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retirement planning Archives - Sharkey, Howes & Javer

New Year, New Goals: Evaluate Your Finances and Make a Plan for 2017

By | Holidays, Tips | No Comments

2016 has been a whirlwind of a year, but hopefully not on your finances. Life changes and with it come new expenses or new financial goals. It’s important to regularly check in on your finances to ensure you are staying on track. What better time than the new year?

Here are 5 things to review as we move into 2017:

Income and expenses

The key to managing a spending plan is knowing how much money is coming in and how much is going out. As we head into the new year, review your pay stubs, earnings reports and other sources of income and crunch some numbers. Once you’ve figured out your income, do the same with your expenses.

Try out an online budget tool or use online banking to automatically categorize your expenses so you can see where you are spending the most. Pull up your budget from last year to see what may have changed and adjust as needed. Remember to be realistic about how much you will spend, not how much you want to spend.

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Thinking of Relocating When You Retire? Remember to Talk to Your Financial Planner

By | SH&J Blog, Tips | No Comments

Recently some of our clients came in for an annual review with Stephen Weatherby, CFP®. During their meeting they casually mentioned they were thinking of moving to a small mountain town in Colorado when they retire next year.

Little did they know, Stephen is well connected in the town they are considering moving to and immediately went to work researching on their behalf. Through his personal network he connected them with a trusted realtor, an attorney, and insurance agents. He even found short term storage facilities and an agent who specializes in short term rentals.

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How to Responsibly Handle Your Tax Refund

By | SH&J Blog, Tips | No Comments

It’s tax season and for almost 80% of Americans, (source) a refund check may be in the mail. It’s easy to view a tax refund as free or easy money, but remember you worked hard to earn that money. Using your tax refund responsibly now can assist in reaching your financial goals in the future.

Here are 8 suggestions for using your tax refund responsibly:

Top Off Your Emergency Fund

An emergency fund is an important part of any smart budget. If your emergency fund has been depleted recently, think about using your tax refund to top it off. Depending on the circumstances, we typically recommend having an emergency fund that covers three to six months of basic living expenses.

Build Your Investment Portfolio

Consider using your tax refund to add to your investment portfolio. Talk to your Certified Financial Planner® about how to allocate your tax refund dollars amongst your investments.

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Retirement Savings 101: 401(k)s, IRAs, Roths, Oh my!

By | Economy, Investing, SH&J Blog, Tips | No Comments

Over the past two weeks we have compared Traditional IRAs to Roth IRAs and 401(k)s to Roth 401(k)s. Today we wrap up the series with a recap comparison to help guide you through the various ways to save for your retirement.

Traditional IRA

Established by: Individual
Contribution Limits: Up to $5,500 per year age 49 or below / $6,500 per year age 50 and above (limits adjusted annually)
Contributions: Pre-tax (unless non-deductible, then post-tax)
Matching Contributions: None
Distributions: Taxable and a 10% penalty unless 59 ½ or older (exceptions may apply)
Forced Distributions: Must start withdrawing funds at age 70 ½
Conversions/Rollovers: Can be converted to Roth IRA. Taxes paid during year of conversion. Deductible contributions can be rolled into a 401(k) if allowed by 401(k) plan.

Roth IRA

Established by: Individual
Contribution Limits: Up to $5,500 per year age 49 or below / $6,500 per year age 50 and above (limits adjusted annually)
Contributions: Post-tax
Matching Contributions: None
Distributions: Contributions may always be withdrawn tax and penalty free. Earnings prior to age 59 ½ are taxable and assessed a 10% penalty. Earnings after 59 ½ are tax-free unless the Roth IRA has been open less than 5 years in which case they are taxable and assessed a 10% penalty. (exceptions may apply)
Forced Distributions: None
Conversions/Rollovers: None

Traditional 401(k)

Established by: Employer
Contribution Limits: Employee may contribute up to $18,000 per year age 49 or below / $24,000 per year age 50 and above (limits adjusted annually)
Contributions: Pre-tax
Matching Contributions: Employer’s discretion
Distributions: Taxable and a 10% penalty unless
· If separated from service after age 55 or
· age 59 ½ or older (exceptions may apply)
Forced Distributions: Must start withdrawing funds at age 70 ½ unless still employed and not a 5% owner
Conversions/Rollovers: Upon termination of employment may
· Rollover to an IRA – not currently taxable
· Rollover to 401(k) if allowed by new employer – not currently taxable
· Convert to a Roth IRA – taxable event
· Distributed directly to owner – taxable event.

Roth 401(k)

Established by: Employer
Contribution Limits: Employee may contribute up to $18,000 per year age 49 or below / $24,000 per year age 50 and above (limits adjusted annually)
Contributions: Post-tax
Matching Contributions: Employer’s discretion (employer contributions are pre-tax dollars)
Distributions: Tax-free, but a 10% penalty plus taxes on earnings unless
· If separated from service after age 55 or
· age 59 ½ or older and the account has been open for at least 5 years (exceptions may apply)
Forced Distributions: Must start withdrawing funds at age 70 ½ unless still employed and not a 5% owner.
Conversions/Rollovers: Upon termination of employment may
· Rollover to a Roth IRA
· Rollover to a Roth 401(k) if allowed by new employer.

Which retirement savings account is right for you? For some, a 401(k) plus a Roth IRA may be the way to go. For others it might be a traditional IRA with a 401(k). Retirement saving decisions are as unique as you are.

As with any big financial decision, we recommend talking to a professional. Financial planners can help guide you to the best decision for your retirement and create a custom plan tailored to your individual goals.

If you are interested in a complimentary consultation, give us a call today at 303.639.5100 or visit shwj.com.

*Research for this post done on IRS.gov

Making Sense of the Social Security Kill Bill

By | Economy, Investing, SH&J Blog, Tips | No Comments

Early this November, Congress surprised many when they introduced the Bipartisan Budget Act of 2015 causing Financial Advisors to revisit ways to maximize cumulative Social Security benefits for their clients. With the passing of this budget deal, we see the end to two Social Security claiming strategies that have benefited many individuals – File and Suspend and the Restricted Application.

The new rules for File and Suspend will take effect with all applications filed after April 30, 2016. We will see the end of filing a Restricted Application for anyone who is turning 62 after December 31, 2015. This leaves a 6 month window for clients to review their situation with their financial advisor to determine how the changes will affect them, and if they can still take advantage of these strategies before they go away.

The File and Suspend strategy was commonly used by married couples to allow one spouse to begin collecting their spousal benefit at full retirement age while allowing the higher earning spouse to delay and then maximize their own benefit at age 70. Under the new rules, any suspension application filed after April 30, 2016 will also suspend all dependent and/or spousal benefits that would have been paid off of the suspended record. In other words, a worker must now collect their own benefit in order to trigger benefits for their spouse or dependents.

Restricted Applications for spousal benefits were often filed by couples who both wanted to delay collecting their own benefits while taking advantage of a spousal benefit in the meantime. The new rules now state that anyone turning 62 in 2016 or later will no longer be eligible to file a restricted application when they reach full retirement age. Individuals who will be 62 by the end of 2015 will remain eligible to file a restricted application when full retirement age is attained. The caveat – if this strategy depends on one spouse filing and suspending after April 30, 2016, the strategy will not work and further planning with your advisor may be beneficial.

For Example: Mark and Mary are both 63 and remain eligible to file a restricted application for spousal benefits at full retirement age. Mark wants to delay collecting his benefits until age 70. However, he will turn 66 after April 30, 2016 at which point the option to file and suspend is no longer available and spousal benefits will no longer be paid off a suspended benefit. Mark will either have to take his own benefit at age 66 to give Mary the option to file a restricted application for spousal benefits, or Mary will have to forego her spousal benefit allowing Mark to delay his own benefit and vice versa.

Individuals fortunate enough to have already implemented these strategies will not see a change to their current benefits. On the other hand, individuals born after 1953 will be unable to take advantage of either claiming strategy and are encouraged along with anyone who will be 62 by the end of 2015 or 66 before April 30, 2016 to meet with their financial advisor to determine the most optimal claiming strategy before the window closes.

Source: Savvy Social Security Planning for Boomers, Social Security ‘Loopholes’ Closing

How much should I save for retirement?

By | Julie Fletcher, SH&J Blog, Tips, Videos | No Comments

We are asked ‘how much I should save for retirement’ all the time. It’s an important question! While we’d love to have a canned answer for everyone who asks, it’s just not that simple. We’ve found that answering a few questions really helps our clients hone in on their retirement savings goals.

Ask Yourself…

  • What age would you like to retire?
  • What kind of lifestyle would you like to live?
  • Are you going to sell your home, stay put, buy a second home?
  • Will you be traveling more often?
  • Will you still work part time or start a new business?

Those questions are a great place to start when planning your retirement. As Julie says in the video, “Get down to the nitty gritty of your desired lifestyle,” when answering the questions about your retirement. Being specific helps you (and your planner) set realistic goals and expectations.

In general we find SH&J clients need to start retirement with 100% of their current living expenses. It is rare for expenses to go down after retirement.

Whether you are close to retirement or decades away, we’d be happy to help you answer some of the questions above and make a retirement plan that makes sense for you. Give us a call at 303.639.5100 to set up a time to come in and chat.