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Even though tax filing season is well under way, there's still time to make a regular IRA contribution for 2021. You have until your tax return due date (not including extensions) to contribute up to $6,000 for 2021 ($7,000 if you were age 50 or older on or before December 31, 2021). For most taxpayers, the contribution deadline for 2021 is Monday, April 18, 2022. You can contribute to a traditional IRA, a Roth IRA, or both, as long as your total contributions don't exceed the annual limit (or, if less, 100% of your earned income). You may also be able to contribute to an IRA for your spouse for 2021, even if your spouse didn't have any 2021 income.

Traditional IRA

You can contribute to a traditional IRA for 2021 if you had taxable compensation. However, if you or your spouse were covered by an employer-sponsored retirement plan in 2021, then your ability to deduct your contributions may be limited or eliminated, depending on your filing status and modified adjusted gross income (MAGI). (See table below.) Even if you can't make a deductible contribution to a traditional IRA, you can always make a nondeductible (after-tax) contribution, regardless of your income level. However, if you're eligible to contribute to a Roth IRA, in most cases you'll be better off making nondeductible contributions to a Roth, rather than making them to a traditional IRA.

Roth IRA

You can contribute to a Roth IRA if your MAGI is within certain limits. For 2021, if you file your federal tax return as single or head of household, you can make a full Roth contribution if your income is $125,000 or less. Your maximum contribution is phased out if your income is between $125,000 and $140,000, and you can't contribute at all if your income is $140,000 or more. Similarly, if you're married and file a joint federal tax return, you can make a full Roth contribution if your income is $198,000 or less. Your contribution is phased out if your income is between $198,000 and $208,000, and you can't contribute at all if your income is $208,000 or more. If you're married filing separately, your contribution phases out with any income over $0, and you can't contribute at all if your income is $10,000 or more. Even if you can't make an annual contribution to a Roth IRA because of the income limits, there's an easy workaround. You can make a nondeductible contribution to a traditional IRA and then immediately convert that traditional IRA to a Roth IRA. Keep in mind, however, that you'll need to aggregate all traditional IRAs and SEP/SIMPLE IRAs you own — other than IRAs you've inherited — when you calculate the taxable portion of your conversion. (This is sometimes called a "back-door" Roth IRA.) If you make a contribution — no matter how small — to a Roth IRA for 2021 by your tax return due date and it is your first Roth IRA contribution, your five-year holding period for taking qualified tax-free distributions from all your Roth IRAs (other than inherited accounts) will start on January 1, 2021.       Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal professional. LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial. This article was prepared by Broadridge. LPL Tracking #1-05248337

Valentine's Day is one of the biggest holidays for romance and for lavishing gifts on that special someone in your life. While flowers and chocolates may be the most common gifts exchanged on that day, why not consider a gift that may grow in value year after year? Then you would truly be giving the gift that keeps on giving. Want to learn about some value-gaining gifts for your loved ones? Check out some of the ideas listed below.

1. Treasury Bonds

Treasury bonds are one reliable gift that grows in value for those who are patient. Consider throwing in a bond with your Valentine's card and give them a little bit of savings growth without any effort on their part.¹

2. Jewelry

A popular gift for Valentine's Day is jewelry. High-quality jewelry made from precious stones, gold, silver, or platinum may make a great accessory and a good investment. If you do your research and find a reputable jeweler, you may have a piece that increases in value over time.²

3. Antiques

Sometimes those old, unique, one-of-a-kind items are worth a lot now and even more in the future. While it may take some legwork and a lot of research to find an item or piece with a high potential to increase in value, you may have a gift that is likely to appreciate in value and be one they won't soon forget.²

4. Artwork

Artwork makes a beautiful and personalized gift for any occasion. If you get a piece from specific artists or time periods, you may end up with a piece that has the ability to appreciate in value for years to come. While it may not be feasible to buy a painting from one of the known masters due to the high expense, works from up-and-coming artists may turn out to be valuable as well. Talk to known art enthusiasts to see what recommendations they may have to offer.²

5. A Trading Account

Has your loved one considered starting their own investments? Why not open a trading account with funds to help them get started? While it may not seem like the most romantic gesture, it shows a commitment towards their financial future.²

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Investing involves risks including possible loss of principal. To determine which investment(s) may be appropriate for you, consult with your financial professional prior to investing. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.   This article was prepared by WriterAccess. LPL Tracking: 1-05216739   Footnotes: ¹6 Valentine's Day Gifts That Keep on Giving, Money Talks News, https://www.moneytalksnews.com/unique-valentines-day-gifts-that-keep-giving/ ²7 smart Valentine's Day gifts that can rise in value, ABS CBN News, https://news.abs-cbn.com/business/02/03/16/7-smart-valentines-day-gifts-that-can-rise-in-value  

With inflation on the rise, the IRS increased the 2022 contribution limits for some retirement accounts. Although a 2021 Congressional report found that only about 8.5% of defined benefit plan participants and 4.7% of individual retirement account (IRA) holders max out their contributions each year, increasing the amount you put aside for retirement may help your financial independence.¹ Here is what retirement savers need to know about the increases allowed in 2022.

Changes to 401(k) Limits

For 2022, the 401(k) limit for taxpayers under age 50 has increased by $1,000, to $20,500.² Those age 50 and older may make another $6,500 "catch-up" contribution, for a total maximum contribution of $27,000. This contribution amount is individual, which means that a married couple may contribute a total of $41,000 to their 401(k)s plus $6,500 more for each person who is age 50 or older to a maximum of $54,000.¹ Along with 401(k)s, this $20,500 contribution limit also applies to the 403(b), 457, and Thrift Savings plans available to government employees.

No Changes to IRA Limits

Though 401(k) limits increased, the IRS did not increase the contribution limits for traditional IRAs and Roth IRAs. These IRA limits remain the same, $6,000 for those age 49 and under and $7,000 for 50 and older.¹ The deductibility of traditional IRA contributions depends on your household income, while your ability to contribute to a Roth IRA also depends on your income. And unlike the IRA contribution limits, these income thresholds have changed for 2022.

• For single taxpayers covered by a 401(k), 457, or another workplace retirement plan, a deduction of up to the $6,000 or $7,000 limit (age 50 or older) is available only if their 2022 income is under $68,000. Those earning between $68,000 and $78,000 may deduct a portion of the full IRA contribution. These income thresholds represent a $2,000 increase from 2021.¹
• For married taxpayers filing jointly, who are both covered under a workplace retirement plan, the full IRA deduction is available if the total household income is under $109,000. Those earning between $109,000 and $129,000 may deduct a portion of the full IRA contribution, while those earning more than $129,000 cannot deduct any traditional IRA contributions.¹
• For married taxpayers filing jointly, where a workplace retirement plan covers only one, both taxpayers may deduct the full IRA contribution if they earn less than $204,000 in 2022, with the phase-out allowing a partial deduction for earnings between $204,000 to $214,000.¹

IRA contributors whose income exceeds these limits may still contribute to a traditional IRA—they just cannot deduct this contribution. But when it comes to Roth IRAs, those whose income exceeds the contribution thresholds are barred from directly contributing to a Roth.

• For single taxpayers or heads of household, the full Roth IRA contribution is available so long as their 2022 income is under $129,000.¹
• For married couples who file jointly, the Roth IRA income threshold starts at $204,000; those whose income exceeds $214,000 cannot contribute any amount to their Roth. Married taxpayers whose household income is between $204,000 and $214,000 may contribute a lower amount to a Roth IRA.¹

Because over-contributing to an IRA or Roth IRA carries some financial penalties, work with a financial professional to not exceed the maximum allowed. It is important to know these limits and how they increased for the 2022 tax year.   ¹ https://www.investopedia.com/2022-401k-limit-rises-5208542 ² https://www.fa-mag.com/news/irs-raises-401-k---roth-contribution-limits-64793.html  

Important Disclosures:

This material was created for educational and informational purposes only and is not intended as ERISA, tax, or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material. We suggest that you discuss your specific tax issues with a qualified tax advisor. Investing involves risks including possible loss of principal. Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal.  Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax. The Roth IRA offers tax deferral on any earnings in the account. Withdrawals from the account may be tax free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.   This article was prepared by WriterAccess. LPL Tracking #1-05218522

The federal government's response to the COVID-19 pandemic continues to impact individual income tax returns, from the suspension of federal student loan interest to expanded child tax credits. For many taxpayers, this may mean your 2021 return may look a bit different from last year's tax return. For some, this may mean a smaller refund or a higher tax rate. Here is some information about how certain factors may result in a lower federal income tax refund or affect your taxes due.

No Tax Waiver on 2021 Unemployment Benefits

In March 2021, Congress passed the American Rescue Plan Act, which waived federal income tax on up to $10,200 of unemployment benefits paid per individual in 2020.¹. However, no unemployment tax breaks have passed since then. This lack of a tax waiver means that the approximately 25 million Americans who received unemployment benefits in 2021 and did not have federal income tax withheld (or pay estimated taxes) may receive a smaller refund than before.

Advanced Child Tax Credits May Lower Refunds

If you have a child under the age of 17 and did not opt-out of the $250 or $300 per month per child advance payments beginning in June 2021, there is a lower income tax refund possible to compensate for these advanced child tax credits payments.² The overall child tax credit was higher than in prior years (at $3,600 per child age five and under and $3,000 per child age six and over). However, advancing half the overall credit over the last half of 2021 means that taxpayers may now get proportionally less when they file their tax returns.

No Federal Student Loan Interest In 2021

For more than a decade, taxpayers who pay interest in federal student loans have been able to deduct up to $2,500 in interest paid. But with the suspension of interest on federal student loans from March 2020 through May 2022, many taxpayers will not have any student loan interest to deduct for 2021.

Those With Defaulted Student Loans Could Have Refunds Seized

Along with the moratorium on student loan payments and interest charges, the federal government stayed tax refund offsets—and all collection activity—for defaulted federal student loans. This moratorium meant that those whose loans were in default could not have their tax refunds garnished by the IRS during the stay period. The moratorium expires on January 31, 2022. This expiration means those who file a tax return early—and receive a refund on or after Feb. 1—could see this refund garnished and put toward their overall loan balance and penalties. For taxpayers in this situation, it might be worth investigating your options to get your loans out of defaulted status before filing your 2021 tax return. Suppose any of these situations apply to you. In that case, a financial professional may be able to help you investigate other available federal and state tax benefits that may help manage your tax bill or boost your refund. ¹ https://www.cnbc.com/2022/01/03/no-a-tax-break-on-2021-unemployment-benefits-isnt-available.html ² https://www.forbes.com/sites/robertfarrington/2021/11/22/americans-should-be-prepared-for-a-smaller-tax-refund-next-year/?sh=4fd19fd1c718 This information is not intended as authoritative guidance or tax advice.  You should consult with tax advisor for guidance on your specific situation.   Important Disclosures The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy. This article was prepared by WriterAccess. LPL Tracking #1-05239398  

When saving for retirement, it often makes sense to contribute to employer-sponsored retirement plans to take advantage of any available employer match opportunities. However, not everyone has access to an employer-sponsored plan. Even if you do, there are reasons you may want to consider using Traditional and/or Roth IRAs to supplement your retirement savings. There are important differences between the two types of accounts.[i] Understanding the potential benefits and drawbacks of each type of IRA can help you make more informed decisions.

Potential Benefits and Considerations

Regardless which type of IRA you choose, the contribution limits are the same, although Roth IRAs contributions are subject to income limits.[ii] Traditional IRA contributions are not limited by income levels unless you or a spouse was covered by an employer-sponsored plan during the year of the contribution. In 2022, the total amount you can contribute to your Traditional and Roth IRA accounts is the lesser of your taxable compensation for the year or $6,000 ($7,000 for those age 50 or older.)[iii] However, there are important differences in tax treatment for these accounts. If your income is below certain thresholds, you may be able to deduct some or all of your contributions to traditional IRAs, reducing your taxable income in the year of the contributions.[iv] Taxes on contributions and any growth are deferred until you begin withdrawing them. So, if your tax bracket in retirement is lower than in your earning years, you may pay less in taxes on your retirement dollars. In contrast, you cannot deduct contributions to a Roth IRA – those are after-tax contributions.[v] However, qualified distributions from Roth IRAs are not subject to federal income taxes, potentially lowering your tax burden in your retirement years.[vi] Generally speaking, Roth IRAs may make sense for investors who expect to be in a higher tax bracket in their retirement than in their working years. And, unlike Traditional IRAs, Roth IRAs are not subject to IRS Minimum Required Distribution rules, giving account owners more control over deciding when to access and use their retirement accounts.[vii]

Roth IRA Conversions

If the idea of using a Roth IRA to supplement your retirement savings appeals to you but you do not meet the income limits to contribute to one, you may want to consider making non-deductible contributions to a Traditional IRA and then converting the account to a Roth IRA. There are no income limits for Roth IRA conversions.[viii] A Roth conversion changes an existing traditional IRA or 401(k) into a Roth IRA, converting the assets so they will grow on a tax-free basis, rather than a tax-deferred one. However, the catch is that you must pay income taxes on any previously untaxed amount converted, in the year of conversion.[ix] There are also rules specifying that you must leave converted dollars in the Roth IRA account for at least five years before withdrawing them. Withdrawing them before the five years are up may subject you to a 10 percent penalty on the withdrawn amount.[x]

Seek Guidance and Weigh Your Options Carefully

Ultimately, there is not a bright-line test to determine whether a Traditional or a Roth IRA is best; the answer depends on your current situation and anticipated circumstances in your retirement years. If your income has dropped so you are in a lower tax bracket in 2021 than in previous years, it may make sense to consider a Roth contribution or conversion. Or, if you are concerned about your tax obligations for 2021, you may be able to make a deductible contribution to a traditional IRA by Spring 2022.[xi] Talk to your financial professional to learn more about different types of retirement planning vehicles, and to explore whether a Roth IRA may make sense for you.   Important Disclosures: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal.  Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax. The Roth IRA offers tax deferral on any earnings in the account. Withdrawals from the account may be tax free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change. Traditional IRA account owners should consider the tax ramifications, age and income restrictions in regards to executing a conversion from a Traditional IRA to a Roth IRA. The converted amount is generally subject to income taxation. This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.   [i] https://www.irs.gov/retirement-plans/traditional-and-roth-iras [ii] https://www.irs.gov/taxtopics/tc309 [iii] https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits [iv] https://www.irs.gov/retirement-plans/ira-deduction-limits [v] https://www.irs.gov/retirement-plans/roth-iras [vi] https://www.irs.gov/publications/p590b#en_US_2019_publink1000231061 [vii] https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds [viii] https://www.thebalance.com/should-you-do-a-roth-conversion-2894481 [ix] https://www.fool.com/retirement/plans/roth-ira/conversion/ [x] https://www.businessinsider.com/roth-ira-5-year-rule [xi] https://www.irs.gov/retirement-plans/ira-year-end-reminders

Sources

https://www.irs.gov/retirement-plans/traditional-and-roth-iras https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits https://www.kiplinger.com/retirement/retirement-plans/roth-iras/601720/who-should-consider-a-roth-ira-and-why-now https://www.thebalance.com/should-you-do-a-roth-conversion-2894481 https://www.fool.com/retirement/plans/roth-ira/conversion/ https://www.businessinsider.com/roth-ira-5-year-rule   This article was prepared by WriterAccess. LPL Tracking # 1-05225844

Spring is traditionally the time to clean the garage and to get the yard in shape. It’s also a great time to clean up your investment portfolio. Going into the final days of tax season, this is a perfect opportunity to get rid of clutter, review your asset allocations and make the necessary changes if your portfolio has strayed from your financial plan. Here are seven steps to making your portfolio cleaner and more efficient.

Think of Your Investments as a Portfolio

This is the first key step. Many investors focus on each individual holding and fail to look at the sum of the parts. Of course, it is important to invest in quality mutual funds, exchange-traded funds, stocks and bonds. But it’s smarter to start by determining whether your overall portfolio allocation is in line with your financial goals and risk tolerance. Ideally, this should all be an extension of your financial plan. Even younger investors starting out should think in terms of their overall portfolio, even if it contains only a few holdings at this point.

Find Your Most Recent Statements and Organize Your Records

Review all monthly, quarterly and yearly documents from your investment accounts. Keep them all in a paper file or on your computer and find a way to take a consolidated, overall view of your holdings as a portfolio. Categorize your portfolio by account and by asset class on a spreadsheet. This shows you how well-diversified you are across different asset classes. Your spreadsheet might reveal an ungainly number of individual holdings across different accounts. That’s called financial clutter. This is common among folks who have a number of old 401(k)s from former employers. This makes your portfolio hard to track and monitor efficiently.

Consolidate Your Accounts

Decrease your financial clutter and consolidate your accounts as much as possible. Unless there is a compelling reason to leave an old 401(k) with a former employer, monitoring your portfolio is much easier if you roll the account into a consolidated individual retirement account or even your current employer’s 401(k) if allowed. Also, consolidate other accounts such as IRAs, taxable accounts or annuities from various companies.

Review Your Financial Plan

Do this before reviewing your individual investments so your current allocation doesn’t distort your judgment. It is very important that you have a financial plan in place before you decide on an asset allocation strategy. The financial plan should drive your investing activities, allocation and choice of investments. A well-constructed plan helps you focus on your risk-tolerance and your goals for the money you save and invest.

Review Your Current Investment Holdings

Did your stocks hit their sell targets? How do your mutual funds compare to their peers? Establish a monitoring process for your individual holdings, and review them against appropriate benchmarks on a regular basis. If needed, make changes as you see fit. It’s best to do this with the help of an advisor, but start by checking Morningstar.com to analyze investment holdings and compare mutual funds.

Rebalance Your Portfolio

After you review your allocation across all of your various accounts, you can buy or sell holdings or add new investment dollars to get back in line as soon as possible to ensure that it is consistent with the risk and return targets in your financial plan.

Establish a Regular Process to Review and Monitor Your Portfolio

Getting your portfolio in shape just once does no good if you don’t establish a process for reviewing your portfolio and your holdings on a regular basis. This doesn’t mean looking at your investments daily or even weekly. Doing so can make you antsy about your investments, which can leads to bad decision-making. Monitoring and rebalancing your portfolio quarterly or semi-annually may be sufficient for most investors. Revisit your portfolio allocation and tweak your financial plan annually to ensure that everything is in synch. Finally, make sure you have a financial professional at least reviewing your assumptions and decisions. Doing so can help provide you financial confidence and independence.   Important Disclosures This material was created for educational and informational purposes only and is not intended as ERISA, tax, or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material. Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments. Asset allocation does not ensure a profit or protect against a loss. Rebalancing a portfolio may cause investors to incur tax liabilities and/or transaction costs and does not assure a profit or protect against a loss. Investing in mutual funds involves risk, including possible loss of principal.  The funds value will fluctuate with market conditions and may not achieve its investment objective. Upon redemption, the value of fund shares may be worth more or less than their original cost. An investment in Exchange Traded Funds (ETF), structured as a mutual fund or unit investment trust, involves the risk of losing money and should be considered as part of an overall program, not a complete investment program. An investment in ETFs involves additional risks such as not diversified, price volatility, competitive industry pressure, international political and economic developments, possible trading halts, and index tracking errors. Investing in stock includes numerous specific risks including: the fluctuation of dividend, loss of principal and potential illiquidity of the investment in a falling market. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price. Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal.  Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax. This article was prepared by RSW Publishing. LPL Tracking #1-05233728

A pre-retirement checklist to make early (or earlier) retirement a reality

As we make our way through 2022, maybe the dream of early retirement has begun to take shape in your mind. Maybe you’re researching when you might first qualify for Social Security retirement benefits (hint: for Social Security income, the youngest age when you can apply is 61 years and nine months old – you would then receive your first Social Security check four months later – one month after your 62nd birthday). But as attractive as monthly checks may be, seriously consider your financial position to be sure you can afford to walk away from the nine-to-five routine. When reviewing your retirement income, incorporate accurate Social Security figures into your financial equation. Keep in mind that Social Security benefits paid at an early retirement age will be less than the benefits paid at full retirement age (65–67, depending on your date of birth). To estimate your Social Security benefit amount, you can go to the Social Security Administration’s website at www.ssa.gov to use the agency’s online calculator.

Think Beyond Social Security

Beyond your Social Security benefits, however, are other major factors, such as your overall financial situation, prospects for future income, and satisfaction with your job. If early retirement seems a reasonable goal, determine how much income you can count on from savings to supplement your Social Security benefits. Remember to include income from employer-sponsored retirement plans, such as 401(k)s, Individual Retirement Accounts (IRAs), or annuities. Once you have determined your retirement resources, add up your current living expenses and calculate a rough estimate of how much income you may need during retirement. It is possible to live on less than your pre-retirement income, depending on your lifestyle. If you find that your retirement funds will be insufficient, explore the possibilities of selling your home, and moving to an area with a lower cost of living, or finding part-time employment where compensation is within allowable Social Security limits to avoid benefit reduction.

Other Considerations

Another critical point to consider is whether retiring from your job would leave you without life and health insurance or other necessary benefits. You may want to investigate the cost of private health coverage until you reach the age that you will be eligible for Medicare. It is also important to prepare for medical costs in retirement, including potential long-term care needs. Typically, many people underestimate the cost of long-term care and overestimate the funding that will be available through public programs and private health insurance. In reality, Medicare only covers short-term care. It may also cover some nursing home or assisted living costs, but only for skilled care that is deemed medically necessary for the duration of an illness, usually limited to 100 days following a three-day hospital stay. Consequently, Medicaid has become the primary source of public funding for long-term care. But, because it is a government program designed to help those in financial need, individuals must “spend down” their personal assets and meet the Federal poverty guidelines before qualifying for assistance. However, long-term care insurance is an alternative that can help cover extended care expenses before you or a loved one become eligible for Medicaid. Policies vary, but in general, they provide a daily, set amount of coverage that can be used in a number of ways. This type of insurance may help cover the expenses of nursing homes, assisted living facilities, adult day health programs, and/or at-home care. The cost of coverage is typically based on your age, current health status, and specific policy features, such as scope of coverage, levels of care, and duration of benefits.

Your Pre-Retirement Checklist

To begin preparation for an early retirement, read the following statements. If you have given careful consideration to the task, check it off.

• I have completed an assessment of my current financial situation, including income, expenses, assets, and liabilities.
• I have determined which of my expenses may be lower after I retire and which may be higher.
• I have determined how much I can expect from Social Security, veterans benefits, and pension plans.
• I have estimated how much I expect to receive from interest on my savings, real estate rentals, etc.
• I have reviewed my insurance policies to ensure that they meet my present and future needs.
• I have organized a strategy to pay off my large bills and debt before retirement.

Final Assessment

If you have any doubts about being able to make ends meet, working for a while longer may help improve your financial situation. If, however, income from savings, rents, royalties, or other non-employment sources, combined with Social Security benefits, is enough to meet your projected retirement expenses, you may want to focus on making your dream of an early retirement a reality.   Important Disclosures The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any Long Term Care (LTC) product. To determine which LTC product may be appropriate for you, consult your financial professional. This article was prepared by FMeX. LPL Tracking #1-05228085

Today, many people are concerned about saving for retirement or paying for a large ticket item, such as a child’s college education. If you belong to this group, now may be the time to organize your finances. It is never too early to begin, and the sooner you start, the better. Consider the following steps to building a strong financial foundation:  

1. Get organized. Smart money management begins with organizing your financial By grouping documents according to categories (e.g., insurance papers, account statements, bank statements, and tax returns), you will be able to find what you need quickly.

 

2. Determine your financial status. Once your files are organized, construct a net worth statement and a cash flow Your net worth is the difference between your assets (what you own) and your liabilities (what you owe). A cash flow statement itemizes all your sources of income (e.g., salary, interest, and rental income) and all your expenses (e.g., mortgage payments, food, clothing, etc.). A firm financial foundation includes having a positive net worth (meaning you own more than you owe) and positive cash flow (meaning you have more money coming in than going out). Even small steps toward improved money management can help you work towards a positive outcome. Look for areas where you can curb your expenses, and put that money toward savings.

 

3. Set financial goals. Once you become aware of your financial status, make the most of your money by establishing financial goals to direct your saving and spending patterns. Because your specific goals may change over time, be sure to re-evaluate your financial priorities on a regular basis.

 

4. Control your credit card spending. Although it is convenient to say “charge it,” buying on credit tends to cater to more impulsive shopping urges. Credit cards also can create an illusion of wealth, tempting you to buy things you cannot afford. If you carry large balances and make only the minimum monthly payments, the interest charges alone may exceed whatever amount you saved buying at bargain prices, and will take a long time to pay off. A practical guideline for controlling credit card spending is to have enough cash available (for example, in your checking or money market account) to pay off your credit card balances immediately to avoid interest charges.

 

5. Develop a tax strategy. Many people start thinking about taxes only when the time comes to file their tax return. However, if you wait until tax season, it may be too late to benefit from some tax-saving strategies. Developing some strategies beforehand with the help of a tax professional may be beneficial in the long run.

  Sound money management starts with organization—knowing where your hard-earned dollars are going. If you follow the steps outlined above, you will be on the path to building a strong financial foundation.   Important Disclosures The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor. This article was prepared by Liberty Publishing, Inc. LPL Tracking #1-05219161