One of the obstacles in the way of saving a lot of money in a short amount of time is the 401(k) and IRA contribution limits.  Contributions to these accounts are limited to restrict the amount of tax-advantaged money an individual can save at once.  However, I have a solution for those that got a late start on retirement planning.  The solution is a Mega Backdoor Roth IRA where I will describe what it is, how it works, who should consider it, as well as other alternatives.

Key Takeaways:

• What is a Mega Backdoor Roth IRA?

• How a Mega Backdoor Roth IRA Works

• Who Should Take Advantage of a Mega Backdoor Roth IRA

• Alternative Options if you Don’t Qualify for the Mega Backdoor Roth IRA

Long-term investments are a great way to help you save for retirement and add stability to your future.  With so many available options, you need to know which investments are worth the time and resources you will ultimately put into them.  Throughout this blog, I will cover the five best long-term investments to help grow your money and set you up for retirement success.

Key Takeaways:

• Reviewing Why Index Funds are Great Investments

• Why You Need to Invest in Yourself

• The Beauty of Depreciation

• Embracing the Entrepreneurial Spirit

• The Rules for Owning Individual Stocks

Working while collecting Social Security has become a popular choice for those approaching retirement, but is it the right choice? If you’ve been thinking about receiving Social Security benefits early, then this is the blog to read.  There are seven things about working and collecting Social Security that I believe are important to know.  Therefore, my goal in this blog is to educate you on each of them so that you can make an educated decision when the time comes!

Key Takeaways:

•  Social Security Recap

• Is There a Limit to How Much Social Security You Can Receive While Working and Collecting Early?

• Practical Examples of Social Security Withholding and How Does All This Work?

• What Income Counts Towards Social Security Withholding?

• The Special Rule You HAVE to Know

• Should You Report Income Changes to Social Security?

• Are Withheld Benefits Gone Forever?

The Federal Income Tax Brackets for 2023 have been released.  These brackets are adjusted each year to account for inflation.  Therefore, if you are interested in these changes and the impact of above-average inflation in 2022 then you have come to the right place!

Key Takeaways:

• What are Income Tax Brackets?

• The Federal Tax Brackets in 2023

• Strategies to Reduce Your Taxable Income

• Other Changes in 2023

Planning for retirement requires many decisions about your future which can be overwhelming.  There are so many things to do that it’s easy to overlook the simple things.  My goal in this blog is to inform you of five common retirement mistakes that you should be sure to avoid.  This is important because the only people make these mistakes is because they were not aware of them until it was too late.  Therefore, you are in the right place as I will provide you with the information you need to avoid these pitfalls and improve your retirement planning process.

Key Takeaways:

• Are you paying too much in taxes?

• How soon is too soon to collect social security?

• Do you have an investment policy statement?

• How much money do you need to retire well?

• Don’t get ripped off by people or products

Q: What are Series I-Bonds?

A: Series I Savings Bonds also known as I-bonds are a financial instrument backed by the United States federal government. They were created by the US Treasury in 1998 to help investors hedge against inflation. These bonds have become significantly more popular in 2022 because the high inflation we have experienced has caused I-bonds to pay out high rates of interest. They did not pay a competitive rate when inflation was held at 2%, but inflation has remained over 8% for seven months and interest rates are through the roof. Therefore, while the stock and bond markets decline, I-bonds seem to be unmatched in returns.

In light of the recent stock market decline, many people are wondering what they should do to survive the bear market. Large fluctuations in stock prices like the ones we experience during a bear market often cause investors to panic and act irrationally. However, I’m going to give you five tips to help weather the financial storm in your portfolio. Get ready to explore the history of bear markets and time-tested strategies used to come out on top during market declines. Click Here to listen to this instead.

Key Takeaways:

• What is a bear market?

• The importance of knowing your asset allocation

• Why you should have a diversified portfolio

• Don’t time the market

• Should I stop investing?

• The impact of having a financial advisor

A 401(k) rollover occurs when you move a retirement plan with a former employer into an Individual Retirement Account (IRA) or another retirement plan with your new employer. It is also common for a retirement plan to allow you to do this when you reach age 59 1/2, even while still working for that company. You will see advertisements telling you to rollover your old retirement plan, but these commercials fail to cover the things you need to consider before doing a rollover. Throughout this writing, we will cover the four most important things to consider before rolling over your Raytheon Savings Plan.

Key Questions:

• Do you own Raytheon stock in your 401(k)?

• Do you have a loan against the Raytheon Savings Plan?

• Are you under age 59 1/2?

• Are you satisfied with the investment options in Raytheon Savings Plan?

According to the Office of the State Comptroller, as of November 19, 2020, there were 13,066 state employees (full-time and part-time) who are eligible for normal or early retirement before July 1, 2022. With that in mind, there are two significant changes to the CT State Employees Pensions that will affect those who retire on or after July 1, 2022. If you have a pension through the State of CT then the question you should be thinking is, should I retire before the changes take effect? In this writing, we will cover various factors that will affect your ability to retire before July 1, 2022.

Key Takeaways:

• What elements of the cost of living adjustment are changing?

• How are my health insurance premiums changing?

• Are you eligible to retire?

• Setting your budget for retirement

Wouldn’t it be great to own a second home in retirement? We have all gone away on vacation and found ourselves in love with the area we are vacationing in. We might have even caught ourselves thinking, “Wow, I could really see myself living here in retirement.” Having two homes in retirement may sound like an incredible retirement. But before you decide to purchase that second home there are several things to consider.

In this article we will cover:

1. Can you afford it?

2. Is using a mortgage the best way to purchase it?

3. How do you properly estimate your second home’s expenses?

4. What is your second home's potential rental income?

5. Will your second home be a good investment?

6. What unexpected costs might there be with your second home?

7. How well do you know the area where you are buying?

8. Is it okay to rent rather than own in retirement?

What exactly is a 401(k) rollover? It is when you have money in a 401(k) (or another type of retirement plan) with a former employer, and you then transfer that money into an Individual Retirement Account (IRA) or another retirement plan with your new employer. Many retirement plans will also allow you to do this when you reach age 59.5, even while still working for that company. There are a tremendous number of advertisements out there telling you that you should roll over your old retirement plan, but many of these do not adequately disclose or cover what you should consider before doing a rollover. In this post, I will cover the four most important things to consider before completing a rollover.

1. Do you own stock in your 401(k) for the company you previously worked for?

If you own stock in your 401(k) from a previous employer, you can potentially save taxes on this money by taking advantage of an IRS distribution option known as net unrealized appreciation or NUA. It allows the company stock portion of your 401(k) to be taxed as a long-term capital gain, rather than as ordinary income, which for many people would be a tax saving. Unfortunately, many people have never heard of NUA and just sell the company stock when doing a rollover voiding the ability for this tax savings.

1) Are you a Fiduciary and a fee-only firm?

Yes we are a Fiduciary and always act as one. Being a Fiduciary means putting our clients interests ahead of our own at all times. Imagine going to see a doctor about a hip problem and without the doctor examing you or performing any diagnostic tests trying to sell you a hip replacement. The doctor then explained you need to act today before prices went up. Later you found out that the doctor was paid extra and received a free Hawaiian vacation for selling you the hip replacement. While absurd for the medical profession, unfortunately these practices go on every day with non-Fiduciary advisors.

Additionally, we are a fee-only advisory firm. What that means is we don’t accept any commissions for recommendations we make or the investments we select for our clients portfolio’s. There are some fiduciary advisors, who maintain insurance and brokerage licenses, that allow them to receive commissions for the recommendations they make. Though we also once maintained these licenses, we believe this creates unhealthy conflicts of interest. We believe that being a fee-only fiduciary advisor is the best way to truly help our clients. Each Fiduciary firm should provide their firm disclosure document (otherwise know as ADV) in advance of hiring them and we recommend that you read it thoroughly for any conflicts before hiring them.

As the economy continues to shrink during Covid-19 some companies are being forced to cut costs. Some are doing it through suspending 401K matches and others are starting to reduce head count by offering buyout/early retirement packages with incentives.

You may be offered one of these packages and are thinking of taking it. As summer is on the horizon what would be better than getting paid to enjoy the nice weather 😊. However, before you accept there are some things to consider:

1) What does the package offer?

There are no set rules for early retirement packages but often you get so many weeks of salary based on years of service up to a maximum. For instance, they might offer you two weeks of service for every year that worked. Sometimes if your company offers a pension, they may offer you a slight increase on it as an incentive. If you have any unused sick or vacation days make sure you’re getting paid for those too. If they are not offering much, then you may not want to take it.

If you’re like most Americans you’ve possibly already filed your 2019 Tax Return or are starting to get ready to file it. Most tax deductions need to be done during the tax year to take advantage of them but there still are a few that you can take advantage of before you file.

#1 Contribute to an HSA account if you’re eligible and haven’t done so for 2019 or haven’t maxed out your contribution fully for 2019.

HSA accounts are still one of the best kept secrets in retirement planning. Most people are unaware that you receive a deduction on the contributions, the money can grow tax deferred while it’s in the HSA account, and when you take it out it’s tax free if used for medical expenses. There is no other triple tax-free plan available in retirement planning. In order to get the most out of your HSA plan it is best to let your contributions grow over time and pay health care related costs(such as co-pays and prescription drugs) out of pocket. You should maintain an excel or google sheets file tracking these expenses and then later on you can take out the money tax free. The more time you give the money to grow the more it will work for you.Once you reach 65 take money out that is not for medical expenses and only pay tax on it, no penalties. There are also many HSA providers that allow you to invest the money in mutual funds or ETF’s will little or no cost such as Fidelity or TD Ameritrade. The limits for a single person are $3,500 and $7,000 for a family. If you’re over 55 you can also contribute an additional $1000. If you’re married each spouse should have their own HSA account to take advantage of the over 55 extra $1000 contribution.

In the final weeks of 2019, the Senate passed the SECURE Act (it was passed by the House in the Summer) and was signed into law by the President. This legislation will have a major impact on your retirement accounts and your ability to create a legacy with them for your children and grandchildren. Many of the other parts of the Act will probably have minimal impact to you but I’ll go over them anyway.No More Stretching...The stated goal of the SECURE Act, which stands for “Setting Every Community Up for Retirement Enhancement” is to strengthen retirement security across the country. From my perspective it does very little to accomplish that. It increases taxes on inherited retirement accounts and prevents them from creating multi-generational wealth for the beneficiary. It does this through the elimination of the so called “stretch IRA” for non-spousal beneficiary inheritors. Under the current law if a non-spousal beneficiary such your son or daughter where to inherit your IRA (or any non-Roth retirement account) they had choices with how they paid the tax on your IRA. They could take it all out at once and pay the tax in one year or take it out over their lifetime to spread out the tax. With the SECURE Act, a non-spousal beneficiary who inherits your IRA must cash in the entire account within 10 years of your death. There are a few exceptions to this such as disabled beneficiaries (as defined by the IRS) , chronically ill (as defined by the IRS with limited exception) beneficiaries, individuals who are not more than 10 years younger than you, certain minor children (of the original account owner) but only until they reach the age of majority (18 in most states).These beneficiaries can still take out distributions over their lifetime rather than over 10 years. However, once minor children reach the age of majority in their state, they must empty the account within 10 years.

We are all, inexorably, marching toward old age. By 2030, 72 million Americans will be age 65 or older. The good news is longevity has been improving, and people are remaining healthy and vibrant at older ages.

 The bad news is cultural perceptions of ‘old’ people have not kept pace. A 2016 analysis by the World Health Organization found ageism was abundant and many people were completely unaware of their biases toward older people. 

Psychology Today warned, “The especially slippery part about ageism is that we can witness it in action time and again throughout society, often without anything triggering our internal antennae that tells us ‘Hey, something is deeply amiss here.’”

Ageism and elder abuse

One of the ugly things hiding beneath the rock of ageism is elder abuse, including financial exploitation. During 2017, the Department of Health and Human Resources reported: 

Here’s a number that will knock your socks off: $400 trillion.1

 By 2050, the retirement savings shortfall in eight of the world’s largest economies is expected to reach $400 trillion, according to estimates from the World Economic Forum (WEF). The shortfall is the difference between the amounts of money retirees may receive from government and/or employer pensions and individual savings. The amount they need to replace 70 percent of their pre-retirement income is also factored in.1

 Retirees in the United States are expected to have the biggest shortfall, coming up at about $137 trillion short.1

 There are many reasons why countries and individuals are poorly prepared to meet the challenges of retirement, including: