Your Last-Minute Tax Checklist

Agemy Financial Strategies

April 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.

Gather All the Essentials

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:

  • Income Documents: This includes W-2 forms from your employer(s), 1099 forms for freelance or contract work, and any income generated from investments or rental properties.
  • Expense Records: Keep track of deductible expenses such as mortgage interest, property taxes, medical expenses, charitable contributions, and unreimbursed business expenses.
  • Moving Expenses: Document any expenses incurred due to relocation for employment or retirement purposes, including transportation, lodging, and storage costs, as they may be eligible for deduction under certain circumstances.
  • Tax Forms: Confirm you have the necessary forms, including Form 1040 for individual income tax returns and any additional schedules or forms relevant to your financial situation.
  • Previous Year’s Return: Having last year’s tax return on hand can provide valuable insight into your tax history and help ensure accuracy when filing this year.
  • Identification Information: You’ll need Social Security or tax identification numbers for yourself, your spouse, and any dependents you claim.

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.

  • If you don’t pay the full amount you owe, the IRS will charge you interest on the unpaid balance until you do.
  • You may be subject to a late payment penalty if you don’t pay at least 90% of your debt. The penalty is usually half of 1% of the amount owed each month, up to a maximum of 25%.
  • If you don’t file your return or Form 4868 by the tax filing deadline, you’ll be subject to a late filing penalty. The penalty is 5% of the amount you owe each month and can increase to 25%.

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:

  • Strategic Planning: A financial advisor can help you develop a comprehensive tax plan tailored to your unique financial situation and long-term goals. By analyzing your income, investments, and expenses, they can identify opportunities to help optimize your tax strategy and maximize tax-saving opportunities.
  • Investment Guidance: Certain investment vehicles, such as retirement and tax-deferred accounts, offer significant tax advantages. A financial advisor can advise you on the most tax-efficient investment strategies to help grow your wealth while minimizing tax liability.
  • Income Management: Timing is key to managing income for tax purposes. A financial advisor can help you strategically time withdrawals from retirement accounts, capital gains realizations, and other income sources to minimize your overall tax liability.
  • Estate Planning: Tax planning isn’t just about the present—it’s also about planning for the future. A financial advisor can assist you in developing an estate plan that helps minimize estate taxes and provides a smooth transfer of wealth to your heirs.

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.

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Knowledge is Power this Financial Literacy Month

Understanding how to manage money effectively is fundamental on your road to retirement.

Retirement should be a time of joy spent with loved ones and enjoying the fruits of one’s labor. However, retirees and soon-to-be retirees often feel vulnerable amidst rising inflation and unpredictable markets. Yet, with careful planning, you can protect your retirement from market turbulence and financial worries.

To empower you to retire with peace of mind, we’ve gathered retirement planning strategies for new retirees and those looking to fine-tune their plans. These insights will help you approach retirement with optimism. Here’s what you need to know.

Map Out Your Retirement Dreams

When it comes to retirement planning, defining your goals is a crucial first step. Retirement can mean different things to different people, so it’s necessary to think about what you want your retirement to look like. 

For some, retirement may involve traveling to new destinations, exploring hobbies and interests, or spending quality time with loved ones. Others may opt to continue working in some capacity during their retirement, while others may have different plans altogether. Whatever your aspirations, clearly understanding your retirement goals is essential.

Once you’ve identified your retirement objectives, you can start crafting a plan to achieve them. This plan should take into consideration various factors, including:

  • Your current financial situation.
  • Anticipated retirement expenses.
  • Projected retirement income.
  • Other factors, such as inflation, taxes, and potential healthcare costs.

Planning for retirement is an essential component of financial literacy. When you define your retirement objectives and chart a course of action, you make significant strides toward accomplishing a successful retirement.

Enhance Your Investment Approach

The primary objective of investing is to achieve high returns, but with higher returns comes a higher level of risk. In order to help optimize your returns and minimize potential risks, it’s crucial to diversify your investment portfolio. Your investment strategy should be determined by several factors, such as:

The goal of investing is when the value of your investments goes up, you can earn money on them. For example, a stock’s price won’t stay the same forever—ideally, the company grows and makes money, and it becomes more valuable overall. Historically, investments in assets like stocks, bonds, and real estate offer higher average returns than traditional savings accounts. While financial markets offer no certainties, investing opens doors to accelerated wealth accumulation, outpacing the growth achievable through saving alone.

By carefully considering these variables, you can determine the best investment strategy for your retirement savings. It’s important to remember that investments are not one-size-fits-all, and what may work for one person may not work for another. Take the time to research different investment options, and if needed, seek advice from a fiduciary advisor to help ensure your investment decisions align with your retirement goals.

Have an Emergency Savings Fund

Life emergencies happen—and for some, they happen a lot. Large or small, these unplanned expenses often feel like they hit at the worst times. An Emergency Fund acts as a safety net, helping to provide the financial resources you need to navigate unforeseen circumstances – without jeopardizing your long-term financial goals or your hard-earned nest egg.

Adequate cash reserves allow you to make decisions without solely relying on fixed-income sources. You can maintain flexibility in your financial choices, whether pursuing a new opportunity, supporting a loved one, or embarking on a passion project. Cash savings help ensure you won’t have to dip into or liquidate your investments, allowing your retirement portfolio to weather economic uncertainty.

By setting up a dedicated emergency fund, you can help protect yourself from chipping into your savings so you can recover quicker and get back on track towards reaching your larger savings goals.

Most professionals believe you should have enough money in your emergency fund to cover at least 3 to 6 months’ worth of living expenses. But it’s not unwise to save more during times of uncertainty. Building up your emergency fund can help prepare you and set your mind at ease if the unexpected should occur.

Plan for Long-Term Care

If you’ve not planned correctly, perhaps one of the biggest financial setbacks to retirees is long-term care. In 2024, without insurance, monthly long-term care costs might include:

  • $5,148 for a home health aide
  • $1,690 for adult day care
  • $4,500 for assisted living
  • $7,908 for a semi-private room in a nursing home
  • $9,034 for a private room in a nursing home

Medicare does not pay for most long-term care expenses because it is primarily designed to cover acute care services for short-term illnesses and injuries. Many individuals opt for private long-term care insurance, Medicaid, or a combination of both to cover the cost of long-term care.

With the likelihood of needing long-term care increasing with age, it’s crucial to consider this aspect in your overall retirement plan. By taking a comprehensive approach to planning for healthcare costs, you can help ensure you have the necessary resources to pay for the level of care you may require.

Track Your Progress & Stay Informed

Monitoring your progress offers valuable learning opportunities. Regularly checking your retirement savings helps you spot potential issues early, like unexpected expenses or market changes. This allows you to take proactive steps, like adjusting your savings rate or rebalancing your investments. Monitoring your progress also helps ensure you’re moving closer to your retirement goals. Aim to review your retirement savings at least once a year and more frequently if your financial situation or investment strategy changes significantly.

Here are some tips to stay accountable during Financial Literacy Month:

  • Expand Your Learning: Explore financial blogs for insights into personal finance basics, investment strategies, and financial planning beyond traditional books and workshops.
  • Stay Informed: Follow trusted financial news podcasts to stay updated on economic trends and tools. Continuous learning helps you adapt to evolving financial landscapes.

Consider Working With a Fiduciary Advisor

Financial literacy is key to making smart financial choices, and a fiduciary advisor can be a valuable ally in helping you confidently navigate a complex financial landscape. If you’re unsure about your path to retirement, teaming up with a fiduciary advisor could provide much-needed support.

A fiduciary advisor is a professional who prioritizes their clients’ interests above all else. They can assist you in crafting a tailored retirement plan and staying focused on achieving your financial goals.

At Agemy Financial Strategies, our fiduciaries are dedicated to empowering our clients with knowledge across various financial domains. Our purpose is to educate retirees – whether that be planning for retirement, legacy planning, wealth management, or just holding your hand when it’s time to leap into retirement. We are celebrating 30 years in business, and we remain steadfast in our dedication to serving and educating retirees.

If you’re interested in learning more about our offerings, see here.

Final Thoughts

Whether you’re nearing the start of your retirement journey or newly retired, this process demands thorough preparation. While it can be stressful to see headlines about threats to the value of your nest egg, a volatile market does not necessarily mean danger for your retirement plans.

At Agemy Financial Strategies, we firmly believe in fostering financial stability and empowerment, particularly in the golden years of retirement. Our retirement income planning services are just one of our many resources designed to help you take control of your financial journey. This Financial Literacy Month, take charge of your retirement journey, overcome challenges, and pave the way for a secure and prosperous future with our team by your side.

Contact us today to schedule your complimentary retirement strategy session.

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Connecticut vs. Colorado: Finding Your Ideal Retirement Destination

While we’ve previously explored the advantages and disadvantages of retiring in Connecticut and Colorado before, tax laws, crime rates, housing markets, and inflated costs of living are constantly evolving. Today’s blog compares the two directly for 2024 to facilitate your up-to-date decision-making process.

Many Americans approaching retirement seek out a new location to spend their golden years, searching for a place that offers comfort and necessary resources. Whether you’re contemplating a move out of, into, or within Connecticut or Colorado, Agemy Financial Strategies is here to assist you.

As a financial firm based in Connecticut with offices in Colorado, we can offer you first-hand experience and knowledgeable advice on managing your retirement in these beautiful states. To start, let’s revisit some of the key pros and cons to consider.

Pros of Living in Connecticut

Pro 1: Close Proximity to Major Cities

Nestled in the heart of New England, Connecticut exudes a classic charm that attracts retirees seeking a tranquil yet culturally rich environment. Connecticut’s location in the northeastern United States provides easy access to major cities like New York City and Boston.

Retirees can enjoy cultural attractions, world-class dining, and excellent healthcare facilities without traveling far. Connecticut boasts a rich historical heritage, with charming colonial towns, historic landmarks, and renowned museums. Retirees interested in history and culture will find plenty to explore in this picturesque state.

Pro 2: Connecticut Has a Longevity Advantage

For health enthusiasts, the concept of blue zones—areas where individuals consistently live past 100 years—holds significant intrigue. While these zones often exist in distant corners of the world, their longevity secrets offer valuable insights for everyone aiming to extend their lifespans.

According to Forbes Health, a recent study has positioned Connecticut as the fourth-ranking potential Blue Zone in the United States. Blue Zones are characterized by populations that live longer and lead healthier lives overall, with a notable number of residents reaching the centenarian mark. Connecticut stands out as one of the frontrunners among U.S. states primed to evolve into future Blue Zones.

Pro 3: Crime Rates are Falling

There’s a sense of safety, which is comforting to anyone. Connecticut is well known for its great, small community atmosphere. Many residents boast their small town feels more like a family. Connecticut witnessed a significant improvement in its crime rates between 2021 and 2022, as reported in the state’s annual crime report.

The report reveals a 13% decrease in violent crime, dropping from 6,272 offenses to 5,464. This decline marks the lowest violent crime rate per 100,000 residents the state has seen in the past decade. Additionally, property crime offenses also saw a decrease of 3% compared to the previous report.

Cons of Living in Connecticut

Con 1: High Cost of Living

Connecticut ranks among the states with the highest living expenses in the United States, especially regarding housing and taxes. Its cost of living consistently exceeds the national average, with studies indicating it could be anywhere from 17% to 25% higher than the rest of the country.

For retirees, this means their retirement savings may not go as far in Connecticut’s costly environment. Housing costs in Connecticut are generally higher than the national median. According to Zillow, the average home value in Connecticut is estimated to be around $384,244 as of February 2024, a 1-year Value Change of +11.1%

Con 2: High Taxes

Connecticut imposes a range of taxes that can significantly impact residents’ finances. The state’s income tax rates vary from 3% to 6.99%, with a corresponding 7.50% corporate income tax rate. In addition, the state sales tax rate stands at 6.35%, aligning closely with the national average.

Moreover, Connecticut’s property taxes further add to the financial burden, fluctuating based on the property’s assessed value and local tax rates. Compared to other states, Connecticut’s tax system ranks unfavorably, placing 47th overall on the 2024 State Business Tax Climate Index.

Con 3: Limited Outdoor Recreation

Connecticut experiences long, harsh winters characterized by cold temperatures and substantial snowfall, which may be challenging for those who prefer milder climates. While the state has beautiful natural scenery, it may offer fewer outdoor recreational opportunities than states like Colorado. Retirees who relish hiking, skiing, and fishing might yearn for a wider array of options.

Pros of Living Colorado

Pro 1: Spectacular Scenery

Colorado presents an enticing option for retirees seeking an active lifestyle amidst breathtaking natural landscapes. It is known for its breathtaking natural beauty, sparkling lakes, and picturesque forests.

Colorful Colorado offers retirees abundant outdoor recreational activities, from skiing and snowboarding in the Rocky Mountains to hiking, biking, and fishing in the numerous state parks. Here are just some of the many places you can easily visit when retiring in Colorado:

Pro 2: Low Taxes

Colorado has relatively low taxes compared to many other states, making it an attractive option for retirees looking to stretch their retirement savings. The state income tax range is a low, flat rate of 4.4%, and you get a fair deduction on retirement income. Sales tax may run higher in the state, but it doesn’t apply to groceries or medication. Another great reason to retire in Colorado is that there’s no estate tax. You can leave money to your family without paying those hefty fees, which can be a huge perk.

Pro 3: Retirement Communities are an Abundance

Retirement communities offer an excellent opportunity to connect with like-minded individuals, fostering social interactions and shared interests. Colorado boasts over 240 retirement communities spread across the state, providing ample options for retirees seeking vibrant social environments. Allowing you to have the best of everything with neighbors your age and loads of activities to keep you as social and busy as you want to be.

Cons of Living in Colorado

Con 1: High Cost of Living

Living expenses in Colorado tend to surpass the national average. This holds true for assisted living costs as well. On average, monthly care expenses for assisted living in Colorado range from $3,800 to $6,200, exceeding the national average. In Denver, specifically, the average monthly cost stands around $5,000.

Even in rural and suburban areas, living expenses can be slightly higher than average. In mountain towns like Aspen, however, costs can soar much higher than the national average. Therefore, if you’re working with a tight budget, it’s crucial to thoroughly assess the cost of living in different Colorado cities before making any decisions.

Con 2: Cost of Healthcare

If you’re considering retiring in Colorado, factoring in the cost of care is crucial. Colorado experienced the second-highest increase in private health insurance premiums this year, trailing only Georgia, according to a recent report. The average monthly cost for a 40-year-old with a mid-range silver plan surged by 19.6% in Colorado, rising from $409 to $489 between 2022 and 2023. Nationally, the average premium increase stands at approximately 4%, with an average monthly cost of $560. However, when considering all age groups and coverage types, Colorado’s average rate hike is closer to 10.4%.

Con 3: Traffic Jams

Due to the popularity of Colorado, some residents have been irked by the overcrowding, and in very populated areas, traffic congestion is also a problem. These are somehow inevitable consequences of a popular place. As more and more people move to live there, the population increases and overcrowding continues. For retirees wishing to live in Colorado, the overcrowding can be a problem if you were hoping to move into a quiet and calm environment.

Comparing the Two States

When weighing the options between Guilford, CT and Denver, CO, it’s important to consider several key factors. While Guilford generally offers a lower overall cost of living and provides more affordable housing options compared to Denver, the healthcare expenses in Guilford are notably higher. Therefore, the decision between these two cities may hinge on individual priorities and budgetary considerations. Here’s what we know about comparing Guilford, CT and Denver, CO:

Making Your Decision

Ultimately, the decision between Connecticut and Colorado comes down to your personal preferences, priorities, and lifestyle goals. Working alongside a trusted fiduciary advisor can help your transition to retirement. At Agemy Financial Strategies, our Connecticut and Colorado-based fiduciaries can provide valuable assistance in developing a retirement income plan that encompasses crucial financial factors, such as:

Our fiduciary advisors are committed to working closely with you to maximize your retirement years. We understand that retirement planning looks different for each individual, and with that in mind, we carefully craft your plan to meet your specific needs. For a complete list of our service offerings, see here.

Contact us today for more information on our retirement and financial planning services.

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Tax Day: What You Need for Tuesday’s Deadline

Tax Day is Tuesday, April 18th, and filing last-minute (in the correct manner) is critical. Are you ready? 

Having a solid tax plan can help retirees maximize their retirement income and avoid unexpected tax liabilities. But many Americans push this important-yet-unpopular task to the wayside, only to bring panic as tax day on April 18th creeps up. According to the Internal Revenue Service, 20-25% of all Americans wait until the last two weeks before the deadline to prepare their tax returns. At that late date, there are only two things you can do: File your taxes pronto, or request a tax extension.

Regardless of whether you’re a recent retiree or are approaching retirement, our goal is to equip you with the tools necessary to make informed decisions about your taxes. Here are some key considerations to keep in mind as you prepare to file your taxes for 2022.

Organization is key

Having everything in one place—even if it’s just a shoebox—will help make preparation of your income tax return easier. Some of the documents that might be required to complete the process include:

  • Form W-2 (your employer must mail the form, which shows your earnings and taxes withheld, by Jan. 31)
  • Form 1099-INT, for interest earned, such as from a savings account
  • Form 1098, Mortgage Interest Statement, which shows mortgage interest paid on a loan for your own home and receipts for all purchases and payments, including those for business, healthcare and education.
  • Older adults have special tax situations and benefits, like Form 1040-SR. Understand how that affects you and your taxes. Get general information about how to file and pay taxes, including many free services, by visiting the Individuals page.

Avoid Common Mistakes

Retirees should be particularly careful when filing their tax returns as common mistakes can delay the processing of the return or the refund they are owed. One of the most significant errors is missing tax forms. This includes forms such as 1099’s, which may occur if you receive investment income.

Although it’s easy to overlook such forms, the IRS receives copies of them and will expect that information to be included on your return. Other common mistakes include the following:

  • Incorrect spelling or digits for your name.
  • Incorrect Birth date.
  • Incorrect Social Security number.
  • Incorrect bank account and routing number information.

It’s crucial to double-check all information before submitting your tax return. Double-check all information before submitting your tax return, and consider filing electronically to streamline the process. Taking these steps can help ensure a smooth and stress-free tax filing experience.

You Can Get an Extension to File— But Not to Pay

For retirees who are unable to file their tax returns by the April 18 deadline, the IRS allows them to request a six-month extension. This extension can be helpful in situations where a taxpayer is missing a tax form or needs 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. The tax bill has to be paid by the April 18 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.

  • If you don’t pay the full amount you owe, the IRS will charge you interest on the unpaid balance until you pay the full amount.
  • If you don’t pay at least 90% of the amount you owe, you might also be subject to a late payment penalty. The penalty is usually half of 1% of the amount owed for each month, up to a maximum of 25%.
  • If you don’t file either your return or Form 4868 by the tax filing deadline, you’ll be subject to a late filing penalty. The penalty is usually 5% of the amount you owe for each month, up to a maximum of 25%.

After you file the extension, you’ll have until October 15 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.

Know Which Health Coverage Form You Need

Three versions of Form 1095 exist: A, B and C. Form 1095-A will be sent to you if you get your health insurance through the Health Insurance Marketplace. You will need information from this form to file your tax return, but don’t include the form with your return. You will receive Form 1095-B if you are covered by minimum essential coverage, and if you are covered by a plan sponsored by an applicable large employer (ALE), you will get 1095-C. You don’t need to wait for 1095-B or 1095-C to file your return.

About filing your tax return

If you have income below the standard deduction threshold for 2022, which is $12,950 for single filers and $25,900 for married couples filing jointly, you may not be required to file a return. However, you may want to file anyway. You may be able to take advantage of several features and benefits in the tax system which could reduce the amount you owe. Or in many cases, especially for people with low incomes, these features can increase the amount you could receive in a refund. There are some key factors to make sure you look out for.

Changes for 2023

For tax year 2022 some tax credits that were expanded in 2021 will return to 2019 levels. This means that affected taxpayers will likely receive a smaller refund compared with the previous tax year. The 2023 changes include amounts for the Child Tax Credit (CTC), Earned Income Tax Credit (EITC), and Child and Dependent Care Credit.

  1. Those who got $3,600 per dependent in 2021 for the CTC will, if eligible, get $2,000 for the 2022 tax year.
  2. For the EITC, eligible taxpayers with no children who received roughly $1,500 in 2021 will now get a maximum of $530 in 2022.
  3. The Child and Dependent Care Credit returns to a maximum of $2,100 in 2022 instead of $8,000 in 2021.

Tax Planning With Agemy Financial Services

Tax planning is an important aspect of retirement planning that cannot be overlooked. Retirees who take the time to understand their tax obligations now can enjoy a more secure financial future.

While certain taxes may be deferred, others can be minimized through tax-efficient investment planning. This is why a Fiduciary Advisor can be a valuable resource for those seeking to navigate the complexities of tax planning.

At Agemy Financial Strategies, we can help you explore your options to make sure you’re not missing out on tax strategies that could help boost your retirement savings. From reassessing your investments to postponing RMDs, Agemy Financial Strategies has over 32 years of experience in tax-strategizing to maximize retirement income in your golden years.

Let’s put together your personalized plan with a complimentary strategy session. Set yours up here today.

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Estate Planning: Creating a Legacy and Protecting Your Assets

Estate planning may not typically rank high on your priority list, but it is crucial to create a plan for the benefit of your family’s future and your peace of mind. Continue reading below to discover how to safeguard your assets while leaving a lasting legacy.

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 in place, retirees risk leaving their loved ones without clear instructions on how to handle their estate. This can lead to confusion, disputes, and potentially costly legal battles.

By creating an estate plan, you can help ensure that your assets are distributed according to your wishes, minimizing the likelihood of family conflict. Before consulting with an Attorney or 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:

  • Who will act on my behalf if I become incapacitated due to illness or injury?
  • What kind of life-sustaining measures do I desire as I approach the end of my life?
  • Who will take care of my underage children if I pass away?
  • How do I want to distribute my assets after my demise?

Although it may be challenging to initiate, discussing your intentions with your loved ones in advance allows you to convey your wishes clearly and provides an opportunity for everyone to ask questions or express their concerns.

Creating Your Estate Plan

In addition to a will, an estate plan may involve various documents that reflect a person’s unique circumstances, such as Living Trusts or Power of Attorney. These complexities can be addressed by  your Fiduciary advisor, who can assist in helping to ensure that all necessary documents are properly completed, witnessed, signed, filed, and stored in accordance with state laws.

The following items are some of the most common documents that can be included in an estate plan:

Trusts

A trust outlines precisely how and when your assets will be distributed after your demise, and it can also serve to reduce taxes, bypass probate, and identify the person responsible for caring for your minor children in the event of your passing. Often, individuals use trust in conjunction with a will. The primary distinction between a trust and a will is that a trust circumvents the probate process of transferring property from you to your beneficiaries. The following are two of the most common types of trusts:

  • Revocable Trusts – Allows changes to terminate the trust during their lifetime.
  • Irrevocable Trusts – Cannot be changed once it is created.

Both types of trusts offer unique advantages and disadvantages, depending on your circumstances and estate planning goals.

Powers of Attorney

In addition to planning for the distribution of your assets, it is also essential to plan for situations where you cannot make decisions for yourself. There are several different Power of Attorney (POA) appointed tasks that you should consider, including:

  • A financial power of attorney appoints someone to manage your finances if you become incapacitated.
  • A healthcare power of attorney appoints someone to make healthcare decisions on your behalf if you are unable to communicate your wishes.
  • A living will outline your specific wishes for life-sustaining treatments, such as whether you want to receive life support or have a “do not resuscitate” order (DNR) in place.

Your health care power of attorney and living will are often referred to as “advance directives,” “health care directives,” or “medical directives.” These documents can be incredibly beneficial in end-of-life situations and serious medical conditions, which can understandably be emotionally challenging for your loved ones. 

By including these documents in your estate plan, you can help minimize the stress and anxiety your family members will experience.

Regularly Reviewing Your Estate Plan

As life changes, so will your estate plan. It’s paramount to periodically review your estate plan to ensure that everything is current and meets your requirements. Here are some factors to consider when it’s time to update your estate plan:

  • Moving to a new location.
  • Getting married or divorced.
  • Retiring from work.
  • Receiving a substantial inheritance.

Apart from reviewing your trusts and power of attorney, it’s also important to verify that the designated beneficiaries for your life insurance policies, retirement plans, and bank accounts are appropriate.

Minimize Income, Gift and Estate Taxes

Estate planning and tax planning go hand-in-hand. Estate tax planning attempts to reduce potential estate tax liability by utilizing planning techniques to reduce either the amount of property in the taxable estate, or to minimize the valuation of the property in the taxable estate. Some strategies to include:

  • Irrevocable Life Insurance Trust (ILIT): an effective strategy for transferring wealth to your beneficiaries without incurring any income tax or estate
    tax liability. (Up to $17,000 per beneficiary in 2023).
  • Portability Election: an estate tax-saving strategy that is used to “transfer” a deceased spouse’s applicable exclusion to the surviving spouse (in 2023 to $12.92 million per individual ($25.84 million for married couples).
  • Gifting: You may gift up to the annual exclusion amount ($17,000, if single and $34,000, if married for 2023) to as many individuals as you wish without incurring gift taxes.

How a Fiduciary Advisor Can Help

A Fiduciary advisor can be a valuable resource when it comes to planning your estate, especially for those who may have complex financial and personal circumstances to consider. A Fiduciary advisor is held to the highest ethical standard and is legally required to act in the best interest of their clients. 

At Agemy Financial Strategies, our Fiduciary Advisors can help you navigate the intricacies of estate planning. This includes crafting a comprehensive plan for the distribution of assets, minimizing tax liability, and identifying the right type of trust to suit your needs. If you have more questions about our estate planning services, see here.

Working With Agemy Financial Strategies

Without an estate plan in place, your heirs could face big tax burdens and the courts could designate how your assets are divided.

When it comes to creating your estate plan, having a retirement income advisor that you trust is crucial to your planning success.  At Agemy Financial Strategies, we have over 30 years of estate planning experience to guide you through the entire process. 

While a proper estate plan will not enable you to avoid death, it can help eliminate, or at the very least, minimize estate taxes. Our experienced estate planning advisors will assess your assets, listen to your concerns and recommend an approach that is most likely to safeguard your estate for future generations. 

If you’re ready to get started on your estate planning, set up a complimentary consultation here today.

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Retire Confidently with Agemy Financial Strategies

The unpredictability of financial markets can disrupt even the best-laid retirement plans. This Financial Literacy month, let’s take some time to reflect on the importance of retirement planning with confidence amid financial turmoil. 

Retirement should be about spending time with those you love, enjoying the perks of free time, and having the money you need to achieve all of your retirement goals and dreams. However, the last few years may have felt like that dream is being ripped away from you as we go through yet another rollercoaster in the financial world.

Unfortunately, retirees and those planning to retire soon are the people most threatened by high inflation and extremely rocky financial markets. Fortunately, planning ahead can go a long way toward helping you protect your retirement when market volatility and worry hits.

At Agemy Financial Strategies, we understand that retirement planning can be intimidating in 2023. To help you retire with confidence, we have compiled a series of retirement planning strategies for both newly retired individuals and those who wish to refine their current plans. This will help allow you to approach the retirement process with a brighter outlook.

Here’s what you need to know.

Define Your Retirement Goals

When it comes to retirement planning, defining your goals is a crucial first step. Retirement can mean different things to different people, so it’s necessary to think about what you want your retirement to look like.

For some, it may involve traveling to new places, pursuing hobbies and new interests, or spending time with family and friends. Some people may choose to work during their retirement years, while others may have different plans. Whatever your plans are, it’s crucial to have a clear comprehension of your goals for retirement.

Once you have a clear idea of your retirement goals, you can begin creating a plan to help you achieve them. This plan should take into account a variety of factors such as:

  • Your current financial situation.
  • Your expected retirement expenses.
  • Your estimated retirement income.
  • Other important considerations are inflation, taxes, and potential healthcare costs.

Planning for retirement is an essential component of financial literacy. When you define your retirement objectives and chart a course of action, you make significant strides toward accomplishing a successful retirement.

Invest Wisely

As the financial world evolves, we understand investing can be overwhelming. But it is an excellent source to help grow your money – and let it work for you in your golden years.

The primary objective of investing is to achieve high returns, but with higher returns come higher risks. In order to optimize your returns and minimize potential risks, it’s crucial to diversify your investment portfolio. Your investment strategy should be determined by several factors, such as:

  • Risk tolerance.
  • Retirement goals.
  • Timeline.

By carefully considering these variables, you can determine the best investment strategy for your retirement savings. It’s important to remember that investments are not one-size-fits-all, and what may work for one person may not work for another.

Around 60% of households in the U.S. own securities in investments on accounts such as IRAs, and employer-sponsored retirement plans. However, this percentage drops to a little over 30% when considering only taxable investments.

It’s essential to take the time to research different investment options and consult with a Fiduciary Advisor if necessary to make informed investment decisions that align with your retirement goals.

Monitor Your Progress

Monitoring your retirement savings progress enables you to make necessary adjustments to your investment strategy, ensuring that you’re on track to achieve your retirement goals. You should check your retirement savings at least once a year, and more frequently if you have made significant changes to your financial situation or investment strategy.

Regularly monitoring your retirement savings also helps you identify potential issues early on, such as unexpected expenses or market volatility. If you are aware of these issues, you can take proactive measures to tackle them, such as modifying your savings rate or rebalancing your portfolio.

Additionally, keeping tabs on your retirement savings progress can motivate you to stay on track and increase your savings rate if needed.

Factor in Emergencies

Life emergencies happen. And they happen a lot. We’re not just talking about your car breaking down. A fender bender, an unexpected medical bill, a broken appliance, a loss of income, or even a damaged cell phone. Large or small, these unplanned expenses often feel like they hit at the worst times. By setting up a dedicated emergency fund, you can help protect yourself from chipping into your savings so you’re able to recover quicker and get back on track towards reaching your larger savings goals.

Most experts believe you should have enough money in your emergency fund to cover at least 3 to 6 months’ worth of living expenses. But it’s not unwise to save more during times of uncertainty. Building up your emergency fund can help prepare you and set your mind at ease if the unexpected should occur.

Plan for Long-Term Care

If you’ve not planned correctly, perhaps one of the biggest financial setbacks to retirees is long-term care. 70% of us will need long-term care, and it’s not cheap. An average room in an assisted living facility in 2023 will set you back around $5000 per month.

In 2023 without insurance, monthly long-term care costs could see you paying: 

  • $5,148 for a home health aide
  • $1,690 for adult day care
  • $4,500 for assisted living
  • $7,908 for a semi-private room in a nursing home
  • $9,034 for a private room in a nursing home

Medicare does not pay for most long-term care expenses because it is primarily designed to cover acute care services for short-term illnesses and injuries. To cover the cost of long-term care, many individuals opt for private long-term care insurance, Medicaid, or a combination of both. 

With the likelihood of needing long-term care increasing with age, it’s crucial to consider this aspect in your overall retirement plan. By taking a comprehensive approach to planning for healthcare costs, you can help ensure you have the resources necessary to pay for the level of care you may require in the future.

Consider Working with a Fiduciary Advisor

If you are worried about your road to retirement, working with a Fiduciary Advisor can provide invaluable guidance and expertise in retirement planning. A Fiduciary Advisor can help you develop a personalized retirement plan, optimize your investment strategy, and stay on track to achieve your goals.

At Agemy Financial Strategies we are committed to educating our clients on a range of financial matters, including retirement planning, legacy planning, wealth management, and even providing support during the transition to retirement. With over 30 years of experience in helping individuals reach retirement in a stress-free manner, our unwavering dedication to educating and serving our clients remains at the core of our mission.

If you’re interested in learning more about our offerings, see here.

Final Thoughts

While it can be stressful to see headlines about threats to the value of your nest egg, a volatile market does not necessarily mean danger for your retirement plans.

At Agemy Financial Strategies, we believe that everyone deserves financial stability and freedom, especially during retirement. We’re passionate about helping our clients achieve their retirement goals, and our commitment to providing resources and guidance is a testament to that. 

Our financial guide to retirement planning is just one of the many tools we offer to help you take control of your finances and plan for the future. Don’t wait any longer to start planning for your retirement.

Contact us today to learn more about how we can help you achieve financial security and peace of mind.

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Tax Secrets the IRS Won’t Tell You… But We Will

Taxes – they’re a fact of life. Whether you love them or loathe them, they’re essential to living in a modern society. But navigating the murky waters of tax laws and regulations can often feel like deciphering a cryptic code. Read on to discover strategies to help mitigate the effects of taxes on your nest egg this filing season.

In the fiscal year of 2023, the IRS processed more than 160 million federal individual tax returns and supplemental documents. However, despite the abundance of information the IRS provides on how to file your taxes correctly, certain lesser-known secrets could save you money or protect you from trouble. In this blog, we’ll shed light on some of these tax secrets that the IRS might not readily disclose.

1. File Taxes on Time

The IRS is strict about Americans paying their taxes on time. If you’re even a day late with a payment, you can expect penalties and possibly fines added to what you owe. This applies even if you disagree with the amounts on your tax return. For example, if you finish your tax return but don’t understand why some deductions were denied, you still have to pay the amount listed as owed.

If you complete your tax return but find certain deductions disallowed, you’re still obligated to remit the amount stated as owed on your return. Afterward, you can consult with the IRS to contest the disallowed deductions, and they may even issue a refund if deemed appropriate. However, if you don’t file your return by the due date, you’ll get hit with a penalty of 5% for every month it’s late, up to 25%. The bottom line? You must file your tax return on time, even if you don’t agree with the outcome.

2. You May Have To Find Deductions and Credits on Your Own

Understanding the nuances between tax credits and tax deductions is essential for maximizing your tax savings. Tax deductions lower your taxable income by subtracting eligible expenses or contributions from your total income. The IRS provides the standard deduction amount on your tax form:

  • The standard deduction for married couples filing jointly for 2024 is $29,200, an increase of $1,500 from 2023.
  • For single taxpayers and married individuals filing separately, the standard deduction is $14,600 for 2024.
  • For heads of households, it will be $21,900 for 2024, an increase of $1,100 from the amount for 2023.

Tax credits can result in substantial savings, as they directly reduce your tax liability rather than just lowering your taxable income. Various credits are available, such as the retirement saver’s credit, mortgage insurance premiums, and the earned income tax credit, which you could be eligible for.

Understanding the distinctions between tax credits and deductions can help you spot opportunities to leverage these tax benefits and retain more of your money. Consulting with a financial advisor can provide valuable guidance if you’re unsure about optimizing your credits and deductions.

3. Utilize Tax-Advantaged Retirement Accounts

Utilizing tax-advantaged accounts is a smart strategy for minimizing your tax burden while saving for future expenses. One key aspect of retirement planning is understanding the contribution limits for retirement accounts such as 401(k)s and IRAs. These limits determine how much you can contribute to these accounts each year, helping you build a robust nest egg for retirement.

Let’s take a look at the expected contribution limits for 2024:

  • 401(k) Plans: The contribution limit for 401(k) plans is projected to increase to $23,000 in 2024, up from $22,500 in 2023. For those aged 50 and older, an additional catch-up contribution of $7,500 will remain the same. It’s important to note that these new amounts apply to 403(b) and most 457 plans.
  • IRA Contribution Limits: Individual Retirement Accounts (IRAs) are another popular retirement savings option. The contribution limits for IRAs are to remain relatively stable. For 2024, individuals under 50 can contribute up to $7,000, up from $6,500 in 2023. Catch-up contributions for adults 50 and older will remain at $1,000.
  • Roth IRA Contribution Limits: Beginning in 2024, more Americans will qualify for Roth IRA contributions, with the AGI range rising between $146,000—l$161,000 for single filers, up from $138,000 to $153,000 in 2023. The Roth IRA contribution phaseout for married couples filing together will rise to between $230,000 and $240,000 in 2024, up from $218,000 to $228,000.

It’s essential to consult with a financial advisor or check the latest IRS guidelines to confirm these limits for 2024 and adjust your retirement savings strategy accordingly.

5. Explore Other Savings Options

While traditional IRAs and 401(k)s are well-known options, several other tax-advantaged accounts are worth considering. Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) are particularly beneficial for managing medical expenses. With an HSA, you can contribute pre-tax dollars to cover qualified medical expenses, such as doctor visits, prescriptions, and over-the-counter items. Contributions to an HSA are tax-deductible, and withdrawals for qualified medical expenses are tax-free, making it a triple tax-advantaged account. 

Similarly, FSAs allow you to set aside pre-tax dollars to cover eligible medical expenses, offering immediate tax savings on qualified healthcare costs. Exploring these tax-advantaged account options can lead to significant tax savings while helping you achieve your financial goals, whether saving for retirement or managing healthcare costs. Strategically utilizing these accounts can help you maximize your tax efficiency and keep more of your hard-earned money in your pocket.

Financial Advisors Can Help With Taxes

Understanding tax strategies and managing your tax bill should be part of any sound financial approach. Some taxes can be deferred, and others can be managed through tax-efficient investing. With careful and consistent preparation, a financial advisor can help you manage the impact of taxes on your financial efforts.

This is where working with a fiduciary advisor can prove immensely beneficial. Fiduciary advisors offer personalized financial strategies to help manage the impact of taxes on your financial efforts. What’s more, as a fiduciary and Registered Investment Advisor, you can be confident Agemy advisors will recommend only what is in your best interest.

From tax planning and legacy planning to wealth management and estate planning, we provide the guidance and support needed to navigate every stage of your financial journey, including the transition into retirement. With years of experience and a personalized approach, you can confidently chart a course toward a secure and prosperous future.

Final Thoughts

While the IRS provides plenty of guidance on fulfilling your tax obligations, there are still many secrets and strategies that can help you save money and avoid trouble. By understanding the ins-and-outs of the tax code and leveraging lesser-known techniques, you can help make the most of your tax filing.

At Agemy Financial Strategies, we are committed to educating our clients on various financial matters. With over 30 years of experience in helping individuals reach retirement stress-free, our unwavering dedication to serving our clients remains at the core of our mission.

Contact us today to learn how we can help you this tax season and beyond.

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Spring Into Action: HNWI Estate Planning

As the seasons transition and we look forward to warmer days ahead, change sweeps not only through the natural environment but our financial world, too. For high-net-worth investors, spring signals a prime time to review financial plans, especially when it comes to estate planning.

In the hustle and bustle of everyday life, it’s easy to overlook the importance of estate planning. Yet, reviewing and updating your estate plan can be valuable as the seasons change and new opportunities emerge. It’s a chance to reflect on your financial legacy and make any necessary adjustments to have it align with your current circumstances and goals. Here’s what you need to know.

The Importance of Estate Planning for HNWI

Estate planning is not solely about the transfer of assets after one’s passing. It involves having a comprehensive approach to managing wealth during your lifetime and beyond. Individuals with high net worth have estates that involve complex structures and significant assets. In order to protect these assets, careful planning is needed.

64% of Americans think having a will is very or somewhat important. Surprisingly, among those who emphasize the importance of having a will, one in four individuals still haven’t drafted one. Yet, higher-earning Americans are twice as likely as lower-earning Americans to prioritize drafting a will after expanding their family.

This emphasizes the importance of estate planning for HNWI, as it protects their assets and ensures the protection and distribution of wealth for their growing families. Without proper planning, a substantial portion of an estate’s value could be lost to taxes, diminishing the legacy for beneficiaries. Let’s look at some strategies that can help you optimize your estate plan while maximizing your wealth preservation.

Setting Up A Trust

HNWIs can optimize their estate plans to help maximize wealth preservation by implementing strategic measures, such as establishing trusts. Trusts can be powerful tools for achieving financial goals and protecting assets. They offer flexibility, control, and numerous benefits, making them popular among individuals with substantial wealth.

There are various types of trusts, each designed to serve different purposes. Common types include:

  • Revocable Living Trusts
  • Irrevocable Trusts
  • Charitable Trusts
  • Special Needs Trusts
  • Spendthrift trust

Understanding the nuances of different trust structures can empower you to decide which type of trust best aligns with your estate planning objectives. Trusts can help shield your assets from creditors, lawsuits, and other threats. Some trusts allow you to serve as the trustee, maintaining control while enjoying the benefits of asset protection and tax planning.

The federal estate tax ranges from 18% to 40% and generally only applies to assets over $13.61 million in 2024 for individuals. But married couples don’t have to pay estate if their estate is worth $27.22 million or less. For 2023, the threshold is $12.92 million for individuals and $25.84 million for married couples.

It’s important to consult a financial advisor who can help you navigate the complexities of trusts to preserve, protect, and distribute your wealth according to your wishes.

Minimize Gift & Estate Assets 

High Net Worth Individuals (HNWIs) can integrate gifting assets strategically into their existing estate plans in various ways. Firstly, they can take advantage of annual gift exclusions, permitting them to gift a set amount per recipient annually without incurring gift taxes. Taxes are a certainty in life, but with careful planning, you can minimize the tax burden on your estate after your passing.

As part of your estate planning journey, it’s crucial to evaluate your total assets, encompassing:

  • Properties
  • Stocks and bonds
  • Cash reserves
  • Interests in life insurance or annuity contracts
  • Retirement accounts like a 401(k)
  • Personal belongings such as vehicles, clothing, and household items

The estate tax threshold, or the exemption limit, is crucial in estate planning. Estates exceeding the current threshold may be subject to federal estate taxes, which can significantly diminish the wealth intended for beneficiaries. Giving gifts to loved ones presents another avenue for reducing the value of your total assets during your lifetime. Notably, you can avoid paying gift tax if your gifts remain below the gift tax limit, which is $18,000 per recipient in 2024. In addition to charitable giving, there exist other avenues for giving that are not subject to gift tax, including:

  • Qualified gifts to your spouse or contributions to a political organization.
  • Qualified medical or educational expenses payments directly to the medical or educational provider.

A comprehensive estate plan evaluates all available strategies and implements those most suitable to your circumstances. Working with a fiduciary can help you find the right strategies based on your needs and goals.

The Role of a Fiduciary in Estate Planning

Navigating the complexities of estate planning can require professional help, especially if you have substantial assets to manage and transfer. Your advisor should be familiar with your goals and concerns, your assets and how they are owned, and your family structure, which is where a fiduciary comes into play. A fiduciary is an individual or entity entrusted to act in the best interests of another party, typically concerning financial matters. There are several ways in which a fiduciary can assist HNWI in their estate planning endeavors:

  • Objective Guidance: A fiduciary provides impartial advice based on a thorough understanding of the client’s financial situation, goals, and concerns. They can offer insights and recommendations tailored to the unique needs of the individual or family, helping to devise a comprehensive estate plan that aligns with their objectives.
  • Experience in Estate Planning: Estate planning entails navigating a maze of legal and tax intricacies that can be daunting for individuals unaware of these laws. Fiduciaries bring extensive experience crafting estate plans, adeptly minimizing tax burdens, and protecting wealth. Their experience allows them to navigate complex regulations adeptly, optimizing strategies to reduce tax exposure and enhance the efficiency of wealth transfer.
  • Conflict Resolution: In cases where disputes arise among beneficiaries or challenges to the estate plan emerge, a fiduciary can serve as a mediator and facilitator, seeking amicable resolutions and upholding the integrity of your wishes.

Working with a fiduciary ensures that your estate planning journey is guided by professionalism, integrity, and a commitment to achieving your long-term objectives.

Regularly Review and Update Your Plan

Estate planning can be challenging, especially for those with a high net worth. You want to protect your family, assets, and business and gain peace of mind knowing you’re prepared and in control. Therefore, it’s essential to regularly review and update your estate plan to confirm it remains aligned with your goals and takes advantage of any new tax-saving opportunities.

An experienced fiduciary advisor can provide valuable advice and guidance regarding estate planning. At Agemy Financial Strategies, our team of skilled fiduciaries excel in assisting clients with creating robust estate plans for HNWIs. We are committed to providing our clients with the highest level of service and will work with you every step of the way to confirm that your estate plan needs are taken care of.

Last Thoughts

Spring is a season of renewal and growth, making it ideal for HNWIs to spring into action and revisit their estate planning strategies. By proactively addressing their estate planning needs and enlisting the support of a knowledgeable fiduciary, HNWIs can help protect their wealth for generations to come.

At Agemy Financial Strategies, you can rest assured that your financial affairs are in capable hands. To learn more about how trusts can benefit your estate planning needs, schedule a complimentary strategy session with us today.

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The Road to Retirement: Essential Steps for the ‘Peak 65’ Generation

As Americans approach their mid-sixties, they will encounter a significant milestone known as ‘Peak 65’. This phenomenon can have profound implications for retirement plans. 

According to the U.S. Census Bureau’s projections, by 2030, all baby boomers born from 1946 through 1964 will have reached the age of 65 or older. This demographic shift signifies that one in every five Americans will have entered the traditional retirement age bracket. Understanding the impact of ‘Peak 65’ and seeking guidance from a fiduciary can be crucial in helping you move through this phase effectively. Here’s what you need to know.

What is ‘Peak 65’?

‘Peak 65’ signifies the age when many individuals contemplate retirement or transition from full-time employment to pursue other interests. As you might have anticipated, the ALI focuses on retirement income, presenting some thought-provoking statistics for those nearing the Peak Zone:

  • When the ‘Peak 65’ generation entered the labor market in 1980, about 60% of private sector workers relied on pensions as their only retirement account, as compared to 4% in 2020.
  • The majority of Peak 65’ers (66%) are worried about having enough money for retirement, 79% are worried about the cost of healthcare in retirement, and only 24% are “very optimistic” about retirement.”

This wave of upcoming retirees is reshaping the retirement planning landscape and also presents the task of protecting wealth for an extended duration. One of the positive aspects of ‘Peak 65’ is that it prompts individuals to reassess their retirement savings, investments, and overall financial readiness for retirement. This demographic shift carries profound implications for the wealth management sector.

As an investor approaching retirement age, your retirement plan must adapt to this new reality to effectively meet the needs of today’s and tomorrow’s retirees. It goes beyond simply having enough to retire; the focus is on sustainable retirement funds, allowing individuals to fulfill their aspirations of leaving behind a meaningful legacy. Let’s explore how wealth management can play a pivotal role in achieving these goals.

Employing A Wealth Preservation Strategy

Financial readiness takes center stage as individuals approach the ‘Peak 65’ milestone. Those nearing retirement must meticulously evaluate their retirement income sources to gauge their readiness for this stage of life. This requires the adoption of a wealth preservation strategy.

While the concept of wealth growth focuses on accumulating more assets, wealth preservation is centered on protecting your wealth against erosion. Various investment strategies are tailored to help secure wealth over the long term. Instead of putting all your eggs in one basket, diversifying your investment portfolio across various asset classes can help spread risk and potentially enhance returns.

Consider a mix of stocks, bonds, real estate, and alternative investments. By embracing a diversified investment approach and incorporating alternative investments toward wealth preservation, individuals can help protect assets from significant declines in value.

Having An Estate Plan

Leaving a lasting financial legacy for children and grandchildren is a key priority for many retirees. As the baby boomer generation ages, they are preparing to pass the torch to the next generation in more ways than one. One crucial aspect of this transition is the astounding $53 trillion in assets that boomers will transfer to their heirs. In order to provide a smooth and efficient wealth transfer, it is imperative to have a well-crafted estate plan.

Effective estate management enables you to manage your affairs during your lifetime and help control the distribution of your wealth after death. An effective estate strategy can spell out your healthcare wishes and help ensure that they’re carried out – even if you are unable to communicate. It can even designate someone to manage your financial affairs should you be unable to do so.

At Agemy, our fiduciary advisors can help you navigate the intricacies of estate planning. This includes crafting a comprehensive plan for the distribution of assets, helping minimize tax liability, and identifying the right type of trust to suit your needs. This brings us to our final step in managing wealth that lasts.

Healthcare and Long-Term Care Considerations

With ‘Peak 65″ comes an increase in people needing long-term care. The cost of long-term care can be substantial, and it’s not covered by traditional health insurance or Medicare. On average, a year in a nursing home can cost around $108,408 per year for a private room.

It’s crucial to remember that nursing home costs vary significantly by location, emphasizing the importance of checking specific rates in your area. The financial commitment associated with long-term care necessitates careful consideration and planning to help ensure both the well-being of your loved ones and your financial stability.

Planning for long-term care needs is essential to help ensure that retirees have the necessary resources to receive the care they require. This can involve creating a financial plan, researching care options, and discussing wishes with loved ones. Ultimately, working with a fiduciary can help you plan for these costs.

Getting The Help You Need

Navigating the complexities of retirement planning, especially during ‘Peak 65’, can be daunting. This is where the experience of a fiduciary can be valuable. Working with a fiduciary can be a highly useful tool for Americans transitioning to their golden years. What’s more, fiduciary advisors must act in their client’s best interests, providing objective advice.

At Agemy Financial Strategies, we offer customized retirement planning services so our clients can get sound advice and gain knowledge in the following areas:

  • Goal Setting: We will help you establish clear and attainable retirement goals, crafting a personalized financial blueprint to realize your retirement lifestyle aspirations.
  • Risk Assessment: Identifying potential financial risks is the cornerstone of our approach. We’ll work with you to develop sound strategies that not only identify these risks but also help mitigate them.
  • Portfolio Management: Our experience extends to implementing and managing a diversified investment portfolio meticulously aligned with your long-term objectives and risk tolerance.
  • Regular Reviews: Financial landscapes are ever-changing. That’s why we’re committed to consistently monitoring and fine-tuning your financial plan to help ensure it remains in harmony with your evolving circumstances.

At Agemy, our top goal is to empower clients to make informed decisions and confidently navigate the financial landscape’s complexities. Our team takes the time to understand each client’s circumstances and long-term objectives, helping to ensure that your retirement plan aligns with your values and aspirations.

Final Thoughts

As ‘Peak 65’ continues to sweep across the nation, we remain committed to providing the knowledge and direction you need to help manage your wealth effectively while confidently navigating your golden years.

Agemy Financial Strategies is a Connecticut-based financial firm (with offices in Denver, Colorado) that understands the challenges an aging America faces. Our purpose is to educate retirees – whether planning for retirement, legacy planning, wealth management, or just holding your hand when it’s time to leap into retirement.

Contact us today to get started on this important journey.

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Protect Your Wealth During Retirement

As you approach retirement, protecting your wealth becomes increasingly important. After all, you’ve spent decades building up your nest egg, and you want to ensure that it lasts as long as you do. 

It’s no secret that it’s hard to plan for retirement. ‌In addition to growing a sizeable nest egg, you must protect it from ‌external factors like market‌ ‌volatility, inflation,‌ ‌and unforeseen expenses.

If you’ve amassed a healthy portfolio of assets from years of hard work, how can you guarantee that it will be sufficient to sustain you through retirement and support your family after you pass on? To aid in securing your wealth during your golden years, we’ve outlined some strategies to consider.

Here’s what you need to know.

Be Flexible With Your Withdrawal Strategy

Retirees face a significant risk in the form of inflation, which gradually diminishes the purchasing power of their savings, making it challenging to maintain their lifestyle over time. Although the 4% rule is a helpful starting point for determining the yearly withdrawal amount, it can be an outdated strategy in 2023. This is why a flexible withdrawal strategy is crucial to adapt to the ever-changing market.

In case of unexpected downturns in your portfolio, you may need to curtail your withdrawal increases or even decrease the withdrawals to protect your long-term needs. Your Fiduciary Advisor can collaborate with you to develop a withdrawal plan that adjusts as your retirement progresses.

Take Your Required Minimum Distributions (RMDs)

Once you reach a specific age, you’re obligated to make annual withdrawals of a minimum amount from your tax-deferred retirement accounts, such as the 401(k) and traditional IRA. Failure to do so will result in significant penalties levied by the IRS.

Although you cannot control your Required Minimum Distribution (RMD), you can opt for various methods to allocate the funds. This includes safeguarding other assets or finance expenses, including permanent life insurance. If you require further details on the RMD regulations, you can contact your Fiduciary advisor. The IRS also offers resources for determining your RMD.

It’s important to stay in the loop with changes to RMDs. Recently, the SECURE 2.0 Act has increased the RMD age to 73 for those turning 72 in 2023. Additionally, the penalty for not taking RMDs has been reduced to 25%.

Diversify Your Portfolio

As the adage goes, don’t put all your eggs in one basket. Diversification is the practice of building a portfolio with a variety of investments that have different expected risks and returns. This specific strategy is essential when it comes to protecting your wealth. 

While diversification can’t guarantee that your investments won’t suffer if the market drops, it can improve the chances that you won’t lose money, or that if you do, it won’t be as much as if you weren’t diversified.

Reviewing your portfolio with your retirement income planner/Fiduciary a few times each year can help keep your long-term plan on track and ensure you don’t have your goals tied to one or two investments.

Review Your Estate Plan

One crucial aspect of safeguarding your wealth is ensuring that it passes on to the intended recipients once you’re no longer around. To achieve this, it’s vital to regularly assess your estate plan, or if you haven’t already created one, to do so. Your estate plan should include the following:

  • Will: Your will should outline how you want your estate to be managed after your passing.
  • Trust: Your trust allows you to designate a trustee to supervise an asset’s utilization on behalf of a beneficiary.
  • Beneficiary Designations: It is essential to review the beneficiary designations on your retirement accounts and life insurance policies. Along with any Transfers or Payables on Death (TOD and POD) that you may have on other accounts and property.
  • Legacy Planning: Suppose leaving a legacy is a priority for you. In that case, you must assess whether you’re on course to achieve your legacy objective. Which could be anything from funding a charity to financing your grandchildren’s education.

By staying vigilant and updating your estate plan as needed, you can ensure that your hard-earned wealth is distributed according to your wishes and benefits your loved ones and causes you care about.

As always, it’s best to first consult with your trusted Fiduciary Advisor to evaluate your estate plan and ensure that it meets your needs.

Plan for Healthcare Costs

With longer life spans and medical costs that historically have risen faster than general inflation—particularly for long-term care—managing health care costs is important for retirees. Retirement planning conversations should include a discussion of the impact long-term care costs have on individuals and their family’s future.

The cost of long-term care can be substantial, and it’s not covered by traditional health insurance or Medicare. On average, a year in a nursing home can cost around $100,000, and the cost of in-home care can be just as high.

In 2023 without insurance, monthly long-term care costs could see you paying:

  • $5,148 for a home health aide
  • $1,690 for adult day care
  • $4,500 for assisted living
  • $7,908 for a semi-private room in a nursing home
  • $9,034 for a private room in a nursing home

Individuals 65 or older have a 70 percent chance of needing long-term care services in the future, but only 11 percent purchase long-term care insurance. The rest are left scrambling to cover costs when the time comes.

To help fill a gap in saving for health care expenses, make sure you are properly insured and consider increasing contributions to your tax-advantaged accounts, especially HSAs (if you have one). HSAs will help enable tax-free spending on health care in retirement.

Work With Agemy Today

After devoting many years to saving and investing for your retirement, switching from saving to spending that money can be stressful. Ideally, soon-to-be retirees should work with a financial advisor to review their individual savings and investment plans to make sure they’re on track for all their goals.

Working with the advisors at Agemy Financial Strategies can help you get ready for the future and future generations. Because making just a couple adjustments to your financial lifestyle can be greatly beneficial in the long run.

Click here to instantly book the day and time you’d like to connect with us for your complimentary 30 minute consultation. Our financial advisors in Guildford, CT and Denver, CO are looking forward to speaking with you.

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