Kathleen Elkins    | @kathleen_elk  Friday, 9 Jun 2017 | 10:07 AM ET

 

The sooner you start putting your money to work, the easier it is to reach seven figures.

 

Ideally, you'll want to start saving and investing in your 20s in order to reap the full benefits of compound interest. That being said, even if you don't get started until your 30s, it's still more than possible to build a million-dollar portfolio.

Recently I came across this article written by an ERISA attorney back in 2011. You'd probably think, as I did, that anything from six years ago would have become irrelevant by now. Unfortunately for small business owners, though, the points made here are just as true today as they were back then.

When most of us think about employer-sponsored retirement plans, we think 401k. But that's just one type among many options, and what's best for your company may be something different. Typically when deciding to set up a plan, we look at several questions to ensure we choose the best one for the situation. For example, how many employees do you have? Are you planning to offer a match to receive some tax benefit for the company? Do you understand that as an employer and plan sponsor, you hold a fiduciary responsibility to your employees to ensure the plan contains investment options that are well-suited to them? Do you want to offer extra retirement benefits to your executive team or senior managers?

While I work with many retirement plans, I'm only one piece of the puzzle that's critical to guaranteeing a well-administered plan that adheres to federal regulations and follows a beneficial tax strategy. The role I fill is as the investment advisor, so I help determine the investments that are available to plan participants, and I often help counsel individual employees on what choices within the plan best suit them based on their unique situation. I'm also, per our licensing as an independent Registered Investment Advisor, what's known as a "fiduciary," meaning that I'm required to provide advice that's in the best interest of my client. In other words, I can't ever recommend a retirement plan because I'd get paid a higher fee. My recommendations must be solely based on what's best for my clients and the participants in the plan.

The other critical player in retirement planning is called a Third-Party Administrator, or TPA. The TPA's job is huge. First, they are experts in plan design. Depending on your goals, company size and other factors, they'll be able to tell you if you need a 401k, a 403b, a Defined Benefit plan, a Cash Balance plan, an Employee Stock Option Purchase plan, a Safe Harbor plan....and on and on and on. It's the TPA's job to know the applicable rules and regulations of each plan, to advise both me and the employer on how the plan should operate, to prepare and provide mandatory notices to participants, and finally, to keep all the plan records (deposits, withdrawals, matches, etc.) and to file any required annual reports with the federal government. Oftentimes the TPA is considered just the recordkeeper, but that undersells the enormous value TPAs provide as an expert resource. As the advisor, I work closely with the TPA to ensure that all the plans I provide advice to are legally and financially compliant and that there are no negative financial surprises at year-end.

Recently I've noticed a concerning trend, particularly among my small business clients, and that's using their payroll provider in place of a TPA. While that's a convenient choice, to have the payroll company calculate paychecks, retirement deferrals and employer matches, to print paychecks and to move money between accounts, it's also an opportunity for trouble and significant excess expense.

According to the most recent data available, the two largest payroll providers, ADP and Paychex, together administer about $80 billion in retirement funds for more than 100,000 plans and upwards of 2 million participants across the country. The typical all-in fee for service with these companies is around 2% of plan assets, and that's an expense that's shared by every plan participant based on the amount in each account. Just imagine, if a reasonable assumption for 401k growth is around 6% per year, after the payroll company gets its cut, your growth is more like 4%. Ouch!

But is the convenience worth it? Not from where I'm sitting, and here's why. Neither ADP nor Paychex are experts in plan design. They're experts at payroll....so they may not know that one type of plan could serve you and your employees better than another. Neither ADP nor Paychex act as a fiduciary; any recommendations they make, if they make them at all, are merely suggestions...there's no requirement that they've done any investment homework to ensure those suggestions make sense; they hold no legal liability to you for any investment suggestions they might make. In some cases, these payroll companies are paid twice, once by the plan (the participants) and then again by the custodian (that's the investment house that actually holds the funds), for directing money to their company. And in many cases, there's no advisor who works with the plans on investment design. So it may be a great lineup, or it may not. Payroll companies simply don't maintain the expertise or standards to offer competent investment advice. 

We recently had a client ask about switching their company retirement plan from one of these payroll providers to a TPA we work with, and requested that we provide investment advice. As I reviewed their existing setup, I was shocked to see that not only were they paying a monthly fee based on the number of employees, but they were also being charged for every deposit that was being made into each employee account, every month. The client was none too pleased with the payroll rep when I explained that we'd be bringing the overall plan cost down to about half of what they were paying with the payroll provider, and that we'd provide the monthly funds transfer all year long at no charge, because it's part of the service we offer.

This has become an issue that I'm passionate about, because these companies seem to be exploiting the lack of knowledge among business owners about the complexity of retirement plans and the difficulty associated with tasks like transferring funds. Every additional dollar they charge is coming out of a worker's hard-earned retirement account. Over an entire career, that can make a huge financial difference. It can prevent an earlier retirement and guarantee the need to work longer. And that goes against everything I aim to do in the business I'm in, which is serving clients who want good financial advice that's both in their best interest and that helps them achieve their financial and lifestyle goals. 

A great resource to see how your retirement plan stacks up can be found at www.brightscope.com. There you can look up companies of similar size and revenue to yours and see what their retirement plan looks like. It's worth it to have a look and gain the opportunity to save yourself and your employees those extra pennies that we all know add up. And if you're currently running your retirement plan through your payroll company, call me. Second opinions are free, and I'm happy to review your plan fees and investment lineup. Hopefully, I'll be able to tell you you're in great hands and everything looks as it should. But if not, let's see if we can save some money, provide more suitable investment options, and improve the plan for both you and your employees.

Best Regards,
Michael Abbate

The following article is important to anyone providing or needing long-term or specialized care. A special needs trust can provide resources to help those who qualify while allowing them to maintain their government benefits. This can often make an enormous difference in the quality of life of  those with special needs. If you'd like a referral to a special needs attorney experienced in setting up this type of trust, please contact us.

By Sarah O'Brien

Originally published August 24, 2016, CNBC.com

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For parents or caretakers of people with special needs, the stakes are higher when it comes to financial planning. Not only are they trying to meet their own current and future financial goals, they also want to ensure their loved one's needs continue being met if the caretaker predeceases their charge.

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Enter the special needs trust.

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"A special needs trust is the cornerstone of planning for a person with special needs," said certified financial planner Michael Walther, founder of Oak Wealth Advisors. "But it has to be done in a way that [ensures] they still qualify for government benefits."

According to a 2015 study by the Centers for Disease Control and Prevention, 53 million adults — roughly 1 in 5 — have a physical or mental disability that impedes their daily functionality. Generalizing the costs associated with special needs is difficult, because it depends on the severity of an individual's disability. Special needs can range from autism spectrum disorders and bipolar disorder to cerebral palsy and genetic disorders. Additionally, disabilities can be brought about by an accident or injury. But collectively, the CDC says, disability-associated health-care expenditures run about $400 billion annually. On top of that are non-medical costs related to caring for a special needs person.

A special needs trust ideally holds and manages assets for the beneficiary in a way that ensures crucial government benefits — such as Medicaid and supplemental security income (SSI) — remain available. To qualify for those benefits, a person must have less than $2,000 in assets. When set up and administered properly, a special needs trust protects that qualification because the beneficiary does not own the assets.

"The most important thing is making sure the individual qualifies for SSI and Medicaid, because they provide an enormous amount of benefits," Walther said.

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Money in the trust goes toward expenses not covered by government benefits, such as education programs, a phone, clothes or other extras. Sometimes a person's disability requires daily care that can range from a few hours to round-the-clock.

The two most common types of special needs trusts are first-party and third-party trusts.

A first-party one holds assets belonging to the beneficiary. This is more typical when the person is older and developed a disability after accumulating assets or receiving them as an inheritance or injury-related compensation. But whatever the government spent on the person must be reimbursed by the trust at the beneficiary's death. Third-party trusts hold assets given by others (such as a parent or grandparents) and have no payback provision.

To create a trust, start with a specialized attorney. If you work with a financial advisor, ask for a referral. Additionally, groups like the Special Needs Alliance and the Academy of Special Needs Planners can put you in touch with attorneys, financial planners and other pros who focus on special needs trusts so you can be more certain to cover all your bases.

"Generally speaking, you have to be extremely careful how the trust is worded," said CFP Stephanie McElheny, assistant director of financial planning at Hefren-Tillotson.

The cost to set up a special needs trust is a few thousand dollars, according to various estimates. Another cost is the trustee's fee. Depending on the complexity and particulars of the trust, a trustee's fee will be a fixed annual cost or a percentage — up to about 1 percent — of the trust's assets.

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Trust in your trustee

Financial advisors recommend giving careful consideration to trustee choice, because mistakes in the trust's administration can lead to — you guessed it — loss of government benefits. For instance, if money is sent to the beneficiary so he or she in turn can pay a bill, government benefits could be affected.

"Regardless of what it's being used to cover, the check should be sent to the service provider," McElheny said. "If it goes to the beneficiary, it's considered a distribution to the beneficiary and can disqualify them from SSI."

Walther said his firm typically recommends hiring a professional trustee who is not only comfortable making all distribution decisions but familiar with the administrative tasks of managing a trust, like taxes and reporting requirements. Additionally, if you want to name a family member or friend as trustee, check with the person first.

"It can create a burden for the trustee," said Walther of Oak Wealth Advisors. "Sometimes it's an anxiety they weren't expecting."

In conjunction with setting up a trust, advisors say it's important to make sure that the assets you want to leave behind are not left outright to the person with special needs.

For instance, if you bequeath your individual retirement account outright to the individual, government assistance might be suspended until the situation is rectified. IRAs and other tax-advantaged retirement funds can be bequeathed to the trust, but there are potential unwanted tax consequences if not set up properly.

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Make sure, too, that you understand the particulars of any life insurance policies you want to leave for the individual. Term life insurance, for example, comes with low premiums but will expire at the end of its term, which might not meet the needs of the beneficiary.

Walther said caretakers also should be aware of a relatively new way to fund expenses. Created in 2014, ABLE (Achieving a Better Life Experience) accounts are tax-advantaged savings accounts for people with disabilities. In simple terms, after-tax contributions to the account can be made by anyone. Income earned in the account is tax-free, but the annual contribution limit is $14,000 regardless of the source, and the balance must remain below $100,000 to avoid losing any government benefits.

Caretakers, take care

Additionally, the person's disability must have existed before age 26, and income tests must be met.

"It's another tool to use in conjunction with a special needs trust," Walther explained.

Regardless of how a caretaker aims to meet the needs of the special needs person, advisors caution caretakers to avoid putting their own financial needs at risk.

"If they are financially unstable themselves, that will directly and indirectly affect the [person] they are taking care of," said McElheny at Hefren-Tillotson. "They need to make sure they're meeting their own financial obligations, because if they can't pay the bills, that will be a bigger problem."

Libby Kane | Feb. 24, 2016, 11:06 AM | www.businessinsider.com

Harry Markowitz is the 1990 Nobel Memorial Prize winner in Economic Sciences, and a recipient of the 1989 John von Neumann Theory Prize.

Markowitz, who is known as the "father of Modern Portfolio Theory" for his work in portfolio construction, is a member Personal Capital's Board of Academic Advisors, which works to devise innovative solutions to help millions of Americans reach their retirement goals and better manage their money.

In an interview with Personal Capital, Markowitz was asked, "What is the best way for first time investors to get started?"

He replied:

Finding a financial adviser is a great first step. But, if you're a first time investor and not wealthy enough to afford a good personal adviser, then you should start by splitting your funds between a well diversified stock portfolio and a savings account.

The ratio of the split will depend on your age – young people should have some savings for liquidity, but could be invested almost entirely in stocks if they want.

It's also important to know your risk tolerance. If you're young and heavily invested in stocks, for example, make sure that you're not so invested that if the market declines 30%, you'll chicken out of stocks altogether?

Risk tolerance — which simply means how much risk you can afford to take in your investments — generally depends on three factors: how much money you have, how much time you have, and how you feel about it.

Generally, 20-somethings with steady incomes are well-positioned to take much more risk in their investments than 50-somethings nearing retirement because they have years for their portfolio to even out. But if the idea of being heavily invested in more volatile stocks gives those 20-somethings hives, they might feel more comfortable dialing down the investing aggression a notch.

As far as deciding how much cash to keep in your bank account and how much to invest, Markowitz, who owns his own business, told Personal Capital that cash should usually be used for liquidity purposes. "There are a lot of different schools of thought on how much cash you should keep in your accounts for emergency purposes," he said. "My rule of thumb has been at least three months of gross income plus enough to pay imminent estimated taxes."

2/10/16

If you're invested in the markets, you know it's been a bumpy ride lately. Analysts believe we're currently in a high-risk, bearish environment, investors are anxious, and money managers are proceeding with caution. Whenever we see these kinds of peaks and valleys, we know we'll hear from nervous clients wondering if they should cut their losses and give up on the market altogether. And it's not just our clients...industry talk is all about financial fears over another 2008-style recession, or at least an impending correction. The fears may come to life as you watch your portfolio values fluctuate, but it's important to remember that volatility means movement in both directions: up and down.

Certainly investors should be paying attention to their accounts and positions, but dumping holdings can often be the worst option in a down market, because selling may mean giving up an opportunity to recoup losses. Obviously all investors, advisors and households are different, and depending on your particular situation, selling may make sense -- especially if you're closer to retirement or if you've held your funds long-term. But frequently, a down market can be an opportune time to get in and create personal wealth as the market recovers. More cashflow infused into the market can also help mitigate the depths of a potential market setback.

I've sent several emails over the past few months about the potential benefits of an IRA, often used as a secondary or independent retirement savings vehicle or to reduce the annual taxes you owe to the federal government. While only your tax advisor can tell you if an IRA might help you write a smaller check come April 15, that's not the only potential benefit. An IRA can also allow you to dip your toes into a down market, limiting your exposure to loss while taking advantage of less expensive investment purchase opportunities. As an independent savings option, an IRA can help you diversify your retirement planning.

These ups and downs are scary for those of us with lifetimes of earned income on the line, but there are ways to help protect your nest egg and limit risks. An educated financial advisor can help you learn about your options and develop a plan that makes the most sense for you and your goals. And if you already meet with a financial advisor, make sure you check in at least once a year. Market conditions, investment products and opportunities change with the times, and regularly reviewing and updating your plan is a smart way to make sure you're getting the most advantage out of your relationship with your advisor.

Overall, an educated investor often becomes a more financially secure and therefore more satisfied retiree...and that's something we could all look forward to after a lifetime of hard work.

Cheers,

Michael

1/16/16

Got your attention pretty quickly, huh?

In fact, we DID win, only it wasn't the $1.5 billion jackpot. Our lottery purchase earned us back a whopping $9. Hey, at least we got something, right?

Huge dollar amounts like this week's Powerball drawing bring out fascinating behavior in all of us: suddenly we're daydreaming, planning, thinking magically about what we'd do with all that money. I do it, Brittany does it, and with 20 years of experience in the financial services industry, I can confidently say most of you have likely done it at least once or twice too. So what would it be like if you won that huge chunk of cash? The number is so large it almost doesn't seem real, like a never-ending stream of resources. For most of us, a billion dollars might as well be a kajillionzillion (yes, that's a made-up number), because that's about as realistic as winning a huge jackpot is ever going to be.

Solid financial planning, though, may eventually feel like a win. Not in the billion-dollar range, of course, but again, at least you get something. An experienced, educated, ethical financial advisor can help you figure out how to preserve your hard-earned money for longer, and how to keep more of it in your pocket (or retirement account) for the future.

Wednesday night, as we followed all the hype leading up to the drawing, we read some lottery FAQs. One of the most interesting answers began with this sentence, quoted from the Powerball website: "We have seen that even financial experts forget about taxes."

Egads! And yet, it's true. When dealing with large numbers, we can become seduced by the dreams and forget the reality. A billion dollars after taxes can be as much as 50% less once federal and state taxes are paid. Now that billion is $500 million, and if you achieve more growth through prudent investments, you'll continue paying taxes (half a billion dollars diversified will generate some hefty annual income, even in a suboptimal market) as long as your careful planning decisions pay off. 

It's not really all that different for us regular folks who make money the old fashioned way....EARNING it, one paycheck at a time. That’s a far less exciting way to amass wealth, so many of us pray for some unexpected windfall instead. But in fact, I've worked with clients who'd rather not receive large sums of money, because they're already paying upwards of 40% on the growth of their assets. After a while, it can start to feel like a constant drip stream, or a well running dry.

That's why we plan. When we consider tax implications at the outset, we can work with your accountant to build in tax management strategies so the hit doesn't feel quite so gutting. One of the most common pieces of planning advice I offer, because it can work for just about anyone who pays taxes, is an annual IRA contribution. A traditional IRA (NOT a Roth) may reduce the amount of income tax you owe. For some, it may even drop your tax bracket so you're able to keep a larger percentage of the income you've worked for. An IRA may be a solid financial option because even though it can offset your adjusted gross income for the tax year, you have until the filing deadline of April 15 the following year to open the account and make a contribution. 

So maybe you went a little overboard at the holidays, and now your CPA says you may have to cut a multi-digit check to the government come April. No one wants to be in that situation, but you still have about four months to find a way to make your money work harder for you, instead of Uncle Sam….and an IRA might be a way to do it. Even if you can't contribute much, it's important to remember that most nest eggs are built just like lottery jackpots....consistent growth from various sources over time can result in serious gains. That's what financial planning is all about.

If you want to hear more about how an IRA may be able to help you, just call...while we're no experts on income tax and the IRS code and do not offer tax advice, we’d be delighted to work with you and your qualified tax preparer to see if this option makes sense for you. And it won't even cost you $2.

Have a happy, healthy new year!

Michael

from CNN

Planning for retirement is tough. Figuring out how much money you'll need for health care is even tougher.

More than half of people over 50 recently surveyed by Nationwide said they were "terrified" of the uncertainty.

READ THE FULL STORY

The Washington Post

(Patrick Semansky/AP) By Andrew G. Biggs | December 29 at 9:10 PM Ask pretty much anyone and they’ll tell you: Americans are undersaving for retirement. It’s not just thought to be a few households falling through the cracks. Rather, there’s a perception that, after a “golden age” of traditional pensions that lasted from World War II until about 1970, most Americans won’t have nearly enough income in retirement to maintain their pre-retirement standards of living. Financial writer Jane Bryant

READ THE FULL STORY

To our treasured clients and friends,

Yet another year passes, and we're reminded of how fortunate we are, how rich in spirit and support and friendship. In 2015, we embarked on an enormous business change to better serve our clients' needs and for the opportunity to offer a greater range of solutions for financial concerns. As many of you know, starting a new business, even when you have experience, is no simple task. It takes hours, days, weeks, months to gain an equilibrium, to get to a place where all the gears are turning smoothly and client experience is seamless. We're hoping that now, with Dynamic Wealth Partners, we're close to that moment, and we're grateful for your trust and loyalty throughout the process.

I won't keep you long (it's New Year's Eve, after all!), but I did want to share a few items that made me see the incredible depth of relationships I've been blessed to develop with many of you. Recently, after an arduous legal situation that drained a client's emotional and financial resources, I received an email: 

"Dear Michael: It is gratifying to know that our financial wellness is just as important to you as it is to us. Your involvement is truly appreciated."

WOW! That'll make your new year, huh?

And a second: 

"I couldn't believe it when you said you were a financial advisor. When are you going to try to sell us something?"

These are some of the most edifying comments to receive from clients. If you feel that I really care what happens to your financial future, then I'm doing my job right, both in focus and communication. And if in my role as an advisor, I'm advising for your benefit and NOT for my sales, I can rest my head on the pillow at night knowing my heart is with all of you and my integrity is intact. It's a blessing to have that recognized among my clients, as I love what I do and am humbled to have been chosen to help you reach your goals.

We are grateful for your friendship, partnership and support. I'm hoping that in 2016, we all grow, learn, appreciate and achieve together.

Have a wonderful, joyous New Year!

Michael

Friday, November 20, 2015

Well, Halloween has passed, and now we come to my favorite part of the year: Thanksgiving. We have a tradition in our family on Turkey Day, where we go around the table and each person has to say exactly what they’re thankful for from the past 12 months and why. It’s always interesting to hear the answers.

Some of you may know a bit about my family’s personal history, because I’ve occasionally shared it to illustrate the importance of planning. But in this case, I’m going to be more specific. During the birth of our son, my beautiful, overachieving wife tore three arteries in her brain, and doctors told us from the ICU where she was taken that she may not recover. I absorbed this news with shock and near mis-comprehension: What’s that, you say? She may not recover? What does that mean? Like she may not be able to go for a run anymore, or something worse?

It was definitely something worse, they said. We’re doing everything we can, they said.

Pray, they said.

For a time after Brittany left the hospital, she was simply unable to care for our children. She couldn’t change a diaper, mix formula, work the television or type on a keyboard. The grocery store was overwhelming, and cooking a meal was out of the question anyway….she required two naps a day. Her sudden disability changed her motherhood, and I watched her being frequently frustrated with her progress. It took several years for her to get back to baseline, but our family was incredibly fortunate in that she has recovered enough to return to a life of "new normal." Now, when she stutters a bit or tongue-trips over a word or has to leave the cocktail party early due to fatigue, we are both reminded of our experience, and I tease her that before, she was wicked, wicked smart. Now, she’s just plain ol’ wicked smart. It makes her laugh every time.

I tell the story because experiencing disability is incredibly challenging, and our family knows that first-hand, especially after Brittany spent four months last year in a wheelchair following a fall. Recently Brittany was approached by a former chef and luxury event planner, Steve Norton, who is now living with disability after a massive stroke and nearly a year of rehab. Brittany and Steve connected over their shared experience of brain injury and disability, and she agreed to contribute her expertise in marketing pro-bono for a new non-profit he's launching that aims to change the lives of people with disabilities. Steve's vision includes an accessible, healthy-eating café serving a healthful, delicious, locally-sourced (when possible) menu, catering company, culinary school and food truck. The café’s potential location is easy to get to, at a local social services center where people with disabilities are interacting and conducting the business of their daily lives, and it’s also on the dial-a-ride route. Once the café is up, operational and self-sustaining, the organization plans to expand to include a custom accessible kitchen to house a culinary school developed specifically for people living with disability, so they can learn about nutrition and healthy eating, and gain useful vocational skills that will help students rely on their own earned income rather than the Social Security Disability Income they likely currently receive. Steve also plans to launch a catering company with an existing client prospect list that will employ graduates of the school, again creating jobs, skills, income and pride.

I’ve helped to advise the Steve on some wealth-building and endowment strategies, and both Brittany and I have donated countless hours to this cause, because we’ve lived with disability ourselves and we know we are fortunate to be living it no longer. So, at this time of Thanksgiving, where we show our gratitude and financial advisors are sending out IRA reminders anyway, I’m going to strategically combine the two.

I am grateful for your partnership and continued confidence in me, and I’m particularly grateful that my wife is here and whole today. As part of that gratitude, I’ve shared the story of Steve Norton and his café, Engaged Urban Eatery, with you, because it’s a cause near and dear to our hearts. If you’re looking for an additional write-off this year and would like to explore charitable giving, give us a call, we’ve learned a lot about it over the past several months! Or, if you think an IRA might help your tax burden, I’d be happy to discuss that also. Either way, let's make the money you've earned work for you whenever we can…these are just two simple strategies out of many.

For more information about Steve Norton and Engaged Urban Eatery project to help improve the lives of those with disabilities, visit his Go Fund Me page offering the full story at www.gofundme/engagedurbaneatery. And then let me know if I can help you figure out a way to maximize the impact of your financial and tax strategies. I’m grateful to be educated about some complicated concepts, and I’m happy to help you put them in place where appropriate.

Finally, as this time of focused gratitude comes upon us, know that I and the entire Dynamic Wealth Partners team are deeply grateful for all of you.

Have a great holiday!

Michael

y Michael J. Abbate | November 18, 2015

Are you ready for retirement? Multiple studies confirm that most Americans don't feel they are...and many retirement experts agree. A recent survey from the TransAmerica Center for Retirement Studies shows that roughly half of Americans who could retire imminently are choosing to continue to work instead, either extending their existing career or taking on an "encore career" to maintain cashflow in retirement. While many of our parents and grandparents had the option to rely on social security income to supplement their savings, that may not be a reality for today's workers.

So, what can you do to make sure you're covered for retirement tomorrow without compromising today? First, if your employer offers a retirement savings plan, use it....there may be some free money in it for you, and it may help decrease your taxable income. Employer-sponsored retirement plans often offer a match when you choose to contribute to your own retirement account. Here's an easy example: You make $50,000 in annual salary. Your employer offers a 3% match ($1500/year). If you choose to set aside 3% of your salary as well, your employer will take it out of your gross pay, and deposit the total 6% into your retirement account. In this scenario, your taxable income would go down by $1500...not a huge decrease, but every little bit helps. This way, you'll be saving for retirement before your paycheck even arrives.

Next, tax season is gearing up. Nobody (including me!) likes writing a big check to the government every April. If you owe taxes for this year (or any other year), a traditional IRA may be a way to pay your retirement account instead of paying the government. Traditional IRA contributions may decrease the amount of your taxes due depending on your income, employment and filing status. The best way to know if this strategy could help you is to sit down with your accountant and ask. An employer sponsor is not required for a Traditional IRA, and contributions are made pre-tax, but your funds will be taxed when you take them out as income in retirement.

You could also look at a Roth IRA. A Roth is unique in that it utilizes AFTER-TAX dollars. So while it may not help your tax situation today, Roth withdrawals in retirement are tax-free for the amount you've contributed over the years, which makes it an advantage in retirement. The gains, however, will be taxable. 

IRA limits for 2015 and 2016 are $5500 TOTAL per individual, meaning that between all of your IRA accounts, you may only contribute $5500 per year. The catch is, the account has to be opened before year-end, but you have until April 15, 2016 to fund it.

If you're interested in more information about financial planning for tax considerations, we're happy to help. Setting up an IRA or making a contribution to an existing one is a simple process that can make a significant difference for you and your family in retirement.

Best,

Michael

11/4/15 :: By Alex Padalka

Rob Gronkowski, the tight end for the New England Patriots, knows a thing or two about saving and is going to be sharing his knowledge, according to CBS Boston.

The 26-year-old football player has been putting away the entirety of his paychecks from football into a savings account and living large off his endorsement payouts only, writes the news outlet. In the five seasons he’s played for the Patriots, Gronkowski has saved $16.3 million, Business Insider reported in June. But he’s eschewing expensive jewelry and flashy cars and wearing a pair of jeans he’s had since high school, says his autobiography as quoted on the website. His endorsement contracts include BodyArmor SuperDrink and Dunkin’ Donuts, noted Business Insider.

CBS Boston tells us that now, in a program designed with Capital One and dubbed “GRONKonomics,” the Gronk will dispense some financial advice to his fans through Facebook and Twitter — such as recommending automatic transfers into savings accounts and setting short-term goals. In his tweet announcing the program, Gronkowski says, much like during a game or a session at a gym, “It’s important to challenge myself on my financial fitness,” the news outlet reports. 

November 5, 2015

Raise your hand if you're expecting to rely on Social Security income as part of your retirement....

Unfortunately, I already know that's what most of us are thinking. Didn't even have to look for all those upstretched arms!

The amount of your specific social security benefit may be more or less depending on WHEN you begin taking benefits. If you take them too soon, your retirement checks from social security will be less. If you take them too late, your benefit may be higher, but you may not live long enough to collect back all that you paid in over the years. It's a true balancing act that can have huge implications on your finances in retirement, as well as on your spouse and loved ones.

Do you have a plan for your social security benefits election? There are literally hundreds of claim combinations that can be used during the setup process to maximize your benefits. Which one will you choose? Suddenly, as you have to make a critical decision that will impact the rest of your life, "social security" sounds pretty puzzling, not secure at all! That's why it's vitally important to consult with a knowledgeable professional who can help you navigate this complex system and advise you as to how your social security income fits into your overall financial picture in retirement.

Studies estimate that some 70% of Americans start collecting their benefits too soon, decreasing their payout and putting greater stress on the system. Retirement is supposed to be relaxing, not stressful! It's never too late to start to plan. If you have questions about social security or your own financial future in retirement, let us know. And if you're on the cusp of retirement and would like a complimentary consultation on your social security options, we'll be happy to provide it.

Social "Security?" Here's to TRUE security in retirement, with an educated strategic plan that can help you get exactly where you want to go in your financial future!

Cheers,

Michael

Get ready for some big changes to Social Security. Two popular claiming strategies are coming to an end. Here's what you need to know.

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October 29, 2015

You know how when you were a kid, you looked forward to dressing up, running around the neighborhood, and getting all the "good" candy? And how you silently cursed and scowled at the house that passed out pencils or pennies?

That's probably because pencils and pennies aren't all that exciting, but candy bars and sweet taffy could keep you going all night long. Mmmmmm, sweet, sugary memories!

I always think of that around this time of year, because it's a similar deal in financial planning: not always exciting and delicious, but just like pencils and pennies, useful and necessary. There's a saying in my industry, "No one plans to fail, they only fail to plan." And in nearly two decades in the financial markets, I can confirm the statement is true. You wouldn't go trick-or-treating without a costume and a bag to hold your candy, but people routinely go into retirement unprepared, without a plan to accomplish their goals. Sometimes that's because, just like Halloween, it can be scary to think about leaving a regular income stream and relying on what you have today to last for the rest of your life. But with proper planning, it IS possible.

We get it....your money is a big deal with a big impact on your life. But you don't have to make one set, static plan for the rest of your life. Even a few smaller steps can make a significant difference. For example, don't spend your change and single-dollar bills, save them instead and open an investment account or a Roth IRA. Better yet, with tax time just around the corner, talk to your accountant to see if a traditional IRA contribution might lessen your tax burden. If you don't have an accountant you trust, we'd be happy to offer recommendations. Finally, meet with your financial advisor regularly to make sure your plan still fits. Lifestyles change, finances change, families change....and when life variables change, financial plans should be updated to reflect those changes.

So, this Halloween, don't forget your costume, don't forget your candy bag,

and don't forget your finances!

Enjoy the holiday!

Michael

October 19, 2015

Whoa! So this happened on the way to take the kids to the movies, it's Saturday Family Fun Night in the Abbate household.

When we'd realized we'd caught a lightning shot, it struck me (no pun intended) how rare it is to time a shot so perfectly. It's like being hit by lightning, or winning the lottery...most of the time it just comes down to luck (or lack thereof). 

Sometimes luck is sufficient. It can often be good enough. And we've all heard the adage "Sometimes it's better to be lucky than good." I agree, sometimes it is.

But most of the time, if you want to improve your chances of success in almost any area, it's better to be good. To be prepared. To be knowledgeable and well-informed about your position and options.

That's especially true when it comes to your financial life. A good financial advisor will help you determine your current position, identify and articulate your financial goals, and offer various options to help you get there. And financial advice isn't only for the wealthy. It can be, however, a very useful component of wealth-building.

To paraphrase the great writer Mark Twain, the difference between having a financial plan and having no plan can be as significant as the difference between lightning and a lightning bug.

As you can see from the photo above, that's some difference.

- Michael

By Matthew J. Belvedere | September 3, 2015 | CNBC

Based on his research of historical stock market valuations, Nobel Prize-winning economist Robert Shiller said Thursday he sees the "risk of substantial declines" ahead.

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