Safe Retirement Solutions

Which IRA Is Right for You

admin — Wed, 22 May 2013 18:39:29 +0000

There are two main types of IRAs – the Roth and the traditional IRA – choosing the one which is right for you and your financial needs can still be a daunting task. Fortunately, we are here to help. Following the three below steps can help you determine the right type of IRA for you.

1. Know the Basics

The first step in choosing the right IRA is to understand the differences between the two. So below is a quick guide for determining which IRA is right for you.

Traditional IRA: The biggest advantage to this type of IRA is tax-deferred compounding. You will not have to pay taxes on your IRA’s investment earnings until you start taking distributions for it after you retire.

Roth IRA: Unlike traditional IRAs, this type of IRA has no restrictions governing when you are allowed to start taking distributions. Furthermore, qualified distributions from a Roth IRA are tax-free, not just tax-deferred.

2. Determine Your Eligibility

There are certain eligibility requirements associated with both Traditional IRAs and Roth IRAs. Do you know what they are?

For starters, you cannot make a deductible contribution to a traditional IRA is your income is above a certain level. Furthermore, if you make over a certain amount of money, you may not even be eligible for a Roth IRA. That is just the beginning. It gets complicated. To help simplify the task, I suggest you check out the TurboTax IRA Calculator.

3. Weigh Your Options

This is where a Safe Retirement Solutions and some in-depth financial planning can work wonders.

Safe Retirement Solutions is your full service, independent financial advisory firm dedicated to providing you with the very best in retirement income planning.

We help our clients in all phases of their retirement planning. We help them prepare for a retirement free from financial worries, so that they can enjoy their retirement years. We help to enable our retired clients with the transition of their wealth into a carefree income that will last them a lifetime.

If you have any questions or want to know more about what we can do for you, please contact Safe Retirement Solutions by calling 877-268-4086 or visit our website today!

You can also follow Safe Retirement Solutions on Facebook and Twitter.

Estate Planning in Baltimore: A Brief Overview

admin — Wed, 01 May 2013 16:19:59 +0000

Estate planning is one of the most important parts of planning for the unexpected. Many people procrastinate about the decisions that need to be made about their estate and if one is unprepared, your beneficiaries may feel disenfranchised when it comes time to deal with your estate.

According to the National Association of Estate Planners & Councils, more than 120 million Americans do not have up-to-date estate plans to protect themselves or their families in the event of sickness, accidents, or death.

By definition, estate planning is a process designed to help you manage and preserve your assets while you are alive, and to conserve and control their distribution after your death according to your goals and objectives. But what estate planning means to you specifically depends on who you are.

Your age, health, wealth, lifestyle, life stage, goals, and many other factors determine your particular estate planning needs. For example, you may have a small estate and may be concerned only that certain people receive particular things. A simple will is probably all you’ll need. Or, you may have a large estate, and minimizing any potential estate tax impact is your foremost goal. Here, you’ll need to use more sophisticated techniques in your estate plan, such as a trust.

Here are a few estate planning tips from Safe Retirement Solutions:

Prepare a will – If you don’t prepare a will, the laws that govern your domicile will determine who inherits what. This is important for non-financial resources such as your prized possessions that relatives may want. Making a will can ensure that your possessions get inherited by the correct people.

Create a trust – A trust will make sure that your funds are allocated to cover specific expenses after you’ve passed on. Expenses such as funeral costs, school loans, house payments and any other bills that are overdue can be adequately planned and paid for using a trust.

Minimize the impact of Estate & Income Taxes – Using tax-efficient strategies can help curb the costs of estate and income taxes. Strategies such as giving your saved-up wealth as a gift to beneficiaries or leaving your taxable assets to charities are both great ways to minimize the effects of these taxes. Talking with your local Annapolis estate planning professionals at Safe Retirement Solutions can help you figure out ways to avoid heavy taxes.

If you’re ready to plan your estate, that’s where we come in. The financial advisors in Annapolis at Safe Retirement Solutions can help you develop a diversified portfolio to help you make the most of your investments. The Baltimore financial advisors at Safe Retirement Solutions can help you determine what steps to take to make sure your estate is properly taken care of, and provide alternative retirement savings guidance. To get started, call 877-268-4086 or visit our website today!

What is a Reverse Mortgage? Safe Retirement Solutions Explains

admin — Fri, 19 Apr 2013 17:06:09 +0000

As people get older, the costs of living and the effects of aging add up to sometimes monstrous totals. Many seniors look for ways to supplement their income and protect themselves from future hardships. One way to do this is by getting a reverse mortgage.

A reverse mortgage is a special type of home loan that lets you convert a portion of the equity in your home into cash. The equity that you built up over years of making mortgage payments can be paid to you. However, unlike a traditional home equity loan or second mortgage, HECM borrowers do not have to repay the HECM loan until the borrowers no longer use the home as their principal residence or fail to meet the obligations of the mortgage. You can also use a HECM to purchase a primary residence if you are able to use cash on hand to pay the difference between the HECM proceeds and the sales price plus closing costs for the property you are purchasing.

With traditional mortgages, the homeowner makes monthly payments to their lender, with a reverse mortgage, money is received from the lender and given to the borrower. As a general practice, this money isn’t expected to be paid back during the lifetime of the homeowner; it is only repaid during a resale or in the case of death – in which case the homeowner or his heirs must repay their debts.

The difference between a reverse mortgage and a home equity loan is that with a second mortgage, or a home equity line of credit, borrowers must have adequate income to qualify for the loan, and they make monthly payments on the principal and interest. A reverse mortgage is different, because it pays you – there are no monthly principal and interest payments. With a reverse mortgage, you are required to pay real estate taxes, utilities, and hazard and flood insurance premiums.

To be eligible for a FHA HECM, the FHA requires that you be a homeowner 62 years of age or older, own your home outright, or have a low mortgage balance that can be paid off at closing with proceeds from the reverse loan, and you must live in the home.

That’s where we come in. The financial advisors in Annapolis at Safe Retirement Solutions can help you develop a diversified portfolio to help you make the most of your investments. The Baltimore financial advisors at Safe Retirement Solutions can help you determine whether a reverse mortgage is the right choice for you, and provide alternative retirement savings guidance. To get started, call 877-268-4086 or visit our website today!

Source: Frequently Asked Questions about HUD’s Reverse Mortgages, HUD.gov

Asset Allocation Strategies from Expert Financial Advisors

admin — Fri, 05 Apr 2013 15:43:37 +0000

A chocolate cake. Pasta. A pancake. They’re all very different, but they generally involve flour, eggs, and perhaps a liquid. Depending on how much of each ingredient you use, you can get very different outcomes. The same is true of your investments. Balancing a portfolio means combining various types of investments using a recipe that’s right for you.

There are various approaches to calculating an asset allocation that makes the most sense for you.

The most popular approach is to look at what you’re investing for and how long you have to reach each goal. Those goals get balanced against your need for money to live on. The more secure your immediate income and the longer you have to achieve your investing goals, the more aggressively you might be able to invest for them. Your asset allocation might have a greater percentage of stocks than either bonds or cash, for example. Or you might be in the opposite situation. If you’re stretched financially and would have to tap your investments in an emergency, you’ll need to balance that fact against your longer-term goals. In addition to establishing an emergency fund, you may need to invest more conservatively than you might otherwise want to.

Some investors believe in shifting their assets among asset classes based on which types of investments they expect will do well or poorly in the near term. However, this approach, called “market timing,” is extremely difficult even for experienced investors. If you’re determined to try this, you should probably get some expert advice—and recognize that no one really knows where markets are headed.

Some people try to match market returns with an overall “core” strategy for most of their portfolio. They then put a smaller portion in very targeted investments that may behave very differently from those in the core and provide greater overall diversification. These often are asset classes that an investor thinks could benefit from more active management.

Just as you allocate your assets in an overall portfolio, you can also allocate assets for a specific goal. For example, you might have one asset allocation for retirement savings and another for college tuition bills. A retired professional with a conservative overall portfolio might still be comfortable investing more aggressively with money intended to be a grandchild’s inheritance. Someone who has taken the risk of starting a business might decide to be more conservative with his or her personal portfolio.

Things to think about

Don’t forget about the impact of inflation on your savings. As time goes by, your money will probably buy less and less unless your portfolio at least keeps pace with the inflation rate. Even if you think of yourself as a conservative investor, your asset allocation should take long-term inflation into account.
Your asset allocation should balance your financial goals with your emotional needs. If the way your money is invested keeps you awake worrying at night, you may need to rethink your investing goals and whether the strategy you’re pursuing is worth the lost sleep.
Your tax status might affect your asset allocation, though your decisions shouldn’t be based solely on tax concerns.

Even if your asset allocation was right for you when you chose it, it may not be right for you now. It should change as your circumstances do and as new ways to invest are introduced. A piece of clothing you wore 10 years ago may not fit now; similarly, you just might need to update your asset allocation, too.

That’s where we come in. The financial advisors in Annapolis at Safe Retirement Solutions can help you allocate your assets to help you make the most of your investments. To get started, call 877-268-4086 or visit our website today!

Tips from Financial Advisors in Annapolis: Asset Allocation

admin — Mon, 25 Mar 2013 13:55:03 +0000

We’re all prone to falling into routines and sticking with them: ordering the same dish at our favorite restaurant, waking up the same time every day, enjoying our creature comforts. But diversifying our options brings flavor to our lives, exposing us to a new ingredient we’ve never encountered, or allowing us to rise a few minutes earlier to watch the sun rise. Diversification should also be applied to your investment choices. We all know by now not to put all our eggs in one basket, but do we have the right mix of asset classes? Assets should be divided amongst stocks, bonds, and cash alternatives in order to bring variation to your portfolio.

All of your investment choices will have their own set of strengths and weaknesses, that combined, will create a synergistic cohesion. You might choose some investments because of their potential for growth over time. Others, because of the steady stream of income they provide. Still others because they allow a safe place for you to keep your money over a long period of time. Whatever investments you choose, you must analyze your risk and return on a product in order to develop the right balance.

Baltimore Retirement Advisors: All About IRAs

admin — Fri, 22 Mar 2013 18:51:23 +0000

How much money can you contribute to your IRA? Does the amount you’re able to give depend upon how much you put towards your 401(k)? How are IRAs impacted by taxes? We’re here to fill you in.

Planning for retirement demands an integrated approach to saving and investment. In 2013, you can contribute up to $5,500 towards your IRA. If you’re over the age of 50, that amount increases by $1,000 to make for a total contribution of $6,500. Depending upon your salary, there may be limitations upon your ability to make deductible contributions to a traditional IRA if you’re already participating in a 401(k) plan, so check with your HR department to figure out how to partition your contributions.

So – how much of that money is taxed each year? The answer depends on whether you have a traditional or Roth IRA. In a traditional IRA, much like a 401(k), the contribution you make to your account isn’t subject to income taxes until you begin receiving a distribution from the plan. With a Roth IRA on the other hand, you pay income tax, and then make your contribution with post-tax dollars. Upon withdrawal, you’ll owe no taxed, and your principal will grow tax-free.

For more information about IRAs and retirement planning in Baltimore, Maryland, call 877-268-4086 or visit our website today!

How Much Can I Contribute to my 401(k)?

admin — Fri, 08 Mar 2013 19:43:16 +0000

As we’ve discussed before when giving the 411 on 401(k)s, these retirement savings funds are an easy way to grow the money you set aside for life after the workforce. That’s because many employers will match at least part of what you put away in your 401(k). But exactly how much can you save each year in these plans? Our recommendation is as much as you can, since this money gets taken out of your paycheck before taxes are withheld, decreasing overall taxable income.

Currently, you can contribute up to $17,500 to your 401(k) annually. If you’re over the age of 50, you may qualify for an additional $5,500, bringing the total up to $23,000. Each year, contribution limits are adjusted in order to account for inflation, which decreases the value of the dollar over time. What this means in planning for retirement is that you have to put more money into your savings in order to have the same purchasing power.

The best way to save with a 401(k) is to contribute as much as you need to in order to qualify for your employer’s highest matching contribution percentage. Work with your company’s human resources department to determine how much you need to contribute to get the best possible match that you can, thereby maximizing your retirement savings.

For more information about retirement planning and consultations in and around Baltimore, Maryland, call 877-268-4086 or visit our website today!

Five Tips for Retirement Planning from Baltimore Financial Advisors

admin — Fri, 01 Mar 2013 06:39:19 +0000

Saving for retirement can be scarier than the monsters you used to think were hiding under your bed. We’re here to give you five tips that will illuminate the matter and make the fear of the unknown dissipate.

Start Early

The early bird gets the worm, as the maxim goes. Start saving as early as you can, so that your money and investments can grow and give you gains that compound over time to help you reach your financial goals.

Be on Target

Speaking of goals, make sure you have them, and that they’re honest ones. Figure out how much you actually need to have to live comfortably in retirement and how much you need to have set aside outside of supplemental income sources like Social Security.

Get in on a 401(k), ‘K?

With matching company contributions, tax deductions, and tax-deferred growth, a 401(k) is one of the best savings plans you can set up for yourself.

Don’t Let IRAs be MIA

An IRA also offers tax advantages, depending on the type you choose, making them great ways to invest. With a traditional IRA, you’ll have tax-deferred growth, and with a Roth IRA, you’ll be offered tax-free growth.

Allocate your Assets

Be smart about how you invest in stocks and bonds in order to see true ROI in the long run.

The Baltimore financial advisors at Safe Retirement solutions can help you make the most out of your retirement savings, offering advice, insights, and plans to help you save and invest well.

For more information about retirement planning and consultations in and around Baltimore, Maryland, call 877-268-4086 or visit our website today!

Sources:

Tips for Planning Your Retirement

Retirement 101: How Do 401(k)s Work? Tips from Baltimore Financial Advisors

admin — Fri, 22 Feb 2013 17:36:01 +0000

401(k)s are a staple of retirement saving and planning, but how do they work? Let us explain. With a 401(k) plan, you can either choose to receive cash payments from your employer in real time, or defer receiving a portion of your income to be placed in the retirement plan. The money that you defer is known as elective deferral or pretax contribution, and is made up of pretax dollars, rather than being a part of your income. This means that your yearly taxes are reduced, since the money placed in a 401(k) isn’t taxed until you begin receiving payments from the plan.

Here’s an example. Say you make a salary of $30,000, and contribute $4,500 of that money annually in your employer’s 401(k) before taxes. The amount of income you earn that is subject to being taxed is $25,500, since the deferred money isn’t taxed until distribution is received.

The Maryland financial advisors at Safe Retirement solutions in Baltimore can help you make the most of your 401(k) and educate you on the ins and outs of this savings system.

For more information about retirement planning and consultations in and around Baltimore, Maryland, call 877-268-4086 or visit our website today!

Is Early Retirement a Wise Idea? Tips from Baltimore Retirement Planners

admin — Fri, 15 Feb 2013 22:43:48 +0000

Retirement has all the magnetism of a charismatic crush, but is it a wise idea to retire early? If you’re considering doing so, we recommend buckling down and analyzing if you can realistically live comfortably off of your savings and reduced income. Though the perks of escaping the fast-paced work force are undeniable, the trade-off of potentially not having enough to see you through life after your career mightn’t be worth the risk. Here are some things to keep in mind if you’re thinking about retiring early.

Penalties for Withdrawing From Retirement Plans Early

Withdrawing money from retirement accounts like 401(k)s or individual accounts early will leave you forced to pay penalties to the IRS when you file your taxes, generally 10% of the total amount you take out.

Life Expectancy

The average lifespan of Americans is growing greater and greater. According to the Social Security Administration, a man who reached age 65 in 2012 can expect to live to 83, and a woman, to 85. That means that before you retire, you must have at least enough money to make it through twenty years of life.

Financial Planning

The financial advisors in Baltimore at Safe Retirement Solutions will be realistic with you about whether retiring early is a smart move for you, and can assist you in developing a plan to help you meet your savings goals for retirements so you can lead the lifestyle you’ve always looked forward to having.

For more information about retirement planning and consultations in and around Baltimore, Maryland, call 877-268-4086 or visit our website today!

Sources:

Calculators: Life Expectancy