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Is It The Right Time To Convert To Roth?

December 09, 2019

Are you wondering if you should convert your retirement account to a Roth by the end of the year? After all, there’s no income limit on IRA conversions and many employers are now allowing employees to convert their company retirement plan balances to Roth while they’re still working there. At first glance, it may sound appealing since the earnings in a Roth can grow tax free, and who doesn’t like tax free? However, here are some reasons why now might not be the time for a Roth conversion:

3 reasons you might not convert to Roth this year

1) You have to withdraw money from the retirement account to pay the taxes. If you have to pay the taxes from money you withdraw from the account, it usually doesn’t make financial sense as that money will no longer be growing for your retirement. This is even more of a tax concern if the withdrawal is subject to a 10% early withdrawal penalty.

2) You’ll pay a lower tax rate in retirement. This can be a tricky one because the tendency is to compare your current tax bracket with what you expect it to be in retirement. There are a couple of things to keep in mind though. One is that the conversion itself can push you into a higher tax bracket. The second is that when you eventually withdraw the money from your non-Roth retirement account, it won’t all be taxed at that rate.

Let’s take an example where you retire with a joint income of $125,900 in 2022. Because of the $25,900 standard deduction for married filing jointly, your taxable income would be no more than $100,000. Of your taxable income, the first $20,550 would only be taxed at 10%, and everything from there up to $83,550 is taxed at 12%. Only the income over $83,550 is taxed at the 22% rate. As a result, you would be in the 22% bracket but actually pay only about 13% of your income in taxes.

You can calculate your marginal tax bracket and effective average tax rate here for both your current and projected retirement income. (Don’t factor in inflation for your future retirement income since the tax brackets are adjusted for inflation too.) The tax you pay on the conversion is your current marginal tax bracket, but the tax you avoid on the Roth IRA withdrawals is your future effective average tax rate.

3) You have a child applying for financial aid. A Roth conversion would increase your reported income on financial aid forms and potentially reduce your child’s financial aid eligibility. You can estimate your expected family contribution to college bills based on your taxable income here.

Of course, there are also situations where a Roth conversion makes sense:

6 reasons to consider converting to Roth this year

1) Your investments are down in value. This could be an opportunity to pay taxes on them while they’re low and then have a long-term investment time horizon to allow them to grow tax free. When the markets give you a temporary investment lemon, a Roth conversion lets you turn it into tax lemonade.

2) You think the tax rate could be higher upon withdrawal. You may not have worked at least part of the year (in school, taking time off to care for a child, or just in between jobs), have larger than usual deductions, or have other reasons to be in a lower tax bracket this year. In that case, this could be a good time to pay the tax on a Roth conversion.

You may also rather pay taxes on the money now since you expect the money to be taxed at a higher rate in the future. Perhaps you’re getting a large pension or have other income that will fill in the lower tax brackets in retirement. Maybe you’re worried about tax rates going higher by the time you retire. You may also intend to pass the account on to heirs that could be in a higher tax bracket.

3) You have money to pay the taxes outside of the retirement account. By using the money to pay the tax on the conversion, it’s like you’re making a “contribution” to the account. Let’s say you have $24k sitting in a savings account and you’re going to convert a $100k pre-tax IRA to a Roth IRA. At a 24% tax rate, the $100k pre-tax IRA is equivalent to a $76k Roth IRA. By converting and using money outside of the account to pay the taxes, the $100k pre-tax IRA balance becomes a $100k Roth IRA balance, which is equivalent to a $24k “contribution” to the Roth IRA.

Had you simply invested the $24k in a taxable account, you’d have to pay taxes on the earnings. By transferring the value into the Roth IRA, the earnings grow tax free. This calculator helps you crunch your own numbers.

4) You want to use the money for a non-qualified expense in 5 years or more. After you convert and wait 5 years, you can withdraw the amount you converted at any time and for any reason without tax or penalty. Just be aware that if you withdraw any post-conversion earnings before age 59½, you may have to pay income taxes plus a 10% penalty tax on them.

5) You might retire before age 65. 65 is the earliest you’re eligible for Medicare so if you retire before that, you might need to purchase health insurance through the Affordable Care Act. The subsidies in that program are based on your taxable income so tax-free withdrawals from a Roth account wouldn’t count against you.

6) You want to avoid required minimum distributions (RMDs). Unlike traditional IRAs, 401(k)s, and other retirement accounts that require distributions starting at age 72 (or 70½, depending on your age), Roth IRAs are not subject to RMDs so more of your money grows tax-free for longer. If this is your motivation, remember that you can always wait to convert until you retire, when you might pay a lower tax rate. Also keep in mind, Roth conversions are not a one-time-only event. You can do multiple conversions and spread the tax impact over different tax years if you are concerned about pushing your income into a higher tax bracket in any particular year.

There are good reasons to convert and not to convert to a Roth. Don’t just do what sounds good or blindly follow what other people are doing. Ask yourself if it’s a good time for you based on your situation or consult an unbiased financial planner for guidance. If now is not the right time, you can always convert when the timing is right.

SOA & Financial Finesse Retirement Literacy Briefs

December 05, 2019

The Society of Actuaries Aging and Retirement Strategic Research Program and Financial Finesse are pleased to make available a series of briefs focused on retirement literacy issues. The first brief in the series explores retirement from a holistic perspective looking at non-financial issues. The second brief looks at retirement planning and the things to consider throughout one’s career. The third brief explores the types of expenses that may occur in the first year of retirement. The fourth brief provides a resource for better understanding retirement tools. The briefs were developed by a team led by Greg Ward of Financial Finesse.

Strategies To Make The Most Of Your Required Minimum Distributions

May 03, 2019

I was doing some workshops for a group of pre-retirees (talk about envy!) and we were going over a lot of the basic questions that group often has:

How do I know if I have enough money?
How do I plan for medical costs?
What should I do about my investment allocations?

But the question that seemed to generate a lot of interest was if there were any strategies surrounding taking the Required Minimum Distribution (RMD), which is when you have to begin withdrawing funds from 401(k) accounts, pre-tax IRAs and some annuities at age 70 1/2. The strategies listed below can help you be more efficient in deciding which dollars you should consider using to pay your RMD.

Consider the number of retirement accounts you have

A lot of people have a misconception that if you have several retirement accounts you need to withdraw the required amount from each account. While you can do that, it’s important to understand what you’re allowed to do, since it varies by account type.

If you have more than one IRA, you have a choice to withdraw each account’s required amount or you can take the combined distribution from one account. An important consideration here is that you cannot group your employer sponsored plan(s) like a 401(k) into this strategy. If you have more than one 401(k) (including Roth!) you would actually need to figure out the RMD from each 401(k) separately and withdraw from each one.

What investments do you currently have?

What if you have an investment that is doing very well and it’s time for you to take your RMD, do you absolutely have to sell that investment? Well if it is your only investment holding yes, but many people have more than one holding.

Consider selling an investment that is not returning as much as others, i.e. dollars that you have in a money market account or perhaps a mutual fund you’ve been thinking of selling anyway. This can also provide an opportunity for re-balancing.

For example, say you have too much in bonds, by selling off a portion of bonds you can make your RMD and get back to a percentage in bonds that you are comfortable with.

Re-investing your RMD if you don’t need the money

What happens if you don’t need the money that the RMD forces you to take? (I know, nice dilemma!) Well you still have to take it, unless of course you like the penalty for not taking it (50% of the amount you should have taken). So what are your choices?

Of course you can spend it, I mean after all you worked hard for it, but you could also re-invest. Some things to consider might be tax efficient investments, such as municipal bonds or if you are working, consider funding a Roth IRA where future growth can be pulled out tax free (after you have held the account for 5 years).

Consider a charitable donation strategy

If you must take an RMD and you normally donate to charity, consider making your donation directly from your IRA account. This is called a Qualified Charitable Distribution and can help lower your taxes, especially if you no longer itemize your deductions because the standard deduction is so much higher than it use to be. You can give up to $100,000 from your IRA each year in this way.

For example, say your RMD for the year was supposed to be $10,000 and you normally give $2,000 to charity each year. You could have the $2,000 sent directly from your IRA to the charity and withdraw the remaining $8,000 RMD from your IRA account. That way, you would not have to pay tax on the $2,000 donated to charity.

If you are in the 22% tax bracket, then you would save $440 in taxes by doing it that way. Otherwise, with a $2,000 charitable donation, you may not be able to itemize your deductions to receive a tax benefit. See IRS Pub 590-B “Qualified charitable distributions.” section for more information.

Bottom line, just because you have to take your RMD, doesn’t mean you can’t be tax efficient by re-investing the money!

Keep in mind that your strategy may be quite simple or may employ some of the above tips, but the one constant is that you want to continue to be on time with your RMD and whenever possible, make it as advantageous for you as you can.

Avoid These Three Financial Pitfalls When Switching Jobs

May 01, 2019

For people who strive to put the maximum amounts away into accounts with annual limits such as 401(k)/403(b) plans and Health Savings Accounts, switching jobs mid-year requires some additional diligence to make sure you’re not going over.

Most company benefits departments will take steps to ensure you don’t go over the limit with contributions from your paycheck, but if you already made deposits to accounts at your prior job that year, your new job won’t automatically know to factor that in – you have to take steps to guard against that. (these issues can also arise if you have more than one job with benefits)

Keep track of your contributions in these 3 areas

Problem: over-contributing to a 401(k) or 403(b)

This issue sometimes doesn’t come to light until after the end of the year when you’re filing your taxes and your tax accountant or software points out that you put more than the annual limit into your 401(k)’s. It’s important to know that the limits are across all accounts, not per account.

401(k) & 403(b) contribution limits
	2022	2021
Amount you can put in via payroll	$20,500	$19,500
Additional if you’re age 50 or older	$6,500	$6,500

What to do if you over-contributed: First of all, it’s important that you act quickly – there is a deadline to fix this without incurring penalties, which is April 15th of the year following the over-contribution.

Send copies of both W-2’s to the plan administrator (aka the company that manages the 401(k) or 403(b)) where you wish to make the withdrawal as evidence of your over-contribution, then request that they send you the extra money.
You’ll receive a check for the amount you over-contributed, including any associated earnings.
You’ll also receive a Form 1099-R, showing the amount you withdrew.
Include the overage amount on your tax return for the year your over-contributed.
Include earnings, if any, on the tax return for the current year when you received the check.

For example, let’s say you over contribute by $5,000 and the administrator attributes $500 worth of growth to that amount – you’ll receive a check for $5,500 and include $5,000 on last year’s tax return to reflect the return of your deposit and $500 on next year’s return to reflect the income on that deposit.

As long as you do this by April 15th, you will avoid any penalties. Waiting until after could incur a 10% early withdrawal penalty or even 100% double taxation of the amount you over-contributed, so you’ll want to get this done ASAP.

Why you might intentionally go over and put yourself in this position: One reason you might intentionally over-contribute to your retirement when switching jobs is if your new job offers a better match than your previous job, and you’d be sacrificing some of the available match if you contributed less.

If that’s the case, you may decide to max out your new match, then withdraw from your old job’s account to reconcile it. If you’re planning to do this, you’ll want to wait until after you’ve successfully withdrawn your overage before rolling your old account into your new plan or an IRA.

Problem: over-contributing to Health Savings Accounts

There are several ways this can happen, especially if you switch mid-year into or out of an HSA-eligible plan. For example, if you had already put the maximum amount into your HSA before switching jobs only to find that your new job doesn’t have an HSA-eligible option, you may want to calculate the eligible amount and withdraw the excess before you file your tax return for that year.

Health Savings Account contribution limits

	2022	2021
Limit for individual	$3,650	$3,600
Limit for family	$7,300	$7,200
Additional for 55 or older	$1,000	$1,000

What to do if you over-contributed: As long as you catch this before you file your federal tax return (including extensions), you can simply request that the additional funds be returned to you, then make sure you include them in your income for the year they were contributed. Similar to retirement fund overage withdrawals, if there are any earnings attributed to the amount you over-contributed, those will also be distributed and taxed as regular income.

If you decide not to do this or miss the deadline, then you can leave the excess contributions in the HSA and pay a 6% excise tax on the amount over-contributed. Note that if you have your account invested for aggressive growth, you may find that paying the excise tax still leaves you ahead in the long run, but for the majority of people these days who simply use the savings account feature of HSAs, they usually opt to withdraw the excess rather than pay 6% tax on it.

Problem: over-paying into Social Security

This can happen if you have higher income or received a very large bonus that would take your total wages for the year over the annual Social Security withholding limit. Most people don’t know this, but you don’t pay Social Security on every penny you earn – it stops when you get to a certain limit. For 2022, that limit is $147,000 or $9,114 in tax.

Employers are required to withhold FICA tax according to the wages they pay you, so if you have more than one job during the year and your total wages exceed the limit, you’ll need to claim the excess as a credit against your income tax when you file your return. (IRS Publication 505 has more on this) If you only have one job and your employer made the mistake, then you should first try to get them to refund you the money and if not, then you’ll need documentation to file Form 843.

What Happens When Someone Dies Before They Retire

April 02, 2019

Dealing with the loss of a loved one is obviously one of the most difficult periods in anyone’s life. Dealing with grief can be compounded by dealing with the financial matters that need to be wrapped up – things like probate, insurance claims, and dividing assets can be time consuming and stressful. Today I want to focus on the benefits that survivors may be entitled to if a loved one is still working when they pass away.

Pension

If your loved one had a pension with their employer, it is likely that plan has some type of pre-retirement death benefit. Each plan will have different options available to a surviving spouse or beneficiary, so it is important to reach out to the plan administrator to see what your options are to claim this benefit. You can get that information from HR at the company where the pension started.

401(k), 403(b) or other employer-sponsored plans

While not all employees still have access to a pension, most will have access to an employer-sponsored retirement plan like a 401(k) or 403(b), and hopefully they were saving into it. Assuming the account had named beneficiaries at the time of death (good reminder here to make sure you have updated beneficiaries on your accounts), those beneficiaries are entitled to that money before probate is completed. There are certain deadlines on making decisions, so you may need to address this before other things in the estate.

Spouse as beneficiary – If the beneficiary of a 401(k) (or similar plan) is the deceased’s spouse, they can either treat that money as if it was theirs all along or roll it into an inherited IRA account. One big difference between these two options is that as an inherited account, the surviving spouse can take penalty free distributions if they need to, whereas, if they treat it as their own, they must generally wait until age 59 ½ to receive distributions from the account penalty free. They should familiarize themselves with the required minimum distributions imposed based on the specific choice and situation.
Non-spouse as beneficiary – If the beneficiary on the account is someone other than a spouse (usually a child or children), the options are a little bit different. The plan may or may not allow you to leave the funds in the plan itself, so you may have to open an inherited IRA account. You generally have two options with the money:

Take all the money out within 5 years of the owner’s death (technically by December 31^st of the fifth year following their death) and pay ordinary income taxes on each withdrawal.
Take the money out in annual increments over your life expectancy (based on IRS life expectancy table) and pay ordinary income taxes on each withdrawal. This is referred to as a “stretch IRA” since you can stretch those withdrawals over your lifetime.

You will want to reach out to the 401(k) plan administrator to initiate the process of transferring the account – you can usually find this information on any recent statements or from HR at the company where they worked. You should also check with a tax professional to discuss the tax implications of your strategy with the funds.

Life insurance

Many employers offer basic life insurance benefits to their employees at no cost to the employee. In addition, your loved one may have purchased additional coverage at work. In the best case, the employer will reach out to you with that information, but it is worth a call to their HR or benefits group to see what life insurance coverage your loved one had. Remember, life insurance proceeds are tax-free to the beneficiary, and they are not included in probate, although they may be taxable to the estate in certain instances.

Other thoughts

If your loved one provided the health insurance for you through work, you may continue that through COBRA coverage for up to 18 months. You should also explore other coverage options to see what the most cost-effective option for you is – if you have insurance available through your job, this would be a qualifying event, allowing you to enroll mid-year if needed, but there is a time limit to making that change from the date of death.

I also encourage everyone to review all your beneficiary designations, your will, and other estate planning documents to make sure things are up to date. Also, maintaining a simple file with who to contact for all your accounts and policies – including those at work – will make it much easier for your loved ones to know who to contact should something happen to you.

Why You Might Not Want To Put All Your Retirement Savings Into Roth

March 25, 2019

If you have the option of making Roth contributions to your employer’s retirement account, should you do it? With a traditional pre-tax contribution, you only pay taxes when you withdraw the money. With a Roth contribution, you pay the taxes before you contribute, but the earnings can be withdrawn tax-free as long as you’ve had the account at least 5 years and are over age 59 ½.

The ‘gurus’ may not always be right

I recently spoke to one employee who has made all Roth contributions and so virtually all of her retirement savings (except for matching contributions) is in a Roth 401(k). When I asked her why, she said it was because she heard from Suze Orman and Dave Ramsey that this was a good thing to do.

One of the problems with taking financial guidance from media personalities is that their advice tends to be overgeneralized. In this case, I’d say it’s worse than that because I would argue that most people are better actually better off making mostly pre-tax contributions even if they retire in the same tax bracket!

It’s still a good idea to have some pre-tax savings

When this employee retirees, almost all of her income will be tax-free. (Her taxable income will be low enough for her Social Security benefits to be tax-free and her husband has no retirement savings.) That sounds great except that if she and her husband were retired today, they would still be eligible to have at least $24,400 of tax-free income in retirement because of their standard deductions, even without the Roth.

If she had contributed to a pre-tax 401(k), she would have paid no tax on the contributions and then no tax on $24,400 of withdrawals each year. (The next $78,950 would still only be taxed at 10 or 12%, much less than the tax rate she would have avoided on her contributions.)

Not too late to fix it

The good news is that she still has plenty of time to make future pre-tax contributions and lower her current taxes before she retires. This would allow her to either save more and/or use the tax savings for other goals. However, her projected retirement income based on these future contributions would still not allow her to take full advantage of her standard deductions in retirement.

It’s still a good idea to have some Roth

This isn’t to say that everyone should make all pre-tax contributions either. There are good reasons to have at least some money in a Roth account, especially if you plan to retire before you’re eligible for Medicare at age 65 since having some tax-free income can lower your health insurance premiums in the exchanges.

A Roth account can also be more beneficial if you think your tax brackets will actually be higher in retirement. Roth IRAs also have other benefits in terms of more flexibility with investment options and withdrawals.

The moral of the story

So what’s the moral of the story? Don’t always believe what you hear or read from so-called “financial gurus.” Their advice/entertainment is meant to be generalized and may be misapplied to your situation. Instead, seek out more personalized guidance from a qualified and unbiased financial planner.

Should You Do A Rollover From Your IRA To Your HSA?

March 20, 2019

Did you know that if you have money in an IRA that you want to use for healthcare expenses tax-free, you may be able to roll it over to your HSA? As more people realize the power of the health savings account, we are getting more questions about this strategy. Here are the ins and outs of what to consider.

Who qualifies

You are able to do a one-time tax-free rollover from a pre-tax/traditional IRA to an HSA if you meet the following conditions:

You are enrolled in a high deductible healthcare plan (HDHP) when you make the transfer and continue to be enrolled in a HDHP until the last day of the 12^th month after you make the transfer.
You can only contribute up to the maximum HSA contribution for that year. In 2019, that is $3,500 single, $7,000 family and if you are 55 or older a $1,000 catch up.
The distribution must be a direct transfer from your IRA custodian to your HSA custodian – it can’t be indirect.

When it makes sense

Some reasons why you would want to do rollover from an IRA to an HSA:

Save on taxes in retirement: Withdrawals from a traditional IRA are taxable, even after age 59 ½, and a common thing that retirees spend their IRA money on is for healthcare. If you spend money in an HSA for qualified medical expenses, it is tax free, so doing this transfer can save on taxes in the future for medical expenses.
It’s risk-free: After age 65, you are able to spend HSA funds on non-medical expenses if you want. If you do, you would have to pay income tax just like an IRA. In other words, if you roll money from your IRA to HSA then end up NOT needing it for medical expenses, you’ll still have access after age 65. In essence, your HSA becomes like an IRA with a healthcare tax benefit.
Good at any age: Many people don’t realize that you only have to be enrolled in a HDHP when you contribute to your HSA, but you can spend that money at any point after, even years later. You are able to spend money that is in an HSA on qualified medical expenses at any age.
Lower your RMDs: With a traditional IRA, you’ll be required to start taking a minimum amount out each year once you turn age 70 1/2. For some people that’s not an issue – they need the money anyway. But for people who may be trying to preserve their IRA for later years, rolling some of the money from your IRA to your HSA during your working years can lower the amount you’ll eventually have to withdraw in your 70’s. (keep in mind that once you’re on Medicare, you can no longer contribute to your HSA, so this strategy must be done prior to your enrollment in Medicare, so you have to plan ahead)

When it doesn’t make sense

Some reasons why you wouldn’t want to do this:

Your money is in a Roth IRA: If your money is in a Roth IRA and has been for at least 5 years, once you reach age 59 ½, the money that is in your Roth IRA can be used for any expenses without paying income taxes. You have more flexibility with Roth IRA distributions.
You’d be missing out on a tax deduction: You get a tax deduction if you contribute to your HSA from non-IRA money. You do not get a tax deduction for a rollover from your IRA to your HSA. If you have the money to max out your HSA with non-IRA dollars, it usually makes more sense to go that route first.

An example of someone who rolled money from their IRA to their HSA

This is a real-world example of when it might make sense to do a rollover from an IRA to an HSA:

Someone is 55, recently laid off and working part-time as an Uber/Lyft driver while looking for a new job.
A substantial portion of their savings is in IRAs and 401(k)s. Very little is in taxable accounts (individual or joint), meaning there isn’t much money available to spend penalty-free before age 59 1/2.
They are making enough income this year to cover their essential expenses but cannot contribute to an HSA.
They have an HDHP and anticipate having a HDHP in the future.
They think it may take them a year to find another position (the 1 month for every $10,000 of monthly income rule).
They think they will eventually use the money ($7,000 + $1,000 catchup) for qualified health expenses.

Like most financial decisions, your individual situation determines whether it makes sense to do a rollover from your IRA to your HSA, but in the right situation it can be a really great idea.

What To Expect When You Do A Retirement Account Rollover

March 14, 2019

One of the most common questions we receive centers around the decision with what to do with your old 401(k). We offer multiple ways to look at whether to stay or move strategically. But once you decide to move the funds from one firm to another, how do you best proceed? Here’s what to know in order to make the process as smooth as possible.

Opening the lines of communication

Have you ever seen an old movie, or a film set in the early days of the telephone? The switchboard operator actually had to plug and unplug the hardwire lines to connect calls. This a good metaphor for what happens when you initiate a rollover. You, as the account holder, function as the operator in terms of moving the funds from company to another.

Rolling money over from one account to another is a fairly common practice but here a few things you will want to consider when approaching this process.

Talk to the firm you are rolling the account from

First you need to know what paperwork is needed for the money to be released – the best place to find this out is to call your current provider. Do not take anyone else’s word for it. The receiving firm may have a decent idea of what the other firm wants, but there is no way to know for if you do not contact them.

To start, simply ask them what the procedure is to rollover your assets to another provider. That question may get you all the information you need, but before you hang up, make sure you know:

What timeframe can you expect from when you request the money to when it will be transferred? (this can take up to a couple weeks)
Are there any costs?
Is there a need to complete any paperwork?
What addresses do they have on file to you?
Can correspondence only be sent to those locations?

Be prepared that before you’re able to obtain this information that you may be transferred to an account retention department where someone may try to talk you out of your decision. It’s ok to be firm and state that you’ve made up your mind and to please give you the rollover information without further delay.

Talk to the firm that will be receiving the rollover

Once you know what will be required to get the money out, make sure you’re in touch with the company you’ve chosen to receive the money (either your new employer or the IRA company you’ve chosen). This side is likely to be a bit more flexible regarding the manner in which they receive the money from your old account, but here are somethings you will want to discuss with them in order to make the transition smooth:

If the receiving firm is a 401(k) or some other retirement plan at your workplace, be sure they know and understand the type of account the rollover is coming from. The ability to receive funds from another plan or IRA is based on what is in the plan document – not all 401(k) accounts accept all incoming transfers.
This also applies to rolling the funds to an IRA. Are the dollars in the old plan pre-tax, after-tax or Roth? This may create a necessity to open both a traditional and a Roth IRA.
If the old firm requires sending a paper check, get clear directions on who the check should be made out to. This step is crucial or you could inadvertently create an indirect rollover and its tax consequences.

You will likely also be asked how you want the money to be invested once it’s in your new account. Don’t let this decision delay the process, as you most likely can make changes once the funds are there, but make sure you make some type of selection so the process can be completed.

Initiate the transfer

Once you are clear on what to do from both ends, you can start your switchboard operator magic. It is common to have to sell any mutual funds or other investments in the old account because the new account may not offer the same investment options.

In the case of retirement accounts this tends not be a big deal because there should be no tax ramifications for selling, but be aware as that may change your mind about this whole process. Transferring cash tends to be a simpler process than transferring shares of mutual funds or stocks anyway.

Keep an eye on the process online and maintain any paperwork sent to you about the transfer.
Enroll in online access for the new account(s) so you can see when the funds are received.
Once the transfer is complete, check to make sure that the amount that left your old account lines up with the amount received in your new account.
Consider leaving the old account open for a few weeks to collect any residual interest or dividends in the old account, then make sure those are transferred over as well.
You should receive a Form 1099-R from the distributing firm the following year – if you did the transfer correctly, there shouldn’t be anything in the taxable box, but keep the form just in case. Use the paperwork and online history to make sure the transactions line up properly.

Hopefully this will help you navigate the steps to a rollover. Depending on your situation, the transaction may be more complex or you may be able skip steps. Also, if you are working with an advisor they can sometimes simplify the process. In either case, lean heavily on each firm to make sure they are both working toward getting your savings to the right place.

3 Strategies To Manage Withdrawals When You Retire During A Bear Market

March 13, 2019

The stock market has taken investors on a pretty wild ride over the past several months. It is during these volatile times that we experience a higher number of calls from people who are concerned about their retirement savings and wondering what they should do. My most concerned callers are those who are getting close to retirement. With the bells from the 2008 financial crisis ringing clearly in their heads, they are asking, “What should I do if I retire into a bear market?”

Here are three different strategies to consider that can allow you to still retire when you want to without the market fluctuations (or downturn) affecting your plans or causing you to run out of money sooner than you originally projected.

Strategy #1: The bucket strategy

To use some jargon, this is also called the time-based segmentation approach. With this strategy, you think of your money in 3 hypothetical buckets that are aligned with your spending needs and the time line for those needs. For example:

Bucket 1 (Short-term): This is the money that you anticipate needing to withdraw over the next 3 to 5 years. Most people will put this bucket in cash or in very conservative investments. The idea is that this money is protected from market down turns, while the rest of your investments can have time to recover (aka grow back with the market) before you need to begin withdrawing them.

Bucket 2 (Medium-term): This bucket is the money that you may need within a 5 to 10-year period. Most people would invest this bucket in medium and longer-term fixed income assets such as bonds or bond funds.

Bucket 3 (Long-term): This is basically the rest of your money, which you estimate you won’t need to withdraw for 10 or more years, and therefore what you want to keep growing. You’ll typically use stocks (aka equities) for this bucket, as you’ll have time for this money to recover from any longer-term bear markets and ideally will continue its growth over the years.

My colleague Chris Setter wrote in greater detail about the Bucket Strategy here.

The drawbacks: It can often be difficult to trust the process and not let emotions get in the way. During up markets, you may feel like the cash you set aside is just not working hard enough and that you should take on more risk.

Likewise, during down markets you might start feeling anxious and like you should move your money into cash for safety. Both reactions can hurt you, as it is nearly impossible to time markets and more often than not you will only contribute to a reduction in how long your money will last.

In addition, it can be challenging to manage money you have across different accounts like tax-free, taxable, and tax -deferred accounts as you may want to keep different types of investments in different types of accounts (for example, higher growth in a tax-free account like a Roth so that you can earn tax-free growth, while municipal bonds earning tax-free interest make more sense in a taxable account.)

What can make it work better: Sticking to your plan and having a strategy in place to replenish and reallocate your buckets while being mindful of the type of accounts your assets are invested is the key to success with this strategy.

Consider funding your short-term bucket by using the more conservative short to medium term bonds in your medium-term bucket, as they are typically the assets that will be most stable. To replenish your medium-term bucket, you can take the gains from the assets that have grown in your long-term bucket and reallocate them.

Ideally you are following an appropriate asset allocation strategy based on your goals, time horizon and cash needs, so this should flow into your existing investment process.

Strategy #2: Essential vs discretionary

With this approach, the goal is to take retirement savings that you need to fund essential expenses (such as housing, healthcare and daily living expenses) and invest them into assets that produce guaranteed income such as annuities. The remaining savings would only be used for discretionary expenses (like travel, non-essential home improvements, etc.) and would remain invested in more growth-oriented vehicles such as stocks.

The drawbacks: The drawback to this method is that some discretionary expenses might actually be considered essential to an individual with a certain retirement lifestyle in mind. If for some reason their discretionary assets did not last, then those individuals might have preferred to continue working until that lifestyle could have been accomplished versus living more frugally in retirement.

What can make it work better: If that’s the case, then maybe think of your savings again in 3 buckets, but with different labels: the Essentials, the Discretionary Non-Negotiables (such as a country club membership), and the truly Discretionary (like taking your whole family on a Disney cruise when times are good, versus just hosting the grandkids at your home when the market is down).

Individuals looking to secure a minimum retirement lifestyle could then place the expenses that are essential and non-negotiable into guaranteed income buckets, and the remaining assets to the truly discretionary items that they would not really miss if push came to shove.

Strategy #3: Structured systematic withdrawals

A systematic withdrawal refers to the process of taking money out of your retirement accounts based on regularly scheduled fixed (percentage or dollar) amounts. For example, a popular systematic withdrawal rule is the 4% rule. The idea behind this rule is that you can “safely withdraw” 4% a year from your savings for the duration of your retirement and as long as you stick to that amount or less, you shouldn’t (in theory) run out of money.

The drawbacks: As my colleague Scott points out in his article, the drawbacks include not taking into account the timing at which you retire (for example, a 40% down market) or the various income needs, lifestyle, and family dynamics of individuals. In other words, one size doesn’t fit all, which means there is no guarantee that the 4% rule in and of itself is the best approach for you.

What can make it work better: This approach can work in the above considerations as long as you also build in decision rules around certain triggers that would lead you to take action during certain market events. For example, perhaps you would reduce your withdrawal percentage during down markets, and/or possibly tap into stable and liquid assets (such as a cash savings account) to help meet your needs while allowing the investment assets that have taken a beating some time to recover.

For example, a colleague of mine shares that he plans to keep 3 years of expenses in cash, and when market downturns occur he might reduce his withdrawal to 3% and supplement his needs from his cash reserves.

How to decide which is right for you?

Since there really isn’t a one size fits all approach, setting up these rules will require thought, foresight and planning.

All of these strategies require you to have an idea of what your annual financial needs will be – use these 5 steps to help determine the retirement income you are aiming for, and then consider consulting with a qualified and unbiased financial planner to help you determine what the best retirement withdrawal approach is for you. They can also help you maintain and update your strategy as you go along.

With proper planning and preparation, anyone can develop a strategy that can outlast the scariest of bear markets, while helping to ensure that your savings can last to infinity and beyond!

Common Financial Mistakes Parents Make By The Decade

March 05, 2019

Lately, I’ve had a lot of heartbreaking conversations with folks who are working hard to be the best parents that they can be and are really struggling to balance finances and parenting. What I have noticed is that it seems that there are recurring themes of money mistakes that parents make based on their age and stage of life.

As a dad myself, I get it. It is so hard to always be “on” and make the right decision. Perhaps by sharing some of the common mistakes we regularly see, I can help you avoid similar situations.

A top mistake parents make in their 20’s

Placing kids before career

Some of the most successful people I know had kids at a very young age. I’ve worked with many single parents who heroically balanced work and early parenthood to scratch their way to success. Often, the resilience and time management they learn in the process helps them later.

One super successful friend of mine started his family when he and his wife were 23 and in grad school. Today he is ranked as one of the 50 most influential people in the US in his profession. That said, they are the exceptions. My friend would tell you that the hardest times in his marriage were those years of school, work, parenting and living at the poverty level.

Without unbelievable willpower and a pretty great support system, most people don’t thrive when they start a family before they start the foundation of their career. That doesn’t mean you have to be in your dream job and have tons in the bank – just that you have put yourself on the right path.

How we avoided this mistake

My wife and I got married just a few weeks before I turned 23. She was a new nurse and as such, always had the night shift. I was still figuring out what I really wanted to do with my degree, so we decided to wait a few years to have kids. I’m so glad we did – 5 years later when we started our family, we were excited about the idea of having kids instead of worrying about how that would change things because we were both more settled in our careers.

I know that it may sound preachy and that isn’t my intent. But as we published in a recent Society of Actuaries essay – our research, and research of leading think tanks, shows that having a committed partner and a career path before a baby goes a long way towards long-term financial wellness.

A top mistake parents make in their 30’s

Not putting limits on kids’ activities

The hardest, but sometimes best, thing we can say to our kids is, “No.” However, in today’s crazy culture of over-scheduled kids, we sometimes don’t even let our kids say “No” because we get worried that they will miss out on something. As activities like sports, music, dance, etc. start at younger ages, sometimes we can forget that our kids haven’t even asked us about playing soccer, but here we are signing them up like their futures depend upon it.

I can’t tell you how many friends I have talked to over the years who have said something to the effect of, “When did our kids activities start running every minute of our lives?” Not only does this impact the time you have to spend with your spouse, your family, friends and even your kids – but it is expensive!

How we placed limits without our daughters hating us

My youngest daughter has been involved in cheerleading over the years and one of the things we had to say at one point was that once she got to high school she could no longer do competitive cheer. It just didn’t make sense to pay huge amounts of money for her to do an activity she was already doing at school, which also required us to drive half way across town two or more times a week (not to mention the cost and time of traveling to those competitions).

My daughter’s initial reaction was not good – she didn’t like it at all. But we stood our ground, then discussed how the money could be directed to other things important to her like vacation and her college fund. She eventually calmed down and I’m happy to report that a month or two into high school, she even said how glad she was to not be doing competitive cheer because she didn’t think she could balance that time commitment with everything else.

The moral of the story

It’s important to encourage your kids to try new things and discover their passions. But it is perfectly OK to set limits on your monetary and time commitment to anything – especially below the middle school level.

A top mistake parents make in their 40’s

Not putting limits on kids’ college choices

No matter where you get your news, you’re probably seeing the same thing we hear every day in talking with people about finances: student loan debt is financially killing people – students AND parents.

Sometimes student loans are unavoidable. My wife entered college right when her dad’s business hit hard times. She got some grants and worked a ton, but she still had to borrow about 1/3 of the cost of her education. That’s what the program was originally designed for – to get students over the final line.

Somehow over the years, costs have risen faster than incomes and more and more people are borrowing to fill the gap. That said, many people are focused on their “dream school” and not their return on investment for education. All education – from technical training to Harvard Law – is a great opportunity as long as you measure the expense against the benefit.

How we’re balancing this in our family

My oldest daughter is majoring in elementary education. She realized early on that our contribution would cover a state school, but she would have a ton of debt at most private or out of state schools. On a teacher’s salary that didn’t make sense, so she’s heading to a state school.

On the other hand, my youngest wants to major in supply chain management. She only has one in-state option in a new program or two nearby states have highly rated programs. Both of those out of state schools will offer her in-state tuition if she gets the ACT score she’s shooting for. Even if she gets a mediocre score, it would probably only mean borrowing about $10,000 – $14,000 for one of those top programs.

That is probably a good investment for a highly rated program. It’s worth noting that her “dream school” for her major would result in about $75,000 of debt or more. On a standard 10-year repayment that would mean an extra $638 per month for essentially the same degree! Needless to say, it’s not even on her list.

So, when talking to your kids about their post-high school education, don’t focus on the name or the cool campus – come at it from a longer-term perspective by setting a maximum amount of debt that jobs in their major can support and don’t go over that amount. A common rule of thumb is that total student loan debt upon graduation should not exceed the first year’s salary in your major’s field in order for the payments to be affordable. If at all possible, stay well below it!

A top mistake parents make in their 50’s

Helping adult kids at the expense of their own retirement

According to a recent study by Merrill Lynch, American parents are setting aside $250 billion annually for retirement while spending $500 billion per year helping their adult children! Think about that for a minute: using twice as much to help your adult kids as you’re using to help yourself.

According to the study, 79% of parents are helping their adult children and most alarming is that 25% of the time people are dipping into their retirement funds to do so. I get it, we all want our kids to succeed because we love them dearly. But I often describe it to people like what you hear from the flight crew before takeoff: if oxygen masks are deployed, put your own mask on first before assisting anyone else. The same concept applies here.

You don’t have to be independently wealthy to help your kids, but you should run a retirement calculation to make sure that you are on track for retirement and that the help you provide won’t jeopardize that. You also want to make sure that you are not making your kids dependent on you, but instead helping them to become self-sufficient. Then you’ll be able to enjoy knowing that not only are you going to be able to enjoy retirement but that you will be able to see your kids enjoy the help.

A top mistake parents make in their 60’s and beyond

Worrying about leaving something to the kids instead of caring for yourself

The last stage of mistakes I’ve seen parents make is worrying about running out of money – not for themselves but that they won’t be able to leave an inheritance to their kids. Of all the mistakes, this is probably the least frequent, but it is still very real and it makes me sad.

It is disheartening when someone works their whole life and then doesn’t do those “bucket list” things because they are worried about their kids again. What’s worse is that usually when I see this, it’s not a vacation that someone goes without but things that really impact their quality of life – I have seen my own family members not want to spend money on things like hearing aids, medical treatments or making accessible improvements to their homes so that they don’t “spend their kids’ inheritance.”

I don’t have a financial solution for this one but just some advice: Remember that your children and grandchildren love you and want you to be healthy and happy. They would rather see you enjoy the fruits of your labor and maintain your quality of life than get a few extra bucks after you are gone. Believe me, they tell me all the time in my line of work.

Your One Stop Guide To Retirement Planning

March 01, 2019

Do you feel overwhelmed thinking about retirement planning? It’s one of the most common topics we’re asked about. One way to make it more manageable is to break it down into a series of decisions:

How much do you need to save?

This is the most complex and the most important question. After all, none of the other questions matter if you don’t have enough in retirement savings.

While there are lots of rules of thumb, the actual number depends greatly on your particular situation like your expected retirement expenses, how much you’re projected to receive in Social Security and pension benefits, when you plan to retire, how much you’ve currently saved, and how aggressive an investor you are. Your best bet is to run a retirement calculator that takes these factors into account. If you’re unable to save the amount you need, consider slowly increasing your retirement savings over time (some retirement plans have a contribution rate escalator that will do this for you automatically) and/or adjusting your retirement goals.

Where should you put your retirement savings?

First max out any match your employer is offering you. It’s hard to beat a 50% or 100% guaranteed return on your money.

Second, contribute as much as you can to an HSA if you’re eligible. That’s because the money not only goes in tax-free but can be used tax-free for qualified health care expenses, which you’ll almost certainly have in retirement. (This includes select Medicare and qualified long term care insurance premiums.) HSAs can also be used for any purpose penalty-free starting at age 65. That’s why you might also want to avoid tapping into your HSA even for qualified health care expenses and instead invest it to grow for retirement.

Unless you have unique investment options in your employer’s retirement plan that you want to take advantage of, you might want to contribute to an IRA next. That’s because you’ll have more flexibility in how the money is invested (almost anything) and how it can be withdrawn. You can use IRAs penalty-free for qualified education expenses and up to $10k for a first-time home purchase. Roth IRA contributions (but not earnings) can also be withdrawn for any reason without tax or penalty. If your income is too high to contribute to a Roth IRA, here’s a backdoor method.

Then go back and contribute as much as you can to your employer’s retirement plan. (If you have access to a 457, start with that because there’s no early withdrawal penalty.) If you max out your pre-tax and/or Roth contributions, see if you can make after-tax contributions and convert them to a Roth to grow tax-free. Finally, if you’ve maxed out all of the above, other options include cash value life insurance or just a regular taxable account.

How should you invest your retirement savings?

You may want to invest in your employer’s retirement plan, an HSA, a Roth IRA, and a taxable account all differently. However, the commonality is to make sure you’re properly diversified according to your time frame and risk tolerance and to minimize costs as much as possible. Then stick with your plan and don’t chase performance or try to time the market. If you take these steps, you’ll find that investing is actually the simplest part of your retirement planning.

What insurance policies will you need?

You need to consider your options for health insurance before you’re eligible for Medicare at age 65 and for supplementing basic Medicare coverage afterwards. Keep in mind that Medicare and other health insurance policies don’t cover long term care. Medicaid does but it may require you to spend down most of your assets and a growing number of institutions no longer accept it so you may want to consider a long term care insurance policy. Finally, if you’re worried about running out of money in retirement, an income annuity provides you income you can’t outlive.

How will you get income from Social Security, pensions, and retirement savings?

You’ve spent your whole life building up retirement assets and now you’ve got to decide how to use them. If you can afford to delay Social Security, you may want to do so to allow your retirement and survivor benefits to grow. If you can take a pension as a lump sum, here are some things to consider. Finally, see how much you can safely withdraw from your retirement savings and how to minimize taxes on those withdrawals.

As you can see, there’s a lot involved with retirement planning, but breaking it up into key decisions can help. (You should address the first three questions now, the fourth when you get closer to retirement, and the last in retirement.) If you have more questions or would like to walk through the decisions, you may want to consult with an unbiased financial planner. In any case, make sure you have a plan and continue to monitor and update it periodically. Your future (retired) self will thank you.

Will You Want Or Need To Work Past Age 65?

February 08, 2019

Many of us work with two kinds of coworkers – those who say they can’t wait to retire and those who swear they love their jobs so much they plan to die at their desks. I get the first group. Who doesn’t want to retire to a life of leisure without alarm clocks, meetings, conference calls, or commuting in traffic?

The second group, however, I view with a somewhat skeptical eye. Sure, some of us have dream jobs that we can’t wait to dive into every day and we would be very happy working in them until we are simply unable to do so. But when it comes to working past “normal” retirement age (let’s call it 65 since that is when Medicare kicks in for American workers), how many of us are going to work that long because we truly want to, and how many of us are masking the reality that we might actually need to work well into retirement age due to financial reasons?

Know your numbers

Even if you are unsure as to which of these two camps you may find yourself, a good first step for all of us is to periodically run a retirement income projection to estimate how much of our pre-retirement income we could potentially replace at retirement time. Knowing how much income we could potentially generate for ourselves in the future across a variety of potential retirement ages can help us plan not only for the retirement lifestyle we prefer, it can also help us plan for the possibility that life may hand us a giant bucket of lemons and force us to retire earlier than expected due to unforeseen events, such as a health issue or a late career downsizing.

If you work with a financial planner, ask him or her to give you an estimate of your future retirement income, or you can use the retirement estimator calculator to do it yourself. You will also want to get an update of your future Social Security retirement benefit amounts from the Social Security Administration at www.ssa.gov.

Employee engagement after 65

A major concern among both employers and workers is just how engaged we are likely to be in our work past age 65. Exactly what does it mean to be engaged on the job? According to an Aon Hewitt study, employee engagement describes the level of an employee’s psychological investment in their organization rather than simply showing up and going through the motions to collect a paycheck.

If you truly are engaged in your job, and you love what you do, where you do it, and with whom you do it with, then you are in your happy place career-wise and should certainly keep working as long as you wish. But what if someday you become that less-than-engaged worker, yet you aren’t ready or can’t yet afford to retire? What are your options then?

Attractive alternatives

You could try to hang on longer and maybe find a way to love your currently uninspiring position, but that seems like a disservice to both you and your employer. Instead, you could contemplate a late-career job change to something you do love that engages you more fully. This proposition is not as scary as it may seem. According to the New Careers for Older Workers study conducted by the American Institute for Economic Research (AIER), 82% of survey respondents not only made a successful career change after age 45, but many of them also received higher earnings.

As an alternative, you could also restructure your lifestyle to live on less. This way, you could successfully retire from a job where you’ve lost that lovin’ feeling without prematurely draining your retirement savings.

What Happens When You Inherit An IRA?

January 31, 2019

You’ve inherited an individual retirement account (IRA) – now what? Should you spend that money or save it for later? What are the consequences of either choice? Although there are several rules to follow regarding the method and timing of distributions from inherited IRAs, it is important to understand that distributions from inherited IRAs are not subject to the usual 10% penalty for distributions received before you reach age 59 ½. The IRS rules for distribution of inherited IRA funds are different depending upon several conditions:

Whether the IRA owner died before his or her beginning date for required minimum distributions (RMDs).
Your relationship with the deceased IRA owner (spousal or non-spousal)
Whether the inherited account is a traditional IRA or a Roth IRA

Spousal beneficiary of traditional IRA

If you inherited a traditional IRA from your spouse and were named the sole beneficiary, you may choose any of these options:

Own it. Treat the IRA as your own, even rolling it into an existing traditional IRA in your own name. Electing this option means the same rules and penalties apply to amounts withdrawn prior to you reaching age 59½. Assets will continue to grow tax-deferred.
Lifetime distributions. Open an inherited IRA (make sure it’s labeled “inherited”), transfer the inherited assets into it, and take annual distributions over your lifetime. Distributions need not begin immediately, but they must start no later than December 31 of the year in which your spouse would have turned 70 ½ or December 31 of the year following the year of death, whichever is later. If your spouse was age 70 ½ or older upon death, then distributions must begin no later than December 31 of the year following the year of death. These lifetime distributions are taxable, but they are not subject to a 10% penalty for early distribution if you are under age 59 ½.
Five year spend down. Open an inherited IRA, transfer the inherited assets into it, and take distributions of the full amount over a five year period. By the end of the fifth year, all inherited IRA assets must be distributed to you. These distributions are taxable, but they are not subject to a 10% penalty for early distribution if you are under age 59 ½.
Lump sum. Take a taxable lump sum distribution. As with the lifetime or five-year distribution options, a lump sum distribution to you is subject to income tax, but a 10% penalty for early distribution prior to age 59 ½ does not apply.

Non-spousal beneficiary of traditional IRA

If you are named as the beneficiary of an IRA from a parent, grandparent, sibling, aunt/uncle, friend, etc. (aka anyone you weren’t married to when they died) then the rules are different – you may not treat the inherited funds as your own. However, the other options available to a spouse are also available to a non-spouse. A non-spouse traditional IRA beneficiary may:

Open an inherited IRA in the deceased’s name, transfer the inherited assets into it, and take annual distributions over your lifetime. These distributions must begin no later than December 31 of the year following the account holder’s death. These lifetime distributions are taxable, but they are not subject to a 10% penalty for early distribution if you are under age 59 ½.
Instead, you may elect taxable distributions of the full amount over a five-year period without incurring a 10% penalty for distributions received prior to turning age 59 ½.
Finally, you could also take a taxable lump sum distribution immediately and without paying a 10% early withdrawal penalty if you’re under age 59 ½.

Spousal beneficiary of a Roth IRA

Treat the inherited Roth IRA as your own, including rolling it into a new or existing Roth IRA.
Elect lifetime tax-free distributions.
Elect tax-free distributions of the full amount over a five-year period. However, if the account is less than five years old when distributions occur, earnings will be taxable.
Take a lump sum distribution. However, if the Roth IRA was less than five years old at the time of the owner’s death, earnings are taxable when distributed.

Non-spousal beneficiary of a Roth IRA

With the exception of treating the inherited Roth IRA as your own (not an option in this instance), a non-spouse beneficiary of a Roth IRA has the same remaining options as does a spousal beneficiary:

Elect lifetime tax-free distributions.
Elect tax-free distributions of the full amount over a five-year period. However, if the account is less than five years old, earnings will be taxable.
Take a lump sum distribution. However, if the Roth IRA was less than five years old, earnings are taxable when distributed

Inheriting an IRA is, of course, a bittersweet occasion where we have to simultaneously deal with the physical and emotional loss of someone we care about and also face some critical financial decisions. For more information and details regarding this important topic, refer to IRS Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs). You might also want to consult with a qualified financial or tax advisor for advice on your particular situation.

5 Reasons Why I Think Everyone Needs Their Own Financial Plan

January 28, 2019

Does everyone need a financial plan? Apparently Wealthfront’s co-founder and CEO doesn’t think so. He claims that young people don’t really need a plan if they’re either single and currently saving money, or married, currently saving money, and not planning to have kids, or are single and can’t save. He argues that the first two should generally be okay even without a plan and the last would benefit more from a budgeting app.

However, here are some reasons that even young people in these situations probably need a financial plan:

1) They need insurance and estate planning.

Financial planning isn’t just about saving. In fact, one of the most important things for many young people is having adequate health, property and casualty, and disability insurance. This is especially true if they haven’t had enough time to build up enough savings to help cope with these risks.

Estate planning may seem like something just for older and wealthier people, but let’s not forget that Terri Schiavo was only 26 years old when she fell into a vegetative state without proper planning. That’s why it’s never too early to get the basic documents in place like an advance health care directive, durable power of attorney, beneficiary designations, and a will. Many employers even offer legal benefits to draft these documents for free or at a reduced cost.

2) They may need help prioritizing debt vs saving.

Many young people are tempted to pay down low interest student loans when they may be better off building emergency savings, capturing the match in their retirement plan, paying down higher interest debt, and/or saving for a down payment on a home. Of course, there are situations when paying down those students loans is the better course of action. That’s where financial planning comes in.

3) They may not be saving enough for retirement.

Many young people just stick to the default contribution rate in their retirement plans or contribute just enough to get the match. This could put them on track to be woefully unprepared for retirement, while even a small increase in their contribution rate could mean early retirement after decades of compounding.

4) They may not be fully utilizing tax-advantaged accounts.

I’ve seen many young people investing in a taxable robo-advisor account (like Wealthfront’s) when they could be benefiting from tax-free growth in a Roth IRA and/or HSA or just contributing more to their 401(k). Many are simply unaware of the benefits or how flexible these accounts can be.

5) Their investments may be improperly diversified or too expensive.

Many young people are either investing too conservatively for their time horizon or aren’t adequately diversified in their attempt to invest more aggressively. They also often don’t realize the impact of fees on their long term investment performance or even what fees they’re paying.

This is not to say that everyone needs to pay thousands of dollars for a 100-page “financial plan” that they probably won’t even read. However, practically everyone can benefit from having a chat with an unbiased financial planner who can help them uncover what they’re missing and what they should focus on at this stage in their financial life. (If they’re really fortunate, they may even be able to get this for free from their employer as part of a workplace financial wellness program.)

4 Red Flags To Watch Out For Before Buying An Annuity

January 25, 2019

Annuities – the word itself can start WWIII in a room full of financial advisors. Some advisors think of annuities as the financial instrument of Satan and other advisors believe it is the Holy Grail for anyone in retirement. I am in the middle.

For the right person in the right situation, they work

I think for the right person, the right annuity can help someone generate the income needed to maintain his or her lifestyle in retirement. For the wrong person, an annuity can tie up money unnecessarily for years. The key (and the challenge) is for the consumer to fully understand both the benefits and risks of an annuity and to assess if the benefits outweigh the risks for their particular needs.

Does anybody really know how these things work?

The problem is that annuities are so complicated that most consumers and most advisors do not completely understand them. The training on annuities at most financial institutions centers on selling them. When I first became an advisor, my company assigned me to an area with a high elderly population. Big surprise – this area also had many annuity sales people.

After a few months in my new location, a client would stop by with a friend who wanted a second opinion on an annuity. Most of the annuities I reviewed were good and a great fit for the owner. Unfortunately, there also annuity contracts I reviewed that did not match the benefits the annuity owner thought they were getting.

Other annuities I reviewed did not match the needs or even long term goals of the annuity owner. These experiences gave me a unique window as to the “red flags” of a potentially bogus annuity salesperson and new perspective on how to help consumers.

Red Flag #1

Your advisor pressures you to sign an annuity contract before fully explaining the contract to you

When you get the annuity contract to sign, have the advisor go over all of your discussed benefits in the contract. Make sure that all of the promised benefits are listed in your contract (your advisor should be able to point them out). If anything that was promised is not in the print of the contract, do not sign. If needed, your advisor can have the contract redone to include your discussed benefits.

Once you sign, no matter what you thought you were getting, you are pretty much stuck with the annuity. Most states have a “free look” provision that gives you the option to get out of your annuity within typically 10-30 days (varies by state), but once that period has passed, it’s yours, even if it’s not what you thought it was.

Red Flag #2

You do not know your advisor’s background

There is an inherent trust people have in anyone presenting himself or herself as a financial professional. One of my friends was told by an aspiring financial advisor that, “All I really have to do is put on a tie and show up, and people are willing to trust me.” The only qualification needed to sell an annuity for most is an insurance license, which requires 20-40 hours of general insurance courses, 6-12 hours of ethics courses and passing an exam. No financial or retirement planning knowledge required.

To sell variable annuities, an advisor would also need at a minimum a Series 6 license. The qualification to getting a Series 6 is for the advisor to be affiliated with an organization that will sponsor them to sit for the exam and for them to pass the 100-question exam with at least a 70% passing score. In most states, an advisor may also have to pass a Series 63, which I personally studied for and passed within a 48-hour period.

This means someone can graduate from high school June 1, go through all of the training, pass the exams and hang a shingle outside of an office as a financial professional by July 1 with absolutely no experience. Ask about the professional experience of anyone managing your money and do background checks by going to your state’s Department of Insurance website and/or by using the Broker Check website.

Red Flag #3

Your advisor did not clearly explain to you why the annuity he or she wants you to purchase is a good fit for you

If you are switching annuities, make sure you understand exactly why switching is such as good idea. I reviewed an annuity sales proposal from a woman who was getting ready to switch from an old annuity to a new one (called a 1035 exchange). The advisor told her it was a good idea, but the client could not explain to me why it was.

Upon reading the proposal, I knew it was because there was no good reason for the exchange except for the commission the advisor would receive. The change would increase her surrender period and cost her more money in fees and the annuity actually had fewer benefits. Make sure you clearly understand how and why the annuity purchase meets your financial goals.

Red Flag #4

The advisor tells you that it is a “no risk” investment

No matter how good an investment is, there are always risks. The risk may be your money being tied up or your money going up or down with the market or getting a low rate of return, or it could be the risk that the annuity company goes out of business. The key is for the benefits to outweigh the risk and for some, the risk may be a deal breaker.

I reviewed an annuity for a friend of a client who wanted to withdraw the money for his child’s education. His advisor told him about all of the benefits but left out the 10% surrender charge for withdrawing his funds. What angered him about this is that he told me that he explicitly told the advisor that he planned to use some of the funds for his child’s education.

The bottom line

Do not sign anything you do not understand. If you don’t understand an annuity, ask questions until you do. Just like Smokey the Bear’s famous quote, “Only you can prevent wildfires,” you are your own best defense against bogus financial professionals.

Why A Roth IRA Makes A Great Emergency Fund

January 23, 2019

Financial planners generally say that one of the most important financial goals should be to have enough emergency savings to cover at least 3-6 months of necessary expenses. As long as you meet the income limits (or can get around them without tax issues), one option to consider for your emergency fund is a Roth IRA. Here are 3 reasons why:

No penalty on early withdrawal of contributions

Unlike other tax-advantaged retirement accounts like a 401(k) and a traditional IRA, early (before age 59 ½) withdrawals of contributions to a Roth IRA are not subject to taxes or penalties. Early withdrawals of earnings may be subject to taxes and penalties, but the contributions come out first.

As an example, if you contribute $5,500 to a Roth IRA and that $5,500 grows to $6,000, you can withdraw the $5,500 at any time and for any purpose without tax or penalty but not the $500 of earnings. (Note that any money you convert to a Roth IRA has a 5 year waiting period before it can be withdrawn tax and penalty-free.)

Your money is more protected

The main benefit of a Roth IRA is that those earnings can grow to be tax and penalty free once the account has been open for at least 5 years and you’re age 59 ½. This can essentially shield your earnings from taxes. In the meantime, Roth IRAs also have stronger protections from creditors and can avoid probate when you pass away.

You’re less likely to use it frivolously

More important than protecting your money from creditors, probate, or even the IRS might be protecting it from you. Because of the benefits of keeping it saved in the IRA, you’re probably less likely to spend your Roth IRA frivolously than if that money was in a regular account. (It also doesn’t hurt that you have to fill out a form for each withdrawal).

By contributing your emergency savings to a Roth IRA, you can build your emergency fund without missing the annual Roth IRA contribution limits. One last thing to keep in mind is that you’ll still want to put your Roth IRA money in something safe like a bank account or money market fund if it’s part of your emergency fund. Once you’ve accumulated enough savings somewhere else, you can then invest it more aggressively for retirement.

How To Withdraw Over $100k From Your 401(k) Tax-Free During Retirement

January 11, 2019

Do you know how your retirement accounts will be taxed at retirement? If not, you might want to get up to speed with the IRS tax code (or work with an advisor who is) otherwise you may be missing out on some significant tax savings. Let’s start with the basics of how different sources of retirement income are taxed:

Common retirement income sources taxed as ordinary income

Traditional retirement accounts, including deductible IRAs, pre-tax 401(k)s, and inherited traditional retirement accounts are taxed as ordinary income in the year of distribution and pension benefits are taxed as ordinary income in the year received. (which means it will be taxed as if you earned it working during that year.)

Another source of taxable ordinary income during retirement is Social Security, but only a portion depending on the amount of total income from other sources. To estimate the taxable portion of Social Security benefits, check out this helpful calculator.

Common retirement income sources taxed as capital gains

Some sources of income during retirement may be taxed at preferential capital gains tax rates (basically lower rates than you pay on income that you earn working, aka “ordinary income”.) These sources include proceeds from the sale of stocks and mutual funds that are NOT held in a retirement account, which are subject to long-term capital gains tax treatment if held for over one year prior to sale. (Losses may be used to offset gains in the same year. Up to $3,000 in net losses may be deducted from income and losses that exceed $3,000 may be carried forward.)

Qualified dividends are a special type of dividend that also receives capital gains tax treatment (aka most people only pay 15% tax on dividends, even if they are in, say, the 32% tax bracket.)

Real estate is also subject to capital gains tax treatment when sold. There is, however, a special exclusion that applies to the sale of a primary residence. If a taxpayer lives in a primary residence for at least 2 of the previous 5 years before sale, the taxpayer may exclude up to $250,000 ($500,000 if married filing jointly) in capital gains from tax.

Common tax-free sources of retirement income

Not all sources of retirement income are taxable. Roth IRAs and Roth 401(k)s are tax-free when the account has been open for at least five years and the owner is at least age 59½. This is referred to as a qualified distribution. Inherited Roth accounts are also tax free as long as the deceased owned the account for at least five years.

Health Savings Accounts (HSA) are tax-free if funds are used for qualified expenses. Funds used for non-qualified expenses are taxed as ordinary income and subject to a 20% penalty tax if withdrawn before age 65 (after age 65, it’s just taxed as income when not spent on medical expenses.)

Finally, withdrawals from your regular savings account may be spent without incurring additional tax liability, although as you probably know, you pay taxes on any interest as you earn it.

Running a few ‘what if’ scenarios

Once you have a general understanding of how your different income sources will be taxed during retirement, you can run a few different “what if” scenarios. For example, let’s assume Hank and Cindy each are age 61 and recently retired at the beginning of the year. They would like to delay the start of their Social Security benefits until full retirement age or later (66 since they were born in 1954). They both have retirement plans from their former employers and can start making distributions penalty-free now that they are over 59½.

Their goal is to minimize taxes as much as possible and to take out just enough from their 401(k) accounts to stay in the safe zone of not outliving their money during retirement. Here is a quick snapshot of their retirement savings:

Hank’s 401(k) = $325,000
Cindy’s 403(b) = $275,000
Emergency savings/“rainy day” fund (checking, savings, CDs) = $150,000

Now, let’s assume that Hank and Cindy have an annual retirement spending goal of $42,000 per year ($3,500 per month). The mortgage is paid off and they are completely debt-free. Based on a generally accepted but widely debated 4% “safe withdrawal rate” rule, they could actually withdraw up to $24,000 in Year 1 of retirement. In this example we’ll stick with a $20,000 withdrawal from Hank’s 401(k), which is realistic based on this How Long Will it Last Calculator. The remaining $22,000 in annual income would come from their checking and savings accounts.

Looking at how their withdrawals will be taxed

How will Hank and Cindy be taxed using the 2018 income tax tables? The $20,000 retirement plan distributions are included as taxable income. The $22,000 coming from their regular checking and savings is after-tax return of principal and would not be taxed. (Only interest earned would be included as taxable income).

Hank and Cindy choose a married filing jointly tax status and their total income tax for 2018 will be a grand total of $0. Yes, that is zero. Here is how they will be taxed:

A quick review of the current Income Tax Rate Table shows us that a married couple filing jointly is taxed at the 12% marginal tax bracket for income over $19,050 but less than $77,400. But keep in mind that your total deductions and exemptions are subtracted from your income to determine your taxable income. The total deductions amount is either your standard deduction or your itemized deductions, whichever amount is greater.

The standard deduction is a fixed amount based on your age and filing status (e.g., $24,000 for married couples filing jointly in 2018). Hank and Cindy’s taxable income will look something like this:

Total Income: $20,000

– Total Deductions: $24,000

= Taxable Income: $0

Note: Hank and Cindy benefited from maintaining an emergency savings account that eventually transitioned into their short-term retirement income bucket. Most financial planners would suggest keeping assets that will be needed within a 3 to 5 year time horizon in safe, conservative investments such as cash equivalents, savings, CDs, or short-term fixed income instruments. This is sometimes referred to as the “safety bucket.

Using a Roth account instead of a savings account

In this example, a similar result could be obtained if the additional $22,000 retirement income was funded through tax-free sources such as a Roth IRA or Roth 401(k).

A similar result with taxable investments

If this couple held taxable investments in a brokerage account, they could also take advantage of historically low long-term capital gains rates (currently 0% for the 10% and 12% marginal tax brackets).

In essence, they could “fill up” the 12% income tax bracket with long-term capital gains up to the marginal tax bracket cap of $77,400 and not have to pay a dime of federal income taxes on that growth. But they would still want to invest that money in tax-efficient investments such as passively managed mutual funds or ETFs with relatively low turnover and low costs.

Remaining tax-free until Social Security starts

In summary, this type of retirement funding strategy could be replicated for the next 5 years until this couple has reached full retirement age for Social Security purposes. By that time, they could realistically take out over $100,000 from their retirement nest egg completely tax-free.

The secret is found within a simple concept known as tax diversification. Having multiple retirement income sources that are each taxed in a different manner can help you legally use the complicated IRS tax code to your advantage.

This is an example of just one of many different ways to minimize taxes during retirement. As you approach retirement, go ahead and run a few different “what-if” scenarios to examine your projected taxes. You can use this simple TaxCaster tool from TurboTax if you want to run a quick estimate using the current tax tables.

Keep taking full advantage of your retirement plan at work, especially up to the max to get the match. But take a second look at Roth IRAs, taxable accounts, HSAs, and good old-fashioned savings as well to help you obtain optimal tax diversification.

8 Ideas To Make The Biggest Impact With Your Bonus

January 08, 2019

This time of year, we often talk with people who are preparing to receive a bonus at work, either about how to make the most of it or how to best handle the taxes, or ideally, both!

Depending on your line of work, earning a bonus may come along often or only rarely, but regardless, when it does, it’s easy to start dreaming of a bigger home, nicer car or even just a fancier wardrobe. Sometimes, the money is literally spent on material things before we actually receive the deposit in our account.

Will it make a big difference? Could it?

At the extreme, many of us think that having more money will make our lives easier, only to find that when we look back over the years we’ve received the bonuses, we realize that the extra money was nice, but nothing really changed in the way we feel about our financial situation. Or we start expecting bonuses so that when they go away, we are financially unprepared for the loss of income.

Hitting the pause button

The next time you find yourself preparing to receive a bonus, before you start bookmarking properties or loading up your shopping cart, PAUSE. This is the perfect opportunity to make a huge impact on your future finances (yes, often by forgoing the immediate spending) and to ultimately make sure that you never have to revisit these thoughts again.

Here are eight suggestions that may not sound very exciting, but when taken seriously, can get you to the point of NOT depending too heavily on bonuses in order to have the life you dream of.

1. Accelerate debt pay-off – Use the Debt Blaster calculator to find out just how much sooner you can get those lingering student loans or credit cards paid off by making a big lump sum payment.

2. Bump up your emergency fund – If you don’t yet have several months of expenses set aside in a separate account, this is your chance to check that off your financial priority list.

3. Max out your Health Savings Account (HSA) – If you are enrolled in a High Deductible Health Plan (HDHP) but aren’t funding it to the maximum amount allowed, this is a good opportunity to do so. Not only will it reduce your taxes, but if you can avoid spending the money on everyday stuff and save it for potential bigger expenses down the road, it can serve as a back-up to your emergency fund.

If you haven’t contributed enough to hit the maximum allowed for last year, you actually have until the tax filing deadline in the spring to send a check or make a deposit directly to the financial institution where your HSA account is held and have it count as a deduction from last year’s income.

4. Contribute more to your 401(k) – Retirement may seem way off (especially if it literally is), but saving more in your earlier years will give you more options for later years. Use the Retirement Estimator calculator as a way to gauge how even just one percent more saved at a young age could mean retiring a year or more earlier than you expect, then consider using some of your bonus to allow you to bump up your per-paycheck contributions.

5. Save for short and/or long-term goals in a Roth IRA – You can put an extra $5,500 into a Roth IRA for 2018 ($6000 for 2019), and even more if you’re 50 or older. When just starting out, a lot of people actually use a Roth IRA as another back-up emergency savings account. Since whatever you contribute can always be taken out tax-free and penalty-free, it can be a way to build up an emergency fund, while also boosting your long-term savings if you end up not having an emergency.

Check out these 12 benefits of a Roth IRA on top of that. (By the way, you can still make a 2018 contribution to a Roth IRA by the tax filing deadline of April 15, 2019.)

6. Purchase some stock through your Employee Stock Purchase Plan (ESPP) at work – If your employer offers an ESPP, it’s a great way to get more bang for your buck because you purchase shares of your employer’s stock at a discounted price (or least without having to pay a brokerage commission). You can leave that money alone until retirement or some people prefer to sell right away to take the earnings from the discount, then put that money toward their next big vacation (or one of the other 7 options here).

7. Set it aside for future education needs – This is a great opportunity to boost savings for your kids’ (or other loved ones’) education expenses. If you don’t already have a 529 account, that’s one way to get started. There are other ways to save as well, which are included here.

8. Accelerate your mortgage pay-off – Maybe you dream of paying your mortgage off early – your bonus can help you make extra principal payments and get you closer to achieving that goal. You can run the numbers with this calculator (scroll down to see the impact of an extra payment or two each year.)

Beware of lifestyle creep

At the end of the day, the point is to enjoy life and a part of enjoying life is having enough money to pay the bills and save for the future while still living in the moment! Beware of lifestyle inflation: our “needs” tend to grow as our income grows. I’m not suggesting that you continue to live like a college student, but living below your means is the key difference between most “everyday” millionaires and those who may earn the same salary, but spend every dime they have.

Like I said before, be careful you don’t become dependent on your bonus for living expenses and instead use them as an opportunity to supercharge goals you’re already working toward. You put in the hard work needed to earn those bonus checks. Now, make the most of it by making sure you are financially stable in the future.

8 Things To Do When You’re Worried About The Stock Market

December 28, 2018

It’s been a rough ride lately in the U.S. markets. As I write this, the S&P 500 index fell about 5.8 percent during a short trading week, leaving investors feeling jittery. Part of the yield curve inverted, which means that short term interest rates are higher than some longer term interest rates. Is the powerful bull market we’ve had since the Great Recession beginning to wind down? If so, what should you do to prepare?

Whether this is normal volatility in a market that has room to grow or the beginning of the next economic downturn, recent events are a reminder that financial markets don’t go up in a straight line. Eventually, we’re going to have a bear market because that’s how the business cycle works. Over my adult lifetime, I’ve seen plenty of market bubbles and busts. Consider your worry about the market a sign that it’s time for a check-in on your investments.

1. Measure returns from where you started, not from the highest balance

It’s a natural tendency to look at the highest number on your 401(k) or brokerage account statement and then feel like you lost money when the statement balance is subsequently lower. You feel like you were counting on that sum, and now it’s not there anymore. Unless you sold at the exact moment when your balance was the highest, however, you wouldn’t have realized the gain, so it’s not very helpful to measure that way.

How did you do against your goals?

A more realistic approach is to measure your success vs. your goals. Has your account balance grown since you originally invested the money? Did you require a certain average annual rate of return or that your balance grow by a certain amount by a certain date to fund your goal?

What’s your progress so far? Are you trying to match or beat a benchmark using one or more market indices? (See Why Is An Index Important In Investing?) If you’re saving for a house down payment or an early retirement, and you’re still on track to meet that goal, that’s what matters – not whether you’re down 10 percent from the all time high.

2. Run a retirement projection

For most of us, funding a future retirement is a primary reason we’re investing. Now is an excellent time to run an updated retirement calculator to check your progress, given your savings and reasonable projections for your rate of return and inflation. You can use the Retirement Estimator for a basic check in to see if you are on track. You can also use the calculator to model different scenarios using different rates of return to see what happens.

Make sure you’re using a reasonable expected rate of return

When updating your retirement projections, it’s better to use a conservative expected rate of return. Research from the McKinsey Global Institute suggests investors lower their expectations for average annual US stock returns to 4 to 6.5%. If they’re wrong about it, you’ll be happily surprised, but if they’re right, you’ll be adequately prepared.

3. Check your risk tolerance

Try downloading our risk tolerance and asset allocation worksheet or use the questionnaire from your brokerage firm or retirement plan provider. Compare the results to your current portfolio mix. If they line up, you may not need to re-balance your investments. If there is a big discrepancy between your current investment mix and your ideal one, you may want to make some changes.

Know the difference between risk and volatility

One note about “risk” and “volatility.” Risk is typically measured in portfolio management by standard deviation. The more spread out daily prices are from the average price – either higher or lower — the higher the standard deviation of an investment.

If it were just math, it would be easier to stomach the volatility. But it’s your money! When most people think about risk, they think only about the downside risk – the risk that they’ll lose money and not be able to achieve their goals.

Try putting a dollar number on your risk tolerance. How much would you be willing to see your portfolio value drop in the short run before you’d throw in the towel? For example, if you need $50,000 in ten years to take a sabbatical, would you be comfortable seeing the interim value of your account drop to $45,000 (a 10 percent drop) in return for the possibility of a ten percent gain? How about $40,000 (a 20 percent drop)? If the thought of seeing your balance temporarily drop to $40,000 causes you indigestion, then maybe it’s time to lower your stock exposure.

4. Rebalance your portfolio if needed

Rebalancing back to a target mix of investments helps you keep the level of risk in your portfolio stable by taking some profits from those investment types that grew faster in value and buying more of the investment types that didn’t grow as fast or fell in value. Think about rebalancing as buying low and selling high.

Once you’ve re-checked your risk tolerance and run projections to see if you’re on track to meet your goals, you may or may not need to make some changes in your investment mix:

Examples of rebalancing:

If your current investment mix reflects your goals and risk tolerance, you probably don’t need to rebalance. For example: you’re planning to retire in 22 years, have a moderate risk tolerance and you’re in a 2040 target date fund.
If your investment mix is out of whack with your target mix, rebalance. During the past decade, many investors have become overweighted in stocks due to strong stock market performance. If your goal is to maintain 60 percent in stocks and you’ve got 80 percent in stock funds, it’s time to rebalance and move 20% back to bonds.
If your risk tolerance has changed and your target investment mix is different than before, that’s also a very good reason to rebalance.
If you’re within 5 years of retirement, consider building up a much larger cash position. In pre-retirement years, it’s generally a good idea to move at least 3 years of anticipated expenses to cash-type investments (think savings, money market funds, CDs, etc.). That way, if the markets are in a slump when you retire, you won’t have to sell investments at a loss to pay your bills and can wait for a market recovery. Make sure you’ve updated your risk tolerance. Many pre-retirees find that they want to take a lot less risk in their investments during the transition to retirement.

Not sure of the best ways to rebalance your portfolio? See 4 Different Ways To Rebalance Your 401k.

5. Put together a simple investment policy statement (IPS)

You may also find it helpful to put together a brief, written outline of your target investment strategy to use across all your accounts. An IPS doesn’t have to be fancy. Just set some targets for types of stocks, bonds and other investments (like real estate or commodities) that you want to maintain over time. See this Investment Policy Statement Template for some ideas and/or dive deeper here: Morningstar Course (free): Creating Your Investment Policy Statement and Investment Policy Worksheet.

6. Diversify

Are your investments as diversified as they could be? Diversification mixes different types of investments so that the gains of some investments offset the losses on others. That reduces risk (although doesn’t eliminate it). Different types of investments historically have delivered gains at different times – think U.S. stocks vs. international stocks or stocks vs. bonds.

If you’ve got a “plain vanilla” portfolio, consider the pros and cons of incorporating different types of investments to reduce volatility. Many investors are just in the S&P 500 index, for example, or only in stocks and bonds. If it fits your risk tolerance and goals, incorporating some non-correlating investments like real estate, commodities and hedge fund proxies (e.g., market neutral funds, managed futures, long/short funds, hedge fund ETFs, etc.) can help reduce risk and smooth out returns.

7. Build up your emergency cash

You may not know when the next recession will hit, but you can still be prepared. Recessions don’t just bring bear markets. For some people, they also bring layoffs. If you don’t already have 6 months in living expenses in an emergency fund, work to build up that account.

8. Take advantage of volatility IF you’re aggressive

Are you a hands-on investor with an aggressive risk tolerance? Periods of high market volatility also present opportunities, but only for those who are comfortable with the financial equivalent of skydiving. There are new ways to “trade volatility,” including volatility ETFs, futures on the VIX (the volatility index) and options on market indices. My husband, Steve, spent time this past week using his mighty math powers to successfully trade volatility ETFs. I’m not that hands-on, nor am I that much of an aggressive investor, so it’s not something I’d do myself.

What’s the bottom line? Recent market volatility is an alarm clock reminding us that it’s been a great bull run, but there may be some roller coaster times ahead. Make sure you’re buckled in.