Even during difficult financial times, opportunity can come knocking at your door. There is very little doubt that the current COVID19 pandemic has wreaked havoc on the U.S. economy, affecting almost every individual in its path. With that said, certain events have made 2020 the year to strongly consider converting any eligible investment accounts into a Roth Individual Retirement Account? 

Does a Roth Conversion Make Sense for Retirees? 

 Under normal circumstances, the conversion of a traditional IRA to a Roth IRA would make little sense for retirees with other sources of income. They would be required to pay taxes on the conversion amount as they take pretax dollar contributions and convert them into a Roth IRA, where contributions usually are taxed upfront with no tax obligation upon withdrawal. 

 Thanks to the CARES Act, a waiver has been issued for retirees, waving the requirement for the mandatory retirement distributions they would have to take in 2020. They can use that waiver as an opportunity to convert their normal annual distributions from other IRAs and 401K accounts into Roth IRA contributions without having to pay the taxes normally associated with doing so. That adds to tax savings on the amount converted based on the individual’s applicable tax rate for 2020. 

How High Earners Can Benefit From Roth Conversions 

 Under normal circumstances, a Roth investment would offer little value to high earners. Anyone making over $139,000, or $206,000 if married and filing jointly, would not be eligible to benefit from a direct investment in a Roth IRA. This rule also applies to anyone who has no reported income. 

 However, there are a couple of ways high earners can benefit from a Roth conversion in 2020. First, it’s worth noting that President Donald Trump signed a tax bill in 2017 that slashed U.S. tax rates to its lowest levels in decades. This offers high earners an opportunity to take the tax hit on conversions at 2020 rates, knowing the future income they will earn from their Roth investments will be tax-free when taking distributions during retirement. 

 The benefit will be realized if tax rates are higher in subsequent years, which is entirely possible if Trump loses the 2020 election. With the country closing in on $27 trillion in National Debt, a new administration would undoubtedly consider increasing tax rates across the board. That would leave 2020 as the last year a high earner could take advantage of current tax rates under this particular scenario. 

 Second, there is a “trick” high earners can use to get access to a Roth IRA. By law, there are no current income restrictions on contributions someone can make to a traditional IRA. There are also income limits or earnings requirements related to Roth conversions. Strategically, they could invest in a traditional IRA and subsequently convert that amount to a Roth. That would leave them with future earnings that would not be subject to income tax. Investment experts refer to this strategy as a “backdoor” Roth IRA. 


As indicated in the opening paragraph, we are living in extraordinary times. As an investor preparing for retirement, it is incumbent on you to stay abreast of opportunities that might arise to give you certain tax advantages. 

 As Congress contemplates how to keep the U.S. economy from flatlining, there will likely be more favorable tax legislation coming out in the next few months. Under the right circumstances, investment options like Roth IRAs might become more appealing. This is the time to keep your eyes open for good opportunities to take advantage of difficult times. 

Estate Planning & Unpaid Debts

by Suzanne Powell

When we pass, there will be debts that are left unpaid, even if we stay caught up with our financial obligations. At the very least, the medical bills accrued towards the end of life and any bills that can end up delinquent as a result of illness. There are more ways you’ll leave unpaid debts behind after you die, so knowing how to prepare for them in advance with a proper estate plan is essential.

What Happens at Probate?

When someone dies, their estate goes through the probate process. This process can take anywhere from a month to up to two years. The length of time your estate remains in probate will depend on a variety of factors, including the laws of your state and the number of creditors seeking payment. A larger number of creditors, or a more significant overall claim against the estate, will prolong this period.

During probate, the estate is used to pay off death taxes and debts. If there isn’t enough cash to cover these obligations, items in the estate, such as valuable works of art and real estate, may be sold to cover the remaining amounts owed. Once taxes and debts are paid, the probate process ends with the executor satisfying the terms of the will by providing heirs with their inheritances.

Which Assets are Protected?

You may be concerned that cash or personal items you intend to leave to your loved ones will be liquidated and used to satisfy your debts. There are many ways an estate planning attorney can help you sidestep this situation and protect the inheritances you want to leave for your spouse, children, or others.

First, it’s essential to know that life insurance policies, retirement funds, and similar investment tools are separate from your estate. Upon your death, the value of these accounts will be passed to the beneficiaries you name in each document. Since these assets aren’t named in the will, they aren’t a part of the probate process.

You can also ask your estate planning lawyer to help you draft a living trust. The living trust is a private document that doesn’t become a part of the probate process, so it helps protect specific assets from being liquidated. You can include real estate, personal assets, or family heirlooms in the living trust to keep them within the family and ensure that your loved ones receive what you intend to leave for them.

What Can You Do About Unpaid Debts?

Some debts will automatically pass to your spouse upon your death. Primarily, this includes loans, mortgages, and credit cards that name your spouse as a co-owner on the account. Once you die, your spouse will be responsible for taking over these financial responsibilities until they have been repaid. Typically, the only option in eliminating these debts is to write a letter to each creditor, explaining that there has been a death and asking for debt forgiveness. This type of request isn’t always approved, but it can work in some cases.

If you have children in college, you can trust that their student loans won’t place an extra burden on the family. Federal student loans and Parent PLUS loans are forgiven upon the death of a parent, or if the student passes away. This ensures your children won’t be saddled with that debt, while they’re coping with the grief of loss.

Every person’s situation is different, requiring different estate planning tools. When you visit a lawyer skilled in probate and estate planning, they can tailor a plan to take your specific concerns into account. A good estate plan will help you ensure your family and your assets are protected after you’re gone.

If COVID-19 has impacted you and you’re closer to retirement than some, read through these tips to see what you can do to overcome the obstacles placed in front of you by the ongoing pandemic.

Check Your Savings

Check your savings account to see how much money you have. It’s a necessary exercise to ensure you have enough in your account to last your entire retirement. It would be best to verify you have more than you need. 2020 has shown you never know when you may face an emergency during your retirement.

Be proactive, don’t be surprised when your savings gets low. Find out if you have enough money to retire now! Will your savings last if you live into your 90’s? Take the time to look through your savings account properly. This way, you can avoid problems in the future.

Consider Freelance Options

Most people will try and find a job after they get laid off, but working isn’t an option for everyone. Consider looking into freelance or remote jobs you can do to create cash flow while looking for something more stable. This way, you can create a stream of income without relying on your savings to survive.

Remember, the internet provides multiple ways for you to turn your hobbies or skills into freelance opportunities. For example, you can take advantage of the “gig economy,” including food delivery, grocery delivery, or at home call center support jobs. If you feel you still have time before you retire and want to keep busy (and income coming in), check out the freelance world and see if you can make some money through it.

Look Into Businesses and Stock

Remember, you don’t need to work at a job to make money. Depending on your financial situation, you could either create a business or purchase stock to make some money before entering retirement. This way, you can work on the best schedule for your situation and look for ways to make money through these avenues.

Creating a business can be difficult, but it can be an excellent opportunity if you approach it correctly and know how to market. On the other hand, stocks can help you make money, but there are some associated risks, just like businesses. It comes down to deciding if either of those risks will be worth the potential rewards you could gain.

You may face some struggles if you get laid off right before you retire, but you can still try and make the most out of the situation. It comes down to assessing your current position and then looking for ways to overcome it. Let me know how I can help!

After months of desolation at the airports, air travel has increased every week, leading into the busy summer vacation season. With full flights becoming the norm, it is more challenging than ever to socially distance on planes, making it increasingly important to take additional precautions.

Mask Up: The number one thing you need to remember before heading to the airport is to mask up. Most airlines and airports now mandate the use of masks. It is a good idea to bring along a few different masks to switch out as necessary. If you are boarding a long flight, you should also try wearing your mask at home for a few hours before the trip to find the type that is the most comfortable for your needs.

Go Digital: Now is the time to make sure you are using the power of technology as much as you can. Start by downloading your airline’s app. From here, you can access flight information as well as your boarding pass. This step will eliminate having to exchange papers with airport employees. For further protection, consider downloading an electronic wallet app to pay for your purchases during the trip. For every contactless interaction that you initiate, you will lower your risk of contracting the virus.

Bring Your Own Supplies: Traveling during a pandemic necessitates that you come prepared. Do not count on the airport or airline having the supplies you need for a safe travel experience. Hand sanitizer is your best friend during this health crisis. Be sure to keep the sanitizer accessible at all times so that you are not left without it. For example, take a small bottle with you in your purse or carry-on bag and your suitcase.

You should also bring antibacterial wipes on your journey. Although the airlines have stepped up their sanitizing efforts on their aircraft and in the boarding areas, it does not hurt to do quick cleaning with your supplies. When you sit down in your seat, you can use the wipes to clean the seat, the tray table, and any other area that you will touch.

Wear Glasses: One of the most significant vectors of transmission is touching your face with your hands. Many people do not even realize how much they touch their faces because it is such a subconscious reflex. Wearing glasses may serve as a natural reminder to not touch your face. This will also further decrease the risk of being infected through the eyes.

Pack Food and Drink: As a result of the health crisis, many airlines have drastically cut their in-flight food and beverage service. Additionally, many terminal kiosks and food vendors are not operating at this time. Packing your own food is also more sanitary than consuming items that have been passed around many hands.

Be Mindful of Distance: There is not much that you can do if you are booked on a crowded flight. However, you can mind your distance while in the terminal building. Even during a pandemic, passengers are crowding the boarding area to get on the plane. Do your part by standing away from the crowd and waiting until the people disperse before you board.

While you cannot put yourself in a bubble while flying, being intentional about following these tips will incrementally reduce the risk that you contract the virus and inadvertently pass it on to others.

The current economic crisis was unexpected, but it hit quickly. Within a month, the stock market lost about a third of its value. Many investors were hit particularly hard. As states mostly locked down, many workers saw their jobs evaporate without much warning. Some of these layoffs were temporary. Unfortunately, many people are still out of work. One thing is clear, the rapid decline in the ability of many Americans to pay their bills teaches valuable lessons.  

Emergency Funds Are Necessary 

 First, having a fund for rainy days is extremely important. It will rain eventually, and having the ability to weather the storm is a necessity. This means you need to save up an old-fashioned emergency fund that can pay your bills if there is little or no income rolling in from a job. Fortunately, many Americans were able to access enhanced unemployment benefits, but this is not a given for the next financial crisis. Most experts recommend having at least three months of your necessary expenses stashed away, but having even more saved might help you sleep better at night. Having six or 12 months available when necessary can alleviate a great deal of financial stress.  

Debt Adds Stress

 Having debt is stressful. A mortgage might make sense because you’d have to rent otherwise. However, other debts, like student loans or credit card debt, can cause stress when things are going great. If you are unable to pay those debts due to an unexpected job loss or a drop in income, your stress level will increase. Once things return to our new normal, you’ll want to start working on your debt to provide more flexibility in your finances.  

Build Margin

 To pay off your debts quickly and build up an emergency fund, you’ll need to have margin. The same is true if you’re looking to invest for long-term wealth. You cannot spend everything you make every month and expect to get ahead. Building margin will likely require writing out a budget and cutting back enough to start putting money away for long-term goals. The more margin you’re able to build up, the higher your level of financial flexibility. Over time, many have been able to become financially independent by building high levels of margin into their household finances.  

Build Multiple Income Streams

 If 100% of your income comes from a single job, finding yourself suddenly unemployed would be detrimental. If your financial stability is left to the whim of your employer, and an economic downturn could lead to a severe crisis in your household. Adding a side hustle or a second job only helps you build margin, but would also help you weather an economic storm. If you can invest and start bringing in a stream of some dividend income, you’ll be in better shape should you lose your job.  

Keep A Long-Term Focus 

 Investing during a quick market downturn can kick your blood pressure up a few points. The recent volatility in the stock market caused some people to bail. You’ll want to remember that investing in the market is a long-term game. You might lose some money on paper in the short run, but you’re likely to see your nest egg grow over the long haul. Selling in a down market means you’ll lock in a loss. 

 The current financial crisis has led to worry. The fact that it’s tied to a global pandemic makes it even more frightening. Despite the deep concern in the immediate term, let’s chat and develop a plan for the future. My inbox and phone line are always open. 

When it comes to retiring early, some of the benefits are obvious. You get to live your life without the constraints of work, and you can pursue your own interests. There are other good reasons for retiring early, and there are some reasons why retiring early is not the most excellent idea.

Your Dedication is Gone

One of the right reasons to retire early is that you are simply not dedicated to working anymore. When you are no longer emotionally interested in working, your performance deteriorates, and your company suffers. 

Working Took its Toll

In some professions, the physical and emotional demands of the job can become too much over time. For example, laborious and dangerous careers such as law enforcement and construction can cause wear and tear on the mind and body. After a few years in a high-risk profession, your body and mind have had enough, and it is time to go home and rest.

Your Finances Become More Flexible

Most people do not realize how expensive it is to work until they are no longer working. When you work any job, you incur expenses such as wear and tear on your car, transportation expenses such as gas or bus passes, work clothing costs, daycare, and miscellaneous medical costs for work-related injuries. If you have planned your finances to allow yourself to retire early, then you will find that your money goes much further when you are not working.

Your Health Could Suffer

For some people, retiring early means abandoning the daily physical activity working required and giving up a big piece of their identity. Retiring early can cause physical and mental problems that could become very serious over time.

You Lose Your Social Circle

After years of working, you tend to take for granted the notion that you will see most of your friends at work five days out of the week. Even people who think that the people they work with are only acquaintances suddenly find that the loss of the social circle they developed at work is devastating.

You Didn’t Plan Well

When you retire before the age of 65, you run the risk of losing out on health insurance. Medicare automatically kicks in for every American when they turn 65, but what would you do until that age? Did you plan your retirement finances right, or will you run out of money? Many people forget to take inflation into account when they plan their retirement, and that makes retiring early financially dangerous.

There are two sides to every story, and that includes the story that goes with retiring early. The idea of walking away from work before the age of 65 can sound appealing, but there are plenty of variables to consider before you make that decision. If you do want to retire early, then talk about it with your family and ask your financial advisor if you have structured your savings properly to be able to live without a paycheck for the rest of your life.

With the passage of the SECURE Act in December 2019, current and future retirees can expect to see significant changes likely to impact their tax planning for retirement. Most notably, perhaps, is the increase in the Required Minimum Distribution (RMD) age from 70 ½ to 72.

For affluent retirees – and soon-to-be retirees – affected by the new RMD age, both the increase in the RMD age and the proposed new life expectancy tables on which individual RMDs are based are a bit of a double-edged sword. RMDs are simply a calculation of the total amounts in your traditional IRA, 401(k), and/or other employer-sponsored retirement account divided by your remaining life expectancy in years. The proposed revisions to the life expectancy tables appear to be a boon – at first. With more years statistically ahead of today’s 72-year-old retiree than in the past, this RMD calculation will initially be lower than before, leaving a more significant portion of your portfolio to grow each year. 

This brings us to the other edge of the sword. All other things being equal, including the average annual return, the RMD amount will likely increase over time because of the growth advantage provided by the revised life expectancy table. And failure to withdraw the RMD will incur a 50% penalty of the RMD amount. (For example, failure to withdraw an RMD of $20,000 will result in a penalty of $10,000.) For those expecting to leave a legacy behind for heirs or charitable purposes, the prospect of losing significant net worth to taxation later in life seems difficult indeed.

So what can high-net-worth individuals do to preserve their legacy and mitigate the risk of account balances being drawn down at disproportionately high rates later in retirement? 

Perhaps the most obvious solution is Roth conversions – the sooner, the better. For individuals whose net worth sits predominantly within a traditional 401(k) or other employer-sponsored plan and who have not yet established a traditional IRA, the Roth conversion process will consist of four equally important steps:

1. Open a traditional IRA. If you are satisfied with your current brokerage, set it up there. 

2. Roll the full amount of one’s 401(k) balance into the traditional IRA. Specifically, you will want to request a “trustee-to-trustee” transfer of the total account balance so that the funds never pass through your hands and trigger taxation or penalties.

3. Open a Roth IRA. Again, your current brokerage is an excellent place to set this up. 

4. Once these accounts are both in place, begin transferring balances annually from the traditional to the Roth IRA according to your ability to pay the taxes at your marginal tax rate. For example, if your current tax bracket is 30 percent based on employment income, the amount of the Roth conversion, which represents an increase in income sufficient to raise your tax bracket to 35 percent, will be taxed at 35 percent.

Numerous guides for doing Roth conversions are available online. However, since these are written for a broad audience, and only you know your exact situation and financial goals, always speak with a reputable financial planner to determine the best way forward for you and your loved ones.

 While the change in RMD age and other aspects of the SECURE Act appear problematic to those who haven’t fully assessed the implications for their personal financial situation, Roth conversions and other tactics can mitigate potential losses of one’s net worth to taxation. For more information, talk to a financial planner today.

Coronavirus has been plaguing the stock market for weeks pushing the markets to record lows! Market volatility can lead to some serious stress on the part of new and old investors alike. The constant up and down of the market can bring fear to even the most seasoned investors. Some periods are less volatile, but the days with no movement in the major market indices are few and far between. When dealing with market volatility, it’s essential to keep several things in mind to avoid making significant mistakes.

Have a Plan

Have a plan that’s made for you and your retirement. Taking on the appropriate amount of risk for your situation can be the most important thing you can plan for. Proper planning wins the race. Sticking with your plan will allow you to take advantage of the periods when the stock market is down. You’ll be able to buy more shares. 

Keep Reinvesting

Dividends and interest tend to keep coming whether the Dow Jones Industrial Average is down or up on a given day. There are indeed situations that will lead some companies to cut or suspend their dividends. However, most companies will keep paying out dividends as long as possible because a cut is a sure-fire way to lose investors and see the price of your company’s stock drop like a rock. Dividends from stocks and interest from bonds are two of the best ways to deal with volatility. It would help if you kept reinvesting the capital your investments throw off. When the market is down, you’ll be able to buy more shares, and this will add to your flow of dividends and interest. By reinvesting during periods of volatility, you’ll be able to increase the power of compounding greatly. 


Emotions drive short-term moves in the market. The reason stock market corrections and bear markets are so worrisome to investors is that upside moves are almost always driven by reason and operational earnings expansion in high-quality companies, while plunges are driven by emotions. These emotions can lead to some wild short-term swings in the stock market, but they’re always outweighed over the long run by reason and operational earnings expansion.

Retirement Impact

The impact of this market plunge is different for everyone. This is why it’s important to have a plan in place that is made for you. How much risk should you be taking on in retirement? If your portfolio gets out of balance, it’s a good idea to rebalance it in the event of a major market downturn, to take advantage of the sale price on stocks. If you have cash sitting on the sidelines, volatility to the downside could be a great time to put that money to work.

As you start a family, consider these ideas.  

Being a parent means being responsible to a degree you have never been before. That elevated responsibility also impacts your financial decisions. You are now a provider and a protector, and that reality may make the following financial moves necessary.

Think about a budget. As a couple, you may have lived for years without budgeting. As parents, this may change. You will face new recurring costs: clothes, toys, diapers, food. Keeping track of weekly or monthly expenses will be handy. (The Department of Agriculture has an online calculator where you can estimate the total cost of raising a child to adulthood. The math may surprise you: the USDA puts the average cost at $233,610 for a middle-income family.)[1,2]

Take care of health and life insurance. Your child should be added to your health insurance plan quickly. Most insurance providers require you to notify them of a child’s birth within 30 days. You can get started before then; be aware that a Social Security number and birth certificate can take weeks to arrive in the mail. If you are in a group health plan, talk with the human resources officer or benefits administrator at work, and let them know that you want to add a dependent to your health care plan. (If you have coverage through a private plan, your premiums may go up after you notify the carrier.) Under the Affordable Care Act, a parent or legal guardian who has health coverage arranged through the federal or state Marketplace has 60 days from the date of birth or adoption to enroll a child as a dependent on their plan; once that is done, health care coverage for the child will apply, retroactively.[3]

Term life insurance provides an affordable way for new parents to have some financial insulation against a worst-case scenario, and disability insurance (which may be available where you work) provides coverage in the event of an extended illness or injury that stops you from doing your job. If you have a Health Savings Account (HSA), you can contribute more per year when you have a child. The maximum annual contribution for a family is currently set at $6,850 (and for the record, the I.R.S. is allowing families to contribute up to $6,900 in 2018).[4]

Draft a will and review beneficiary designations. A will can do more than declare who receives your assets when you die. It can also name a legal guardian for your child in the event both parents pass away. Additionally, you can specify a guardian of your estate in your will, to manage the assets left to a minor child. While you may have named your spouse or partner as the primary beneficiary of your IRA or investment account, you may decide to change that or at least add your child as a contingent beneficiary.[5]

See if you can save a little for college. The estimated cost of four years at a public university starting in 2036? $184,000, CNBC reports. That may convince you to open a 529 plan or have some other kind of dedicated college savings account with investment options. Most 529 plans require a Social Security number for a beneficiary, so they are commonly started after a child is born, rather than before.[2,6]

Review your withholding status and tax forms. An addition to your family means changes. You may also become eligible for some federal tax breaks, like the Earned Income Tax Credit, the Adoption Tax Credit, the Child Tax Credit, and the Child & Dependent Care Credit.[7]

Keep the big picture in mind. You still need to build retirement savings; you still need to have an emergency fund. Becoming a family might make accomplishing those tasks harder, yet they remain just as important.

After reading all this, you may feel like you need to be a millionaire to raise a child. The fact is, most parents are not millionaires, and they manage. Whether you are wealthy or not, you will want to take care of many or all of these financial and insurance essentials before or after you bring your newborn home.

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