Uncategorized Archives - Fort Pitt Capital Group Just another WordPress site Tue, 15 Jul 2025 19:45:16 +0000 en-US hourly 1 https://www.orchid-ibex-388317.hostingersite.com/wp-content/uploads/2020/08/cropped-logo-32x32.png Uncategorized Archives - Fort Pitt Capital Group 32 32 What Changes Are Coming to Social Security in 2024? https://www.orchid-ibex-388317.hostingersite.com/blog/social-security-changes/ Wed, 07 Dec 2022 19:26:15 +0000 https://www.orchid-ibex-388317.hostingersite.com/?p=20526 Over 70 million Americans, including those with disabilities and retirees, receive Social Security benefits. While the program won’t undergo significant reforms in 2024, the new year will still bring a few notable changes to Social Security, impacting beneficiaries and retirees. Specifically, we’ll see a benefit increase and higher earnings limits for early retirees. These adjustments can influence the financial aspects of your retirement planning, making it essential to understand how they might affect you. Knowing the details will help you confidently navigate your retirement plans. Here are several changes coming in 2024 you need to know about to make informed decisions for your financial security. Social Security and Supplemental Security Income Adjustments Social Security is the only retirement benefit that stays on par with inflation, and Supplemental Security Income (SSI) benefits will also increase to help Americans keep up with their living expenses in 2024. The cost-of-living adjustment (COLA) for 2024 will increase Social Security benefits by 3.2%, above average for the last decade. This COLA calculation is based on the Bureau of Labor Statistics’ Consumer Price Index (CPI), measuring […]

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What Changes Are Coming to Social Security in 2023?

Over 70 million Americans, including those with disabilities and retirees, receive Social Security benefits. While the program won’t undergo significant reforms in 2024, the new year will still bring a few notable changes to Social Security, impacting beneficiaries and retirees. Specifically, we’ll see a benefit increase and higher earnings limits for early retirees.

These adjustments can influence the financial aspects of your retirement planning, making it essential to understand how they might affect you. Knowing the details will help you confidently navigate your retirement plans.

Here are several changes coming in 2024 you need to know about to make informed decisions for your financial security.

Social Security and Supplemental Security Income Adjustments

Social Security is the only retirement benefit that stays on par with inflation, and Supplemental Security Income (SSI) benefits will also increase to help Americans keep up with their living expenses in 2024.

The cost-of-living adjustment (COLA) for 2024 will increase Social Security benefits by 3.2%, above average for the last decade. This COLA calculation is based on the Bureau of Labor Statistics’ Consumer Price Index (CPI), measuring price adjustments on retirees’ spending patterns. The maximum monthly benefit for someone claiming Social Security at full retirement age (FRA) will be $3,822.

Social Security and Supplemental Security Income Adjustments

Recipients will see an overall increase in benefits, which includes disability and payouts for widows and widowers. The SSI Federal Payment Standard increases monthly SSI payments to $943 for individuals and $1,415 for couples. COLA notices are sent out in December 2023, but you can also access this information on your Social Security account.

You can review the Social Security COLA Fact Sheet for more information about how the increases might impact your specific situation. Of course, you can always consult with your financial advisor for tailored information and advice.

Income Tax Increase

Tax rates will stay at 7.65% for employees and 15.30% for self-employed people. This remains a combined rate for Social Security and Medicare. Medicare’s portion (HI) is 1.45% of all your earnings. You will also see several beneficial adjustments to the Social Security benefits for 2024.

We will see some changes in the Federal Insurance Contributions Act (FICA) for next year. The payroll tax gap will increase by 5.2% to $168,600 in 2024, affecting a smaller portion of the nation. Self-employed people may see Social Security taxes rise by an additional $1,042.

Higher Retirement Benefits

In the United States, the retirement age is 62. This is when you may receive your benefits and reduced Social Security payments. Delaying your full retirement benefits can earn you an 8% bonus on your monthly benefits every year. It is worth noting that this delay is capped at age 70. 

Eligibility for retirement benefits happens by collecting Social Security credits. These credits are allocated as you work for an employer or yourself, where you pay Social Security taxes. In 2024, the credit will increase by $90, so you will receive one credit per $1,730 earned.

The maximum retired worker benefit will increase to $3,822 monthly in 2024. If you start collecting Social Security retirement benefits before you reach your full retirement age and continue to work, the benefits will be reduced. The Social Security Administration (SSA) will reduce benefits by $1 for every $2 you earn over the annual limit. As you reach FRA, benefits are reduced by $1 for every $3 you earn over the higher yearly limit. In 2024, the lower annual earnings limit will increase to $22,320.

Early Filers Keep More Benefits

If you file early while you’re still working, you may get to hold on to more of your benefits. In 2024, the workers’ earnings test limit increases with a 5% bump from $21,240 to $22,320.

Those working in their 60s and collecting Social Security may see deductions depending on their annual wages. This can be a $1 reduction in annual benefits for every $2 you earn above the limit. The Social Security earnings test may reduce your benefits check, but if this happens, your earnings will receive an adjustment as you reach your full retirement age. This means your checks will show an increased amount as a result.

Disability Earning Limit Changes

There are positive changes for individuals with disabilities receiving Social Security benefits while working. These individuals must be unable to engage in a substantial gainful activity to qualify for Social Security disability benefits. Blind workers will have an earnings threshold of $2,590 per month, and non-blind workers with disabilities can make $1,550 a month without losing their Social Security benefits. The trial work period threshold is capped at $1,110 a month.

Increase in Medicare Premiums and Deductibles

Your Medicare Part B premiums — which cover outpatient treatments like doctor visits — are deducted from your Social Security payments. An estimated increase of $9.80 each month in these premiums can undercut your COLA adjustment benefit. Part B rates will increase from $164.90 to $174.70, which takes $10 off your COLA gain. Medicare Part B enrollees will see an annual deductible of $240 due to anticipated healthcare spending increases — up from $226 in 2023.

Medicare Part A inpatient deductibles for beneficiaries will increase by $32 to $1,632 in 2024. Beneficiaries will also pay $408 a day for days 61 to 90 of any hospitalization. Only 1% of Medicare beneficiaries will be liable to pay these Part A premiums.

For more information about Medicare adjustments in 2024 and how they may impact you, review the fact sheet from the Centers for Medicare & Medicaid Services.

Learn More About Social Security Changes With Fort Pitt Capital Group

There are several Social Security changes coming in 2024. Whether you are affected by the COLA adjustment, Medicare premium increase, or disability earning limit changes, it is important to be prepared. Keeping an eye on these updates and consulting a financial advisor will help you navigate and adapt with ease.

Find out how these changes affect you and your retirement plans by contacting Fort Pitt Capital Group. Since 1995, we have led clients toward financial success with exceptional client services, transparency, and apt investment strategies. In addition to helping you plan your retirement, our team can help you manage other areas of personal finance, offering you a comprehensive strategy for success.

Whether you’re currently working and saving for retirement or are already retired and want to understand your Social Security benefits better, we’re here to help with resources and advice. Find out how our services can benefit your financial planning by scheduling a consultation or calling us at 1-800-471-5827. We look forward to hearing from you!

Learn More About Social Security Changes With Fort Pitt Capital Group

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Smart Tax Tips For Year-End & Beyond https://www.orchid-ibex-388317.hostingersite.com/blog/smart-tax-tips-for-year-end/ Tue, 22 Nov 2022 19:20:54 +0000 https://www.orchid-ibex-388317.hostingersite.com/?p=18838 This provides detailed information on several clever end-of-year tax strategies and planning tips for the future. Consider these methods if you’re looking for quick ways to get started before the year ends. Accelerating Deductions Reducing your income on paper can lessen your tax burden. This tax planning strategy can look like donating to charity, contributing to retirement funds, or even shifting assets to family members — usually children that don’t have taxable income. Organize whatever methods you want to use early to reduce your federal tax levels. Tax Loss Harvesting Investments that lose money can benefit your taxes. If you sell these investments before the year’s end, you can write them off as losses and put those funds into a similar investment. This strategy allows your losses to offset some of the gains made by other investments, helping you pay less in taxes overall. Charitable Gifting Account Each year, you can give up to $300 if you’re single and $600 if you’re married to charity and avoid paying taxes on that sum. However, if you’re unsure which charity you want […]

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This provides detailed information on several clever end-of-year tax strategies and planning tips for the future. Consider these methods if you’re looking for quick ways to get started before the year ends.

Accelerating Deductions

Reducing your income on paper can lessen your tax burden. This tax planning strategy can look like donating to charity, contributing to retirement funds, or even shifting assets to family members — usually children that don’t have taxable income. Organize whatever methods you want to use early to reduce your federal tax levels.

Tax Loss Harvesting

Investments that lose money can benefit your taxes. If you sell these investments before the year’s end, you can write them off as losses and put those funds into a similar investment. This strategy allows your losses to offset some of the gains made by other investments, helping you pay less in taxes overall.

Charitable Gifting Account

Each year, you can give up to $300 if you’re single and $600 if you’re married to charity and avoid paying taxes on that sum. However, if you’re unsure which charity you want to support, you can set up a charitable gifting account where the money stays tax-free until you donate it. Establishing these accounts can take time, so start looking into it right away if you’re interested.

Contributing to Retirement

When you put money in your IRA or 401(k), you can take that value out of your taxable income. Contributing to retirement is one of an experienced accountant’s favorite methods, as the money you put into these accounts compounds over time. If you’re contributing to a company-sponsored plan, you might also benefit from your company matching your additions. However, if you’re within two years of qualifying for Medicare, know that making significant changes to your retirement accounts can affect your premiums.

Learn More About Fort Pitt’s Financial Advisory Services

The best strategies for saving on taxes are often combined with other steps you can take to secure your financial future. At Fort Pitt, our only goal is to ensure you have the necessary tools and knowledge to make sensible choices that further your money goals. Our financial advisors are ready to help you, your business and your loved ones manage your portfolios, understand your investments, and much more. Contact us today and watch your financial situation transform.

Please note that Fort Pitt Capital Group is not a tax advisor. For the most up-to-date information on end-of-year tax planning, contact your accountant or another tax professional.

Fort Pitt's Financial Advisory Services*Content is provided for educational purposes only.  Opinions provided include endorsements of the products and services provided by Fort Pitt; however, they are not indicative of any specific client experience or testimonial.

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Intro to SECURE Act 2.0 https://www.orchid-ibex-388317.hostingersite.com/blog/secure-act-2/ Mon, 13 Jun 2022 14:43:58 +0000 https://www.orchid-ibex-388317.hostingersite.com/?p=19789 The SECURE Act 2.0 is an update to 2019’s original SECURE Act — or the Setting Every Community Up for Retirement Enhancement Act. The first version of the SECURE Act brought numerous changes to required minimum distributions (RMDs), traditional individual retirement account (IRA) contributions, annuity offerings, and 529 plans. The SECURE Act 2.0 seeks to expand on the initial version’s groundwork. The House of Representatives passed this bill in March of 2022, which means Senate confirmation and President Joe Biden’s approval would make the updates a reality. 5 Major Changes Coming to How You Save for Retirement As the SECURE Act 2.0 is likely to pass in the Senate, now is a great time to analyze how it will impact how you save for retirement. Here are five major changes the SECURE Act 2.0 will bring. 1. Higher Catch-Up Contribution Limits As an incentive that encourages saving, the SECURE Act 2.0 allows individuals between the ages of 62 and 64 to contribute more to their 401(k), 403(b), and SIMPLE plans. The limit for 401 (k) and 403 (b) plans will […]

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Intro to Secure Act 2.0

The SECURE Act 2.0 is an update to 2019’s original SECURE Act — or the Setting Every Community Up for Retirement Enhancement Act. The first version of the SECURE Act brought numerous changes to required minimum distributions (RMDs), traditional individual retirement account (IRA) contributions, annuity offerings, and 529 plans.

The SECURE Act 2.0 seeks to expand on the initial version’s groundwork. The House of Representatives passed this bill in March of 2022, which means Senate confirmation and President Joe Biden’s approval would make the updates a reality.

5 Major Changes Coming to How You Save for Retirement

As the SECURE Act 2.0 is likely to pass in the Senate, now is a great time to analyze how it will impact how you save for retirement. Here are five major changes the SECURE Act 2.0 will bring.

1. Higher Catch-Up Contribution Limits

As an incentive that encourages saving, the SECURE Act 2.0 allows individuals between the ages of 62 and 64 to contribute more to their 401(k), 403(b), and SIMPLE plans. The limit for 401 (k) and 403 (b) plans will raise from $6,500 to $10,000, while the SIMPLE plan limit will raise from $3,000 to $5,000.

2. Assistance for Student Loan Borrowers

A new addition in version 2.0, student loan borrowers will now have a way to receive employer contributions, even if they aren’t saving for retirement yet. Under the SECURE Act 2.0., your employer would contribute as much to your retirement plan as you contribute to your student loans.

3. Delayed Minimum Distributions

Version 2.0 extends the age at which workers must begin withdrawing from their retirement accounts. The initial version set the age at 72, but version 2.0 will increase the age first to 73 by 2022, then 74 by 2029, and 75 by 2032.

4. Easier Annuity Purchases

Annuities are excellent ways to disperse your retirement payouts and avoid overuse. Under the SECURE Act 2.0, annuities become easier to include in retirement plans. The update will reduce RMD requirements for annuity options while expanding the retirement savings amount you can use to purchase a Qualified Longevity Annuity Contract (QLAC).

5. Reduced Costs for Employers

The SECURE Act 2.0 reduces the financial burden of retirement planning on employers in a few ways. Small businesses with up to 100 employees would receive a 100% three-year small employer startup tax credit. Additionally, version 2.0 lowers costs and regulations for 403(b) plans. All the while, version 2.0 reduces penalties for reporting errors.

Learn More With Fort Pitt Capital

Fort Pitt Capital Group is committed to helping employees save for retirement and maintain financial comfort when the time finally comes. We invite you to browse our financial services for individuals online or get in touch to discuss your situation.

Learn More With Fort Pitt Capital

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Making Moves: Financial Considerations for Retirement Relocation https://www.orchid-ibex-388317.hostingersite.com/blog/making-moves-financial-considerations-for-retirement-relocation/ Wed, 03 Oct 2018 13:59:54 +0000 https://orchid-ibex-388317.hostingersite.com/?p=6672 Retirement is a time full of new choices and exciting change. One of the biggest changes we often see individuals and couples make is opting to move across state lines, or even abroad, where they can start fresh and enjoy their golden years in a new location. However, as with any move, retirement relocation does come with a unique set of considerations that pre-retirees should carefully think through. It’s critical to do your homework ahead of this move, and to ensure that the new location is truly where you want to be. We often counsel clients to spend 3-6 months in the new location as a “test run.” Does the new location offer the social scene you are expecting? Is there enough between hobbies, restaurants, etc., to keep you occupied? Think about why you want to move there, and take time to explore the area to confirm it will check all the boxes. A retirement relocation can be expensive, but do you know what is even more costly? Deciding a few months in that this new spot isn’t where you […]

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Retirement is a time full of new choices and exciting change. One of the biggest changes we often see individuals and couples make is opting to move across state lines, or even abroad, where they can start fresh and enjoy their golden years in a new location. However, as with any move, retirement relocation does come with a unique set of considerations that pre-retirees should carefully think through.

It’s critical to do your homework ahead of this move, and to ensure that the new location is truly where you want to be. We often counsel clients to spend 3-6 months in the new location as a “test run.” Does the new location offer the social scene you are expecting? Is there enough between hobbies, restaurants, etc., to keep you occupied? Think about why you want to move there, and take time to explore the area to confirm it will check all the boxes. A retirement relocation can be expensive, but do you know what is even more costly? Deciding a few months in that this new spot isn’t where you want to be after all, and having to move again.

It’s also important to zero in on everyday expenses you currently have, and create a checklist of expenses you expect to have in the new location. Often, people move from a single-family home into some sort of resort or golf community, and there are a myriad of fees and annual expenses that can throw off a financial plan. Think about HOA fees, annual assessments to community grounds or infrastructure, whether homeowner fees will escalate on a yearly basis, or even if new hobbies will impact the financial plan.

Other big-ticket expenses with a relocation

After understanding and comparing discretionary spending expectations, there are other significant financial considerations to keep top of mind.

  • State taxes. Before moving to a new state, do you know what the state tax laws are on income, pension income, and sales tax? People often overlook this, and if it increases from your current to new state, it could have a big impact on finances.
  • Healthcare. Compare what you are getting in the current state vs. what is offered in the new state. In some cases, when you shift to a new state, you might end up paying more money for lower-quality care, which is a big deal in retirement as individuals and couples age.
  • Family travel and expectations. Are you moving to a state that is farther away from adult children and grandchildren? Take into account the yearly expense of traveling back and forth for birthdays, holidays, impromptu visits, etc. – it might be a small expense, but it can add up. Another element is the size of the house you buy. Too often, we see retirees purchase a home with multiple bedrooms because they think the children and grandchildren will visit multiple times per year, and then can’t make the trip. If you are relocating, purchase a home that makes the most sense for you and your partner, not the extended family.

There’s a lot that goes into retirement relocation, but by planning ahead and thinking about how all costs can impact long-term funds, individuals and couples can be better prepared and more financially secure when ultimately making the move.

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Tackling Debt Before & During Retirement https://www.orchid-ibex-388317.hostingersite.com/blog/tackling-debt-before-and-during-retirement/ Tue, 11 Sep 2018 18:49:44 +0000 https://orchid-ibex-388317.hostingersite.com/?p=6609 When anticipating retirement, advanced planning is the common thread that binds your financial future together. Therefore, managing debt during retirement is easier when you have a plan. Approximately 10 years before retirement, reassess your financial position and create a feasible plan to pay down consumer debt — that includes credit cards, student loans and car loans. It’s also advisable to pay off your mortgage as well. But, if necessary, this is a reasonable liability to carry into retirement. This advice is all well and good, but how do you get there? It comes back to basic budgeting. For example, if a client has a $2 million portfolio and plans to withdraw 4 percent annually, that provides $80,000 in yearly income which can be used in addition to Social Security and any pension income to create a budget. Given these income projections, they must decide if their mortgage obligation (should they decide to maintain) is reasonable during retirement. Other mortgage considerations or options include making additional payments while working to pay off the loan faster or simply continue working longer. Even […]

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When anticipating retirement, advanced planning is the common thread that binds your financial future together. Therefore, managing debt during retirement is easier when you have a plan. Approximately 10 years before retirement, reassess your financial position and create a feasible plan to pay down consumer debt — that includes credit cards, student loans and car loans. It’s also advisable to pay off your mortgage as well. But, if necessary, this is a reasonable liability to carry into retirement.

This advice is all well and good, but how do you get there? It comes back to basic budgeting. For example, if a client has a $2 million portfolio and plans to withdraw 4 percent annually, that provides $80,000 in yearly income which can be used in addition to Social Security and any pension income to create a budget. Given these income projections, they must decide if their mortgage obligation (should they decide to maintain) is reasonable during retirement. Other mortgage considerations or options include making additional payments while working to pay off the loan faster or simply continue working longer.

Even with a budget, the best laid plans can get off track. If you must carry some debt into retirement, consider refinancing and or consolidating to create more manageable monthly payments. In addition, we recommend establishing an emergency fund. Ideally, this fund would consist of 9-12 months of living expenses. These dollars are earmarked for unplanned events and expenses that seemingly come out of nowhere. Talk to your advisor about options and consider a combination of savings, a home equity line of credit or reverse mortgage as further financial backups.

It’s important to be thoughtful about spending as you transition into retirement. Avoid overextending which can compromise retirement security and ultimately create unwanted financial pressures down the peaceful road to retirement.

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Financial Challenges When One Spouse Retires First https://www.orchid-ibex-388317.hostingersite.com/blog/financial-challenges-when-one-spouse-retires-first/ Tue, 21 Aug 2018 14:30:31 +0000 https://orchid-ibex-388317.hostingersite.com/?p=6556 In an ideal world, couples plan for and start their retirement at the same time, stepping away from a long-tenured career and excitedly starting the next chapter of their life together. Realistically though it might be hard for spouses to “pull the retirement trigger” at the same exact time, and when one spouse retires before another it can create tricky financial and lifestyle challenges. Whether it’s a difference in age, an unexpected job loss, or outside decision that hastens retirement, there are a number of reasons why couples might not be able to enter their golden years together. For couples to stay on the same page, and on track with finances until the second spouse enters retirement, there are key considerations to talk about with your advisor and with your partner. Social Security. Know that there could be tax implications if the other spouse continues to work, but you are filing taxes jointly. Determine if it makes sense to delay taking Social Security until later years, or at least understand the financial impact that the tax could have on annual […]

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In an ideal world, couples plan for and start their retirement at the same time, stepping away from a long-tenured career and excitedly starting the next chapter of their life together. Realistically though it might be hard for spouses to “pull the retirement trigger” at the same exact time, and when one spouse retires before another it can create tricky financial and lifestyle challenges.

Whether it’s a difference in age, an unexpected job loss, or outside decision that hastens retirement, there are a number of reasons why couples might not be able to enter their golden years together. For couples to stay on the same page, and on track with finances until the second spouse enters retirement, there are key considerations to talk about with your advisor and with your partner.

  • Social Security. Know that there could be tax implications if the other spouse continues to work, but you are filing taxes jointly. Determine if it makes sense to delay taking Social Security until later years, or at least understand the financial impact that the tax could have on annual finances.
  • Budgeting. This is a hugely important element when one spouse retires first, and something that your advisor will sit down and evaluate early on if couples might experience this scenario. Will you try to maintain current lifestyle on one income? Do you intend to begin Social Security or tap into retirement assets (or both)? How will this new lifestyle and newfound hobbies impact your day-to-day financial picture? Have open and frequent conversations with your partner, and advisor, to make sure that any spending is in line with the long-term goal of both spouses.
  • Drawing down assets. The order in which assets are pulled from is important in this scenario, not only from a tax standpoint, but from the perspective of letting other accounts grow due to the power of compounding (from the spouse still working). Assuming the first-retired spouse needs to draw funds to support cash-flow needs, a traditional non-qualified investment account could be the most desirable to draw from while the other spouse works. Until the working spouse retires, it may be best that their retirement funds are not touched.
  • Non-financial concerns. The next tip serves more as cautionary advice, but is still something to think about, even though it is a non-financial challenge. When one spouse retires first, there can be the potential for resentment to creep up from the spouse who is still working. Set expectations early on about what you plan to do with free time, hobbies you plan to take up, and how this new lifestyle could affect the overall financial goals of the couple. Have open discussions so both parties can be on the same page and support one another until the second spouse enters their golden years.  

While there may be challenges to navigate, having open dialogue between spouses, working closely with an advisor, and having a strong plan in place before either spouse retires can help to mitigate any financial or non-financial issues that may arise.

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A Primer on Spousal IRAs https://www.orchid-ibex-388317.hostingersite.com/blog/a-primer-on-spousal-iras/ Thu, 03 May 2018 12:55:20 +0000 https://orchid-ibex-388317.hostingersite.com/?p=6299 Whether you’re a stay-at-home parent or taking some time off work, saving for retirement shouldn’t go by the wayside. In many cases, individuals aren’t aware they’re able to save for retirement when they don’t have earned income. Contributing to an IRA or Roth IRA is a viable option, and a good way to keep that nest egg growing. For those who may not be familiar with this commonly overlooked option, we’ve put together a quick primer. What is a spousal IRA? A spousal IRA allows a non-working spouse to save for retirement. A common misconception is that opening an IRA requires earned income, and this myth could cost you. As long as the working spouse is employed, a spousal IRA allows the non-working spouse to put retirement assets in their name. What taxes or penalties should I know about? There are no taxes or penalties, and it’s very possible that you can deduct it depending on your income. There’s no penalty for contributing to an IRA for a non-working spouse. What is the contribution limit for a spousal IRA? For […]

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Whether you’re a stay-at-home parent or taking some time off work, saving for retirement shouldn’t go by the wayside. In many cases, individuals aren’t aware they’re able to save for retirement when they don’t have earned income. Contributing to an IRA or Roth IRA is a viable option, and a good way to keep that nest egg growing. For those who may not be familiar with this commonly overlooked option, we’ve put together a quick primer.

What is a spousal IRA?
A spousal IRA allows a non-working spouse to save for retirement. A common misconception is that opening an IRA requires earned income, and this myth could cost you. As long as the working spouse is employed, a spousal IRA allows the non-working spouse to put retirement assets in their name.

What taxes or penalties should I know about?
There are no taxes or penalties, and it’s very possible that you can deduct it depending on your income. There’s no penalty for contributing to an IRA for a non-working spouse.

What is the contribution limit for a spousal IRA?
For 2018, the contributions for traditional IRAs is $5,500 or taxable income for the year, whichever is less. Also, you can do an additional $1,000 catch-up for the non-working spouse, if you’re 50 or over, again assuming you have taxable income of at least that amount.

What should individuals know ahead of opening a spousal IRA?
If you don’t qualify for a tax-deductible contribution, the non-working spouse can open a Roth IRA and that money can grow completely tax-free until the time of withdrawal. However, there are income limits for contributing to a Roth IRA based on your filing status. Also, to contribute to a spousal IRA, you must file a joint return. You should consult your financial advisor or your tax advisor for more information on income and contribution limits.

One last thing to keep in mind — alimony next year will not be considered earned income, unless you’re already receiving, then you’ll be grandfathered in. Starting in 2019, when alimony isn’t considered taxable income, individuals won’t be able to contribute to an IRA if a spouse isn’t working.

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Empty-Nesters: Reprioritize Your Finances for Retirement https://www.orchid-ibex-388317.hostingersite.com/blog/empty-nesters-reprioritize-your-finances-for-retirement/ https://www.orchid-ibex-388317.hostingersite.com/blog/empty-nesters-reprioritize-your-finances-for-retirement/#respond Tue, 10 Oct 2017 14:14:10 +0000 https://orchid-ibex-388317.hostingersite.com/?p=4610 With back-to-school season in full swing, and kids settled on their own at college, parents can take time to focus on their own financial picture. Why is this an important time for couples to drill down on their financial plans? Today, people are delaying having children so there’s often an intersection with the final years of saving for retirement as kids head off to college—both large expenses to plan for. With kids out of the house, now is the perfect time for empty-nesters to address financial goals. Don’t doubt yourself. If you’re behind with retirement savings, it’s never too late to get started. People’s biggest financial obstacle is often their own fear about being underprepared for retirement so they become paralyzed and continue to delay planning. It’s never too late to start and you can absolutely catch up on retirement savings, it just takes a plan to get there. Create a plan. The solution to getting back on track and prioritizing financial goals is creating a plan. First things first, pay down any high-interest debt. Next, get an idea of expenses in […]

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With back-to-school season in full swing, and kids settled on their own at college, parents can take time to focus on their own financial picture. Why is this an important time for couples to drill down on their financial plans? Today, people are delaying having children so there’s often an intersection with the final years of saving for retirement as kids head off to college—both large expenses to plan for. With kids out of the house, now is the perfect time for empty-nesters to address financial goals.

  • Don’t doubt yourself. If you’re behind with retirement savings, it’s never too late to get started. People’s biggest financial obstacle is often their own fear about being underprepared for retirement so they become paralyzed and continue to delay planning. It’s never too late to start and you can absolutely catch up on retirement savings, it just takes a plan to get there.
  • Create a plan. The solution to getting back on track and prioritizing financial goals is creating a plan. First things first, pay down any high-interest debt. Next, get an idea of expenses in retirement and understand how much you’ll need to supplement Social Security and other savings. Once you have a retirement cash flow plan in place, you can make an actionable plan to save the amount needed between now and retirement day.
  • Review your estate. Every new life stage and change in personal situation should warrant a review of the estate plan. As the kids are off doing their own thing now, parents’ lives change as well, so a review of what should occur if an accident happens can address those types of situations as well. Kids may not be able to gauge how to handle an inflow of capital from your estate and each child may be different than the others, depending on where they are in life, so it’s important to have an estate plan that reflects current circumstances.
  • Talk it out. For the last 18-20 years, parents have focused on raising their kids, but it’s time for the couple to focus on themselves and create a comfortable retirement. That may mean saying, “No,” to funding adult children’s lives. With a budget in place, parents can create boundaries and talk to their kids about what they can and cannot cover financially. Since this can be an emotional topic, we encourage families to come to the office for these discussions because for us, it’s not personal—we show children the numbers and it becomes a function of the plan set forth, not Mom and Dad saying, “No.” While your kids will always be your kids, they have to leave the nest at some point, and that’s when there’s more room to focus on your future as a couple.

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Happy 70.5 Birthday, baby boomers! https://www.orchid-ibex-388317.hostingersite.com/blog/happy-70-5-birthday-baby-boomers/ https://www.orchid-ibex-388317.hostingersite.com/blog/happy-70-5-birthday-baby-boomers/#respond Tue, 18 Apr 2017 15:01:25 +0000 https://orchid-ibex-388317.hostingersite.com/?p=4253 The first wave of baby boomers started turning 70.5 in July 2016, and over the next 18 years roughly 10,000 boomers per day will hit this milestone. But why is this age an important one for retirees? Once you reach age 70.5, you have to begin taking the required minimum distribution (RMD) annually from your Individual Retirement Account (IRA). It’s important to consult with an investment advisor and tax professional closely to review each unique situation for withdrawing assets. Cash flow planning It’s critical to consider overall cash flow planning when drawing down on assets in retirement. Prior to reaching the age for RMDs, the best way to consume capital is to spend after-tax money first, IRAs second and Roth’s third. However, that changes when you turn 70.5 because you’re required to take money out of a retirement account. After age 70.5, an RMD should be used to satisfy the immediate cash flow needs in that year for income. If you have cash flow needs above an RMD, then you can go back to your personal funds. If you don’t […]

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The first wave of baby boomers started turning 70.5 in July 2016, and over the next 18 years roughly 10,000 boomers per day will hit this milestone. But why is this age an important one for retirees? Once you reach age 70.5, you have to begin taking the required minimum distribution (RMD) annually from your Individual Retirement Account (IRA). It’s important to consult with an investment advisor and tax professional closely to review each unique situation for withdrawing assets.

Cash flow planning
It’s critical to consider overall cash flow planning when drawing down on assets in retirement. Prior to reaching the age for RMDs, the best way to consume capital is to spend after-tax money first, IRAs second and Roth’s third. However, that changes when you turn 70.5 because you’re required to take money out of a retirement account. After age 70.5, an RMD should be used to satisfy the immediate cash flow needs in that year for income. If you have cash flow needs above an RMD, then you can go back to your personal funds.

If you don’t need an RMD
If you must begin taking an RMD, but don’t need it for cash flow, there are three popular options to consider. First, you can simply move the money to your personal portfolio and reinvest it. The second option, if you are charitably inclined, is to gift that money directly to a charity and claim the usual tax benefits of a charitable donation. A third popular option is to use excess cash to fund a child or grandchild’s 529.

Mistakes to avoid
One of the biggest mistakes is to not keep up with taking the distribution. At Fort Pitt, we are very diligent with keeping track of RMDs for clients. The penalty for not taking distributions are substantial, so make sure you keep track and take it annually.

Taking more than you have to for an RMD is also another mistake that those planning on their own may make. When taking an RMD, it is advantageous to take only the minimum, as it can help save a few thousand dollars on tax. Delaying distributions as long as possible is the best way to compound wealth over time.

If you are still working at age 70.5, you will need to take distributions from an IRA account, but you may not need to take from your 401(k) if you are gainfully employed. This is a unique situation that needs to be discussed with your team of tax and investment advisors.

Be sure to plan distributions strategically to maximize the best tax benefit. There can be great strategies for both monthly distributions due to dollar cost averaging, verses lump sums throughout the year.

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A Successful Family Meeting… With Your Financial Advisor https://www.orchid-ibex-388317.hostingersite.com/blog/a-successful-family-meeting-with-your-financial-advisor/ https://www.orchid-ibex-388317.hostingersite.com/blog/a-successful-family-meeting-with-your-financial-advisor/#respond Mon, 23 Jan 2017 15:51:59 +0000 https://orchid-ibex-388317.hostingersite.com/?p=4051 A study by T. Rowe Price shows that only 44 percent of parents discuss money with their kids. The reluctance to discuss teachable financial moments early on creates a significant disservice to adults later in life, when they are making their own critical financial decisions. Getting the conversation started and including your children in meetings with your financial advisor is advantageous in many ways, putting them on the right track. At Fort Pitt, we encourage adult children to sit in on their parent’s meetings with financial advisors once they’re in their senior year of college or within their first year of working. We see value in educating individuals about their financial future once they’re on the brink of adulthood, in order to instill the power of making the right decisions from the start. Part of our suite of services is to encourage parents to bring their children in for a “crash course” in basic financial themes like investing and money management. During these meetings, we commonly review the power of compounding and how making a small percentage increase in your […]

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A study by T. Rowe Price shows that only 44 percent of parents discuss money with their kids. The reluctance to discuss teachable financial moments early on creates a significant disservice to adults later in life, when they are making their own critical financial decisions. Getting the conversation started and including your children in meetings with your financial advisor is advantageous in many ways, putting them on the right track.

At Fort Pitt, we encourage adult children to sit in on their parent’s meetings with financial advisors once they’re in their senior year of college or within their first year of working. We see value in educating individuals about their financial future once they’re on the brink of adulthood, in order to instill the power of making the right decisions from the start.

Part of our suite of services is to encourage parents to bring their children in for a “crash course” in basic financial themes like investing and money management. During these meetings, we commonly review the power of compounding and how making a small percentage increase in your savings rate is rather meaningful. In addition, we discuss basic fundamentals like good debt vs. bad debt, positive money behaviors, and how to make big financial decisions – such as renting or buying a home. At this age, millennials should get in the habit of working with an advisor and seeking advice.

The sooner that adult children receive financial advice, the better off they’ll be. When you’re young, you have a long time horizon and time to overcome financial mistakes. However, the longer you wait, the more financial mistakes can be magnified. In addition, learning basic financial lessons and committing to a financial plan early on can be a game changer. At Fort Pitt, we encourage you to bring your children to meetings, we’re eager to meet them and get them on to sound financial footing.

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