Author: 360financial_dev

Retirement Planning for Self-Employed People

Posted on by 360financial_dev

How to Plan for Retirement as a Self-Employed Person

Written by Mike Rogers, Founder and President at 360 Financial

Retirement planning for self-employed people may seem very overwhelming. When you have a full-time job, your retirement planning is in the form of a 401(k). But when you’re self-employed, the path is less cut and dry. However, with proper planning, you can retire just as early as someone with a 401(k).

This article explains how to plan for retirement if you’re self-employed.

 

TABLE OF CONTENTS

  1. How to Plan for Retirement When Self-Employed
  2. Retirement Options for Self-Employed People
  3. What retirement plan works best for someone who is self-employed?
  4. Can a self-employed person have a 401(k)?
  5. How to open a 401(k) without an employer?
  6. IRA for Self-Employed People
  7. Best Retirement Plans For High-Income Self-Employed People
  8. Best Retirement Plans for Self-Employed People with Employees
  9. Best Retirement Plan for S Corp Owners
  10. How Do I Set Up a Self-Employed Retirement Plan?
  11. Key Takeaways
  12. Plan for Retirement at 360 Financial

 

How to Plan for Retirement When Self-Employed

You don’t have an employer offering a 401(k), but saving for retirement is essential. You don’t want to work forever, and you won’t be able to keep working as you age. Saving now is key to help you retire, relax, and afford a home care facility in your future. Think of saving for retirement as self-care for your future self. Planning for retirement when you’re self-employed starts with knowing your options.

 

Retirement Options for Self-Employed People

The freedom of self-employment offers options. Just like you can choose how to run your business, you also have to choose what retirement account you want to open.

 

Traditional or Roth IRA:

IRAs are a great option if you’re just starting out and have no employees. If you just left a full-time job, choose an IRA, because you can roll your old 401K into a Traditional or Roth IRA. Both types of IRAs offer tax benefits. The contribution limit is $6,500 in 2023.

 

One-Participant 401(k) i.e. Solo 401(k):

This is another great option for self-employed people who have no employees, and these can also cover your spouse. These plans have the same rules and requirements as any other 401(k) plan. The contribution limit in
2023 is $22,500, but if you’re over 50, you can contribute $30,000.

 

SEP IRA:

If you have an established business with no or a few employees, the SEP IRA is a great choice. If you have employees, you will have to contribute the same percentage for each employee—including yourself. You’ll be treated as an employee in this case. You also have to give contributions to every eligible employee, but the burden of making contributions is entirely on you. In 2023, you can contribute the lesser of $66,000 or up to 25% of compensation or net earnings. You do have a limit of $330,000.

 

SIMPLE IRA:

If you have a large business with up to 100 employees, we recommend the SIMPLE IRA. This retirement plan allows employees to contribute as well. This is an easy account to open, but you make mandatory contributions to employee accounts. This may be costly if you have a lot of employees. You can contribute up to $15,500 in 2023.

 

Profit-Sharing Plan:

If you have a lot of employees, we recommend a Profit-Sharing Plan. This allows you to contribute what you want to employees. However, only you will contribute to this plan, not your employees. If you have a profit-sharing plan, you can also have other retirement plans.

 

Money Purchase Plan:

Another option is the Money Purchase Plan. This is a good option if you have a lot of employees. This plan allows you to grow big accounts, but you do have contribution requirements you have to follow. You’ll have to contribute certain percentages of employee’s salaries, but this may mean highly compensated employees get a lot more.

As you can see, you have a variety of options when it comes to planning for retirement. We recommend researching your options, and focusing on what type of plan is best for you at this stage in your career. You can always open a different type of account down the road.

If you do decide to work on your personal financial plan alone, here’s what you can expect.

 

What retirement plan works best for someone who is self-employed?

There’s no one-size-fits all for self-employed retirement planning. It truly depends on you and your business.

Generally, if you have no or few employees, we recommend:

> A Traditional or Roth IRA
> One-Participant 401(k) i.e. Solo 401(k)
> SEP IRA

If you have a business with employees to consider, choose from:

> SIMPLE IRA
> Profit-Sharing Plan
> Money Purchase Plan

Again, it all depends on your circumstance. If the choice isn’t clear as you research these options, you can always work with a financial planner or advisor to help you.

 

Can a self-employed person have a 401(k)?

Yes. Although you won’t have an employer-sponsored 401(k), you can still have a 401(k).

 

How can I open a 401(k) without an employer?

Open up a One-Participant 401(k) i.e. Solo 401(k). You can also share this account with your spouse. It will work similarly to any other 401(k).

 

IRA for Self-Employed People

An IRA is a popular choice among self-employed people. You’ll enjoy tax benefits with every type of IRA, but what tax benefits you will reap depends on what type you choose. For example, with a Roth IRA, you reap tax benefits when you withdraw the money in your retirement. With a Traditional IRA, you’ll get the tax breaks when you put it in.

Overall, IRAs are great because they have less restrictions when you want to take the money out early. You’ll also have less restrictions when you retire. Also, if you’re a disciplined saver, you’ll often be able to have more money in retirement than other types of accounts.

If you have a few employees, you can open up a SEP IRA. If you have more employees, open up a SIMPLE IRA.

 

Well-Positioned Retirement Plans For High-Income Self Employed People

If you earn more money, we highly recommend a SEP IRA. With this type of account, your annual contribution cannot exceed the lesser of 25% of your total compensation or $66,000 in 2023. Obviously, you can contribute a lot more per year than someone with a Traditional or Roth IRA—they can only contribute $6,500 in 2023.

If you have employees, we recommend the Profit-Sharing Plan. This is because you can contribute what you want to your employees, and that doesn’t have to be equal to yourself. If you want to save a great amount for yourself, you have more freedom to do so with this plan.

 

Retirement Plans Better Suited for Self-Employed People with Employees

If you have employees, certain types of plans won’t be ideal for you. Here are the options we recommend choosing from:

> SIMPLE IRA
> Profit-Sharing Plan
> Money Purchase Plan

All of these retirement accounts will help you save for your own retirement, along with your employees.

 

Best Retirement Plan for S Corp Owners

If you have an S Corp, we recommend choosing between:

> Traditional or Roth IRA
> SEP IRA
> SIMPLE IRA
> One-Participant 401(k) i.e. Solo 401(k)

 

How Do I Set Up a Self-Employed Retirement Plan?

Choose what type of account you want, then you’ll open an account with a brokerage like Vanguard or Ameritrade. If you’re not sure what type of account to do or you want help throughout the process, work with a financial planner or advisor. They will help you with tax planning.

 

Key Takeaways:

  • You can plan for retirement as a self-employed person.
  • You have options, but getting started as early as possible is key.
  • The plan that is best for you depends on your current circumstance.
  • If you need expert advice and guidance, work with a financial advisor.

 

Plan for Retirement with 360 Financial

At 360 Financial, your retirement planning is our priority. We want you to be as financially comfortable as possible throughout retirement. We’ll help you make your money work for you as you age.

 

About the Author

Mike Rogers

Mike Rogers is the founder and president of Minnesota-based financial advisory firm 360 Financial. As the founder, Mike’s priority is that 360 Financial always serves the clients with empathy, integrity, and honesty. This unique, client-centric approach allows the firm to help clients decipher between the things they can control and what truly matters.

In other words, Mike understands that money is not the end-all-be-all; instead, it’s the “how” that fuels the “why” to the question: “What’s important to you?”

Learn more about Mike.

 

Schedule a Call

At 360 Financial, our clients come first. You deserve personalized attention from an advisor at our firm. You’ll be happier and more confident to know that your needs always come first. Book a 15-minute introductory call with us today.



 

Read More Posts on Financial Planning

How Many Steps Are in the Financial Planning Process
How to Choose a Good Financial Advisor
Financial Planning Young Adults: Saving, Investing, and Managing Money

 

 

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

How Many Steps Are In the Financial Planning Process?

Posted on by 360financial_dev

How Many Steps Are In the Financial Planning Process?

Written by Mike Rogers, Founder and President at 360 Financial

How many steps are in the financial planning process?

This is a great question to ask if you’re considering working with a financial planner. We’ll help you understand the process.

TABLE OF CONTENTS

  1. What is the Financial Planning Process?
  2. What are the Steps in the Financial Planning Process?
  3. What are the Steps in Personal Financial Planning?
  4. Key Takeaways
  5. Services 360 Financial Offers All Clients

What Is the Financial Planning Process?

The financial planning process documents your financial goals and the long-term strategy you will follow to achieve these goals. The plan is comprehensive but highly specific to your needs, obstacles, and goals. The financial planning process also includes implementing your plan, monitoring your financial progress, and making updates as needed.

A financial planner can help you every step of the way. They help you make a plan to reach your financial goals, including:

  • Budgeting
  • Saving
  • Retirement planning
  • Investing
  • Insurance

Now that you understand what the financial planning process is, we’ll break down the process into steps.

What Are the Steps in the Financial Planning Process?

The financial planning process consists of six steps:

1 – Understanding your financial circumstances.

Your financial plan will be specific to you, so your financial planner will make sure they completely understand your financial circumstance. They’ll also try to understand your personal circumstances. This step ensures your financial plan is comprehensive and specific to your needs.

2 – Identifying goals.

Your financial planner will want to understand your top financial goals. Whether buying a house, saving for retirement, or creating a college fund, you will explain your financial goals.

3 – Analyzing your current course of action.

You’ll also explain what you’re currently doing with regard to your financial goals. Knowing where you’re starting from helps your financial planner create a more realistic plan to help you reach your goals.

4 – Developing financial planning recommendations.

Now that your financial planner knows all about your goals and situation, they will begin to create and record financial planning recommendations. They’ll present their recommendations to you, giving you options. At this point, it’s important you pick a plan that you’re comfortable and happy with.

5 – Implementing the financial plan.

Once you pick the plan you’re comfortable with, you’ll have to begin implementing it.

6 – Monitoring progress and updating.

As you implement your financial plan, you’ll monitor your progress. Then you can report back to your financial planner, and if something isn’t working, your financial planner will change it. On the flip side, if some aspects of your plan are working better than expected, your financial planner may adjust your plan to include more of the successful strategy.

Many people find financial planning easier when they work with a financial planner. Your financial planner will take the stress of making decisions off your shoulders, and they will only recommend their tried and true strategies.

Financial planners are professionals, and they can make the entire process easier for you.

What Are the Steps in Personal Financial Planning?

If you plan to work on your personal financial plan without hiring a financial planner, you’ll have to dedicate far more time to research, building strategies, and making decisions.

Here’s what the financial planning process looks like:

  1. Set your financial goals.
  2. Come to an understanding of what your current financial situation is.
  3. Analyze your current course of action.
  4. Research financial strategies to help you reach your specific financial goals.
  5. Build financial strategies, including alternatives so you have options.
  6. Choose your financial plan.
  7. Implement your financial plan.
  8. Monitor progress.
  9. Do research to update your current plan to meet your goals.

As you can see, when you do this process all on your own, it is much more involved than when you work with a financial planner. Many people prefer to work with a financial planner because they have to dedicate much less time to the process, and they typically get better results.

Key Takeaways

  • The financial planning process includes setting your goals, implementing your plan, monitoring your progress, and updating your plan.
  • A financial planner can make the entire process far easier for you. Doing the entire process alone can be far more work than you have time for.
  • It pays off to hire an expert who knows how to help you pursue your goals.

Financial Planning and Wealth Management Services at 360 

At 360 Financial, we care about your happiness and future. We’ll help you pursue your most important financial goals so you remain comfortable and confident in your future. We are financial advisors, wealth managers, and financial planners with years of experience helping our clients achieve their goals with a big-picture plan. We also help you with wealth management, estate planning, and retirement planning.




About the Author

Mike Rogers

Mike Rogers is the founder and president of Minnesota-based financial advisory firm 360 Financial. As the founder, Mike’s priority is that 360 Financial always serves the clients with empathy, integrity, and honesty. This unique, client-centric approach allows the firm to help clients decipher between the things they can control and what truly matters.

In other words, Mike understands that money is not the end-all-be-all; instead, it’s the “how” that fuels the “why” to the question: “What’s important to you?”

Learn more about Mike.

Schedule a Call

At 360 Financial, our clients come first. You deserve personalized attention from an advisor at our firm. You’ll be happier and more confident to know that your needs always come first. Book a 15-minute introductory call with us today.



Read More Posts about Financial Planning

How to Do Retirement Planning If You’re Self-Employed 
How to Choose a Good Financial Advisor
Financial Planning Young Adults: Saving, Investing, and Managing Money

 

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

 

How to Choose a Good Financial Advisor

Posted on by 360financial_dev

How to Choose a Good Financial Advisor

Finding a Financial Advisor that’s the Perfect Fit

Written by Mike Rogers, Founder and President at 360 Financial

Inflation is increasing, costs are rising, and financial insecurity is a huge concern for many people across the globe. Now is the perfect time to get serious about managing your finances and reaching your financial goals—and a financial advisor can help you along the way. Today, we’ll be explaining how to choose a good financial advisor.

 

TABLE OF CONTENTS

  1. Financial Advisor Services
  2. What does a financial planner do to help their clients?
  3. Wealth management vs. financial planning
  4. Costs of working with a financial advisor
  5. Benefits of a Good Financial Advisor
  6. Looking at a financial advisor’s credentials
  7. What should I look for when interviewing a financial advisor?
  8. What is most important about choosing a financial advisor?
  9. How do you know if a financial advisor is trustworthy?
  10. Important Questions to Ask Every Financial Advisor You Meet
  11. Working with a Major Bank or Wealth Management Firm vs. a Smaller Independent Firm
  12. Why You No Longer Need to Find Your Advisor Locally
  13. Work with Your Financial Advisor Online

 

Financial Advisor Services

If you have a financial goal but are unsure what steps to take, a financial advisor can help you create an actionable, achievable plan. When you follow their plan, you can meet your major financial goals, such as:

  • Buying a house
  • Investing
  • Retirement planning
  • Saving for your child’s college education

Whatever financial goals you have, your financial advisor will help you create a plan to reach those goals—but they will also assist you along the way.

 

What does a financial planner do to help their clients?

When you work with a financial advisor, you won’t be following their financial plan on your own. Your financial advisor will provide more hands-on services to help you execute your plan.

These services include:
  • Managing your investments
  • Acting as your stock broker
  • Advising and arranging insurance coverage
  • Strategizing estate planning
  • Making financial decisions

A financial advisor is perfect for you if you want help implementing your financial plan.

 

Wealth Management vs. Financial Planning

It’s common to wonder if financial planning overlaps with wealth management. Here’s how to differentiate the two services: While financial planners consider every aspect of your finances—from insurance to everyday expenses—wealth managers typically only focus on assets, investments, will and trust services, and estate planning.

 

Costs of Working with a Financial Advisor

Every financial advisor is different—and so is how they charge for their services.

Financial advisors charge for their services in a few ways:

  • Flat hourly rate (typically between $100 and $400 per hour)
  • Flat annual fee (ranging between $2,000 and $7,500 per year)
  • Commission on investments or products, which will be a certain percentage
  • A certain percentage of your portfolio (often 0.25% to 1% per year)

It all depends on the financial advisor you choose, so be sure to ask this question while you are vetting your options.

 

Benefits of a Good Financial Advisor

A good financial advisor helps you build wealth by:
  • Keeping you on track and reminding you of your financial goals
  • Creating a financial plan and helping you follow it
  • Making financial decisions that are in your best interest (so you don’t have to)
  • Providing guidance and assistance along your financial journey

And most importantly, a good financial advisor is trustworthy, giving you peace of mind on a daily basis. You’ll no longer be working towards a prosperous future on your own but with the help of an expert.

 

Looking at a Financial Advisor’s Credentials

If you’re looking for a financial advisor, make sure they hold a FINRA Series 65 license. This license is the most important credential that distinguishes a financial advisor from a financial planner.

They may also hold other credentials, including:
  • Certified Financial Planner (CFP)
  • Chartered Financial Analyst (CFA)
  • Chartered Financial Consultant (ChFC)
  • Certified Investment Management Analyst (CIMA)

All of these extra credentials give financial providers more expertise and knowledge to help you create and execute your financial goals.

 

Common Questions About Working with a Financial Advisor

 

What should I look for when interviewing a financial advisor?

When you’re interviewing financial advisors, look for an advisor that is a fiduciary. Legally, fiduciaries are required to put the financial interests of their clients above their own—but not all financial advisors are fiduciaries. Nonfiduciaries are not required to give you the same level of financial loyalty that fiduciaries are.

Always choose a fiduciary over a nonfiduciary.

 

What is most important about choosing a financial advisor?

Aside from looking at credentials and choosing a fiduciary, specialties are another important aspect of financial advisors. When you know your financial goals, you can pick a financial advisor who specializes in your financial realm. For example, if your main goal is to improve your investments, you can find a financial advisor who has focused on investments throughout their career.

Look for financial advisors who have specialties that align with your goals.

 

How do you know if a financial advisor is trustworthy?

Here are some signs that help you know if a financial advisor is trustworthy:
  • The financial advisor knows your goals, remembers them, and prioritizes them
  • The advisor speaks openly about financial risk, and educates you about it
  • You clearly understand the fees that you would pay if you choose this financial advisor
  • Your advisor wants to meet regularly to discuss your portfolio

 

Important Questions to Ask Every Financial Advisor You Meet

To help you find the right financial advisor for you, here are some questions to ask:
  • Are you a fiduciary?
  • What are your certifications and qualifications?
  • Do you have any specialties?
  • What is your investment philosophy?
  • What are the fees and costs of working with you?
  • How regularly do you meet with your clients?
  • What makes your client experience unique?

On top of these questions, don’t hesitate to ask personal questions that will help you get to know the personality of your advisor. A personality alignment is just as important as a professional alignment, so you can ask about their values and their hobbies.

 

Working with a Major Bank or Wealth Management Firm vs. a Smaller Independent Firm

You can have luck working with a major bank or wealth management firm, but we recommend working with a smaller independent firm. At a smaller firm, you won’t be just another number, but a priority, and your advisor will take more time to get to know you, your goals, and your dreams.

At 360 Financial, part of our philosophy is to treat our clients like family. Your financial advisor will take the extra time to get to know you on a deeper level so that your financial plan meets your needs.

 

Why You No Longer Need to Find Your Advisor Locally

In the past, your only option was to find an advisor locally. Now, thanks to advancements in technology, you can work with any advisor across the country remotely. Sticking to local advisors can be very limiting, so we recommend considering remote options.

 

Work with Your Financial Advisor Online

The best fit for you may be just a Zoom call away at 360 Financial. We’re more than happy to work with you remotely. We connect with families all across the United States, and we’d be happy to add you to our financial family.

 

Key Takeaways

  • A financial advisor creates your plan and implements it, advising you along the way.
  • Look for a financial advisor that has a FINRA Series 65 license.
  • Look for a financial advisor that is a fiduciary.
  • Ask the right questions to find a financial advisor you trust.

 

Financial Planning and Wealth Management Services 360 Financial Offers All Clients

We’re here to help you with your big picture planning. Financial planning is not one-size-fits-all, and you need an advisor that is in tune with your goals and needs—which is what we specialize in at 360 Financial.

We focus on tax strategies, income planning, legacy planning, risk management, investment planning, and estate planning. 360’s financial advisors consider your entire financial picture when creating a plan for you.

 

Schedule a Call

At 360 Financial, we believe that every client deserves personalized attention from our team of experts. You can be confident in knowing that your financial needs are our first priority.


 

Read More Posts about Financial Planning

How to Do Retirement Planning If You’re Self-Employed 
How to Choose a Good Financial Advisor
Financial Planning Young Adults: Saving, Investing, and Managing Money

 

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

 

 

Financial Planning Young Adults: Saving, Investing, and Managing Money

Posted on by 360financial_dev

Top 5 Financial Planning Tips for Young Adults

Saving, Investing, and Managing Money as a Young Adult

Written by Mike Rogers, Founder and President at 360 Financial

While there’s no magic formula to making money and growing your wealth, there are certain things you can do to stack the odds in your favor. Starting at a young age is key because you’re more likely to develop good habits – which can make all the difference in achieving future financial success.

For people in their late teens and twenties, this is the time to learn about finance and start saving for your financial future. The younger you are, the more time your savings and investments have to grow.

This article will give you tips on how to start saving, investing, and managing your money.

TABLE OF CONTENTS

  1. Why is Financial Planning Important at a Young Age?
  2. Top 5 Financial Planning Tips for Young Adults
  3. Earning more at a younger age
  4. Budgeting and managing your money
  5. Investing as a young adult
  6. Saving for a financially-free lifestyle
  7. Building your wealth and protecting it
  8. How do you Financial Plan in your 20s?
  9. Managing an Inheritance
  10. Financial Advisor for Young Adults

Why is Financial Planning Important at a Young Age?

The most valuable thing in life is time, and when you’re young, you have it. The younger you are, the more time you have to make money. You also have more time to let your money grow through either investments or savings. Also, you have more time to take risks—which increases your rewards—and more time to make financial mistakes and learn from them.

Another reason it’s important to plan financially at a young age: Now is the time that you are building your habits. If you build habits that allow you to succeed financially now, you will carry those with you throughout the rest of your life.

Top 5 Financial Planning Tips for Young Adults

Here are our tips to help you plan financially:

1. Earning more at a younger age

Earning more money is the first step to financial freedom. You can’t save, manage, or invest money if you don’t have it. That’s why it’s so important to start earning more right away. While your mind might jump to side hustles, we urge you to try to work smarter, not harder. After all, no one wants to be constantly overworking themselves.

While side hustles can be great, first, it’s important to find a full-time income that adequately pays you for your skills. It’s important to know your worth by performing market research, so you can ask for enough and not under-sell yourself. Even after you get a job, it may pay off to keep yourself on the market. Wage growth for job switchers is 47% higher than for those who stay in their current job. This is because you have negotiating power when you’re switching jobs.

If you’re struggling to find a full-time job that pays enough, consider becoming self-employed. While it’s not the right path for everyone, it can potentially help you earn more.

2. Budgeting and managing your money

Once you start earning money, you need to budget and manage it — otherwise, you’ll spend it all too fast. You’ve probably heard the saying, “You can’t manage what you don’t measure.” When it comes to your money, that’s especially true.

When you know where all your money is going, it becomes easier to make decisions about how you want to spend and save. The first step is to simply record and analyze how you’re currently spending money, and where you can make changes.

After you analyze where your money is going, now it’s time to create a budget. A budget is a detailed plan for how much money will be coming in and going out over a given period of time.

Remember: A budget is a plan, and it won’t always be executed perfectly. Give yourself grace when you make mistakes, but continue to track your spending so you can avoid those mistakes next month.

3. Investing as a young adult

When you start budgeting and managing your money, you will begin allotting some towards savings. But letting ALL of your savings sit in a bank account isn’t the best way to grow your money. While savings are undoubtedly essential, we also recommend investing a certain percentage of your income monthly.

Investing is more of a risk, but it has a much higher reward than saving. And because you’re young, those risks are easier to take because you usually won’t be needing your money for decades—giving it time to grow again, even if you lose some along the way. You’ll keep your money in your investment account for the long-term and ride out any short-term downdrafts.

Investing your money will likely yield high returns, and it’s best to get started as a young adult.

4. Saving for a financially-free lifestyle

As we mentioned previously, saving is extremely important. Your main goal should be cutting your spending in unnecessary areas and allotting a certain amount of money each month into your savings.

Now is the time to save for financial freedom. This means you’ll have the money you need to live the life you want to live. Ideally, this means you create enough income, so you don’t have to work after you retire.

When you’re old, you won’t want to be spending your days working. You want to work and save now so that you can enjoy your older years in peace. But the best thing about savings, unlike investments, is that if you have an emergency, you can use these funds to help you.

We recommend starting an emergency fund first, which is a savings account that is meant to be used during a crisis. After that, start building a savings fund that you ideally won’t touch until retirement.

5. Building your wealth and protecting it

Building your wealth is a process that involves making, managing, investing, and saving money. You also have to protect your wealth as you grow up from avoidable losses and risks. Protecting your wealth means getting great insurance and working with a financial advisor.

A financial advisor does the following:

  1. Creates your financial plan
  2. Manages your investments
  3. Acts as your stock broker
  4. Advises and arranges insurance coverage
  5. Strategizes estate planning
  6. Makes financial decisions
  7. Executes your financial plan

All of which can take stress and tasks off your shoulders. Plus, a financial advisor is an expert who can get you better results than if you manage your money on your own.

How To Do a Financial Plan in Your 20s

When you create a financial plan, whether with a financial advisor or on your own, there is a process to follow. Here are the steps:

  1. Set your financial goals
  2. Understand what your current financial situation is
  3. Analyze your current course of action
  4. Research financial strategies to help you reach your goals
  5. Build financial strategies, including alternatives, so you have options
  6. Choose your financial plan
  7. Implement your financial plan
  8. Monitor progress
  9. Do research to update your current plan to meet your goals

However, when you work with a financial advisor, they will take on the majority of the grunt work, help you make decisions, and monitor your progress.

Managing an Inheritance

With more money comes more responsibility. While you have a great opportunity to build upon your wealth by managing your inheritance properly, there’s also a great risk of overspending and causing your inheritance to vanish quickly.

If you have received an inheritance, we highly recommend working with a financial advisor. They can help you properly invest your money so that it grows.

Financial Advisor for Young Adults

The prospect of working with a financial advisor may seem intimidating, but it really isn’t. The important thing to remember is that a good financial advisor wants to help YOU succeed and meet your financial goals. Many advisors work with young adults, and most have pricing that scales with you.

Overall, when you’re looking for a financial advisor, it’s essential to find someone you trust. You want to feel comfortable with them and talk openly and honestly with them. Avoid any advisors who make you feel intimidated.

Key Takeaways

  • The younger you are, the more time you have to earn and build your wealth.
  • When you’re young, your habits are important and carry with you for the rest of your life. Now is the time to create financially healthy habits.
  • Budget, manage, invest, and save your money.
  • If you need expert advice and guidance, work with a financial advisor.

Services 360 Financial Offers All Clients

At 360 Financial, we want you to be confident that you have a financially comfortable future. We’ll help you create a plan, execute it, and monitor your progress so that you can be financially free in the future.

About the Author

Mike Rogers

Mike Rogers is the founder and president of Minnesota-based wealth management firm 360 Financial. As the founder, Mike’s priority is that 360 Financial always serves the clients with empathy, integrity, and honesty. This unique, client-centric approach allows the firm to help clients decipher between the things they can control and what truly matters.

In other words, Mike understands that money is not the end-all-be-all; instead, it’s the “how” that fuels the “why” to the question: “What’s important to you?”

Learn more about Mike.

Schedule a Call

At 360 Financial, our clients come first. You deserve personalized attention from an advisor at our firm. You’ll be happier and more confident to know that your needs always come first. Book a 15-minute introductory call with us today.


 

Read More Posts about Financial Planning

How to Do Retirement Planning If You’re Self-Employed 
How to Choose a Good Financial Advisor
Financial Planning vs. Financial Advisor
Financial Planning for Business Owners

 

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

WHAT TO EXPECT ON YOUR 2021 TAX RETURN

Posted on by 360financial_dev

The federal government’s response to the COVID-19 pandemic continues to impact individual income tax returns, from the suspension of federal student loan interest to expanded child tax credits. For many taxpayers, this may mean your 2021 return may look a bit different from last year’s tax return. For some, this may mean a smaller refund or a higher tax rate. Here is some information about how certain factors may result in a lower federal income tax refund or affect your taxes due.

No Tax Waiver on 2021 Unemployment Benefits

In March 2021, Congress passed the American Rescue Plan Act, which waived federal income tax on up to $10,200 of unemployment benefits paid per individual in 2020.1. However, no unemployment tax breaks have passed since then. This lack of a tax waiver means that the approximately 25 million Americans who received unemployment benefits in 2021 and did not have federal income tax withheld (or pay estimated taxes) may receive a smaller refund than before.

Advanced Child Tax Credits May Lower Refunds

If you have a child under the age of 17 and did not opt-out of the $250 or $300 per month per child advance payments beginning in June 2021, there is a lower income tax refund possible to compensate for these advanced child tax credits payments.2 The overall child tax credit was higher than in prior years (at $3,600 per child age five and under and $3,000 per child age six and over). However, advancing half the overall credit over the last half of 2021 means that taxpayers may now get proportionally less when they file their tax returns.

No Federal Student Loan Interest In 2021

For more than a decade, taxpayers who pay interest in federal student loans have been able to deduct up to $2,500 in interest paid. But with the suspension of interest on federal student loans from March 2020 through May 2022, many taxpayers will not have any student loan interest to deduct for 2021.

Those With Defaulted Student Loans Could Have Refunds Seized

Along with the moratorium on student loan payments and interest charges, the federal government stayed tax refund offsets—and all collection activity—for defaulted federal student loans. This moratorium meant that those whose loans were in default could not have their tax refunds garnished by the IRS during the stay period.

The moratorium expires on January 31, 2022. This expiration means those who file a tax return early—and receive a refund on or after Feb. 1—could see this refund garnished and put toward their overall loan balance and penalties. For taxpayers in this situation, it might be worth investigating your options to get your loans out of defaulted status before filing your 2021 tax return.
Suppose any of these situations apply to you. In that case, a financial professional may be able to help you investigate other available federal and state tax benefits that may help manage your tax bill or boost your refund.

1. https://www.cnbc.com/2022/01/03/no-a-tax-break-on-2021-unemployment-benefits-isnt-available.html
2. https://www.forbes.com/sites/robertfarrington/2021/11/22/americans-should-be-prepared-for-a-smaller-tax-refund-next-year/?sh=4fd19fd1c718

This information is not intended as authoritative guidance or tax advice.  You should consult with tax advisor for guidance on your specific situation.

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by WriterAccess | LPL Tracking #1-05239398

3 ESTATE PLANNING TIPS FOR SMALL-BUSINESS OWNERS

Posted on by 360financial_dev

For business owners, estate planning may seem like another task to do on a long to-do list. Having a solid estate and succession plan in place may be crucial to your business’s long-term success. If you are incapable of making business decisions, or if you unexpectedly pass away without an estate plan, your heirs may scramble to keep your business afloat.

Here are three tips that may make the estate planning process less stressful.

Begin With the Basics

When making an estate or business succession plan, start with a workable outline. Do not be afraid to set out a plan that still needs some fine-tuning. Put your ideas in writing. Even simple notes are better than leaving your loved ones without guidance and scrambling while dealing with emotional turmoil.

Some factors to consider when drafting a will and basic estate plan include:

• Who would you like to run your business in your absence? Should this person be a full owner, part owner or simply a manager?
• What framework would you like your heirs or loved ones to use to resolve business-related disputes in your absence?
• Do you want to restrict business ownership to family members or allow others to invest?
Imagining the future of your business helps to make big-picture estate planning decisions.

Make Your Plans Tax-Efficient

An attorney may help you write a will and a business contingency plan but may not be the best professional to work on tax issues. A financial professional may work with you on the process of succession. The goal is to transfer your business with a strategy that manages the impact of state, federal, and local income taxes on the transaction.

Discuss Your Intentions with Those Affected

One of the biggest sources of friction in the business transition process may come from the hurt feelings of those involved. Interfamily disputes may come up from miscommunication or unmet expectations. If your child has counted on being tapped to run the business in your absence, only to see that you named someone else to this role, it can be tougher for your loved ones to rally together.

Even if you suspect that this discussion may lead to some conflict, it is important to communicate your intentions and plans with those affected by them. The time to work on these issues is before they are needed, not after it is already too late.
Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.
This article was prepared by WriterAccess | LPL Tracking # 1-05233601

HOPING THAT 2022 IS WHEN YOU RETIRE EARLY?

Posted on by 360financial_dev

A pre-retirement checklist to make early (or earlier) retirement a reality

As we make our way through 2022, maybe the dream of early retirement has begun to take shape in your mind. Maybe you’re researching when you might first qualify for Social Security retirement benefits (hint: for Social Security income, the youngest age when you can apply is 61 years and nine months old – you would then receive your first Social Security check four months later – one month after your 62nd birthday).

But as attractive as monthly checks may be, seriously consider your financial position to be sure you can afford to walk away from the nine-to-five routine.

When reviewing your retirement income, incorporate accurate Social Security figures into your financial equation. Keep in mind that Social Security benefits paid at an early retirement age will be less than the benefits paid at full retirement age (65–67, depending on your date of birth). To estimate your Social Security benefit amount, you can go to the Social Security Administration’s website at www.ssa.gov to use the agency’s online calculator.

Think Beyond Social Security

Beyond your Social Security benefits, however, are other major factors, such as your overall financial situation, prospects for future income, and satisfaction with your job. If early retirement seems a reasonable goal, determine how much income you can count on from savings to supplement your Social Security benefits. Remember to include income from employer-sponsored retirement plans, such as 401(k)s, Individual Retirement Accounts (IRAs), or annuities.

Once you have determined your retirement resources, add up your current living expenses and calculate a rough estimate of how much income you may need during retirement. It is possible to live on less than your pre-retirement income, depending on your lifestyle. If you find that your retirement funds will be insufficient, explore the possibilities of selling your home, and moving to an area with a lower cost of living, or finding part-time employment where compensation is within allowable Social Security limits to avoid benefit reduction.

Other Considerations

Another critical point to consider is whether retiring from your job would leave you without life and health insurance or other necessary benefits. You may want to investigate the cost of private health coverage until you reach the age that you will be eligible for Medicare. It is also important to prepare for medical costs in retirement, including potential long-term care needs.

Typically, many people underestimate the cost of long-term care and overestimate the funding that will be available through public programs and private health insurance. In reality, Medicare only covers short-term care. It may also cover some nursing home or assisted living costs, but only for skilled care that is deemed medically necessary for the duration of an illness, usually limited to 100 days following a three-day hospital stay.

Consequently, Medicaid has become the primary source of public funding for long-term care.But, because it is a government program designed to help those in financial need, individuals must “spend down” their personal assets and meet the Federal poverty guidelines before qualifying for assistance.

However, long-term care insurance is an alternative that can help cover extended care expenses before you or a loved one become eligible for Medicaid. Policies vary, but in general, they provide a daily, set amount of coverage that can be used in a number of ways. This type of insurance may help cover the expenses of nursing homes, assisted living facilities, adult day health programs, and/or at-home care. The cost of coverage is typically based on your age, current health status, and specific policy features, such as scope of coverage, levels of care, and duration of benefits.

Your Pre-Retirement Checklist

To begin preparation for an early retirement, read the following statements. If you have given careful consideration to the task, check it off.

• I have completed an assessment of my current financial situation, including income, expenses, assets, and liabilities.
• I have determined which of my expenses may be lower after I retire and which may be higher.
• I have determined how much I can expect from Social Security, veterans benefits, and pension plans.
• I have estimated how much I expect to receive from interest on my savings, real estate rentals, etc.
• I have reviewed my insurance policies to ensure that they meet my present and future needs.
• I have organized a strategy to pay off my large bills and debt before retirement.

Final Assessment

If you have any doubts about being able to make ends meet, working for a while longer may help improve your financial situation. If, however, income from savings, rents, royalties, or other non-employment sources, combined with Social Security benefits, is enough to meet your projected retirement expenses, you may want to focus on making your dream of an early retirement a reality.  

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any Long Term Care (LTC) product. To determine which LTC product may be appropriate for you, consult your financial professional.

This article was prepared by FMeX. | LPL Tracking #1-05228085