Photo credit: diedoe
Goal planning is the real “meat” of financial planning. That is to say, once you’ve covered the issues of organizing your information, developing and improving your net worth, and providing for the safety issues, it is now time to consider exactly what you would like to do with your money and your life.
This is a very personal set of decisions – no one person makes the same choices. Perhaps you’d like to open your own business, and become your own boss. Maybe all you’d like to do is to finish working after 30 years and spend your time playing with your grandchildren. Or maybe you’ve finished up college and now you’re beginning to earn some money, and so you’re planning on starting a family and buying a home.
Setting your goals is very important as you begin a savings and investing plan, because without a goal in mind, it is difficult if not impossible to “map” your way there. Of course, if all you’d like to do is save money for the fun of watching the amounts increase – that, in itself can be a goal.
Keep reading…
Share, tweet, print, email, like or pin this post:
Like this:
Like Loading...
Posted in: fiduciary, financial planning, goals.
Tagged: fiduciary · financial planning · goals
For 2015 the IRS has given the new limits regarding retirement contributions as well as estate and gift tax exemptions.
Regarding retirement contributions employees may now defer $18,000 annually to their employer sponsored plan including a 401k, 403b, and 457 plans. This is an increase from last year’s $17,500 amount. Additionally, employees age 50 or older can now make an age based catch-up contribution of $6,000 which is a $500 increase from last year’s $5,500 amount.
Keep reading…
Share, tweet, print, email, like or pin this post:
Like this:
Like Loading...
Posted on
Dec 26th, 2014
by author: sraskie.
Posted in: #noTOP, 2015 tax year, 401 k, 401 k 403 b, 401k, 403 b, 457, Annual limits, estate tax, financial planning, gift tax, IRA, ira contribution limits.
Tagged: 401k · 403 b · charitable contribution · income tax · retirement accounts · tax
The following is a story that was related to me by another financial planner. The message is quite remarkable – and important for all of us to understand.
A dentist, age 53, had sold his practice and partially retired. When we reviewed his portfolio, which amounted to approximately two million dollars, it became apparent that he had strong feelings regarding protection of capital. The entire two million dollars was invested in a combination of CD’s, money market funds, and short-term US government bonds.
Keep reading…
Share, tweet, print, email, like or pin this post:
Like this:
Like Loading...
Posted in: inflation, investing, investment, investment diversification, risk.
Tagged: inflation · portfolio · risk
For 2015 there is a new type of tax-deferred savings account, called the ABLE account. The acronym ABLE comes from the name of the act: Achieving a Better Life Experience Act of 2014. As such, these accounts are dedicated to provide for tax-deferred savings (non-deductible contributions) of up to $14,000 per year for folks who became blind or disabled before age 26.
Tax-free distributions from the ABLE account can be used to pay for housing, transportation, education, job training, and the like. The assets in an ABLE account are not counted toward an individual’s eligibility to qualify for Medicaid, Supplemental Security Income and other federal mean-tested benefits (up to a $100,000 balance in the ABLE account).
This is the great benefit of the ABLE account, because the means-testing applied to so many benefits for folks with disabilities actually discourages savings of this nature. With the ABLE account, people with disabilities will be able to save in a tax-efficient manner for future needs.
There will be much more information about the ABLE accounts as the regulations from the IRS are finalized. Stay tuned.
Share, tweet, print, email, like or pin this post:
Like this:
Like Loading...
Posted in: 2015 tax year, ABLE, saving.
Tagged: ABLE · medicaid · saving
In July of 2014 the IRS issued final regulations regarding the allowance of qualified longevity annuity contracts in employer sponsored plans such as 401ks, 403bs and 457b plans as well as IRAs.
What it Means and What it Means to You
QLAC stands for qualified longevity annuity contract. This means that a person is allowed to take up to 25% of their overall account balance but not more than $125,000 in their retirement plan and use that money as premium to fund a longevity annuity contract.
Additionally, the annuitant must start the annuity by no later than the first day of the month following the attainment of age 85. They can however, start earlier.
In a 401k, 403b or 457b plan a QLAC can be purchased up to the maximum of $125,000 across all accounts (IRAs included), but not more than 25% of the account balance per plan.
Keep reading…
Share, tweet, print, email, like or pin this post:
Like this:
Like Loading...
Posted on
Dec 19th, 2014
by author: sraskie.
Posted in: 401 k, 401 k 403 b, 401k, 403 b, 457, annuities, annuity, financial planning, IRA, ira account, QLAC, qualified longevity annuity contract.
Tagged: 401 k · 401k · 403 b · financial planning · IRA · ira account · qualified retirement plan
With the passage of the Taxpayer Tax Increase Prevention Act of 2014, the qualified charitable distribution (QCD) from your IRA is available through the end of the year under normal rules. This means that you can, if you’re age 70½ or older, make direct distributions from your IRA to a qualified charity or charities, not counting the distribution as income and not itemizing the charitable contribution.
Share, tweet, print, email, like or pin this post:
Like this:
Like Loading...
Posted in: #noTOP, 2014 Tax Year, IRA, QCD.
Those of us who are parents know this conflict very well – should we put aside money for retirement, or for college saving? It may come as a surprise, but a general rule of thumb with regard to this conflict is to put money aside for retirement first, and college second.
The reason behind this is that there are many ways to pay for college, such as grants, scholarships, work-study programs, student loans, parent loans, etc.. With this plethora of choices, it becomes clear that your student’s college funding needs can be met from quite a few angles, none of which should have a dramatic impact on your overall net worth (or your student’s).
On the other hand, no one will give you a scholarship to retire. It is solely up to you and your savings (coupled with Social Security and any available pensions).
Share, tweet, print, email, like or pin this post:
Like this:
Like Loading...
Posted in: 529, coverdell esa, education, education expenses, fafsa, IRA.
As the end of the year approaches many employers will pay and many employees will receive year-end bonuses. While often the icing on the cake for a productive year employee should be aware of the tax consequences of their bonus.
Percent vs. Aggregate Method
When it comes to taxing the bonus an employer may choose the percentage method versus the aggregate method. Under the aggregate or wage holding bracket method the employer will use the withholding tables generally used for the employee normal paycheck. Then, the supplemental wages are aggregated with the employee’s normal pay and taxes are withheld accordingly.
Keep reading…
Share, tweet, print, email, like or pin this post:
Like this:
Like Loading...
Posted on
Dec 12th, 2014
by author: sraskie.
Posted in: #noTOP, 2014 Tax Year, 401k, financial planning, tax, tax deferral, taxable compensation.
Tagged: financial planning · income tax · tax
You can listen to this article by using the podcast player below if you’re on the blog; if you’re reading this via RSS, there should be a “Play Now” link just below the title to access the audio.
Podcast: Play in new window | Download
Did you realize that even delaying a few months can have a significant impact on your Social Security benefit? This is the case for all Social Security benefits, including your own, a Spousal Benefit, or a Survivor Benefit. This applies whether you are taking the benefit before FRA or after, since your age is always calculated by the month. Increase or reduction factors are applied for each month of delay or early application, respectively.
Keep reading…
Share, tweet, print, email, like or pin this post:
Like this:
Like Loading...
Posted in: #noTOP, Book review, podcast, Social Security, social security benefits, Social Security Owner's Manual, Social Security spousal benefit, social security survivor benefits.
Tagged: podcast · Social Security · social security benefits
The Holiday season is the time of year when we get into the spirit of giving and start our lists of who’s been naughty and nice. With Black Friday and Cyber Monday over, there are still plenty of days left to shop for friends and loved ones.
It can be tempting to get caught up in the spirit of giving so much that after the Holidays are over we’ve put ourselves in a financial bind. The following are five tips to consider this Holiday season to avoid overspending.
Keep reading…
Share, tweet, print, email, like or pin this post:
Like this:
Like Loading...
Posted on
Dec 5th, 2014
by author: sraskie.
Posted in: #noTOP, budgeting, fiduciary, financial planning.
Tagged: financial planning
Background
Every year, the College Board releases its Trends in College Pricing and Trends in Student Aid reports that highlight current college costs and trends in financial aid. While costs can vary significantly depending on the region and college, the College Board publishes average cost figures, which are based on its survey of nearly 4,000 colleges across the country.
Following are cost highlights. Total cost figures include tuition and fees, room and board, and a sum for books, transportation, and personal expenses. Together, these expenditures are officially referred to as the “total cost of attendance.”
Keep reading…
Share, tweet, print, email, like or pin this post:
Like this:
Like Loading...
Posted in: #noTOP, 2014 Tax Year, education, education expenses, Uncategorized.
Listen to this post:
Podcast: Play in new window | Download
Most of you have one or more types of defined contribution retirement plans, such as a 401(k), 403(b), 457, IRA, SEP-IRA, or any of a number of other plans. Each type of plan has certain characteristics that are a little different from other plans, but most of them have the common characteristic of deductibility from current income and deferred taxation on growth.
Photo credit: jb
1. Each dollar you defer is worth more than a dollar. It’s true. As you defer money into your retirement account, each dollar that you defer could be worth as much as $1.66. How, you might ask?
Since you are not taxed on the dollar that has been deferred into the retirement account, your “take home” pay only reduces by the amount that is left over after taxation. For example, if you’re in the 25% bracket, generally your income will only reduce by 75¢ for every dollar that you defer into your retirement plan. Therefore, the 75¢ that you’ve effectively “spent” is worth 33% more ($1.00) in your retirement account. For every dollar that you defer, you effectively have set aside $1.33 (for the 25% bracket).
If you happened to be in the upper-most 39.6% tax bracket, this works out to a 66% increase in the value of each dollar deferred. This doesn’t even take into account the potential for matching dollars from your employer! Keep reading…
Share, tweet, print, email, like or pin this post:
Like this:
Like Loading...
Posted in: 401 k, IRA, podcast, qualified retirement plan, Roth IRA.
Tagged: 401 k · IRA · qrp · qualified retirement plan · roth ira
For many folks, attaining age 70 ½ means the beginning of required minimum distributions (RMDs) from their 401k, 403b as well as traditional IRAs. There are however, some individuals that will continue to work because they want to or (unfortunately) have to and still want to save some of their income.
At age 70 ½ individuals can no longer make traditional IRA contributions. They are allowed to make contributions to a Roth IRA as long as they still have earned income. Earned income is generally W2 wages or self-employment income. It is not pension income, annuity income or RMD income.
Keep reading…
Share, tweet, print, email, like or pin this post:
Like this:
Like Loading...
Posted on
Nov 28th, 2014
by author: sraskie.
Posted in: required minimum distribution, rmd, rmds, rollover, Roth IRA, roth ira.
Tagged: 401 k · 401k · 403 b · fiduciary · financial planning · IRA · rmd · rollover
The end of the year, especially around the holidays, is a time when many folks’ thoughts turn to charitable giving. Many opportunities present themselves, from the gentleman with the bell and the red kettle to our local food and coat drives. With this in mind, the IRS recently published their Special Edition Tax Tip 2014-13 which details six tips for charitable giving. The actual text of the Tip is listed below.
In addition to those tips, I’ll offer one more: if you are interested in utilizing the Qualified Charitable Distribution option from your IRA – presently this option has not been extended for tax year 2014. It’s possible that it might be extended yet this year, so check back here – we’ll keep you posted.
Keep reading…
Share, tweet, print, email, like or pin this post:
Like this:
Like Loading...
Posted in: #noTOP, charitable contribution, income tax, QCD.
Tagged: charitable contribution · income tax · QCD
It’s hard to imagine but another year is almost over. Soon, 2014 will make way for 2015. As you prepare for the end of the year here are some good tips to keep in mind before January 1st.
Keep reading…
Share, tweet, print, email, like or pin this post:
Like this:
Like Loading...
Posted on
Nov 21st, 2014
by author: sraskie.
Posted in: #noTOP, fee-only, fiduciary, financial planning.
Tagged: fiduciary · financial planning
For quite a while now we’ve been reading the reports from the Social Security Administration’s reviews of the status of the trust fund – where the prediction is that we’ll end up in the year 2033 with only enough money to pay 77¢ on the dollar of the promised benefits from Social Security. So far this revelation has not resulted in policymakers’ taking any actual steps to fix things, but sometime someone has to act. What can be done about fixing Social Security?
Keep reading…
Share, tweet, print, email, like or pin this post:
Like this:
Like Loading...
Posted in: Social Security, social security administration, social security benefits, social security tax, social security wage base.
Tagged: Social Security · social security administration · social security tax
Today’s message is about Safety – but not things like “don’t run with scissors” or “wait a half hour after eating to go swimming”. What we’re referring to is the old concept of having an emergency fund. The primary thing that you should take away from this Safety discussion is Peace Of Mind.
An emergency fund is a vital component of your overall financial toolkit. You should have 3 to 6 months’ worth of expenses set aside in a liquid, stable account, such as a bank passbook savings account or a money market account. By “liquid” we mean that the funds are easily valued and withdrawn as necessary. By “stable”, we mean that the funds are not at risk due to market volatility, but also that there is some return in the form of interest to the account, however small.
Keep reading…
Share, tweet, print, email, like or pin this post:
Like this:
Like Loading...
Posted in: emergency fund, fiduciary, financial planning.
Tagged: emergency fund · financial planning
Sometimes when we need more money for a specific goal in the future such as retirement, college, a down payment on a home or an emergency fund we may feel that before these things can happen we need to make more money. We may feel that once our incomes are up to a certain level that we’ll be able to afford to save for those goals.
It may not be necessary to earn more in order to achieve the above goals. For many folks the solution is simply to prioritize between wants and needs. In other words, learning to distinguish between the wants and the needs in your life and then reallocating your money to fund retirement or college goals without having to ask for a raise or get a second job.
Keep reading…
Share, tweet, print, email, like or pin this post:
Like this:
Like Loading...
Posted on
Nov 14th, 2014
by author: sraskie.
Posted in: fee-only, fiduciary, financial planning, IRA, retirement savings, saving.
Tagged: fiduciary · financial planning
As you plan and save for your retirement, it’s nice to have multiple types of taxation for your income sources. You may have a pension, Social Security, and a traditional IRA, all of which are taxed to some degree or another. Adding to this list you might have a Roth IRA which generally will provide you with tax-free income in retirement. The problem with the Roth IRA is that you have some strict limits on the amounts that you can contribute, and typical Roth Conversion strategies are costly and complicated. With the recent pronouncement from the IRS in Notice 2014-54, there is a brand new, sanctioned method, to fund your Roth IRA.
Keep reading…
Share, tweet, print, email, like or pin this post:
Like this:
Like Loading...
Posted in: #noTOP, 401 k, IRA, Roth conversion, Roth IRA.
Tagged: 401 k · IRA · roth conversion · roth ira
Listed below are a few time-honored maxims that we’ve all heard. Perhaps we’ve even heard these from very trusted sources – like our Mothers. As you’ll see, it’s not always good advice… In the interest of full disclosure, my own Mother did not give me any of this advice. She tended to stay with the “wait an hour after eating to go swimming” variety of advice. One of my favorites was always given as I was leaving the house during my younger years: “Have fun. Behave!” I once pointed out to her the fallacy involved there but she didn’t see the humor. :-) At any rate, those rules have served me well through the years – thanks, Mom!Keep reading…
Share, tweet, print, email, like or pin this post:
Like this:
Like Loading...
Posted in: fiduciary, financial planning.
Tagged: fiduciary · financial planning
Sterling Raskie, MSFS, CFP®, ChFC®
The latest in our Owner’s Manual series, A 401(k) Owner’s Manual, was published in January 2020 and is available on 
A Medicare Owner’s Manual, is updated with 2020 facts and figures. This manual is available on 
Social Security for the Suddenly Single can be found on Amazon at 
Sterling’s first book, Lose Weight Save Money, can be 
An IRA Owner’s Manual, 2nd Edition is available for purchase on Amazon. Click the link to choose the 
Jim’s book – A Social Security Owner’s Manual, is now available on Amazon. Click this link for the 
And if you’ve come here to learn about queuing waterfowl, I apologize for the confusion. You may want to discuss your question with Lester, my loyal watchduck and self-proclaimed “advisor’s advisor”.