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You are here: Home / Archives for finances

finances

How to Create a Personal Investment Plan for Financial Independence

October 3, 2021 By quadcities Leave a Comment

Begin to lay out your plan. The key is to start.

As we begin this journey – and yes, it is a journey – we ask the question: Is it possible to develop an investment plan to achieve financial independence? The immediate answer is yes, it is possible. In this article, we shall explore the necessary steps to make it a reality.

What is Financial Independence?

How do you define financial independence? Is it having all the money you need or want? Or is it something else? Does money have anything to do with it?

How about doing anything you want whenever you want! Not having to do something (e.g. working) because you have to but because you want to. Getting excited about what you do! Doing something for the fun of it.

What would that feel like?

Laying the Groundwork

Before you begin your investment program, one must get their house in order.

  • Create a detailed budget. Know what you can put into an investment program.
  • Eliminate all non-mortgage debt. Yes, get rid of the credit cards, car loans, personal debt, student loans and any other type of debt.
  • Determine your risk tolerance. How much risk will you take? Develop a risk reward model. The higher the risk the higher the potential returns, of course you could lose it all.
  • Make certain you are not investing the rent and food money. If you are, then stop now. You are not ready to develop an investment plan

Develop a Plan Specific to You

This is your plan, not mine. Not someone else’s. Get yourself educated, learn about investing. Do not take investment advice from your neighbor or some other acquaintance.

  • Read investment books.
  • Hire an advisor. Make sure you hire one that will take the time to explain things to you. If you interview one who tells you to do what they say, run! Interview at least three. Make sure you are comfortable and vet them thoroughly.
  • Will you do it yourself? Get educated.
  • How much will you invest on a regular basis? Will it be weekly, monthly or annually?
  • What will be your target returns based upon your risk tolerance?
  • Will you be able to sleep at night or will you worry endlessly?

What Type of Vehicles Will You Use?

How will you accumulate your great wealth? Will you use retirement vehicles such as an IRA, Roth IRA, 401k, Roth 401k or some type of personal taxable investment account?

  • I believe the best investment vehicle is the Roth option. Yes, this is a retirement type vehicle, but it has many advantageous features. Contributions are made after tax dollars and grow tax-free. Who does not like tax-free? Another feature is no required mandatory distributions. And in certain situations, you can take tax-free withdrawals before age 59-and-a-half.
  • Next best is an IRA or other tax deferral vehicles. Contributions are made before tax and grow tax deferred. Taxes are paid when withdrawals are made. There are mandatory required distributions at age 72. Withdrawal before 59-and-a-half has a penalty of 10% plus taxes.
  • Taxable investment account contributions are made with after tax dollars and any earnings either from interest, dividends or capital gains are taxed.

Decisions, decisions. While none are wrong, it depends on your situation and your financial goals. Once again, educate yourself.

Choosing Your Investment Vehicle

The types of investment vehicles will depend on your goals. Are your goals long-term, short-term or somewhere in the middle? When will you need the money you invest? Do you just want to live off of the interest or dividends? Are you seeking long-term appreciation?

  • If you are seeking long-term returns, finding returns for 10% or greater should be your goal.
  • Medium term would be in the 5-7% range.
  • Short term most likely would be below 2%.
  • How will you achieve your financial returns?
  • Mutual funds
  • EFTs
  • Single Stocks
  • Dividend stocks
  • Corporate bonds
  • Government bonds (municipal bonds)
  • Treasury bonds
  • Certificates of Deposits (CDs)
  • Money Market funds or savings accounts
  • There are other choices, such as large cap, mid cap and small cap as possible types of stocks or mutual funds. And I dare say Bitcoin or any other type of crypto-currencies?
  • Real estate is another possibility.

As you can see, more homework will be needed. Educate yourself and pick what you are comfortable investing in.

Getting Started

The best time to start is now. There have been many factors discussed in this article. Take your time and go through them one at a time. Begin to lay out your plan. The key is to start. Begin with educating yourself, decide what consistent program you will follow. Hire a professional to teach you what you do not know.

If you do not start, you will not reach financial independence! QCBN

By Steven Calabrese, CPA

Steven Calabrese, CPA, is the CFO of Polara Health. He also is the owner/operator of a website known as thebiweeklyadvisor.com, where topics such as budgeting, investing, paying off debt and goal setting are discussed.

Filed Under: Columnists Tagged With: budgeting, finance, finances, financial independence, investing, Investing for retirement, paying off debt, Polara Health, Steven Calabrese

Nine Strategies for a Debt-Free Life

August 3, 2021 By quadcities Leave a Comment

Detailed below is how you can achieve a debt-free life.

A debt-free life, what would that be like and how do you achieve it? Living debt-free is a life that is stress-free. A stress-free life is something that you can become comfortable with. Once you achieve such a goal, you will never go back.

Detailed below is how you can achieve a debt-free life.

LIVE ON LESS THAN YOU MAKE

This tip sounds simple, but it is not for many people. Most want to keep up with the Joneses. Trust me, the Joneses are not having fun. They are actually broke!

If you make $100, then only spend 80% or 90%. Never spend it all and certainly never spend more. If you are spending more, that indicates you are most likely borrowing to keep up.

STICK TO A BUDGET

Sticking to a budget, once you have detailed it out, is what a debt-free lifestyle feels like. A budget is not a restriction. It actually is permission to spend.

Setting your budget with reasonable spending targets and living within those targets is what freedom to spend feels like. Create enough flexibility.

PAY CASH FOR PURCHASES 

When you pay cash for your purchases, actually, you create an environment that will cause you to spend less. When you pull out cash and count it out, it hurts your brain because you actually feel the act of spending.

Using plastic is not the same. Swipe the card and you are done. The money comes right out of your account or if you are using a credit card you will see the bill later when the purchase is just a memory.

SEEK WAYS TO REDUCE EXPENSES

Always look for a more cost-effective way to purchase needed items. Shop when things are on sale but make sure they are really on sale. Many times prices are marked up and then reduced.

ELIMINATE ALL DEBT

Those debt payments are only lining the pockets of the big banks or finance companies that are charging interest in the 15% or more range. Really? In most cases, you are paying for purchases for items long gone.

Do whatever it takes to eliminate these debt payments and put that money back in your pocket. Pay cash. Get off of the merry-go-round.

AUTOMATE YOUR SAVING

This strategy is the key to accumulating wealth. Use the pay-yourself-first method. When you set up automatic savings that comes right off the top of your pay, you will never miss it.

If your company has a 401k or a similar retirement plan, set up a percentage to go directly into it. This way, you do not take it home.

These savings should be invested in good solid mutual funds returning at least 10%. This is a long-term strategy.

CREATE AN EMERGENCY FUND

The thought here is it will rain almost 100% of the time. An unexpected expense will come up. These are items not included in your normal monthly budget.

An example could be an unexpected car repair, or perhaps a job loss.

Prepare beforehand and create a fund with at least three months of expenses, with a goal toward six.

I call this my “peace of mind fund.” It lets me sleep at night.

HAVE LONG TERM GOALS

Setting goals is perhaps the secret formula to achieving success. You need to have professional, financial, family and spiritual goals.

A well-balanced set of goals will be your roadmap. You don’t take a road trip without a map, so don’t go through life without a map. Create long-term goals, and short-term goals to get you to your long-term goals.

Make SMART goals (Specific, Measurable, Attainable, Relevant and Time Bound). And make sure they are in writing. An unwritten goal is just a dream.

SHOP AROUND

Never make the impulse buy. You will overpay! Do some research. Are you getting the best price for the quality product?

Or are you just getting a bargain and it is cheap, but you will buy it three times because it won’t last. Many times it is better to spend a little more and get a higher quality product and only buy it once.

There is no doubt that other strategies can be used to live a debt-free life. These are the tried and true. What is your favorite? Or do you have one you use that is not listed here?

So why wait? Get started now! QCBN

By Steven Calabrese, CPA

Steven Calabrese, CPA is the CFO of Polara Health. He also is the owner/operator of a website known as thebiweeklyadvisor.com, where topics such as budgeting, investing, paying off debt and goal setting are discussed.

Filed Under: Columnists Tagged With: budget, budgeting, Debt, debt-free life, emergency fund, finances, getting out of debt, goal setting, investing, money, paying off debt, Polara Health, saving, Steve Calabrese, the bi weekly advisor

1.1 Million Paycheck Protection Program Loans Forgiven So Far Totaling Over $100 Billion

January 15, 2021 By quadcities Leave a Comment

The U.S. Small Business Administration has already forgiven more than 1.1 million Paycheck Protection Program (PPP) loans for over $100 billion, providing an extraordinary amount of critical relief to America’s small businesses just 3 months since the earliest PPP borrowers’ covered periods ended.   
 
“Today’s news is a key indicator that the PPP is working for all small businesses across our Nation,” said SBA Administrator Jovita Carranza. “For any eligible small business continuing to struggle due to the coronavirus pandemic, the Program has re-opened for new and certain existing PPP borrowers, and we encourage you to take advantage of the PPP to keep your workers on payroll, regardless of any local economic restrictions on your operations. SBA is continuing to work around the clock to forgive existing PPP loans and implement the next phase of this vital Program.” 
The SBA has so far received 1,346,125 forgiveness applications for approximately $170.5 billion.  SBA has made payment on nearly 85% of the applications, forgiving over $100 billion.  For the smallest borrowers with loans up to $50,000, 88% have been approved for forgiveness.
 
The new data comes as the Paycheck Protection Program has recently re-opened as a result of the Economic Aid to Hard Hit Small Businesses, Nonprofits and Venues Act, signed into law by President Trump on Dec. 27, 2020.  The Act added operational expenditures, certain property damage costs, supplier costs and worker protection expenditures, such as drive-through areas, ventilation and sneeze guards, as eligible expenses as well.
The SBA provides PPP Forgiveness Submission & Payment Metrics, as well as Paycheck Protection Program reports, online at www.sba.gov/ppp.
 
 
About the U.S. Small Business Administration 
The U.S. Small Business Administration makes the American dream of business ownership a reality. As the only go-to resource and voice for small businesses backed by the strength of the federal government, the SBA empowers entrepreneurs and small business owners with the resources and support they need to start, grow or expand their businesses, or recover from a declared disaster. It delivers services through an extensive network of SBA field offices and partnerships with public and private organizations. To learn more, visit www.sba.gov.­

Filed Under: Business Tagged With: business, finances, loan forgiveness, money, Payment Protection Program, PPP, U.S. Small Business Administration

Considerations for Dealing with Debt

November 25, 2020 By quadcities Leave a Comment

When you consolidate your debt, there is the possibility that you could lower your interest rate. The payments may be lowered and there will be only one payment to make instead of numerous payments.

When you consolidate into one loan, you most likely will be extending the time to repay. When you do that, it will take longer. If it takes longer, the lower interest rate will become irrelevant because you may end up paying more interest because the debt will be outstanding longer. So, is there a benefit?

Is the Problem Fixed?

Consolidating your debt to one payment without cutting up the credit cards is very dangerous. If you have not eliminated the use of credit cards, you will find yourself with a bigger problem. By not changing your habits and continuing to use the credit cards, before you know, it the credit card debt will be back.

The only problem now is you also have a debt consolidation loan on top of the new credit card debt. What will you do now? Have another debt consolidation loan? Run the cards up again and consolidate yet again? If you keep doing this, you may wonder why you can never get ahead.

Beware of Shady Debt Consolidation Companies

There are companies that will tell you they can get your debt paid off for fractions on the dollar. My advice here is for you to run. Run as fast as you can to get away unharmed.

They will tell you to pay them something less than you are currently paying and, in turn, they will pay the credit card companies. This will continue for some period of time.

Here is what will happen. They will hold your payments. Then, they will not pay the credit cards, putting you in a delinquent positon. They will force the credit card companies to take less than the full amount owed on the debt.

Your credit rating will be trashed because of the late payments. There will be taxes owed on the debt forgiven.

The results will not be pretty. So, like I said run, run quickly to get away. Do not engage this type of company. QCBN

By Steven Calabrese, CPA

 

Steven Calabrese, CPA, is the CFO of West Yavapai Guidance Clinic. He also is the owner and operator of a website known as thebiweeklyadvisor.com, where topics such as budgeting, investing, paying off debt and goal setting are discussed.

Filed Under: Columnists Tagged With: CPA, Debt, finances, Steven Calabrese, West Yavapai Guidance Clinic

Developing a Successful Portfolio: Are your assets properly allocated?

August 21, 2017 By quadcities Leave a Comment

Everyone has an idea of what they want their retirement to look like, whether that means spending more time with family, traveling, or enjoying a favorite pastime. Many people even base their financial plans off of their vision for the future. The reality is that you can never truly prepare for everything that life has in store for you – your plans need to be adaptable.

Generally speaking, most portfolios include many types of investments with varying degrees of risk and include elements of long-term growth, income generation and built-in principal preservation.

One of the most important aspects of portfolio allocation is paying attention to risk, which starts by examining your unique financial position. It helps to consider when you want to retire, what your financial goals are in retirement and your ability to handle a financial loss. Knowing your goals and how you feel about risk will help you determine the ideal path and process in reaching your retirement goals.

Oftentimes, people strive to avoid taking on any investment risk. The problem with this mentality is that all investments carry some risk and also that a certain amount of risk can be necessary for a healthy portfolio. Conservatively constructed portfolios aren’t able to provide the long-term growth potential that is needed to outpace inflation and build wealth. Investors that seek “absolute safety” often run into risks of a different variety, like investment opportunity loss and the destruction of purchasing power resulting from inflation.

At American Financial Investments, LLC, we work with you to help ensure any financial decisions are being made in your best interest and will help assess any potential risk in your retirement plans. We are dedicated to creating a financial strategy that aligns with your personal investment objectives and goals, and we will utilize our knowledge and experience to help manage your portfolio throughout various economic conditions and investment cycles.

When you work with our team, which includes full spectrum investment and tax services, we will help you determine your current comfort level with risk by getting to know you on a personal level and using surveys. We then analyze your financial picture for a reality check against your income needs and the cost of your hopes and dreams.

We believe that following sound investment principles such as asset allocation, regular portfolio reviews and managing risk can lead you to long-term success – and that’s what we strive for. Developing a successful portfolio can be an overwhelming task, but you don’t have to do it alone. After all, you wouldn’t perform surgery on yourself, so why try to manage a portfolio if it’s not your area of expertise?

Let our professional investment managers who understand the fundamentals of the stock and bond markets and have the industry knowledge on their side help you make decisions that are in your best interest – giving you the time and peace of mind to enjoy the things you love. QCBN

 

Ronald F. Stevenson & Barbara Clark Stevenson own American Financial Security, LLC. They specialize in Retirement Income Planning, Social Security Maximization, Tax Free Income Design, Personal & Corporate Tax Preparation and Planning. For more information, call 928-771-8368 or visit AmericanFinancialSecurity.net, 3112 Clearwater Dr., Suite B, Prescott, AZ 86305.

 

 

By Ronald Stevenson and Barbara Clark Stevenson 

 

All written content is for information purposes only.  It is not intended to provide any tax or legal advice or provide the basis for any financial decisions.  Opinions expressed herein are solely those of American Financial Investments LLC and our editorial staff.  Material presented is believed to be from reliable sources; however, we make no representations as to its accuracy or completeness. All information and ideas should be discussed in detail with your individual adviser or qualified professional before making any financial decisions.

American Financial Investments LLC and American Financial Security, LLC are not affiliated with or endorsed by the Social Security Administration or any government agency.

Ronald F. Stevenson is and Investment Advisor Representative and offers Advisory services through American Financial Investments LLC a Registered Investment Advisor in Arizona. Insurance products and services are offered through American Financial Security, LLC, an affiliated company.

 

 

Filed Under: Columnists Tagged With: assests, finances, Stevenson

Social Security and Retirement: Do You Know the Right Time to File?

July 30, 2017 By quadcities Leave a Comment

Since 1935, Social Security has been one of the pillars of retirement income, serving as the primary source of income for half of Americans over the age of 65. In many ways, it can be regarded as a government-run retirement account for those who have put a portion of their paycheck toward the program throughout their working life.

When you retire, your income may cease but your need for income doesn’t. Finding other sources of revenue that can replace your old salary is often the biggest challenge of retirement planning, which makes getting the most out of your Social Security benefit even more important.

The significance of maximizing your Social Security benefit can’t be overstated – the difference can literally be thousands of dollars for some people. It’s also worth noting that a married couple has more than 8,000 different filing possibilities, and there are more than 2,700 rules that govern the program’s payouts.

There is no one-size-fits-all rule when it comes to Social Security, and determining when to file is not a decision that should be taken lightly.

At American Financial Investments LLC, we are dedicated to providing you with personalized financial solutions and making sure that your plans can provide for you down the road. We are committed to analyzing your unique situation against every possible combination of filing strategies and coming up with a plan tailored to you.

Although deciding when to file can be stressful, it doesn’t have to be. When you work with the right financial professional, he or she can offer different strategies that will help you maximize your benefits based on your marital status, age, earnings, financial needs and other considerations.

Ultimately, when it comes to retirement income, every penny counts. Every dollar you increase your Social Security benefit by is one less dollar that has to be pulled from your personal savings down the road. Taking time to work with a qualified financial professional and understand Social Security and the

strategies surrounding it can help you make the most of your benefit and maximize your retirement income plan. QCBN

By Ronald Stevenson and Barbara Clark Stevenson

 

American Financial Investments LLC and American Financial Security, LLC are not affiliated with or endorsed by the Social Security Administration or any government agency.

All written content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. Opinions expressed herein are solely those of American Financial Investments LLC and our editorial staff. Material presented is believed to be from reliable sources; however, we make no representations as to its accuracy or completeness. All information and ideas should be discussed in detail with your individual adviser or qualified professional before making any financial decisions.

 

About the Authors: Ronald F. Stevenson & Barbara Clark Stevenson own American Financial Security, LLC. They specialize in Retirement Income Planning, Social Security Maximization, Tax Free Income Design, Personal & Corporate Tax Preparation and Planning. For more information, call 928-771-8368 or visit AmericanFinancialSecurity.net, 3112 Clearwater Dr., Suite B, Prescott, AZ 86305

 

###

 

 

Ronald F. Stevenson offers Advisory services through American Financial Investments LLC a Registered Investment Advisor in Arizona.

Insurance products and services are offered through American Financial Security, LLC.

American Financial Investments LLC and American Financial Security, LLC are affiliated companies.

 

 

Filed Under: Columnists Tagged With: finances, Stevenson

Major Changes Recommended to Improve Financial Future for Arizona

May 8, 2017 By quadcities Leave a Comment

Business representatives, employers, educators, community residents and elected officials present all agree – something serious needs to be done, soon, if Arizona expects to be competitive with the rest of the nation, let alone the global community.

That was the consensus following an intense series of economic, governmental and economic presentations from four Quad Cities leaders on April 4.

Called “Financing Arizona’s Future,” the forum was sponsored by Arizona Town Hall, and attracted community residents from throughout the Quad Cities area. The result was six consensus statements intended to stimulate a government finance system that would create a healthy and prosperous future.

The kick-off speaker was Martin Grossman, Prescott Valley town council member. Now in his second term, Grossman emphasized that he thought the future economic growth and development of the entire area, but particularly rural Arizona, was linked to convincing Arizona legislators that they had to support public infrastructure at all levels.

Following Grossman, George Ruffner from Prescott-based Econ-Plan Associates, cited data that funding for the criminal justice system in Arizona is not properly allocated. He noted that funds that go into the Department of Corrections should instead be used to support programs to provide intervention before incarceration. He quoted a report: “Funding prisons is a crisis management approach to criminal justice that ultimately costs more than would be spent on early intervention such as substance abuse treatment and mental health care.”

Another speaker, Prescott Valley Deputy Town Manager Ryan Judy, was critical of the Arizona legislature’s ongoing introduction of “unfunded mandates” – statutes or regulations that require local or state government to perform actions without any money provided to fund those obligations.

Judy also criticized the way the tax base in Arizona is structured. “Our politics too often are to keep taxes low. You can bring in the same amount of tax revenue if you broaden the tax base. But if you lower the rate, you’re not going to bring in more dollars.”

Even more critical of the way some tax bases are devised was Prescott Valley Town Manager Larry Tarkowski. “We need to change the mindset so that people better understand that if you don’t pay for it, you’re not going to get it. You get what you pay for. If you don’t pay a gasoline tax, the roads are going to go to hell. If you don’t want to increase revenue, the schools are going to be dramatically underfunded.”

Tarkowski emphasized, “The conversation needs to be directed at people running for elected office. They need to be willing to go ahead and pay for critical services.”

Several in the audience agreed with Judy and Tarkowski. Prescott resident Michael Ellegood said the public, especially Millennials, needs to be better educated about how essential services are paid for.

Agreeing with Ellegood was Scott Farnsworth, an administrator at Yavapai College. “We can’t continue to ignore the issues, especially in support for education. These issues of how best to pay for what we need to grow and prosper simply must be addressed.”

Speaker Joel Hiller, executive director of the Yavapai Indian Cultural Center and Museum, said that Arizona leaders need to look carefully at what other states, which have successful and growing economies, are doing. “There’s nothing wrong with finding out why they succeeded and then imitating what they do,” he said.

Embry-Riddle Aeronautical University, which provided space for the community meeting, was represented by Chancellor Frank Ayers. He told the crowd that the university was collaborating with the broader community to develop and support a business and economic incubator – an organization designed to accelerate the growth and success of entrepreneurial companies through providing physical space, capital, coaching, and network connections.

“We need to bring in new industries to the area,” said Ayers. “We need to create well-paying jobs and keep our young people in the area.”

 

Six Key Recommendations

Those present, through open discussion and back-and-forth deliberation, developed six key recommendations that will be forwarded to community, county and state leaders.

Summarized in writing by Arizona Town Hall President Tara Jackson, those points were:

  • We need to do a better job of educating our legislators and the public about the long-term impact of tax cuts as well as the long-term impacts of initiatives that have large future expenses.
  • We should look to other states as models of how to better balance our government revenue streams.
  • We can increase government revenue by growing our economy and brining in revenue from sources outside the state. Embry-Riddle in Prescott is one local example of how a private entity can help grow a local economy by attracting outside revenue sources.
  • We should look strategically at ways to grow our economy through smart growth opportunities.
  • We need to have more transparency with how government funds are used, especially as they relate to charter schools and private prisons. The auditor general should be charged with auditing these entities in the same manner as district schools and public prison systems.
  • Arizona’s low property taxes were initially created to attract populations to the state. We have continued low property and income rates for years, trying to spur economic growth. It is not working. Instead, those regions that invest in education like Northern California appear to be regions that are having the greatest economic growth in high wage jobs.

A complete summary of the full report, Financing Arizona’s Future, is available online at aztownhHall.org or by calling 602-252-9600 to request a printed copy. QCBN

By Ray Newton, QCBN

 

 

 

 

 

 

 

 

 

 

Filed Under: Local News Tagged With: changes, Feature, finances

Planning for a Retirement That is Better Than a Vacation

October 19, 2016 By quadcities Leave a Comment

StevensonSome people spend more time planning their vacation than they spend planning for retirement. When it comes to retirement, many Americans don’t know where to begin.

It is important to have a retirement plan addressing ways to have income for life. Finding the most efficient and beneficial way to address this may impact your lifestyle, your asset accumulation and your legacy planning after you retire. Satisfying that need for daily income entails first knowing how much you need and when you need it.

Knowing how much retirement income you need is different for everyone. The general rule of thumb is that a retiree will require 70 to 80 percent of their pre-retirement income to maintain their current lifestyle. Once you figure out what the amount is you need, the next step would be to find beneficial investment strategies, options and tools to help you achieve your income goals.

One of the best strategies for income planning is very similar to a portion of the vacation planning process, which is the flight. You book your tickets, pay for the airfare and arrive at the airport. Because you have faith in the airport, you typically don’t give it much more thought. The airlines are the ones who take into consideration that not every flight goes as smoothly as planned. And, although they plan for the best, they prepare for the worst. Our income planning process at American Financial Security takes a similar approach.

At American Financial Security, we understand that your financial situation will change at different stages in your retirement. We project for potential health care costs, emergencies, plans for moving or traveling and other retirement expenses. You can really give your calculator a workout with all this planning.

Once we identify your various projected stages in retirement and the associated expenses with each stage in the income planning process, we begin creating your personal income plan. Your retirement income plan can consist of a variety of financial resources. Social Security is one of the best-known ways to fill a retiree’s income need and is the foundation of income planning for most anyone who is about to retire and need a reliable source of income. We help you determine when the best time for you to begin claiming your benefit in order to receive the maximum amount possible.

Once your retirement income plan has been completed, we then address your current financial situation in order to determine an appropriate strategy to generate specific income sources needed to help you live a happy and comfortable retirement.

At American Financial Security, we offer to help book your flight so you can fly away from the confusion and uncertainty and help you arrive at your desired retirement destination. Call us today, and we’ll take care of your income retirement plan to help make your retirement as enjoyable as a vacation. QCBN

By Ronald Stevenson and Barbara Clark Stevenson

About the Authors: Ronald F. Stevenson & Barbara E. Clark Stevenson own American Financial Security, LLC. They specialize in Retirement Income Planning, Social Security Maximization, Tax Free Income Design, Personal & Corporate Tax Preparation and Planning. For more information, call 928-771-8368 or visit AmericanFinancialSecurity.net, 3112 Clearwater Dr., Suite B, Prescott, AZ 86305.

 

Filed Under: Columnists Tagged With: finances, Retirement, Stevenson

Tax Planning for and in Retirement

February 10, 2016 By quadcities Leave a Comment

StevensonEven though retirees are not working full-time, their tax situation can still be complicated because they may receive investment income, interest or dividend income or capital gains distributions in addition to collecting social security, a pension or drawing from an IRA. Whether they take those monies out or reinvest them, they may not be in as low of a tax bracket as they had hoped. In preparing for retirement, it is important to identify your future income sources and anticipated deductions as well as to understand the impact to credits previously enjoyed or different taxes that may apply now. When converting from earned income to unearned or passive income, many truly experience firsthand our adage “not all money is created equal.”

We often receive questions such as “How can I save on my taxes?” or “How can I know my tax burden ahead of time when I might be able to do something to change it?” When it comes to saving taxes, most Americans have options. Working with a financial planner who also understands taxes enables you to develop an overall financial planning strategy, which is more likely to save you money.

What makes this difficult in real life is that the tax laws aren’t always that clear on how they can save money and pay less in taxes. To normal Americans, and to plenty of people who have studied it, the U.S. tax code is easy to get lost in. There are all kinds of rules, exceptions to rules, caveats and conditions that are difficult to understand, or even to know about. Compounding that is that Congress has postponed making final tax changes until well into December, which leaves little time to leverage. What you really need to know is your options and the bottom line impact of those options.

There are some tax strategies that we use with our clients that have successfully helped them have a better idea of what their tax bill is going to be at the end of the year. Since we are a tax firm, we can look over our clients’ taxes and help form their specific tax strategy. The strategy is meant to help them have an understanding about what the normal tax ramifications might be of some of the investment and financial decisions that they make.

A strategy might include – but is not limited to – maximizing tax-free income, taking advantage of standard or itemized deductions, timing the sales of taxable assets or deferring your retirement plan distributions until needed. At American Financial Security, we look for strategies that can best optimize your tax landscape and possibly minimize your taxes if tax rates do change for you in the future.

Most everyone, when it comes time to file their taxes, is glad to have them done for the year. However, not everyone takes that extra time to go back through and make sure that absolutely everything was done correctly. According to the Internal Revenue Service, roughly 60 percent of tax returns are done by a paid preparer, and a report released by the Government Accountability Office states that 17 out of those 19 returns had significant errors.

Conducting a second opinion on your taxes can help make sure you filed correctly. Sometimes a second opinion may find an error on your tax return resulting in you getting some extra money back or even lowering your tax bill. But, it can also go the other way. Even if you find a tax error that causes you to owe a little bit more, it is still a great idea to get that cleaned up and fixed on your own timetable, rather than the IRS catching a mistake two years later and adding costly interest and penalties.

Conducting a second opinion is pretty straightforward. All you need to do is come in with copies of your past year tax returns, investment statements and any other pertinent data. We’ll go through the documents to get a general idea or an overview of what your total situation is. Then, we’ll look at it and prepare an amended return where necessary or valuable and make recommendations for the coming year(s). QCBN

By Ronald Stevenson and Barbara Clark Stevenson

About the Authors: Ronald F. Stevenson & Barbara Clark Stevenson own American Financial Security, LLC. They specialize in Retirement Income Planning, Social Security Maximization, Tax Free Income Design, Personal & Corporate Tax Preparation and Planning and Small Business Start-ups. For more information, call 928-771-8368 or visit www.AmericanFinancialSecurity.net, 3112 Clearwater Dr., Suite B, Prescott, AZ 86305

 

Filed Under: Columnists Tagged With: Barbara Clark Stevenson, finances, Ronald Stevenson

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