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Many people don’t quite know what to look for in an adviser. A Harris Poll found that more than a third of Americans don’t even know what a financial adviser does. Choosing the right financial adviser for your needs is crucial. It’s not just your money that’s at stake. Your ideal future is, too. Any good adviser will take as much time as needed to help you feel comfortable with their services. However, the best way to learn how your money will be managed and if you can trust your adviser is to ask questions. The Greek philosopher Socrates is quoted as saying, “The unexamined life is not worth living.” When it comes to finding financial help, I say, “The unexamined adviser is not worth hiring.” The caveat? You should also fully understand the answers to your questions before signing on the dotted line. Here are 10 questions we would ask and the reasons why. 1. What are all the costs and fees associated with investing? When it comes to investing, there are always costs. There are costs associated with owning investments, such as mutual funds and ETFs, as well as transaction fees for trading. If an adviser tells you there are none, proceed no further — except for the exit. The financial industry is creative when it comes to fees though, so this is a question you may need to ask several ways. Ask if you will be charged front-end or back-end commissions. Also, find out if any of the investments charge 12b-1 fees, which are fees charged by mutual funds to shareholders for marketing and distribution purposes. Essentially, these fees don’t directly benefit you, but instead lower your return. Remember, the more you pay in fees, the less you get in return. Some advisers also sell annuities. Be careful. Annuities are often wrapped in layers of fees. If you’re considering an annuity, ask for a complete summary of the fees, including any optional riders and benefits, mortality and expense charges, administration fees and investment fees. Further, make sure you understand the annuity’s surrender fee schedule. 2. How will you and your firm be compensated? The fact is, we advisers don’t work for free. Sorry. We charge for our services just like everyone else. The tricky part is that advisers can be compensated for their services in different ways. Some charge a flat dollar amount or a percentage of assets under management. Others are compensated by the investments they sell in the form of commissions and 12b-1 fees. This is an important difference. It’s better to have an adviser who is compensated for the work done for you and not for the investments sold. Advisers should not be compensated extra for making changes to your account or selling you more products. 3. Are you a fiduciary? Fiduciary is the highest legal standard to reach. It means those providing financial services are legally obligated to act in the best interests of their clients. Registered investment advisors (“RIAs”) are regulated under the Investment Advisers Act of 1940, which binds them to the fiduciary standard. This is a higher standard than the “suitability” standard that is followed by registered representatives, such as stockbrokers. Therefore, you should be aware that the advice you receive from one adviser to the next can differ depending on how they are registered. However, one thing to keep in mind is that advisers are technically not fiduciaries on the investments they don’t manage. For example, an adviser helping a client with an active 401(k) or providing advice on purchasing a car is not in those instances held to the fiduciary standard. When interviewing an adviser, ask what standard would apply to the investments he or she manages and any others you need help with. 4. Who’s your custodian? You should never be required to give the money you’re investing directly to a financial adviser. Think Bernie Madoff. Instead, there should be a third party, the custodian, who holds your account and the assets in it. This should be a reputable company that sends you regular statements and provides online access. 5. Are you credentialed? The financial industry is home to an alphabet soup of letters. Arguably, the three most respected sets of letters are CFP (Certified Financial Planner), CPA (Certified Public Accountant) and CFA (Chartered Financial Analyst). Advisers are required to undergo rigorous testing and continuing education to earn and maintain these designations. For personal finance help, look for a CFP. 6. How long have you been a financial adviser? Along those same lines, if applicable, you might also ask how long have you been employed with your company? Further, what’s your future look like? It’s good to know that your adviser has a history with a reputable firm and has every intention of sticking around. It takes time to build a trusted relationship, which is an investment on your part that you don’t want to go to waste if your adviser leaves in 12 months. 7. Do you have any disclosures? If your adviser has any rulings against him or her, it’s important to know what they are. You can also find this information on your own. Search through government websites such as the Securities and Exchange Commission’s Central Registration Depository and the Financial Industry Regulatory Authority’s BrokerCheck. Simply type the adviser’s name in the search field and you’ll find any past disciplinary action, registrations or licenses and educational and career histories. 8. How will you invest my money, and what’s your investment philosophy? You don’t necessarily need to know how the sausage is made, but you should be comfortable with what’s served to you on the plate. You and your adviser should come to an agreement on the appropriate asset allocation in your portfolio based on the level of risk you’re comfortable with and your long-term financial goals. You should also understand what types of investments your adviser recommends. Will your adviser use mutual funds and ETFs, individual securities, insurance products, etc.? And, how often might changes be made? Few investments perform well indefinitely, so it’s inevitable you will need adjustments in your portfolio from time to time. However, frequent investment changes can hurt more than help. Learning how often an adviser buys and sells investments will provide some indication of what you could experience. It’ll tell you whether he or she is trying to help your money grow over the long term or constantly trading in hopes of hitting a home run. 9. How often will we communicate? Perhaps you’ll need a lot of hand holding or want continued comprehensive planning. Or, maybe you just want someone to manage your money while you concentrate on living life to the fullest. Either way, make sure your new adviser will provide the level of attention you desire via written correspondence, phone, email and in-person meetings. 10. How will I fit in among your clients? The last thing you want from an adviser is to be treated as just another number. Nor do you want to have financial needs your adviser isn’t able to help you with. One way to get an idea of where you stand with your adviser is to ask how many clients he or she services. After all, there’s only so much of one adviser to go around. Further, ask how your account size and financial goals relate to other clients. Lastly, what other aspects of your financial life — beyond investing your money, planning for retirement, etc. — can you get help with. If you feel like small fish in a big pond with important financial needs unmet, then it’s a sign you need to find another adviser. Source: Kiplinger.com

Parents know all too well that getting food on the table doesn't come cheap. If you're not careful about your expenses, you might just blow a good portion of your paycheck on a routine stop at the supermarket. To help you figure out if you're overspending on food for your family, budgeting website Growing Slower created a monthly grocery spending guidelines chart. The guideline, which was shared by The Real Deal of Parenting Facebook page, uses data from the USDA's Cost of Food report to make recommendations for a thrifty monthly grocery budget based on family size. The chart starts with a family of one and goes up to a family of 11. For just a mom, dad and child, for example, Growing Slower suggests dedicating between $475 and $558 a month on groceries. For a family of six, the range is $768 to $999 per month. The chart can be seen here or below: Family Size (Total) Thrifty Monthly Grocery Budget 1 $200 - 227 2 $392 3 $475 - 558 4 $557 - 707 5 $633 - 882 6 $768 - 999 7 $870-1089 8 $1013-1216 9 $1166-1343 10 $1355-1442 11 $1543-1536   When the chart was shared on The Real Deal of Parenting's Facebook page, a lot of parents were surprised at how they actually spent less than the range given for their size family. Though, it's worth noting that a family of four that includes a toddler and a breastfeeding baby is very different than one that includes two voracious middle-schoolers. It's also not a complete science — it doesn't account for the cost of groceries in more expensive cities, and it doesn't account for extra spending on meals out of the house. So take it with a grain of bargain salt, and see if your family's spending is on track. Source: PopSugar.com

The state of Wisconsin has a budget surplus of nearly $400 million.  Governor Walker and the state legislature have decided to return some of that surplus to tax payers who have children in the form of a child sales tax rebate. Basically, to qualify for the rebate you must have had a qualifying child that you claimed as a dependent on your 2017 tax return and lived in Wisconsin during 2017 (non-residents and part-year residents can qualify too).  The rebate is $100 for each qualifying child. DO NOT PROCRASTINATE! There is a window in which you can file.  Today is the earliest date you can file for the rebate and it ends on July 2, 2018.  According to the state, late filing will not be accepted. I filed for the rebate and the process is quite simple, taking less than 10 minutes.  The easiest way to file is to go to childtaxrebate.wi.gov and fill out the online form.  You will need the social security number and date of birth for yourself, your spouse (if you filed a married/joint tax return) and each child.  You can receive a check or you can have the rebate deposited into your bank account (have your routing and account number available for this option). The state has a great resource available answering most questions that you may have, including more detail about how to claim this rebate how you can qualify for this child sales tax rebate.

Check out this article by Ian Maxwell that discusses what everybody needs to know about investment fees. I recently read an article in The Wall Street Journal where a reporter went on an epic quest to discover exactly what fees she was paying within her employer 401(k) plan. Unfortunately, the difficulties encountered, and the time invested, only led her back to where she started — confused and unclear. This is an all too common experience for investors today. I was moved by her story and reached out to see if she ever found answers to the valid questions she was asking. Her response was telling. She was receiving so many emails in response to her article, more response than she had received from anything else she had ever written, that she felt she did not have time to even set up a quick call. This got me wondering, why are fees such a hot topic, consistently generating significant attention and emotional turmoil? I think it comes down to one key concept: value. Most people are OK paying for something if they can perceive an appropriate amount of value in it. Based on the complexity and confusion often encountered when trying to clearly understand how much you are paying in fees, how can anyone decide if they are getting value? If you have no idea what you are paying, how can you make this important decision? No one likes the feeling of being confused or that feeling of being kept in the dark, especially when trying to decide if they are willing or unwilling to pay for something. We live in the “information age.” We have access to more technology and more information on our phones today than NASA scientists had when launching rockets into space 30 to 40 years ago, and this is also true of professionals in the world of financial services. There is no reason why it should be so hard to clarify and clearly explain investment fees so that the investor can decide if the options being presented provide the desired levels of value. Especially when considering the push for fiduciary standards across the financial services industry, clients and investors should come to expect 100% disclosure and clarity when it comes to understanding the investment fees they are going to pay. Getting back to the question of why fees are such a hot topic, I do not think it is because fees are inherently bad - this is how many financial services professionals get paid, and there is nothing wrong with that as most provide a valuable service to their clients. The issue, I think, is feeling a lack of control and awareness when a client or investor wants to know what they are paying, and finding that no one is able to quickly provide an exact answer. That is anything but comforting. How can an adviser uphold his or her fiduciary commitment to clients if they can neither understand, nor clearly explain fees? How can an adviser be sure they are doing what is in the client’s best interests? Again, it is not the fees that are inherently bad, it is the lack of clarity surrounding them. It is the complete inability to decide if the fees are fair, if they make sense, if the services being provided for the fees are helping to reach defined goals, and if they are providing value. When starting your investigation into investment and advisory fees, there are a few basic categories you can use to help clarify who you are paying and exactly what you are paying for. I encourage people to have a clear understanding of their “All In” number so they can understand the total they are paying in fees. See the categories below: Adviser Fee This is the fee that is charged by your financial adviser if you have decided to hire someone for additional help. This can range widely based on different pricing structures, but annual averages should be somewhere around 1% - 1.5% of assets under management, depending on account size. Other advisers charge by the hour. The adviser fee is sometimes mistaken for all the fees the client is paying, but this is not usually the case. Investment Management Fees These are the fees charged by money managers to manage the funds and strategies being used to invest client money. These can range widely and can drive up the “All In” number behind the scenes without proper disclosure and close monitoring. Investment management fees can range from 0.3% - 2.5% per year levied on the amount invested. Platform Fees Depending on how the adviser is setting up his or her investment models, there may be added fees for the investment platform being used. These fees can range in the area of 0.5%. These can be harder to spot and often relate to different custodians and/or TAMP-UMA services. Transaction Costs These also happen behind the scenes and can cause the most difficulty when trying to find them out. Depending on the investment style of the funds being used, there can be costs for buys and sells executed to adjust the holdings of a given fund or strategy. They vary from year to year. An efficiently run fund could cost a few hundred dollars per year in addition to adviser, platform and management fees. Use these criteria to guide your search for understanding your fees and add them all up to get your true “All In” number. With this number in mind, now you can properly assess if it is worth it or if you want to look around to find better value elsewhere. Keeping everything at or below 2% is a decent general benchmark to keep in mind. For example: A 1.2% adviser fee, investment management fees of 0.5%, and a platform fee of 0.3% would give you an “All In” total fee of 2% before counting transaction costs. It should take no more than 10 to 15 minutes to find an answer to the simple question, “What am I paying in fees?" If it takes more than 30 minutes of actual research, or no one can get back to you within a few hours with a clear answer, you may want to reconsider who you are working with when seeking financial advice. Source: Kiplinger.com

Do you feel hesitant to put more of your money in the market because it feels like a gamble? Even seasoned investors can get nervous about investing their hard-earned money, because all investments come with risk. And for most people, the thought of losing the money you worked hard to earn is far more painful than the chance of possibly earning more. But here’s the thing: If you’re investing wisely, you can mitigate your risks through the right strategies, like appropriate asset allocation and diversification. You still risk experiencing temporary losses, but it’s not the same as taking your cash to the blackjack table. Some people, though, treat investing that way. They throw money into the market without a plan, without a strategy, and without the proper safeguards in place to protect against unnecessary risks. In other words, they don’t invest at all. They speculate, and they often experience wild swings and major losses in their portfolios as a result. What Are You Doing with Your Wealth? Benjamin Graham wrote about how to identify a speculator in his great investment book, The Intelligent Investor. He explained that “the speculator’s primary interest lies in anticipating and profiting from market fluctuations. The investor’s primary interest lies in acquiring and holding suitable securities at suitable prices.” Graham goes on to write that investors do care about market movements — but only from a practical standpoint, not because they get emotionally involved with volatility. Movements in a market, said Graham, “alternately create low price levels, at which [the investor] would be wise to buy, and high price levels, at which [the investor] certainly should refrain from buying and probably would be wise to sell.” Based on this definition, “investors” are not just individuals who put money into the market. Investors are people who purposefully, strategically and rationally buy and sell securities. Speculators, on the other hand? Those are individuals who also buy and sell in the market — but they do so emotionally and without a strategy. So, on which side of the spectrum do you fall? Are you investing or speculating? If you’re unsure, consider this list of activities and behaviors. If you’re checking the boxes here, you might be speculating: You think about the short term. You’re trying to earn a big return in a short amount of time. Rather than planning to invest over years or decades, you want to see a return within months, weeks or even days. You act based on hunches, guesses or tips. No one knows what the market is going to do tomorrow (let alone any one individual security in that market). If you base your investments off of predictions, forecasts or what someone else told you was going to happen… that’s speculating, not investing. And yes, this holds true even if the hunch came from a so-called “expert” on a financial TV program! You let your emotions get the best of you. Humans are highly emotional, irrational decision-makers. There’s nothing we can do to change that — but we can plan for it by putting an investment strategy in place and then sticking to that strategy. If you abandon your plan in favor of your feelings, you’re probably speculating. You think you know more than the market. An efficient financial market means that the securities within that market are accurately priced. But speculators think they have some sort of information the rest of the market doesn’t have — and they try to use that information to find mispriced securities. If you think you know more than the millions of other market participants and all the data that flows in and out of that market to determine individual prices … A. you’re probably wrong, and B. you’re speculating. If You Are Speculating … That Might Be Just Fine Here’s the thing: If you realize you’re speculating instead of investing, that might be OK in some circumstances. Speculating isn’t inherently bad, but people run into problems when they leverage all their available wealth to do so or fail to realize they’re not investing. If you use 95% of your available funds to invest wisely, you’re on track to meet all your financial goals, and you have the risk capacity (and tolerance)to be OK losing a small amount of cash on a speculative investment. It might be OK to take 5% of your available funds and go play. The key is to understand you’re doing just that: playing around, or making a gamble, or speculating. If you have the money available, feel free to speculate on the side — and make a distinction between that activity and your strategic investment plans. Of course, some people do not have the capacity to speculate with any amount of their money. A good financial planner can help you determine what’s appropriate for your situation and provide an objective, third-party opinion on how much cash you can safely use to speculate with stocks, businesses or other vehicles like cryptocurrencies. Your adviser might also be able to serve as the voice of reason needed to say, “OK, you’ve made a great return with your speculative investment — now, it’s time to sell.” Even when you’re exploring the possibilities with a small, safe amount of your wealth, it’s helpful to have a logical voice on your shoulder to help you make the most of both your strategic investments and your more speculative ventures. Source: Kiplinger.com

Q: I'm thinking about leaving my job and starting my own business, but I'll lose my health insurance from work. Can I sign up for coverage through HealthCare.gov now, or do I have to wait until open enrollment? A: You usually need to wait until open enrollment to buy individual health insurance, but you can get coverage anytime during the year if you're eligible for a "special enrollment period." To qualify, you must have experienced one of several life changes, which include leaving your job and losing your employer health coverage; moving to a new zip code; getting married; having a baby or adopting a child; or losing health insurance because you got divorced or legally separated. If you qualify for a special enrollment period, you usually have up to 60 days following the event to enroll in a new health insurance plan. See Healthcare.gov for more information about special enrollment periods. To shop for coverage, start by going to HealthCare.gov. Depending on your state, either you'll be able to buy individual health insurance at the site or you'll find a link to your state's health insurance marketplace. If your income is less than 400% of the federal poverty level ($48,240 for singles, $64,960 for couples or $98,400 for a family of four in 2018), then you'll qualify for a subsidy to help pay the premiums of a policy you purchase through HealthCare.gov or your state's health insurance marketplace. Use the tool at HealthCare.gov to see if you qualify for a subsidy. If your income is higher than the cut-off point, you can still buy a policy through the marketplace, but you won't receive a subsidy. You may also want to compare the costs and coverage of policies offered through a health care exchange to policies that are being sold outside of the marketplace, such as directly from an insurer, through an agent or at a website such as eHealthInsurance.com. Your state insurance department may also have information about health insurance available in your state. See www.naic.org/map for links. Another option is to continue your current coverage under COBRA. That's the federal law that allows people to stay on their employer's plan for up to 18 months after leaving a job. COBRA coverage tends to cost more than individual insurance because you have to pay both the employer's and the employee's share of the cost. You would, however, have the same provider network and cost-sharing arrangements that you have now. Ask your employer about your options. People who want to change health insurance plans midyear and don't qualify for a special enrollment period need to wait until the next open-enrollment period to buy a new policy. Open enrollment for coverage starting in 2018 ran from November 1 to December 15, 2017. No open-enrollment period has been set for choosing 2019 coverage, although it may be similar to last year's. Some states also have longer enrollment periods. Source: Kiplinger.com

In the 1930s, the US government began issuing social security cards as a means to track retirement and disability benefits to which individuals were entitled. Very quickly, businesses and agencies started using them for identification purposes. It was just so convenient that every US citizen and permanent resident had one. But with this proliferation of uses for social security numbers came a steep increase in identity theft.  Once a thief has your social security number, it’s easy to start opening financial accounts in your name. So, where is the sweet spot between giving businesses and agencies the information they need and protecting your identity? Who can ask for a social security number – and who can’t? Keep reading to learn more from our financial advisors in LaCrosse. Situations where you legally must provide your Social Security number There are times when you will need to give your social security number. These include: Anything that requires tax reporting, such as employers reporting your income. Banks for monetary transactions such as getting a loan or opening a line of credit. This can include other entities where you open a line of credit such as a phone contract. Real estate transactions. Government agencies (both state and federal) that provide benefits or services such as administration of taxes, driver’s licenses, child support enforcement, Medicaid, food stamps and unemployment compensation, student loans, and workers’ compensation. Making cash transactions over $10,000. When working with an investment advisor. Applying for group health insurance through an employer. Situations where you don’t have to provide your Social Security number Businesses will often ask for your social security number because it’s an easy way to track your account. It’s also an easy way to track you down for collection purposes.  That doesn’t mean they really need it or should have it. Here are some examples. Business over phone or email Refuse to give your social security number when someone representing themselves as an agent of a business, even one you use, asks for it during a call or email you did not initiate.  This is a common way for scammers to steal identities. On a job application Although employers can ask for your social security number, they should not be asking for it on a job application before you are hired. Leave it blank until you accept an offer. The doctor’s office When you visit a new doctor, the staff typically hands you a form to complete. Often, that form asks for a social security number. There is usually no reason that they need it, and you’re better off leaving it blank. School enrollment Public schools cannot require the social security number of a child or their parents to enroll. You can use other documentation for proof of identity. You also aren’t required to provide a social security number to enroll in college.  However, be aware that applying for financial aid of any kind will require a social security number.  Ask these questions The more you spread your social security number around, the more you increase your chances of identity theft. If you’re concerned about whether or not a business can ask for your social security number, ask these questions: Why do you need my social security number? How will you use my social security number? Where and how are you storing my social security number? Is there another form of identification you would accept instead? What will happen if I do not provide my social security number? What may happen if you refuse It’s not illegal for a business to ask you for your social security number, even if it’s not legally required. If they will not accept another form of identification, they may refuse to provide service. Keep your financial future safe with Advisors Management Group If you have more questions about who can legally ask for your social security number or keeping your financial data safe, don’t hesitate to contact us now. A knowledgeable financial advisor in Eau Claire or a financial advisor in Green Bay can answer your questions and help you make sound financial decisions. We have offices conveniently located in La Crosse (608.782.0200), Eau Claire (715.834.9512), and Green Bay (920.434.2192), Wisconsin. Advisors Management Group, Inc. is a registered investment adviser whose principal office is located in Wisconsin. Opinions expressed are those of AMG and are subject to change, not guaranteed, and should not be considered recommendations to buy or sell any security. Past performance is no guarantee of future returns, and investing involves multiple risks, including, but not limited to, the risk of permanent losses. Please do not send orders via email as they are not binding and cannot be acted upon. Please be advised it remains the responsibility of our clients to inform AMG of any changes in their investment objectives and/or financial situation.  This commentary is limited to the dissemination of general information pertaining to AMG’s investment advisory/management services. Any subsequent, direct communication by AMG  with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. A copy of our current written disclosure statement discussing our advisory services and fees continues to remain available for your review upon request.

Getting a credit card an easy way to build your credit, but you should still be careful when it comes to spending and swiping. Kimberly Palmer, credit card and banking expert from Nerdwallet, shares some pros and cons of using plastic. PRO: Credit cards can help build your credit history “Credit cards are actually one of the simplest and most straightforward ways to build credit,’ Palmer says. “Building your credit history when you’re young is so important because it can really affect so much of what you do in your financial life.” Showing that you can responsibly handle credit will make it easier for you to take out a loan — for your education, a car, or a new home — down the line. But in order to build a strong credit history, be sure to pay off your bills on time every month. “The lender you’re considering using will always check your credit history to see how you’ve paid off your bills each month,” Palmer says. “It’s such an important thing to build up [your credit history].” CON: Late payments can snowball Palmer cautions credit card users to not see credit cards as “free money.” “It’s really important to understand that if you don’t pay off the balance at the end of every month, then really quickly fees and interest can accrue and you can end up building up a lot of debt,” she says. PRO: Rewards and perks When you sign up for a credit card, Palmer recommends researching all the benefits that come with it. Aside from earning points and getting cash-back deals, there might be other advantages that come with your card. “Some of the perks that come with credit cards are things like renters’ insurance or car insurance. Some cards come with purchase protection, so if you buy something you can get your money back. There’s also things like fraud protection, which can help you avoid worrying about losing money,” Palmer says. CON: Leaving money on the table If you avoid researching the benefits and perks of offered by your card, you could be leaving money on the table, Palmer says. “Credit cards will reward you for spending on different categories and you want to make sure you’re maximizing that,” Palmer says. “Cards are so different from each other so you first have to really think about how you spend the money because you can actually get rewarded based on how you spend,” she says. Look for cards that offer the best benefits for the purchases you make. For example, if you use your card for groceries, find cards that offer a high percentage back on those purchases. Or if you want to travel, find a card that offers travel deals or rewards points you can cash in later. PRO: Using your card as a budgeting tool Palmer says your credit card can be an easy way to organize your finances and see where your money is going each month. “Every time you use it, it gets logged on to your account, so you can look up your statement and review where you spent money,” Palmer says. “You can also organize that spending by category so you can see the percentage you’re spending at restaurants or on travel [for example].” Seeing where you spend can help you determine if you need to cut back. “It’s a really useful way of getting organized with your finances without having to collect receipts,” Palmer says. CON: The temptation to overspend Palmer cautions that if people find themselves overusing their cards to pay with cash instead. “If you really need to exert more self-discipline, and it’s just too tempting to pull out that credit card and spend — even when you know you shouldn’t — that’s a red flag,” Palmer says. Source: Finance.Yahoo.com

We’re over 1 month into 2018, a time when many people are still riding the motivation high of their New Year’s resolutions. People resolve to save more and spend less, pay off debt, and accumulate funds for a future purpose. But even if you have those goals firmly placed in your mind, when it comes to the action steps and decisions it takes to reach those goals, many people battle internal thoughts and external stimulus. There are two voices playing in your head. Typically, one voice outshouts the other, making it the winner of your decision-making process. There are several types of conversations that might play out at various times. For example, one voice might be urging you to spend on something fun or frivolous, while the other tells you that it won’t be quite as much fun when the bill comes in next month. It might sound something like this: “Wow, look at that __________! You’ve always wanted it!” “Gee, yeah, I’ve been thinking about buying it. But, I don’t know….” “Come on, you KNOW you want it. You deserve it, you work hard!” “I’ve been working really hard to keep my spending under control…” “Which is one of the reasons why you should have it. You know, a reward for how well you’re doing!” The internal conversation continues until one voice wins — causing you to spend or save. Your inner voices battle, unless one is clearly stronger than the other, and it will lead you to one of two paths: living closer to your values or money misery. The good news is that you know what to do and which voice to heed. The bad news is that sometimes, the cacophony is simply too overbearing to find clarity. It might take a “third party”, so to speak, to help you decide: your gut. The voice that is urging you to go off plan will typically awaken that feeling in your stomach reminding you about that something that might not be aligned with your values. Your gut feelings are worth trusting. You know from your money history whether your decisions have led you towards positive outcomes or frustrating problems. Here are five action steps to making the right financial decisions: 1. Make a list of the last five financial decisions you’ve made. 2. Which voice swayed your decision? 3. If you could go back and do it over, would you make the same decision again? 4. What did you THINK about when making the decision? 5. What did you FEEL when you made the decision? Chances are, you might not even remember what you thought or felt — your decision might have been that quick and decisive. But nonetheless, there was a process. Whether it was deciding on purchasing a bottle of water, a snow blower, or to invest in a particular security, you went through a process of deciding. Be present and aware of your decisions and whether those decisions are being made with your values in mind. Be aware of which voice is speaking and whether it is pulling you away from your goals or supporting your choices to live within your financial boundaries. Check in with your gut and decide whether what you’re “hearing” is genuinely what you want. Your awareness is necessary in order to achieve financial success — there are no magic bullets or potions. There is only you, your values, and your ability and willingness to listen to the right voice. Source: Forbes.com

Tax lawyers, accountants and financial planners are burning the midnight oil trying to figure out all the ins and outs of the new tax law. The men and women of the IRS, given less than two weeks between the day President Trump signed the law and the time most of the new provisions went into effect January 1, are scrambling, too. When Congress approves the most sweeping changes in the tax law in more than three decades, you can bet you’ll be affected. Here are 17 things you need to know about how the new rules affect retirees and retirement planning. Supersized Standard Deduction The new law nearly doubles the size of the standard deduction – to $12,000 for individuals and $24,000 for married couples who file joint returns in 2018 (up from $6,500 and $13,000). The increase, in conjunction with new limits on some itemized deductions, is expected to lead more than 30 million taxpayers who have itemized in the past to choose the standard deduction instead (because it will reduce their taxable income by more than the total of their deductible expenses). There’s even more incentive for taxpayers age 65 and older to make the switch because their standard deduction will be even bigger. As in the past, those 65 and older or legally blind get to add either $1,300 (married) or $1,600 (single) to the basic amount. For a married couple when both husband and wife are 65 or older, the 2018 standard deduction is $26,500. All the hoopla about doubling the standard deduction is somewhat misleading. As a trade-off, the new law eliminates all personal exemptions. The 2018 exemption was expected to be $4,150, so, for a married couple with no children, the $11,000 hike in the standard deduction comes at a cost of $8,300 in lost exemptions. While this will affect your tax bill, it does not affect the standard deduction/itemizing choice. A Squeeze on State and Local Tax Deductions The new law sets a $10,000 limit on how much you can deduct for state and local income, sales and/or property taxes for any one year. This could be particularly painful for retirees with second homes in the mountains, say, or at the seashore. In the past, property taxes were fully deductible on any number of homes, and there was no dollar limit on write-offs for either state and local income or state and local sales taxes. The new law lumps all so-called SALT (state and local taxes) deductions together and imposes the $10,000 annual limit. This crackdown, along with the increase in the standard deduction, will lead millions of taxpayers to switch from itemizing to claiming the standard deduction. Loss of Deduction for Investment Management Fees Just as one part of government is pushing financial advisers who work with retirement accounts to charge clients set fees rather than commissions, Congress has decided to eliminate the deduction of such investment management fees. In the past, such costs could be deducted as a miscellaneous itemized deduction to the extent all of your qualifying miscellaneous expenses (including fees for tax advice and employee business expenses, for example) exceeded 2% of your adjusted gross income. As part of the tax overhaul, Congress abolished all write-offs subject to the 2% floor. If you’re paying a management fee for a traditional IRA, having it paid from the account itself would effectively allow you to pay it with pre-tax money. 401(k)s Spared A firestorm of criticism blew up last fall when it was learned that the House of Representatives was considering severely limiting the amount or pre-tax salarly retirement savers could contribute to their 401(k) plans. In the end, though, Congress decided to leave 401(k)s alone, at least for now. For 2018, savers under age 50 can contribute up to $18,500 to their 401(k) or similar workplace retirement plan. Older taxpayers can add a $6,000 “catch-up” contribution, bringing their annual limit to $24,500. Stretch IRA Preserved Early on in the tax-reform debate, it appeared that Congress would put an end to the “stretch IRA,” the rule that permits heirs to spread payouts from an inherited IRA over their lifetime. This could allow for years, or even decades, of continued tax-deferred growth inside the tax shelter. One plan that gained traction on Capitol Hill would have forced heirs to clean out inherited IRAs within five years of the original owner’s death. The accelerated payout would have sped up the IRS’s collection of tax on the distributions. Ultimately, though, this plan wound up on the cutting room floor. The stretch IRA is still available as long as the heir properly titles the inherited account and begins distributions, based on his or her life expectancy, by the end of the year following the original owner’s death. Stretch IRA Preserved Early on in the tax-reform debate, it appeared that Congress would put an end to the “stretch IRA,” the rule that permits heirs to spread payouts from an inherited IRA over their lifetime. This could allow for years, or even decades, of continued tax-deferred growth inside the tax shelter. One plan that gained traction on Capitol Hill would have forced heirs to clean out inherited IRAs within five years of the original owner’s death. The accelerated payout would have sped up the IRS’s collection of tax on the distributions. Ultimately, though, this plan wound up on the cutting room floor. The stretch IRA is still available as long as the heir properly titles the inherited account and begins distributions, based on his or her life expectancy, by the end of the year following the original owner’s death. FIFO Gets the Heave-Ho For a while, it looked as if Congress would restrict the flexibility investors have to control the tax bill on their profits. Investors who have purchased stock and mutual fund shares at different times and different prices can choose which shares to sell in order to produce the most favorable tax consequences. You can, for example, direct your broker to sell shares with a high tax basis (basically, what you paid for them) to limit the amount of profit you must report to the IRS or, if the shares have fallen in value, to maximize losses to offset other taxable gains. (Your gain or loss is the difference between your basis and the proceeds of the sale.) This flexibility can be particularly valuable to retirees divesting holdings purchased at different times over decades. The Senate called for eliminating the option to specifically identify shares and instead impose a first-in-first-out (FIFO) rule that would assume the oldest shares were the first to be sold. Because it’s likely that the older shares have a lower tax basis, this change would have triggered the realization of more profit sooner rather than later. In the end, though, this idea fell by the wayside. Investors can continue to specifically identify which shares to sell. As in the past, you need to identify the shares to be sold before the sale and get a written confirmation of your directive from the broker or mutual fund. Do-Overs are Done For The new law will make it riskier to convert a traditional individual retirement account to a Roth. The old rules allowed retirement savers to reverse such a conversion—and eliminate the tax bill—by “recharacterizing” the conversion by October 15 of the following year. That could make sense if, for example, the Roth account lost money. Recharacterizing in such circumstances allowed savers to avoid paying tax on money that had disappeared. Starting in 2018, such do-overs are done for. Conversions are now irreversible. Relief for Some 401(k) Plan Borrowers The new law gives employees who borrow from their 401(k) plans more time to repay the loan if they lose their jobs. Currently, borrowers who leave their jobs are usually required to repay the balance in 60 days to avoid having the outstanding amount treated as a taxable distribution and hit with a 10% penalty if the worker was under age 55. Under the new law, they will have until the due date of their tax return for the year they left the job. End of Home-Equity Loan Interest Deduction Taxpayers who use home-equity lines of credit to get around the law’s general prohibition of deducting interest get bad news from tax reform. The new law puts the kibosh on this deduction . . . immediately. Unlike the restriction of the write-off for home mortgage interest—reducing the maximum amount of debt on which interest is deductible from $1 million to $750,000—which applies only to debt incurred after December 14, 2017, the crackdown on home-equity debt applies to old loans as well as new ones. New Luster for QCDs The new law retains the right of taxpayers age 70 ½ and older to make contributions directly from their IRAs to qualifying charities. These qualified charitable donations count toward the IRA owners’ required minimum distributions, but the payout doesn’t show up in taxable income. As more and more taxpayers claim the standard deduction rather than itemizing, QCDs stand out as a way to continue to get a tax benefit for charitable giving. Taxpayers who qualify and claim the standard deduction may want to increasingly rely on QCDs. Custodial Accounts and the Kiddie Tax If you’re saving for your grandkids, or great grandkids, in custodial accounts, you need to know about changes in the kiddie tax. Under the old law, investment income over a modest amount earned by dependent children under the age of 19 (or 24 if a full-time student) was generally taxed at their parents’ rate, so the tax rate would vary depending on the parents’ income. Starting in 2018, such income will be taxed at the rates that apply to trusts and estates, which are far different than the rates for individuals. The top 37% tax rate in 2018 kicks in at $600,000 for a married couple filing a joint return, for example. That same rate kicks in at $12,500 for trusts and estates . . . and, now, for the kiddie tax, too. But that doesn’t necessarily mean higher taxes for a child’s income. Consider, for example, a situation in which your grandchild has $5,000 of income subject to the kiddie tax and that the parents have taxable income of $150,000. In 2017, applying the parents’ 25% rate to the $5,000 would have cost $1,250. If the old rules still applied, using the parents’ new 22% rate would result in an $1,100 tax on that $5,000 of income. Applying the new trust tax rates produces a kiddie tax bill of $843. The kiddie tax applies to investment income over $2,100 of children under age 19 or, if full-time students, age 24. New Rules for State 529 College Savings Accounts If you’re investing in a college fund for your grandchildren, you need to know about changes in tax-favored 529 plans. The new law expands the use of these savings plans by allowing families to spend up to $10,000 a year to cover the costs of K-12 expenses for a private or religious school. The $10,000 cap applies on a per-pupil basis. Previously, tax-free distributions were limited to college costs. Although 529 contributions are not deductible at the federal level, most states offer residents a break for saving in the accounts. Expanded Medical Expense Deduction While Congress cracked down on a lot of deductions, and the medical expense write-off was once threatened with complete elimination, in the end the lawmakers actually changed the law so that more taxpayers can benefit from this break. Until the new rules became law, unreimbursed medical expenses were deductible only to the extent that they exceeded 10% of adjusted gross income. The high threshold meant that relatively few taxpayers qualified, although retirees with modest incomes and high medical bills frequently did. The new law reduces the threshold to 7.5% of AGI and the more generous rule applies for both 2017 and 2018. In 2019, the threshold goes back to 10%. Tax-Free Income from Consulting Planning to start your own business or do some consulting in the early years of your retirement? If so, one change in the new law could be a real boon. The law slashes the tax rate on regular corporations (sometimes referred to as “C corporations”) from 35% to 21%, starting in 2018. There’s a different kind of relief to individuals who own pass-through entities—such as S corporations, partnerships and LLCs—which pass their income to their owners for tax purposes, as well as sole proprietors who report income on Schedule C of their tax returns. Starting in 2018, many of these taxpayers can deduct 20% of their qualifying income before figuring their tax bill. For a sole proprietor in the 24% bracket, for example, excluding 20% of income from taxation has the same effect of lowering the tax rate to 19.2%. Another way to look at it: If your business qualifies, then 20% of your business income would effectively be tax-free. For many pass-through businesses, the 20% deduction phases out for taxpayers with incomes in excess of $157,500 on an individual return and $315,000 on a joint return. Higher Estate Tax Exemption Congress couldn’t bring itself to completely kill the federal estate tax, but lawmakers doubled the amount you can leave heirs tax-free. That means even fewer Americans will ever have to pay this tax. Starting in 2018, the tax won’t apply until an estate exceeds about $11 million. This means a married couple can leave about $22 million tax-free. These amounts will rise each year to keep up with inflation. The Angel of Death Tax Break That’s what we call the provision that increases the tax basis of inherited assets to the value on the date the previous owner died. When it appeared that the new law would repeal the estate tax, some observers worried that the step-up rule would be changed or eliminated. In the end, the estate tax was retained, as noted in the previous slide. And, the step-up rule survived. If you inherit stocks, mutual funds, real estate or other assets, your tax basis will, in most cases, be the value on the day your benefactor died. Any appreciation prior to that time is tax free. Source: Kiplinger.com