Couple’s Financial Checkup: Valentine’s Edition
Valentine’s Day is often associated with flowers, hearts and candy. Romantic dinners are common. Perhaps the most romantic thing a couple can do for each other is to ensure that they are on track financially. Being financially secure can enable you to do the things you want to do as a couple such as travel, buying your dream home, dining out and most importantly achieving financial independence. Here are some steps to consider in doing a couple’s financial checkup. Have your lives changed recently? This could entail any number of changes. Did you give birth to a child, or perhaps you adopted one? Do either of you have a new job? Did you receive an influx of money from an inheritance or perhaps a bonus from one of your jobs? Did either of you lose your job? These are just a few of the life changes that could have either a positive or negative impact on your financial situation as a couple. Review Your Budget and Spending If you have established a spending budget in the past, review your current monthly spending against your budget. Are you staying within your budget or are you overspending in most months? If the latter, you need to review your spending and see what, if any, adjustments can be made. If you do not have a budget in place, this should be a top priority for this financial review. You need a budget, and you need to monitor spending to ensure that you stay within your budget. Review Your Financial Goals If you have previously set financial goals as a couple, this is the time to review your progress towards those goals. These might include saving for your children’s education, saving for a down payment on your dream home, contributing to your 401(k)s at work and a host of others. Are you on track towards your goals? Do you need to add any new goals? If you are behind on any of your goals, what can you do to get back on track? Review Your Debt This is a good time to review all debts. This might include a mortgage on your home or perhaps a second home you own. Do you have consumer debt? Student loan debt? You want to be sure that your debt is under control and that you have a plan to pay this debt down. Review Your Retirement Savings Are you both contributing to your retirement? If you have access to a 401(k) or similar workplace retirement plan, be sure that you are contributing as much as possible. Consider adding to your IRAs. If you are self-employed or have a side gig, be sure to look at funding a self-employed retirement plan such as a solo 401(k) or SEP-IRA. Review Your Investments How are your investments doing? Do you have an asset allocation plan in place, and do you rebalance your portfolio on a periodic basis? You should review your overall portfolio including any taxable accounts as well as investment held in a 401(k) or an IRA. Review Your Estate Plan Do you have an estate plan in place? At the very least you should have a will and be sure that assets such as your home are titled properly to ensure they are passed on to the desired heirs. Often this will be your spouse if you are married. Depending upon your situation and the types of assets you own together, it is important to be sure you have a plan in place to pass these assets on to your desired heirs in the event of the death of one or both of you. Especially with minor children, you want to be sure that they are taken care of if one or both of you should die. A big part of basic estate planning is ensuring that all beneficiary designations are up to date. This includes retirement plan accounts such as a 401(k), all IRAs, any life insurance policies and any annuities that either of you may have. Speaking of life insurance, you will want to review any life insurance policies that are in place to ensure that you have adequate protection for each other and your family in the event that one of you dies. Review Your Tax Situation The beginning of the year is also time to get ready to file your taxes for the prior year. How does your tax situation look? Are you taking all deductions you might be eligible for? Are there other moves you can make to reduce your tax liability in the new year? Be sure that you are doing all that you can to manage your tax liability this year. Set a Date for Your Next Review Doing a couple’s financial review is great. But only doing it once really does not help much. Be sure to make this review a regular thing. Annually might be fine; perhaps you want to look at your finances more often such as semi-annually or quarterly if needed. Figure out what works best for you. You do not have to go at this alone. Your Wedbush financial advisor can help, just reach out to them and tell them you want help reviewing your financial situation. Disclosure Securities and Investment Advisory services offered through Wedbush Securities, Inc. Member NYSE / FINRA / SIPC. Wedbush Securities does not provide tax or legal advice. Please consult your tax or legal advisor. 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 presented is not intended to constitute an investment recommendation for, or advice to, any specific person. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that
Navigating Tax Changes in 2024: What You Need to Know
Each new year brings a number of tax changes for taxpayers. This is the case for 2024. There are important changes that taxpayers should be aware of in their tax planning for 2024. Here is a look at some of them. Tax Brackets Changes to the marginal income tax brackets in line with inflation will be in effect for the 2024 tax year. Here are the marginal 2024 tax rates. Marginal Tax Rate Single Married Filing Joint Married Filing Separate Head of Household 10% $0 to $11,600 $0 to $23,200 $0 to $11,600 $0 to $16,550 12% $11,601 to $47,150 $23,201 to $94,300 $11,601 to $47,150 $16,551 to $63,100 22% $47,151 to $100,525 $94,300 to $201,150 $47,151 to $100,525 $63,101 to $100,500 24% $100,525 to $191,950 $201,150 to $383,900 $100,525 to $191,950 $100,501 to $191,950 32% $191.950 to $243,725 $383,900 to $487,450 $191,950 to $243,725 $191,950 to $243,700 35% $243,725 to $609,350 $487,450 to $732,200 $243,725 to $365,600 $243,700 to $609,350 37% $609,351 or more $732,201 or more $365,601 or more $609,351 or more The 2024 marginal tax brackets are about 5.4% higher than the corresponding 2023 brackets. This can play into your 2024 tax planning in terms of being able to earn a bit more than in 2024 without moving into a higher bracket. This could impact retirement account distributions and other types of income. Standard Deduction The standard deduction has increased for 2024 as follows: For single filers, the 2024 standard deduction is $14,600 – up from $13,850 for the 2023 tax year. For those filing married and joint, the 2024 standard deduction is $29,200 – up from $27,700 for the 2023 tax year. These increases could help reduce taxable income for some filers, it will also raise the threshold to be able to itemize deductions on your return. Annual Gift Tax Exclusion For those who are looking to make gifts to family members or others, the annual gift tax exclusion for 2024 will increase to $18,000 from $17,000 in 2023. This is the amount that you can give to anyone without having any part of the gift count against your lifetime estate and gift tax exclusion. Retirement Plan Contributions The annual limits for contributions to retirement plans are increasing in 2024 as well. The annual limit for IRA contributions is increasing from $6,500 to $7,000. The catch-up contribution limit for those who are 50 or over will remain the same at $1,000. The annual contribution limits for 401(k)s, 403(b) plans, most 457 plans and the government Thrift Saving Plan have increased to $23,000, up from $22,500 in 2023. The catch-up contribution limit will remain at $7,500 for 2024. For those who are self-employed, the annual contribution limit for a SEP-IRA plan is increasing to $69,000 from $66,000 for 2023. Note all contributions to a SEP-IRA are made by the employer. The contribution limits for SIMPLE IRAs have increased to $16,000 from $15,500 in 2023. The catch-up contribution for those who are 50 or over will remain at $3,500 for 2024. These increased retirement plan contribution limits allow for greater pre-tax contributions, and tax savings, on contributions made to a traditional IRA or retirement plan account. While contributions to a Roth account are made with after-tax dollars, the money in these accounts grows tax-free and can be withdrawn tax-free as long as the criteria for a qualified distribution are met. EV Tax Credit For those looking to buy an electric vehicle in 2024, there have been some changes to the EV tax credit. One big change is the ability of buyers to receive an instant credit that can be used as a down payment on qualifying new or used vehicles. This can help reduce their out-of-pocket cost for the vehicle and can help reduce any amount that might need to be financed. They can also continue to defer the credit to use when they file their 2024 tax return. Qualified Charitable Distributions (QCDs) The Secure 2.0 rules call for the level of qualified charitable distributions that can be taken by those who are at least 70 ½ from their traditional IRA accounts to increase by inflation each year beginning in 2024. The limit for 2024 is $105,000 which is up from the original limit of $100,000 in prior years. QCDs are a tax-efficient way for those who cannot itemize charitable deductions to donate to charity. While QCDs are not tax deductible they do come out of the IRA tax-free. For those who are of an age where they are taking required minimum distributions from their TRA, QCDs can be used to cover some or all of their RMD, eliminating the tax on these distributions. Note the sequencing of the QCD versus other withdrawals from the IRA is important in using the QCD to satisfy some or all of the RMD requirement. These are a few of the tax changes to be aware of for 2024. You will want to discuss your situation with your tax professional and your Wedbush advisor or registered representative to be sure that you are incorporating all eligible tax breaks into your financial planning for 2024 and beyond. Disclosure Wedbush Securities does not provide tax or legal advice. Please consult your tax or legal advisor. 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 presented is not intended to constitute an investment recommendation for, or advice to, any specific person. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it 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. The information in these materials may change at any time and
Understanding the Importance of Long-Term Care Insurance
In an era where health and well-being take center stage, planning for the future involves more than just financial investments. Long-term care is a critical aspect of this planning, and one effective tool that individuals can utilize is long-term care insurance. What is Long-Term Care Insurance? Long-term care insurance is a specialized insurance product designed to provide coverage for the costs associated with extended care services. These services can include assistance with activities of daily living (ADLs) or instrumental activities of daily living (IADLs), especially when an individual is unable to perform them independently due to aging, chronic illness, or disability. It’s important to keep in mind that long-term care does not always mean an extended period of time, and can range from a few months to years. Key Features of Long-Term Care Insurance: Coverage for Various Care Settings: Long-term care insurance can cover a range of care settings, including nursing homes, assisted living facilities, home health care, and adult day care. Activities of Daily Living (ADL) Assistance: Policies often cover the costs of assistance with ADLs, such as bathing, dressing, eating, toileting, and transferring. Flexible Policy Options: Policyholders can choose from various options, including benefit periods, daily or monthly benefit amounts, and elimination periods, allowing for flexibility based on individual needs. Preservation of Assets: Long-term care insurance helps protect assets by covering the expenses associated with long-term care, preventing the depletion of savings or retirement funds. Why Long-Term Care Insurance Matters: Financial Security: Unexpected long-term care needs can lead to significant financial strain. Long-term care insurance provides a layer of financial security, helping individuals and their families manage the costs of care. Choice and Control: Having long-term care insurance allows individuals to have greater control over the type and location of care they receive, empowering them to make choices that align with their preferences. Reduced Burden on Loved Ones: With the financial support of long-term care insurance, the burden on family members or friends providing care is reduced. This can strengthen relationships and provide peace of mind for everyone involved. Early Planning Advantage: Securing long-term care insurance early offers the advantage of more affordable premiums. Planning ahead ensures that coverage is in place when it’s needed most. In summary, long-term care insurance is vital for comprehensive financial planning, protecting against high costs associated with extended care. Connect with a Wedbush financial advisor to explore personalized options and learn more on how to incorporate long-term care insurance into your portfolio.