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Small Steps and Giant Leaps Toward Retirement

Written on July 15, 2019.

July 20^th marks the 50^th anniversary of the moon landing. In the middle of summer vacation, Baby Boomers gathered around their TVs to watch Neil Armstrong take one small step for man and one giant leap for mankind. This milestone in human history marked many Americans’ upbringings and identities in a significant way. It was a testament to the power of human ingenuity and perseverance, and the ability of America to reach its loftiest goals. Putting a man on the moon probably seemed impossible to many when President Kennedy promised we would in 1961, but it happened. Right now, your retirement goals might seem out of reach, but with perseverance and a good plan, they can be attained.

Financial Lessons from a Founding Father

Written on July 12, 2019.

July 12^th marks the 215^th anniversary of Alexander Hamilton’s death. As the first secretary of the treasury for America, he created the first national bank, consolidated the new country’s war debts, and established credit the country could count on. You could say he was America’s, Chief Financial Officer. He was also a self-taught immigrant who started off with no wealth and ended up on the $10 bill. Thanks to his killer, Aaron Burr, Hamilton never reached retirement. But we can learn important financial lessons from the Founding Father who built our country’s financial system.

Beware of Sequence of Returns Risk

Written on July 8, 2019.

Times of market volatility are never pleasant, but they pose a particular threat to you as you near and enter retirement. The state of the market just before you retire can impact your returns throughout your entire retirement. This is because once someone takes withdrawals from a fund’s underlying investments, they expose themselves to sequence of returns risk.

3 Things to Do if the Stretch IRA Dies

Written on July 5, 2019.

The House of Representatives voted in favor of the Secure Act 417-3, and the bill is now on a fast track to vote in the Senate. The bill would do away with the tax-planning strategy for inherited IRA commonly referred to as the “stretch IRA.” “Stretching” an IRA allows beneficiaries to take required minimum distributions (RMDs) from an inherited IRA based on their own, longer life expectancies. The Secure Act proposes that beneficiaries must deplete inherited IRAs within 10 years of the original owner’s death. This could cause a bigger tax burden on beneficiaries and cause them to lose the advantage of continued tax-deferred growth. However, there will be exceptions to the proposed new rules, and alternatives to a stretch IRA.

Plan to Maintain Your Independence This 4th of July

Written on July 1, 2019.

Many Baby Boomers are watching their parents age to the point where they should move out of their home – and refuse. Maybe it’s that they are stubborn when it comes to their independence, or maybe they refuse to be a burden on their children. While these sentiments are admirable, older children can be faced with daily anxiety about their elderly parents’ wellbeing alone in their homes. At the same time, they can probably sympathize with the desire to remain in one’s own home, a comfortable and familiar environment where one is independent. If an elderly relative’s experience with aging in place has you thinking about how you will stay in your home, consider these home renovations. Even after the fireworks are over this 4^th of July, you’ll be thinking about how to maintain your independence throughout retirement.

Retirement the Machiavellian Way

Written on June 28, 2019.

When someone says “Machiavellian,” you might think of a lying schemer, a power-hungry politician, or ruthless individual who believes the ends justify the means. But this characterization isn’t quite fair to the political philosopher Niccolo Machiavelli. He gave practical advice to the prince of Florence about how to rule, and was concerned with him being successful, not evil. Possibly his most important piece of advice was to focus on what you can control, not on matters of chance.

Spring Cleaning Your Retirement Accounts

Written on April 16, 2019.

By the time you’re ready to retire, you’ve probably had a number of jobs over the course of your working life. In fact, according to the Bureau of Labor Statistics, Americans hold an average of 12 different jobs by age 50. This means that it’s likely you also have more than one 401(k) account, leaving you with a few options for spring cleaning your retirement accounts; rolling over your old 401(k)s into your IRA or 401(k) at your current job, leaving it where it is, or cashing out. If you’re looking to spring clean your finances, you might want to address your old 401(k)s.

If you left a job and had less than $5,000 in your 401(k) account, you may not have been allowed to keep it in that account. But, if you weren’t prompted to move it, you may have forgotten about relatively small sums to money in different accounts. This can become an issue when people don’t know how much they’re paying in fees in their 401(k) account. Even a small difference in fees can add up over time to significant amounts of money. You can compare the fees between multiple accounts to determine whether or not to consolidate funds.

You may want to rollover funds from old 401(k)s to make it easier to manage your money. For example, if your contracts at your old company are no longer current, or your investment portal changes, it can mean more paperwork to keep track of. You’ll need to assign beneficiaries to all your retirement accounts, and remember to update all of them in the event of divorce, death, or another life-changing event. If you are no longer able to directly handle your financial affairs as you get older, reducing financial clutter can make it easier if you’re thinking about how to pass on a retirement account.

You can roll over your old 401(k) into a traditional or Roth IRA. The transfer to a traditional IRA is simple, as both contributions were made pre-tax. But, if you roll it over into a Roth IRA you must pay tax on the funds and may have to increase withholding or pay estimated taxes to account for the liability. If your 401(k) was a Roth account, you will not pay tax on the funds you rolled over into a Roth IRA.

If your finances need some spring cleaning and you’re unsure of which option for your old 401(k) is best, contact the professionals at Peak Financial Freedom Group. We can help you create a retirement plan that help you make the most of what you’ve earned. Click here to schedule your no cost, no obligation financial review today.

If You Have an IRA Don’t Forget About This Important Deadline

Written on March 25, 2019.

Most people know that April 15^th is Tax Day, but they may not know that it is also the deadline to contribute to an IRA. Even if you file for a tax extension, you must send your IRA contribution by April 15^th. Contributing to an IRA is one good way to save for retirement, so make sure your contribution isn’t forgotten in the busy period leading up to Tax Day.

You can contribute up to $5,500 a year to your IRA for 2018 if you are under 50. If you are over 50, you can contribute an additional $1,000. You can no longer contribute to a traditional IRA after you turn 70 ½, but you can contribute to a Roth IRA for as long as you live. Due to a unique set of circumstances, you might be wondering if now is the time to convert to a Roth IRA.

If you make more than $199,000, you cannot contribute to a Roth IRA. You can contribute to a traditional IRA no matter how high your income is. However, there are limits as to what you can deduct from your taxes: If you have a retirement plan through your employer and your income is over $73,000 as a single person, or over $121,000 as a married person filing jointly, you cannot take a deduction if you contribute to a traditional IRA.

In general, you must earn income in order to contribute to an IRA, but you can contribute on behalf of a nonworking spouse. The working spouse can contribute the maximum amount to both his or her IRA and the nonworking spouse’s IRA. If you want to take advantage of this, you must do so before April 15^th.

Note that you still have to make an IRA contribution by April 15^th even if you file for a tax extension, unless you are contributing to a SEP-IRA in which case you must contribute by your tax filing due date. As with a tax return, you must mail the contribution by April 15^th and it’s immaterial as to when it arrives at your financial institution. Make sure to clearly indicate to which year your contribution applies, especially if you are sending your contribution between January 1^st and April 15^th.

At Peak Financial Freedom Group, we want to make saving for retirement as easy as possible. With so many nuances to the rules regarding retirement accounts, it helps to have a team of professionals at your side. Click here to schedule you no cost, no obligation financial review today.