The Legal Bible for Retirement Plans

This book is not for the faint of heart as it is written by an attorney for attorneys and retirement plan professionals, but this is the Bible when it comes to planning that relates to group retirement plans and IRAs. IRAs and 401(k)s may seem simple, but when it comes to death, RMDs, and inheritance options, they are anything but simple. This is evidenced by the fact that this book is 624 pages of legal information related to these plans. If you ever inherit a retirement plan, please be sure to talk to a qualified professional. There are a lot of things that can go wrong when it comes to making smart decisions with inherited retirement plans.

First Seen right here: The Legal Bible for Retirement Plans

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2017 Market Review and Thoughts on 2018

For today’s blog post, we thought we’d share a letter that we sent to our investment management clients at the start of the year. It contains some reflections on 2017 as well as some thoughts about what 2018 might have in store. 

Dear Friends and Clients of Dunston Financial Group,

As a firm, we want to sincerely thank you for placing your trust in our team. We are dedicated to your success, and we consider it an honor to work with you.

In 2017 our organization continued to grow, and we now have six people dedicated to serving you. Stephanie McElheny, CFP®, EA, ChSNC, came to us from PNC Investments where she served as Director of Financial Planning and oversaw the financial planning activities of 13 financial planners. Stephanie is an Enrolled Agent, a designation that allows her to prepare tax returns and legally represent our clients before the IRS. She is also a specialist in special needs planning and can assist our clients who have family members with special needs. Ryan Bowman, CFP® joined us from the largest independent investment advisory firm in St. Louis, and he brings to us a tremendous amount of financial planning and investment expertise. Ryan is also a U.S. Army veteran, and he served two active-duty tours in Iraq. Finally, Rosanna Sabian joined us as our new administrative assistant. Rosanna came to us from the bay area in California where she served as office manager for a successful CPA firm.

Year-End 2017 Market Review

As we approach 2018, it‘s time to reconcile the past 365 days of 2017. We are sending off a very exciting and tempestuous year. The stock market is at an all-time high. Volatility is at a record low. Consumer spending and confidence have passed pre-recession levels.

As a firm at Dunston Financial Group, we would like to wish all you a happy and prosperous 2018. It’s almost certain that the coming year will be as electrifying and eventful as the previous one!

The New Tax Plan

The new tax plan is finally here. After heated debates and speculations, president Trump and the GOP achieved their biggest win of 2017. In late December, they introduced the largest tax overhaul in 30 years. The new plan will reduce the corporate tax rate to 21% and add significant deductions to pass-through entities. It is also estimated to add $1.5 trillion to the budget deficit in 10 years before accounting for economic growth.

The impact on the individual taxes, however, remains to be seen. The new law reduces the State and Local Tax (SALT) deductions to $10,000. Also, it limits the deductible mortgage interest for loans up to $750,000 (from $1m). The plan introduces new tax brackets and softens the marriage penalty for couples making less than $500k a year. The exact scale of changes will depend on a blend of factors including marital status, the number of dependents, state of residency, homeownership, and employment versus self-employment status. While most people are expected to receive a tax-break, certain families and individuals from high tax states such as New York, New Jersey, Massachusetts, and California may see their taxes higher.

Affordable Care Act

The future of Obamacare remains uncertain. The new GOP tax bill removes the individual mandate, which is at the core of the Affordable Care Act. We hope to see a bi-partisan agreement that will address the flaws of ACA and the ever-rising cost of healthcare. However, political battles between republicans and democrats and various fractions can lead to another year of chaos in the healthcare system.

Equity Markets

The euphoria around the new corporate tax cuts will continue to drive the markets in 2018. Many US-based firms with domestic revenue will see a boost in their earnings per share due to lower taxes.

We expect the impact of the new tax law to unfold fully in the next two years. However, in the long run, the primary driver for returns will continue to be a robust business model, revenue growth, and strong balance sheets.

Momentum

Momentum as an investment strategy was the king of the markets in 2017. The strategy brought +38% gain in one of its best years ever. While we still believe in the merits of momentum investing and include it in our portfolios, we are expecting more modest returns in 2018.

Value

Value stocks were the big laggard in 2017 with a return of 15%. While their gain is still above average historical rates, it’s substantially lower than other equity strategies. Value investing tends to come back with a big bang. In the light of the new tax bill, we believe that many value stocks will benefit from the lower corporate rate of 21%. And, as S&P 500 P/E continues to hover above historical levels, we could see investors’ attention shifting to stocks with more attractive valuations.

Small Cap

With a return of 14%, small-cap stocks trailed the large and mega-cap stocks by a substantial margin. We think that their performance was negatively impacted by the instability in Washington. As most small-cap stocks derive their revenue domestically, many of them will see a boost in earnings from the lower corporate tax rate and the higher consumer income.

International Stocks

It was the first time since 2012 when International stocks (+25%) outperformed US stocks. After years of sluggish growth, bank crisis, Grexit (which did not happen), Brexit (which will probably happen), quantitative easing, and negative interest rates, the EU region and Japan are finally reporting healthy GDP growth.

It is also the first time in more than a decade that we experienced a coordinated global growth and synchronization between central banks. We hope to continue to see this trend and remain bullish on foreign markets.

Emerging Markets

If you had invested in Emerging Markets 10-years ago, you would have essentially earned zero return on your investments. Unfortunately, the last ten years were a lost decade for EM stocks. We believe that the tide is finally turning. This year emerging markets stocks brought a hefty 30% return and passed the zero mark. With their massive population under 30, growing middle class, and almost 5% annual GDP growth, EM will be the main driver of global consumption.

Fixed Income (Bonds)

It was a turbulent year for fixed income markets. The Fed increased its short-term interest rate three times in 2017 and promised to hike it three more times in 2018. The markets, however, did not respond positively to the higher rates. The yield curve continued to flatten in 2017. And inflation remained under the Fed target of 2%.

After a decade of low interest, the consumer and corporate indebtedness has reached record levels. While the Dodd-Frank Act imposed strict regulations on the mortgage market, there are many areas, such as student and auto loans, that have hit alarming levels. Our concern is that high-interest rates can trigger high default rates in those areas, something which can subsequently drive down the market.

Gold

2017 was the best year for gold since 2010. Gold reported 11% return and reached its lowest volatility in 10 years. The shiny metal lost its momentum in Q4 as investors and speculators shifted their attention to Bitcoin and other cryptocurrencies. In our view gold continues to be a solid long-term investment with its low correlation to equities and fixed income assets.

Real Estate

It was a tough year for REITs and real estate in general. While demand for residential housing continues to climb at a modest pace, the retail-linked real estate is suffering permanent losses due to the bankruptcies of several major retailers. This trend is driven on one side by the growing digital economy and another side by the rising interest rates and the struggle of highly-leveraged retailers to refinance their debt. Many small and mid-size retail chains were acquired by Private Equity firms in the aftermath of the 2008-2009 credit crisis. Those acquisitions were financed with low-interest rate debt, which will gradually start to mature in 2019 and peak in 2023 as the credit market continues to tighten.

In the long-run, we expect that most public retail REITs will expand and reposition themselves into the experiential economy by replacing poor performing retailers with restaurants and other forms of entertainment.

On a positive note, we believe that the new tax bill will boost the performance of many US-based real estate and pass-through entities.  Under the new law, investors in pass-through entities will benefit from a further 20% deduction and a shortened depreciation schedule.

What to Expect in 2018

After passing the new tax bill, Congress will turn its attention to other topics of its agenda – improving infrastructure, and amending entitlements. Further, we will continue to see more congressional budget deficit battles.

It will be important to talk to us as well as your accountant to find out how the new bill will impact your taxes.

With markets at a record high, we’ll want to keep an eye on the possibility of capturing some of your capital gains and, as always, maintaining a well-diversified portfolio will be paramount.

We might see a rotation into value and small-cap; however, the market is always unpredictable and can remain such for long periods.

We will monitor the Treasury Yield curve. In December 2017 the spread between 10-year and 2-year treasury bonds reached a decade low at 50 bps. While not always the case, a flattening yield has often predicted an upcoming recession.

Index and passive investing will continue to dominate as investment talent is ever more scarce, and it will be an important part of building a diversified portfolio. Mega large investment managers like iShares and Vanguard will continue to drop their fees.

Thank you again for another great year. We look forward to serving you in 2018.

The Dunston Financial Group Team

First Posted on: 2017 Market Review and Thoughts on 2018

Dunston Financial Group Considered Top 13 Best Financial Advisors in Colorado

Dunston Financial Group is excited to share that we’ve been named one of the top 13 financial planning firms in Colorado. Summarizing their analysis, AdvisoryHQ writes,

As a fee-only fiduciary, Dunston Financial Group represents the golden standard of Denver wealth managers, ensuring trust between clients and their advisors. Additionally, the firm boasts a diverse and talented team, with professional certifications including MBA, CFP®, CFA, and ChSNC®, enabling each Denver financial advisor to tackle a variety of financial and investment challenges. With a solid financial planning strategy, a fiduciary commitment, and an accredited team of Colorado financial advisors, Dunston Financial Group has earned a 5-star rating on our list of the best financial advisors in Denver.

We would like to thank all of our wonderful clients and professional colleagues for helping us achieve this exciting accomplishment!

You can read a detailed review of our firm as well as find tips about how to select the best financial advisor here.

 

First Seen over here: Dunston Financial Group Considered Top 13 Best Financial Advisors in Colorado

Monday Quick Tip: Tax Credit for Small Business Retirement Plan Setup

Did you know there’s a tax credit available for small businesses that set up a new retirement plan? As a small business owner, which includes a self-employed business of one, you can claim a tax credit for part of the ordinary and necessary costs of starting a SEP IRA, SIMPLE IRA, or other qualified retirement plan. The credit equals 50% of the cost to set up and administer the plan and educate employees about the plan, up to a maximum of $500 per year for each of the first 3 years of the plan. You can even claim the credit for a prior year or carry it forward if needed. The credit is claimed on IRS Form 8881. More information about the credit can be found on the IRS website. Setting up a retirement plan is fantastic way to save and invest for retirement, and it can also provide helpful tax deductions.

If you’d like to talk with one of our CERTIFIED FINANCIAL PLANNER™ professionals about setting up a SEP IRA, SIMPLE IRA, or other qualified retirement plan, please feel free to contact us.

First Posted on: Monday Quick Tip: Tax Credit for Small Business Retirement Plan Setup

What The Griswolds Can Teach Us About Our Finances

The holidays can be an exciting and joyous occasion or stressful depending on how you prepare for them. But, using the Griswold’s situation in National Lampoon’s Christmas Vacation as a learning experience, you can take some steps to make the holidays more bright. So, grab some eggnog and your moose mug, and consider the following as you prepare for the year ahead:

  • Don’t write a check you can’t cash – Or, as the saying goes, “don’t count your chickens before they hatch.” By relying on a source of income that you haven’t yet received, you put yourself at risk of financial catastrophe. For example, if you decide to put in a pool, make sure to wait until you receive your bonus check.
  • Make sure you have an emergency reserve – Should the unexpected occur (for example, getting fired after your crazy cousin kidnaps your boss), it is important to have a liquid source of funds available to meet your monthly expenses until you can recover. This account is normally recommended to cover approximately 3 – 6 months’ worth of expenses.
  • Save some of your year-end bonus – While bonuses can be a nice surprise and should be enjoyed, we recommend saving at least a small portion. This could mean padding your emergency reserve, depositing money into a brokerage account, or contributing to an IRA.
  • Consider pet insurance – Should your feline companion chew on a cord and get electrocuted, chances are the vet bill will be fairly high. Much like human health insurance, pet insurance allows you to set deductibles and coinsurance based on an agreed-upon monthly premium. While not cheap, in circumstances where your pet requires more expensive care, this coverage can help greatly reduce the cost of your vet bill and save you money in the long run.
  • Give to charity (or family) – It truly is better to give than to receive. Whether it’s helping those less fortunate or purchasing gifts for family members who don’t have the funds, the joy of helping others is priceless. In addition, should you decide to give to charity, you may receive the added benefit of a potential tax deduction.
  • Make decisions together – Prior to making any major purchase, be sure to speak with your spouse first to avoid potential conflict. This could include asking their opinion on installing a pool or purchasing gifts for other people’s children. Financial disagreements account for a great deal of marital strife, so clear communication is imperative.

In the new year…

  • Have your insurance coverage reviewed – This includes disability insurance should a loved one take a tumble off the roof while hanging lights and homeowner’s insurance in case your home is destroyed by the neighbors’ zealous anticis. In addition, don’t forget about your auto coverage should you wreck while narrowly avoiding a run-away-sled, liability insurance if someone gets hurt (yourself or others), and health insurance if holiday planning causes high blood pressure and puts you at increased risk of a heart attack.
  • Keep your estate plan up-to-date – Should one of your family members make the unfortunate decision to light a match in the vicinity of flammable material and the worst were to occur, it is extremely important to have current legal documents. These can help ease the estate distribution process and reduce family conflict in an already stressful time.

Originally Posted over here: What The Griswolds Can Teach Us About Our Finances

Year-End Tax Tip: Deducting Meals & Entertainment Expenses

A taxpayer may deduct business-related meals and entertainment expenses incurred for entertaining a client, customer, or employee. Entertainment expenses are deductible only if they are both ordinary and necessary and meet one of the following tests:

Directly-related test – The taxpayer must show all of the following:

  1. The main purpose of the combined business and entertainment is the active conduct of business
  2. The taxpayer did engage in business with the person during the entertainment period
  3. There is more than a general expectation of getting income or some other specific business benefit at some future time

Associated test – Even if the taxpayer’s expenses do not meet the directly-related test, they may meet the associated test. Taxpayer must show that the entertainment is:

  1. Associated with the active conduct of the business, and
  2. Directly before or after a substantial business discussion

Generally a taxpayer may deduct 50% of unreimbursed entertainment expenses.

First Posted over here: Year-End Tax Tip: Deducting Meals & Entertainment Expenses

2017 Year End Tax Planning

As we approach the end of another tax year, it is beneficial to consider certain actions that can not only result in a lower tax bill this year, but also in the years to come. Below are a number of strategies you may wish to utilize prior to December 31:

  • Increase retirement plan contributions – Even though it is the end of the year, there is still time to save! If you find yourself with extra income, make sure to contribute any excess to your retirement plan during the last few pay periods; if you receive a year-end bonus, you can also redirect a portion of that to your retirement plan. Not to mention, you may qualify for a higher employer match.
  • Take advantage of preferential capital gains rates – For those individuals whose income falls in the 15% marginal bracket, long-term capital gains are taxed at 0%. With this in mind, you may wish to consider realizing enough gains to “fill up” the 15% bracket and therefore pay no capital gains taxes on that income. However, be careful as an increase in Adjusted Gross Income (AGI) can affect taxability of Social Security, itemized deductions subject to thresholds, charitable deductions, credits, etc.
  • Review your withholding – To reduce the chances of owing money at tax time, make sure that your current tax withholding is as up-to-date and accurate as possible. You can use online tools to help calculate the correct amount; if you have been withholding too little, try to approximate the amount of additional withholding necessary to break even. To adjust the percentage for the final few pay periods of the year, all you need to do is file a revised W-4 with your employer.
  • Convert your Traditional IRA – If you think you might be entering a higher tax bracket in the future, will be in a lower than normal bracket this year, or think tax rates will rise, it might make sense to convert your Traditional IRA to a Roth IRA. This will allow tax-free growth of your money and future qualified distributions will be tax-free (assuming you meet the necessary qualifications). This strategy can also be beneficial in situations where your account has lost money but will likely recover; a conversion will result in less taxes payable than otherwise would be due to the diminished balance. Consider pairing this strategy with a charitable donation (below) to at least partially offset taxes due on the conversion. Remember – you have until the tax deadline of the following year to recharacterize the conversion if your situation changes or you find yourself unable to pay the tax.
  • Donate to charity – For those who itemize deductions (or plan to) and are charitably inclined, donating cash or property to a qualified organization can have a sizeable impact on your tax bill. In general, contributions to charity can be deducted by up to 50% of AGI, but a 30% limitation may apply to certain organizations. In addition, the IRS allows tax-free Qualified Charitable Distributions (QCDs) directly from your IRA to a charity of your choice in lieu of taking a traditional RMD. To utilize QCDs, taxpayers must be over 70½ and up to $100,000 can be transferred.
  • Remember your RMDs – If you are older than 70½, make sure to take your Required Minimum Distribution from your retirement plans and inherited IRAs. While the IRS tends to be fairly lenient when it comes to missed RMDs, there is a chance that a potentially sizeable penalty could be due (50% of shortfall) if the mistake is not forgiven.
  • Bunch itemized deductions – Taxpayers who do not have enough itemized deductions in a given year may want to consider “bunching” items together in order to exceed the standard deduction threshold. This is especially useful in cases where an item must exceed a percentage of AGI in order to be deducted. For example, if you know that you (and your spouse, if applicable) might need certain medical procedures in the near future, it may make sense to schedule them within the same tax year so that you are able to meet the AGI threshold for deducting medical expenses.
  • Harvest losses – If you anticipate having large capital gains this year, they can be offset by selling other positions at a loss. This can be especially beneficial in situations where the gains will be subject to the higher rate (20%) and/or the 3.8% Medicare Surtax. In addition to mitigating capital gain income, you can also offset up to $3,000 in ordinary income and carry the remaining balance forward for future tax years. Finally, reducing net gains will also reduce AGI which can have a positive effect on certain deductions. An important reminder when utilizing this strategy is to avoid the wash sale rules – this means that if you sell an investment at a loss, you must wait 30 days (either before or after) to purchase that same investment.
  • Contribute to a 529 College Savings Plan – If you would like to help someone save for college, a 529 College Savings Plan can be the perfect vehicle. These accounts let you contribute on a state tax-deductible basis (depending on where you reside) and distributions are tax-free if used for qualified higher education expenses.
  • Review Investment Holdings for large unrealized gains – Many mutual funds pay out dividends and large embedded capital gains at the end of the year, which will be reportable by the owner of the fund as of the “ex-dividend date.” While it may seem like a good idea to buy shares before this date in order to receive the extra income, it is important to be aware that the payout causes the share price to fall by that same amount. Not only that, but even if you automatically reinvest the dividends, you still have to pay tax on that income (assuming the shares are held in a non-qualified account). For some people, it may make sense to sell a mutual fund prior to a large capital gain distribution and reinvest that money in a low-cost ETF in the interim, then re-purchase the fund at a later date (again, be careful of the wash sale rules). Note that this situation usually only benefits people who are holding a fund without a large unrealized capital gain; otherwise, the sale of the fund will trigger its own capital gain on the net proceeds.
  • Make gifts to family – Not only can you help your family financially, you can also receive a tax benefit by gifting certain property. For example, if you gift a stock or mutual fund prior to the ex-dividend date (as mentioned above), the new owner will be responsible for reporting the distributed income. This can make sense if you have a sizeable position with a large expected distribution and can shift the income to a beneficiary in a lower tax bracket than yourself.  You can give $14,000 per year, per beneficiary free of gift tax in 2017. Giving property to family can also help you to reduce your estate.
  • Consider AMT preference items – While the Alternative Minimum Tax only affects 4-5% of taxpayers, it is important to be aware of so that you can limit it, or avoid triggering it in the first place. Certain deductions, like state and local income taxes and property taxes, are not deductible under AMT. Before accelerating certain payments, make sure to consider how these might affect the AMT calculation.
  • Increase retirement plan contributions – Even though it is the end of the year, there is still time to save! If you find yourself with extra income, make sure to contribute any excess to your retirement plan during the last few pay periods; if you receive a year-end bonus, you can also redirect a portion of that to your retirement plan. Not to mention, you may qualify for a higher employer match.
  • Take advantage of preferential capital gains rates – For those individuals whose income falls in the 15% marginal bracket, long-term capital gains are taxed at 0%. With this in mind, you may wish to consider realizing enough gains to “fill up” the 15% bracket and therefore pay no capital gains taxes on that income. However, be careful as an increase in Adjusted Gross Income (AGI) can affect taxability of Social Security, itemized deductions subject to thresholds, charitable deductions, credits, etc.
  • Review your withholding – To reduce the chances of owing money at tax time, make sure that your current tax withholding is as up-to-date and accurate as possible. You can use online tools to help calculate the correct amount; if you have been withholding too little, try to approximate the amount of additional withholding necessary to break even. To adjust the percentage for the final few pay periods of the year, all you need to do is file a revised W-4 with your employer.
  • Convert your Traditional IRA – If you think you might be entering a higher tax bracket in the future, will be in a lower than normal bracket this year, or think tax rates will rise, it might make sense to convert your Traditional IRA to a Roth IRA. This will allow tax-free growth of your money and future qualified distributions will be tax-free (assuming you meet the necessary qualifications). This strategy can also be beneficial in situations where your account has lost money but will likely recover; a conversion will result in less taxes payable than otherwise would be due to the diminished balance. Consider pairing this strategy with a charitable donation (below) to at least partially offset taxes due on the conversion. Remember – you have until the tax deadline of the following year to recharacterize the conversion if your situation changes or you find yourself unable to pay the tax.
  • Donate to charity – For those who itemize deductions (or plan to) and are charitably inclined, donating cash or property to a qualified organization can have a sizeable impact on your tax bill. In general, contributions to charity can be deducted by up to 50% of AGI, but a 30% limitation may apply to certain organizations. In addition, the IRS allows tax-free Qualified Charitable Distributions (QCDs) directly from your IRA to a charity of your choice in lieu of taking a traditional RMD. To utilize QCDs, taxpayers must be over 70½ and up to $100,000 can be transferred.
  • Remember your RMDs – If you are older than 70½, make sure to take your Required Minimum Distribution from your retirement plans and inherited IRAs. While the IRS tends to be fairly lenient when it comes to missed RMDs, there is a chance that a potentially sizeable penalty could be due (50% of shortfall) if the mistake is not forgiven.
  • Bunch itemized deductions – Taxpayers who do not have enough itemized deductions in a given year may want to consider “bunching” items together in order to exceed the standard deduction threshold. This is especially useful in cases where an item must exceed a percentage of AGI in order to be deducted. For example, if you know that you (and your spouse, if applicable) might need certain medical procedures in the near future, it may make sense to schedule them within the same tax year so that you are able to meet the AGI threshold for deducting medical expenses.
  • Harvest losses – If you anticipate having large capital gains this year, they can be offset by selling other positions at a loss. This can be especially beneficial in situations where the gains will be subject to the higher rate (20%) and/or the 3.8% Medicare Surtax. In addition to mitigating capital gain income, you can also offset up to $3,000 in ordinary income and carry the remaining balance forward for future tax years. Finally, reducing net gains will also reduce AGI which can have a positive effect on certain deductions. An important reminder when utilizing this strategy is to avoid the wash sale rules – this means that if you sell an investment at a loss, you must wait 30 days (either before or after) to purchase that same investment.
  • Contribute to a 529 College Savings Plan – If you would like to help someone save for college, a 529 College Savings Plan can be the perfect vehicle. These accounts let you contribute on a state tax-deductible basis (depending on where you reside) and distributions are tax-free if used for qualified higher education expenses.
  • Review Investment Holdings for large unrealized gains – Many mutual funds pay out dividends and large embedded capital gains at the end of the year, which will be reportable by the owner of the fund as of the “ex-dividend date.” While it may seem like a good idea to buy shares before this date in order to receive the extra income, it is important to be aware that the payout causes the share price to fall by that same amount. Not only that, but even if you automatically reinvest the dividends, you still have to pay tax on that income (assuming the shares are held in a non-qualified account). For some people, it may make sense to sell a mutual fund prior to a large capital gain distribution and reinvest that money in a low-cost ETF in the interim, then re-purchase the fund at a later date (again, be careful of the wash sale rules). Note that this situation usually only benefits people who are holding a fund without a large unrealized capital gain; otherwise, the sale of the fund will trigger its own capital gain on the net proceeds.
  • Make gifts to family – Not only can you help your family financially, you can also receive a tax benefit by gifting certain property. For example, if you gift a stock or mutual fund prior to the ex-dividend date (as mentioned above), the new owner will be responsible for reporting the distributed income. This can make sense if you have a sizeable position with a large expected distribution and can shift the income to a beneficiary in a lower tax bracket than yourself.  You can give $14,000 per year, per beneficiary free of gift tax in 2017. Giving property to family can also help you to reduce your estate.
  • Consider AMT preference items – While the Alternative Minimum Tax only affects 4-5% of taxpayers, it is important to be aware of so that you can limit it, or avoid triggering it in the first place. Certain deductions, like state and local income taxes and property taxes, are not deductible under AMT. Before accelerating certain payments, make sure to consider how these might affect the AMT calculation.

Originally Posted over here: 2017 Year End Tax Planning

This Thanksgiving, Don’t Just Stuff the Turkey

Top of mind for many individuals is whether or not they have accumulated sufficient assets to retire and if they’re saving enough to meet their goals and objectives. While determining an approximate amount is a more in-depth exercise involving numerous variables, here are a few tips to help you build a better nest egg:

 

  • Update your budget Creating and utilizing a budget can help establish spending patterns, reveal inefficiencies, and uncover excess cash flow and opportunities for savings. Usually, budgets should not exceed more than a year and should be calculated on a monthly basis. When putting together the budget, make sure to keep it simple; if there is too much detail, you risk making it too difficult to implement and monitor.
  • Make sure you have a healthy emergency reserve – This account can serve as a buffer to your retirement accounts should something unexpected come up. A general rule of thumb is to keep at least 3-6 months’ worth of expenses in liquid assets to protect against unforeseen circumstances (i.e., job loss, disability, unexpected car or home expense, etc.). This fund may consist of checking/savings accounts, money market funds, or short-term CDs.
  • Save your tax refund If you do overestimate your taxes and wind up with receiving a refund, consider using it to fund your IRA, pad your emergency reserve, or pay down debt.
  • Leverage your employer match – Employees fortunate enough to receive these contributions should increase savings to at least the minimum amount necessary to receive the full company contribution. Outside of that, individuals can contribute up to the maximum that the plan allows.
  • Contribute the maximum amount (if you can) – For 2017, employees can contribute up to $18,000 a year to 401(k)s and $5,500 to IRAs. Upon turning age 50, people can begin to make annual catch-up contributions which are $6,000 for company retirement plans and $1,000 for IRAs. In addition, the tax benefits of these plans can allow for increased growth.
  • Check your credit score – Establishing good credit is important for debt management purposes, since it is integral to obtaining loans and securing favorable interest rates. If you have existing debt, you may wish to consider refinancing. The lower your interest rates on loans, the more money in your pocket each month and the more that can be saved.
  • Invest in the market – Contributing as much as is feasible to your retirement accounts is the first step in savings, but equally as important is investing wisely. Overcoming the impact of inflation, while also growing your money, requires prudent diversification and allocation.
  • Consider a new plan – Self-employed individuals should review their current retirement plan to determine if it’s the most effective in terms of cost and allowable contributions. Some of the more popular plans include SEP IRAs, SIMPLE IRAs, and the Individual 401(k), each having different pros and cons.
  • Adjust your tax withholding – If you generally overpay your taxes, you are not only reducing the amount you could be saving, you are also losing out on any compounding interest that could have been accrued on those funds. For these reasons, it is wise to estimate your taxes due ahead of time so that you can withhold the proper amount each year.

Original Post over here: This Thanksgiving, Don’t Just Stuff the Turkey

Dunston Financial Group Featured In Chicago Life on How to Prepare for Retirement

 

At Dunston Financial Group, we work with pre-retirees and retirees on a daily basis. If you’re preparing for retirement, here’s a really helpful article from Tom Groenfeldt, writing on behalf of Chicago Life Magazine, that features some of our own thoughts from the team here at Dunston Financial Group. This is a digital magazine, and you’ll find the article on pages 34-35.

 

Originally Posted on: Dunston Financial Group Featured In Chicago Life on How to Prepare for Retirement

Dunston Financial Group Welcomes Stephanie McElheny, CFP®, ChSNC®, EA to the Team

Stephanie McElheny, CFP®, ChSNC®, EA 

Director of Financial Planning

Dunston Financial Group would like to welcome Stephanie McElheny to the team! A Certified Financial Planner™ professional with more than seven years of industry experience, Stephanie is passionate about identifying opportunities and implementing comprehensive financial planning solutions for both individuals and businesses. As a Chartered Special Needs Consultant™ and an Enrolled Agent, Stephanie’s specific expertise includes special needs planning as well as individual and business taxation.

Prior to joining Dunston Financial Group, Stephanie was the Manager of Financial Planning, and an Assistant Vice President, at PNC Investments. She led a team of 13 professionals who provided financial planning services and solutions to more than 750 advisors across the country. Previously, Stephanie acted as both the Assistant Director of Financial Planning and a Registered Investment Advisor for Hefren-Tillotson, a mid-size wealth management firm. During her tenure with Hefren, Stephanie was responsible for reviewing and auditing financial plans for accuracy and completeness as well as acting as a lead content creator for the blog, newsletter, and radio spots.

A Pittsburgh native, Stephanie served as President and Symposium Chair of the Pittsburgh chapter of the Financial Planning Association (FPA), among other roles. She also spent time on the pro-bono committee, offering financial literacy education to seniors, veterans, and underprivileged families.

Outside of work, Stephanie enjoys spending time with her husband, Steve, and their dog, Myron. She is an outdoor enthusiast who loves hiking, camping, cycling, and snowboarding. Stephanie also takes great pride in cheering on her hometown sports teams and alma mater – the Pittsburgh Steelers, Penguins, and Pirates and the Penn State Nittany Lions.

 

 

First Posted on: Dunston Financial Group Welcomes Stephanie McElheny, CFP®, ChSNC®, EA to the Team