Tips

10 Tips to Boost Your Travel Smarts

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Starkey, Howes and Javer: 10 Tips to Boost Your Travel Smarts

Traveling is fun, exciting and sometimes stressful. Break-ins, identity theft, pickpocketing, and other traveling mishaps can not only ruin a vacation, they can have a tremendous impact on your life. Learning a few travel lessons before hitting the road can help eliminate many travel misfortunes and free up your vacation for more fun!

1. Leave Home Lived In
Whether you are gone for a long weekend or a trip overseas, it’s important to leave your home looking lived in. Consider putting a light or two on a timer, ask a neighbor to bring in mail, and put a stop on daily newspaper delivery while you are away. Lock up valuables you aren’t taking with you such as jewelry, social security cards, and family heirlooms.

2. Freeze Your Credit
If you plan to be gone for an extended period, consider freezing your credit. A credit freeze blocks access to using your credit so no one can open a credit card or apply for a loan while you are away. Continue reading →

The Value of Objective Financial Planning

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Starkey Howes & Javer Value of Objective Financial PlanningOutside of a portfolio’s rate of return, it’s often easy to overlook the value that objective, client-focused financial planning brings. Although many financial professionals offer “free” services, do you stop and ask yourself “Hmmm, I wonder how he/she is paid if it’s not by me?” (source).

As objective financial planners, we fully support the “you get what you pay for” belief. Below is a list of just a few of the values we believe objective planning offers. Please feel free to let us know your thoughts on any of the following.

1. An independent financial planner helps protect you from financial salespeople.

According to Bob Veres, “…the Wall Street firms that pretend to offer financial planning guidance are seldom (if ever) looking out for the best interests of their customers.” Unfortunately, as a consumer in our industry, it’s not always easy to recognize when there’s an underlying motive or incentive behind the financial advice you receive.

Brokers might have business cards with the title of “Financial Advisor,” but in reality are often simply salespeople who are paid by their company to sell you as many products as possible. Unless they are a fiduciary, they are expected to do what is in the company’s best interest, not what is in your best interest. They are rewarded when they meet sales targets, and bonuses are often based on the clients they sign (source). Continue reading →

Avoid Being “House Rich, Cash Poor”

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Starkey Howes & Javer Home Loans

Recently, a client was trying to understand how much home he could afford in the current Denver real estate market. Over the course of his home search, his maximum price point grew from $500,000 to $700,000 as he discovered how much it would take to purchase a home that fit within his criteria. The lender had approved him for the higher amount, so he assumed it was something he could comfortably afford. In addition, he had used several online “Home Affordability Calculators” that justified his inflated price point.

Thankfully he came to us before any of his offers were accepted. We calculated his new expected housing costs relative to his gross annual income, taxes, savings goals, and monthly obligations. In the end, he opted for the lower mortgage price point we proposed and was relieved that it would allow him to continue supporting his family and saving for long-term goals, many of which he would have had to forego had he chosen the higher priced home.

After our meeting, we reviewed several of the online “Home Affordability Calculators” by plugging in our own information and the results were breathtaking. The suggested home price points we received were also dramatically inflated.

Therefore, when you are shopping for your next home, we suggest taking a look at the difference between the approved home loan amount and the home loan amount that is appropriate for your own personal financial situation. Oftentimes, the two numbers are vastly different.

Why might this be the case? Although monthly obligations (debt, child support, etc.) and long-term savings are often considered in the mortgage lender’s calculation, the assumed savings (for retirement, education, etc.) are typically insufficient to reach your goals.

The term “house rich, cash poor” is a common term for being in the predicament where you’ve got lots of home, but not a lot of cash to meet your other needs. In order to avoid this destiny, we suggest working with a Certified Financial Planner™ to find the appropriate price point when purchasing a new home. If you are interested in a complimentary consultation or meeting with your current advisor, please do not hesitate to call us at 303-639-5100.

Tips to Protect Your Social Security Number

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As the number of identity theft cases and hacking scams increase, it is becoming more and more important to be aware of where and how you are releasing your personal information. Announced by the Bureau of Justice Statistics, 17.6 million U.S. residents experienced some type of identity theft in 2014 (source). The most critical piece of information to protect is the master key to your identity – your Social Security Number (SSN)!

Below are 6 tips to help protect your Social Security Number:

1. Offer Alternate Identification
It is important to be aware of who really needs to know your Social Security number and who does not. Often times financial institutions, employers, and the IRS will require the use of your Social Security number to open a new account, run a background check, or file your taxes. If you are prompted to provide your SSN, ask if an alternate ID such as your driver’s license will work instead. For example, your SSN is not always needed to run a credit report. (source) Continue reading →

5 Questions to Ask Before Taking on More Debt

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The term ‘debt’ generally has a negative connotation. While being in too much debt or the wrong kind of debt can be risky, sometimes debt makes sense. If you are considering taking on more debt, sit down and answer the questions below first to make sure the new debt won’t get in the way of your long-term goals.

How much debt do I currently have?
When thinking about debt, it’s important to first analyze your current financial landscape. Be sure to review everything: credit cards, lines of credit, mortgages, loans and possibly IOU’s to family or friends. Once you have totaled all monthly recurring debt payments, divide that number by your gross monthly income to find your debt to income ratio (DTI). The lower the number, the better. Talk with your financial planner about your ratio and ask for his/her recommendation on whether you should consider taking on more debt. Continue reading →

10 Ways to Give Back: Time, Talent and Treasure

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As the new year begins and we look to the future, many of us start thinking of ways we can give back to our communities. We’ve rounded up 10 ideas for you which include everything from financial giving to contributing your time or talents to support the charities and nonprofits you love! Check out the list to discover new ways to give back.

1. Give Money
Making a donation of money can be a very simple way of giving back. Charities and nonprofit organizations need capital not only to support their cause but also for operating costs. Make sure to save your donation receipts for your accountant.

2. Gift Appreciated Stock
Your favorite organization can benefit from a gift of appreciated stock by selling the stock at market value and realizing the full amount without paying taxes. Here’s a simple example: If you bought 10 shares of a stock at $25 a share and it is now worth $100 a share, the organization would receive the full value of $1,000 and you may be eligible to receive a $1,000 tax deduction. Donating the stock will prevent you from having to sell those shares and pay taxes on the gain and allow the charity to realize the full value of the appreciated stock. Donating appreciated stocks can be a wonderful way to give to organizations. Continue reading →

10 Ways to Keep Your Finances Healthy in 2016

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The New Year is here and it’s time to start thinking about how you’re going to keep your finances healthy in 2016. Looking at your finances now gives you time to readjust and put your finances on a healthy trajectory.

1. Review Everything
As you start out the New Year, go through your finances with a fine tooth comb. Leave no account unturned. It may be helpful to create a password protected spreadsheet. Make notes on the use of the account, the institution where it is held, and the interest rate (if applicable). Check bank accounts, credit cards, retirement accounts, and mortgages.

2. Plan for Emergencies
We all know emergencies happen, but are you financially prepared? From something small, such as a new appliance, to something larger, such as an unexpected medical procedure — it’s important to be prepared. Plan for the unexpected expenses and set aside funds accordingly.

3. Reevaluate Your Budget
You may have created a budget a year ago, or even 5 years ago, but when was the last time you updated it or made adjustments? Have your monthly expenses changed? Has your income increased? Do you need to increase your savings rate? Take a look at our 10 Beneficial Budgeting Tips for ideas on making and following an effective budget.

4. Invest
Consider increasing your overall investment contributions. Before making any investment decisions, consider meeting with your Certified Financial Planner™.

5. Consolidate Your Accounts
Do you have multiple 401(k) plans from old employers or IRA accounts you’ve been meaning to consolidate? Start the New Year off right by getting your accounts rolled into one. Your financial planner can help you decide on the best account type for your goals. We are happy to help you find and consolidate all of those old accounts. Your retirement funds should be easier to track if they’re in one place.

6. Check Your Liquidity Ratio
To determine your liquidity ratio, divide the total of all your cash assets (checking accounts, savings, non-retirement stocks and bonds) by your total monthly expenses. This will show you how long you could maintain your current lifestyle if you were to lose your income. It is generally recommended you have 3-6 months of money saved.

7. Evaluate Your Goals
If your goal is to retire by age 60 or upgrade your house in the next couple of years, use the New Year to evaluate where you are in reaching your goal. Plan on checking in on the status of your short-term goals monthly and long-term goals about once or twice a year to help ensure you stay on track. If you haven’t set financial goals yet, start the New Year with financial goal setting. Think about your goals for 2016 as well as the next 5, 10, 20 years and beyond.

8. Check in on Your Credit
2016 is the perfect time to take a look at your credit score, if this is not something you do regularly. Checking your score can help you detect (and dispute) errors, stop potential identity theft and save money. Also be sure to thoroughly review your 3 credit reports, which will tell you what you are doing well and what you could improve on. If your credit isn’t where you want it to be, you can resolve to take steps throughout the New Year to improve your score.

9. Protect Your Family – and Assets
Last year in the 2015 Financial Check-Up post, Julie Fletcher, CFP® said, “Be sure not to leave any gaps in your insurance coverage that would leave you vulnerable. Potential gaps include premature death, disability, health, liability, business, car and homeowner’s insurance. Having the proper insurance in place is essential for your protection.” What was true in 2015 is true in 2016. Check your insurance coverage to keep you and your family protected.

10. Visit a Financial Planner
If you find yourself feeling lost, talk to your Certified Financial Planner™. His or her job is to work with you to look at your goals, financial status, and discuss what is best for you and your family. We would love to meet with you to see how we can work together to help you plan, invest and succeed. Contact us for a complimentary consultation.

The New Year provides a great opportunity to check in on your finances and get them on the right path. Following the advice above will give you a good start to keeping your finances healthy in 2016 and beyond.

Retirement Savings 101: 401(k)s, IRAs, Roths, Oh my!

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Retirement golden eggs on dollars, IRA in focus, 401k blurryOver the past two weeks we have compared Traditional IRAs to Roth IRAs and 401(k)s to Roth 401(k)s. Today we wrap up the series with a recap comparison to help guide you through the various ways to save for your retirement.

Traditional IRA

Established by: Individual
Contribution Limits: Up to $5,500 per year age 49 or below / $6,500 per year age 50 and above (limits adjusted annually)
Contributions: Pre-tax (unless non-deductible, then post-tax)
Matching Contributions: None
Distributions: Taxable and a 10% penalty unless 59 ½ or older (exceptions may apply)
Forced Distributions: Must start withdrawing funds at age 70 ½
Conversions/Rollovers: Can be converted to Roth IRA. Taxes paid during year of conversion. Deductible contributions can be rolled into a 401(k) if allowed by 401(k) plan.

Roth IRA

Established by: Individual
Contribution Limits: Up to $5,500 per year age 49 or below / $6,500 per year age 50 and above (limits adjusted annually)
Contributions: Post-tax
Matching Contributions: None
Distributions: Contributions may always be withdrawn tax and penalty free. Earnings prior to age 59 ½ are taxable and assessed a 10% penalty. Earnings after 59 ½ are tax-free unless the Roth IRA has been open less than 5 years in which case they are taxable and assessed a 10% penalty. (exceptions may apply)
Forced Distributions: None
Conversions/Rollovers: None

Traditional 401(k)

Established by: Employer
Contribution Limits: Employee may contribute up to $18,000 per year age 49 or below / $24,000 per year age 50 and above (limits adjusted annually)
Contributions: Pre-tax
Matching Contributions: Employer’s discretion
Distributions: Taxable and a 10% penalty unless
· If separated from service after age 55 or
· age 59 ½ or older (exceptions may apply)
Forced Distributions: Must start withdrawing funds at age 70 ½ unless still employed and not a 5% owner
Conversions/Rollovers: Upon termination of employment may
· Rollover to an IRA – not currently taxable
· Rollover to 401(k) if allowed by new employer – not currently taxable
· Convert to a Roth IRA – taxable event
· Distributed directly to owner – taxable event.

Roth 401(k)

Established by: Employer
Contribution Limits: Employee may contribute up to $18,000 per year age 49 or below / $24,000 per year age 50 and above (limits adjusted annually)
Contributions: Post-tax
Matching Contributions: Employer’s discretion (employer contributions are pre-tax dollars)
Distributions: Tax-free, but a 10% penalty plus taxes on earnings unless
· If separated from service after age 55 or
· age 59 ½ or older and the account has been open for at least 5 years (exceptions may apply)
Forced Distributions: Must start withdrawing funds at age 70 ½ unless still employed and not a 5% owner.
Conversions/Rollovers: Upon termination of employment may
· Rollover to a Roth IRA
· Rollover to a Roth 401(k) if allowed by new employer.

Which retirement savings account is right for you? For some, a 401(k) plus a Roth IRA may be the way to go. For others it might be a traditional IRA with a 401(k). Retirement saving decisions are as unique as you are.

As with any big financial decision, we recommend talking to a professional. Financial planners can help guide you to the best decision for your retirement and create a custom plan tailored to your individual goals.

If you are interested in a complimentary consultation, give us a call today at 303.639.5100 or visit shwj.com.

*Research for this post done on IRS.gov

Making Sense of the Social Security Kill Bill

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Retirement Concept Social Security BenefitsEarly this November, Congress surprised many when they introduced the Bipartisan Budget Act of 2015 causing Financial Advisors to revisit ways to maximize cumulative Social Security benefits for their clients. With the passing of this budget deal, we see the end to two Social Security claiming strategies that have benefited many individuals – File and Suspend and the Restricted Application.

The new rules for File and Suspend will take effect with all applications filed after April 30, 2016. We will see the end of filing a Restricted Application for anyone who is turning 62 after December 31, 2015. This leaves a 6 month window for clients to review their situation with their financial advisor to determine how the changes will affect them, and if they can still take advantage of these strategies before they go away.

The File and Suspend strategy was commonly used by married couples to allow one spouse to begin collecting their spousal benefit at full retirement age while allowing the higher earning spouse to delay and then maximize their own benefit at age 70. Under the new rules, any suspension application filed after April 30, 2016 will also suspend all dependent and/or spousal benefits that would have been paid off of the suspended record. In other words, a worker must now collect their own benefit in order to trigger benefits for their spouse or dependents.

Restricted Applications for spousal benefits were often filed by couples who both wanted to delay collecting their own benefits while taking advantage of a spousal benefit in the meantime. The new rules now state that anyone turning 62 in 2016 or later will no longer be eligible to file a restricted application when they reach full retirement age. Individuals who will be 62 by the end of 2015 will remain eligible to file a restricted application when full retirement age is attained. The caveat – if this strategy depends on one spouse filing and suspending after April 30, 2016, the strategy will not work and further planning with your advisor may be beneficial.

For Example: Mark and Mary are both 63 and remain eligible to file a restricted application for spousal benefits at full retirement age. Mark wants to delay collecting his benefits until age 70. However, he will turn 66 after April 30, 2016 at which point the option to file and suspend is no longer available and spousal benefits will no longer be paid off a suspended benefit. Mark will either have to take his own benefit at age 66 to give Mary the option to file a restricted application for spousal benefits, or Mary will have to forego her spousal benefit allowing Mark to delay his own benefit and vice versa.

Individuals fortunate enough to have already implemented these strategies will not see a change to their current benefits. On the other hand, individuals born after 1953 will be unable to take advantage of either claiming strategy and are encouraged along with anyone who will be 62 by the end of 2015 or 66 before April 30, 2016 to meet with their financial advisor to determine the most optimal claiming strategy before the window closes.

Source: Savvy Social Security Planning for Boomers, Social Security ‘Loopholes’ Closing