Posts by Rosemont Advisors

How to Detox Your Finances This Spring

Posted by on Apr 19, 2016 in Articles, Uncategorized

Spring is one of my favorite times of the year. The weather is warmer, which means my daughters no longer have to look like Ralphie’s younger brother from the movie A Christmas Story. This also means that I can’t hide indulgences in chocolate and comfort foods during the winter behind big sweaters. Our family tradition is to do a cleansing of our bodies and home to welcome in a new season. As I was talking about this to a girlfriend over ice cream (O.K., the cleansing will start next week), she mentioned that she wished she could do this for her finances. Here are some financial areas I suggested may be due for a cleansing: Documents. Do you have a section in your closet that looks like a paper version of Cousin Itt? Use this cleansing period to rid yourself of the stress of piles of unidentifiable papers that keep growing. Use the following guidance as a general rule for keeping records: Sales receipts- Consider attaching your sales receipt to your warranty and discard when your warranty expires. If you do not have a warranty, consider keeping your receipt until your date to get a refund and/or exchange expires. Paycheck Stubs- The rule of thumb is that you can get rid of them when you have compared the stubs to your W2. Tax Return- The conservative guidance is to keep the records forever. Others say seven years. The more complex your tax returns are, the longer they should be kept. Healthcare Statements- Keep until you have verified that the bill has been settled. While you are purging records, you might as well get them organized: Consider getting a fireproof safe or safe deposit box for important documents like marriage certificates, birth certificates, passports, property insurance information, and estate documents like a will and powers of attorneys. Make sure the executor of your estate actually knows where your documents are located. For those that have fully embraced the digital age (I am Generation X and I will admit that I am not quite there), consider storing your documents digitally. Expenses. If your wallet is like a black hole (money seems to disappear the second it connects with you), then it may be time to do a spending cleanse. If you are not sure where to start, consider this list: Eating out. Eating out is the ultimate black hole of most budgets. If you spend $10 on lunch and cut out lunch twice a week, that could add up to $1,000 a year that could go toward a financial goal like a starter emergency fund or paying down debt. If you must eat out, consider downsizing the meal – water only, appetizer or cheap entrée with no drink. If you are with a friend or significant other, consider splitting a meal. Your wallet and your waistline will thank you. Cable TV. It never fails to amaze me how some people will work 70 hours in a job they hate to pay for a $150 cable package that they are too tired to watch. Consider streaming devices like Google Chromecast, Apple TV, Amazon Fire TV or Roku to cut the cable cord and stream TV and movies through services like Netflix, Hulu, and Sling TV so you won’t go into television deprivation. Cell Phones. Contact your cell phone provider about discounts on your cell phone package.  Another consideration is to use Tier 2 carriers such as Cricket, Metro PCS, Boost or Straight Talk that sometimes work with the same cell phone towers as some of the bigger carriers like AT&T, Sprint, T...

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How to Decide If You Should Run a Business in Retirement

Posted by on Apr 15, 2016 in Articles, Uncategorized

Consider how a small business could fit into the retirement lifestyle you desire. Older workers often have the necessary knowledge and expertise to start a business to gain extra income during retirement. But there are many angles to consider before you decide to run a business during your retirement years. There are financial challenges regarding the start-up funds and cash flow as well as lifestyle considerations, such as how much time you want to spend running your business. Here’s how to tell if starting a business in retirement might work for you. Consider the cost. Before you jump headfirst into your own business, consider the physical, mental and time costs involved. If you’re already a business owner, you might have some idea of the demands. If increasing your leisure time is a goal, you may want to consider how to keep your business running while cutting down on your time commitment. If you’re not yet an entrepreneur, think about what type of lifestyle you want to lead as a business owner. You might want to work 10 hours a week or 40. Some people would rather have a set schedule each week, while others prefer flexible hours. Think about whether you want to work with people or be primarily on your own. Your income needs are also important. Consider whether you need to make a few hundred dollars a month or a few thousand. Your lifestyle needs can help determine the type of business you want to begin. You might want to be able to travel while you work. For example, you could start a blog, which you can run from anywhere but could require a lot of time. Or you could start a crafting business where you work alone during the week and then interact with customers at craft fairs on the weekends. You might need to use some of your own money to get the business started. Some businesses can be launched for just a few hundred dollars or less, while others cost thousands or more to start up. Consider how much you can safely afford to invest in the business, and don’t put any money down that you can’t afford to lose. Consider your retirement benefits. Continuing to earn income in retirement could impact your retirement benefits. Your income might affect the size of your Social Security payments. If you are age 65 or younger and earn more than $15,720 in 2016, part or all of your Social Security benefit could be temporarily withheld depending on how much you earn. However, after your 66th birthday there’s no longer any withholding if you earn above the limit. Continuing to work could also make your Social Security income taxable. For 2016, your Social Security benefits will become partially taxable if your adjusted gross income, nontaxable interest and half of your Social Security benefit tops $25,000 for individuals and $32,000 for couples. If these income sources top $34,000 for individuals and $44,000 for couples, a greater share of your Social Security benefit, but not all of it, will be taxed. If you continue to work after signing up for Social Security, remember to determine just how your earnings will affect your Social Security income during retirement. It’s about your preferences. Whether or not you should run a business in retirement depends on a variety of factors. If you have substantial retirement savings and don’t need loads of extra income, a business that takes just a few hours a month could be a fun hobby. But if you want to continue working full time at something you love, consult with...

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How to Free Up Money to Put Toward Retirement

Posted by on Apr 7, 2016 in Articles, Uncategorized

With a few tweaks, you can find more money to invest in your future. According to a recent survey by the TransAmerica Center for Retirement Studies, 61 percent of people currently in their 40s expect to either work past age 65 or not retire at all. The numbers weren’t much different for survey-takers in their 50s, with 59 percent expecting to work past age 65 or not retire at all. It’s no secret that Americans have some work to do when it comes to saving for retirement. Nearly every authority in the personal finance and retirement arenas has been touting the very real need for people to increase the amount of money they are saving for retirement. Americans know what they need to do, but the big question is: “Where can I find more money to put toward retirement?” Varied reports in the financial world tell us that between 40 to 60 percent of families are living paycheck-to-paycheck. Those living on a tight budget might find it difficult to find more money to put toward retirement, however there are often hidden ways for people to free up money that can then be used toward retirement savings. Here are seven ways to find more money to put toward your retirement. Start Budgeting and Tracking Spending A 2013 Gallup poll found that only 1 in 3 American households prepares a detailed budget to track spending. The fact is, you can’t manage your money more wisely if you have no idea where it’s going in the first place. By planning out where you want your paycheck to go, and by tracking where you spend money each month, you can better direct your money toward your most important financial goals – including retirement. Cut Unnecessary Expenses Unnecessary expenses often devour a large portion of a household budget. The average American spends over $200 a month on restaurants alone. Here are some nonnecessities that you may be able to cut back on – or eliminate altogether – that will help you put more toward retirement. Cable or satellite TV packages Gym memberships Magazine subscriptions Restaurant or takeout expenditures Cutting back on or eliminating unnecessary costs and putting some or all of that newfound cash into retirement vehicles can help assure you’ll live more comfortably during your retirement years. Find Ways to Decrease What You’re Spending on Necessities Necessary expenses such as groceries and insurance can’t be eliminated from your budget, but those expenses can often be reduced. Try making a detailed meal plan for your household and grocery shop only once a week. Skip the snack foods l as well in order to reduce grocery expenditures. Shop around for insurance quotes to see if you can find insurance for less. Work to reduce your electricity bill by being more mindful of energy usage. By examining each necessary expenditure to see if you can spend less, you can free up more cash to put toward retirement. Drive Paid-For Cars The average car payment for Americans today is $482 a month. Instead of taking on car loans, choose instead to buy reliable used cars that you can pay for with cash, and put the money you would have spent each month on a car payment into a retirement vehicle. Downsize Your House Is your mortgage payment eating up more than 30 percent of your net income? If so, it might be a good idea to downsize to something more affordable so that you can increase your 401(k) or IRA contributions each year. Put Pay Increases Straight into Your Retirement Funds Since pay increases equal money you’ve...

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How to Rightsize Your Retirement

Posted by on Apr 5, 2016 in Articles, Uncategorized

About a third of Americans between ages 50 and 64 plan to move within the next five years or so, according to a survey by the Demand Institute. Some baby boomers – especially those who have been renting all their lives or who never moved up from their starter house – actually plan to spend more on their homes in retirement. But more often than not, the baby boomer move will involve downsizing. They will trade in the old family home for smaller digs, perhaps in a less expensive neighborhood. Putting the old house on the market and clearing out decades worth of possessions can involve a lot of work and emotional unrest. Many people who do not plan to move actually cite their overwhelming amount of possessions as a significant reason they are staying put. But there are enormous benefits to cleaning out the clutter and changing to a simpler lifestyle. It helps to think of a move not as downsizing, which suggests sacrifice, but as a liberating choice that points us toward a less stressful and more rewarding lifestyle. But whether we’re moving across town, across the country or not moving at all, we shouldn’t let our future lives be weighed down by our past commitments or former obligations. The best solution, for all of us, is not necessarily to downsize or upsize, but to rightsize. We should choose a home, neighborhood and lifestyle that allows us to pursue our true dreams in retirement. Here are a few suggestions inspired by a new book by Kathy Gottberg, “RightSizing: A Smart Living 365 Guide to Reinventing Retirement”. She also blogs at Smart Living 365 about making “conscious choices for a better lifestyle that more closely fits your new needs in retirement.” Step off the keep up with the Joneses treadmill. Some of us have our self-esteem wrapped up in the size of our house or how fashionable our neighborhood is. But at this point in our lives, we should be beyond such superficial comparisons. It’s not what you have that’s so important, but what you do. So stop trying to impress your friends and neighbors, and start enjoying life as you want to live it. More freedom in your life. A smaller home brings lower house payments in terms of taxes, insurance, utilities and maintenance. It also means less clutter, less work and less stress. Maybe you can even get your new home without a mortgage. The money you save on your home can be used to finance the things you like to do, whether it’s travel, a new hobby, helping out your children and grandchildren or shoring up your retirement savings. More time to do the things you want. The bigger the house, the more maintenance you have to do. The more stuff you have, the more you have to clean, store, fix and find. Once you rightsize your life for your new stage – with no kids, no job, no obligations – you can spend your time doing the things you enjoy. You no longer take care of things for other people, but have the time and energy to pursue your own interests and passions. A more friendly neighborhood. If you give up the big suburban yard for a little patch of cityscape, what you lose in lawn maintenance you gain in convenience. It saves time and it’s more fun to walk to the corner to get your morning coffee and hook up to wi-fi, compared to climbing in the car and fighting traffic for 15 minutes to do the same thing. Also, many people benefit from...

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The 3 Biggest Financial Surprises for New Retirees

Posted by on Mar 31, 2016 in Articles, Uncategorized

Now that 2015 bonus checks have been issued and stock grants have vested, thousands of executives will retire from their companies on March 31. After working for decades, they are ready to enjoy life with few worries, thanks to solid financial planning. But for some, the financial plan they’ve taken years to craft may be disrupted by unexpected events. If that happens, your financial plan, expectations of travel abroad and lifestyle choices may need a major overhaul. Having helped hundreds of corporate executives plan for retirement over the past 16 years, I can share a list of the three biggest surprises that can upend a retirement plan — and some recommendations on how to cope with them. Surprise No. 1: Ailing parents. One or both parents of the retiree need nursing or assisted living care and don’t have the money to pay for it. In most cases, new retirees need to determine how much they can afford to pitch in and how it will impact their own financial future. Unfortunately, elder care is not cheap. While costs vary by state, long-term care insurer Genworth estimates that the median annual cost of a private room in a nursing home is more than $90,000. Another option is to determine if it makes more sense for the new retiree to become the caregiver. Providing daily care will lessen the financial impact on the new retiree’s nest egg, but it will also cause a major lifestyle change. This situation can often lead to difficult conversations with siblings who may not have as much personal time or the financial resources as the new retiree. To make certain this scenario doesn’t disrupt a person’s retirement plans, I ask my clients this question: “Is there anyone else in your life that you may need to support financially one day?” If the answer is yes, funds need to be set aside to cover these costs. “Parents always want to help their children out of trouble. But … it helps to know how much money you can afford to give before it wreaks havoc on your retirement plans.” Surprise No. 2: The unused vacation dream home. Planning to spend weekends and summers near the beach or the mountains, the retiree also envisions the vacation home as the ideal location to host adult children and grandchildren for holidays and other big events. Unfortunately, this plan doesn’t always pan out. Several years ago, one of my clients purchased a vacation home in the mountains of Tennessee for this very reason. But after his adult child moved north as part of a job promotion, the retirees ended up traveling there to see their grandchildren and rarely used the vacation home. In addition, the Tennessee property didn’t appreciate much over time, so the main reasons for buying the home were nullified. The retiree and his spouse sold the home, but the proceeds were barely enough to cover the mortgage, meaning they had little to reinvest. While this particular scenario was difficult to predict, anyone caught in a similar situation needs to determine if they want to keep their property and, if not, the best way to get rid of it. For example, if the home was purchased before the Great Recession of 2008 and has declined in value, the new retiree will need to explore whether it makes sense to sell the property at a loss. Surprise No. 3: An adult child falls on hard times. The cause of the child’s need for a cash infusion will likely be a job loss, an unexpected long-term illness, poor investment or other bad financial...

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