Transcript TAX-SMART INVESTMENT STRATEGIES
FINANCIAL CONSIDERATION$ DURING TRAN$ITION
Presented by:
Lisa M. Gabriel, CFP ®, ChFC ® President & CEO, Pinafore Wealth Counsel, Inc.
DON’T PANIC!
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Make a plan – financial strategies, key moves and decisions can make the difference.
FIRST STEPS……
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Promptly file for unemployment insurance Handle severance package with care Maintain health insurance Continue life and disability insurance Map out priorities
MAKE A FINANCIAL SURVIVAL STRATEGY
SURVIVAL BUDGET
Sources of income
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Severance pay
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Unemployment benefits
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Cash from emergency fund
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Working spouse’s income (decrease tax withholding)
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Temporary work/freelance
SURVIVAL BUDGET
Age 62 or older?
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Social Security (Earnings limit $15,480) Other Cash Sources (come with limits and consequences)
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Cash value of life insurance
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Home equity
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Reverse mortgage (62 or older)
SURVIVAL BUDGET
Think Outside the Box:
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Collect on loans you have made
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Ebay?
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Barter
SURVIVAL BUDGET
List expenses in order of priority
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Mortgage/rent
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Groceries/utilities
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Student loans
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Car payments/transportation
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Job search expenses
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Reduce discretionary expenses
STUDENT LOANS
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Income-based repayment Student loan forgiveness program
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Public Service Loan Forgiveness
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Only applies to Federal Direct Loan Program
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Must make 120 on-time, monthly payments (10/1/2007)
NC Foreclosure Prevention Fund
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Meet Robert Sherwood www.ncforeclosureprevention.gov
1-888-623-8631 “If you qualify, the NC Housing Finance Agency will make your mortgage payment directly to your loan provider or bank.”
NC Foreclosure Prevention Fund
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Job loss, divorce, illness
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0% interest up to $36,000
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If you remain in home, loan is forgiven at end of 10 years
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Special program for Veterans
SURVIVAL BUDGET
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Reduce contributions to retirement or educational savings accounts Consider government or private assistance Talk to your family
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Adjust expectations
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Teachable moment
MANAGE DEBT
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Avoid using credit cards Contact creditors – renegotiate Sell collateral (car, boat) Consolidate debts – carefully Credit counseling service
800/338-2227
YOUR CREDIT SCORE
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Review your credit report and score www.annualcreditreport.com
www.creditkarma.com
Ways to improve your credit score Correct any inaccuracies Higher scores = lower premiums for auto and homeowners insurance
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Retirement Plan Decisions
If you have a loan against your 401k it must be repaid per plan document
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If not repaid, it is treated as a withdrawal taxable income and if you are under 59 ½ a 10% early withdrawal penalty is assessed Consider rolling 401k into IRA Rollover
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You control custodian and investments Review beneficiary designations
Retirement Plan Decisions
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Withdrawals are taxed as ordinary income for the year in which you make the withdrawal. Also, you may have to pay a 10% penalty tax for early withdrawal if you're under age 59½ unless an exception to the penalty applies.
Tip: If you're considering taking funds from your IRA or retirement plan, you should consult a tax advisor regarding the specific tax treatment of your withdrawal.
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Retirement Plan Decisions
Consider a Roth Conversion for part or all of a 401k/403b if your income permits
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If you have a State 401k/403b
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You may qualify for the “Bailey” provision
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Beneficiary IRA’s no longer bankruptcy protected unless State exemptions apply
Investment Decisions
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Stock options to exercise?
Review asset allocation Roth IRA conversion Avoid short-term or risky investment strategies Don’t become a day-trader
STAY HEALTHY!
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Eat healthy foods Exercise Limit alcohol Seek support
REEVALUATE
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Network/NetWeave Be flexible
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Relocate?
Invest in yourself – reassess your career or consider additional job training Reestablish life goals Have faith, volunteer and help others
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WHEN YOU RETURN TO WORK Celebrate – hug your loved ones Assess current financial situation Create a new budget
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Start saving and tackle debt Rebuild emergency fund Catch-up on retirement savings Get a check-up – good health is one of your greatest financial assets
Questions?
THANK YOU!
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Presented by:
Lisa M. Gabriel, CFP ®, ChFC ® President & CEO, Pinafore Wealth Counsel, Inc.