How Much Do I Need In My 401k To Retire?


Retirement is a relatively new concept and before 1960, it didn’t really exist for most people.  We’re still getting used to the idea of living off our savings during the golden years.  This also begs the question “How much can I safely spend from my savings without running out of money in retirement?’ Unfortunately, we cannot answer this question perfectly because we don’t know three very important things about the future: How long are you going to live? What annualized return will your money earn in retirement? In what sequence will you get these returns? Many people have said they will simply “live off the interest” in retirement.  Well, if you ladder a bunch of five year CDs you’re talking about 2.25% interest or $22,500 on $1 million in savings.  Oh, and don’t forget that the latest inflation rate according to the Bureau of Labor Statistics is 1.7% for the 12 months ending in July...

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Protecting Your Personal Information After the Equifax Breach


On September 7, Equifax, one of the country’s largest credit monitoring bureaus, announced they suffered a massive data breach, exposing millions of consumers’ personal information to hackers. Potentially, anyone with a credit history could be a victim of this unprecedented cybercrime. According to Equifax, the breach lasted from mid-May through July and approximately 143 million consumers were exposed.  Hackers accessed people’s names, Social Security numbers, birth dates, addresses and in some cases driver’s license numbers, the corporation reported.  Also included in the theft were credit card numbers for 209,000 people and certain dispute documents for another 182,000 U.S. consumers. As financial advisors, we understand the importance of keeping personally identifiable information private and protecting against increasing cyber threats.  In light of the Equifax incident here are the steps we recommend our clients take to protect their identity and accounts: Find out if you were exposed. Click on this link and follow the simple...

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How can you help your grandchildren pay for college?


Navigating the college landscape for students and parents can be frustrating.  Gone are the days when students could work part time jobs to cover most or all of their tuition.  When students graduate, they often have a hard time paying off their loans. This forces them to delay other purchases, like owning a home. If you are a grandparent who is in a financial position to ease the burden on your grandchildren, here are some ways to help. Pay Tuition Directly In 2017, the annual gift tax exclusion is $14,000 per person. This means you can give up to $14,000 each year to as many people as you want without filing a gift tax return. However, if you would like to help your grandchildren with tuition bills you can pay the school directly. You will not be limited to a particular dollar amount because the Internal Revenue Code allows an unlimited gift...

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Small Business Owner? What’s the right retirement plan?


In a previous post, we discussed the issues faced by business owners seeking to extract profits from their firms on a tax-advantaged basis through a qualified retirement plan and discussed the Safe Harbor 401-k Plan design.   In this blog post, let’s look at additional plan design opportunities well suited for self-employed business owners with few or no employees. This business could be someone’s primary occupation or a lucrative side business.  In either regard, a number of options exist that allow the business owner to shelter income from taxation and invest for retirement.  In our experience, individuals often do not look past the obvious choices and miss out on some interesting opportunities. A common default choice is the SEP IRA.  A self-employed business owner may contribute 25% of their net profits to a SEP IRA plan up to a maximum dollar amount of $54,000 in 2017.   It is a very simple plan...

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Lessons for the Next Crisis


It will soon be the 10-year anniversary of when, in early October 2007, the S&P 500 Index hit what was its highest point before losing more than half its value over the next year and a half during the global financial crisis. Over the coming weeks and months, as other anniversaries of major crisis-related events pass (for example, 10 years since the bank run on Northern Rock or 10 years since the collapse of Lehman Brothers), there will likely be a steady stream of retrospectives on what happened as well as opinions on how the environment today may be similar or different from the period leading up to the crisis. It is difficult to draw useful conclusions based on such observations; financial markets have a habit of behaving unpredictably in the short run. There are, however, important lessons that investors might be well-served to remember: Capital markets have rewarded investors over...

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Don’t make these five common estate planning mistakes


Estate planning sounds complicated and forbidding to many people. They sometimes end up rushing the process or ignoring it altogether, leading to one or more of these common mistakes.   Failing to plan: Estate planning is not just for elderly rich people. Anyone over the age of 18 should have something in place. Are you young and single with few assets? You still want to appoint the right person to take care of your pet and decide who gets your car and controls your digital accounts at death (see below). You should make plans for potential disability. If you are a little older and have children, you absolutely need a will to appoint their guardians and a trust to handle assets you leave to them. Do you own a house? You should consider a will or a life estate to pass it on to children or other heirs (joint ownership with someone...

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Three Estate Planning Tips to Avoid Probate


Probate is the process of validating the legitimacy of a will, distributing assets according to that will or intestate laws if no will is present, and paying any claims of the deceased’s creditors. This process is known to be fairly expensive, including costs such as hiring attorneys, appraisers, accountants, auctioneers, etc. The probate process can also be very lengthy, in extreme circumstances lasting a couple of years. The process is also open to public inspection. For these reasons, many people try to avoid the probate process all together. Here are three easy tips to avoid your assets passing through probate: JTWROS: Add a “joint owner with right of survivorship” to a bank account or other property. For married couples, using the distinction of “tenancy by the entirety” is another alternative. Be cautious of any taxable gifts this strategy may create, either immediately or in the future. Also be aware that there are...

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Retirees get significant tax benefits in New York State


New York State has long been known as the “land of taxes.” Higher-than-average real estate, income, and sales taxes have been a reality for many years. However, New York offers some significant tax breaks to older residents, making it less onerous to retire and remain in the state.   Here are some of the major tax breaks a retiree in New York can look forward to:   Taxes on Social Security: The good news here is that all Social Security income is tax-free in New York, regardless of your income or the size of your Social Security benefit. The federal government may tax some of your Social Security benefit if your income is above certain guidelines, but New York will take a pass. This is an important benefit and a bonus for New Yorkers since 12 other states levy income taxes on Social Security benefits if their residents pay federal income taxes on the...

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Beneficiary Designations: What is the difference between Per Stirpes and Per Capita?


You’ve done your part to set up a will and properly named your beneficiaries on key accounts. You’ve made your first important moves in the sometimes complicated process of estate planning. Suddenly, a tragic death in the family has you wondering “What will really happen with my assets when I pass?” Properly setting up your beneficiary designations is critical to ensuring your wishes are followed when you’re gone.   When a Parent Loses a Child When a parent loses a child a “per stirpes” or “per capita” designation comes into play. These estate planning terms may seem like mere legal jargon, but they are crucial to ensuring that your assets pass to your heirs according to your wishes. The terms are added to a beneficiary titling to determine where the deceased child’s share of your inheritance will go.   Per Stirpes – This designation means that if one of your children dies before you, their...

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