Posts

Lessons for Teenagers – understanding debt and the cost of a loan

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As so many adolescents and young adults head off to college during this season, they are faced with various financial decisions, many of which are completely new and in uncharted territories.
Starting early with small lessons can help better prepare, especially our young women, to develop the tools needed to engage with a knowledge base instead of emotion when seeking financing for college or a car to get to work.
This article posted by Women Who Money provides some good insights and tools to assist in guiding our younger generation:

https://womenwhomoney.com/help-teenager-understand-loans/

SECURE Act Legislation heads to the Senate……..and what that could mean for your non-spouse beneficiaries.

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I have had a few clients email requesting information on how the SECURE act could impact their future financial plans related to RMD’s and passing the asset to their children.  As traditional pensions are fading away, people are mostly responsible for fully funding their retirement income.  The main vehicle by which this is accomplished is a 401k and an IRA.  The SECURE Act focus is to encourage and “simplify” the qualified saving process for the average person.

One item that is favorable would be extending RMD’s, required minimum distributions from 70 ½ to 72 but the main impact for those who have truly been ardent savers and plan to pass along the tax deferred growth account to non-spouse beneficiaries would be limited if not extinct.  A non-spouse beneficiary would have only 10 years by which to completely withdraw the account and yes, pay the respective income taxes on those withdrawals.

Kiplinger posted a good article that I wanted to share and have included the link:

https://www.kiplinger.com/slideshow/retirement/T047-S001-how-the-secure-act-could-impact-retirement-savings/index.html

Should you have any questions about your specific circumstance related to passing along your hard earned asset to a non-spouse beneficiary and what planning choices are available to preserve the asset in a tax efficient manner, contact us at www.arkagosadvisors.com as we are happy to work with you and review your options.

Do you have a plan for long-term care?

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Developing a LONG-TERM CARE Plan is quickly becoming a necessity just as planning for retirement has evolved over the past 20 years into a true necessity.  The needs could be for yourself or your aging parents, regardless there is a quickly rising need to understand and plan for future expenses:

Centenarians, those living to (or beyond) the age of 100, now number 82,000 up from 50,000 in 2002. Those 100-plus are America’s second-fastest growing age group, just after those 85 and older.  -WSJ, May 20, 2019

 Arka̅gos Advisors is a holistic planning firm and as a standard part of our financial planning assessment for all clients we calculate a needs analysis for future care needs and help the client creating a viable plan that is sustainable.  Let us know if we can assist you and your family to ensure that your needs are covered for late in life expenses.

Inflation vs. The Cost of Living – Quantifying a Female Variable

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When planning for retirement, remember it is key to understand that difference between factoring standard inflation (the cost / purchasing power that is lost over time) and the cost of living that is specific to you.  One of the key components to planning for a retirement that will last, is to understand what your standard of living will cost in the future and to plan accordingly with a sustainable investment design:

https://www.nj.com/business/2017/03/growing_poorer_inflation_vs_cost-of-living_biz_bra.html

The Australian Economic Miracle

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According to the Organization for Economic Cooperation and Development, Australia has the longest sustained expansion on record, at 28 years. They have not experienced a recession since 1991.

-The New York Times, April 6, 2019

Get Your Financial Ducks in a Row

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A shocking 32% of Americans would rather do their taxes, get a root canal, or give up sex for a month than create a will! Prince, unfortunately, was in that group. In the three years since the musician Prince has passed away without a will (leaving behind roughly $200 million), the estate has blown through $45 million in administration costs alone.-Forbes, April 29, 2019

This is a useful overview of the documents essential to estate planning, including wills, trusts and powers of attorney:
https://financialducksinarow.com/12964/estate-planning-essentials/

The costs of estate planning can be critical for the average family if the basics are not in order.  As previously mentioned, when working with clients, I also incorporate a list of digital documents, passwords and access that can be protected to be accessed after death. Most of the TOA (Terms of Service Agreements) generally default to closing the account and restricting any transfer outside of the account owner’s instruction.  There are currently no legal provisions in place within a standard TOA to transfer digital assets in the event of death; therefore, planning is critical.  If you would like assistance with reviewing any current estate planning documents or developing a plan to transfer assets, whether physical or digital, I would welcome the opportunity to work with you and your family.

Digital assets and estate planning: do you have a plan?

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Do you have a plan for your digital and social media assets? When planning your estate, be sure to include instructions for the content of your email, social media accounts, and even PayPal and similar online money transfer services.  In addition to the sentimental value of your posts and pictures, there may be significant financial value in your online money transfer accounts, or even domain names.

This article highlights the necessity of including digital assets in your estate planning, and gives helpful tips on what to include: https://www.kiplinger.com/article/retirement/T021-C000-S004-devise-a-plan-for-your-digital-assets.html

Taxation of Social Security Benefits and Translating the Confusion

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The taxation of Social Security Benefits is often a shock to most people as it is commonly assumed that after age 70, those benefits are not taxed.  The taxation of benefits is based on your income which also includes investment income and non-taxable bond interest irrespective of age.

If you have a combined income greater than $34,000 annually ($25,000 for single filers), then a portion of your benefits will be taxed regardless of age.  Also note that RMD’s (required minimum distributions) are considered income and will add to your base for calculating how much of your benefits are taxed.

This is a great article from AARP that explains the details and caveats for the taxation of your retirement benefits.  If you have further questions or if can assist you with better understanding your unique situation, please contact my office on 703-535-5921 or send an email to [email protected].

https://www.aarp.org/retirement/social-security/questions-answers/how-is-ss-taxed.html

Tax tips and mistakes to avoid as you begin to prepare your taxes for 2018:

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https://www.fool.com/taxes/2019/01/27/3-costly-tax-mistakes-to-avoid.aspx