Author Archives: Nancy Hecht

Strategies to lower your tax bill

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Unless Congress acts, your tax bill will be higher next year. Top income tax rates will go from 35% to 39.6%. On top of that, a piece of the health-care reform law goes into effect: For higher-income taxpayers, the provision means an additional 3.8% Medicare tax on investment income that most people are not aware of yet. That brings the highest marginal tax rate to about 43.4% before state and local taxes, if they apply to you. So what can you do?

One solution available to most of us is our retirement accounts. Many employees are only funding their 401k accounts to the company match. If you increase that by just 3%, you will lower your tax bill but make little or no difference in your spendable income.

Another solution is to take advantage of the tax rates we are under now and look into converting part of your Traditional IRA to a Roth IRA. You will pay tax on the amount that you convert but it will be at today’s lower tax rate vs. next years’ increased rates. Converting part of your Traditional IRA to a Roth may also help with tax management in the future. When calculating your Required Minimum Distribution, the Roth balances are not included.

A comprehensive review of your retirement accounts, cash flow, and taxes should be done annually. Contact your Certified Financial Planner Professional® today.

 

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

You always spend more on vacation

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A major component that I look at when putting together a retirement plan is how my clients are living their life. I like to know not only what their fixed expenses are, but also what they spend on vacations, charitable gifting, personal care, pets, kids, and all of the little things that make up our lives. Retiring is like a long vacation, and you always spend more on vacation. So how do you prepare?

We like to start 2-3 years before you plan to retire by looking at the total expense figure plus tax and inflation. While inflation has been downplayed by the government over the last few years, I never ignore it. We like to take this budget and review it annually just as we do with the investment mix to make sure you are not falling off the track. Budgets are just as important in retirement as they are prior to retirement. You should not be surprised if you blow your budget in the first year of retirement. Most clients do.

By scheduling regular review and update appointments, we can keep close track of not only your investment portfolio but how well you are doing with your retirement budget. Knowledge is power. Knowing where your cash is going will give you the freedom to occasionally blow the budget in retirement.

 

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

Your question – my answer

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Q: We own 2 pieces of property which can sell for about $200,000. Our only income is Social Security. When we sell the property, is it a good idea to put all of the money in an annuity that will pay us monthly?

A: You are asking about an Immediate Annuity. It will pay a fixed income over your lifetime and that of your Spouse, and/or for a certain period of time. It can be a nice choice because you will receive a fixed income every month. This choice is an irrevocable decision as once that tap is turned on, you cannot turn it off. You may want to call to get a few quotes using a portion of the funds vs. all of the funds from the property sales.

 

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

This Saturday hear myself & Denise Kovach on our program “On the Money”!

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We will  be discussing . . .
• I Have Been Phished – Now What Do I Do?
• Make Me a Signer – Not an Owner:
What to Tell Your Parents When They Want to Add You to Their Accounts & Why.
• Email Question: I work full time and have a 401k as well as an IRA. What will I have to pay tax on when I retire?

Call in your
questions at
407-290-0058 OR
1-800-328-5858

Listen for details about
our upcoming workshops:
Countdown to Retirement
Saturday, November 3, 2012 – 11 a.m.–1 p.m.
Social Security:
Maximize Your Benefits
Thursday, January 24, 2013 – 6:45 p.m.-8:00 p.m.

Tune in for
“On The Money”
Every Saturday
on WDBO at 9:00 a.m.

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your computer by
clicking the link above
at 9:00 a.m. on Saturday
to hear “On The Money”

WDBO offers a variety of information radio talk programs on a variety of topics. For nearly 20 years, Certified Financial Group has been the selected host for the 9:00 a.m. Saturday time slot to discuss topics pertinent to the financial world.

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Make me a signer – not an owner.

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I was at a brunch yesterday when one of the women at my table started talking about her mother. She said that while her Mom is in her late 70’s, she is in good health but she wanted to start preparing for the end. Her mother was looking into Long Term Care insurance and wanted to make sure that her daughter was able to do everything for her legally and easily. The woman mentioned that her Mom put her on all of her accounts. My question to her was; “are you a signer or did she make you a joint owner”? Here is why I ask that question;

If you are just a signer on your parent’s accounts, you can transact business for them, pay bills, transfer money as needed, help with the day to day financial transactions without opening up yourself or your parents to additional liability. Let me explain by way of example. Let’s say you have a 19 yr. old son who gets into a car accident and it is his fault. Aside from the entire trauma that you have to deal with regarding your car and his health, there is the other victim and there financial needs. If the other victim decides to sue for damages, you now open up your full financial picture to a suit. Any accounts that you are a joint owner on with your parents now can potentially be attached as an asset in a lawsuit. Likewise, if your parents were to cause an accident.

If your parents were to name you as Power of Attorney for their financial transactions, or simply make you a signer on their accounts, this can be avoided. If your parents are concerned that their assets pass to you without Probate, the simple addition of Transfer on Death to their account titles will allow all of the assets to pass without going through Probate, saving time and taxes.

So let your parents know you want to help but tell them: Please, make me a signer – not an owner

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

Tune in to 96.5 FM to hear Roger Johnson & Judi Sanborn discuss these topics:

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This week’s “Must Read”: 8 Social Security Myths Exposed

Workshops:
Countdown to Retirement Saturday, November 3, 2012 – 11:00am – 1:00pm
Social Security: Maximize Your Benefits Thursday, January 24, 2013 – 6:45pm – 8:00pm

Topic:
Non-Spouse IRAs: Mistakes to Avoid

Planning Issues for 2013

What is the “Retirement Planning Process?”

Money Matters

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I participated in the Orlando Sentinel Money Matters Hotline. I will be sharing some of the excellent questions I was asked by your neighbors. Here is one:

Q: I work full time and have a 401k as well as an IRA. What will I have to pay tax on when I retire?

A: At age 70.5 you will be required to take a Required Minimum Distribution. Your total qualified retirement account balances as of 12/31/ the year prior to 70.5 multiplied by 3.65% will be the first RMD. This is all taxable as ordinary income.

 

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

8 Times my annual income?

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The other day my girlfriend asked me about an article she read stating that pre-retirees need to save 8 times their annual income in order to have a comfortable retirement. With the average income in the U.S. being just over $50,000 that means $400,000 in the nest egg. After the last few years we have been through economically, this figure may be hard to reach for many Americans.

My comment to her was; I prefer to look more at expenses vs. earnings. I want to know how my clients are living their lives + taxes and inflation. My average client is spending $30,000 so that would mean having a nest egg of $180,000 – $240,000 in reserves. Most of my clients do not wish to reverse their standard of living in retirement and that is why I like to look at their expenses vs. their current income. I want my clients to know that when the time comes to buy an airline ticket to their Grandchild’s graduation, they do not have to think about what they might have to give up to do so.

Financial planning should be done no less than 2 years prior to retirement. Call me today for your plan.

 

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

Many of you have heard our story of caring for my Father-in-law and the perils of not having Long Term Care insurance. The following is a list of items that an average Nursing Home requires for admission. All of the items on this list must be presented at the time of application. Please discuss these items with your Parents or Grandparents, make sure that you & they know where these items are. The time to discuss these issues and requirements is when everyone is happy and healthy. Please do not wait until your back is close to the wall.

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Birth Certificate
Picture ID
Social Security Card
Medicare Card – Supplimental Insurance Card
Marriage Certificate
Death Certificate
Divorce Papers
Proof of Income
Income Taxes – 5 years
Current Statements of all assets
Current Life Insurance policies
Copies of Will, Durable POA, Living Will
Pre-paid Burial contract
Cemetary Lot Deed
Car Title
Property Deed

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