10 Brilliant Ways To Reduce Your Taxes in Retirement

10 Brilliant Ways To Reduce Your Taxes in Retirement

John Csiszar  Mon, May 29, 2023

Though taxes might not be the first thing you think of when it comes to how you want to spend money in retirement, planning strategically can mean more funds for the things you love. That's why when you're budgeting for retirement, it's important to factor in how much of your money will be going to the IRS each year.

Reducing your taxes after retirement can help you reduce the savings you need to retire in your state. See how you can maximize your retirement savings.

1. Pick Your Retirement State Carefully

If possible, try to retire in one of the most tax-friendly states for retirees. Not all states are created equal when it comes to taxes in retirement. Nine states have no income tax at all, and Tennessee and New Hampshire only tax interest and dividends. 

On the other end of the spectrum, California has a top tax bracket of 13.3%, meaning the Golden State isn't topping the list of retirement-friendly places to spend your golden years.  You almost certainly have other factors to consider when deciding where you want to spend your retirement years aside from which places are tax-friendly states for retirees, but it could be an important factor.

2. Contribute To or Convert To Roth Accounts

If you haven't finished working yet, consider whether you should be contributing to a pretax retirement account -- like a traditional IRA or 401(k) -- or an after-tax retirement account like a Roth IRA or 401(k). If you expect to have more taxable income once you retire -- whether that's from dividends, Social Security payments or selling investments -- you can reduce your taxes by contributing to a Roth account so the distributions won't be taxed.

Or, if you expect that income tax rates will increase in future years, convert a portion of your retirement savings to a Roth IRA. You'll pay taxes in the year of the conversion, but the later withdrawals from the Roth account will be tax-free.

3. Roll Over From a Traditional IRA to an HAS

To continue reading, please go to the original article here:

https://finance.yahoo.com/news/10-brilliant-ways-reduce-taxes-130058921.html

‘I Got $300,000 in a Personal Injury Settlement. What Do I Do With It?’

‘I Got $300,000 in a Personal Injury Settlement. What Do I Do With It?’

MY TWO CENTS APR. 27, 2023 By Charlotte Cowles, the Cut’s financial-advice columnist

About three years ago, I was in a car accident. It was 100 percent the other driver’s fault (he had been drinking), and it left me with multiple injuries. Basically, I had to learn how to walk again, and I will probably have screws in my leg for the rest of my life. I was in school for nursing at the time and I had to take medical leave. I couldn’t work or even shower on my own. I moved back in with my mom while I did physical therapy and recovered.

While my life will never be quite the same, I recently won a personal injury settlement from the accident that awarded me more than $300,000 after attorney’s fees. This is a ton of money, more than anyone in my family has ever seen. I’m overwhelmed by it and I don’t know where to start. I want to give some of it to my mom, because she took care of me and housed me while I got back on my feet (literally).

But I also want to be careful. I know that a lot of people mismanage large amounts like this, and I don’t want to be one of them. I’m now back in nursing school and set to graduate next year, but I’m still living with my mom. How much should I give to her? Should I use the rest to pay off my student loans? Should I invest it? Should I save it? Should I use it for a down payment on a home? My lawyer told me to hire a financial adviser, but I’m not even sure how to find one. What do I do?

First of all, I’m so sorry you went through this hellish experience. No amount of money can make up for a painful accident and difficult recovery, not to mention the life stuff that got sidelined because of it. But this settlement can provide you with some comfort and security going forward, especially if you manage it well. I hope that things only get better from here.

I agree that sitting down with a certified financial planner is a smart idea. No one — including me — can or should give you specific advice without reviewing the details of your life. I’ll give you some pointers on finding a professional you can trust, and then cover the topics that you can discuss with them.

But first, as you mentioned, there’s a lot of bad advice out there about how to handle a big windfall like this. A quick Google turned up a bunch of stuff about annuities — don’t fall for it! You might also have people coming out of the woodwork to ask you to invest in their business or tell you to buy a house or a car or a pony or cryptocurrency. Practice some version of this statement: “Thank you. I’d actually rather talk about something else. This has been a lot to deal with.” And then either give them a nice smile or a hard stare.

To continue reading, please go to the original article here:

https://www.thecut.com/article/personal-injury-settlement.html

Here’s What To Do If You Inherit a House

Here’s What To Do If You Inherit a House

Crystal Mayer   Fri, May 26, 2023

Real estate is a valuable investment almost anywhere you go, so inheriting a property can have a significant positive impact on your finances. However, if you are not prepared, it also can strain your resources. Houses are not cheap.

Stay ahead of the market

While not all inherited properties come with mortgages, they do all come with some sort of expense. Utilities, property taxes, upkeep and maintenance are all costs you will have to factor in if you are set to receive an inherited home.

There are several things to consider when inheriting a home, including whether you want to live in it and how you are going to pay for it. From getting the deed changed to preparing for taxes, there is a long list of stuff that should get done before you accept the keys. To ensure that you don’t end up in a money pit, you need to do your research and follow these five steps.

Make a Plan

When you find out that you are set to inherit a property, you have three options. You can move into the home, you can sell the home or you can rent it. If you are inheriting the house with others, you need to speak to them and arrive at an agreement on how to move forward.

Inheriting a house is often more complicated when more people are involved. If you and the people you are inheriting the house with do not agree, there may be a number of options on how to handle it. For instance, you may want to consider a buyout from or to the other party. You also can decide to sell the house or rent it and split the profits.

Meet with a Professional

The average price of a home in the United States was $348,079 in 2022, according to The Zebra, an insurance comparison site. For most people, a house is the largest asset they own. It also can be the most significant source of debt.

Unless the home you inherit is paid off, you will have to prepare for the financial burden of another mortgage. Even if there is no mortgage, there may be additional costs that you will need to factor into your budget.

A professional can help you understand what an inherited home may mean to your bottom line. A pro can research whether the property has any liens against it and can help anticipate what the cost of the house will be each month. The expert also can review the pros and cons of keeping the house, renting it or selling it. The more information you are armed with, the better decision you can make in the long run.

To continue reading, please go to the original article here:

https://www.yahoo.com/finance/news/inherit-house-180017927.html

6 Things Millionaires Are Doing With Their Money To Prep for an Economic Downturn

6 Things Millionaires Are Doing With Their Money To Prep for an Economic Downturn

Gabrielle Olya   Wed, May 24, 2023

The majority of Americans (67%) believe the economy will enter into recession later this year, a new Northwestern Mutual study found. It also found that among those anticipating a recession, three out of four expect it to have a high or moderate impact on both their near-term (78%) and longer-term (75%) finances.  Even the ultra-wealthy don’t believe they’ll make it through a recession unscathed, so many are taking preemptive steps now to be ready when the downturn hits, the study found.

Here’s a look at what millionaires are doing to prepare, plus, what the average American can learn from these behaviors.

The Majority of Millionaires Are Building Up Emergency Savings

The study found that the No. 1 thing high-net-worth individuals are doing to offset the effects of a potential recession is building up their savings and emergency funds — 50% of millionaires are taking this action.

“The strategy of putting some money aside to have some dry powder aside for both opportunities, or for potential unknown challenges, is a sound one,” said Tim Harrison, founder and CEO of Harrison Financial Services – Northwestern Mutual Private Client Group in Omaha, Nebraska. “Higher interest rates are making it harder to borrow for big purchases, but they also make it easier to save and invest for goals tomorrow.”

Harrison notes that building savings has been a proven strategy for the ultra-wealthy to make it through past downturns.

“Many high-net-worth individuals accumulated their wealth through running a business and they are often fairly aware of the economic and business cycles,” he said. “These individuals have been through a few recessions and have ‘muscle memory’ and intuition around what is necessary in tightening cycles.”

Nearly Half of Millionaires Are Cutting Costs

Even those with money to spare are tightening their purse strings. The second-most common action millionaires are taking to be ready for a recession is cutting costs — 46% of high-net-worth individuals said they are currently reining in their spending.

“I am not surprised that high-net-worth individuals are cutting costs,” Harrison said. “This is analogous to an athlete knowing you have an event coming up and so you train, you focus and save up your energy for the event, and you try to get mean and lean to be able to perform through the challenge. The HNW look at a recession the same way: they conserve their strength and energy for the potential for rainy days ahead.

To continue reading, please go to the original article here:

https://finance.yahoo.com/news/6-things-millionaires-doing-money-110059710.html

5 Pieces Of Terrible Life Advice Parents Should Stop Giving Kids

5 Pieces Of Terrible Life Advice Parents Should Stop Giving Kids

I’m a self-made millionaire: 5 Pieces Of Terrible Life Advice Parents Should Stop Giving Kids

Jasmin Merdan  Matt Higgins, CNBC Contributor   Tue, May 23, 2023

It’s graduation season, which means many parents will observe a sacred rite of passage: dispensing terrible life advice to their kids.  Mom and dad mean well. But the class of 2023 will enter a job market during one of the worst periods of uncertainty since the 2008 financial crisis.

I’ve endured similar crises, from growing up in poverty, to dropping out of high school to care for my disabled mother, to holding down two jobs while earning my college and law degrees.

Throughout my trials and my journey to becoming a self-made millionaire, bestselling author, CEO and investor, the one key to thriving was to not play it safe.

Here’s the worst and most outdated advice young people should ignore, and what to do instead:

1. “You need a fallback plan.”

A Wharton study found that just thinking about a backup plan can significantly reduce the likelihood of Plan A from happening, along with the motivation to even try.

There are only a handful of things you can break in your 20s that you can’t fix in your 30s. The only way you’ll have a shot at being the next Taylor Swift is to believe that you will be, and to not worry about what happens if you fall short.

Trust your capacity and agency to figure things out if Plan A doesn’t work.

2. “Cut down your screen time.”

Screens are the future of work. Playing video games for 10 hours straight might not help, but you can learn all sorts of lucrative new skills online.

If you want to start a side hustle, write a business plan, launch a website or market a product or service, the right resources are out there, and often at low or no cost at all.

To continue reading, please go to the original article here:

https://www.yahoo.com/news/m-self-made-millionaire-5-225716665.html

7 Mistakes People Make When Choosing a Financial Advisor

7 Mistakes People Make When Choosing a Financial Advisor

Helping people make smart financial decisions

Choosing a financial advisor is a major life decision that can determine your financial trajectory for years to come.   A 2020 Northwestern Mutual study found that 71% of U.S adults admit their financial planning needs improvement. However, only 29% of Americans work with a financial advisor. 1

The value of working with a financial advisor varies by person and advisors are legally prohibited from promising returns, but research suggests people who work with a financial advisor feel more at ease about their finances and could up end up with about 15% more money to spend in retirement.2

Consider this example: A recent Vanguard study found that, on average, a hypothetical $500K investment would grow to over $3.4 million under the care of an advisor over 25 years, whereas the expected value from self-management would be $1.69 million, or 50% less. In other words, an advisor-managed portfolio would average 8% annualized growth over a 25-year period, compared to 5% from a self-managed portfolio.3

SmartAsset's no-cost tool simplifies the time-consuming process of finding a financial advisor.

A short questionnaire helps match you with up to three fiduciary financial advisor that serve your area, legally bound to work in your best interest. The whole process takes just a few minutes, and in many cases you can be connected instantly with an advisor for a free retirement consultation.

Advisors are rigorously screened through SmartAsset's proprietary due diligence process. 

Being aware of these seven common blunders when choosing an advisor can help you find peace of mind, and potentially avoid years of stress.

1. Hiring an Advisor Who Is Not a Fiduciary

To continue reading, please go to the original article here:

https://go.greensprout.com/content/jAkXafgl96sj7i6?sub5=6bbe0063-e9ce-4d6e-9d49-2618fc903f7a&sub1=G7Mistakes1&s5=6bbe0063-e9ce-4d6e-9d49-2618fc903f7a&max_cid=6bbe0063-e9ce-4d6e-9d49-2618fc903f7a&p_uuid=

3 Ways to Recession Proof Your Retirement

3 Ways to Recession Proof Your Retirement

by Adam McFadden  April 13, 2023

Stay the course. Don’t overreact. Think long-term.

Following this advice during times of economic uncertainty can do wonders for your retirement plan. But don’t mistake it as an invitation to sit back and do nothing!  There are moves you can make now while things are volatile that can pay off significantly down the road.

Let’s look at a few:

Have A Financial Pro Look Over Your Plan

You know those genius billionaires? They have financial advisors.

It's almost always a good idea to go over your long-term financial plan with an expert from time to time and you might be surprised by how much you can benefit from just one meeting.

Even if you previously developed a plan with the help of a professional, you may find that your plan needs adjusting, especially in an environment where economic factors are changing.

Choosing a financial advisor is easier than you may think. WiserAdvisor is a website that matches you to the best financial advisor for your situation. There's no cost to use WiserAdvisor, and you aren't obligated to hire an advisor.

Protect Your Portfolio With Precious Metals

To continue reading, please go to the original article here:

https://www.gobankingrates.com/easy-things-you-can-do-to-start-preparing-for-retirement-now-1165700/?utm_term=incontent_link_5&utm_campaign=1227440&utm_source=yahoo.com&utm_content=8&utm_medium=rss

Money Expert Jaspreet Singh Says ‘Becoming Wealthy Is Surprisingly Simple’

Money Expert Jaspreet Singh Says ‘Becoming Wealthy Is Surprisingly Simple’ — Here’s Why

Cameron Diiorio  Tue, May 23, 2023

Jaspreet Singh, known as “Minority Mindset” on YouTube, is an attorney and entrepreneur with a goal to spread financial education. The Minority Mindset brand has grown into a number of companies including Market Briefs, a free financial newsletter, and Market Insiders, an investing education app. His brand has helped countless people get out of debt and start investing.

As one of GOBankingRates’ Top Money Experts, Singh speaks here about creating a plan for building wealth.

What’s the one piece of money advice you wish everyone would follow and why?

The one piece of money advice I wish everyone would follow is: make yourself rich before you make everyone else around you rich. When you go out and wear Lululemon pants with your Gucci belt and Apple AirPods — you look rich, but the people who are actually getting rich are Lululemon, Gucci, and Apple (not to mention their shareholders, too).

The person who isn’t getting rich is you. I want you to flip it around. Make yourself rich first by using your money to buy investments. Then, go out and buy all the Lululemon, Gucci, and Apple you want when you can afford it.

What’s the most important thing to do to build wealth?

Becoming wealthy is surprisingly simple. That doesn’t mean it is easy, it’s actually really tough, but there are only three steps. First, you have to spend less than what you make. Second, you have to work to earn more money. And third, you have to invest the money you don’t spend. Starting with step one, if you spend all of your money, you will never have a chance to become wealthy. This is where most Americans fail. Most Americans work to buy nice things like fast cars, nice vacations, and luxury clothes.

But if you spend all your money, you will never become wealthy. Then, you have to work to earn more money. Regardless of how cheap you are, there will always be a limit to how many expenses you can cut. But there’s no limit to how much money you can earn.

That means you have more upside by learning how to make more money. YouTube has made this financial education much more accessible, and it’s free! Finally, you have to invest the money. Just like how you can’t get rich by spending all your money. You also won’t become wealthy by saving all your money. You have to invest your money if you want to become wealthy. Where do you invest?

Stocks, rental properties, businesses, and your own education. While this can sound very daunting, the good news is you can start investing with less than $100. You just have to get started!

What’s your best tip for fighting the impacts of inflation?

To continue reading, please go to the original article here:

https://finance.yahoo.com/news/money-expert-jaspreet-singh-says-130008715.html

Does Beneficiary Designation Overrule a Will?

Does Beneficiary Designation Overrule a Will?

Ashley Kilroy   Mon, May 22, 2023

Some financial products like life insurance or tax-advantaged retirement accounts require you to name one or more beneficiaries. However, that’s not the case with many assets. For instance, you can buy a house or set up a savings account without designating who should receive it when you pass away.

While beneficiary designations for specific financial products are necessary, they are not sufficient by themselves for creating a comprehensive estate plan. A financial advisor can help ensure that you have a holistic estate plan.

What Is a Beneficiary Designation?

A beneficiary designation assigns a person or party to receive benefits from a financial product, such as a retirement account or life insurance policy. For instance, say you have life insurance with a $500,000 payout. If you pass away, your insurance company fulfills the policy by distributing money to your designated beneficiary (the person, people, or entity you define in your policy).

 You might list your spouse, children or siblings as beneficiaries. You can also choose a charity or nonprofit organization to receive money from your policy.

Some financial products allow you to assign two types of beneficiary designations: primary and contingent. As the name suggests, your primary beneficiary has priority in your list of beneficiaries.

In other words, if you pass away, the insurance company or financial institution will attempt to send payment to your primary beneficiary first. If your primary beneficiary doesn’t respond to the communication or is no longer alive, the company will try to distribute payment to your contingent beneficiaries.

If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.

What Is a Will?

To continue reading, please go to the original article here:

https://finance.yahoo.com/news/beneficiary-designations-vs-wills-care-140023243.html

How to Make a Retirement Plan When You Don’t Have Kids

How to Make a Retirement Plan When You Don’t Have Kids

 By Kara

I don’t want to have kids. So I hear often: who’s going to take care of you when you get old? And while I don’t love that question, it’s an important one to ask yourself. Today we’re going to talk about how you can set up a financial plan now and later in life to make sure that you have a plan for care.

First, let’s be clear that kids are not a retirement plan in general, and having kids just so that you have someone to take care of you later in life is a really bad idea. It’s also absolutely no guarantee of care.

Taking care of aging parents is expensive, time consuming and can be emotionally draining. Especially here in the United States where there is a home health care worker shortage and aging is really expensive because of our messed up health care. Even with rapid growth, home care agencies can’t meet demand. More than 85% of the home care agencies in the 2022 HCP benchmarking report turned down cases in 2021 due to the shortage, and 59.7% consistently turned down clients.

Plus, financially speaking, the cost of aging can be astronomical. I recently spent time with my grandmother near the end of her life, and we were quoted $5,700 per week to have a live in 24 hour nurse. $5,700 per week! That’s not per month, that is per week.

As more and more adults remain child-free, the question really does become what is the plan? Who will be there to make healthcare decisions for you or to act as your legal representative if you are incapable? And I do think these questions and more are really, really important to answer. It’s important that our younger, healthier selves make decisions, and set up systems for our older and potentially unhealthy selves.

How to make a retirement plan when you don't have kids

To continue reading, please go to the original article here:

https://bravelygo.co/how-to-make-a-retirement-plan-when-you-dont-have-kids/?utm_source=rss&utm_medium=rss&utm_campaign=how-to-make-a-retirement-plan-when-you-dont-have-kids

Personal Representative vs. Trustee: What’s the Difference?

Personal Representative vs. Trustee: What’s the Difference?

A reader writes in, asking:

“I’ve read your book twice, and FINALLY got my wife to face the reality that I’m likely to die before her (I’m 82, she’s 76)!

I love the simplicity of the book, however there is one topic I think needs some fleshing out: the text seems to use the terms Personal Representative and Trustee interchangeably. The functional roles seem a bit fuzzy.

Am I correct that the Personal Rep assists the surviving spouse on immediate-death matters (a short-term function), and the Trustee assists the surviving spouse (and beneficiaries) on post-death (trust) asset management (a long-term function)?

Additionally, am I correct that that a spouse, beneficiary, or friend could be qualified to be a personal rep, but a trustee has more responsibility and thus requires higher qualifications? Lawyers and CPA are so qualified, but they are too expensive to use continuously. Do you have any suggestions on this?”

The personal representative (PR) and trustee roles are analogous but they are definitely not interchangeable. (And to be clear, in my writing I do not use the terms interchangeably. If a given sentence refers to a personal representative, it means specifically the personal representative. And ditto for referring to a trustee.)

In short, the PR is in charge of administering the estate, whereas a trustee is in charge of administering a trust (if any). But they both have the job of managing the assets in question for the benefit of the beneficiaries in question.

To continue reading, please go to the original article here:

https://obliviousinvestor.com/personal-representative-vs-trustee-whats-the-difference/