Lifestyle Archives

The Power of Nostalgia

Written on April 30, 2019.

You might think that the more recent an event, the easier it would be to remember it. And you might think that things that happened to you a long time ago would be harder to recall, but the human brain and memory are actually more complex. There is what psychologists call a “reminiscence bump,” which is the tendency for older adults to more easily recall events from their adolescence and early adulthood. It turns out that in studies where people are asked to produce memories, a disproportionate amount tend to be from this time in their life.

There are many reasons for this: There are many “firsts” during that period of time, like a first graduation, job, and first experiences like falling in love and losing a loved one. And, this is generally the period where people develop their sense of self, form their beliefs, and make important decisions that affect them for the rest of their lives. Because of this, it could be the case that the reminiscence bump can be used to help to keep you young.

In a landmark “Counterclockwise” study at Harvard University, a group of men in their 70s were taken to a retreat locale that was a sort of time machine back to 1959: The participants listened to Perry Como, watched Ed Sullivan, read magazines from the 50’s, and were not allowed to speak about anything that took place after 1959. If you’re a nostalgic person you may think this just seemed like a fun way to spend a week, but the point of the study was to measure the physical effects of the surroundings on the older participants.

Believe it or not, reliving aspects of the time when the participants were younger seemed to make them younger. There was measurable improvement in their physical strength, manual dexterity, memory, cognition, hearing, and vision. Outside observers even said the participants looked younger when shown before and after pictures. Talk about age just being a number! You could say it pays to be old fashioned.

Transitioning into retirement is no small task, but it can be a good time to reconnect with one’s self after a busy career, go back to one’s roots, and pursue what makes us happy – be that golf or watching reruns of Leave it to Beaver and listening to the Beatles. Here at Peak Financial Freedom Group, we can help you create a comprehensive retirement plan that takes your unique retirement goals into account. Click here to schedule your no cost, no obligation financial review today.

Aging in Place

Written on April 26, 2019.

Many homeowners age 50 and older say that they want to “age in place,” but the reality is that many homes were not built to accommodate the needs of older people. If you want to remain in your house during your golden years, you may need to do some home remodeling. Fortunately, there are modifications you can make to your home to accommodate yourself as you age. And, they will be easier to make before you actually need them. Features like no-step entries and a first floor bedroom and full bathroom can keep you in your home as you age.

Bathrooms can be remodeled to accommodate wheelchairs with curbless showers with grab bars and high-seat toilets. Narrow doorways can be widened to accommodate wheelchairs. The sidewalk and steps leading to the front door can be replaced with a ramp for wheelchairs. If you or your spouse are not using wheelchairs, replacing deep-pile carpet with low-pile carpet or installing no slip flooring to prevent falls can help to make your home safer as you age.

If you’re caring for aging parents, you may have noticed that one thing that makes staying in your home as you age difficult is all the upkeep: To reduce maintenance, you can install quartz countertops which are stain resistant and never need sealing, and LED lights which last longer. Replacing fixed shelves with roll-out shelves means no need to bend over, and retrofitting upper cabinets with pull-down shelving units means avoiding lifting heavy items.

Small changes like adding lights to the front of our home and along the sidewalk to you can see at night and a bench by the front door so you can rest can make a difference. If you’re thinking of remaining in your home in your golden years, it could be beneficial to consider the necessary alternations before they become necessary. Features like no-step entries and first floor bedrooms can make your home more livable as you age.

If you’re thinking of how to change your home to fit your needs as you age, you understand the importance of planning. Just like your house, your financial plan needs to be ready for when you retire. The professionals at Peak Financial Freedom Group can help you create a comprehensive retirement plan that takes your unique needs into account. Click here to schedule you no cost, no obligation financial review today.

Caring for Aging Parents

Written on April 12, 2019.

Baby Boomers are sometimes referred to as the “Sandwich Generation,” because many spend time and money care for both their children and aging parents. In fact, according to the Pew Research Center, one in eight middle-aged Americans cares for at least one child and parent in their house. Aging parents who require expensive medical care and ongoing long-term care can become a financial burden, especially as Americans continue to live longer. There are ways to use these costs to lower your taxes and help fund long-term care expenses.

If you care for a parent and provide more than half of their support, you can no longer claim the $4,050 personal exemption for your parent. But, you can still claim them as a dependent if they do not file jointly with a spouse, you paid more than half of their support for the calendar year, they lived with you all year or are a qualified relative, and their gross income was less than $4,150.

You can also deduct what you paid for a loved one’s unreimbursed medical costs if it exceeds 7.5% of your adjusted gross income. The threshold used to be 10%, but for the 2018 tax year has been reduced to 7.5%. These costs can include dental treatments, health insurance premiums, transportation to medical appointments, and qualified long-term care services. Long-term care insurance is expensive, and there are long-term care myths, but most policies are tax-qualified so if you itemize consider deducting premiums. The amount you can deduct rises with age: Those 40 and under can deduct up to $420, and those 71 and over can deduct up to $5,200.

You can count long-term care services as medical expenses if they were required for a chronically ill person and prescribed by a licensed health-care practitioner. For example, if your loved one requires care because of a specific medical condition such as Alzheimer’s, these expenses can qualify. But, general household services cannot be deducted, even if they are performed by the same employee giving personal care services needed because of a chronic condition. If you hire an in-home caregiver and want this deduction, you should get a letter from your loved one’s doctor documenting that the care is necessary.

If you’re not sure if taking the standard deduction or itemizing and taking these deductions is better for you, consult the professionals at Peak Financial Freedom Group. Taxes can constitute your biggest expense in retirement, and we want to try and help you minimize them. Click here to visit us online and schedule you no cost, no obligation financial review today.

Do You Need to File a Tax Extension?

Written on April 9, 2019.

Doing your taxes might be complicated, but thankfully filing for an extension can help give you some more time to prepare. There are many decisions to be made when preparing your taxes, such as whether you should itemize or take the standard deduction, and finding out how new changes to the tax code affect you.

If you need more time to figure these things out, simply fill out an IRS Form 4868. This is the Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, and you can submit it either in paper form, online, or through a tax software program. It’s free and most people who request an extension are granted one. If you’re granted an extension, the new deadline is October 15^th. Americans living abroad automatically have a six month extension.

While it’s easy to get more time to file your taxes, this doesn’t mean you get more time to pay your taxes. You still have to estimate how much you owe in taxes, and pay that full amount by April 15^th. April 15^th is also the last day to contribute money to an IRA, so if you have an IRA don’t forget about this important deadline. If you don’t send a payment by April 15^th, you could get hit with a penalty, even if you didn’t realize you owed the IRS money. For the 2018 tax year, if you fail to pay less than 80% of what you owe in taxes, you will owe an additional penalty of 5% of the amount you owe per year, compounded daily. You would normally incur the penalty if you failed to pay 90% of what you owe, but because of the changes to the tax code, the IRS is being more lenient for the 2018 tax year only.

Note that the penalty for failing to file your taxes is much more severe than the penalty for failing to pay. The penalty for failing to file or request an extension is 5% of the unpaid amount per month, up to 25%. So, even if you cannot pay your taxes by the deadline, you should definitely still file or file for an extension to avoid this steep penalty.

Doing your taxes can be stressful, and tax minimization strategies can be complicated. If you need more time to consult a professional as to what deductions you’re qualified to take, whether you should itemize or take the standard deduction, or how the changes to the tax code affect you, contact the professionals as Peak Financial Freedom Group. Click here to schedule your no cost, no obligation financial review.

Lifelong Learners: Set Up a 529 Plan for Yourself

Written on March 29, 2019.

Whether you think of yourself as an old dog or spring chicken in retirement is up to you. Even if you don’t retire early, you still have many years ahead of you to enjoy your free time, or even discover a new interest. If you’d like to continue your education in retirement as part of pursing another career, or just to nurture an interest, you can fund it with a 529 plan.

If you’ve used a 529 plan to contribute to a child or grandchild’s education, you’ll be familiar with how the tax advantaged account works: Funds grow tax-free in the account, and can with be withdrawn tax free to pay for tuition, books, room and board, or other qualified education expenses. One former accountant took advantage of his 529 plan to study horticulture and conversation using the $5,000 he had saved. He retired at 62 and now runs a farm – talk about a career change!

Each state has its own plan, and it is worth comparing plans since some states offer different deductions, better investing options, and or lower fees. However, most states offer their residents a tax break for contributing to the state’s own plan. Even if you don’t allow much time for the funds to grow in the account, you can still take advantage of the rule that allows you to withdraw immediately and still qualify for a state tax deduction that same year. Michigan, Minnesota, and Montana, and Wisconsin have restrictions on this, however.

Keep in mind that you can’t benefit from both a 529 plan and the federal Lifetime Learning tax credit. The latter is worth 20% of the first $10,000 in tuition you pay per year. If you use the federal Lifetime Learning tax credit, you can pay additional expenses with a 529 account, but the withdrawals will not be tax free.

If you have leftover money in a 529 account originally intended for a child or grandchild, you can use it for your own education. Who said you can’t teach an old dog new tricks? Continuing your education is one way to use your free time in retirement, whether as part of pursuing another career, or just nurturing an interest you didn’t have time for while you were working. If you’re not ready to stop learning in retirement, consider using a 529 plan to finance your retirement goals.

If you have a unique set of retirement goals and aren’t sure how to go about creating a plan to achieve them, contact the professionals at Peak Financial Freedom Group. We can help you strategize so that you can finance the retirement you deserve. Click here to visit us online and schedule you no cost, no obligation financial review today.

Are You Thinking About Buying a Second Home?

Written on March 8, 2019.

A home is one of the most significant purchases you’ve made in your lifetime, so you should take your time when thinking about buying a second one. The ability to rent the house, how you will use it, and its future value are all important things to think about. While many people have a favorite vacation spot in a scenic area, they can’t spend a significant amount of time there until they’re retired, and transitioning into retirement is no small task. And, the rules of Real Estate are a bit different for vacation homes, so there is still a lot of research for even the most experienced home owners to do.

First, you should consider what the primary purpose of the second home is going to be. Think about what your long-term goals are, and how buying a second home would help you achieve them. Is it a place for your family to gather? A place for you to enjoy a particular natural landscape? Or, is it a property you don’t see yourself visiting often and want to rent out? If you don’t expect to occupy it for more than a small portion of the year, you might want to look into if it could pay for itself. If it can’t, the cost and labor associated with maintenance could defeat the purpose. Assess how much of your time the house will take up and consider if that will make it more of a burden than an asset.

If you’re buying a second home as an investment, research how easily you can rent it, how it will appreciate or depreciate in value in the future, and the laws surrounding using real estate as an investment. For example, second homes in vacation destinations tend to be less susceptible to economic fluctuations, so don’t forget the classic piece of advice that real estate is all about ‘location, location, location.’ A unique residence in a desirable location can make for a great investment.

Since a second home requires a big financial commitment, you should look into how easy or difficult it would be to liquidate. If your financial situation changes and you need to sell, consider the desirability of the property. Remember that if market volatility forces you to sell, you may not be alone, which could affect prices and demand.

If you’re thinking about buying a second house, there are many things to consider; how you will use it and how much, its future value, and its potential to pay for itself are just a few. Second homes can be places for families to gather, lucrative investments, or a mix. They can also be a financial gamble, so learn the rules of real estate for vacation homes and think about how you would use the second home.

If you think a second home is part of your retirement plan, contact the professionals at Peak Financial Freedom Group before making the big decision. We can help you assess your financial situation and weigh the pros and cons. Click here to schedule your complimentary, no obligation review today.

Travel in Retirement Without Overspending

Written on March 1, 2019.

So you want to become a world traveler in retirement, but you’re also a responsible person who knows they need to support themselves for the next 30 years. You can take advantage of your newfound free time in retirement and rethink your destinations to maximize value. With careful planning and some creativity, you could fulfill your dreams of travel in retirement without overspending.

Setting a travel budget is one thing you can do to start your retirement off on the right foot, especially if you want to take advantage of your abundance of free time and make multiple, or extended trips. You can look at your retirement income, subtract essential expenses, then decide how much of the left over funds you want to put towards travel.

Consider the cost of vacations, as well as visits to family, and travel to special events like graduations and reunions you want to attend. If you look beyond Western Europe for a vacation, you’ll find that travel is much less expensive. Museums, food, and hotels in major cities in Western Europe can break the budget, while the cost of living, amenities, and entertainment in Southeast Asia and South America is much lower.

Just as important as choosing where to travel is choosing when to travel. You might want to push your ultimate dream vacation back a year or two in order to budget for it properly, or wait until you’ve sold your house. Alternatively, you can reduce the cost of a trip by scheduling it for the offseason. Airlines may offer deals, hotel rates tend to be lower, and as an added bonus, destinations tend to be less crowded.

Once you’re retired, your schedule will be more flexible. You can use this to your advantage by traveling on Tuesdays and Wednesdays, which tend to be the best days for saving money. Stretching out your vacation and living more like a local by renting a room instead of staying in a hotel, and making your own food instead of eating out can also help you get the most for your money. You don’t have to schedule vacation days in advance, so consider remaining on the lookout for sudden flight price drops. Make a list of places you would like to visit, and then look out for deals.

Enjoying your retirement doesn’t have to mean overspending. Planning and creativity can go a long way towards maximizing the value of your travel budget. Traveling in the offseason or in the middle of the week, and considering new destinations can help you fulfill your travel goals without overspending.

Before your plan your dream vacation, you have to plan for your retirement. At Peak Financial Freedom Group, we can help you create a retirement plan that accounts for your individual retirement goals. Click here to schedule your no cost, no obligation review today.

Transitioning Into Retirement Is No Small Task

Written on February 8, 2019.

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.

How to Handle Life’s Busy Seasons

Written on January 21, 2019.

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.