The new year is almost upon us. If you’re like many people, that means it’s time for resolutions. What’s your plan for 2019? Do you want to start exercising or maybe improve your diet? Do you want to take up a new hobby or even further your education?
 
When you’re thinking about resolutions, don’t forget about retirement planning. You could make 2019 the year you finally take back control of your planning and get your retirement back on track. Below are a few planning steps to consider:

Maximize contributions to your IRA. 

Do you contribute to an IRA? If not, now may be the time to start. An IRA can be a powerful savings tool because it offers a variety of tax benefits. In a traditional IRA, the contribution may be deductible, depending on your income. In a Roth IRA, the contribution isn’t deductible, but distributions are tax-free if you’re over age 59½. In both accounts, your earnings accumulate tax-deferred as long as the funds stay in the account. That tax deferral may help you accumulate assets faster than you would in a similar taxable account.
 
In 2019, IRA contribution limits increase to $6,000. You can contribute an extra $1,000 if you’re age 50 or older.1 You don’t have to contribute the maximum, though. Even a modest regular contribution can have an impact. Consider setting up an automatic contribution to an IRA. If you already have an IRA, look at your budget and see how you can increase your contributions.

Increase contributions to your qualified retirement plan. 

If you’re like many Americans, you probably participate in an employer-sponsored retirement plan, such as a 401(k) or 403(b). If so, you may want to increase your contributions. Even a gradual increase can have a big impact on your retirement savings. Your contributions grow tax-deferred, and they may even earn a matching contribution from your employer. Those two factors make an employer-sponsored plan a powerful savings vehicle.
 
In 2019 you can contribute up to $19,000 to a 401(k) or 403(b). If you’re age 50 or older, you can contribute an additional $6,000 in catch-up contributions.2 Not everyone can afford to put $19,000 per year into a retirement plan, though. You could resolve to simply increase your contributions by 1 percent. The following year, you could raise them by another percentage point. Over time, those increased contributions could compound to a sizable amount.

Create a stream of guaranteed* retirement income. 

Today’s retirees face challenges that previous generations didn’t face. There was a time when retirees could count on a company pension and Social Security to fund their retirement. Today, retirees have to shoulder much of that burden with their own savings. Distributions from savings may not be guaranteed*. If you spend too much too soon, or if your investments decline in value, there’s a risk you could outlive your money.
 
If you’re approaching retirement, you may want to take time in 2019 to guarantee* a portion of your future income. An annuity can be a valuable tool for creating a guaranteed* lifetime income stream that isn’t affected by market volatility. You get a reliable stream of income that lasts no matter how long you live.

Ready to take control of your retirement strategy in 2019? Let’s talk about it. Contact us today at Heritage Financial North. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.
 
1https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits
2https://www.irs.gov/newsroom/401k-contribution-limit-increases-to-19000-for-2019-ira-limit-increases-to-6000
 
*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
 
18280 - 2018/11/28

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The holiday season is here. For many Americans, that means giving to their favorite charitable cause. In fact, a recent survey found that 63 percent of Americans donate to a charity in the last two weeks of December. More than 75 percent of those donations go to either churches, poverty-related charities or children’s causes.1
 
If you’re passionate about supporting charity, you may be looking for ways to make a lasting impact. Perhaps you would like to use a portion of your assets to leave a charitable legacy that will help others for years or decades to come.
 
A charitable remainder trust is an effective tool that can help you leave an impactful, charitable legacy and also meet some important financial objectives. You can use a charitable remainder trust to generate lifetime income and also to minimize tax exposure.
 
Is a charitable remainder trust right for you? That depends on your unique goals, needs and objectives. However, it may be worth considering as part of your overall legacy strategy.

What is a charitable trust? 

A charitable remainder trust is a legal document that facilitates the sale and transfer of your assets to a charitable organization. It’s usually used in conjunction with assets that have appreciated significantly in value over time and could create a sizable tax liability.
 
You start by identifying the charity and creating the trust document. You then transfer ownership of specific assets from yourself to the trust. The trust can sell the assets and use those funds to create a diversified portfolio that’s aligned with your needs and goals. The trust then pays you income over a set period of time, usually the remainder of your life. Upon your death, the trust assets are transferred to the designated charity according to your instructions.
 
There are several tax benefits to this type of structure. First, the trust isn’t taxed on the sale of the assets because they are ultimately intended for charity. That means you could place a highly appreciated asset in the trust and minimize your tax exposure. Second, you also may realize a current income tax deduction for contributing assets to the trust, as they’re considered a charitable donation. A tax professional can help you determine exactly how you might benefit.

How does the trust generate income? 

Remember, the trust doesn’t transfer your assets to the charity until after you pass away. In the meantime, the trust pays you annual income. The amount of income depends on the type of trust you establish.
 
You can set up your trust to pay you a level income amount every year. The income amount stays the same regardless of what happens to the value of the trust assets. This type of arrangement can offer predictability, but there can also be drawbacks. If the trust assets decline in value, your income could become problematic and may deplete the trust value.
 
An alternative approach is to take a fixed percentage of the trust value each year as income. The trust value is reassessed at the beginning of every year, and your income is adjusted accordingly. Your income may not be predictable from year to year, but it will stay proportionate to the overall value of the trust. If the trust value increases, so will your income. if the value declines, your income will decline, too.

What drawbacks should you consider? 

A charitable remainder trust isn’t for everyone. One of the biggest drawbacks is that it’s irrevocable. That means you can’t get the assets back out of the trust, even if you change your mind after the fact. Before you establish a charitable trust, make sure you won’t need the assets in the future.
 
There are a number of risks that could arise through retirement, including the need for long-term care or costly medical care. Develop a plan to address those risks before donating assets to charity. It’s possible that there may be other charitable actions you could take that are more appropriate for your needs and goals. A financial professional can help you develop the right strategy for your objectives.
 
Ready to develop your charitable plan? Let’s talk about it. Contact us today at Heritage Financial North. We can help you analyze your needs and implement a strategy. Let’s connect soon and start the conversation.
 
1https://www.worldvision.org/about-us/media-center/survey-majority-americans-donate-charity-end-december
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
 
18276 - 2018/11/27