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Elder Care: How to Help Your Parents Manage

It’s a decision most adults dread: having to take over the financial and day-to-day living decisions for parents who can no longer manage on their own. When caring for your parents, you may need to plan on three levels: managing finances, making health care decisions, and making sure their daily household needs are met. Finding qualified experts who can advise you in these areas may make it easier to manage the situation.

Managing Finances

If your parents currently are able to communicate, try to initiate a conversation about how they would like their money to be managed. Rather than telling them what to do, be clear that you would like to help and to make sure that their wishes are met. Access to bank and brokerage statements, insurance policies, and other financial documents may help you to safeguard your parents’ assets.
If your parents work with a financial advisor, try to arrange a joint meeting where all parties can review the situation. If you pay your parents’ bills and manage their checkbook, arranging for direct deposit of Social Security or pension benefits, as well as electronic delivery of recurring bills, could expedite the process.

Arranging for Health Care

If your parents are mentally competent, ask them about consulting a lawyer who can draft a health care proxy, a legal document designating you (or another person) to make decisions about medical care when they are no longer able to do so. If your parents have opinions about end-of-life care, their wishes can be incorporated into a living will, another legal document.
Even without these documents, the medical establishment is likely to look to you or other siblings to make decisions about health care, which could include arranging for long-term care or making end-of-life decisions. As part of this process, determine the type of medical insurance that your parents have and what it covers.

Overseeing Daily Living Activities

If your parents are able to remain in their home, you may need to consider helping them to manage medication, to conduct daily tasks such as bathing or meal preparation, and to make arrangements for assistance with household chores. A visiting nurse and home care agency may provide assistance in these areas.

You may want to consider consulting a Professional Geriatric Care Manager, a professional who may help arrange for home care, provide crisis intervention, and help you identify solutions to potential problems. You can learn more at www.caremanager.org.
Managing a parent’s affairs can be complicated, but arranging for support from qualified people may help you care for parents in a way that meets their needs and does not create too much stress on you.
© 2011 McGraw-Hill Financial Communications. All rights reserved.

Questions to Ask When Drafting an Estate Plan

Because you’ve worked hard to create a secure and comfortable lifestyle for your family, you’ll want to ensure that you have a sound financial plan that includes trust and estate planning. With some forethought, you may be able to minimize gift and estate taxes and preserve more of your assets for those you care about.
A qualified financial professional and tax professional can help ensure you are minimizing taxes and maximizing gains for your heirs. You can bring this four-part checklist to your initial meeting to discuss how to make your plan comprehensive and up-to-date.

Part 1: Communicating Your Wishes

  • Do you have a will?
  • Are you comfortable with the executor(s) and trustee(s) you have selected?
  • Have you executed a living will or health care proxy?
  • Have you considered a living trust to avoid probate?
  • If you have a living trust, have you titled your assets in the name of the trust?

Part 2: Protecting Your Family

  • Does your will name a guardian for your children if both you and your spouse are deceased?
  • Are you sure you have the right amount and type of life insurance for survivor income, loan repayment, capital needs, and all estate settlement expenses?
  • Have you considered an irrevocable life insurance trust to exclude the insurance proceeds from being taxed as part of your estate?
  • Have you considered creating trusts for family gift giving?

Part 3: Reducing Your Taxes

  • If you are married, are you taking full advantage of the marital deduction?
  • Are you making gifts to family members that take advantage of the $13,000 annual gift tax exclusion?
  • Have you gifted assets with a strong probability of future appreciation in order to maximize future estate tax savings?
  • Have you considered charitable trusts that could provide you with both estate and income tax benefits?

Part 4: Protecting Your Business

  • Do you have a management succession plan?
  • Do you have a buy/sell agreement for your family business interests?

Because of the possibility of human or mechanical error by Financial Communications or its sources, neither Financial Communications nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall Financial Communications be liable for any indirect, special or consequential damages in connection with subscriber’s or others’ use of the content.
© 2011 McGraw-Hill Financial Communications. All rights reserved.

Tax Smart Investing Tips

Savvy investors have long realized that what their investments earn after taxes is what really counts. After factoring in federal income and capital gains taxes, the alternative minimum tax (AMT), and potential state and local taxes, your investment returns in any given year may be reduced by 40% or more. Luckily, there are tools and tactics to help you manage taxes and your investments. Here are four tips to help you become a more tax-savvy investor.

Tip #1: Invest in Tax-Deferred and Tax-Free Accounts

Tax-deferred investments include company-sponsored retirement savings accounts such as traditional 401(k) and 403(b) plans and traditional individual retirement accounts (IRAs). In some cases, contributions to these accounts may be made on a pretax basis or may be tax deductible. More important, investment earnings compound tax deferred until withdrawal, typically in retirement, when you may be in a lower tax bracket.
Contributions to Roth IRAs and Roth 401(k) savings plans are not deductible. Earnings that accumulate in Roth accounts can be withdrawn tax free if you are over age 59 1/2, have held the account for at least five years, and meet the requirements for a qualified distribution.

Tip #2: Manage Investments for Tax Efficiency

Tax-managed investment accounts are managed in ways that can help reduce their taxable distributions. Your investment professional can employ a combination of tactics, such as minimizing portfolio turnover, investing in stocks that do not pay dividends and selectively selling stocks that have become less attractive at a loss to counterbalance taxable gains elsewhere in the portfolio. In years when returns on the broader market are flat or negative, investors tend to become more aware of capital gains generated by portfolio turnover, since the resulting tax liability can offset any gain or exacerbate a negative return on the investment.

Tip #3: Put Losses to Work

At times, you may be able to use losses in your investment portfolio to help offset realized gains. It’s a good idea to evaluate your holdings periodically to assess whether an investment still offers the long-term potential you anticipated when you purchased it. Your realized losses in a given tax year must first be used to offset realized capital gains. If you have “leftover” losses, you can offset up to $3,000 against ordinary income. Any remainder can be carried forward to offset gains or income in future years.

Tip #4: Keep Good Records

Keep records of purchases, sales, distributions, and dividend reinvestments so that you can properly calculate the basis of shares you own and choose the most preferential tax treatment for shares you sell.
Keeping an eye on how taxes can affect your investments is one of the easiest ways to help enhance your returns over time. For more information about the tax aspects of investing, consult your tax professional.

Source/Disclaimer:
The information in this article is not intended to be tax advice and should not be treated as such. You should consult with your tax advisor to discuss your personal situation before making any decisions.
© 2012 S&P Capital IQ Financial Communications. All rights reserved.

Five Strategies for Tax-Efficient Investing

You may be able to use losses within your investment portfolio to help offset realized gains. If your losses exceed your gains, you can offset up to $3,000 per year of the difference against ordinary income.

After factoring in federal income and capital gains taxes, the alternative minimum tax, and potential state and local taxes, your investments’ returns in any given year may be reduced by 40% or more. Here are five ways to potentially lower your tax bill.1

Invest in Tax-Deferred and Tax-Free Accounts

Tax-deferred accounts include employer-sponsored retirement accounts such as traditional 401(k)s and 403(b) plans, individual retirement accounts (IRAs) and annuities. In some cases, contributions may be made on a pretax basis or may be tax deductible. More important, investment earnings compound tax deferred until withdrawal, typically in retirement, when you may be in a lower tax bracket. Contributions to nonqualified annuities, Roth IRAs and Roth-style employer-sponsored savings plans are not deductible. Earnings that accumulate in Roth accounts can be withdrawn tax free if you have had the account for at least five years and meet the requirements for a qualified distribution.

Withdrawals prior to age 59½ from a qualified retirement plan, IRA, Roth IRA or annuity may be subject to a 10% federal penalty. In addition, early withdrawals from annuities may be subject to additional penalties charged by the issuing insurance company.

Consider Government and Municipal Bonds

Interest on U.S. government issues is subject to federal taxes but is exempt from state taxes. Municipal bond income is generally exempt from federal taxes, and municipal bonds issued in-state may be free of state and local taxes as well. Sold prior to maturity government and municipal bonds are subject to market fluctuations and may be worth less than the original cost upon redemption.

Look for Tax-Efficient Investments

Tax-managed or tax-efficient investment accounts are managed in ways that can help reduce their taxable distributions. Investment managers can potentially minimize portfolio turnover, invest in stocks that do not pay dividends and selectively sell stocks at a loss to counterbalance taxable gains elsewhere in the portfolio.

Put Losses to Work

You may be able to use losses within your investment portfolio to help offset realized gains. If your losses exceed your gains, you can offset up to $3,000 per year of the difference against ordinary income. Any remainder can be carried forward to offset capital gains or income in future years.

Keep Good Records

Maintain records of purchases, sales, distributions, and dividend reinvestments so that you can properly calculate how much you paid for the shares you own and choose the most preferential tax treatment for shares you sell.

Keeping an eye on how taxes can affect your investments is one of the easiest ways you can enhance your returns over time.

1This information is general in nature and is not meant as tax advice. Always consult a qualified tax advisor for information as to how taxes may affect your particular situation.

Government bonds and Treasury bills are guaranteed by the US government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.

Municipal bonds are subject to availability and change in price. They are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax-free but other state and local taxes may apply.

Because of the possibility of human or mechanical error by Financial Communications or its sources, neither Financial Communications nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall Financial Communications be liable for any indirect, special or consequential damages in connection with subscriber’s or others’ use of the content.

© 2013 Standard & Poor’s Financial Communications. All rights reserved.

Strategies for Funding Your Business

One of the key elements in starting or growing a business is developing a comprehensive financing strategy. A long-term plan can help reinforce short-term spending discipline and reduce the likelihood your business will burn through capital too quickly.
Creating a capitalization strategy requires an understanding of the business activities your company plans to finance, estimates of how much these activities will cost, and knowledge of appropriate sources of financing.

Running the Numbers
Once you understand the business activities you need to finance, you can develop an annual budget and estimate your capital requirements for at least the next two years. Many experts recommend planning for worst-case, realistic, and best-case scenarios. This approach may decrease your likelihood of underestimating your capital requirements, which could cause you to run out of money or pass up potential opportunities. You may want to consult outside sources (such as your accountant) to ensure your budget is as reliable as possible. Your local chamber of commerce or a regional business association may help you estimate expenses such as utilities or payroll that tend to vary regionally. A professional association that represents your industry may have information about standard costs, margins, and financial ratios.

Sources of Capital
After researching your capital needs, you’re ready to consider potential sources of funding. The table below explains sources that entrepreneurs frequently use and the characteristics associated with each.

Source Advantages Disadvantages
Company profits Allows owner maximum control of business. Not feasible for start-up or early-stage company. May be inadequate to finance significant long-term expansion.
Business owner’s personal resources Owner maintains control. May require business owner to increase personal debt or jeopardize long-term goals such as a secure retirement.
Family and friends May provide flexible terms. May lack business expertise or be inadequate for long-term needs. Could potentially risk jeopardizing relationships.
Loan from bank or commercial finance company Frequent source of short-term financing. Loan officers may have broad business experience and provide assistance with financial issues. May be reluctant to provide long-term loan or to finance a start-up company. Requires collateral to secure loan agreement.
Loan guaranteed by U.S. Small Business Administration or a business development program sponsored by state government May provide capital for businesses that would not qualify for loans through other economic channels. Guaranty requirements may change in response to federal fiscal policy and current conditions.
“Angel” investor who finances small businesses Typically a former entrepreneur or executive, investor may possess considerable management expertise. May provide access to business associates and other investors. May desire active, involvement in the business, resulting in less control for the entrepreneur.
Venture capitalist Does not require additional debt, providing the business owner with financial flexibility. Often necessitates a higher rate of return than lenders because there is no requirement to make current payments.

Special Considerations for Start-Ups
If you are estimating capital needs for a start-up business, plan on maintaining sufficient funding to cover anticipated expenses for at least six months. Most start-up businesses are not profitable and typically operate six months or longer before generating capital internally. Also, the type of business you manage will influence your capital requirements. For example, a retail business requires inventory that must be financed before taking delivery. Many service businesses typically wait between 30 and 90 days before receiving payment from customers, which may require an infusion of capital to pay interim expenses.
© 2012 S&P Capital IQ Financial Communications. All rights reserved.

Starting a Home-Based Business

If you’re thinking of setting up an office in your home, there are a number of considerations you’ll want to take into account.

Zoning and Insurance
Perhaps the first issue you’ll need to address is making sure your home business meets zoning regulations and that any required licenses or permits are obtained. Many towns and homeowners associations have restrictions on home business activities. If customers will be coming to your home, you may need to comply with other requirements as well. These include parking, disability access, and display of advertising. If you rent, check your lease and consult your landlord. It’s also a good idea to tell your immediate neighbors what you plan to do so that they bring their issues to you directly rather than to the landlord or association.
You should also check your home insurance policy to make sure that “commercial” activities are covered. Most home policies do not cover claims arising out of commercial activities in a residence. If your business involves any activities that might increase the likelihood of slips or falls or damage to property, consider expanding your property loss and liability coverage.

Technology
A major factor to consider when operating a business from home is technology. The significant advances in Internet technology and home office equipment in the past 20 years have made working from home easy and realistic for a growing number of people. Yet there are several factors you should consider, including:

  • Systems support — Make sure you have somewhere to go when you have systems problems. Find a local techie you can rely on to resolve systems issues quickly and effectively.
  • Backup — A common oversight of many home businesses is systems backup. Save your work often, back up your files regularly, and make sure you have an alternative should your computer suddenly crash. Losing your files could mean losing your business.
  • Internet access — High-speed access to the Web, via cable or DSL, is a necessity for most home businesses. Check with your local phone and cable company to see what’s available in your area.
  • Upgrades — The average computer is virtually obsolete in just three years, and most of the widely used software applications come out with new versions every two years, so keeping on top of technological advances is an ongoing effort.

Tax Considerations
If you operate a business out of your home, the IRS may allow you to deduct expenses associated with your home office. For sole proprietors, this is done on Form 8829 (Expenses for Business Use of Your Home). These may include phone, internet access, and various maintenance expenses, as well as a portion of your rent or mortgage and property taxes,1 association fees, insurance, and other expenses, based on the percentage of space in your home that the office occupies.
To qualify for these deductions, there are certain requirements you must meet. The home office must be used “exclusively” for business; a guest room/office will not qualify — nor will any other shared space. Although the office doesn’t have to be a separate room, it must be a “defined separate space” used exclusively for business. To take a deduction for phone expenses, the IRS generally looks for a separate line devoted solely to the business. The same applies to cell phone and Internet service.

The key to claiming any of these deductions is to prove that they are necessary for and confined to business use. Accordingly, it’s a good idea to keep accurate records and back up your space-based deductions with photos of the office in case you are subject to an IRS audit.

Source/Disclaimer:
1Mortgage interest and property taxes are also deductible under Schedule A and cannot be deducted twice.
© 2012 S&P Capital IQ Financial Communications. All rights reserved.

Risks to Your Retirement Future

As Americans live longer, the task of managing money after retirement gets more complex. A retiree in his or her mid-60s typically has a different risk profile than an individual approaching 90. It may be helpful to look at various types of risk from the vantage point of how they affect retirees at different life stages. Here are four key risks to consider.

Risk 1: Investment Risk

Balancing risk and return takes on a different meaning for individuals as they age. A negative rate of return during the early years of retirement could leave an individual with a significantly smaller nest egg when compared with negative returns later in the retirement life cycle. Your financial advisor can help you craft an investment mix with the goal of smoothing out returns over the long term and increasing the chances that your assets will last throughout your lifetime.

Risk 2: Longevity Risk

Withdrawing too much from a portfolio during the early years of retirement may heighten the chance of depleting your assets during your later years. For this reason, many financial advisors recommend limiting annual withdrawals to 5% or less of a portfolio’s value, adjusted for inflation, to make assets last as long as possible.

Risk 3: Inflation Risk

Because younger retirees typically are planning for a time horizon of 20 years or more, it is important that their portfolios include a source of growth that is likely to exceed inflation over the long term. To complement this potential growth, many retirees rely on more conservative investments that may generate income and help to balance risk and potential return.

Risk 4: Health Care Risk

It is not unusual for medical costs to increase as retirees age, and it may be prudent to plan for these costs before the need is immediate. Preretirees and younger retirees may want to explore options for medical insurance that supplements Medicare, as well as long-term care insurance, to reduce the possibility of dipping into personal assets to finance illness- or accident-related expenses. Also, remember that those who retire before age 65 need to find an alternate source of medical insurance prior to becoming eligible for Medicare.
Reviewing these and other challenges associated with retirement planning with your financial advisor may increase your confidence that you have considered all scenarios. While it may not be possible to prepare for every situation, planning ahead may help you cope with financial issues that come your way.

© 2012 S&P Capital IQ Financial Communications. All rights reserved.

Retiree Challenge: Making Your Money Last

The ultimate goal for most retirees is making sure their assets last as long as they live. And because of increased longevity, managing cash flow is more critical than ever. While many variables come into play, there are a number of planning moves that can help retirees live within their means and make appropriate adjustments in response to changes in income and expenses.

Tools for the Task
If you are retired or about to retire, you will need to clarify your current financial situation, as well as any significant changes you expect. Two sources will provide this information:

  • A net-worth statement, which provides a snapshot of your assets, debt, and cash reserves.
  • Your monthly or annual budget, with itemized breakdowns of your income and expenses. If you haven’t retired yet, it’s a good idea to prepare a projected budget of your retirement income and expenses.

Even with reasonable assumptions about investment returns, inflation, and retirement living costs, it is likely you will encounter numerous changes to your cash flow over time. Experts often recommend a monthly review of your budget, as well as a comprehensive annual review of your financial situation and goals.

What to Look For
What should you look for as you monitor your finances? Following are potential developments that could affect your cash flow and require adjustments to your plan.

  • Interest rate trends and market moves may result in an increase or decrease in income from your savings and investments.
  • You may also encounter changes in federal, state, and local tax rates and regulations. Watch for changes in Social Security or Medicare benefits or eligibility, as well as new rules affecting employer-sponsored retirement benefits and private insurance coverage.
  • Inflation and health care costs are two other variables that can have an impact on living costs and, hence, your retirement planning assumptions.
  • Life events such as marriage, the death of a spouse, and the addition or loss of a dependent may also affect your cash flow. In addition, cash flow is impacted by both small and significant choices you make over the course of your retirement, such as how much you spend on travel and entertainment and whether you live in a lower-cost or a higher-cost locale.

It is worth paying close attention to cash flow, making sure you budget carefully, monitor income and expenses frequently, and take action whenever you believe that significant changes may be necessary.
© 2011 McGraw-Hill Financial Communications. All rights reserved.

Phases of Retirement

Although many Americans now plan for a retirement up to 20 years, your retirement may last much longer.

Believe it or not, living nearly a century may someday soon be almost commonplace. As a result, rather than thinking of retirement as the final stage of life, a more realistic approach may be to view it as a progression of phases, such as early, middle, and late. This involves taking a fresh look at retiree expenses and income, as well as withdrawal and estate planning strategies.

The Need for Flexible Planning
Traditionally, retirees were advised to project income needs over the length of time of retirement, add on an annual adjustment for inflation, and then identify any potential income shortfall. But the planning required may not be that linear. For example, research suggests that some retirees’ expenses — other than health care — may slowly decrease over time.

That means many retirees — depending on personal expenses — may need more income early in their retirement than later. That’s why it’s critical not just to determine a sustainable withdrawal rate at the outset of retirement but also to periodically evaluate that withdrawal rate.

Or consider another trend: The desire to remain active means many people are continuing to work part time or starting new businesses in retirement. In fact, some psychologists and gerontologists believe that many people don’t really want to retire, but instead want to reinvent themselves through a mixture of work and leisure. As a result, more older men and women may be inclined to jump back into the workforce – and possibly enjoy the most productive years of their lives.

Early Years: Income and Tax Decisions
Keep in mind that adding employment earnings to your retirement “paycheck” requires careful planning because it may impact other sources of retirement income or bump you into a higher tax bracket. For example, in 2012 retirees who collect Social Security before the year of their full retirement age will see their benefits cut $1 for every $2 earned above $14,640. Also, depending on adjusted gross income, you might have to pay taxes on up to 85% of benefits, according to the Social Security Administration.

The need to potentially stretch out income over a longer period than previous generations also means that some people may not want to tap Social Security when they’re first eligible. Consider that for each year you delay taking Social Security beyond your full retirement age until age 70, you’ll receive a benefit increase of 6% to 8%, depending on your age. One caveat: If you do decide to delay collecting Social Security, you may want to sign up for Medicare at age 65 to avoid possibly paying more for medical insurance later.

Also plan ahead as to how you’ll pay for health care costs not covered by Medicare as you age. Remember that Medicare does not pay for ongoing long-term care or assisted living and that qualifying for Medicaid requires spending down your assets.

If you have accumulated assets in qualified employer-sponsored retirement plans, now may be the time to decide whether to roll that money into a tax-deferred IRA, which could make managing your investments easier. A tax and financial pro can also help you decide which accounts to tap first at this point in your post-retirement planning — a situation that could significantly affect your financial situation.

Finally, don’t overlook any pension assets in which you may be vested, especially if you changed employers over the course of your career. Pensions can supply you with regular income for life. Annuities may also play a role in helping you generate steady income.1

Middle Years: Distributions and Lifestyle Realities
By April 1 of the year after you reach age 70½, you’ll generally be required to begin making annual withdrawals from traditional IRAs and employer-sponsored retirement plans (except for assets in a current employer’s retirement plan if you’re still working and do not own more than 5% of the business you work for). The penalty for not taking your required minimum distribution (RMD) can be steep: fifty percent of what you should have withdrawn. Withdrawals from Roth IRAs, however, are not required during the owner’s lifetime. If money is not needed for income and efficient wealth transfer is a goal, a Roth IRA may be an attractive option.

Also, consider reviewing the asset allocation of your investment portfolio. Does it have enough growth potential to keep up with inflation? Is it adequately diversified among different types of stocks and income-generating securities?

Later Years: Your Legacy
Review your financial documents to make sure they are true to your wishes and that beneficiaries are consistent. Usually, these documents include a will and paperwork governing brokerage accounts, IRAs, annuities, pensions, and in some cases, trusts. Many people also draft a durable power of attorney (someone who will manage your finances if you’re not able) and a living will (which names a person to make medical decisions on your behalf if you’re incapacitated).

You’ll still need to stay on top of your investments. For example, an annual portfolio and asset allocation review are important. Keep in mind that a financial advisor may be able to set up an automatic rebalancing program for you. And finally, be aware that some financial companies require that you begin taking distributions from annuities once you reach age 85.

Preparing for a retirement that could encompass a third of your life span can be challenging. Regularly review your situation with financial and tax professionals and be prepared to make adjustments.

Points to Remember
1. By April 1 of the year after you reach age 70½, you’ll generally be required to begin making annual withdrawals from any tax-deferred accounts.
2. Match living arrangements to changing lifestyle needs and plan ahead for how you’ll pay escalating health care expenses.
3. Make sure that financial documents are true to your wishes and beneficiaries are consistent.
4. Regularly consult with financial and tax professionals and be prepared to make adjustments, depending on how your life and needs change.

1Withdrawals from annuities before age 59½ are taxed as ordinary income and may be subject to a 10% federal penalty tax. In addition, the issuing insurance company may also have its own set of surrender charges for withdrawals taken during the initial years of the contract.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

© 2012 S&P Capital IQ Financial Communications. All rights reserved.

Is a Rollover Right for You?

If you’ve recently changed jobs — or maybe changed jobs a few times over the years — you may be juggling multiple retirement plan accounts. While it’s certainly acceptable to leave your money in your former employer’s plan (as long as your balance is over $5,000, your old employer can’t cash you out), in many instances it might be a better idea to consolidate your assets.

Consolidation can help make administering and allocating your assets much simpler.1 Having your entire retirement portfolio summarized on one statement makes it easier to track performance and make changes.

But before you initiate a rollover, be sure to compare the investment options and their associated fees in your old plan with those in your new plan.

  • Were you able to properly diversify your assets in your old plan?1 If your investment choices were limited, you probably want to move your old account into your new account.
  • Are the investment fees higher or lower than those in your current plan? If you were paying more at your old plan, it’s a good reason to move your assets to a plan with lower investment fees.
  • Are you satisfied with the investment choices and fees charged in your current plan? If you’re not happy with your current plan — and weren’t crazy about your old plan — you can always roll over your old plan assets into an IRA.

Initiating a roll over isn’t difficult. First, check your current plan rules to confirm that rollovers are permissible (the vast majority of plans accommodate this feature). Then contact the administrator of your old plan (you can find their information on your quarterly statement) to get the ball rolling. Some plan providers have a simple online request process, while others require completion of a paper-based rollover form. Your current plan provider or IRA provider may even furnish a rollover service for you.

It’s also important to know the difference between a rollover and a distribution. A rollover allows you to transfer your money from one qualified retirement account to another without incurring any tax consequences. A “qualified” account can be either your new employer’s plan or a rollover IRA.

A distribution is essentially a withdrawal from your account. If you request a distribution, the account administrator is required by law to withhold 20% of your account balance to pay federal taxes. State taxes, if applicable, are also due. If you are under age 59 1/2, you will probably be hit with an additional 10% federal early withdrawal penalty.
If you have specific questions about your retirement plan distribution options, contact your employer’s benefits coordinator or a qualified financial consultant.

Source/Disclaimer:
1Asset allocation and diversification do not ensure a profit or protect against a loss in a declining market.

© 2012 S&P Capital IQ Financial Communications. All rights reserved.

Can You Afford Early Retirement?

Early retirement is a phrase many Americans wish they could turn into a reality. While retiring in your 50s or early 60s sounds enticing, it typically requires years of planning to make sure you’ve accumulated enough retirement assets to last for 20 or 30 years or more. It’s important to factor in how an early retirement could affect your Social Security benefits, options for health insurance, and the nest egg you plan to rely on for ongoing living expenses.

Social Security and Medicare
Those who collect Social Security at age 62, the earliest age when most retirees are eligible, face a permanent reduction in benefits. For example, if your full retirement age is 66, collecting benefits at age 62 will result in a 25% reduction in the monthly benefit you would have received by retiring at 66.1

Those born in 1960 or later will experience a permanent 30% benefit cut if they choose to begin collecting benefits at age 62 instead of their full retirement age of 67. In contrast, delaying benefits past full retirement age results in a higher benefit, with a maximum delayed retirement credit of 8% annually for those who were born in 1943 or later and wait until age 70 to retire.

Regardless of your age when you retire, Social Security is not likely to pay all of your living expenses. Social Security currently comprises 36% of the income of Americans aged 65 and older, with remaining income coming from employer-sponsored retirement plans, wages, and other sources.2

Finding health insurance is equally important if you plan to retire early. Eligibility for Medicare begins at age 65, and those who retire earlier typically must obtain health insurance on their own or through a former employer, which can cost thousands of dollars annually in premiums.

Saving and Budgeting
Early retirement typically requires a larger nest egg to finance living expenses over a longer period of time. Contributing as much as you can afford to qualified retirement accounts, such as an IRA or an employer-sponsored retirement plan, can help you build this nest egg.

Retiring early requires advance planning to make the situation work to your advantage. If you have the financial resources to do it, you may want to start the process at your earliest opportunity.
1Source: Social Security Administration.

2Source: Social Security Adminstration, Fast Facts & Figures About Social Security, August 2010.

© 2011 McGraw-Hill Financial Communications. All rights reserved.

De Soto Bass Team Goes to State Champs!

In 2013, B.A.S.S. launched a Bassmaster High School Series. This birth allowed High School Athletes to compete in State and National Bass Fishing Tournaments which offer prizes and scholarships. Although the De Soto School District has not yet accepted Bass Fishing into their program, this has not stamped out the enthusiasm and thirst for 6 young men to form the first De Soto (High School) Bass Fishing Team.

De Soto Bass Team

The members individually have many years of fishing experience including competing, and placing among top anglers in numerous local, state, regional, and national tournaments. The team participates in conservation projects and activities locally, serves as role models for youth interested in Bass Fishing, and competes in Bass Tournaments.

With the support of Personal Financial Group, this team had 2 out of 3 teams have qualify to compete in the State Championship at Perry Lake May 2nd.

The teams have been through the extremes with the weather, emotional ups and downs, and yes even physically hauling in lunkers for 8 hours each day on the water.  One courageous angler empathized with the bass so much that he tumbled into the water and hooked himself in the lip with his own bait!  True story, his dad was there to net him and pull the hook out, ouch!  Heck of a time trying to shove him into the live well.

De Soto Bass Team
De Soto Bass Team

After the State Championship the team begins their youth series for the summer.

Personal Financial Group is proud to support and encourage these young outdoorsmen!

Go De Soto Bass Team!

 

Securities offered through LPL Financial, member FINRA / SIPC.
Investment advice offered through Personal Financial Group, Inc., a Registered Investment Advisor and separate entity from LPL Financial.
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