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Couples usually don’t retire at the same time when they have an ‘age gap’ between them. An age gap relationship is one where there is eleven or more year’s age difference between them. Age-gap relationships are becoming more common as people are choosing to marry later in life with someone significantly younger. This type of relationship requires some additional financial planning.

The latest study from the National Center for Health Studies (2017 statistics), states the average woman is living 81.1 years. In 1960 it was 74 years. In 1960 the average man was living 67 years today the average man is living 76.1 years. The increase in life expectancy is helping to change the age differences in many couples, making financial planning even more critical.

In age-gap relationships, one member continues to work for a decade or longer than the other. The drawing of retirement assets coupled with differing longevity factors presents a financial planning challenge.

Age-gap couples may have up to a half-generation between their ages. They should consider planning for two different scenarios to reflect their age difference. These couples shouldn’t rely on a financial plan based only on the older member’s financial information and longevity factors. Some things to consider for these couples:

The older member may want to delay taking Social Security benefits until their full retirement age unless they have health issues. Delaying the benefits of the older member will benefit both if the older member was the higher income earner.

Health Insurance Coverage

If the older member carried the health insurance and goes on Medicare health insurance coverage will be impacted. This will require the younger one to find new insurance.

Basing the financial plan on the partner with the longer life expectancy will help the combined portfolio last over a longer time horizon. Both expected retirement dates should be included even if they are a decade or more apart.

Tax Consequences

Considering the tax consequences for drawing down retirement assets at two different starting dates is important. With one member continuing to work, they should maximize their pre-tax retirement account contributions. This will off-set moving the couple into a higher income tax bracket. Most retirees have a higher income tax consequence in the first few years of their retirement.

If you are in an age gap relationship we have the skills and guidance needed to help plan your retirement.

Additional Disclosure

The newsletter and links are being provided as a service to you. Please note that the information and opinions included are provided by third parties and have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation. This newsletter is designed to provide general information on the subjects covered. Pursuant to IRS Circular 230, it is not intended to provide specific legal or tax advice and cannot be used to avoid penalties or to promote, market, or recommend any tax plan or arrangement. You are encouraged to consult your personal tax advisor or attorney. Planning services are generally available at additional cost and can only be offered only by appropriately licensed registered investment advisors.

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For those who are looking for financial advice, we realize the available options are many and deciding who to work with is a challenging problem.  At Strategic Path Financial Group, we know that it is your retirement, and you should have control over it. We offer our experience and knowledge to help you design a custom strategy for financial independence. Contact us today to schedule an introductory meeting!

Here we are, already to the end of 2019! The end of a year and the start of a new one is when most people decide to clean up and implement changes in some areas of their lives. Whether it is financial or health-related, starting the New Year off with tasks completed feels good! Here are ten financial tasks that can make a difference to you now, and later:

Task #1- Increase Retirement Savings Contributions

Increasing or maximizing your pre-tax and after-tax retirement savings contributions helps in two ways; first, it helps to ensure you will have more money in retirement. Second, contributions into pre-tax retirement savings accounts help to lower your taxable income in the year the contributions made.

Task #2- Take your Losses

If you decide to sell losing assets before 2020, you may be able to use those losses to offset your taxable capital gains. Make sure to consult your tax professional to understand if tax-loss harvesting will benefit you or not.

Task #3- Consider Converting to a Roth IRA

Since contributions and earnings in a Roth IRA grow tax-free, converting your tax-deferred retirement savings into a Roth may make sense for you. Although you are required to pay taxes on the entire contributions and earnings, the conversion in 2019 may be a tax-smart move in the long term.

Task #4- Prepare for 2019 Tax Reporting

You don’t need to wait until 2020 to meet with your tax professional. Having an idea of how much you may need to pay in taxes for 2019 can benefit you when you still have time to contribute to tax-sheltered investment accounts opened by December 31st, 2019, to off-set personal income and capital gains. Especially if you’ve made more money in 2019 than in previous years, having an idea of taxes due in the 4th quarter and pre-paying taxes can save you stress later. 

Task #5- Evaluate Health Savings Account (HSA) Contributions

HSAs allow pre-tax contributions, much like your pre-tax retirement savings. However, when used at a later date for health-related expenses, including future long-term care expenses, the contributions and accumulation are tax-free upon withdraw. Make sure you are maximizing your contributions to enjoy the benefits of using the account later and lowering your taxable income for 2019!

Task #6- Contribute to your Children’s or Grandchildren’s 529 College Savings Plan

Many states offer a state income tax credit or deduction up to a certain amount for parents or grandparents that contribute.

Task #7- Rebalance, Rebalance, and Rebalance

Market swings cause portfolio allocations to change over time. The end of the year is a great time to rebalance all of your investment accounts.

Task #8- Spread Your Wealth to Benefit Non-Profits

Donor-Advised Funds allow you to deduct your contributions to a non-profit. Due to the Tax Cuts and Jobs Act, contributions must be made into a donor-advised fund in 2019 to be itemized and deducted on your 2019 tax return.

Task #9- Check and Update Beneficiaries

Check and update beneficiary information on your employer retirement plan and all life insurance policies. Has there been a marriage, divorce, or name change for any beneficiary? Keeping beneficiary information and your information current is essential to help avoid problems later if there is a death claim.

Task #10- Schedule Your Annual Review for 2020

The beginning of a new year is a great time to schedule an annual investment review, complete or update your financial plan.

If you have questions regarding any of the above financial tasks, contact our office to complete these before we say goodbye to 2019 and welcome 2020!

Additional Disclosure: Diversification and asset allocation strategies do not assure a profit or protect against loss.

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For those who are looking for financial advice, we realize the available options are many and deciding who to work with is a challenging problem.  At Strategic Path Financial Group, we know that it is your retirement, and you should have control over it. We offer our experience and knowledge to help you design a custom strategy for financial independence. Contact us today to schedule an introductory meeting!

Dreaming and goal setting are interrelated; first, you dream about what you want, then you determine how to obtain it. Our dreams should help guide us to make the right choices at the right time and in the proper manner. But merely dreaming about something is not enough; we must set goals to achieve it. In psychology, goal setting refers to a successful plan of action that we set for ourselves.

Psychologist Frank L. Smoll, a Ph.D. and working psychologist at the University of Washington, emphasized through his studies the three essential features of goal-setting, which he calls the A-B-Cs of goals. Smoll said that effective goals are:

A-Achievable

B-Believable

C-Committed

Others in the field of psychology have determined that goal-setting for productivity involves five criteria; it must be specific, measurable, achievable, realistic, and time-sensitive. Whether your dream is buying a larger house, completing a degree, losing weight, or saving a specific amount for retirement, all of these criteria must be included in your planning to achieve success.

If dreaming and ‘goal-setting psychology’ sounds a lot like financial planning, it is. Financial plans develop with all of these productivity criteria in mind. Financial advice is then executed to help make a dream a reality. Achieving more significant goals, such as saving for retirement to live in retirement as one envisions, takes longer. Throughout a client’s life, they may change their retirement dream or adjust their goals to the evolving criteria.

Dreams are Like a Destination

Remember that dreams are like a destination- if you want to go somewhere, you need to visualize where you want to be, recognize where you are at now, and make a plan to get there. You must also stay motivated and keep dreaming! I can help you do all of this; all you need to do is ask.

Additional Disclosure: The newsletter and links are being provided as a service to you. Please note that the information and opinions included are provided by third parties and have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation. Planning services are generally available at additional cost and can only be offered only by appropriately licensed registered investment advisors.

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For those who are looking for financial advice, we realize the available options are many and deciding who to work with is a challenging problem.  At Strategic Path Financial Group, we know that it is your retirement, and you should have control over it. We offer our experience and knowledge to help you design a custom strategy for financial independence. Contact us today to schedule an introductory meeting!