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Personal Residence Issues in Retirement

September 22, 2018

John Jastremski Presents:

 

Personal Residence Issues in Retirement

 

What is it?

As you grow older, housing issues become an integral part of your retirement plans. You may be living on a fixed income and want to get additional cash by borrowing against the equity in your home. You may feel isolated in that big house you bought 30 years ago when your children were young. Perhaps your health isn’t what it used be, and you may desire more convenient access to medical services or may need around-the-clock care. Maybe you want to leave your home to your children and avoid estate taxes if possible. These are just a few of the personal residence issues you may be facing in retirement. It is important to make a timely examination of the primary residence issues in your life. Financial, emotional, and physical considerations will drive your decisions. Careful planning may allow you to enrich the quality of your retirement years, get the health care and services you need, and maximize the financial benefits of homeownership for you and your family.
Getting the most out of your current home

If you are living on a fixed income, you may want to use the equity in your home to obtain additional cash. One way in which you can tap the equity in your home is by obtaining a reverse mortgage. One advantage of a reverse mortgage is that repayment is deferred until a later time. Ahome equity loan or second mortgage may also provide you with cash, but repayment is not deferred. Renting your home may provide you with additional cash flow and tax benefits, andseeking relief from real estate taxes may allow you to lower the expense of maintaining your home.

If you plan to leave your home to your family, you may be able to avoid estate taxes and continue using the home as your principal residence. A qualified personal residence trust allows you to transfer the home to your intended heirs now and retain the right to use the home for a number of years. A gift- or sale-leaseback transaction also involves a current transfer of your home but requires you to rent the home thereafter. If instead you decide to sell the house and move to a more agreeable climate or closer to the grandchildren, you should know that under the current tax laws, you may be able to exclude up to $250,000 ($500,000 for married couples filing jointly) of gain.
Other residence options

You should carefully consider your housing options before pulling up stakes and moving out. There may be advantages to staying where you are and financial products to help you do so. You may also be able to take advantage of in-home care programs if you need in-home healthcare services, household help, or personal care assistance. However, if you decide to move on, you also have choices.

Moving in with (or near) your children often seems the obvious choice, but be aware of your emotional and physical needs before taking over the spare room in your child’s house. If you need independence but don’t want to buy another house, consider an independent living community (retirement community) where you can rent or own a condominium or townhouse. Someone else will mow the lawn and shovel the sidewalk, but you can enjoy the privacy of your own living space. If you are faced with physical or medical limitations, assisted living options may be your best bet. Typical assisted living arrangements provide you with a room or apartment, housekeeping services, meals, transportation, and, in some cases, nursing services. When you need more care, your last resort may be a quality nursing home.
Choosing a continuing care retirement community

Continuing care retirement communities are an increasingly popular assisted living arrangement for retirees. If you are currently in good health, a CCRC will agree to provide you with housing and nursing home care throughout your life. When seeking the CCRC that is right for you, compare entrance fees, monthly fees, additional insurance requirements (if any), and the financial condition of the facility. In addition, check the quality of the facility and medical care provided. Be aware that a portion of your fees may be tax deductible as medical expenses.
Choosing and paying for a nursing home

The prospect of entering a nursing home can be a frightening one. However, there are good facilities that provide care and services not available elsewhere. You must choose carefully. Examine the quality of medical care and the cost of the care. Look at the appearance of the facility and grounds. Find out about safety and security. Ask about recreational activities and staff-to-resident ratios.

There are a number of ways to pay for nursing home care. You may have sufficient savings, or you may have long-term care insurance. Long-term care (LTC) insurance premiums may be tax deductible, and you may be able to exclude LTC insurance reimbursements from income.Government benefits may also pay for a portion of your nursing home costs.

This material was prepared by Broadridge Investor Communication Solutions, Inc., and does not necessarily represent the views of John Jastremski, Jeremy Keating, Erik J Larsen, Frank Esposito, Patrick Ray, Robert Welsch, Michael Reese, Brent Wolf, Andy Starostecki and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.

The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, hewitt.com, resources.hewitt.com,  access.att.com, ING Retirement, AT&T, Qwest, Chevron, Hughes, Northrop Grumman, Raytheon, ExxonMobil, Glaxosmithkline, Merck, Pfizer, Verizon, Bank of America, Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

John Jastremski is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

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6 Steps to Get Out of Debt. By John Jastremski

September 14, 2018

 

 Why not plan to lighten your financial burden?

 

Positive moves to counteract negative cash flow. The financial analysis website nerdwallet.com keeps track of the various debts common to the U.S. household. As of April 2014, they’ve found an average mortgage debt of $154,365. They have also discovered an average household has $7,087 in debt from credit cards, but when the numbers are revised to only look at American households already in debt, the average more than doubles to $15,191. When you add this to the average student loan debt of $33,607, it paints a rather bleak picture.1

Every day, people draw on money they don’t actually have – via credit cards, various loans, home equity lines of credit, and even their 401(k)s. Many of them end up making minimum payments on these high-interest loans – a sure way to stay indebted forever.

If this is your situation, you may be wondering: how do I get out of debt? Here are some ideas.

*Make a budget. “Where does all the money go?” If you are asking that question, here is where you learn the answer. You might find that you’re spending $80 a month on gourmet coffee, or $100 a week on lousy movies. Cable, eating out, buying retail – costs like these can really eat at your finances. Set a budget, and you can stop frivolous expenses and redirect the money you save to pay down debt.

*Get another job.I know, this doesn’t sound like fun. But having more money will aid you to reduce debt more quickly. A family member who isn’t working can work to help reduce a shared family problem.

 

*Sell stuff. The Internet has proven that everything is worth something. Go to eBay, craigslist or some other online marketplace – you’ll be amazed at the market (and the asking prices) for this and that. What people collect, want and buy may surprise you. Don’t be surprised if you have a few hundred dollars – or more – sitting around your house or in your garage. You might be able to pay off a couple of credit cards – or even a loan – with what you sell.

*Ditch the big car payment and drive a cheaper car that gets good MPG. You’ve likely been thinking about saying goodbye to your current car if it gets terrible mileage. Get a car that makes sense instead of a statement. Your wallet will thank you.

 

*Pay off all debts smallest to largest. The benefits are psychological as well as financial. Knock off even a small debt, and you have an accomplishment to build on – encouragement to erase bigger debts. Also, every debt you have incurs its own interest charge. One less debt means one less interest charge you have to pay.

 

*Or, pay off your highest-interest debts first. Take a minute to figure out which of your debts hits you with the highest interest rate. Pay the minimum amounts toward each of your other debts, and apply all the extra money you can toward paying off the debt with the highest interest. This will have a cumulative effect. Your highest-interest debt will become smaller, meaning you will be saving some dollars on interest charges on the balance because the balance is lower. If the balance is lower, you should be able to pay off the debt faster. When you say goodbye to that debt, you can start paying down the debt with the next highest interest, and so on.

 

Keep the real goal in mind. Building wealth, not reducing debt, should be your ultimate objective. Some debt reduction and debt consolidation planners obsess on getting you out of debt, but that is only half the story. Minimizing debt is great, but maximizing wealth is even better.

 

You can plan to build wealth and reduce debt at the same time. If you have a relationship with a financial advisor, you might be able to do it in the same unified process. Why just keep debt at bay when you can leave it behind? Do yourself a favor and talk with a good financial advisor who can show you ways toward financial freedom.

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

1 – nerdwallet.com/blog/credit-card-data/average-credit-card-debt-household/ [5/8/14]`

 

This material was prepared by Peter Montoya Inc, and does not necessarily represent the views of John Jastremski, and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. Please consult your Financial Advisor for further information or call 800-900-5867. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. 


The Retirement Group is not affiliated with nor endorsed by fidelity.com, Northrop Grumman, netbenefits.fidelity.com, resources.hewitt.com, access.att.com, ING Retirement, AT&T, Qwest, Chevron, Hughes,  Raytheon, ExxonMobil, Glaxosmithkline, Merck, Pfizer, Verizon, hewitt.com, Bank of America, Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

John Jastremski is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

Women & Money Paralysis. Not making a move may not be the best move to make. By John Jastremski

September 8, 2018

Women & Money Paralysis

Not making a move may not be the best move to make.  

 

A decision not made may have financial consequences. There is an old belief that women are more cautious about money than men, and whether you believe that or not, both women and men may fall prey to a kind of money paralysis as they age – in which financial indecision is regarded as a form of “safety.”

Retirement seems to heighten this tendency. If you are single, retired, and female, you may be extremely fearful of drawing down your retirement savings too soon; or investing in a way that would mean any kind of risk.

 

This is understandable: if you are over 80, you likely have memories of the Great Depression, and baby boomers have memories of the severe economic downturn of the late 2000s.

 

“Paralysis by analysis,” or simple hesitation, may cost you in the long run. Your retirement may last much longer than you presume it will – perhaps 30 or 40 years – and maintaining your standard of living will undeniably take some growth investing. As much as you may want to stay out of stocks and funds, they offer you a chance to out-earn inflation – a chance you forfeit at your financial peril.

 

Even minor inflation can subtly reduce your purchasing power over time. Of all the risks to quality of life in retirement, this is often the least noticed. Doing nothing about it – or investing in a way that avoids all or nearly all risk – may put you at greater and greater financial disadvantage as your retirement proceeds.

 

Keeping a foot in the stock market – in whatever major or minor way you choose – allows your invested assets the potential to keep pace with or outpace inflation.

Retirement is the time to withdraw retirement assets. Some women (and men) are extremely reluctant to tap into their retirement nest eggs, even when the money has been set aside for years for a specific dream. Even though they have saved or dedicated, say, $20,000 for world travel, when retirement comes they may be skittish about actually using the money for that purpose. Buying a car to replace one that has been driven for 15 years, or remodeling part of the house to make it more livable after 70 or 80 may be viewed as extravagances.

 

We cannot control how long we will live, how much money we will need in the future, or how well the economy will perform next year or ten years on. There comes a point where you must live for today. Pinching pennies in retirement with the idea that the great bulk of your savings is for “someday” can weigh on your psyche. What does your retirement dream amount to if you don’t start living it once you retire?

 

If you fear outliving your money, remember that growth investing offers you the potential to generate a larger retirement fund for yourself. If you seek more retirement income, ask a financial professional about ways to arrange it – there are multiple ways to plan for it, and some that involve little risk to principal.

 

Don’t forget America’s built-in retirement insurance: Social Security. For every year you wait to claim Social Security benefits after your full retirement age (either 66 and 67 for most people) and age 70, your monthly payments grow by 8%. In contrast, if you start taking Social Security before your full retirement age, it will mean less SSI per month than if you had waited.1

 

The 4% rule may provide you with a guideline. For many years, some retirement planners have recommended that a retiree withdraw between 4-4.5% annually from savings. (This percentage is gradually adjusted north for inflation over the years.)2

 

The 4% rule is a worthwhile rule for many retirees, but it is hardly the only yardstick for retirement income withdrawals. At its Squared Away blog, the influential Center for Retirement Research at Boston College notes a study from one of its economists on this topic. It suggests an alternative – termed the RMD strategy – that mimics the Required Minimum Distributions the federal government requires from a traditional IRA after the original IRA owner enters his or her seventies. In this withdrawal strategy, you start withdrawing only 3.1% of your retirement assets at age 65, which climbs to 4.4% at 75 and then 6.8% by 85. (That is just withdrawal off of principal; interest and dividends can be added to that to give you more income.)2

 

Are you wondering just how much money to live on in retirement? Are you also wondering how your retirement savings and income may grow? Talk with a financial professional about your options – you may have many more than you initially assume. A practical outlook on investing and decisions to work longer or claim Social Security later can also potentially help you amass or receive more money for the years ahead.

  

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

1 – forbes.com/sites/nextavenue/2013/08/22/5-cures-for-womens-retirement-spending-paralysis/ [8/22/13]

2 – squaredawayblog.bc.edu/squared-away/retiree-paralysis-can-i-spend-my-money/ [7/11/13]

 

This material was prepared by Peter Montoya Inc, and does not necessarily represent the views of John Jastremski, and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. The publisher is not engaged in rendering legal, accounting or other professional services. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.


The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, hewitt.com, resources.hewitt.com, access.att.com, ING Retirement, AT&T, Qwest, Chevron, Hughes, Northrop Grumman, Raytheon, ExxonMobil, Glaxosmithkline, Merck, Verizon, Bank of America, Pfizer,  Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

John Jastremski is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

Should You Put Your Home Into a Trust? The arguments for & against this estate planning decision by John Jastremski

August 28, 2018

Should You Put Your Home Into a Trust?

The arguments for & against this estate planning decision.

 

                                                                                               

Uncommon, or uncommonly wise? Occasionally, acouple or a family will elect to put their home into a revocable living trust, a charitable remainder trust (CRT) or a qualified personal residence trust (QPRT). There are advantages and disadvantages to doing this.

 

People make this move for a variety of reasons. They may want to save money on probate and reduce estate taxes. They may want a little more protection against “creditors and predators”. They may be looking for a way to gift real property to their adult children. They may want an orderly transfer of such property to a particular heir, free of interfamilial squabbles. By putting a house into a trust, they may accomplish some or all of these objectives.1,2

 

If much of your net worth is linked to the value of your home, you may be considering this. As the federal estate tax exemption is higher than it once was, placing your house into a trust may have slightly less merit today than it once did. There are significant potential benefits, however.

 

Putting your home into a revocable living trust. In this arrangement, the title to your house is transferred to the living trust during your lifetime. Besides being the grantor of the revocable living trust, you may also name yourself trustee and beneficiary. This gives you the power to a) add other real estate to the trust, b) gift or sell the real estate held within it while you are alive, c) unwind the trust and put the real property back in your estate within your lifetime.1,3

 

At your death, the trust becomes irrevocable. Control of the real property is then transferred to a named successor trustee, presumably one of your adult children.1

 

A revocable living trust may spare your home from probate and facilitate the transfer of title to your heirs. There may be some estate tax savings, and if you become incapacitated, another trustee can be chosen to manage the trust.1

Putting your home into an irrevocable living trust. The irrevocable variation offers you similar benefits, but the difference here is that you are giving up control – once you transfer real property into an irrevocable trust, it is out of your taxable estate and no longer yours. An independent third party trustee manages the trust on behalf of its beneficiaries. In this case, the transfer of real property is subject to gift tax because it is defined as a gift to the trust beneficiaries. Crummey withdrawal right letters may help in this regard – if they are sent to the beneficiaries, some of the amount of the gift may be shielded from such tax.4

 

Putting your home into a CRT. A charitable remainder trust is an irrevocable trust that helps an owner of a highly appreciated asset defer capital gains and income taxes and help a qualified charity. You make a gift of the real property to the CRT, which then sells it and arranges recurring income payments to you out of the managed sale proceeds. These payments last either for life or for a 20-year period. After you or your surviving spouse die, the charity receives the remainder of those sale proceeds.4,5

 

By donating real estate to a charity via a CRT, you accomplish four things: you take the real property out of your taxable estate, you get an income stream, you avoid recognition of capital gains on what is presumably a highly appreciated asset, and you can take an immediate income tax charitable deduction based on a portion of the property’s value.5

 

At first glance, it may seem like the charity is the “winner” here – not your heirs. To counter that, life insurance policies are frequently used. Trust assets may be used to purchase “cash value” life insurance, so that your heirs may one day receive tax-free insurance proceeds of equivalent or greater value than the donated asset.4,5

 

Putting your home into a QPRT. Qualified personal residence trusts allow you to gift your home to your children while you retain control of it for the term of the trust (typically 10 years). If your home seems poised to rise in value, the QPRT may lead to major estate and gift tax savings – it helps you transfer the home out of your taxable estate, thereby reducing its size. The value of the gift is the fair market value of the home minus “retained interest” (i.e., your right to keep living in it for X number of years, the value of which is derived from IRS calculations).2,6,7

You have to outlive the term of the QPRT and then either a) move out of your house or b) pay your heirs fair market rent to keep living in it. If that doesn’t happen, the trust will be rendered invalid and when you die, the full market value of your home will be counted in your taxable estate. QPRTs were introduced in 1990, when the federal estate tax exemption was only $600,000. As it is currently above $5 million, some estate planners feel these trusts are less necessary today.2,6,8

A last word. Even simple trusts invite complexity into your financial life. You must weigh whether the cost of trust creation and administration will be worth it. After you pass, the trust has to file tax returns and value assets, and the resulting expenses may compare to the money saved by keeping the home out of probate. A transfer-on-death deed (permitted in some states) or other estate planning tools may help you realize your goals more cheaply.

 

 

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

1 – homeguides.sfgate.com/advantages-disadvantages-putting-house-trust-42083.html [8/6/13]

2 – money.cnn.com/magazines/moneymag/money101/lesson21/index6.htm [8/6/13]

3 – nolo.com/legal-encyclopedia/free-books/avoid-probate-book/chapter7-7.html [8/6/13]

4 – homeguides.sfgate.com/tax-advantages-creating-trust-real-estate-82243.html [8/6/13]

5 – bnaibrith.org/charitable-remainder-trust-crt.html [8/6/13]

6 – tinyurl.com/ktl8zlj [7/10/13]

7 – foxbusiness.com/personal-finance/2013/07/26/shielding-your-assets-from-estate-taxes/ [7/26/13]

8 – irs.gov/pub/irs-soi/89-90estxs.pdf [1990]

This material was prepared by Peter Montoya Inc, and does not necessarily represent the views of John Jastremski, and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.


The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, hewitt.com, resources.hewitt.com, access.att.com, ING Retirement, Qwest, Chevron, Hughes, Northrop Grumman, Raytheon, Merck, Pfizer, Glaxosmithkline, ExxonMobil, Verizon, Bank of America, AT&T, Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

John Jastremski is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

 

 

 

Taking Taxes Into Account When Saving & Investing by John Jastremski

August 21, 2018

Taking Taxes Into Account When Saving & Investing

It isn’t always top of mind, but it should be.

 

How many of us save and invest with an eye on tax implications? Not that many of us, according to a recent survey from Russell Investments (the global asset manager overseeing the Russell 2000). In the opening quarter of 2014, Russell polled financial services professionals and asked them how many of their clients had inquired about tax-sensitive investment strategies. Just 35% of the polled financial professionals reported clients wanting information about them, and just 18% said their clients proactively wanted to discuss the matter.1

Good financial professionals aren’t shy about bringing this up, of course. In the Russell survey, 75% of respondents said that they made tax-managed investments available to their clients.1

When is the ideal time to address tax matters? The end of a year can prompt many investors to think about tax issues. Investors’ biggest concerns may include any sudden changes to tax law. Congress often saves such changes for the eleventh hour. Sometimes they present opportunities, other times unwelcome surprises.

The problem is that your time frame can be pretty short once December rolls around. You can’t always pull off that year-end charitable donation, gift of appreciated securities, or extra retirement plan contribution; sometimes your financial situation or sheer logistics get in the way. It is better to think about these things in July or January, or simply year-round.

   

While thinking about the tax implications of your investments year-round may seem like a chore, it may save you some money. Your financial services professional can help you stay aware of the tax ramifications of certain financial moves.

Think about taxes as you contribute to your retirement accounts. Do you contribute to a qualified retirement plan at work? In doing so, you can lower your taxable income (and your yearly tax liability). Why? Those contributions are made with pre-tax dollars. In 2014, you can contribute up to $17,500 to a 401(k) or 403(b) account or the federal government’s Thrift Savings Plan. If you are 50 or older this year, you can put in up to $23,000 into these accounts. The same is true for most 457 plans. This can reduce your taxable income and lower your tax bill.2,4

Think about where you want to live when you retire. Certain states have high personal income tax rates affecting wealthy households, and others don’t levy state income tax at all. If you are wealthy and want to retire in a state with higher rates, a Roth IRA may start to look pretty good versus a traditional IRA. Withdrawals from a Roth IRA aren’t taxed (assuming the Roth IRA owner follows IRS rules), because contributions to a Roth are made with after-tax dollars. Distributions you take from a traditional IRA in retirement will be taxed.2

What capital gains tax rate will you face on a particular investment? In 2013, the long-term capital gains tax rate became 20% for high earners, up from 15%. On top of that, the Affordable Care Act Surtax of 3.8% effectively took the long-term capital gains tax rate to 23.8% for investors earning more than $200,000.2,3

Greater capital gains taxes can actually be levied in some cases. Take the case of real estate depreciation. If you sell real property that you have depreciated, part of your gain will be taxed at 25%. The long-term capital gains tax rate for collectibles is 28%. Own any qualified small business stock? If you have owned it for over five years, you typically can exclude 50% of any gains from income, but the other 50% will be taxed at 28%. Lastly, if you sell an asset you’ve held for less than a year, the money you realize from that sale will be taxed at the short-term rate (i.e., regular income), which could be as high as 39.6%.2,3

Are you deducting all you can? The mortgage interest deduction is not always noticed by taxpayers. If a home loan exceeds $1.1 million, interest above that amount may not qualify for a deduction. Itemizing can be a pain, but may bring you more tax savings than you anticipate.2

A tax-sensitive investing approach is always specific to the individual. Therefore, any strategy needs to start with an in-depth discussion with your tax or financial professional.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 – russell.com/us/newsroom/press-releases/2014/russell-survey-advisors-say-tax-aware-investment-strategies-not-top-of-mind.page? [4/29/14]

2 – foxbusiness.com/personal-finance/2014/08/07/investments-and-tax-planning-go-hand-in-hand/ [8/7/14]

3 – bankrate.com/finance/money-guides/capital-gains-tax-rates-1.aspx [3/27/14]

4 – irs.gov/uac/IRS-Announces-2014-Pension-Plan-Limitations;-Taxpayers-May-Contribute-up-to-$17,500-to-their-401%28k%29-plans-in-2014 [11/4/13]

The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, Merck, Pfizer, Verizon, hewitt.com, resources.hewitt.com, access.att.com, ING Retirement, AT&T, Qwest, Chevron, Hughes, Northrop Grumman, Raytheon, ExxonMobil, Glaxosmithkline,Bank of America, Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

This material was prepared by Peter Montoya Inc, and does not necessarily represent the views of John Jastremski, and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.

John Jastremski is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

 

 

Buying Short-Term Health Insurance

August 13, 2018

John Jastremski Presents:

 

Buying Short-Term Health Insurance

 

Should you care about a temporary gap in your health insurance coverage, even if you and your family are healthy? If you really think about it, any lapse in your health insurance could be devastating. Accidents–a fall off the ladder, a trip down the stairs–occur every day. Hospitals are filled with people who never expected to be there, and medical expenses paid entirely out of pocket can drain your family’s finances.
Who needs a short-term health insurance policy?

A gap in your health insurance can pop up for many reasons:

  • You changed jobs, and your new insurance doesn’t become effective immediately
  • You would like an alternative to expensive COBRA benefits
  • You’re between jobs and don’t know when you’ll work next
  • You just graduated from college and are no longer covered under your parents’ plan or student policy
  • You lost coverage because of a divorce
  • You’re a seasonal employee
  • You’re an early retiree who is not yet eligible for Medicare
  • You’re planning a trip overseas, and your current policy does not cover expenses outside the United States

How does a short-term health insurance policy work?

Coverage periods range from 1 to 6 months. When the coverage period ends, the insurance stops. Some companies will allow you to renew your policy for a total of 12 months. If you still need coverage after that, you will have to go through the application process again and take out a new policy. There may even be a waiting period, such as 6 months, before you can reapply. If you had any illnesses or injuries during your previous policy’s period, those now become pre-existing conditions, and you may not be eligible for new coverage.

Benefits vary depending on the policy you purchase, but they usually include:

  • Doctor visits
  • Diagnostic tests
  • Hospital charges
  • Complications from a pregnancy (but not pregnancy itself)

These policies are intended to cover unexpected illnesses and accidents–they’re not designed to meet your permanent health insurance needs. They will not pay for preventive care, such as routine physical exams and well-child care. Short-term health insurance policies are generally not for individuals with pre-existing conditions diagnosed or treated within the last five years.

If you have ever been denied health insurance, you probably won’t be eligible for short-term insurance, because a denial indicates that you probably have health problems. Maternity costs are not covered, and most policies will not insure you if any of your dependents are pregnant, whether they are applying for coverage or not. Additional strict eligibility requirements vary from insurer to insurer.

In many cases, coverage is issued within 24 hours because all you have to do is answer a few basic yes/no questions, and physical exams are usually not required.
How much does the insurance pay?

Deductibles generally range from $200 to $2,500. After you pay the deductible, the policy pays a coinsurance, such as 50 percent or 80 percent. Some policies pay the coinsurance on expenses up to $5,000 or $10,000, then pay 100 percent of covered expenses. For example, if you have a policy with a $500 deductible, 80 percent co-payment for the first $5,000, and 100 percent thereafter, your out-of-pocket expenses for a $25,000 medical bill would be:

Deductible $500
20% of next $5,000 $1,000
Total $1,500

How much does it cost?

You can buy a policy for you and any dependents between the ages of 15 days and 65 years. Premiums vary depending on the coverage you select and your age.

When comparing policies, make sure that you understand your potential out-of-pocket costs. Some policies require you to pay the deductible each time you are treated for a new injury or illness. For other policies, the deductible applies to the life of the policy.

Ask for the policy’s definition of covered expenses. Some policies base their coinsurance on what they consider usual and customary charges. These are amounts charged for the same service by doctors within your area as determined by the insurance company. If your doctor charges more, your out-of-pocket expenses could be higher than expected.

Other benefits to look for:

  • Deductible and emergency room co-payment waived if you are in an accident
  • Continuation of coverage if you are in a hospital on the last day of your policy’s term
  • Refund of unused premium
  • Lifetime benefits of $1 million or more
  • Worldwide coverage if you are traveling out of the United States

To reduce costs, choose a policy with a higher deductible. Consider 50/50 coverage instead of 80/20. However, make sure that you can reasonably afford the higher out-of-pocket expenses without ruining your financial plans in the event of catastrophic claims. Ask about a discount if you pay the premium in a single payment rather than in monthly installments. Try to buy insurance for the term you need. But don’t cut yourself short–remember, these are nonrenewable policies. If you have to reapply for a new policy, you might not be able to get it.

This material was prepared by Broadridge Investor Communication Solutions, Inc., and does not necessarily represent the views of John Jastremski, Jeremy Keating, Erik J Larsen, Frank Esposito, Patrick Ray, Robert Welsch, Michael Reese, Brent Wolf, Andy Starostecki and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.

The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, hewitt.com, resources.hewitt.com,  access.att.com, ING Retirement, AT&T, Qwest, Chevron, Hughes, Northrop Grumman, Raytheon, ExxonMobil, Glaxosmithkline, Merck, Pfizer, Verizon, Bank of America, Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

John Jastremski is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

Starting or Buying a Business

August 6, 2018

John Jastremski Presents:

 

Starting or Buying a Business

Each option involves some element of risk and reward. Whichever option you choose, however, owning your own business offers a chance at more freedom and greater financial rewards. So, you’re thinking of going into business for yourself. You have several options available, and all involve some degree of risk. Do you want to create a start-up operation? Perhaps you are planning on buying an existing business. Or, you may be considering the purchase of a franchise operation.
Start-ups

If you are planning on building your business from the ground up, you are taking a bigger risk than if you were buying an existing business or a franchise. Existing businesses and franchises have some operating history that you can use to gauge the likelihood of the success of the business. By comparison, with a start-up business, you naturally think that you will succeed, but there are fewer guarantees.

Most successful start-ups don’t actually begin with a new, innovative product. Instead, they begin with a proven product or service (start-up owners often open competing businesses in areas in which they are familiar) and become innovative after the new venture has generated some level of profit and success.

Because your start-up has no previous track record (even if you have had success in your field), you will first need to raise enough financing to make a go of it. Banks or investors will want to see a plan of attack before they will approve a loan for your start-up. Therefore, your first step should be to create a strong business plan.
The business plan

A well-developed business plan serves several useful purposes. It helps to organize thoughts and ideas about how the business should be developed. It also creates a plan of attack that will help you stay focused. And, it will assist you in getting financing. There are several important elements to a well-prepared plan:

  • Strong introduction: The cover page, executive summary (essentially an overview of the plan), and table of contents will be the first elements that potential financiers or investors will see. If these aren’t strong, potential financiers may not take you seriously enough to get to the heart of your plan.
  • Business description: Whether you are using the business plan to get financing or create a focus of how your business should be run, you need to present a clear vision of what your business will be. The description should include how you want your business to be positioned in your industry, what will make your business unique, the products or services that you will provide, and how you plan on pricing within the industry. Do you want to be the low-cost provider, or the high-end specialist?
  • Market positioning: If you want to attract investors to your business, you need to convince them that a need in the marketplace exists for what you are proposing. This section needs to include details on the size of the potential market for your business, how your business can benefit through sales inside the market, and how you plan on succeeding against your competitors.
  • Financial objectives: This is perhaps the most important part of your business plan. Here, you need to convince your potential backers or lenders that your business will make a sound investment. You’ll want to show that you have evaluated the attendant risks and rewards of your proposed business. You’ll also need to project cash needs and expected income, and present a cash flow statement.
  • Other areas: A good business plan will also cover in some detail your marketing plan, a discussion of how you plan on developing products to bring to market (if the business is a manufacturing concern), and so on.

Buying an existing business

The obvious advantage to buying an existing business is that it has a proven track record of success. But that doesn’t mean that there are no possible pitfalls that you should avoid.

Perhaps the greatest problem in buying an existing business is that you might not acquire the expertise and services of the existing owners, who have often accumulated goodwill with their customers or clients. However, when a business is bought, it is not unusual for the previous owners to stay on for a period of time to assist with the transition and to make introductions to clients in an attempt to transfer some of that goodwill.

Consult qualified professionals to properly evaluate the information that the owners of the existing business may provide you. Also, make sure that the reasons why the business is on the market are true. Is the owner really planning on retiring to Florida, or is he or she just trying to escape the crushing debt that the business has accumulated over the last few years?

Also, keep in mind that you may be taking on a heavy load of debt in acquiring the business. A business that is marginally profitable may not be able to both pay off the debt service on the loan and pay you a living wage.
Franchises

When you buy a franchise, you also buy marketing support, business strategy, name recognition, and assistance with site location (if it’s a retail operation), among other things.

However, you also give up some things. You will never have the final say in all decisions, because franchisors typically retain rights to ensure that your business is run their way. Also, you won’t be entitled to all of the profits of your business, because franchisors typically take a percentage as part of their fees. Finally, you may be limited in your decision-making processes (e.g., some franchisors require you to buy materials from their suppliers).

If you are thinking of purchasing a franchise, it is very important to thoroughly investigate the company. Remember, you are doing more than just purchasing a name–the franchisor is going to be your business partner. Make sure that he or she doesn’t want only your money and then move on to the next potential buyer.

Franchisors are required to disclose lots of information to potential franchisees. Do your homework. Talk not only to successful franchisees but also to ones who have failed. If several former franchisees tell you that the company didn’t fulfill the promises of the franchise agreement, beware.

Make sure every representation is made to you in writing before you purchase. Take notes of everything said to you, and have the franchisor sign off on them. That way, you will have a record of what was represented to you if things go wrong.

This material was prepared by Broadridge Investor Communication Solutions, Inc., and does not necessarily represent the views of John Jastremski, Jeremy Keating, Erik J Larsen, Frank Esposito, Patrick Ray, Robert Welsch, Michael Reese, Brent Wolf, Andy Starostecki and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.

The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, hewitt.com, resources.hewitt.com,  access.att.com, ING Retirement, AT&T, Qwest, Chevron, Hughes, Northrop Grumman, Raytheon, ExxonMobil, Glaxosmithkline, Merck, Pfizer, Verizon, Bank of America, Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

John Jastremski is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.