Month: February 2019

Your Tax Burden in Retirement

Even in retirement, taxes are a guarantee. Your Social Security benefit, capital gains, and retirement account distributions can all be taxed, leaving you with less retirement income than you planned on receiving. Your tax burden is important to consider when planning for retirement, and can be your most significant expense. Here is how common retirement income sources are taxed.

While you will gain a new source of income in retirement through Social Security, it could also add to your tax burden. There are many reasons why you can’t rely solely on Social Security in retirement, so you will probably have other sources of income. Half of your Social Security benefit is taxable if your adjusted gross income, nontaxable interest and half of your Social Security benefit equals over $25,000 for individuals and $32,000 for couples. If these equal over $34,000 for individuals or $44,000 for couples, up to 85% of your benefit can be taxed.

You may sell an investment to add to your nest egg. Investment dividends, as well as investment sales can be taxed. Investments held for less than a year are taxed at ordinary incomes tax rates. Investments held for over a year are taxed at the long-term capital gains rate, which is 15% for individuals with an income of over $39,375 and couples with an income of over $78,750, and 20% for individuals with an income of over $434,550 and couples with an income of over $488,850.

Distributions from retirement accounts count as income, and are required after age 70 ½. If you turned 70 ½ in 2018, you must take your first required minimum distribution (RMD) by April 1st of this year and going forward, you must take RMDs by December 31st. If you delay your first RMD, you might need to take two withdrawals in the same year, resulting in a larger tax burden. At 70 ½ you also lose the ability to defer tax on new IRA contributions, unless you are still working or have a Roth IRA.

Keep in mind that your Social Security benefit, capital gains, and retirement account distributions can be taxed in retirement. Factoring in taxes as an expense in retirement will help you create a better plan with fewer surprises. Rather than wait until retirement to deal with new tax burdens, start strategizing now to avoid them when possible.

Don’t let your tax burden derail your retirement goals. Let the professionals at Peak Financial Freedom Group help you create a retirement plan that minimizes your taxes. Click here to schedule your no cost, no obligation review today so you can start strategizing as soon as possible.


Why $1 Million in Savings may not be Enough

They say age is just a number, but the same probably shouldn’t be said of retirement preparation. While $1 million may seem like a substantial nest egg, it may no longer be enough if you want to retire comfortably. In the past, many people set a goal to have a million dollars to retire on, but in today’s world it may not get you where you need to be for retirement. Healthcare costs and inflation are just a few of the retirement expenses that can eat up savings. Everyone’s retirement goals and situation are unique, and preparing for retirement might not be as simple as saving for a specific number at all. It’s worth taking a more in depth look at your finances and future needs to make sure you’re saving enough for retirement, and creating a comprehensive plan that fits you.

As Americans continue to live longer than previous generations, their retirement savings have to stretch further. It’s important to consider that health care costs tend to rise as we age. According to research from Fidelity Investments, The average 65-year-old couple retiring now can expect to spend roughly $280,000 of healthcare alone during retirement, which is up 75% from 2002. As Medicare most likely won’t cover all of your expenses, it’s important to anticipate a high cost of healthcare as you age. Health Savings Accounts, long-term care insurance, and Medicare Advantage plans are ways you can save for healthcare costs in retirement.

You know what $1 million is worth now, but what about in 20 years? Inflation erodes the value of savings, and will continue to do so after you retire as you start relying more on your savings for income. On average, the inflation rate is about 2.5% a year, and can spike. To get a sense of how you should save, make a retirement budget that includes how much you need to cover expenses and funds for leisure activities you’re looking forward to, multiply it by 25-30, and then adjust for inflation. Unfortunately, the rising cost of living could leave you with effectively half the money you thought you had saved from your retirement years. Low-risk investments, bonds, and annuities are some of the ways you can protect against inflation in retirement.

You can’t predict how retirement could be different in 2030, but you can create a solid plan for retirement. While saving for retirement is necessary, it’s not the only thing you need to do to prepare. High healthcare costs and inflation can eat up your savings in retirement, possibly making $1 million insufficient. A comprehensive plan looks beyond an arbitrary number to your unique retirement goals and situation.

At Peak Financial Freedom Group, we will work with you to create a comprehensive retirement plan that takes costs in retirement into account. Click here to schedule your no cost, no obligation financial review to take the first steps towards a retirement plan that’s more than just a number.

Is Now the Time to Convert to a Roth IRA?

Roman poet Horace penned the famous phrase, “carpe diem” – seize the day. Could 2019 be the year to seize the Roth? A Roth IRA can be a valuable asset in retirement because qualified distributions are not taxed, unlike distributions from a traditional IRA.  Roth IRAs are also not subject to required minimum distributions, (RMDs) so funds can continue to grow tax free, and the remaining balance can be passed onto a beneficiary. If lowering your tax burden or passing on tax free wealth is a retirement goal, you may want to consider converting to a Roth this year.

A Roth IRA conversion is a significant decision, as conversions are now irreversible. Also, you will have to pay taxes on the conversion, and the bigger the conversion the more you pay. However, you don’t have to convert the entirety of the funds at once. The market volatility at the end of 2018 might have reduced the value of your IRA, in which case a Roth conversion now would mean a lower tax burden. Market performance this year is an important factor to consider if you’re thinking about a Roth conversion.

It’s also important to consider that the Tax Cut and Jobs Act lowered tax rates – and that these lower rates probably won’t be around forever. Most will see tax hikes come 2025. If you expect to pay higher taxes in the future for this reason, or others such as relocation or increased income level, a conversion now could be the move, as distributions from a traditional IRA will be taxed at those higher levels later on. This is also important to consider if you plan on passing on your retirement account to a beneficiary, as higher taxes in the future means a higher tax burden on your beneficiary.

2019 could be a good year to make the conversion. If your IRA sustained losses in the recent bout of market volatility, or you are worried about your tax burden in the future, converting to a Roth could help to minimize the damage by allowing funds more time to grow tax free, as they are not subject to RMDs or taxes if they are withdrawn. A Roth IRA could be a very valuable asset in retirement strategies for high-income earners, especially if you want to lower your tax burden or pass on tax free wealth to a loved one. Will you seize this opportunity in 2019?

Before making an important financial decision like a Roth conversion, talk to the professionals at Peak Financial Freedom Group. We can help you create a comprehensive plan that makes the most of your retirement accounts. Click here to schedule your no cost, no obligation financial review.

Retirement Strategies for High-Income Earners

For the high-income earners and savers, retirement planning can look different – and more complicated than for others. Maybe you don’t just want to get by in retirement – maybe you want to travel and pursue passions – as well as leave behind a legacy to your loved ones. Reaching these goals requires strategy and planning. Saving in the years leading up to retirement, considering a Roth IRA, and deciding on the best time to start taking Social Security can be important parts of a strong retirement plan.

Building a cash stockpile in the years leading up to retirement can be a good strategy to help survive volatile markets. A stockpile can help you ride out the storm so that investments have the time to rebound. Also, a period of dedicated saving before retirement can help you adjust to a lower-cost lifestyle after you retire. And, living more off of cash in retirement might put you in a lower income tax bracket. In addition to lowering your tax burden, this can make a Roth IRA conversion a good option.

Converting a traditional IRA to a Roth can be a good strategy for those who have saved a significant amount in their retirement accounts. You can pay tax on the conversion to roll over a traditional IRA into a Roth, and then enjoy tax-free withdrawals later on. This strategy can make sense for those who are focused on their legacy, because Roth IRAs pass on tax-free income. The best times to convert are years where your income tax bracket is lower than usual, and before tax rates increase. You can convert in parts if you don’t want to cause your taxes to spike because of a large lump-sum conversion. Keep in mind that conversions are now irreversible.

Whether you should wait to take Social Security or not depends on individual circumstances. You will receive 75% of your full benefits if you take them at 62, 100% if you take then at your full retirement age, which is 65-67 depending on when you were born, and 132% if you wait until 70. Retirement goals, life expectancies, and tax burdens are all factors to consider. One thing to consider is that taking benefits earlier will allow you to defer distributions from other investments, which can help you contribute to a legacy.

Saving in the years leading up to retirement, converting to a Roth IRA, and deciding when the best time to start taking Social Security is can be important aspects of retirement planning for high-income earners and savers. Strategizing and planning now could make for a great retirement later on.

The professionals at Peak Financial Freedom Group can help you come up with a retirement plan to make the most of what you’ve earned. We will work with you to create a comprehensive plan that takes your retirement and legacy goals into account. Click here to schedule your complimentary review.

Important Gifts for Your Valentine

What are you getting your spouse for Valentine’s Day this year? Flowers? Chocolates with weird fillings? How about a bigger Social Security benefit, or an insurance policy that could secure their financial future? Whatever you decide to give your loved one this Valentine’s Day, it’s also the perfect time to sit down and talk with your spouse about your future to make sure you’re both on the same page and have a solid plan in place.

For some couples, communication is an issue. It’s not always fun to have tough conversations, but when it comes to things like finances, Social Security and insurance, it’s important to have an open and honest discussion. Although sitting at a fancy restaurant on Valentine’s Day may not be the ideal time to talk about these things, you should consider setting some time aside to go over your financial plan so that you’re both on the same page when creating a retirement game plan.

Who said Social Security can’t be romantic? If you’re married, Social Security spousal benefits can be a great way to increase your joint earnings in retirement. The spousal benefit will kick in if one spouse’s benefit is less than half of the other’s. For instance, if one is entitled to $1,500 per month, and the other $400, the latter is entitled to an additional $350 per month. Usually the spouse wishing to receive the spousal benefit must be at least 62 years old and must draw their own retirement benefit first. Spousal benefits can be reduced if claimed before full retirement age. As with regular Social Security benefits, spousal benefits can be reduced is claimed before full retirement age, however, there is no upside to waiting until 70 to claim benefits.

Insurance may not seem like a romantic gift, but it could be the most practical one: Life insurance and disability insurance could save your family from a lot of anxiety in the event of your passing or becoming disabled. It’s important to discuss how much income your family would need in order to sustain its current lifestyle, and look into insurance policies that suit your particular needs. Making sure that your family will always be financially protected could be the most loving gift.

So, this Valentine’s Day, while consumers are spending $2 billion on flowers, $1.7 billion on candy and $4.3 billion on jewelry, according to the National Retail Federation, consider investing in something more impactful – you and your spouse’s future. If you get a plan together now for the lifestyle that you want to live in retirement, you can be sure that you will accomplish your retirement goals together.

At Peak Financial Freedom Group, we know that we’re not just helping you plan for you financial future, but your spouse’s and family’s as well. Let us help you create a comprehensive plan that takes all your loved ones into account. Click here to schedule your complimentary review.

Transitioning Into Retirement Is No Small Task

Even though most people look forward to retirement, some forget that losing the structured routines, sense of purpose, and social interactions that work brings can lead to a difficult transition from working to retirement. Recently, a professor at Harvard Business School conducted a study on the mental and emotional effects of retirement. The study found that people undergo “life restructuring” and “identity bridging” in retirement, and it gives examples of how people can successfully transition into retirement. But even though retirement changes your daily schedule, there are ways to help make your smooth transition into retirement a more manageable feat.

Life structure consists of the places you spend your time, the activities you engaged in, and the important relationships you’ve cultivated throughout your life. Many of these can change drastically after entering retirement, from work activities to relationships with coworkers. You might even move, and there are several things to consider before moving in retirement. Successful restructuring starts with deciding when and how to retire. Some study participants transitioned to part-time work, and others developed their social schedules or started volunteering. Introducing new activities and investing in relationships are also components of identity bridging.

Identity bridging can be important for people who identify strongly with their profession or organization. Some study participants coped by enhancing their pre-retirement identity. They spent more time on, and gave more attention to relationships and activities that were important to them before they retired. In one example, a man enhanced his relationship with his teenage daughter by spending more time with her and helping her improve her performance in school. Other participants activated a hidden identity that had fallen by the wayside during busy careers. One man had given up motorcycling years before, but once he was retired he bought a new motorcycle and connected with other motorcyclists.

Another interesting takeaway from the Harvard Business School study was that some retirees found purpose by using the skills and knowledge gained in their careers in retirement. One retired engineer volunteered to work on the new community center in his town. Others engaged in mentoring and consulting. This can help replace the social connections and positive feedback work provides. One woman mentored junior workers at her former workplace, and volunteered her coaching services at a community organization. Another man reinvented himself by starting a handyman business where he could work as much or as little as he wanted doing one of his favorite hobbies.

Ultimately, it’s important to prepare financially as well as mentally for retirement. Successful life restructuring and identity bridging can help lead to a happier and more fulfilling life in retirement. And, envisioning how retirement could be different in 2030 while considering the relationships and activities that really make you happy can help with the transition.

Consider what you want your retirement to look like. At Peak Financial Freedom Group, we’ll work with you to help better understand your goals, and we can help you create a comprehensive financial plan to that allows you to achieve them. Click here to schedule your no cost, no obligation financial review to take the first step because remember, transitioning into retirement is no small task.

Press Release: Book Publishing Deal with Celebrity Press

Peak Financial Freedom Group Co-Founders Dan Ahmad and Jim Files signed a publishing deal to co-write the forthcoming book titled Momma’s Secret Recipe for Retirement Success, published by CelebrityPress® LLC. In addition to Ahmad’s and Files’ expertise, the publication features content from world-renowned entrepreneur, professional speaker, and Best-Selling Author® Jack Canfield.

For Reference – Original Source

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Creating a Retirement Game Plan

Whether your team won or lost this Sunday, we can all agree that it’s no easy feat to make it to the big game at the end of the season. This game is the culmination of the both teams’ practicing, strategizing, and collaboration all season long. Creating a game plan for football is a lot like creating a retirement plan: You have to know when to protect your lead and when to be aggressive, how to adapt to new challenges, and recognize the importance of good coaching when planning for your future.

Even if a team is losing by the end of the second quarter, they still have time to catch-up and win the game. At half time the coach may adjust the game plan based on how the game is going. Similarly, planning for retirement isn’t a one-time event – it’s an ongoing process. Changes in health, market volatility, the birth of a new grandchild, and new personal retirement goals are just some of the events that could make you want to reevaluate your retirement plan. A good coach considers what can happen ahead of time, and is prepared with a plan.

The best football teams aren’t always the ones whose athletes run the fastest or throw the furthest; it’s the teams that can read what they’re up against and respond to short-term challenges while keeping their long-term goals in mind that succeed. And, that’s why it’s so important to have a coach with experience and the expertise to help the team achieve its full potential. Or, in your case, it’s the importance of having a trusted financial professional to help guide you to and through a safe, secure, and enjoyable life in retirement.

Good coaching can be just as critical in retirement planning as it in football. Finding a balance between conservative and aggressive investing plans and creating a plan that can respond to change is difficult. This is where your trusted financial advisor can step in and help you call the plays. Assessing what constitutes a touchdown in your retirement, whether it is travel, leaving a legacy, or surviving volatile markets, is the first step in creating a retirement game plan.

If you need a timeout to help create or assess your retirement game plan, let the professionals at Peak Financial Freedom Group help. The best teams are ones in which the players and coach are on the same page, so click here to schedule your no cost, no obligation financial review.

Peak Financial Freedom Group
2520 Douglas Boulevard, Suite 110
Roseville, CA 95661


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2019(1), 2020(2), 2021(3), 2022(4) and 2023 (5) Five Star Professional Wealth Manager Award - Dan Ahmad and Jim Files have been nominated for and have won the 2019, 2020, 2021, 2022 and 2023 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

Investment advisory services are offered through Fiduciary Solutions, LLC, a California Registered Investment Advisor. Insurance products and services are offered through PFFG Insurance Agency LLC, a licensed insurance agency (CA Insurance License #0N14013). 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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