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Passive Income Strategies for Financial Freedom in Retirement
NewsMay 03, 2024
Unfortunately, many retirees struggle to maintain their desired lifestyle on fixed incomes. Achieving financial freedom in retirement hinges on developing and executing a strategic plan to generate long-term passive income.
According to data from the U.S. Census Bureau, only 20% of American households earn passive income either through dividends, interest, or rental properties. To address this shortfall, retirees and pre-retirees should consider exploring alternative income opportunities. Passive income allows retirees to earn money without active involvement, helping to provide financial stability during their golden years.
In this blog, we’ll explore various strategies for generating passive income in retirement to help you achieve financial independence and security without relying solely on traditional sources like pensions or social security.
Understanding Passive Income
Passive income is not just a financial strategy; it’s a pathway to freedom from conventional job constraints. Contrary to misconceptions of “easy money,” establishing passive income requires some upfront effort and investment. Imagine generating and boosting your income while pursuing personal passions or unwinding on a tranquil afternoon. Passive income embodies financial autonomy and flexibility, making it an indispensable component of retirement planning. Some key benefits of passive income include:
1. Unlocking Real Estate Opportunities
Investing in real estate through owning rental properties offers retirees a compelling opportunity to generate passive income. Retirees can enjoy consistent earnings and potential capital appreciation by purchasing and renting properties. Real estate stands out among investment options because it provides a stable and predictable cash flow, making it an appealing choice for those seeking reliable income streams.
Additionally, there are tax benefits like deducting depreciation expenses and reducing taxable income. Here are some tax deductions that should be on your radar if you own a rental property or are thinking about buying a rental property:
Understanding and leveraging these tax deductions can further enhance passive income. It’s important to note that managing rental properties requires effort and maintenance. Whether you decide to handle property management yourselves or hire professionals, understand that each approach has its associated costs and responsibilities.
If the idea of being a part-time landlord doesn’t interest you, there is another option to invest in real estate that offers passive income opportunities: real estate investment trusts (REITs). REITs help investors pool resources to purchase real estate properties, functioning like mutual funds but focusing on real estate.
As a real estate investor who holds income-producing rental property, you can deduct depreciation as an expense on your taxes. That means you’ll lower your taxable income and reduce your tax liability. Although some reliable REITs are in the market, many still use debt to purchase properties, which increases the risk for investors.
It’s crucial to seek advice from an investment professional, such as a fiduciary advisor, before investing in REITs. They can help you assess the risks and determine whether investing in REITs aligns with your financial goals and overall investment strategy. Working with a financial advisor enables you to make informed decisions and potentially generate passive income through real estate investing.
3. Utilize High-Yield Savings Accounts
A high-yield savings account provides a higher return on your money than standard savings accounts. However, these accounts may come with fees, minimum balance requirements, and variable interest rates that fluctuate over time. Many online banks offer competitive interest rates that are significantly higher than those of traditional banks. Retirees can easily earn interest and help minimize risk by depositing funds into these accounts.
Many online banks and financial institutions offer savings and money market accounts with annual percentage yields (APYs) ranging from 3-5%. According to Bankrate’s most recent survey of institutions, the national average yield for savings accounts is 0.58 percent APY as of May 13, 2024
It’s crucial to compare rates and terms of different savings and money market accounts and choose one that aligns with your financial goals and needs. While high-yield savings accounts may not provide as much passive income as rental properties or REITs, they can offer a lower-risk and hassle-free option for retirees seeking additional income.
4. Invest in Dividend Stocks
Investing in income-generating investments can help you cover your expenses during retirement and provide you with a steady income stream. Dividend-paying stocks can provide a regular income stream that allows shareholders to receive regular payouts in the form of dividends. Companies with a history of paying dividends often continue to do so, making them a potentially stable source of income. However, dividend payouts are not guaranteed and can fluctuate based on the company’s performance.
Selecting the right stocks can be tricky, and that’s where an experienced fiduciary advisor can provide valuable guidance. An advisor can help ensure your investment strategy aligns with your retirement goals and risk tolerance. At Agemy Financial Strategies, we can help you select the right income-generating investments to meet your income needs and minimize the risk of running out of money in retirement.
5. Extra Income-Generating Avenues
Exploring these additional avenues for passive income generation can help diversify your income sources and reduce reliance on a single revenue stream during retirement. In addition to the strategies mentioned above, consider exploring other avenues to enhance your financial security and support your retirement goals:
Collaborating with a fiduciary adds another layer of benefits and security. At Agemy Financial Strategies, our fiduciaries can assist you in carefully evaluating each investment opportunity and optimizing your financial strategy for retirement. Let us help you make informed decisions and tailor your current investment plan to help you reach your retirement goals.
Final Thoughts
While diversifying investments across various passive income sources can help maintain a desired lifestyle and achieve financial independence in retirement, passive income isn’t without risk. Consult with your financial advisor to make informed decisions aligned with your financial goals before making any adjustments to your current plan.
At Agemy Financial Strategies, our fiduciary advisors can help you create a tailored game plan to help ensure your needs are met on your retirement journey. Schedule your complimentary consultation with us today to get started.
Trusts for Owners of High-Net-Worth Estates
NewsFor high-net-worth individuals looking to safeguard their assets and ensure their legacy lives on, estate planning is paramount. One effective tool that can aid in achieving these goals is a trust. In this blog, we’ll delve into the essentials of trusts and why they may be advantageous for your overall estate planning needs.
Trusts can help high-net-worth (HNW) individuals protect assets, minimize taxes for beneficiaries and help ensure their money goes where they want it to. One of the most effective ways to protect HNW estates is through using different types of trusts, which are legal entities that hold assets for the benefit of designated beneficiaries.
What is A Trust?
A trust is a legal arrangement where a trustee manages assets on behalf of the trust’s beneficiaries. Trusts can offer several benefits for high-net-worth individuals, including:
Now that we’ve covered the basics of trusts, let’s take a closer look at some of the different types of trusts that may be beneficial for high-net-worth individuals.
Types of Trusts
One of the most effective ways to protect your estate is by using different types of trusts. They’re essentially legal entities that hold assets for designated beneficiaries. Let’s take a look at the types of trusts that may be beneficial for high-net-worth retirees.
1. Intentionally Defective Grantor Trusts (IDGTs)
Intentionally Defective Grantor Trusts (IDTs) are irrevocable trust that can be particularly advantageous for high-net-worth individuals. Especially if they want to reduce the impact of estate taxes while transferring wealth to beneficiaries. The unique structure of IDTs allows them to be intentionally disregarded for income tax purposes, meaning that the grantor is still responsible for paying income taxes on the trust’s income.
However, this also means that the assets in the trust can be removed from the grantor’s gross estate at death, reducing the overall value of the estate subject to estate taxes. In essence, IDTs can help individuals achieve their wealth transfer goals while minimizing tax liabilities.
2. Revocable Trusts & Irrevocable Trusts
Revocable trusts, also called living trusts, are flexible estate planning tools that allow individuals to maintain control over their assets during their lifetime. As the name suggests, revocable trusts can be amended or revoked at any time by the grantor. When the grantor passes away, the assets in the trust are distributed to the beneficiaries without the need for probate, which can save time and costs.
On the other hand, irrevocable trusts are a type of trust that cannot be amended or revoked once established. Although the grantor gives up control over the assets placed in the trust, this type of trust offers greater protection against creditors and can help reduce estate taxes. By removing assets from the grantor’s estate, the value of the estate subject to taxes is reduced. This can potentially save beneficiaries a significant amount of money. Irrevocable trusts can also be structured to benefit charities or provide for long-term wealth management for multiple generations.
3. Charitable Trusts
Charitable trusts are designed to allow individuals to donate assets to a charitable organization while still retaining some benefits from those assets. One example of a charitable trust is a charitable remainder trust, which can provide income for the grantor during their lifetime. With this type of trust, the grantor transfers assets to the trust, which then makes payments to the grantor based on an agreed-upon formula. After the grantor passes away, the remaining assets in the trust are distributed to the designated charity.
Charitable trusts offer several benefits:
These types of trusts can be tailored to meet individual goals and can be structured in various ways to suit different situations. It’s important to work with an experienced attorney and Fiduciary Advisor to determine if a charitable trust is appropriate for your estate planning needs.
4. Dynasty Trusts
A dynasty trust is a type of trust that is specifically designed to provide long-term wealth management for multiple generations. This means that the trust can help ensure that your wealth is passed down to your grandchildren and great-grandchildren – and potentially even further down the line.
One of the main benefits of a dynasty trust is that it allows you to transfer assets to future generations while minimizing tax liabilities. By keeping assets within the trust, the trust can continue to grow and provide for future generations without being subject to estate taxes at each generation’s passing.
Why Trusts Are Important
Establishing trust is essential for individuals who want to protect their assets and ensure their wealth is transferred to their beneficiaries in a tax-efficient way. Trusts offer many benefits, including the ability to minimize estate taxes. While the estate tax rates are currently progressive, it’s important to know the tax rates you’re up against. Take a look at the table below:
Any amount over $1 million is taxed at the top rate of 40%. By creating a trust, individuals can reduce the overall value of their estate subject to taxes, ensuring that more assets can be passed down to their beneficiaries. Working with an experienced Fiduciary Advisor can help individuals determine the most suitable type of trust for their unique needs and goals.
Working With a Fiduciary Advisor
Estate planning can be challenging — especially for those with a high net worth. You want to protect your family, assets, and business, and gain the peace of mind of knowing you’re prepared and in control.
Working with professionals when establishing a trust is essential to ensure that your wishes are met, and your assets are protected. An experienced fiduciary advisor can provide valuable advice and guidance, help navigate complex legal and financial issues, and determine the best type of trust for your specific needs and goals. They can also ensure that your trust is structured in a way that provides the maximum benefit to your beneficiaries.
At Agemy Financial Strategies, we have a team of skilled Fiduciary Advisors who excel in helping clients create robust and meaningful trusts. We are committed to providing our clients with the highest level of service and expertise, and we will work with you every step of the way to ensure that your trust meets your unique needs and goals.
Final Thoughts
For high-net-worth retirees, trusts can be a valuable tool in safeguarding assets and ensuring that their wealth is distributed to beneficiaries in a tax-efficient manner. But the process tends to be complicated and time-consuming because there are so many things for high-net-worth estates to consider.
If you’re in this position, you want to protect the inheritance to your heirs, reduce the amount of estate taxes you have to pay, and avoid going into probate. Partnering with a trusted financial professional to establish a trust can provide peace of mind.
At Agemy Financial Strategies, you can rest assured knowing that your financial affairs are in capable hands. If you’re interested in learning more about how trusts can benefit your estate planning needs, schedule a complimentary strategy session with us today.
Navigating RMDs in Retirement
NewsAs a retiree, you have worked hard to accumulate a significant nest egg over the course of your career. However, as you near retirement, you must navigate a series of financial requirements designed to make sure you’re using savings appropriately. That’s where Required Minimum Distributions come in.
When it comes to retirement plan distributions, IRS rules require everyone with a retirement account to take required minimum distributions (RMDs) once they reach a certain age. Since IRA distributions are usually taxable right away, the question of what to do with the money is often entwined with a desire to find tax-efficient strategies simultaneously.
Here are some strategies to help you navigate RMDs as you transition to retirement.
What is an RMD?
A required minimum distribution (RMD) is the amount of money that must be withdrawn from employer-sponsored retirement plans by owners, and qualified retirement plan participants of retirement age.
In 2023, the age at which you must begin taking RMDs changed to 73 years. Account holders must therefore start withdrawing from a retirement account by April 1, following the year they reach age 73. The account holder must withdraw the RMD amount each subsequent year based on the current RMD calculation.
Another significant change from Secure 2.0: Starting in 2024, holders of designated Roth 401(k) accounts will no longer be required to take RMDs from them (during their lifetime). This rule is already true for Roth IRAs.
Which Retirement Accounts Require RMDs?
Most—but not all—retirement accounts have RMDs, from individual retirement accounts (IRAs) to employer-sponsored plans. Those that do include:
403(b) plans
RMD rules do not apply to Roth IRAs, which are funded with after-tax dollars. However, there’s one exception: Upon the account owner’s death, beneficiaries may be required to take an RMD from that account every year or face a penalty.
Understand the RMD Calculation
To determine your RMD, you need to calculate the amount you must withdraw based on your account balances as of December 31 of the previous year. The IRS has established useful resources online that specify life expectancy based on age and other factors, such as whether you are married and your spouse’s age. It’s important to note that your RMD amount will change from year to year based on changes in your account balance. Therefore, it’s essential to recalculate your RMD amount each year to ensure that you are withdrawing the correct amount.
Here is the RMD table for 2023, based on the Uniform Lifetime Table of the IRS, which is the most widely used table. The IRS has other tables for account holders and beneficiaries of retirement funds whose spouses are much younger.
Retiree Age Distribution Chart
Retiree Age Distribution Chart
Source: Internal Revenue Service (IRS)
Consider Charitable Giving
The IRS provides assistance to those who prioritize charitable donations through qualified charitable distributions. This method allows for a direct transfer of up to $100,000 per year from an IRA to a qualified charity, which counts towards the RMD. While this option is available for both spouses, the $100,000 distribution allowance is not shared in joint returns. Therefore, if one spouse donates $75,000, the other can still donate up to the full $100,000.
Andrew A. Agemy, Founder and CEO of Agemy Financial Strategies, highlights that “Utilizing qualified charitable distributions can be an effective strategy for managing RMDs while also reducing taxable income.“
This approach can provide significant benefits for those looking to optimize their retirement savings and support charitable causes.
Take Advantage of Roth Conversions
A viable option to explore is the conversion of a regular IRA to a Roth IRA. Traditional IRAs are funded with pre-tax dollars, while after-tax dollars fund Roth IRAs. Roth IRA payouts and capital growth are tax-free and can be inherited without inheritance tax. Additionally, Roth IRAs are not subject to RMDs, making them a smart choice for retirees.
According to Agemy, “Roth conversions are key when it comes to reducing taxes over the long term.” The conversion process will require payment of income taxes on the IRA holdings, but it provides flexibility. The conversion doesn’t have to include all assets in the regular IRA account, which maximizes tax efficiency. This is particularly useful if your tax rate is projected to increase in the future.
For those with substantial traditional IRA or 401(k) balances, converting some of those funds to a Roth IRA may be advantageous. This conversion offers the opportunity to avoid future RMDs and improve tax efficiency.
Can You Delay RMDs?
There are a few instances where you may be able to delay RMDs. These include:
Penalties are a consideration if you forget to take out your RMD. With the passing of Secure ACT 2.0 the missed RMD penalty dropped to 25% in 2023 and is dropped to 10% if fixed during the correction window.
Consult with a Financial Advisor
Retirees with substantial retirement account balances may find navigating RMDs to be a complex process. However, working with a Fiduciary Advisor can simplify the process by developing a comprehensive retirement income plan that includes RMDs, tax planning, and other critical factors.
The fiduciary advisors at Agemy Financial Strategies will work alongside you to strategize the best way to minimize taxes in retirement. We work tirelessly to provide a reliable retirement income stream that can withstand volatile market conditions, allowing you to enjoy the best possible retirement lifestyle.
If you’re interested in learning more about navigating RMDs and planning for a secure retirement, contact us here today.
Trust Solutions for High-Net-Worth Estates
NewsApril 26, 2024
Estate planning is essential for high-net-worth individuals, who often have significant assets to pass on to their families. One of the most effective ways to protect HNW estates is through the use of different types of trusts. Here’s what you need to know.
Busy schedules and high-stress environments often lead many wealthy individuals to delay the critical process of including trusts in their estate plans. According to a recent survey from Caring.com, over half of the wealthiest Americans have implemented no form of estate plan—no will, trust or advance directive. A staggering 54% attribute their inaction to procrastination.
With the right knowledge, trusts offer a powerful solution for preserving your legacy and helping secure your assets. At Agemy Financial Strategies, we believe trusts are one of the most undervalued financial tools for managing your hard-earned wealth.
Join us as we explore how trusts in your overall estate plan can help you protect your family’s future and achieve your financial goals.
First is Understanding The Importance of Estate Planning
Estate planning is a crucial aspect of retirement planning as it allows retirees to set a blueprint for the distribution of their assets after their passing. Without an estate plan, retirees risk leaving their loved ones without clear instructions on handling their estate. Poor planning can lead to confusion, disputes, and potentially costly legal battles.
35% of American adults say they have personally experienced family conflict or know someone who has due to not having an estate plan in place. Creating a comprehensive plan helps ensure your assets are distributed according to your wishes, minimizing the likelihood of family conflict.
Before consulting with a fiduciary advisor to start your estate plan, take some time to reflect on your posthumous wishes, as well as some critical questions and scenarios, including:
Although it may be challenging to initiate, discussing your intentions with your loved ones in advance allows you to convey your wishes clearly and allows everyone to ask questions or express their concerns.
Trusts serve as effective tools for high-net-worth individuals (HNWI) by protecting assets, minimizing taxes for beneficiaries, and helping provide precise allocation of wealth. Essentially, trusts are legal entities that hold assets for designated beneficiaries. Trusts provide several benefits for high-net-worth individuals:
In addition to these primary advantages, trusts can be tailored to achieve specific goals, such as charitable giving and preserving wealth across generations. Now that we’ve covered the basics of trusts let’s explore trusts that may benefit high-net-worth individuals.
Types of Trusts Available
Each type of trust presents unique advantages and considerations, and the suitability of a specific trust structure depends on individual circumstances and goals. Trusts are powerful tools for high-net-worth retirees who aim to preserve their wealth and legacy for future generations. Here’s a look at several common types of trusts.
1. Living Trust
A Living Trust is created during your lifetime and it designates a trustee who will manage assets for your Beneficiary or Beneficiaries after your passing.
2. Intentionally Defective Grantor Trusts (IDGTs)
These irrevocable trusts are advantageous for estate tax reduction and wealth transfer. IDGTs allow assets to be excluded from the grantor’s estate for tax purposes while the grantor pays income tax on trust earnings.
3. Revocable Trusts & Irrevocable Trusts
4. Charitable Trusts
Charitable trusts are designed to allow individuals to donate assets to a charitable organization while still retaining some benefits from those assets. With this type of trust, the grantor transfers assets to the trust, making payments to the grantor based on an agreed-upon formula. After the grantor passes away, the remaining assets in the trust are distributed to the designated charity.
Charitable trusts offer several benefits:
These types of trusts can be tailored to meet individual goals and structured in various ways to suit different situations. It is important to work with an experienced fiduciary advisor to determine if a charitable trust is appropriate for your estate planning needs.
5. Dynasty Trusts
Dynasty trusts are designed to perpetuate wealth management across multiple generations while minimizing tax liabilities. By keeping assets within the trust, dynasty trusts can protect wealth from estate taxes and creditors, ensuring a lasting legacy for future descendants. Consulting with a knowledgeable fiduciary advisor is essential to determine the most appropriate trust strategy for maximizing estate protection and achieving long-term financial objectives.
The above list serves as just a few trusts available for HNWIs. Others to discuss with your fiduciary advisor include:
Why Trusts Are Important
Setting up a trust is essential for asset protection and ensuring tax-efficient wealth transfer. Trusts play a crucial role in reducing estate tax exposure, enabling more assets to be passed to beneficiaries in a tax-efficient manner. By minimizing estate taxes, trusts offer significant benefits to estate planning.
While estate tax rates are currently progressive, it’s crucial to understand the tax rates applicable to your situation. Many states, including Connecticut, impose estate taxes with lower asset thresholds than the federal government. The table below outlines each state’s exclusion amount.
Living in a state with an estate tax can be advantageous, as your estate tax bill is generally subtracted from your taxable estate before calculating what you owe the IRS. Consulting with an experienced fiduciary advisor is key to selecting the most suitable trust to meet your unique needs and goals.
Working With a Fiduciary Advisor
Estate planning that includes the right types of trusts can be challenging, especially for those with a high net worth. You want to protect your family, assets, and business while gaining peace of mind knowing you’re prepared and in control. That’s why when estate planning for HNW estates, it’s essential to work with an adviser highly experienced in this area of retirement planning.
Working with fiduciaries is essential when establishing a trust. They can help ensure that your wishes are met and your assets are protected. An experienced fiduciary advisor can help you navigate complex legal and financial issues and determine the best type of trust for your specific needs and goals. They can also help confirm that your trust is structured to provide the maximum benefit to your beneficiaries.
Agemy Financial Strategies has a team of skilled fiduciary advisors who excel at helping clients create robust and meaningful trusts. We are committed to providing our clients with the highest level of service and will work with you every step to help ensure that your trust meets your unique needs and goals.
Final Thoughts
For high-net-worth retirees, trusts are pivotal in preserving assets and facilitating tax-efficient wealth distribution. Partnering with Agemy Financial Strategies can help bring you peace of mind regarding effective estate planning. Our experienced team is dedicated to helping you secure your legacy and confidently achieve your financial goals.
Schedule a complimentary strategy session with us to learn more about leveraging trusts for your estate planning needs.
Generating Passive Income in Retirement
NewsThe key to being able to enjoy freedom and comfort in retirement is to have a strategy to develop passive streams of income – and then implement this strategy intelligently.
Retirement should be a time of relaxation and enjoyment, free from financial worry. Many retirees, however, find themselves struggling to maintain their desired lifestyle on a fixed income.
Preparing for retirement has become more demanding, given the increased risks and rising costs associated with healthcare, housing, and long-term care. As a result, retirees may need to seek other sources of income to supplement their retirement savings.
One solution that retirees turn to is generating passive income. Passive income can be an excellent way to earn money without working actively, providing financial security and stability during retirement. In this blog post, we will explore a variety of strategies to generate passive income in retirement, helping you achieve financial freedom and maintain a comfortable lifestyle. Here’s what you need to know.
What is Passive Income?
Generating passive income is a way to earn a steady stream of money with minimal daily effort. However, it’s important to note that earning passive income is not a “get-rich-quick” scheme, as it requires some initial effort and investment. For instance, some passive income ideas such as creating a blog or an app may require significant time and financial investment at the outset.
Nonetheless, if you take the time to establish a passive income stream, it could eventually generate income while you sleep. Some key benefits of passive income include:
Buying Real Estate
Owning rental properties can be an excellent way to generate passive income during retirement. As a retiree, you can purchase a rental property and rent it out to tenants, providing you with a steady stream of income. However, before diving into real estate investment, it’s crucial to do your due diligence.
Firstly, it’s recommended to pay off your home before purchasing an investment property with cash. Taking on debt to buy a rental property can be risky and may not be a wise financial decision during retirement. Additionally, owning a rental property requires effort and maintenance to ensure it remains a source of income.
When purchasing a rental property, it’s essential to decide how you want to manage it. If you plan to manage it yourself, consider buying a property that is conveniently located for you to visit regularly. As an alternative, you can hire a property management company to handle the day-to-day operations, but this will come at an additional cost.
On the plus side, there are tax benefits to take advantage of. As a real estate investor that holds income-producing rental property, you can deduct depreciation as an expense on your taxes. That means you’ll lower your taxable income and possibly reduce your tax liability. If the idea of being a part-time landlord doesn’t interest you, there is another option to invest in real estate that offers passive income opportunities. Real estate investment trusts (REITs).
Invest in Real Estate Investment trusts
Real estate investment trusts (REITs) allow investors to pool their money with other investors to purchase properties. In essence, it’s a mutual fund that invests in real estate instead of stocks.
REITs can be a good investment option for seasoned investors. However, if you’re just starting, it’s advisable to focus on building your wealth before investing in REITs. Although there are some reliable REITs in the market, there are still many that use debt to purchase properties, which increases the risk for investors.
It’s crucial to seek advice from an investment professional, such as a Fiduciary Advisor, before investing in REITs. They can help you assess the risks and determine whether investing in REITs aligns with your financial goals and overall investment strategy. By working with a financial professional, you can make informed decisions and potentially generate passive income through real estate investing.
Take Advantage of High-Yield Savings Accounts
Aside from rental properties and REITs, there are other ways retirees can generate passive income. One such way is through high-yield savings accounts, which can help reach short-term financial goals and provide a source of passive income.
Many online banks and financial institutions offer savings accounts and money market accounts with annual percentage yields (APYs) ranging from 3-4%. This yield is significantly higher than the national average for savings accounts, which is only 0.37% as of March 2023 (according to the Federal Deposit Insurance Corporation (FDIC).
Online banks can offer higher rates due to their lower overhead costs compared to traditional brick-and-mortar banks. For instance, if you have a fully funded emergency fund of $25,000 in a savings account or money market account with a 4% APY, you can earn $1,000 in interest growth over the next year without doing anything. The more you save, the more interest you can earn.
It’s crucial to compare rates and terms of different savings accounts and money market accounts and choose one that aligns with your financial goals and needs. While high-yield savings accounts may not provide as much passive income as rental properties or REITs, they offer a lower-risk and hassle-free option for retirees looking to generate additional income.
Invest in Dividend Stocks
Dividend-paying stocks are another excellent way to generate passive income. Many companies pay dividends to their shareholders, which can provide you with a regular source of income. Dividends are paid per share of stock, so owning more shares can result in higher payouts.
However, selecting the right stocks can be tricky, and that’s where an experienced Fiduciary Advisor can provide valuable guidance. They can help you find exchange-traded funds (ETFs) and mutual funds that align with your investment objectives. ETFs are a great option because they’re easy to understand, liquid, and typically less expensive than mutual funds.
By working with a Fiduciary Advisor, you can choose the right dividend-yielding stocks to help generate passive income with minimal effort.
Remember, passive income isn’t “free money” nor is it “risk-free”. Every move you make with your money has risk involved, so once again, always consult with your financial advisor before making passive income moves.
Final Thoughts
Generating passive income in retirement can help you maintain your desired lifestyle and achieve financial freedom. By diversifying your investments and exploring various income-generating opportunities, you can help create multiple streams of passive income that will support you throughout your retirement years.
At Agemy Financial Strategies, our Fiduciary Advisors can work with you to create a tailored game plan that aligns with your financial goals. Having a Fiduciary by your side can help ensure that your needs are met on your road to retirement and beyond. By working with us, you can make informed decisions and help create a secure financial future for you and your family.
If you’re ready to start the conversation, get in touch with us here today to schedule your complimentary consultation.
Your Last-Minute Tax Checklist
NewsApril 11, 2024
Taxpayers across the United States anticipate a looming deadline: Tax Day. Falling on Monday, April 15th, this date evokes a sense of urgency and, for many, a hint of stress as they rush to gather essential documents, receipts, and forms.
An estimated 28% of Americans are unaware of this year’s tax filing deadline. Agemy Financial Strategies is here to provide the necessary guidance and assistance, offering careful planning to help you seize the opportunity to optimize your financial situation. Here’s what you need to know.
The key to a smooth Tax Day experience lies in careful preparation. Here’s a checklist of essential items you’ll need to gather before the April 15th deadline:
Compiling these documents and information ahead of time can help you streamline the tax filing process and minimize the risk of errors or oversights.
Understand Changes to Tax Brackets
Understanding tax bracket changes for the 2023 tax year is crucial for taxpayers to navigate their financial planning effectively. Tax brackets are revised periodically to adjust for inflation and changes in the tax code. While the tax rates have remained unchanged, there has been a notable 5.4% increase in the federal income tax brackets.
Staying informed about these changes can help empower individuals and businesses to make informed decisions regarding their income, investments, and overall financial strategy. Taking advantage of available tax deductions and credits can also help minimize your tax liability.
Maximize Available Deductions and Credits
Maximizing deductions and credits is a savvy strategy for taxpayers looking to lower their taxable income and reduce their tax liability. Deductions such as contributions to retirement accounts, including traditional IRAs or 401(k)s, help individuals save for the future and offer immediate tax benefits by lowering taxable income.
Charitable giving can also be a tax-smart strategy, particularly for retirees with substantial assets. It can help lower withdrawal taxes from your tax-deferred retirement accounts, including Required Minimum Distributions (RMDs). Additionally, it can help reduce your taxable estate and minimize the tax liability for your account beneficiaries. However, it’s important to note that generally, you should be over the age of 59½ to avoid early withdrawal penalties.
To help maximize these tax benefits, consider seeking advice from a financial advisor. They can provide insights into optimizing your tax advantages. Strategies such as grouping charitable donations into a single year or establishing charitable trusts are effective ways to enhance the tax benefits of charitable giving. By strategically maximizing deductions and credits, taxpayers can help optimize their tax situation and maximize their financial resources.
Manage Your Tax Deadline Effectively
The IRS allows retirees who cannot file their tax returns by the April 15th deadline to request a six-month extension. This extension can be helpful in situations where a taxpayer needs a tax form or additional time to prepare their return. Taxpayers can request an extension for free via IRS Free File, regardless of their income.
It’s essential to note that while an extension will give retirees additional time to file their returns, it doesn’t extend the deadline to pay their federal taxes. Your tax bill has to be paid by the April 15th deadline. In cases where a taxpayer is missing a tax form, they can estimate their tax bill by using tax software and inputting estimates for any missing forms.
It’s also worth noting that requesting a federal extension doesn’t automatically extend the deadline for state tax returns. Those who need additional time to file their state tax returns must request a separate extension.
There is no penalty for filing an extension. However, not paying on time or enough, or failing to file altogether, may cost you.
After you file the extension, you’ll have until October 15th to gather your documents and finish your filing. When you complete your return, you should include the amount you’ve already paid in the payments section of your Form 1040.
Minimize Your Tax Burden With a Financial Advisor
While gathering the necessary paperwork is essential, it’s only one piece of the puzzle. Partnering with a skilled financial advisor can take your tax planning to the next level by helping you strategically manage your finances throughout the year to minimize your tax burden.
At Agemy Financial Strategies, we can help you explore options to help ensure you take advantage of tax strategies that can minimize your tax liability while boosting your savings. Here’s how our advisors can assist you in creating a tax plan strategy:
Get an Extension
Not ready to file on Monday? Taxpayers who can’t file by the deadline of April 15, 2024, should request an extension before that deadline. Remember, however, that an extension to file is not an extension to pay taxes. If they owe taxes, they should pay them before the due date to avoid potential penalties and interest on the amount owed. Apply for your extension here.
Last Thoughts
Tax Day doesn’t have to be a dreaded deadline. By gathering the necessary documents and partnering with a financial advisor to develop a tax plan strategy, you can confidently navigate the tax filing process and even potentially minimize your tax burden.
Agemy Financial Strategies is dedicated to providing knowledgeable guidance on tax planning strategies to help you minimize future tax burdens. Our team is here to help you every step of the way, helping ensure that your retirement years are filled with immense fulfillment.
With our guidance, you can embrace the opportunity to optimize your financial situation and secure a brighter financial future. Contact us today to get started and schedule your complimentary strategy session here.