The Forty-hour work week paired with a busy schedule tends to be a recipe for stress and burn out. While practicing daily self-care in small increments is an important piece to preventing burn out, periodically taking a prolonged break from our responsibilities and stressors is equally as important. According to Dr. Krauss of Psychology Today, a vacation well-done can inspire self-reflection and rejuvenation, allowing us to seize the day upon return to our regular lives.

Experiencing high levels of stress on a daily basis can diminish a person’s physical, mental, and emotional health. Dr. Krauss points out that consequences include depression and a weakened immune system. Balancing our lives and setting boundaries for ourselves is important. Additionally, taking time off to simply enjoy life, explore, and step outside our comfort zones, are all crucial to staying healthy. Planning a successful vacation takes time, energy, and focus, but the reward is priceless. And, if you are taking a family trip then there is no better way to strengthen bonds than sharing time abroad or on a great American road trip.

Preparation is everything!

No one wants to find themselves scrambling for answers and information after their trip has begun. So prepare yourself by reviewing helpful information prior to starting your travels. This may include looking into air carrier rules if you are flying or checking your travel route for road work and tolls if you are driving.

Let go of the guilt!

Dr. Krauss sheds her wisdom when she points out that we need to let ourselves off the hook about feeling guilty about going vacation just because other people we care about aren’t going on their own vacation. Remember that you are autonomous from family, friends, or coworkers that won’t be traveling and it is more than okay for you to enjoy your vacation.

Staying connected is okay

Yes, you are on vacation to step away from your daily life. However, for everyone back home, life is not on hold. So, if you need to check in with the sitter or review a flight notification on your email then do so. Psychology Today supports taking this peace of mind. 

Take chances!

There is a time when you are on vacation to sit back and relax. However, there is also a time to take a leap of faith and venture outside of what is easy. Challenge yourself to try new things and make an effort to have experiences that you may not usually pursue. Within these unexpected moments and unforeseen plans, an opportunity to truly experience being alive arises. So, if you really want to turn off auto-pilot, take this approach by getting in touch with the local scenery of your destination or booking an activity that you find slightly intimidating. This approach is an excellent way to build your confidence and prove to yourself that you may be capable of more than you ever realized. 

Pack properly

Make lists and check those lists off when packing for your vacation. Wasting spending money on things that you forgot at home or didn’t foresee needing is not a smart way to travel. To help keep organized, try categorizing your lists. Also, remember what you may need that is specific to your travel destination. Additionally, pack for unexpected events like losing your passport or catching a cold. Anything can happen while traveling and being prepared for the unexpected is the difference between being inconvenienced or put in a crisis. While no amount of planning or preparing can prevent the inevitable, it can make life easier if things turn sour. Additionally, pack a list of emergency phone numbers and resources.

Source; https://www.psychologytoday.com/us/blog/fulfillment-any-age/201006/the-importance-vacations-our-physical-and-mental-health 

Is Your Pension at Risk?

Everyone faces the concept of retirement at some point. The closer an individual gets to retirement age, the more concerned he may become about his ability to live comfortably after retirement. It may also make him wonder whether his retirement benefits will be available when he is ready to collect.

The Future of Pensions

Those who expect to collect a pension when they reach retirement age may have become concerned about recent reports regarding pension-fund growth. Recent issues regarding pension fund investments such as:

• Modest economic growth
• Low interest rates
• Rich stock valuations

These factors have caused some economic experts to begin reevaluating previous assumptions they had concerning returns on pension funds. Keeping the above factors in mind, anyone whose retirement income includes a pension is encouraged to speak to a financial adviser to assess the effects these projections may have on his financial plans.

One problem is the benefits many state and local governments are committed to paying cost more than the availability of funds. This shortage of funds could result in decreased pensions for retirees, increases in taxes or decreases in other programs funded by various governmental agencies; this may be necessary to cover the deficit in the pension funds.

According to the National Association of State Retirement Administrators, the low interest rates that have been consistently in effect since 2009 has led to a re-evaluation of many public pension plans. This has been necessary for these entities to project potential long-term investment returns. In addition, they have been forced to reduce previous assumptions regarding plan investments This has been necessary to allow these entities to project potential long-term investment returns.

Public Pension Funding

Government-funded pension plans reported assets of $4.41 trillion during the period ending September 30, 2018. How are the assets used to fund the pensions? They are held in trust and invested so that they will be available to fund the cost of pension benefits. The return on those investments is essential since the earnings from those investments provide most of the financing for public pensions. Any shortage in projected long-term earnings from those investments must be replaced through increases in contributions or reductions in benefits. 

Projections are necessary to fund a pension benefit and make assumptions concerning future events. Public pension plans typically consist of two components: the real return rate and inflation. When these two components are added together, the result is what is called the nominal rate of return, the most common rate used in the industry.

The real rate of return is the second component of the return on investment projection. This component consists of the actual return on the investment after it is adjusted for inflation. The purpose of knowing the real rate of return is so those in charge of monitoring the pension funds know the return that the investment generated for the fund. This allows them to better assess the future of the fund and plans for future investments.

The risk an individual pension may face is contingent upon several factors: inflation, return on investments and rate of return. While currently corporate pension funds are doing better than government-funded pension funds, this continued growth could change at any time. Pension funding always carries an element of risk; the future retirees need to follow the news in order to make plans for their future income.

Planning for retirement allows for many considerations and avoiding Probate is one of them.  The good news is if own a retirement account and have named beneficiaries, the account does not have to go through the probate process in most cases. Avoiding probate should be one of the goals of proper estate and retirement planning. While probate is a good fail-safe to ensure the property of a deceased owner is distributed fairly, probate also introduces delays, expenses, and headaches that are not usually necessary.

What Is Probate?

Probate is the judicial process in which the property of the deceased is fairly distributed to creditors and heirs. In the United States, probate is based on the wishes of the deceased as laid out in a document called a will. The probate court will ignore any instruction in the will that is not legally binding. If no will exists, state laws of inheritance are followed.

As probate is a judicial process, there will be court fees and lawyer fees paid out from the holdings of the estate. Some lawyers base their fees on the value of the estate in probate, so minimizing the value of the estate will save money which can be distributed to the heirs. The probate process also takes time – for a non-contested will, probate typically takes from six to eighteen months to complete.

Why are Retirement Accounts Different?

A will cannot supersede instructions in other legally binding documents or contracts. In the case of retirement accounts, there is an agreement on how the money will be distributed to beneficiaries after the owner’s death. If valid beneficiaries are named on the retirement accounts, those beneficiaries will be entitled to the portion of the account as named. If the will directs how the retirement accounts should be settled, the court will ignore that part of the will during probate as long as the beneficiaries are valid.

Under What Circumstances Do Retirement Accounts Go Through Probate?

There are a few circumstances in which retirement accounts will go through probate. If the retirement account owner has named his or her estate as the beneficiary, the retirement account will go through probate. If the beneficiaries are not valid – such as a deceased person or a minor – the account will go through probate.

In some rare cases, a retirement account owner may want their retirement accounts to go through probate. If the owner has outlived everyone he or she would care to name as a beneficiary, the owner may wish to pass the account through probate. A more common reason why retirement accounts pass through probate is because the account owner did not keep the beneficiary list up to date. If the owner started a job before starting a family, it would make sense to name the estate as the beneficiary. The accounts would go through the probate process if the owner did not change the beneficiary list as his or her life circumstances changed.

In the community property states, a living spouse is entitled to at least half of the value of retirement accounts. If the spouse is not named as a 50% or greater beneficiary for the retirement account, the spouse can claim their share in probate court. In other states, surviving spouses are guaranteed something from the deceased’s estate. If there is no or little remaining value beyond retirement accounts, the probate court will consider retirement account money even if the spouse was not a named beneficiary.

When planning an estate, it is essential to know how property will be distributed upon the owner’s death. Different rules and laws apply to different assets. In general, it is best to avoid probate whenever possible. For retirement accounts, the time and expense of probate can be avoided by naming valid beneficiaries on the retirement account. Be sure to check your beneficiary designations every few years to make sure the money is distributed according to your wishes.

The Setting Every Community Up for Retirement Enhancement Act (SECURE Act) recently passed in the House of Representatives by a margin of 417-3 last Thursday. The bill is slated to be successfully ratified into law by the U.S. Senate later in the year in a rare moment of bipartisanship.

The SECURE Act marks the most momentous legislative change in retirement planning since the Pension Protection Act of 2006. That said, the SECURE Act that passed in the House of Representatives recently is a necessary and expected change to the U.S. retirement system. 

Why? Because the Tax Cuts and Jobs Act passed in President Trump’s first year in office effectively punted on retirement reform. The SECURE Act, by contrast, would allow for 29 fresh provisions or groundbreaking changes to existing retirement protocol. 

The way that all of this will play out legislatively is fairly predictable. The Senate has a sister bill called the Retirement Enhancement Securities Act (RESA), which will interplay with the U.S. House of Representatives SECURE Act. Aspects of the Senate bill will make their way into, and be modified by, the House bill and vice versa over the coming weeks. 

This reconciliation process is needed to harmonize the bills with each other and with what average Americans want out of their retirement plans. The bill that makes it out of reconciliation is expected to remove IRA age limits, expand the start of required minimum distributions (RMDs), and enhance the possibility that more employers set money aside for retirement plans. 

Both the SECURE Act and RESA are meant to address social security funding issues and out-of-control pharmaceutical costs in particular and healthcare expenses more generally. The Medicare system is thought to be under serious strain at present since about a third of Americans don’t set anything aside for retirement and rely on the system to the exclusion of everything else. 

So, how can the SECURE Act and RESA make things better? The first salient aspect of both of these plans is that each enhances the ability of small employers to create retirement plans for their employees. The bills make multi-employer plans easier to undertake, and each plan allows smaller employers the opportunity to create 401(k) retirement plans with fewer worries about fiduciary oversight. 

The SECURE Act will also delay the RMD (minimum distribution) requirement to at least 72 years of age. The current RMD cutoff is 70.5 years of age. The surprising thing about these upcoming retirement changes is that the Senate is attempting to push the RMD requirement to beyond the House’s ambitious uptick and set the RMD requirement to 75 years of age. 

Another positive aspect of these upcoming changes to retirement planning in the United States is a removal of age limits on IRA contributions. Previously, retirement savings were effectively discouraged insofar as individuals who continued to work into their seventies had a harder time making contributions. In the old system, once you hit the age of 70.5 years old you were disallowed any contribution to an IRA, though you could still contribute to a Roth IRA past this arbitrary cutoff. Section 114 of the House’s SECURE Act would shore up older workers’ ability to make regular IRA contributions by axing the aforementioned age limitation. 

But since every new piece of legislation has to include both a stick and a carrot in order to correctly balance incentives that Americans will face when planning for retirement, both the SECURE Act and Resa feature some kind of tax credit for automatic enrollment. These tax credits will redound to small employers. The aim is greater accessibility.

Source: https://www.wsj.com/articles/house-on-track-to-pass-bill-making-big-changes-to-u-s-retirement-system-11558625474

It is never too early to begin thinking about retirement. Even if that season of life is decades away for you, the financial decisions that you make now can have a significant impact on your quality of life later down the road. As you begin planning for your future, it is important to have a guideline for each age in life. Here are ten stages of life and what you need to be doing at each age to best prepare your finances for life after retirement:

UNDER AGE 49: Now is the time to be aggressive with funding your retirement accounts. Leverage the power of compounding interest when you are young and you will be set in the later years. In 2019, the federal 401(k) contribution limit is $19,000. You can add an additional $6,000 in an individual retirement account (IRA) to bring the total contribution to $25,000.

AGE 50: Once you hit age 50, you can add an additional $6,000 to your 401(k) per year. Take advantage of this increased limit to ramp up the savings during your prime earning years. You can also boost the IRA contribution by another $1,000. This puts your contribution maximum at $32,000.

AGE 55: Now is when you can begin withdrawing retirement funds without penalties from a past employer. This allowance can be beneficial if you are simply cutting back hours and need funds to bridge the gap.

AGE 59 1/2: This is the magic age in which you can begin taking out money from your IRA and other retirement accounts without accruing the standard ten percent withdraw penalty.

AGE 62: Age 62 is when you become eligible to receive social security payments. However, it is important to proceed with caution, as monthly payments are reduced for the remainder of your life if you begin withdrawing early. By choosing to begin taking out funds at this age, your monthly allowance is reduced by 30 percent. This amount decreases the longer you wait.

AGE 65: As the benchmark standard retirement age, 65 is when you become eligible for Medicare. Even if you are not withdrawing on your retirement funds, it is important to sign up for this service three months prior to turning 65 so that you do not incur costly additions to your monthly premiums.

AGE 66: Depending on when you were born, this is the age when you may receive the full benefit of your social security payment. Those people born between the years 1943 and 1954 qualify for the entire benefit at age 66. If you were born between 1954 and 1959, the age in which you receive your full benefit kicks in at different intervals during the year that you are 66.

AGE 67: For those people born after 1960, 67 is the age in which the full social security benefit is realized.

AGE 70: Once you hit age 70, it is no longer beneficial to delay receiving social security benefits. If you have not already done so, now is the time to begin receiving these benefits.

AGE 70 1/2: Anyone over the age of 70 1/2 is no longer allowed to receive a tax deduction for IRA contributions. Likewise, you are now mandated to begin withdrawing funds from your 401(k) and IRA accounts and pay the income tax on these withdraws. The only exception to this rule is if you are still working and have a 401(k) account with that current company.

Sources:

Although we assume many of our readers know what a 401(k) and an IRA are, let’s cover these quickly.

What is a 401(k)?

401(k) retirement, savings, and investment accounts are tax-deferred ways to invest your money where your contributions are typically matched – a portion of those earnings, usually not all of them in dollar-for-dollar fashion – by your employer. These plans are named after the section of the Internal Revenue Code – 401(k) – that lays out the rules for these plans.

There are other benefits that 401(k) plans bring to the table, such as not having to pay money on the growth of your 401(k) account over the years. This reduces your taxable income, a valuable perk during your peak earning years. The government taxes withdrawals in retirement, but most people won’t have high incomes at that time. As a result, they will make their withdrawals in a lower tax bracket. Even if they are withdrawing large amounts of money, the asymmetric nature of tax brackets means most of them will benefit from the lower taxes – an easy way to play some tax arbitrage.

What is an IRA?

IRA is short for Individual Retirement Account, which is a type of investment account and is one of the easiest ways to save for retirement.

Individual Retirement Accounts can be used to purchase stocks, mutual funds, ETFs or other financial instruments – basically all kinds of investments. Further, IRAs may also provide tax breaks that help reduce your taxable income, and the taxes you must pay. 

Now that you understand what a 401(k) plan and an IRA are, let’s highlight this year’s changes to the 401(k) account’s contribution limit

Up until 2018, Americans who are saving for retirement were able to sock away $15,000 in their 401(k) accounts and $5,500 in their Individual Retirement Accounts. 

Starting in 2019, these contribution limits have increased by $500 for each account.

If you use 401(k), 403(b), and 457 accounts, as well as the Thrift Savings Plan, you will be legally able to shelter $19,000 in earnings in 2019. IRA limits have increased to $6,000.

If you’re in a marginal tax bracket of 24%, and also pay a state tax bracket of 9.3% like many of our California clients, contributing $19,000 to your 401(k) helps reduce your  income tax by $6,327. Sort of like a tax subsidy from the government to help fund your retirement accounts.

Workers who are of at least 50 years of age will be able to contribute a maximum of $25,000 to such accounts in 2019, which is up from the cap of $24,500 from last year. 

The 2019 Individual Retirement Account Contribution Amount

In 2018, the IRA contribution cut-off was $5,500. It had remained at this amount since 2013. This year’s $6,000 limit can be contributed anytime until April 15^th, 2020.

American workers who are of age 50 or greater will not be able to store more money to their Individual Retirement Accounts in their later years in a greater amount than what was available in previous years. The catch-up contribution cap for the Individual Retirement Account will stay true at $1,000.

Traditional IRA Changes

People who own 401(k) accounts can’t claim tax deductions on their contributions for 2019 if their earnings are more than $74,000 if filing individually, or $123,000 as a married couple. Each of the amounts increased $1,000 this year and $2,000 this year, respectively. The tax deduction starts being phased out at the amounts of $64,000 and $103,000 for 2019.

Roth IRA changes

This year, the maximum income ceiling for Roth IRA contributions after has risen $2,000 for individuals and $4,000 for married couples filing jointly. 

People earning $137,000 individually or $203,000 as married couples can’t contribute to Roth IRAs. Their ability to contribute starts to be phased out at $122,000 and $193,000 for individuals and married couples, respectively.

Once you move to a different employer, or retire, you’ll want to rollover the 401(k) balances. This helps prevent maintaining several accounts with different institutions, making your finances simpler to manage, and making the calculations and withdrawals of Required Minimum Distributions in retirement much easier.

Individuals working for years and planning for retirement ultimately lead to be dynamic go-getters who don’t want to think about the limitations and possible incapacitations of old age. However, with smart planning in your 50’s and 60’s, you can protect your heirs from financial risk and even protect a business from a crippling lack of leadership.

Costs of Long Term Care

Depending on where you live, long term care can cost you anything from $54,800 to $150,200 per year. While nearly half of all those who use a long term care facility are there for more than a year, this expense can be covered by a long term care policy. 

Average costs on long term care policies run approximately $2,700 per year, though significant discounts are available for couples. Depending on when you buy, you can lock in a low rate that will protect you from the expense of a long stay in an assisted care facility.

Business Protection

If a great deal of your assets are tied up in a business, work with your attorney and business partners to make sure that your assets and legacy will be protect in the event of a catastrophic health challenge. 

Make your intentions and goals known. Take care that any personal savings would be readily accessible to your spouse or heirs as you intend in the event you can no longer authorize withdrawals or sign checks. Consider setting up a trust to divert your assets into a tax protected vehicle in the event of your incapacitation.

Daily Cares

It’s important to note that the majority of those currently receiving daily assistance are still living at home. In terms of budget, this makes good sense. While the average cost of a semi-private room is more than $80,000 in the United States, a full-time health aide will cost less than $50,000.

Spousal Protection

In the event of a catastrophic health event that requires skilled nursing care, a long term care policy can provide substantial protection for your remaining assets. For example, should your resources be exhausted and you need to rely on Medicaid due to lack of insurance, your spouse would be able to keep slightly more than $100,000. 

With a long term care policy that offers asset protection for your partner, your partner will be able to keep more. The amount of protected coverage will be determined by the policy. 

Also be aware that Medicaid rules vary from state to state, so don’t rely on this protection without a careful review by your insurance agent and attorney.

Consider Touring Local Facilities

One of the greatest challenges in choosing long term care is finding a bed in an emergency. If your health history demonstrates that you may need long term care, consider finding a facility with a feeder facility, such as apartments or condos. You would likely have closer access to long term care when you need it, and you can use the features at the feeder facility to improve your health and put off long term care as long as possible.

The best time to make plans for long term care is long before you need it. With the right policy, you can protect your assets, guard your heirs and shield your partner from great worry and expense.

Social Security is one of the main benefit programs for workers in the United States. At some point, almost everyone will collect something from Social Security. If you are getting close to collecting from Social Security, you might be wondering how the program works and what to expect. Here are some of the most commonly asked questions about Social Security benefits.

How Old Do You Have to Be to Collect?

The short answer is that it depends on when you were born. Also, you can decide if you want to start collecting benefits earlier and take a smaller amount, or if you want to wait for a higher amount.

The soonest you can start receiving benefits is at age 62. If you do that, your monthly payment will be smaller. You can delay the payment each year and it will keep increasing until you’re 70 years old. So it’s really up to you how you want to handle it. The “full retirement age” is considered 65 for those born before 1938. If you were born after that, there’s a sliding scale up to 66 years and 4 months to reach retirement age.

How Much Can I Get?

The amount you get from Social Security varies depending on when you retire and when you were born. How much you earned over your career also plays into the calculation. To give you an idea, the average benefit for someone on Social Security as of January 2019 was $1464 per month. On the high end of the spectrum, you could earn as much as $2861 per month if you waited as long as possible to retire and were in the highest bracket. Your spouse can also receive a benefit of roughly half of your benefit. If you pass away, your spouse can also keep receiving spousal benefits from Social Security.

When Do I Get My Social Security Check?

The short answer is, you won’t actually get a check. Social Security doesn’t mail physical checks, but you can sign up for direct deposit. In that case you’ll get an automatic deposit into your account. Another option is to receive a prepaid debit card with your benefits on it. If you do automatic deposit like most people, the day that the deposit arrives varies depending on when your birthday is.

If your birthday is in the first 10 days of the month, your payment will arrive on the second Wednesday of the month. If your birthday falls in the range of the 11th through the 20th of the month, then you’ll get your payment on the third Wednesday of the month. If your birthday is after the 20th, you’ll get the payment on the fourth Wednesday.

How Do I Apply for Social Security benefits?

The easiest way to apply for Social Security benefits is online at SSA.gov. Another option is to go to the local Social Security office and apply in person. You can start this process when you’re 61 years and 9 months old. You can receive your first benefits when you turn 62 if you wish to start as early as possible.

Remember, Social Security benefits should only account for a portion of your retirement income.  A retirement plan with other sources of income is ideal and we are here to help you plan for the retirement road ahead.

One of the crucial decisions in life if you have minor children is to make arrangements for the guardian or guardians who will finish raising your children if you and your spouse should happen to die in a common accident or weather disaster.

A will likely find that a lot of thought and planning have to go into that decision, and you need to give it a great deal of consideration.

The first step is to have a complete discussion with the person or people that you have considered for this very important family event. There are a multitude of factors that enter into this designation, some of which are the following:

* Does the person really want that responsibility? Will there be passion in performing the “duties” and the financial ability to do so?

* Does that person have the same parenting methods, discipline ideas, lifestyle, finances, religious beliefs, medical decisions, motivation, and future plans for the children’s education that you do?

* Although you may think your parents are the perfect answer, would they be capable of assuming that role if many years go by and they have medical or age related restrictions if the time ever came?

* Where is the guardian located? Would it mean an upsetting move for your children into a totally new area without friends? Will they perhaps be put into a large family and are used to a small one?

Guardianship provisions are an integral part of your estate planning, as follows:

* You must deliberately and carefully spell out the guardian or guardians that you have chosen in your will or living trust or in a proper separate document where parents can designate a guardian. A qualified family law or estate attorney will provide all the necessary language and the required documents for your state and will even ensure that future children born or adopted would be included in the guardianship designation. The legal guardianship of minor children is regulated by each individual state, which has its own unique requirements, rules, and obligations.

* It is considered good practice to name at least one alternate guardian in case circumstances change.

* You may think that if you do not specify a guardian, one of the children’s closest relatives will be appointed. Realize that the person may not want or is not prepared to take on that role, and it would be up to the court to decide who to appoint. You might not agree with that decision.

* In the future, whenever you review your will to see if it is up-to-date, remember to also review your guardian choice to make sure it still is appropriate.

How do guardianships and adoptions differ?

A guardianship of minors is a legal relationship between the guardian and a minor child where the guardian has certain obligations and rights regarding that child. A guardianship does not sever the legal relationship between the biological parents and the child, and they co-exist. 

An adoption permanently alters the legal relationship between biological parents and a child. The adopted parents become the legal parents, and the biological parents give up their parental rights and obligations.

Rest easy

You may hope and pray that the day will never come when a guardianship would be necessary, but you will have peace of mind if you have provided for your children in the event that such an event ever occurs.