Category Archives: investing

Do you believe this retirement myth?

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You will be in a lower tax bracket when you retire?

You may very well lose deductions and/or exemptions when you retire, and state and federal taxes may climb. This combination is not one that equals lower taxes in retirement. Even if the federal tax does not increase, you may still pay a higher percentage of your income to taxes after retirement vs. before. Do not under estimate the power of a deduction, it’s lose bumped up against you having to take Required Minimum Deductions may be all it takes to push you up into the next tax bracket.

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

Tune in Tomorrow @ 9am to 96.5 FM WDBO to hear me!

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

They’ll be discussing . . .
• Have you planned too optimistically?
A few retirement questions to ponder.
• I take Issue with an MSN Money article about 401k accounts.

• THIS WEEK’S “On the Money 101”:
What is “fee Income?”

Call or eMail
Your Questions:
407-290-0058 OR
1-800-328-5858

Nancy@FinancialGroup.com
Denise@FinancialGroup.com

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

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