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NEWS & INSIGHTS

Financial To Do List for 2025

 

December 2024

  1. Sign up for Client Access and get a $25 fee credit when you elect paperless delivery. Also view all your account information online or on the Raymond James client access mobile app. (Clients can install the app from the Apple App Store for iPhone users, or the Google Play Store for Android users.

  2. Review the beneficiaries on your retirement account(s) to make sure they are up to date.

  3. Add a TOD (transfer on death) to your investment account(s).

  4. Set up an ACH on your accounts to streamline disbursing or receiving funds.

  5. Consider consolidating old retirement accounts (i.e. 401k plan)

  6. Set up a trust and get your estate planning in order (i.e. revocable trust, simple will, advanced healthcare directive, power of attorney)

  7. Understand you budget for 2025!

 

Please contact us if you need any help on any of the above.

 

Merry Christmas and Happy New Year!

Strategizing for Effective Charitable Giving

 

By John Jennings for Forbes

November 2024

 

Americans are generous. They gave $471 billion to charity in 2020, nearly 80% by individuals (and the remainder from corporations and foundations).

 

Why do we give to charity?

While the reasons vary by individual, the top ones are:

  • A reaction to personal experience. Examples are giving to an alma mater, a place of worship, or a cause that has affected themselves, a family member, or a friend.

  • A need to make a difference, do something about a problem, or take a stand on an issue. For instance, to respond to a catastrophic local or global event like the Ukrainian refugee crisis.

  • The motivation to receive recognition and benefits. There is a wide spectrum of psychological and emotional needs to be recognized, from a simple “thank you” to having your name on a building. Giving also signals virtue.

  • A desire to strengthen bonds with a community. This includes giving that is based on personal relationships or returning a favor.

  • The belief that giving is good to do. Some people believe in the value of giving itself. They may also feel a spiritual or moral obligation.

All these reasons have a common foundation: we give because it makes us feel good. Research has found that giving to charity increases happiness and an overall sense of well-being for the giver. Some studies have found that giving money to benefit others increases the giver’s happiness more than spending money on themselves. It just feels good to give.

 

Beware of Unorganized and Reactive Giving

Yet not all charitable giving is created equal. It’s been found that charitable giving that is strategic and planned is more satisfying for the donor than reactive or unorganized giving.

How to Be a More Effective Giver

How can we be more strategic and effective with our giving so we feel better about it?

 

Adopt a Top-Down Strategy

Start by defining your top-down strategy, how much you want to give to charity each year, and roughly which charities or causes you will support. For example, you may decide that you want to donate about $40,000 and that you’d like 25% to go towards education, 40% to environmental causes, 15% to support the arts, and 20% to various charities that you’ll decide about as the case arises (or solicitations arrive in the mail).

As you formulate your strategy, think about your values and passions and how your giving can further them. Which problems do you want to help solve?

Select Charitable Organizations

Once you’ve decided how much you’d like to give and how you want to allocate it, you next need to select some charities.

First, review the charities to which you usually give. Are there any that aren’t solving problems you care about? Are you giving to some because you’ve given in the past? It’s okay to stop giving to charities that you don’t connect with strategically or emotionally. And don’t feel bad about not giving to organizations that solicit you.

There are several ways to find charitable organizations that line up with your top-down strategy:

  • Use a charity recommender service like Giving Compass, Charity Navigator, Charity Watch, or Give Well. These organizations have large, searchable databases of charitable organizations in many fields.

  • Ask your local community foundation for assistance. They will have insight into charities that are doing effective work in the areas you want to contribute.

  • Find another donor, such as a foundation with expertise in an area, and give in parallel to them or just to them.

  • Make a site visit to a charity to learn more about them and help you decide whether you want to give to them. For those in Southern California check out Operation Help a Hero from Camp Pendleton (Check back after Nov. 25th for more specifics) Also, Operation Christmas Child, Salvation Army

 

Monitor Your Giving

Third, monitor and evaluate your giving. A key to feeling good about your giving is knowing if it’s effective.

  • Periodically set aside time to review charities to which you give. Look at their websites which often detail the projects they undertake. Many charity websites have a blog or an area for news.

  • Many charities produce an annual impact report detailing how effectively they are addressing their core mission. Make sure you are on the list to receive these reports from your charities.

  • Galas and other events hosted by a charity can provide valuable information about the organization’s achievements and deepen your mutual relationship.

  • For your most important charitable relationships, periodic meetings to learn about their good works provide great insight into the organization and the impact your charitable dollars make.

  • The tax returns of every charity are open to public inspection and can be found through the website Guidestar. A charity’s tax return provides valuable information about its financial health and where and how it spends its money.

 

How much charitable giving is tax deductible?

Generally, charitable cash contributions you can deduct from your taxes are limited to up to 60% of your adjusted gross income (AGI).

 

Can RMD be donated?

Yes, money from an individual retirement account (IRA) can be donated to charity. What’s more, if you've reached the age where you need to take required minimum distributions (RMDs) from your traditional IRAs, you can avoid paying taxes on the money by donating it to charity. (We will help you coordinate this.)

 

What qualifies as charitable giving?

Giving money or property, such as clothes, household items, or even a vehicle, to a qualified 501(c)3 nonprofit is considered charitable giving. A charity must have a 501(c) status if you want to deduct your donations from your federal taxes.

Charitable giving is personal — there is no one right way to do it. The most important things are that you feel good about your giving and you are making a difference in the world.

 

Material prepared by Forbes, an independent third-party.

Raymond James is not affiliated with and does not endorse the opinions or services of John Jennings or Forbes.  The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of John Jennings and not necessarily those of Raymond James.

Make the most of Medicare's open enrollment period

October 2024

 

With open enrollment season upon us, ask yourself a few questions to make sure you're getting the most from Medicare.

 

Medicare’s open enrollment season is upon us. Between October 15 and December 7, you are able to make changes to your Medicare Advantage plan and prescription drug coverage.

During this time, you can change from Original Medicare to a Medicare Advantage plan or vice versa, or switch from one Medicare Advantage plan to another Medicare Advantage plan. You can also join a Medicare Advantage or Medicare prescription drug plan for the first time or drop your drug coverage completely.

Even if you’re satisfied with your current plan, open enrollment presents a great opportunity to make sure you’re getting the most out of Medicare. Every year you should compare your current plan to other plans in your area in case another plan offers better health and/or drug coverage at more affordable prices.

The coverage provided by insurance companies often changes each year. You could wind up paying more out of pocket on healthcare expenses throughout the year.

Here are some tips to help you get started:

  • Ask yourself: Have my needs changed? Is my current coverage adequate? Will the cost of my current plan be going up? Are there comparable, lower cost plans available?

  • Review the annual notice of change from your current plan provider. You should receive this in September.

  • If you have a Medicare Advantage plan, make sure your doctor is still accepting your plan next year. If your doctor is out of network, you will have to choose a new plan or pay higher out-of-pocket costs.

  • Carefully review your plan for prescription drug coverage and determine your copayment and coinsurance costs.

  • If you switch from a Medicare Advantage plan to Original Medicare, you will want to join a standalone Part D plan to get Medicare drug coverage.

  • Compare plans using the Medicare Plan Finder at medicare.gov.

  • Get one-on-one assistance from the State Health Insurance Assistance Program.

  • Call the Medicare Rights Center at 800.333.4114 for free counseling.

  • All changes to your Medicare plan will take effect on January 1 following the enrollment period.

 

Medicare decisions can be complicated. If you have any questions about open enrollment, or if you’d like to discuss how healthcare costs factor into your overall financial plan, please contact your financial advisor.

How Are Social Security Spousal Benefits Calculated?

 

By Claire Boyte-White (Investopedia)

September 2024

 

If you’re eligible for Social Security spousal benefits, how much you’ll receive depends on a number of factors, including your age, the amount of your spouse’s benefit, and whether you have other retirement benefits available to you.

 

Who’s eligible? Anyone whose spouse, ex-spouse, or deceased spouse was or is eligible for benefits, once you have reached the age of eligibility, is eligible.

 

The maximum spousal benefit you can receive is 50% of your spouse’s benefit at their full retirement age. The precise amount you’ll get and when you’ll get it depend on several circumstances, including your spouse’s age and past income, your age and past income, and more.

 

That leaves some room for you to maximize the amount you receive. And if that amount is less than what you would get based on your own past income, you’ll automatically get the higher amount.

 

Key Takeaways

  • The maximum spousal benefit is 50% of the other spouse’s full benefit.

  • You may be eligible if you’re married, divorced, or widowed.

  • You can collect spousal benefits as early as age 62, but in most cases, the benefits are permanently reduced if you start collecting before your full retirement age.

  • If your past income earns a higher benefit, you’ll receive that rather than the spousal benefit.

 

Who Qualifies for Social Security Spousal Benefits?

 

If your spouse has filed for Social Security benefits, you can also collect benefits based on the spouse’s work record, if:

  • You are at least 62 years old.

  • Regardless of your age, you care for a child who is entitled to receive benefits on your spouse’s record, and who is under age 16—or a child who receives Social Security disability benefits. (Note: Even if you make a claim before you reach your full retirement age, your spousal benefits will not be reduced if you’re caring for a child who qualifies under the age or disability rules.)

 

When you apply for spousal benefits, you’ll also be applying for benefits based on your own work history. If you’re eligible for benefits based on your earnings, and that benefit amount is higher than your spousal benefit, that’s what you’ll get. If it’s lower, you’ll get “a combination of the two benefits that equals the higher amount,” according to the Social Security Administration (SSA).

 

How Spousal Benefits Are Calculated

 

Spousal benefits are based on how much the other spouse would receive if that person began collecting Social Security benefits at the full retirement age. It increases gradually from age 66 to 67. For those born in and before 1942, it’s 65. For those born in the years 1943 to 1959, it’s age 66. For those born in 1960 and after, it’s 67.

 

No matter when your spouse actually retires, or if your spouse dies, that person’s full benefit amount is relevant to you in calculating your spousal benefit entitlement.

 

The SSA has an online calculator that shows you the effects of early retirement—that is, the percentage of your spouse’s benefits you will receive, based on your age when you apply.

 

The short answer to the calculation is this: You’re eligible for half of your spouse’s benefit amount as long as you wait until your full retirement age to apply. The earlier you file, the less you’ll get.

 

Claiming Early or Late

The amount you receive will depend on when you begin to claim benefits. You can claim spousal benefits as early as age 62, but you won’t receive as much as if you had waited until your own full retirement age. For example, if your full retirement age is 67 and you choose to claim spousal benefits at 62, you’d receive a benefit equal to 34.6% of your spouse’s full benefit amount.

 

The amount you receive increases with each year you delay. At your full retirement age (age 67 in this example), you’d be eligible for the maximum, which is 50% of your spouse’s full benefit. So there is no incentive to file for spousal benefits later than your own full retirement age.

 

If You’re Receiving Other Retirement Benefits

The calculation gets a bit more complicated if you are eligible to receive benefits from a government pension or foreign employer not covered by Social Security. In that case, you may still be eligible, but the amount will be reduced.

 

For example, if you have a government pension for which Social Security taxes are not withheld, the amount of your spousal benefit is reduced by two-thirds of the amount of your pension. This is known as a government pension offset.

 

For example, suppose you are eligible to receive $800 in Social Security spousal benefits and you also get a $300 pension each month from a government employer that didn’t withhold Social Security taxes. Your Social Security payment is reduced by two-thirds of $300, or $200, making your total benefit amount from all sources $900 per month ([$800 - $200] + $300).

For more information on your personal social security benefits go to The United States Social Security Administration | SSA.

Raymond James is not affiliated with Claire Boyte-White or Investopedia.

4 ways to make the most of leftover 529 college savings account money

By Isabel Engel,CNBC 

Published August 22, 2024

 

Families looking to reallocate unused 529 college saving plans funds can roll over money to a Roth individual retirement account in the beneficiary's name.

Other ways to put leftover 529 savings funds to use include changing the beneficiary and paying off student loans.

As families try to offset the increasing cost of college education, many have turned to 529 college savings plans as a strategy.

These accounts let families set aside money toward college expenses while taking advantage of tax breaks and compound interest.

If investing starts at the child's birth, it may result in 18 years of growth which could be enough to outpace inflation of the price of college.

Families have invested $441 billion in such accounts as of the end of 2023, according to Morningstar, a 16% increase from 2022. When it comes to paying for college, 35% of families used 529 funds in 2024, according to Sallie Mae. For the average family, that money covered 9% of the cost of attendance.

But what happens if you have leftover 529 funds?

Education choices can also result in a surplus. Figures show fewer students are earning bachelor's degrees, while more are earning certificates due to growth of vocational programs.

Unused money does not have to stay in the 529 college savings account.

Here are four ways to make the most of it:

1. Roll funds into a Roth IRA

Thanks to Secure Act 2.0, savers now have the ability to roll money from a 529 plan to a Roth individual retirement account, free of penalties or income tax. The measure, which took effect this year, gives Americans more flexibility with their 529 accounts.

This option has limitations, however.

To qualify for a transfer to a Roth IRA, the 529 account must have been open for 15 years. Plus, there is a lifetime cap on 529-to-Roth rollovers of $35,000.

Depending on how much money you want to transfer, it may be a multiyear project. The conversion counts toward your annual IRA contribution limit. For 2024, that is $7,000 for investors under age 50.

2. Change the beneficiary

If you feel certain the original beneficiary of the 529 plans will not need the leftover funds, say, for grad school, it is possible to change the account beneficiary to another "qualified family member." That might include a sibling or step-sibling or parent, among other relatives, according to the IRS.

Changing a 529's beneficiary does not trigger withdrawal fees or any tax penalty.

3. Pay off student loans

Another way to use leftover 529 funds is to pay off student loans, Cherry said. Under the Secure Act of 2019, savers can use funds for this purpose: up to $10,000 per year for each plan beneficiary, as well as for each of the beneficiary's siblings.

4. Withdraw the money outright

Your contributions can be withdrawn tax- and penalty-free, while any earnings not used for qualified expenses may be subject to income tax and a 10% penalty. An exception: If your child receives scholarships, you can withdraw up to the amount of that scholarship for nonqualified expenses without penalty.

This allows families to have immediate access to the money, rather than redirecting it to another account or putting it toward a qualified education expense.

Raymond James is not affiliated with nor endorses the opinions or services of Isabel Engel or CNBC. This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Neither Raymond James Financial Services nor any Raymond James Financial Advisor renders advice on tax or legal issues, these matters should be discussed with the appropriate professional.

 

Earnings in 529 plans are not subject to federal tax, and in most cases, state tax, so long as you use withdrawals for eligible education expenses, such as tuition and room and board. However, if you withdraw money from a 529 plan and do not use it on an eligible education expense, you generally will be subject to income tax and an additional 10% federal tax penalty on earnings.  As with other investments, there are generally fees and expenses associated with participation in a 529 plan. There is also a risk that these plans may lose money or not perform well enough to cover college costs as anticipated. Most states offer their own 529 programs, which may provide advantages and benefits exclusively for their residents. Investors should consider, before investing, whether the investors or the designated beneficiary’s home state offers any tax or other benefits that are only available for investment in such state’s 529 college savings plan. Such benefits include financial aid, scholarship funds, and protection from creditors. The tax implications can vary significantly from state to state. As a result of the SECURE ACT 2.0, unused funds in a 529 account can be rolled over to a ROTH IRA for the beneficiary. The 529 account must have been open for a minimum of 15 years and contributions made to the 529 plan in the last five years, including the associated earnings, are ineligible for a tax-free transfer. Rollovers to a ROTH IRA are subject to the standard annual ROTH IRA contribution limits.

Affordable Weekend Getaways in California

BY REBECCA T. 

July 2024

 

Whether you decide to get back in touch with nature or head to a buzzing city, these are the state's best affordable weekend trips.

If there’s one thing everyone loves, it’s a weekend getaway to a new destination—make that an inexpensive trip, and it’s tough to resist. Though California has a reputation for being an expensive place, going off the beaten path in the state leads you to affordable hidden gems you’ll wish you’d discovered sooner. From rustic retreats by white sandy beaches to swanky suites in underrated small towns, California is brimming with stellar affordable weekend getaway options from north to south. 

With so many options to choose from, finding the perfect spot for an inexpensive weekend getaway can become overwhelming. Whether you decide to get back in touch with nature or head to a buzzing city for some good old-fashioned sightseeing, these are the best affordable weekend trips in the Golden State.

AFFORDABLE WEEKEND GETAWAYS IN SOUTHERN CALIFORNIA

 

Catalina Island

Right off the coast of Orange County, you’ll find the charming Catalina Island. A short ferry ride will get you to this port town that feels like it was plucked straight out of the Mediterranean and dropped in SoCal. Experience the historic Avalon on the east end of the island, or head west to Two Harbors for a more rustic and remote adventure. Can’t choose one or the other? An inexpensive long weekend getaway to Catalina will help ensure you don’t leave any stone unturned. 

Hike to the top of the cliffs, enjoy views of the coast, explore some of the best snorkeling spots in California, watch for marine life, and wrap up your day at one of Catalina’s many amazing coastal campsites. Whatever your interests are, you’ll enjoy an affordable weekend getaway in Catalina without breaking the bank.

La Jolla

Think California dreaming in La Jolla is too big for your budget? You might be surprised to learn that this upscale beach town in San Diego is a totally doable destination for an affordable weekend getaway in Southern California. Strolls through Torrey Pines State Natural Reserve, sunsets spent at La Jolla Cove, and picnics at Ellen Browning Scripps Park—a getaway to La Jolla promises a sun-kissed SoCal adventure like no other. 

If you’re looking to add an adventurous twist to your inexpensive weekend getaway, sign up for a one-of-a-kind outdoor Airbnb experience such as kayaking in La Jolla Bay. You’ll discover sea caves and a thriving ecosystem while creating memories you’ll remember forever.

INEXPENSIVE WEEKEND GETAWAYS IN NORTHERN CALIFORNIA

 

Mount Shasta

An affordable weekend getaway in Mount Shasta offers laid-back hippie vibes in unbelievably scenic surroundings. The namesake 11,000-foot-tall mountain will serve as a majestic backdrop to any adventure you embark on in the northernmost area of the Golden State. Visit the nearby Lake Siskiyou, hike through Shasta-Trinity National Forest, and unwind at Mount Shasta City Park. 

Visiting during the winter? Ski down the snow-covered slopes for a thrilling daytime adventure you won’t get enough of. If you do get bored of exploring the outdoors (which is highly unlikely), you can tour the many art galleries and museums nearby and stop for a quick bite at one of the city’s local eateries for gourmet dining.

Sacramento  

The state capital of Sacramento is a perfect destination for an affordable weekend getaway in California. Whatever type of traveler you are, a trip to Sacramento will likely exceed your expectations—there’s no shortage of must-see sights and things to do

Visit on the second Saturday of the month to enjoy the free Art Walk and discover local artists’ works. After getting your art and culture fix, head to Folsom Lake or Capitol Park for some outdoor relaxation. Other free attractions to check out in Sacramento on your inexpensive weekend getaway are Effie Yeaw Nature Center, Verge Center for the Arts, and the California State Capitol Museum.


INEXPENSIVE ROMANTIC GETAWAYS FOR COUPLES

Big Sur

Spanning 90 miles, this rugged and mountainous landscape along the Central Coast is the perfect inexpensive romantic getaway destination for couples who love outdoor adventure—Big Sur is filled with state parks, natural preserves, beaches, and forests. A long weekend in Big Sur offers an array of outdoor activities like no other. Hike the top-rated trails, watch for unique wildlife, and spend the night at some of the best camping destinations in California for an affordable couples’ getaway you’ll never forget. 

 

Napa Valley

Home to lush forests, sprawling vineyards, and many beautiful natural landmarks, the Napa Valley is an affordable romantic getaway in California that’ll make sparks fly. Just a short drive away from San Francisco will expose you to incredible hotels, sweeping views, delicious eateries, and an array of outdoor activities to choose from. 

Bike around the vineyards and through the serene streets, trek enchanting hiking trails, tour the local art galleries, and explore the local food scene for an inexpensive romantic getaway that’ll feel like a million bucks. Looking to take your affordable weekend trip up a notch? Golden Haven in Calistoga specializes in couple’s spa treatments and offers a wide range of relaxing activities that’ll have you feeling rejuvenated and refreshed.


AFFORDABLE WEEKEND TRIPS FOR FAMILIES

Joshua Tree

Active families looking to spend time in the great outdoors will love exploring Joshua Tree National Park. Offering hiking, camping, rock climbing, and more, this inexpensive weekend getaway in California makes for an adventure of a lifetime. It’s not uncommon to hear words like “magical” and “spiritual” being used to describe this location, and that is usually because of the Dr. Seuss-like trees scattered throughout the park and the otherworldly sunsets. 

Your kids can lose track of time running around the park that looks like it’s straight out of their favorite storybook, but there are plenty of fun activities for adults as well. The Outdoor Desert Art Museum and the Smith’s Ranch Drive-in are popular pastimes that families of all ages and sizes will love to visit.

Dana Point

We don’t know what it is about the Golden State’s beaches that make them so enchanting, but once you’ve been to one, you’ll always dream of going back. Nestled halfway between Los Angeles and San Diego is the coastal town of Dana Point—this is an alluring spot with miles of beaches that are perfect for an inexpensive weekend getaway in Southern California. 

Head to Baby Beach, a great family-friendly destination, to spend a day basking in the sun and splashing around in the calm waters. Boating, fishing, surfing, whale watching, and touring galleries and museums are also popular activities you can try on your affordable beach getaway. We can’t stress enough how underrated this SoCal destination is, so you won’t want to miss it.

Free Summer Concerts in the Park

June 2024

Throughout the state of California, there are thousands of free concerts throughout the year. The Summer of 2024 will continue the trend, providing people across the state countless of opportunities to attend a variety of different concerts. To learn more about free concerts near you, just click here California Free Summer Concerts and Concert in the Park (seecalifornia.com)

Spring Cleaning Your Finances: A 10 Point Checklist

Jonathan I. Shenkman Forbes Contributor

May 2024

 

 

The craziness of tax season is now behind us, and we are rapidly approaching the slow and sleepy summer season. Before investors checkout for a few months, a bit of financial spring cleaning is in order. Periodically reviewing your finances can help ensure that you are on track to achieve your goals and minimize the chances of any costly oversights.

Below are 10 areas worth assessing and adjusting where appropriate:

1. Review your cash flow: Gathering your latest bank statement and credit card bills to review line by line is not the most glamorous task. However, taking a few hours to go through this process at least once a year is foundational to ensuring that you are making the most of your money. This is a great time to cut wasteful spending, like memberships and subscriptions that you don’t use, or assess discretionary spending to determine if there are any activities, such as eating out, that you’d like to minimize.

 

Freeing up cash from unnecessary expenses can give you the flexibility to spend more in areas that are more meaningful for you, like family, vacation, or making necessary home improvements. Alternatively, if these extra funds are not needed for expenses, they can be invested for your future.

2. Reassess your debt: If you have debt, it’s a good idea to review it from time to time. There may be opportunities to consolidate it or possibly transfer the balance to a 0% promotional opportunity. There is no reason to pay 15-20% on credit card debt if you can avoid it.

3. Bolster Emergency Fund: The Federal Reserve is actively working to get inflation under control. The unfortunate consequence of raising rates and slowing down the economy is job loss. Now would be a good time to ensure that you have an adequate emergency fund. A rule of thumb is 3 to 6 months’ worth of expenses, though you may consider keeping more depending on your situation. It’s hard to plan for unexpected job loss and a pro-longed unemployment, however, a robust emergency fund can significantly mitigate that risk.

4. Consolidate your accounts: Tax season may have been a rude awakening for how unorganized your finances are. Trying to locate 1099s at a variety of different institutions is time consuming and frustrating. It also makes managing and tracking your investments difficult. In that vein, unless there is a specific reason that you have scattered accounts, your investments should be held at one or two investment firms. The only obvious exceptions are a current employer’s retirement plan and your checking account. Going forward, monitoring, tracking, making changes, and collecting tax documents will be far more seamless with all your investments held at one firm.

5. Streamline your investments: On the same theme of organizing your accounts to help during tax time, you should assess if you have a tax inefficient investment portfolio. Indications of inefficiency include high turnover within your portfolio, with many trades being placed that may potentially lead to a higher tax bill. Additionally, if you were issued several K-1s this may delay your tax filing.

 

Now is a good time to reconsider these suboptimal tax holdings and determine if you can implement your investment strategy more tax efficiently. Streamlining your investments may provide far fewer headaches next tax season.

6. Plan for Future Tax Seasons: It’s worth considering tax-loss harvesting and proper asset location strategies to potentially help with future taxes.

Tax-loss harvesting involves selling securities at a loss to help offset taxes owed from capital gains in taxable investment accounts. Even though the market has appreciated a bit as of this writing, it is still well off its highs, which may offer the ability to use losses to offset gains.

Asset location is a strategy where investors intentionally choose where they park their investments to maximize their tax benefit. This includes putting more tax inefficient investments into tax advantaged accounts, like 401(k), 403(b), 529 college savings accounts, and HSAs, to name just a few.

7. Analyze pay stubs: In line with the previous point, an important step to maximize your tax benefit is reviewing your paystub. There are various benefits available through your employer, including an FSA (Flexible Savings Account), HSA (Health Savings Account), and 401(k) with a possible match. It may be worth sending a short e-mail to your colleagues in HR to understand all the available tax advantaged opportunities. Why not take full advantage of all the benefits and perks that your employer has to offer?

8. Put excess cash to work: Inertia is one of the biggest obstacles to financial success. The inability to make decisions, and take action, when necessary, can impact various aspects of personal finance. One example of imprudent inertia is sitting on excessive cash instead of investing it. Holding too much cash ensures that you are losing money due to inflation.

You should invest any excess cash not needed to pay your expenses or emergency fund. This will more effectively grow your nest egg. Automating the process of contributing to your investment accounts will remove emotion and procrastination from your investment process.

9. Take insurance coverage inventory: At each stage of life, there are different types of insurance coverage that a family may require. For example, having kids may precipitate more life insurance coverage. On the other hand, when your kids move out of the house and become self-sufficient, you may not need as much life insurance coverage, but may need to consider your long-term-care insurance options. Taking annual inventory of all your insurance needs, including life, disability, long-term care, umbrella, auto, home, renters, and others, is a worthwhile exercise. It helps confirm that you have adequate coverage. It also will allow you to eliminate insurance that is no longer necessary, which will free up cash flow to spend on other areas of your life.

10. Review your beneficiaries: Doing a quick scan every year of the beneficiaries named on all your retirement accounts and insurance policies can save a lot of headache and heartache later. When an account or a policy has beneficiaries attached to it, those assets pass outside of one’s will. In order to ensure that your money is going to the people that you want upon your death, it’s worth reviewing your beneficiary designations periodically. The last thing anyone wants is the proceeds from these accounts going to an ex-spouse.

Similar to spring cleaning your home, financial maintenance is not the most glamorous or enjoyable activity. However, taking the time to work through this list with your spouse and financial advisor can help tie up any loose ends with your finances. This process will allow you to enter the summer months with peace of mind knowing that your finances are in order.

Material prepared by Forbes, an independent third-party.

Raymond James is not affiliated with and does not endorse the opinions or services of John Jennings or Forbes.  The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of John Jennings and not necessarily those of Raymond James.

Estimating Your Retirement Income Needs

By Raymond James 

April 2024

 

You know how important it is to plan for your retirement, but where do you begin? One of your first steps should be to estimate how much income you'll need to fund your retirement. That's not as easy as it sounds, because retirement planning is not an exact science. Your specific needs depend on your goals and many other factors.

 

Use your current income as a starting point

It's common to discuss desired annual retirement income as a percentage of your current income. Depending on whom you're talking to, that percentage could be anywhere from 60% to 90%, or even more. The appeal of this approach lies in its simplicity, and the fact that there's a fairly common-sense analysis underlying it: Your current income sustains your present lifestyle, so taking that income and reducing it by a specific percentage to reflect the fact that there will be certain expenses you'll no longer be liable for (e.g., payroll taxes) will, theoretically, allow you to sustain your current lifestyle.


 

The problem with this approach is that it doesn't account for your specific situation. If you intend to travel extensively in retirement, for example, you might easily need 100% (or more) of your current income to get by. It's fine to use a percentage of your current income as a benchmark, but it's worth going through all of your current expenses in detail, and really thinking about how those expenses will change over time as you transition into retirement.

 

Project your retirement expenses

Your annual income during retirement should be enough (or more than enough) to meet your retirement expenses. That's why estimating those expenses is a big piece of the retirement planning puzzle. But you may have a hard time identifying all of your expenses and projecting how much you'll be spending in each area, especially if retirement is still far off. To help you get started, here are some common retirement expenses:

  • Food and clothing

  • Housing: Rent or mortgage payments, property taxes, homeowners insurance, property upkeep and repairs

  • Utilities: Gas, electric, water, telephone, cable TV

  • Transportation: Car payments, auto insurance, gas, maintenance and repairs, public transportation

  • Insurance: Medical, dental, life, disability, long-term care

  • Health-care costs not covered by insurance: Deductibles, co-payments, prescription drugs

  • Taxes: Federal and state income tax, capital gains tax

  • Debts: Personal loans, business loans, credit card payments

  • Education: Children's or grandchildren's college expenses

  • Gifts: Charitable and personal

  • Savings and investments: Contributions to IRAs, annuities, and other investment accounts

  • Recreation: Travel, dining out, hobbies, leisure activities

  • Care for yourself, your parents, or others: Costs for a nursing home, home health aide, or other type of assisted living

  • Miscellaneous: Personal grooming, pets, club memberships

 

Don't forget that the cost of living will go up over time, and keep in mind that your retirement expenses may change from year to year. For example, you may pay off your home mortgage or your children's education early in retirement. Other expenses, such as health care and insurance, may increase as you age. To protect against these variables, build a comfortable cushion into your estimates (it's always best to be conservative). Finally, have a financial professional help you with your estimates to make sure they're as accurate and realistic as possible.

 

Decide when you'll retire

To determine your total retirement needs, you can't just estimate how much annual income you need. You also have to estimate how long you'll be retired. Why? The longer your retirement, the more years of income you'll need to fund it. The length of your retirement will depend partly on when you plan to retire. This important decision typically revolves around your personal goals and financial situation. For example, you may see yourself retiring at 50 to get the most out of your retirement. Maybe a booming stock market or a generous early retirement package will make that possible. Although it's great to have the flexibility to choose when you'll retire, it's important to remember that retiring at 50 will end up costing you a lot more than retiring at 65.

 

Estimate your life expectancy

The age at which you retire isn't the only factor that determines how long you'll be retired. The other important factor is your lifespan. We all hope to live to an old age, but a longer life means that you'll have even more years of retirement to fund. You may even run the risk of outliving your savings and other income sources. To guard against that risk, you'll need to estimate your life expectancy. You can use government statistics, life insurance tables, or a life expectancy calculator to get a reasonable estimate of how long you'll live. Experts base these estimates on your age, gender, race, health, lifestyle, occupation, and family history. But remember, these are just estimates. There's no way to predict how long you'll actually live, but with life expectancies on the rise, it's probably best to assume you'll live longer than you expect.

 

Identify your sources of retirement income

Once you have an idea of your retirement income needs, your next step is to assess how prepared you are to meet those needs. In other words, what sources of retirement income will be available to you? Your employer may offer a traditional pension that will pay you monthly benefits. In addition, you can likely count on Social Security to provide a portion of your retirement income. To get an estimate of your Social Security benefits, visit the Social Security Administration website (www.ssa.gov). Additional sources of retirement income may include a 401(k) or other retirement plan, IRAs, annuities, and other investments. The amount of income you receive from those sources will depend on the amount you invest, the rate of investment return, and other factors. Finally, if you plan to work during retirement, your job earnings will be another source of income.

 

Make up any income shortfall

If you're lucky, your expected income sources will be more than enough to fund even a lengthy retirement. But what if it looks like you'll come up short? Don't panic — there are probably steps that you can take to bridge the gap. A financial professional can help you figure out the best ways to do that, but here are a few suggestions:


 

  • Try to cut current expenses so you'll have more money to save for retirement

  • Shift your assets to investments that have the potential to substantially outpace inflation (but keep in mind that investments that offer higher potential returns may involve greater risk of loss)

  • Lower your expectations for retirement so you won't need as much money (no beach house on the Riviera, for example)

  • Work part-time during retirement for extra income

  • Consider delaying your retirement for a few years (or longer)

 

 

This information, developed by an independent third party, has been obtained from sources considered to be reliable, but Raymond James Financial Services, Inc. does not guarantee that the foregoing material is accurate or complete. This information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. This information is not intended as a solicitation or an offer to buy or sell any security referred to herein. Investments mentioned may not be suitable for all investors. The material is general in nature. Past performance may notbe indicative of future results. Raymond James Financial Services, Inc. does not provide advice on tax, legal or mortgage issues. These matters should be discussed with the appropriate professional. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc

Six Keys to More Successful Investing

 

By Raymond James

February 2024

 

 

A successful investor maximizes gain and minimizes loss. Though there can be no guarantee that any investment strategy will be successful and all investing involves risk, including the possible loss of principal, here are six basic principles that may help you invest more successfully.

1. Long-term compounding can help your nest egg grow

It's the "rolling snowball" effect. Put simply, compounding pays you earnings on your reinvested earnings. The longer you leave your money at work for you, the more exciting the numbers get. For example, imagine an investment of $10,000 at an annual rate of return of 8 percent. In 20 years, assuming no withdrawals, your $10,000 investment would grow to $46,610. In 25 years, it would grow to $68,485, a 47 percent gain over the 20-year figure. After 30 years, your account would total $100,627. (Of course, this is a hypothetical example that does not reflect the performance of any specific investment.)

 

This simple example also assumes that no taxes are paid along the way, so all money stays invested. That would be the case in a tax-deferred individual retirement account or qualified retirement plan. The compounded earnings of deferred tax dollars are the main reason experts recommend fully funding all tax-advantaged retirement accounts and plans available to you.

 

While you should review your portfolio on a regular basis, the point is that money left alone in an investment offers the potential of a significant return over time. With time on your side, you don't have to go for investment "home runs" in order to be successful.

 

2. Endure short-term pain for long-term gain

Riding out market volatility sounds simple, doesn't it? But what if you've invested $10,000 in the stock market and the price of the stock drops like a stone one day? On paper, you've lost a bundle, offsetting the value of compounding you're trying to achieve. It's tough to stand pat.

 

There's no denying it — the financial marketplace can be volatile. Still, it's important to remember two things. First, the longer you stay with a diversified portfolio of investments, the more likely you are to reduce your risk and improve your opportunities for gain. Though past performance doesn't guarantee future results, the long-term direction of the stock market has historically been up. Take your time horizon into account when establishing your investment game plan. For assets you'll use soon, you may not have the time to wait out the market and should consider investments designed to protect your principal. Conversely, think long-term for goals that are many years away.

 

Second, during any given period of market or economic turmoil, some asset categories and some individual investments historically have been less volatile than others. Bond price swings, for example, have generally been less dramatic than stock prices. Though diversification alone cannot guarantee a profit or ensure against the possibility of loss, you can minimize your risk somewhat by diversifying your holdings among various classes of assets, as well as different types of assets within each class.

 

3. Spread your wealth through asset allocation

Asset allocation is the process by which you spread your dollars over several categories of investments, usually referred to as asset classes. The three most common asset classes are stocks, bonds, and cash or cash alternatives such as money market funds. You'll also see the term "asset classes" used to refer to subcategories, such as aggressive growth stocks, long-term growth stocks, international stocks, government bonds (U.S., state, and local), high-quality corporate bonds, low-quality corporate bonds, and tax-free municipal bonds. A basic asset allocation would likely include at least stocks, bonds (or mutual funds of stocks and bonds), and cash or cash alternatives.

 

There are two main reasons why asset allocation is important. First, the mix of asset classes you own is a large factor — some say the biggest factor by far — in determining your overall investment portfolio performance. In other words, the basic decision about how to divide your money between stocks, bonds, and cash can be more important than your subsequent choice of specific investments.

 

Second, by dividing your investment dollars among asset classes that do not respond to the same market forces in the same way at the same time, you can help minimize the effects of market volatility while maximizing your chances of return in the long term. Ideally, if your investments in one class are performing poorly, assets in another class may be doing better. Any gains in the latter can help offset the losses in the former and help minimize their overall impact on your portfolio.

 

4. Consider your time horizon in your investment choices

In choosing an asset allocation, you'll need to consider how quickly you might need to convert an investment into cash without loss of principal (your initial investment). Generally speaking, the sooner you'll need your money, the wiser it is to keep it in investments whose prices remain relatively stable. You want to avoid a situation, for example, where you need to use money quickly that is tied up in an investment whose price is currently down.

 

Therefore, your investment choices should take into account how soon you're planning to use your money. If you'll need the money within the next one to three years, you may want to consider keeping it in a money market fund or other cash alternative whose aim is to protect your initial investment. Your rate of return may be lower than that possible with more volatile investments such as stocks, but you'll breathe easier knowing that the principal you invested is relatively safe and quickly available, without concern over market conditions on a given day. Conversely, if you have a long time horizon — for example, if you're investing for a retirement that's many years away — you may be able to invest a greater percentage of your assets in something that might have more dramatic price changes but that might also have greater potential for long-term growth.

 

Note: Before investing in a mutual fund, consider its investment objectives, risks, charges, and expenses, all of which are outlined in the prospectus, available from the fund. Consider the information carefully before investing. Remember that an investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporate or any other government agency. Although the fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in the fund.

 

5. Dollar cost averaging: investing consistently and often

Dollar cost averaging is a method of accumulating shares of an investment by purchasing a fixed dollar amount at regularly scheduled intervals over an extended time. When the price is high, your fixed-dollar investment buys less; when prices are low, the same dollar investment will buy more shares. A regular, fixed-dollar investment should result in a lower average price per share than you would get buying a fixed number of shares at each investment interval. A workplace savings plan, such as a 401(k) plan that deducts the same amount from each paycheck and invests it through the plan, is one of the most well-known examples of dollar cost averaging in action.

 

Remember that, just as with any investment strategy, dollar cost averaging can't guarantee you a profit or protect you against a loss if the market is declining. To maximize the potential effects of dollar cost averaging, you should also assess your ability to keep investing even when the market is down.

 

An alternative to dollar cost averaging would be trying to "time the market," in an effort to predict how the price of the shares will fluctuate in the months ahead so you can make your full investment at the absolute lowest point. However, market timing is generally unprofitable guesswork. The discipline of regular investing is a much more manageable strategy, and it has the added benefit of automating the process.

 

6. Buy and hold, don't buy and forget

Unless you plan to rely on luck, your portfolio's long-term success will depend on periodically reviewing it. Maybe economic conditions have changed the prospects for a particular investment or an entire asset class. Also, your circumstances change over time, and your asset allocation will need to reflect those changes. For example, as you get closer to retirement, you might decide to increase your allocation to less volatile investments, or those that can provide a steady stream of income.

 

Another reason for periodic portfolio review: your various investments will likely appreciate at different rates, which will alter your asset allocation without any action on your part. For example, if you initially decided on an 80 percent to 20 percent mix of stock investments to bond investments, you might find that after several years the total value of your portfolio has become divided 88 percent to 12 percent (conversely, if stocks haven't done well, you might have a 70-30 ratio of stocks to bonds in this hypothetical example). You need to review your portfolio periodically to see if you need to return to your original allocation.

 

To rebalance your portfolio, you would buy more of the asset class that's lower than desired, possibly using some of the proceeds of the asset class that is now larger than you intended. Or you could retain your existing allocation but shift future investments into an asset class that you want to build up over time. But if you don't review your holdings periodically, you won't know whether a change is needed. Many people choose a specific date each year to do an annual review.

6 Tips a Financial Planner Recommends Using Now to Save Money on Taxes in 2024

 

by Hanna Horvath for Business Insider

January 2024

 

 

As the year draws to a close, taxes are probably the last thing on your mind right now. But planning just a little bit ahead of time could pay off big time come tax season.

Here are five tax moves you should make before the year draws to a close.

 

1. Maximize your retirement contributions

One of the most effective ways to save on taxes is by maximizing contributions to tax-advantaged retirement accounts like 401(k)s and IRAs. By contributing more, you can reduce your taxable income (and grow your nest egg).

 

The 2023 401(k) contribution limit is $22,500, with an additional $7,500 catch-up contribution if you're aged 50 and older. If your employer offers matching contributions, you should take advantage of them, as they provide an additional boost to your retirement savings. The 2023 combined employee and employer contribution limit is $66,000.

 

Make sure to make any 401(k) contributions before the December 31 deadline for them to count towards your income.

 

If you don't contribute to an employer-sponsored plan, you can contribute to an individual retirement account (IRA). The 2023 contribution limit is $6,500, with an added $1,000 catch-up contribution for those aged 50 and older. Unlike 401(k)s, the deadline to make IRA contributions is April 15, so you have a bit more time.

 

Remember: Contributions to Roth plans, including Roth 401(k)s and Roth IRAs, are made with after-tax dollars and don't reduce your taxable income.

 

2. Harvest investment losses

If you have investments that have declined in value, consider giving them the boot. By selling these investments at a loss, you can offset the capital gains from other investments and reduce your tax liability.

 

Consider selling off your poor-performing investments by the end of the year and claim a capital loss. If your capital losses are greater than your capital gains, you can reduce your taxable income by up to $3,000. This strategy can be a valuable tool for minimizing your tax liability while rebalancing your investment portfolio.

 

If your capital losses exceed $3,000, you can carry over the balance into future years and deduct it on future returns.

 

Keep in mind that tax-loss harvesting should be done strategically. It's probably a good idea to talk with a financial advisor before you decide to harvest.

 

3. Leverage tax credits and deductions

Tax credits and deductions can significantly lower your tax bill. Take the time to read up on the options that may apply to you, including Earned Income Tax Credit (EITC), Child Tax Credit, and Education Tax Credits.

Apart from the widely known deductions, such as mortgage interest and student loan interest deductions, there are several credits and deductions that taxpayers often overlook. For example, if you've purchased an electric vehicle (EV), you may be eligible for tax credits at both the federal and state levels.

 

There are additional deductions for energy-efficient home improvements, educational expenses, and healthcare costs. It's a smart idea to look into these lesser-known credits and deductions to see if you qualify.

 

4. Take advantage of charitable contributions

It's the season of giving — which can also save you money on taxes. If you're considering making a charitable donation, doing so before the end of the year can help reduce your taxable income.

To maximize the tax benefits, consider donating appreciated securities — like stocks — instead of cash. By doing this, you can avoid paying capital gains tax and can take a charitable deduction for the fair market value. Remember to keep proper documentation of your donations for tax purposes.

Find a Qualified Financial Advisor

 

5. Adjust your tax withholding

Take a moment to review your withholding and estimated tax payments to ensure they align with your current financial situation. If you had any significant life changes this year, such as marriage, divorce, or the birth of a child, it might be smart to adjust your withholding to avoid overpaying or underpaying your taxes.

 

If you're self-employed or have other sources of income not subject to withholding, make sure you're making appropriate estimated tax payments. Underpayment of estimated taxes can result in penalties, so it's a good idea to make sure you're staying accurate.

 

6. Contribute to a Health Savings Account (HSA)

If you have a high-deductible health insurance plan, contributing to a Health Savings Account (HSA) can be a smart move. HSAs offer a triple tax advantage: contributions are tax-deductible, earnings grow tax-free, and withdrawals for qualified medical expenses are tax-free.

 

By maximizing your HSA contributions before the year ends, you not only reduce your taxable income but also build a tax-advantaged fund for future healthcare expenses.

 

As the year comes to a close, taking steps to optimize your tax situation can have a big impact on your finances well into the next year. By doing one (or all) of these five moves before the end of the year, you can potentially save a significant amount of money and set yourself up for success in 2024.

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