Lately, it has been hard watching the markets. It seems as if we will never have an up day again. But there could be a hidden surprise in this downturn. I know that many of you watch your balances every day, a practice I do not recommend. when was the last time you really looked at your cost basis vs. the current market value? Do you have large long term gains that have made your portfolio off kilter? Many of my clients do but do not want to sell any of those gains and pay the associated tax. Now you have the opportunity to wipe out part of that capital gains tax.
Harvest some of your losses to offset the gains. If you have a few holdings that are in a capital loss position, you can sell the losses to off set the capital gains and rebalance your portfolio.
Remember to match long term gains to long term losses, and short term gains to short term losses.

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Last week my Father-in-law received a summons for jury duty. He would have loved the whole process of being on a jury, thoughtfully listening to everything said, then deciding the person’s fate with great reverence.
Here’s the problem; sadly, my Father-in-law passed away last December. When my husband called the county to let them know this, he was met with words of condolence. Quickly after the kind words from the clerk was a request of proof of his death. My husband told her politely to check her own counties records for his death certificate.
I have no words.

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Almost half of working Americans do not have a 401(k) available to them. This should not stop you from saving for your retirement. If you don’t – then who will? There are other options for retirement savings.

Traditional or Roth IRA:
If neither you nor your spouse has a corporate retirement plan, you can take advantage of a fully deductible Traditional IRA by depositing up to $5,500, or if you are over age 50, $6,500.
SEP IRA:
If you are self-employed, you can contribute up 25% of your net earnings or $53,000, whichever is less in 2015.
Solo 401(k):
If you are self-employed with no full time employees, you can contribute $18,000 or $24,000 if you are over age 50. Your spouse can also make a contribution if employed in your business.

No one is going to take care of your retirement for you. You owe it to yourself to make sure your retirement is everything you wish it to be.

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I have been asked to be a columnist for Seminole Magazine. Here is my latest article. Please feel free to subscribe – it is free.

http://seminolemagazine.com/food-for-thought

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Assumptions can be tricky and retirement assumptions can be a disaster. Here are a few things you do not want to assume in retirement:
A 4% withdrawal rate will ensure I don’t run out of money.
This is a rule that was introduced in 1994. In 1994, the average investment was earning 8%; a 4% withdrawal rate + inflation never put a dent in your principal. Over the last 10 years, we have seen that a consistent 8% annual growth rate cannot be counted on.

Spending always goes down in retirement.
This is the biggest eye-opener for many of my clients. We are all living longer, but not necessarily healthier. Health care is expensive. If you end up with Alzheimer’s or dementia, the costs can go through the roof.

I will remain married.
On average, 50% of first marriages end in divorce, the statistics are higher for second & third marriages. There is a wave of “gray” divorces, couples age 50 and up divorcing at a faster pace than in the past. Running two households, especially when you live on a fixed income, can be hard.

Don’t assume – plan for the unexpected.

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I met with a woman yesterday who was recently widowed. She received an insurance payout and felt she could invest it, but was not sure. She told me she had just met with two other financial planners, one had nothing to suggest but an indexed variable annuity. The other gave her an expense summary sheet to complete that consisted of 5 items, asked her what all of her sources of income were, told her she had enough income for the rest of her life, then showed her an indexed annuity.
Wow!
After spending some time getting to know her, I gave her our expense summary, which has about 40 items on it, a confidential profile, a risk questionnaire, and ask her to take some time completing her ‘homework.” When I have all of this date + investment information she left with me, I will complete a comprehensive plan that will take her through age 90, include some inflation, and many other items to determine what investment, if any, these dollars can go to.
Sales or planning – make sure you get what you really need to make life long financial decisions.

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

Recently a client of mine started a home business. She is having some success and wanted to know what options are available for retirement savings. Of course she could use a traditional deductible IRA account, but I also told her about a Solo 401k.
The Solo 401k was established by EGTRRA* in 2001. They work just like corporate 401k accounts but may only cover the self-employed business owner and their spouse. There cannot be any full time employees.
The response I received from my client was that their accountant had “never heard of a Solo 401k before but would look it up on the IRS website.” I was shocked by this response. My suggestion to my client was to rethink the person that was helping them with their taxes.

*Economic Growth & Retirement Reconciliation Act of 2001

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Recently, I received a panicked call from a client, the IRS left a message stating they owed a lot of tax and had to return the call immediately.
My client does not make enough reportable income in her retirement to require filing of a tax return. As she takes her small annual required minimum distributions, we withhold tax. She did not know what to do.
This scam is rampant in the months leading up to our annual tax filing in April. This year it seems to have gone on longer.
If you owe or are being audited, the IRS will send a certified letter. The IRS does not call you.

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Q: Please give me one good reason why I, at age 70, should not convert my whole retirement account to a Roth IRA?
A: Currently you do not have to take any withdrawals from your retirement accounts, so right now; you would not pay any addition income tax. At age 70.5 you will have to take your first required minimum distribution form your retirement accounts. Only the amount of withdrawal will be taxed.
If you convert your whole retirement account to a Roth, you will pay ordinary income tax on the full account value. The Federal Government will love you for this choice, to me; this is a good reason not to convert.

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“As mankind become more liberal, they will be more apt to allow that all those who conduct themselves as worthy members of the community, are equally entitled to the protection of civil government. I hope ever to see America amongst the foremost nations in examples of justice and liberality.” — George Washington
“Freedom lies in being bold.” — Robert Frost