Adam C. Harding, CFP® Investments & Financial Planning
I blend financial science, modern technology, and complex planning techniques to help my clients pursue a better investment experience.
As the son of a private practice Certified Public Accountant (CPA) I received an early start in understanding of the importance of building strong financial habits to achieve personal goals. As my first teacher, my father ingrained in me the importance of tax-efficient savings methods, deferred gratification and, by demonstration, the importance of taking care of "his people" (i.e. clients).
Formally, I have added to that original educational foundation with completed study in Economics (Arizona State University, BS), as well as the CERTIFIED FINANCIAL PLANNER™ (CFP) designation.
My professional career has been, and will continue to be, focused on acting as a fiduciary for clients, serving as a sounding board for any and all financial matters, and, to quote my first teacher, "taking care of my people."
As a CERTIFIED FINANCIAL PLANNER™ I have demonstrated competency in comprehensive financial planning and have chosen to abide by a strict Code of Ethics.
**Any comments or articles posted are strictly for informational purposes and should not be considered investment, tax, or legal advice.Nothing should be considered an offer or solicitation of services. Opinions are subject to change.
BS, Economics, Arizona State University
Assets Under Management:
Nothing contained in this publication is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional.
A couple things:
1) If he treats the IRA as an Inherited IRA, then it he will have withdrawal flexibility before age 59.5. If he rolls it into a regular IRA (which is a provision specifically allowed to spouses whom inherit IRAs), then it will be subject to the 59.5 rule. In short, he has plenty of options available to help meet whichever goal you'd like, and will simply want to meet with your financial advisor when that unfortunate time comes.
2) He'll want to compare his Social Security benefit to what he could potentially claim as a spousal benefit on your record. The rule is generally that he can claim the higher of his benefit or 1/2 of your benefit. At 50 years old he still has many working years left (assuming he's working) to increase his potential benefit.
3) You might consider whether some kind of Roth conversion strategy is appropriate. This may be helpful at mitigating your long term tax burden if this IRA represents the most significant part of your wealth and future income. These strategies can be complex so don't hesitate to reach out to me or another competent fiduciary to get a bit of assistance.
4) Your beneficiary designation is a great way to streamline your estate plan. You might also review if your state allows for beneficiary deeds on real estate, transfer on death provisions on auto titles, and payable-on-death provisions on your savings and checking accounts, Of course, if any of these are jointly held with your husband then there's no need to amend, but if they're solely owned by you it may be helpful to outline some of these terms.
As mentioned above, if I can help navigate any of this or provide additional clarity, I'm happy to do so.
Adam Harding, CFP
Ten years is a good time frame to adopt a modest amount of risk in pursuit of returns. However, the definition of "modest" as it pertains to portfolios may change from one person to another. I think you're going to find that it's very hard for advisors on a site like this to give you definitive investment advice in a response (like this one).
Also, what's important is that you likely have a flexible time horizon on these funds, which can be tremendously important when investing.
Of course, this is for informational purposes only and I never give advice without having complete information. Feel free to shoot me a message if you'd like more definitive insight.
Adam Harding | Investments & Planning
Titling of assets often comes down to state-specific rules, so you should consider asking a title company in Arkansas what your options are. With that said, you can typically add someone to the title and that does not affect the loan arrangement. If you'd like to add her to the loan just call the bank and ask what your options are.
Perhaps more importantly, if you can let me know exactly what you're looking to accomplish (like an eventual outright transfer of the property to your daughter) then I may be able to provide actionable guidance.
Adam Harding | Investments & Planning
Here's what I'd consider:
1) If you're not working, consider delaying your Social Security benefits to age 70. I'd recommend living off of your 401(k) assets if you had previously planned on receiving income from Social Security at an earlier age (like 66). This will lessen the balance in your 401(k) while also increasing your SS benefit by 8%/year for each year you defer beyond your Full Retirement Age.
2) Consider a Roth IRA conversion strategy. This approach can be systematic, like a yearly $50K conversion (or something similar), or it can be targeted. Targeted Roth IRA conversions are a result of you having a diversified portfolio with many different asset classes. When you convert assets from a traditional IRA to a Roth, income taxes will be due on the converted amount. So, assets that have declined significantly in value are ripe for a Roth conversion. You’ll pay less in taxes because of the current depressed value, then you’ll have the potential for future tax-free growth within the Roth IRA structure.
To make any Roth conversion strategy viable, the converted assets would need to perform well enough after the conversion to offset the impact of the taxes paid. If you feel that the assets are simply in a correction, and you still like the outlook for them, then this strategy becomes more attractive.
3) Lastly, if you were 70.5 today and needed to take your RMD on $1.2M, the amount would be roughly $43K that you'd have to withdrawal and claim as income. Depending on your other sources of income, I wouldn't consider this added income to be the most crucial consideration you should be focusing on for your retirement plan. Limiting taxes is important, but I think that it's more important to be sure there's a thorough understanding of the overall risk exposures within your portfolio and your projected expenses throughout retirement.
Adam C. Harding, CFP
When making decisions about investing, or anything else really, the best path to choose is often the one that requires you to make the fewest amount of assumptions. Clearly no one can predict the future of an investment's return, but we can know for certain that every dollar of unpaid debt will grow at a guaranteed fixed rate (i.e. the stated APR). Thus, we can know with great certainty what the impact of paying down debt will be rather than speculating in the financial markets. In order to justify an investment over debt repayment, the expected return must be higher than the interest rate on the debt.
With that said, it's not always so cut-and-dry. If you have student loans, I wouldn't let that impede you from saving for a down payment on a house. Or if an employer match exists on a 401(k), then this should certainly be prioritized (in fact, I often urge even those with debt to contribute to 401(k) plans regardless of a match to help build the right habits). Every situation is a bit different and needs to be looked at individually.
Many advisors on this site are here to help consumers build and maintain their wealth in much the same way they do for their clients. While paying off debt isn't the most exciting advice, it's often the most prudent. You should beware of the risks of seeking a professional that simply echoes what you want to hear; this would be like a smoker looking for the one doctor that will tell them that smoking is okay rather than to quit.
If you need any clarification or want to chat, feel free to shoot me a message.
Adam C. Harding, CFP