8 Financial Strategies For The New Year

8 Financial Strategies For The New Year

The start of the New Year is a great time to implement financial strategies toward improving your life. Whether you’re already saving or trying to pay off debt, making the right financial resolutions and working towards them can help you achieve your goals. Use these eight financial strategies to improve your financial health in the New Year.

#1- Improve Your Financial Education.

Financial literacy is the confluence of the economic, credit, and debt management knowledge necessary to make financially responsible decisions that are integral to our everyday lives. A lack of financial education is one of the reasons why people struggle with saving and investing. The more you know, the more likely you will make good decisions. Here are a few financial literacy resources to keep in mind:

  • Smart About Money (SAM) is a web-based, self-directed financial literacy program that provides financial information, tips, and skills necessary to be financially stable.
  • Mint is an application that allows you to see your financial life on one platform. Mint helps you manage your money and save and makes recommendations that can help you save based on your lifestyle and goals.

#2- Create A Monthly Budget.

A budget lets you check your income and expenses over time, such as each month. It is a tool to help keep your finances on track as you adjust to changing financial situations. A budget is a simple but effective financial strategy.

#3- Work With A Financial Professional.

A financial professional can help evaluate your financial situation and provide ideas to become financially well. Work with them to create a financial plan to help prepare you for the future by examining your financial stability today.

#4- Eliminate Debt And Control Credit Card Use.

Interest rates and fees can negatively impact your finances, especially if you’re working toward a secure financial future. High-interest rates cost you more, so work toward paying higher interest rate debts off first or negotiating a lower interest rate. If appropriate, consider refinancing or finding a new lender to consolidate debt at a lower interest rate and then transfer credit balances.

#5- Fully Fund An Emergency Fund.

Ideally, you should have three to six months of living expenses saved in an easily accessible account that you intend to use only for emergencies. Once you reach six months of emergency savings, continue to save. Right up until you reach another milestone, such as one year of living expenses.

#6- Save For Retirement.

Saving for retirement by participating in your employer’s retirement savings plan and on your own is essential. Ensure you save enough to receive your employer’s match and automatically increase your contributions yearly through automation. Consider contributing to a Roth IRA with after-tax dollars and work towards maximizing your contributions.

Your financial professional can help you by assessing your financial situation today. By offering suggestions to get your finances on track, and helping you prepare for the future with a financial plan. And develop financial strategies best for your situation.

#7- Purchase Life Insurance.

Life insurance is one way to protect your family from financial hardship if you die prematurely. To determine how much life insurance death benefit you should have, factor in the cost of caring for your children each month and their cost after you are gone each year until age 21. Several types of life insurance to consider are term, guaranteed, or indexed universal. Financial and insurance professionals can help you find insurance that meets your unique needs and budget. Guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.

#8- Have Essential Legal Documents Drafted Or Updated.

Generally, a will determines who will care for your children if you die. While an estate plan details how your assets will distribute to beneficiaries. A power of attorney document gives someone the legal right to make decisions on your behalf while you are still living. Consider a medical directive or medical power of attorney document to handle your medical decisions. If you cannot do so yourself. Work with a legal professional to determine which documents are appropriate for your situation.

SWG 2568567-1122c The sources used to prepare this material are believed to be true, accurate and reliable, but are not guaranteed. This information is provided as general information and is not intended to be specific financial or tax guidance. When you access a link you are leaving our website and assume total responsibility for your use of the website you are linking to. We make no representation as to the completeness or accuracy of information provided at this website. Nor is the company liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technologies, websites, information and programs made available through this website.

In addition, M3 Wealth specializes in providing strategies and guidance for those who are seeking a better lifestyle in retirement. If you have retirement savings of five million dollars or $50,000, we can ensure it works as hard. As a result, we offer our experience and knowledge to help you design a custom strategy for financial independence. Contact us today to schedule an introductory meeting!

5 Ways To Plan Your Legacy In Retirement

As you retire and continue to grow your wealth, you may want to give back to others. Allowing you to plan your legacy through philanthropic giving in retirement.

Philanthropic giving casts a broader net of giving over charity as it helps society or organizations flourish over time. While the goal of philanthropic giving is on the impact it makes, it also may help reduce your income tax. It may also reduce capital gains tax in retirement and estate taxes for heirs.

As you plan your legacy, work with your financial and tax professionals to determine which philanthropic vehicles may be appropriate for your situation. Here are some vehicles strategies you may want to consider depending on your unique situation:

1. Life Insurance

The primary purpose of life insurance is to provide financial resources for those that depend on you when you die. However, you can lessen the complexity of philanthropic giving through wealth transfer by using life insurance as a gifting strategy. Guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.

Additionally, here are the various ways to gift permanent life insurance as part of your wealth transfer strategy. In order to benefit your favorite charitable organizations and plan your legacy:

Name The Organization As The Beneficiary

This method is the easiest way to use life insurance to give to charity. However, naming a revocable beneficiary is one way the donor can change the beneficiary. Naming a revocable beneficiary enables the donor to remain in control of the insurance policy if their wealth transfer plan changes. Also, naming a charity upon death keeps the charitable gifting transaction private.

Gift The Policy Dividends

The donor can gift the policy dividends to charity, keeping the death benefit for other beneficiaries or another charity. The donor can take the policy’s dividends in cash and donate cash with this option. With this method, the dividend donation is tax-deductible.

Donate The Life Insurance Policy (Policy Donation)

The donor continues to make all premium payments on a policy they donate to charity. There is no limit on the size of the policy donation. The policy pays in full upon the donor’s death. Gifting through a policy donation can help reduce the donor’s estate taxes and provide a much more significant benefit to the charity, which has no tax consequence from the gift.

Life insurance can provide a donation more extensive than the premiums paid, making life insurance a suitable option for charitable giving. The benefits of giving through life insurance include:

  • The policy value continues to grow over time until the donor dies.
  • Gifting life insurance provides a much larger donation than if given in cash.
  • The donor can make smaller payments through monthly premium payments.

2. IRA Qualified Charitable Distributions (QCDs)

If you’re age 70 1/2 or older, you can use a qualified charitable distribution or QCD to donate directly from your IRA to the charity of your choice. QCDs count toward your required minimum distributions (RMDs) for tax purposes. However, you cannot claim the RMD amounts as charitable donations if you itemize your deductions.

Without using a QCD, taking a distribution from your IRA and donating it to charity may be more expensive for you since the distribution may be more than the IRS charitable deduction due to the limits to philanthropic contributions under the IRS code. Talking to your tax and financial professionals before using a QCD strategy for philanthropic giving would be appropriate.

3. Donor-Advised Funds (DAFs)

You can donate cash or other assets to a charitable investment account and receive a tax deduction immediately with a DAF. Since a DAF grows tax-free, you may distribute funds over time to organizations and causes or time your contributions to coincide with higher-income years for a more significant tax deduction.

4. Private Foundations

A private foundation is an independent legal entity set up solely for charitable purposes. The funding is typically provided by an individual, a family, or a corporation, which receives a tax deduction for donations. A private foundation is controlled by the donor, which determines the following:

  • The mission of the foundation
  • Who is on the board
  • Where the funds are invested
  • How, where, and when are the funds are given away

To determine if forming a private foundation is appropriate, consult a legal professional, as there are rules and regulations to follow, reports to file, and costs associated with it.

5. Charitable Trusts

The two types of charitable trusts you may want to incorporate into your financial plan include charitable lead trusts (CLTs) and charitable remainder trusts (CRTs) that benefit the charity of your choice and you as a donor:

  • A charitable lead trust (CLT) is an irrevocable trust designed to reduce transfer taxes upon inheritance that can be funded with cash, publicly traded stock, real estate, private business interests, private company stock, and other assets.
  • Charitable remainder trusts (CRTs) are irrevocable trusts that let you donate assets to charity and draw annual income for life or a specific period.

If you plan to include securities in your trust, you must consult financial and legal professionals before drafting your trust documents and forming your trust.

Now that you know some of philanthropic vehicles used to benefit charities, meet with your financial, legal, and tax professionals to plan your legacy now or in retirement.

SWG 2568567-1122b The sources used to prepare this material are believed to be true, accurate and reliable, but are not guaranteed. This information is provided as general information and is not intended to be specific financial or tax guidance. When you access a link you are leaving our website and assume total responsibility for your use of the website you are linking to. We make no representation as to the completeness or accuracy of information provided at this website. Nor is the company liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technologies, websites, information and programs made available through this website.

In Conlcusion

In addition, M3 Wealth specializes in providing strategies and guidance for those who are seeking a better lifestyle in retirement. If you have retirement savings of five million dollars or $50,000, we can ensure it works as hard. As a result, we offer our experience and knowledge to help you design a custom strategy for financial independence. Contact us today to schedule an introductory meeting!

Savings Statistics To Help Motivate You To Save More In 2023

As we enter the New Year, your financial security be top of mind as you work towards your goals. Here are some saving statistics to help motivate you.

There are many ways to save using different wealth-building accounts and strategies to help ensure you’re not putting all of your savings into one account or investment strategy. This article presents savings statistics that may surprise and motivate you to save more this year. Use these savings statistics to gauge your savings and then take the appropriate actions toward these age-related milestones.

Savings Accounts

Many people have savings accounts, and the average balance can vary. But if your balance is near zero, it may indicate that you’re living paycheck to paycheck. Here’s how much Americans have in their savings accounts by age:

  • Under age 35 – $11,250
  • Ages 35-44 – $27,910
  • Ages 45-54 – $48,200
  • Ages 55-64 – $57,670
  • Ages 65-74 – $60,410

Source: The Average U.S Savings Account Balance by Age, AdvisorSmith.

Retirement Savings Balances

Retirement savings accounts can be Roth IRAs, which fund with after-tax contributions, 401(k)s, 457(b) plans, and other pre-tax retirement savings accounts that fund with pre-tax contributions. Basically, see how your retirement savings combined balances compare based on your age to these approximate values:

  • Under age 25 – $6300
  • Ages 25-34 – $37,200
  • Ages 35-44 – $97,000
  • Ages 45-54 – $179,200
  • Ages 55-64 – $256,200
  • Ages 65+   – $280,000

Source: How America Saves 2022, Vanguard.

Retirement Savings Contributions

Retirement savings contributions are easy to automate and can automatically increase with age. Monthly contributions are set up as a percentage of your monthly income and can be a starting point to determine if you need to save more to meet the IRS contribution limits. Although, your financial professional can help you plan for your retirement by inputting your current retirement savings balances, monthly contributions, and assumed portfolio returns to help you understand if you’re on track or may have a retirement savings gap. How do these savings statistics encourage you?

  • Under age 25 – 8.0%
  • Ages 25-34 – 10.8%
  • Ages 35-44 – 11.3%
  • Ages 45-54 – 11.9%
  • Ages 55-64 – 13.3%
  • Ages 65+   – 13.1%

Source: How America Saves 2022, Vanguard

New IRS Retirement Savings Contribution Limits For 2023

Additionally in 2023, the contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increasing to $22,500, up from $20,500.

The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan is increasing to $7500, up from $6500. Therefore, participants in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan who are 50 an older can contribute up to $30,000 starting in 2023. The catch-up contribution limit for employees aged 50 and over participating in SIMPLE plans is increased to $3500, up from $3000.

In addition, the limit on annual contributions to an IRA is increasing to $6500, up from $6,000. The IRA catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000. You can learn more about 2023 retirement savings contributions by visiting the IRS.gov website or contacting your financial professional to determine how you can save in 2023. All things considered, I hope these savings statistics help motivate you or encourage you.

Disclosure

SWG 2568567-1122d The sources used to prepare this material are believed to be true, accurate and reliable, but are not guaranteed. This information is provided as general information and is not intended to be specific financial or tax guidance. When you access a link you are leaving our website and assume total responsibility for your use of the website you are linking to. We make no representation as to the completeness or accuracy of information provided at this website. Nor is the company liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technologies, websites, information and programs made available through this website

In Conclusion

In addition, M3 Wealth specializes in providing strategies and guidance for those who are seeking a better lifestyle in retirement. If you have retirement savings of five million dollars or $50,000, we can ensure it works as hard. As a result, we offer our experience and knowledge to help you design a custom strategy for financial independence. Contact us today to schedule an introductory meeting!

7 Actions To Help Boost Your Retirement Savings In The New Year

Planning for retirement by implementing appropriate retirement savings strategies can help boost your retirement savings. It’s essential to realize that saving for retirement happens over time through varying market performance cycles and specific actions.

Here are seven steps that could help you boost your retirement savings in the New Year:

#1- Get Your Employer’s Matching Retirement Savings Dollars

Contribute enough to your employer’s plan to receive a matching contribution (commonly a 2-4% match). You may have the option to contribute to pre-tax and after-tax retirement savings accounts and choose where to apply your employer’s match. Ensure you’re not throwing away ‘free money’ by contributing less than the minimum required by checking your contribution amount and employer retirement plan documents.

#2- Maximize Your Retirement Savings Contributions

If you’re over 50, the IRS allows you to contribute more through catch-up provisions for your pre-tax and after-tax retirement savings accounts. Check with your financial professional for the New Year’s Roth IRA, IRA, 401(k), 403(b), and 457 plan contribution limits if you intend to save more by maxing out your contribution limits.

#3- Fund A Roth IRA

Roth IRAs fund with after-tax contributions, so you pay taxes upfront. When you take distributions, both the contribution and accumulation are tax-free. However, the IRS ‘five-year rule’ says you cannot withdraw earnings tax-free or without a 10% penalty before age 59 1/2 or until at least five years since you made your first contribution to the account.

Anyone can open a Roth IRA at any age, as long as they have income. But income limits apply and can vary from year to year. Reach out to your financial and tax professionals to determine if you are eligible to contribute and the contribution limits for this year.

#4- Assess Your Portfolio’s Risk And Allocations

Meet with your financial professional to determine if your risk tolerance and portfolio allocations are appropriate. Your financial professional will assess your timeline, performance, how inflation may impact your retirement savings, and other factors as they work towards evaluating your portfolio.

#5- Consider Other Retirement Savings Strategies

Different strategies that you can contribute towards now can help fund your retirement income later, such as:

Fixed-indexed annuities are contracts purchased directly from an insurance company or a financial institution. Annuities are purchased with a one-time or series of payments over time. If you have retirement savings plans from past employers, you can use the value to buy an annuity. Some features of annuities include:

  • Provide income for life
  • Protect against market risk- the initial investment and accumulation are protected when the market declines.
  • Annuities offer tax efficiency while they grow.
  • Lock in gains based on market performance

Life Insurance can be used for retirement income when you borrow against the policy’s cash value (without tax consequences) to supplement your retirement. You will still have some remaining death benefits if you don’t use all of the cash value or surrender the policy.

Policy loans and withdrawals will reduce available cash values and death benefits, and may cause the policy to lapse or affect any guarantees against lapse. Additional premium payments may be required to keep the policy in force. In the event of a lapse, outstanding policy loans in excess of the unrecovered cost basis will be subject to ordinary income tax. Withdrawals are generally income tax-free unless the withdrawal amount exceeds the premium paid. Tax laws are subject to change. Clients should consult their tax professionals.

Talk to your insurance professional to understand the details of using life insurance for retirement funding. How it may or may not be an option, depending on your unique situation.

#6- Engage In Tax Planning

Part of your retirement savings should be in tax-sheltered accounts. Discuss your portfolio and each investment strategy with your financial and tax professionals. In order to ensure you are paying the appropriate amount of taxes. They can also help you prepare for taxes in retirement when you start taking distributions from your retirement savings.

#7- Have A Financial Plan Completed

Meet your financial professional for a financial planning meeting and have a financial plan completed or updated. A financial plan is crucial. It provides a roadmap to determine if your risk tolerance, asset allocations, and timeline until retirement are still on target. A financial plan can help you focus on boosting your retirement savings in the New Year.

SWG 2568567-1122a The sources used to prepare this material are believed to be true, accurate and reliable, but are not guaranteed. This information is provided as general information and is not intended to be specific financial or tax guidance. When you access a link you are leaving our website and assume total responsibility for your use of the website you are linking to. We make no representation as to the completeness or accuracy of information provided at this website. Nor is the company liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technologies, websites, information and programs made available through this website.

An annuity is intended to be a long-term, tax-deferred retirement vehicle. Earnings are taxable as ordinary income when distributed, and if withdrawn before age 59½, may be subject to a 10% federal tax penalty. If the annuity will fund an IRA or other tax qualified plan, the tax deferral feature offers no additional value. Qualified distributions from a Roth IRA are generally excluded from gross income, but taxes and penalties may apply to non-qualified distributions. Consult a tax advisor for specific information.

In Conclusion

In addition, M3 Wealth specializes in providing strategies and guidance for those who are seeking a better lifestyle in retirement. If you have retirement savings of five million dollars or $50,000, we can ensure it works as hard. As a result, we offer our experience and knowledge to help you design a custom strategy for financial independence. Contact us today to schedule an introductory meeting!

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