FormulaFolios and AssetLock Select Calandra Financial Group, LLC

There Is Strength In Numbers

Calandra Financial Group, LLC is proud to announce our new partnership with FormulaFolios and AssetLock.

Your financial future doesn’t have to be complicated. It’s simple when you work with a financial advisor that is using a clear methodology to produce the results you are looking for.

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The cornerstone of a great financial plan is a sound investment process. At FormulaFolios, it is believed that using smart formulas to help automate good decisions, while simultaneously avoiding bad ones. Each decision our portfolios make is based on proven, academic research. We’ve structured three specific processes to enhance your experience:

Customized Asset Allocation

Money Manager Selection
Tactical, Ongoing Asset Management
AssetLock is designed to help protect your gains, so you can help protect your future. We are the exclusive provider of AssetLock technology in Metro Atlanta. AssetLock is a revolutionary way to monitor your portfolio and invest with confidence. We believe this combination is a Smart and Secure approach.

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What do I have?
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9 Regrets Baby Boomers Have in Retirement

The last of the baby boomer generation will be turning 50 this year, and it’s time for them to get a fix on how they are going to prepare for retirement. Fortunately, there are valuable lessons to be learned from those who have already reached their later years. It is upon each American to avoid retirement pitfalls that cause regrets.

According to a leading accounting firm and Lisa Barron at Retirement Advisor Magazine, these are the biggest boomer retirement regrets they see.

1. Lack of savings and an unrealistic understanding of how much will be needed in retirement

2. Failure to have a tax plan, an income plan and an investment plan

3. Failure to use a tax-forward plan, such as deferring Social Security

4. Withdrawing money from tax-deferred IRAs too early

5. Not spreading Roth IRA conversions over a period of time

6. Failure to hedge against inflation and use a tax co-efficient

7. Excessive borrowing

8. Retiring too early and underestimation life expectancy

9. Not planning for long-term healthcare expenses

I’m sure other regrets could be added. So, how about you, is it time to get professional guidance to help you prevent these same regrets?

Look… the stock market crash of 2008 was a game-changer for the psyche of many boomers. Many of our the clients and potential clients we see have had to shift from focusing on how much they make to how much they keep. Many folks spend their time looking at how they can get the maximum rate of return, whereas, what they should be focused on is a strategy that gives them guaranteed income month over month without having to worry about the risk that’s associated keeping a large portion of their portfolio in the markets. Let me be clear, there are many ways to accomplish your best retirement. Stop being closed minded and open your potential.

9 Regrets Baby Boomers Have in Retirement

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The last of the baby boomer generation will be turning 50 this year, and it’s time for them to get a fix on how they are going to prepare for retirement.  Fortunately, there are valuable lessons to be learned from those who have already reached their later years.  It is upon each American to avoid retirement pitfalls that cause regrets.

According to a leading accounting firm and Lisa Barron at Retirement Advisor Magazine, these are the biggest boomer retirement regrets they see.

1.   Lack of savings and an unrealistic understanding of how much will be needed in retirement

2.   Failure to have a tax plan, an income plan and an investment plan

3.   Failure to use a tax-forward plan, such as deferring Social Security

4.   Withdrawing money from tax-deferred IRAs too early

5.   Not spreading Roth IRA conversions over a period of time

6.   Failure to hedge against inflation and use a tax co-efficient

7.  Excessive borrowing

8.  Retiring too early and underestimation life expectancy

9.  Not planning for long-term healthcare expenses

I’m sure other regrets could be added.  So, how about you, is it time to get professional guidance to help you prevent these same regrets?

Look… the stock market crash of 2008 was a game-changer for the psyche of many boomers.  Many of our the clients and potential clients we see have had to shift from focusing on how much they make to how much they keep.   Many folks spend their time looking at how they can get the maximum rate of return, whereas, what they should be focused on is a strategy that gives them guaranteed income month over month without having to worry about the risk that’s associated keeping a large portion of their portfolio in the markets.  Let me be clear, there are many ways to accomplish your best retirement.  Stop being closed minded and open your potential.

 

How Does Obama Want to Change Your Retirement Accounts?

President Obama’s 2015 budget includes a number of proposed changes aimed at retirement accounts. Six out of the seven provisions (or similar versions of them) are detailed below and unveiled Monday of this week.

It’s important to know the key retirement account provisions included in the President’s budget this year, because they certainly could happen and, at the very least, they are an indication as to where the administration wants to head. Here are the key changes you should know about:

‘HARMONIZE’ ROTH IRA RMD RULES WITH OTHER RETIREMENT ACCOUNTS

This is major deal and when people catch on to it, it’s bound to make some major waves. Under the premise of simplifying the tax rules for retirement accounts, President Obama’s 2015 budget calls for a provision that would require Roth IRAs to follow the same required minimum distribution (RMD) rules as other retirement accounts.

In other words, you would have to begin taking RMDs from your Roth IRA when you turn 70 1Ž2, the same way you do with your traditional IRA and other retirement accounts. If this were to come to pass, it would be a major game-changer when it comes to retirement planning.

The fact that Roth IRAs have no RMDs is one of the key reasons many people decide to contribute or convert to Roth IRAs in the first place. The distribution would be a tax-fee withdrawal, however, once the money is out of the tax-free haven, where would it go. Either, the money would be spent or re-invested in a less tax advantaged location.

If this proposal were to become law, conversions would make sense for far fewer people. Not only that, this proposal gives all those who haven’t made Roth conversions over the years because they “don’t trust the government to keep their word” more ammunition.

MAXIMUM BENEFIT FOR RETIREMENT ACCOUNT CONTRIBUTIONS

The maximum tax benefit (deduction) for making contributions to defined contribution retirement plans, such as IRAs and 401(k)s, would be limited to 28%. As a result, certain high-income taxpayers making contributions to retirement accounts would not receive a full tax deduction for amounts contributed or deferred.

Example: Currently, if an individual with $500,000 of taxable income defers $10,000 into a 401(k), they will not pay any federal income tax on that $10,000. Without that salary deferral, that income would be taxed at 39.6% (currently the highest federal income tax rate).

However, if this proposal were to become effective, that $10,000 would effectively be taxed at 11.6% (39.6%-28% = 11.6%), since the maximum tax benefit that a client could receive would be limited to 28%. That equates to an additional tax bill of more than $1,000.

MANDATORY 5-YEAR RULE FOR NON-SPOUSE BENEFICIARIES

Most IRA (and other retirement plan) non-spouse beneficiaries would be required to empty inherited retirement accounts by the end of the fifth year after the year of the IRA owner’s death (known as the 5-year-rule). The proposal does call for certain exceptions to this rule, such as for disabled beneficiaries and a child who has not yet reached the age of majority.

While this proposal might simplify the required minimum distribution (RMD) rules for most beneficiaries, it would mark the death of the “stretch IRA.” Most non-spouse beneficiaries would face more severe tax consequences upon inheriting retirement accounts and as such, the value of these accounts as potential estate planning vehicles would be diminished.

RETIREMENT SAVINGS ‘CAP’ PROHIBITING ADDITIONAL CONTRIBUTIONS

New contributions to tax-favored retirement accounts, such as IRAs and 401(k)s, would be prohibited once you’ve exceeded an established “cap.” This cap would be determined by calculating the lump-sum payment that would be required to produce a joint and 100% survivor annuity of $210,000 starting when your turn 62.

At the present time, this formula produces a cap of $3.2 million. If you ended up with more than this total in cumulative retirement accounts at the end of a year, you would be prohibited from contributing new dollars to any retirement accounts in the following year. The cap would be increased for inflation.

RMD ELIMINATION IF RETIREMENT ACCOUNTS TOTAL $100,000 OR LESS

This one’s simple. If you have $100,000 or less – across all of your retirement plans combined – you would be exempt from required minimum distributions. Currently, if you fail to take the proper RMD amount comes with one of the stiffest retirement account penalties there is, a 50% penalty on any shortfall.

This proposal would eliminate that possibility if you have $100,000 or less in retirement accounts and would allow you to take as much, or as little, as you want without a penalty.

INHERITED ASSETS: ALLOW 60-DAY ROLLOVERS FOR NON-SPOUSE BENEFICIARIES

Non-spouse beneficiaries would be allowed to move inherited retirement savings from one inherited retirement account to another inherited retirement account via a 60-day rollover (in a manner similar to which they can currently move their own retirement savings).

Unifying the rollover rules for retirement account owners and beneficiaries would greatly simplify this aspect of retirement accounts and reduce the number of irrevocable and costly mistakes that are often made by beneficiaries under the current rules.

MANDATORY IRA AUTO-ENROLLMENT FOR SMALL BUSINESSES

Employers in business for at least two years that have more than 10 employees and don’t offer another retirement plan already would be required to offer auto-enrollment IRAs to their employees. Contributions to employees’ IRAs would be made on a payroll-deduction basis.

Employees would be able to elect how much of their salary they wish to contribute to their IRA (up to the annual IRA contribution limit), including opting out entirely. In the absence of any election, 3% of an employee’s salary would be contributed to their IRA. Employees would be able to choose whether to contribute to an IRA or Roth IRA, with the Roth being the default option.

The provision would also enhance incentives, in the form of a tax credit for small businesses, to adopt a company-sponsored retirement plan.

If you have questions on how this may affect your specific situation, give our office a call. If you are not our client and feel like it is time to get a second opinion or professional guidance give our office a call.

This originally appeared on www.theslottreport.com. Information and examples by Jeffrey Levine, CPA.

Is It Actually a Good Idea to Pay Off a Low-Interest Mortgage?

Home loans frequently make up significant amounts of household debt, and reducing as much debt as possible before entering retirement can seem like a good idea. A 2013 survey found that 40% of Americans age 55 and older believe that paying off their mortgage was the smartest financial move they ever made.[i] There’s also a certain peace of mind that can come from having one less bill to pay in your later years.

However, given today’s low interest rates, your mortgage may be the cheapest form of debt to hold, and it may make sense to use the extra money in different ways. Given the choice, should you pay down your low-interest mortgage as soon as possible, or use the extra income to save more aggressively?

As with so many things, the answer is: it depends. Everyone’s personal financial situation is different, and there are many factors to consider before making a decision about your mortgage.

Here are some questions to help guide your decision-making:

Are you maxed out on contributions to tax-advantaged accounts?

If you have crunched the numbers on your retirement assets with a financial representative and feel comfortable with your savings, you may be able to devote more income to extra mortgage payments.

However, if you haven’t maxed out your contributions or are concerned about your retirement preparation, you might be better off putting extra money into tax-advantaged saving accounts. The final years before retirement represent your last opportunity to add significantly to your nest egg, and it’s important to make sure you have enough put away.

How would your taxes be affected by paying down the mortgage?

For many people, mortgage interest payments are deductible on federal taxes, which reduces the effective interest rate paid on the loan. Since contributions to retirement accounts, health savings accounts, and other qualified accounts are frequently tax deductible, making extra contributions (instead of extra mortgage payments), may add more to your bottom line.

However, if you are no longer able to deduct the interest on your mortgage, and are already maxed out on your tax-advantaged contributions to retirement accounts, paying down your mortgage could make financial sense. Keep in mind that taxes are just one part of the overall picture, and it’s important to view your financial situation holistically.

Do you have adequate cash reserves?

Emergency savings are a critical part of your long-term financial plan. Unexpected life events like the loss of a job, a sudden illness, or expensive repairs can put a strain on your household finances. Having several months of income saved in cash can help you cover major expenses without being forced to liquidate investments or go into debt. If you don’t already have an emergency reserve – or don’t have enough money set aside – you should consider saving those extra mortgage payments for a rainy day.

Have you weighed risk against potential return?

Paying off high-interest credit card debt or personal loans is a no brainer. The average variable credit card APR was 15.61% at the end of April 2014.[ii] This means you’re essentially ‘earning’ that much back on every dollar you pay off. You’re not likely to find investments paying that much consistently, so your priority should be to pay off that debt as quickly as possible.

However, given how low mortgage rates are – especially if you’re getting a tax break on the interest – you’ll want to carefully weigh the possibility of earning market returns higher than your interest rate. Market returns are not guaranteed, so it’s a good idea to have a financial representative walk you through these calculations and help you understand your own attitude about risk and return.

How would paying off your mortgage affect your peace of mind?

Most financial decisions have emotional components, which is why it’s so important to develop an understanding of your long-term goals. For many folks, knowing that they own their home free and clear outweighs most financial considerations. If being able to pay off your mortgage early helps you sleep better at night, it might be the best decision for you.

Conclusions

As you can see, there are many important variables that must be factored into a decision about paying off your mortgage. If you have any questions about the benefits and drawbacks of holding a mortgage or any other loan, please give me a call. I frequently help my clients evaluate their personal financial situations and help them determine the right strategy for their needs and goals.

[i] MarketWatch

[ii] BankRate

How Does Obama Want to Change Your Retirement Accounts?

President Obama’s 2015 budget includes a number of proposed changes aimed at retirement accounts. Six out of the seven provisions (or similar versions of them) are detailed below and unveiled Monday of this week.

It’s important to know the key retirement account provisions included in the President’s budget this year, because they certainly could happen and, at the very least, they are an indication as to where the administration wants to head. Here are the key changes you should know about:

‘HARMONIZE’ ROTH IRA RMD RULES WITH OTHER RETIREMENT ACCOUNTS

This is major deal and when people catch on to it, it’s bound to make some major waves. Under the premise of simplifying the tax rules for retirement accounts, President Obama’s 2015 budget calls for a provision that would require Roth IRAs to follow the same required minimum distribution (RMD) rules as other retirement accounts.

In other words, you would have to begin taking RMDs from your Roth IRA when you turn 70 1Ž2, the same way you do with your traditional IRA and other retirement accounts. If this were to come to pass, it would be a major game-changer when it comes to retirement planning.

The fact that Roth IRAs have no RMDs is one of the key reasons many people decide to contribute or convert to Roth IRAs in the first place. The distribution would be a tax-fee withdrawal, however, once the money is out of the tax-free haven, where would it go. Either, the money would be spent or re-invested in a less tax advantaged location.

If this proposal were to become law, conversions would make sense for far fewer people. Not only that, this proposal gives all those who haven’t made Roth conversions over the years because they “don’t trust the government to keep their word” more ammunition.

MAXIMUM BENEFIT FOR RETIREMENT ACCOUNT CONTRIBUTIONS

The maximum tax benefit (deduction) for making contributions to defined contribution retirement plans, such as IRAs and 401(k)s, would be limited to 28%. As a result, certain high-income taxpayers making contributions to retirement accounts would not receive a full tax deduction for amounts contributed or deferred.

Example: Currently, if an individual with $500,000 of taxable income defers $10,000 into a 401(k), they will not pay any federal income tax on that $10,000. Without that salary deferral, that income would be taxed at 39.6% (currently the highest federal income tax rate).

However, if this proposal were to become effective, that $10,000 would effectively be taxed at 11.6% (39.6%-28% = 11.6%), since the maximum tax benefit that a client could receive would be limited to 28%. That equates to an additional tax bill of more than $1,000.

MANDATORY 5-YEAR RULE FOR NON-SPOUSE BENEFICIARIES

Most IRA (and other retirement plan) non-spouse beneficiaries would be required to empty inherited retirement accounts by the end of the fifth year after the year of the IRA owner’s death (known as the 5-year-rule). The proposal does call for certain exceptions to this rule, such as for disabled beneficiaries and a child who has not yet reached the age of majority.

While this proposal might simplify the required minimum distribution (RMD) rules for most beneficiaries, it would mark the death of the “stretch IRA.” Most non-spouse beneficiaries would face more severe tax consequences upon inheriting retirement accounts and as such, the value of these accounts as potential estate planning vehicles would be diminished.

RETIREMENT SAVINGS ‘CAP’ PROHIBITING ADDITIONAL CONTRIBUTIONS

New contributions to tax-favored retirement accounts, such as IRAs and 401(k)s, would be prohibited once you’ve exceeded an established “cap.” This cap would be determined by calculating the lump-sum payment that would be required to produce a joint and 100% survivor annuity of $210,000 starting when your turn 62.

At the present time, this formula produces a cap of $3.2 million. If you ended up with more than this total in cumulative retirement accounts at the end of a year, you would be prohibited from contributing new dollars to any retirement accounts in the following year. The cap would be increased for inflation.

RMD ELIMINATION IF RETIREMENT ACCOUNTS TOTAL $100,000 OR LESS

This one’s simple. If you have $100,000 or less – across all of your retirement plans combined – you would be exempt from required minimum distributions. Currently, if you fail to take the proper RMD amount comes with one of the stiffest retirement account penalties there is, a 50% penalty on any shortfall.

This proposal would eliminate that possibility if you have $100,000 or less in retirement accounts and would allow you to take as much, or as little, as you want without a penalty.

INHERITED ASSETS: ALLOW 60-DAY ROLLOVERS FOR NON-SPOUSE BENEFICIARIES

Non-spouse beneficiaries would be allowed to move inherited retirement savings from one inherited retirement account to another inherited retirement account via a 60-day rollover (in a manner similar to which they can currently move their own retirement savings).

Unifying the rollover rules for retirement account owners and beneficiaries would greatly simplify this aspect of retirement accounts and reduce the number of irrevocable and costly mistakes that are often made by beneficiaries under the current rules.

MANDATORY IRA AUTO-ENROLLMENT FOR SMALL BUSINESSES

Employers in business for at least two years that have more than 10 employees and don’t offer another retirement plan already would be required to offer auto-enrollment IRAs to their employees. Contributions to employees’ IRAs would be made on a payroll-deduction basis.

Employees would be able to elect how much of their salary they wish to contribute to their IRA (up to the annual IRA contribution limit), including opting out entirely. In the absence of any election, 3% of an employee’s salary would be contributed to their IRA. Employees would be able to choose whether to contribute to an IRA or Roth IRA, with the Roth being the default option.

The provision would also enhance incentives, in the form of a tax credit for small businesses, to adopt a company-sponsored retirement plan.

If you have questions on how this may affect your specific situation, give our office a call. If you are not our client and feel like it is time to get a second opinion or professional guidance give our office a call.

This originally appeared on www.theslottreport.com. Information and examples by Jeffrey Levine, CPA.

Required Homework Before Visiting One Of The Social Security Locations

Do not drive to your local Social Security office until you have educated yourself. That is the best advice I can give to all you baby boomers heading towards retirement. There is a large crater between what most Americans think they know about Social Security and the real rules governing this entitlement program. Multiple surveys and an untold number of stores reveals this fact.

As a result of this lack of knowledge and people not getting professional guidance, the typical retiree will walk right past up to $100,000 in lifetime retirement benefits.

For a married couple, the difference between a smart Social Security claiming strategy and the urge to “take the money and run” could be $250,000 or more over their combined lifetimes. Social Security is the cornerstone of retirement income for most Americans. So why are so many people not doing their homework before going to the social security office?

Last year Financial Engines conducted a survey of more than 1,000 people who are retired or close to retirement . The repsondents were asked eight basic questions about claiming Social Security benefits. Of those people who had not yet claimed their benefits, 74% scored a grade of C or lower. Only 5% were able to answer all eight questions correctly. This survey shows that this retirement decision is more complex than most Americans think. As a financial professional, I can assure you that this decision will have a dramatic impact on the standard of living most people enjoy in this new chapter of life.

The Financial Engines survey found that 70% of people who hadn’t yet claimed Social Security said they would be at least somewhat interested in a professional service to help hem develop a claiming strategy. And, 39% said they would be extremely or very interested in this type of Social Security-claiming help. Who is going to provide that assistance, the Social Security Administration? A financial advisor is best suited to help you understand how to put the pieces of a retirement income plan together. Those pieces should include Social Security, retirement savings, pensions (if you are one of the fortunate few) and for some people continued work in retirement. In the current economic environment, some may be better off by tapping their retirement accounts in order to delay Social Security as long as possible. That is probably not what most Wall Street brokers would like to see happen to that IRA.

A financial advisor may be able to improve a client’s investment return by 1-2% with good asset allocation and diversification, but guiding clients to a better claiming decision as it relates to Social Security could increase their lifetime income by 25% or more. Although we can claim benefits as early as 62, your payment will be reduced forever and you will be subject to earnings caps if you continue to work and you will forfeit the ability to engage in creative claiming strategies that could boost your lifetime income.

Many retirees do not understand what a file and suspend, or restricted application could do for them. Nor do they understand the spousal benefit strategies and how they work.

Here’s my irresistible offer to America…send to my email:

Your Date of Birth, Spouses Date of Birth, Your age 66 Social Security payment, Your Spouses age 66 Social Security Payment.

And I will run an optimized SS Report for you at NO COST and NO OBLIGATION.

Email me @: phil@calandrafinancialgroup.com

www.CalandraFinancialGroup.com

What Is Your Bear Market Plan?

If you have been invested in the market, you know strong bull markets are inevitably followed by principal-destroying bear markets. When the market is going straight up, as it has since the financial crisis, you become complacent and overconfident . “Hey…look at my portfolio, I am making money, I’m rich.” How quickly one forgets the wealth destruction that inevitably happens. The reality is some investors will be prepared, some will not.

At our firm, we tend to be on the more conservative side. Our client’s don’t want huge losses, so we take a different approach. Some will utilize Fixed Index Annuities to give them a floor under their assets, others will not. The stock market can be a very rewarding place to invest. But beware of Wall Street! The markets will giveth… and the markets will taketh away.

Do You Want To Give Back Three Years Of Gains?

When the dot-com bubble finally burst in 2000, three years of gains were wiped out. The final damage to principal was on the order of 51%, which is how far the S&P 500 dropped from the bull market peak to the bear market trough.

Graph-for-blog

Eleven Years…Gone In A Flash

Similarly, after the property and mortgage bubble began losing air, the S&P gave back eleven years worth of gains. The final damage to principal was on the order of 58%, which is how far the S&P 500 dropped from the bull market peak to the bear market trough.

Graph-2-for-blog

If We Know A Bear Is Coming

If it is inevitable a bear market is coming at some point in the future, is it not logical to start putting your protect-my-principal plans in place now? Obviously, the answer is yes.

Then why is it that when I ask potential new clients, what is the floor under your feet when the market collapses, the answer is usually a blank stare and the sound of crickets chirping.

Most likely, it is because people tend to work with ”accumulation” advisors, those buy and hold type stockbrokers that have little sense of planning or strategic investment management. Consequently, they expect you the investor to “hang in there” and “ride it out” as you watch your life’s hard work go to money heaven.

Once the declines begin in the early stages of the next bear market, stress levels will begin to rise dramatically. We all make better decisions under low stress conditions. Therefore, now is the time to begin formulating your “inevitable bear market plan”.

So, what will be your strategy to protect your portfolio when the inevitable bear market roars again?

Introducing Asset Lock

You may be familiar with a leading Identity Theft program called Life Lock; a very worthwhile credit protection program.

Beginning in May, we will be rolling out a proprietary portfolio protection program called Asset Lock to our preferred clients.

Asset Lock is a portfolio monitoring software that watches your account everyday 24/7. This allows us to be fully invested without worry.

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Asset Lock will ensure that we never get caught off guard by the destruction of the next market crash.

Learn more about Asset Lock by clicking here. And contact our office today to discuss your “inevitable bear market plan”.