Insight Archive - Page 8 of 33

What’s New | AEGIScoop

What’s New with the Team!

Kenji Passed his Series 65 Exam!

A Big Congratulations to Kenji Callahan, Relationship Manager, who passed his Series 65 Exam! We are excited to see him continue to grow in his career at AEGIS and continue to serve our clients well. Way to go Kenji!

Kristie is Back in the Office!

Kristie Hennes, Chief Compliance Officer/Director of Operations, has now returned back to work full-time after her surgery she had in January at Mayo in Rochester, Minnesota. She was diagnosed with Ameloblastoma, very rare. She had a mandibulectomy fibula free flap reconstruction which is taking her left fibula and reconstructing her right lower jaw with it. She is doing very well. She is still recovering and going through treatment at Mayo, along with physical therapy. She would like to thank everyone for their well wishes, calls, emails, cards, prayers, etc. She is grateful for all your support.

A New Addition to the Reed Family!

Elissa Reed, Relationship Manager, is expecting! To celebrate, the team had a group lunch and small baby shower for her in June. We are excited for her to embark on this journey of motherhood and can’t wait to see what this little bundle of joy will bring to the Reed family. Congratulations Elissa & Chuck!

Congratulations to the future Mr. & Mrs. Deitte!

We are pleased to announce that Courtney Krell, Marketing Coordinator and her fiancé, Jacob Deitte, will become husband and wife on Saturday, August 13th at the Medina Wedding Chapel in Appleton. After the ceremony, the two will celebrate with close family and friends followed by a big reception at a later date.

We look forward to seeing Jacob and Courtney begin their lives together. We pray for a blessed marriage and for a lifetime of happiness.

New Addition to the Madell Family!

Although Mariah Madell is no longer working here at AEGIS, she will always be a part of the AEGIS family. Mariah and Jason welcomed little Alayna Madell into their family on April 12, 2022. Mariah is enjoying her new job as a stay-at-home mom and they both are ecstatic to see what the future holds Alayna, and their futures. See below a recent picture of Alayna.

Past Events!

Oshkosh Open House

On May 17^th we had our Oshkosh Office Open House! Several people stopped in to see our newly expanded location, visit with our team, and enjoy a snack or two! Thanks to everyone who came out for Oshkosh Open House!

Team Family Picnic

On June 12^th the AEGIS Team got together for a family picnic and games at Menominee Park in Oshkosh. The team played games like cornhole, ladder toss, jumbo jenga and more. The team got to get to know each other’s families and also see the competitive side to each other as well. Check out the pictures below from the event!

Upcoming Events!

AEGIS Financial’s Summer Celebration!

On Sunday August 14, we will have our Annual New Client Celebration for the new families we are excited to serve. This year we will attend a Timber Rattlers Game and enjoy a lunch with our new clients and ambassadors.

A big thank you to our client ambassadors for putting your trust in us and introducing these families to us.

If you know of a family member or friend who is looking for financial planning advice, we would love to schedule a free consultation with them.

Social Media

Go like us on our Facebook page “AEGIS Financial” and find out what’s happening around the office! We will be posting frequently with birthdays, and important events for our team members as well as sharing some helpful articles that could help you with your finances!

Market Update Videos!

Bill Bowman, CPA and Brian Rogers, CFP frequently share the Investment Committee’s insights on the market and economy. These videos are emailed to you and available on our YouTube Channel “AEGIS Financial” as well as our Facebook and LinkedIn pages! Be sure to like and subscribe!

Financial Planning Educational Video Series!

Do you have questions about your accounts? Are you not sure what different types of investments are or how they work? Then this educational series is the perfect thing for you! We are continuing our educational series of short 1-2 minutes videos hitting on questions and topics that our clients frequently have. Follow us on Facebook, LinkedIn, or YouTube to stay up to date with the latest videos in the series!

Lunch & Learn Educational Series!

Will I have enough to retire? How will I replace my paycheck? Should I take Social Security early, or wait until full retirement age? How will I minimize taxes and protect my benefits? Will my money last? Do you know of anyone asking these questions? We can help!

We are now offering FREE Lunch & Learn Presentations! With a complimentary lunch, we will provide you with a presentation on any of the following categories or by special request!

Retirement Planning
Long-Term Care
Social Security
Charitable Giving Strategies
Roth conversions to Reduce Taxes Over Lifetime

A Plan for All Seasons | Summer 2022

Oshkosh Corporation Employees! You Must Make a Pension Election by September 1st!

If you are struggling to figure out what to do now that your Oshkosh Corporation Pension is terminating, please read on. The team at AEGIS Financial can provide help…

Oshkosh Corporation is terminating their Salaried and Clerical Employees Retirement Plan (“the Salaried Pension Plan”). There are many different distribution options available to you including taking your benefit in a one-time lump sum payment or rollover. A rollover gives you the opportunity to put your pension benefit into an individual retirement account (IRA) or another qualified plan.

At AEGIS Financial we are here to guide you through this decision!

With CPA and CFP professionals on staff as well as a team of wealth managers, who have experience helping both current and former Oshkosh Corporation employees. We will look at your options closely as a part of your overall financial plan and offer advice that is tailored for you individually.

We are a fiduciary advisor who pride ourselves in providing individualized advice which benefits you, the client, first and foremost keeping your best interests at heart. If you or someone you care about needs unbiased client-first advice, please feel free to refer them to the team at AEGIS Financial. To schedule your FREE consultation, give us a call at (920) 233-4650 to get started today!

Estate Planning – Don’t Leave Home Without It! | Advice for Life

Every year, we lose clients either expectantly or not. Recently we lost two precious ladies. One expected, one not. One had a spunk we loved and the other sweet as the day is long. What these two ladies had in common was that their estate was well planned to accomplish their wishes.

I have had the burden of probating the estate of my father. He was not one to openly share his finances and was not willing to have his estate well planned. The process took more than 2 years and several trips to Milwaukee to process his estate through the county probate office. Fortunately for my family I was able to navigate the complexities of this process, something I would not wish on anyone. I did get through it knowing with proper planning it would have gone much quicker and smoother.

Many people think estate planning is only for the rich. But this is not true.

Estate planning allows you or anyone to implement certain tools now to ensure that your concerns and goals are fulfilled after your death. Your objective may be to simply make sure that your loved ones are provided for, or you may have more complex goals, such as avoiding probate or reducing estate taxes.

Estate planning can be as simple as implementing a will (the cornerstone of any estate plan) and purchasing life insurance, or as complicated as executing trusts and exploring other sophisticated tax and estate planning techniques. Therefore, estate planning is important whether you are wealthy or whether you have only a small estate. In fact, estate planning may be more important if you have a smaller estate because final expenses will have a greater impact on your estate. Wasting even a single asset may cause your loved ones to suffer from lack of financial resources.

You will also want to plan your estate if you have special circumstances such as any of the following:

• You have minor children or children with special needs

• Your spouse is uncomfortable with or incapable of handling financial matters

• You have property in more than one state

• You have special property, such as artwork or collectibles

While trusts offer numerous advantages, they incur up-front costs and often have ongoing administrative fees. The use of trusts involves a complex web of tax rules and regulations.

At AEGIS Financial we work with experienced estate planning legal professionals and your tax advisors before implementing strategies to make sure your wishes are carried out after you are gone.

So, Estate Planning is for everyone. Don’t leave home without it!

What Happens When There are No Beneficiaries? | 70 + Older

Where do these accounts and policies end up?

Some accounts have no designated beneficiary. Rarely, the same thing occurs with insurance policies. This is usually an oversight. In exceptional circumstances, it is a choice. What happens to these accounts and policies when the original owner dies?

The investment or insurance firm gets the first chance to determine what happens. On many retirement plans, for example, a spouse is often the default beneficiary, even if not named on a beneficiary form. If the deceased has no spouse, then the plan assets may just become part of that person’s estate. Brokerage accounts without any designated beneficiaries are also poised to become part of the estate of the decedent. The next stop for these assets could be probate.¹

The state may end up deciding where the assets go when beneficiary forms are blank. If the deceased failed to name account or policy beneficiaries but had a valid will or other valid estate documents, this will influence the path from here – but it may not exempt the assets from probate court.

If no legally valid estate documents exist, then the deceased party dies intestate, and the state determines the destiny for the assets. Most states go by the same ladder of potential inheritors – surviving spouse at the top, then kids, then grandkids, then parents, grandparents, siblings, nephews or nieces. If absolutely no legitimate heir can be found, then the assets become property of the deceased’s state of residence.²

What about life insurance policies? A life insurance policy usually has at least two levels of designated beneficiaries, and it is rare when a policyholder outlives them and even rarer when a policy has none. In such a circumstance, the proceeds of the life insurance policy become part of the estate of the policyholder upon the policyholder’s death.³

Several factors will affect the cost and availability of life insurance, including age, health, and the type and amount of insurance purchased. Life insurance policies have expenses, including mortality and other charges. If a policy is surrendered prematurely, the policyholder also may pay surrender charges and have income tax implications. You should consider determining whether you are insurable before implementing a strategy involving life insurance. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.

What if a person simply lacks possible heirs, or sees no worthy heirs? Occasionally, this happens. Some people remain single for life, and others are estranged from relatives or heirs who would otherwise be beneficiaries.

A person in this situation has a choice: charity. Perhaps a charitable or non-profit organization deserves the assets. Perhaps a college or university would be a worthwhile destination for them. Choices exist, and those who are single can explore them as they consider their estate.











This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations
1. Kiplinger, June 6, 2022 
2. Schwab.com, September 24, 2021
3. SmartAsset, April 28, 2022

Investment Review Appointments

We are committed to completing an investment review with you at least annually. During each review, the team at AEGIS Financial will attempt to schedule your next review. We understand that your schedule 6 months or a year from now may change. Scheduling the appointment in advance helps us to service our growing client base. We greatly appreciate your help by scheduling in an advance.

In the past, AEGIS Financial mailed out postcards to remind you to call and setup your periodic investment review or to remind you of your scheduled appointment date and time, instead we will be sending you an email from our general mailbox (info@aegis4me.com) for you to call to schedule your investment review. We will also send an email reminder one month prior to the appointment, and a phone call reminder one week prior to the appointment. If you do not have an email address, we will still send you a post card in the mail. If you have any questions or need to make an appointment, please call Courtney, AEGIS’ Communications Coordinator at our Oshkosh office at (920) 233-4650. Courtney handles confirming and scheduling all appointments.

We appreciate your understanding and cooperation in advance. Please ensure you are checking your email periodically as email has become our most common method of communication.

If you are not comfortable coming into our office due the pandemic, we are now offering both zoom and phone call investment reviews. We will still be holding in person reviews as well using social distancing guidelines.

Advice 4 Life

As we look back at 2020, it was a year we would mostly like to forget. A global pandemic, an economic shutdown, an emotional and contentious election.

But as we have done so many times in the past, as Jim Bowen, CEO of First Trust says, “We worked the problem.”

Medical professionals continue to work overtime, caring for the sick, compiling scientific data, and developing vaccines in historic time.
Companies innovated and created ways that we could work and communicate from a distance. Who would have thought that Zoom, would be worth more than ExxonMobil?
Parents balanced the need to be teacher, parent, and provider.
Families lost loved ones, at times without being able to say goodbye.

But it is this spirit in America that keeps us going and “Working the Problem” that makes us unique. I recall the recent Super Bowl ad about making lemonade out of lemons.

This is what we have been doing at AEGIS Financial dating back to 1986. No matter what the market gives us, it is our job to manage through these times and look for opportunities to make life better for our clients.

As many of you are aware and have experienced, one thing that makes AEGIS Financial different is our tax planning strategies. At the end of every year, we go through all after-tax accounts we manage and determine if we should realize any losses in the account. But you may not have known that we can also realize gains if the situation is appropriate and prudent.

The small business side of our economy has taken some of the worst hits due to the pandemic. Many had to close for extended periods of time, and some have had to shut their doors. We saw the financial loss that occurred as an opportunity to offset built up gains realized over the last few years for those small businesses with which we have a relationship.

We worked with our clients’ CPA to determine the extent of the anticipated loss, what would flow through their tax return, and sold assets in an amount to offset that loss netting a $0 tax. Another technique we used to accomplish this offset is converting IRA accounts to ROTH IRAs.

With change in the political party in power it is not difficult to see that Tax Planning will need to take on an even greater role in overall management of your financial life. We are happy to say that AEGIS Financial is well suited to take on this challenge.

Under 30 | Managing Money as a Couple

What are the keys to prepare to grow wealthy together?

When you marry or simply share a household with someone, your financial life changes—and your approach to managing your money may change as well. The good news is that it is usually not so difficult.

At some point, you will have to ask yourselves some money questions—questions that pertain not only to your shared finances but also to your individual finances. Waiting too long to ask (or answer) those questions might carry a price. In the 2019 TD Bank Love & Money survey of consumers who said they were in relationships, 40% of younger couples described having weekly arguments about their finances.¹

First off, how will you set priorities? One of your first priorities should be simply setting aside money that may help you build an emergency fund. But there are other questions to ask. Should you open joint accounts? Should you jointly title assets?

How much will you spend & save? Budgeting can help you arrive at your answer. A simple budget, an elaborate budget, or any attempt at a budget can prove more informative than none at all. A thorough, line-item budget may seem a little over the top, but what you learn from it may be truly eye-opening.

How often will you check up on your financial progress? When finances affect two people rather than one, credit card statements and bank balances become more important. Checking in on these details once a month (or at least once a quarter) can keep you both informed, so that neither one of you have misconceptions about household finances or assets. Arguments can start when money misunderstandings are upended by reality.

What degree of independence do you want to maintain? Do you want to keep some money separate? Some spouses need individual financial “space” of their own. There is nothing wrong with this approach.

Can you be businesslike about your finances? Spouses who are inattentive or nonchalant about financial matters may encounter more financial trouble than they anticipate. So, watch where your money goes, and think about ways to pay yourselves first rather than your creditors. Set shared short-term, medium-term, and long-term objectives, and strive to attain them.

Communication is key to all this. Watching your progress together may well have benefits beyond the financial, so a regular conversation should be a goal.¹

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations

1. newscenter.td.com, October 2, 2019

Under 50 | Starting a Roth IRA for a Teen

This early financial decision could prove helpful over time.

Want to give your child or grandchild a great financial start? A Roth IRA might be a choice to consider. There are many reasons why starting a Roth IRA for a teenager may be a sound financial strategy. Read on to learn more about how doing this may benefit both of you.

Tax-free benefits during retirement. Setting up a Roth IRA for the teenager in your life could prime them to have more retirement savings. Plus, a Roth IRA has the potential to accumulate over the years, and the owner may be able to better manage their tax burden if they withdraw the money after age 59½.¹

For example, a 19-year-old who contributes $5,000 a year to a Roth IRA, which earns 8% for 40 years, would be positioned to have about $1.4 million by age 59. Of course, this is a hypothetical example that’s used for illustrative purposes only. It is not representative of any specific investment or combination of investments. Actual results will fluctuate.²

Greater earning potential, thanks to the magic of compound interest. Setting up a Roth IRA for a teenager is a great way to introduce them to basic financial concepts, such as compound interest. Giving your teen a hands-on learning experience may help them understand the value of saving for the future. You might also be facilitating your child or grandchild to develop lifelong financial habits.³

Looking ahead to the future. If money is withdrawn before age 59 ½, there may be a penalty assessed. This is typically a 10% I.R.S. penalty, but in some circumstances, it can be more. There is, however, a notable exception. Up to $10,000 of earnings can be taken out of a Roth IRA at any time if the money is used to buy a first home. In this particular case, the I.R.S. waives the early withdrawal penalty. Should your teenager become a parent someday, a portion of those Roth IRA assets might also be utilized to pay college tuition costs for themself or their child.^1,4

Keep in mind that this article is for informational purposes only. It’s not a replacement for real-life advice, so make sure to consult your tax, legal, and accounting professionals before modifying any Roth IRA strategy.

Rules for gifting a Roth IRA. Setting up a Roth IRA for a teen means that you can gift them some of the funds to get it started, provided that your teen is earning income. So, if your 15-year-old has earned $6,000 at a summer job, you can gift them up to $6,000 (the maximum annual contribution) to invest in a Roth IRA. The amount gifted or contributed cannot exceed the teen’s income, however, and the annual contribution limits to a Roth IRA still apply. What’s more, you may also realize a tax perk. If you make the initial contribution to the Roth IRA as a parent or grandparent, that money can count as a gift within your $15,000 yearly gift tax exclusion ($30,000 for a married couple).⁵

There are a few things to consider when setting up a custodial Roth IRA. Setting up a Roth IRA for a minor is often referred to as a custodial IRA. Until the child is able to take it over, you act as the custodian of the account. Individual state laws determine when the minor child is able to take over management of the Roth IRA for themselves.^1,4

You should always consult with a tax professional to ensure that you and your minor child are following all federal and state regulations. If this is something you’re considering doing for a loved one, I’d be happy to talk with you further.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 - USNews.com, February 21, 2020

2 - Bankrate.com, July 23, 2020

3 - Forbes.com, February 13, 2020

4 - USNews.com, January 1, 2020

5 -  IRS.gov, January 16, 2020

Under 60 | Before You Claim Social Security

A few things you may want to think about before filing for benefits.

Determining when to take Social Security benefits is a complicated financial decision. Here are a few things to think about and discuss with your financial professional.

How long do you think you will live? If you have a family history that suggests you might live into your 90s, you may want to consider claiming Social Security later. If you start receiving Social Security benefits at or after full retirement age (FRA, which varies from age 66 to 67 for those born in 1943 or later), your monthly benefit will be larger than if you had claimed at 62.¹

What fits best with your financial strategy – more lifetime payments that are smaller versus fewer lifetime payments that are larger? For the record, Social Security’s actuaries project that the average 65-year-old man will live to 84.0 years, and the average 65-year-old woman, 86.5 years.²

Will you keep working? If you want to keep working, you’ll need to be mindful of earning too much income, which may result in your Social Security benefits being taxed.

Keep in mind that this article is for informational purposes only. It’s not a replacement for real-life advice, so make certain to consult your tax or accounting professional before modifying your decision on whether to work in retirement.

Prior to full retirement age, your benefits may be lessened if your income tops certain limits. In 2020, if you are aged 62 to 65, receive Social Security, and have an income over $18,240, $1 of your benefits will be withheld for every $2. If you receive Social Security and turn 66 later this year, then $1 of your benefits will be withheld for every $3 that you earn above $48,600.³

Social Security income may also be taxed above the program’s “combined income” threshold. (“Combined income” = adjusted gross income + nontaxable interest + 50% of Social Security benefits.) Single filers who have combined incomes from $25,000 to $34,000 may have to pay federal income tax on up to 50% of their Social Security benefits, and that also applies to joint filers with combined incomes of $32,000 to $44,000. Single filers with combined incomes above $34,000 and joint filers whose combined incomes surpass $44,000 may have to pay federal income taxes on up to 85% of their Social Security benefits.³

When does your spouse want to file? Timing does matter, especially for two-income couples. If the lower-earning spouse collects Social Security benefits first, and then, the higher-earning spouse collects them later, that may result in greater lifetime benefits for the household.⁴

Finally, how much in benefits might be coming your way? Visit SSA.gov to find out, and keep in mind that Social Security calculates your monthly benefit using a formula based on your 35 highest-earning years. If you have worked for less than 35 years, Social Security fills in the “blank years” with zeros. If you have, say, just 33 years of work experience, working another couple years might translate to a slightly higher Social Security income.¹

When to start drawing Social Security benefits may be one of the most significant financial decisions of your life. Ideally, your choices should be evaluated years in advance – with insight from the financial professional who has helped you prepare for retirement. And if you feel behind on your decision, all the more reason to consider working with a financial professional who may be able to help you up the learning curve.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1. SSA.gov, 2020

2. SSA.gov, May 28, 2020

3. U.S. Social Security Administration, 2020

4. SSA.gov, February 11, 2020

Under 70 | Retirement Seen Through Your Eyes

After you leave work, what will your life look like?

How do you picture your future? If you are like many contemplating retirement, your view is likely pragmatic compared to that of your parents. That doesn’t mean you must have a “plain vanilla” tomorrow. Even if your retirement savings are not as great as you would prefer, you still have great potential to design the life you want.

With that in mind, here are some things to think about.

What do you absolutely need to accomplish? If you could only get four or five things done in retirement, what would they be? Answering this question might lead you to compile a “short list” of life goals, and while they may have nothing to do with money, the financial decisions you make may be integral to achieving them.

What would revitalize you? Some people retire with no particular goals at all, and others retire burnt out. After weeks or months of respite, ambition inevitably returns. They start to think about what pursuits or adventures they could embark on to make these years special. Others have known for decades what dreams they will follow … and yet, when the time to follow them arrives, those dreams may unfold differently than anticipated and may even be supplanted by new ones.

In retirement, time is really your most valuable asset. With more free time and opportunity for reflection, you might find your old dreams giving way to new ones. You may find yourself called to volunteer as never before or motivated to work again in a new context.

Who should you share your time with? Here is another profound choice you get to make in retirement. The quick answer to this question for many retirees would be “family.” Today, we have nuclear families, blended families, extended families; some people think of their friends or their employees as family. You may define it as you wish and allocate more or less of your time to your family as you wish (some people do want less family time when they retire).

Regardless of how you define “family” or whether or not you want more “family time” in retirement, you probably don’t want to spend your time around “dream stealers.” They do exist. If you have a grand dream in mind for retirement, you may meet people who try to thwart it and urge you not to pursue it. (Hopefully, they are not in close proximity to you.) Reducing their psychological impact on your retirement may increase your happiness.

How much will you spend? We can’t control all retirement expenses, but we can control some of them. The thought of downsizing may have crossed your mind. While only about 10% of people older than 60 sell homes and move following retirement, it can potentially lead to more manageable mortgage payments. You could also lose one or more cars (and the insurance that goes with them) and live in a neighborhood with extensive, efficient public transit. Ditching landlines and premium cable TV (or maybe all cable TV) can bring more savings. Garage sales and donations can have financial benefits as well as helping you get rid of clutter, with either cash or a federal tax deduction.¹

This article is for informational purposes only and is not a replacement for real-life advice, so make sure to consult your tax, legal, and accounting professionals before modifying your overall tax strategy.

Could you leave a legacy? Many of us would like to give our kids or grandkids a good start in life, but given some of the economic realities of today, leaving an inheritance can be trickier than many realize.

Consider a couple with, for example, $285,000 in retirement savings. If that couple follows the 4% rule, the old maxim that you should withdraw about 4% of your retirement savings per year, subsequently adjusted for inflation – then you are talking about $11,400 withdrawn to start. When you combine that $11,400 with Social Security and other potential investment income, that couple isn’t exactly rich. Sustaining and enhancing income becomes the priority, and legacy preparations may have to take a backseat. On the other hand, a recent survey showed that 92% of all respondents believe it is important to leave money and other assets to their children.²

How are you preparing for retirement? This is the most important question of all. If you feel you need to prepare more for the future or reexamine your existing strategy in light of recent changes in your life, conferring with a financial professional experienced in retirement approaches may be a smart move.

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations

1. IRS.gov, March 14, 2019

2. Bankofamerica.com, Spring 2019

70+ | Will Updated I.R.S. Tables Create an Opportunity for Retirees?

Life expectancy table updated for the first time since 2002.

If you are retired and have reached your seventies, you may have the opportunity to draw a little less income from your retirement savings accounts in 2022.

Next year, the Internal Revenue Service plans to update the life expectancy tables used for the calculation of required minimum distributions, or RMDs – the annual withdrawals you are asked to make from certain kinds of retirement plans.¹

The I.R.S. knows that on the whole, Americans are living longer than they used to, and therefore, their retirement savings need to last longer. In recognition of this, it is revising the tables used to figure RMDs for the first time since 2002.¹

Under the new life expectancy tables, RMD amounts are reduced a bit. Generally speaking, they shrink by several percentage points.

For example, if you turn 72 in 2022 and take your first RMD from a traditional IRA (or other qualified retirement plan) by the end of 2022, that RMD will be 6.65% smaller than it would be according to the 2021 tables. (You do have the choice to delay your initial RMD into 2023, though if you do so, you will be asked to take two 2023 RMDs.)²

To further illustrate this, we will switch over to dollars from percentage points. If you turn 72 in 2022 and decide to take your first RMD from a traditional IRA that has $3,000,000 in it by the end of 2022, your RMD is $109,489 by calculations using the 2022 tables. Using the current tables, that 2022 RMD would be $117,186.³

Speaking of traditional IRAs, as a reminder, distributions from traditional IRAs must begin once you reach age 72. The money distributed to you is taxed as ordinary income. When such distributions are taken before age 59½, they may be subject to a 10% federal income tax penalty. You may keep contributing to a Traditional IRA past age 72, as long as you meet the earned-income requirement.

The reduction in RMDs may be a benefit. You might be wondering if you should offset it by withdrawing more than the RMD amount, but there could be a price to pay for that over time; drawing down your retirement savings too much can heighten the risk of outliving your money.

Consider the upsides to smaller RMDs. A little more of your retirement money stays in the account, with further potential for tax-deferred growth. As RMDs represent taxable income, a marginally smaller RMD may leave you with slightly less income tax linked to the distribution.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations

1. Kiplinger.com, December 20, 2020

2. Florida Today, January 8, 2021

3. IRAHelp.com, November 9, 2020