As the IRS does every year, all the tax brackets are increasing by the annual inflation amount. This is beneficial because it gives the consumer the ability to keep up with the rising cost of living. But don’t worry, it’s really just a regular IRS tax adjustment and not any major overhaul like we had a few years ago. 2020 Tax Brackets for Single Tax Payers Taxable Income Tax Rate $0 - $9,875 10% $9,875 - $40,125 12% $40,125 - $85,525 22% $85,525 - $163,300 24% $163,300 - $207,350 32% $207,350 - $518,400 35% $518,400+ 37% 2020 Tax Brackets for Married Filing Jointly Taxable Income Tax Rate $0 - $19,750 10% $19,750 - $80,250 12% $80,250 - $171,050 22% $171,050 - $326,600 24% $326,600 - $414,700 32% $414,700 - $622,050 35% $622,050+ 37% Head of Household 2020 Tax Brackets Taxable income Tax Rate $0-$14,100 10% $14,100-$53,700 12% $53,700-$85,500 22% $85,500-$163,300 24% $163,300-$207,350 32% $207,350-$518,400 35% $518,400+ 37% Married Filing Separately 2020 Tax Brackets Taxable Income Marginal Tax Rate: $0-$9,875 10% $9,875-$40,125 12% $40,125-$85,525 22% $85,525-$163,300 24% $163,300-$207,350 32% $207,350-$311,025 35% $311,025+ 37% Standard Deduction: The standard deduction is an amount you can deduct from your total taxable income for the tax filing year. The standard deduction has increased in 2020 to the following limits: Single or married filing separately: $12,400 Married...

Today our team gathered at the place where it all started, forty years ago this week! On December 28th, 1979 our initial Certificate of Incorporation was filed with the New York Department of State by our founder, Alan Vogt.  In 1984, our company name was officially changed to Paramount Planning, named after the street Mr. Vogt and his wife Phyllis lived on in Tonawanda.  Forty years later, after two more name changes, that small one-person company has grown to fourteen employees managing more than $427 million in assets for over 620 families, individuals and organizations.  The founding principles of integrity, honesty, diversified investing, and long-term financial strategies instilled by our founder has followed the company throughout, making Level Financial one of the largest locally-owned independent registered investment advisory firms in Western New York. We thank all of our dedicated employees, our loyal clients, and -- most of all -- Mr. Alan Vogt,...

Congress recently passed, and the President recently signed, a bill called the Setting Every Community Up for Retirement Enhancement Act (SECURE Act).  This brings major changes to the retirement landscape that will affect all retirement savers going forward.  These are the most sweeping changes to the retirement rules in my entire 13-year career.  Let’s walk through the most impactful changes: 1) Changes the age to start required minimum distributions from age 70.5 to age 72 This is good news for those who don’t need to take money from their retirement accounts because they are still working or have other funds they can tap for retirement expenses.  This change allows more time to strategically plan for those who retire before 72 and want to take advantage of low tax years by doing Roth conversions.  I can also appreciate the starting date no longer being a “half” age, which is incredibly annoying for most...

Often, the average investor approaching retirement assumes they will convert their nest egg to a more conservative portfolio and then “live off the interest.”  It’s an attractive concept because it’s simple and it makes us feel safer.  But is it really so?  Simpler, yes; but not necessarily safer.  If you broaden your lens and consider that the greater risk in retirement is the effect of thirty-plus years of inflation, the answer is clearly no. To create cash flow from just interest, an investor would probably have a portfolio filled with fixed income investments (CDs, bonds, REITs and high dividend stocks).  Over thirty years, this portfolio would be more vulnerable to the loss of purchasing power (inflation) when compared to a more broadly diversified allocation that is managed for total return.  Even modest inflation rates can decimate a portfolio’s purchasing power over this length of time. And, retirees are exposed disproportionately to...

The other day when talking with some peers at a group function in New York, someone asked a pretty simple but intriguing question: “As a business owner, what really keeps you up at night?” It was interesting to listen to the variety of answers coming from this very capable group of leaders.  Market volatility, political turmoil, ever-changing regulatory requirements, hiring bright new advisors; the list went on and on and on.  Perhaps more fascinating to me during this impromptu round of “Q and A” was how no one had dropped the dreaded c-word.  Cyber-security! There’s nothing as a business owner that presents a greater risk, that is more pervasive, susceptible to soft targets, and damaging than the potential for a data breach.  In financial services, that risk is only amplified. Yes, we are a financial advisory firm entrusted with helping our clients reach their life-long goals, but perhaps even more important –...

In a previous blog post (Converting Your Retirement Nest Egg to Income), I argued that higher income individuals must juggle a far more complex and unique set of variables in retirement than they faced in their working years, if they hope to be as efficient as possible with their accumulated wealth.  Many of the variables are tax related and interrelated, in that a change to one may change the others. While complicated, a holistic, forward-looking planning process pays big dividends in tax efficiencies that can stretch your retirement nest egg.  This post will focus on one specific variable; the Medicare Premium Surcharge, called the Income Related Monthly Adjustment Amount or IRMAA. Wait, what does Medicare premiums have to do with retirement tax planning?  At the risk of oversimplifying, here is a quick summary explanation (for those interested, here’s a more detailed look from the IRS): Medicare is our system of retiree health...

Let’s assume that you’re completing a solid career, have earned a good income and through thrift and discipline, accumulated a significant nest egg for retirement.  Sounds good so far, right?  But as you approach retirement, the thought may occur to you: “I don’t really know how to convert this nest egg into retirement income when I stop working”. Well, you’re not alone.  In our experience, there is a fair amount of angst that accompanies this much anticipated life event, and for good reason.  Compared to the working years, there are many unique moving parts and complexities to consider in retirement that most individuals have never had to think about.  Building wealth while earning a healthy income is pretty one dimensional. For most individuals, it’s about setting aside regular long term savings and investments in the most tax effective manner possible.  With relatively high marginal tax brackets, individuals tend to build their retirement nest eggs with pretax contributions first; usually through contributions...

For most retirees, Social Security is an essential component of financial security.  It is estimated that Social Security benefits account for one-third of all retirement income each year.  Despite its significance, it appears that many retirees are not optimizing their benefits and losing out on substantial income over their lifetimes.  The Social Security claiming options are complex and there is no one strategy that is the right fit for everyone; however, one of the common errors is claiming too early.  Only 4% of retirees wait until age 70 to claim the maximum retirement benefit.  A recent study estimates that US retirees would generate an additional $111,000 of income on average over their retirement years if they optimized their Social Security benefit selection.   Many factors may influence the decision to claim early, with poor health and a reduced life expectancy being the most common. There is a break-even life expectancy calculation that is important to consider: how long must I live before the maximized age 70 Social...

If you have been tuned-in to the financial press recently, you will have noticed a great deal of attention surrounding the concept of an inverted yield curve.  Why all the excitement and alarm?  While the topic can be quite complex, here is a quick primer. The Yield Curve:  This is an important metric to economists.  It is a simple graph that plots the yields of U.S. Treasury obligations of all different maturities.  Remember, Treasuries (bills, notes and bonds) are debt instruments issued by the US Government; it’s how they borrow money.  The Treasury’s “maturity” describes how long before the bond is repaid and ranges from 1 month to 30 years.  The vertical axis of the graph measures the % yield paid by the bond.  The horizontal axis measures the length of all the maturities. Normal Yield Curve:  Under normal conditions, the curve created by plotting the points on the graph is upward sloping.  It indicates that interest rates increase with each longer maturity.  At the most basic...