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Archive for Financial Services – Page 8

Leaving a Meaningful Financial Legacy

Posted by Frank McKinley on
 May 3, 2021

Many of us want to do our part to leave the world a better place. Below are five different ways you can leave a financial legacy.

1. Give gifts in your lifetime.
If you have the financial  freedom to do so, making financial gifts while you are still alive is a great way to leave a legacy. Money you donate to qualified charitable organizations can be  deducted from your taxes, saving you money while also helping you support a good cause. If you want to leave a family legacy, consider giving
gifts to loved ones while you are living, like helping pay for your grandchild’s college education. Just make sure you’re aware of annual limits on what you can give to individuals without triggering gift tax ($15,000 per person in 2021).

2. Make a bequest in a will.
Many people use their will to make philanthropic bequests, leaving funds to their favorite charity, alma mater, or church. For people who have money to give, recognizing an organization in their will is a relatively easy way to leave a legacy. Bequests in a will don’t require any additional
planning and are exempt from estate tax, provided the recipient is a qualified charitable organization. However, if you plan to make a substantial bequest to a charity, you may want to inform them of your plans in advance. This is particularly important if you plan to donate physical property, like real estate or artwork, as not all charities will want or be able to accept such donations, or if you plan to place restrictions on how the gift is used.

3. Create a charitable remainder trust.
If you would like to make a substantial gift to a charity but also want to provide for your heirs
or continue to receive income during your lifetime, a charitable remainder trust (CRT) may be an option. Here’s how it works: You transfer

consider giving gifts to loved ones while you are living

property to the trust (and get a tax deduction at the time of the transfer), and you or your heirs receive income from the trust for a specified period of time. Then, when that period ends, the remaining assets go to the charity of your choice.

A word of caution: CRTs are irrevocable, which means once you’ve made this decision, you can’t reverse it.

4. Set up a donor-advised fund.

Know that you want to leave money to a charity, but not ready to hand it over just yet? Consider setting up a donor-advised fund. A donoradvised
fund allows you to make contributions to a fund that is earmarked for charity and claim the associated tax deduction in the year you contribute the funds. You continue to make more contributions to the fund, which are invested and grow free of tax. Then, when you are ready, you can choose a charity to receive all or some of the accumulated assets. It’s a great way to earmark funds for charity now while also accumulating a more substantial amount of money to leave as a legacy.

5. Fund a scholarship.
Endowing a scholarship is a great way to make a difference in the life of a talented student. Here’s how it typically works: You give a certain amount of money to the school of your choice,

which earmarks it to fund scholarships, often for certain types of students (e.g., female math majors, former foster children, or people suffering from a certain disease). Other scholarships are established through community foundations. A seed gift of $25,000 or $50,000 may be enough to get started. Be aware, however, that while you may be able to have a say in selection criteria for the scholarship, there’s a good chance you won’t be able to select the recipient yourself. If you want to do that, you’ll need to distribute the money in another way, perhaps by setting up your own nonprofit organization.

6. Start a foundation.
Starting a family foundation is appealing to
many, especially those who like the idea of having greater control over how their money is used as well as the prestige that comes with running a foundation. Well-managed private foundations can also endure for many generations after you’re gone. But you’ll need substantial assets to make setting up a foundation worth it. Plus, foundations are complicated and expensive to set up and
administer. But, if you are committed to the idea of giving back, and especially if you want to keep the entire family involved in giving (a concern for many wealthy families), a private foundation could be the way to go.

Curious about steps you can take to leave a meaningful legacy? Please call to discuss this topic in more detail.

Frankly Speaking

“You don’t buy life insurance because you are going to die, but because those you love are going to live.” – Anonymous

Since mid-February, the average retail investor has underperformed the S&P 500 by 11%.- Investopedia Sunday, March 26, 2021

“We could say that the government spends money like drunken sailors, but that would be unfair to drunken sailors.” -Ronald Reagan

OK, nobody wants to talk about Life Insurance or Estate Planning BUT…what will happen to your family when you’re gone? And we will ALL go someday. Yet there is no reason they should be left in a lurch, unable to stay in their home or finish the kid’s education. This last year should have made you seriously realize Life Insurance is for THEIR sake as are a Will and related documents. Still need help? PLEASE ask me about additional coverage and for guidance on Estate Planning FREE OF CHARGE! What have you got to lose besides sleepless nights worrying?

If you would like more information or to discuss your financial concerns

Click Here
Categories : Contributions, financial planning, Financial Services
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Tips to Teach Children to Save

Posted by Frank McKinley on
 April 23, 2021

Think of all the lessons parents teach their children, but what about learning to save? Short- and long-term savings are important life lessons that should start early and remain an ongoing conversation. Here are some tips you can use:

Wants versus Needs: To a child, most everything is a need. A toy, a new bike, and a video game are all needs to them, so the first important lesson of
saving is helping them understand the difference between wants and needs. You’ll want to explain that needs are the basics, such as food, housing, and clothing, and that anything beyond the
basics are wants. You could use your own budget to help illustrate that wants are secondary to needs.

Their Own Money: To help your child become a saver, they need to have their own money. Giving your child an allowance in exchange for chores will be a step in helping them learn to save as well as understanding the value of work.

Set Goals: Setting savings goals is a way for your child to understand the value of saving and what a savings rate is. For example, let’s say one goal is a
$40 video game, and they get a weekly allowance

of $10. You can help them understand how long it will take to reach that goal based on how much of their weekly allowance they put toward the goal.

A Place to Save: Kids need a place to save their money, so take your child to a bank or credit union to open a savings account. This will allow them to
see how their savings grows over time, as well as the progress they are making toward their savings goals.

Track Spending: Knowing where your money goes is a big part of being a better saver. Have your child write down their purchases and then at the
end of the month add them all up. Just like adults, this can be an eye-opener. Help your child understand that if they change their spending habits, they will be able to more quickly reach their savings goals.

Mistakes Are a Good Lesson:  A parent’s natural reaction is to step in to prevent mistakes, but part of learning to control money is letting your child learn from their mistakes. A bad purchase
decision can be a great lesson to understanding
that a savings goal will now take much longer than they thought based on decisions they made.

Beneficiary Designations Override Wills

W hen was the last time you looked at your
beneficiaries on your retirement accounts, insurance policies, annuities, and bank accounts? Many people forget to update their beneficiaries, especially if they’ve held the accounts for a
long time. If you marry, divorce, or have other changes to your family situation, you need to update your beneficiaries.

Some people think their will or trust is all they need to ensure their assets go to the desired recipients. A beneficiary designation is a legally
binding document that supersedes a will or trust. That means that regardless of your current family
status or what your will or trust says, the assets will go to the beneficiary you named when you
last updated it. And if you don’t have anyone named as your beneficiary on these types of
accounts, state laws will determine who receives the benefit.

It is also a good idea to get into the habit of reviewing them on an annual basis to ensure your assets will be distributed based on your
wishes.

Financial Thoughts

Companies with a lot of passive fund ownership are more likely to repurchase shares in order to boost their short-term stock price, subsequently harming performance over the long term. Higher passive ownership was shown to negatively impact the relationship between buybacks and future capital expenditures, employment, cash flow, and return on assets and equity (Source: Centre for Economic Policy Research, April 2020).

A study found that although retirement plays a role in alleviating some of the stress the body undergoes while working a manual labor job, when those workers retire they can accumulate health deficits faster than individuals whose jobs do not require manual work. The health of men working in manual labor was more positively affected after retirement than women. Individuals with low education, in blue collar jobs, and in physically or psychosocially demanding occupations develop new health deficits faster than white collar workers. People who perform manual labor jobs display
on average almost 30% more health deficits than their counterparts who do not (Source: AAII Journal, September 2020).

If you would like more information or to discuss your financial concerns

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Categories : Blog, Financial Services, Savings, Savings Goals
Tags : , , , ,

Review and Reevaluate Your Portfolio

Posted by Frank McKinley on
 April 16, 2021

Periodically, you should thoroughly review your portfolio to ensure it is still helping you work toward your investment goals. Follow these steps:

Review your current portfolio mix. List the current value of all your investments.  Determine what percentage of your portfolio is held in stocks, bonds, cash, and other investments. Take a closer look at where the stock portion of your portfolio is invested.

Break out your stock investments by market capitalization (small-, mid-, and large-cap), by style (growth and value), by area (domestic and  international), and by sector (technology, financial, utilities, energy, etc.).

Analyze each investment. Determine whether it still makes sense to own each investment. Don’t let emotions get in the way. Review why you purchased each investment and whether those reasons are still valid.

Emotionally, it is difficult to sell an investment at a loss, but holding on until you get back to breakeven
may not be the best strategy. It may never get back to that price or may take an excessively long time to do so. You may want to sell the investment and reinvest in another with better prospects. Instead of worrying about what you paid for the investment, decide whether you would buy it today at its current
price.

Determine if changes are needed to your current allocation. If we’ve learned anything over the past few years, it’s that your portfolio should not be highly concentrated in one area or sector. Instead, look to broadly diversify your portfolio.

Some points to consider include:

Decide how much to allocate to stocks and bonds. Your stock and bond mix is a major factor in determining your expected portfolio return and how much your portfolio will fluctuate with market movements. However, be careful not to let recent events cause you to allocate too much to bonds just to avoid stock market fluctuations. Make this decision based on your financial goals, risk tolerance, and time horizon for investing. If you are investing for the long term — say, 10 years or more — you probably still want a major portion of your investments allocated to stocks.

Reassess your stock allocation. Is your stock portfolio too heavily weighted in technology stocks or blue chip stocks? Have you selected only growth stocks, ignoring value stocks? Do you prefer large-cap stocks, ignoring smaller stocks? The stock market moves in cycles, with different sectors outperforming other sectors at different times. Since no one can predict when one sector will outperform, it is typically best to broadly diversify your stocks over all areas.

Move your allocation closer to your desired allocation. When making changes, first consider the tax ramifications of the transactions. If you can make changes without incurring tax liabilities, you may want to make the changes immediately.

If substantial tax liabilities will be incurred, look for other ways to get your portfolio closer to your desired allocation. For instance, any new investments should be made in under-weighted areas of your portfolio. Or you may be able to reallocate in your tax-deferred
accounts, such as individual retirement
accounts and 401(k) plans, where you typically won’t incur tax liabilities.

However, if you can’t get your allocation in line within a year using these approaches, you might want to sell some of the poor performers and reinvest the proceeds.

If you’d like help reevaluating your portfolio, please call.

Analyze your investments and reasses your stock allocations

If you would like more information or to discuss your financial concerns

Click Here
Categories : Blog, financial planning, Financial Services, Investments, Retirement
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6 Signs You Need a Financial Plan

Posted by Frank McKinley on
 April 9, 2021

A clear financial plan helps you prepare for the future, brace yourself for the unexpected, and positions you to pursue your goals. Below are six signs
it may be time for you to get a financial plan.

You’re planning (or just had) a big life change.
New job. New baby. New house. All of those milestones and more are signs you should take a big picture look at your finances. When your life changes in big ways, it often brings with it changes in how you approach money.

You’re worried about your finances — and your future.
If money worries keep you up at night, a financial plan can help ease your mind. Whether you have immediate worries or are just feeling uneasy about what tomorrow may hold, you can regain control over your life by having a clear direction.

You’re making good money, but you’re not sure where it goes.
If you want to turn today’s income into tomorrow’s wealth, you need a financial plan. That way, you’ll be able to take the money you’re bringing in today and use it to create a secure future for yourself and your family.

You have financial goals, but you’re not sure how to make them a reality.
Does retirement seem like a distant dream? Do you wish you could upgrade to a bigger home, send your kids to college without taking on debt, or start a
business? With a financial plan, you’ll know what you need to do financially to make those dreams a reality.

You and your partner are fighting about money.
If you and your partner can’t see eye-to-eye on money issues, a financial plan might be part of the solution. Meeting with an objective third party can help you both recognize where you stand when it comes to your finances, and then negotiate a path forward that works for both of you.

Your investments and finances are getting so complicated, it’s difficult for you to keep track of everything.

Many people start out managing their investments and finances on their own. That often works for a time, but as your money and life get more complex, it can be difficult to manage all the details without help.

A good financial plan will help provide security for you and your family

If you would like more information or to discuss your financial concerns

Click Here
Categories : financial planning, Financial Services, IRA, Retirement

How To Know If You Are Saving Enough

Posted by Frank McKinley on
 April 2, 2021

Most people think when they start earning more money, they’ll start saving more money. But what often  happens is the more you make, the more you spend. If you want financial independence,
you have to establish a savings routine. The more money you make, the more your savings rate needs to increase.

While it may seem like a daunting task, it can be accomplished. The only way to reach financial
independence is to save and live within your means. Your savings should include retirement account contributions, matching funds from
your company if available, cash savings, and any other investments.

Savings at Every Age

Your 20s: You are just starting out and, hopefully, you’ve found a good job that pays a reasonable
salary. This is the beginning of the accumulation stage, so start by paying off any debt you have and work to save at least 10%–25% of your
income. If your employer offers a 401(k) plan, start investing right away. Try to contribute as much as possible or at least as much as your
employer will match.

Your 30s: Hopefully, you have now found out what you want to do for a living and have had a jump in income. You are still in the accumulation
stage, so you should be increasing contributions to your retirement account and trying to contribute the maximum per year. By the end of your 30s, you’ll want at least twice your annual salary saved. A simple example: If you’re making $50,000 annually, you’ll want to have $100,000 accumulated in savings by age 39. But remember this includes retirement accounts.

Planning savings while working will help prepare you for retirement

Your 40s: This is the decade of major responsibilities, as you probably have dependents. Your income may have increased as you climbed the ladder at your job or moved to a
new one. And even with the increase in expenses, you should also be increasing your savings rate. By the end of your 40s, you should
have saved four times your salary. Now you will want to max out your contributions to retirement accounts as well as monitor your investments
for performance.

Your 50s: You are now at your peak earning years and your saving rate needs to be at its highest. Your expenses are still pretty high; but by the end of this decade, you will most likely be an empty-nester, and expenses should decrease. By the time you reach 59, you’ll want to have saved seven times your income. Monitor your investments so you can make adjustments to
increase your returns.

Your 60s: You’re getting close to or have retired. Your mortgage may be paid off and expenses have decreased. Your saving should be at its peak, which is 10 times your income prior to retiring. You can now start to relax as you will
receive distributions from your retirement accounts as well as Social Security benefits. You’ll need to make sure that you are informed
about distribution requirements of your retirement accounts.

Your 70s and beyond: Now all of your expenses are covered by your retirement account distributions and Social Security benefits. Hopefully, you are reaping the benefits of all those years of saving.

Watch for These Warning Signs

As you go through the journey to retirement, you may not be able to accumulate the level of savings you need, but you should have acquired a good amount of savings for a comfortable retirement.

Take stock of how much you are saving every year and look forwarning signs that you are not saving enough. If you experience any of the following, you need to take a hard look at your financial situation to get on track:

You have no idea how much money you’re spending every month, which means you are most likely overspending.

You don’t have savings goals or a savings plan. If you don’t have goals and a plan to achieve
them, you will have a hard time saving for important milestones.

You’re living paycheck to paycheck. It’s time to take a serious look at your finances to see what can be reduced or eliminated.

You’re putting off saving for retirement. It will get here quicker than you think, and this is
the one thing you really need to start saving for as early as possible.

You can’t pay your credit card balance in full, which means you probably have significant debt.

You don’t have an emergency fund. You know the unexpected will happen and need to be prepared.

Frankly Speaking

“When they call the roll in the Senate, the senators do not know whether to answer ‘present’ or ‘not guilty.’ ” -President Theodore Roosevelt

“I never gave anybody hell! I told them the truth and they thought it was hell!” -President Harry S. Truman

Whether you pay income taxes on April 15 or file for an extension, PLEASE be sure to do so. And get your final 2020 Traditional & ROTH IRA contributions in by then. Consider a monthly Systematic Investment Plan to help budget your contributions and ‘Pay yourself first!’ for 2021.

An extension to Oct. 15 is usually available IF you request it and pay at least 90% of the tax due. You also have until then to make 2020 contributions to SEP and SIMPLE IRAs which offer tax advantages to the self-employed with different filing guidelines. Do you know what they are or how they could help you? If not, it’s time we spoke. Please contact me ASAP!

Please contact me if you would like to discuss this in more detail.

Contact Frank
Categories : Blog, financial planning, Financial Services
Tags : ,

Expanded Employee Retention Tax Credit

Posted by Frank McKinley on
 March 25, 2021

The CARES Act provided businesses with an employee retention tax credit for wages paid from March 12, 2020 to January 1, 2021. Businesses that received a PPP loan were not able to utilize the employee retention tax credit. This Act extends, expands, and modifies the employee retention tax credit. Some changes are effective retroactively to 2020 and some changes are only for 2021.

Changes Retroactive to 2020

The most significant retroactive change is that businesses that received a PPP loan can also take advantage of the employee retention credit. However, the same wages cannot be used to qualify for both the employee retention credit and forgiveness of a PPP loan. The Internal Revenue Service and Treasury Department must issue guidance on this provision before it can be put into effect.

The other significant retroactive change is that healthcare expenses are now eligible to be treated as wages, even if the employee was not receiving other wages (for example, if he/she was furloughed).

To summarize the original employee retention tax credit: Employers were eligible for the credit if they met one of two tests and did not receive a PPP loan:

1) Operations were fully or partially disrupted because of a government order limiting commerce and travel as a result of COVID-19.

2) Gross receipts for a quarter in 2020 were less than 50% of gross receipts for the same quarter in 2019, with eligibility ceasing following a quarter where gross receipts were greater than 80% of the previous year.

Businesses with over 100 employees could only take the credit for wages paid to employees who were furloughed or faced reduced hours as a result of the coronavirus. Businesses with 100 or fewer employees could take the credit for all paid wages. The retention credit was calculated by taking 50% of qualified wages for each employee during the eligible period of March 12, 2020 to January 1, 2021. The maximum wage amount used for the credit is $10,000 for that period, meaning the credit cannot exceed $5,000 per employee.

The credit was used against the employer’s share of Social Security payroll taxes. If the credit for the quarter exceeded that amount, the excess was treated as a tax overpayment and was refunded to the employer.

Changes for 2021

The Act makes a number of substantial enhancements to the employee retention credit for 2021:

The employee retention credit is extended through June 30, 2021.

The amount of wages eligible for the credit are $10,000 per employee per quarter (compared to $10,000 for all of 2020).

The credit percentage is increased from 50% of wages to 70% of wages. Thus, the maximum credit per employee is $7,000 per quarter or $14,000 for 2021. The maximum credit in 2020 was $5,000 per employee.

A small employer is defined as one with up to 500 employees, up from 100 employees in 2020.

To qualify for the credit, gross receipts must decline by more than 20% (down from 50%) when comparing either the calendar quarter or the prior quarter to the corresponding quarter in 2019 or the employer must be fully or partially shut down by government order. For example, an employer may be eligible for the first quarter of 2021 if either its gross receipts for the first quarter of 2021 fell by more than 20% when compared to the first quarter of 2019 or its gross receipts for the fourth quarter of 2020 fell by more than 20% when compared to the fourth quarter of 2019.

Advance payment of this credit is allowed only in cases of small employers with fewer than 500 employees and only up to 70% of the average quarterly wages paid in 2019.

Frankly Speaking

The animal characters Walt Kelly created for his classic newspaper comic strip Pogo were known for their seemingly simplistic, but slyly perceptive comments about the state of the world and politics.

None is better remembered than Pogo the ‘possum’s quote to help promote environmental awareness and publicize the first annual observance of Earth Day, April 22, 1970:

“WE HAVE MET THE ENEMY AND HE IS US.”

Sounds like Pogo may have been foreshadowing recent events. We all have an opinion of who was in the right Jan. 6, but were they of the Right or Left, and how far Right or Left? Pogo’s comment of 50 years ago seems to have come home to roost.

If you or someone you know wants to consider ESG investing, call or contact me!

Categories : Blog, Financial Services, Tax, The CARES Act, the SECURE ACT
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