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Category: Retirement Planning

Your 401(K) Isn't Your Only Option

Your 401(K) Isnt Your Only Option

Posted By Lineweaver Financial Group
October 03, 2017 Category: IRA, 401(k), Retirement, Retirement Planning

You’ve heard it over and over again, from many places –  never, ever make an early withdrawal from your 401(k), unless it’s an emergency.  And, we agree - that’s often good advice.  But there are a few exceptions where an early withdrawal may be to your advantage. Some companies allow active employees participating in a qualified employer-sponsored retirement plan to withdraw a portion of their account balance upon request, without demonstrating a specific financial need, usually at age 59 ½. This is called an in-service, non-hardship withdrawal. One reason you may want to consider this option is that by rolling over a portion of employer-sponsored retirement plan assets to a rollover IRA, you may be able to significantly expand your investment choices, especially if you have limited choices in your employer-sponsored retirement plan.  401(k)s typically offer limited fund options to participants.  Spreading the risk among a group of investments is generally a good thing when saving for the long term.  But this usually means you miss the opportunity on select investments. Outside of your 401(k), you could invest in specific sectors that may have greater long-term growth potential, like healthcare.  You could move into investments that will have lesser impact with anticipated rising interest rates, like limited-duration bond funds. You could look at alternative investments, like real estate, gold and other com

How Much Money Do You Really Need To Retire?

How Much Money Do You Really Need To Retire

Posted By Lineweaver Financial Group
March 24, 2017 Category: Retirement, Retirement Planning

Life is full of uncertainty. What your career will bring, changes in your family, your health, and the market. And these are just a few! So it’s hard for anyone to predict the future, but there are really only two ways to figure out how much you need for retirement. And, as you’ll see, one offers a better future for most. 1.      Save What You Can It’s no secret that many people are putting off or avoiding saving for retirement. A recent article on CNN.com shared that about 26% of workers said they and their spouse have saved less than $1,000 for retirement, according to a report from the Employee Benefit Research Institute. Another 16% said they have between $1,000 and $10,000 stashed away for retirement. While some of those are no doubt younger workers who have time to save, some are likely not. It’s highly doubtful that they’d be able to retire at all on that! Some financial planners point out that planning retirement spending around your current income might not make sense. Many people drastically change their spending habits in retirement. Expenses might shrink, or they might increase. But, even if they stay the same or decrease, you have to consider what the markets might do, how inflation might affect your savings, or how healthy you will be. 2.      Work Backward and Make a Plan This is the advice you’d likely hear most often. This involves some version of working b

Are You Spending Your Legacy?

Are You Spending Your Legacy

Posted By Lineweaver Financial Group
March 10, 2017 Category: Legacy, Retirement, Retirement Planning

Are You Spending Your Legacy? Retirement is supposed to be a well-earned reward – a time when you can stop worrying about the day-to-day struggles of your career, and everything that went with it. A time to enjoy your family, and to scratch a few things off your bucket list. Confronted with so much freedom, it can be tempting to do all those things without considering a plan going forward. While we find that most of our clients aren’t afraid of running out of money for themselves, many of them do want to leave a legacy to help their children or grandchildren. So how can you ensure that you’ll be able to have the retirement you want and still help your loved ones? It all comes down to your spending rate. To find your rate, start by adding up your expenses, and subtract that from any non-portfolio income you might be receiving in retirement. That can mean things like rental property income, annuity income, or even Social Security. The amount left over is what you’ll need to withdraw. You can divide that by your total portfolio, and there’s your spending rate! Most financial advisors will recommend a 4% spending rate. But keep in mind that financial professionals have arrived at this rate by making a number of assumptions. They are: 1.       That you’ll want a steady and consistent income 2.       That your portfolio asset allocation is aligned with your financial goals and ri

What Level of the Retirement Pyramid Have You Reached?

What Level of the Retirement Pyramid Have You Reached

Posted By Lineweaver Financial Group
February 23, 2017 Category: Retirement, Retirement Planning,

When it comes to retirement planning, it’s hard to know where to start. Many people put it off for years, only to discover that they’ve put themselves at a distinct disadvantage. They often have to sacrifice to catch up financially, or work for far longer than they would have otherwise. When we talk to clients, they are interested in two things: they want to maintain their quality of life while saving for retirement, and they don’t want to make sacrifices once they have retired. We’ve put together a helpful guide that can help you do just that! To simplify the many options available to you, we’ve laid these out like a pyramid – you shouldn’t think about progressing to the next level before you’ve completed the other levels from the base up. We think that this makes it easier to understand by helping clients strategically, thoughtfully, and thoroughly build the retirement of their dreams, and to have a roadmap to understand what they should be doing now, and what comes next. Level one: Make sure you’re investing enough to receive your company match If your employer offers a 401(k) with matching contributions, that is essentially free money. Although you have to contribute some of your own money, it will be matched at a certain pre-determined rate ($.50 on the dollar up to 6% is the most common), which is like giving yourself an immediate raise. Generally speaking, and even if the match is relatively small, it’s

Living for Today and for Tomorrow

Posted By Lineweaver Financial Group
August 01, 2016 Category: Retirement Planning, Financial Planning

Life is about finding the right balance, whether it be with diet, exercise, or your finances.  Do we sacrifice today for a richer future, or do we live it up today and worry about the future when it gets here? Most of us are trying to manage multiple goals at the same time; that is true in our financial lives also. Enjoy life today; pay off debt; save for future goals….retirement, children and their education; build emergency funds; or build funds for a future large purchase. Do Americans have financial balance in their lives? The results of a recent survey from Bankrate indicate the answer is no. Fewer than one in four Americans have enough money in their savings account to cover at least six months of expenses--enough to help cushion the blow of a job loss, medical emergency or some other unexpected event--according to the survey of 1,000 adults. Meanwhile, 50% of those surveyed have less than a three-month cushion and 27% had no savings at all! Only 48% of respondents to a Federal Reserve study said that they would completely cover a hypothetical emergency expense costing $400 without selling something or borrowing money. I wouldn’t be able to sleep at night in that situation. Even households earning at least $100,000 are finding themselves pinched, with 1 in 4 saying they sometimes live from pay period to pay period. Hopefully these statistics are a wake-up call. I hope that in the future, we see Americans develop a healthy relationship with money. B

Portfolio Stress Test

Portfolio Stress Test

Posted By Lineweaver Financial Group
June 06, 2016 Category: Financial Planning, Retirement Planning, Diversification

Review Your Investments Before the Next Panic. Better to Act than React. This time last year who would have thought that the price of oil would drop to today’s levels? Or that slowing growth in China would send shivers through the market? Barely seven years after the financial crisis, it already feels like a distant memory—and rosier than it was. Test your own recollection of the bear market: Do you remember correctly that between October 2007 and March 2009, the U.S. stock market dropped in price by 57%? Most investors build retirement portfolios with one goal in mind—to maximize returns. Does that take into account reality? Probably not. On the other hand, you need to understand the cost of being overly cautious also. Risk and returns frequently go hand-in-hand. If losses cannot be tolerated, then long-term return will be decreased along with risk levels, which will mean that retirement goals must be reassessed. If you think stocks can’t fall by at least 50% again, you are wrong. If you think that you (or anybody else) can know exactly when that will happen, you must have a very reliable crystal ball!  And if you think you won’t overreact when it does, you had better test that belief now—before it is too late to find out you were kidding yourself. The Federal Reserve annually examines large financial institutions to see how they would weather various significant financial stresses. The test simulates a crisis that includes a de

Asset Allocation Review

Posted By Lineweaver Financial Group
May 16, 2016 Category: Financial Planning, Retirement Planning

The underlying principle of asset allocation is to diversify your investment portfolio among several different asset classes in an effort to reduce the risk and volatility of your overall portfolio and potentially improve your overall returns. Even if you’ve already constructed a plan, changes to your investment profile such as time horizon or risk tolerance may require adjustments to your asset allocation plan. The plan you established last year may not be appropriate this year as a result of economic fluctuations or changes in your personal or financial circumstances. Your allocation to international investments might not make as much sense this year with slowing foreign growth and heightened terrorist concerns. To start the review run through a quick exercise of determining your exact current asset allocation, on a percentage basis; add up your exposure to stocks, bonds, cash or otherwise. Then simply ask yourself: What type of market am I allocated for? Obviously, a bull market portfolio would have a high allocation to stocks or alternatives, whereas a bear market portfolio would have outsize allocations to high-quality bonds and cash. In a rising interest rate environment be careful assuming the bonds are risk adverse- the opposite could hold true. Heading into the 7th year of market growth an important consideration is having adequate cash reserves, and possibly a downsized risk appetite. We all know the market will decline- after 7 years that likelihood incre

Avoid Costly Financial Mistakes

Posted By Lineweaver Financial Group
April 21, 2016 Category: Retirement Planning, Financial Planning

Learn from the mistakes of others so you don’t follow the same path With the combined decades of experience in financial planning of the advisors at The Lineweaver Financial Group, we have witnessed mistakes made by people planning for and living out their retirement years. Some of the mistakes are costly emotionally and others have been costly financially. Today we share some of the mistakes that are common, so you can use this information to evaluate your own situation and ongoing plans. We are not going to look at the rare unlikely mistakes, but rather focus on those we see commonly. Ignore significant financial drops- Most of our clients have one thing in common. They have enough money to live out a comfortable retirement as long as they don't lose it. Over the years we've taken great pride in helping our clients hold on to what they have. Forgetting About Income Taxes- Just because we retire does not mean income taxes go away. During retirement income tax planning can be even more critical to preserve the nest egg. Especially with the onset of required retirement plan distributions, it is important to continually evaluate whether to take the minimum or to accelerate withdrawals. Retiring Early Without Adequate Planning- An early retirement can present exponentially greater challenges to one's savings. Not to say it should not be done, but it is particularly critical that a game plan be developed well ahead of time to help assure there will be enou

Congress Makes Charitable Contributions from IRA’s Tax Free. Forever!

Congress Makes Charitable Contributions from IRA’s Tax Free. Forever!

Posted By Lineweaver Financial Group
February 04, 2016 Category: Retirement Planning, Financial Planning, Charitable Contributions, Tax

Are you at least 70 ½, and want to build regular charitable contributions into your legacy plan using excess funds in your IRA? In the past, you had to worry that the government might decide that donation was considered taxable income, which meant you would either had to either contribute more to cover the shortfall or give simply give less. The good news is you never have to worry about that again because the Federal Government has made a permanent change to IRA gifting.  Starting 2016, charitable donations of up to $100,000 per year made from your IRA funds are no longer subject to any tax because the donation is excluded from your taxable income.  That means, for those of you so inclined to give-back, you can integrate a regular annual donation into your retirement plan. And, since the law refers to Individual Retirement Accounts, your spouse can do likewise with his or her IRA funds. A little good news for your kids…. There’s also a provision in the new law that you might want to mention to your children who are putting aside money in their IRA or in a 529 plan for their kids. The cost for computers, software, and even internet access can now be withdrawn from accumulated savings tax and penalty free — even if the school your grandchildren attend do not require a computer as a condition of

Time is ticking….. Less than six months to take advantage of two vital Social Security pay-out strategies

Time is ticking….. Less than six months to take advantage of two vital Social Security pay out strategies

Posted By Lineweaver Financial Group
December 07, 2015 Category: Social Security, Social Security Benefits, Retirement, Retirement Planning

  With the passage of the 2015 Budget Bill, two important Social Security claiming strategies called “File & Suspend” and “Restricted Application” are going away for everyone under age 62, whether you are in retirement or thinking about retirement.  Understanding these changes, and taking certain steps prior to this enactment, can mean thousands more in lifetime benefits for you, your spouse, and your family. The benefits of these two disappearing strategies are best explained in two common scenarios: Scenario #1 Your spouse collects her spousal benefit (50% of your full retirement benefit*) while you “File & Suspend” your own retirement benefits to age 70 to take advantage of Social Security’s higher Delayed Retirement Credit (i.e., SS increases 8% per annum after FRA). Scenario # 2 Your spouse files for early SS benefits at age 62. When you reach your FRA* you file a “Restricted Application” that entitles you to 50% of her projected full benefit, while deferring your retirement benefits to age 70 to take advantage of Social Security’s higher Delayed Retirement Credit (i.e., SS increases 8% per annum after FRA). What to do? If you are under age, 62, and plan to be in either category, or, are simply not sure how these expiring benefits could affect you and your spouse, we suggest you sit down with a qualified financial planner ASAP. Because is this case, time really is

Social Security Benefits Unchanged

Posted By Lineweaver Financial Group
November 23, 2015 Category: Social Security, Social Security Benefits, Retirement Planning, Retirement

No help for the middle class. Social Security Benefits Unchanged….Again While the politicians have their political debates promising the moon, the middle class has again taken it on the chin. There will be no cost of living increase in 2016 Social Security payments. In fact, this no-increase decision has only happened three times since 1975 – 2010, 2011 and now again in 2016.  In all the years since 1975 there have only been three years with no increase- 2010, 2011 and now again for 2016. The argument is that Cost of Living Adjustments (COLA) are designed to help recipients cope with inflation. But, while the real cost of energy has declined, and pushes the overall rate of inflation down, a number of everyday items has remained the same, if not increased. For example, when was the last time you saw a dozen eggs plummet in costs? The other difficulty of course, is we are living longer lives, partially due to medical advances, and what appear to be increasing expensive drug regimens. It is well-documented the cost of drugs shows no signs of abatement, and, it seems virtually everyday, there is a new miracle drug with a heavy advertising budget suggesting you talk to your doctor about them. For many, flat Social Security payments means another year of careful budgeting. For the more fortunate it may simply mean postponing a vacation or modifying the Christmas gift list. It may also be a time to see if we can review your portfolio, and come up with some add

Year End Tax Tips

Posted By Lineweaver Financial Group
November 02, 2015 Category: Tax, Education Programs, Retirement Planning, Financial Planning

There are some basic tried and true tax planning tips that can be applied each and every year. While these may not be new and exciting, they are highly effective and proven to minimize your tax bill. Here is a brief highlight of the tax planning maneuvers you should still be considering for 2015: Defer Income: Income is taxed in the year it is received. If possible defer year-end bonuses from employers to 2016 if you feel that income will place you in a higher tax bracket in 2015. If you are self-employed you may consider delaying billings until late December so that the payments are not received until 2016. Also consider accelerating income into 2015 if you feel you will be in a lower tax bracket in the current tax year. Bunching Itemized Deductions: Consider paying real estate taxes due in early 2016 in 2015, pay medical bills ahead, or make charitable deductions earlier to enable you to get past the itemized deduction threshold in 2015. Charitable Deductions: You may wish to consider donating appreciated property (stocks or property) in lieu of cash. This may render you the double tax benefit of deducting the contributed asset at Fair Market Value and avoiding paying the capital gains tax on the built up appreciation. HSA: If eligible, consider setting up and contributing to a Health Savings Account. You may make a tax deductible contribution to a Self-Only HSA of $3,350 or a family HSA of $6,650 (plus an additional $1,000 if age 55+). You must have a minimum annual

What is a Financial Plan?

Posted By Lineweaver Financial Group
October 01, 2015 Category: Financial Planning, Retirement Planning

The average American faces an uncertain economy and more options for saving and investing than ever before. It’s easy to feel overwhelmed or confused, unless you find a way to understand the big picture. Yet few have a plan in place. Only 31% of financial decision makers in families say they have created a comprehensive financial plan either on their own or with professional help, according to the 2012 Household Financial Planning Survey conducted by the Certified Financial Planner Board of Standards. What’s the most expensive thing you’ll ever buy in your lifetime? The answer probably isn’t a big-ticket item like a new TV, car or home. When you put money into a retirement nest egg, you’re “buying” your retirement. According to the Employee Benefit Research Institute, 46% of all American workers have less than $10,000 saved for retirement and 29% of all American workers have less than $1,000 saved for retirement. Vacation planning takes precedence over retirement planning for a large segment of the population, according to an Edward Jones study. The survey asked 1,006 people which item they spent the most time on: vacation planning, planning for retirement, planning for higher education, or planning a big purchase such as a house or car. The largest group (28 percent) said they spent most of their planning time on vacations. The study revealed more than half said they had spent five hours or more doing research the last time they

Heading into the Homestretch

Posted By Lineweaver Financial Group
August 24, 2015 Category: Retirement, Retirement Planning, Retirement Tips

If retirement is just around the corner, here are some tips you might want to consider in preparation for the big day. Protect your 401k. If your plans are to retire in the next 12 months or so, you might want to consider getting ultra conservative in your 401k. If you plan on taking your 401k and rolling it over to an IRA, protect your current balance from potential market declines by moving into a common 401k option, a stable value fund. You could give up some upside potential, but you may sleep better at night knowing you have limited downside risk. Even if retirement is more than 12 months away, get the 401k ready for the future. Now is probably not the time to be taking on additional risk; the opposite could be your best option. But be careful using bonds; many 401(k) investors invest in bonds to reduce risk and lock in more stable returns. But if interest rates continue to rise, bond fund returns could suffer. Don’t jump from the frying pan into the fire! Pick pension option. If you’re among the one in five private sector workers who still have a pension, you may be offered the option of taking a lump sum rather than a stream of checks for life. Do your homework before you make any decision; this decision will be carved in stone.  If you’re a disciplined investor, you theoretically could do better by taking the lump sum and investing it. The lump sum might also be a smart call if your annual pension reports show the fund is seriously underfinan

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