Member Blogs

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  • Beneficiary designations are an important part of estate planning. Despite what your will might say, beneficiary designations are going to drive where a significant amount (if not most) of your financial assets go. This holds true for virtually any financial account, ranging from your banking accounts (through payable-on-death or POD designations) to your life insurance policies, to your investment and retirement accounts. (Feed generated with FetchRSS )
  • Not everyone is cut out to start a business. In fact, starting a company is an irrational act. Most successful Founders bring a unique combination of drive, determination, product knowledge, creative problem-solving skills, business acumen, stamina, and a keen sense of timing, to their fledgling enterprises. And the best of these know how to communicate with a variety of audiences by telling a great story. A Founder has many audiences that compete for attention—The Core Team, Investors, Suppliers, and Customers to name a few. Each is critical to the success of a new enterprise and the ability to prioritize, communicate with them, and engage them at just the right time, is essential to the success of any start-up. With limited resources, failure to engage with any one of these important audiences at the right moment can be the difference between success and shutting down. Most successful Founders bring a unique combination of drive, determination, product knowledge, creative problem solving skills, business acumen, stamina and a keen sense of timing to their fledgling enterprises. The key to a successful start-up is solving a high value problem that customers care about and will pay for a level that provides the business outcomes desired by the product owner. In addition to sound advice for managing your product and business relative to competing products, you must get to know your customers, understanding the problem along with changing requirements and designing solutions that customers will appreciateNot everyone is cut out to start a business. In fact, starting a company is an irrational act. Most successful Founders bring a unique combination of drive, determination, product knowledge, creative problem-solving skills, business acumen, stamina, and a keen sense of timing, to their fledgling enterprises. And the best of these know how to communicate with a variety of audiences by telling a great story. A Founder has many audiences that compete for attention—The Core Team, Investors, Suppliers, and Customers to name a few. Each is critical to the success of a new enterprise and the ability to prioritize, communicate with them, and engage them at just the right time, is essential to the success of any start-up. With limited resources, failure to engage with any one of these important audiences at the right moment can be the difference between success and shutting down. Most successful Founders bring a unique combination of drive, determination, product knowledge, creative problem solving skills, business acumen, stamina and a keen sense of timing to their fledgling enterprises. The key to a successful start-up is solving a high value problem that customers care about and will pay for a level that provides the business outcomes desired by the product owner. In addition to sound advice for managing your product and business relative to competing products, you must get to know your customers, understanding the problem along with changing requirements and designing solutions that customers will appreciate.
  • Credit bureaus collect data about how you manage your financial obligations. Here’s what you should know about the top bureaus and how they obtain your information.
  • Selling your life insurance policy is an option you may not have considered before - but it may be something worth looking into.
  • Last month we discussed how college students and their families are facing tough choices. And in a Kiplinger.com article entitled “For Financially Responsible Kids, Do NOT Do These 3 Things,” the author suggests that parents not leave this decision about which school to attend solely in the hands of their teenaged children:“Most parents feel obliged [] ©Bring Clarity to Your Finances™. College Choice: Family and Financial Considerations is a post from Bring Clarity to Your Finances™
  • We’re all trying to slow the spread of SARS-CoV-2 and protect those at risk and philanthropists are in a unique position to help — but only if they have the ability to mobilize quickly, appropriately and effectively. If this global pandemic is teaching us anything, it’s that we can be responsive and flexible in the face of adversity—at a massive scale. Regardless of a philanthropist's focus, there are effective ways to soften the curve of crisis for grantees working to advance change. Now, the best known philanthropist are usually billionaires because their gifts have a lot of zeros. Robert F. Smith who paid off all the student loans of the graduating from Morehouse College, Warren Buffett who is giving away his fortune to the Gates Foundation and John Rockfeller whose foundation is about the well being of humanity in the world. The definition of philanthropist is to love humanity. Today, philanthropy means generosity in all forms. It is often defined as giving gifts of the 3 Ts (time, talent and treasure) to help make life better for other people. You do not have to be a millionaire or billionaire to be philanthropist. You can practice philanthropy by making a monetary gift, such as a donation to a cause you believe in.
  • History shows that you can’t time stock returns. To capture the market’s historical premiums, you have to be patient.
  • When you process a transfer with a P2P app you need to be especially careful to accurately enter the recipient’s information. The transfer is like cash, once it is transferred it is gone.
  • While the coronavirus-related legislation allows for more leniency, there’s nothing new for most people. Even the rule that allows people to be taxed on their withdrawals over multiple years, or to put money back—that was designed specifically to provide flexibility to get through today’s tough times, nothing more. (Feed generated with FetchRSS )
  • Fiduciary—a buzzword you see plastered on advisor websites, blogs, and internet searches. A title coveted yet cloaked in mystery. Working with a fiduciary seems to be on any check-list for people in search of a new advisor, but what does being a fiduciary really mean and why does this designation affect you, the client? Today, our team is going to bring you a two-part series that delves into the new fiduciary standards that the CFP Board issued in June 2020. These 15 standards impact the way that advisors operate and provide additional assurance that you are working with someone who only has your best interests at heart . Without further ado, let’s dive into the world of fiduciaries. What is a fiduciary?Let’s start with a basic definition of a fiduciary. A fiduciary is a person or company that has a legal and ethical relationship of trust with another person. In the financial industry, a fiduciary is someone who always (remember this word) acts in the client’s best interest. While this may seem like a basic requirement for financial advisors, the fiduciary rule is far from universally adopted. Many professionals who market themselves as financial advisors are really brokers whose job is to sell products and services. While brokers play an important role in the financial space, their jobs are different than that of a fiduciary financial advisor. The CFP Board’s new Standards of ConductThe CFP Board took major steps to help its advisors clearly define and execute fiduciary duties. The fiduciary rule has undergone a lot of change over the years but the CFP Board implemented a new Standard of Conduct that makes the rules crystal clear. Before these new requirements, a CFP® professional had to act as a fiduciary only when providing financial planning services to clients. The new rule implements a “fiduciary at all times” rule which means that your CFP® professional always needs to act in a fiduciary capacity with their clients. This revised Standard of Conduct includes 15 duties that fiduciary advisors owe to their clients. By implementing this rule, clients can rest assured that they are working with a professional who always keeps their best interests at heart and only makes recommendations that are good for the client. Here at Step by Step, we are passionate about being a CFP® professional and want to ensure that we provide you with the best service possible. For us, that means bringing these fiduciary duties to life in each and every interaction we have with our clients. Let’s take a look at the 15 fiduciary duties and how they impact you. Fiduciary duty to clientsThis first rule is an embodiment of the “fiduciary at all times” standard. It means that whether the advisor is providing direct financial planning services or not, they are obligated to act in a fiduciary capacity. As a fiduciary, advisors need to uphold three basic tenets: Duty of loyalty. This means that the advisor needs to work in your best interest and disclose any conflicts of interest. Duty of care. This duty means advisors need to take a comprehensive view of your needs and make recommendations that support your vision. For example, when planning your investment strategy our team would look at your risk tolerance, risk capacity, asset allocation, asset location, as well as short and long term goals to build a plan that works for your unique needs. Duty to follow client instructions. As your advisor, we work for you and will enact the plans that you select. These three duties are at the heart of the fiduciary at all times rule. This really means that being a fiduciary is a full-time job, one that we take seriously. Reign in conflicts of interestConflicts of interest are going to pop up—after all, we are only human. But a fiduciary designation requires advisors to clearly disclose what those are before any advice is given. This also includes implementing preventative measures to lessen conflicts of interest and properly manage them if they arise. Fiduciary advisors tend to have fewer conflicts of interest from the get-go because their fees aren’t relying on the sale of a product, service, affiliation, or commission. But this rule asks that all fiduciary advisors take a proactive approach to conflicts of interest and always uphold the client’s wishes. This fosters an environment of openness, honesty, and trust. Provide the full scope of information to both clients and prospectsThis section gets a little in the weeds, but ultimately this means that an advisor needs to provide clients and prospects with the full scope of any engagement they have with them. For example, this would include the service offerings themselves, fees, payments, referrals, and other elements associated with the plan. Essentially, the clients (and prospects) need to have adequate and comprehensive knowledge of the process before starting services. This idea upholds that transparency aspect of what we do. The CFP Board wants to ensure that advisors are providing all of the information necessary for clients and prospects to understand the situation. Clear client communicationCommunication is at the heart of most successful relationships. Think about it, by effectively communicating with your spouse , parents, kids, and friends you are able to have more open and fulfilling relationships. This same idea can be applied to your professional relationship with an advisor. In terms of the CFP Board, this section really means active engagement with clients and upfront, transparent communication tactics. This section is intimately tied with the one above, as a properly structured plan will lead to better communication. Fiduciary re-capBeing a fiduciary has always been a full-time job for our team at Step by Step and for many qualified advisors out there. The CFP Board wanted to solidify that promise and work to further enhance the client experience. We are excited to dive into the other 11 duties with you all next time. How will a fiduciary advisor benefit you? Schedule a call with us today to find out.
  • As many parents start ramping up their retirement planning efforts, their kids are also reaching an important next step in life: heading off to college. These tips will help you balance the cost of your own financial goals with the education pursuits of your children.
  • While current estate tax exemptions are high, there is no guarantee that this will continue in the future. If you have even a modest amount of assets to leave to your heirs, they could end up paying a lot of estate taxes that could easily have been avoided by filing Form 706.
  • Skills, retirement
  • To respond to requests for information about what people should invest in, The Motley Fool doesn’t offer a list of specific companies but instead outlines some rules of thumb that novice investors could follow.  Having an investment strategy is important. Rather than chasing what you think may be a hot investment, find a way to [] ©Bring Clarity to Your Finances™. Outline an Investment Strategy Instead of Chasing Hot Investments is a post from Bring Clarity to Your Finances™
  • Covid-19 Humor For Day
  • Wondering how to divide your assets without dividing your family? If you’re thinking about leaving more for one child than the other, it’s important to know your options.
  • Before the coronavirus epidemic, Amazon had been consuming some 2% of all U.S. household income, a percentage that has assuredly risen since the outbreak’s onset, particularly among the company’s more than 150+ million Amazon Prime members. While 51% of American households attend church, 62% have Prime memberships. In the best of times, the company’s presence in our daily lives is inescapable. As Amazon gains many invaluable lessons from the Covid-19 outbreak, the company will only become more ubiquitous in the decades ahead. Soberly aware of Amazon’s staying power, the CEO quipped to employees in 2018: “I predict one day, Amazon will fail. If you look at large companies, their lifespans tend to be thirty-plus years.” At the time he made that comment, Amazon was twenty-four-years-old. Bestselling Good to Great author Jim Collins says Amazon needs to build a new mechanism for growth. That mechanism—a virtuous cycle “flywheel” that used data to attract more buyers and sellers whose new data contributions could then be harnessed by the flywheel—was championed by Bezos and today has been made to accelerate even faster using Amazon’s massive AI engines. As the author argues, Amazon is a business where AI is increasingly making the decisions that humans used to make and keeps getting smarter on its own. Rivals have taken notice. This why some companies, such as Walmart and Alibaba, have chosen to steal from Amazon’s playbook while others have tried to identify the few things the Seattle juggernaut can’t do and excel at them. Bezos has built one of the most efficient wealth-creation machines in history, a juggernaut. This convenience, however, will come at a cost. It will lead to massive job disruptions and our lives being affected by technology in ever more invasive ways. Joining us for our discussion on The Amazon Effect is Brian Dumaine who is on the phone from his New York office. Brian Dumaine is an award-winning journalist and a contributing editor at Fortune magazine. His latest book is Bezonomics: How Amazon is Changing our Lives and What The World's Best Companies Are Learning From It. Welcome to Mastering Your Money, Brian Dumaine .
  • The pandemic drags on.  Here in Massachusetts, we are taking mask-wearing seriously. Even the iconic ducklings in Boston’s Public Garden and the giant baby head outside of Boston’s Museum of Fine Arts are wearing them. (Does anyone else think the giant baby head is a little weird?) Under the Coronavirus Aid, Relief, and Economic Security []
  • Student loan debt across America sits at $1.54 trillion. But how did we get here, and where do we stand with educating America's future workforce?
  • Dollar cost averaging allows you to invest in the market while providing some protection against market fluctuations and downside risk. It is most effective for investors who have a long investment horizon, maintain a diversified portfolio, and want to minimize risk.
  • College students face some tough choices as they look to how they will continue their college education that was likely disrupted in some way by the pandemic during this past spring semester. Some classes are all online or partially online and some students can’t fully pursue their courses of study because of the need for [] ©Bring Clarity to Your Finances™. College Students and Their Families Face Tough Choices is a post from Bring Clarity to Your Finances™
  • Roth conversions shouldn’t be done in a vacuum. They should be done as part of a deliberate Roth conversion strategy, either one that you’ve created on your own or that you’ve created in consultation with your tax professional or investment advisor. (Feed generated with FetchRSS )
  • Act By The End of 2020 For A Major Retirement Income Tax Break
  • After suffering from the effects of the coronavirus pandemic for four months, the ailing U.S. economy was widely expected to suffer another loss of four and a quarter million jobs in May, but in a stunning surprise the economy instead created 2.5 million jobs! The news was a complete surprise and a major step toward a recovery, but the road back is still likely to take many months
  • Traditional retirement planning is less effective when spouses stop working at different ages. Here are a few things to take into account as you prepare for this next chapter.
  • In 2020, many clients are provided with a “once-in-a-lifetime” opportunity to avoid taking their IRA distributions. This also presents an opportunity to create income in lower (never to be seen again) tax rates. However, navigating your taxable ordinary income in a way that avoids creating income at unexpectedly high tax rates is riddled with perils. Be sure your advisor can calculate your 2020 tax, and build multiple scenarios to take advantage of waived RMDs without being hit by the Social Security Tax Torpedo or other such perils.
  • People are always in search of the right fit. We do this with our jobs, spouses, friends, clothes, hobbies, food, and more searching for the things that feel right to us. Working with a financial advisor is no different. Finding the right fit for someone who you entrust your finances and future dreams is a huge decision, one that has to be built on a foundation of trust. But not all financial advisors are a good fit for every person. Finances are complex and nuanced. Think about it like this: you wouldn’t want an attorney who specializes in real estate law to represent you in a criminal defense case. The same idea applies to financial advisors. An early-career technology professional, for example, would want to work with an advisor who specializes in stock options, taxes, and other industry-specific strategies not an advisor whose target demographic is retirees. Today, our team wanted to bring you a post dedicated to this idea of finding the “right fit.” Who is the right fit for Step by Step? Let’s find out. Family Matters: A Case StudyIn order to help illustrate the type of client we serve best, we wanted to provide you with a client case study. Keep in mind that these are not real people, rather a representation of who we consider to be our ideal clients. The Moore Family John and Sara Moore have been happily married for 35 years. They met young by happenstance at a local church summer picnic. Ever since that late July afternoon, nothing was the same again. The two of them committed to building their lives and growing their family together. Through the ups and downs of raising three children, the Morres found strength in themselves, the community, and their marriage. John is a veterinarian and Sara is a human resource specialist. On the weekends, they use their musical talents to conduct the local church choir which they always considered their special time to create something beautiful together. Their jobs have afforded them a comfortable and happy lifestyle but they remain grounded and humble. John and Sara are committed to their family’s financial well being and have instilled in their children the value of hard work and saving for the future. Since they believe their family to be truly blessed, they always look to share that with others by regularly volunteering and giving financial support to their church and local community. While the Moores have always been fiscally responsible, as they near retirement, John and Sara want to make sure that their finances are set up in a way that supports their goals long-term. What makes the Moores a good fit for us?Now that we learned a little bit about the Moore family. The next step is to understand why they are such a good fit for us. They are pre-retirees with healthy savings but in need of a more refined strategy.They understand and prioritize their long-term needs.Their financial habits are linked with their values and they work to live that out every dayThey are family and community-centric, giving their time, talents, and resources to the people, places, and things they care about.Couples have unique opportunities and challenges when building a retirement plan . They need to be aligned on a shared vision, goals, and template for their life. This means coordinating on lifestyle needs, investment choices, income planning, Social Security strategies as well as charitable giving and legacy plans. We thrive in this space—helping clients organize, navigate, and execute their plans. Our strategy at Step by Step is comprehensive, meaning we look at every aspect of your financial plan and see how each piece fits together like your insurance, risk coverage, tax plan, income strategy, investments, and financial goals . Why the “right fit” mattersYour finances are a deeply personal part of who you are. In order to reach your goals, you need to work with someone who understands what they are and has a clear vision for helping you get there. This is a similar concept to finding the right primary care doctor for your health or babysitter for your kids. This person plays a crucial role in your life and family, which makes it important that you find someone who is qualified and also respects you and your goals. Retirement is likely the largest savings goal of your life. Working with an advisor who can help you navigate, plan for, and live out your dream retirement is an integral part of that decision. We would love to be that team that helps you and your family live the life you always wanted. Ready to learn more? Set up a call today!
  • A Live Chat with The Washington Post’s Color of Money columnist Michelle Singletary posed an interesting question about handling a parent’s debt. The person who wrote in to the chat has financial power of attorney and has had to move that parent into an assisted living facility. The parent had $3,000 in credit card debt [] ©Bring Clarity to Your Finances™. Financial Power of Attorney: Are You Responsible for Covering Debt? is a post from Bring Clarity to Your Finances™
  • Thinking about moving closer to your adult children? These 4 financial considerations can help you decide.
  • Women need to take an active role in managing the household finances. Organize your finances so you both understand your current financial situation – what you have, where it is held and how to access it.
  • Earlier this year, we mentioned that the federal income tax deadline was extended and that you needed to check your state deadline. Like many other employers across the country, the IRS also scaled back operations, so they were unable to process tax returns and offer the phone assistance they had previously offered. But with the [] ©Bring Clarity to Your Finances™. File Federal Income Taxes by July 15 is a post from Bring Clarity to Your Finances™
  • While you may have chosen to save using a traditional IRA, you do have the option to switch to tax-free retirement income. Who should consider a Roth conversion, and who should stay away? We've got your biggest questions answered.
  • Flowers are born to bloom. With every spring blossom, they open themselves up for the nutrients they need to survive. But blooming is far from simple or predictable. In order for flowers to bloom, they need the right access to light, temperature, water, and wind. Each of these elements plays a role in the lifecycle of a flower and when one goes wrong, it can be difficult for them to open up. Like flowers, we too are born to bloom. We want to thrive in our environment and use the tools and resources we have to build a beautiful life. But there are many things that stand in our way. One element that has certainly proven itself a formidable opponent is the coronavirus pandemic. This virus has impacted nearly every facet of our lives: from work to relationships to hobbies and more, our way of life has altered in profound ways. We have had to rely on technology for family visits, church attendance, and even jobs. In the swirl of this global health crisis came drops in the market, loss of jobs, and general uncertainty about one’s financial future. Today isn’t about speculation, forecasts, or predictions. Instead, today is an opportunity for a breath of fresh air, a chance to focus and reflect on your finances for the rest of the year. While we may still be weathering this storm, there is a way to bring light and life to your finances this year. Let’s get your finances to full bloom together. 1. Adapt your plan to life changesEveryone is experiencing a change in one form or another, and it is important that your finances accurately reflect that change. If this pandemic is any indication, nothing stands still, not even your finances. Take the two new pieces of legislation introduced in 2020: The SECURE Act and the CARES Act. While each targets different groups, they are both designed to provide reform and adapt to current circumstances. The SECURE Act implemented new stipulations designed to help retirees save more for retirement namely making it easier for employers to establish 401k plans, doing away with the age limit to contribute to IRAs, and increasing the age for RMDs to 72. While the CARES Act provided economic relief due to the pandemic, it also suspended RMDs for 2020 and allowed retirees to dip into their 401k for COVID-related expenses without penalty. The point here is that things adapt; perhaps your income has fluctuated or you have newfound medical bills or you are caring for a loved one. The first thing to do is understand, recognize, and manage that shift and bring your finances along for the ride. Once you have a firm grasp on your situation, you’ll be better able to take productive steps in the right direction. 2. Re-work your spending and saving habitsMore likely than not, your finances have been impacted in some way from the pandemic. Perhaps your part-time job has stalled or maybe your nest egg took a bigger hit than you anticipated. No matter what, you will need to start re-working your spending and savings habits to best reflect where you are now. This might mean that you have to spend less on discretionary spending like eating out, gifts, and travel, and refocus your spending on the things that you need. When you take a good hard look, you’ll be able to find places to cut back and redirect those dollars to another source like your emergency fund or investment accounts. Take the time to really dig deep and evaluate your current spending habits. How have your spending habits changed?What adjustments can be made to your retirement spending plan that reflects those changes while still keeping you on track to reach your goals?These questions will help you take a critical look at your spending habits and ways to improve them moving forward. The other half of this equation is saving. Perhaps you had to dip into your emergency fund to cover some expenses due to the coronavirus. Don’t worry, that is what an emergency fund is for: emergencies. Now is a good time to start directing any other discretionary income to build up that emergency fund and get you back on solid footing. You might also look at contributing more to your retirement funds like IRAs or other portfolio investments. While it might seem scary to not only remain in the market but also add funds to it, retaining your long-term financial strategy is often the best course of action. 3. Review your taxesOur team at Step by Step views taxes as a year-round element. We are always looking for new ways to add proactive tax strategies into your financial plan. Given the current world climate, you may need to make some tax adjustments. Will your RMD strategy differ this year?How will any loss of revenue impact your Social Security strategy?Do you need to withdraw more from your portfolio than initially planned? Our team can help walk you through these nuances and add stability to your tax situation. Proactive tax planning will help you lessen your tax bill and strengthen your financial plan. 4. Concentrate on your goalsIt is tough for situations to be out of your control. Many people have been experiencing this lately and it isn’t fun. But the antidote for this stress is taking action. Instead of focusing on the things that are outside of your control like the market, focus your energy on the things that you can control like your income plan, spending, saving, and your financial goals . In times of uncertainty, you can use your financial goals as a guidepost. Take a look at both the short-term and long-term goals that you set for yourself at the beginning of this year. You might find that your short-term goals were redirected but what about your long-term ones? Here are some questions to ask yourself. What are your long-term financial goals?Have those goals shifted? If so, how?Is your financial plan still set up for you to reach those long-term goals? If not, what productive changes can you implement to help get you there?In general, your long-term financial goals remain relatively constant. The coronavirus didn’t stop your goals or make them any less valuable to you. In most cases, trusting the financial plan you and your advisor team built around your goals is the best thing to do. It can help stabilize and ground you, providing hope for days to come. 5. Focus on what really mattersDifficult times give us the opportunity to center ourselves on the things that matter most: family, loved ones, community, spirituality, and more. It is important to give yourself the mental space you need to dedicate your time and energy to what matters most. Now is a good time to give yourself (and those around you) a break. Try to find moments of grace in your life and let your goals, values, and priorities be your guide. 6. Work with a team you trustWith all of the changes happening in the world, it is crucial to work with a financial advisor you trust. You need a team that understands your unique financial situation and can build a plan around that to help you reach your goals. Married retirees today are facing unique challenges like reassessing their charitable giving strategy, making a new plan for RMDs, understanding their investment strategy, and more. Our team specializes in navigating people through these changes and challenges. Are you ready to refocus your finances this year? Schedule a call with our team today.
  • In Estate Planning in the Time of Corona, we discussed some of the ways in which estate planning may have changed during the pandemic. While some of the logistics and methods used to execute an estate plan may have changed, the excuses we use to avoid this work may have remained the same—with the added [] ©Bring Clarity to Your Finances™. Why Are You Avoiding Estate Planning? is a post from Bring Clarity to Your Finances™
  • Every once in a while, we get the following question: “I came across these old stock certificates. What should I do with them?” Stock certificates come from any number of places, particularly when you’re clearing out the effects of a deceased loved one. (Feed generated with FetchRSS )
  • As husband and wife, you have been there to support, love, and encourage one another each and every day. Through all of life’s journeys, the ups and downs, the ebbs and flows, you have been together every step of the way. Teamwork has been a cornerstone in building and growing your life together. You have used it to develop dreams, hopes, and designs for your life, and retirement planning is no different. Your retirement goals, lifestyle, and income plan have all been created together. Married couples also have a unique opportunity to create a Social Security plan that supports both people. One part of that plan comes from understanding spousal Social Security benefits. What are spousal Social Security benefits, how do they work, and what can you do to maximize them? Let’s find out. What are spousal benefits?Spousal Social Security benefits allow one spouse to claim benefits off of the other spouse’s work record. This system helps support households that had one spouse serving as the primary earner. The benefit amount depends on a few factors including the age you collect, your spouse’s primary insurance amount (PIA), and whether you have your own benefits available to you. The maximum spousal benefit is 50% of the primary earner’s PIA. In order to be eligible for a spousal benefit a few things must be true: You are at least 62 years of ageYou have been married for one year (or more)Your spouse has already started collecting benefitsThe earliest age to collect spousal benefits is 62, but similar to collecting early off of your own record, this will decrease your monthly benefit by about 30%. While it might make sense for some couples to collect early, be sure that you discuss this with your planner before permanently reducing your benefit. Most likely, your full retirement age will be somewhere between 66 and 67. Consult the Social Security Administration’s chart to gain a clear sense of yours. Remember, the maximum benefit you can receive is 50% of your spouse’s total benefit. Unlike traditional Social Security, spousal benefits don’t accrue delayed retirement credits eliminating any incentive to collect later than your full retirement age. In order to start collecting benefits, your spouse must already be collecting their own benefits. Keep in mind that the amount of your benefit is always based on your spouse’s primary insurance amount. This means that your benefit won’t be reduced if your husband or wife collects their benefits early. Spousal benefits can be complex. To help, let’s take a look at a fictional example of a married couple to illustrate how this works. Mae and Skye have been married for 30 years. Skye is a successful entrepreneur and Mae works part-time at the local library and raises their 4 children. Skye’s maximum monthly benefit is $2,000 and he collects at his full retirement age. If Mae claimed spousal benefits at her full retirement age, she would be eligible for $1,000. But if both Skye and Mae are eligible for their own benefits, the Social Security Administration would pay benefits off of their individual work records first before any spousal benefits kicked in. Let’s say that when her kids went to school, Mae not only worked at the library but also followed her passion of designing floral arrangements. It may have just started with a few local church events but steadily grew into a top floral business for graduations, weddings, and other events. In this scenario, Mae’s Social Security benefit would be $1,500. Since this is higher than what she would have received from a spousal benefit, the SSA would pay her the higher of the two amounts. But if Mae stayed at the library, her monthly benefit would only be $500. In this case, the SSA would pay her the $500 off of her work record and supplement another $500 from spousal benefits to reach the $1,000 maximum. Understanding survivor benefitsShould your spouse pass away, you are eligible for a survivor benefit as early as 60. Each year that you claim benefits before your full retirement age, your benefit is reduced. But if you have already reached your full retirement age, you can collect your late spouse’s full benefit. Widows and widowers do have a unique opportunity to make the most of their benefits. Unlike traditional spousal benefits, survivor benefits allow you to restrict your application. This means that you can apply for either your survivor benefit or your personal benefit and switch applications at a later point. This strategy usually makes sense for people who have strong work records themselves. They can start by claiming their survivor benefit and wait until they have accrued all of their delayed retirement credits and apply off of their own work record at 70. If you and your spouse have both claimed benefits and then one of you passes away the Social Security Administration will continue to pay the surviving spouse either their own payment or their late spouses but not both. Keep in mind that you would receive the higher of the two amounts, making claiming Social Security benefits a strategic long-term decision. Every couple’s needs are different. Be sure that you work with an advisor who can help you make the most of your benefit in the short and long term. Social Security + YouSpousal benefits are an important part of your retirement income plan. It is vital that you and your spouse make strategic decisions about Social Security because it will impact you in the short-term but more importantly in the long run as well. There are different strategies to consider when it comes to claiming benefits but it all comes down to your income needs, retirement goals, lifestyle considerations, and future needs. Ready to craft a Social Security strategy for your needs? Schedule a complimentary initial strategy session with our team today.
  • In calmer, more predictable times some people find it difficult not to panic based on headlines. During a pandemic, the temptation to panic and make impulsive money moves may be even greater. Kiplinger.com offers advice to nervous investors in “How to Save Yourself from…Yourself.”  The article says “It is only a loss if you sell [] ©Bring Clarity to Your Finances™. Time-Honored Investing Advice Applies During a Pandemic is a post from Bring Clarity to Your Finances™
  • Check the Lost & Found

    You know that feeling you have when you find $20 in your winter coat left there since last winter. Well, you can have that feeling again by searching for unclaimed property held by your state.
  • College is an exciting time but it's also a time for learning, learning how to budget. Help your college-bound children learn the importance of finance with these 4 tips.
  • People with a positive attitude about money, view money with a sense of abundance rather than scarcity. Their ability to earn or accumulate money does not impact the ability of others to succeed.
  • We recently overheard a radio offering a promotion that allowed the winning caller a chance to treat their father to dinner on Father’s Day (this coming Sunday). One lucky family will be able to get a meal at no cost and the restaurant offering this meal got airtime and publicity. So, while the pandemic had [] ©Bring Clarity to Your Finances™. Supporting Fathers During a Pandemic is a post from Bring Clarity to Your Finances™
  • Don’t believe the marketing hype about rolling your 401(k) into an IRA just because you left your job. You don’t have to. Your next move should make sense in your overall financial plan and your Roth conversion strategy. (Feed generated with FetchRSS )
  • Your retirement income plan sets the stage for nearly all of your financial decisions. It informs your spending and saving habits and provides you the means to fund your ideal lifestyle. Creating a strong plan that supports your income and cash flow is necessary as you navigate your golden years. A big part of that income plan comes from Social Security. The Social Security Administration (SSA) estimates that the benefits replace about 40% of your income in retirement. Implementing smart Social Security strategies will help you maximize your benefit and boost your monthly check. Social Security has many moving pieces and one of them is figuring out when to collect your benefit. Before we dive into that, let’s take a closer look at what Social Security is, how it works, and how your benefit is calculated. What Is Social Security?Social Security is a government program designed to help retirees supplement their income. President Roosevelt signed it into law in 1935 and though many changes have been made over the past 85 years, the integrity of the system is still the same: providing income to those who can’t or are no longer working. It is important to note that Social Security provides benefits to more than just retirees it also serves disabled workers, dependent children, spouses, and surviving spouses. In order to qualify for Social Security benefits, you need to accumulate at least 40 work credits. While the exact figure changes year to year, in 2020 you get one work credit for every $1,410 in earnings up to a maximum of four credits per year. You earn credits when you pay social security taxes. Keep in mind that while you need work credits to qualify for Social Security, work credits don’t inform your total benefit. How does the SSA calculate your benefit? Instead of basing your benefit off of work credits, the SSA calculates your benefit based on your lifetime earnings. They calculate your average earnings for the 35 years in which you made the most money and then apply that to their formula to come up with your primary insurance amount (PIA) or monthly benefit. The PIA is the amount you are eligible to receive at your full retirement age (FRA). Is there a way to impact your monthly benefit? The answer is yes. The most significant change you can make to your benefit is when you decide to start receiving it. In general, there are three time frames for collecting Social Security: Early, at 62On-time, at full retirement ageLate, at 70 We are going to explore each of these options by digging into the pros and cons to help you figure out which is best for you. Collecting early at 62The earliest time you can collect benefits is at 62, which in turn makes it one of the most popular times to enroll. After all, you have been working all these years, doesn’t it make sense to start reaping the rewards? Not quite. By collecting at 62, your monthly benefits permanently decrease by about 30%. This is a huge cut for your income plan and cash flow. Say, for example, Will’s estimated primary insurance benefit is $1,750, by collecting early his monthly checks decrease to $1,225. That $525 could have been used to pay Medicare premiums or added to an investment account or included in Will’s annual charitable contributions . If you start benefits at 62 and wish to withdraw your application the SSA allows you to do this within a year of starting benefits. By withdrawing, you would be responsible for paying back any money you received. Say that you had been collecting benefits for 6 months, you would need to pay back all of your benefits for that time. In Will’s case that would be about $7,350. Keep in mind you can only withdraw your application once. There are, however, times when it makes sense to start collecting benefits at 62 like for those who need immediate access to the funds to pay bills or who are in poor health and want to make the most of the funds. It is all about balancing your income needs, retirement lifestyle, budget, and your health. Collecting at full retirement ageYour full retirement age is the time when the SSA initially designed for you to receive your benefit. FRA is determined by the year you were born. See the chart below to find yours. Year Full Retirement Age 1954 66 1955 66 and 2 months 1956 66 and 4 months 1957 66 and 6 months 1958 66 and 8 months 1959 66 and 10 months 1960 67 By waiting until your full retirement age, you are able to collect 100% of your benefit. Take Will from the example above. Let’s say he was born in 1961, that means that his full retirement age is 67 and by waiting until then he is eligible for the full $1,750 monthly checks. The SSA provides many tools for calculating your primary insurance amount which is excellent for retirement income planning as it helps you plan out your monthly payments. Collecting “on time” is a great option for many people, but as the FRA continues to increase it can make it difficult for some to wait. Collecting late at 70When people talk about being late, it isn’t always in a positive light but with Social Security, that’s not the case. Every month that you postpone your benefits after your full retirement age, you accumulate delayed retirement credits (DRC). These credits continue to add up until you reach 70 at which point you could increase your monthly benefit by about 25%. Let’s bring Will back to demonstrate. Will’s PIA is $1,750, but Will is in good health and has other sources of income to cover his living expenses and decides to wait to collect benefits until 70. That means that his monthly checks increased by about $440, making the new total $2,190. If you can, delaying benefits is a wonderful option. You are able to significantly increase your monthly income which could leave room for other lifestyle goals like travel, home upgrades, charitable giving, aiding in your grandchildren’s education, and more. But there are plenty of downsides as well such as your current income needs, health considerations, and other retirement goals. Which option is right for you?No two retirement plans are built alike. Each couple has their own needs, goals, and aspirations for retirement which will make income planning unique to each person. When thinking about when to collect Social Security, keep the following in mind: Your current (and future) income needsCash flow and other streams of incomeYour healthMaximizing a survivor benefit for your spouseRetirement and lifestyle goals Social Security is an important part of your retirement plan. Our team at Step by Step will help you evaluate your needs and create a strategy that will optimize your goals both now and in the future. Schedule a call with our team to learn more about how Social Security fits into your retirement plan.
  • Washington Post columnist Michelle Singletary offered new rules for retirement savings in “Forget what you’ve heard. Here are the new rules for post-pandemic retirement,” and  we are going to discuss two of them that relate to retirement planning. “Old rule: Make retirement savings your No. 1 priority. New rule: Make paying off debt, especially high-interest debt, a [] ©Bring Clarity to Your Finances™. The Pandemic Has Changed the Rules for Retirement is a post from Bring Clarity to Your Finances™
  • Lakeside Financial Planning (LFP) wants to let you know that we are here to support you during this difficult period. Rest assure, we still are fully operational, and have always been, from a remote perspective.
  • It’s important to devote time to enhance your career and increase your earning potential. This includes working effectively in your current position and taking time to improve your skills and education to progress in your career.
  • When the Finance101 article “Why donating your travel miles is a good idea” was written,  during the holiday season last year,  some of us would have no idea that we would, in a sense, be grounded for months in 2020 due to the Coronavirus pandemic. While we mourn our canceled trips and travel opportunities, we still may [] ©Bring Clarity to Your Finances™. Did You Know You Can Donate Travel Miles? is a post from Bring Clarity to Your Finances™
  • Ive been hearing that people are getting their stimulus payments in the form of an Economic Impact Payment Card instead of a check. Ive checked it out: its not a scam, its really the government trying to send you money (using MetaBank as a bizarre middleman for some reason.) Heres what you need to do [] The post How to use the Economic Impact Payment Cards appeared first on Wendy Marsden, CPA, CFP® .
  • One of the more frequent questions we get in times like this is “What do you think the markets will do?” I don’t know over the short term — seriously, not a clue. But for those seeking clarity, there’s no shortage of poo flinging monkeys who will answer that question. Just turn on the financial… [Continue] (Feed generated with FetchRSS )