Article courtesy of George Peterson Insurance Agency, 10/20/2020

AS THE TEMPERATURE starts dropping and harsher weather looms in the coming months, now is the time to get your home ready. Taking steps now to protect your home and belongings can help you enter the new season worry-free, and you might save money in the process. You can follow these tips to do just that:

1. Clean your furnace and switch out filters
Check your furnace for soot, ignition problems, pilot-light health and the state of other components to make your home ready for fall.  You should also clean up dust and dirt and if you see anything that could spell trouble, call for an inspection. This is also a great time to switch out your filters as you’ll probably be using your heater, which draws air from the outside. You may also need to winterize your outdoor air conditioner unit, depending on the type of system you have. This usually involves cleaning your coils and covering the unit.

2. Check your insulation
Fix insulation issues before the cold weather arrives. You’ll need to climb up to your attic or crawlspace during daylight hours, which is the best time to spot any rays of light in the corners.
You should only be getting light from attic vents. If you see light in a corner, it could mean you have cracks somewhere or you need to replace some of your insulation.

3. Tend to your fireplace
Clean out your fireplace, check your chimney for blockages and make sure that your damper is working smoothly. If your chimney is coated in soot, you need to have it cleaned to prevent fire hazards. For gas fireplaces, vacuum out any dust and check that the pilot light is properly turned on.

4. Insulate pipes
When temperatures drop below freezing, standing water in your pipes can start to freeze. This can ruin valves and even crack brittle pipes, leading to leaks and water damage.  If your pipes aren’t protected or you have installed new plumbing, you can get your home ready for the cold by insulating your pipes. This can be done with simple foam sleeves.

5. Inspectscreens and windows
Check your window screens to make sure they aren’t bent and don’t have holes. Also, check your window weatherstripping to make sure the felt is intact and not letting any drafts through.

6. Clean your rain gutters and downspouts
Climb up on a ladder with a garden hose and flush out your rain gutters to remove natural debris like twigs and leaves. After flushing them, don a pair of gloves as you will have to likely dig in there with your hands to get the rest of the debris out. Also, check the gutters for damage and repair as needed.

Connie Brezik with Buckingham Strategic Partners, 2/20/2020

One of the best gifts you can leave your heirs is education about money in general and your financial affairs specifically. This can include passing along your ethics and values.

You may have become knowledgeable about finance, investments, income taxes and estate planning because you have been successful and have had years of experience. For someone who doesn’t handle these things, all of this can seem like a big black hole.

There are reasons you may choose to handle all the financial issues on your own. Maybe you understand and like dealing with the family finances, or you feel you are doing your spouse and children a favor, or you are protecting your heirs and you want to keep tight control.

But it can be cruel to not teach your spouse and children about finances. As adults, we all need to be competent in handling finances. We won’t always have someone else around to take care of this for us. And if you are no longer around or capable of managing everything, your heirs will need to know what to do.

Your children may be young or haven’t yet gotten past living paycheck-to-paycheck. They could be raising a family, paying a mortgage and investing in a business of their own. These are good reasons to learn important financial lessons, and you want them to understand the meaning of money in their own lives.

Passing on a legacy of sound wealth management has many virtues. It could prevent your heirs from making many mistakes due to lack of knowledge. It may help ensure your estate lasts for many generations. It will also give you confidence that your family is equipped to handle things when the time comes.

You may have concerns about leaving your children and grandchildren with large sums of money or other assets. These concerns can be addressed with proper estate planning and by tackling issues directly with your heirs.

I’ve found the best way to educate children is to start from a very early age. Involve them in age-appropriate discussions and allow them to make their own mistakes and develop good money habits.

Doing everything for a spouse and keeping them in the dark is a real disservice. One day your spouse may need to pay all the bills, take care of the house and car and take care of you. Ensuring your spouse has the know-how and confidence that they need is an act of love.

Family meetings can be a great way to introduce your heirs to your finances. You can bring in your other advisers, such as investment advisers, CPAs, insurance agents and estate attorneys. The goal is for your heirs to know your team of advisers and for this team to know your family. Your heirs will understand who to call when and if they need help.

If you have a family business, it is critical to get everyone involved in how to run the business. Find out early which children and/or grandchildren may be interested in taking over the business and which ones will be capable. You may find that none of your family is interested. Knowing this early will allow you time to figure out how to sell the company or transition it to other qualified employees. Good succession planning and training on all aspects of running a business will help with a smooth transition when the time comes for you to exit.

Leave your heirs a legacy of knowledge and financial confidence. Your family will appreciate this more than you can know.

This commentary originally appeared February 2 on TheCasperStarTribune.com

By clicking on any of the links above, you acknowledge that they are solely for your convenience, and do not necessarily imply any affiliations, sponsorships, endorsements or representations whatsoever by us regarding third-party Web sites. We are not responsible for the content, availability or privacy policies of these sites, and shall not be responsible or liable for any information, opinions, advice, products or services available on or through them.

The opinions expressed by featured authors are their own and may not accurately reflect those of the BAM ALLIANCE^®. This article is for general information only and is not intended to serve as specific financial, accounting or tax advice.

Jeffrey Levine, CPA/PFS, CFP®, AIF®, CWS®, with Buckingham Strategic Partners 8/4/2020

For many, correctly answering the question, “When should I begin to take my Social Security benefits?” is a critical step toward making sure their retirement income and savings last at least as long as they do. For others, who perhaps are lucky enough to have accumulated a more substantial nest-egg, the decision may have less of an impact on their ultimate chances of a “successful” retirement (as they may have enough income and/or other assets to overcome a poor choice). But let’s face it … nobody wants to leave Social Security dollars on the table because of a less-than-ideal claiming decision.

Unfortunately, making the right choice for you and your specific life and financial circumstances is often much easier said than done. Consider, for instance, that there are literally thousands of rules governing the Social Security system and nearly a dozen different types of Social Security benefits.

As if that weren’t bad enough, choosing the best time to claim Social Security benefits also means trying to guestimate how long you will live, which just complicates things further. Factors such as health, family history, and even income can all be helpful predictors, but they’re far from perfect. Healthy people sometimes die young, while those with poor health sometimes live beyond even the most optimistic estimates.

For married couples, the decision-making process can be even more challenging, because it’s not just one life to consider, but two. It’s enough to truly make one’s head spin!

With that in mind, let’s consider one way that married couples can reframe their thinking about Social Security benefits and simplify claiming decisions. But first, a quick recap of some basic Social Security rules.

In general, Social Security retirement benefits can be claimed as early as 62. However, claiming at 62 will result in a significantly reduced benefit (25% to 30%, depending upon the year in which you were born) compared to waiting until Full Retirement Age (66 to 67, depending upon the year in which you were born). Waiting until your Full Retirement Age will earn you a so-called unreduced retirement benefit, which kind of makes it sound as though it’s the biggest benefit you can receive, but that’s not the case.

Rather, by delaying benefits beyond your Full Retirement Age, you are entitled to receive “Delayed Credits,” which will further increase your benefit by 8% per year (or two-thirds of 1% per month), in addition to any cost-of-living adjustments that might apply. Therefore, by waiting until as late as 70 to begin receiving Social Security retirement benefits, you can effectively increase your “unreduced” benefit by as much as an additional 24% to 32% (depending upon the year in which you were born).

Of course, while delaying the receipt of your Social Security benefits can boost your monthly benefit amount, it also, quite obviously, reduces the number of months that you will receive benefits. Thus, the obvious question arises:

“Should I start receiving smaller Social Security checks sooner so that I get more total checks during my lifetime, or should I wait to take Social Security until some future date to make the checks I do receive bigger?”

In trying to figure out the answer to this question, people, including married couples, often base their decision when to start receiving benefits upon how long they (the individual person) will live. For married couples, though, that is often a mistake, and instead of each spouse looking at their own life expectancy, they should often consider the following planning hack.

Stated simply, instead of focusing on when their own death will occur, the higher-earning spouse should focus on answering the question, “When will the second of our deaths occur?” By contrast, the lower-earning spouse should focus on answering the question, “When will the first of our deaths occur?”

Note: The term “higher-earning spouse” is used to refer to the spouse with the higher Social Security benefit. Accordingly, “lower-earning spouse” is used to refer to the spouse with the lower Social Security benefit.

If the higher-earning spouse believes that either spouse will still be alive into their 80s, they should give more consideration to delaying Social Security benefits, possibly until as late as age 70, even if they don’t think that they will live much beyond that time themselves. Conversely, if the lower-earning spouse believes that either spouse will die within the next decade or so, they might want to give additional consideration to claiming their own benefit sooner, even if they think that they will personally live to 100!

So, why does this work?

When the first spouse of a married couple dies, so too does the lower Social Security check. Meanwhile, the higher of the couple’s Social Security checks will live on with the surviving spouse.

In more technically correct terms, if the spouse with the lower benefit dies first, that spouse’s Social Security check will stop being paid, but the surviving spouse will keep their own monthly retirement benefit (which was the higher monthly check). Alternatively, if the spouse with the higher benefit dies first, the surviving spouse can trade in their own lower retirement benefit or spousal benefit for a higher monthly survivor’s benefit.

Note: In certain circumstances, a pre-Full Retirement Age surviving spouse receiving their own Social Security benefit may decide to delay switching from their own retirement benefit to a survivor’s benefit to prevent reductions in the survivor’s benefit due to the surviving spouse’s age.

Put in the simplest terms, as long as at least one spouse ends up living until their early-to-mid 80s, it often makes sense for the higher-earning spouse to delay receiving Social Security benefits (possibly until as late as age 70). And in truth, it is this spouse’s decision that is generally more important. Claiming “too early,” for instance, could not only hurt the higher-earning spouse during their lifetime but the lower-earning spouse as well if they are the second to die.

Conversely, the lower-earning spouse can also claim benefits “too early,” but that mistake is only relevant until the first death occurs. As such, for couples who are on the fence about when to claim Social Security (because they want the protection of higher checks if they live a long time, but also want to start getting something sooner to enjoy in case they don’t live as long as they expected), the default thought process should often be to have the higher-earning spouse delay benefits and to have the lower-earning spouse claim benefits earlier to get that desired taste of Social Security at a younger age.

This framework, of course, doesn’t work for all couples. And even couples that it helps will still have questions, like just how early the lower-earning spouse should consider claiming and just how long the higher-earning spouse should wait. So, in the end, Social Security claiming decisions remain incredibly personal and complex, which is why we strongly urge clients to consult with their wealth advisory team before taking any action.

The information presented here is not specific to any individual’s personal circumstances and is for general information and educational purposes only. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. By clicking on any of the links above, you acknowledge that they are solely for your convenience, and do not necessarily imply any affiliations, sponsorships, endorsements or representations whatsoever by us regarding third-party websites. We are not responsible for the content, availability or privacy policies of these sites, and shall not be responsible or liable for any information, opinions, advice, products or services available on or through them. IRN-20-859

By Hayden Adams, Author for Charles Schwab

Even in the best of times, not every investment will be a winner. Fortunately, losing investments do have a silver lining: You may be able to use them to lower your tax liability and better position your portfolio going forward. This strategy is called tax-loss harvesting, and it’s one of the many tax-smart strategies that investors should consider.

Tax-loss harvesting generally works like this:

• You sell an investment that’s underperforming and losing money.
• Then, you use that loss to reduce your taxable capital gains and potentially offset up to $3,000 of your ordinary income.
• Finally, you reinvest that money into a different security that meets your investment needs and asset allocation strategy.

The general principle behind tax-loss harvesting is fairly straightforward, but it’s best to do some planning before implementing the strategy to make sure you avoid some common pitfalls.

The basics
Imagine you’re reviewing your portfolio and you see that your tech holdings have risen sharply, while some of your industrial stocks have dropped in value. As a result, you now have too much of your portfolio’s value exposed to the tech sector. To realign your investments with your preferred allocation, you sell some tech stocks and use those funds to rebalance. In the process, you end up recognizing a significant taxable gain.

This is where tax-loss harvesting comes in. If you also sell the industrial stocks that have declined in value, you could use those losses to offset the capital gains from selling the tech stocks, thereby reducing your tax liability.

In addition, if your losses are larger than the gains, you can use the remaining losses to offset up to $3,000 of your ordinary taxable income (for married couples filing separately, the limit is $1,500). Any leftover losses can be carried forward to future tax years and used to offset income down the road.

For example, let’s say you recognize a gain of $20,000 on a stock you bought less than a year ago (Investment A). Because you held the stock for less than a year, the gain is treated as a short-term capital gain and will be taxed at the higher ordinary income rates, rather than the lower long-term capital gain rates, which apply to investments held for more than a year. At the same time, you also sell shares of another stock for a short-term capital loss of $25,000 (Investment B). Your $25,000 loss would offset the full $20,000 gain—you’d owe no taxes on the gain and the remaining $5,000 loss could be used to offset $3,000 of your ordinary income. The leftover $2,000 loss could then be carried forward to offset income in future tax years.

Assuming you’re subject to a 35% marginal tax rate, the overall tax benefit of harvesting those losses could be as much as $8,050 ($20,000 of offset capital gain + $3,000 current-year deductible loss against ordinary income × 35% = $8,050 total savings).

Issues to consider
As with any tax-related topic, there are rules and restrictions to be aware of before utilizing tax-loss harvesting, including these:

• Tax-loss harvesting isn’t useful in retirement accounts such as a 401(k) or IRA, because the losses generated in a tax-deferred account cannot be deducted.
• There are restrictions on using specific types of losses to offset certain gains. A long-term loss would first be applied to a long-term gain. A short-term loss would be applied to a short-term gain. If there are excess losses in one category, these can then be applied to gains of either type.
• When conducting these types of transactions, you should also be aware of the wash-sale rule, which states that if you sell a security at a loss and buy the same or a “substantially identical” security within 30 days before or after the sale, the loss is typically disallowed for current income tax purposes.

A tax break for ordinary income
Even if you don’t have capital gains to offset, tax-loss harvesting could still help you reduce your income tax liability.

Let’s say Sofia, a single income-tax filer, holds XYZ stock. She originally purchased it for $10,000, but it’s now worth only $7,000. She could sell those holdings and take a $3,000 loss. Then, she could use the proceeds to buy shares of ZYY stock (a similar but not substantially identical stock) after determining that it is as good as or better than XYZ, given her overall investment goals and objectives.

Sofia could use the $3,000 capital loss from XYZ to reduce her taxable income for the current year. If her combined marginal tax rate is 30%, she could receive a current income tax benefit of up to $900 ($3,000 × 30% = $900). She could then turn around and invest her tax savings back in the market. If she assumes an average annual return of 6%, reinvesting $900 each year could potentially amount to approximately $35,000 after 20 years.

Harvesting losses regularly and proactively—when you rebalance your portfolio, for instance—can save you money over the long run, effectively boosting your after-tax return.

Important Disclosures

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. Rebalancing strategies do not ensure a profit and do not protect against losses in declining markets. Rebalancing may cause investors to incur transaction costs, and when rebalancing a nonretirement account, taxable events may be created that may affect your tax liability. Examples provided are hypothetical and for illustrative purposes only and not intended to be reflective of results you can expect to achieve. This information is not intended to be a substitute for specific individualized tax, legal or investment planning advice. Where specific advice is necessary or appropriate, Schwab recommends consultation with a qualified tax advisor, CPA, Financial Planner or Investment Manager. Investing involves risks, including loss of principal. (1119-90X9)

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