Financial Tips for National Preparedness Month

Happy September and National Preparedness Month – a great reminder of the importance of preparing for unexpected events. Whether you face financial challenges from a global pandemic or a volatile economy, it’s essential to have a plan in place. Here’s what you need to know.

This year, millions of households are coping with serious financial challenges related to the economic impact of the pandemic, while the threat of natural disasters is ever-present.

While the Covid-19 pandemic has increased Americans’ awareness of the need to have a will, living trust or other similar end-of-life document prepared, only about 33% of Americans have put these plans in place. That means that 67% are leaving what happens to them and their assets in case of disability or death up to others, including the state.

Even more worrying, over half (53%) of Americans report not having emergency savings should a disaster strike.

The Importance of an Emergency Fund

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.

Whether it’s an unexpected evacuation due to a natural disaster or unexpected medical expenses, having funds set aside can alleviate stress and protect your assets, allowing you to focus on what truly matters—your safety and well-being.

How to Invest Your Emergency Fund for Liquidity

Having money saved for emergencies is a great first step. But if you want this emergency money to grow by investing it, it’s important to know you can still get to it quickly when you need it.

A liquid asset is something you own that can be quickly and easily turned into cash without losing much value. This means you can get your money fast when you need it. Examples include money in a regular savings account, money market accounts, and stocks that can be sold quickly.

Due to its volatility, avoiding investing your emergency fund in stocks is wise. This is because if you need to sell your stocks to use the money for an emergency expense, you may be forced to sell at a loss. Bonds are generally less volatile than stocks but may take time to sell.

If you want to try to earn returns, which can help prevent losses due to inflation, you can consider other investment choices like a money market account, high-yield savings account, or CD. For more guidance on investing your funds according to your personal situation and goals, speaking with an experienced financial advisor can help take the guesswork out of your investment journey.

Create Your Financial First Aid Kit

The Emergency Financial First Aid Kit is a crucial tool to help you make financial preparations. It offers guidance on minimizing the financial repercussions of disasters for you and your family.

Besides growing your cash through liquid assets, there are day-to-day steps you can make to help strengthen your feeling of being financially prepared:

  • Prepare for the risks where you live. Personal financial planning helps families prepare for disasters, both big and small.
  • Check your insurance coverage. Having insurance for your apartment, home, or business property is the best way to be sure you will have the necessary financial resources to help you repair, rebuild, or replace whatever is damaged. Furthermore, other insurance plans like Long-term Care is designed to bridge the gap and cover costs that health insurance won’t.
  • Review your current retirement plan. Life can throw unexpected surprises; when they do, your retirement plan could need adjusting to adapt to these changes. Consult with your trusted financial advisor if and when life events change to see if your current strategy needs tweaking.

Establish a Clear Estate Plan

Financial preparedness extends beyond emergencies. Estate planning can help safeguard your wishes and assets.

Having a robust plan takes center stage when it comes to preparedness. An estate plan can be a lifesaver in a time of crisis. It outlines your wishes regarding the distribution of your assets and leaves instructions for situations when you become incapacitated. Your estate plan should contain a power of attorney, granting a trusted individual the authority to decide on your behalf if you cannot.

This document also empowers you to manage your finances, pay bills, and ensure the seamless continuation of essential affairs. Additionally, a healthcare proxy or medical power of attorney is equally important. This person is authorized to make medical decisions if you’re incapacitated. By appointing this person, you allow yourself to safeguard your well-being according to your wishes.

When harmoniously integrated into your broader financial strategy, these components of your estate plan can provide an extra layer of financial preparedness. By outlining your preferences and empowering trusted individuals to act on your behalf, you can help ensure that your affairs align with your wishes, even in challenging circumstances.

Regularly Review Your Plan

Creating a comprehensive preparedness plan is not a one-time task but an ongoing responsibility requiring regular attention and adjustments. As circumstances in life evolve, so should your strategy.

Life often throws you unexpected curveballs; as such, it’s essential to adjust when these changes happen. Shifts in family dynamics, such as a divorce or a death, can impact your financial standing. When these events occur, adjustments should be made to your estate and retirement plans.

Annual reviews provide an opportunity to evaluate your progress, reassess your financial situation, and make any necessary adjustments to your plan. Partnering with an experienced and trusted financial advisor can help enhance the efficacy of your emergency preparedness efforts.

Work With Agemy Financial Strategies

At Agemy Financial Strategies, our trusted advisors can help you prepare for all stages of life, even in unexpected emergencies. Our team of Fiduciaries is here to assist you every step of the way, helping to make your retirement years filled with joy and fulfillment.

We hope you feel financially inspired this National Preparedness Month. As always, contact us with any questions regarding your retirement outlook and financial future. We look forward to helping you prepare for whatever life may bring.

Schedule your complimentary strategy session here.

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Investing for Retirees 101

Agemy Financial Strategies

August 24, 2022

Saving for retirement is a top financial priority for most Americans. But once you hang up your hat, you shouldn’t necessarily stop thinking about saving and investing. Here’s the ins-and-outs of investing for retirees in a a volatile climate.

There is no doubt that we are in a bear market. When this happens, we naturally look for all the causes. Each bear market or recession has its own cause and effect.

As the stock market swings wildly, investors will be looking for less risky investments to mitigate the impact on their portfolios. Some investors will be tempted by volatility, seeing it as an opportunity. But others will want to avoid risk, especially given the uncertainty of exactly how much the Fed will raise interest rates and the impact that will have on the economy.

Here are some investments for retirees that might provide shelter from volatile stock markets.

High-Yield Savings Accounts

High-yield savings accounts also known as CDs are low risk investment vehicles. They are FDIC insured so you have no risk of losing your investment principle. With these accounts, you are not locking your money up for a specified amount of time, but for that additional flexibility, you tend to get a lower interest rate.

You can open a high-yield savings account at any bank or credit union. There’s no minimum balance requirement and the process is typically quick and easy. Depending on your time horizon, adding CDs to your retirement strategy can help offset losses from other investment vehicles. They can also provide a home for excess retirement distributions made from other accounts, such as an IRA or 401(k).

Individual Bonds vs. Using Bond Mutual Funds

Investing your money in bond mutual funds is a popular method with investors. What many people don’t realize is that bond mutual funds carry risks, costs, and tax implications that can be reduced, or even eliminated, by investing in a diversified portfolio of individual bonds, or other fixed-income securities.

That’s because when an investor buys an individual bond, they have two important securities. First, they’re promised a fixed rate of interest for the life of the bond. Secondly, when the bond matures, they’re expected to get their principal back – assuming there have been no defaults. With that assumption, an investor knows exactly what they’re going to earn on the bond that they hold to maturity, they know at what date it will mature, and they know the name of the company they are invested in.

Most investors understand the inverse relationship between interest rates and bond values. When interest rates go down, bond values tend to go up, and when interest rates go up, bond values tend to go down. If something happens in the bond market to cause bond values to drop, a portfolio of individual bonds as well as bond mutual funds will both be affected. However, if you’re holding individual bonds, the loss is simply a “paper loss” because you’re going to still receive your fixed interest payment for the life of the bond, and when the bond matures, you’re still going to get your principal back assuming there have been no defaults.

Investing in income-generating securities is similar to lending your money to the largest U.S. companies that pay you regularly scheduled interest. In the case of bonds, at the end of the loan term, they send you the last interest payment along with the return of your original principal.By owning predominantly income-generating securities, prudent investors can know, with a greater degree of certainty, what their financial future holds. Other investment vehicles such as common stocks and mutual funds don’t offer much certainty at all.

U.S. Treasury Bonds

If you’re looking for a lower risk investment, U.S. Treasuries are an excellent choice. Because the U.S. government has never defaulted on its bonds, U.S. Treasuries are one of the more dependable investments available.

With TIPS (Treasury Inflation-Protected Securities), you can get government bonds that have their face value and the interest they pay adjusted for inflation. Because TIPS trades on the open market, their price adjusts to inflation expectations, so you can be sure that your money will be worth more in the future than it is today even if inflation rises over time!

Bonds including, T-bonds, can be a good investment for those who are seeking a steady rate of interest payments. Although bonds and Treasury bonds are popular, they have some disadvantages and risks associated with them and may not be ideal for every investor. So always discuss this option with your trusted Fiduciary advisor before making any investment moves.

Investing in Gold

Gold is seen as the ultimate in safe havens. And it does provide some protection from inflation – just not every year. Timing can make a big difference. At times it can be as volatile as the stock market, but over the long term, it does tend to keep its value. It is a monetary asset, so its best use might be to diversify away from dollar-based investments. It’s important to invest with caution when it comes to gold.

If you’re interested in investing in gold, it is typically more secure to invest in a gold ETF like SPDR Gold Shares (GLD). This is a way to invest in gold without buying actual physical gold bars or coins. If you want exposure to gold and don’t want to deal with storing physical gold yourself, this could be a good option for you.

Investing in Preferred Stocks

Preferred stocks are hybrid investments that have some features in common with both stocks and bonds. You get the ownership stake of stocks, and the potential for appreciation, combined with guaranteed dividend payments similar to the interest payment on bonds. Generally, they’re considered more stable than common stocks, but not quite as steady as bonds.

However, that appreciation potential cuts both ways. You will often see larger swings in market pricing of preferred shares compared to bonds. So why are they dependable investments for retirees? Because preferred stock dividends are a good choice in nearly all cases, meaning you’ll get income no matter what the stock is doing. This also makes them a very good fit for our Income Method, as we look for reliable income streams from our holdings.

CEFs offer diversification as additional protection even in the already relatively less risky preferred securities space. Preferred shares issued by CEFs have both the benefits of the diversification of the CEFs holdings, and those same benefits of being a hybrid investment with stock-like price movements and a bond-like dividend stream.

At the end of the day preferred stocks can be a welcome addition to a portfolio looking for a yield boost.

Investing With Agemy Financial Strategies

Investing should be easy – just buy low and sell high – but most of us have trouble following that simple goals. Understanding these principles and strategies can help you avoid some of the pitfalls that snare some investors.

In the past, market volatility has been an opportunity to pick up more income-producing assets at a good price. But now we are entering a period where market volatility is likely to be higher than normal and economic conditions could be rough. So some investors would like to put some of their assets into investments of greater security.

We are able to help you find a low-risk investment strategy that focuses on cash flow and security first. It’s important to look at your finances and see if any of the above strategies could help you in the long run.

At Agemy Financial Strategies, we want you to know we’re here to help you navigate retirement and answer any questions that come up during your retirement process. As Fiduciary advisors, it’s our duty to act on your behalf in finding the right solutions for your individual wants and needs.

For more information on our investing, retirement and financial planning services, contact us here today.

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How to Make Your Dream Retirement a Reality

Agemy Financial Strategies

August 21, 2024

Retirement is often viewed as the ultimate reward for decades of hard work—a time to relax, pursue passions, and enjoy life without the demands of a 9-to-5 job. However, transforming this vision into reality requires more than daydreaming; it demands purposeful planning and strategic action. 

In this blog, we’ll walk you through the essential steps to envisioning your dream retirement and how a fiduciary advisor can help you achieve it. Here’s what you need to know.

Assess Your Financial Foundation

The first step in planning your dream retirement is understanding where you currently stand financially. This means taking a close look at your savings, investments, and income sources. Do you have enough in your 401(k), IRA accounts, pensions, and other investments to support the lifestyle you envision? Have you considered all potential income streams, including any passive income from investments?

On average, Americans say they’ll need around $1.46 million to retire comfortably. That represents a 15% increase from last year’s $1.27 million and a 53% increase from their $951,000 goal in 2020.

At Agemy Financial Strategies, we help you create a comprehensive financial snapshot that outlines your current assets and identifies any gaps in your retirement plan. This thorough assessment is crucial for building a retirement strategy tailored to your unique goals and circumstances.

Define Your Retirement Vision

Retirement looks different for everyone. Some envision spending their golden years traveling the world, while others see themselves settling into a quiet life surrounded by family. Defining what retirement means to you is key to planning effectively.

Consider questions like:

  • Where do you want to live?
  • What activities and hobbies do you want to pursue?
  • How much time do you want to spend with family and friends?
  • Are you interested in part-time work or volunteer opportunities?

By clearly defining your retirement vision, you can create a plan that aligns with your personal aspirations. Agemy Financial Strategies takes a personalized approach, helping ensure that your retirement plan reflects your lifestyle goals, not just financial objectives.

Create a Sustainable Withdrawal Strategy

A sustainable withdrawal strategy is crucial to ensuring that your retirement savings last throughout your lifetime, providing you with financial security and peace of mind. This strategy involves carefully determining how much you can withdraw from your retirement accounts each year without depleting your resources too soon.

However, this one-size-fits-all approach may not suit everyone, as it doesn’t account for individual factors like market fluctuations, inflation, or personal spending habits. For some, a more conservative withdrawal rate might be necessary, while others may have the flexibility to withdraw a bit more, depending on their unique financial situation.

At Agemy Financial Strategies, we work with you to develop a withdrawal strategy that aligns with your income needs and risk tolerance. We consider market conditions, tax implications, and the overall financial picture to create a plan that maximizes your income while minimizing the risk of outliving your savings.

Plan for the Unexpected

Life is unpredictable, and even the best-laid plans can be disrupted by unforeseen events. An emergency fund is essential, whether it’s an economic downturn, a major health issue, or a change in family circumstances.

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. Having funds set aside can alleviate stress and protect your assets, allowing you to focus on what truly matters—your safety and well-being.

Creating a comprehensive preparedness plan is not a one-time task but an ongoing responsibility requiring regular attention and adjustments. As circumstances in life evolve, so should your strategy. Working alongside a fiduciary advisor can help you include this in your retirement plan.

Partner with a Trusted Advisor

Retirement planning is a complex process that requires ongoing attention and adjustment. Partnering with a trusted fiduciary advisor can make all the difference in achieving your retirement goals. At Agemy Financial Strategies, we pride ourselves on providing personalized, fiduciary-based advice that prioritizes your best interests. Here are some of the areas we can help you with:

  • 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: The cornerstone of our approach is identifying potential financial risks. We’ll work with you to develop sound strategies for identifying these risks and helping 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.

Our team of dedicated fiduciaries is here to help you navigate the complexities of retirement planning, offering guidance and support every step of the way.

Final Thoughts

Envisioning your dream retirement is exciting, but turning that vision into reality requires careful planning. By assessing your financial foundation and defining your retirement vision, you can build a retirement plan that supports the life you’ve always dreamed of.

At Agemy Financial Strategies, we are committed to helping you plan for a fulfilling and secure retirement. As a Connecticut-based financial firm (with offices in Denver, Colorado), we understand the challenges people preparing for retirement face. Our purpose is to educate clients- 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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Your Roadmap To Retiring In Connecticut

The state of Connecticut has a lot to offer retirees. If you’re considering retiring here, you’ll need a well-thought-out plan. Here’s what you need to know.

Connecticut is known for many fabulous reasons. Its four-season climate, Ivy League universities, and rich history are all things to admire. When the time to retire comes, many residents nearing retirement find themselves deciding whether to stay in their current city or move somewhere new. But one question remains, are your golden years worth relocating?

Agemy Financial Strategies is proud to have first opened our doors in the place we call home. With our headquarters in Guilford, CT, we can offer you experienced and knowledgeable advice on managing your retirement in this beautiful state. But before making such a life-changing decision, let’s look deeper at what retiring in Connecticut entails.

Step 1: Define Your Retirement Goals

Regardless of where you are in your retirement planning journey, clearly understanding your goals is important. Do you want to move closer to family? Do you want a beach life? In a quaint town, or a bustling city? Sitting down and identifying what you want to prioritize is paramount, whether it is proximity to family, cultural activities, or a peaceful natural environment.

Fortunately, Connecticut has a lot to offer its retirees. Connecticut beaches are only two hours away from the ocean at the furthest point when living here. Several popular destinations within the state include Hammonasset Beach State Park and Ocean Beach Park. The state boasts nearly 100 miles of coastline along the Long Island Sound and is crossed by four major rivers, providing residents with beautiful scenery and outdoor recreational opportunities.

It is a fantastic place for hiking, which includes a stretch of the Appalachian Trail. Most state parks have opportunities for you to enjoy, and a handful of forest preserves make for the perfect autumn trek. There is something for everyone to love when you live in Connecticut.

Step 2: Factor in the Cost of Living

How much do you need to retire comfortably? It’s a question in the mind of every American saving for retirement. Unfortunately, there’s not a one-size-fits-all answer. There are several rules of thumb to help you figure out how much to save to retire. But the exact dollar amount you need will depend on a variety of factors — especially where you plan to live in retirement.

When planning for retirement in Connecticut, it’s essential to consider the cost of living, which tends to be relatively high. In 2023 there was a notable increase in the cost of living adjustment, which rose to 8.7%. This adjustment can affect your retirement budget and financial planning, underlining the significance of factoring in these figures as you map out your retirement journey.

Furthermore, Connecticut house prices can quickly eat into your retirement savings. The median home price in the state stands at $379,836, up 5.0% over the past year. Renting a two-bedroom apartment or house can also come with a significant price tag, averaging $1,950 per month.

While the cost of a comfortable Connecticut retirement is down the list of the most affordable state to be in, according to GoBankingRates, Connecticut’s cost of living for retirees is still very much attainable:

  • Total expenditures: $60,171
  • 20% comfort buffer: $15,043
  • Cost of a comfortable retirement annually: $75,213

This number was estimated based on an individual’s spending on groceries, healthcare, housing, utilities, and transportation – and the annual retirement income needed to cover these living expenses.

Step 3: Factor In Taxes

Including state-specific taxes is crucial when deciding where to spend the rest of your golden years. Taxes can erode your retirement income quickly if you are unprepared. Let’s take a look at four of the most common types of taxes you need to consider:

  • Income Tax: Connecticut’s state income tax structure is graduated, meaning that the amount people are taxed increases as their earned income increases. This ranges anywhere from 3% to 6.99%. While Connecticut has a higher sales tax rate than the national average, no local sales taxes are charged, which produces a balancing effect for the net amount of taxes collected.
  • Sales Tax: The State of Connecticut has a single, statewide sales tax. Because local jurisdictions in Connecticut impose no additional sales taxes, the rate of 6.35% applies to the retail sale, lease, or rental of most goods and taxable services.
  • Property Tax: Connecticut homeowners pay relatively high property taxes. The effective property tax rate is 2.5%, while the effective property tax rate for the nation is 1.11%.
  • Inheritance and Estate Tax: A huge benefit for residents of Connecticut is that it does not have an inheritance tax. However, there is an estate tax. As of 2023, the Connecticut estate tax exemption amount is $12.92 million.

Working with a financial advisor can help you navigate Connecticut tax questions and concerns.

Step 4: Healthcare Considerations

The elephant in the room? Access to quality healthcare and the price tag it comes with. Connecticut ranked 3rd healthiest state in the nation by the United Health Foundation. 93% of patients in the state have healthcare coverage. But what about the cost of long-term care?

The average length of time people need long-term care services is 3 years. In 2022, the average cost for 3 years of long-term care in Connecticut is $546,132 ($182,044 annually). That cost is projected to be $986,376 ($328,792 annually) in 2042.

It’s important to factor in healthcare costs like LTC in retirement and ensure you are properly insured. Researching healthcare providers, Medicare coverage, and long-term care options helps ensure you’re well-prepared for any health-related needs that may arise during retirement. The peace of mind that comes with knowing you’ve prepared for your healthcare needs can contribute significantly to your happiness (and financial stability) in retirement.

Step 5: Estate Planning Needs

When it comes to protecting your wealth, estate planning is one of the most important roadmaps to retirement. These legal documents help outline your healthcare proxies and establish powers of attorney if you pass away. This level of preparation can bring peace of mind to you and your family. Without a clear estate plan, the distribution of assets can lead to conflicts and disputes among family members.

It’s important to review your estate plans frequently, including wills, trusts, and powers of attorney. Consult with your financial advisor (preferably a Fiduciary) to help ensure your affairs are in order and your wishes are documented. This step is essential for securing your assets and providing peace of mind for you and your loved ones.

Work With A Fiduciary Advisor

Whether you want to remain in Connecticut, move into Connecticut, or even out of our great state (stay!), working alongside a trusted Fiduciary Advisor can help your transition to retirement. At Agemy Financial Strategies, our Connecticut-based Fiduciary Advisors can provide invaluable assistance in developing a retirement income plan that encompasses crucial financial factors, such as:

  • Retirement Planning
  • Estate planning
  • Wealth management
  • Long-term care planning
  • Lifestyle Management

Our Fiduciary Advisors are committed to working closely with you to make the most out of 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.

Final Thoughts

Retiring in Connecticut can be a wonderful and fulfilling experience with the right plan in place. By defining your goals and including all your possible expenses in retirement, you can be well on your way to a satisfying retirement in the Nutmeg State. Remember, retirement is a journey; with a solid roadmap, you can make it a journey of joy, exploration, and contentment.

At Agemy Financial Strategies, we want you to know we’re here to help you navigate retirement and any questions during your retirement process, wherever life takes you.

For more information on our retirement planning services, contact us today.

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Healthcare & LTC Planning for Seniors

Agemy Financial Strategies

August 14, 2024

August 21st is World Senior Citizens Day, a perfect time to celebrate our seniors and acknowledge their unique financial challenges in retirement. 

Chances are, you’ll probably spend more in retirement than you think. Did you know that recent data shows a healthy 65-year-old couple might need over $395,000 for healthcare in retirement?

At Agemy Financial Strategies, we know how important it is to plan ahead for these expenses to help ensure a comfortable retirement. Our team is here to help seniors and their families navigate the details of healthcare and long-term care planning.

In this blog, we’ll provide essential insights into planning for healthcare and long-term care. We’ll cover key aspects of preparing for these significant costs and offer practical tips to help you create a robust plan for a financially stable retirement.

Why Seniors Need Both Healthcare and Long-Term Care

It’s important to understand the distinction between healthcare and long-term care, as they serve different purposes and have different financial implications. Seniors often require both healthcare and long-term care, as healthcare coverage alone may not address all their needs.

Healthcare focuses on treating and managing acute and chronic medical conditions. It covers medical expenses related to illnesses or injuries, such as doctor visits, hospital stays, medical procedures, surgeries, prescription medications, and preventive care. Typically, healthcare is covered by health insurance plans, including Medicare and private insurance policies.

Long-term care is about maintenance rather than treatment, aiming to provide comfort and safety. It includes assistance with daily living activities such as bathing, dressing, eating, and mobility. Services can range from nursing home care and assisted living to in-home and adult day care. Unlike healthcare, long-term care is typically not covered by standard health insurance or Medicare, requiring separate long-term care insurance or personal savings.

Understanding these differences helps you make informed decisions about the type of care you may need in the future and how to plan financially for these needs.

The Importance of Healthcare in Retirement

Healthcare is a critical component of retirement planning. As we age, the likelihood of needing more frequent medical care increases, making it essential to have a robust healthcare plan. Finding the best health insurance for retirees and seniors involves evaluating various factors, including coverage options, costs, and additional benefits like prescription drug coverage.

Medicare often serves as the foundation for healthcare coverage for seniors, but understanding its parts—Part A, Part B, Part C, and Part D—is crucial for complete coverage. Here is a closer look:

  1. Medicare Part A: Often referred to as hospital insurance, Part A covers inpatient hospital stays, skilled nursing facility care, hospice care, and some home healthcare services.
  2. Medicare Part B: This insurance policy covers outpatient care, doctor’s visits, preventive services, and medical supplies, such as durable medical equipment.
  3. Medicare Part C (Medicare Advantage): These plans often provide additional benefits beyond Original Medicare, such as dental, vision, and hearing coverage. They can be an excellent option for seniors looking for more comprehensive care.
  4. Medicare Part D (Prescription Drug Plans): Helps ensure coverage for prescription medications, especially those for managing chronic conditions.
  5. Medigap Policies: Also known as Medicare Supplement Insurance, Medigap policies help cover out-of-pocket costs not covered by Original Medicare, such as copayments, coinsurance, and deductibles.

At Agemy Financial Strategies, our fiduciaries help clients navigate these options, helping ensure they choose a plan that fits their medical needs and financial situation. Let’s take a look at some crucial factors to consider.

The Growing Need for Long-Term Care

Long-term care is another critical aspect of planning for the senior years. This type of care encompasses various services designed to meet health or personal care needs over an extended period. The cost of long-term care can be substantial.

On average, a year in a nursing home can cost around $108,408 per year for a private room. However, these costs can vary widely based on location, so checking specific rates in your area is crucial. The financial commitment associated with long-term care requires careful planning to help ensure the well-being of your loved ones and your financial stability.

Medicare primarily covers acute care services for short-term illnesses and injuries, not long-term care. Long-term care supports individuals with chronic conditions or disabilities who need ongoing help with daily activities like bathing, dressing, and eating. This kind of custodial care is not included in traditional Medicare coverage.

While Medicare does provide limited coverage for skilled nursing facility (SNF) care following a hospital stay, this is only for a short period and must be considered medically necessary. To help cover long-term care expenses, many people rely on private long-term care insurance, Medicaid, or sometimes both. Retirees must understand Medicare’s limitations in covering long-term care and plan accordingly as they age.

Below is a comparison of long-term care costs between

This comparison highlights the importance of planning for long-term care expenses, as costs can vary greatly depending on the location. For those approaching their senior years or planning for the future, understanding these costs and securing the right insurance or savings plans is crucial to help ensure financial stability and access to necessary care.

 

How Agemy Financial Strategies Can Help

Navigating healthcare and long-term care options can be daunting, especially considering the financial implications. If you’re in Connecticut or Colorado, our fiduciary advisors are here to help you plan effectively for your healthcare needs in retirement. At Agemy Financial Strategies, we recognize that healthcare costs can significantly threaten your retirement nest egg. That’s why we provide valuable assistance in developing a comprehensive retirement income plan that encompasses crucial financial factors, such as:

We understand that retirement planning looks different for each individual, so we carefully craft your plan to meet your specific needs. By taking a proactive approach, we help you manage healthcare expenses and maintain financial stability throughout your retirement.

Final Thoughts

National Senior Citizens Day reminds us to honor and support our senior community. Helping provide access to quality healthcare and planning for long-term care are essential steps in providing the security and peace of mind they deserve. At Agemy Financial Strategies, we are here to help every step of the way, providing the compassion needed to navigate these critical aspects of retirement planning.

Contact us today to learn how we can assist you in planning for a secure and comfortable future.

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Managing Wealth in an Aging America

As America’s population ages, the financial landscape evolves, too. This demographic shift, often dubbed the “silver tsunami”, brings unique challenges and opportunities to wealth management. It’s an unprecedented phenomenon requiring new strategies and understanding. 

If you are a Baby Boomer (born between 1946 to 1964), the retirement challenges that are just around the corner may seem a bit overwhelming. While it’s never too late to plan, the reality is you don’t have as much time to close the retirement preparedness gap.

At Agemy Financial Strategies, we strive to guide you through the complexities of managing wealth in an aging society. Today we will dive into strategies to help you navigate the challenges of increased life expectancy and shifting demographics. Here’s what you need to know.

What is the Silver Tsunami?

The term “silver tsunami” describes the noticeable increase in the average age of the American population. As the baby boomers reach retirement age, advancements in healthcare technology have extended their life expectancy beyond that of any previous generation. The U.S. Census Bureau projects that by 2034, the number of adults aged 65 and older will surpass the count of children under 18, reflecting the impact of this demographic shift.

This wave of upcoming retirees is reshaping the retirement planning landscape, presenting the task of ensuring that wealth endures for an extended duration. This momentous demographic shift carries profound implications for the wealth management sector. To effectively meet the needs of today’s and tomorrow’s retirees, planning for retirement must adapt to this new reality. It goes beyond simply having enough to retire; the focus is ensuring that retirement funds are sustainable, 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.

The Importance of Wealth Preservation

While older Americans are splurging on travel and dining out more than ever before, there needs to be more of a focus on preserving their wealth. According to Cerulli Associates, there’s one worry that stands out above the rest — the possibility they may outlive their assets. The wealth preservation approach focuses on implementing measures to shield it from erosion caused by inflation, market fluctuations, taxes, and unexpected circumstances.

Basically, while the growth of wealth means making more assets or wealth, wealth preservation means safeguarding that wealth so you don’t lose that money.

There are a variety of investment strategies that are all aimed at securing your wealth for the long term. By adopting a diversified investment approach and incorporating alternative investments geared toward wealth preservation, individuals can effectively help mitigate the impact of market volatility and shield their assets from significant declines in value.

Planning for a Long Retirement

Generating a reliable and consistent income stream during retirement becomes a significant challenge in an aging society. From 1900 to 2020, the average life expectancy in the United States increased by over 30 years, thanks in part to various public health measures implemented during this period. With people living longer than before, traditional income sources like Social Security and pensions need to be supplemented or increased to ensure financial security throughout retirement. This could be via investments such as bonds and income-producing equities that can offer additional retirement income beyond traditional savings and income sources.

Working with financial advisors experienced in retirement income planning can immensely benefit retirees’ nest eggs in the long run by helping you determine the most appropriate retirement income strategy for your needs. Additionally, the right financial advisors can look at tax-efficient strategies to maximize income and minimize tax burdens in retirement.

Estate Planning

Leaving a lasting financial legacy for children and grandchildren is a key priority for many retirees. As the baby boomer generation gracefully ages, they are now 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 be transferring to their heirs. In order to ensure 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 control the distribution of your wealth after death. An effective estate strategy can spell out your healthcare wishes and 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, minimizing 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…

Working With a Fiduciary Advisor

Working with a Fiduciary Advisor can be a transformative experience in securing a prosperous future. A Fiduciary Advisor is a professional who offers comprehensive financial guidance tailored to individual needs and aspirations, legally bound to put their client’s best interests ahead of their own.

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

  • Investment Strategies
  • Tax Planning
  • Retirement Planning
  • Estate Planning
  • Risk Management
  • Succession planning and more.

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 individual circumstances and long-term objectives, helping to ensure that your plan aligns with your values and aspirations.

With a knowledgeable Fiduciary Advisor by your side, you can embark on a well-informed journey toward financial success, allowing you to focus on what truly matters.

Final Thoughts

As the silver tsunami continues to sweep across the nation, we remain committed to providing the knowledge and direction you need to manage your wealth effectively, while confidently navigating your golden years.

Agemy Financial Strategies is a Connecticut-based financial firm (with offices located in Denver, CO & Fort Lauderdale, FL.) that understands the challenges faced by an aging America. 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.  with tailored solutions to help preserve and grow wealth, generate income, and plan for a lasting legacy.

Contact us today to get started on this important journey.

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Women’s Equality Day and Planning for Retirement

From National Women’s Day in South Africa to Women’s Equality Day here in the U.S, across the globe, the month of August holds particular significance when it comes to the power and progress of women. However, the current health and economic crisis has a severe impact on women’s financial and retirement security. Here’s why a number of other financial priorities can get in the way and how to overcome them.

Breaking Down Barriers

Women face unique challenges in preparing for their retirement, making it essential to address these issues proactively.

While progress has been made in gender equality, women still face unique financial empowerment challenges. Bank of America recently released research findings on women and financial wellness, revealing that 94% of women anticipate personal responsibility for their finances at some point in adulthood. Yet only 48% of women feel confident about their financial situation, and just 28% feel empowered to take decisive action.

These numbers aren’t too surprising given their specific retirement planning challenges. Some of which include:

  • Women are often the caregivers: Some 20% of all women workers in the U.S. are family caregivers, meaning women must balance both traditional employment and familial caregiving needs.
  • Women live longer: Women typically live about six years longer than men; U.S. women have a life expectancy of 79.3 years, while men have a life expectancy of 73.5 years. This difference means that women must often make their retirement savings last longer.
  • Women face higher healthcare costs: According to the Retiree Health Cost Index, a 65-year-old woman retiring today should expect to spend about $155,000 on healthcare, versus the $134,000 that a 65-year-old man can expect.
  • Women collect less in Social Security: Because many women are caregivers for children or family members, they experience at least $16,000 in lost wages annually because of the “motherhood wage gap.” At the same time, women are typically paid 83.7% of what men are paid.
  • Women can be more unprepared: Lower lifetime earnings and decreased Social Security benefits are reflected in women’s retirement contributions, on average 30% less than men. As well as retiring earlier for caregiving needs, half of women have no personal retirement savings, compared with 47% of men; and 22% of women have $100,000 in savings, versus 30% of men.

As you can see, several unfair barriers impede women’s journey toward financial empowerment, including gender pay gaps, limited access to education and employment opportunities, societal expectations, and cultural biases. It is crucial to address these systemic issues to foster financial inclusivity and equality. Let’s delve deeper into some strategies for women to overcome these barriers and attain financial wellness.

Long-term Financial Strategies

When it comes to empowering retired women financially, implementing effective long-term financial strategies is crucial. Retired women should establish clear retirement goals and envision the desired lifestyle they aim to achieve during their post-work years. Setting specific goals provides a roadmap for financial planning and enables them to allocate their resources accordingly.

Diversifying investment portfolios is another crucial aspect. You can help mitigate risk and maximize potential returns by spreading investments across asset classes such as stocks, bonds, real estate, and mutual funds. This strategy helps reduce the impact of market volatility and increases the likelihood of long-term financial growth.

Healthcare expenses often pose a significant financial burden in retirement. To proactively address potential healthcare costs, you should explore options like long-term care insurance, health savings accounts (HSAs), or Medicare supplement plans. Understanding and incorporating these expenses into their plans can help maintain financial security and peace of mind.

It’s crucial to remember that each individual’s financial situation is unique. Seeking guidance from financial advisors who can provide personalized advice based on specific needs and goals is highly recommended. By implementing effective long-term financial strategies, you can take control of your economic well-being, enjoy a comfortable retirement, and experience greater financial security in the years to come.

Education and Awareness

One of the first steps towards empowering retired women financially is providing them with access to quality education and raising awareness about financial literacy specific to their retirement years. According to a financial literacy survey conducted by the TIAA Institute, women, on average, they answered only 45 percent of personal finance questions correctly.

Retirement comes with unique financial considerations, and retired women should have the knowledge and skills to navigate this phase successfully. Programs and initiatives focusing on retirement planning, managing pensions and savings, and understanding healthcare costs can play a pivotal role in empowering retired women to take control of their financial well-being.

At Agemy Financial Strategies, we have a whole library of free online educational tools and resources to take advantage of. From informative financial blogs to educational YouTube shows and radio podcasts, it’s never too early—or too late—to start taking charge of your personal finances.

Access to Financial Services

In pursuing gender equality, addressing retired women’s limited access to retirement-specific financial services is crucial. Many retired women may face challenges in managing their retirement savings, making informed investment decisions, and accessing suitable insurance and healthcare options. Therefore, improving retired women’s access to retirement-specific financial services is essential for their economic security.

Research indicates that many working women need to catch up in their retirement savings, with nearly two-thirds (62 percent) falling short compared to 48 percent of men. This disparity highlights the need to prioritize women’s access to retirement savings accounts and participation in formal financial systems.

By encouraging retired women to seek professional advice and explore retirement-friendly financial products, we can enhance economic security and help ensure a comfortable retirement.

Building Supportive Networks

Establishing women’s networks in financial and retirement planning is crucial for several reasons. These networks provide a supportive and inclusive space where women can freely discuss their unique financial challenges, concerns, and goals. By sharing experiences and knowledge, women can gain valuable insights and learn from one another’s successes and mistakes, empowering them to make informed decisions about their finances and retirement.

By joining forces, women can raise awareness of gender-based financial challenges, such as wage gaps, unequal access to opportunities, and biases in the financial industry. Together, they can advocate for policy changes and reforms that promote economic empowerment and equality. Additionally, access to mentors in the financial and retirement planning fields can inspire and guide women in achieving their financial goals.

Working with a Financial Advisor

Working with a knowledgeable and experienced financial advisor can be a valuable resource for retired women on their financial journey. A financial advisor can provide personalized guidance and create a comprehensive retirement plan catered to you. At Agemy Financial Strategies, our financial advisors can help you with the following services, crafted to your unique needs and retirement goals:

  • Managing Retirement Savings.
  • Optimizing Investment Strategies to preserve and grow wealth.
  • Creating a sustainable withdrawal strategy.
  • Lifestyle Management.
  • Estate and Legacy Planning.

Our Fiduciary advisors work diligently to preserve your financial stability and retirement longevity. For a complete list of our service offerings, see here.

Final Thoughts

Women face unique challenges when it comes to planning for retirement, but these challenges don’t have to derail your plans. By breaking barriers, providing education, and improving financial access, we can pave the way for women to achieve economic independence and contribute to a more inclusive and prosperous society.

Allow our advisors to assist you in shaping a future where all women are equipped with the necessary tools, resources, and opportunities to prosper financially and realize their full potential.

Contact us today to set up your complimentary strategy session here today.

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Financial Strategies for Baby Boomer Retirement Success

Agemy Financial Strategies

August 06, 2024

Baby Boomer Recognition Day is on August 17th. With retirement becoming a reality for so many Baby Boomers across the nation, it’s essential to have a robust financial plan in place.
Baby boomers hold roughly 51% of the wealth in the United States. That’s not just a substantial amount of money — it’s half of the country’s $156 trillion in assets, despite representing only 21% of the population. This level of wealth grants boomers significant influence over the economy, impacting everything from the stock market to real estate trends. Their financial decisions reverberate throughout the economy, affecting us all.

With so much at stake, Agemy Financial Strategies understands the intricacies of preserving your wealth for retirement and is here to help you navigate this crucial phase of life.

Understanding Baby Boomers’ Financial Challenges

Baby Boomers—born between 1946 and 1964—are entering or already in retirement. This generation faces several financial challenges, including outliving retirement savings, rising healthcare costs, and needing long-term care. Understanding these unique challenges is crucial for developing a comprehensive retirement plan that ensures stability and peace of mind.

Here are some key risks to consider:

  1. Longevity Risk: With advances in healthcare, many Baby Boomers are living longer than previous generations. This longevity risk means your retirement savings must last you throughout your extended retirement years.
  2. Healthcare Costs: Rising healthcare costs are a significant concern. Medicare covers some expenses, but out-of-pocket and long-term care can strain your retirement savings.
  3. Market Volatility: As you approach retirement, preserving your savings becomes more critical. Market fluctuations can impact your retirement portfolio, making it essential to have a balanced and strategic investment approach.

It’s no longer just about having enough to retire; the focus is on ensuring that retirement funds are sustainable, allowing individuals to fulfill their aspirations of leaving a meaningful legacy. Let’s explore how effective financial planning can play a pivotal role in achieving these goals.

1. Assess Your Financial Health 

Before diving into retirement planning, it’s essential to gain a comprehensive understanding of your financial health. This foundational step involves a detailed evaluation of your assets, liabilities, income sources, and expenses. You can set realistic and achievable retirement goals by assessing your net worth and understanding your income needs. A thorough financial assessment includes:

  • Evaluating Assets: Identify and appraise all your assets, including savings accounts, investments, real estate, and other valuable items. Understanding their value is critical for determining how much you can rely on them during retirement.
  • Reviewing Liabilities: Assess your outstanding debts, such as mortgages, loans, and credit card balances. Knowing your liabilities helps you create a plan to manage or eliminate debt before retirement.
  • Analyzing Income Sources: Document all current income streams, including wages, rental income, investment dividends, and pensions. This overview will help you protect your income during retirement.
  • Estimating Expenses: Evaluate your current spending habits and project future expenses. This should include essential costs such as housing, healthcare, daily living expenses, and discretionary spending.

Our fiduciaries will help you review your current financial situation to build a solid foundation for your retirement planning. By identifying strengths, addressing potential gaps, and creating a personalized retirement income plan, you can help secure a comfortable retirement.

2. Diversify Your Investment Portfolio

With the stock market as volatile as it is today, diversification is a crucial element of any investment strategy. It involves spreading your investments across different asset classes to minimize risk and maximize returns. As a retiree, you should prioritize diversification to protect your portfolio from market volatility and potential losses. A diversified portfolio should have a mix of different assets.

Here are the most common types of investments to consider:

  • Stocks
  • Bonds
  • Mutual funds
  • Exchange-traded funds (ETFs)
  • Real estate investment trusts (REITs)

Diversifying your financial portfolio across various asset classes can help you distribute risk and minimize the effect of a single asset’s performance on your overall investment. This approach means that if a particular asset class performs poorly, the impact on your entire portfolio will be less severe. It’s imperative to consult with a reliable fiduciary advisor to determine the optimal asset allocation and diversification strategy for your financial situation.

3. Plan for Healthcare Costs

The percentage of people in the United States who are 65 years and older has increased noticeably in recent years. As of July 2024, the U.S. Census Bureau estimates 76.4 million baby boomers. Since adults 65 and older typically spend more on healthcare than any other age group, this increase in older Americans will likely increase healthcare costs in the long run.

Healthcare costs can be a significant expense in retirement, and it’s essential to plan for them. This process involves taking stock of your current well-being, as well as anticipating potential health issues in the future:

  1. Evaluate Your Current Health Status: Consider factors such as your overall physical fitness, existing medical conditions, family genetic disorders, and general well-being. Are you in good health, or have any ongoing health concerns? Understanding your health status and potential issues down the road provides a baseline for future planning.
  2. Medical History: Take note of any surgeries, hospitalizations, or significant health events you have experienced. Understanding your medical history can help you anticipate potential health issues or complications that may arise as you age.
  3. Chronic Conditions: If you have any chronic health conditions, assess their severity and the ongoing treatment they require. Chronic conditions often demand regular doctor visits, medications, and specialized care, all of which can significantly impact your healthcare expenses in retirement.
  4. Lifestyle Factors: Consider your lifestyle choices, such as diet, exercise, and stress management. These factors can substantially impact your overall health and healthcare needs as you age.

By thoroughly assessing your past, present, and potential future health and healthcare needs, you’ll be better prepared to make informed decisions about your retirement healthcare budget. This process can also help you explore options for health insurance, long-term care insurance, and other financial strategies to help ensure you have adequate resources to cover your healthcare expenses in retirement.

4. Consider Estate Planning

Estate planning is an important aspect of retirement planning, especially for Baby Boomers who may want to pass on their assets to their heirs. As the baby boomer generation gracefully ages, they are now preparing to pass the torch to the next generation in more ways than one. As of June 2024, baby boomers, born between 1946 and 1964, have a total net worth of $78.55 trillion, making them the wealthiest generation in the United States.

A well-crafted estate plan is imperative to help ensure a smooth and efficient wealth transfer. Effective estate management enables you to manage your affairs during your lifetime and control the distribution of your wealth after death. An effective estate strategy can spell out your healthcare wishes– even if you cannot do so. At Agemy Financial Strategies, we’ll help you navigate the legal and financial aspects of estate planning to achieve peace of mind.

How Agemy Financial Strategies Can Help

At Agemy Financial Strategies, we aim to empower clients to make informed decisions and confidently navigate the financial landscape’s complexities. Our team of fiduciary advisors takes the time to understand each client’s individual circumstances and long-term objectives, helping to ensure that your plan aligns with your values and goals. Here’s how we can assist you:

  1. Tailored Financial Planning: Our team will work with you to develop a customized retirement plan based on your goals, risk tolerance, and financial situation. We help ensure that your plan is flexible and adaptable to changing circumstances.
  2. Investment Management: We offer guidance on investment strategies and portfolio diversification. Our goal is to help you achieve a balance between growth and risk management.
  3. Insurance Planning: We can help you estimate and plan for healthcare costs, including exploring insurance options and setting aside funds for unexpected medical expenses.
  4. Ongoing Support and Review: Retirement planning is not a one-time task. We provide continuous support and regular reviews of your financial plan to ensure it remains on track and adapts to any changes in your life or the financial landscape.

Celebrate Baby Boomer Recognition Day with Confidence

As we honor Baby Boomer Recognition Day, take this opportunity to assess your retirement readiness and help ensure that your financial strategy stays strong.

At Agemy Financial Strategies, we are committed to helping you achieve a successful and secure retirement. With the right strategies and guidance, you can enjoy your retirement with peace of mind and financial stability. Working with a knowledgeable fiduciary advisor, you can embark on a well-informed journey toward financial success, allowing you to focus on what truly matters.

Contact us today to schedule your complimentary consultation.

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Understanding the Tax Implications of Your Investments

Agemy Financial Strategies

September 06, 2024

Many investors focus on growing their retirement portfolios to help ensure a comfortable future. However, one crucial aspect often overlooked is the tax implications of those investments. 

Taxes can significantly impact your retirement savings, reducing the money available to enjoy your golden years. Understanding how taxes affect your investments and carefully planning is essential for maximizing your retirement income. In this blog, we’ll explore key tax considerations for retirement investments and how a fiduciary can help guide you in making tax-smart decisions.

The Impact of Taxes on Retirement Investments

When you retire, you leave behind the daily grind, the commute, and perhaps even your old home, but one thing you can’t escape is taxes. Taxes can eat into your retirement savings in various ways, depending on the type of investments you hold and how you manage them. Here are some critical areas to consider:

  1. Tax-Deferred Accounts: Investments in accounts like 401(k)s and traditional IRAs grow tax-deferred, meaning you don’t pay taxes on earnings until you withdraw the money in retirement. While this allows for compound growth, withdrawals are taxed as ordinary income, which can be higher than capital gains tax rates.
  2. Taxable Accounts: Investments held in taxable accounts are subject to capital gains taxes when sold. The rate depends on how long you’ve held the investment—long-term capital gains are taxed lower than short-term gains. Additionally, dividends and interest earned in these accounts are taxed annually.
  3. Roth Accounts: Contributions to Roth IRAs and Roth 401(k)s are made with after-tax dollars, but withdrawals, including earnings, are tax-free in retirement. This makes Roth accounts a valuable tool for managing tax liability in retirement.

Working with a fiduciary advisor is crucial as they can help you navigate the complexities of taxes on retirement investments, helping ensure that your hard-earned retirement savings are maximized and protected.

Strategies for Tax-Smart Investing

Making tax-smart investment decisions involves more than just picking the right stocks or funds. It requires a comprehensive strategy considering your overall financial picture, including your current and future tax situation. Here are some strategies to consider:

  1. Asset Location: Placing the right investments in the appropriate accounts can help minimize taxes. For example, tax-efficient investments like index funds are well-suited for taxable accounts, while bonds and other income-generating assets may be better placed in tax-deferred accounts.
  2. Tax-Loss Harvesting: Selling investments that have lost value to offset gains from other investments can reduce your taxable income. This strategy can be particularly effective during market downturns.
  3. Roth Conversions: Converting a traditional IRA to a Roth IRA allows you to pay taxes on the converted amount now, potentially at a lower rate, and enjoy tax-free withdrawals in the future. This strategy can be beneficial if you expect your retirement tax rate to be higher.
  4. Strategic Withdrawals: Planning the order and timing of withdrawals from different accounts can help manage your tax liability. For example, drawing from taxable accounts first may allow your tax-deferred accounts to grow.

Planning for Tax-Efficient Gifts 

Gifting assets can benefit you and your loved ones, provided you can comfortably maintain your lifestyle with your remaining retirement income. Transferring wealth before your death can help you avoid tax implications such as estate taxes, which can significantly affect your hard-earned wealth. 

The IRS allows you to give up to a certain amount each year without incurring gift taxes. For 2024, the annual exclusion from gift tax—the amount that may be gifted annually to individuals without tax consequences—has increased from $17,000 to $18,000 per recipient. The lifetime exclusion amount, the total amount you can gift without incurring federal gift or estate taxes, is currently $13.61 million per individual. It’s important to stay informed about these limits as they can change periodically.

While making tax-free gifts has advantages, such as reducing your taxable estate and providing financial support to your beneficiaries, there are also potential downsides. It’s crucial to weigh the pros and cons of making tax-free gifts and discuss your options with an advisor. At Agemy Financial Strategies, we can help you navigate the complexities of gifting and estate planning to ensure your financial decisions align with your long-term goals.

Don’t Forget About RMDs (Required Minimum Distributions)

Required Minimum Distributions (RMDs) are mandatory withdrawals from certain tax-advantaged retirement accounts that owners must make at retirement age. The IRS mandates this age threshold to help ensure retirees begin drawing down their retirement savings and paying taxes on deferred income.

As of 2023, the age for starting RMDs changed to age 73. The first RMD must be taken by April 1st of the year after you turn 72 (or age 73 if you reach 72 in 2023 or later). Each year after that, RMDs must be withdrawn by December 31st. Understanding the timing and requirements for RMDs is crucial for retirement planning. As always, it is important to consult a financial advisor to ensure compliance with RMD rules.

RMDs are an essential part of retirement planning, and it’s important to understand how they fit into your overall strategy. Agemy Financial Strategies can help you navigate the complexities of RMDs and ensure you’re meeting your obligations while minimizing your tax exposure.

How Agemy Financial Strategies Can Help

Navigating the complexities of taxes in retirement can be overwhelming, but you don’t have to do it alone. At Agemy Financial Strategies, we specialize in helping clients create tax-efficient retirement plans that align with their long-term goals. Here’s how we can assist you:

  • Personalized Tax Planning: We analyze your entire financial situation, including current income, future income projections, and tax brackets, to develop a customized tax strategy that maximizes your retirement income.
  • Investment Management: Our team helps ensure that your investments are allocated tax-efficiently, considering factors like asset location and potential tax consequences of trades.
  • Roth Conversion Analysis: We’ll evaluate whether a Roth conversion makes sense for you and help you implement the strategy to help minimize taxes over the long term.
  • Ongoing Monitoring: Tax laws and your financial situation can change over time. Our fiduciary advisors can guide ongoing monitoring and adjustments to your plan, helping ensure your strategy remains effective as you retire.

Final Thoughts

Understanding the tax implications of your retirement investments is essential for maximizing your income and preserving your wealth. 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 set up your retirement tax strategy session and learn how we can help you achieve a tax-smart retirement.

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Succession Planning For Retirement

Retirement presents a distinctive challenge for business owners and industry leaders: ensuring their organization’s continuity and prosperity. This is where succession planning becomes crucial. 

Your retirement is likely to require that someone takes your place in the future. Succession planning involves anticipating that need.  In this blog, we will delve into the importance of succession planning for retirement and explore effective strategies to secure a smooth transition. Here’s what you need to know.

Why is Succession Planning Important?

The retirement of baby boomers and the tendency of younger workers to switch jobs is causing a significant turnover in various positions. This dynamic shift in personnel impacts small businesses and larger companies, resulting in changes in ownership and leadership. In fact, Retirement rates have doubled when comparing data from the last five years to the long-term average from 1975 to 1995.

The turnover forces business leaders to think about succession of ownership, executive positions, and more. Succession planning enables organizations to cultivate and nurture potential leaders from within their ranks. Businesses can establish a robust talent pipeline by investing in developing talented individuals.

Secondly, a well-executed succession plan ensures the stability and continuity of an organization’s operations. It facilitates a smooth leadership transition, minimizing disruptions and maintaining the momentum required to achieve business goals. This strategic approach safeguards against any leadership vacuum from unexpected departures or retirements.

Furthermore, succession planning is crucial in helping retirees chart their long-term goals. It involves thoughtful consideration of various aspects, such as the desired retirement lifestyle, financial responsibilities, philanthropic aspirations, and the extent of support they wish to provide to future generations. By having a clear vision of their post-retirement objectives, retirees can tailor their succession plans accordingly, aligning them with their values and aspirations.

Estate Planning vs. Succession Planning

Estate planning and succession planning are different, and they are both important for business owners.

Estate planning is about deciding what happens to your personal belongings and assets after you pass away. It includes things like your will, trusts, and medical directives. However, estate planning doesn’t necessarily address what will happen to your business after you’re gone.

If you own a small business as a corporation or an LLC (Limited Liability Company), you need to include your ownership in the business in your estate planning documents. For example, if you own stocks in a corporation, you can specify in your will who will inherit those stocks after you’re gone. The same goes for an LLC; your interest in the company can be passed on according to your estate plan. If you are a sole proprietor, your business assets are treated as your personal property and will be passed on according to your estate plan.

On the other hand, succession planning is about making arrangements for your business to continue running smoothly after your death or retirement. It doesn’t only focus on who will own the business, although in many cases, it does involve deciding who will take over ownership. For small businesses, the top manager is often the owner, so succession planning is crucial for ensuring the business can carry on even if the owner is no longer there.

Because both estate planning and succession planning are vital for small business owners, it’s essential to consider them together. This way, you can make sure your personal assets and your business are well taken care of when the time comes. To sum up:

Essential components of an estate plan include:

  • A will and trust(s)
  • A compilation of all financial assets (including the family business)
  • Power of attorney
  • A life-insurance policy
  • Named beneficiaries and bequests

A succession plan, meanwhile, has at its core:

  • An identified successor for the business OR a business-sale plan
  • A buy-sell agreement or shareholder agreement governing the transfer of shares and laying out financing for their sale
  • Key-person life insurance
  • An independent business valuation

Succession Planning Step 1: Evaluate Your Assets

Wealthy retirees frequently have a wide range of assets, encompassing financial investments, real estate holdings, businesses, and personal property. Conducting a thorough evaluation to ensure a comprehensive understanding of these assets is crucial. During the evaluation process, assets are assessed for value, and potential challenges or complexities related to ownership transfer are identified.

Retirees can make informed decisions about managing and distributing their assets by evaluating them. This assessment provides valuable insights into the financial landscape, enabling retirees to develop effective strategies that align with their goals and priorities. It also helps identify potential gaps or areas that require attention, allowing retirees to take necessary actions to optimize their asset portfolio.

Succession Planning Step 2: Create a Comprehensive Estate Plan

As mentioned previously, Developing a comprehensive estate plan is paramount regarding succession planning. An estate plan is the foundation for ensuring a smooth transfer of assets and preserving the retiree’s legacy. It involves the creation of various legal documents, including wills, trusts, powers of attorney, and healthcare directives.

The primary objective of an estate plan is to ensure that the retiree’s assets are distributed following their wishes. By clearly outlining their intentions and designating beneficiaries, retirees can minimize the potential for disputes and secure their assets to the intended individuals or organizations. This comprehensive approach helps avoid the complexities and uncertainties that may arise without a well-defined estate plan.

Additionally, an estate plan enables retirees to manage their assets from a tax perspective strategically. Through careful planning and appropriate legal mechanisms, such as trusts, retirees can minimize estate taxes and maximize the value of their estate for future generations. This proactive approach preserves wealth and provides a solid financial foundation for beneficiaries.

Succession Planning Step 3: Consider Philanthropic Endeavors

Wealthy retirees frequently aspire to make a lasting positive impact on society by engaging in charitable giving. Philanthropy is vital in succession planning, enabling retirees to support causes that hold personal significance while benefiting from potential tax advantages. One effective approach is establishing a charitable foundation or setting up a donor-advised fund, allowing retirees to leave a philanthropic legacy for future generations.

By directing retirement assets to charitable organizations, retirees can maximize the impact of their giving. Since registered charities are exempt from paying income tax, the full amount of the retirement account directly benefits the chosen charity. This provides an opportunity to divide retirement assets between charitable causes and heirs according to specific percentages designated by the retiree. This strategic allocation ensures that both philanthropic endeavors and the financial well-being of loved ones are addressed in the succession plan.

With careful planning and the assistance of financial advisors, retirees can create a legacy that combines their philanthropic aspirations. By utilizing retirement assets to support charitable organizations, retirees can contribute to meaningful causes and positively impact society while optimizing the tax benefits associated with their philanthropic endeavors.

Succession Planning Step 4:Continually Review and Update Your Plan

Open and transparent communication with family members is crucial during succession planning. Discussing intentions, addressing concerns, and involving heirs in decision-making can help prevent misunderstandings and family conflicts. It also allows retirees to share their values, personal stories, and the rationale behind their wealth transfer decisions.

Retirees should regularly review and update their succession plans to adapt to evolving needs and goals. Tax laws, family dynamics, and asset portfolio changes may necessitate adjustments. Periodic reviews ensure the plan remains effective. As business needs evolve, adjust the plan accordingly, and update the pool of potential successors to reflect the changing landscape.

Working With A Fiduciary Advisor

Succession planning for retirement involves careful consideration of investment objectives and the creation of personalized retirement plans. A Fiduciary Advisor can play a crucial role in this process by offering valuable guidance and ongoing portfolio management. When selecting a Fiduciary Advisor for succession planning, it is important to ask relevant questions about their experience and approach to retirement planning.

A clear understanding of the Fiduciary Advisor’s services and specific offerings is essential to making an informed decision. Managing investments during retirement can be challenging, especially if one needs to improve their investing knowledge.

At Agemy Financial Strategies, our team of Fiduciary Advisors excel in comprehensive retirement planning services focusing on succession and estate planning. We are committed to helping clients navigate the complexities of investment management during retirement. With our expertise and guidance, we can help you select investment options that align with your specific retirement goals and risk tolerance.

Final Thoughts

Incorporating succession planning into retirement planning is a proactive strategy that safeguards the future success of your business. Businesses can ensure continuity, preserve institutional knowledge, and promote employee engagement by identifying and nurturing potential successors.

If you’re ready to take the next step and incorporate succession planning into your retirement plan, Agemy Financial Strategies is here to assist you. Contact us today to get started on this important journey.

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