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Tag: Retirement Planning

The Pinwheel of Financial Wellness

The Pinwheel of Financial Wellness

Posted on by Emily Promise

January is Financial Wellness Month and the start of a new year – the perfect time to focus on and evaluate your financial health. Our pinwheel highlights the key areas we cover to create a comprehensive plan for every client at Blakely Financial. From investing to retirement and beyond, we make sure every piece of your financial wellness is in place. 

Budget Planning

When creating a comprehensive financial plan, it is important to begin by discussing your goals. Are you saving for college? Preparing for retirement? Looking to purchase a second home, or maybe remodel your kitchen? There is no one-size-fits-all plan for your finances!

Based on your goals, your financial advisor will help you create a budget to provide the confidence and clarity you need to relax and enjoy your years ahead while working towards your goals. They will work with you every step of the way to manage your estate, prepare your finances to support the people you care about most, and strengthen your financial legacy. 

Employer-Sponsored Retirement Plan

Take full advantage of any retirement plans offered by your employer. Some plan options may include 401(k)s, Roth IRAs, SEPs, and more. When choosing the right employer-sponsored plan for you, there are several elements to consider:

  • Does your employer offer a contribution match? If so, are you leveraging it properly?
  • How far away from retirement are you?
  • Are you saving enough to maintain your lifestyle during retirement?

It is important to fully understand all of your retirement plan options to maximize your savings. Sit down with your financial advisor to decide which option is best for you and your unique financial situation.

Life Insurance

No matter your current stage in life, the best thing you can do for yourself and your loved ones is to be prepared for anything life throws at you. Your financial advisor is here to help you prepare for the unexpected. They will help you create a comprehensive plan including life insurance options specific to your overall needs to protect your family’s financial future. 

Education & College Planning

Do you lay awake at night worrying about the cost of your children’s education? You are not alone! Planning college funds and paying for private schools can be intimidating. Meeting with a financial advisor can help you get started with a strong financial plan factoring in education and college planning, so you can sleep more soundly. By starting early, you can take advantage of tax-advantaged savings options like 529 plans, which grow over time to help offset rising tuition costs.

Estate Planning

Spending time now to properly plan for the future can provide financial security for your family and alleviate any stress you may have about the distribution of your assets. Although discussing end-of-life arrangements is not always comfortable, estate planning is essential to a sound financial plan. Working with your financial advisor along with an estate attorney can help you plan and preserve the legacy you have worked so hard to build. By incorporating strategies such as truss or gifting, you can ensure your assets are passed on efficiently and according to your wishes. 

Tax Planning

Properly planning your taxes is a major aspect of your financial wellness. This means taking advantage of all available deductions, optimizing your contributions, and more. Start thinking about what can be done now to save yourself from stress later on. Keep track of dates for your deductions, contributions, and donations. Consult a tax professional for guidance on your specific tax situation and for policies and regulations that may pertain to you. 

Health Care

As we age, the cost of health care rises significantly, making it essential to factor into your financial wellness and comprehensive financial planning. Consider expenses like premiums, out-of-pocket costs, and long-term care. Additionally, you may want to consider opening a Health Savings Account(HSA) if eligible, as it offers tax advantages and can be used to cover medical expenses in retirement. A trusted financial advisor can walk you through your options to help you allocate your funds wisely and ensure you and your family’s healthcare needs are covered without compromising your financial goals. 

Long-Term Care

Setting funds aside for long-term care in old age is often overlooked, but it is an integral part of any well-rounded financial plan. Long-term care insurance may be a practical solution to funding care needs, whether for at-home care or a nursing home, providing peace of mind for you and your loved ones. This type of insurance can also be a vital part of your estate planning, talk to your financial advisor to evaluate your options and ensure you are prepared.    

Social Security Optimization

Are you making the most of your social security benefits? To optimize your benefits you may want to consider:

  • Delaying claiming past full retirement age for higher payments
  • Coordinating spousal benefits strategically
  • Planning for potential benefit taxes based on your income

If you receive social security benefits, you can expect them to increase by 2.5% due to a cost-of-living adjustment in 2025. Limits for taxable earnings and income thresholds can also change year-to-year, so be sure to sit down with your advisor to see how these changes impact you and your finances. 

Retirement Income

Planning your retirement income is essential to ensuring your savings last throughout your golden years. An experienced financial advisor can help you develop a strategy to maximize income, minimize taxes, and meet your goals. Key considerations include creating a withdrawal strategy, managing Required Minimum Distributions (RMDs), factoring in inflation, and diversifying income streams. By regularly reviewing your spending patterns and income strategy, you can enjoy a fulfilling retirement with confidence!

A sound financial plan should include all of these aspects to ensure your long-term financial security. No matter your goals, you have a team behind you at Blakely Financial. Take the first step toward your financial wellness journey and contact us today!

 

529 plans involve investment risk, including the possible loss of funds. There is no guarantee that an education-funding goal will be met. In order to be federally tax free, earnings must be used to pay for qualified education expenses. The earnings portion of a nonqualified withdrawal will be subject to ordinary income tax at the recipient’s marginal rate and subject to a 10 percent penalty. By investing in a plan outside your state of residence, you may lose any state tax benefits.
Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals. Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM  to see what other financial tips we can provide towards your financial well-being.
Commonwealth Financial Network® or Blakely Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.
Year in Review: Financial Updates

Year in Review: Financial News

Posted on by Emily Promise

As 2024 draws to a close, it is the perfect time to reflect on the year’s financial news and developments that have influenced individuals, businesses, and markets alike. From tax adjustments to changes in policies and trends, these key financial updates have posed both challenges and opportunities throughout the last year.

Tax Updates

2024 saw significant adjustments in tax laws, providing new opportunities for individuals and families to save. Here are a few:

  • Higher Standard Deduction: For 2024, the standard deduction increased to $29,200 for married couples filing jointly, $14,600 for single taxpayers and married individuals filing separately, and $21,900 for heads of household. 
  • EV Tax Credits Enhanced: Buyers of qualifying electric vehicles (EVs) now have the option to transfer the federal $7,500 EV tax credit to the dealer at the time of purchase, lowering the upfront cost of the car. This simplifies the process for buyers and incentivizes eco-friendly choices!
  • Retirement Contributions: Contribution limits for IRAs and workplace retirement accounts increased again in 2024. Individuals can now contribute up to $7,000 to traditional and Roth IRAs, with an additional $1,000 catch-up contribution for those over 50. The contribution cap for 401(k)s increased to $23,000, with an additional $7,500 for catch-up contributions.

Medicare Costs Rise

Medicare Part B premiums saw a 6% increase in 2024, rising to $174.70 per month and reversing the prior year’s decrease. Additionally, the deductible for Part B increased from $226 to $240. While some Medicare Advantage and Part D plans experienced slight adjustments, the changes highlight ongoing concerns about the affordability of healthcare. 

Retirement Policy Shifts

Retirement planning experienced several notable changes including:

  • Required Minimum Distributions (RMDs): As part of the SECURE 2.0 Act, the age to begin RMDs remained at 73 for 2024. 
  • HSA Contribution Limits: Health Savings Account (HSA) contribution limits reached record highs in 2024, with individuals able to contribute up to $4,150 and families up to $8,300, reflecting the growing importance of HSAs in healthcare and retirement planning. 

Inflation and Interest Rates

Inflation rates in 2024 remained more stable compared to the highs of 2022 and 2023. However, the Federal Reserve maintained its cautious stance by keeping interest rates elevated, aiming to curb any lingering inflationary pressures while ensuring economic growth. This policy reinforced the need for strategic financial planning with many borrowing costs, including mortgages, auto loans, business investments, and more. 

Real Estate Market Dynamics

Throughout 2024, the real estate market remained challenging due to the high interest rates. Homebuyers faced affordability issues as mortgage rates stayed above 7% for much of the year, leading to slower home sales and increased demand for rental properties. Sellers in competitive markets still benefitted, but many opted to wait for rates to drop before listing their homes.

It’s critical to stay informed and proactive when it comes to policy updates and your finances. At Blakely Financial, we are here to help you navigate these changes and plan for a healthy financial future. If you have questions or need guidance on how these 2024 financial updates may impact your goals, contact us today.

 

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals. Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM  to see what other financial tips we can provide towards your financial well-being.
Commonwealth Financial Network® or Blakely Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.
What to Know About 401(k) Contributions

What to Know About 401(k) Contributions

Posted on by Robert Blakely

For 2024, the IRS announced a change in the contribution limit for employees who participate in 401(k), 403(b), and most 457 plans, as well as the federal government’s Thrift Savings Plan. Annual contribution limits increased to $23,000 from $22,500 as a cost of living adjustment. The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), and most 457 plans, as well as the federal government’s Thrift Savings Plan, remains unchanged at $7,500.

What does this mean for me?

If your employer offers benefits such as retirement plans, you will want to make sure you are taking advantage of everything offered to you to save for retirement. In order to take full advantage of this, it is important to understand any changes to contribution limits.

If you are already making the maximum contribution to your 401(k) each year, increases in contribution limits are good news for you, as you will be able to set even more money aside for retirement. If you are looking to maximize your retirement fund, you may want to consider contributing to both your employer-sponsored retirement plan and an IRA.

Making the Most of your 401(k)

One of the most important financial planning strategies when saving for retirement is maximizing your employer’s 401(k) match if offered. This extra money can significantly boost your retirement fund, especially if you consistently contribute enough to receive the maximum match. Take the time to thoroughly read over your company’s plan with your financial advisor to ensure you understand the specifics and make the most of your money.

Key Points to Remember About a 401(k)

Here are a few key points to keep in mind about a 401k):

  • A 401(k) is a retirement savings plan, so once you put money in, it is always best to leave it in.
  • There are penalties if you take the money out of your 401(k) before you hit retirement age.
  • If you change employers, you can roll your vested balance into your new employer’s 401(k) plan or into another qualifying retirement account such as an IRA.

Take advantage of any type of savings plan offered by your current employer. The earlier you begin and the more aggressive you are, the closer you will be to achieving your financial goals. If you have further questions about your 401(k), retirement savings, or any other aspect of your financial plan, it is always a great idea to speak with your financial advisor for guidance. Contact the Blakely Financial team today to get started.

If you are considering rolling over money from an employer-sponsored plan, you often have the following options: leave the money in the current employer-sponsored plan, move it into a new employer-sponsored plan, roll it over to an IRA, or cash out the account value. Leaving money in a plan may provide special benefits including access to lower-cost investment options; educational services; potential for penalty-free withdrawals; protection from creditors and legal judgments; and the ability to postpone required minimum distributions. If your plan account holds appreciated employer stock, there may be negative tax implications of transferring the stock to an IRA. Whether to roll over your plan account should be discussed with your financial advisor and your tax professional.
Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals. Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM  to see what other financial tips we can provide towards your financial well-being.
Commonwealth Financial Network® or Blakely Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.
Downsizing or Rightsizing: Finding the Right Fit for Your Future

Downsizing or Rightsizing: Finding the Right Fit for Your Future

Posted on by Steve LaFrance

If you’re thinking about downsizing or rightsizing your home prior to retirement, you’re not alone. This decision is not just about reducing space – it’s a significant financial decision that can benefit your lifestyle and financial health and many people are choosing to adjust their living spaces as they approach this new chapter in their lives. Learn more about the process of downsizing or rightsizing and how it can help you as you approach retirement.

Assessing Your Living Space

As homeowners age and children begin to move out, it’s common for individuals to assess their homes, finding that they primarily live in just three rooms: the family room, the bedroom, and the kitchen. Housing expenses can constitute a significant portion of a person’s budget in retirement. Naturally, many look to reduce their home size as a way to cut these expenses. However, it’s important to remember that reducing the size of your home doesn’t always equate to reducing your budget. 

Financial Planning: Pre- and Post-Downsizing

Before taking the leap to downsize, it’s crucial to complete both a pre-downsizing budget and a post-downsizing budget with your financial advisor. This will give you a clear picture of your financial situation and help you understand the potential impact on your finances. Additionally, when selling your home, be aware of the potential capital gains tax implications. Fortunately, couples can exclude up to $500,000 of capital gains from the sale of their primary residence. You might also reinvest what you owe into a new permanent home. 

Personal Considerations

While the financial benefits of downsizing are important, they are not the only factors to consider. Many people also think about the proximity to family, a warmer climate, or being closer to friends, all of which can significantly influence your decision. It is also essential to recognize that downsizing your home can impact your estate planning goal, retirement goals, and other financial situations in your life. Sit down with your financial advisor to see how downsizing would impact all areas of your financial plan before making a final decision. 

Consulting with Trusted Advisors

At Blakely Financial, we suggest contacting your most trusted advisors to discuss this important decision. They can provide you with clarity, insight, and guidance tailored to your unique situation. Everyone’s circumstances are different, and having the best information possible is key to making an informed choice.

Downsizing or rightsizing your home is a significant decision that can shape your future in many different ways. By considering all factors and seeking professional advice, you can make a choice that supports your financial well-being and personal happiness. Still on the fence? Contact Blakely Financial today to get started. 

 

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals. Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM  to see what other financial tips we can provide towards your financial well-being.
Commonwealth Financial Network® or Blakely Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.
Financial Freedom for Women

Financial Freedom for Women

Posted on by Emily Promise

Achieving financial freedom is a goal for many, but for women, it often comes with unique challenges. From wage gaps and career breaks to planning for longer life expectancies, women face distinct hurdles in their financial journeys. However, with the right knowledge, these obstacles can be overcome. In this blog, learn how to build wealth, take control of your financial future, and thrive in the financial world.

Understanding the Unique Challenges

The first step in gaining financial freedom as a woman is to understand the unique challenges you may face in the financial world. Here are a few you may come across:

  • Wage Gaps: Women often face wage disparities across various sectors and industries, which can significantly impact their long-term financial health.
  • Career Breaks Many women take career breaks for caregiving, which can impact their earning potential and career growth.
  • Longer Life Expectancies: Women typically live longer than men, which means it is crucial to plan for extra years of retirement.

Combating Challenges

While these challenges are very common among women, they can also be overcome. To combat wage gaps, women should be educated about industry salary standards and negotiation skills to ensure they are fairly compensated for their work. Additionally, supporting women’s access to leadership training and mentorship can help them reach higher-paying positions and close the wage gap.

Women can mitigate the financial impact of career breaks by engaging in proactive financial planning, such as saving specifically for this purpose. When speaking with your financial advisor, let them know this is part of your plan and they will help you factor it into your financial game plan.

When taking longer life expectancies into consideration, women should focus on extending their retirement planning to ensure they save enough to cover these additional years. Investing in robust healthcare plans and health savings accounts can address the rising medical costs associated with aging.

Essential Financial Strategies

When embarking on your journey toward financial independence, there are a few essential financial strategies to keep in mind:

  • Investing Early: Starting your investment journey early maximizes the benefit of compounding interest, which is crucial for building long-term wealth. Even small investments can accumulate significantly over time, helping women secure their financial future. 
  • Diversified Portfolio: A mix of assets can manage risks and promote steady growth, safeguarding wealth against unpredictable market conditions. A diverse portfolio may include stocks across different industries and risk profiles, as well as other assets such as bonds and real estate.
  • Retirement Planning: Retirement planning is particularly important for women due to longer life expectancies and unique career trajectories. Effective strategies include maximizing 401(k) contributions and selecting suitable retirement accounts to ensure financial stability in later years. Be sure to research your employer’s retirement plan options and work with your financial advisor to select the one that best fits your unique situation and needs. 

Learn and Grow

The journey to financial freedom is ongoing, requiring continuous learning, growth, and support. The following are key to a successful financial future:

  • Education & Awareness: Understanding the financial landscape is crucial for achieving financial independence. By educating yourself through workshops, webinars, and resources, you can become more aware and better prepared for any situation coming your way. Additionally, learning negotiation skills can help you secure better salaries and benefits, which is essential for building long-term wealth. 
  • Strategic Planning: Strategic financial planning is essential for reaching financial independence. For example, having a plan that accounts for career interruptions by saving for sabbaticals or considering career break insurance can help create a solid path toward financial stability and independence.
  • Support and Community: Building a strong support system is crucial for women’s financial success. Engaging in mentorship programs for guidance and joining networks with other women facing similar financial challenges can provide valuable support. 

 

With determination and the proper resources, women can confidently navigate their financial paths and achieve lasting financial security. If you want to learn how to gain financial independence, contact us today. We’re here to guide you every step of the way.

 

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals. Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM  to see what other financial tips we can provide towards your financial well-being.
Commonwealth Financial Network® or Blakely Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.
Retirement Planning for Dads at Every Stage

Retirement Planning for Dads at Every Stage

Posted on by Emily Promise

Retirement planning is a journey spanning the entirety of your career, evolving as you move through different phases of your life. For dads, this process holds unique significance – not only are you securing your own future, but you’re also safeguarding your family’s long-term financial well-being. From the early days of your career to the time you decide to retire, every stage of your journey offers opportunities to optimize your retirement planning strategy. As Father’s Day approaches, let’s explore retirement planning for dads and what this may look like at each career stage, ensuring a smooth transition to a financially secure retirement for you and your family.

Early Career (20s to Early 30s)

In the early stages of your career, when you are in your 20s to early 30s, time is your greatest ally. To build a strong foundation in your retirement planning, you will want to begin contributing to your retirement accounts as soon as possible. Research any retirement accounts offered by your employer and be sure to enroll in one, such as an employer’s 401(k) plan. Once enrolled, strive to contribute enough to qualify for the full employer match, if it is available, as it essentially offers free money towards your retirement savings. Simultaneously, it’s essential to establish an emergency fund, which serves as a financial buffer during unexpected situations and emergencies. Aim to have three to six months’ worth of expenses saved in this account to avoid dipping into your retirement savings and preserve future compounding gains in case of emergency.  

Mid-Career (Mid-30s to 40s)

As you progress into your mid-career in your mid-30s to 40s, your earning power typically increases, making it the perfect time to ramp up your retirement contributions! Strive to max out your 401(k) contributions and consider opening an IRA for additional tax-advantaged savings. Additionally, it is critical to start diversifying your investment portfolio beyond standard retirement accounts. Other assets may include real estate, stocks, and more. Talk to your financial advisor to see which options are best for you and your risk tolerance. Moreover, while it is tempting to focus solely on saving for your children’s education during these years, it is important to maintain a balance between funding their college accounts and boosting your retirement savings. 

Late Career (50s to Early 60s)

When you reach your 50s to early 60s and retirement begins to inch closer, take full advantage of catch-up contributions in your 401(k) and IRA, which allow you to contribute additional funds if you are over 50. It is also important to reevaluate your retirement goals once you reach this stage. Ask yourself, “Am I on track to live comfortably?” and adjust your savings strategies accordingly. Additionally, focus on reducing or eliminating any outstanding debt including your mortgage, credit cards, and personal loans before retirement. Entering your retirement debt-free can significantly reduce your monthly expenses as well as financial stress. 

Nearing Retirement (Late 60s and beyond)

In the years closest to retirement, develop a strategic plan for withdrawing from your retirement savings accounts to maximize your gains and minimize taxes. Speak with your financial advisor to learn more about tax-saving strategies and the best approach for you and your unique situation. In addition, consider any necessary lifestyle changes such as downsizing your home for cost efficiency, and begin to plan for healthcare needs. Understand your Medicare options and assess the need for supplemental policies or long-term care insurance, ensuring you are covered for any health issues that may arise during retirement. 

 

As you navigate the joys of fatherhood, remember it’s also crucial to plan for your future. At Blakely Financial, we’re dedicated to helping dads at every stage of fatherhood work toward a comfortable retirement. From your first Father’s Day to enjoying your golden years, let’s make sure your financial plans are as strong as the legacy you’re building. Contact us today to get started. 

 

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals. Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM  to see what other financial tips we can provide towards your financial well-being.
Commonwealth Financial Network® or Blakely Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.
Your Guide to Year-End Financial Planning

Your Guide to Year-End Financial Planning

Posted on by Emily Promise

As 2023 comes to a close, now is a great time to review your financial plan. With 2024 coming quickly, it’s crucial to reevaluate your financial objectives, consider any life changes impacting your finances, and stay informed about the latest tax and finance developments. Before your yearly financial advisement meeting, here are four areas to consider for your year-end financial planning.

Tax Planning Strategies

The first step in your guide to financial planning, as the year ends, is to nail down your tax planning strategies. First, be sure to understand and utilize any tax deductions and credits available to you. Investigate credits such as child tax credits, education credits, and energy efficiency credits. A financial professional can also help you discover and optimize various deductions and credits.

Additionally, reexamine your finances to see if you can reduce your taxable income in other ways. One way to do so is to defer your income. Deferred income refers to income you have received but not yet earned. This is common if you offer products or services and have received advance payments. Another way to reduce taxable income is by accelerating your donations. Giving multiple years worth of charitable contributions in one year can bring you closer to the threshold. 

Accounts such as FSAs and HSAs can also offer tax relief. Talk to your financial advisor to see if you qualify. They can help you choose the best option for your unique financial situation, understand your balances, your rollover options, and how to maximize your contributions.

It is important to note that tax laws change frequently. Thoroughly research any tax law changes that will affect you over the upcoming year.

Investment Portfolio Review

When conducting your year-end financial review, give your investment portfolio a check-up. Assess risk tolerance and make adjustments accordingly. Strategize your stock options. Is selling in January 2024 more tax-efficient than doing so this year? You can also look for opportunities for tax loss harvesting. This would involve selling underperforming investments to offset gains, potentially reducing your taxable income. The rules surrounding tax-loss harvesting are complex, so it is best to seek professional advice before taking action. Your financial advisor can help you assess the timing for selling your stock as well as your best options for investment overall. 

Retirement Planning

Year-end is a great time to fine-tune your retirement plans! Are you maxing out your retirement contributions? If you are not currently, it is worth considering, especially to leverage employer-match benefits in workplace plans or increase traditional IRA contributions. Contribution limits change annually, so make sure you are up to date with the latest rules.

Additionally, if you inherited an IRA, specific rules apply to you in regards to how much you have to take up annually, or if it’s your IRA and you’ve reached the required minimum distribution age, you also have to take out distributions.

Another consideration is Roth conversions. If your current tax bracket has room, converting traditional IRA savings into a Roth IRA might be beneficial. This strategy involves paying taxes upfront for tax-free growth later. Consult your advisor to see if this suits your long-term tax strategy.

Make sure that you’re balancing what you’re setting aside for retirement as well as taxable savings. You don’t want all your money in one bucket or the other!

Charitable Giving

The end of the year is often referred to as the season of giving – it’s a great time to look at your charitable giving. This can be a great thing to do from a tax perspective as well as to fulfill personal needs.

The first thing to do is look at donor-advised funds, which are a flexible aspect of charitable giving. You can put lump sums of cash and appreciated securities into a donor-advised fund. From there, you’re able to get a full tax deduction from the amount of money that you put into it. You’re able to give these funds out for however long you want to the charities of your choice.

If you’re at the required minimum distribution age, you can start a qualified charitable distribution (QCD). This allows you to take your RMD (required minimum distribution) and give it directly to the charity of your choice.

Generally, a donor-advised fund is a separately identified fund or account that is maintained and operated by a section 501(c)(3) organization, which is called a sponsoring organization. Each account is composed of contributions made by individual donors. Once the donor makes the contribution the organization has legal control over it. However, the donor, or the donor’s representative, retains advisory privileges with respect to the distribution of funds and the investment assets in the account. Donors take a tax deduction for all contributions at the time they are made, even though the money may not be dispersed to a charity until much later.

Are you ready to talk to a financial professional about your year-end financial planning? Contact Blakely Financial today to get started.

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals. Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM  to see what other financial tips we can provide towards your financial well-being.
Commonwealth Financial Network® or Blakely Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.
National Entrepreneurship Month: Managing Irregular Income and Retirement Options When You’re Self-Employed

National Entrepreneurship Month: Managing Irregular Income and Retirement Options When You’re Self-Employed

Posted on by Emily Promise

November is National Entrepreneurship Month and is dedicated to celebrating entrepreneurs, their spirit of innovation, risk-taking, and the economic growth they bring to our communities and the global economy. Honoring these entrepreneurial spirits would not be complete without acknowledging the unique financial challenges they face as self-employed individuals. In this blog, we’re answering common questions about managing irregular income and retirement options when you’re self-employed. These financial strategies and considerations will help you build a healthy financial future as an entrepreneur. 

How can I plan for my retirement while also reinvesting in my business?

When you are self-employed and running your own business, it is tempting to reinvest every dollar you earn right back into your business. Of course, it is important to reinvest some of your earnings to fuel essential growth in your business, but your financial security is also of high importance. Balancing these needs can be challenging, but is possible with proper and thoughtful planning. There are various types of retirement accounts for self-employed individuals including SEP IRAs, 401(k)s, and SIMPLE IRAs. These accounts offer tax advantages while allowing you to save for your retirement and a financially healthy future. The key to successfully utilizing a retirement fund is to contribute consistently, even when income is irregular. Work with a financial advisor to establish a realistic retirement savings goal, and aim to meet it each year. 

What deductions and credits are available to entrepreneurs?

There are many tax deductions and benefits available to self-employed entrepreneurs. The Tax Cuts and Jobs Act (TJCA) went into effect in 2018 and put several changes into place in tax deductions for the self-employed, some of which are permanent and others which are temporary. The following are only some of the current deductions that may be available to you to help reduce your taxable income:

  • Self-employment tax deductions refer to Medicare and Social Security taxes self-employed people are required to pay
  • Home office deductions allow you to deduct the cost of any workspace used regularly and exclusively for business, the business percentage of deductible mortgage interest, home depreciation, utilities, and repairs if you own your home. Rent deductions are also available if you rent your office space outside of your home. 
  • Internet and phone bill deductions allow you to deduct the business portion of these expenses regardless of whether or not you claim home office deductions. 
  • Health insurance premiums deductions are available if you pay for your health insurance premiums and are not eligible to participate in a plan through your spouse’s employer.
  • Meal deductions are relevant when traveling for business, at a conference, or dining with clients. 
  • Travel deductions apply to business travel lasting longer than an ordinary workday, requiring rest, and taking place away from where your business is located. 
  • Retirement plan contributions deductions are available and help you build up tax-deferred investment gains for the future.

Tax credits such as the Small Business Health Care Tax Credit and the Research and Development Tax Credit are also available. It is important to review your deductions and credits every year in order to make your business as profitable as possible. Consider speaking to a financial professional to help you maximize your benefits while remaining compliant with tax laws.

How can I ensure financial security for myself and my family after retiring from my business?

Planning for a financially secure retirement is not solely about accumulating wealth, it also involves creating a reliable income stream in your post-working years. Many different strategies can be used to build your retirement income plan such as investments, annuities, and Social Security. Additionally, be sure to create your estate plan to ensure your wealth lasts beyond your lifetime and can contribute to your family’s financial security. Consider life insurance and disability insurance as an extra layer of protection in the case of unforeseen events. Sit down with your financial advisor to determine which options are best for you based on your personal retirement goals and your individual financial circumstances. 

How can I balance my personal financial goals with the financial needs of my business?

Balancing your personal goals with the needs of your business may be daunting, but it is essential to your (and your business’s) financial well-being. To begin your balancing act, set clear priorities for your personal finances while keeping your business’s financial needs in mind. Use these priorities to create a budget that accommodates both business and personal aspects of your life. Build an emergency fund into this budget to help take care of any unexpected expenses, whether they are personal or business-related. The most important part of budgeting is sticking to your budget! If you are struggling to establish or stay within your set budget, reach out to a financial advisor.

What steps should I take to prepare for audits or regulatory inspections?

Facing audits or regulatory inspections can be nerve-racking, but with proper records and a strong financial team, you can navigate them smoothly. The best approach involves maintaining accurate financial records and documentation to ensure transparency in your financial affairs. Keep receipts, bills, and records of any necessary communication on hand. Additionally, take time to understand relevant regulations and tax laws through your own research and professional financial guidance. By staying informed and organized, you can help avoid any accidental lack of compliance to mitigate regulatory headaches.

By seeking professional financial guidance as an entrepreneur, you can proactively address financial challenges and reap the long-term benefits of effectively managing your irregular income and retirement planning. At Blakely Financial we understand that running a successful entrepreneurial venture is challenging, and our team of financial advisors would love to see how we can support your entrepreneurial efforts. Contact us today to get started. 

 

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals. Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM  to see what other financial tips we can provide towards your financial well-being.
Commonwealth Financial Network® or Blakely Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.

Monstrous Money Mistakes

Posted on by Robert Blakely

It may be the season of spooky haunts and horrors, but don’t let these monstrous money mistakes lead you to the financial graveyard!

Investment Zombies

Don’t neglect your investment strategies. Just like zombies mindlessly wander, not actively managing investments can lead to missed opportunities or poor performance, even for high earners. Revisit and reevaluate your investment portfolio periodically to be sure you are diversifying your investments and maximizing your returns. Talking to your financial advisor can help you avoid an investment zombie apocalypse.

Estate Planning Ghouls

Failing to create a comprehensive estate plan can haunt families after a high-earning individual passes away. This mistake can lead to unnecessary taxes, legal battles, and confusion over asset distribution. Meet with your financial professional to discuss the best estate planning options for you and your loved ones. Review your plan annually and make adjustments to reflect any life changes that may occur.

Lifestyle Vampire

This monstrous money mistake involves succumbing to lifestyle inflation. High earners might start spending excessively as their income rises, without properly considering the long-term impact on savings and investments. Don’t bite off more than you can chew with your spending.  It is crucial to find a balance between your desired lifestyle and your long-term financial goals and well-being to really enjoy life to the fullest. 

Debt Demons

Credit card ghouls, student loan specters, and mortgage monstrosities. Oh my! These debt demons come in many forms and can feel like never-ending financial nightmares if not managed properly. Be sure to explore interest rates and different repayment options to pay down your debt, and even consider refinancing your loans or mortgage to make payments more manageable. Utilizing a budget can help you do this more easily. Exorcize these debt demons and keep control of your financial future!

Budget Banshee

You’ll hear the eerie wails of the budget banshees if you neglect proper budgeting. The shrieks serve as haunting reminders of overspending, impulse purchases, debt, disorganized finances, and unexpected expenses. Create a budget unique to your financial situation by tracking your income and expenses and establishing your financial goals. Explore where you may be able to save and remain disciplined when it comes to your spending. Don’t forget to factor an emergency fund into your budgeting to cushion the impact of any unexpected financial shock! Evaluate your financial health routinely and adjust your budget accordingly to banish the budget banshees. 

If you need help battling these monstrous money mistakes, contact Blakely Financial today. 

 

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals. Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM  to see what other financial tips we can provide towards your financial well-being.
Commonwealth Financial Network® or Blakely Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.
Optimizing Your 401(k) Contributions

Optimizing Your 401(k) Contributions

Posted on by Robert Blakely

What is a 401(k) plan?

A 401(k) plan is a company-sponsored retirement plan that allows eligible employees to contribute a portion of their salary to a variety of investment options. 401(k) contributions are typically “before tax” money, meaning the amount you choose to contribute is deducted from your paycheck before taxes are taken out and you are paying taxes on a smaller portion of your salary. 

Many plans also offer options for employees to make post-tax ROTH 401(k) contributions from their paychecks. Post-tax ROTH contributions do not lower an employee’s taxable income, but they do grow tax-free and aren’t taxed upon withdrawal.

An additional benefit of a 401(k) plan is that when you finally pay the taxes on your 401(k) contributions, you may be at a lower rate. Typically, you begin withdrawing money from your 401(k) when you retire and you may very well be in a lower tax bracket at that time; thus you could end up paying less tax on your savings when you do eventually withdraw funds.

If your company offers a 401(k) plan and you are not participating, you may want to revisit your decision as they are a great opportunity and an easy way to save for the future. If you have just entered the workforce, retirement may be the last thing on your mind. Or if you are an older employee nearing retirement, you might be thinking it is too late. At any stage of life, 401(k)s can offer specific advantages that make them a great option for investing and saving.

Making the Most of Your 401(k) Contributions

Many employers offer matching contributions to 401(k)s. For example, your employer may offer a 4 percent match, where they will contribute the same amount you do, up to 4 percent. While this is their limit, you can personally contribute more. If you are not contributing to your company’s 401(k) plan and they have a match, you are leaving money on the table! Don’t be concerned if you cannot contribute the maximum amount to your retirement plan. Simply participating in an employer-sponsored plan puts you in a great position for a successful retirement, especially if you start early. If you are unsure about the specifics of your company’s plan, take the time to read over it thoroughly, perhaps with your financial advisor, so you can make the most of your money.

Combined Savings Strategy

A large number of people find success in a combined savings strategy using both a 401(k) and an IRA to truly maximize their retirement funds. A study conducted by the Employee Benefit Research Institute (2020) found that, on average, individuals who owned both a 401(k) and an IRA at some point during the six years of the survey had combined balances about 2.5 times higher than those who owned only a 401(k) or an IRA. People who owned both types of accounts consistently over the period had even higher balances. Talk to a financial advisor to explore your options and decide which is best for you based on your own income and circumstances.

A Few Key Points to Remember about 401(k)s

  • It is a retirement savings plan, so once you put money in it is best to leave it in. 
  • There are penalties if you take the money out before retirement age.
  • If you change employers you can roll your vested balance into your new employer’s 401(k) plan or into another qualifying retirement account such as an IRA.

No matter what, take advantage of any type of savings plan your current employer offers as the earlier and more aggressive you are, the closer you will come to achieving your financial goals. If you have questions, it is always a great idea to call a financial advisor for guidance. Contact the Blakely Financial team today to get started saving for your future. 

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals. Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM  to see what other financial tips we can provide towards your financial well-being.
Commonwealth Financial Network® or Blakely Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.