YOUR WEALTH CONNECTION
Tips for Keeping Your Resolutions This Year
It’s the start of another year, and with the changing of the calendar comes the desire to set new goals.
While many people make New Year resolutions, few follow through. According to Statista, only 4 percent of those who put up plans and promises accomplish all they set out to do; 8 percent meet most of their goals, and 16 percent meet some. It’s not encouraging.
So how can you increase your chances of success? We’re here with tips to help!
1) WRITE DOWN YOUR GOALS
Inc. magazine reports you are 42 percent more likely to achieve your goals if you write them down.
It not only forces you to get clear on what you want to accomplish, but it also motivates you to complete the tasks necessary for your success.
The process of putting your goals on paper forces you to strategize, ask questions about your progress and brainstorm a plan of attack.
2) IMPLEMENT A PLAN TO ACHIEVE YOUR RESOLUTIONS
For example, let’s say you want to get your house cleaned by the beginning of spring. If you were to schedule two rooms a week, you are taking one step at a time — and your goal is now manageable.
3) RECOGNIZE SMALL WINS
Small wins help us track the incremental steps involved in achieving much larger goals.
A person who has smoked for years can decide to stop, but the actual process of quitting might not be as straightforward. However, every time they turn down a cigarette or resist the urge to buy a pack, it signifies growth.
As we stack up small wins, we create a constant source of motivation and build confidence.
4) KEEP YOURSELF ACCOUNTABLE
Holding yourself accountable is important because it allows you to prioritize your goals and better understand why you have them. It also can help you learn how to manage your time and produce better results — and fulfilling your obligations makes you feel more confident throughout the day!
It also helps to have a partner. Research shows having a specific accountability partner boosts your chance of success to 95 percent.
5) REWARD YOURSELF
There will be an inherent sense of satisfaction when you have achieved your New Year’s resolution, but why not give yourself a prize, a reward when you have checked that box? It’s an accomplishment, and you deserve to celebrate it.
You won’t be perfect. At times, life will get in the way. That’s OK. But if you keep coming back, persistence can take you further than any other quality alone, and you’ll see success.
Disclaimer: This article was prepared by Horsesmouth, LLC, and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note — investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting, or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax, or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service and should not be relied upon as such.
January is a Good Time to Begin Estate Planning
According to a recent study, almost half of Americans say money is the most challenging thing to talk about — harder than death, politics, and religion.
But when families don’t talk about estate plans, misunderstandings happen.
With no specific directions on what to do after you’re gone, family members may be left fighting each other over property, accounts, and investments.
January is a new start, and there’s no time like the present to open yourself up to the hard questions about money and your departure.
Also, the pandemic has heightened awareness of how important it is to think things through and have a plan that articulates your wishes about how your assets will flow — and who is to handle your affairs if you are not able to do so yourself.
To that end, here are important estate-planning moves to consider:
Up-to-date beneficiary designations
Your beneficiary designations determine who inherits retirement plan accounts or life insurance, even if your will says otherwise.
For example, your former spouse could inherit the money if you don’t update your designations after a divorce. So it’s a good idea to make sure your beneficiary designations are up to date every few years.
You may also need to update your beneficiary designations as laws change. For example, in 2020, the SECURE Act changed the rules for IRA beneficiaries. In the past, non-spouse beneficiaries could spread out required minimum distributions for inherited accounts and keep the money growing tax-deferred.
Under the new law, non-spouse beneficiaries must withdraw all money from an inherited IRA within 10 years. So you may want to reconsider your beneficiary designations with new rules in mind.
A durable power of attorney (or health care proxy)
This authorizes someone to handle matters such as finances or health care on your behalf if you become incapacitated.
Durable powers of attorney help you plan for medical emergencies and declines in mental health and help to eliminate confusion and uncertainty when tough decisions need to be made.
A will
If you want any of your assets to go to an unmarried partner or other people, or if you’ve been remarried and have a blended family, it’s crucial to have a will that spells out who you want to inherit the property. A will also lets you specify who will administer your estate as executor or personal representative.
A living will
This lets you specify your wishes for end-of-life treatment. For example, whether you want to be resuscitated or intubated or want life-sustaining treatment.
A plan for long-term care
Often, a plan is about balance, weighing the kind of care you expect and the risks you might face. The other part of preparing is figuring out how you may pay for the cost of care — through savings, long-term care insurance, or planning that may help you ultimately qualify for Medicaid.
Keep in mind all of these steps take planning, and you won’t have as many options if you wait until you need the care.
Also, it’s a misconception that you need a lawyer to draft estate plan documents. If your family and financial situation are relatively simple, you can prepare many of these documents yourself at little or no cost.
Hilltop Wealth & Tax Solutions can help if you’re unsure how to begin. Many of our client meetings start with a question like, “What’s going on in your life?” Understanding your goals and the legacy you hope to build for your family allows us to tailor a plan to help you achieve those aspirations.
On that firm foundation, you can begin a dialogue with your family about long-term planning rather than waiting for a time of crisis. A shared plan gives all your family members a sense of empowerment and the comfort of knowing that you’re leaving nothing to chance.
Disclaimer: The material shown is for informational purposes only and should not be construed as accounting, legal, or tax advice. Hilltop Wealth & Tax Solutions is a registered investment adviser with the Securities and Exchange Commission; registration does not imply a certain level of skill or training. While efforts are made to ensure information contained herein is accurate, Hilltop Wealth & Tax Solutions cannot guarantee the accuracy of all such information presented.
Stocks are Risky, But Avoiding Them is Risky, Too
How Inflation May Impact Your Tax Bill
Inflation hit a 39-year high in December. Borrowing rates are due to rise, too, with the Federal Reserve saying it expects a series of rate hikes this year to combat the growing cost of living.
While the IRS boosted federal income tax brackets for 2022, standard deductions, 401(k) plan limits, and other provisions remain unchanged.
“It’s a way of phasing in tax increases,” says Partner and Accountant Kimberly Williams. “For instance, capital gains taxes haven’t changed since 1997, and median home sales prices have more than doubled over the past two decades.”
For example, couples who file together and sell their primary home may exclude up to $500,000 of profit from capital gains taxes ($250,000 for single filers), provided they meet ownership and use tests. But tax exemptions on long-term capital gains have declined in value over time.
Click here for details on long-term capital gains taxes and rates for the 2021 and 2022 tax years.
The thresholds for taxes on Social Security benefits have also stayed the same for decades. Currently, up to 85 percent of your benefits are taxable if your income is more than $34,000 (individual) or $44,000 (couple).
Say you file individually, have $50,000 in income and get $1,500 a month from Social Security. You would pay taxes on 85 percent of your $18,000 in annual benefits, or $15,300. However, nobody pays taxes on more than 85 percent of their Social Security benefits — no matter their income.
The Social Security Administration estimates that about 56 percent of Social Security recipients owe income taxes on their benefits.
“The intent seems to be to have more Social Security benefits taxable over time,” Williams says, “to slow the depletion of the Social Security trust fund — which many rely on for retirement income.”
Inflation is a top issue in our work with clients. If you would like to talk about steps you can take to protect your wealth and assets during times of rising prices, Hilltop Wealth & Tax can help.
Disclaimer: The material shown is for informational purposes only and should not be construed as accounting, legal, or tax advice. Hilltop Wealth & Tax Solutions is a registered investment adviser with the Securities and Exchange Commission; registration does not imply a certain level of skill or training. While efforts are made to ensure information contained herein is accurate, Hilltop Wealth & Tax Solutions cannot guarantee the accuracy of all such information presented.
Real or Fake? The January Newsletter Quiz
The financial facts below are based on actual events — but one point isn’t correct.
Without further ado, we reveal the answers!
Real or Fake:
Warren Buffett made 99 percent of his nearly $117 billion fortune after age 52. As much as $72 billion of his wealth came after he turned 65.
REAL
Medium reports Buffett started his financial path towards wealth at age 11 and built his fortune slowly.
Real or Fake:
Until the laser printer was invented in 1969, individual banks could create their own money.
FAKE
ofBut, before the Federal Reserve was founded by an act of Congress in 1913 to control the supply of money and order currency from the U.S. Treasury Bureau of Engraving and Printing, private banks could issue money backed by federal bonds.
Real or Fake:
In the 1980s, the settlement of stock trades could take more than a month.
REAL
Whenever you buy or sell a stock, bond, or mutual fund, there are two important dates to understand — the transaction date and the settlement date. “T” is the transaction date. The abbreviations T+1, T+2, and T+3 refer to security transactions that occur on the transaction date — plus one day, two days, and three days, respectively.
When shares were traded in physical form in the 1980s, the settlement of trades could take over a month. After introducing electronic matching engines in the mid-1990s, the process was reduced to 14 days. Now it typically takes one to three days.
Real or Fake:
In 1944, the top tax rate peaked at 94 percent on income over $200,000 (that would be on income over $3.1 million today).
REAL
During World War II, the rate had reached 94 percent on income of more than $200,000. It dropped down to 91 percent in 1946 and remained there until President Kennedy cut taxes in the early 1960s.
Disclaimer: The material shown is for informational purposes only and should not be construed as accounting, legal, or tax advice. Hilltop Wealth & Tax Solutions is a registered investment adviser with the Securities and Exchange Commission; registration does not imply a certain level of skill or training. While efforts are made to ensure information contained herein is accurate, Hilltop Wealth & Tax Solutions cannot guarantee the accuracy of all such information presented.