Banknotes

You’ve done everything you were supposed to do. You’ve saved, invested, and you have a total of $1,000,000 in your employer retirement plan. You even got the memo about Roth contributions, and $200,000 of your million is in Roth contributions. You’ve decided that now is the time to ride off into the sunset and enter the wonderful world of retirement. What’s next?

I’m always fascinated by lists, especially those that show the differences in this wonderful country of ours. For example, I recently learned from a list that, in Wisconsin, our favorite Halloween candy is Starburst, while in New Jersey, Tootsie Pops are king. As the end of the year approaches, I thought it might be interesting to examine the differences in how well each state sticks to its New Year’s resolutions.

You’ve done all the saving and planning necessary to enter the next stage of your life. Great! But don't stop there. Here are some very simple, yet effective tips to make sure that your transition from working to non-working life goes smoothly.

The U.S. unemployment rate is at a 50-year low, currently sitting at 3.8%. The economy seems to be firing on all cylinders, people are working and actually getting raises, and Democrats and Republicans are putting political differences aside for the betterment of the country.

OK, maybe only the first two are true … but two out of three isn’t bad. So what’s the problem?

For many small- to medium-sized businesses, the owner's single largest investment is the business itself. The retirement plan is to live off the sale of his or her life’s work.

Steven Wright’s quintessential, dry-witted line about excess probably doesn’t do much for most of us, other than cause a chuckle. We probably aren’t looking for a deeper meaning or applying it to our everyday life. However, I thought it might be interesting to examine a few well-known idioms/quotes/sayings and explore how we might use them to make practical applications to our personal finances.

Cost of living increase will kick in during the 2019 tax year which means individuals can save more money in tax-advantaged plans prior to their retirement. 

Buy-sell agreements or buyout agreements are often referred to as prenuptial planning for business partners.  What happens to the business if a partner dies, becomes incapacitated or wishes to leave are all things that can be addressed with solid upfront planning.  It is extremely valuable having an attorney draft an agreement that deals with situations that could disrupt the business’ continuity.  A solid buy-sell agreement provides a value of the business and partner’s interest as well as terms dictating how the business continues while providing proper consideration to the departing partner or his/her estate.

Do all of these describe you?

• You are over the age of 70.5
• You have Traditional IRA assets
• You used to itemize your deductions but will not anymore because of tax reform
• You give to non-profit organizations on a regular basis

If you fit this profile you can take advantage of qualified charitable distributions from your IRA.  Since the standard deduction nearly doubles ($24,000 for married individuals filing a joint return) for the tax year 2018 many individuals will not be able to deduct contributions that they made in the past.

There are many unique challenges facing the current generation of retirees including higher medical costs and longevity. Perhaps the biggest challenge is the lack of a pension. Years ago most private sector employers made the shift to defined contribution plans (e.g. 401(k)) from defined benefit plans (e.g. pension). This put more of the savings onus on the employees plus the additional challenge of managing your income in retirement.