Monday, January 28, 2013

Will You Run Out of Retirement Money/Income?



Will You Run Out of Retirement Money/Income?

Most of us have never paused to think about this possibility either because we know that we are indeed set, or we are, quite frankly, simply naïve. As much as I might hope the latter is never the case, study after study tells us: 

The foremost issue facing today’s retirees is outliving one’s money.



In a sense, this is not entirely shocking, given the near extinction of defined benefit plans. It used to be that you went to work and upon retirement, the corporation gave you lifetime income – in most cases these benefits extended to your spouse after your death. However, I think the fact that so many Americans today are exposed to the dreadful possibility of outliving their money (more so than any other time in our history) should cause us to investigate other possible causes, beyond the erosion of corporate pensions.

Here’s what I’m thinking: Most of us plan for retirement all of our working lives by following the advice of our financial counselors with the goal of specifically preventing this fate. Yet more and more folks seem to be staring outliving their savings right in the face. Might the issue be that they are receiving substandard advice? Is it possible that this has actually been the situation all along, but it’s becoming more apparent now because guaranteed employer pensions have gone the way of the dinosaurs? Given the cases I’ve seen – and continue to see daily – in our practice, I tend to believe that bad advice could be the culprit in more cases than not.

You see, I think many so-called advisors tend to be very myopic, focusing retirement plans on “accumulation” only, with little to no emphasis on whether that pot of money will actually be able to accomplish its intended purpose: provide lifetime income (keyword: lifetime). What use is all those years of saving and investing if, in the end, you’re not guaranteed that it will produce the necessary results?

I hope you can emphatically point to something in your retirement arsenal that specifically guarantees you’ll never run out of income/money, versus simply hoping that doesn’t happen to you. The thing is, true retirement security is possible, and it’s much easier than most would think. If you’d like to know how to incorporate such a guarantee into your retirement strategy, this free special report might be of interest to you. 

Good luck, and have a happy retirement!

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Have other questions about your retirement investments? Call us today at  877.656.9111  or visit us on the Web 

Monday, January 21, 2013

New Limit on Medical Expense Deduction


Here’s a recent query we received and the answer we provided:

Q: I make only $50,000 a year and have a medical condition that costs me between $4,800 and $5,000 every year. My tax guy tells me that I’ll no longer be able to claim any portion of my medical expenses on my itemized deductions. Could you clarify why?

Sincerely,
Danica R.

A: I believe your tax guy is talking about one of the tax law changes that resulted from the new health care law – affectionately known as “ObamaCare.” To break it down, let me give you a general idea about the before-and-after effects, so to speak.
Through the 2012 tax year, if you itemize deductions on your federal tax returns, one of the things you’re able to claim is the portion of your qualified unreimbursed medical expenses that exceeds 7.5 percent of your Adjustable Gross Income (AGI). Assuming that your AGI is $50,000, as you indicated, 7.5 percent would be $3,750. Therefore, if your unreimbursed medical expenses were $4, 800 you could deduct $1,050 ($4,800 minus $3,750), the portion that exceeds 7.5 percent of your AGI. Likewise, if your expenses were to total $5,000, you’d be able to deduct $1,250 ($5,000 minus $3,750).

Here’s how things change with the new ObamaCare rule, beginning in 2013. You are allowed to deduct the amount that exceeds 10 percent of your AGI (instead of the 7.5 percent of prior years). So given an AGI of $50,000, 10 percent would be $5,000. Therefore, you would be able to deduct only the portion of your qualified unreimbursed medical expenses that exceeded $5,000. Since your medical costs range from $4,800 to $5,000 a year, you would effectively lose the deduction of $1,050 to $1,250 that you were receiving through 2012.

I must mention, however, that for those tax filers aged 65 or older, this new rule doesn’t kick in until 2017. For those younger than that age, it begins in 2013.
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Have other questions about how changes in the tax law will affect your 2013 filing status? Call us today at  877.656.9111  or visit us on the Web to schedule your complimentary, confidential consultation with experienced financial professionals who can help you make the most of your investments and plan for a secure retirement that takes all the pieces into account.

Monday, January 14, 2013

How to Keep Your Retirement Assets Out of Congress’ Reach


How to Keep Your Retirement Assets Out of Congress’ Reach
As I explained in my last column, from my vantage point, the recent “fiscal cliff” deal amounted to tax increases on the rich, middle class, and poor alike. As you may remember, the whole idea was to tackle – in a meaningful way – our federal debt/deficit problem. So here’s the simple question: Was that goal accomplished? The straightforward answer is: Not even close!
So what’s next? Could more tax increases be coming down the pipe? If that were to happen, would your retirement income be crushed? Interesting questions, aren’t they? I think smart financial advisors (and investors) should be having these discussions right now, if they have not already. Wouldn’t you agree?  
You see, under existing IRS rules, your income could be either taxable or nontaxable. As the names imply, taxable income is 100 percent taxable, but you pay zero tax (as in nothing!) on nontaxable income (read the next words slowly) regardless of how much of it you earn. That’s almost unbelievable, isn’t it? However, as some like to say, the law IS the law.
From the way things are looking in Washington, D.C., if you have money sitting in yet-to-be-taxed 401(k)s, IRAs, 403(b)s, or whatever they might be, you’d be wise to visit with a savvy advisor who can help you reposition some of your assets into vehicles that would generate nontaxable income.
That way, regardless of how low or high tax rates go in the future, you could rest assured that you wouldn’t face any nasty surprises. Generally speaking and for the most part, some very simple tweaks are all that would be required to achieve this. However, you will need a savvy, experienced advisor who knows exactly what he/she is doing.
For a much more detailed look into specific vehicles and strategies, get a copy of my acclaimed book, 5 Mistakes YourFinancial Advisor Is Making.
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Making 2013 resolutions about your investments or retirement planning? Call us today at 877.656.9111 or visit us on the Web to schedule your complimentary, confidential consultation with experienced financial professionals who can help you make the most of your investments and plan for a secure retirement that takes all the pieces into account.

Monday, January 7, 2013

The Fiscal Cliff Deal is Essentially a Tax Hike on the Middle Class


The Fiscal Cliff Deal is Essentially a Tax Hike on the Middle Class
Most Americans are under the impression, erroneous as it may be, that Congress’ nick-of-time fiscal cliff deal basically stuck it to the “rich” (in this case, single individuals earning more than $400,000 a year or couples making more than $450,000) by increasing their top marginal rate to 36.9 percent and their dividends/capital gains rate to 20 percent.
However, practically everyone who gets a paycheck in the next few paydays will see their taxes increase by 2 percent (or see their take home pay decrease on the first $113,700) also as a result of that deal.
Personally, I think this should have been made the headlines for the very simple reason that it affects practically every wage earner in America. How many folks at your workplace (or in your neighborhood) make more than $400,000 a year? On the other hand, I bet you know folks who make $113,700 or less a year, right? That’s everyone! The fact of the matter is that your taxes also went up although you probably don’t consider yourself rich - and indeed you’re not, according to Congress’ and the President’s own definition.
This past Friday, a friend of mine who considers herself decidedly not rich told me that her biweekly paycheck was $55 less. So all of a sudden, she’s going to have to make do with almost $120 less every month, going forward. If I’m not mistaken, President Obama and politicians from both parties promised again and again that the middle class wouldn’t see a dime of tax increases, didn’t they? In fact, almost every pundit in the media predicted – wrongly – that this 2 percent tax increase wasn’t going to happen.
As I explain extensively in my book, 5Mistakes Your Financial Advisor Is Making, anyone who thinks that Congress is likely to tax only the rich to fix our unsustainable debt problem is, quite frankly, being naïve. Hopefully, you didn’t drink that Kool-Aid, did you?
You see, there just aren’t enough rich people to tax. Besides, under our current tax code, it’s possible for someone who made way more money to end up paying less income tax than someone who made a lot less in the same year. The reason is that it’s all about your taxable income and less about gross/total income. Congress knows all too well that the rich hire the best financial minds – like those here at LaserFG – to help them legally keep their taxes to the barest minimum. So in a nutshell, the middle class is the easiest tax revenue target.
In my next column, I will discuss what you should be doing to keep your retirement assets out of Congress’ reach. But in the meantime if you already haven’t done so, get yourself a copy of my book from Amazon or the iTunes store so that you can be in the know!
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Making 2013 resolutions about your investments or retirement planning? Call us today at 877.656.9111 or visit us on the Web to schedule your complimentary, confidential consultation with experienced financial professionals who can help you make the most of your investments and plan for a secure retirement that takes all the pieces into account.