Take Advantage of Today’s Tax Rates with the Mini-Roth Conversion

In today’s blog post and video, we break down the correct way to take advantage of Roth conversions using today’s tax rates.

In our last video on Roth’s we talked about how doing large Roth conversions can be a disaster as it can severely increase your taxes.

Today we wanted to talk about when it actually makes sense.

The reason is simple, with today’s tax rates being the lowest we’ve seen in a while it may be advantageous for you to use the Roth conversion up to your current tax bracket.

If there is one nice thing to have it’s multiple buckets of money to pull from with different tax implications.

Ready to break it down? Watch the video to learn more.

Let’s recap:

Roth conversions can make sense to “make the gap” between your current income and the next level up when tax rates increase. For example, if you’re income was at $70,000 it might make sense to convert $30,000 in order not to bump up your tax rate.

You most likely can’t touch the money for 5 years but it can be beneficial down the road to have a tax free bucket of money to spend or pass along to your heirs.

Today’s tax rates could be going away soon. Don’t wait until it’s too late to take advantage of these conversions and make sure they’re done right.

  1. Planning for taxes is one of the most overlooked areas of financial planning and we want you to take advantage of it whenever possible.
  2. Roth conversion could be that advantage in today’s tax environment.
  3. If you need planning your retirement income and need to learn an often underutilized strategy, then head on over to our eBook and download it today.

You can go pick up a free copy by using the link below:

http://ironwoodfinancial.com/ebook-01-new

Like always, if you’re facing retirement and need a second opinion learn about what makes us different, we’ll audit your entire strategy to make sure you have the right tools to make your retirement as low risk as possible and still drive in a good income.

And if you want a further dive into some of the biggest risks with retirement planning then check out our webinar or download our ebook on taking income in retirement.

Annuity Case Study and What to Look Out for…

In today’s blog post and video, we break down how annuities can be abused by agents not held to a fiduciary standard. If you’ve ever wondered if you should be buying annuities on a regular basis then this video is for you.

If there is one thing that we see all the time it’s annuities being used incorrectly.

Maybe it’s just a product of the suitability standard, but this post today is to help guard you, your friends, and your families from situations that are usually not in their best interest.

What are we talking about?

Let’s break this down.

First off, we want to remind you that we don’t love annuities or hate them. It’s about when they get used and how.

Like we discussed in our last video on annuities, in today’s low interest rate environment, the internal rates of returns on these products can be pretty dismal even with all the riders and contract bonuses the insurance company is offering. So, you have to be careful about what you buy and how it’s used for your retirement.

And second, we want to show you some of the strategies being used that are often times not in your best interest and hope this isn’t happening in your portfolio.

It all comes down to “layers” of annuities using the free withdrawal provision

Let’s break an example down that sheds light on that subject and why we’re so passionate about this.

Let’s recap:

  1. Are you buying new annuities every year with your free withdrawal provision? This can destroy liquidity and create longer surrender periods than may have originally been planned.
  2. Is your advisor or agent a Fiduciary and doing this because it’s in your best interest? Or because it’s in theirs?
  3. WFiduciary advisors are required to do what’s in your best interest regardless of pay or commission. In the suitability standard brokers and agents are held to the best interest of their company. Which one would you rather have advising you?
  4. Audit your contracts and portfolios for these conflicts of interest before you make any more big decisions.
  5. Annuities perform the best in high interest rate environments which might not be happening any time soon.

Low interest rates are making retirement planning very difficult in today’s environment. Not only can fees eat you alive you need you need to avoid making emotional decisions. It’s up to you to go beyond “trusting” someone to help you. You also need to get proof and education on what strategies can work, how they can fail or backfire and what options you really have.

Annuities can be great and they can be terrible depending on your situation. But there are other options:

That’s why we created our free ebook.

It covers ways to drive income without relying on interest rates, annuities, or other high-cost and high-risk strategies all too common in today’s environment.

Like always, if you’re facing retirement and need a second opinion learn about what makes us different, we’ll audit your entire strategy to make sure you have the right tools to make your retirement as low risk as possible and still drive in a good income.

And if you want a further dive into some of the biggest risks with retirement planning then check out our webinar or download our ebook on taking income in retirement.

Should you hate annuities, or love them?

In today’s blog post and video, we break down how most annuities with all the fancy riders and big promises really work. Watch below to learn the truth.

Oh annuities…

If there’s one thing most financial experts are passionate about, its annuities.

And no matter if they love them or hate them, annuities always seem to drive controversy.

It makes sense, most of the marketing surrounding them is filled with misinformation and over simplified explanations that leave the consumer no better off than when they started. It’s like a magic trick. While they wave their right hand and make all the fancy promises they don’t show you what the left hand is doing.

We’re on a mission to change that.

At Ironwood we don’t love them or hate them. It’s about when they get used and how.

In today’s low interest rate environment, the internal rates of returns on these products can be pretty dismal even with all the riders and contract bonuses the insurance company is offering. So you have to be careful about what you buy and how it’s used for your retirement.

Let’s break an example down that sheds light on that subject.

In today’s video we’re going to break the basic types down then get into an example of why an annuity, in today’s environment, may not be the best thing for you.

Let’s recap:

    Annuities are usually broken down by deferred or immediate.

  1. Fixed and variable “deferred” annuities often come with Riders and other income provisions
  2. When they promise guaranteed growth rates the long term internal rate of return you can get over time is often glossed over.
  3. For instance: while you might get 6% for 10 years growing your “income value” to $160,000. That can leave you with a 5% guaranteed income rate of $8,000 a year. If you took $8,000 a year for 20 years after letting it grow for 10 first, your internal rate of return could be as low as .5%. Don’t let the long term interest rates get glossed over and do your research.
  4. Annuities perform the best in high interest rate environments which might not be happening any time soon.

Low interest rates are making retirement planning very difficult in today’s environment. Not only can fees eat you alive you need you need to avoid making emotional decisions. It’s up to you to go beyond “trusting” someone to help you. You also need to get proof and education on what strategies can work, how they can fail or backfire and what options you really have.

Annuities can be great and they can be terrible depending on your situation. But there are other options:

That’s why we created our free ebook.

It covers ways to drive income without relying on interest rates, annuities, or other high-cost and high-risk strategies all too common in today’s environment.

You can go pick up a free copy by using this link:

Like always, if you’re facing retirement and need a second opinion learn about what makes us different, we’ll audit your entire strategy to make sure you have the right tools to make your retirement as low risk as possible and still drive in a good income.

And if you want a further dive into some of the biggest risks with retirement planning then check out our webinar or download our ebook on taking income in retirement.

Will Interest Rates Stay Low Forever?

Are you losing money on your savings accounts and CD’s because of low rates and inflation? Then this video is for you.

Do you know how low interest rates affect you?

If you’re like most retirees or future retirees at some point you’re most likely going to have to drive income with your savings.

And in today’s low interest environment that can be tricky. When rates are low it not only becomes hard to drive a livable income from your investments, but in many cases, you can actually lose money in terms of purchasing power.

Losing purchasing power isn’t something many retirees living on a fixed income can handle and facing that burden can seem overwhelming. But we’re on a mission to change that and give you the tools to feel confident again.

If you’ve ever asked yourself:

Where interest rates are headed?

Will they stay low for the foreseeable future?

Can anything be done?

What are the risks?

Then this video is for you.

We’ll break down the current interest rate environment, what’s causing the situation and cover the pros and cons, so you can be more informed on your situation.

Let’s dive in:

Let’s recap:

  • Quantitative easing is all about driving up demand to keep interest rates low.
  • It’s being phased out over time, but we won’t know the long term affects until it runs its course.
  • You need to understand this environment because you don’t want to lose your purchasing power because of inflation.
  • It may be a good time to have a mortgage as rates are lower than they’ve been in a long time.
  • If you need income you have to start thinking outside the box as many “traditional” strategies aren’t working like they have in the past.
  • 2 dangerous products in low interest environments: fixed annuities and long-term bonds.
  • Make sure you review your long-term strategy to see what would happen if interest rates start to increase.

Low interest rates are making retirement a very difficult and tricky adventure for millions of retirees. When you can’t just live off of the interest you might be left wondering what strategies can help?

That’s why we created our free ebook.

It covers ways to drive income without relying on interest rates, annuities, or other high-cost and high-risk strategies all too common in today’s environment.

Like always, if you’re facing retirement and need a second opinion learn about what makes us different, we’ll audit your entire strategy to make sure you have the right tools to make your retirement as low risk as possible and still drive in a good income.

And if you want a further dive into some of the biggest risks with retirement planning then check out our webinar or download our ebook on taking income in retirement.

New Charitable Contributions Strategy For Minimizing Taxes Using Your Required Minimum Distributions

Did you know that the way charitable contributions are claimed for retirees is changing?

With the new tax plan in place, many people could soon lose the tax advantages of their charitable contributions.

Why?

Just check out this article: under the Trump tax bill, you’ll probably stop itemizing your deductions (http://nymag.com/daily/intelligencer/2017/11/under-the-trump-tax-bill-itemizing-deductions-will-drop.html)

But don’t fret, we have a strategy for retirees so they can most likely still get the tax deduction.

It all comes down to the way you take your RMD.

In this video we explain the strategy, so let’s dive in.

Let’s recap:

  • Remember this only works if you don’t receive the money directly,
  • Talk to your advisor and tax planner to see if this is possible for your situation.
  • If it is, make sure you coordinate your RMD with your custodian (who holds your investments) to tell them how you want your RMD’s distributed.

If the new tax plan has gotten you worried that it might negatively affect your retirement then we recommend you meet with your advisor and tax planner to see what options you have.

It’s better to know and have a plan than wait until it’s too late. So take action now.

Like always, if you’re facing retirement and need a second opinion learn about what makes us different, we’ll audit your entire strategy to make sure you have the right tools to make your retirement as low risk as possible and still drive in a good income.

And if you want a further dive into some of the biggest risks with retirement planning then check out our webinar or download our ebook on taking income in retirement.

Should You Pay Off Your Mortgage?

Do you know the consequences of paying off your mortgage in today’s interest rate environment? If not, then this video is for you.

If your starting to live off your investments or are approaching retirement, then you’ll most likely have wondered if it makes sense to pay off your mortgage or keep it in retirement.

While most of us hate being in debt, that doesn’t make it a straightforward question.

The problem lies in the current interest rate environment and the “cost” of holding money in an asset like a home vs. putting it to work to earn money and build wealth.

To help answer this question we’re going to cover when it makes sense to keep it or get rid of it.

As always, we’re on a mission to give you the truth about all things retirement-related in the Tucson area so this is something we’re not afraid to tackle.

Without further ado, let’s dive in.

Let’s recap:

  • Find out what your interest rate is vs. what you can earn in an investment.
  • Don’t avoid mortgages just for the sake of being out of debt. Weigh the pros and cons of your situation before you make your decision.
  • Get a good faith estimate on your home and see what options you have.

No matter the approach the question should be what interest rate will you be paying on your debt, how much of a tax break you receive and will that money earn enough to eclipse the benefit of paying down your house.

That’s why we advise that you talk with a mortgage professional, get a good faith estimate and then talk to your financial advisor about the situation so you can make an informed decision.

Like always, if you’re facing retirement and need a second opinion learn about what makes us different, we’ll audit your entire strategy to make sure you have the right tools to make your retirement as low risk as possible and still drive in a good income.

And if you want a further dive into some of the biggest risks with retirement planning then check out our webinar or download our ebook on taking income in retirement.

Are Hidden Fees Eating Away At Your Portfolio?

Do you know how much you’re paying in “hidden” fees? If not, then this video is for you.

If you’re an investor then you’ve most likely asked this ultra-crucial question at some point in your career:

“How much am I really paying in fees?”

The problem is that many fees are hidden, glossed over or exclusively hidden by advisors, banks or investment companies. Leaving you to wonder “what’s the honest truth?”

To help give you clarity, we’re going to cover the most misunderstood fees out there. And while many of you might already know about investment management fees, commissions or how much you’re paying an advisor we’re going to cover a few that you’ve probably never heard of.

As always, we’re on a mission to give you the truth about all things retirement-related in the Tucson area so this is something we’re not afraid to tackle.

Without further ado, let’s dive in.

Let’s recap:

  • Make sure you’re advisor fee is 1% or lower.
  • Understand what you’re investment management fees, internal expenses or expense ratio is.
  • Don’t miss the effect that your turnover ratio can have on your portfolio.
  • Understand that the larger the fund doesn’t always mean lower costs when it comes to market dynamics and “hidden” turnover costs.
  • And finally, make sure you understand how taxes work in each of your accounts.

No matter the approach or strategy you need to know every single possible cost that you face so you can avoid anything unnecessary.

That’s why we advise that you get a fee review with someone who can walk you through all the costs without trying to hide or gloss over the details.

The more educated you are, the safer you’ll be. But taking unnecessary risks because you haven’t done your due diligence? That’s not something we’d recommend.

Like always, if you’re facing retirement and need a second opinion learn about what makes us different, we’ll audit your entire strategy to make sure you have the right tools to make your retirement as low risk as possible and still drive in a good income.

And if you want a further dive into some of the biggest risks with retirement planning then check out our webinar or download our ebook on taking income in retirement.

Should you do a Roth Conversion?

Ever wondered if a Roth conversion could help you get a “tax-free” retirement?

When the Roth conversion came out it was all the rage. Advisors and investors clamored to take advantage of the tax loophole and jumped on the bandwagon thinking they “gamed” the system.

Then they got their tax bills…

If you’re like most people we talk to on a regular basis then you’ve most likely heard from other advisors talking about a “tax-free” retirement. The biggest tools being used by said advisors is either the Roth conversion or cash value life insurance (which we’ll talk about later). And while the Roth conversion isn’t inherently bad it almost always comes with many unintended consequences that shock people when they get their taxes done.

Here’s the problem:  Many of the people who do Roth conversions today don’t actually end up saving any money in the long run.

That’s why we’re on a mission to educate retirees in Tucson about retirement and all the hidden “little things” that eat away at the return and put your retirement at risk.

On today’s agenda:  The Roth Conversion

To make it easy, we shot this quick video that explains the good, the bad, and the fine print…

Let’s Recap:

  1. If your tax rate will be lower in retirement than it is today, you may want to avoid them.
  2. When you pull the money out you’ll most likely have to pay the tax bill from other accounts.
  3. If you pay the tax bill from an IRA you may also pay even more in taxes…
  4. If you’re in your lowest tax bracket years then ROTH 401(k)’s and ROTH IRA’s make the most sense.
  5. Convert small chunks up to the next bracket in income to safely use this strategy.

No matter the approach or strategy you need to know the good AND the bad and what long-term consequences you’ll face if you pull the trigger.

That’s why we caution jumping into a Roth Conversion without doing the research or meeting with a CPA who can walk you through the benefits and risks step by step.

Like always, if you’re facing retirement and need a second opinion learn about what makes us different, we’ll audit your entire strategy to make sure you have the right tools to make your retirement as low risk as possible and still drive in a good income.

And if you want a further dive into some of the biggest risks with retirement planning then check out our webinar or download our ebook on taking income in retirement.