Author Archives: Nancy Hecht

I have an issue with this MSN Money article.

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Last week MSN Money ran an article titled “5 reasons not to contribute to your 401k”. Point number 2 is: Your employer doesn’t match contributions. This is, in my opinion, a stupid reason not to contribute for your own retirement. A 401k account is one of the easiest ways to save for your retirement. All of the money you save for yourself is contributed in whole, pre-tax dollars. Saving pre-tax dollars will not reduce your spendable income by the same amount; it will be a lesser amount. Saving after-tax dollars simply takes more out of pocket to equal the same as pre-tax dollars.

You should look at an employer match as nothing more than icing on the cake, free money, or any other euphemism you so choose.. Do not use this as an excuse to stop saving for your own retirement.

disclosures:http://www.hechteffect.net/?page_id=31

Necessary Holiday Conversations

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The family is all gathered together for the holidays. Everyone is happy and healthy. Now is the time to bring up those sticky topics no one likes to think about. Because when no one is ill, it is exactly the time to have this talk. There are no impending circumstances or decisions to be made, no stress, and no worry.

Ask everyone what their health care wishes are. If needed, where do they want to live? How far should care go in an end-of-life situation? Who do you want making these decisions for you?

Where are all of your important papers and who has access to them? Do you have a current will, living will, durable power of attorney? These are the basic legal documents that allow others to act on your behalf.

Have you made final arrangements? Not everyone in your family may have the same idea as to final resting places or procedures.

My Father passed away at the age of 50 of a sudden heart attack. My family was not prepared. We did have this very discussion a number of years later when we were all gathered for my Daughter’s Bat Mitzvah. It is a tough, but necessary conversation.

disclosures:http://www.hechteffect.net/?page_id=31

Can I contribute more to my retirement plan in 2014?

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The simple answer is no. The contribution limits for 2014 have not been increased. You can still contribute $17,500 to your 401(k), 403(b), or 457 plans. If you are over age 50, you can add an additional $5,500. The contribution limit for a Traditional or Roth IRA also remains at $5,500 plus $1000 if you are over 50.

What has changed are the income limits that determine if you can contribute to a Roth IRA. In 2014 if you are single with adjusted gross income less than $129,000 or $191,000 if married, you can make a full Roth deposit.

Whatever the limits, you should contribute as much as you comfortably can for yourself through the options available to you at work.

Disclosures:http://www.hechteffect.net/?page_id=31

“How do I budget?”

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This question was recently asked of me by a client. Let’s first look at what comes to mind when we think of a budget. Most people think of the basics, housing costs, utilities, auto expense, food, and our children’s activities. You look at your income and then figure out the difference. That is not the whole picture. When we look at how you are living your life, we also want to know things like:
How much do you contribute to charities? How much do you spend on personal care? What about pet care? Vacations? Phone? Cable? Taxes? How much does inflation add to your costs? These are the items that “nickel and dime” our bottom line.

An easy way to track your spending, because that is what really matters, is to put yourself on a cash only diet. For a two to four week period, you only use cash. Not for the big things like paying your mortgage, but everything else. Pay cash for gas, food, entertainment, coffee, and clothing, whatever you may purchase. Keep your receipts, then review. You will get a good look at exactly where the money is going. I have also found that when you spend actual cash vs. using a card it is more real. This method can also help you determine if the purchase is a need vs. a want. Track the cash flow, then you can keep your budget on track.

disclosures:http://www.hechteffect.net/?page_id=31

Have you planned too optimistically?

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Did you take Social Security early? Did you look at all of the Social Security options available to you? Did you think that inflation would remain low, or not have an impact on your retirement? Did you think you would live a shorter life? These are all factors that are too optimistic, in one direction or the other, and detrimental to your retirement. Many retirees spend a lot in the early years of retirement believing that some of the points I have just listed would not apply to them. Through planning we can estimate inflation, we look at life expectancies, and all of the Social Security options available. Generally, we err on the side of caution. If we are wrong, it falls in our clients’ favor. The question becomes as simple as did you fail to plan.

disclosures:http://www.hechteffect.net/?page_id=31

“At your age you don’t have to file tax returns anymore.”

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Why do I start with this quote? I have just spent time reviewing my In-laws 2010-2012 tax returns. The above sentence was what they were told by the “lovely woman” who was taking care of them. Why did they believe her? Do they suffer from dementia? They do not suffer from dementia – they suffer from “she is so nice- she loves us- she would never lie or steal from us-ities.”

If you have income that is less than $10,000, and you are under age 65 and single, you do not have to file.
My In-laws have pension, social security, and RMD income. They have to file a tax return. They are now subject to a bit of penalties for not filing.

My Husband is very involved in their financial life now, this is something they kept hidden, and they must have known it was not quite the proper advice. The moral of this story is: sometimes our Parents need to be watched, and their “friends” monitored more than our kids.

Disclosures:http://www.hechteffect.net/?page_id=31

It is radio time!

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This Saturday hear
Nancy Hecht CFP® and
Joe Bert CFP®
co-host our program
“On The Money”!

They’ll be discussing . . .
• There are only 8 weeks left!
What you need to do now
to reduce you tax bill for 2013.

• E mail Question: “ If I retire at age 63,
but don’t take my Social Security until 66,
will my benefit be cut.”
• THIS WEEK’S “On the Money 101”:
‘NUA’ Net Unrealized Appreciation

Disclosures:http://www.hechteffect.net/?page_id=31

Can you believe there are only 8 weeks left?

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That’s right, only 8 weeks left in 2013. Visions of holiday dinners and gift buying pop into our minds, but what about our taxes? Yes, I said taxes. It is not too late to make sure you have done all you can for yourself to avoid paying too much in taxes.

Have you fully funded your retirement plan? Have you used your flexible spending account? Have you paid your Property Tax? Have you made all of the charitable deduction(s) you wanted to? These are all important issues and you do not want to leave money on the tax table that can be left in your pocket.

One thing I have done with a couple of my clients is a “mock” tax return. We have gone to www.irs.gov, printed off a blank 2012 1040, applied what we know of the 2013 tax code, and processed a “mock” return. In one case, we were able to see how much could be pulled from the IRA account and not push the client into a higher tax bracket. Another client wanted to pay off their mortgage. We discovered that they could do this and not pay more in tax even though they no longer would have their mortgage interest as a deduction.

So go ahead, do the return. Confirm to yourself that you have done everything you can to lower your own tax picture, and then get to planning for your holidays. After all, there are only 8 weeks left!

disclosures:http://www.hechteffect.net/?page_id=31