I want to put you to the test. It’s time to take a hard look at your financial life and figure out what habits you need to change.

Remember, sitting on a pile of cash does not equal a successful retirement. Here’s where most people go wrong:

You Have No Idea What You’re Doing.

This can be hard to admit. Put yourself to the test, do you resonate with any of these?

1. You are constantly stressed and don’t know if your money is working for you.
2. You don’t know your numbers, have a budget, or understand your cash flow.
3. You don’t have a plan. Or maybe you did put together a financial plan at one point, but that old binder has become a decoration on your bookshelf. Plans need to be updated as life changes.

You Make Bad Choices.

Bad choices come in all shapes and sizes and can be extremely detrimental to your financial health and future. Here are a few examples:

1. Bad investments. Think of it this way: the turtle always wins. Chasing the next winner seldom works.
2. Life happens and how you react impulsively to your needs and wants can make your budget hurt you in the long run.
3. Reacting Emotionally. This is simply an effect of not having a plan or budget in place to give you peace of mind.

Your Plan Is Not Working for You.

Most people tend to stand in their own way.

As a famous boxer once said, “Everyone has a plan until they get punched in the mouth.” Or to paraphrase a former US president, “Plans are of no particular value, but planning is indispensable.”

It’s not enough to have a plan on paper. You need something that can adapt to unforeseen circumstances. And you need someone who can help you to update the plan and carry it out. That is what a financial advocate can do for you.

You can do better. Hope is not a strategy.

It’s time to master your money and take back control. If you effectively manage your finances to make your money work for you, you can enjoy life today and in the future.

Remember it’s not about how much money you make, it’s about how much of it you actually keep.

The post What If $1,000,000 Is Not Enough? appeared first on AWM.

This makes August a stellar time to work on your finances. My advice? Don’t put it off until December.

Here are a few year-end planning items to check off your list:

1. Get Ready for Upcoming Education Costs

For students: this is a great time to start looking at college scholarships. Find 3 or 4 you would like to win and start working to make yourself the perfect candidate and apply early.

For the parents: take a look at some college calculators to get a sense of how much your expected family contribution (EFC) will be and the best tax-efficient way to pay for it.

Even if college is a few years out, planning now can help keep costs down later. Make sure everyone is on the same page and only look at schools that you can afford.

2. Do You Need to Rebalance Your Investments?

Consider the market. Is your current asset allocation up-to-date and working for you? This is a good time to review your portfolio with your financial planner.

Also, consider the tax consequences of reallocating your investments. This might be a good time for a tax planning session.

3. Revisit Your Budget and Goals

Do you have dreams of buying a home, paying for college expenses, or ramping up your retirement savings?

Take a look at your budget. How are you doing? It might be time to trim down some costs by eating out less and ditching subscriptions you no longer use.

Write down your goals and how you plan to reach them. This is the first step in making those dreams a reality.

4. (Bonus!) Plan for Your Next Tax Bill

August is usually a slow month for accountants and other tax experts. This means it’s a good time for tax planning.

Don’t wait until December. Estimate your upcoming take bill, and start preparing for it.

If you don’t already have a team of professionals ready to help you through this planning season, consider talking to a certified financial planner who offers hourly consulting—and keep the conversation limited to tax strategies.

A 2-hour planning session could help you keep more of your hard-earned money.

The post Don’t Wait to Start Your Year-End Financial Planning appeared first on AWM.

Vacations can cost more than expected, especially if you have a large family or an exotic destination in mind. Several of my clients love to treat their entire extended families to a variety of family trips.

Some of my best memories are vacationing with my family. I’m sure yours are too. That’s why I advocate for every family to set aside time and money to vacation together. But the key is planning.

Big price tag purchases can change your tax bracket, hurt your investment strategy, or even postpone your retirement date.

If you want to plan for an elaborate family trip without wrecking your retirement plan, here are a few tips to get you started.

1. Start planning & saving early.

I recommend estimating the total cost of the trip, and then add a 10% cushion. This should cover possible inflation or unexpected costs.

Next, start a savings schedule. Open a separate account and contribute to it every month. Little by little you’ll reach your goal and be able to track your progress.

Planning early can also provide opportunities for early booking specials and discounts when reserved a year or more in advance.

2. Set expectations and communicated them.

Another, equally important aspect of logistical planning is setting expectations with those who are going.

If you are going to pay for the trip, it’s even more important to communicate your expectations. Who is going? How will you deal with boy/girlfriends? What activities or meals should the group participate in? Will there be a family photo with coordinating outfits?

It’s also important to be clear about costs. There are both “upfront” costs such as flights and hotels, but also “on the ground” costs like meals and excursions.

These might seem like small details, but I promise you, that if you’ve saved for months for a trip, you will have expectations (spoken or unspoken) about what the trip will be like. To avoid any hurt feels or frustrations, sit down with everyone who’s going and figure out what this vacation should look like.

3. Set yourself up for success.

Vacation is all about making memories and spending time with those we love and cherish most.

But don’t let it hurt your retirement. Start planning and saving early, set proper expectations, and check with your trusted Financial Advisor to make sure your retirement is still on track.

With these few simple tips, your next family vacation can be both fun and financially feasible!

Start Planning!

The post How to Plan a Family Vacation without Hurting Your Retirement appeared first on AWM.

1. Act Now.

Did you know you can contribute for 2020 until the tax filing deadline? That means you have until April 15^th to make your last contribution.

If you’re planning to contribute, get it done sooner rather than later. Avoid any last-minute problems and let your IRA grow faster.

2. Talk to Your Advisor About a Roth IRA Conversion.

If you have a traditional IRA, you can convert part of it to your Roth IRA.

Because tax laws are constantly changing, a conversion that didn’t make sense last year might do so in 2021.

While it might not be a great option for everyone, it is worth discussing with your tax specialist.

3. Know How to Move Your Money.

I can’t stress this enough. Know how to move your IRAs.

If you’re wanting to consolidate retirement accounts, make sure to roll over them to a like-titled account.

This will also avoid the 60-day and once-per-year rollover rule.

Do not accept a check in your name. Otherwise, you will owe taxes on that account immediately.

4. Update Your Beneficiary Designation.

Make sure your hard-earned money will be left to the right people. Family and friend dynamics change often.  Be sure to keep your beneficiary designation form up-to-date.

Recent changes like the SECURE Act could also impact your current beneficiary form. Spend some time making sure your wishes are accurately documented.

5. Use QCDs and Other IRA Tax Breaks.

IRA rules can be overwhelming, but make sure that’s not keeping you from options you might benefit from.

If you’re over 70 ½ and charitably inclined, you might consider a Qualified Charitable Distribution (QCD). First-time homebuyers might be able to use a portion of their IRA to help fund their down payment.

Take some time to learn what options you have available to you.

6. Plan for the Unexpected.

Our tax laws and IRA rules are constantly changing. I think we should expect more change in 2021 than in previous years.

Remember, IRS guidance on recent rule changes and a new administration and Congress could have a big impact on your IRA.

The bottom line? Plan ahead and work closely with a fiduciary professional who will seek out the best solutions to fit your situation.

The post How Can I Ramp Up My IRA in 2021? appeared first on AWM.

This is especially true in 2020 with the COVID-19 pandemic leaving many Americans unemployed or uncertain about their job security.

What is early retirement?

Some people choose to retire early because they can afford it. Others might not have a choice. In 2020 alone, many of our clients were confronted with layoffs, severance packages, or concerns about health issues.

What should I do?

You might not have a choice. Your employer may simply eliminate your position or even the entire department. If you do have a say in the matter, here is the process you should follow:

1. 1. Educate yourself.

Understand all your options and their consequences. Ask questions and take notes. Learn the implications and consequences of choosing one option over the other. You need to have all the facts when making a decision.

Most of the time, decisions about retirement are permanent. If you accept a severance package, chances are your employer will not hire you back.

1. 2. Work with a Fiduciary Financial Advisor.

Find an experienced professional and talk through your options. They might recommend a hybrid approach you haven’t thought of. They can even brainstorm questions to ask before challenges arise.

A Fiduciary Advisor might also help you plan for outside factors like Social Security and health care costs. Unfortunately, rising health care premiums and taxes can leave you with less income to spend.

Remember, it’s not about how much you make.  Rather, it’s about how much you keep after all expenses and taxes are paid.

It’s important to work with someone who is experienced and can help you find the right option for you and your family.

1. 3. Put your plan into motion.

It can be scary to take the leap, but if you’ve done your due diligence and follow your plan, you will have peace of mind knowing you’re protecting your family. Your plan is like a roadmap, giving you a clear picture of where you’re going.

Don’t forget to check-up on your plan too. Life changes quickly and can impact the success of your retirement.

Try to stay positive.

These are trying times and you might be forced into a decision you didn’t want to make.

Having a solid plan in place will not only ease the stress and anxiety of retiring early, but it will also help you make wise decisions during uncertain times.

You deserve to enjoy your retirement. After all, you’ve earned it.
 

Let’s Get Started

The post Help! I’m being forced into early retirement. appeared first on AWM.

Sound familiar?

Just last week we had another exhausting encounter with an annuity company.

Our client asked us to help him take money out of his annuity contract and transfer it to his investment account.

Should be easy, right?

Nope.  The annuity company messed up by giving out the wrong information and forms.  They also made our client jump through more hoops. To top it off, they even tried to sell him an additional annuity!

My client was so frustrated; he was willing to pay the penalties to get all his money out.

Our client asked, “Why does it have to be so complicated? There has to be an easier way. How can someone do this on their own?”

So, who is going to help you?

Not the person who sold you the annuity in the first place…

Unfortunately, most annuity salesmen have great incentives to keep your money locked up or even sell you another contract. This protects the insurance company, not you.

Instead, consider a Fiduciary Advisor who can advocate for your best interest.

What will that process look like?

At Ambassador Wealth Management, we break it down into three steps.

1. First, we get to know you, your objectives, and your concerns.
2. Then, we decipher the annuity contact to determine the best course of action for your family.

If it’s best for you to leave your money in, that’s what we’ll recommend. If it’s best for you to take money out, we collaborate on a plan to get it out and examine other investment options.

3. Finally, together we confront the annuity company. We know their lingo and the right questions to ask. We are with you, every step of the way, to help you regain control of your money.

Are you going to try to sell me some sort of contract?

Not us. We don’t sell annuities or illiquid products. We want our clients to be in control of their money.

Ambassador Wealth Management is an independent, fiduciary firm. Our goal is to remove conflicts of interest to better serve each of our clients.

If you feel frustrated and lost with your annuity, we would love to help you.

The post Are you fed up with your annuity? appeared first on AWM.

That’s a fair question, but also a complicated one.

Many of you might be able to relate to this situation: your kids come to you with a question.  They are not really seeking you to answer with your wisdom.  Rather, the way they ask tips you off that they actually are seeking your affirmation or approval for their decision or behavior (even if they know better).

I decided to probe a little more deeply.  I wanted to gain a better insight as to what this family was thinking.

It became apparent that they did not seek my professional opinion.  Instead, they were seeking my approval –  to sympathize with the decisions they had already made long ago.

Even all of my best advice would never change their mind. They had already made their plans and wanted to go places. They worked hard and saved a long time for this moment.

So, what’s the answer?

The answer is different for every family.

You know the saying, in real estate it’s all about location.  In retirement, it’s all about budget.

Here are just a few of the many factors to consider:

• When should you take Social Security?
• How much savings could you afford to spend down?
• What if you need assisted living?
• What will your taxes look like?

After we talked and wrote out real numbers, we decided a hybrid approach would work best. My client needed a plan to generate income while chipping away at their debt.

One of the greatest investments a family can make is designing a measurable and achievable Financial Plan.

Retirement will change your life.

The truth is that retirement is one of the biggest decisions you will ever make. Having a plan for this stage of your life is the key to finding success.

I want to see as many people as possible avoid harmful mistakes and make the best possible decisions for their family.

I can’t say it enough. Find a true fiduciary financial planner to work with. You will most likely need a hybrid approach that is tailored to your family’s needs and goals.

My new client’s answer was complicated. For them, a little bit of both options ended up being best.

So, what’s your answer?

Let’s find out!

The post Which is Better: Savings or No Debt? appeared first on AWM.

Unfortunately, one in three families will not have enough money to maintain their lifestyle throughout retirement.

Through these conversations, I’ve been able to narrow down three major pitfalls that many savers make before retirement.

1. They have no plan.

Life gets busy. It’s so easy to put off planning for retirement. Tomorrow is a convenient excuse.

There’s a shocking statistic from AARP: only 23% of Americans have some sort of retirement plan.

Many people spend upwards of 30+ years in retirement. Having a strategic plan is the only way to successfully enjoy retirement with confidence.

2. They didn’t save enough.

This relates closely to #1. Without a plan, how can you know if you’ve saved enough?

There are so many factors that need to be considered. Things like inflation, health care expenses, taxes, the unexpected (like COVID-19), and much more.

If you’re not sure how much you need to enjoy a successful retirement, I strongly encourage you to seek out expert advice and start planning today. Retirement will come faster than you think.

3. They mismanaged their investments.

I see this every single day. And it boils down to three things:

People often invest their savings poorly. Whether it’s holding too much of one position or investing in unreliable holdings, I see people putting their retirement nest egg at risk and even losing a large portion of their assets.

Secondly, budgeting. I’ve known families that make several hundred thousand dollars in annual income, but have nothing in savings and too much in debt. It’s so important to follow a measurable and achievable budget.

Lastly, I think some people are too quick to gift their money to the next generation. Not only might you need those resources for your living expenses, but think about the lost potential returns and future income you might be giving away prematurely.

So, what does your future look like?  Do you know?

It is time to invest in yourself and reap the rewards of your labor.

Keep more of your income and pay less in taxes.

Let’s Talk

The post Why Do So Many People Fail in Retirement? appeared first on AWM.

So, what’s the good, the bad and the ugly of the SECURE Act?

Let’s find out!

PROS:

1.      Now you can contribute to your IRA beyond age 70 ½ 

The new law eliminates age restrictions for traditional IRA contributions as long as you have earned income.

2.      Required minimum distributions (RMD’s) moved up to age 72

IRA owners catch a break in 2020 and can postpone their RMD’s until they turn 72.

3.      Qualified charitable distributions (QCD’s) from your IRA

It’s a great tool to use in tax planning strategies. But it can have a negative impact if you’re not careful.

CONS:

1.      Inherited IRA distributions generally must now be taken within 10 years

If you inherited an IRA on January 1^st, 2020 or later, the stretch IRA is replaced with a 10-year rule for most beneficiaries. Inherited accounts prior to 2020 still carry the old rules.

2.      Eligible designated beneficiaries are the exception

If you are a surviving spouse, minor child (not grandchild), disabled, chronically ill, and/or not more than 10 years younger than the IRA owner you can still qualify for a stretch IRA.

3.      Trusts no longer work as planned under the SECURE Act

Your trust needs immediate review, especially if it names your IRA as a beneficiary. Seek out an estate planning specialist to explain the new laws.

PROCEED WITH CAUTION:

1.      Each parent can withdraw up to $5k penalty-free from their retirement plan(s) per birth and/or adoption

This will help to pay for adoption expenses.

2.      Employer plans will start to offer annuities

Many provisions of the SECURE Act are designed to make it easier for employers to offer annuities. If you’re not sure an annuity is the best option for you, get a second opinion. Annuities might pose problems down the road.

It’s time to talk to a professional financial advisor

A fiduciary financial advisor can help clarify changes in the tax code and how they impact your family and personal finances. Take this opportunity to update your planning strategies. Your plan should evolve as you do.

The post How SECURE Should We Feel about DC’s New Tax Laws? appeared first on AWM.

Contributing to your IRA by April 15^th could lower your tax bill for 2019.

The annual contribution limits for IRAs (both traditional and Roth) for 2019 is $6,000 for any working individual under the age of 50. Those over the age of 50 can contribute up to $7,000 each year.

These contributions might lower your taxable income if you have earned an income. Here are a couple examples:

Let’s assume you are single and earn an adjusted gross income (AGI) of $60,000. If you contribute the maximum of $6,000, you will only pay taxes on $54,000 of your income.

If you’re married, filing jointly and have an AGI of $98,000, you can both contribute up to $12,000 ($6,000 each) for 2019. You will pay taxes on $86,000, assuming you make the maximum contributions allowed under the law.

Traditional IRA contributions are non-itemized deductions, which means you can claim them on your return.

However, there are limits for who can deduct their IRA contributions based on a few different factors:

1. If you make too much income, you might still be able to contribute to your IRA, but might be limited or disallowed deductions.
2. If you’re married and not covered by a retirement plan, your AGI limits are higher. It’s always good to check with your financial advisor or accountant for clarification on these limits.

For more information, you can visit irs.gov. I encourage you to speak with a fiduciary financial advisor and your tax specialist. They can help you maximize the deductions you qualify for and make the most of your tax returns for 2019.

Schedule Appointment

The post Contributing to Your IRA by April 15 Could Lower Your 2019 Tax Bill appeared first on AWM.