​Every two years, Fidelity releases its Retirement Savings Assessment, a deep analysis of Americans’ readiness for retirement. Overall, the 2020 report showed that Americans have improved their retirement readiness. As a whole, Americans are ready to replace 83% of the income they will need in retirement. That’s up from 62% in 2006.1
 
However, there was one group that hadn’t made positive progress. It’s Generation X. It’s easy to forget about Generation X amid the ongoing social media war between Baby Boomers and Millennials. While Generation X isn’t as sizable as those groups, it is still sizable with 66 million members between the ages of 39 and 54.2
 
According to the Fidelity assessment, Generation X’s readiness has actually declined in recent years. Generation X had a readiness score of 80, down from 83 in 2016. They were the only generation to decline in readiness.2
 
There are a few possible reasons for Generation X’s decline in readiness. One is that they lag other groups in savings rates. Generation X saves an average of 8% of annual income, while Boomers and Millennials save 10%. Generation X also more mortgage debt and personal debt than other generations.2
 
The good news is Generation X still has time to catch up. Even the oldest members of Gen X have a decade or more until retirement. Below are a few steps you can take to get back on track:
 
Increase your contributions. 

The simplest way to boost your retirement savings is to increase your contributions to your 401(k) and IRA. In 2020, you can contribute up to $19,500 to a 401(k) and up to $6,000 to an iRA.3
 
However, if you are 50 or older, you can contribute even more. Starting at age 50, you can make something called a “catch-up contribution,” which is simply an extra amount of money you can put in a qualified account each year. In 2020, you can contribute up to an additional $6,500 to a 401(k) and an additional $1,000 to an IRA.3
 
Even if you can’t contribute the maximum, it’s still helpful to increase your contributions. Try increasing by a small amount every year or even every six months. If you gradually increase your contributions over time, it may not put as much pressure on your budget.

Create a health care strategy. 

Saving more for retirement is always helpful, but you can also improve your retirement readiness by reducing future costs. One of the biggest costs you’ll face in retirement could be health care.
 
Fidelity estimates that the average 65-year-old couple will spend $285,000 out-of-pocket in retirement.4 That figure includes a wide range of costs, like deductibles, premiums, and expenses not covered by Medicare.
 
You can prepare for health care costs by putting away money today. One effective way to do so is with a health savings account (HSA). You can make tax-deductible contributions to an HSA and then allocate the funds according to your needs and goals. All growth is tax-deferred, and withdrawals for medical expenses are tax-free.
 
You can also protect yourself against excessive health care costs by investing in your health today. Stay active. Watch your diet. Get annual physicals and other preventive services. The healthier you are, the less care you’ll need, which will reduce your out-of-pocket costs.

Protect your income. 

For many people, the point of saving for retirement is to create income in the future. Yes, you will likely have income from Social Security and possibly a defined benefit pension. But if you’re like many Americans, you’ll have to generate much of your retirement income from your retirement savings.
 
How do you determine how much income to take each year? What if you live longer than expected and run out of money? What if you spend too much in the early years of retirement and don’t have enough left for the later years? What if the market suffers a downturn and threatens your retirement income?
 
One way to minimize these risks is to establish guaranteed streams of lifetime income. You can use retirement income vehicles like an annuity to create additional sources of lifetime income, which could potentially help reduce risk and uncertainty in retirement. A financial professional can help you determine if this is a good strategy for your needs.
 
Ready to take back control of your retirement? Let’s talk about it. Contact us today at Thomas Financial Corp. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation.
 
1https://www.marketwatch.com/story/this-is-the-only-generation-less-prepared-for-retirement-than-they-were-even-two-years-ago-2020-01-30
2https://www.pewresearch.org/fact-tank/2018/03/01/millennials-overtake-baby-boomers/
3https://www.irs.gov/newsroom/401k-contribution-limit-increases-to-19500-for-2020-catch-up-limit-rises-to-6500
4https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/press-release/healthcare-price-check-040219.pdf
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. 19954 - 2020/3/30

​Do you make any sacrifices for lent? Perhaps sweets or some other unhealthy favorite food? Or are you trying to kick a more serious habit, like smoking or drinking? No matter what you’re giving up, lent is a great time to make a small sacrifice in your life and practice discipline.
 
Sacrifice and discipline are also important for retirement planning. It takes a significant amount of savings to fund a long, enjoyable retirement. In order to accumulate those savings, you may need to bypass some spending today.
 
A budget is always a helpful tool to manage spending. Unfortunately, many Americans don’t use one. According to a recent poll, a third of all Americans don’t use a budget.1 If you’re among that group, now may be the time to make a change.
 
Budgeting isn’t the only way to save money though. By making some sacrifices in your current lifestyle, you may be able to reduce your spending and put more money away towards retirement. Below are a few examples of things you could give up to boost your retirement savings:

Large Home 

If you’re like most people, your home is probably one of your largest expenses. It comes with a mortgage payment, but that’s not all. You also have insurance, property taxes, maintenance, repairs, and more.
 
When it comes to housing, bigger isn’t always better. Yes, a bigger house may offer more space and may be nicer, but a larger and more expensive home also usually leads to higher costs. The more your home costs, the higher the insurance and taxes are likely to be. A larger home often generates higher costs for maintenance and utilities.
 
If you’re in the market for a home in the near future, consider staying well under budget. By simply moving down to a lower price range, you could save yourself thousands not only on your mortgage, but also all the other associated costs.

Travel, Shopping, and Dining Out 

Going out to eat and shop is always fun, as are the occasional vacations. While the cost of a night out may not seem that significant as a one-time expense, those costs can certainly add up over time. A budget can help you manage your spending in these areas and more.
One way to manage these expenses is to simply cut down on the frequency. For example, if you go out to a nice dinner twice a month, try cutting back to once a month and putting the savings into your IRA. Instead of going on a few big trips a year, try taking one large vacation and some smaller trips over a long weekend. You don’t have to cut these items out of your life altogether. However, reducing the frequency of these discretionary types of spending could help you boost your savings.

Yearly Raises 

Do you get an annual raise at your job? Does the raise make an impact on your finances or does it seem to just disappear?
 
One way to make that raise more impactful is to put it in your 401(k) or other retirement savings plan. As you get a raise, simply increase your contribution to match the raise amount. The increased salary will go straight into your retirement rather than into your pocket. Over time, those contributions could compound and add up to a substantial amount of additional savings.
 
Ready to develop your retirement budget? Let’s talk about it. Contact us at Thomas Financial. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation.
 
1https://www.prnewswire.com/news-releases/fewer-americans-are-budgeting-in-2019----although-they-think-everyone-else-should-300824384.html
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
 
19634 - 2020/1/13

It’s been a volatile few weeks in the financial markets. In mid-February, we were still enjoying a relatively healthy economy. And then the coronavirus arrived. Between Friday, February 21 and Monday, March 16, the Dow Jones Industrial Average has dropped by 30.37%.1
 
The rapid decline has left many investors with two questions:

• How much further will markets drop?
• What can I do to protect my assets?

 
There’s no easy answer to the first question. If history is any guide, eventually the decline will stop, and the economy will recover. The second question is even more difficult to answer. There are certainly protection options available, but not all options are right for all investors. Your strategy should be based on your unique needs, goals, and tolerance for risk. Below are a few options you have available:

Shifting to a more conservative strategy. 

You could transition to a more conservative strategy. Many people become more risk-averse as they approach retirement. If you haven’t reviewed your allocation in years, this may be the right time to do so.
 
Of course, a more conservative allocation could limit your participation in a recovery when it happens. Work with a financial professional to find an allocation strategy that limits your exposure to further losses, but still gives you an opportunity to participate in future upside.

Using market risk-protection vehicles. 

Another option is to take advantage of market risk-protection vehicles like annuities. There is a wide range of different types of annuities that can limit your exposure to market risk and protect your future income. For example, some annuities guarantee your principal against downside market loss, but also give you the ability to earn interest. That could be a way to limit further losses but still maintain growth potential.
 
Life insurance is another possibility. Yes, you can use life insurance to limit your exposure to risk. Most permanent life insurance policies have a cash value account. If you have a whole life or universal life policy, this cash value account isn’t exposed to the financial markets. There is no risk of loss due to market decline. However, you may earn dividends or interest so you can grow your cash value on a tax-deferred basis.

Protect your income. 

Are you planning on using your assets to generate income in retirement? If so, every day of losses may mean a reduction in future income. You can guarantee your future income by using financial vehicles like annuities. Many offer optional benefits that pay a guaranteed income stream in the future, no matter how long you live or how the markets perform. A financial professional can help you determine if an income guarantee is right for you.
 
Ready to protect your nest egg? Let’s talk about it. Contact us today at Thomas Financial. We can help you analyze your needs and implement a strategy. Let’s connect soon and start the conversation.
 
 
1https://www.google.com/search?safe=off&sa=X&tbm=fin&sxsrf=ALeKk02Fk2yPH2_A7nU0wQGE5IUIixHyGQ:1584394531365&q=INDEXDJX:+.DJI&stick=H4sIAAAAAAAAAONgecRozC3w8sc9YSmtSWtOXmNU4eIKzsgvd80rySypFBLjYoOyeKS4uDj0c_UNkgsry3kWsfJ5-rm4Rrh4RVgp6Ll4eQIAqJT5uUkAAAA&ved=2ahUKEwiBmOfJ-Z_oAhWUW80KHc2dA3MQ3N8BMAJ6BAgCEAM#scso=_SfFvXsWJMJe1tAbX6pm4BQ1:0
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. 19926 - 2020/3/17

​Do you have a retirement budget? A budget can be a powerful tool to help you manage your expenses and stay on-track to reach your biggest financial goals. If you don’t have a budget, you’re not alone. A recent study found that a third of all Americans don’t use a budget.1
 
Of course, a budget has to be accurate. If you forget to include certain expenses in your budget, it won’t be a very effective planning tool. That’s what makes it so hard to budget for retirement. You can’t predict the future, so how can you know what your expenses will be when you retire?
 
You may not be able to make a precise projection, but you can estimate your spending based on your goals, objectives, and current spending levels. Some expenses may be obvious, like groceries, utilities, housing, and more.
 
But not all retirement expenses are quite so easy to predict. In fact, there are a few potentially sizable expenses that may not even be on your radar. Below are a few such expenses. If you haven’t budgeted for these costs in retirement, now may be the time to do so.

Taxes 

That’s right. Just because you stop working doesn’t mean you’re done paying taxes. You could still face taxes in retirement on a wide range of income sources, including:

• Social Security
• Defined Benefit Pension benefits
• 401(k) distributions
• IRA distributions
• Annuity distributions
• Investment income
• Business income
• And more

 
You could also face property taxes, sales taxes, capital gains, and other forms of taxation. A financial professional can help you analyze your potential tax liability and build those costs into your retirement budget.

Health Care and Long-Term Care 

Think Medicare will cover all your health care costs in retirement? Think again. While Medicare is a valuable resource, it doesn’t cover every treatment. Even when something is covered by Medicare, the coverage is often partial. That means you’ll likely have copays and deductibles in addition to your monthly premiums.
 
In fact, Fidelity estimates the average retired couple will pay $285,000 out-of-pocket on premiums, deductibles, copays, and for services not covered by Medicare.2 Assume you live 25 years in retirement. That’s more than $10,000 per year in out-of-pocket healthcare costs.
 
That $285,000 doesn’t include a major health-related expenses - long-term care. Long-term care is ongoing assistance with daily living activities like cooking, bathing, getting dressed, and even basic mobility.
 
So how much will you spend on long-term care? It’s hard to say. The U.S. Department of Health and Human Services estimates that 70% of retirees will need long-term care at some point. However, there’s wide variance in just how much care each person will need. Twenty percent of seniors will need care for more than five years. A third of seniors will never need it at all.3
 
The average man is expected to need long-term care for 2.2 years, while the average woman needs it for 3.7 years.3 That care can come in many forms. It could be provided by a family member or a part-time caregiver. It could involve adult daycare. Or it could mean moving to assisted living or even a nursing facility.
 
Every year, Genworth studies average long-term care costs around the country. In 2019, the average monthly costs were as follows:
 
Adult Daycare - $1,625
Assisted Living - $4,051
Full-time Home Health Aide - $4,385
Private Nursing Home Room - $8,517
 
You can’t predict what kind of care you will need or how long you will need it. However, it’s easy to see how those costs can add up if you need months or years of support.

“Other” Housing Costs 

Will your mortgage be paid off before you retire? If so, that will likely free up a large chunk of cash in your budget. Even without a mortgage, though, you will still likely face housing costs like:

• Property taxes
• Homeowners insurance
• Repairs
• Maintenance

 
How much will these items cost you in retirement? It’s hard to say. The average homeowner spent $1,200 on insurance in 2019.4 They also spent an average of nearly $5,000 on repairs and maintenance.5 Of course, those figures depend on the size and value of your home. Downsizing is one possible way to keep these costs under control in retirement.

Inflation 

Possibly the most difficult cost to budget for is inflation. That’s the gradual increase in prices for goods and services. Inflation varies from year-to-year but is usually minimal. However, over time, even a minimal amount of inflation can significantly increase prices.
 
Does your retirement strategy account for inflation? How will you grow your assets and income to keep up with rising prices?
 
Ready to develop your retirement budget? Let’s talk about it. Contact us at Thomas Financial. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation.
 
1https://www.prnewswire.com/news-releases/fewer-americans-are-budgeting-in-2019----although-they-think-everyone-else-should-300824384.html
2https://institutional.fidelity.com/app/item/RD_13569_42402/retirement-planning-health-care-costs.html
3https://longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html
4https://www.policygenius.com/homeowners-insurance/how-much-does-homeowners-insurance-cost/
 
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
 
19631 - 2020/1/10

Tax time is almost here again. Are you one of those filers who wait until the last minute? You’re not alone. Unfortunately, procrastination can be costly, especially in retirement when every dollar count. If you wait, you may rush and that may cause you to miss valuable deductions, credits, and other strategies.
 
The good news is you still have time to prepare. Below are five actions you can take today to get prepared for tax time and possibly save yourself some money. If you haven’t gotten started on your tax planning, now is the time to do so.

Get organized early. 

Time is a valuable asset, especially when it comes to tax planning. Take time now to organize all your receipts for major purchases, especially for things that may be deductible like business expenses or health care costs.
 
You should also use this time to get all your 1099s, W2s, and other income documents in order. If you haven’t received some yet, call the appropriate administrator and ask for one. The earlier you can ballpark your total income for the year, the sooner you can start analyzing possible deductions and credits.

Track your medical expenses. 

Did you have major medical expenses in 2019? If so, those expenses could save you tax dollars. You can deduct medical expenses that exceed 10% of your adjusted gross income in 2019.1
 
Of course, you need to know how much you had in medical expenses and be able to document those costs to take advantage of this deduction. Track down all statements and receipts to find a total. You also may want to contact your health care provider for documentation if necessary.

Make a retirement contribution. 

Do you have a traditional IRA? If so, you still have time to make a contribution and potentially realize a tax deduction. In a traditional IRA, your contributions are tax-deductible, assuming you meet certain income restrictions. Growth is tax-deferred and your withdrawals in retirement are taxed as income.
 
You can make a deduction up to April 15 and count it as a 2019 contribution. In 2019, you can contribute up to $6,000, or $7,000 if you are 50 or older.2 If you haven’t yet met the maximum, you can still do so and possibly see a deduction on your upcoming return.

Take your RMD. 

If you’re age 70 ½ or older, your tax issues may not involve contributions but rather withdrawals. At age 70 ½, you are required to start taking minimum distributions from your 401(k), IRA, or other qualified accounts. These required minimum distributions (RMDs) amounts are based on your account balances and your age.
 
What happens if you don’t take your RMD? You could face a penalty of up to 50% of the required withdrawal amount.3 Fortunately, you have until April to take your RMD for 2019. If you haven’t done so yet, now is the time to make that distribution.

Think about the future. 

Tax planning isn’t just about your upcoming return. It’s also about your long-term future. What steps can you take now to reduce your tax exposure ion future returns?
 
For example, perhaps you could create tax-efficient income in retirement. Maybe you can take advantage of additional deductions and credits by planning ahead. You may be able to reduce your taxable income by delaying your Social Security filing. A financial professional can help you explore these options and develop the right strategy for your needs.
 
Ready to take control of your taxes this year? Let’s talk about it. Contact us at Thomas Financial. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation.
 
1https://turbotax.intuit.com/tax-tips/health-care/can-i-claim-medical-expenses-on-my-taxes/L1htkVqq9
2https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-iras-contributions
3https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-required-minimum-distributions#9
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
 
19562 - 2019/12/16

Retirement is supposed to be a joyous occasion. After all, this is the time when you get to leave the constraints of a busy career behind. You’re free to set your own schedule and spend your time as you wish. There’s no boss to report to. No clients to manage. No big projects to complete. You’re free to do whatever you like.
 
So why is retirement so difficult for many people? Very often, new retirees realize that this new phase of their life isn’t all they had expected. They miss socializing with their colleagues at work. Without a job, they feel a lack of purpose. They have trouble transitioning to life at home. In fact, a recent study showed that retirees were twice as likely to suffer from depression as those who are still working.1
 
The good news is you can take steps to ease into retirement and pave the way for a smooth transition. Below are a few tips to consider as you leave the working world:

Structure your day. 

During your career, you likely had a set schedule. You had tasks, obligations, and goals you wanted to achieve. You may have even had a to-do list.
 
Just because you’re retired doesn’t mean you have to abandon that structure. If you get comfort from having a list of tasks or objectives, keep doing it in retirement. Set a schedule for the next day. Instead of focusing on work-related tasks, you can pursue a new hobby, meet with friends, or even do something nice for your grandchildren. A structured day could help you fulfill your need for productive activity.

Set short-term goals or milestones. 

At work, you’re always looking forward to the next milestone. Maybe it’s landing a new client or finishing a big project. In retirement, you may not get that same feeling of achievement or success.
 
In retirement, you may feel depressed or anxious without a similar set of goals or objectives. Just because you’re no longer working doesn’t mean you can’t have goals. Plan a big vacation for you and your spouse. Take up a new activity or hobby and set goals for yourself. You could even volunteer for a favorite charity and take on a big fundraiser or similar project. You could coach your grandchild’s sports team. By setting short-term goals you can give your retirement a sense of purpose.
 
Make new friends. 

Maybe you think of your coworkers as friends or maybe you think of them as merely colleagues and acquaintances. Either way, they may play a major role in your social life. They’re a source of adult interaction and socialization. After you retire, you may find that you miss your coworkers and the daily conversation you have with them.
 
Socialization isn’t just important for your mood and happiness. It’s also important for you health. A recent study found that retirees with large social networks had a 26% lesser chance of developing dementia.2
 
Look for opportunities to make new friends in retirement. You could pursue a hobby or join a group of like-minded people. You could volunteer. Many community centers offer outings and activities for retirees. Be proactive in expanding your social circle. It could make your retirement happier and even healthier.
 
Ready to plan your transition into retirement? Let’s talk about it. Contact us today at Thomas Financial. We can help you analyze your needs and develop a strategy.
 
1https://www.usatoday.com/story/money/2019/06/11/depression-during-retirement-how-cope-and-prepare/1416091001/
2https://brainworldmagazine.com/friends-with-benefits-socializing-to-fight-alzheimers/
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
19535 - 2019/12/10

The government passed a year-end spending bill in December, and it included one piece of legislation that could have a big impact on retirees. It’s called the SECURE Act. The bill’s name is an acronym for Setting Every Community Up for Retirement Enhancement.
 
The legislation is aimed at helping Americans save more for retirement. While many of the changes will certainly be helpful, they may also require you to revisit your retirement strategy. The SECURE Act affects many different areas, from your 401(k) plan to your IRA to even how you take withdrawals in the later stages of retirement.

Below are some of the biggest changes in the SECURE Act:
 
Elimination of” Stretch” IRA 

The biggest change in the SECURE Act may not impact you but rather your IRA beneficiaries. The SECURE Act eliminates the ability to “stretch” an IRA, which was a strategy commonly used by non-spousal beneficiaries to reduce their tax burden and continue to grow the account.

Under a stretch IRA concept, your non-spousal beneficiary, like a grown child for example, could simply withdraw your RMDs on annual basis from the IRA after you pass away. Because they are taking the minimum amount from the IRA, they reduce their annual tax obligation. They also leave assets in the IRA to continue growing on a tax-deferred basis.
 
The stretch IRA is no longer an option, however. Under the SECURE Act, all non-spousal beneficiaries must take the full IRA balance within 10 years. The only exceptions are minor children and handicapped individuals. If you plan on leaving your IRA to someone other than a spouse, you may want to review their options.
 
RMD Age 

Most qualified accounts like IRAs and 401(k) plans have something called required minimum distributions, or RMDs. These are withdrawals that you are required to take each year once you hit a certain age.
 
Traditionally, RMDs have started at age 70½. However, the SECURE Act pushes the RMD start age back to 72. That means you’ll have eighteen additional months of tax-deferred growth in your 401(k) or IRA before you have to start taking taxable withdrawals.1

Traditional IRA Contributions 

RMDs aren’t the only reason why 70½ has historically been an important age. That’s also the age at which point you could no longer make contributions to a traditional IRA. Until now.
 
The SECURE Act eliminates the age limit on traditional IRA contributions. That means you can continue making contributions well past 70½. That could be especially helpful if you plan on working in retirement and want to continue to bolster your savings.1

401(k) Plans for Part-Time Employees and Small Businesses 

The SECURE Act has also made 401(k) plans more accessible for part-time employees and employees at small businesses. In the past, 401(k) plans were usually reserved for full-time employees. However, under the SECURE Act, companies are required to offer 401(k) eligibility to any employee who works 1,000 hours in one year or 500 hours in three consecutive years.1

It’s also been difficult for many small businesses to offer 401(k) plans. These plans often have high startup and administrative costs that can be burdensome for small businesses with a tight budget.
 
The SECURE Act aims to resolve that problem. The new law offers up to $5,000 in tax credits to offset 401(k) plan startup costs for small businesses. It also allows small businesses to pool together to offer 401(k) plans to their employees.

401(k) Plan Income Strategies 

The SECURE Act also focuses on how 401(k) plans can generate income for participants. Plans must now deliver “lifetime income disclosure statements” each year. This document will show you exactly how much income your plan could generate for life if you used the balance to purchase an annuity.
 
The law has also made it easier for 401(k) plan participants to access annuities with guaranteed lifetime income features. The SECURE Act eliminated some regulatory issues that had prevented annuities from being common strategy options in 401(k) plans. With those issues resolved, participants can now use their 401(k) funds to create guaranteed lifetime income through the use of an annuity.
 
What Should I Do? 

These are some of the biggest changes to retirement plans in decades and it would be wise to re-evaluate your retirement plan. By meeting with a financial professional, we can help you evaluate your current plan and how you may want to adjust based on these recent changes. There are certain things you may want to look at differently, including some sophisticated tax planning opportunities, that only a professional can truly help you understand.
 
Ready to review your retirement strategy to see how it is impacted by the SECURE Act? Let’s talk about it. Contact us at Thomas Financial today so we can help you analyze your current plan and develop a winning strategy. Don’t wait, the sooner we can help you evaluate your needs, the sooner you can feel confident about the plan you have in place. Let’s connect soon and start the conversation!
 
1https://www.fidelity.com/learning-center/personal-finance/retirement/understanding-the-secure-act-and-retirement
 
Licensed Insurance Professional.  We are an independent financial services firm helping individuals create retirement strategies using a variety of investment and insurance products to custom suit their needs and objectives. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. 
19636 - 2020/1/13

It’s the giving season. Are you planning to make a donation to your favorite charity this holiday season? If so, you have company. More than 60% of Americans make some type of charitable donation in the last two weeks of the year. The post popular charities are churches, organizations that serve the poor, and children’s charities.1
 
Regardless of what charity you choose to support, the end of the year is a perfect time to make a donation. You help your favorite charity build their financial reserves for the upcoming year and you may even be able to realize a tax deduction.
 
A cash donation may seem like the obvious way to support your charity, but it’s not your only option. You can also use life insurance to make a donation. If you have a life insurance policy you no longer need or if you are in the market for life insurance, below are a few ways you can use your policy to help the charity of your choice:

Name the charity as a beneficiary. 

One of the easiest ways to use life insurance to support a charity is to name the charity as a beneficiary on the policy. You can name them the sole beneficiary or partial beneficiary. You simply fill out a beneficiary change form with your carrier. When you pass away, the charity files their beneficiary claim and receives their share of the death benefit.
 
This type of donation can be advantageous because it’s convenient and because it doesn’t require a cash donation today. The charity doesn’t receive the money until some point in the future when you pass away. Just be sure to let the charity know that you have named them as a beneficiary. If you don’t, they may not know that they need to file a beneficiary claim upon your passing.

Transfer the policy to the charity. 

You can also transfer ownership of the policy to the charity. In this instance, the charity becomes the new policy owner and usually, the new beneficiary as well. They receive the death benefit when you pass away, but they also assume full control of the policy.
 
For example, the charity controls the cash value. They can withdraw cash from the policy or even take dividends or interest as distributions. They can change the beneficiaries on the policy. They can even surrender the policy and take the cash value as a distribution if they want.
 
If you don’t want to relinquish all control of the policy to the charity, this probably isn’t a good option. However, if you truly don’t have any use for the policy, you may want to consider it. You may even be able to deduct the value of your paid premiums and all future premiums.

Use a charitable rider. 

Some life insurance companies offer a charitable rider. This is an optional feature in which the insurance company automatically pays a small portion of the death benefit to the charity of your choice upon your death. In many cases, these riders have no cost.
 
This could be a good option if you want to leave a modest amount to a charity. The charity isn’t named as a beneficiary, so your other beneficiaries may not even know that the charity was included in your death benefit. You also don’t have to worry about the charity forgetting to file a claim. The insurer automatically makes the donation.

Donate your interest or dividends. 

If you have a permanent life insurance policy, you may receive annual payments from the insurer. On whole life policies, these payments come in the form of dividends. On universal life policies, the payments are interest.
 
You can donate your annual interest or dividends to the charity of your choice. They can then use those funds as they see fit. You may even be able to deduct the donation from your taxes.
 
Ready to review your life insurance strategy? Let’s talk about it. Contact us today at Thomas Financial. We can help you review your protection and find the right plan for your needs. Let’s connect soon and start the conversation.
 
1https://www.worldvision.org/about-us/media-center/survey-majority-americans-donate-charity-end-december
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
 
19505 - 2019/11/21

It’s hard to believe we’re already nearing the end of 2019. This year has flown by and 2020 is almost upon us. If you’re like many people, you use the end of the year to evaluate the past and make resolutions for the future. Your financial strategy might be included in those resolutions.
 
This year has been a rollercoaster for many investors. While the markets have moved higher and hit new record levels, that growth hasn’t come without a few bumps. Through November 20, the S&P 500 has increased by 24% year-to-date. However, the index also experienced several sharp downturns, especially through the summer.1
 
If you’re approaching retirement, you may not have the same comfort level for risk that you once did. This may be the time to review your retirement strategy and implement changes that can reduce your risk exposure. Below are a couple of steps to consider as you make your 2020 financial resolutions:
​
Protect yourself from risk. 

Are you less comfortable with risk and volatility than you were in your younger years? That’s natural. Many people become more risk-averse as they approach retirement. After all, you don’t have as much time as you once did to recover from a market loss.
 
There are a few steps you can take to reduce your exposure to risk. One is to review your allocation and risk tolerance and make sure they’re aligned. Your risk tolerance is your specific comfort level with market volatility. It’s based on your unique needs, goals, and time horizon.
 
As you get older, your risk tolerance may change, so it’s important that your strategy changes along with it. You could shift your strategy to more conservative assets that have less exposure to risk and volatility. You could also utilize financial vehicles that offer growth potential without the chance of downside loss. A financial professional can help you identify strategies that can reduce your risk exposure.

Guarantee* your income. 

Income planning is one of the most important elements of any retirement strategy. Generally, the goal is to generate enough income to cover your expenses so you don’t drain your retirement savings. If you have to withdraw too much money from your savings in the early years of your retirement, you may not have assets left in the later years.
 
Fortunately, you’ll likely receive at least one source of income that’s guaranteed* for life from Social Security. You also may be fortunate enough to receive a defined benefit pension.
 
You can also take steps to convert a portion of your retirement savings into a guaranteed* income stream. There are a number of different financial vehicles available that can be used to create a source of income that is guaranteed* for life, no matter how the market performs or how long you live.
 
You could reduce your risk and protect your financial future by guaranteeing* a portion of your income in retirement. If you’re nearing retirement and haven’t explored options for guaranteed* income, you may want to take that step in 2020.
 
Ready to get back on track for retirement in 2020? Let’s talk about it. Contact us today at Thomas Financial. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation.
 
 
1https://www.marketwatch.com/investing/index/spx
 
*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
19504 - 2019/11/21

What are you most thankful for this Thanksgiving? Time spent with family and friends? Good health? Perhaps a positive career development? This is the season to reflect on the past year and appreciate all of life’s good fortune.
 
You probably have a number of blessings for which to be thankful. One that may not be so obvious is your financial strategy to protect your loved ones from risk. Specifically, you might be thankful for your life insurance policy, which protects your loved ones from one of life’s most catastrophic risks.
 
Granted, you probably won’t mention “life insurance” at the Thanksgiving table when your it’s your turn to say why you’re thankful. However, this may be the time to review and reflect on your family’s needs and your protection strategy. Below are four reasons to be thankful for life insurance coverage:

Family Protection 

Life insurance can serve many purposes, but the primary purpose is usually protection. When you purchase life insurance, you name one or several individuals as beneficiaries. Upon your death, your beneficiaries file a claim with your insurer. The insurer then pays them their portion of the death benefit, either as a lump-sum or in regular installments.
 
Your beneficiaries can use their benefit in any way they see fit. If you’re a breadwinner and provider for your family, they may use the funds to pay off debt, cover living expenses, or simply stabilize their financial situation. Your kids or grandchildren could use the funds to pay for college. Your surviving spouse could use his or her benefit to pay for retirement. Life insurance can help your family reach their financial goals even after your death.

Probate-Free and Tax-Free Legacy 

Life insurance death benefits are unique in that they are tax-free and probate-free. Your beneficiaries don’t pay income taxes on life insurance benefits.
 
The benefit also avoids probate. When you pass away, your estate may have to go through probate, which is the legal process for resolving outstanding estate issues. During this time, your estate executor files a final tax return, pays off debts, and distributes assets to heirs. It can be time-consuming and costly.
 
However, life insurance proceeds avoid probate. That means your beneficiaries can receive their share of the death benefit, even if your estate is still in probate.

Tax-Deferred Growth 

Permanent life insurance policies have something called a cash value account. When you make a premium payment, a portion pays for the cost of insurance and the remainder goes into the cash value account.

Your cash value can grow over time. The method of growth depends on your type of policies. Some pay interest or dividends. In other policies, your cash value is invested directly in the financial markets. In all permanent policies, though, your cash value grows on a tax-deferred basis. That means you pay no taxes on your growth as long as the funds stay in the life insurance policy.

Tax-Efficient Income 

What can you do with your tax-deferred growth in your life insurance policy? One option is to use it as a source of tax-efficient income. When you take a withdrawal from your life insurance policy, the premiums come out first and growth comes out last. As long as you only withdraw your own premium payments, withdrawals are tax-free.
 
You can also take loans from your policy. Loans are also tax-free. You can borrow from your policy’s cash value and then repay the loan through premium payments over time. If you don’t repay the loan before your death, the balance is taken from the death benefit. Your cash value could serve as a helpful supplemental income source, especially in retirement.
 
Ready to evaluate your life insurance strategy? Let’s talk about it. Contact us today at Thomas Financial. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
 
19433 - 2019/10/28