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Protect Your Wealth During Retirement
NewsAs 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 Although the 4% rule is a helpful starting point for determining the yearly withdrawal amount, it can be an outdated strategy in 2023.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:
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:
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.
How To Maximize Your Investments During Retirement
NewsSpring is the perfect time to take a fresh look at your finances and make some changes that can help you achieve your financial goals.
American investors are worried about retirement. One survey recently revealed that 82% of those married and in their late 40s who had dependents were more afraid of outliving their money than they were of death.
Why the concern? People are living longer, so that money has to cover a longer period. Making matters worse, economic turmoil over the past three years has led to record-breaking inflation rates. On an individual level, the inflation rate affects how much your retirement dollars will really be worth. Over time, inflation can seriously devalue your savings and income.
Thankfully, there are many ways you can build your net worth and achieve financial freedom. Below, we’ll explore some strategies you can use to grow your wealth this spring and beyond.
So let’s take a deep breath of fresh spring air and get started on the path to growing our wealth!
Understand Your Investment Goals
What does your ideal retirement look like? Retirement is a major achievement in an individual’s life, signifying the conclusion of working years and the start of a new chapter.
One of the most crucial aspects of retirement is maintaining your finances to ensure that you have adequate funds to cover your expenses for the rest of your life. To do this, many people turn to investments to help support them when they retire.
Retirement goals and investment goals go hand-in-hand. Both are self-determined milestones on your journey to retirement. A successful retirement plan consists of at least the following key components:
Anticipated lifestyle
Expected retirement income, including but not limited to savings, pension and social security benefits
Risk tolerance if you choose to incorporate investing into your goals
Strategy for handling long-term care expenses, such as medical bills and fees associated with assisted living
To accomplish your goals, it is critical to maximize your investments during retirement. And one of the best strategies for doing so is to make sure you’re investing for the long term rather than the short term. This is especially true if you choose to invest in the stock market.
Do you want to create income, expand your assets, or both? Knowing your goals will assist you in selecting the appropriate investment approach and vehicles to achieve them.
Diversify Your Portfolio
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:
Diversifying your 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 in case of poor performance of a particular asset class, the impact on your entire portfolio will be less severe. It’s imperative to consult with a reliable and trustworthy Fiduciary advisor to determine the optimal asset allocation and diversification strategy for your individual financial situation.
Consider Income-Generating Investments
Investing in income-generating investments can provide a steady stream of income during retirement. These investments can help you cover your expenses and provide a source of regular income. Here’s a look at some examples and how they differ from one another:
Investing in income-generating investments can help you cover your expenses during retirement and provide you with a steady stream of income. However, it’s essential to work with a financial advisor to ensure that your investment strategy aligns with your retirement goals and risk tolerance. At Agemy Financial Strategies, we can help you select the right income-generating investments to meet your income needs and minimize the risk of running out of money in retirement.
Rebalance Your Portfolio
As you move into retirement, you should rebalance your portfolio to ensure that it aligns with your investment goals and risk tolerance. Rebalancing involves adjusting your asset allocation to maintain a consistent level of risk and return.
Part of the purpose of an asset allocation is to dilute the impact of each asset class by limiting both the upside and downside impact of the investments. But, when a particular investment grows in value faster than the other investments, you are exposed to more risk than you originally intended. Rebalancing your portfolio returns your investments to your original risk tolerance and reduces the risk that your portfolio will drop in value.
Maintaining ideal levels of risk and the correct asset allocation is a critical component of any long-term financial plan. Taking the time to rebalance your portfolio on a regular basis can help achieve both these goals.
Tax Strategies
Taxes are an aspect of retirement investing that every savings plan participant should understand. Five common types of taxes on investments include:
Tax on capital gains
Taxes on investments in a 401(k)
Tax on dividends
Tax on mutual funds
Tax on the sale of a house
While investing is a fantastic way to build wealth and security, it’s also a fantastic way to create a hefty bill if you don’t understand how and when the IRS imposes taxes on investments. Make sure you’re accounting for these taxes in your investment strategy!
Consider Working With a Fiduciary Advisor
Managing your investments during retirement can be complicated, especially if you’re not familiar with investing. Consider working with a Fiduciary Advisor who can help you develop a retirement investment plan.
At Agemy Financial Strategies, our Fiduciary advisors offer comprehensive retirement planning services to help you navigate the intricacies of investment management during retirement. With our expert guidance, you can choose the most suitable investment vehicles based on your retirement goals and risk tolerance, and establish a diversified portfolio that can generate steady income and protect your savings.
Let’s Talk Strategy
Making the most of your investments during retirement is crucial for securing financial stability in your later years. By identifying your investment goals and collaborating with a reliable Fiduciary Advisor, you can optimize your retirement investments.
Contact us today to set up your complimentary strategy session.
Empowering Women to Plan for Retirement
NewsInternational Women’s Day, observed annually on March 8th, is a reminder of the battle and ongoing journey toward gender equality and empowerment. It’s a day dedicated to recognizing and uplifting women from all walks of life, including those approaching retirement age. Despite strides made toward equal rights, women continue to encounter challenges in securing their financial futures.
From wage disparities to career breaks for caregiving responsibilities, these factors can significantly impact a woman’s ability to save for retirement. However, with careful planning and the help of a financial advisor, women can take control of their finances and retire confidently.
Data shows a significant gap between men and women regarding retirement savings. Women lag significantly behind men, with men boasting an average retirement savings balance of $98,000, whereas women have an average balance of just $62,000. This discrepancy can largely be attributed to the persistent gender pay gap, resulting in lower lifetime earnings for women and subsequently diminished retirement savings.
Furthermore, women are more likely to experience interruptions in their careers, whether due to caregiving responsibilities for children or elderly family members or opting for part-time employment. These career breaks can further restrict women’s ability to accumulate retirement savings, which can leave many women vulnerable to financial insecurity as they near retirement age. Addressing these systemic issues is crucial to fostering financial inclusivity and equality. Let’s explore strategies women can foster to help overcome these barriers and attain financial wellness.
Education and Awareness
One of the first steps towards helping empower retired women financially is providing them access to quality education and raising awareness about financial literacy specific to their retirement years. Nearly half (48 percent) of women are confident about their finances, although only 28 percent feel empowered to take further action.
Furthermore, according to a special report by the BMO Real Financial Progress Index, only 53% of women feel financially confident about their ability to retire at their target age, compared with 66% of men. Plus, a shocking 74% of women surveyed report having no financial plan in place to reach their retirement goals, compared with 58% of men.
Retirement comes with unique financial considerations, and retiring women need to acquire 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 and helping them take control of their financial well-being.
At Agemy Financial Strategies, we have a 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 finances.
Building and Maintaining A Solid Retirement Plan
Creating and sustaining a robust financial plan for your golden years is essential for women to achieve their long-term financial goals and secure their future. Here are some key steps that can help women build and maintain a financial plan tailored specifically to them:
Building Supportive Networks
For several reasons, establishing women’s networks in financial and retirement planning is crucial. These networks help 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.
Helping empower them to make informed decisions about their finances and retirement. Together, they can advocate for policy changes and reforms that promote economic empowerment and equality. Additionally, access to financial and retirement planning mentors can inspire and guide women in helping achieve 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:
Our Fiduciary advisors work diligently to help preserve your financial stability and retirement longevity. For a complete list of our service offerings, see here.
Final Thoughts
Our final tip for women transitioning for retirement is to regularly review and update your financial plan to reflect changes in your life circumstances, financial goals, and market conditions. These steps and staying committed to your financial plan can help you take control of your finances, build wealth, and achieve financial security for yourself and your family.
While women encounter distinct hurdles in retirement planning, these obstacles shouldn’t stop their aspirations. Through dismantling barriers, fostering education, and enhancing financial accessibility, we can help forge a path for women to attain financial prosperity in retirement and beyond. Let our advisors guide you in crafting a future wherein every woman is empowered with the requisite tools, resources, and avenues to thrive financially and unleash her complete potential.
Contact us today to set up your complimentary strategy session.
Estate Planning for Women
NewsWomen have a variety of responsibilities that affect their financial planning needs. Estate planning can often be put on the backburner to cater for more immediate needs, but this could have serious financial consequences for you and your family further down the line. This International Women’s Day, choose the right estate planning tools that meet your needs with Agemy.
What many American women don’t realize is that in addition to investing, estate planning is a crucial component of retirement planning. The word estate alone can throw off many, but this misleading mindset can come back to bite you.
Whatever assets you possess (small or large), a well designed estate plan can ensure you can pass on your wealth and possessions to the ones you love most. Let’s take a look at some tips that can help take control of your estate planning.
Why Women Should Have an Estate Plan in Place
One of the financial planning areas that women often leave out, but need to particularly pay attention to, is estate planning. Estate planning is the legal planning that helps you control who will inherit your money and property, and who can make medical and financial decisions on your behalf if you’re unable to do so yourself. It’s especially critical for women to take part in estate planning for the following reasons:
Making Plans For Living Longer
Everyone who has assets should have an estate plan in place. An asset can be anything from inherited wealth, stocks, family heirlooms or even a car. As mentioned, American women are living longer, and this requires additional planning. Along with all the positive aspects of a longer life span comes the reality that there is a greater incidence of mental and physical decline in those later years.
Plan accordingly by having a Power of Attorney. It is perhaps the most basic tool to ensure that if you become disabled mentally or physically, your assets can be accessed and managed without court intervention. While these issues can be difficult to talk about, it’s essential to have a plan in place.
The powers that you grant in a power of attorney are broad and are intended to permit the attorney-in-fact to step into your shoes. Without an estate plan, the court will designate a guardian to manage your financial assets and medical care.
Remember, like anything in life, nothing stays the same. Whatever the reason may be, you do not have to keep the same power of attorney you initially allocated in your plan.
Designate Your Beneficiaries
Designating beneficiaries to inherit your assets after you pass is important as it will enable the assets to be transferred smoothly. Proper estate planning should include assigning beneficiaries for all accounts.
Certain assets pass to heirs based on beneficiary designations. These are known as “will substitutes.” This means that the beneficiary designation overrides anything that might be in the client’s will regarding the distribution of the asset. A couple of examples of these assets would be:
It’s important that these beneficiary designations are current, especially after a major life change like getting divorced, getting married, or becoming widowed.
Revisit and Revise As Needed
Estate plans are not set in stone. Once you have your estate plan made, it is not something that you can forget about. As you approach your review process, you are looking to ensure that your intentions have not changed, that the right people are included, that major life changes are reflected, and that all other major changes are notated.
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.
By regularly revisiting your estate plan with your trusted Fiduciary advisor, you can let them know of any life changes that could affect your plan and make appropriate adjustments. This can include anything from marriage, death of a spouse, relocating, and more.
Further Considerations
So, what else should you remember to include in your estate plan?
Final Thoughts
Women deserve to have their assets protected. Agemy Financial Strategies can help make that happen.
International Women’s Day is a great reminder for the importance of protecting yourself and your assets with an estate plan. When it comes to estate planning, 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 of creating last wills and testaments, living trusts, powers of attorney, and living wills — all with the help of our trusted Fiduciary advisors.
If you’re ready to get started on your estate planning, set up a complimentary consultation here today.
Taking The Luck Out of Your Social Security Payments
NewsWorried about how potential Social Security changes will affect your pot of gold? Don’t leave your retirement income to chance this St. Patrick’s Day; take control of your financial future by planning Social Security into your retirement plan.
According to the Social Security Administration, in 2023, an average of almost 67 million Americans per month will receive a Social Security benefit, totaling over $1 trillion in benefits paid during the year.
While Social Security can make up a significant portion of retirement income for many individuals (up to 40% of retirement income), it was never designed to be the proprietary source of cash for your golden years. Today, the future of Social Security remains uncertain, forcing people to ask questions like, “Will Social Security run out?”
According to long-term projections by the Congressional Budget Office, if changes are not made to the program, its funding could be exhausted by 2033.
Running Out of Time and Luck?
Due to the fact Social Security may only be able to pay full benefits for another decade, lawmakers in Washington are looking for ways to save the program, and the possible changes will affect the benefits Americans receive.
Broadly, that comes down to two potential key changes: raising the retirement age and increasing the amount of annual wages subject to the Social Security payroll tax. But this could be prevented.
“The Social Security fund will be insolvent in less than a decade. If Congress chooses to do nothing, current law requires painful 24% cuts to benefits and a daunting future for fulfilling our promises. If we come together now, we can preserve and protect the retirement security of all Americans now and long into the future,” Senators Angus King, I-Maine, and Bill Cassidy, R-Louisana, wrote in a recent statement.
The proposed plan is not yet fully developed which is leaving many Americans more confused than ever.
If you’re relying on luck when it comes to SSI payments in retirement, you could be in for a nasty surprise. Knowing where you stand now with Social Security will only pay off in the future.
Understand the Basics
First and foremost, retirees should familiarize themselves with the basic workings of the Social Security program. This includes understanding how benefits are calculated, when they can be claimed, and how they can be affected by factors such as retirement age, work history, and marital status.
To understand how Social Security benefits are calculated, it’s important to know that the formula takes into account the average of your highest-earning 35 years of work, as well as the age at which you start receiving benefits. Retirees should also be aware that claiming benefits before full retirement age (which is between 66 and 67 depending on your birth year) will result in a reduction in monthly payments.
Additionally, factors such as work history and marital status can impact your benefits, with certain spousal and survivor benefits available to eligible individuals. Understanding these basics can help retirees make informed decisions about when to claim benefits and how to maximize their overall Social Security income.
Maximize Your Benefits
Once you understand the basics, you can begin to explore strategies for maximizing your benefits. For example, delaying claiming benefits until age 70 can result in a significant increase in monthly payments. Additionally, claiming spousal benefits, taking advantage of the earnings test, and using restricted application strategies can all help retirees increase their overall Social Security income.
Delaying Social Security benefits until age 70 can result in a significant increase in monthly payments. The increase is based on your date of birth and the number of months you delay your retirement benefits. The following table explains how delayed retirement affects your benefits:
Retirees can also consider claiming spousal benefits, which may allow them to receive up to 50% of their spouse’s benefit amount if it’s higher than their own. Taking advantage of the earnings test may allow retirees to continue working while still receiving some Social Security benefits.
Using restricted application strategies can help maximize benefits for married couples, allowing one spouse to claim a spousal benefit while the other delays their own benefit to maximize its value. By exploring these strategies, retirees can potentially increase their Social Security income and ensure a more comfortable retirement.
Plan Ahead
Think of your social security payments as one piece of the puzzle when it comes to retirement income. While Social Security benefits are an important component of retirement income, they are unlikely to cover all of your expenses. Especially if you are a few years away from retiring and concerned payments will run dry.
That’s why it’s crucial to have a comprehensive retirement plan in place that takes into account your Social Security payments, as well as any other sources of income, such as pensions, investments, and personal savings. A well-rounded retirement plan can help retirees ensure that they have enough income to cover their expenses and enjoy a comfortable retirement.
By planning ahead, retirees can make informed decisions about when to retire, how to maximize their Social Security benefits, and how to make their retirement savings last as long as possible.
Seek Professional Advice
With the latest news of potential changes to come to the Social Security system, navigating the complexities of Social Security can be challenging. This is why retirees should consider seeking professional advice from a trusted Fiduciary planner who excels in retirement income planning.
At Agemy Financial Strategies, our experienced professionals can provide you with personalized guidance based on your unique financial situation. Our team strives to assist you in making educated choices regarding Social Security benefits, tax-strategizing and more.
By working with a reputable and dependable Fiduciary planner, you can have confidence in your retirement plan and ensure that your retirement income is optimized to meet your needs.
Final Thoughts
Social Security payments can be a valuable source of retirement income for retirees, but with potential changes ahead, it’s important to take luck out of the equation by understanding how the program works.
This St. Patrick’s Day, make the most out of your money by maximizing your benefits, planning ahead, and seeking professional advice with Agemy Financial Strategies.
Get started today and receive a complimentary retirement planning consultation.
The Importance of Intergenerational Wealth Transfer
NewsBaby Boomers, the generation of people born between 1944 and 1964, are expected to transfer trillions of dollars in wealth to younger generations over the next many years, also known as the “great wealth transfer”. Is your family ready?
Over the next two decades, an enormous amount of wealth is set to change hands as baby boomers pass on their accumulated assets to their adult children in Generation X and millennials.
In fact, it’s estimated that this Great Wealth Transfer could amount to a staggering $68 trillion dollars. But what’s driving this historic transfer of wealth? And what will its impact be on the world’s economy? To answer these questions, we need to take a step back and examine the factors that have led us to this moment in time.
From the post-World War II economic boom to the rise of the technology industry, several key events have contributed to the accumulation of wealth by the baby boomer generation. And now, as they begin to retire and pass on their assets, we are about to witness a massive shift in the distribution of wealth across generations.
So, what can we expect as this wealth transfer takes place? And how can we best prepare for the changes to come? In this blog, we’ll explore the answers to these questions and more, as we delve into the impact of intergenerational wealth transfer on our society and economy.
What is Intergenerational Wealth?
The first step to understanding Intergenerational wealth is to know what it entails. Intergenerational wealth refers to the transfer of assets, resources, and financial well-being from one generation to the next within a family. It includes all types of assets, such as financial investments, real estate, businesses, and personal property.
Intergenerational wealth can be passed down through inheritance, gifting, or other means, and it is typically accumulated over time through a combination of hard work, wise investments, and other factors. The transfer of intergenerational wealth can have a significant impact on both the receiving and giving generations.
For the receiving generation, it can provide financial stability, opportunities for education, and the ability to pursue personal goals and passions. For the giving generation, it can offer a secure feeling of passing on a legacy and helping their loved ones achieve their dreams.
This topic has become an increasingly important issue, especially for those retiring in the not-far-far distance. If you find yourself in this situation, you may be wondering how you can pass your wealth to your children and grandchildren. With deliberate financial planning, the process doesn’t have to be overwhelming.
Start The Conversation Early
It’s never too early to start planning for intergenerational wealth. Even if your children and grandchildren are young, you can start setting aside money in a trust or savings account for their future. This can help you maximize the power of compound interest and grow your wealth over time.
However, dealing with multiple assets across generations can sometimes make it challenging to adopt an open communication approach. Most families find it uncomfortable to discuss death and the division of wealth, resulting in family financial planning being postponed or ignored.
Nonetheless, due to the enormity of the task, it is essential to have a clear plan in place. Seeking the help of a trusted financial advisor can be particularly useful in sensitive family circumstances as they can offer unbiased advice.
It is crucial to establish a solid financial plan that protects the interests of all parties involved to ensure the effective transfer of wealth within your family, which will have a significant impact on the protection of wealth for future generations.
Understand Your Options
Building intergenerational wealth can provide financial security for your family for generations to come. Seeking the professional guidance of a Financial Fiduciary Advisor is one of the most significant measures you can take to establish a strong wealth transfer strategy. By working with a financial advisor and taking a thoughtful, strategic approach, you can create a plan that aligns with your values and ensures your legacy.
Together, you can investigate your options regarding:
Pitfalls to Avoid
When figuring out the best way to pass along assets to the next generation, there are certain missteps you should avoid. A few to watch out for include:
Don’t Forget to Plan for Taxes
Taxes can take a significant bite out of your wealth, both at the federal and state levels. There are several different types of taxes that can come into play and affect the value of your estate that’s passed on to your heirs.
Whether you pay estate tax might come down to the state you live in. If you reside in Connecticut, the estate tax exemption for 2023 is $12,920,000 per individual (up from $9,100,000 in 2022). You can give up to those amounts over your lifetime without paying federal income tax. Any amount above is taxed at a hefty 40%.
There is no estate or inheritance tax in Colorado.
Though taxes are not always completely avoidable, the best wealth transfer strategies work to minimize this tax liability.
Gift and State Tax Exclusions Expire in 2025
The opportunity to make significant and tax-efficient wealth transfer gifts is set to expire at the end of 2025.
A result of the 2017 Tax Cuts and Jobs Act, the gift and estate tax exclusion as well as the generation-skipping transfer tax exclusion effectively doubled from their 2017 levels – allowing individuals to make generational wealth transfers at a reduced transfer tax cost. Indexed for inflation, the current exclusions allow gifts of more than $12 million before triggering gift, estate, and transfer taxes. Those exclusion levels expire at year-end 2025, when the exclusion level for those taxes will drop to just more than $6 million.
Creating Your Wealth Transfer Plan
An intergenerational wealth transfer plan is an important part of the estate planning process.
Agemy Financial Strategies offers professional financial advising services to help individuals and families create and implement a comprehensive financial plan tailored to their unique needs and goals. An elaborate estate plan will account for your current assets and liabilities as well as future cash flows to determine the best method for distributing your assets.
By working with our trusted Fiduciary advisors, we’ll help you create a plan that positively affects all members of your family unit, both young and old, to ensure your loved ones are all better off in the long-term.
Contact us today to learn more and schedule your complimentary consultation.