As retirement plan advisors, we understand that as pension plans in the private sector become less common, the retirement pension plan for federal employees remains an attractive retirement option. If you’re a federal employee or considering becoming a federal employee, here are the basic elements of the Federal Employee Retirement System.
Topics: Retirement Planning
Getting a Grip on Income Taxes in Retirement
You’ve spent the last few decades toiling away at your job or running your own business. You’ve provided for your family and possibly created jobs for others at the same time. And you have certainly been paying income taxes over that same time frame, probably ever since your dad got you that summer job that paid you the minimum wage.
As your retirement years come into focus, it’s a good bet that you’re looking forward to stepping away from the everyday grind of your family business or profession. Maybe you also believe that you will be walking away from paying Uncle Sam his share of your retirement income. That popular misconception is certainly not the case.
While retired Americans generally pay less in income taxes than other age groups because of a reduction in income, the tax burden can still be a significant line item in their budget.
Many different income streams in retirement, including Social Security benefits, are subject to federal and possibly state income taxes. This discussion, though, will focus on tax liabilities at the federal level. The amount of tax you will be required to pay is at least partly a function of how much income you will receive once you stop working. Let’s explore the primary sources of retirement income and what tax burden they carry.
Topics: Retirement Planning, Taxes
New in ’22 – How the RMD Landscape has Changed
While not exactly front-page news, many of our readers should be aware of changes implemented for 2022 by the IRS for Required Minimum Distributions (RMDs). The primary change is related to updates to the life expectancy tables that the IRS uses to compute these RMDs.
For those new to this corner of the personal finance universe, an RMD is the minimum amount of money that a taxpayer must withdraw from a qualified retirement account each year in order to avoid adverse tax consequences. Virtually all defined contribution plans are affected, including traditional IRAs, (SEP) IRAs, and (SIMPLE) IRAs. Other accounts impacted include 401(k), 403(b), and 457 plan accounts. The date at which the RMD is triggered and the amount of the distribution are primarily determined by the age of the account holder.
In 2018 former President Trump directed the U.S. Treasury Department to better reflect increases to life expectancy for the American populace, since the existing tables had been in place for nearly twenty years.
This executive order brought about the changes that are taking place for 2022. Before we delve into this year’s differences, let’s review other relatively recent changes to RMDs.
Topics: Retirement Planning
Top Things to Know About Retirement Planning, Even If You’re Not Financially Savvy
The state of retirement planning in the United States is grim. More than a third of Americans surveyed believe they’ll never have the ability to retire, 59 percent plan to work longer and 41 percent said financial security in retirement would “take a miracle.” The good news is that saving for retirement doesn’t need to be overly complicated. Here are the top things to know about retirement planning strategies that even the least financially savvy can implement.
Topics: Retirement Planning
Resolve to Prepare: Retirement Planning Conversation Checklist
Welcome to 2022! The start of the new year is a great time for a retirement planning conversation and to revisit the progress you’ve made so far. We recommend scheduling a meeting with your financial advisor, who can provide in-depth knowledge about what you’ve saved so far and what retirement strategies will work for you going forward.
Retirement planning looks different for everyone, but the basic rule of thumb is that you should plan for 70 to 90 percent of your pre-retirement income. Your financial advisor will walk you through that conversation so that you’re making good progress and staying on your desired retirement schedule. Below, we’ve created a checklist of topics to guide your retirement planning.
Topics: Retirement Planning
Life Events: Reasons to Change Your Will
You’ve got many important documents you keep safe: your Social Security card, your birth certificate, your marriage certificate and, perhaps most important, your will. Though some of these documents can’t be changed, your will can be modified throughout your life so that your estate is handled according to your wishes after your passing. You want to make sure the right people inherit your assets, and those circumstances can change over time in relation to choices and relationships. Here’s a look at some reasons to change your will.
Topics: Financial Planning, Retirement Planning
You Can’t Take It With You Part 3: Living Well With Wealth
Congratulations! You’ve made it to the finish line of your career, and now you’re ready to enjoy the rewards of your hard work and savvy financial planning. Nowadays, retirement looks a little different from previous generations: many retirees are now active and busy, completing their bucket lists and staying excited about tomorrow’s possibilities. You, too, can experience the enrichment of this new chapter.
Retirement looks different for everybody. It’s a great time to think of what goals you made for yourself when you were younger. What have you always wanted to do but never had the chance? Did you want to travel somewhere specific? Master a certain craft, give back to the community, or start a new hobby? Now may be the right time to say yes to all of those opportunities.
In our previous posts in this series, we discussed gifting money to family and charitable giving. In this post, we take a deep dive into enjoying your nest egg. Here are some categories.
Topics: Financial Planning, Retirement Planning
A Day in the Life of a Retirement Services Principal: Meet Kim Gannis and Learn Just How Personalized Corporate Retirement Plans Can Be
Kim Gannis, AIF®, is a Principal at Carnegie and Director of Retirement Plan Services and works in Carnegie’s Pittsburgh office. She has been with the firm for six years. Kim earned her Bachelor of Science in mathematics from the University of Pittsburgh; she is also a designated Accredited Investment Fiduciary®.
“With my degree, I thought I was going to be a teacher coming out of school,” Kim recalls. “I soon realized that I would rather poke my eyes out than be a teacher.” She landed at Mercer as an analyst, then continued with positions at PNC Bank and American Century Investments. Her desire to understand the real side of money led to her move to Carnegie. She has been doing financial work all her life and plans to continue for the rest of her career.
Let’s take a look at a day in the life of a principal and director of retirement plan services.
The Question Isn’t “Will You Act as a Fiduciary?” It’s “Will You Act as a Fiduciary, 100% of the Time?”
The word fiduciary has evolved from some obscure financial terminology rarely uttered at the neighborhood cocktail party to the in-vogue standard. If your financial person doesn’t meet the standard, you might be deemed a rube.
The term fiduciary seems so commonplace that you might be tempted to take it for granted. Surely, your advisor wouldn’t stoop to anything less than being a fiduciary: a professional who always strives to work in your best interest, even after you are invested. You can check that box. Right?
Topics: Financial Planning, Investment Management, Relationship Management, Retirement Planning
The 3 Financial Phases of Life: Tips to Help You Prepare
As we progress through life, we arrive at various well-defined markers along the way, termed as life events or major milestones. These events might include earning a college education, entering the workforce, marrying, raising a family, advancing in your career and retiring. There are obviously many others you might experience during your life’s journey.
In this article, we address the financial stages of life. We look to define those phases and help you properly prepare for each stage. Goal setting is a key component of this process. Better preparation today will lead to a more beneficial outcome once you reach your retirement years.
Topics: Financial Planning, Retirement Planning