5 Ways To Plan Your Legacy In Retirement

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!

12 Tips To Help Your Holiday Budgeting

Holiday spending and holiday budgeting go hand-in-hand. Holiday spending doesn’t just include gifts. Holiday spending on food, decorations, travel and more during the holiday season may often increase your monthly spending.

Don’t let the holiday season take a toll on your wallet and avoid a New Year’s Day debt hangover by using these twelve tips when you begin your holiday budgeting:

Tip #1

Determine an amount you feel comfortable spending this holiday season, then stick to it!

Tip #2

Make a list of everyone you’d like to buy gifts for and assign a dollar amount to each. Use your list to keep your spending on track with your budget.

Tip #3

Make gifts to save money and show the recipient what they mean to you by giving them something unique

Tip #4

On tip for holiday budgeting starts way before the holidays. Save ahead of the holiday season and utilize your bank’s automatic transfers to set up a holiday savings account.

Tip #5

If you plan to use credit, consider using a credit card that offers cash back or rewards. You may gain additional benefits or rewards to help lower the cost of spending.

Tip #6

Don’t settle for the first price tag you see when shopping for specific items. Research other local stores or search online to see if you can find a lower price.

Tip #7

Watch for sales or price cuts instead of waiting for Black Friday or Cyber Monday. Many retailers offer discounted items ahead of these one-day sales events.

Tip #8

Buying last year’s edition of a big-ticket item may save you money since retailers discount big-ticket items at the end of the year to make room for newer models.

Tip #9

Watch for travel specials on airlines or trains, or determine the cost of driving to your destination. Purchase tickets early, book hotels early, and set aside money ahead of the holiday travel season.

Tip #10

Shop for groceries that can be frozen or dry stored when they are on sale versus last minute. Consider using off-brand versus name-brand products if they will save you money.

Tip #11

Reuse decorations, extra cards, mismatched paper goods, and gift wraps to create a unique look and save. You can also check thrift stores for holiday items at a reduced cost or consider swapping these items with a friend to save even more.

Tip #12

The final holiday budgeting tip is. Don’t wait until the last minute, as rushing may lead to overspending.

SWG 2444322-0922a 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!

Incorporating Giving Back Into Your Year-End Financial Planning

If you’re incorporating giving back as part of your year-end financial planning, there are many ways you can do so.

You can make an impact while receiving tax benefits by giving as part of an approach to charitable giving. You may want to consider philanthropic giving. Which addresses the root cause of social issues and requires a more strategic, long-term strategy, versus donating which tends to be more occasional giving.

Philanthropic giving often includes inviting younger generations to participate to become part of a family’s legacy. Here are actions to guide you as you work towards having philanthropy as part of your financial planning:

1. Identify Your Values

Determine your reason for incorporating giving and what you want to change. Since philanthropy is giving over time, determine how long you want to give and if you want it as part of your family’s legacy for the next generation to manage.

2. Define Your Goals

Your financial professional can help you define your goals and implement a giving plan as part of your financial plan. Each year, evaluate how much you intend to give and when. Depending on your circumstances, you may include a giving schedule, such as quarterly or a one-time contribution each year. Other things to consider when defining your philanthropic goals include:

  • Your giving in retirement
  • Icorporating giving through your estate plan
  • Including giving as part of a business-exit strategy

3. Select Your Charities

To ensure a charity is legitimate, ask the charity for details about their mission and how they’ll use your donation. The charity should also provide proof that it’s a 501(c)(3) public charity or private foundation so that your contribution is tax-deductible. As a second fact check on the charity, visit the IRS Tax Exempt Organization Search list to ensure it is a reputable, tax-exempt charity.

4. Understand How To Maximize Giving

Financial and tax professionals can help you determine how to maximize the tax advantages of giving. As tax laws change, your financial plan and giving plan may need to revise so that you receive the tax benefits of your gift. Here are a few ways to maximize when incorporating giving:

  • Qualified Charitable Distributions (QCDs)- If you’re age 70 1/2 or older, you can use a QCD to donate directly from your IRA to the charity of your choice. This strategy allows you to deduct the amount transferred to the charity from your taxable income. You can use a QDC each year versus taking the distribution and paying taxes.
  • Bunch your donations- By making charitable contributions for several years at one time, the total of your itemized deductions may exceed the standard deduction and offer some tax benefits.
  • Itemize your contributions- Charitable contributions can reduce your tax bill if you choose to itemize when filing your taxes. Work with your tax professional to determine how to itemize your giving if the total of your deductions plus charitable gifts equals more than the standard allowable deduction.

5. Determine Which Strategies To Use

There are strategies that you can use or establish to help you organize your giving within your financial plan, such as:

  • Donor-Advised Funds (DAF)- DAF allows you to donate cash or securities, which are non-refundable, to a nonprofit organization. You may claim a tax deduction for the year you contribute to the DAF rather than the year your contribution goes to the charity. Stay in touch with your financial professional, as proposed legislative changes may impact when donors can receive the tax deduction.
  • Charitable Trusts- A charitable trust allows you to donate assets to a chosen tax-exempt organization to help you minimize taxes. Consult your financial and legal professionals to help you understand how trusts work and if you intend to include giving securities as part of your giving plan.
  • Private Foundations- A private foundation (PF) is a nonprofit charitable entity created by an individual or a business. An initial donation, known as an endowment, is used to generate income to make grants to charities per the foundation’s charitable purpose. Consult with your financial, legal, and tax professionals to determine if a PF is appropriate for your situation.

6. Consider Giving Other Assets

Also there are other assets you can give as part of your financial plan that are not associated with securities:

  • Real Estate- If you have a property you no longer need, you can donate it to charity.
  • Cash- With a cash gift, you may receive a tax deduction equal to the amount of money you donated minus the value of any products or services you received.
  • Life insurance- You can name a charity as the beneficiary on your life insurance contract or choose to donate the cash value accumulation each year.
  • Art and collectibles- Gifted art and collectibles can be auctioned to raise money at charity events. To use either as part of your giving, have a certified appraisal completed with reporting.  You can submit the appraisal information and the donation documentation at tax time, indicating the value of your donation. Consult your tax professional regarding how to value and report these specific assets.

A benefit of incorporating giving in your financial plan is that it helps to ensure that your goals are listed. In addition a plan implements appropriate strategies, and progress towards your goals is monitored. Contact your financial professional to start your on-going year-end giving plan today.

Disclosure

SWG 2444322-0922d 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!

Thinking About Delaying Retirement? Here’s What To Consider

If you’re unsure about retiring and are considering delaying retirement, you must consider if you have enough retirement savings. Do this before making your decision. Examining retirement savings benchmarks and having a comprehensive financial plan that outlines specific actions are the first steps toward knowing if you should delay your retirement. Also, some questions to ask yourself to help determine your retirement readiness include:

  • Do you save money to cover unforeseen emergencies?
  • Do you follow a monthly budget?
  • Is your saving and spending in balance?
  • Have you discussed significant financial decisions with others before making them?
  • Do you have a financial plan that you monitor and adjust?
  • When was your last annual money checkup?
  • Do you work with a financial advisor?

Other Indicators For Retirement Readiness

In addition, there are several indicators of retirement readiness beside the above topics. All in all, knowing if you are on track or should delay retirement should include age-based benchmarks aligned with your goals and your unique situation. To determine your unique retirement savings benchmark, you will need the following information:

  • How much you’ve saved
  • Your age
  • Your gross yearly income

Income Replacement Strategies

Another key point is to aim to replace 80% of your income in retirement as a starting point for your retirement savings.  This may help you maintain the same lifestyle you have today. Once you determine how much you will need in retirement, adjust your retirement savings benchmark up or down. Although adjustments are based on your unique situation and account for all sources of retirement savings income in your calculation:

  • 401(k)
  • IRA
  • Roth IRA
  • Annuities
  • Pension
  • Social Security
  • Other retirement savings

In addition here’s an example of how age-based benchmarks work:

Current Age retirement savings need retirement savings benchmark
Age 55 7 times your yearly salary =
Age 60 8 times your yearly salary =
Age 65 9 times your yearly salary =
Age 67 10 times your yearly salary =

Source: Forbes

Consult With A Professional Before Delaying Retirement

Once you have considered your retirement readiness and age-based benchmarks and delaying retirement. In addition, work with a financial professional to help you identify the actions necessary to pursue or delay your retirement. Your financial professional may also include:

  • Insurance analysis
  • Tax analysis
  • Inflation scenarios
  • Identifying retirement savings strategies
  • Managing portfolio risks

However, financial planning is about saving enough for retirement and determining specific retirement income goals, strategies, and actions to achieve them. In addition. deciding if you should be delaying retirement, comprehensive planning considers your future expenses, liabilities, and life expectancy. Therefore once you have the information, you can make an informed decision about your situation.

SWG 2444322-0922e 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 the information provided on 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. All in all, contact us today to schedule an introductory meeting!

Drawing Social Security Early And Still Working? Here’s What You Need To Know.

Some people decide to retire early and start drawing Social Security early. Many people are unable to live out their retirement plans due to inadequate retirement savings. In addition, many are spending retirement working another job.

However, some people enjoy working and want to do so during retirement. It’s appealing to be able to work part-time or where you have an interest. Or even start a small business while making an income and receiving Social Security retirement benefits.

Early Retirement

While early retirement and a part-time job may be of interest to you, they can affect your Social Security Retirement benefits. If you aren’t at full retirement age. Your Social Security retirement benefits may be subject to taxes if your combined income, Social Security, and wages exceed a certain threshold. Combined income is your adjusted gross income plus one-half of your Social Security benefit plus any income earned from tax-exempt interest income. There is no age limit, including income from all sources, earned or unearned.

Often, retirees are confused about the impact of working in retirement. You can still collect Social Security benefits, but earning above a certain amount may reduce your monthly benefit. Here are a few things you need to know about working and drawing Social Security Retirement benefits:

  • If you are drawing benefits and you are younger than your full retirement age (FRA), Social Security will deduct $1 from your benefits for every $2 or $3 you earn above a certain amount.
  • After you reach full retirement age, Social Security will increase your benefits to account for the money it withheld earlier.
  • Earned income is income from work or self-employment and includes your salary, bonus, or net self-employment income.
  • Any benefits that reduce due to too much earned income are not truly lost and will be added to your benefit once you reach your FRA.

Source: What Income Reduces Social Security Benefits? Investopedia

Test Calculator

Use the Social Security Retirement Earnings Test Calculator to determine if you are at risk for reduced Social Security benefits if you continue working. Social Security can be confusing, and if you have any questions regarding your benefits, including when to claim them.  Contact your local Social Security Administration office to schedule a meeting.

Taking Benefits Early

Suppose you plan to take Social Security Retirement benefits early and continue to work. In that case, you can modify your financial plan to reflect how working may or may not benefit you. Once your financial professional has run your Social Security Retirement benefits and income scenario, you can make a more informed decision. Contact your financial professional today regarding how working in retirement may impact your situation.

Disclosures

SWG 2444322-0922b 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 the 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.  This article is not endorsed or approved by any other Government Agency.

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!

The Fed Is Rising Interest Rates: Will It Impact You?

Interest rates are rising again as The Fed continues working towards raising the target interest rate to a “terminal rate,” or endpoint, of 4.6% in 2023. The terminal rate implies a quarter-point rise next year but no decreases, with a goal to slow spending and help curb the inflation rate as it stretches the dollar.

Raising interest rates is how The Fed works towards lowering the inflation rate since American consumers are paying more at the grocery store, gas pumps, for electricity, and consumer staples such as household goods and hygiene products. The interest rate hike to help curb inflation is due to multiple things:

  • Supply chain issues
  • A shrinking workforce
  • Higher wage demands
  • Increasing raw material costs
  • Unpredictable oil prices and transportation costs

Interest rates and inflation are generally tied together as The Fed attempts to control both and help boost the economy. Here are ways that raising interest rates may impact you:

#1- Borrowing Becomes More Expensive

For those shopping for a new home, borrowing becomes more costly due to higher interest rates. An interest rate hike may make affording a home impossible since the higher interest rate can make the monthly premium, plus interest and mortgage insurance push the borrower under the qualification debt-to-income ratio limit on the loan.

#2- Increasing Interest Rates May Increase The Debt

Small interest rate hikes spread over a few months likely won’t be as impactful to individuals with low debt-to-income ratios. But for those with a lot of debt, increasing interest rates are unwelcome because they may increase what they owe if they carry a monthly balance. Here are debts that are interest-rate sensitive:

  • Student Loans
  • Home Mortgages with Variable Rates
  • Credit Card Interest Rates
  • Auto Loans

While some of these debts may have a set interest rate, the rate often depends on the prime rate, the rate The Fed borrows to banks. The banks then mark up the rate, which is the rate they charge lenders on loans.

#3- Stocks And Bonds May Be Impacted

Higher rates can affect companies’ stock prices by influencing their bottom lines. Higher rates make it more difficult to borrow, expand, acquire competitors or partners, and slow stock repurchases.

Bond yields, closely correlated to the federal funds rate, move opposite their prices. When The Fed raises interest rates, the action implies a bond rout, and bonds trade with negative yields.

Ways To Offset Inflation And Rising Interest Rate Risk

While investors can’t control interest rates, there are actions they can implement to help decrease the impacts:

  • Allocate part of your portfolio to specific products to allow asset allocation strategies to address rising interest rates.
  • Improve your financial literacy about the correlation between interest rates and inflation.
  • Develop a budget to manage your spending
  • Reduce your use of credit since inflation generally increases interest rates

Are you concerned about interest rates and portfolio performance? Your financial professional may help reduce your anxiety about rising interest rates and determine appropriate strategies to help mitigate interest rate risk in your portfolio. Contact them today.

SWG 2444322-0922c 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!

Is Now The Suitable Time To Sell Your Home?

There are several reasons why now may be a suitable time for you to sell your house. Depending on your situation, here is what you should consider in your decision:

Timing

Historically, spring and summer are when buyers start shopping for their new home, but so are fall and winter. The geographic location and climate where your home is located should determine when you should list your home. But remember, following home season cycles may mean you may have more competition. Do your research online or talk to a realtor before making your decision.

Inventory

Over the past year, surplus buyers and low inventory have resulted in bidding wars and higher home prices. While this has benefitted sellers in the past, not all geographic areas are still experiencing low inventory.

Interest Rates

The Fed is working to lower inflation by raising interest rates which impact the interest rates on mortgages. The average rate on a fixed rate 30-year mortgage is 5.54%, significantly higher than one year ago. Rising interest rates may keep some borrowers out of the market if their increased monthly payment no longer qualifies them for a mortgage. You may consider how rate increases may impact your ability to sell quickly.

More Home Equity

Since home values have risen nationally, you may have a record level of equity at your disposal. You can use the extra funds to purchase a new home, expand your real estate portfolio, or invest in other wealth-building strategies.

Increased Profit

If you put your property on the market, there’s a possibility it will sell quickly for the top dollar, given the current housing market. If you decide to sell your primary home, you may have to pay more to live in a comparable property.

According to Bankrate, there are signals to look for to determine the appropriate time to sell your home:

When Is It A Good Time To Sell?

  • If interest rates are low- Low interest rates entice more prospective buyers to enter the market, which is advantageous to sellers. An increased number of buyers shopping for homes often leads to bidding wars and drives up home prices, meaning you can likely sell your home for a solid profit.
  • If supply is short- A shortage of housing inventory also drives up demand and prices for available homes. What’s more, when housing supply is low, homes on the market tend to sell much faster.
  • If you’re ready to downsize- Downsizing may be a more budget-friendly choice than maintaining a larger, costlier home. For older homeowners, downsizing may even be a necessity.
  • If you need to relocate- If you’re relocating to a new state for a job or want to enjoy your retirement in a new area, and you need the profits from the sale to put toward your new place, selling is unavoidable.

When Is It A Good Time To Wait?

  • If rates are rising- Rising mortgage rates often mean fewer buyers and a smaller pool of buyers who can afford to offer the price you want.
  • If you’re upsizing- The cost to purchase a new, bigger home may be unaffordable in a hot market.
  • If you’ve recently refinanced- If you’re recently refinanced your mortgage, it may not make financial sense to sell just yet. You may actually lose money doing so, when considering the closing costs and other fees typically paid as part of the refinancing process.
  • If your home is in poor condition- Got a long list of repairs waiting to be completed around your home? You may want to postpone selling until some of the work can be done. It’s important to show your home in its best light in order to land the most favorable offer possible.
  • If you have no game plan- If you’re simply trying to time the market to make a profit and have no plan for after your home is sold, it may be best to wait.

Source- Should I sell my house now or wait? Bankrate.com

In Closing

There is a lot to consider before deciding to sell your home. Your financial professional can help you investigate home trends in your area and determine an appropriate strategy for your situation and how selling your home now may impact your finances.

SWG 2306340-0822d 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 Things To Consider When Starting Estate Planning

One thing to keep in mind about starting estate planning is not to set it and forget it. As life changes, your estate plan should too.

The reason people choose an estate plan is that it avoids probate.  Starting an estate plan helps ensure that your money, property, and assets transfer more easily to your beneficiaries after you die. Here are five things to keep in mind as you start your estate planning process:

Keep An Up-To-Date Inventory Of Your Assets

You may not realize how valuable your assets are or who may want them when you’re gone, so be sure to list who receives each asset and the approximate value of each in the estate plan. During the estate planning process, asset information to keep in mind includes homes, land, other real estate, vehicles, boats, and collectibles. Intangible assets to include in an estate plan are savings accounts, life insurance policies, retirement plans, ownership in a company, and more.

Remember To Establish A Will Or Update Your Last Will

Even if you have an estate plan, you will also need a will since it takes care of assets or details that may not be included in your estate plan document. Work with a legal professional to create a last will that will detail your wishes regarding the distribution of your property, money, and assets. Your will is also the document to appoint someone to care for minor children or pets. Keep this document up to date as your financial and familial situation changes.

When Starting Estate Planning Consider Using A Living Trust

A house is an excellent example of something that can be extremely time-consuming and emotionally exhausting to transfer after someone dies. If you don’t have a living trust document, your family may need to go through probate. This is a tedious court process to transfer your assets retroactively, which can be expensive and public.

Establish Your Directives

A complete estate plan includes legal directives such as a power of attorney document, a medical care directive, and a trust document. Who you choose as your power of attorney is a critical decision. So choose wisely and keep your power of attorney document up to date. In case the relationship with that individual(s) changes.

Review Your Beneficiaries

Consistently check the beneficiaries listed on your retirement and insurance plans. These designations can outweigh what is listed in a will. Life transitions that may prompt a change in beneficiaries. These transitions include divorce, the birth of a new child, the loss of a loved one, a marriage, etc.

In Conclusion

Your legal and financial professionals will work together to help ensure that your estate plan contains specific information regarding your securities and retirement assets to help transfer your assets to your heirs when it’s time.

SWG2379430-0822b 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!

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