Part 1 of 3
One factor that makes your financial life complicated is that it runs on two tracks: paper and electronic. If you’re like me, you receive bills in the mail but pay them electronically. Or maybe you receive some brokerage statements via email, others via snail mail. The key to keeping this organized is to have a filing system. Try creating files like Advisors, Auto, Bank Accounts, Credit Cards, Home, Health or Taxes. Give the folder on your computer that same name as the one in your filing cabinet.
Check the latest tech. Thieves are less likely to target homes with surveillance systems. There are all sorts of new home security devices like doorbells that ring on your cell phone (like the Ring Video Doorbell). It’s inexpensive and easy to install. Get advice from your local electronics store or read reviews online. I’m not surprised but, having a dog made the top of the list as a burglar deterrent. If you don’t have one, try getting a virtual pet. Hearing that barking dog will send thieves running the other way. Another idea is, timing for your devices. By setting lights or devices to turn on and off will give the impression that someone is home and the normal routine is taking place. One more thing, if you’re going away for the day or evening, consider leaving your car in the driveway as opposed to inside your garage. These tricks should turn potential burglars away.
If you live long enough you will have some kind of disability. Planning for disability is harder than planning for death.
Powers of Attorney (POA) require extra work. Fidelity, Schwab and Bank of America won’t accept your POA. They want you and your agent to sign their indemnity form. They insist your agent be added to the account. Do not wait too long for if you are disabled then no one will accept your signature.
The POA’s are an imperfect substitute for you. Your agent will not be able to access your Fidelity account online to find your tax forms from an agent’s account. When your agent calls Caremark about your credit card and your drug plan, Caremark, will demand a business POA, a medical power of attorney, a HIPPA authorization and a Medicare claim assistance form and you must also come to the phone to talk to them.
We always have our clients develop a revocable trust funded well before disability. This system allows for a smoother transition and insures access to liquid assets for your needs when the disability sets in.
True you still need POA’s for IRA’s and other assets that cannot be re-titled. As always, we are here to advise you on every aspect of your financial life.
If your bank is taking you for granted, that is, charging you for checking and paying nothing on savings, then, it may be time to move on.
Free checking is available at smaller community banks, credit unions and online banks. Many online banks pay more than 1 percent on savings for little or no minimum deposits.
Check out Federally insured online banks at Bankrate.com. Many are established community banks that use the Internet to market nationally.
Keep More of Your Savings
People in their 60s should already be planning ways to minimize taxes in their 70s. Investors can pull money out of tax-deferred retirement accounts without penalty after turning age 59 ½ . Yet many choose to let their investments grow sheltered from taxes as long as possible, which can trigger higher taxes when mandatory distributions kick in. Ironically, tax-deferred growth creates its own tax problem if you do it too well.
Most people tend to delay taxes as long as possible, but this can backfire when it comes to RMDs. “It just pushes all the taxes farther and farther down the line and then they get this huge tax bite later.” “Unfortunately, it’s too late at that point.”
But it’s not too late for retirees in their 60s when withdrawals are penalty free, RMDs haven’t yet kicked in and disbursements are likely to be taxed at a lower rate because the recipient is no longer working. Or consider converting part of your traditional IRA each year to a Roth IRA. You’ll owe income taxes on the amount converted, but it may be at a lower rate if you’re retired.