I love Roth’s and so should you – Four keys for Roth accounts.

ST. CROIX INSIGHTS

I love Roth’s and so should you – Four keys for Roth accounts.

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

ROTH Account

One of most powerful financial tools that Congress created was the Roth IRA/401(k) Roth accounts. If you had a $1 million in a Traditional IRA and $1 million in a Roth IRA, which one would be worth more?

The answer is the Roth IRA as these accounts are not taxed upon the distribution of the funds if you follow these four keys:

  1. Rules….no one likes them but with each type of retirement account you fund, you make a deal with our government. Yet, I contend the Roth IRA rules are extremely favorable. Favorable doesn’t mean simple. There are tons of rules to comply with to avoid taxes or penalties with Roth accounts.
  2.  

  3. Many of you have been told you CAN’T fund a Roth account because your income is too high. In technical terms, your Adjusted Gross Income (AGI) based on your 1040 falls about the funding thresholds. But that’s not the entire story. You can fund a Roth IRA accounts even if your AGI is high. The best strategy is funding a non-deductible IRA and right away do an IRA Conversion to a Roth IRA account. Simple, done. You funded a Roth IRA account. Now it’s a little more complicated if you have IRA accounts with account balances and that’s where we need calculation a tax rate on the conversion.
  4.  

  5. Another big misconception is around your employer’s 401(k) Roth option. Many believe if your AGI is too high you still cannot contribute to your employers. Employer 401k plans DO NOT have income limitations around funding a Roth or Traditional account.
  6.  

  7. These accounts do not have Required Minimum Distribution (RMD) levels. Yet 401(k) Roth accounts do at age 70 ½ unless you are still working for the company.

Roth accounts are powerful financial tools when you follow the four keys.

St. Croix Advisors, LLC is an investment advisory firm. We seek to help our clients achieve financial simplicity. Before implementing financial ideas, you read, work with a Certified Financial Planner (CFP) or CPA for advice or recommendations that fit your own financial situation. The content is developed from sources believed to be providing accurate information.

Sign up for our eNewsletter blog that includes timely financial matters, news, and planning strategies that you can implement today.

2 + 3 =

2018 Employee Benefit Open Enrollment

ST. CROIX INSIGHTS

2018 Employee Benefit Open Enrollment

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

It’s hard to believe 2017 is coming to an end open enrollment is just around the corner. It’s easy to take your employer benefits for granted. But let’s not! Let’s make sure you have fully taking advantage of the benefits your employer offers. After all, you are working hard for them each day.

Here are a few key items to evaluate this year during your open enrollment period:

  • Join the 1% club. Increase your 401(k) savings each year by 1%. It’s easy, and you won’t miss the money.
  • Ask the question, will you have too much money in pre-tax retirement? This means when you retire will all of your income be taxable in your retirement years? Funding a Roth IRA is a great option for tax-free income in your retirement years.
  • Review your medical coverage. Have you or a family member’s health status changed? Will you require medical care outside of your primary network? Are you saving enough into your HSA account to cover items not covered by your plan and out of pocket expenses?
  • Examine your disability insurance. Chances are your largest asset is your ability to produce income. Are you fully insured in the event you develop a sickness or illness? Will your benefits be taxable? Read the policy, so you are informed.
  • Are there any new benefits? What benefits have you overlooked all these years and now maybe you should have them? Companies offer a host of benefits as your life changes, so will your needs. Keep up-to-date. Often having the proper amount of life insurance is an overlooked benefit until it’s too late.

If you need help analyzing your employee benefits, let’s schedule a time to meet to make sure they are properly incorporated into your financial planning.

Sign up for our eNewsletter blog that includes timely financial matters, news, and planning strategies that you can implement today.

14 + 8 =

Covering Health Care Costs When Retired

ST. CROIX INSIGHTS

Covering Health Care Costs When Retired

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

If you’re like many Americans, you’re eyeing retirement with apprehension. When my clients come to me, no matter the reason or the stage of life, there are always two questions that they ask me. “Will there be enough money?” and “Will everything be okay?”

As with any other situation in your life, planning and being prepared ahead of time is key for retirement planning. Making sure you cover your bases and manage potential factors before they arise is key. And one factor that weighs in is the cost of health care coverage.
The rising costs of health care (especially as we age) is enough to strike fear in the hearts of many approaching retirement. Health care costs can eat up a sizable chunk of retirement savings, especially given the hit that many retirement accounts took in the last decade.

“I know and can prove that if you pay attention to your money, you actually have more money than you think. ”

Outliving one’s retirement assets is becoming a real fear for those approaching retirement, as people are living longer and being forced to spend diminished retirement income on rising health care expenses.

You shouldn’t be forced to spend your retirement worrying about whether or not you’ll be able to qualify for Medicaid or if your retirement nest egg will run out too soon. You should be enjoying these golden years of your life. This can be accomplished through the peace of mind that sound financial planning provides and you have many options for health care coverage as well as retirement savings and investing.

If you’re like the 62% of Americans in pre-retirement age (50-64) who are not at all confident that you will have enough savings to weather their health care costs in retirement, I encourage you to contact St. Croix Advisors today to get a financial plan in place. Don’t waste another second of your life worrying about the future that you could be looking forward to.

Sign up for our eNewsletter blog that includes timely financial matters, news, and planning strategies that you can implement today.

12 + 9 =

Saving for College or Saving for Retirement

ST. CROIX INSIGHTS

Saving for College or Saving for Retirement

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

Often, clients are willing to forego saving for retirement (under the guise of postponing it) in favor of saving for and financing their children’s higher education. This is a dangerous game to play and one that is not recommended.

With advancements in health care and increased lifespans, coupled with decreasing home and investment values that could occur at the wrong time, outliving your retirement is a very real possibility without proper planning.

I understand that for many families, you may not be able to save for both retirement and college simultaneously. However, you should not put your future (in terms of your retirement) on the line to cover college expenses for your children. I hear your arguments, and yes, children are the future, but just don’t do it.

“Why?” you might ask.For starters, you can get loans to cover college expenses. You cannot get loans to cover your retirement expenses. Additionally, when you’re funding your retirement savings, those financial tools may be more tax friendly AND still allow access to that money down the road. For college savings, it is very specifically for college expenses only.

The best plan? Continue saving for retirement. In fact, save as much as you can for retirement.

Then, when the kiddos start coming along, start saving for their educations as early as possible (i.e. when they’re babies), so the amount may build incrementally as they grow up.

If your kids are older now and you’re already staring down the gauntlet of college expenses, thinking that you should have started sooner, don’t fret, there are still plenty of options available to you. Contact me today for more information on formulating a plan for your situation.

Sign up for our eNewsletter blog that includes timely financial matters, news, and planning strategies that you can implement today.

7 + 8 =

The Importance of Updating Beneficiaries on your Retirement Accounts

ST. CROIX INSIGHTS

The Importance of Updating Beneficiaries on your Retirement Accounts

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

There’s no better time than the present. Keeping your beneficiaries, both primary and contingent, up to date matters, so your wishes in regard to who should receive your money are carried out.

 

Best Practices

It’s best practice to retain your own copy of beneficiary documentation, in the event your retirement account provider is unable to locate the document upon your death. Even with all the advances in technology and recordkeeping, paper copies can still disappear.

Avoid having someone else decide who receives your retirement account. It’s a good idea to periodically review beneficiary information and update as necessary.

Retirement Plan Beneficiaries

When to Update Beneficiary Designations

Some examples of when you need to update your retirement account beneficiary designations include:

 

  • When a spouse or family member dies
  • Divorce
  • Marriage
  • An overall change in one’s family situation
  • Financial or tax status changes

Chances are this will be the largest check your beneficiaries will ever receive. Call St. Croix Advisors at (651) 337-1919 or (877) 393-1919 or email at info@stcroixadvisors.com for help with your retirement accounts.

Sign up for our eNewsletter blog that includes timely financial matters, news, and planning strategies that you can implement today.

8 + 1 =

What Does Saving Money Really Mean to You?

ST. CROIX INSIGHTS

What Does Saving Money Really Mean to You?

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

I thought I was saving money for retirement. It turns out there is another side of the coin.

 

My Aunt Hank

My Aunt Hank, one of my all-time favorites, used to wear electrical tape around her shoes because she couldn’t afford to purchase new shoes. When I took her grocery shopping she would ask for a 6-pack of pop because she couldn’t afford a twelve pack of Coco-Cola (or so she said – I knew better!). Or stealing the sugar from the restaurant and bringing a few packets home for coffee in the morning. Now that’s a real life example of saving money at its core. How many of you would do that? Today, our shoes get a little dirty and we’re on amazon.com buying new ones.

 

Hudson Retirement Saving Strategies

Retirement & Taxes 

I bet we all have a host of ways we try to save money, day-in and day-out, and my guess is you’re pretty successful at it.  At the same time, I bet you’ve overlooked a major expense that we’re all going to face when we retire: taxes. You’ve saved all these years into your IRA, 401k, 403b, SEP or Simple IRA plan but haven’t considered helping prevent your retirement accounts from being consumed by taxes. Uncle Sam is the uncle who shows up and never leaves. If you’re not careful, he’ll eat you out of house and home.

 

With the exception of a Roth IRA, contributions are contributed on a pre-tax basis and upon distribution, these types of accounts (IRA, 401k, 403b, SEP, Simple IRA) are taxed at the ordinary income rate. The tradeoff is tax-free growth since taxes are paid upon distribution at retirement.

 

A Bigger Trade Off

But, here’s the bigger trade off. What happens to your retirement accounts when you die? Heirs potentially encounter not only income taxes on the account, but also potentially estate taxes. You need to add it all up – all of your retirement accounts, your home, your investments, and even your business to determine your federal estate tax rate. I also failed to mention any State taxes which you may need to include. It doesn’t take long before over 50% of your retirement accounts could be eroded by taxes. Chances are you haven’t worked all these years just to pay taxes, have you? I’m all for paying my fair share, and my fair share alone. I would rather see my family and favorite charities benefit from the fruits of my labor and planning.

Sign up for our eNewsletter blog that includes timely financial matters, news, and planning strategies that you can implement today.

10 + 12 =