How to Get Help with an Inheritance
If you are wondering how to get help with an inheritance you’ve just received, or expect to soon, here are a few key things to consider.
Fiduciary Financial Advisor in Longview Texas
Belonging Wealth Management is a fiduciary financial advisor in Longview Texas. Our area of expertise is tax-efficient retirement planning. You get a customized plan for your retirement income needs. We help with withdrawal planning, investment management, retirement accounts, tax planning, and Social Security optimization. Are You located in Longview Texas? Yes. We are located at …
Questions to Ask a Financial Advisor About Retirement
What are some questions to ask a financial advisor about retirement to make sure you are thinking about all the important issues and that your advisor is the right person to help you? Retirement is exciting and potentially stressful. Because it is such an important time of transition, many people will seek help from a …
Simple Retirement Calculator
This simple retirement calculator will help you quickly see if you are ready to retire. You can also use this retirement calculator to see how changes in your savings rate, retirement age, or investment return influence your ability to retire. Although this retirement calculator is simple to use, it is a good tool for seeing …
403b Calculator
This 403b calculator can help you whether you need to know how much you should be contributing to your 403b or if you are nearing retirement and want help figuring out how much you can withdraw from your 403b plan. Either way, this 403b calculator makes it easy to do some simple estimations. If you …
Pre-Retirement Planning Checklist
Preparing for retirement? This simple two-page retirement checklist will help you make sure you don’t miss any of the major things to consider when retiring. How to Use the Retirement Checklist This checklist is meant to provide you with a broad overview of the issues you need to consider before you retire. The intent is …
Are 403b Contributions Tax Deductible?
Generally, 403(b) contributions are tax-deductible up to an annual limit set by the IRS each year. You may be allowed to deduct additional “catch up” amounts depending on your age and how long you have been with your current employer. There are some exceptions to deductibility though, such as in the case of contributions to …
CAPM Calculator
The Capital Asset Pricing Model, or CAPM, is a basic theoretical model for determining the expected return on a security or portfolio. This CAPM calculator will allow you to quickly find the expected return on a stock using the CAPM. I provide a short explanation of the CAPM first, but you can just scroll down …
What Happens to My 403(b) When I Quit?
For the most part you get to decide what happens to your 403(b) when you quit or change jobs. You may be able to leave your 403(b) with your old employer. Otherwise you can withdraw it, roll it into an IRA, or transfer it over to a new employer. What you do depends in part …
Purchasing Power Risk
Purchasing power risk is the possibility that you will not be able to buy as much with your savings in the future. It represents a loss of value due to inflation. What is It? Purchasing power refers to what you are able to buy with a given sum of money. The risk, then, is that …
Can I Reinvest My Required Minimum Distribution?
If you are wondering whether you can reinvest your required minimum distribution, then chances are you have one coming up that you realize you don’t need. Required minimum distributions are one of the most loathed aspects of retirement plans. They can even disrupt your withdrawal plan if you don’t account for them properly. That doesn’t …
How to Avoid Capital Gains Tax on Stocks
Taxes are an unavoidable truth of retirement planning and investing. However, avoiding capital gains tax on stocks is a good way to lower your total tax liability. Here are a few ways you can lower your capital gains tax bill. What is Capital Gains Tax? To understand how to avoid capital gains taxes, you first …
Future Value Calculator
You can use this future value calculator to find the future value of a lump sum or stream of regular savings. For example, if you invest a certain number of dollars today, once, and let it earn interest for a predetermined number of periods, what is it worth in the future? Or, if you regularly …
What is a Vested Balance?
Your vested balance is the amount of money in your retirement account that belongs to you. If you quit your job or leave your employer, your vested balance is the portion of the money that you can take with you. What Does Vested Mean? According to Webster’s, vested means: Fully and unconditionally guaranteed as a legal …
Meeting Harry Markowitz
Fair warning, this post is a departure from my normal articles on retirement planning. I had an opportunity to meet one of the founding fathers of modern finance, Harry Markowitz, in June of 2019 and I simply want to share the experience with you here. Harry Markowitz isn’t a household name, but the work he …
Callable Bonds – How They Work
Callable bonds are bonds that the issuing corporation can redeem before maturity. If you hold a callable bond and the issuer decides to redeem it you will have to surrender the bond. Not all bonds are callable. The bond indenture must contain a call provision to allow for it if the issuer want to redeem …
What Is Inflation?
What is Inflation? Inflation is the gradual increase in prices over time. Specifically, it refers to changes in the Consumer Price Index. Understanding how price changes rise over time can help individuals budget and plan for the future. Businesses need to understand it to remain profitable. Policy makers need to know it as well to …
Contingent Beneficiary – Per Stirpes vs. Per Capita
Having trouble understanding what a primary or contingent beneficiary is? Deciding between per stirpes vs. per capita? I’ll address it all in this article. When you name beneficiaries on a retirement account application there is an implied assumption that you will pass away before they do. Most people name their spouse as a beneficiary for …
QLAC: Qualified Longevity Annuity Contract
A qualified longevity annuity contract, or “QLAC”, is a retirement withdrawal tool. It can be a helpful part of your retirement withdrawal strategy. A QLAC allows you to use the money in a qualified retirement plan to purchase a deferred income annuity without running afoul of required minimum distribution rules. In this article I’ll explain …
Gross Expense Ratio – What it is and Why it Matters
A gross expense ratio is the annual cost of operating a mutual fund or ETF. It tells you the total expense of owning the fund as a percentage of your investment. Fund families will often rebate portions of the fee so that your actual expense is lower than the gross expense ratio. That number is …
Can I Contribute to an IRA if I am Retired?
The simple fact that you are retired doesn’t mean you can’t contribute to an IRA. You can still contribute to an IRA if you are retired, but you need to have earned income. This is the same condition you had to satisfy before you retired. Be careful though. Not all income is considered earned income …
Can I Retire on 500k?
It is possible to retire on 500k in retirement savings, but you’ll need to do some careful planning. There aren’t many universal answers to retirement questions like this one. You need an individualized answer. I’m going to show you a simple process for answering this question. Whether you can or not depends largely on how …
What Happens if I Contribute Too Much to My 401k?
If you contributed too much to your 401k you may end up owing a penalty. Depending on when you realize that you have contributed too much, you may be able to reverse it. If you do it before the deadline you can avoid the penalty entirely. In this article I’ll explain what you need to …
Does Employer Match Count Towards 401k Limit?
There are two different annual limits on 401k contributions. The elective deferrals limit, and the annual additions limit. Your employer match counts toward one, but not the other. Elective Deferrals Limit The money that you have withheld from your pay to go into your retirement account is an elective deferral. You might see this called …
Fund of Funds Explained
A fund of funds is a collection of mutual funds bundled together. By combining different mutual funds into one package, the fund of funds purpose is to give you a single-choice investment solution. You’ll sometimes see a fund of funds abbreviated as FOF. This can simplify your investment process, but you need to understand how …
What is the Market Risk Premium?
The market risk premium is the return that you earn on stocks above what you could earn by investing in government bonds. For example, if the rate of return on the market is 15% when the rate on a government bond is 3%, the market risk premium is 12%. A more formal way of defining …
702(j) Retirement Plan: Worthwhile?
A 702(j) retirement plan really isn’t a “retirement plan” at all. It’s a cash value life insurance policy sold as a retirement plan. You may have heard the spiel. The promise of a 702(j) plan is tax-free retirement income. It is possible to access the cash value in a life insurance policy tax-free, but there …
Tax-Gain Harvesting?
Tax-gain harvesting may seem counter-intuitive, but it can be an effective way to reduce your total tax burden in retirement. Mindful tax planning is one of the easiest ways to improve your finances in retirement. What makes that true is the fact that current tax rates are known, so any time you make a decision …
How Long Will My Money Last in Retirement? (With Calculator)
Want to know how long your money will last with systematic withdrawals? Use the retirement withdrawal calculator to give you a good reference point. It’s based on the 4% rule, but with updated data. Simply input your savings in the portfolio balance, your withdrawal rate as a percentage (for 4% just type in 4), and …
What is a MYGA Annuity?
A multi-year guaranteed annuity, or MYGA, is very similar to a CD. A MYGA pays a fixed rate of interest and is most appropriate when you need a stable return from a conservative investment. Any time I mention annuities I try to make it clear that I am not licensed to sell them. Annuities tend …
What is an In-Kind Distribution?
In-kind distributions can sometimes provide tax or other benefits that a cash distribution doesn’t. So what is an in-kind distribution? Any distribution NOT made in cash. For a retirement account, that would typically be a distribution of stocks, bonds, mutual funds, or ETFs. In the case of an inheritance that would mean you would receive …
Marginal vs Effective Tax Rate in Retirement
Knowing the difference between your marginal vs effective tax rate is an important element of tax planning. When you understand your tax rate, you’ll be able to incorporate that into an integrated retirement withdrawal plan. The ability to properly manage your tax bill can save you thousands of dollars. It can also dramatically improve your …
What Happens to Your 401k When You Leave a Company?
Whether you retire, change jobs, or even get fired, you’ll have a few options for your 401k. While it is generally up to you, what happens to your 401k when you leave a company is also dependent on why you leave and how long you’ve been there. You won’t have a choice on some things. …
Are Reinvested Dividends Taxable?
If you hold a portfolio that contains stocks or equity funds, whether they are mutual funds or ETFs, then chances are you receive dividends. You probably reinvest at least a portion of them. But are reinvested dividends taxable? Reinvested dividends are generally taxable like any other dividend but that doesn’t necessarily mean you’ll incur a …
401k Withdrawal Age: How Does it Affect You?
There isn’t a magic or standard 401k withdrawal age. You can withdraw from your 401k at any time. Of course, you’ll likely owe taxes and possibly penalties if you do. Beyond a certain age you may be required to withdraw. However, the consequences of a 401k withdrawal are very different depending on your age. Most …
Paying Roth Conversion Taxes
This article covers the mechanics of paying Roth conversion taxes. Specifically, we will look at the source of money that you use to pay the tax bill due on the conversion, as this could actually impact the amount you owe on the conversion. If you are under 59 & 1/2, paying taxes with money from …
Goodman Triangle – The Unholy Trinity of Life Insurance
As for dramatic names, the Goodman Triangle wins the competition with the moniker “Unholy Trinity of Life Insurance”. Maybe I watched too many horror movies as a kid (don’t tell my mom) but when I hear that I envision something much more sinister than a tax scenario involving life insurance. While an exorcism won’t be …
Roth 401k vs Roth IRA: Should I Roll it Over?
When choosing between a Roth 401k vs Roth IRA, there are a few similarities and differences you need to be aware of. It’s customary to roll Roth 401ks into Roth IRAs at retirement for better options and more control. However, Roth 401k withdrawal rules differ from the rules for Roth IRA withdrawals in several ways. …
Sustainable Retirement Withdrawals from the S&P 500 in a Taxable Account
The idea for this article comes from a question submitted by a reader. I’ve copied the question below, and omitted the names to protect the innocent. (No animals were harmed in the creation of this article.) The question: Let me start by saying, I totally enjoy reading your articles/post! Do you have any information on …
Mega Backdoor Roth
A Mega Backdoor Roth is a conversion strategy that allows you to save a much higher amount in your Roth IRA than you are allowed to through direct contributions. Using a mega backdoor Roth is also a way that you can contribute to a Roth IRA if your income is above the phaseout limit and …
What is a Money Market Account?
Money Market Accounts, or MMAs, are a type of savings account that pay a higher rate of interest than you typically earn on a standard savings account. Because they are highly liquid, money market accounts can be a good choice for the cash portion of savings. There are a few things to be aware of …
Tax-Free Municipal Bonds
One of the easiest ways to increase your retirement income is to reduce your tax bill on that income. With tax-free municipal bonds you can reduce that tax bill to zero and enjoy tax-free retirement income. If you loan money to state and local governments by purchasing municipal bonds, the interest you receive is normally …
Emergency Fund CD Ladder
An emergency fund CD ladder can be a good tool to earn a little higher rate than you would likely get if you simply kept your emergency fund money in a checking account. One of the most basic components of a financial plan is an emergency fund. Keeping readily accessible cash on hand can help …
Bond Price Calculator
To use this bond price calculator simply select the item that you would like to solve for and input the variables that you know. Below the calculator you’ll see instructions to solve for anything you can use a bond calculator for to include tax-free equivalent municipal bond yield. A few quick notes… Coupon A bond’s …
RMD Percentages – Can They Affect My Withdrawal Strategy?
If you are subject to required minimum distributions (RMDs), you may be wondering if they can affect your planned withdrawal strategy. You can see this easily by considering the RMD percentages by age and comparing them to your planned withdrawal rate. In this post I’ve made an RMD percentage table and will show you how …
Should I Do Roth Conversions When the Market is Down?
Roth conversions can be a good strategy to reduce your tax bill both before and during retirement. A large market drop provides a good opportunity to convert even more of your retirement savings to a Roth IRA with an even lower tax bill. The benefit is even greater if you still have a long-term mindset …
Is $600,000 Enough to Retire?
If you have $600,000 saved toward retirement can you retire? It may be possible. It really all depends on what is important to you in retirement and how much income you need for a comfortable retirement. To figure out if $600,000, or any amount, is enough for you to retire on you’ll need to consider …
Should I Hold Company Stock in My 401k?
Should you hold your own employer’s stock in your 401K? The conventional answer, and my default response, is… no. However that is a topic that is worth some discussion. While I wouldn’t encourage you to buy your employer’s stock in your 401k plan it doesn’t necessarily follow that you should immediately sell it if you …
Can I Contribute to a Roth IRA if My Income is Too High? – The Backdoor Roth IRA
Roth IRA’s are one of the best retirement saving tools. You can’t deduct contributions from your taxable income, but you get to withdrawal them, and the earnings, tax-free in retirement. Because of your contributions ability to grow exponentially over time, that can be a big benefit. However, not everyone is able to contribute directly to …
Normal Yield Curve: What Does it Mean?
The yield curve is a popular economic indicator. It is a graph of the yield on bonds with different maturity terms, and often used to gauge the direction the economy is headed. Although you can create a yield curve from the yield and maturity of any type of bond, “THE yield curve” usually assumes we …