Retirement Planning

How a Taxable Investment Account Can Be Good for Your Retirement

Published on: October 24, 2016 | By McCulloch & Miller, PLLC

We’ve been so inundated with the idea of tax-free investment accounts that the taxable investment account’s role in retirement planning is underutilized and overlooked.

If you’re like most Americans, you’ve got at least one and maybe a few retirement accounts. You like the tax benefits that come from having IRA's, 401k's, 403b's, 457b's and defined benefit plans. You know you’ll have to pay income taxes when you start taking distributions from them, except for the Roth accounts, but seeing those accounts grow makes you feel good. And if you have a Roth, you like knowing that even if you aren’t getting a deduction now, distributions will be tax free. But there are other kinds of investment accounts for retirement planning.

As Physician’s Money Digest says in “10 Reasons You Need a Taxable Investment Account,” taxable retirement accounts are ignored because we’re so focused on IRS-approved retirement accounts. But you might think about supplementing your savings with a taxable retirement account. This can be a regular, old-school investment portfolio that’s not linked to any government regulations and that you’re building for retirement.

Too Old for an IRA? You Can Still Be Tax-Smart

Published on: September 9, 2016 | By McCulloch & Miller, PLLC

If you are working after 70 ½, there are still ways to save money tax-free.

Wage earners are not permitted to put money into a traditional IRA in the year they turn 70 ½ according to the Kiplinger article, “Tax-Smart Ways to Save When You're Too Old for a Traditional IRA.” But you would still be able to contribute to a Roth IRA, as long as your income in 2016 is less than $132,000 if single or $194,000 if married and file taxes jointly. In addition to the money growing tax-free in the Roth IRA with no time limit, you don’t have to take any RMDs (required minimum distributions).

You can contribute up to the amount you earned for the year (your net income from self-employment), with a maximum of $6,500—that’s $5,500 for everyone under age 50, plus $1,000 for people age 50 and older. If your earnings are well over the $6,500 maximum, you can just contribute that amount. However, if your earnings are near or under the maximum, you’ll need to know what is considered compensation and how to calculate your allowed contribution.

It Takes More than a Nest to Protect Your Retirement

Published on: September 2, 2016 | By McCulloch & Miller, PLLC

Having an emergency fund in place will help you deal with the unexpected. Surprising survey results point to this as a very weak link in many Americans’ financial plans.

Seniors who have finally reached retirement age after decades of work and smart planning may think they are all set once their nest egg is funded. But that nest egg needs to be protected by an emergency fund—something which most Americans seem to have forgotten during their retirement planning.

Fox Business’ recent article, “What Nest Egg? Two-Thirds of Americans Can't Cover $1,000 Emergency,” talks about the importance of maintaining an emergency fund so you don’t take withdrawals from your retirement accounts.

Mid-Summer is Time for a Midyear Financial Checkup

Published on: August 19, 2016 | By McCulloch & Miller, PLLC

While the number of people making New Year’s financial resolutions are on the rise, we would do well to make a midyear financial check a regular part of the summer season.

The good news is more than 30% of Americans did give some thought to making financial resolutions this past New Year, according to a survey from Fidelity Investments. The goals were nothing out of the ordinary. They were simply the things we should all be doing with our money: saving more, spending less and getting rid of debt.

If you were one of these go-getter and goal-setters, this summer is a perfect time to look at your progress, says US News in “Keep Your Money Goals on Track with a Midyear Financial Checkup.”

Should Your Aging Parent Live with You?

Published on: July 25, 2016 | By McCulloch & Miller, PLLC

Whether or not an aging parent should live with their adult children raises issues for the parent and the children. There is no single or easy answer.

It usually starts when one spouse dies and an aging parent suddenly seems alone and vulnerable. The parent may bring it up first, referencing a long ago conversation when the adult children said they would never put their parent into a nursing home or similar facility. As described in Forbes’ “Aging Parents and The Rise of the Multi-Generation Household,” this promise is usually made when the parents are well and the natural response “of course not” is an easy answer. But situations change, and the answer is not always so simple.

The Dickensian concept of “being put in a home” is based on largely outdated ideas of poorhouses and debtors’ prisons. While perhaps a bit drastic, it may not be that far off for Depression-era kids who saw the treatment of seniors before Medicare and Medicaid provided some care. Some nursing homes are still found to violate government regulations, but most are decent, well managed and comfortable places to care for seniors who need a lot of attention for a multitude of medical needs. Licensed board and care homes may be another option for long-term care, usually at a lower cost than nursing homes. They don’t offer skilled nursing, but they do have a more intimate environment with a less institutional atmosphere.

Need to Track Down a Missing Pension?

Published on: June 20, 2016 | By McCulloch & Miller, PLLC

The defined-benefit pension is a rare bird today. But if you are lucky enough to have one, don't assume that your distribution will go smoothly. Here's how to protect yourself.

For millennials, the idea of a pension plan that pays benefits from the time you retire to the day you die is an unheard of concept. Fewer and fewer American companies offer this benefit, so if you are among those who have a defined-benefit pension, congratulations. But don't assume that the check is in the mail. A recent investigation by the Department of Labor into some of these large plans shows that more than $500 million is owed to retirees.

Kiplinger's article, "Missing Pensions Costly to Retirees," reports that since last summer the Labor Department has investigated more than four dozen large pension plans and has found staggering results: some of them are not doing a very good job of monitoring retired participants and paying benefits when they're owed. Some plans don't even have the names or ages of many of their participants.

Retirees Are Changing Things Up-Could Houston be a Hot Destination?

Published on: June 2, 2016 | By McCulloch & Miller, PLLC

The entire US is up for grabs for retirees who are moving to a wide variety of location—from the mountains of Montana to the moderate temperatures of South Carolina. Is Houston a hot spot?

Once upon a time, if you lived in the north, your default retirement destination was either Arizona or Florida. Today, retirees are looking for low taxes, nice weather and an active lifestyle. They are finding it in many different locations.

The New York Daily News explains this and more in its article, "Forget Florida and Arizona — today's retirees are branching out all over the U.S." Women continue to live longer than men, but the difference has narrowed as the lifespan of males has grown consistently within recent decades. This means that the chances are better now that a married woman will spend additional time in retirement together with her partner than as a widow. Retirees are taking advantage of this additional time together by heading to new territories.

Make That Retirement Nest Egg Stretch As Far as Possible

Published on: May 2, 2016 | By McCulloch & Miller, PLLC

Long gone are the days of pensions, when employers took care of all Houston retirement income. On the flip side, Houstonians are living longer and healthier lives.

If X equals a longer lifetime and Y equals smaller retirement funds, how do you solve for Z? Making retirement money last longer to match a longer lifespan is a very real problem for Houstonians. These three suggestions from The Motley Fool's "3 Easy Moves to Make Your Money Last Your Lifetime" cover some of the big-picture topics: expenses, investment tools and earned income.

Decreasing expenses and cutting unnecessary costs is the first step in making your nest egg last longer. More than likely, your biggest cost is housing. This is where paying off your mortgage long before retirement—or downsizing into a smaller home either before retirement or just as you retire—makes sense. Unfortunately, more and more Houston seniors are still carrying mortgages during retirement. Consider throwing all unexpected windfalls against the mortgage, or make one extra payment every year—if cash flow allows.

Protect Your Houston Retirement – Avoid These Three Mistakes

Published on: April 12, 2016 | By McCulloch & Miller, PLLC

Reality kicks in when the year or actual date of your retirement is around the corner and you realize that your retirement finances aren't what you had thought they would be. For many, this means their retirement includes part time employment or not retiring at all. Harsh lessons, which can be avoided if you take the advice found in "3 Retirement Errors to Avoid" from CPA Practice Advisor.

Unfortunately, many folks don't spend a lot of time even thinking about retirement because they think it's a far-off time when money will have magically accumulated. That means no money to buy the condo in Cozumel, pay for the grandkids' education, or live a life of leisure. Someone in this situation might have to find a part-time job to make ends meet—and it's not out of the question that they could outlive their money. Don't end up without the money you need for retirement. Avoid these common mistakes.

Not understanding taxes. We know that most of the time our money is taxable right away, like earnings from employment or interest on savings. But with individual retirement accounts, the taxes can be deferred. There's also tax-free money, like municipal bonds, life insurance proceeds, and 529 education savings plans. You should try to move as much taxable money as you can to the tax-deferred or tax-free categories.

Houston Seniors Face Growing Debt Burden

Published on: April 1, 2016 | By McCulloch & Miller, PLLC

When you live on a fixed income, any increases in your living costs present a huge challenge. For Manny Martinez, whose sole income is his monthly Social Security check, even living in rent-controlled senior housing doesn't protect him from being squeezed when costs go up. There are months when he has no choice but to accept food from the very same church food bank where he is a regular volunteer.

Martinez said it doesn't pay to get a part-time job because his rent would increase.

Martinez hasn't had to borrow money, but his situation is similar to many seniors who are struggling to get by, says The Daily Item in "New Report: More seniors falling into debt."