Are You Properly Set for Your Retirement? 5 Things You Can Do Now

retirement planning. LAwrence Israeloff, tax attorney, CPAIt is never too early to begin retirement planning. Unfortunately, many people put it off. If you are wondering what you can do now to ensure you are set for retirement – even if it is decades into the future – consider these five tips.

  1. Consider Your Retirement Activity Plans

People dream of their retirement, expecting to be comfortable. But many are unsure how to make the transition to a “life of leisure” once the time arrives. In order to make sure you have enough money to truly have leisure time, you need to determine how that time will be spent.

Are there dreams you have postponed until after you stop working? Do you want to travel? Are you hoping to stay active in your community? Will you be sharing the activities of your retirement with an also-retired spouse? The important thing is to get a handle on your retirement activity plans, so you can do what it takes now to make these dreams a reality.

  1. Create a Savings Goal

Once you know how you intend to spend your retirement years, you can begin planning how much money it will take to live that way without a steady employment income.

Questions to ask yourself:

  • Realistically, how much will it take to maintain your current lifestyle?
  • Do you plan to drastically change that lifestyle once you retire?
  • What will you add and subtract from the way you live now?
  • What does your retirement income future look like, including savings, social security, pensions, etc?

Your goal is to create a ballpark figure you can work toward that will allow you to make your retirement dreams a reality. Once you have a number range in mind, you can better plan to accomplish that savings nest egg goal.

  1. Healthcare

In addition to saving money for healthcare costs as you get older, there are a few specific things you can do now and in the years leading up to retirement that will help you ease the financial burden of your health as you get older. Investing in long-term care insurance is one of the best moves you can make now to protect you in the future. Some say it can be costly, but should you become seriously ill in your senior years long-term care insurance will help protect your savings by paying for a large part of the medical expenses. Plans vary so shop around.

  1. Manage Debt

The sooner you begin to pay down your debts the better your retirement funds will be. Avoid taking on any high-interest debt as you near retirement and focus on paying your higher interest loans as soon as possible. Ideally, you will have no debt by the time you reach retirement, but if this is unreasonable, focus on reducing it as much as possible.

  1. Hire a Financial Advisor

If you are not already working with an expert to help you plan for retirement, now is the time to find someone. Your investment needs are going to change over the years and having a professional in your corner can really make things easier. Discuss the plans you have for retirement with your financial planner and let him or her help you create a plan that will get you to the point you want to be by retirement age.

 

The most important thing to remember about retiring is there are very few rules that are hard and fast that apply to every situation. Some people don’t even want to retire because they enjoy working and fear they will get bored with no job. Others want to retire earlier than usual or are willing to work just a few extra years to build up additional savings. Every individual has his or her own unique situation and should plan accordingly so retirement can be an exciting life transition.

Sources:

http://www.huffingtonpost.com/quora/ten-things-to-do-to-prepa_b_6062612.html

http://www.usatoday.com/story/money/columnist/brooks/2013/02/11/retiree-babyboomer-financial-debt/1891349/

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The Benefits of Working with a PFS (Personal Financial Specialist)

The Benefits of Working with a PFS (Personal Financial Specialist), LAwrence Israeloff tax attorney, CPA

Working with a PFS helps you put your current earnings, your projected earnings, and your long-term outlook into proper perspective.

A Personal Financial Specialist, or PFS, is an individual who is highly qualified to offer advice on a variety of financial issues and has earned the PFS credential from the American Institute of Certified Public Accountants. He or she can help you establish and build an investment portfolio, minimize your taxes, assist with estate planning, recommend insurance, and help you plan for retirement. It is possible for you to do all of these things on your own or to work with separate advisers in each wealth management area, but a PFS is a one-stop shop who can organize the process and focus your efforts. A PFS provides personalized attention and advice based on your specific circumstances.

Setting Goals and Creating a Financial Plan

There are three things you and your PFS will do initially and on an ongoing basis to determine how best to manage your wealth:

  • First, you will assess your current situation.
  • Then, you will set financial goals and choose the means to achieve them.
  • As time passes, you will evaluate your progress toward your goals, determine if those goals still apply, and make adjustments to your plan when necessary.

 Putting Things in Perspective

Statistics on financial planning can be frightening when you think about how quickly the years pass and retirement arrives. According to BusinessInsider.com, only 50% of Americans have more than a single month’s income saved. Many people are also unaware of what they are spending and how their current spending habits affect their long-term savings goals. A PFS will evaluate your current financial position, analyze your finances from a uniquely professional viewpoint different from your own, and help you determine what changes must be made now to help achieve your long-term goals.

Empowering You Financially

Working with a PFS helps you put your current earnings, your projected earnings, and your long-term outlook into proper perspective. He or she does not make decisions for you or take control of your money. Instead, the two of you work together to determine the appropriate financial path you should be following. It is entirely up to you whether or not you want to act on the advice of a PFS.

The world of finance and wealth planning can feel overwhelming, especially if you are just beginning to consider your financial future. A PFS can provide information, education, and guidance to help you get a solid grip on your financial situation.

 

 Source: http://www.businessinsider.com/a-dozen-shocking-personal-finance-statistics-2011-5

 

 

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Tax Changes You Need to Know About in 2015

Tax Changes You Need to Know About in 2015, tax attornet & CPAEach year there are changes to the tax code that affect your tax return, and 2015 is no different. Here are the changes to be aware of for the coming year:

Healthcare

Everyone has been talking about it, but it still seems some are unaware of the stipulations of the Affordable Care Act. The ACA mandates that all Americans have qualifying health insurance coverage or pay a penalty to the IRS. The penalty in 2014 was 1% of your household income or $95 per person. But in 2015, the penalty increases to 2% of your total household income or $325 per person.

There are also a few 2015 changes regarding flexible spending accounts for healthcare costs that relate to rollover savings. If you carried over the allowed $500 into 2015, you are ineligible to save in a general purpose FSA this year. Unfortunately, it’s too late to spend what was left in your 2014 account to qualify, but now is a great time to discuss your health savings situation with your employer and/or your tax advisor.

Retirement

As of the first of this year, you can only make one rollover from an IRA to another IRA within a 12 month period. A rollover counts as withdrawing funds from one IRA, holding them for fewer than 60 days, and then depositing them into another IRA.

There are also changes to 401(k) limits this year. The limit on employee contributions increases to $18,000, so you are eligible to deposit $500 more than last year into retirement savings. In order to do this, you must let your employer know you want to increase your contribution. If you haven’t already, make the change now to take advantage of the most savings available.

Other increases are also available this year, including:

• Employees over the age of 50 are now allowed an additional $500 ($6,000 total in addition to the standard amount) for 401(k) “catch up” contributions
• Increases also apply to 403(b) and 457 retirement accounts
• Employees can now contribute $2,550 to their flexible spending accounts to put toward healthcare costs

Income

There are a few additional changes to be aware of that relate to the amount of money you earn in 2015.

First, the AMT exemption has increased to $53,600 for individuals and $83,400 for joint filers, which is a 1.5% increase from last year.

Income tax thresholds have been adjusted for inflation, too. The highest tax rate (39.6%) applies to single filers earning at least $413,200 annually and joint filers earning $464,850. This is an increase of about 1.6%.

Finally, 2015’s standard deduction increases to $6,300 for single filers and $12,600 for joint filers. The standard deduction for heads of household rises to $9,250. Keep in mind that itemized deductions such as medical costs, taxes, interest expense and charity donations provide a tax benefit only if in total they surpass the amount of the standard deduction.

Sources:
http://www.usatoday.com/story/money/personalfinance/2014/12/19/taxes-2014-w-2-retirement/19903221/
http://www.irs.gov/uac/Newsroom/In-2015,-Various-Tax-Benefits-Increase-Due-to-Inflation-Adjustments

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Personal Tax and Financial Planning 2014 – 2015

Personal Tax and Financial Planning 2014 , Israeloff law cpa, Melville NY

Personal Tax and Financial Planning 2014 – 2015: What You Can Do Now to Save Money Now

If you are like most people, you experience an end-of-year rush that leaves you feeling exhausted and frustrated. Tax and financial planning is no different – the change in the calendar and the coming tax season after the New Year loom, and you want to do all you can now to save money. Luckily, there are a few important moves you can squeeze in now to make things a little easier when 2015 tax season arrives.

Remember, as you make decisions, any planning and strategy you employ must apply to both 2014 and 2015. A multi-year outlook ensures anything you do to save taxes this year won’t cost you more in the coming year. Also, be aware of the Alternative Minimum Tax. What works now could increase tax problems in the future. People who have many dependents, deduct state and local tax, exercise incentive stock options, or enjoy large capital gains should expect to pay this alternative tax.

Income and Deductions

Postpone income until 2015 and accelerate deductions into 2014 to lower your 2014 tax bill. This strategy may enable you to claim larger deductions, credits, and other tax breaks for 2014 that are phased out over varying levels of adjusted gross income. These include child tax credits, higher education tax credits, and deductions for student loan interest. Postponing income is also desirable for those taxpayers who anticipate being in a lower tax bracket next year due to changed financial circumstances. Note, however, that in some cases, it may pay to actually accelerate income into 2014. For example, this may be the case where a person’s marginal tax rate is much lower this year than it will be next year or where lower income in 2015 will result in a higher tax credit for an individual who plans to purchase health insurance on a health exchange.

Charitable Giving

The holidays are a time for giving and charitable contributions are no exception. Many people feel generous this time of year, and tax-wise it can pay off. Keep in mind donations charged on a credit card are deductible in the year charged, not when you make your payment. This means you can squeeze in a few donations before the end of this year and not need to make the payment until your bill arrives in January. You can give generously without leaving yourself short on funds for the holiday season.

Make Changes to Your IRA Funds

Converting traditional IRA funds to a Roth IRA can save you money over the long-term if your tax rate this year is lower than it will be in the future. Wiggle room in your current bracket also allows you to absorb a small Roth IRA conversation without forcing you into a higher tax bracket this year.

Also, don’t forget to make a tax deductible contribution to your traditional IRA or 401(k) retirement account if you are eligible.

Update Estate Planning

Recent changes concerning federal and state estate tax could mean it’s time to take a look at your current estate plan, if any, or finally implement an estate plan for the first time. In addition to changes in the law, changes in your personal life might be cause for a review of your estate plan that could lead to saving you money and improving your family’s situation in the future.

Making gifts sheltered by the annual gift tax exclusion before December 31st can save gift and estate taxes. You can give $14,000 in 2014 to each of an unlimited number of individuals but you can’t carry over unused exclusions from one year to the next. The gifts also may save family income taxes where income-earning property is given to family members in lower income tax brackets who are not subject to the kiddie tax.

Taking action now can reduce your tax liability this year and next. Unfortunately, many people get caught up in the hustle and bustle of the holiday season and miss out on this last minute opportunity to save money. Waiting reduces your options and could be a big financial mistake. To make the most of your circumstances and take advantage of end of year savings, contact a financial planning and tax expert for more information. Feel free to call us to discuss your situation.

Source: http://themoneygeek.com/2014/11/09/2014-year-end-tax-planning-tips/

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