The death of a spouse is one of the most devastating events of a person’s life. During this difficult time, do not make any major financial decisions right away. Allow yourself time to only deal with the emotions of your loss. Then, get 10 to 20 copies of your spouse's death certificate to document ownership changes. Be sure to keep all payments current to avoid late and interest charges.
You might be thinking, “Since I don’t need the required minimum distribution from my retirement accounts in order to live on, can’t I just leave it in my retirement account?”
If you do not withdraw the required minimum distributions, the IRS will impose a penalty of 50%. Further, after imposing the penalty, you are still required to make the withdrawal. You must make the withdrawals so that you can pay taxes to the government. The remainder of the withdrawal after taxes can be invested with the goal of building wealth outside your IRA. Let’s discuss strategies to help you invest money both inside and outside of your IRA. Give us a call today.
People often ask us, “How long will it take to double my money? You can find the answer with the rule of 72. Here's how it works. Compounding interest is the interest you earn on a growing amount of money.) To find out how long it will take your money to double, take the number 72 and divide it by the interest rate earned. This will give you the number of years it will take to double your money.
The average American household debt is increasing. Some debt is good, but some debt is bad. Good debt includes borrowing for a home or college education. Good debt is often defined as debt that can help you generate additional income or increase your future net worth. Bad debt includes buying things you use that won’t generate money in the future, like a boat or a high priced car. Save up and buy these kinds of things with cash, not with debt. Set aside a certain amount of savings each month just for this purpose.
A “Living Trust” is a trust you created that is active while you are alive versus a Testamentary Trust which becomes active at your death. When you create a Living Trust, you ensure that your assets will be disbursed efficiently to the people you choose after your death. The big advantage to a Living Trust is that the trust doesn't have to go through probate court as a will does. Probate can be expensive in attorney and court costs while also causing long and frustrating delays.
A Living Will can also be called an Advance Health Care Directive. It is a legal document instructing what actions should be taken if you are unable to make decisions due to illness or incapacity. Medical intervention can unnecessarily prolong life, pain, expenses and emotional stress for patients and family members. You can reduce this stress by planning well.
Written goals are your road map to financial success. Be specific, simple, and realistic and include time frames and dollar amounts. Have some big goals and some small ones. Include a savings plan and an emergency fund. Pay off high-interest debt and control the amount of your debt. Then, take action to achieve your goals. Review your goals often and remember it takes time to achieve goals so be patient. Without a plan, your path waivers and valuable time is lost.
The durable power of attorney is a legal document that allows a trusted person to act in your place if you're incapacitated. If you are unable to act on your own due to accident or illness, they can step in to take action for you. They can pay bills, or control investments, or even make decisions about health care issues.
What are required minimum distributions and how are they determined? Beginning at age 70.5, you must begin to withdraw money from your retirement accounts every year. The amount is determined based on your life expectancy as contained in the IRS tables. Required minimum distributions are computed by dividing the account balance at year-end by the life expectancy factor.
As life expectancy has grown, your retirement now can last between 20 and 30 years. So Social Security planning is critical, no matter how much money you have. It can make a difference of hundreds of thousands of dollars. For example, if you retire at age 62 and pass away at age 86, you’ll receive at least 25% less for 24 years. But, if you wait to retire at age 70, you’ll receive 32% more for 16 years. If your retirement income at age 66 was $2,000 per month, this could be a difference of over $200,000 during your lifetime.
If you're like most people, most of the time, you focus your financial efforts on maximizing your current income. But it's also important to plan ahead for the benefit of your spouse if you should pass away. Here are some tips on how to do that.
You might be asking yourself, "When should I retire? Should I retire early or defer it?" Deciding when to retire may not be just one decision, but a series of decisions and calculations. For example, you’ll need to estimate not only your anticipated expenses but also what sources of retirement income you’ll have and how long you’ll need your retirement savings to last.
The information presented on this website is for information on matters of interest only. Given changing laws, rules and regulations, there may be delays, omissions or inaccuracies in information contained on this website. The information in this website is provided with the understanding that the authors and publishers are not herein engaged in rendering legal, accounting, tax, or other professional advice and services. Before making any financial decision, you should consult one of the Charles Carroll advisors. Every effort has been taken to see that the information contained on this website is accurate. Charles Carroll in not responsible for any errors or omissions, or for the results obtained from the use of this information. Charles Carroll and its employees are not liable to you or anyone else for a decision made or action taken based on the information on this website