January 2019 | Peak Financial Freedom Group

Month: January 2019

Why Can’t You Rely Solely on Social Security in Retirement?

Social Security is only designed to replace a part of a retiree’s income, and the buying power of its benefits has decreased by a third since 2000, according to a report by the Senior Citizen’s League. The cost-of-living adjustments (COLA) used to determine Social Security benefits don’t always accurately reflect seniors’ rising living expenses. And, the services retirees spend the most money on – housing and medical – have increased significantly. On top of all this, inflation can erode your savings. Since inflation rates change every year, it’s hard to estimate exactly how much income you will receive after retirement. But one thing’s for sure, you can’t solely rely on Social Security in retirement.

The best defense is relying as little as possible on Social Security. One way to help try and accomplish this is by delaying benefits: If you start receiving benefits at the earliest possible age of 62, you will receive reduced benefits. If you wait until your full retirement age, which ranges from 65 to 67 depending on the year you were born, you will receive full benefits. If you wait until 70, you receive full benefits plus an additional 32 percent. Also, one spouse can file for benefits when they are of full retirement age, and suspend payments until 70. If they are old enough to receive Social Security, the other spouse can then file for a spousal benefit. This benefit is half of the other spouse’s benefit. However, it’s always important to note that your situation is unique, you have your own personal goals, and so you must have a custom Social Security strategy that works best for you.

If you’re less comfortable relying on a lump sum nest egg rather than a steady stream of cash, an annuity could be a viable option to consider. An annuity can help provide an annual income for as long as you live, and can be transferred to a spouse when you die. It may be a good option if you think you could outlive your savings, or if your spouse will live for a long time after you pass. There are many different types of annuities, so work with a qualified financial professional to make sure you are looking at the ones best suited to your goals and unique financial situation.

Luckily, most say that the immediate existence of Social Security is not in jeopardy, as long as those over 60 remain an active voting block. Proposed legislation tends to exclude those already receiving benefits from being subject to policy changes. While Social Security can help cover expenses in your retirement, it won’t fund your pre-retirement lifestyle: The average monthly payout is about $1,372, and the maximum is about $2,788, to put it into perspective.

While the existence of Social Security isn’t in question, its actual purchasing power relative to major costs in retirement is. You may not know exactly how much income you will need after retirement, or for how many years you’ll need it. Knowing when to file and how to claim your Social Security benefits is crucial, along with determining whether additional streams of guaranteed income, such as an annuity, is right for you in planning for your retirement.

We want to help you create a solid plan for your retirement. It can be hard to know the ins and out of Social Security benefits and how to create alternative sources of income in retirement on your own. That’s why we’re here to help. Click here to schedule your no cost, no obligation financial review.

How to Handle Life’s Busy Seasons

Generally, accountants have a good work-life balance, but they’re notoriously busy during tax season. From January to April, their workload increases significantly, and they must come up with new techniques to manage their time. Sometimes when we’re used to a routine, extra work or activity can throw us off because we don’t know how to adapt. The same can also happen when we go from working full weeks to having free time in retirement, when a packed social or travel schedule can constitute a busy season.

Although your work load probably won’t ramp up as much as an accountant’s during tax season, everyone has “busy seasons” in life, even in retirement. So here are some strategies accountants use during their busy season that might also help you if your schedule is changing.

You don’t always know when a busy season will come, but if you do you can plan ahead. You can get tasks like car maintenance and housework done ahead of time and assess your calendar to see what could be removed from your schedule. Some accountants prepare by investing more time in relationships they will have little time for during tax season. Intentionally scheduling more social and family time before a busy season can help make sure your relationships don’t suffer. Planning is important for busy seasons, and for financing your retirement goals.

In retirement, no matter what your schedule looks like, prioritize self-care. Sleep is essential if you want to be productive, and exercise helps with focus. Working out before a busy day and taking the time to eat properly can make a busy season more bearable.

And if you ever feel overwhelmed by a busy season, remember that it’s temporary. Figuring out which techniques work best for you can help you adapt to changes in workload. Even if your work load doesn’t ramp up as much as an accountant’s during tax season, these strategies can be useful during any busy season in life.

Tax season is upon us, and we can help you navigate new and existing laws. Click here to schedule your no cost financial review today.

Significant Estate Planning Steps

You made sure your kids wore helmets, ate their vegetables, and looked both ways before crossing the street when they were small. Why? Because you worried about their safety. Protecting your children financially is no less important. Rather than leaving them to figure out a plan for finances and medical care in the event of your death or incapacitation, you can create a living Will, a traditional Will, a health care proxy, and designate beneficiaries. Taking these significant estate planning steps can help ease the burden on your loved ones.

Create a Will

A Will allows you to leave specific assets to designated loved ones, and name a guardian for your children if they are not of legal age. Creating a Will is easy, and makes your wishes legally binding, which is why estate planning is so crucial. Wills can help limit arguments among siblings, as big-ticket items like houses, cars, and jewelry, as well as objects of sentimental value are clearly bequeathed to one person.

Name Beneficiaries to Retirement Accounts

You can name a beneficiary for your 401(k), 403(b), IRA, and HSA in the event of your death. You can designate children as the beneficiaries even if you have a spouse, and these designations can supersede Wills.

Designate a Heath Care Proxy

A health care proxy, also known as medical power of attorney, is a document that identifies an individual to make decisions for you if you are unable. If there is a medical emergency and you are without one, even your spouse or children won’t have legal authority to make medical decisions for you. Parents can also remind their children to create a health care proxy for themselves once they turn 18, otherwise even as their parent, you will not be able to make medical decisions for them.

Create a Living Will

An advance medical directive, or living will, allows you to state your wishes regarding issues such as life support and organ donation in case of an emergency. If you don’t have a living will, family members may not know what to do regarding your health care and argue over serious issues.

A living Will, traditional Will, health care proxy, and designated beneficiaries become very important in the cases of death and emergencies, when family members will probably feel least able to make important decisions because of grief and stress. Securing your child’s future after your death and taking steps to relieve their stress if you become very ill are important parts of being a good parent.

Planning ahead of time can help you avoid major problems in the future. We will help you look to the future and plan for all aspects of retirement including significant estate planning steps. Click here to schedule your complimentary, no obligation review today.

 

Are You Turning One of These Ages in 2019?

If you’re turning one of these ages in 2019, take note of what makes them important. Some ages, such as 65, the age at which you qualify for Medicare, require you to apply before your birthday, so it’s important to pay close attention so you don’t miss an important deadline!

Age 50

Once you turn 50, you can make catch-up contributions to your retirement accounts. You can contribute an extra $6,000 per year to a 401(k), 403(b), and 457 plan, $3,000 to a Simple IRA or Simple 401(k), and $1,000 to a traditional IRA.

Age 55

If you leave your job for any reason during the year you turn 55 or after, you can withdraw from your 401(k) penalty-free. This includes retirement, termination, or leaving for another job.

Age 59 ½

If you do not leave your job, retire, or are fired, you must wait until you are 59 ½ to withdraw from your IRA, 401(k), or 403(b) plans without incurring a 10% federal income tax penalty. 457 plans never incur this penalty. Distributions from traditional IRAs, 401(k)s, and other employer-sponsored are taxed as income.

Age 62

At age 62, workers can start receiving Social Security benefits, but if you are working and making over $17,040 a year, they will be reduced by $1 for every $2 earned. It’s often not ideal to start benefits at this age for this reason.

Age 65

Those aged 65 and older qualify for Medicare. You should apply three months before your birthday in order to start benefits on time. If you are already receiving Social Security benefits, you will automatically be enrolled in Medicare Part A, which covers hospital visits, and Medicare Part B, which covers doctor visits, as well as medical and preventative services and procedures.

Ages 65 to 67

Depending on what year you were born, you become eligible for your full Social Security benefits between 65 and 67. For example, those born in 1960 or later will receive full benefits at 67, while those born in 1955 will receive full benefits at 66 and 2 months.

Age 70

At age 70 you can receive more than you full Social Security benefits. This means that you receive 132% of the monthly benefit because you delayed receiving benefits. However, you gain nothing from waiting until any later than 70 to start receiving Social Security benefits.

Age 70 ½

Once you turn 70 ½ you must start taking required minimum distributions (RMDs) from your IRA, 401(k), 403(b), and or 457 plan. RMDs are calculated based on your life expectancy and amount of money in your account. If you are still working after 70 for a company you do not own more than 5% of, you can delay RMDs. You can roll over your traditional IRA or 401(k) into a Roth account, which is not subject to RMDs.

Even if you’re not turning one of these ages this year, it’s helpful to have a full picture of when benefits, RMDs, and penalties apply to you. Creating a retirement plan starts with important information, so you can avoid penalties and get the most out of your benefits.

 We’re here to celebrate all your birthdays and make sure that you are prepared for them with a strong financial plan. Don’t miss these key dates, click here to schedule a no cost, no obligation financial review and start celebrating this year’s birthday early!

Press Release: Featured in USA Today

Dan Ahmad and Jim Files were recently named Gamechangers® in USA Today by the National Association of Experts, Writers and Speakers® due to their vast contributions to their field. The spread, also titled “GameChangers®,” shines the spotlight on an elite group of entrepreneurs and their credentials. The piece, a full-page feature, ran in the December 17, 2018 edition of USA Today.


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All presentation data is provided and intended to be used for general educational purposes only and is not intended as a solicitation for you to buy or sell any financial product.  By contacting Peak Financial Freedom Group, you may be offered additional information regarding the purchase of financial products. None of the material presented is intended to give you, nor are the presenters engaged in giving you, specific tax, investment, real estate, legal, estate, retirement, or financial advice, but rather to serve as an educational platform to deliver information; nor is it intended to show you how the strategies presented can specifically apply to your own tax, investment, estate, financial, or retirement position, but rather to offer an idea of how these principles generally may apply. Consult with a qualified investment, tax, legal, and/or retirement advisor before making any decisions.

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2019(1) and 2020(2) Five Star Professional Wealth Manager Award - Dan Ahmad and Jim Files have been nominated for and have won the 2019 and 2020 Five Star Wealth Manager awards. Wealth managers do not pay a fee to be considered or placed on the final list of Five Star Wealth Managers. Once awarded, wealth managers may purchase additional profile ad space or promotional products. Award does not evaluate quality of services provided to clients. The Five Star award is not indicative of the wealth manager’s future performance. The inclusion of a wealth manager on the Five Star Wealth Manager list should not be construed as an endorsement of the wealth manager by Five Star Professional or this publication. Working with a Five Star Wealth Manager or any wealth manager is no guarantee as to future investment success, nor is there any guarantee that the selected wealth managers will be awarded this accomplishment by Five Star Professional in the future. Award winners represent an exclusive group of wealth managers who have demonstrated excellence in their field by satisfying 10 objective selection criteria. For additional information on the Five Star award, including a complete list of the 10 objective selection criteria and their research/selection methodology, go to https://fivestarprofessional.com.

Investment advisory services are offered through Fiduciary Solutions, LLC, a Registered Investment Advisor (CRD #148118). Insurance products and services are offered through PFFG Insurance Agency LLC, a licensed insurance agency (CA License #0N14103). Peak Financial Freedom Group, LLC is a financial planning and umbrella marketing organization, which enables the provision of multiple financial services under one brand. Peak Financial Freedom Group LLC, PFFG Insurance Agency LLC, and Fiduciary Solutions LLC are affiliated entities with common ownership and control. Jim Files is licensed as an investment adviser representative with Fiduciary Solutions LLC (CRD # 1620449) and is a licensed insurance producer with PFFG insurance Agency LLC (CA Insurance License #0F06511). Dan Ahmad is licensed as an investment adviser representative with Fiduciary Solutions LLC (CRD # 1491561) and is a licensed insurance producer with PFFG insurance Agency LLC (CA Insurance License #0732913).

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