A fresh new year is once again upon us. It’s the time to be thankful for the blessings of the past year and to take stock of all our achievements. At the same time, New Year 2017 is a brand new year to start afresh, to start strong, and yet another chance to do everything we want to do this year.

The amazing thing with chances is how we get them every year. So, set positive goals and resolutions. Hang them where you can see them every hour of the new year. And be excited for what you can achieve this 2017.

First, build an emergency fund. We had two hurricanes come through our area in 2016, and my daughter totaled her car – without an emergency fund, we would have been in trouble. Try to save two to three months worth of income for your emergency fund. Do Not touch it unless you have a true emergency.
Second, put more away for your retirement. Using payroll deduction is the easiest way to save. Through payroll deduction, you can save pre-tax dollars and may notice little to no change in your spendable income.
Review your portfolio. I recommend at least twice a year. Things change in the markets; things change in your life – semi-annual review will make sure that you portfolio keeps pace with these changes.

I hope you have a prosperous 2017!

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Many people worry that the Social Security system will run out of funds before they start taking their benefits; this is not a totally crazy thought. Unless changes are made, the Social Security Trust fund is predicted to be out of reserves by 2033, then being supported solely by the deposits being made. One change that has been put into place is pushing out what is considered full retirement age for benefits. The next change occurs starting in January and this is the one I predicted.
Currently, $118,500 of your earnings is taxed for Social Security. As of January 1, 2017, that amount increased to $127,200 and this is a 6.8% increase in what can be taxed for Social Security. This increase is to help prop up the Trust fund, but whether these two changes are enough remains to be seen.

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Every December, my clients over age 70 &1/2 want to know why they have to withdraw funds from their qualified retirement accounts. Here is the easy explanation:
Why does the government force you to make withdrawals from your retirement account? Because they want those tax bucks. Remember, when you put money into your IRA, you got a tax deduction. As the account grew, you paid no tax whatsoever. Now, the government wants its money.
There are other questions that generally are asked by those taking their RDM as follows:
Which investments should I sell to raise funds for the withdrawal?
You can choose any investment to sell. Many of my clients like to look at which holdings have gains and will sell the gains to satisfy the RMD amount. Other clients will pull a little from each holding. There is no right or wrong.
Can I still give some of my RMD directly to charity?
Yes, you can have the amount you wish sent directly from your retirement account to your charity of choice and have that satisfy your RMD.
What happens if I don’t take my RMD on time?
Your will pay a 50% penalty tax on what you should have withdrawn.

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Here are a few more moves to consider so you can have more money in your pocket.
1. If you can, defer some income and accelerate expenses. Do you get an annual bonus? Can you ask that it be paid in January vs. December? If you can do that and pay next years’ property tax in advance, you can potentially save a lot on your 2016 tax bill.
2. Contribute to your kids’ (or grandkids’) 529 College Savings Plan. The funds deposited into the 529 will grow tax-free until used for higher education. If withdrawn for higher education, the withdrawals will be tax-free also.
3. Max out your gift tax allowance. You can gift $14k annually to anyone without incurring Federal Gift tax. There is no current income tax savings, but, there could be estate tax savings in the future.

Now, you can put a checkmark next to keeping some cash in your pocket and savings on your 2016 tax bill.

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It is that time of year – you are making lists for everything: gifts to buy, parties to attend, food to prepare, how about your “End of year financial checklist”? There is a lot of money to be spent at the end of the year; I don’t want you leaving some of your hard earned cash on the table. Here are a few items to check:
1. Donate to charity. December 31st is the deadline for making deductible charitable donations. I know, you have been thinking all year about donating to that charity – do it now.
2. Max out your deductible contributions. Many people base their payroll deducted contributions to their company match, which is the wrong thing to do if you can afford to contribute more. You are paying Federal Income Tax when you could be paying yourself.
3. Use your FSA account. Many employers offer Flex Spending Accounts for health care – have you used all of yours? Go buy those new glasses or get your teeth cleaned. Don’t leave this money on the table.

I’ll have more end of year Financial Checklist items for you to consider later this week.

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“While shopping for holiday gifts, I bought something using my store credit card and was told that I would not have to pay any interest for 12 months. How does that work?”

This is what is called “deferred interest” and please be very careful if you use this option.
This means you won’t pay interest on that purchase as long as you pay off your balance by the end of the deferred interest period (12 months) and don’t make any late payments. If you are even one day late, you owe all of the interest that has been deferred.

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A couple of weeks ago my daughter got engaged; soon I will carry the title of Mother-in law. We are very happy and there is a lot to do over the next 18 months. I cannot help but put on the “advice cap” that comes along with my new title. Since my future son-in-law is still in college while my daughter is working as an RN, I have a lot of advice. They are currently living off of mainly one income, but that will change.
When my daughter started working I had her immediately start deposits to both her retirement plan and to an emergency fund. Eventually, there will be two incomes and their dynamic will change. Here is some additional advice to anyone who is approaching marriage:
Put money on the agenda:
Money is a big issue for all couples, as newlyweds, they need to discuss their feelings and goals regarding their money.
Is your debt my debt?
How do you payoff student loans? What about an auto loan? Do you pool resources to pay debts jointly or do you keep them separate with separate payment responsibility? This is where basic budgeting comes in handy. I am not a fan of separate accounts, but my attitude does not work for all couples.
Plan ahead:
When do you plan of having kids? What will you do for child care? How much do you want to spend on housing? What are your short-term, medium –term, and long-term goals? Successful couples address these questions, and revisit them at regular intervals.

I embrace my upcoming title and am looking forward to a wonderful future for their new lives together.

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