Saving enough by age 65 to ensure that you can maintain your standard of living through a long retirement has become increasingly difficult.  You will probably be responsible for the majority of your retirement income, whether you obtain that income from 401(k) plans, individual retirement accounts (IRA’s), or taxable investments.  Before retiring, you’ll want to ensure that you have sufficient savings to support yourself for 20, 30, or even 40 years, depending on your age when you retire.

Deciding how much you’ll need to accumulate by retirement age is difficult, since so many of the variables that go into that calculation are uncertain. To come up with an estimate, you need to make assumptions about your life expectancy, how much income you’ll need during retirement, how much you’ll receive from other retirement sources, when you will retire, your long-term rate of return on investments, future inflation, and future income tax rates. If your estimates are inaccurate, you could end up with little in the way of income in the later years of your life.

Because of all the uncertainty, it is typically recommended that you only withdraw modest amounts from your retirement savings, especially in the early years of your retirement. A common rule of thumb is to withdraw no more than 4% annually from your retirement funds.  So if you want to withdraw $75,000 annually from your retirement assets, you need to accumulate $1,875,000 by retirement age. But that 4% figure is based on the value of your investments when you are ready to make the withdrawal and is not a static number based on your savings when you retire. During periods of market volatility, your asset balances can fluctuate substantially, causing significant changes in the recommended withdrawal amounts. Market fluctuations are especially dangerous during the early years of your retirement, when it can be difficult to make up for market declines while you are withdrawing money from those reduced balances. If you aren’t able to overcome market declines, you could be forced to drastically change your retirement plans.  How can you ensure that your retirement savings will last a lifetime?  Consider these points:

• Annuitize a portion of your retirement assets. This will provide you with a definite monthly income for the rest of your life. Annuities can be purchased with or without inflation protection.  Since an annuity provides income for the rest of your life, it protects you from outliving your savings and from the risk that lower-than-expected investment returns will reduce your portfolio. Typically, the benefits will end once you (and your spouse if you elect joint benefits) die, although some annuities will pay a lump sum or periodic benefit to beneficiaries. Thus, it is important to understand that if you (and your spouse if you elect joint benefits) die at a relatively young age, your benefits may not equal the purchase price of the annuity. While you probably do not want to use all of your retirement assets to purchase an annuity, you may want to use a significant portion to purchase an annuity that will cover your regular monthly expenses.

• Withdraw conservative amounts from your retirement assets. If you limit your withdrawals to 3% or 4% of your balance, the assets should last for decades. At  least annually, reassess your retirement assets and make sure that your withdrawals are reasonable based on your current balances.  Market fluctuations can cause your asset allocation to get out of line, so you should rebalance at least annually. Even during retirement, you should allocate your assets among a variety of investment types, ensuring that your allocation is appropriate for your specific situation.

• Reach retirement with minimal expenses. Cut back on your living expenses before retirement, and try to enter retirement with as few debts  as possible. Mortgage and consumer debt payments consume a significant portion of most people’s income. Pay off those debts by retirement, and you can significantly reduce your cost of  living. This can have a two-fold impact on your retirement.  First, it frees up money to set aside for retirement. Second, you get used to a lower standard of living, which should also reduce the cost of your retirement lifestyle.

• Work as long as possible. While there is something very alluring about totally retiring from the work force, the reality is that a long retirement is very costly. Working a few more years can go a long way in helping fund your retirement. Those years are typically your highest earning years, so hopefully you’ll save significant sums during that period.  Also, every year you work is one year you don’t have to support yourself with your retirement savings. Once you are ready to retire, try to work at least part time during the early years of your retirement. That doesn’t mean you have to stay at your current job. You can find a totally different job or start a business. Even modest earnings can help significantly with retirement expenses. Please call if you’d like help planning for your retirement.

Copyright © Integrated Concepts 2012. Some articles in this newsletter were prepared by Integrated Concepts, a separate, nonaffiliated business entity. This newsletter intends to offer factual and up-to-date information on the subjects discussed, but should not be regarded as a complete analysis of these subjects. The appropriate professional advisers should be consulted before implementing any options presented. No party assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

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Long gone are the days when most employees worked for the same employer their entire careers. In fact, the U.S. Bureau of Labor Statistics reported recently that people born between 1957 and 1964 held an average of nearly 11 different jobs between the ages of 18 and 42.

That means millions of Americans have participated in more than one 401(k) or other type of qualified retirement plan. A good number of them maintain those 401(k) plans with their former employers. The alternative is to transfer accounts to your current employer’s plan or to roll the funds over to an IRA.  While there’s no law limiting the number of tax-advantaged accounts you can maintain, there are practical considerations in favor of rolling over your plan assets into a single account:

• It’s harder to execute an asset allocation strategy across multiple accounts. A key to getting the most out of your investments is a defined asset allocation strategy that matches your need for performance and your tolerance for risk. You achieve this by diversifying your portfolio across the basic asset classes and a number of sub-classes. When your portfolio is spread out over more than two accounts, it’s more difficult to monitor your asset allocation.

• Plans can change providers. Plan sponsors (employers) often change 401(k) plan providers as they try to maximize service  and minimize administrative expenses. This usually means a change in the plan’s fund choices that you need to evaluate. Also, if you don’t make your choices in a timely manner, the new provider will typically automatically place your funds in a low-risk alternative.

• Rebalancing is more difficult. Rebalancing involves restoring your portfolio to its planned asset allocation proportions by selling off some of the investments that are performing well and reinvesting the proceeds in your underperforming investments. The more investments you have in more places, the more transactions you have to execute.

• With more than one account, it’s harder to assess the performance. With fewer investments in fewer places, it’s easier to monitor their performance and identify how they’re doing compared to the markets.

•  You may reduce your expenses. Fees charged by 401(k) plan providers directly affect the returns your portfolio generates. If former employers’ plans charge more than your new one, you may be able to boost your portfolio return simply by consolidating your funds into one plan. There may also be very good reasons to maintain more than one retirement account. For example, rollover IRAs generally offer more investment choices and control than most 401(k) plans. Please call if you’d like to discuss this in more detail.

Copyright © Integrated Concepts 2012. Some articles in this newsletter were prepared by Integrated Concepts, a separate, nonaffiliated business entity. This newsletter intends to offer factual and up-to-date information on the subjects discussed, but should not be regarded as a complete analysis of these subjects. The appropriate professional advisers should be consulted before implementing any options presented. No party assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

In 1998, the Roth individual retirement account (IRA) was enacted. Instead of offering a tax break when you contribute, the Roth only allows after-tax contributions; and instead of subjecting retirement-age withdrawals to income taxes, qualified Roth IRA withdrawals are tax free.  The Roth IRA was an immediate hit among higher-income Americans, because it can generate more after-tax income for people who will be in a higher income tax bracket after they retire.

Ironically, the regulations that created the Roth IRA also limited its access by the people who could most benefit from it. In 2012, eligibility to contribute starts to phase out for single filers with adjusted gross incomes of more than $110,000 and disappears altogether at $125,000. For joint filers, the income limits are $173,000 and $183,000, respectively.

Starting in 2010, however, all taxpayers, regardless of income level, can convert from a regular IRA to a Roth
IRA. This gives higher-income individuals the means to effectively contribute to a Roth IRA, although it is not as simple as a direct contribution and gets more complicated when other funds are already in a traditional IRA.

Since 2006, though, many higher-income Americans have an alternative means of accessing the advantages of the Roth IRA: the Roth 401(k). There are no income limits to contribute to a Roth 401(k) account. However, not all plans offer the Roth 401(k) option. Some of the most important features of a Roth 401(k) plan include:

• Participants are limited to the same total annual contribution amount as a regular 401(k). In 2012, you can contribute a maximum of $17,000, plus a $5,5000 catch-up contribution for those age 50 and over, if permitted by the plan. However, your employer may set lower limits to comply with nondiscrimination rules.

•   Participants can split their contributions any way they want between a regular and a Roth 401(k) account.

• Employer-matching contributions are based on the total of a participant’s contributions to both kinds of accounts, but must be contributed to the regular 401(k) account.

• Withdrawals from Roth 401(k) plans must be taken after age 70½. However, funds in the Roth 401(k) plan can be rolled over to a Roth IRA, which would not require distributions.

Please call if you’d like to discuss Roth 401(k) plans.

Copyright © Integrated Concepts 2012. Some articles in this newsletter were prepared by Integrated Concepts, a separate, nonaffiliated business entity. This newsletter intends to offer factual and up-to-date information on the subjects discussed, but should not be regarded as a complete analysis of these subjects. The appropriate professional advisers should be consulted before implementing any options presented. No party assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

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Sure, you know you shouldn’t use your individual retirement account (IRA) for anything other than retirement. But sometimes you find yourself in a situation where it just can’t be avoided. However, if you’re under age 591⁄2 when you withdraw the funds, you’ll likely have to pay the 10% federal income tax penalty in addition to any income taxes due.

If you have a temporary need for funds, you can withdraw funds from your IRA for 60 days on a penalty- and income tax-free basis, as long as the funds are replaced by the end of the 60 days. You can also withdraw contributions from Roth IRAs on a penalty- and income tax free basis at anytime.

The 10% federal tax penalty is imposed to discourage you from using your IRA for other than retirement purposes. However, the government waives the penalty in certain circumstances:

• Distributions are made to beneficiaries after the IRA owner ’s death.
• Distributions are made to the IRA owner due to the owner ’s disability.
• Amounts distributed equal medical expenses paid in excess of 7.5% of adjusted gross income.*
• Distributions are made to certain unemployed IRA owners to pay health insurance premiums.*
• Distributions are made for up to the $10,000 lifetime limit for qualifying first-time homebuyer      expenses.*
• Distributions are made to pay qualified higher-education expenses for you, your spouse, your children, or your grandchildren.
• Distributions are made as part of a series of annual withdrawals in substantially equal amounts over the owner ’s life expectancy or the joint life expectancy of the owner and beneficiary.*

While most of these exceptions apply when used for a specific purpose, the last exception can be used for any reason. The Internal Revenue Service provides three different methods for  calculating the annual withdrawal amount — the amortization method, the annuity method, or the required distribution method. Each method results in a different withdrawal amount, so you can use the one that best meets your needs. If the amounts calculated exceed the amount you need, you can split your IRA into separate accounts and only withdraw from one.  Once you start distributions, you must continue withdrawing this amount for five years or until age 591⁄2, whichever is later. If you stop or change withdrawals before then, the 10% federal tax penalty will be retroactively levied on all distributions before age 591⁄2.

The only exception is that an Internal Revenue Service (IRS) Revenue Ruling allows a one-time irrevocable change from the amortization or annuity method to the required minimum distribution method. This change will lower the required distribution and provide for recalculation of the distribution amount every year based on market values and your life expectancy. However, the reduction can be steep and may leave individuals with insufficient distributions for their needs.  While you should make every effort not to use your IRA for anything other than retirement, there are situations where it can’t be avoided. In those cases, consider using one of the above methods to avoid the 10% federal tax penalty.  Please call if you’d like to review your specific situation.

* While distributions are exempt from the 10% federal tax penalty, these types of withdrawals from a Roth IRA are subject to ordinary income taxes on any earnings.  The other types of withdrawals are penalty free and federal income-tax free.

Copyright © Integrated Concepts 2012. Some articles in this newsletter were prepared by Integrated Concepts, a separate, nonaffiliated business entity. This newsletter intends to offer factual and up-to-date information on the subjects discussed, but should not be regarded as a complete analysis of these subjects. The appropriate professional advisers should be consulted before implementing any options presented. No party assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

Saving as Much as You Can

Are you contributing as much as you can to retirement plans? If you’re not funding the maximum amount possible, you could be missing out on a way to significantly increase your retirement funds. The limits are:

• Individual retirement accounts (IRAs) — The maximum contribution is $5,000 in 2011 and 2012. In addition, individuals age 50 and older can make additional catch-up contributions of $1,000 in 2011 and 2012. These limits apply to traditional and Roth IRAs. Annually, the lesser of either the maximum IRA contribution or earned income can be contributed. You can make a deductible contribution to a traditional IRA if you and your spouse aren’t participants in a company-sponsored pension plan. Active participants can make deductible contributions as long as their income is less than prescribed limits. All taxpayers, regardless of income or pension plan participation, can make nondeductible contributions to traditional IRAs. Roth IRA contributions, while not tax deductible, can be made by single taxpayers with adjusted gross incomes (AGIs) of less than $107,000 in 2011 and $110,000 in 2012  (contributions are phased out for AGIs between $107,000 and $122,000 in 2011 and $110,000 and $125,000 in 2012) and by married taxpayers filing jointly with AGIs less than $169,000 in 2011 and $173,000 in 2012 (contributions are phased out with AGIs between $169,000 and $179,000 in 2011 and $173,000 and $183,000 in 2012). Starting in 2010, all taxpayers, regardless of income level, can convert a traditional IRA to a Roth IRA, providing a means for taxpayers over the annual contribution limits to contribute to a Roth IRA.

• 401(k) plans — The maximum contribution to a 401(k) plan is $16,500 in 2011 and $17,000 in 2012. The catch-up contribution for individuals age 50 and older is $5,500 in 2011 and 2012.  Every year, analyze your contributions to ensure you are funding as much as you can. Please call if you’d like to discuss this in more detail.

Copyright © Integrated Concepts 2012. Some articles in this newsletter were prepared by Integrated Concepts, a separate, nonaffiliated business entity. This newsletter intends to offer factual and up-to-date information on the subjects discussed, but should not be regarded as a complete analysis of these subjects. The appropriate professional advisers should be consulted before implementing any options presented. No party assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

The tax law permits you to deduct home office expenses if you “regularly and exclusively” use an area of your home as either:

• Your principal place of business.
• A place to meet or deal with clients, customers or patients in the normal course of business.

These restrictions mean that no personal activities can be conducted from a deductible home office. If you qualify to take write-offs, you can deduct a proportionate share of expenses including mortgage interest, depreciation deductions, utilities, insurance, security systems and repairs.

The IRS often challenges home office deductions. To protect yourself in case of an IRS audit, keep good records. It also helps to take photos of the room to help prove it was used for business purposes.

Here are a few more tips concerning home offices.

• To figure the percentage of your home used for business, you can use the most advantageous of two methods — square footage or the number of rooms.
• Even if you don’t qualify for the deduction, you might be able to get a write-off for the expenses involved in storing inventory or product samples in a room in your home.
• Home office deductions can’t exceed your income. But if your expenses and deductions are greater, you can carry the loss forward to a future year.
• If a home office is required by an employer, it’s a good idea for the employee to get a written statement from the company explaining the requirement. Another option is to have the requirement included in an employment contract. To be deductible, the home office of an employee must be for the convenience of the employer.

Consult with your tax adviser if you have any questions about home office tax breaks.

Hoffman, Stewart & Schmidt, P.C  provides this information  for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.

Operation HOPE and Financial Beginnings empower youth and adults to take control of their financial futures.  We provide educational programs that incorporate all aspects of personal finance to give individuals from 4th grade to adult the foundation they need to make informed financial decisions.

Both programs are free, providing age-specific curriculum and activities designed to promote self-sufficiency, fiscal responsibility, and encourage active and educated participation in the banking system. Together, Financial Beginnings and HOPE have served over 35,000 youth at more than 100 schools across Oregon. They also serve at-risk youth by delivering their programs in partnership with dozens of social service agencies such as Open Meadow Career Connections and Innovative Housing Inc., among many others. Financial Beginnings and HOPE’s programs are taught by more than 500 trained volunteers, many of whom work in the local finance or business industries and supplement curriculum with their personal stories and career experience.

Damon Winter of Majestic Eagle joined HOPE as a volunteer presenter over three years ago.  He has taught at several schools and helped the organization raise close to $10,000 to help educate even more youth in our communities.

“It is through partnerships with people like Damon Winter that allows us to continue to educate and inspire our youth,” said David Bell, Senior Program Manager for Operation HOPE in Oregon.

For more information on Operation HOPE and Financial Beginnings go to www.operationhope.org and www.financialbeginnings.org.

I also want to take a moment and thank all of you who have referred your family, friends, and associates to us; your confidence in MEA is greatly appreciated.  A referral to MEA is the sincerest form of compliment and we want to thank you for those referrals through our Thank You Referral Program.

When one of your referrals calls us, we will ask them how they heard of us.  When your name is mentioned we will send you a $5.00 Starbucks gift card. In addition, you will be eligible for that month’s drawing of a $25.00 gift card AND be eligible for the quarterly drawing of a $50.00 gift card.  Every referral gives you another opportunity to win in the monthly and quarterly drawings!  It’s just our way of saying “thanks” for sharing your confidence in MEA with others.

We genuinely appreciate your business and look forward to working together for many years to come.

The winner of the $25.00 gift card for December was Jeri M. from Clackamas.  Our quarterly winner of a $50.00 gift card is Connie F., from Canby!

Thank you for your help and support!

Information security insurance may be a whole new animal for most small business owners. And in these recessionary days, every dollar spent has to be carefully scrutinized for its impact on the bottom line. Business owners focused on success are too busy to spend a lot of time thinking about their insurance needs. However, the savvy business owner who delves a bit deeper into how data breach exposures can impact their business will understand the value behind an information security and privacy insurance policy. The following three facts can help gauge the level of risk to small businesses.

First, identity theft is America’s fastest growing crime. It is fuelled by what’s known as “personally identifiable information,” such as consumer credit card data, social security numbers or employment information – facts that can help someone obtain credit in somebody else’s name. Although would-be thieves get this information by breaching the computer network security of companies big and small, smaller companies may be more at risk, since they don’t have sophisticated IT departments or procedures at work to keep hackers out. But it’s not only computer hackers who put data at risk . . . information can be compromised when an employee inadvertently leaves an unencrypted laptop behind at the airport, or an administrative assistant tosses sensitive information into the trash.

If a company touches or holds any customer data that can be used to steal an identity, it’s at risk.

Second, handling credit card information ups the ante substantially. Banks and financial institutions typically do not penalize consumers whose cards are used fraudulently or in an unauthorized fashion. However, they can go after whose information was stolen or jeopardized by a data security breach. Also, businesses that handle consumer credit cards are responsible for protecting that information and can be subject to state and federal notification laws in the event of a breach. They may face extensive fines from Attorney Generals or the Federal Trade Commission (FTC) for not reporting the potential breach immediately.

Thirdly, government regulations are tight . . . and getting tighter. When businesses think of insuring information security and privacy liability, they immediately think of legal liability. However, there are many other substantial costs to consider, many of them regulatory driven.

For instance, most states now require companies to notify customers or consumers whose data have been compromised or is even potentially at risk. Notification costs are significant. As a note, consumer notification is based on where the consumer lives—not the location of the business. Moreover, alerting customers or others of a breach can spur class action lawsuits.

Some of the government regulations out there is industry-specific, and other rules cast a wider net. To give you some examples:

• The Health Insurance Portability and Accountability Act (HIPAA) mandates confidentiality of healthcare information, and the High Tech Act widens the scope of privacy and security protections available under HIPAA to give healthcare providers an affirmative duty to notify consumers if information is breached.
• Graham-Leach-Bliley requires financial institutions to take action to maintain the confidentiality of data.
• The Red Flag Rules, being handed down by the Federal Trade Commission, will require certain entities that grant credit or are involved in the chain of custody of credit information with a creditor to have a program in place to “flag” situations that may indicate identity theft and to prevent incidents from occurring.

Once you understand the problem of identity theft and how it puts you at risk, the pronounced exposure arising from handling credit card information, and the challenging and potentially quite costly regulatory environment, be assured that there is a solution.

This article is prepared and edited by Beazley Group, and is published with the understanding that neither it nor the editors or authors is responsible for inaccurate information. The information set forth in this article should not be construed nor relied upon as legal advice and is not intended as a substitute for consultation with counsel. 2011 Beazley Group

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Many churches sponsor recreational activities during the winter months. A few safety tips can greatly reduce the potential for serious injuries. In recent years, the number of total injuries to skiers has declined, but the number of head injuries has stayed about the same. However, for snowboarders, both numbers have significantly increased.

The overall accident rate has tripled and head injuries have increased by a factor of five. One important factor is that children are more likely to experience a head injury and are participating in snowboarding in increasing numbers, especially for those between 7 and 11 years of age.

The Consumer Product Safety Commission has estimated that a helmet would have prevented or lessened the severity of two-thirds of the injuries associated with a fall. Falls are the leading cause of head and neck injuries.

In addition to helmets, skiers should also be encouraged to wear wristbands. Wrist injuries often occur as individuals stretch out their arms to break a fall. Sledding also requires careful supervision. Each year, serious accidents occur as the result of collisions with obstacles such as trees and with other children. Sleds can achieve high speeds and sleds with runners can cause particularly bad injuries. Makes sure that sled runs are clear and avoid the use of sleds that have runner blades.

If your church is planning a skiing, snowboarding, or sledding activity, be sure to

• Encourage participants to wear helmets.

• Encourage participants to wear wristbands.

• Instruct participants to maintain a safe speed.

• Instruct participants to stay on trails.

• Instruct participants to use trails for their level of expertise.

• Instruct participants to slow down at points where ski trails merge.

• Instruct participants to take regular breaks and not to ski when they are tired.

• Instruct supervisors to correct inappropriate behavior immediately.

• Instruct supervisors on emergency procedures in case of an accident or a health problem.

Copyright © 2010 by the author or Christianity Today, Inc.