The Elephant in the Room

“Elephant in the room,” “ticking time bomb”…whatever you wish to call it, there is an issue currently present but not talked about nearly enough. The issue hits a nerve with nearly everyone – investor/saver or not. The issue is taxes – more specifically future taxes on retirement savings. Unfortunately, the issue has become so politicized that its true impact has almost been forgotten.

 Tax rates and total taxes paid may be higher or the same as today for lots of savers in retirement.

Back in 2016, I discussed part of this topic in TGIF 2 Minutes. (Click Death & Taxes to read.) At that time, the focus was soaring healthcare costs.

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Goals Gut Check

From the TGIF 2 Minutes Archives earlier this year PRE-coronavirus…

Earlier this year in February things were GOOD! The economy was cranking, unemployment was low, wages were up, and it was a somewhat perfect time of the year to set goals. Think: it was pre-tax filing time and after the holidays.

Fast forward to today… the world has changed. Our savings have been tapped in the pandemic — and new savings and other goals need to be reset! While the kids may now be going back to school (followed by maybe not??) using this precious time to set just a handful of goals can pay off toward achieving those goals.

silver and gold coins
Give yourself a “Goals Gut Check” with this precious time before things potentially go a little haywire.

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Why Do We Save Money?

As we persevere through the coronavirus pandemic, consider the following message from the 2019 Archives of TGIF 2 Minutes….

What is your reason for saving money? Is it retirement? Or are there “mini-goals” that would feel really great to achieve today?

Of course, retirement is often a primary long-term savings goal, but not always. “Retirement” encompasses more than simply stopping work and being on a “permanent vacation.” In fact, research published in the Journal of Financial Planning* reports that quitting work cold turkey often is not reality – for a number of reasons.

green typewriter on brown wooden table
What is your reason for saving money? Is it retirement? Or are there “mini-goals” that would feel really great to achieve today?

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Is This Time Different?

Originally titled, “Practical Suggestions, part 2” this edition of TGIF 2 Minutes covers a topic more related to “Is This Time Different?”

Related to a specific situation or event, most everyone has heard the bold acclamation, “This time is different!” Then, there are those who firmly believe that times are NEVER different… and that time simply repeats itself but with different nuances.

Looking at today, who is correct? The past 12 years are evidence of BOTH.

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In saving for or in retirement, it has never been more important to have a mix of a comfortable amount of safe cash plus a well-designed portfolio.

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A Warm Up For Retirement

Retirement? What do you mean, Retirement?! That is in the waaay distant future, you may say.

Well the lock down, shelter in place, husbands and wives/girlfriends and boyfriends/parents and kids working from home TOGETHER is just that: a warm-up for retirement. Or a forced “retirement together” for those already retired.

competition dispute goats
Retirement – or being one-on-one 24/7 with the same person or people – is not as easy as it looks!

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Not-So-Fat Tuesday

Originally titled, “Gut Check in Rocky Markets” but with a new twist the following excerpted edition from the archives of TGIF 2 Minutes is timely on (Not So) Fat Tuesday. Please keep in mind three new factors:

  • The political divide currently in the US is adding to market tensions and even politicizing the Coronavirus,
  • Primary Elections and Debates and the policy issues being brought forth are next-to-center stage in the media,
  • A still very recent UP 29% equity market in 2019,

and there exist the makings of a potential market correction. A market correction is defined as a decline of 10% from a recent high; the US equity markets are down over 6% in two days and are nearing an official “market correction” in 2020.

Coronavirus Stock Market
A “Not-So-Fat Tuesday” as the Dow sank 879 points after worrisome forecasts about the coronavirus.

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Achieving Financial Goals

At February 21st, while the year is still young… the time is perfect for reviewing or setting goals for this year and the years and months to come. No pressure. The holidays are in the past and the deadline for filing 2019 taxes is still a bit in the distance – for now!

At this somewhat perfect time of the year, goal setting can pay off in a big way toward achieving those goals. Often goal setting is difficult to start with a blank sheet of paper so here are a few tidbits to create momentum:

green palm trees and white gazebo
Setting financial goals is difficult, so start by thinking in terms of categories: Work, Fun, Family.

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Tax Law Changes That Matter For You

As the year turned from 2019 to 2020, there stealthily rolled in several of the most sweeping reforms to retirement and tax legislation in a decade or so (outside of the 2017 Tax Cuts and Jobs Act, or TCJA). The recent changes apply to IRA, 401k and other retirement savings accounts. If any of these apply to you then please read on:

  • Inherited IRA
  • Turning 70½ this or next year
  • Own a business with or proposing a 401k plan
  • Working for a small company and do not have access to a 401k plan
  • Need an early distribution for reasons of qualified birth or adoption

US Capitol
The SECURE Act is the most sweeping reform to retirement and tax legislation in a decade. As with most pieces of Congressional legislation there are positives and negatives.

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What am I Saving For?

Most people would define their primary savings goal as “retirement.” …Or would they?

Of course, retirement is often a primary long-term savings goal, but not always. The definition of retirement itself has morphed over the recent decade with people living longer lives. “Retirement” encompasses more than simply stopping work and being on a “permanent vacation.”  In fact, recent research published in the Journal of Financial Planning* reports that quitting work cold turkey often is not reality – for a number of reasons.

selective focus photography of person holding the adventure begins mug
There is more to the long-term savings equation that a simple line from Point A (today) to Point B (retirement).

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Year-End Tax Planning Tips

Excerpts from the TGIF 2 Minutes Archives:

The beginning of October means we are in the 4th Quarter… and the countdown begins to year-end. The following are excerpts from the Year-End Tax Planning Checklist.* Several of these items, if addressed now, could make a big difference to your 2019 tax filing AND add to your savings.

variety of pumpkins
The beginning of October means we are in the 4th Quarter… and the countdown begins to year-end.

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