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Posts Tagged ‘financial planning’

Can Baby Boomers Learn Financial Lessons From Millennials?

It’s graduation season. Perhaps you have family members such as children, grandchildren, nephews, nieces or others who are graduating from high school or college this year. Members of the current generation of graduates are known as millennials, a group loosely defined as those born between the mid-1980s and early 2000s.1

Millennials sometimes get a bad rap as being entitled and self-focused. However, their relationship with technology has given them a unique worldview. They grew up with cellphones, internet access and other technology that previous generations couldn’t even imagine. Millennials recognize how to use technology to their advantage, and they may see opportunities that older generations don’t recognize.

Technology isn’t the only factor that’s had an impact on the thinking of millennials. They’re influenced by major world events like 9/11 and the economic collapse of 2008. They also struggle with student loans, which may influence their view on money and debt.

As a baby boomer, you may feel it’s your responsibility to impart wisdom to millennials. However, there could also be important financial lessons you can learn from them, especially as you approach retirement. Below are three ways you can think like a millennial as you enter retirement:

 

Use the sharing economy to generate side income.

 

Sharing is a basic life skill that most people learn in kindergarten. However, technological advances have helped reshape the economy through the idea of sharing. The “sharing economy” is based on the concept that anyone can earn income by sharing the use of their assets, such as cars, homes, tools and even their time.

Millennials have embraced the sharing economy, as both users and sellers. You may be able to do the same in retirement to generate side income. For example, you could use your car to drive part time for a ride-hailing company. You could earn extra income by renting out a room in your home to travelers. There are even sharing services that allow you to make money by running errands for others or loaning out your tools. Do some research and be creative to find moneymaking opportunities.

 

Budget your spending so you can enjoy memorable experiences.

 

Many millennials say they would rather spend their money on experiences than on stuff. They value activities like travel, concerts, parties and other social events. To finance those experiences, they often take a minimalist approach to the accumulation of “stuff,” such as clothing, furniture and more.

That could be a wise approach to take in retirement. If you’re like many retirees, your plans may include travel, hobbies, dining out and spending time with family and friends. Those activities require money.

If experiences are important to you, consider funding them by cutting spending in other areas of your budget. For example, cut back on shopping for new clothes. Consider downsizing to a smaller home, which would reduce your costs for things like mortgage payments, utilities, maintenance and more. That could give you more money for the activities that are most important to you.

Use technology to your advantage.

 

There’s no doubt that many millennials are much more tech-savvy than their baby boomer counterparts. You may even turn to your children or grandchildren for help with your tablet, cellphone or other devices.

However, now could be the time to embrace technology and learn how to use it to your advantage. For example, a number of apps can help you budget and track your spending in real time. That could keep you on the right path so you don’t deplete your assets. Also, your financial professional could help you take advantage of planning tools that can forecast your retirement and monitor your investments. Look for technology that can help you keep your retirement on track.

 

Ready to implement these tips into your retirement? Let’s talk about it. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation.

 

1https://www.theatlantic.com/national/archive/2014/03/here-is-when-each-generation-begins-and-ends-according-to-facts/359589/

 

Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.

16694 – 2017/5/23

What Can You Expect From the New Tax Law in 2019?

A new year is here, and with it comes a flood of year-end tax documents like W-2s, 1099s and others. Before you know it, the April 15 tax filing deadline will be upon us, and it will be time to submit your return.

It’s always wise to meet with your financial professional at the beginning of the year. It gives you an opportunity to discuss the past year, your goals for the coming year and your tax strategy. However, a consultation with your financial professional could be especially helpful this year.

 

The Tax Cuts and Jobs Act was signed into law in late 2017 by President Trump. While some of its changes went into effect last year, 2018 was the first full calendar year under the new law. The return you file in April will likely be the first that reflects much of the law’s changes. Below are a few of the biggest changes and how they could affect your return:

 

Increased Standard Deduction

 

The new tax law impacted a wide range of credits and deductions, from the deduction of medical expenses to credits for child care. Those who itemize deductions may have felt the brunt of these changes.

 

However, the tax law significantly increased the standard deduction. In 2017 the standard deduction was $6,350 for single filers and $12,700 for married couples. The new law increased those numbers to $12,000 and $24,000, respectively.1

 

Given the changes to itemized deductions and the increased standard deduction, you may want to consult with a financial or tax professional before you file your return. If you’ve traditionally itemized deductions in the past, that may no longer make sense.

 

New Tax Brackets

 

The new tax law also made significant changes to the tax brackets. There are still seven different brackets, just as there were before the passage of the law. And the lowest rate is still 10 percent. The top income tax rate is down to 37 percent, however, from 39.6 percent.2 There are similar cuts throughout the rest of the brackets as well.

 

The law also made changes to the income levels for each bracket. Generally, the bracket levels were increased throughout the tax code, which means you have to earn more before moving into a higher bracket. Under the old tax code, for example, a married couple earning $250,000 would be in the 33 percent bracket. Under the new law, that same couple would be in the 24 percent bracket. A single individual earning $80,000 would be in the 28 percent bracket under the old law but is now in the 22 percent bracket.2

 

Itemized Deduction Changes

 

As mentioned, the new tax law increased the standard deduction amounts. However, those increases came at the expense of many itemized deductions. The new law eliminated or reduced many common deductions, including those for state and local taxes, real estate taxes, mortgage and home equity loan interest, and even fees to accountants and other advisers.

 

However, there could be other opportunities to boost your itemized deductions above the standard deduction level. Charitable donations are still deductible, as are medical expenses assuming they exceed the 7.5 percent threshold. If you’re a business owner, you can deduct many of your expenses, including up to 20 percent of your income assuming you meet earnings thresholds.3

 

Ready to develop your tax strategy? Let’s connect soon and talk about taxes and your entire financial picture. Contact us today at Retirement Peace Project. We can help you analyze your needs and goals and implement a plan.

 

1https://www.nerdwallet.com/blog/taxes/standard-deduction/

2https://www.hrblock.com/tax-center/irs/tax-reform/new-tax-brackets/

3https://money.usnews.com/investing/investing-101/articles/know-these-6-federal-tax-changes-to-avoid-a-surprise-in-2019

 

18326 – 2018/12/26

Check These 3 Items Off Your Planning List Before You Retire

 


 

Trying to decide when to retire? It’s a question that every worker faces at some point. In some cases your decision is made for you, because of health issues or employer restructurings. In an ideal world, however, you would get to retire at the time that’s right for you. There’s no universal correct answer on when that time is. It should be based on your unique needs, goals and objectives.

It may be helpful to think about what you need to complete before you retire. For example, you may want to save a certain amount of assets. Or you may want to reach full retirement age (FRA) for Social Security. Maybe you have stock options or other employer benefits that need to vest before you leave the working world.

There are also planning items you can use to minimize risk and improve your odds for success. Below are three such items. If you’re thinking about retirement but haven’t completed these items, now may be the time to do so. A financial professional can help you complete your planning so you can enter retirement with confidence.

Develop your retirement budget.

Are you one of the 60 percent of Americans who don’t use a budget?1 If so, retirement is the perfect time to make a change. A budget is one of the most effective financial tools available because it helps you make informed purchasing decisions and stay on track to reach your goals.

A budget is especially important as you enter retirement. One of the biggest risks in the early years of retirement is that you spend too much and deplete your assets too quickly. That could lead to you not having enough money in the later years of retirement. A budget can minimize this risk.

You can’t predict every expense you’ll face in retirement, but you can make estimates based on your current spending and your desired lifestyle. Also, be sure to include inflation in your budget. Your cost of living is likely to increase over time.

Map out your retirement income.

Where will your income come from in retirement? If you’re like most retirees, you’ll receive Social Security benefits. You also may receive a pension or some other type of income. And you’ll likely need to take distributions from your 401(k) plan, IRA or other retirement accounts.

Take some time to project your income. The Social Security Administration can provide you with benefit estimates, and your company’s human resources department should be able to provide estimated pension payments. A financial professional can help you determine a reasonable distribution amount to take from your savings each year. You also may want to consider an annuity, which can generate guaranteed* lifetime income.

Minimize your risk exposure.

Life can be unpredictable, and it’s possible that your retirement may not go according to plan. For instance, you or your spouse may develop a condition such as Alzheimer’s that requires long-term care. The financial markets could suffer a downturn that limits your ability to draw income. Your health care costs could be greater than expected.

A financial professional can help you develop strategies to minimize your exposure to risk. For example, you may want to consider long-term care insurance. An annuity could be a helpful tool to guarantee* your income and minimize downside risk. These steps and more could help you avoid dangerous threats that could sink your retirement.

Ready to implement your retirement strategy? Let’s talk about it. Contact us at Retirement Peace Project. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.

 

1https://money.cnn.com/2016/10/24/pf/financial-mistake-budget/index.html

*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.

17848 – 2018/7/30