4 Tips for Financially Independent Women | AGT The Safe Money People

Is there a meaningful difference in the way men and women consider money? There is, according to a study published in a recent issue of Social Indicators Research.

Women associate money with love and emotion, according to the research, while men are twice as likely to link finances to independence and power. While the differences are not mutually exclusive, researcher’s hope the general findings will help people better understand their relationship with money, which may lead to better-informed financial decisions.

“Also, it’s helpful to remember that, historically, women haven’t had control of their own financial destiny; and that includes many women who are retired today,” says Leah Miller, a financial and Medicare expert, and CEO of Red Anchor Wealth Management (www.redanchorretirement.com).

“Despite the fact that women control most of the economy today and tend to be the CFO of most households, many continue to get the short end of the stick – especially when it comes to retirement. Women live longer and are often the ones to find out that they’ve outlived their money.”

Speaking directly to women, Miller offers context on how to face emotionally the stress of financial planning for retirement.

Make the most of your time on this Earth. 

A long life shouldn’t be a bad thing. If you’re married with a husband, you’ll likely enjoy many years together sharing Social Security, a pension or IRA income and other sources. However, much of that money won’t be there should you outlive your husband. Many women may be prone to avoiding thoughts of life after their spouse moves on. While that may be romantic in a sense, Miller says, it is highly impractical if you’re trying to live a long and fulfilling life.

Money keeps women up at night.

People don’t like to think about the things that cause them pain. For women, the stress of an uncertain financial future is a huge pain. While there is a way to feel much better about this uncertainty, millions of women avoid troubleshooting this latent and palpable stressor. It’s like someone who is desperate to lose weight but is too afraid to step on the scale.

Anxiety is worse than actually taking care of the problem (getting started). 

If you are the family chief financial officer, then abstracting a future budget is an easy step to start with. The important goal of retirement planning is to craft an income stream that will sustainably support your needs, so start accounting now. Make a balance sheet that includes your savings account, retirement accounts, 401(k) plans, investment real estate, stocks, bonds, mutual funds, annuities, cash value life insurance and other assets. Then break it down further by pre-tax and post tax-accounts.

Don’t take your estate for granted; beware the pre-Medicare timeframe.

Some women have it better than others, but beware of overconfidence, because you can fall ill anytime. For example, the average couple who retires at age 62 will spend $17,000 out-of-pocket on health care each year until they enroll in Medicare. And, that’s basically the cost of the premium, so even in good health the price is very high. A nice nest egg in combination with other assets can be depleted rapidly with insufficient Long Term Care insurance.

“Some of these considerations may be unpleasant, but what’s the alternative?” Miller says. “Don’t bury your stressful feelings. Instead, do something about it. You’ll feel better and you’ll be better off as you move forward.”

Tips for Affordable Traveling in 2016 | AGT The Safe Money People

If travel is a part of your plan for the new year, 2016 looks to be a good time to do it. You don’t have to break the bank, but if you do want to save cash it’s all about where you’re going and how you book getting there.

Planning is key to saving money on travel. NBC Charlotte spoke with Sarah Gavin with Expedia. She says you can save up to 36 percent by booking at least 21 days out.

For domestic travel, you’ll save the most by booking 57 days out. For international flights, you’ll get the best deals by booking 150 to 170 days in advance. You can also save more money by searching for flights on specific days of the week.

Right now, Gavin says the weekend is the best time to get online and book your flights. Gavin says if you are planning international travel, certain destinations will save you more money. She says 2016 will be a good year to fly to Asia because the cost is down about 15 percent from last year. It’s also a good time to go to Europe.
Fuel prices are down, and Gavin says the airlines are passing on the savings.

Another tip for getting the most for your money, Gavin says to bundle your flight and hotel just like you bundle your cable and internet. She says you can save about 20 percent, which is about $570 for the average trip. For resort destinations, the savings are even higher. You can save between $800 and $1100 on a week-long trip.

Tax facts about long-term care insurance - AGT The Safe Money People

Traditional long-term care insurance (LTCI) policies that meet the IRS requirements are treated as tax-qualified policies. These policies can generate tax breaks for clients, but those breaks depend on the client’s circumstances. (Non-tax-qualified policies don’t provide any tax advantages.) Here’s what you need to know.

Premium Deductibility

LTCI policyholders who itemize their deductions and have unreimbursed medical expenses that exceed 10 percent of their adjusted gross income can deduct eligible LTCI premiums. (Eligible premiums are age-based; see IRS Publication 502 for the current limits.) The hurdle for taxpayers age 65 and older is 7.5 percent of AGI through 2016. Those conditions mean that few policyholders will ever claim that deduction, according to Scott Olson with LTCShop.com in Yucaipa, CA.

“Nobody has medical expenses that high,” he said. “If they do, they probably can’t qualify for long-term care insurance. So, for somebody who’s a (IRS Form) W-2 employee, there’s not going to be much hope in terms of getting any pretax dollars or income tax benefits unless they live in a state that has a nice credit.”

Jayne Van Zile, CLTC with JVZ Strategies in Rochester, NY, has not seen any W-2 employees claim a deduction for their premiums. If the client did have that level of medical expenses, she notes, it’s likely they would qualify for a waiver of premium on their LTCI coverage. The group that does get a tax break for is self-employed who show a net profit, she adds. Sole proprietors can deduct eligible LTCI premiums as accident and health insurance and they can include premiums paid for their spouses and eligible dependents, regardless of the AGI percentage threshold.

“A perfect example is a professor who does some consulting on the side and generates, say, $10,000 of income annually on a 1099 basis,” she said. “That professor can take the premium and if they’re between 51 and 60 years old, that person plus their spouse can reduce their adjusted gross income in 2015 by $1,430 a person or if they’re 61 or over, it jumps to $3,800 per person.”

State Tax Credits

As Olson pointed out, some states provide incentives in the form of tax credits or deductions for residents’ LTCI premiums. The American Association for Long-Term Care Insurance (AALTCI) summarizes the available state-level tax breaks on its website. 

Some states provide little or no financial incentive to buy LTCI but others are generous. For example, New York residents are entitled to a 20 percent tax credit on any tax-qualified LTCI premium paid regardless of income, age, or premium, said Van Zile. The catch is that the taxpayer must have a New York State tax liability—policyholders can’t receive a credit greater than the amount of tax they owe. “It is a significant benefit and I have found clients take this into account when determining their out-of-pocket costs,” she said.

Paying with an HSA

Tax-qualified LTCI premiums are considered to be a qualified medical expense. Consequently, taxpayers with health savings accounts (HSAs) can make tax-free withdrawals to pay their LTCI premiums. Some additional criteria apply, but paying premiums from a HSA can still cut out-of-pocket costs. “Someone who owns a health savings account, even if they’re a W-2 employee, can use the money in the health savings account to pay for their long-term care insurance on a pretax basis,” said Olson.

Tax breaks matter

In New York, a self-employed person can take both the available Federal deduction and the New York state tax credit, said Van Zile. Many of her clients are self-employed and she says that they take these tax incentives seriously. Olson agrees that tax savings are an incentive. Potential tax breaks are not a primary concern for prospective buyers but the topic almost always comes up, he says. The buyers typically initiate that discussion and want to know if their premiums will be tax deductible. Olson responds by asking additional questions about their employment status and deductions; that information gives him an idea of the likely tax result.

“The main question that I’ll ask is if they or their spouse or partner are self-employed or have any type of self-employment income because self-employed people get the best deductions for long-term care insurance,” he said. “That actually is a pretty high percentage of my clients. I mean, probably close to half of my clients are self-employed or they are a small-business owner.”