If you’re like most business owners, you probably have a million things on your mind on any given day. You may fill many roles, from CEO to sales to marketing to accounting and more. As a business owner, your task list is full every day, and there are likely many days where you never cross everything off.
Given how busy you are, it’s possible that you haven’t given much thought to one of the biggest challenges that business owners often face. It’s business succession, or the process by which you pass on the business to the next owner.
Many workers assume that once they retire, they’re spending naturally go down. This notion is so widely accepted that it’s not uncommon for workers and financial professionals to account for a reduction in spending when trying to calculate a retirement savings goal.
However, the assumption that spending will naturally decrease in retirement is not always correct. In fact, many retirees find that their spending actually goes up after they stop working. If you’re relying on a reduction in spending to meet your retirement goal, you may have to take some proactive steps to make it happen. To do that, it’s important to understand some of the factors that can inflate retirement spending.
If you’re like many Americans, much of your retirement assets may exist in plans such as an employer-sponsored 401(k) or an IRA. These plans are attractive retirement savings vehicles because of their unique tax structure. Many qualified plans offer tax-deductible contributions and tax-deferred growth as long as the funds stay in the account.
On most qualified plans, though, the taxes aren’t deferred forever. While the Roth IRA offers tax-free distributions, withdrawals from 401(k) plans, traditional IRAs and other IRA types are considered taxable events.
Many people assume that estate planning is only for the ultra-wealthy or for those who have enough assets to face estate taxes. That’s not true, though. Estate planning is an important piece in the financial puzzle for anyone who has accumulated assets and wishes to pass those assets onto their loved ones.
Even if you don’t meet the asset threshold to worry about estate taxes, there are still plenty of other costs that can erode your legacy. One is health care and long-term care costs at the end of your life. Another is funeral expenses. And yet another potential threat is probate.
Does much of your retirement savings exist inside your company’s 401(k) plan? You’re not alone. The 401(k) is a widely-used retirement savings vehicles. Your 401(k) plan likely offers tax-deferred growth and matching employer contributions, the combination of which can power your retirement asset accumulation.
When and if you ever leave your employer, you may face a choice about what you should do with your vested plan balance. Conventional wisdom is to roll the 401(k) balance into an IRA. When you do a rollover, you avoid taxes and penalties, and you may gain access to a wider menu of investment options.
Do you have any resolutions for the New Year? It’s not too late to make some! While many people make resolutions to get in shape or pursue a new hobby, you may want to make 2018 the year you take control of your retirement planning. Whether you’re quickly approaching retirement or still many years away, it’s always a good time to reassess your planning and make adjustments.
Below are three action steps that can have a big impact on your planning and your financial future. Sticking to just one of these resolutions could strengthen your financial stability and help you have a more comfortable and enjoyable retirement.
The holiday season is here, which, among other things, means many charities are in the midst of their busiest time of year with regard to donations. A 2017 study from Guidestar found that 50.5 percent of surveyed nonprofits receive more than half of their donations in the final three months of the year.1
There are many reasons why charitable giving ramps up as the year draws to a close. Some individuals may feel urgency to follow through on early-year resolutions to give more. Others may be swayed by the spirit of the holiday season. And, of course, many Americans are also looking for ways to maximize their end-of-year tax deductions.
April is National Financial Literacy Month. The purpose is to educate Americans on some important but often overlooked financial issues. The death of a parent may be one of the biggest threats that family can face, especially if there are minor children in the home.
Despite the threat posed by death, studies show that many households have little or no life insurance protection. A 2015 study from Bankrate found that only 60 percent of Americans had life insurance, and half of those had less coverage than they needed. Among families with children, 37 percent had no life insurance protection, while 32 percent had less than $100,000 in coverage.1
Income is at the heart of any retirement plan. In many ways, your financial stability in retirement depends on your ability to generate consistent income to support your expenses. If you’re like many retirees, you will likely depend on income from sources such as Social Security, employer pensions and your own savings.
Unfortunately, you may find that those sources don’t provide enough income to meet your needs. That could be especially true during times in which you face unexpected costs or volatile market swings. In those times, you may find it helpful to utilize supplemental income, preferably in a tax-efficient manner.
Thinking about one’s death may not be pleasant, but it’s important you take some time to figure out how your assets will be distributed in the event of your passing. Without a plan in place, it’s possible your assets could get distributed in a way that isn’t consistent with your wishes.
Have you recently get married? If so, congratulations! You and your spouse are probably enjoying your time as newlyweds and celebrating your new life together, so you may not want to take time right now to think about financial matters, especially with regard to estate planning.