Your Full-Service Financial Planning for the Year Ahead

Agemy Financial Strategies

December 22, 2021

For over 31 years, Agemy Financial Strategies has helped our clients plan and prepare. This way, when the unforeseen occurs, their clients are uniquely positioned for success. As we enter the new year, here’s what you need to keep on top of for financial success in 2022.

At Agemy Financial Strategies, our firm exists for the purpose of helping people achieve their personal and financial goals. Our philosophy is to deliver quality financial programs and teach principles for successful living.

With 2022 around the corner, now is the best time to plan for the new year. An annual financial plan can determine where you are financially at that particular moment. Consider all of your assets such as—how much you get paid, what’s in your savings and checking accounts, how much is in your retirement fund—as well as your liabilities, including loans, credit cards, and other personal debts.

Here’s how Agemy Financial can assist in being your full service financial planning firm to help you plan for your year ahead.

Annual Financial Plan Check-Up

In your financial plan check up you should include things like your mortgage or rent, utility bills and other monthly expenses. This snapshot should also factor in what your goals are and what you’ll need to accomplish in order to get there. This can include things such as retirement planning, tax planning, and investment strategies.

Check off each step that you’ve considered. The idea is to make sure you’ve looked at the issue. It’s vital for you to cover every item in the above section, so that you have a full financial inventory. Here’s what your inventory should look like:

  • Your credit report and score.
  • A list of assets, such as: emergency fund, retirement accounts, other investment and savings accounts, real estate equity, and education savings.
  • A list of debts, such as: mortgage, student loans, car loans, credit cards, and other loans
  • A calculation of your credit utilization ratio, which is the amount of debt you have versus your total credit limit.
  • A review of the fees you’re paying to a financial advisor, if any, and the services they provide.

Set Financial Goals

Once you have a personal financial inventory completed, you can move on to setting goals for the remainder of the year or and for the next 12 months. Your goals will be divided into short-term, mid-term, and long-term ones.

Among your short-term goals might be to:

  • Establish a budget, which can be made easier with one of the best budgeting apps currently available
  • Create an emergency fund or increase your emergency fund savings
  • Pay off credit cards

Your mid-term goals might include:

  • Getting life insurance and disability income insurance
  • Thinking about your dreams, such as buying a first home or vacation home, renovating, moving, or saving so that you’ll have money to have a family or to send children or grandchildren to college

Then review your long-term goals, including:

  • Determining how much of a nest egg you’ll need to save for a comfortable retirement
  • Figuring out how to increase your retirement savings

Review Your Retirement Savings Plans

Saving for retirement in an individual retirement account IRA or a 401(k) is a smart way to enjoy some tax advantages. As you put together your annual financial plan, you should consider whether you need to:

  • Decide whether a Roth or traditional IRA is best for you now
  • Consider switching an existing IRA to a different brokerage
  • Convert a 401(k), which can be traditional IRA, Roth or regular
  • Rollover any old 401(k) accounts from a previous employer. If your employment status has changed from employed to self-employed, update yourself on the limits for SEP IRA or other self-employment retirement accounts and maximize your contribution amounts.
  • Increase or decrease your annual contribution amounts to retirement accounts.

Get Set For Financial Success with Agemy

The most important step in reaching any goal is to develop a plan to achieve it. That’s why it’s so important to plan ahead for your financial future. We work hard to deliver a dependable retirement income strategy, in any market, so that clients can enjoy the “best” of their lives during retirement.

Agemy Financial Strategies provides retirement planning services designed to educate clients as to their best options for meeting their current financial needs, achieving their long-term financial goals, avoiding common retirement-planning mistakes, and enjoying a lifetime of financial stability.

Our goal is to give clients confidence in a custom developed robust retirement portfolio and provided investment options designed to generate interest and dividends regardless of market conditions. This is income that can be spent or reinvested for dependable “organic” portfolio growth.

  • Educating retirees and pre-retirees to make smart financial decisions
  • Purpose-based investing
  • Implementing generational wealth transfers
  • Generating income (a retirement paycheck), you can depend on in all market conditions

As a fiduciary and Registered Investment Advisor, you can be confident AFSi will recommend only what is in your best interest.

Five Star Professionals 

There are a hundred reasons to work with Agemy Financial Strategies, but winning the Five Star Professional award for 10 consecutive years are at least ten of those reasons. Celebrating 31 years, we are dedicated to educating retirees through retirement planning, legacy planning, wealth management and more. Our goal is to help retirees achieve their personal and financial goals. Our education-driven financial advisors, Daniel Agemy in Denver, Colorado and Andrew Agemy in Guilford, Connecticut, are delighted to win the Five Star Wealth Management award for three and 10 years!  

Are your most important decisions being made with the advice and guidance of a Five Star Professional?

  • Andrew A. Agemy, MRFC® has been recognized for the quality service he provides to the clients in his community. He has an unbroken record of receiving nine consecutive Five Star awards for his outstanding service.
  • Additionally, Andrew has been actively teaching and coaching people with their finances for over 31 years in the Shoreline community.
  • Daniel J. Agemy, CPM®, RFC®, has been working in the world of finances for most of his life! He, too, has an unbroken record of receiving nine consecutive Five Star awards for his outstanding service.
  • Five Star is an international research group that helps identify top providers of service in their field.
  • Agemy Financial Strategies: because your assets are too important for anything less than Five Stars or AAA (Andrew A Agemy)

Final Thoughts

An annual financial plan is an exceptionally valuable tool for your life (and peace of mind) today and for your future. Best-case scenario: You’ve checked off all the items on this punch list by now. If not, don’t hesitate to put time on your calendar to do so.

Finding the right financial advisor that fits your goals and lifestyle doesn’t have to be hard. The trusted team at Agemy Financial Strategies is here for your every step of the way to make some real progress on your journey to financial freedom this coming year.

When the hustle and bustle has passed and the holiday dust has settled, talk to one of our wealth management professionals so we can make sure you’re starting 2022 off on the right foot.

The entire team at Agemy Financial Strategies would like to wish you a safe, happy and healthy New Year!

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Financial New Year’s Resolutions to Keep

Agemy Financial Strategies

December 15, 2021

2021 is winding down, which means it’s time to think about resolutions for the coming year. With the rising taxes and out-of-control inflation, financial resolutions are foremost in the minds of many pre-retirees and retirees alike.

If you’re someone who likes to make New Year’s resolutions, you already know how hard it is to stick to them. One report puts the failure rate at 80%. Yet, more than 55% of U.S. adults think they’ll follow through on their resolutions this year, a recent survey by the Finder found.

This year however, why not embrace the fresh start the new year brings? 65% of Americans age 18 and older are considering a financial goal for the new year, according to this 2021 financial resolutions study. It’s a great time to commit to your money goals, budget better, pay down debt, plan your taxes, ditch bad habits and improve your financial picture to reach your goals.

Here are a couple of resolutions that could help increase your financial planning strategy and hopefully inspire you to stay committed to them throughout the new year.

Create a Budget 

Saving and investing during your working years should lead to a rising net worth over time, helping you to achieve many of life’s most important goals. Creating your own budget and net worth can help you build your road map and stay on track. Here are steps that can help:

  • It’s important to have a budget with these three things in mind: how much you’re taking in after taxes, how much you’re spending, and how much you’re saving. Try tracking your spending using a spreadsheet or an online budgeting app for 30 days. Determine how much money you need to cover your fixed expenses, such as your rent/mortgage and how much you’d like to put away for other goals. If you aren’t retired, create an emergency fund with three to six months’ worth of essential living expenses, set aside in a savings account. The emergency fund can help you cover unexpected and necessary expenses when you least expect it.
  • Calculate your personal net worth annually. Make a list of your assets and subtract your liabilities. Subtract the liabilities from the assets to determine your net worth. Don’t panic if your net worth declines during tough market periods. What’s important is to see a general upward trend over your earning years. If you’re retired, you’ll want to plan an income and distribution strategy to help make your net worth last as long as necessary and to support other objectives.
  • If you’re retired, consider keeping 12 months of living expenses after accounting for Social Security or a pension in short-term CDs, an interest-bearing savings account. Consider keeping another two to four years’ worth of spending laddered in short-term bonds or invested in short-term bond funds as part of your portfolio’s fixed income allocation. This helps provide the money you need in the short-term. It also allows you to invest other money for a level of growth potential that makes sense for you, while reducing the chances you’ll be forced to sell more volatile investments (like stocks) in a down market.

Manage Your Debt

For most people, some level of debt is a practical necessity, especially to purchase an expensive long-term asset to pay back over time, for example the purchase of your first home. However, problems arise when debt becomes more of a burden than a tool. Here’s a couple tips on how to stay in control.

  • Keep your total debt load manageable. Keep the monthly costs of owning a home (principal, interest, taxes, and insurance) below 28% of your pre-tax income, and your total monthly debt payments (including credit cards, auto loans, and mortgage payments) below 36% of your pre-tax income.
  • Eliminate high-cost, non-deductible consumer debt. Try to pay off credit-card debt and avoid borrowing to buy depreciating assets, such as cars. The cost of consumer debt adds up quickly if you carry a balance. Consider consolidating your debt in a low-rate home equity loan or line of credit and implement a schedule to pay it back.
  • Match repayment terms to your time horizons. Create a plan to pay off the mortgage on your primary home before you plan to retire. If you’re likely to move within five to seven years, you could consider a shorter-maturity loan or an adjustable-rate mortgage (ARM), depending on current mortgage rates and options.

Protect Your Estate

An estate plan may seem like something only for the wealthy. But there are simple steps everyone should take. Without proper beneficiary designations, and a will, the fate of your assets or minor children may be decided by attorneys and tax agencies. These fees can eat away at these assets, and delay the distribution of assets just when your heirs need them most. Here’s how to protect your estate—and your loved ones.

  • Review your beneficiaries, especially for retirement accounts, annuities, and life insurance. A beneficiary is designed to be your first line of defense, to make your wishes for assets known, and ensure that they transfer to who you want quickly.
  • Update or prepare your will. A will isn’t just about transferring assets. It can provide for your dependents’ support and care, and help you avoid the costs and delays associated with dying without one. It can also spell out plans to repay debts, such as a credit card or mortgage. Keep in mind that a beneficiary designation or asset titling trumps what’s written in a will, so make sure all documents are consistent and reflect your desires.
  • Coordinate asset titling with the rest of your estate plan. The titling of your property and non-retirement accounts can affect the ultimate disposition and taxation of your assets. Talk with an estate planning professional about debts and the titling of assets, such as a home, that don’t have a beneficiary designation, to make sure they reflect your wishes and are consistent with titling laws that can vary by state.

Put Yourself First

It’s all too easy for you to become engrossed in the day-to-day demands of life, work and family. Paying yourself first generally means “paying” your future self money. It’s important to do it first because if you pay yourself last, chances are you won’t pay yourself at all. An easy way to pay yourself first is by contributing to a 401(k), especially if your employer offers matching contributions.

Set a goal of setting aside 10% of your income each month for a future need such as retirement. If your employer matches up to 4% of your annual income, then you would only need to contribute 6% of your income to pay yourself 10% of your income for retirement.

Finally, invest in your financial future by making an appointment with your wealth management advisor. Financial advisors can be a great help in getting a handle on debt. They’re experts at helping their clients get their finances in shape for today and the future. They may provide several services, such as investment management, income tax preparation, and estate planning. When you meet with your advisor, ask them (and yourself):

  • Is my investment strategy on track?
  • Am I saving in the most tax-efficient way?
  • Do I have adequate life insurance for my situation?

Hiring a reputable financial advisor to help draft a debt reduction strategy and a financial plan going forward is an extremely beneficial way to get your debt under control.

Final Thoughts

Lastly, remember you don’t have to do everything at once. There’s a lot you can do to improve your financial health by taking one step at a time and think of these resolutions as a checklist. It’s all about taking the time (no matter how hard it may be to squeeze it in), doing some planning and keeping your eye on the prize.

There’s no one-size-fits-all financial plan. Your situation is unique, and your goals are your own. Our financial advisors can help you create a personalized plan that fits your life. Want to gain better control of your finances? The trusted team Agemy Financial Strategies is here for your every step of the way to make some real progress on your journey to financial freedom this coming year.

When the hustle and bustle has passed and the holiday dust has settled, talk to one of our wealth management professionals so we can make sure you’re starting 2022 off on the right foot.

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Do You Need to Rebalance Your Portfolio?

Agemy Financial Strategies

December 07, 2021

After a second year of a bull market in stocks, the end of the year could be a great time to rebalance your portfolio. However, be sure to manage the levels of risk in your portfolio, which is often a major concern for those in or near retirement. Here’s what you need to know. 

With 2022 around the corner, now is the perfect time to tune up your stock portfolio. As we close out 2021, most people are in the midst of figuring out what they need to change as they enter the new year. As most people know, a new year calls for a fresh perspective.

When it comes to your retirement income planning, investing well requires you to get your head around some pretty unique (and sometimes counterintuitive) concepts. Common wisdom tells us that we should periodically rebalance our investment portfolio, but it might not always make sense.

Advantages of Rebalancing

Part of the purpose of an asset allocation is to dilute the impact of each asset class by limiting both the upside and downside impact of the investments. But, when a particular investment grows in value faster than the other investments, you are exposed to more risk than you originally intended. Rebalancing your portfolio returns your investments to your original risk tolerance and reduces the risk that your portfolio will drop in value.

Disadvantages of Rebalancing

Rebalancing is an uninformed strategy that assumes that high-flying investments have nowhere to go but down or, at best, have no room for further growth. But, past performance does not predict future results. Rebalancing also conflicts with other common strategies, such as buy-and-hold and harvesting losses to offset capital gains. The decision to rebalance should be forward-looking, based on expectations about where the stock and bond markets will head in the future.

Be Responsible with your Investments

Your investments should be in line with your financial goals, starting with where you are currently sitting at and where you’d like to be down the line. As long as you are on your path towards your goals, you should try not to let emotions get involved when you see the latest downward trend. When investing in the stock market, the responsibility is on you to make the most of the information available to you.

A great way to do some internal housekeeping is to tally up the total dollar value of the stocks, bonds and cash you hold in your taxable and retirement accounts. If you own a fund that invests in both stocks and bonds, such as a balanced fund or target-date fund, review the fund’s latest holdings to see how much it holds in each major asset class. To find out your current asset mix, calculate the percentage of each asset class relative to your total portfolio.

There is a lot of internal and external environment that influences equity prices. Equity prices today are linked to expectations of profits for tomorrow. Sectors like consumer technology, financial services, healthcare, technology services, infrastructure could continue to see new investments each year. But again, you must…

Do Your Research

Overall, one of the most overlooked aspects of updating your portfolio or getting into stocks in general, is doing your research. Looking at a range of factors to evaluate a stock, and then decide whether it deserves attention in your portfolio. Stocks are considered long-term investments because they carry quite a bit of risk; you need time to weather any ups and downs and benefit from long-term gains.

Key steps in evaluating any stock includes:

  • Gathering stock materials: Quantitative research begins with pulling together a few documents that companies are required to file with the U.S. Securities and Exchange Commission. These include Forms 10-K and 10-Q.
  • Narrow Your Focus: Zero in online items such as revenue, net income, EPS and ROAs to become familiar with the measurable inner workings of a company.
  • Turn to Qualitative Research: This reveals the black-and-white financials of a company’s story to give you a truer picture of its operations and prospects.

A majority of the population needs to understand that financial markets move in cycles. Profitability of companies influences stock markets. Fixed income markets move on the back of the inflation and interest rate trends. You need to keep yourself informed and make calculated decisions. At the end of the day, before you buy any stock, you want to build a well-informed narrative about the company and what factors make it worthy of a long-term partnership.

Tweaking and Rebalancing

If you determine you need to make some changes to your current portfolio from your research, you may want to go back to your saved portfolio and do some amendments. Conventional wisdom holds that there are two ways to rebalance–either you can rebalance on a set schedule, say, every December, or you can rebalance whenever your portfolio gets dramatically out of whack with your targets.

Rebalancing can require that you sell, so it’s important to factor in rebalancing efforts on your tax-sheltered accounts to help reduce tax costs. In some cases, the alterations you need to make might be obvious–if you’re heavy on bonds, for example, trimming your bond funds should resolve the problem. Getting to the bottom of other bets might take a little more research. This is where advice from a financial professional can help.

Hire A Trusted Financial Advisor

When planning your financial future, it’s always a good idea to seek professional guidance. A financial advisor should be the first member that you add to your team. With the right financial advisor, you can ask them any money-related issues and gain answers to your most sought-after financial questions. Your advisor is there to help you succeed on your financial journey. Some choose to delay this decision for a multitude of reasons. If you are not into finance, it is good to discuss the standards of all possible investment avenues with your financial professionals.

Another part of internal housekeeping would be to keep your personal finances in check. You should discuss your insurance needs and check if the health insurance plan you are currently enrolled in is adequate for you. The same should be done with your life insurance policy. Your life insurance should comfortably cover any liabilities. In short, these housekeeping tips must be a regular feature for all things finance. Your financial advisor will help you with all of the things mentioned above in order to organize your finances in a simple manner.

Final Thoughts

Maintaining ideal levels of risk and the correct asset allocation is a critical component of any long-term financial plan. Taking the time to rebalance your portfolio on a regular basis can help achieve both these goals. Meeting with an advisor to perform regular maintenance now may help you avoid major headaches during the next market correction.

If you’re interested in learning more about stock portfolios and financial advising strategies for 2022, contact us today!

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No Increase in IRA Limits? Here’s How You Can Still Save in 2022.

Agemy Financial

December 01, 2021

If you’re proactive about retirement savings or want to up your savings game this year, you may already know that retirement contribution limits stayed the same for 2022. Here’s what you need to know on how you can still save more for retirement.

High earners have a variety of options for saving for retirement—but income limits mean that direct contributions to Roth IRAs may not be among them. Roth IRAs offer tax-free earnings growth and withdrawals in retirement. This makes them a potentially valuable part of a broader investing and tax-planning strategy. Having both Traditional and Roth accounts can help with tax diversification in retirement. Let’s break down what this and other recent changes can mean for your retirement plans, whether you’re already saving or just getting started.

Are you getting the most from your 401(k)s?

Maxing out contributions to a traditional 401(k) is a good place to start. These accounts have no income phase-out limits, so you can generally contribute the lesser of your income or $19,500 (plus an additional $6,500 if you are 50 or older).  Pre-tax contributions will reduce your taxable income and in turn, your earnings will grow on a tax deferred basis.

If your employer also offers access to a Roth 401(k), then you could consider using one to set aside some post-tax retirement savings. Like their traditional 401(k) counterparts, Roth 401(k)s don’t have income phase out limits. So even if you don’t qualify for a Roth IRA because your income is above IRS income limits you can make after taxes contributions to a Roth 401(k). Your earnings will grow tax-free, and you will pay no taxes when you take withdrawals after 5 years and over the age of 59½.

The annual contribution limit applies across all of your 401(k) accounts, not on each account individually. The IRS broke down the amount of Roth IRA contributions you can make for 2022. This table shows whether your contribution to a Roth IRA is affected by the amount of your modified AGI as computed for Roth IRA purpose.

If your filing status is… And your modified AGI is… Then you can contribute…
married filing jointly or qualifying widow(er)

< $204,000

up to the limit
married filing jointly or qualifying widow(er)

> $204,000 but < $214,000

a reduced amount
married filing jointly or qualifying widow(er)

> $214,000

zero
married filing separately and you lived with your spouse at any time during the year

< $10,000

a reduced amount
married filing separately and you lived with your spouse at any time during the year

> $10,000

zero
single, head of household, or married filing separately and you did not live with your spouse at any time during the year

< $129,000

up to the limit
single, head of household, or married filing separately and you did not live with your spouse at any time during the year

> $129,000 but < $144,000

a reduced amount
single, head of household, or married filing separately and you did not live with your spouse at any time during the year

> $144,000

zero

Amount of your reduced Roth IRA contribution

The IRS stated that If the amount you can contribute must be reduced, figure your reduced contribution limit as follows.

  1. Start with your modified AGI.
  2. Subtract from the amount in (1):
    • $204,000 if filing a joint return or qualifying widow(er),
    • $-0- if married filing a separate return, and you lived with your spouse at any time during the year, or
    • $129,000 for all other individuals.
  3. Divide the result in (2) by $15,000 ($10,000 if filing a joint return, qualifying widow(er), or married filing a separate return and you lived with your spouse at any time during the year).
  4. Multiply the maximum contribution limit (before reduction by this adjustment and before reduction for any contributions to traditional IRAs) by the result in (3).
  5. Subtract the result in (4) from the maximum contribution limit before this reduction. The result is your reduced contribution limit.

See Publication 590-A, Contributions to Individual Retirement Accounts (IRAs), for a worksheet to figure your reduced contribution.

What about non-deductible IRAs?

Does it ever make sense to contribute to a Traditional IRA even if you can’t deduct the contributions? At the very least, you could still enjoy the potential for tax-deferred growth in the account.

You wouldn’t be getting any upfront tax break, and future withdrawal of growth on your original contribution would be taxed at your ordinary income tax rate. It’s possible that the future tax rates you’d pay would be higher than what you would owe if you’d invested in a tax-efficient way in a regular taxable brokerage account. With today’s low long-term capital gains and qualified dividend rates, non-deductible contributions to a traditional IRA may make less sense.

In 2022, long-term capital gains are taxed at a federal rate of either:

  • 0% for single filers with taxable income up to $41,675 or joint filers with taxable income up to $803,350.
  • 15% for single filers with taxable income between $41,675-$459,750 or joint filers with taxable income between $83,351-$517,200.
  • 20% for single filers with taxable income above $459,751 or joint filers with taxable income above $517,201.

It’s important to have money in taxable accounts as well as tax-advantaged accounts because it can give you flexibility and access to savings for needs prior to age 59½. At 59½, you can withdraw from traditional IRAs and retirement accounts without a 10% early withdrawal penalty. These methods can also provide flexibility in managing your tax bracket as you plan for post-retirement cash flows.

What about Medicare Tax?

In addition to the above, filers may have to pay the Medicare surtax.

The Federal Insurance Contributions Act (FICA) imposes two taxes on employers, employees and self-employed workers — one for Old Age, Survivors and Disability Insurance, which is commonly known as the Social Security tax, and the other for Hospital Insurance, which is commonly known as the Medicare tax.

There’s a maximum amount of compensation subject to the Social Security tax, but no maximum for Medicare tax. For 2022, the FICA tax rate for employers is 7.65% — 6.2% for Social Security and 1.45% for Medicare (the same as in 2021).

2022 updates

For 2022, an employee will pay:

  • 6.2% Social Security tax on the first $147,000 of wages (6.2% of $147,000 makes the maximum tax $9,114), plus
  • 1.45% Medicare tax on the first $200,000 of wages ($250,000 for joint returns; $125,000 for married taxpayers filing a separate return), plus
  • 2.35% Medicare tax (regular 1.45% Medicare tax plus 0.9% additional Medicare tax) on all wages in excess of $200,000 ($250,000 for joint returns; $125,000 for married taxpayers filing a separate return).

For 2022, the self-employment tax imposed on self-employed people is:

  • 12.4% OASDI on the first $147,000 of self-employment income, for a maximum tax of $18,228 (12.4% of $147,000); plus
  • 2.90% Medicare tax on the first $200,000 of self-employment income ($250,000 of combined self-employment income on a joint return, $125,000 on a return of a married individual filing separately), plus
  • 3.8% (2.90% regular Medicare tax plus 0.9% additional Medicare tax) on all self-employment income in excess of $200,000 ($250,000 of combined self-employment income on a joint return, $125,000 for married taxpayers filing a separate return).

Final Thoughts

Contribution limits didn’t increase for the 2022 tax year, but through understanding your contribution limits and future taxes, you can still continue to make good progress toward saving for retirement. Where will your retirement money come from? If you’re like most people, qualified-retirement plans, Social Security, and personal savings and investments are expected to play a role. Once you have estimated the amount of money you may need for retirement, a sound approach involves taking a close look at your potential retirement-income sources. What’s more, understanding tax strategies can potentially help you better manage your overall tax situation.

At Agemy Financial Strategies, we have an array of will and retirement and tax planning solutions to guide you through the entire process, all with the help of our trusted financial planners.

For more information on IRA limits and how you can put your best foot forward in 2022, contact us today!

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