A mutual friend with a new dog brought Stephen and Katie together. Stephen had headed to his friend’s house to meet the new furry member of the family, and when he got there, he saw Katie playing with dog in the backyard. “Katie was so outgoing,” says Stephen. “She was the nicest person you’ll ever meet.”
That first meeting led to beach outings and concerts, and over time to getting married and thinking about starting a family. It was Katie who suggested they get life insurance. Stephen admits he wasn’t too happy about the idea. They were young and healthy, so he didn’t see the point. Katie, however, convinced him to sit down with insurance professional Rose Goheen, who walked them through the process and presented them with affordable options.
When the couple welcomed Chase, they decided to reevaluate their life insurance. Given their expanding family and responsibilities, they both bought additional life insurance.
It was during her recovery from giving birth to Reid that Katie realized something was wrong. Her doctor confirmed her suspicion that the abdominal lump she felt was something much more serious. In fact, it was an aggressive form of cancer. Katie, with the love and support of her family, valiantly fought the disease, but just over a year later it claimed this young mom’s life.
She was just 30.
No words can capture the devastation that Stephen and his boys felt at Katie’s loss. “It’s horrible to lose your soul mate and best friend,” he says. “But I have two boys to support, and I want them to know their dad can carry on.”
Life insurance has helped with that process.
“Nothing can bring Katie back, but having life insurance meant we didn’t lose everything,” he says. “I don’t earn enough alone to afford living in our house. Life insurance has eased my financial worries on so many levels.”
Thinking back to that first meeting with Rose, Stephen says: “Katie was the smarter one. She knew to plan for the future—our future—with life insurance.”
Things you can do for your future as the year unfolds.
What financial, business, or life priorities do you need to address for the coming year? Now is an excellent time to think about the investing, saving, or budgeting methods you could employ toward specific objectives, from building your retirement fund to managing your taxes. You have plenty of choices. Here are a few ideas to consider:
Can you contribute more to your retirement plans this year? In 2021, the contribution limit for a Roth or traditional individual retirement account (IRA) is expected to remain at $6,000 ($7,000 for those making “catch-up” contributions). Your modified adjusted gross income (MAGI) may affect how much you can put into a Roth IRA. With a traditional IRA, you can contribute if you (or your spouse if filing jointly) have taxable compensation, but income limits are one factor in determining whether the contribution is tax-deductible.1
Remember, withdrawals from traditional IRAs are taxed as ordinary income, and if taken before age 59½, may be subject to a 10% federal income tax penalty starting again in 2021. Roth IRA distributions must meet a five-year holding requirement and occur after age 59½ to qualify for tax-exempt and penalty-free withdrawal. Tax-free and penalty-free withdrawals from Roth IRAs can also be taken under certain other circumstances, such as a result of the owner’s death.2
Keep in mind, this article is for informational purposes only, and not a replacement for real-life advice. Also, tax rules are constantly changing, and there is no guarantee that the tax landscape will remain the same in years ahead.
Make a charitable gift. You can claim the deduction on your tax return, provided you follow the Internal Review Service (I.R.S.) guidelines and itemize your deductions with Schedule A. The paper trail is important here. If you give cash, you should consider documenting it. Some contributions can be demonstrated by a bank record, payroll deduction record, credit card statement, or written communication from the charity with the date and amount. Incidentally, the I.R.S. does not equate a pledge with a donation. If you pledge $2,000 to a charity this year but only end up gifting $500, you can only deduct $500.3
These are hypothetical examples and are not a replacement for real-life advice. Make certain to consult your tax, legal, or accounting professional before modifying your record-keeping approach or your strategy for making charitable gifts.
See if you can take a home office deduction for your small business. If you are a small-business owner, you may want to investigate this. You may be able to write off expenses linked to the portion of your home used to conduct your business. Using your home office as a business expense involves a complex set of tax rules and regulations. Before moving forward, consider working with a professional who is familiar with home-based businesses.4
Open an HSA. A Health Savings Account (HSA) works a bit like your workplace retirement account. There are also some HSA rules and limitations to consider. You are limited to a $3,600 contribution for 2021 if you are single; $7,200 if you have a spouse or family. Those limits jump by a $1,000 “catch-up” limit for each person in the household over age 55.5
If you spend your HSA funds for non-medical expenses before age 65, you may be required to pay ordinary income tax as well as a 20% penalty. After age 65, you may be required to pay ordinary income taxes on HSA funds used for nonmedical expenses. HSA contributions are exempt from federal income tax; however, they are not exempt from state taxes in certain states.
Pay attention to asset location. Tax-efficient asset location is one factor that can be considered when creating an investment strategy.
Review your withholding status. Should it be adjusted due to any of the following factors?
* You tend to pay the federal or state government at the end of each year.
* You tend to get a federal tax refund each year.
* You recently married or divorced.
* You have a new job, and your earnings have been adjusted.
These are general guidelines and are not a replacement for real-life advice. Make certain to consult your tax, human resources, or accounting professional before modifying your withholding status.
Did you get married in 2020? If so, it may be an excellent time to consider reviewing the beneficiaries of your retirement accounts and other assets. The same goes for your insurance coverage. If you are preparing to have a new last name in 2021, you may want to get a new Social Security card. Additionally, retirement accounts may need to be revised or adjusted?
Are you coming home from active duty? If so, go ahead and check on the status of your credit and any tax and legal proceedings that might have been preempted by your orders.
Consider the tax impact of any upcoming transactions. Are you planning to sell any real estate this year? Are you starting a business? Might any commissions or bonuses come your way in 2021? Do you anticipate selling an investment that is held outside of a tax-deferred account?
If you are retired and in your seventies, remember your RMDs. In other words, Required Minimum Distributions (RMDs) from retirement accounts. Under the SECURE ACT, in most circumstances, once you reach age 72, you must begin taking RMDs from most types of these accounts.6
Vow to focus on your overall health and practice sound financial habits in 2021. And don’t be afraid to ask for help from professionals who understand your individual situation.
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.
Traci L. Kovacic is a registered representative of and offers securities through The O.N. Equity Sales Company, Member FINRA/SIPC, One Financial Way; Cincinnati, OH 45242; (513)794-6794
Riverfront Financial and The O.N. Equity Sales Company are unaffiliated companies
Why do so many people choose them over traditional IRAs?
Provided by Traci Kovacic
The IRA that changed the whole retirement savings perspective. Since the Roth IRA was introduced in 1998, its popularity has soared. It has become a fixture in many retirement planning strategies because it offers savers so many potential advantages.
The key argument for going Roth can be summed up in a sentence: Paying taxes on your retirement contributions today may be better than paying taxes on your retirement savings tomorrow.
Think about it. Would you rather pay taxes today or wait 10 years and see where the tax rates end up? With that in question in mind, here are some of the potential benefits associated with opening and contributing to a Roth IRA.
What you see is what you get. Roth IRA contributions are made with after-tax dollars, and any potential earnings on investments within a Roth IRA are NOT subject to income tax or included in the account owner’s income. Instead, they accumulate on a tax-deferred basis and are tax-free when withdrawn from the Roth if the distribution is qualified.1
You can arrange tax-free retirement income. Roth IRA earnings can be withdrawn tax-free as long as you are 59½ or older and have owned the account for at least 5 years. The IRS calls such tax-free withdrawals qualified distributions.2
Withdrawals don’t affect taxation of Social Security benefits. If your provisional income is between $25,000 and $34,000 — or $32,000 and $44,000 for joint filers — then your Social Security benefits may be taxed if you take withdrawals before your full retirement age. Luckily, a qualified distribution from a Roth IRA doesn’t count as taxable income, which may be a means of avoiding taxation on your social security benefit.3,4
You have until your tax-filing deadline to make a Roth IRA contribution for a given tax year. For example, IRA contributions for the 2020 tax year may be made up until April 15, 2021. While April 15 is the annual deadline, many IRA owners who make lump sum contributions for a given tax year make them as soon as that year begins, not in the following year. Making your Roth IRA contributions earlier gives the funds in the account more time to potentially grow. Remember, though that Roth IRA contributions cannot be made by taxpayers with high incomes. In 2020, the income phaseout limit was $139,000 for single filers and $206,000 for married couples who file jointly.5
Who can open a Roth IRA? Anyone with earned income (and that includes a minor).
How much can you contribute to a Roth IRA annually? The combined annual contribution limit to all of your traditional and Roth IRAs is $6,000 for 2019 and 2020 ($7,000 if you’re age 50 or older), but income limits may reduce or eliminate your ability to contribute. To sweeten the deal even further, you can keep making annual Roth IRA contributions all your life.6
All this may have you thinking about opening up a Roth IRA. A chat with the financial professional you know and trust may help you evaluate whether a Roth IRA is right for you, given your particular tax situation and retirement horizon.
1-The Roth IRA offers tax deferral on any earnings in the account. Withdrawals from the account may be tax free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.
_________________________________________________________________________________ Traci L. Kovacic is a registered representative of and offers securities through The O.N. Equity Sales Company, Member FINRA/SIPC, One Financial Way; Cincinnati, OH 45242; (513)794-6794
Riverfront Financial and The O.N. Equity Sales Company are unaffiliated companies
Traditional Vs. Roth IRA Do you know the difference?
Provided by Traci Kovacic
Traditional Individual Retirement Accounts (IRA), which were created in 1974, are owned by roughly 33.2 million U.S. households. Roth IRAs, however, were created as part of the Taxpayer Relief Act in 1997, are owned by nearly 22.5 million households.1
Both are IRAs. And yet, each is quite different.
Know the limits. Up to certain limits, Traditional IRAs allow individuals to make tax-deductible contributions into the account. Distributions from traditional IRAs at retirement are taxed as ordinary income, and if taken before age 59½, may be subject to a 10-percent federal income tax penalty. Remember, under the SECURE Act, in most circumstances, once you reach age 72, you must begin taking required minimum distributions from a Traditional Individual Retirement Account (IRA). Additionally, you may continue to contribute to a Traditional IRA past age 70½, under the SECURE Act, as long as you meet the earned-income requirement.
Filing single. For singles, the maximum tax-deductible contribution starts shrinking once your modified adjusted gross income (MAGI) reaches $65,000. Singles with adjusted incomes of $75,000 and above are not eligible for a tax deduction.2
Filing jointly. For those who are married and filing jointly, things are a bit more complicated. If you or your spouse makes an IRA contribution that is covered by a workplace retirement plan, the deduction begins phasing out when your adjusted gross income is at $104,000, and it disappears at $124,000. However, if you do not have a workplace plan, but your spouse does (or vice versa), the 2020 limit starts at $196,000, and no tax deduction is allowed once the contributor’s income reaches $206,000.
Also, within certain limits, individuals can make contributions to a Roth IRA with after-tax dollars and then qualify for tax-free and penalty-free withdrawals at retirement. Roth IRA distributions must meet a five-year holding requirement and occur after age 59½.3
Income impacts total contributions. Like a traditional IRA, contributions to a Roth IRA are limited based on income. For 2020, contributions to a Roth IRA are phased out between $196,000 and $206,000 for married couples filing jointly and between $124,000 and $139,000 for single filers.
Contribution limits. In addition to distribution rules, there are limits on how much can be contributed each year to either IRA. In fact, these limits apply to any combination of IRAs; that is, workers cannot put more than $6,000 per year into their Roth and traditional IRAs, combined. So, if a worker contributed $3,500 in a given year into a traditional IRA, their contributions to a Roth IRA would be limited to $2,500 during that same year.4
Catch-up contributions. Individuals who reach age 50 or older by the end of the tax year can qualify for “catch-up” contributions. The combined limit for these is $7,000.5
Let’s chat. When it comes to picking an IRA, both traditional and Roth IRAs may play an important role in your retirement strategy. If you have any questions, let’s chat soon about how these products may be a good fit for your goals.
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.
_________________________________________________________________________________ Traci L. Kovacic is a registered representative of and offers securities through The O.N. Equity Sales Company, Member FINRA/SIPC, One Financial Way; Cincinnati, OH 45242; (513)794-6794
Riverfront Financial and The O.N. Equity Sales Company are unaffiliated companies
How Much Do You Really Know About Extended and Eldercare?
Separating some eldercare facts from eldercare myths.
How much does eldercare cost, and how do you arrange it when it is needed? The average person might have difficulty answering those two questions, for the answers are not widely known. For clarification, here are some facts to dispel some myths.
True or false: Medicare will pay for your mom or dad’s nursing home care.
FALSE. Medicare is not extended care insurance.1
Medicare Part A will pay the bill for up to 20 days of skilled nursing facility (SNF) care, but after that, you or your parents may have to cover some costs out-of-pocket. After 100 days in a SNF, you will have to cover all costs out of pocket. The only way to “reset the clock” for Medicare coverage of these services is if the patient can somehow go without skilled nursing care for 30 or 60 days or if they require a hospital stay of three full days or longer.1
True or false: A semi-private room in a skilled nursing facility costs about $35,000 a year.
FALSE. The median cost of a semi-private room is now $89,297. A private room in an assisted living facility has a median annual cost of $100,375 annually. A home health aide could run you up to $4385 per month for full-time care. Even if you just need someone to help mom or dad with activities of daily living (ADLs), such as eating, bathing, or getting dressed, the median hourly expense is not cheap: non-medical home aides run about $23 per hour, which at 10 hours a week, means nearly $12,000 a year.2,3
True or false: Only around 40% of Americans aged 65 and older are expected to need extended care.
FALSE. Someone turning 65 today has a 70% chance of needing extended care. That means that by 2030, it’s estimated that around 24 million Americans will need extended care. This is double the current number already receiving care.4,5
True or false: The earlier you buy extended care insurance, the more manageable the premiums.
TRUE. Younger policyholders may pay lower premiums. The best time to consider extended care insurance is when you are healthy. While you may be paying a premium for a longer amount of time, the expense may pale in comparison to paying for unexpected medical costs out of pocket.6
True or false: Medicaid can pay nursing home costs.
TRUE. The question is, do you really want that to happen? While Medicaid rules vary by state, in most instances, a person may only qualify for Medicaid if they have no more than $2,000 in “countable” assets ($3,000 for a couple). A homeowner can even be disqualified from Medicaid for having too much home equity. A primary residence, a primary motor vehicle, personal property, and household items, burial funds of less than $1,500, and tiny life insurance policies (with face values of less than $1,500) are not countable. So, yes, under these economic circumstances, Medicaid may end up paying extended care expenses.7
A little strategizing now could make a big difference in the years to come. Call or email us today to learn more about ways to pay for extended care and discuss your choices. You may need to find a way to address this concern.
Traci L. Kovacic is a registered representative of and offers securities through The O.N. Equity Sales Company, Member FINRA/SIPC, One Financial Way; Cincinnati, OH 45242; (513)794-6794
Riverfront Financial and The O.N. Equity Sales Company are unaffiliated companies
Citations
Medicare.gov, March 26, 2020
SeniorLiving.org, June 24, 2020
APlaceForMom.com, May 11, 2020
AmericanActionForum.org, February 18, 2020
LongTermCare.gov, July 23, 2020
Forbes.com, April 17, 2020
LongTermCare.ACL.gov, July 23, 2020
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.
September is National Life Insurance Awareness Month, so it’s a great time to review your coverage.
If you don’t have any life insurance, you’re not alone. Life insurance is one of those “someday” things for many people – but the cheapest time to buy it is probably today.
There are two kinds of life insurance: termand permanent. Additionally, there are three kinds of permanent life insurance: whole, universal, and variable.
How do these forms of life insurance differ, and how do you find out which type of coverage is right for you?
The way to find out is to look at where you are in life, so that you can assess your current insurance needs. Have you reviewed your insurance lately? Don’t think you need life insurance? If so, consider the following potential factors that may make it a good idea:
*You have a spouse or partner
*You have children
*You have an aging parent or disabled relative who depends on you for support
*Your household depends heavily on your income
*Your retirement savings or pension won’t be enough for your spouse or partner to live on should you pass away
*You own a business, either solely or with partners
*You have a substantial joint financial obligation, such as a personal loan for which another person could be legally responsible after your death
In any of these circumstances, you may require life insurance. If you have coverage, changes in your life may demand an update.
The affordability of life insurance may surprise you. Many people think it is expensive, and so often, it is not. The non-profit insurance education group Life Happens recently
conducted a study about this. More than half the millennial’s contacted for the study thought a $250,000 term life policy would cost $1,000 or more per year. The reality: the a
average annual premium is about $160.1
Life insurance is intended to help your loved ones financially after you die.
The proceeds from a life insurance policy may help your spouse, partner, or family members manage finances if they have to adjust to life without your income.
The death benefit may also be used to meet funeral costs and other final expenses, which may run into the tens of thousands of dollars.
Are you still unsure about buying life insurance, or do you suspect that your current insurance coverage needs to be updated?
Please contact us at (412) 837-2400 or Tkovacic@Riverfrontfin.com and we will be happy to assist you in evaluating all the factors and help you choose an appropriate policy.
Riverfront Financial awarded Best Insurance Agencies in Pittsburgh 2020
This material was prepared by MarketingPro, Inc for use by Traci Kovacic
Traci L. Kovacic is a registered representative of and offers securities through The O.N. Equity Sales Company, Member FINRA/SIPC, One Financial Way; Cincinnati, OH 45242; (513)794-6794
Riverfront Financial and The O.N. Equity Sales Company are unaffiliated companies
How Much Money Will You Need for Retirement? It depends on your goals, time horizon, and risk tolerance.
“Will I outlive my retirement money?”
That’s one of the top fears for people who are starting to prepare for their retirement years.
So I have to chuckle a bit when I see headlines that say, “Here’s how much money Americans think they need to retire comfortably.”1 $1.9 million is the number, according to a nationwide survey of 1,000 employed 401(k) participants by a well-known financial services company. In 2019, the same survey reported the number was $1.7 million. But this year’s pandemic increased the total by $200,000.2 Is $1.9 million a realistic figure for retirement? It’s hard to say. The survey didn’t ask participants how they arrived at that figure or what information they used to draw that conclusion.
Determining how much money you need in retirement is a process. It shouldn’t be a number that you pull out of thin air.
The process should include looking at your current financial situation and developing an approach based on your goals, time horizon, and risk tolerance. The process should take into consideration all your potential sources of retirement income, and also may project what your income would look like each year in retirement.
A significant figure like $1.9 million does little good if you’re uncertain what it means for your retirement years. We can help you develop a retirement strategy and show you investment ideas designed to help you pursue the retirement of your dreams.
Contact us anytime at 412-837-2400 to set up a free financial review.
Traci Kovacic Tkovacic@Riverfrontfinancialpgh.com
Joe Kovacic TKovacic@Riverfrontfinancialpgh.com
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.
Traci L. Kovacic is a registered representative of and offers securities through The O.N. Equity Sales Company, Member FINRA/SIPC, One Financial Way; Cincinnati, OH 45242; (513)794-6794
Riverfront Financial and The O.N. Equity Sales Company are unaffiliated companies
