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July 2020

Six benefits to starting your financial planning now

Last month, I posted a picture on Instagram with a cake to celebrate my company’s 5th birthday. I had planned to write a blog post to go along with it but due to the coronavirus, my world has been pretty crazy. Instead of blogging, I’ve been doing a lot of tax loss harvesting and taking on new clients who wanted to take advantage of the downturn in the market.

However, this long holiday weekend (happy belated Fourth of July!) brought some time to reflect on these past five years. While year one looks vastly different than today, one question from clients has remained the same: “Megan, how come they don’t teach this in school?”

What follows that comment is often the client’s regret of wishing they had started their planning earlier in life. While we do our very best to set a client of any age up for retirement success, this is why I love meeting with young individuals/couples. A bonus is that our similarity in age means that we usually become friends and I love new friends. I also have a single younger sister, so I am on the hunt to find her a man … kidding … (maybe)!

Coming from my five years of experience with clients who started their financial planning at an earlier age as well as the alternative, the former has benefits of:

  • seeing their investments grow over a longer period of time with compounding returns,
  • having a higher risk tolerance and therefore, possibly greater returns,
  • potentially getting better life insurance rates before they may face possible medical issues,
  • knowing exactly what to do when their employer offers them a 401(k), Simple IRA, health insurance plans, etc.,
  • feeling confident with their day-to-day budget right out of the gate, knowing that they are setting themselves up for short and long-term success,
  • creating flexibility and control with their future retirement (e.g., a few clients I work with are projected to retire early).

I’m sure I will continue getting the question, “Why don’t they teach this in school?” for the next five years or more. Either way, what matters is that people understand why they should begin financial planning early on. I always joke, “No one has ever said I’m intimidating!” and make it clear that I don’t bill for my time.

If you’d like to not wait a day longer to kick off your financial plan or get a second opinion, don’t hesitate to reach out using the contact information at my page. It’s important that you work with someone who you like and trust. I may not always have birthday cake, but my door is always open!

What are catch-up contributions, and should you be making them?

Man review finances on tablet

Man reviewing finances on tablet

If you’re among the millions of Americans putting money into a workplace retirement plan, you probably know that IRS rules limit annual tax-deferred contribution amounts. For example, 401(k) and 403(b) participants can set aside a maximum of $19,500 in income on a tax-deferred basis in 2020. But if you’re age 50 or older, you could be eligible to contribute amounts that exceed the standard IRS limitations.

Catch-up contributions, as the name implies, allow workers to save more tax-deferred income as they get closer to traditional retirement age. Allowable catch-up amounts vary depending on the type of retirement plan. For our 401(k) or 403(b) example, the catch-up amount is $6,500 in 2020.

Catch-up contributions only extend the amounts workers can contribute to their plans each year. They do not increase employer-match limits.

The IRS updates annual contribution limits each year—including catch-up contribution amounts—for each type of retirement plan. A professional financial advisor can explain the rules that apply to your specific account to you.

Should you get in on this?

If you’re 50 or over and looking to grow tax-deferred savings for retirement, and you already max out your plan’s limits each year, making catch-up contributions might be right for you.

On the other hand, if a large portion of your retirement savings is in tax-deferred dollars, you could be facing a sizable income-tax burden when you retire and begin taking plan distributions. In that case, there might be better retirement savings options for you than increasing your tax-deferred contributions.

Because everyone’s financial needs and objectives are unique, we can’t over-stress the importance of consulting a trained financial advisor when planning for retirement. A qualified professional can help forecast whether you’re saving enough for the retirement lifestyle you want—and help you determine if you have any “catching up” to do.

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Prepared by The Creative Block, Inc. Copyright 2020.
The Creative Block, Inc. does not provide investment, tax, legal, or retirement advice or recommendations. The information presented here is not specific to any individual’s personal circumstances.
To the extent that this material concerns tax matters, is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Turnwald joins Savage to serve Putnam County area

Dan Turnwald, associate*, has joined Savage and Associates to serve clients in Putnam County and beyond. Savage is a full-service financial, insurance, and group benefits services firm partnering with clients across the nation.

“Dan has an outstanding reputation throughout multiple northwest Ohio counties,” stated J.R. Toland, president and CEO, Savage. “We are thrilled to have him on board, and this now gives clients even easier access as we expand to our fourth location.”

Turnwald has more than 15 years of experience developing life protection plans for individuals and families. In only his second year, he qualified for membership in the Million Dollar Round Table (MDRT) – an association that qualifies insurance and financial services professionals in exceptional professional knowledge, strict ethical conduct and outstanding client service. In 2009, he finished with the lowest lapse rating in North America, indicating very high client satisfaction.

With the addition of Turnwald and his location at 150 Church St., Glandorf, Ohio 45848, Savage – which started in 1957 – also has offices in Maumee, Bowling Green and Findlay.

(* Dan Turnwald is not affiliated with Osaic Wealth, Inc.)
(Qualifying membership in the MDRT is based on minimum sales production requirements and gross business generated within a year. Each MDRT status designation is granted for one year only. All members must apply every year to continue their affiliation with the Million Dollar Round Table. Third-party rankings and recognitions are no guarantee of future investment success and do not ensure that a client or prospective client will experience a higher level of performance or results. These ratings should not be construed as an endorsement of the advisor by any client nor are they representative of any one client’s evaluation.)
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