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You’ve Taken a Financial Hit During COVID-19. Use These 5 Techniques to Overcome Financial Stress

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You’ve Taken a Financial Hit During COVID-19. Use These 5 Techniques to Overcome Financial Stress

Beginning in February and March 2020, America, Canada and Europe locked down cities, closed businesses and halted travel amidst the onset of COVID-19. Six months later, we’re still experiencing the pandemic’s global impact in our communities. A record number of people have applied for unemployment in America since March, and millions are still left jobless, behind on their bills or struggling to make ends meet. If you and your family have been financially hit during the COVID-19 pandemic, here are a few things you can do to help handle and overcome your financial stress.

Tip #1: Make a To-Do List

Sometimes the most effective techniques are the simplest. When it comes to overcoming your financial stress, start by putting your to-do list in writing. Creating a clear list of what’s ahead can help it feel more tangible and doable. If you can, start with the easiest tasks and slowly work through your list, checking things off one by one. With a to-do list in front of you, there’s no need to bear the burden of remembering everything in your head. Starting with a list of tasks can help you more effectively build a plan of action.

Tip #2: Try Talking to Someone

While working with a financial advisor is recommended, it can still help to open up to a family member or friend in the meantime. Keeping everything bottled up and to yourself is only going to escalate your anxiety. If you’re able to, talk it out with someone you trust and be honest. Discussing your problems can ease the burden significantly. Your friend or family member may even have some advice to offer or a financial advisor to recommend.

Tip #3: Review Your Spending Habits

Ignoring the situation may be tempting, but putting your financial obligations off will only make them worse. While some financial issues are more complicated than others, taking stock of your current situation can help build a better understanding of where you are today and what needs to happen. This often starts with adjusting your spending and saving habits. When it comes to addressing your current spending habits, there are a few things you can do right away:

  • List out every income source you currently have
  • Determine your debts (student loans, car payments, credit card debt, etc.)
  • Keep track of all your spending manually or using a phone app
  • Identify potential spending patterns or triggers (when you’re stressed, right after payday, etc.)
  • Determine what changes you can make to your average spending to save more
  • Avoid impulse spending

Tip #4: Make a Plan and Create a Monthly Budget

Creating and tracking a monthly budget is a great way to get in the habit of healthier spending – and healthier spending habits mean less 􀀁nancial stress.
To get started on creating your monthly budget, start by:

  • Listing out recurring expenses such as gas, groceries, utilities, etc.
  • Prioritize contributing to your emergency fund each month
  • Set up automatic payments to avoid late fees or interest
  • Determine where you may be able to cut down on spending (entertainment, clothes, etc.)+

Tip #5: Establish a College Savings Plan

If you have a young one at home, paying for college is likely looming over your head. To ease this large financial burden, take the time now to establish or check up on your 529 plan. This tax-advantaged savings plan is designed to encourage saving for future education costs (such as tuition, room and board, etc.). You and other family members can contribute to the account, which will gain interest over time as you set aside funds to pay for a child or grandchild’s education. Getting your finances in order is no easy feat. Identifying your main stressors and establishing a plan to address them can make a big difference in how you and your family feel about your finances. If you’re feeling lost, confused or overwhelmed, don’t forget to reach out to a trusted financial professional who can help make sense of your current financial situation.

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalites. Please consult legal or tax professionals for specific information regarding your individual situation. THe opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security

4 Yearlong Tax Tips for Retirees

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4 Yearlong Tax Tips for Retirees

Whether you’re just easing out of the workforce or you’ve been in retirement for a few years now, making financial moves is critical. If you’re working with an advisor or taking a look at your finances
one central goal during retirement is protecting your wealth from unnecessary taxes.

In many cases, there are ways to avoid owing more taxes – but usually, this requires proactive action beyond tax season. Below we’ll explain four tips you can utilize throughout the year to help minimize your tax obligations in retirement.

Tip #1: Take Your Required Minimum Distributions (RMDs)

An RMD is an amount that must be withdrawn from your retirement account. These required withdrawals begin when you, the retirement plan account owner, reach age 72. The rules apply to employer-sponsored retirement plans, traditional IRA plans and Roth 401(k) accounts, but they don’t apply to Roth IRAs when the account owner is still alive.
Some IRA custodians and retirement plan administrators might find out what your RMD is for you, but the responsibility ultimately falls on you. To find out what your RMD is, the IRS provides l ife expectancy t ables to utilize according to your circumstances. If you do not withdraw the RMD (or the correct amount), the amount not withdrawn will be taxed at 50 percent, which is why it’s critical to take your RMDs and withdraw the correct amount.1

It’s important to note that as part of the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, passed on March 27th, 2020, RMDs are not required for the remainder of 2020.2

Tip #2: Manage Your Income Combinations

As a retiree, a portion of your income will likely come from Social Security. However, not all of your benefits are taxable, and there are ways to minimize or, at times, eliminate taxes on your Social Security benefits.

If half of your Social Security benefits in addition to your other income is higher than the base amount for your status, your benefits will be taxable. By strategically managing all of your income sources (such as pension payments, dividends or part-time jobs), it’s possible to lower the portion of benefits that will be taxed. Rules regarding Social Security income taxes also vary from state to state, so always check with your state regulations to determine the best solution for you.3

Tip #3: Figure Out if You Need to Pay Quarterly Taxes (If Not, You May Decide to do it Anyway)

If you don’t have taxes withheld automatically, you may need to pay estimated tax payments. Individuals who are expected to owe $1,000 or more – or those whose withholding and refundable credits are 1) less than 90 percent of the tax owed or 2) at least 100 percent of the tax on the previous year’s return – must pay estimated tax.

In some cases, you might decide to pay quarterly taxes, even if you are not required to, in an effort to avoid the inconvenience of paying a large sum all at once. If you miss a payment or underpay, you may be charged a penalty.4

Tip #4: If You’re Moving to a New State, Get to Know Its Tax Laws

If you’re relocating to a new state during retirement, consider the impact of the move on your financial situation, as tax laws vary according to the state. For example, some states, like Florida and New Hampshire, don’t tax on income or only tax on dividends and interest.5 On the other hand, they may have higher property taxes. For example, New Hampshire’s property taxes are high compared to the rest of the country.6 In addition to nicer weather or a more serene lifestyle, you might decide to move to a new state in an effort to save on taxes.

In many cases, an individual or couple is working with a fixed amount of wealth to last throughout retirement, which is why taking the right financial steps is essential. By working with an advisor and keeping these four tips in mind during the year, you can make sure you’re not paying more than you need to. When it comes time to finalize gifting to your children or grandchildren, you can further reduce taxes by incorporating other strategies, like charitable giving, into the equation. 7

1. https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-required-minimum-distributions#1
2. https://www.congress.gov/bill/116th-congress/house-bill/748/text
3. https://www.irs.gov/faqs/social-security-income
4. https://www.irs.gov/publications/p505#en_US_2019_publink1000194564 arevenue.com/faq/pages/faqsearch.aspx?keywords=income%20tax&cat=0&subcat=0

6. https://www.revenue.nh.gov/assistance/tax-overview.htm#interest
7. https://taxfoundation.org/the-effects-of-making-the-charitable-deduction-above-the-line/

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

4 Areas of Your Estate Plan to Review in Light of COVID-19

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4 Areas of Your Estate Plan to Review in Light of COVID-19

Although COVID-19 related restrictions are beginning to ease, many people continue to help slow the staying home and self-isolating. There are still unknowns related to the pandemic and how it will play out, undoubtedly keeping us all on edge. Over the past few months, we’ve been forced to face fears of falling ill, losing a job, spending time alone, etc. With these anxieties weighing on your mind, it may feel as though there’s a sudden need to get your affairs in order, just in case.

It never hurts to be prepared in the event that, for instance, you may need to be hospitalized for coronavirus or any other sickness. Thinking about falling ill or not being able to make decisions for yourself can be frightening, but having an estate plan in place can help ease your concerns.

Many people are taking this time at home to update their estate plans, and if you don’t have one in place, there’s no better time to put it together.

Estate Plan Documents That Should Be Reviewed & Updated If Necessary

Individuals over the age of 18 should have some level of estate planning in place. You may be surprised to learn that wills and trusts aren’t the only documents to prioritize. A strong estate plan will include several important documents, such as a living trust, financial powers of attorney, health care powers of attorney and more.1
In light of the current pandemic, two of the most important documents to have up-to-date and on-hand are your medical and financial powers of attorney. For instance, if you’re quarantined in your home, admitted to the hospital or become incapacitated, you’ll need someone to handle your finances or make medical decisions on your behalf. With those in place, it’s a good idea to continue organizing a comprehensive estate plan that includes the following documents.

1. Power of Attorney and Health Care Proxy

A financial power of attorney grants authority to carry on a person’s financial affairs and protect their property by acting on their behalf. This includes the ability to write checks, pay bills, make deposits, purchase or sell assets or sign any tax returns.1

Similarly, a health care power of attorney grants the authority to make health care decisions on your behalf should you become incompetent or incapacitated. If you are over the age of 18 and do not have a health care power of attorney in place, your family members will need to request that the court appoint a
to take on these responsibilities.1

Ensuring that you have named trustworthy and reliable individuals as your powers of attorney is key as you update your estate plan. If your current documents are outdated, implementing new ones should be on the top of your list.

2. Your Will

A last will and testament is a legal document that allows you to direct distributions of your property at the time of your death. A will also allows you to appoint an executor who oversees the distribution of your assets.2 This person will attend to your affairs after you pass, probate your will if necessary and file income and estate tax returns on your behalf. If you have children who are minors, you should also name a guardian for them in the will.

Everyone has assets that must transfer after a person’s death, and without a will, there is no direction as to how and to whom those assets will pass. Distribution of your assets will be handled by the state and the court will decide on the best person to oversee the administration. This is similar to an appointed guardian in that if you don’t appoint one, a court will decide on the best person to fulfill this role.2

3. Living Trust

In general, your trust benefits you while you are alive and may also be beneficial to others, such as your spouse or children. Identifying who will receive assets upon your death may be a detail that needs updating based on your lifestyle and changes that have taken place. Additionally, you’ll want to outline whether your beneficiaries receive your assets outright or perhaps you’ll want to provide them with an income stream instead. If your beneficiaries are young, you may want to consider holding assets for them in a trust until they are old and responsible enough to handle finances themselves.

Appointing a trustee will identify who will step in to manage your affairs without the involvement of the court, avoiding extra time and money associated with probate.3 A trust also affords you privacy regarding the details of your estate since it eliminates the need for probate, which is a public process.

4. Beneiciaries

Another important update you should make to your estate plan is to review beneficiary designations on your life insurance policies, retirement accounts, etc.2 Keep in mind that if you have a joint asset such as a bank account, that will pass to the surviving joint owner. Be sure to name someone you trust to act in your best interest should the time come for them to be responsible for your assets.

Due to stay-at-home orders and social distancing practices, it may be more difficult to meet with your or notary in-person to prepare or update your documents. There are template websites online

that allow you to create documents from scratch, and some states have even suspended various statutes to let people appear before a notary public via videoconference.4 While some documents can be finalized virtually, wills need to be signed in front of witnesses, which means this step to finalizing your documents may need to be done in person.

While you have the time, you should start reviewing your estate plan and making any adjustments with the appropriate professionals as needed. Making necessary and important changes now will likely benefit you and your family in the future.

1. https://www.americanbar.org/groups/real_property_trust_estate/resources/estate_planning/
2. https://www.americanbar.org/groups/real_property_trust_estate/resources/estate_planning/an_introduction_to_wills/
3. https://www.consumerreports.org/cro/2013/11/how-to-create-a-bulletproof-estate-plan/index.htm
4. https://www.americanbar.org/groups/law_aging/resources/coronavirus-update-and-the-elder-law-community/notarization-in-the-age-of-covid-19–the-status-of-states/

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

4 Things to Know Before Adding Your Teen to Your Car Insurance

By | Resources

4 Things to Know Before Adding Your Teen to Your Car Insurance

For teenagers, getting that first car is a milestone – it serves as a symbol of maturity and independence. ss, most teens aren’t in the financial position to pay their own car insurance. But with teenagers aged 16-19 being the most likely to damage their cars, going uninsured isn’t an option.If your teen is approaching driving age, you may be preparing to add them to your car insurance. It’s important to be aware of these four things before you do so.

1. Your Rates Will Increase

Adding a teen to your policy will inevitably increase your rates. It doesn’t matter how good of a driver they are, teens are the most inexperienced drivers and, therefore, the riskiest to insure. While the average annual cost of auto insurance for a 25-year-old is $3,207, the same is $7,179 for an 18-year-old driver.2 However, it’s typically still cheaper to add a teen to your policy rather than putting them on their own.
You might want to investigate other car insurance companies and compare what your costs will be once your teen is added to your insurance. Remember that they will likely be on your insurance for years. Your current provider may or may not offer the cheapest rates available to you in the long run, and it’s worth it to investigate all your options before making any changes.

2. The Car They Drive Matters

While it may make your teen happy to be handed the keys to their shiny new dream car, that’s probably not the best choice when it comes to lowering auto insurance costs.
Your auto insurance rates drop about 3.4 percent for every year your car ages.3 While rates depend on a number of variables, insuring a brand new Audi convertible is likely to cost much more than a used Mazda. Regardless, as your teen acclimates to life behind the wheel, it’s advisable that you buy them a safer, possibly used car as opposed to a new one that “looks” nicer.

A good idea is getting your teen involved in the car shopping process. Have them research which cars are affordable and safe, but also allow them to have a say by looking for one they’ll like.

3. Know Your Insurance Policy & State Policy

lt to make generalizations about auto insurance because so much depends on the actual
self. Insurance companies widely differ in rates and policies. Your insurance company may have a policy about new teen drivers you’re not even aware of. For instance, certain companies don’t charge to cover your teen while they have their driving permit. Overall, the best option is to have a discussion with your insurance company about your teen’s situation and how it will impact your car insurance.

Moreover, states have different policies when it comes to age and insurance requirements. Certain states require that teens be covered by insurance to get their learner’s permit, while others only require that licensed drivers be covered. Either way, it’s smart to inform your insurer when your teen gets their learner’s permit and even smarter to get them insured as soon as possible.

4. Investigate Discount Options

Again, this differs from company to company, but certain insurers offer discounts for young drivers. Check if your insurance company offers any of these to get some relief on your teen’s auto insurance:

Good Student Discount: This discount rewards student drivers for achieving high grades. The threshold depends on the insurance company.
If your teen takes an approved safe driving course, they may qualify for this discount.
Let your insurance company know when your teen leaves for college. If they’re not taking a car with them and attend a college over 100 miles away, you might get some insurance relief.

Among all the financial considerations to make before adding your teen to your auto insurance, there’s a more personal consideration, too: holding your teen accountable. The first year of licensure is typically the riskiest for teenagers.4 Ensure that you teach your teen important safety and car care principles before easing them into independent driving.

1. https://www.cdc.gov/motorvehiclesafety/teen_drivers/teendrivers_factsheet.html
2. https://www.statista.com/statistics/555827/auto-insurance-costs-usa-by-age/
3. https://www.thezebra.com/auto-insurance/vehicles/new-vs-used-car-insurance-comparison/
4. https://www.cdc.gov/motorvehiclesafety/teen_drivers/teendrivers_factsheet.html

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for
or sale of any security.