Frequently Asked Questions
WHEN CAN I RETIRE?
Depends on many factors such as; income needs, health insurance until age 65 when Medicare starts. We also need to look at long-term care needs and the ever-increasing costs with taking care of you or your spouse. Long-term tax planning is also a very important factor.
WHAT IS WEALTH MANAGEMENT?
Wealth management is a process of gathering and analyzing a broad spectrum of financial data and issues, then executing appropriate decisions. It can include many or all components of financial advice such as retirement planning, portfolio management, asset allocation, tax planning and/or financial estate planning. The process takes place over time, as wealth is accumulated. Wealth management brings together changing client situations and goals with the financial advisor knowledge to sort through various financial and asset management strategies to find appropriate solutions.
WHAT IS RETIREMENT PLANNING?
People often wonder, “Will I have enough money to retire comfortably?” There’s no perfect answer because we cannot predict the future, but with a little effort it is possible to evaluate if a person is on the right track. Important factors include time horizon, spending habits, earning potential and expected investment income generation among others. Retirement planning is one way to help achieve the comfortable retirement we all are hoping for.
WHAT IS A TAX CREDIT?
A Tax Credit could mean cash-a dollar for dollar reduction of taxes owed to the IRS or your State.
WHAT IS A TAX DEDUCTION?
A tax deduction lowers taxable income, like donating to charities or claiming mortgage interest. These deductions will lower the amount of taxable income which in turn, you should pay less in taxes.
WILL I HAVE ENOUGH MONEY WHEN I AM READY TO RETIRE?
This is a question that we often get asked and there is unfortunately not one answer for everyone. Everyone has a different situation and goal in life and some of the major factors that will help determine whether you will have enough money when you retire are; lifestyle choices, your health, and the all-important effects of inflation. A good rule of thumb going into retirement is to sustain an income that will replace around 70%-80% of your pre-retired income stream.
DO I REALLY NEED TO DO PERSONAL FINANCIAL PLANNING?
In the grand scheme of life, your personal finances are one of the most important aspects of your life. There are many areas that take more of our time and attention than financial long-term planning. However, how will you enjoy all those other areas of life such as family, travel, and community involvement if there is no money in the end to support these areas that are most important to you? Proper planning will help you to organize your finances to help reduce taxation, maximizing investment opportunities, while spreading out risk factors. When at least some form of financial planning is done, you can rest easier and spend less time insuring your future.
WHY CAN'T I DO MY OWN FINANCIAL PLANNING?
You can do some financial planning on your own, but will you? Most people find that with an already increasingly busy schedule there is little time left to allocate properly planning for their financial future. Most of the road blocks that we commonly see are:
- Inadequate Time
- Too many investment opportunities that become overwhelming
- Tax laws are constantly changing
DO I NEED LIFE INSURANCE?
It does depend on if you are leaving family, friends, Fort Wayne Charities, or churches behind that you want to take care of after your death. Life insurance many times is used to replace a lost pension when a spouse passes away. Life insurance is like a love letter that is left for those you care about as it says; I cared enough about those I leave behind to insure my loved ones will be taken care of.
The death benefit from life insurance can help with the cost of burial, debt, estate taxes, successors educational expenses, spousal support, and many more needs that you may leave those you love behind.There are many different types of life insurance policies available from very in-expensive term policies, to much more expensive permanent policies and many in-between. Life insurance can be affordable for everyone if the proper planning is done for each families needs.
Tradewell Tax & Financial has over 800 life insurance client’s. We are Fort Wayne Insurance Experts specializing in protecting assets and providing for our family when were no longer here. Lets face it, it is not a matter of if, but rather when were not going to be here. We have an option now, to do what we can to protect those who we will be leaving behind.
Contact Tradewell Tax & Financial for a no obligation life insurance quote, or a complimentary review of your current policy.
WHAT ELSE CAN I PUT MY MONEY IN WHEN CD RATES ARE THIS LOW?
There are many other conservative investment vehicles that earn competitive interest rates such as annuities. We offer these types of accounts to our clients while being able to offer most generally a higher interest rates for the same term as the CD that they were in or looked at investing into.
Annuities are best suited for long term investors. Withdrawals from an annuity prior to age 59 ½ are subject to a 10% tax penalty and income tax on earnings. Guarantees are provided by the claims-paying ability of the underlying insurance company. Unlike CDs, Annuities are not FDIC insured. Surrender schedules may apply.
HOW DO I KNOW WHAT IS SUITABLE RISK FOR MY AGE?
his is a great question. All to often we have new clients come into the office from other firms and come to find out that they are in the same risk portfolio as someone who is thirty years younger than they are. The person thirty years your junior has thirty additional years to follow the market trends and recoup if the market crashes. Someone already in retirement or heading to retirement in the next five years does not have the time to gain back the losses before they will need too start living off their money. Many advisers just put everyone in the same portfolio based on what their company tells them to put their clients in, and they do not do Age Based Planning. Be sure you don’t fall into this category. Sit down with a planner that does suitable risk factors based on age and individual situational needs.
HOW WILL I REPLACE MY INCOME WHEN I RETIRE?
It seems the days of pensions are quickly fading and theres more and more concern on if and when social security will become a thing of the past. Income replacement is one of TradeWell’s specialties as you must begin to plan for income replacement as early as possible to insure your standard of living can remain the same. There are many investment opportunities that the financial industry has provided that are geared just for those needing to replace an income stream into retirement.
ARE CHARITABLE DONATIONS DEDUCTIBLE IF I DON'T HAVE A RECEIPT?
Usually, your tax preparer will require a receipt or Bank record to back up your deduction if the gift was under $250.00. If your donation is above the $250.00 then a receipt is required by the IRS.
ARE UNEMPLOYMENT BENEFITS TAXABLE?
Yes. Unemployment Insurance is considered ordinary income and will be taxed as such. You may want to have your State Unemployment Department to withhold federal and state taxes to avoid owing at the end of the year.
IF I TAKE A HARDSHIP DISTRIBUTION FROM MY 401K CAN I AVOID THE EARLY WITHDRAWAL PENALTY?
No. There are 401k plans that allow hardship distributions but the IRS does not have a hardship policy and will still penalize you if you’re younger then 59 1/2.
HOW DOES TRADEWELL GET PAID IF YOU MANAGE MY IRA?
We are a fee-based Investment Advisory Firm. So, a small fee will be attached to the balance of your account. Typically, these fees come out of your account on a quarterly basis. So, you do not have to worry about writing us a check because it is automatic. Take note that when you understand how I get paid we are in this together, I actually have skin in your game. If your account goes down in value due to market fluctuations or you make a withdrawal, the amount we make goes down as well. If your balance goes up (I like this better) I make more.
DO YOU CHARGE A FEE WHEN YOU RECOMMEND INSURANCE PRODUCTS?
No. We are a fee-based advisory firm, but generally speaking when insurance products are recommended we receive compensation from the insurance companies and pass that savings on to you. I suppose we could charge a financial planning fee, but we try to keep our fees as low as possible for our clients.
HOW MUCH DO YOU CHARGE FOR TAX PREP?
Generally, we charge no more than $199 to complete both your individual State and Federal taxes. This covers most schedules other than C, or businesses. We specialize in farm income and pastoral income.
HOW LONG HAVE YOU BEEN IN BUSINESS?
Mike Albertson started in the financial services industry in 2002 and formed the parent corporation, Indiana Tax Advisory Group, Inc at that time.
DO YOU BELONG TO THE BETTER BUSINESS BUREAU, OR BBB?
Yes. We encourage you to contact the BBB directly before you choose to do business with us. We have nearly a thousand clients and are proud of our record and are proud of our status of an Accredited Business with the BBB. 800-552-4631 or online @ http://northernindiana.bbb.org/
IS MY PRINCIPAL AT RISK WHEN I INVEST IN A FIXED ANNUITY?
No, your principal is safe due to stock market fluctuations. But, inflation and other factors could bring additional risk to this historically safe savings vehicle. We recommend you speak to us for a second opinion if your considering purchasing an annuity.
HOW MUCH CAN I TAKE OUT OF MY ANNUITY EACH YEAR?
Most insurance companies allow a 10% free withdrawal on an annual basis. Please consult your advisor if you are considering this because every company is different and have varying policies regarding withdrawals.
IS THERE A WAY TO INVEST RISK-FREE WHILE IN THE STOCK MARKET?
No. The only way to eliminate systematic risk in the stock market is to completely remove yourself from the stock market.
IF I DIE AND MY SPOUSE LATER REMARRIES, COULD MY CHILDRENS' INHERITANCE BE IN JEOPARDY?
Yes. This is a big reason why we have a full-time Elder Law Attorney in our office. This is a big deal and these issues should be addressed in your Estate Plan.
IF I MOVE TO A NEW STATE, WILL I NEED A NEW WILL?
Yes. Typically the Will should be constructed and signed in your state of residence. Always consult a licensed attorney for your legal concerns.
ARE MUTUAL FUNDS SAFER THAN STOCKS?
Typically mutual funds are less aggressive that individual stocks. Individual stocks are not a diversified investment unlike many mutual funds. We typically use diversified mutual funds for risk reduction efforts while managing your investments in the stock market.
ARE YOU LICENSED TO DO BUSINESS IN OTHER STATES?
Yes. Our clients are located all over the USA. Mike Albertson is a Investment Advisor Representative and a Indiana licensed Insurance Agent and currently holds the proper licensure to sell annuities, index annuities, fixed annuities, immediate annuities and life insurance in the following states: AL, AZ, AR, CA, CO, CT, DE, DC, FL, GA, ID, IL, IN,IA, KS, KY, LA, ME, MD, MI, MN, MO, NE, NH, NJ, NC, OK, OR, PA, RI, SC, TN, TX, VA, WA, WV and WI.
WILL TAXES BE HIGHER IN THE FUTURE?
We believe so. We’re in an ever increasing tax environment due to many factors such as the Federal Deficit and inflation.
DO YOU DO 401K ROLLOVERS?
Yes we do. One of the most important things we need to remember to do is roll that old 401k out of your old employer and into a new IRA. If done properly, no taxes would be due and you will be able to continue tax deferred growth.
ARE YOU THE SAME AS A STOCK BROKER?
No. Typically, Stock Brokers do not hold a Fiduciary responsibility to do whats in your best interest and can charge up-front commissions for the sale of their products. Mike Albertson is a Fiduciary and is required to do whats in the client’s best interest on all of his recommendations. We are also a fee-based advisory firm and do not have the ability to charge the same way as commissioned brokers.
HOW DOES TRADEWELL GET PAID?
We get a couple ways. First, is the fee-based part of our platform. If we can help with one of your investment accounts like, your IRA, Stock or trust account or ROTH IRA we will come to an agreed upon fee that would be deducted from your account based upon your balance. So, if your account balance goes down due to the market or withdrawals, then we would make less. If your balance goes up based on market performance or additional deposits, then we would make a little more. We do not hold the proper licensure to charge up-front commissions, front loads, or rear loads and we also cannot share in 12b1 fees or “other compensation” that commissioned brokers can participate in.
If we make a recommendation that involves insurance products we would be compensated by the referred company we choose to place business with. Although we could charge a fee for this service, I choose not to and pass the savings on to you, the client. We try to keep our overhead low and manage expenses the best we can which allows to be a low-cost investment advisory firm.
WHY AM I PAYING TAXES ON MY RETIREMENT INCOME?
During the time we are working we are putting away money into our 401K never thinking about the long-term tax issues we may face in the future. While we get a tax break during these years for the amount we contribute into such plans, what many people don’t plan on is the taxation that will occur when you begin to take this money out in retirement. This money has never been taxed. So not only does Uncle Sam charge us when we take this money out to live on, based on our tax rate on the amount we put into these plans we also get taxed on all the interest that they have earned during all those years the account was sitting there growing tax deferred. The only way you wont get taxed on this money is if you have you fall under the amount of taxable income with your deductions and exemptions in mind. Everyone is different on how much they can take out before being taxed, so make sure you sit down with a tax professional on what that threshold is.
WHY AM I BEING TAXED ON MY SOCIAL SECURITY WHEN I ALREADY PAID TAX ON IT?
Just when you thought you had finally done your share of paying Uncle Sam, you learn that you are being double taxed. This is one of the most overlooked areas in income & tax planning that we see. Most people who are new to our firm are not even aware that they can get taxed on their Social Security. You can be taxed and will be if you earn over what the government sets as the earning limits. You can be taxed on up to eighty-five percent of your Social Security! These earnings don’t just include W2 income only, no they base it off pension income, IRA withdraws, Capital Gains, and other areas of income that you may or may not even being taking out to live on. We are happy to call ourselves tax specialist, and we help people just like you every day reduce these types of taxes with strategic tax planning.