Adapt First Investments, LLC

08/01/2023

The ROTH IRA

Following up on our previous education, we will now spend a few minutes on the Roth. We'll start with the Roth IRA. We'll tackle the ROTH 401K in another post so stay tuned.

Here, we contribute "after tax dollars" into the Roth IRA account. The account grows tax deferred and when you are over 59 1/2 and have the contribution(s) have been in the account for more than 5 years, you can take all of the money out tax free.

Wait, grow my account without taxes each year and then have the ability to take the money out tax free when ever I want, monthly, annually, in bulk for a new care, a second home, a unforeseen health issue or even your retirement vacations and I never pay taxes, it can't be!

Well, it is but. There's always a but! There are income requirements that you must meet and there are limits as to how much you can contribute. After that though, you are all set. Open the account, invest in appropriate investments for your situation and risk tolerance and away you go!

Wouldn't it be nice to have a portion of your retirement nest egg in an account that can come out tax tree, when the kids(tax deductions) are out of the house and the house (interest is tax deductible) is close to or completely paid off??

Few details to remember.

Prior to age 59 1/2 and/or the contribution hasn't been in the account for 5 years, you can always have your principal back if you need to withdraw monies but you may have to pay tax on any growth.

Be careful of opening an IRA account like this at the banks. If they have an advisor, fine, but if they advertised "IRA Rates" they are referring to using cd's as your investments, which, for many, may not be the best investment choice for this account.

There are no RMD (Required Minimum Distributions) on a Roth either like there are on Traditional IRA's. You control all withdrawals of your money.

Many times, Roth IRA's can even be used to reduce the taxes owed on your Traditional IRA withdrawals. Obtain the income tax tables, determine your income need, then take the appropriate amount from the Traditional IRA (100% taxable) and the rest from the Roth in an attempt to keep you in a lower tax bracket.

Ta da! Now the Roth is saving you taxes on your Traditional IRA savings...brilliant planning my dear Watson!

Ever a question, reach out to me, your advisor or a tax professional to get the advice you need.

As always, start early, invest often and pay yourself first...in the correct accounts with the correct priority!

Happy investing.

04/20/2023

Traditional vs Roth 101
Far too often I have seen folk's not utilizing IRA's and 401K's properly and with the recent significant changes to the Traditional IRA, I think it's time for a little education.
Over the next few weeks, I will explain both the Traditional and the Roth IRA as well as the same Traditional vs Roth concepts within your 401k's at work.
From this tutorial, people should be able to ensure they are correctly utilizing these tools to improve their own retirement as well as keeping more money in your own hands during retirement, your family's pockets at your passing and a lot less going to Uncle Sam.
This will also the number question I get from people which is "Where should I be saving my money?"
Sound fair?
Keep an eye out for these posts and by the end, you'll be feeling excited that you can save properly and with confidence.

02/28/2023

It's not too late to make your Traditional or Roth IRA 2022 contribution! The deadline to make last year's contribution is April 15th, 2023 although it is advised to plan for the contribution in advance.
If you are under 50, the maximum limit is $6,000 and $7,000 if you are over 50.
FYI: both of these limits increase by $500 in 2023
Be mindful of the income limits in order to make your full contribution.
For 2022, the income limits are as follows:
Single $144,000 with phase out beginning at $129,000
Married $214,000 with phase out beginning at $204,000
Ask your tax advisor and/or financial advisor for advice as to which IRA you should be contributing to.
Happy saving everyone!

02/02/2023

Emergency Money:
We all should have money on hand for different emergencies, unexpected job changes or spending items. This allows us to handle those situations without having to reach into retirement accounts and pay penalties or taxes.
The amount to keep in emergency is based on one's own situation but one guideline routinely used may include 3 to 6 months of net income.
Where to put your cash? Unfortuantely our local banks are hesitant, to say the least, to raise savings rates as interest rates have increased however we have found that online banks have done a much better job at this. We are seeing these online banks offering over 3% which, when compared to your local bank, may be worthwhile.
As an example, say your emergency number is $50,000 and you moved from a .10% account to a 3.10% online account, and that rate stayed level for the year, that would equate to an additional $1,500/year or $125/month simply by taking advantage of better rates. You can keep your current bank relationships, simply move some or the bulk of your emergency monies online.
It's not for everyone but if it is, simply find a bank you feel comfortable. I have a few I can suggest as well.
As always, reach out if you have any questions.
George Kitchen
Investment Advisor
Adapt First Investments, LLC.

01/18/2023

SECURE 2.0 is here!!! So, what’s in it?

Setting Every Community Up for Retirement Enhancement (Secure) 2.0 Act of 2022 is now law, however, with any law there are still numerous steps and different iterations before they become enacted.
This is just a quick note describing some of the more important changes possibly on our way and is meant as a way for everyone to identify any changes that may impact them.
- Automatic Enrollments – Employers will be required to automatically enroll all new employees into their retirement plan ie. 401K at a contribution level of 3%
- 62 to 64 years old will be able to contribute an additional 10K per year to their 401Ks and IRA catch up provisions for folks over 50 would be increased due to current inflation levels starting in 2025
- If you are currently paying off student loans AND you are NOT contributing to your 401K, you would receive matching retirement contributions made by your employer up to a certain salary % into your 401K
- RMDs for seniors will increase again. The specifics are not clear yet but would impact most 72+ seniors in 2023. The latest I’ve read is age 73 in 2023 and age 75 by 2033. The incredible 50% penalty for folks who do not make their RMD withdrawal(s) will also be reduced to 25%, 10% if corrected in a timely manner
There is a little bit of change for a lot of folks so be sure to read up more on any pieces that may impact you or your family and be sure to reach out to your financial advisor, CPA etc to obtain the specifics.
Keep in mind the specifics regarding years implemented and specific numbers and percentages may change.
I hope this helps.

05/02/2022

Tired of the bank model of giving you the LOWEST interest rate necessary to keep you, then using YOUR money to offer higher interest rate mortgages, car loans and credit cards products to others?
Tired of rising inflation eating away at your purchasing power? Chomp! Chomp!

Here at Adapt First Investments, LLC I work with my clients to develop a cash program taking advantage of several cash alternatives that are available.
One I will share with you today is I Bonds. What, give my money to the government? Yes!!
I Bonds are a safe place to park some money (10K max per person per year) and receive a favorable rate of return, currently 7.12%! New rates coming soon for May 2022.
As with all investments, educating oneself on any investment and identifying all of the risks associated, is very important, so please read all of the particulars.
I bonds are purchased through the enclosed link. Good luck and let me know if you picked some up. I would love the feedback!

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03/01/2022

A successful retirement
When you hear this phrase, it may meet some with a smile, puzzle some others and frustrate many due to the overwhelming thoughts that come to mind. I have no idea, I never think about it, too far away and heck, I'll never make it are thoughts that may come to mind for those that struggle in this area. We will break this down and see what we can do to help those that are sneering and jeering right now.
First, we must picture what we want our retirement to include. Are you traveling the globe each month or staying put and spoiling the grandkids? Is there an ocean or mountain house you would like to include or a relocation to "settle down" in your future? The first step in creating a successful retirement is to do just that, create it.
Talk about it with loved ones, picture it, dream about it, pray about it and then after enough soul searching, write it down. What do "they" always say? "Written goals have a way of transforming wishes into wants, cants into cans and dreams into plans."
We may spend decades in retirement, let's make them some of the best years of our lives. The more detailed your plan is, the easier it will be in future steps we will be taking to achieve our plan. So, let's get to it!
Next time we meet, we will roll up our sleeves and begin to quantify our plans and then begin developing our plan to reach our, now, written goals so we can live our best retirement. This is when the real work begins. In the interim, enjoy the dreaming, wishing and wanting step. We all deserve our best life.

Least I forget about my last post about your estate documents? Did you think about it and then simply dismiss it like most others do? Or better yet, you took the advice, got it done and are now basking in the peace of mind this exercise brings? If so, good for you!! If not, get off your keister, take the appropriate actions to get your "affairs in order". After all, it's not something that can be done after the fact.

Till next time,
George

12/29/2021

As we near another year end and the thoughts of New Year resolutions are top of mind, may I take a minute of your time and suggest one of my own for you and your family to consider?
The resolution to consider is Estate Planning.
I know what you are thinking. What is wrong with this guy? I get it.
Let me make an argument for getting this done this year. I know we don't wake up thinking "Hey, what a great day to get my will done!"

Peace of mind.
By obtaining the proper documents, which usually include a will and a couple of POAs, you can rest comfortably knowing your affairs are in order.
Gift to your loved ones
Having an estate plan in place, allows loved ones to know what to do and who/where to turn to at the right time to prevent family issues, uncertainty and errors from occurring.
Avoid Probate
Probate is a public, lengthy and costly process which can be avoided in most instances.

Being a financial advisor for almost 20 years, I have seen numerous cases in which proper steps had not been taken and is why I have had my estate in order since my late 30's.

If you have any questions as to how to get this done, feel free to reach out to me directly.
Happy New Year to all and hopefully, 2022 will be the year you tackle this very important issue.