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Advice Capital Leadership

Never Waste a Good Crisis – 5 Ways to THRIVE In a Recession

A recession is coming! A recession is coming! Many are sounding the alarm about the country’s economic future. Is this based on real data or are the ‘chicken littles’ of the world taking over?

Almost three-quarters of Americans – 70 percent – believe an economic downturn is coming, as per a survey from MagnifyMoney. However, 75 percent of likely votes thinks we are already in a recession, according to a CNN poll. Inflation is the lead cause among survey takers – 88 percent, while housing costs (61 percent) and rising interest rates (56 percent) are some of the most dire warning signs that we’re headed in the wrong direction.

But what exactly makes for a recession?

While many define the term as two consecutive quarters of falling real GDP, that isn’t quite fully accurate. To determine whether we are headed to a recession, one needs to consider a number of factors such as combining data pertaining to the labor market, consumer and business spending, industrial production, and incomes.

According to the National Bureau of Economic Research, considered the “official” recession scorekeeper, a recession is defined as a “significant decline in economic activity that is spread across the economy and that lasts more than a few months.”

The bottom line right now is: we are not in a recession. Yet.

Here’s an interesting fact: our economy has only been in a recession 8 percent of the time over the past 30 years.

“Quite frequently, recessions are self-fulfilling prophecies. If enough people talk about it, people will begin to react as if it is here and move to conserve cash, collect on accounts, reduce trade credit, decrease inventories, and lessen labor,” said Lewis A. Weiss, president, All Metals & Forge Group.

Whether you’re a small business owner, a solopreneur or a Fortune500 executive, you must have an arsenal of tactics and strategies to help minimize the impact a recession can have on your business and therefore, your finances.

Here are 5 things you can do to mitigate the economic impact and thrive during a recession: 

Identify the common enemy.

Currently, 36 percent of U.S. employees are engaged at work, according to Gallup. Globally, that number drops to only 20 percent of employees. Let’s add tough economic times to the mix and there’s a good chance some might become even more disengaged.

The moment it is confirmed a recession is inevitable, make sure everyone in the company is well aware of who the common enemy is. Keeping everyone on the same (mental) page is a tough thing to do and opinions can sour quickly.

The key is achieving full alignment with your team. Once you have everyone rowing in the same direction, it’s easier to navigate the rough waters of a challenging economic climate. However, sometimes no matter how hard you try, you will have detractors and naysayers. To those people I say, ‘we love you, but we’ll miss you.’

Every great leader knows that communication is critical to the survival of an organization. At a time where people are being hit with bad economic news, it’s our job to communicate openly and transparently. “Leaders must have practices in place to support wellbeing and commit to exceptional communication. Preparing for retention and resilience is as important as a focus on financials,” commented Terre Short, CEO of Thriving Leader Collaborative.

Remind your team how much you’ve overcome together as an organization and how out of crisis, also comes opportunity. Reassure them that this too shall pass.

Money, money, money.

Have as much cash as possible because there will be plenty of opportunities to capitalize on. In fact, build a 12-to 24-month emergency fund. When the economy is in an upswing, many experts recommend saving for three to six months’ worth of living expenses. In business, double and triple that.

As a business owner one winning strategy is mergers. What other players out there can be leveraged? Who can we bring into our midst with that complements our efforts? Buying market share, finding other experts and bring them together can only benefit all parties involved.

A few other things to do to help your business thrive:

  • Trim your sails — freeze travel, freeze expenses, freeze new services
  • Go through every credit card statement and see what you can cut, even if it’s $10 per month
  • Look for discounts whenever/wherever possible
  • Build a moat around your most important customers and protect them

Keep as much soluble cash as possible so it’s there in case of an emergency. At this juncture, my advice is to get as many base hits as possible, rather than swing for the fences. Less risk, high reward.


Loyalty pays.

During an economic downturn, you must take care of those loyal customers who have been with you through thick and thin. Be mindful that not everyone will stay.

Taking care of your existing customers will pay off in the long run. Andrew Taylor, founder & CEO of Edison Loyalty said, “If I could share ONE Silver Bullet to help businesses survive the coming peril, it would be to hunker down, circle the wagons and covey up to your existing loyal database of customers.”

Taylor went on to add that taking care of loyal customers means that you can increase revenue by nearly 50 percent, while retaining just 5 percent of your customers. In fact, 54 percent of consumers would consider increasing their amount of business with a company for a loyalty reward.

Take care of your customers. They’ll take care of you, too.

Opportunity will knock. Answer the door.

Recession is a scary word, but not everything is bleak. Some of today’s most profitable and recognizable companies started during a recession — companies like Airbnb, Microsoft, Square, Uber, General Motors, and so many more.

For every dark (economic) cloud, there’s a sliver of sunshine that comes through and points you in the right direction. As a leader, you need to be in the right frame of mind to see the opportunity staring at you in the face. Blink and you might miss it.

“There’s more opportunity today to not just change, but to truly transform our products, services, processes, and customer experiences than in any other time in human history! We are doing things today that were impossible just a few years ago, and we will be doing things two years from now that are impossible today. Instead of being a crisis manager during a recession, become an opportunity manager taking advantage of disruptive change,” said Daniel Burrus, best-selling author, keynote speaker & futurist, Burrus Research, Inc.

Keep your eyes peeled and ears open. When opportunity knocks, you better be there to answer.

Never retreat. Never surrender.

As General Douglas MacArthur said, “We are not retreating – we are advancing in another direction.”

The same principle applies in war and business. Business is always evolving and not adapting means that you will be left for dead. To survive and win, especially in bad times, you need to learn to roll with the punches and pivot at a moment’s notice. According to a survey from GetApp, 92 percent of U.S. small businesses reinvented themselves during the pandemic. Another survey by Pollfish states that 51 percent of businesses changed their branding. By now, everyone is used to having to change direction if they want to remain in business – and competitive. If you’re savvy enough, you know that when everyone is retreating, that’s when you attack.

Chris Heller, Chief Real Estate Officer at OJO Labs believes, “There’s a natural tendency for business leaders to hunker down, but when you’re doing that, you can’t be head’s up looking for, or taking advantage of opportunities. As a leader, you need to block out the noise — doom and gloom from the media and other business leaders — and focus on finding those opportunities.”

As human beings, it’s tempting to sit back, lick our wounds or wait for the storm to pass. A true business leader resists that temptation. In fact, they forcibly reject that notion. Wasting a good crisis is a fruitless endeavor. Soldiers followed Gen. MacArthur into war. No one will follow you if you just sit back and watch others do what you should be doing. Join the fray!

Forge ahead, fight, battle on…and WIN!

Categories
Advice Body Language Branding Capital Strategy Women In Business

How to Look Good on a Budget: Recession-Proofing Your Appearance

When times are tough, it’s easy to let our appearance slide. After all, who has the time or money to invest in expensive clothes and grooming products? However, caring about your appearance, especially when money is tight, can have a big impact on your personal and professional success. In this article, we’ll explore some tips and strategies for recession-proofing your look and enhancing your personal style, even on a budget.

 

Invest in high-quality basics

When it comes to building a wardrobe on a budget, it’s important to focus on high-quality basics that will stand the test of time. These might include items like a well-fitted blazer, classic jeans (a dark wash is always best), and versatile shoes. While these items may require a higher upfront cost, they will pay off in the long run by lasting for years and allowing you to mix and match them with different outfits. You should spend 80% of your wardrobe budget on your basics.

 

Accessorize strategically

Accessories are a budget-friendly way to add interest and style to your outfits. Look for accessories like scarves, pocket squares, jewelry, belts, and hats that can be used to change up your look without breaking the bank. By adding a pop of color or texture to your outfit with a well-chosen accessory, you can elevate your style and create a more polished and put-together look.

 

Prioritize fit

One of the most important factors in looking good on a budget is finding clothes that fit well. Clothes that are too big or too small can make you look sloppy and unprofessional, while clothes that fit well can enhance your best features and make you look more polished and put-together. Look for clothes that flatter your body shape and accentuate your best features, and don’t be afraid to have them tailored if needed. This is the number one mistake that can cheapen your look if you don’t pay attention to it.

 

Focus on grooming

Good grooming habits can go a long way in enhancing your appearance and making you feel more confident. This includes basics like regular haircuts, good hygiene, and clean nails. If you wear makeup, focus on simple, natural looks that enhance your features without breaking the bank. By taking care of your grooming needs and presenting a clean, polished appearance, you can feel more confident and put-together, even on a tight budget.

 

Care about your appearance

Finally, it’s important to care about your appearance, even when money is tight. How you present yourself can have a big impact on how others perceive you and the opportunities that come your way. By taking care of your appearance and presenting yourself in a professional and polished manner, you can position yourself for success even during tough economic times. Remember, you don’t have to spend a lot of money to look and feel your best. With a little creativity and effort, you can recession-proof your look and enhance your personal style, even on a budget.

 

In conclusion, recession-proofing your look requires a combination of strategic shopping, good grooming habits, and a commitment to presenting yourself in the best possible light. By investing in high-quality basics, accessorizing strategically, prioritizing fit, focusing on grooming, and caring about your appearance, you can look and feel your best even on a tight budget. So go ahead and rock that budget-friendly outfit with confidence, knowing that you’re presenting your best self to the world.

 

If you’re looking for expert guidance on how to recession-proof your personal brand and enhance your appearance, consider working with Sheila Anderson, The Image DesignerÔ. With years of experience in the branding and image consulting industry, Sheila can provide personalized advice and strategies for success that align with your unique goals and budget.

 

Whether you’re an entrepreneur, freelancer, or corporate professional, building a strong personal brand and enhancing your appearance can help you stand out from the competition and position yourself for success, even during tough economic times. So don’t wait – contact Sheila Anderson today to learn more about how she can help you recession-proof your personal brand and take your career or business to the next level.

Categories
Capital Leadership Management

UNLOCKING YOUR ULTIMATE HAPPINESS: THE TWO SURPRISING FACTORS YOU NEVER KNEW EXISTED!

If I could show you a way to be much happier, incur no out-of-pocket cost, and you can start to receive benefits much faster than an Amazon Prime delivery, would you be interested?

Just practice Gratitude and The Love of Learning.

Gratitude. Being grateful takes up space in the brain that might otherwise be occupied by fear. Being fearful happens to be one of the root causes of many mistakes. Once that space is filled with gratitude, certain things begin to happen

Gratitude also leads to feelings of optimism. Optimists outperform pessimists by 31 percent. 

Gratitude leads to better thinking. 

Gratitude reduces stress. When you’re under stress, your body releases cortisol, a hormone that decreases your creativity, problem-solving capacity, and life span.

Many studies have shown people receiving pensions are much more grateful and outlive people who live off the ups and downs of their market portfolios.

Staying grateful is the best way to overcome life’s challenges.

What can you be grateful for right now? Even the simple things like your cup of tea or coffee this morning will work. Having a family member or friend or just waking up today. The list is endless, so make yourself a checklist!

Love of learning is the other key factor in personal happiness.

We’re dealing with continuous change and overwhelming information, which is not slowing down. So, when confronted with a problem, we may need to learn something new. This new situation forces some of our brain’s warning lights to go on for many of us, alerting us that we are in new territory and trying to get us back to the comfort zone that worked before.

Once you realize that your current level of knowledge is not insufficient for a solution and your mind is working against you, the Love of Learning will allow you to learn these new things by overriding the brain’s comfort zone. Instead of stressing, you can calmly approach the concern and not be deterred by the brain’s warning lights. Now it’s full steam ahead as you confidently approach the problem because you love to learn. 

For more Healthy Money Tips Listen to our PodCast “Money 911”

Subscribe to my Youtube channel youtube.com/@healthymoneyhappylife

Sign up for a Financial Fitness Strategy Session at Meet with Kris Miller – Financial Fitness Strategy Sessions

Go to my website https://healthymoneyhappylife.com/

Email me at Kris@HealthyMoneyHappyLIfe.com

Call me or text (951) 926-4158

Categories
Capital Economics

THE OVERCONFIDENCE TRAP: HOW YOUR BELIEF IN YOURSELF MIGHT BE SABOTAGING YOUR SUCCESS

The majority of people think they’re better-than-average drivers, and mathematically, not everyone can be above average. Being optimistic is excellent, and too much may impair your judgment on many things, especially when planning for your financial future.

Being optimistic is valuable as we live our life. Frequently, overconfidence bias leads quickly to confirmation bias, and both of these biases are problematic, especially when combined.   However, sometimes our abilities begin to skew toward unrealistic, which can impair decision-making behavior.

Either alone or combined, these biases are often linked to us believing we can avoid negative things from happening to us. When it comes to retirement planning decisions, you need to separate your biases from reality; this can present a challenge.

Overconfidence in your retirement planning may cause you to overlook potential risks, underestimate the time spent in retirement, and misjudge how long your income will last. Seeing the bigger picture through another set of impartial eyes is crucial and will help you sidestep the influence of biases. Finding ways to work around these biases will allow you to see the value of long-term planning. 

Let’s be realistic about the financial future:

  • Over 50% of retirees retired before they planned; the most common reason was health problems. Illness can occur at any time and may lengthen your retirement requiring savings to stretch farther than planned. 
  • 50% of retirees said their healthcare costs were higher than expected. 
  • Almost 40% said all other expenses were more than they thought. 

It’s essential to understand no one can avoid retirement risks; however, careful planning can help mitigate them.

While overconfidence can undermine the success of a long-term financial plan, clients who are secure in their decisions will likely be satisfied customers. It would be best if you found a balance between an optimistic yet realistic approach to planning.

For more Healthy Money Tips Listen to our PodCast “Money 911” and Subscribe to my Youtube channel here

Sign up for a Financial Fitness Strategy Session at Meet with Kris Miller – Financial Fitness Strategy Sessions

Go to my website https://healthymoneyhappylife.com/

Email me at Kris@HealthyMoneyHappyLIfe.com

Call me or text (951) 926-4158

 

Categories
Advice Capital Leadership Women In Business

UNLOCKING THE MYSTERY PART 2: THE ESSENTIAL GUIDE TO UNDERSTANDING THE VITAL TOOL ALMOST 50% OF PEOPLE OWN, YET FEW TRULY GRASP – A MUST-READ FOR HR AND BUSINESS OWNERS!

A comfortable retirement should include a traditional pension plan or a 401(k) or similar account and Social Security. Please be aware while pensions and 401(k) provide money in retirement, they are very different.

Here is a short review to understand the basics of each account, including the benefits, disadvantages, and differences between a pension plan vs. a 401(k).

An old-fashioned pension gives you and or a partner a source of stable and predictable lifetime income in retirement, so you do not have to worry about depleting assets. Pensions take the guesswork out of retirement planning.” The company funds pensions, and sadly they are declining in availability. High costs, market worries, and the promise to pay the retired worker or partner for life have become expensive promises. Companies that have dropped pensions are replacing them with 401(k)s, shifting all the costs and responsibility of saving for retirement to workers.

Having a 401(k), all the responsibility to manage risks is on you. If you don’t save enough, withdraw too much, or your investment choices drop, your retirement fund could run out of money. Even a well-funded 401(k) offers no guarantees. While you can estimate what you may have in retirement based on previous market returns, there is no guarantee you’ll grow your retirement savings at a planned rate. This can make planning for retirement spending very difficult.

401(k) plans allow you to invest your money but only between investments your employer authorizes, and you do not have access to any investment you want. However, with a 401(k), if investments fail to perform as expected, it directly impacts your nest egg. It’s a flawed system that expects an average person to become a savings and investing expert.

A Roth 401(K) may be wise if your company offers it. The tax benefits will be appreciated when taxes rates rise. The massive national debt and the need to continue meeting its financial obligations will cause taxes to increase.

Summary: Pension & 401(k) plans can be summed up as follows:

  • Employers primarily fund pensions, while 401(k) plans are primarily funded by employees.
  • Employers control pension investments, while employees partially control 401(k) assets. Pensions offer a guaranteed income for life, while 401(k) provides unknown payments
  • that may be depleted depending on an individual’s decisions.
  • 401(k) plans are portable employer to employer. Pensions stay at the company till retirement age.

All is not lost if your employer only offers a 401(k) plan. There are a few IRS-approved strategies to make the 401(k) more pension-like and provide some guarantees. Please reach out and see if any of the ideas are available to you.

For more Healthy Money Tips Listen to our PodCast “Money 911”

Sign up for a Financial Fitness Strategy Session at Meet with Kris Miller – Financial Fitness Strategy Sessions

Go to my website https://healthymoneyhappylife.com/

Email me at Kris@HealthyMoneyHappyLIfe.com

Call me or text (951) 926-4158

Categories
Advice Best Practices Capital Leadership

HABITS ARE NECESSARY FOR ACHIEVING YOUR GOALS, AND THEY CAN ALSO LIMIT YOUR SUCCESS WITH SELF-DESTRUCTIVE PATTERNS

Habits and practices may prevent you from achieving your goals.

Habits make us who we are, how we respond to the world, how we act in front of others, and how we think. And that’s not always a bad thing.

The importance of habits cannot be overstated. Why some habits/ patterns are needed:

You don’t have to concentrate on how to drive your car, so you can be on the lookout for danger while driving. You don’t have to think about how to walk, so you can focus on where you are going.

However, habits can also limit your success by keeping you stuck in self-destructive patterns.

More than likely, if you wish to achieve higher levels of success, you will need to drop some habits you have established up to this point.

Therefore, if you want to accomplish something that requires you to perform at a higher level, I strongly encourage you to drop these bad habits that aren’t serving you and develop new ones that align with what you want.

Do you have any habits that prevent you from achieving your goals?

Ask yourself these questions and be honest:

  • Are you late frequently?
  • Do you forget to return phone calls?
  • Do you stay up late and don’t get enough sleep?
  • Are you prone to breaking your promises?
  • Do you spend money that you don’t have?
  • If all your habits were productive, how would your life be?
  • If you ate healthy foods, exercised regularly, and slept enough.
  • How about saving money, avoiding credit cards, and paying cash for everything?
  • What if you overcame your fears and began networking with people in your field instead of procrastinating?
  • To stay on track to achieving your goals, how about creating a detailed plan broken down into monthly, weekly, and daily objectives?

Changing your habits may not be as hard as one thinks:

  • Make a list of all the habits that keep you from being productive or could negatively affect your future.
  • Choose better, more productive success habits and create a system to support them.

Follow these tips to make sure you follow through on your new habits:

  • Put up signs (yes, signs) to remind yourself to follow through.
  • Stay focused on your new habit with a partner. Talk to your partner five minutes a day, or every few days, to stay on track. 
  • Create consequences for failing to maintain your new habit. (Maybe a monetary amount, slightly painful,  for each offense to a charity.

The “no exceptions rule” is perhaps one of the most powerful ways to stay on track.

People don’t suddenly start living perfect lives overnight, and their habits play a significant role in enabling them to create the lives they want. It is up to you to decide whether to develop habits that lead you to create your ideal life or keep you anchored to your current circumstances.

Decide, commit, and watch your new life unfold. What are your thoughts?

For more Healthy Money Tips Listen to our PodCast “Money 911”

Meet with Kris Miller – Financial Fitness Strategy Sessions

https://healthymoneyhappylife.com/

Kris@HealthyMoneyHappyLIfe.com

(951) 926-4158

Categories
Accounting Advice Capital

BREAKING THE RETIREMENT PLANNING MYTH: WHY 100% OF STRATEGIES FAIL TO SECURE YOUR LIFETIME INCOME

100% of all retirement planning will fail to provide you with a guaranteed lifetime income.

Yes, 100% is correct. Regardless of how big the planning company is and how lucky or smart the advisor is, none can guarantee you an income for as long as you live.

The best they can do is guess how much or how long you could expect to get checks in retirement. Unlike Social Security and a company pension (not a 401k type plan) that can give you exact numbers, investment advisors can never give you any guarantees.

There are two separate and distinct areas of planning that confuse. Both of them start with the word Retirement. Retirement planning is what an employee gets when he starts working for a company and needs to learn about his investment options, risk tolerance, and dollar matching in the company’s 401(k) or IRA plan.

However, retirement “Income” planning is very different. Note the word income. How to get this saved money to produce a monthly paycheck as I or we are nearing Retirement? That sounds like a reasonable question to ask- how much can I take out for as long as we are both alive? In all honesty, it is the only question that matters. (I have put together critical questions you need to ask now). Income planning should be seriously looked at about ten years before you want to retire.

The retirement planning investment pros cannot give you an answer to that seemingly simple question. Why not? Social Security and company pension plans know to the penny how much you will get guaranteed for your life and a partner if you have one. How come to your retirement planner cannot do the same? Unfortunately, there is no way for them to do that. They can’t give any guaranteed amounts or length of time the money may last.

Why? You see, investment advisors are prevented by law from doing so. Because they can’t give you any guarantees, they need to craft a story that will convince people to leave their money with them: failure to provide a convincing story will result in them losing billions of dollars in commission and fees!

The first step is for you to believe they are the authority by multi-million-dollar advertising.

The second step is to do hypothetical case studies and use computerized projections to tell a story that looks so factual that you believe it. These projections appear authentic by predicting (really guessing) the chances your savings will last and not run out during retirement. To do this, they must apply guesses about what inflation will be projections for portfolio growth, (even though every investor knows “past performance does not guarantee future results, asset mix, and a sustainable

Withdrawal rate. These many assumptions lose any basis in reality. Countless economic studies have proven no one knows what percentage you can take out of your portfolio without running out of money. (No one can predict to future). Now your retirement planner puts these assumptions into a computer, presses the go button, and from these “guesses and assumptions,” impressive report prints.

The best part is that it looks official, leading many to a false sense of security (no guarantees) and the real possibility of running out of money in retirement.

It would be best to ask your advisor direct questions about how your money can produce income now. I have created a robust list of questions, including a guide highlighting each question and detailing what to look for. Please reach out, and I will send them.

 

For more Healthy Money Tips Listen to our PodCast “Money 911”

Meet with Kris Miller – Financial Fitness Strategy Sessions

https://healthymoneyhappylife.com/

Kris@HealthyMoneyHappyLIfe.com

(951) 926-4158

Categories
Capital Economics Wealth

TACKLING THE DEBT, SAVING, AND POOR KNOWLEDGE DILEMMA FOR SMART FINANCIAL DECISIONS IN YOUR LIFE

Knowing financial terms and other surplus jargon is irrelevant to one’s personal financial situation. However, knowing some financial terms is marginally helpful to one’s general well being. Understanding how the Fed uses the Federal Open Market Committee (FOMC) to implement monetary policy through Open Market Operations (OMOs) as they direct the Federal Reserve Bank of NY’s Trading Desk to buy securities – is not in the least bit helpful.

In my view, the solution to tackling the debt, saving, and poor knowledge dilemma is teaching people how to make better decisions. Personal Financial Proficiency (PFP) in a manner that allows them to make smart financial decisions in their personal lives, their professional lives, or maybe in their business lives

There is so much information, programs, and courses focusing on financial literacy today; most of them are of little value and waste time. Countless studies have shown that many people fail basic financial questions when asked, and many have so little savings that they can’t handle a $2,000 emergency. 

Teaching financial proficiency through my Foundation Building program is simple; it takes real-life situations and breaks them down so you can apply real-life fixes. The big difference with the Foundation Building program is that they learn these solutions through short 15-minute programs. 

In creating these programs, I reversed and engineered over the last four decades the excuses people used for not having enough saved or accumulated debt, etc. I have heard every excuse you can imagine, and I took all those reasons why they couldn’t and designed solutions so they could. Sadly, the lack of sufficient savings and spending habits is not a problem for just the working poor; it dramatically affects people earning over $250,000 as well. These classes are designed for everyone to get proficient in PFP.

For more Healthy Money Tips Listen to our PodCast “Money 911”

Meet with Kris Miller – Financial Fitness Strategy Sessions

https://healthymoneyhappylife.com/

Kris@HealthyMoneyHappyLIfe.com

(951) 926-4158

Categories
Capital Wealth

THE LACK OF FINANCIAL UNDERSTANDING AFFECTS ALL AGES AND SOCIOECONOMIC LEVELS

Promoting informed financial decisions, saving habits, and education in the workplace is essential to a vibrant and productive workforce. Unfortunately, many people may lack the basic math skills and financial know-how to make decisions. One of my favorite books, which I reread from time to time, is the 1988 book Innumeracy by John Paulos; he coined the book’s title from people being slow in math as compared to illiterate. Math and money are very different, and learning the differences is crucial to building wealth securely.

Even though many adults across generations were functioning with medium levels of financial literacy, too many workers today possess low levels of Personal Financial Proficiency (PFP) and have difficulty applying financial decision-making skills to real-life situations.   

Here are a few general questions about everyday financial situations that stumped so many:

  • Determining wages and take-home pay, 
  • Questions about investment types, risk, and return, 
  • Understanding specific risk economic outcomes risk
  • Understanding that 401(k) are not pensions

This is where Americans exhibit the lowest scores, with less than one-third answering correctly.

Lack of financial understanding affects all ages and socioeconomic levels. The result is those who fall into the limited PFP category, even though financially literate, may not manage their financial resources effectively and may feel intimated by retirement, budgeting, tax planning, and Social Security topics.

One way to help everyone become more confident about their personal finances is by building a solid foundation with Personal Financial Proficiency. 

Financial literacy dark secret

People with higher levels of financial literacy “fluency bias.” are more likely to build weak foundations to support their financial houses. Sadly, in this case, a little knowledge is dangerous and prevents many from developing a strategy that works and won’t leave you in a pickle as you get to retirement age.  

For more Healthy Money Tips Listen to our PodCast “Money 911”

Meet with Kris Miller – Financial Fitness Strategy Sessions

https://healthymoneyhappylife.com/

Kris@HealthyMoneyHappyLIfe.com

(951) 926-4158

Categories
Capital Economics Wealth

A TAX BOMB IN DISGUISE: THE SECURE ACT AND THE IRS

The SECURE act is a Tax bomb in disguise. Many people saved large retirement accounts where they thought a big chunk of it would be left over for their beneficiaries. The beneficiaries used to be able to take withdrawals from the inherited funds over their lifetimes. Taking the money over their lifetime was known as the stretch IRA.

Under the SECURE act, all of the inherited IRAs, 401(k), etc., money will have to be withdrawn and taxed within ten years after death. This change is known as the ten-year rule.

This new ten-year rule allowed beneficiaries, or so they thought, that the money could be left to compound for those ten years. However, the IRS had different ideas. They did not want to wait ten years to get their significant share. The IRS ruled that the money would be subjected to required distributions each year during the ten years, and the inherited accounts and those forced required distributions would take big chunks out of the growth.

IMAGE

People tend to get involved in the fine print for workarounds-there are none. The IRS needs money badly to fund the US’s spending. In case you didn’t know, the government spends more each year than it takes in. Therefore what better place to get big tax dollars than from someone who is not around to complain?

While it may seem that this tax-grab situation looks dismal, tax-saving moves can be used to make the most of a challenging situation. 

There are a few options that may have some significant tax breaks. Suppose you want to create a source of tax-free income for retirement or family. In that case, you need to consider a Roth IRA. Although subject to limits and rules, the Roth should be reviewed. Another option widely gaining popularity is a new “special” type of life insurance. This new product comes with much higher limits, fewer restrictions, and greater flexibility. A more practical option is to use a combination of both to maximize all the benefits.

Converting to these options while the market is down minimizes the tax liability and allows for more significant tax-free growth when the markets rebound.

The tax time bomb does have a ticking clock, so you must take advantage of the 2017 tax reform legislation because those lower tax rates are temporary and set to expire after 2025.

There are many additional considerations when determining to make changes.

 

For more Healthy Money Tips Listen to our PodCast “Money 911”

Meet with Kris Miller – Financial Fitness Strategy Sessions

https://healthymoneyhappylife.com/

Kris@HealthyMoneyHappyLIfe.com

(951) 926-4158