Review Category : Benefits

Big Financial Pitfalls If You Plan On Working Longer

There are more people I meet every day who tell me that they aren’t planning to retire early, but instead enjoy life a little bit more and succumb to the fact that they are going to have to work later into their lives.  While on the surface this all seems fine and dandy, the harsh reality is that there are some major pitfalls with trying to work past the age of 65.   This strategy is often filled with some pretty unrealistic expectations and can have close to retirement families grasping for straws if their plan isn’t executed successfully.  Here are my pitfalls and tips to be thinking about if you want to work past the age of 65. Reality vs. Fantasy – In a recent study by the employee benefit research, 38% of the workers in the workforce expect to retire at the age of 70 and only 4% actually retire at the age of 70.   So, many workers are ...

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Five Smart Money Moves To Make When You Are Offered A Severance Package

When the consulting companies are done offering advice to your corporation on how to make it more effective, the one word you don’t want to hear from upper management is “reorg”.    Reorg, short for reorganization, if often a labor intensive process where a large organization systematically eliminates a section of the workforce to streamline their overall processes, people, and systems.   When these reductions in workforce happen, one of the possibilities that may occur is to offer you a severance package.    The problem for most families is that decisions have to be made so quickly that people often make poor choices on how to best maximize this package. Here are five smart money moves to make when you are offered a severance package. Double Dip On Pay If your company offers you six months or one year as a severance package, this is not the time to take an extended vacation.   Every month that you can work for a new employer ...

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Why People Still Don’t Know Their 401(k) Costs

On February 3, 2012, the Department of Labor published final regulations on fee disclosure for retirement plans. The final regulations were supposedly going to finalize the process where the DOL began to expand disclosure of compensation paid to service providers of ERISA-subject plans. In short, the idea of this regulation was to offer the consumer better transparency of their 401(k) by having much easier fee disclosure to read and understand. The regulations raised important questions for plan sponsors and service providers to implement new compliance systems within the regulation. As fiduciaries, plan sponsors are responsible for making the decisions related to selecting an appropriate fee structure.  These fees can include asset fees charged by the financial institution, fund expenses within the mutual funds themselves, and broker/financial advisor compensation that may exist within the plan.   This doesn’t involve the actual cost to the company of running the plan for recordkeeping, plan participant fees, etc.  It’s up to each and every company ...

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Can You Buy A Rental Property In Your IRA?

The U.S. homeownership rate, which was over 69 percent at the height of the housing bubble, had fallen by the beginning of 2015 all the way to 63.7 percent. That means over the last 10 years that the U.S. has lost all of the homeownership gains of the previous 20 years. It means that the 2010 decade is on pace to be the strongest decade for renter growth in history (source: www.chicagotribune.com). That steep drop has put the national homeownership rate back where it last was in 1993. Effectively, 1.7 million fewer households owned their homes by 2015 than they did at the bubble’s peak.   Many people are now thinking about buying a rental property, but may be short the cash to do it.  One of the questions that we are often asked is “Can I use my IRA to buy a rental property?” The short answer is yes, but let me first give a little ‘buyer beware’ that Real ...

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Are You Paying Too Much For Your Group Term Life Insurance at Work?

It’s 11:00 P.M. the night before your open enrollment, and once again you have waited until the last minute to check the boxes for next year’s benefits. Every year, I help hundreds of clients review the corporate benefits they get from their company. As the booklets get larger and the benefits more complex, one of the biggest mistakes that I see employees make is not doing a shopping comparison with their voluntary group life insurance. Remember these upcoming bullet points when it comes to viewing your company life insurance. First, there is no free lunch. Although the company may give you some life insurance that you get for no cost, if the insurance is more than $50,000 you’ll get something on your pay stub called imputed income. You’ll notice this if you look at your next pay stub and see GTL (group term life) as income on your paycheck. Second, when it comes to voluntary term life insurance and you ...

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The One Secret Your Benefits Department Never Told You About Your 401(k)

What if we were to tell you that you could get access to part of your 401(k) today and NOT pay a single penalty to move your funds into an IRA account?  You would think that we were kidding, right?  Unfortunately, most Time Warner employees (CNN, Cartoon Network, Turner, TBS, TNT, etc.) are unaware of a little known rule in your summary plan description of your 401(k) called an “in-service distribution”. Time Warner permits an in-service distribution which would allow you to withdrawal some of your money from the 401k and roll it over to an IRA while you are still employed with the company!  YES, this is 100% TRUE.  Call Fidelity yourself and find out!  By rolling over the assets to an IRA, you can maintain control of how you manage your money. Let’s face it- – some 401k’s are deficient with high fees, limited investment fund choices, and your ability to customize an investment process within your 401k ...

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Be Careful About The Rules Around Saving For Healthcare

With so many changes happening with our tax code every year, it is really important that you sit down and review how this will affect your family finances. As 2015, approaches us, one tax issue that could affect your family center around the changes intertwined with Flexible Spending Accounts (FSA’s) and Health Savings Accounts (HSA’s). In many prior years, traditionally FSA’s were you use it or you lose it plans if the money is not spend by year-end. Since 2013, you were allowed to roll money over from the prior year and carry it forward into the current. However, going into 2015 there is a BIG twist that you should consider before the 2014 year is over. If you elect to carry forward the $500 in your FSA plan from 2014 into 2015, you will immediately become ineligible to participate in a Health Savings Account for 2015. This is true for the entire calendar year. So, if you opted to ...

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How Do You Practice For Retirement?

Almost every week in my line of business, I hear someone talking about ‘retirement’.    They have hopes, dreams, and ideas about the day that they just don’t have to work anymore.   I firmly believe that anything you do well in life is going to take practice.   That’s right Allen Iverson, I said practice.   But how in the world will you practice for retirement?  Here are three smart money moves ideas to help you think about getting ready for the day you say ‘no mas’ to letting the alarm clock get you up for work. Practice Your Money Habits- Having built well over a 1,000 budgets for families over the years, there may be no tougher budget than planning the one for retirement.   You’ll never really know how much you need in terms of withdrawals from your portfolio until you actually spend three to six months trying to live on that budget.  As one would imagine, this is difficult if the ...

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Obamacare: Open Enrollment What You Need To Know

It may be open enrollment season for many of you at work, but for millions of Americans it will be the official open enrollment for Obamacare coming up this Saturday.  Amidst the unknown of the upcoming Supreme Court case regarding federal subsidies, there is a plethora of information to digest for those of you who are considering the federal marketplace for your health insurance.  Here are my five smart money moves Q & A to help you get an initial start to understanding the open enrollment period beginning this week. Get Obamacare Help Here > Question 1:  When does open enrollment start/end and how many people are expected to sign up this year? Starts November 15, 2014 and ends February 15, 2015. You must apply by December 15th if you want your coverage to begin January 1st There are no other enrollment periods unless you qualify for a special enrollment for life events such as marriage, divorce, birth of new ...

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