Tehachapi's Online Community News & Entertainment Guide
Tehachapi's Online Community News & Entertainment Guide
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Go out into your yard and dig a big hole. Every month, throw $50 into it, but don’t take any money out until you’re ready to buy a house, send your child to college, or retire. It sounds a little crazy, doesn’t it? But that’s what investing without setting clear-cut goals is like. If you’re lucky, you may end up with enough money to meet your needs, but you have no way to know for sure. How do you set goals? The first step in investing is defining your dreams for the future. If you are marri...
In times of crisis, you don’t want to be shaking pennies out of a piggy bank. Having a financial safety net in place can ensure that you’re protected when a financial emergency arises. One way to accomplish this is by setting up a cash reserve, a pool of readily available funds that can help you meet emergency or highly urgent short-term needs. How much is enough? Most financial professionals suggest that you have three to six months’ worth of living expenses in your cash reserve. The actua...
We live in an age of medical miracles. People live longer than ever before, and life expectancies are increasing at a steady rate. This means that many of us will be fortunate enough to still have our parents with us as we ourselves reach retirement age. As our parents age, however, their health may decline, and the greater the chance becomes that they will require home care, nursing home care, or other assisted-living arrangements. Long-term care: The odds against it aren’t long at all Maybe y...
What is long-term care? In general, long-term care refers to a broad range of medical and personal services designed to assist individuals who have lost their ability to function independently. The need for this ongoing care arises when you have a chronic disability or when physical/mental impairments prevent you from performing certain basic activities, such as feeding, bathing, dressing, transferring, and toileting. What are the three levels of long-term care? Because some long-term care...
(continued from July 4 issue of the Loop) Who should purchase LTCI? During the “golden years,” when income typically declines, the purchase of LTCI should be carefully considered. People with significant discretionary income and substantial resources to protect for spouses, children, and other loved ones should seriously consider purchasing LTCI. Individuals with modest resources (e.g., less than $50,000 net worth) may find the premiums unaffordable, and may qualify for Medicaid by spending down...
What is long-term care insurance (LTCI)? Long-term care insurance (LTCI) is a contractual arrangement that pays a selected dollar amount per day for a selected period of time for skilled, intermediate, or custodial care in nursing homes and other settings (such as home health care). Because Medicare and other forms of health insurance do not pay for custodial care, many nursing home residents have only three alternatives for paying their nursing home bills: their own assets (cash, investments),...
You made it through tax season and now you’re looking forward to your summer vacation. But before you go, take some time to review your finances. Mid-year is an ideal time to do so, because the demands on your time may be fewer, and the planning opportunities greater, than if you wait until the end of the year. Think about your priorities What are your priorities? Here are some questions that may help you identify the financial issues you want to address within the next few months. Are any l...
During your working years, you’ve probably set aside funds in retirement accounts such as IRAs, 401(k)s, and other workplace savings plans, as well as in taxable accounts. Your challenge during retirement is to convert those savings into an ongoing income stream that will provide adequate income throughout your retirement years. Your retirement lifestyle will depend not only on your assets and investment choices, but also on how quickly you draw down your retirement portfolio. The annual p...
If you’re one of the millions of parents or grandparents who’ve invested money in a 529 plan, now may be a good time to see how your plan stacks up against the competition. You can research 529 plans at the College Savings Plans Network website at collegesavings.org. If you discover that your 529 plan’s performance has been sub-par, what options do you have? Roll over funds to a new 529 plan One option is to do a “same beneficiary rollover” to a different 529 plan. Under federal law, you can r...
You raised them, helped get them through school, and now your children are on their own. Or are they? Even adult children sometimes need financial help. But if your child asks you for a loan, don’t pull out your checkbook until you’ve examined the financial and emotional costs. Start the process by considering a few key questions. Will your financial assistance help your child in the long run? It’s natural to want to help your child, but you also want to avoid jeopardizing your child’s indepen...
I owe a large amount of money to the IRS. Can I pay what I owe in installments? Unfortunately, not everyone gets a refund during tax season. If you are in the unenviable position of owing a large amount of money to the IRS, you may be able to pay what you owe through an installment agreement with the IRS. With an installment agreement, the amount of your payment will be based on how much you owe in unpaid taxes and your ability to pay that amount within the agreement’s time frame. Although you a...
Understanding financial matters can be difficult if you don’t understand the jargon. Becoming familiar with these 10 financial terms may help make things clearer. 1. Time value of money The time value of money is the concept that money on hand today is worth more than the same amount of money in the future, because the money you have today could be invested to earn interest and increase in value. Why is it important? Understanding that money today is worth more than the same amount in the f...
Every year, the Internal Revenue Service (IRS) announces cost-of-living adjustments that affect contribution limits for retirement plans, thresholds for deductions and credits, and standard deduction and personal exemption amounts. Here are a few of the key adjustments for 2015. Retirement plans Employees who participate in 401(k), 403(b), and most 457 plans can defer up to $18,000 in compensation in 2015 (up from $17,500 in 2014); employees age 50 and older can defer up to an additional $6,000...
Getting married is exciting, but it brings many challenges. One such challenge that you and your spouse will have to face is how to merge your finances. Planning carefully and communicating clearly are important, because the financial decisions that you make now can have a lasting impact on your future. Discuss your financial goals The first step in mapping out your financial future together is to discuss your financial goals. Start by making a list of your short-term goals (e.g., paying off wed...
Financial investments Pay attention to the changes in the capital gains tax rates for individuals and try to sell only assets held for more than 12 months. Consider selling stock if you have capital losses this year that you need to offset with capital gain income. If you plan to sell some of your investments this year, consider selling the investments that produce the smallest gain. Personal residence and other real estate Make your early January mortgage payment (i.e., payment due no later...
What are appropriate checklists for year-end tax planning? Tax planners often develop checklists to guide taxpayers toward year-end strategies that might help reduce taxes. Typically, suggestions are grouped into several different categories, such as “Filing Status” or “Employee Matters,” for ease of reading. When year-end approaches, it might be wise to review each suggestion under the categories that may apply to you. Filing status and exemptions If you’re married (or will be married b...
Build your retirement fund: Save, save, save When you know roughly how much money you’ll need, your next goal is to save that amount. First, you’ll have to map out a savings plan that works for you. Assume a conservative rate of return (e.g., 5 to 6 percent), and then determine approximately how much you’ll need to save every year between now and your retirement to reach your goal. The next step is to put your savings plan into action. It’s never too early to get started (ideally, begin saving...
You may have a very idealistic vision of retirement--doing all of the things that you never seem to have time to do now. But how do you pursue that vision? Social Security may be around when you retire, but the benefit that you get from Uncle Sam may not provide enough income for your retirement years. To make matters worse, few employers today offer a traditional company pension plan that guarantees you a specific income at retirement. On top of that, people are living longer and must find...
Continued from the October 11, 2014 issue. If possible, save for your retirement and your child’s college at the same time Ideally, you’ll want to try to pursue both goals at the same time. The more money you can squirrel away for college bills now, the less money you or your child will need to borrow later. Even if you can allocate only a small amount to your child’s college fund, say $50 or $100 a month, you might be surprised at how much you can accumulate over many years. For example, if yo...
You want to retire comfortably when the time comes. You also want to help your child go to college. So how do you juggle the two? The truth is, saving for your retirement and your child’s education at the same time can be a challenge. But take heart--you may be able to reach both goals if you make some smart choices now. Know what your financial needs are The first step is to determine what your financial needs are for each goal. Answering the following questions can help you get started: For re...
Here are 10 things to consider as you weigh potential tax moves between now and the end of the year. Answer: Make time to plan: Effective planning requires that you have a good understanding of your current tax situation, as well as a reasonable estimate of how your circumstances might change next year. There’s a real opportunity for tax savings when you can assess whether you’ll be paying taxes at a lower rate in one year than in the other. So, carve out some time. Defer income: Consider any...
Answer: You probably didn’t notice, but when the clock stuck midnight on Dec, 31, 2013, a number of popular tax benefits, commonly included the list of provisions referred to as a “tax extenders” expired. While it’s possible that Congress could retroactively extend some or all of these items, you’ll have to evaluate your 2014 tax situation based on the fact that you’re no longer available. Qualified charitable distribution: For the past few years, a qualified charitable distribution (QCD) of up...
(continued from The Loop Aug. 16, 2014 issue, pg 8) What should you know about distributions from IRAs and other retirement plans? Effective retirement planning involves not only an awareness of the types of savings vehicles available, but also an understanding of taking distributions from these vehicles. In particular, you should be familiar with the income tax ramifications of distributions (including a possible 10 percent premature distribution penalty tax for distributions made prior to age...
What is retirement planning? Retirement planning involves an analysis of the various choices you can make today to help provide for your financial future. To make appropriate choices, you need to predict – as well as you can – your future economic circumstances. You’ll also need to establish your post-retirement goals. When you’ve determined how much of an income stream you’ll probably require in the future, you’ll be in a position to make wise choices now about income, saving, investments...
Yes, they can be an excellent way to save for college. College savings plans are established by states and typically managed by an experienced financial institution designated by the state. Each plan has slightly different features. A 529 college savings plan lets you save money for college in an individual investment account that offers federal tax advantages. You (or anyone else) open an account in your child’s name and thereafter contribute as much money as you wish, subject to the p...
