 percent, compared to 30 percent the year before.

In addition to grants and scholarships, parent income and savings provided for 29 percent of costs. Student resources chipped in for 12 percent, and loans covered another 20 percent. On average, households paid $23,688, slightly less than in 2014-15.

Parental and student income and assets have a big impact on the student’s eligibility for financial aid. For parents, the most significant factor is income, followed by assets held in a 529 college savings plan, Coverdell ESA savings and taxable savings and investment accounts.

However, here is an important point for high-net worth families: Even if you don’t expect your student to qualify for financial aid, you should submit a Free Application for Federal Student Aid (FAFSA) application every year in order for your student to be eligible to receive a federally subsidized student loan.

If you use invested funds to help pay college expenses, be aware of any taxable events triggered by withdrawals. For example:

  • Withdrawals from traditional IRA and 401(k) accounts are taxed as ordinary income
  • Withdrawals of contributions from a Roth IRA are tax free, but withdrawals that represent earnings are taxed as ordinary income
  • Assets taken from taxable accounts may be subject to capital gains taxes

We believe you should try to exhaust other resources before paying for college expenses with funds allocated to retirement savings accounts.

A 529 college savings plan can offer numerous advantages for parents or grandparents helping to cover a student’s tuition. You can open multiple 529 accounts — one for each child or grandchild, and it doesn’t matter if different accounts name the same individual as beneficiary. Following are a few of the 529’s benefits:

  • Assets in the account remain under the control of the account owner
  • However, for the purpose of removing assets from the owner’s estate, 529 contributions are considered a gift to the account beneficiary
  • Contributions earn interest tax free
  • Withdrawals made to pay for qualified college expenses are tax free
  • Withdrawals for any other reason also are tax free, with the exception of the portion considered earned interest, which will be taxed as income plus a 10% tax penalty
  • Distributions from a grandparent-owned 529 are considered student income

The content provided here is designed to provide general information on the subjects covered. It is not, however, intended to provide specific legal or tax advice.  Contact us at info@securedretirements.com or call us at (952) 460­-3260 to schedule a time to discuss your financial situation and the potential role of investments in your financial strategy.

Age-Old Advice for Good Health

by

For some retirees, losing memory and thinking skills in old age can be just as worrisome as the loss of health. “Brain training,” which involves mental exercises like crossword puzzles and learning a foreign language, can help, but that’s just part of what it takes to maintain a sharp mind.

Scientists are researching the correlation that continuing certain healthy behaviors, practiced in combination, can help retain mental acuity. Indeed, this could mean that stopping them may promote deterioration.

A more complete approach to brain training is to pursue a disciplined regimen of a combination of the following healthy behaviors:

  • Physical exercise — Promotes the growth of new brain cells and increases activity in the parts of the brain associated with the ability to plan, organize, remember details and filter speech.
  • Eat healthy — Whole grains, fruits and vegetables, and healthy fats from fish, nuts and oils. Also, don’t over eat or under eat — maintain the same calorie intake day after day.
  • Get enough sleep — If you suffer from sleep loss due to sleep apnea, an overactive bladder or as a side effect from a medication, address these conditions to help improve the quality and quantity of sleep.
  • Computer and video games can help improve attention and the ability to react quickly as well as sharpen thinking skills.
  • Meditation or exercises such as tai chi appear to increase the brain’s cognitive reserve, which is the ability to switch between different tasks and deal with stressful events.

The problem for many adults is that when they retire, they gradually stop doing some or all of these things. While no single activity on this list is guaranteed to work, regular deployment of these different factors in combination has shown demonstrated results.

Health Savings Account Update

by

Introduced in 2003, a Health Savings Account (HSA) used in combination with a high deductible health care plan provides three tax advantages:

  • Income tax deduction for annual contributions
  • Tax-deferred growth
  • Tax-free withdrawals for qualified health care expenses

Depending on the fate of the current health care law, the HSA could become even more useful. Both the new president and Republicans in Congress have called for an increase in the contribution limit to the maximum out-of-pocket limits for high-deductible health plans. If those rules take effect in 2017, the individual HSA limit would rise from $3,400 to $6,550 for individuals and $6,750 to $13,100 for family plans. It has also been proposed that an HSA should not be subject to estate taxes when passed on to beneficiaries.

The content provided here is designed to provide general information on the subjects covered. It is not, however, intended to provide specific legal or tax advice.  Contact us at info@securedretirements.com or call us at (952) 460­-3260 to schedule a time to discuss your financial situation and the potential role of investments in your financial strategy.