What to Know About 2021 RMDs

After being waived for 2020, Required Minimum Distributions (RMDs), which are amounts you must take each year from most retirement accounts once you reach a certain age, are happening again in 2021. Make sure you don’t overlook taking these distributions from your retirement account. 

Last year, the RMD age changed to 72 from 70½ and new IRS life expectancy tables are to go into effect next year. Anyone born July 1, 1949, or after can wait until 72 to take their required distributions. 

In a recent CNBC article, they stated “The amount you must withdraw each year is generally determined by dividing the balance of each qualifying account by a “life expectancy factor” as defined by the IRS. And, if you already were taking RMDs before 2020 (you had already reached age 70½),  you would simply resume those distributions this year, using the current life expectancy tables, your age and your account balance at the end of 2020.”

Also included in the RMD data is that if you turned  70½ in the first half of 2019 and planned to take advantage of the April 1, 2020, deadline for taking out the RMD — and did not do it — it must be taken by December 31. That being said, if you turn 72 this year, you have until April 1st 2022 to take your 2021 RMD. 

“There are also withdrawal rules to take into account. For inherited IRAs, 401(k) plans or other qualified retirement accounts, the balance must be entirely withdrawn within 10 years if the owner died after 2019, unless the beneficiary is the spouse or other qualifying individual. The 2019 Secure Act eliminated the ability of many beneficiaries to stretch out distributions across their own lifetime if the original account owner died on Jan. 1, 2020, or later,” according to an article by CNBC. 

The specifics of RMDs can seem complicated, so if you have any questions about whether or not you are eligible or other concerns relating to your required retirement withdrawals, send us an email at info@shermanwealth.com and we are happy to further explain it for you. 

Ep. 57 Launch Financial- Are Inflationary Numbers Here to Stay?

Overview: 

Join us this week on Launch Financial for Ashley’s special birthday episode as we discuss whether inflationary numbers are here to stay, southwest cancellations and holiday travel, and market volatility. Not an episode you want to miss! 

Show Notes: 

Ep 56 Launch Financial- Debt Ceiling & Market Volatility

Millennials Top $10 Trillion in Assets for First Time

Are Inflationary Prices Here To Stay?

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Millennials Top $10 Trillion in Assets for First Time

Despite the pandemic-induced recession of 2020, new data from the Federal Reserve shows that America’s young adults have doubled their assets over the past four years.

According to the Federal Reserve data, this marks the first time the assets millennials have exceeded $10 trillion. 

It is interesting to see the shift in wealth from one generation to the next. The covid-19 pandemic has definitely had a large impact on millennials as there has been a great deal of layoffs amongst this demographic. Overall, “the percentage gains seen by millennials in 2020 far exceed advances by Gen X and the baby boomers, but younger Americans still only hold a small fraction of the wealth of older adults.”

Further, the wealth of many younger Americans could see a rocky future.  A recent survey found that people 40 and younger saw the lowest likelihood of finding a job in the next three months than at any time since 2013. 

While millennials have certainly accomplished a lot when it comes to accumulating assets, there is always room for learning and improvements. Whether you are just starting out and need someone to help you establish a budget or financial plan, or are questioning what to do with any extra cash you may have laying around, book a complimentary 30-minute consultation on our site. 

Are Inflationary Prices Here To Stay?

Have you been feeling the impacts of inflation over the last 6-9 months? As many of us are starting to spend more money again on things we had been accustomed to pre-Covid, you are likely noticing that costs related to dining, travel, gas, and more have been on the rise. Over the last few months, we’ve been talking a great deal about inflation and the impact it is having on us all. 

As you may have been seeing in the headlines of CNBC and The Wall Street Journal, higher prices seem like they are here to stay when it comes to Uber and Lyft, FedEx and UPS, and even the dollar store. Last week we even saw US Crude Oil hitting a record high since 2014, reaching over $80 a barrel. We’re not the only ones talking about it- A CNBC article noted that Treasury Secretary Janet Yellen cautioned that inflationary pressures hitting the US economy could last a while. 

As we focus on this data and the likelihood of a longer term inflationary impact, how are you feeling about it? Some of you may be not panicking over the increased dollar here or there, but others are certainly feeling the impacts. What’s important to remember during a time like this is to not get overwhelmed, but to adjust your financial plan and budget. Revisit your wants versus your needs and decide what is a priority for you and your family. Since it now costs more to fill your tank with gas, maybe you can scale back on some of your take-out meals. In the event your spending habits change as a result of inflation, it’s key to align your budget with your cash flows and monthly expenses. If you have questions about how to realign your budget and spending habits with your financial goals and current economic situation, email us at info@shermanwealth.com or schedule a complimentary 30-minute consultation here.

Ep 56 Launch Financial- Debt Ceiling & Market Volatility

Overview: Tune into this week’s episode of Launch Financial as we unpack a big news week, including debt ceiling, inflation, market volatility, Facebook’s social media outage, and more. 

What You’ll Learn: 

  • 10 things to discuss with your partner before marriage 
  • Updates on the current debt ceiling
  • Market volatility explained 

Show Notes: 

https://twitter.com/carlquintanilla/status/1446090653688008704?s=12 

10 Important Things To Discuss Before Marriage

The Financial Services Industry Is Evolving

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The Financial Services Industry Is Evolving

As our world is evolving and industries are becoming more complex, we have found that consumers too are heightening their expectations in terms of products and services received. A recent survey by Spectrem Group found that there is quite a gap between what consumers expect and what they receive in actuality, especially in regards to the financial services industry. 

As you can see from the chart below, financial planning and wealth management were two areas in which consumers found that services expected and services received had the least discrepancy. As a financial advisor, we recognize that the financial services industry is evolving, relationships continue to grow and adapt, and advisors must strive to deliver a holistic service to their clients. 

The chart above shows the client demand for an all-encompassing approach to the financial services industry and the importance of finding an advisor who truly understands the value of a financial plan. At Sherman Wealth, our focus is on helping the whole client, whether it involves setting up a 529 for those with young children, making sure retirement goals can be attained, knowing how to best maximize your 401(k) or creating a monthly budget and thorough financial plan for those just starting out. We are constantly adapting our technology solutions to keep up with the ever changing advancements as well as refining our relationships with clients. If your needs align with our values, please reach out to us at info@shermanwealth.com or schedule a complimentary 30-minute consultation here.

10 Important Things To Discuss Before Marriage

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10 Things to Discuss Before the Big Day

You are excited, in love, and planning the wedding of your dreams. Probably the only money questions on your mind are the down payments for the caterers and the florists!

Yet – whether your wedding reflects a minimalist sensibility or is a no-holds-barred extravaganza – it’s better to have a good understanding of each other’s finances before the “I Do’s”. This is a time when procrastination could cost you a bundle, even if neither one of you currently have a lot of assets.

Getting married is more than just substituting the word “ours” for “yours” and “mine”.  It’s combining your finances, histories, dreams, aspirations, possessions – even your music – and making all of that “ours too. Since a significant part of those dreams and aspirations involve money, having multiple financial conversations before marriage (or right after, if you’re newlyweds!) can help you start married life on a firmer footing, with regard to financial goals.

Here are a few conversations that will get your marriage off to a smoother financial start:

1) Views on money. How we feel about money is often very emotional and very personal. Our family’s views on money can have a big impact on the way we see finances. In some families money may not be talked about. In others, one partner may hide money or spending from the other. While we might not consciously have these same behaviors, our upbringing will have an impact on how we feel about money and how we save, spend, and budget.

The best way to address unconscious – and sometimes conflicting – money behaviors is to start by recognizing how you each feel about money. Then you can take a practical approach and implement the best strategies from the past and incorporate them into your new relationship. This will also give you a chance to address any not-so-beneficial attitudes and behaviors and work to consciously change them.

2) Spending/Saving Habits. Chances are the two of you don’t spend and save money the same way. The interesting thing about spending and saving habits is that they give insight into priorities, both financial and otherwise because we tend to spend money on things we feel are most important and scoff at spending on things we see as unimportant.  Some people value saving more than anything and could be considered “tightwads”. Other people have a “live for today” attitude and spend whatever they have available, saving nothing or little for later. Most of us find ourselves somewhere in the middle.

Not agreeing on spending priorities can lead to serious conflicts down the line. While there is no right and wrong answer regarding priorities and habits, it’s valuable to know and understand each other’s habits earlier rather than later.

3) Divvying Up the Bills. This is an important conversation about how you will manage your money together. Will you have separate or joint accounts? Who will be responsible for paying the bills and investing for long term goals? A realistic understanding both of your current incomes and current debts is important so you can create a realistic budget based on your combined income and expenses.

4) Credit History. No one likes to talk about credit ratings because they highlight past mistakes and spending habits. Yet it’s essential to know and discuss your credit histories. This can help you talk about past money mistakes, current debt loads, and how to address any issues that are lurking. Having this conversation now will also help if you’re planning to borrow money for a large purchase, such as a home or car; credit history will effect how much you’ll pay in interest for loans, as well as how much it will cost for things like insurance. Many companies even pull credit for potential job applicants. When it comes to credit, it’s best not to have surprises down the road, so have the conversation now.

5) Risk Tolerance and Financial Goals. Couples often have very strong – and differing – feelings about risk and money that are deeply rooted in past experiences.  Your family may have gone through periods of unemployment, for instance, or  you may have grown up taking financial security for granted. One of your parents may have owned a business and you saw it go bankrupt,  so you might be very conservative with your money and not want to take unnecessary chances. Or perhaps they invested in a business that was a huge success.

Everyone brings a different level of comfort when it comes to risk tolerance and it’s important to understand your partner’s because it has an impact on spending and savings habits – everything from where you invest to how much money you want to set aside. Money provides a level of security that can be very powerful and risk tolerance is directly linked to that feeling of security.

6) Ongoing Financial Obligations. If this is a second marriage, are there child support or alimony payments that need to be considered in the budget process? If so, how much and how long will the obligations need to be fulfilled. Caring for elderly parents might also be a long term expense you will be facing as a couple.

7) Net Worth. When it’s a first marriage, often neither partner has much in the way of assets, but if one partner has more than the other, are you going to want a pre-nuptial agreement? When discussing net worth it is valuable to discuss not only current net worth, but also aspiring net worth. What household income level are you both hoping to achieve. Will reaching those aspirations include additional education? Will it mean switching jobs several times early in your career? Will it mean working 80 hours a week for decades? As a couple, understanding financial expectations and future net worth aspirations will help you plan a life together that will meet both of your needs, financially and emotionally.

8) Family Plans. The family size you hope to have will also have a big impact on your financial needs. Children, as wonderful as they are, are very expensive to raise. Do you both want to have children and, if so, one child or several children? Discussions about how the children will be raised and educated are also valuable from a financial perspective. Will one of you stay home to raise the children? Will you pay for day care? How far apart should the children be? Each of these answers will have a significant financial impact to the family budget.

9) Combining Physical and Financial Assets. Particularly with couples getting married later, both partners will have accumulated possessions that now need to be combined. This can be as simple as which sofa and bedroom set to keep, or more complicated when multiple homes, retirement accounts, and other investments are brought into the mix. Discussing whether property, accounts, and debt should be left in individual names or held jointly is also an important conversation to have.

10) Wills, Trusts, and Life Insurance. When you’re getting married, you don’t really want to think about death. Yet wills, trusts, and life insurance need to be updated soon after you say, “I Do.” This is true especially if you have assets or children. The process of obtaining a will or trust is fairly straightforward; it’s the discussions that lead up to it that provide the most value. Both of you should have a good understanding of what you have and what you want to happen, should the unthinkable occur.

Financial advisors can be a real asset, when it comes to pre-marital financial discussions. They can help you determine when it is best to hold assets jointly or separately. Assistance with budgeting and planning for long term goals will help you create a strong financial plan. Advisors can also guide you in building a strategy for reaching financial milestones.

So, if you’re getting married (or just got married), congratulations! And while these discussions may not be the most romantic ones you’re having, they do have the ability to bring you closer together. Planning together and sharing your dreams will give you better insight into the mind and heart of the person you’ve fallen in love with and allow you to become stronger partners when it comes to reaching your goals as a couple, emotional as well as financial.

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The views expressed in this blog post are as of the date of the posting, and are subject to change based on market and other conditions. This blog contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
Please note that nothing in this blog post should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with your own financial advisors, accountants, or attorneys regarding your individual circumstances and needs. No advice may be rendered by Sherman Wealth unless a client service agreement is in place.
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