9 minute read
Legal
Filling A Retirement Savings Gap
Renee A. Hanson, CFP® , ChFC®, CEP®, CDFA™ , CFS®, BFA®, APMA®
Are you on track to achieve your retirement savings goals? It’s important to establish a target savings amount and regularly make retirement plan contributions. It’s also vital to regularly check your progress so you know if you are on the right track. Should you determine that you are falling behind on your savings goals, it’s time to try to rectify the situation.
Any or all of the following solutions can help you overcome a retirement savings gap:
#1 – BOOST YOUR SAVINGS
The first option to make up for a retirement shortfall is to boost your savings. For example, if you set aside $200 more per month in your retirement accounts, that could add up to more than $63,000 in 15 years (assuming a 7% average annual return before fees and taxes).
Find that money by reducing current living costs, particularly discretionary expenses. You may want to refinance your mortgage to reduce house payments or transfer balances on high interest credit cards to lower your monthly payouts. Be sure to take full advantage of an employer’s matching contribution to a workplace retirement plan if you have access to one.
#3 – MOVE YOUR RETIREMENT DATE
You can choose to take more time to meet your retirement savings goal. That might mean working longer than you initially expected and continuing to set money aside to close the savings gap. If you planned to retire in your 60s or earlier, you should have some room to maneuver. Assuming you are in good health, adding a year or two of work may be feasible.
#4 – ADJUST YOUR RETIREMENT EXPECTATIONS
If you are too close to retirement to make a significant dent in your retirement savings gap, you may need to adjust lifestyle expectations when you are done working.
Take a closer look at your retirement income needs and determine where you can cut back on discretionary expenses in the years to come.
Look for help
Even if retirement is a long way off, you want to stay on top of your progress and make sure you are taking all of the steps you can to make your goals a reality. Talk to a financial advisor to help you assess where you stand and what you can do to avoid or erase a savings gap.
#2 – UPGRADE YOUR INVESTMENTS
For most people, time is on their side when investing retirement assets. This provides flexibility to invest your money in a way that can generate a competitive return because you have time to overcome short-term market fluctuations. If your savings isn’t generating the return you expected, you may want to reassess your holdings and seek out a combination of investments that have the potential to earn a higher return within your tolerance for risk.
Renee A. Hanson, CFP® , ChFC® , CEP® , CDFATM , CFS®, BFA® , APMA® , is a Private Wealth Advisor with Affinity Wealth Advisory Group, a private wealth advisory practice of Ameriprise Financial Services, LLC. in Phoenix, Arizona. She specializes in fee-based financial planning and asset management strategies and has been in practice for 31 years. To contact her visit www.affinitywealthadvisor.com or call (602) 923-9800. Her office is located at 7010 E. Chauncey Lane, Suite #200, Phoenix, AZ 85054-3115. Investment advisory products and services are made available through Ameriprise Financial Services, LLC, a registered investment adviser. Investment advisory products and services are made available through Ameriprise Financial Services, LLC, a registered investment adviser. Investment products are not insured by the FDIC, NCUA or any federal agency, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal Putting the needs of clients first is the approach I believe in. I’ll work with you to find and fluctuation in value. the right financial solutions to help you plan for your unique goals. And together, we’ll Ameriprise Financial Services, LLC. Member FINRA and SIPC. © 2022 Ameriprise Financial, Inc. All rights reserved. track your progress over time, adjusting your plan along the way to help get you where you want to go.
Renee A. Hanson CFP®, CEP®, CDFA®, CFS®, ChFC®, APMA®
Private Wealth Advisor
Affinity Wealth Advisory Group
A private wealth advisory practice of Ameriprise Financial Services, LLC
602.923.9800
7010 E. Chauncey Ln Ste 200 Phoenix, AZ 85054 renee.a.hanson@ampf.com affinitywealthadvisor.com
Ameriprise Financial Services, LLC. Member FINRA and SIPC.
Legal
Have a Side Hustle? Tax Season Just Got More Complicated
Contributed by Arete Financial Solutions
According to a recent survey, 45% of Americans have a side hustle in addition to their full-time job. In Maricopa County the formation of businesses rose from 4.7% to 31.9% between 2019-2020. Whether out of necessity or passion, these side jobs will have important tax consequences come April 15.
“1099 contractor income is selfemployment income. It is extremely important to seek guidance from a tax professional when you have any kind of business,” says Enrolled Agent Mary L. Reha, co-founder of Arete Financial Solutions. “Working with a professional who knows and understands the tax laws in this constantly changing area can save you a lot of money.”
According to Reha, those who started a side business last year need to carefully consider key items that are critical in properly and lawfully filing their 2021 taxes.
PAPERWORK NEEDED: As a 1099 contractor, you need to bring documentation of your income, expenses, bank statements, P&L or revenue statements, balance sheets, vehicle mileage or actual expenses and receipts for any asset over $2,500 to your tax preparer.
OVERLOOKED EXPENSES: Individuals accustomed to being a W2 employee often don’t realize the many things that can be deducted as business owners. Your tax professional can help uncover expenses incurred that might qualify as business deductions.
ESTIMATED TAXES: Self-employed individuals who expect to owe more than $1,000 in federal tax need to pay estimated taxes throughout the year to avoid underpayment penalties. A tax professional can ensure that you make the right estimated payments moving forward.
RETIREMENT ACCOUNTS: W2 employees often have a 401K, but side hustle owners could also start a SEP IRA where they can contribute up to 25% of their solo business income to a retirement fund.
LEGAL STRUCTURE: In addition to tax consequences, it’s equally important for anyone with a side business to have the proper legal structure to support it. “Although it is a ‘side hustle,’ it is important that people take the necessary steps to protect themselves from a legal standpoint,” says Ted Ashton, Esq., co-founder and director of the Arete Financial Solutions legal team. “Proper formation, insurance and accounting are all critical to the success and protection of you and your business.”
With 70 million Americans involved with a side business, knowing how to prepare for tax day and beyond is imperative. Even though a side hustle might be more of a hobby than a real job for many, it is still a legitimate business in the eyes of the IRS and the law.
Legal
Take Care of Your Beloved Pet with Estate Planning
By Libby Banks, The Law Office of Libby Banks, PLLC
Those of us with pets consider them members of our family. Along with the rest of the family, we need to make sure our pets are cared for when we can no longer do the job. How do we do this with our estate planning? It can be complicated or simple, depending on you, your pet and what you want.
A pet trust is one way to take care of a pet. The wealthy and famous often do this. The widow of the Star Trek creator left $4 million for their dogs and $1 million for their caretaker. Oprah Winfrey is rumored to have established a pet trust for her beloved dogs, setting aside $30 million for them.
Pet trusts are real and ordinary people (and their pets) can benefit from the Arizona law allowing trusts to be set up for pets. A pet trust can be especially helpful if you have a pet that can live a long time, like a tortoise. A friend of mine has a tortoise named Pepe who could live for 100 years. A cockatoo can live as long as 60 years. When your pets could easily outlive you, you should plan for them to be adopted by the right people and provide the money for their care.
Your pet may also be very expensive to keep. One example is the horse, which requires more time and money than most dogs or cats. A pet trust can be a great way to assure both that the money you leave is really used for the care of your pet, and to provide for the succession of caregivers.
The pet trust allows you to provide money for the animal as well as detailed requirements for their care – what veterinarian to use, what food they should eat, and even requirements for grooming, walks or car rides.
The pet trust can be created as a separate trust or created within your own revocable living trust. It can also be simpler, with a straightforward designation of a caregiver and a cash gift to go with each pet for their care. We often also include directions to the trustee to find a suitable new home if the original caregiver is not available.
However you wish to provide for your pets, it is important to put the instructions into a binding plan. Having a plan in place for your assets, your pets and for your own care if you are incapacitated will give you immense peace of mind.
If you are interested in putting an estate plan in place, I offer a complimentary first consultation. Give me a call at 602375-6752 or check out my website at libbybanks.com.
Call us today to schedule your FREE Estate Planning Consultation
Our Estate Planning in Phoenix and Scottsdale is highly customized to meet your unique family situation, assets, values, and personal goals. Our complimentary first meeting allows you to get to know Libby, our Estate Planning attorney and talk about your unique situation and what plan will best fit your needs.
Remember, when you choose Libby you are not only hiring someone to prepare your Estate Plan, you are choosing a seasoned Estate Planning attorney to guide you through this often complex process and raise questions you might not have considered. You are choosing an experienced professional to create a plan that serves your family in the way that you want and, after you are gone, a trusted advisor that your loved ones can depend on.
Come see us in our new, convenient office located just down the street at 5010 E. Shea Blvd, Suite 205 Scottsdale, AZ 85254 602.375.6752 | www.libbybanks.com | libby@libbybanks.com
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