Finances

Women Retirees May Need to Adjust Financial Lifestyle

By: about

Here’s something to consider: 50% of women h­­ave had to adopt a more frugal lifestyle in retirement, compared to just 34% of men, according to a recent survey by Age Wave and Edward Jones. If you’re a woman, what can you do to live a financially secure life when you retire?

For starters, while you’re still working, try to put in as much as you can afford into your retirement plans, such as a 401(k) and IRA. And if you enjoy your job, you might even want to extend your employment past your originally planned retirement date. This will give you more time to contribute to your retirement accounts and possibly help you delay taking Social Security, which can result in larger monthly benefits.

If you’re already retired, look for ways to reduce your expenses. You might even consider downsizing your living arrangements.

When you’ve retired, you’ll also likely need to depend on your investment portfolio for some of your income. So, you’ll want to have enough growth potential in your investments to keep you ahead of inflation.

By adjusting your financial course as needed, you can help make your retirement journey less stressful — and more enjoyable.

This content was provided by Edward Jones for use by David Beerman, your Edward Jones financial advisor at 401 W. Oakland Ave Johnson City, TN.

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Investment Ideas for Business Owners

By: about

By definition, business owners put a lot of their financial resources into their enterprises. But as an owner, you may need to invest in more than inventories and payroll to help achieve the future you’ve envisioned.

Here are a few investments you may want to consider:

  • Retirement account – Depending on the nature of your business and how many employees you have, you can choose from a variety of tax-advantaged retirement plans, such as an owner-only 401(k), an SEP-IRA and a SIMPLE IRA. By contributing regularly to one of these accounts, you can avoid being entirely dependent on the sale of your business to pay for your retirement years.To fund your 401(k) or other retirement plan, you’ll have many investment options — stocks, bonds, mutual funds and so on. And if you “max out” on your retirement plan, you may even be able to build a separate investment portfolio. In any case, keep in mind that you’re already putting a lot of money into your business, so, to achieve a level of diversification, you may want to concentrate your investment choices in areas outside your industry. However, while diversification can help reduce the impact of market volatility on your portfolio, it can’t guarantee profits or protect against losses in a declining market.
  • Property – Your physical space is a key part of your business’ success. So, you may want to invest some time in comparing the pros and cons of renting versus owning. Of course, owning your building may require a big financial commitment, and it may not be feasible, but it could free you from worrying about untimely rent increases.
  • Disaster protection – If a fire or a weather-related disaster should strike your business, would you be prepared? It’s important for you to create a disaster recovery plan, which can include business interruption insurance to pay for your operating costs if you’re forced to shut down for a while.
  • Emergency savings – While a disaster protection plan with appropriate insurance can help keep your business afloat, it’s unlikely to cover other types of emergency needs, such as a major medical bill or an expensive repair to your home. For these unexpected costs, you may want to build an emergency fund covering at least a few months’ worth of living expenses, with the money kept in a liquid account. Without such an emergency fund, you may be forced to dip into your 401(k), IRA or other long-term investment vehicle.

You’ll also want to invest the time and energy into creating a business succession plan. Will you keep the business in your family? Sell it to outsiders or a key employee? If you do sell, will you do it all at once or over time? Clearly, the answers to these types of questions will make a big difference in your ultimate financial security.

Finally, invest in help – Enlist the services of a financial advisor and business-planning professional, so you’ll be able to make the decisions that work best for your business and you.

Your business may well be a lifelong endeavor — so make sure you’re investing whatever it takes to earn a lifetime of benefits.

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.
Edward Jones, Member SIPC

Contact David Beerman, Edward Jones Financial Advisor

Can You Plan for an Unplanned Retirement?

By: about

Many people plan to take an early retirement, so when that day arrives, they’re ready for it. But what if you were to face an unplanned retirement? Would you be prepared to deal with the financial issues?

It’s something worth thinking about, because any number of factors — illness, a spouse’s illness, downsizing, other issues — could lead to an abrupt departure from the workforce. But taking action while you’re still working may help you make the transition easier on yourself.

Your first move, of course, should be to at least consider the possibility of having to retire earlier than you planned. You can then move on to some concrete steps, possibly including the following.

  • Build an emergency fund. Under any circumstances, it’s a good idea to build an emergency fund — but it’s especially important if you want to prepare for an unforeseen retirement. Generally speaking, your emergency fund should contain three to six months’ worth of living expenses, with the money kept in a liquid, low-risk account. But if you suspect an earlier-than-anticipated retirement may be in your future, and you have some time to prepare for it, you should consider an emergency fund that contains a full year’s worth of expenses.
  • Consider your portfolio’s asset allocation. If you’re concerned about an unexpected retirement, you may want to consider the equities allocation in your portfolio. If you think you may need to tap into your portfolio sooner than you expected, you may not want to be over-exposed to investments most vulnerable to market volatility. However, these are the same investments that offer you the most growth potential — which you’ll need to help stay ahead of inflation. So, look for an investment balance that’s appropriate for your needs. As part of this positioning, you may want to shift some assets into income-producing vehicles, while also adding to the “cash” portion of your portfolio to boost your liquidity.
  • Evaluate your Social Security options. An unplanned retirement may cause you to consider taking Social Security earlier than you had planned. You can start taking Social Security when you’re 62, but your monthly benefits will be up to 30% lower than if you had waited until your full retirement age, which is likely between 66 and 67. If you have sufficient income through other sources, you may be able to delay taking Social Security until your checks will be bigger — but of course, if you need the money, waiting may not be an option.
  • Address your health care needs. If you take an unplanned retirement, and you have employer-sponsored health insurance, you’ll have to look for alternatives. You might be able to get extended coverage from your employer, but this could be quite expensive. Of course, if you’re already 65, you can get on Medicare, but if you’re younger, you might be able to get coverage under your spouse’s plan. If that’s not an option, you may want to explore one of the health care exchanges created by the Affordable Care Act. To learn more about these exchanges, visit healthcare.gov.

Taking an unexpected retirement can certainly be challenging – but the more prepared you are, the better your outcomes are likely to be.

 This article was written by Edward Jones for use by David Beerman, your local Edward Jones Financial Advisor.

Edward Jones, Member SIPC

CONTACT INFO – DAVID BEERMAN

Watch Out for Tax Season Scams !

By: about

It’s that time of year when we do our taxes — but it’s also the same time that tax scammers go to work. What scams should you watch for — and how can you avoid being victimized?

Sadly, the list of scams is pretty long, including demands for payment or requests for “additional information” pertaining to your tax refund, in which the sender asks for your Social Security number and other personal information. These scam emails can look quite official, often incorporating the IRS logo. You might also receive scam text messages containing bogus links claiming to be the IRS website or an online “tool” that can help process your refund faster.

But keep these points in mind:

  • The IRS generally won’t contact you by phone and won’t contact you by email, text messages or social media channels to ask for personal or financial information. The IRS begins most correspondence to taxpayers through regular mail delivered by the U.S. Postal Service.
  • The IRS won’t call to demand you make an immediate payment through a prepaid debit card or wire transfer. If you owe taxes, the IRS generally will mail you a bill. And the IRS won’t threaten to bring in the police or another law enforcement group to arrest you for not paying your taxes.

In general, be extremely skeptical about any type of communication purporting to be from the IRS that sounds bullying or over-inquisitive — and certainly don’t give out any personal or financial information. But these fake messages aren’t the only tax-season scams out there. You might even receive a direct deposit from what appears to be the U.S. Treasury Department — but if you weren’t expecting it, something’s likely not right. This payment could be a sign that a fraudulent tax return was filed in your name, and it might be followed by a communication from a supposed IRS agent requesting this overpayment be sent to them. If this happens to you, you’ll want to contact the IRS right away, and you could also ask your bank to return the deposit to the government.

Other scams don’t claim to originate directly from the IRS, as scammers pretend to be from real or imaginary tax organizations. For example, you could get a message from the Taxpayer Advocate Service, an independent organization within the IRS, but this agency won’t contact you without a legitimate reason. Or you could receive a message from the nonexistent “Bureau of Tax Enforcement.” Your best bet is to delete these messages immediately or send them to your spam folder.

Not all tax season scams originate from fraudulent IRS representatives or fake agencies. You also need to be careful about whom you hire to prepare your taxes. If possible, get a recommendation from a trusted friend or family member. And keep in mind that a legitimate tax preparer must have a valid Preparer Tax Identification Number and must sign your tax return. If someone doesn’t have this number or is reluctant to sign your return, it may well be a sign that this individual is a “ghost preparer” who only wants to pocket your fee.

Tax scammers are, unfortunately, here to stay — but remaining vigilant can help you keep them from causing problems for you in this tax season and all the ones in the future.

This article was written by Edward Jones for use by David Beerman, your local Edward Jones Financial Advisor.

 Edward Jones. Member SIPC.

Contact David Beerman

If you’d like to contribute to a Roth IRA, but your income is too high, do you have any options?

By: about

There aren’t many drawbacks to having a high income — but being unable to invest in a Roth IRA might be one of them. Are there strategies that allow high-income earners to contribute to this valuable retirement account?

Before we delve into that question, let’s consider the rules. In 2023, you can contribute the full amount to a Roth IRA — $6,500, or $7,500 if you’re 50 or older — if your modified adjusted gross income is less than $138,000 (if you’re single) or $218,000 (if you’re married and filing jointly). If you earn more than these amounts, the amount you can contribute decreases until it’s phased out completely if your income exceeds $153,000 (single) or $228,000 (married, filing jointly).

A Roth IRA is attractive because its earnings and withdrawals are tax free, provided you’ve had the account at least five years and you don’t start taking money out until you’re 59½. Furthermore, when you own a Roth IRA, you’re not required to take withdrawals from it when you turn 72, as you would with a traditional IRA, so you’ll have more flexibility in your retirement income planning and your money will have the chance to potentially keep growing. But given your income, how can you contribute to a Roth?

You may want to consider what’s known as a “backdoor Roth” strategy. Essentially, this involves contributing money to a new traditional IRA, or taking money from an existing one, and then converting the funds to a Roth IRA. But while this backdoor strategy sounds simple, it involves some serious considerations.

Specifically, you need to evaluate how much of your traditional IRA is in pretax or after-tax dollars. When you contribute pretax dollars to a traditional IRA, your contributions lower your annual taxable income. However, if your income is high enough to disqualify you from contributing directly to a Roth IRA, you may also earn too much to make deductible (pretax) contributions to a traditional IRA. Consequently, you might have contributed after-tax dollars to your traditional IRA, on top of the pretax ones you may have put in when your income was lower. (Earnings on after-tax contributions will be treated as pretax amounts.)

In any case, if you convert pretax assets from your traditional IRA to a Roth IRA, the amount converted will be fully taxable in the year of the conversion. So, if you were to convert a large amount of these assets, you could face a hefty tax bill. And since you probably don’t want to take funds from the converted IRA itself to pay for the taxes, you’d need another source of funding, possibly from your savings and other investments.

Ultimately, then, a backdoor Roth IRA strategy may make the most sense if you have few or no pretax assets in any traditional IRA, including a SEP-IRA and a SIMPLE IRA. If you do have a sizable amount of pretax dollars in your IRA, and you’d still like to convert it to a Roth IRA, you could consider spreading the conversion over a period of years, potentially diluting your tax burden.

Consult with your tax advisor when considering a backdoor Roth strategy. But if it’s appropriate for your situation, it could play a role in your financial strategy, so give it some thought.

This article was written by Edward Jones for use by David Beerman, your local Edward Jones Financial Advisor.

Edward Jones, Member SIPC