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10 Signs That Your Retirement Fund is Not Adequate

Jan 10, 2022

The last thing anyone wants is to run out of money in retirement. But that can indeed happen, and does sometimes happen, to retirees who didn’t plan adequately. If any of these ten signs sound familiar, you might want to review your retirement savings strategy before you set a target retirement date.


You haven’t considered the impact of inflation. Did you know that at the current rate of inflation, your spending power could be reduced by more than half within 20 years? What sounds like a lot of money now might not stretch as far as you expect in the future. 


You haven’t considered your life expectancy. Did you know that one in four 65-year-old people today will live until age 90? Could that be you? And can you afford a retirement that lasts that long? 


You don’t have a plan for long-term nursing care. Long-term nursing care costs thousands per month, and Medicare actually does not pay for it (except for very limited stays). One illness or injury could quickly deplete your retirement savings. 


You’ve underestimated the cost of healthcare in retirement. Similarly, Medicare also does not pay for 100 percent of regular healthcare costs. Most would-be retirees are surprised to learn that healthcare costs about $250,000, on average, over the course of retirement. 


You don’t know how income taxes will impact you. Are you surprised to learn that your retirement income might be taxed? If that news came as a shock, you should reexamine your anticipated budget. 


You’re divorced or considering a divorce. If you’ve already divorced, then you might already know that your retirement fund took a hit. But if you’re considering a divorce in the years before retirement, you might consider marriage counseling instead. A divorce can result in your retirement fund being divided in half. 


You haven’t considered your future spending habits. Have you realistically estimated your budget for travel, hobbies, and entertainment? You might be tempted to spend more on these items than you think. 


You would have difficulty affording a large, unexpected expense. And what about the cost of a major car or home repair? How would you fit that into your budget?


You frequently overspend on children and grandchildren. Sometimes loving our famlies a bit too much can get us into financial trouble. Make sure you’ve considered the cost of gifts, college, or helping during emergencies. 


You don’t have a retirement plan withdrawal strategy. How much money are you planning to withdraw from your retirement fund each year? And how long will your money last with that plan? If you can’t answer these questions satisfactorily, it’s time to schedule an appointment with us. Let’s talk about your withdrawal strategy so that you know what to expect from your savings. 

Life Insurance for Different Life Stages: Tailoring Your Policy to Your Needs

16 Apr, 2024
Life insurance isn't one-size-fits-all. Just as your life evolves over time, so too should your insurance coverage. Whether you're starting your career, raising a family, or enjoying retirement, understanding how to tailor your life insurance policy to your current life stage is essential for ensuring adequate protection for you and your loved ones. Starting Out: Young Professionals As a young professional just starting out in your career, life insurance might not be at the top of your priority list. However, this is the ideal time to secure coverage, as premiums are typically lower when you're young and healthy. A term life insurance policy can provide affordable protection for your loved ones in the event of your untimely passing while also allowing flexibility to upgrade to permanent coverage later on. Growing Family: Parents and Homeowners For parents and homeowners, life insurance becomes even more crucial. You want to ensure your family is financially secure and able to maintain their standard of living if something were to happen to you. Consider a combination of term and permanent life insurance to cover immediate expenses, such as mortgage payments and childcare costs, as well as long-term financial needs like college tuition and inheritance planning. Midlife Milestones: Empty Nesters and Career Climbers As your children grow up and become financially independent, your insurance needs may shift. You might choose to adjust your coverage to reflect your changing financial obligations and goals. This could mean reducing coverage amounts or transitioning to a policy with cash value accumulation features, such as whole life insurance, to supplement retirement savings and leave a legacy for your heirs. Retirement: Golden Years and Legacy Planning In retirement, life insurance can still play a valuable role in your financial plan. While your need for income replacement may decrease, you may still want coverage to cover final expenses, estate taxes, or leave a financial legacy for your loved ones. An insurance policy with guaranteed death benefits, such as universal life insurance, can provide peace of mind and help protect your assets for future generations. Review and Adjust Regularly Regardless of your life stage, it's essential to review your life insurance coverage regularly to ensure it continues to meet your needs. Major life events, such as marriage, divorce, birth of a child, or career changes, may warrant updates to your policy. Working with a trusted life insurance broker can help you incorporate these changes into your long-term plans and make informed decisions about your coverage. Life insurance is a vital component of your financial plan at every stage of life. Meet with us now and regularly in the future so that we can help you evaluate and adjust your life insurance policy to ensure that it truly meets your needs.

How to Safeguard Against an IRS Audit

08 Apr, 2024
Receiving a notice from the IRS for an audit can be a nerve-wracking experience. The time, effort, and potential financial consequences make it a situation you'd rather avoid. Fortunately, many audits stem from avoidable errors. Here's how you can avoid the five most common audit triggers and keep your tax returns in the clear. Ensure You Report All Income Income discrepancies are a major red flag for the IRS. While taxes are typically withheld from regular wages, other sources of income, like business earnings or capital gains, may not have taxes automatically deducted. Be vigilant in accurately reporting all sources of income, whether you receive a 1099 form or not. Document and report any non-wage income meticulously to prevent underreporting. Explain Significant Income Fluctuations Significant fluctuations in income from year to year can draw the IRS's attention. If your income varies widely, provide explanations or notes with your tax filings. Whether it's due to changes in business circumstances or other factors, clarifying these fluctuations can help prevent misunderstandings. Document Business Losses Carefully While it's common for businesses to experience losses, chronic or substantial losses can raise eyebrows at the IRS. Keep detailed records of your business finances, especially in the early years. Additionally, if you operate a sole proprietorship, ensure your business activities are distinguishable from hobbies to justify loss deductions. Support Your Deductions Certain deductions, such as large charitable contributions or home office expenses, may attract scrutiny. Be prepared to provide supporting documentation for all deductions claimed on your tax return. Thorough records can help substantiate your deductions and alleviate concerns during an audit. Accurately Value Assets For estate tax returns, undervalued assets are a common trigger for audits. When valuing assets without a public market price, seek multiple appraisals from qualified professionals. Having multiple valuations can strengthen your position and minimize the risk of an audit. Remember, even if you enlist professional help for your taxes, the responsibility for accuracy ultimately lies with you. Review your tax returns carefully before signing them to ensure everything is in order. Understanding the Different Types of Audits IRS audits come in three main varieties, each with its own level of intensity. Correspondence Audit. Conducted through the mail, this audit is often triggered by missing information or minor discrepancies. Office Audit. Requires a visit to an IRS office, typically for more complex tax returns or multiple disputed items. Field Audit. The most comprehensive type, conducted in person at your home or business, involves a thorough examination of your return. Regardless of the type, the IRS will provide a written request for specific documents beforehand. By being proactive and thorough in your tax reporting, you can minimize the risk of an audit and ensure a smoother process if one does occur.
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