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.

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.

Somewhere sunny, on a beach? Your dream house on a piece of land?

If you love vibrant cultures and authentic food, retiring abroad might be what makes your retirement years golden. Before you go, it’s important to plan and research thoroughly. Otherwise, you might end up paying some over-looked expenses:

1. Paying for what you leave behind.

If you’re planning to keep a house in the U.S., consider the upkeep and maintenance costs. You’ll either have to hire a professional service to mow the lawn and clean out the gutters or purchase a ticket to fly back and do it yourself.

2. Steep utility bills.

On the surface, living abroad can appear to be significantly cheaper than in the U.S. If you don’t research the local prices for Wi-Fi, fuel, internet, and natural gas, you might be surprised to spend more on utilities than you are used to.

3. Paying for English.

If you don’t speak the common language, don’t be surprised to pay premiums. You could easily be marked as a “tourist” or be charged more for an English-speaking plumber.

4. Not knowing their systems.

As an American citizen, you know exactly how and when to renew your driver’s license. Other countries can have complicated immigration and residency requirements that can be costly. Especially if you need to hire a translator.

5. International health insurance.

Medicare won’t cover health care costs outside of the U.S. You may end up buying an international health insurance plan or factor in out-of-pocket health care expenses.

6. Exchange rate fluctuations.

Don’t assume exchange rates will always work in your favor. Even if the rates are good now, they can and will change over time. Think about how a gradual increase over 10 years could impact your day-to-day- budgeting.

7. Spending on extras.

Planning an annual trip to the states is a great way to keep in touch with your kids and grandkids. But once a year might not be enough. If a loved one’s health changes suddenly, you could find yourself in the U.S. for weeks or months to help out.

Missing certain foods or electronics could also lead to higher bills. It’s easier than ever to find what you’re looking for abroad, but they often come with big importation taxes and shipping expenses (i.e. Peanut Butter can double in price).

Retiring abroad might be just the thing you’re looking for to happily live out the rest of your non-working days. But I urge you to do some research and work with a trusted fiduciary financial advisor before you go.

Let’s Talk

The post 7 Overlooked Costs of Retiring Abroad 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.

I hope you enjoyed a Merry Christmas and a wonderful New Year!

In 2019, I saw great success stories in our client’s lives. I want to congratulate those who invested in themselves to confidently walk into the next chapter of their lives. We have families who:

• Retired successfully
• Paid off their debts
• Bought vacation homes with cash
• Bought and/or sold businesses
• Invested in and/or updated their Financial Plans
• Families who established plans a few years back saw the rewards of their sacrifices come to fruition

Congratulations on your accomplishments! I am so excited and thankful to be part of your financial journey and look forward to seeing what you will be rewarded within 2020.

An Incredible 2019 in the Rear-View Mirror

Last year started with a lot of uncertainty. But as the months went on, we saw the market recover from two 2018 corrections, and things started to look promising. A few things contributed to a good year:

• Tax cuts stimulated the economy
• Deregulation has made it easier for corporations to do business
• The Federal Reserve cut interest rates three times, making borrowing more affordable

We have a lot to be grateful and thankful for. That said, history follows a pattern.  It would not surprise us to see some sort of correction after the strong year in 2019. Economic and political issues such as China trade, unrest in the Middle East and the upcoming November elections are potential risks.

Do you know where you stand?

Since the last great recession of 2008, we have had 10 years of a strong bull market, albeit with some temporary declines.

Let’s plan today so that when history repeats itself, you will have peace of mind, confidence, and freedom in knowing that you were proactively planning and taking care of your financial health.

Whether you are already in or are getting ready for retirement, ask yourself the following questions:

• Am I prepared for the unexpected?
• When the market corrects, how will that impact my income?
• How much can my assets go down before my lifestyle is impacted?
• Do I know where I stand?

If you’re not confident answering these questions, it’s time to review your plan.

What to look forward to in 2020.

1. Towards the end of last December, Congress passed numerous new laws to take effect in 2020 (for instance, the SECURE Act that impacts IRA’s).

We will research and understand the implications of the new laws. Throughout the year, we will also have conversations with those of you who are part of the Financial Planning Club, to guide you through changes and steer you to success.

2. As I’ve said repeatedly for the last two years, having a roadmap is the most important investment you can make in yourself to find peace of mind, confidence and freedom. Don’t short change yourself or get in the way of your own goals. Tomorrow comes faster than you think.

3. I have been asked by Camas and Ridgefield Life magazines to write educational articles each month. If you live in the Ridgefield or the Camas area, I encourage you to look for our articles.

Investment Brief

Looking towards 2020, we continue to see similar themes that we have covered in prior newsletters (4Q19 and 3Q19).

Here’s a quick glance at investment trends:

• US growth remains positive, but subdued.
• International growth is still weak, but stabilizing.
• Prices in many assets are high, but interest rates still remain low.
• Macro volatility is still a risk, though unlikely to derail the broader economic story in 2020. Politics (US elections, China trading, unrest in the Middle East) might offer more risk than economics (Fed already cut rates, and are unlikely to raise in the near term).

After a strong year in 2019, we would expect positive but more subdued returns this coming year.  We are projecting to see a good balance of risk and return.

If you want more in-depth resources on these trends, please visit our website and read our investment newsletters from 2019.

Summary

As you set your New Year’s resolutions, I encourage you to be proactive with your financial planning.  You can control your future, but it’s up to you to make it happen.

Now is the time to set new goals and dreams for the year. I’m here to cheer you on along the way.

Let’s make 2020 a great one!

Sincerely,

Petr Burunov, CFP®
President / Wealth Strategist

The post Client Newsletter 1Q20 appeared first on AWM.

Can you relate?

It’s not easy to make financial resolutions, but with the right plan, Donna (and you) can rest easy about the future.

1. Up Your Retirement Contributions
   

   In 2020, Donna can contribute more than ever to her retirement accounts. Because she’s still working, Donna can stock away $19,500. If you are expecting a raise, bonus, or can sock away a little extra, consider upping your contributions this year. Donna knows, even the smallest increase can have a large impact down the road.

    

2. Make Catch-Up 401(k) Contributions
   

   Since Donna is over 50, she can play “catch-up” with her retirement savings. This means she can contribute an extra $6,500 to her 401(k), maxing out at $26,000 in 2020. If your birthday falls anytime in 2020, you can start making these contributions as early as January 1, 2020. Think of it as a birthday present to yourself 😉

    

3. Max Out Your IRA Contributions

   As long as Donna or her husband are earning income, she can put $6,000 into a traditional or Roth IRA, assuming she meets the income threshold. Donna can contribute up to $7,000 since she’s over 50. Certain situations allow for backdoor Roth contributions if you can’t deduct your IRA contributions.

    

4. Start A Health Savings Account (HSA)

   Did you know HSAs have triple tax-free benefits? Donna can take tax deductions when funding the plan, her money will grow tax-free, and it’s not taxed on withdrawals when used for health care expenses after the age of 65. You can contribute $3,550 as a single or $7,100 as a family.

    

5. Design a Comprehensive Financial Plan 

   Donna has real, tangible ways she can work to prepare for her future, but she’s not done yet. She wants to meet with her financial planner and make sure she’s on track to meet her retirement goals. The ups and downs of the market are so much easier to follow when you have a solid plan to follow.

With the right planning and professional help, Donna can take advantage of various retirement plans and stow away a substantial amount each year for her future. Sounds like a pretty good New Year’s Resolution to me.

Talk to your financial advisor or accountant. Let’s make 2020 the best year yet!

Ask a Question

The post How can I make meaningful resolutions that will help my family? appeared first on AWM.

Letter from the President: Petr Burunov, CFP®

Dear Ambassador Family,

This summer was a whirlwind.

On July 9^th, I received a heartbreaking call from my family in Sacramento. My cousin was in a fatal motorcycle accident. Passing away at the young age of 38, he left behind 2 small children and a pregnant wife.

As his family relied on my expertise to talk through his business and personal finances, it quickly became clear that most of his ideas, wishes, and plans were in his head, and not on paper. I watched his wife struggle to make sense of things. This young, vibrant family thought they had plenty of time to plan and prepare for the future, but instead found themselves in complete disarray.

While dealing with the pain of losing a loved one, the family quickly discovered that my cousin’s business didn’t have a succession plan. Many documents were missing or didn’t even exist. This hindered maximizing the business valuation and added stress to his family. Should something happen to you, would your family be able to pick up where you left off?

Life is so fragile.

This is a great reminder to all of us, that planning is a MUST. Check that your documents are in good order with clear instructions. Make sure your accounts and property are titled according to your wishes and with the most current information. If possible, help your loved ones avoid probate, a time-consuming and costly process.

You can save them so much stress and chaos.

We’re watching your money.

Throughout 2018, we started to take profits on some investments due to rising concern in going forward performance and deteriorating fundamentals of certain companies.

A number of clients called, asking us why we were selling some really good names. During those conversations, I heard a common theme that people get emotionally attached to well-known companies that pay dividends.

Nearly a year after selling some of these positions, a number of these companies are trading well below where they were last year. Others were forced to cut dividends, just to survive.

My number one goal is to watch out for you and your families.

Dividends are a nice way to get extra income, but we must consider other factors:

• Can the company maintain and/or grow its dividend?
• Is their market share vulnerable to competition?
• How does it hold up under a slowing global economy? (See the investment letter)

Year-End Planning Ideas.

Going back to my previous point, our goal is to look after our clients, especially at the end of the year. We want to make sure each client, who is over the age of 70½, satisfies their RMDs. Don’t forget to include RMD’s from all retirement accounts. It happens more often than you’d think. And please, don’t wait until the last minute.

As we talk with you and your families, we encourage our clients to stick to your budget, especially during the holidays. For those wanting to give to charities, we want to help you make sure your donations are made in a tax efficient way. We encourage you to give your time and heart to causes you passionately believe in.

When you experience a big change that could impact what we’re doing, please let us know. It’s important for us to consider your individual situations as we help you manage your family financial health.

My goal is to see your life full of purpose.

I hope you enjoy the rest of the year with your loved ones. If you have any questions, please don’t hesitate to contact us.

Sincerely,

Petr Burunov, CFP®
President / Wealth Strategist

The post Client Newsletter 4Q19 appeared first on AWM.

Sadly, one of America’s hottest growth industries is retired families in bankruptcy.

How did we get here?

According to AARP, close to half of retirees still carry debt into retirement.

But how is that possible?

You worked so hard and saved so much.

The fact of the matter is, only 23% of Americans have a retirement plan. That means only 1 in 4 have some kind of roadmap for their retirement journey.

If you don’t want to be part of these statistics, here are 3 things you can do:

1. First, get a strategic financial plan.  Understand where you are going.
2. Second, understand your budget. Be willing to take radical steps to adjust your lifestyle once you retire. The first 12 months of retirement are the hardest to adjust to. Preparing ahead of time can make this transition easier for you and your family.
3. And third, admit that it is possible to run out of money. Think through every possibility.

• • What if the market corrects?
  • What if you or your spouse are diagnosed with an illness?
  • What if your kids or grandkids need help paying for college?

So many variables can impact your retirement lifestyle.

You don’t have to settle for bankruptcy if you take action now.

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

Request a free consultation.

Free Consultation

The post Are You Ready for Retirement? appeared first on AWM.

Traditional IRA contributions increased by $500, now totaling $6,000 for anyone under 50. If you are turning 50 or older this year, you can contribute up to $7,000 to your IRA.

1.    IRS Increases IRA Limit

This is the first increase to the annual contribution limit since 2013. For the past five years, anyone under the age of 50 was able to contribute a maximum of $5,500, or $6,500 for those 50 and older. IRA contribution limits are adjusted periodically to keep up with the cost of living. These contributions are only increased in $500 increments, so they don’t necessarily increase each year we experience inflation.

2.    Rules to Remember

A word of caution as you plan out your contributions for the year: not everyone is eligible to contribute the full amount. Here are some rules to remember:

• IRA contribution limits are per-person, not per-account
• You can make IRA contributions anytime during the calendar year, or in the following calendar year up to the regular tax deadline (April 15).
• You must be earning an income
• Taxable income might not be considered earned income (i.e. social security/investment income)
• Anyone 70 ½ or older cannot make traditional IRA contributions. However, if you are still working and your employer offers a 401(k), you might be able to participate in the plan. Talk to a fiduciary advisor to see if you are eligible.
• You might make too much money to contribute to a traditional IRA
• You might have limits on your deductions for traditional IRA contributions

Also, keep in mind that the higher limit applies to contributions made for 2019, not necessarily all contributions made in 2019. If you are planning to make a 2018 contribution in 2019, you will be limited to the 2018 amount of $5,500 ($6,500 if you are over 50).

3.    Other Limits Increased

The IRA raised limits on other retirement accounts as well. Salary deferrals into 401(k) plans have increased to $19,000 and $25,000 if you are 50 or older. Other increased limits include the eligibility to make a Roth IRA contributions and limits for deductibility of traditional IRA contributions for active participants. For more information on the new 2019 limit changes, visit the IRS website.

I encourage you to seek out professional advice when planning out your annual contributions. A fiduciary financial advisor can help you maximize your contributions and answer any question along the way. Strategically placing your retirement savings is vital to your future and we would love to help guide you on your journey.

Schedule Appointment

The post You Can Save More to Your IRA in 2019 appeared first on AWM.