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Key Retirement and Tax Numbers for 2017

Every year, the Internal Revenue Service announces cost-of-living adjustments that affect contribution limits for retirement plans, thresholds for deductions and credits, and standard deduction and personal exemption amounts. Here are a few of the key adjustments for 2017.

Retirement plans

  • Employees who participate in 401(k), 403(b), and most 457 plans can defer up to $18,000 in compensation in 2017 (the same as in 2016); employees age 50 and older can defer up to an additional $6,000 in 2017 (the same as in 2016).
  • Employees participating in a SIMPLE retirement plan can defer up to $12,500 in 2017 (the same as in 2016), and employees age 50 and older will be able to defer up to an additional $3,000 in 2017 (the same as in 2016).

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How Can I Pay Off the Credit Card Debt I Racked Up Over the Holidays?

It's a common occurrence once the holiday season winds down — you reluctantly look at your credit card statement and wince at all the purchases you made over the holidays. Fortunately, there's no need to panic. Consider using one of the following strategies to help pay it off.

Make a lump-sum payment. The best way to pay off credit card debt is with a single lump-sum payment, which would allow you to pay off your balance without owing additional interest. Look for sources of funds you can use for a lump-sum payoff, such as an employment bonus or other windfall. However, most individuals find themselves getting into credit card debt due to a lack of cash on hand in the first place, so this may not be an option for everyone.

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I Get So Many Credit Card Reward Offers. How Do I Know Which One to Choose?

Credit card reward programs are more popular than ever. In order to keep up with such high demand in a competitive market, credit card companies are coming up with new and more enticing offers every day. How do you know which one to choose?

Are you the type of credit card user who likes to travel and/or frequent a particular hotel or airline? If so, then a travel rewards credit card might be the right option for you. Typically, a travel rewards card allows you to earn points (sometimes referred to as miles, depending on the card) for every purchase you make on the card. Typically, cards offer a reward that is equal to 1% of your purchase, which means that for every $100 you spend, you will earn 1 point or mile. Some credit card companies offer even greater incentives, such as double points for specific types of purchases or bonus points when you open up an account. Before signing up, however, be sure to read the fine print. Many travel rewards cards have specific rules that apply to point redemption and may charge a hefty annual fee.

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Playing Catch-Up with Your 401(k) or IRA

A recent survey of baby boomers (ages 53 to 69) found that just 24% were confident they would have enough money to last throughout retirement. Forty-five percent had no retirement savings at all, and of those who did have savings, 42% had saved less than $100,000.1

Your own savings may be on more solid ground, but regardless of your current balance, it's smart to keep it growing. If you're 50 or older, you could benefit by making catch-up contributions to tax-advantaged retirement accounts. You might be surprised by how much your nest egg could grow late in your working career.

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The Giving Season: Six Tips for Making Smart and Effective Charitable Donations This Holiday Season

The holidays are a popular time for charitable donations. With so many charities to choose from, it's more important than ever to ensure that your donation is well spent. Here are six tips that can help you make smart and effective charitable donations.

1. Choose your charities wisely

Choosing worthy organizations that support the causes you care about can be tricky, but it doesn't have to be time-consuming. There are several well-known organizations that rate and review charities, as well as provide useful tips and information on how to donate and choose a charity.

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What It Means to Be a Financial Caregiver for Your Parents

If you are the adult child of aging parents, you may find yourself in the position of someday having to assist them with handling their finances. Whether that time is in the near future or sometime further down the road, there are some steps you can take now to make the process a bit easier.

Mom and Dad, can we talk?

Your first step should be to get a handle on your parents' finances so you fully understand their current financial situation. The best time to do so is when your parents are relatively healthy and active. Otherwise, you may find yourself making critical decisions on their behalf in the midst of a crisis.

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What Should I Evaluate When Considering a New Job Offer?

Today, few people stay with one employer until retirement. Instead, it's likely that at some point during your career, you'll be searching for a new job. You may be looking for more money, greater career opportunities, or more flexibility. Or you may be forced to look for new employment if your company restructures. Whatever the reason, at some point in your working life you might be faced with a new job offer. Should you take it? Here are some things to evaluate.

Salary: How does the salary offer stack up against your previous job? If the offer is less than you expected, find out when you can expect performance reviews and/or pay increases (a typical company will review your salary at least annually). You can compare your salary offer to the salary range for others working in the same industry by looking at salary-related websites. In addition, consider the availability of bonuses, commissions, and/or profit-sharing plans that can increase your total income, and find out whether they're dependent on your own job performance, the company's performance, or a combination of both.

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I Received a New Job Offer but the Salary is Low. Should I Make a Counteroffer?

Probably. Getting paid less than you should when starting a new job can affect not only your current paycheck but also your long-term asset accumulation. For example, the less money you earn, the less you have available to contribute to your retirement plan, and potentially the lower the amount of matching employer contributions you'll receive if they are offered.

In addition, because your current salary is typically the benchmark for future pay increases and bonuses (which are often expressed as a percentage of your salary), the effect of a pay gap is cumulative. Unless corrected, pay disparities may widen over the course of your career. For example, a low starting salary at job #1 could serve as a benchmark for your salary at job #2, which could serve as a benchmark for your salary at job #3, and so on.

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Will vs. Trust: Is One Better Than the Other?

When it comes to planning your estate, you might be wondering whether you should use a will or a trust (or both). Understanding the similarities and the differences between these two important documents may help you decide which strategy is better for you.

What is a will?

A will is a legal document that lets you direct how your property will be dispersed (among other things) when you die. It becomes effective only after your death. It also allows you to name an estate executor as the legal representative who will carry out your wishes.

In many states, your will is the only legal way you can name a guardian for your minor children. Without a will, your property will be distributed according to the intestacy laws of your state. Keep in mind that wills and trusts are legal documents generally governed by state law, which may differ from one state to the next.

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Are You Ending 2016 Healthy, Wealthy, and Wise?

Although the year is drawing to a close, you still have time to review your finances. Pausing to reflect on the financial progress you made in 2016 and identifying adjustments for 2017 can help you start the new year stronger than ever.

How healthy are your finances?

Think of a year-end review as an annual physical for your money. Here are some questions to ask that will help assess your financial fitness.

  • Do you know how you spent your money in 2016? Did you make any progress toward your financial goals? Look for spending habits (such as eating out too much) that need tweaking, and make necessary adjustments to your budget.
  • Are you comfortable with the amount of debt that you have? Any end-of-year mortgage, credit card, and loan statements will spell out the amount of debt you still owe and how much you've been able to pay off this year.

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Pretax, Roth, or After-Tax Contributions: Which Should You Choose?

If your employer-sponsored retirement savings plan allows pretax, after-tax, and/or Roth contributions, which should you choose?

Pretax: Tax benefits now

With pretax contributions, the money is deducted from your paycheck before taxes, which helps reduce your taxable income and the amount of taxes you pay now. Consider the following example, which is hypothetical and has been simplified for illustrative purposes.

Example(s): Mark earns $2,000 every two weeks before taxes. If he contributes nothing to his retirement plan on a pretax basis, the amount of his pay that will be subject to income taxes would be the full $2,000. If he was in the 25% federal tax bracket, he would pay $500 in federal income taxes, reducing his take-home pay to $1,500. On the other hand, if he contributes 10% of his income to the plan on a pretax basis--or $200--he would reduce the amount of his taxable pay to $1,800. That would reduce the amount of taxes due to $450. After accounting for both federal taxes and his plan contribution, Mark's take-home pay would be $1,350. The bottom line? Mark would be able to invest $200 toward his future but reduce his take-home pay by just $150. That's the benefit of pretax contributions.

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Do I need to make any changes to my Medicare coverage for next year?

During the Medicare Open Enrollment Period that runs from October 15 through December 7, you can make changes to your Medicare coverage that will be effective on January 1, 2017. If you're satisfied with your current coverage, you don't need to make changes, but you should review your options before you decide to stay with your current plan.

Your Medicare plan sends two important documents every year that you should review. The first, called the Evidence of Coverage, provides information about what your plan covers and its cost. The second, called the Annual Notice of Change, lists changes to your plan for the upcoming year that will take effect in January. You can use these documents to evaluate your current plan and decide whether you need different coverage. You should also review the official government handbook, Medicare & You 2017, which is available electronically or through the mail. It contains detailed information about Medicare that should help you determine whether your current plan is right for you.

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What changes can I make during this year's Medicare Open Enrollment Period?

Each year, current Medicare beneficiaries can make changes to their Medicare coverage for the following year during the Medicare Open Enrollment Period that starts on October 15 and runs through December 7. Because this period is the only time during the year that all people with Medicare can make changes to their health and prescription drug plans for the following year, you should carefully consider your options.

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Earnings Call: A Closer Look at Financial Reports

The second quarter of 2016 marked the fifth quarter in a row of declining U.S. corporate earnings. Low oil prices and a strong dollar were largely to blame for lackluster financial results.

Publicly traded companies are required to report quarterly financial results to regulators and shareholders. Earnings season is the often-turbulent period when most companies must disclose their successes and failures.

An earnings surprise--whether profits come in above or below the stock market's expectations--can have an immediate effect on a company's stock price, so it's easy to understand why executives may go to great lengths to impress their investors. Earnings do represent a corporation's bottom line and are generally a key driver of the stock price over time. Still, an earnings surprise may not be a reliable indicator of a company's longer-term outlook, partly because earnings figures generally reflect past performance.

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Ten Year-End Tax Tips for 2016

Here are 10 things to consider as you weigh potential tax moves between now and the end of the year.

1. Set aside time to plan

Effective planning requires that you have a good understanding of your current tax situation, as well as a reasonable estimate of how your circumstances might change next year. There's a real opportunity for tax savings if you'll be paying taxes at a lower rate in one year than in the other. However, the window for most tax-saving moves closes on December 31, so don't procrastinate.

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Top Financial Concerns of Baby Boomers, Generation Xers, and Millennials

Many differences exist among baby boomers, Generation Xers, and millennials. But one thing that brings all three generations together is a concern about their financial situations.

According to an April 2016 employee financial wellness survey, 38% of boomers, 46% of Gen Xers, and 51% of millennials said that financial matters are the top cause of stress in their lives. In fact, baby boomers (50%), Gen Xers (56%), and millennials (60%) share the same top financial concern about not having enough emergency savings for unexpected expenses. Following are additional financial concerns for each group and some tips on how to address them.

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What are my health-care options if I retire early?

If you're eligible for an early-retirement package from your employer, determine whether post-retirement medical coverage is included. These packages sometimes provide medical coverage until you reach age 65 and become eligible for Medicare. Given the high cost of medical care, you might find it hard to turn down an early-retirement package that includes such coverage.

If your package doesn't include post-retirement medical coverage, or you're not eligible for an early-retirement package at all, you'll need to look into alternative sources of health insurance, such as COBRA continuation coverage or an individual health insurance policy, to carry you through to Medicare eligibility.

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Should I accept my employer's early-retirement offer?

The right answer for you will depend on your situation. First of all, don't underestimate the psychological impact of early retirement. The adjustment from full-time work to a more leisurely pace may be difficult. So consider whether you're ready to retire yet. Next, look at what you're being offered. Most early-retirement offers share certain basic features that need to be evaluated. To determine whether your employer's offer is worth taking, you'll want to break it down.

Does the offer include a severance package? If so, how does the package compare with your projected job earnings (including future salary increases and bonuses) if you remain employed? Can you live on that amount (and for how long) without tapping into your retirement savings? If not, is your retirement fund large enough that you can start drawing it down early? Will you be penalized for withdrawing from your retirement savings?

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Investors Are Human, Too

In 1981, the Nobel Prize-winning economist Robert Shiller published a groundbreaking study that contradicted a prevailing theory that markets are always efficient. If they were, stock prices would generally mirror the growth in earnings and dividends. Shiller's research showed that stock prices fluctuate more often than changes in companies' intrinsic valuations (such as dividend yield) would suggest.1

Shiller concluded that asset prices sometimes move erratically in the short term simply because investor behavior can be influenced by emotions such as greed and fear. Many investors would agree that it's sometimes difficult to stay calm and act rationally, especially when unexpected events upset the financial markets.

Researchers in the field of behavioral finance have studied how cognitive biases in human thinking can affect investor behavior. Understanding the influence of human nature might help you overcome these common psychological traps.

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Be Prepared to Retire in a Volatile Market

In an ideal world, your retirement would be timed perfectly. You would be ready to leave the workforce, your debt would be paid off, and your nest egg would be large enough to provide a comfortable retirement--with some left over to leave a legacy for your heirs.

Unfortunately, this is not a perfect world, and events can take you by surprise. In a survey conducted by the Employee Benefit Research Institute, only 44% of current retirees said they retired when they had planned; 46% retired earlier, many for reasons beyond their control.1 But even if you retire on schedule and have other pieces of the retirement puzzle in place, you cannot predict the stock market. What if you retire during a market downturn?

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Understanding the Net Investment Income Tax

It's been around since 2013, but many are still struggling to come to grips with the net investment income tax. The 3.8% tax, which is sometimes referred to as the Medicare surtax on net investment income, affected approximately 3.1 million federal income tax returns for 2013 (the only year for which data is available) to the tune of almost $11.7 billion.1 Here's what you need to know.

What is it?

The net investment income tax is a 3.8% "extra" tax that applies to certain investment income in addition to any other income tax due. Whether you're subject to the tax depends on two general factors: the amount of your modified adjusted gross income for the year, and how much net investment income you have.

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Should I pay off my student loans early or contribute to my workplace 401(k)?

For young adults with college debt, deciding whether to pay off student loans early or contribute to a 401(k) can be tough. It's a financial tug-of-war between digging out from debt today and saving for the future, both of which are very important goals. Unfortunately, this dilemma affects many people in the workplace today. According to a student debt report by The Institute for College Access and Success, nearly 70% of college grads in the class of 2014 had student debt, and their average debt was nearly $29,000. This equates to a monthly payment of $294, assuming a 4% interest rate and a standard 10-year repayment term.

Let's assume you have a $300 monthly student loan payment. You have to pay it each month--that's non-negotiable. But should you pay more toward your loans each month to pay them off faster? Or should you contribute any extra funds to your 401(k)? The answer boils down to how your money can best be put to work for you.

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Have you heard about the newest employee perk?

What's one of the most cutting-edge employee benefits right now? Company-provided student loan assistance for employees who are paying back student loans.

With a record amount of student loan debt attached to the incoming workforce (visit finaid.org to see a student debt clock that now tops $1.3 trillion), companies that rely on a college-educated workforce--and want to attract and retain the best workers--are starting to offer student loan assistance to meet this immediate financial concern of many employees.

How do these programs work? Generally, an employer will contribute a certain amount each month toward an employee's student loans, typically from $100 to $250 per month, up to a lifetime cap (for example, $10,000). Programs may restrict participation to employees who have been with the company for a minimum period of time, and may require employees to remain at the company for a certain period of time after they receive loan repayment benefits.

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Mid-Year 2016: An Investment Reality Check

Market volatility is alive and well in 2016. Low oil prices, China's slowing growth, the prospect of rising interest rates, the strong U.S. dollar, global conflicts--all of these factors have contributed to turbulent markets this year. Many investors may be tempted to review their portfolios only when the markets hit a rough patch, but careful planning is essential in all economic climates. So whether the markets are up or down, reviewing your portfolio with your financial professional can be an excellent way to keep your investments on track, and midway through the year is a good time for a reality check. Here are three questions to consider.

1. How are my investments doing?

Review a summary of your portfolio's total return (minus all fees) and compare the performance of each asset class against a relevant benchmark. For stocks, you might compare performance against the S&P 500, Russell 2000, or Global Dow; for mutual funds, you might use the Lipper indexes. (Keep in mind that the performance of an unmanaged index is not indicative of the performance of any specific security, and you can't invest directly in an unmanaged index.)

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Q and A's on Roth 401(k)s

The Roth 401(k) is 10 years old! With 62% of employers now offering this option, it's more likely than not that you can make Roth contributions to your 401(k) plan.1 Are you taking advantage of this opportunity?

What is a Roth 401(k) plan?

A Roth 401(k) plan is simply a traditional 401(k) plan that permits contributions to a designated Roth account within the plan. Roth 401(k) contributions are made on an after-tax basis, just like Roth IRA contributions. This means there's no up-front tax benefit, but if certain conditions are met both your contributions and any accumulated investment earnings on those contributions are free of federal income tax when distributed from the plan.

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Finding and Claiming Forgotten Funds

As a child, you may have dreamed about finding buried treasure, but you probably realized at an early age that it was unlikely you would discover a chest full of pirate booty. However, the possibility that you have unclaimed funds or other assets waiting for you is not a fantasy.

According to the National Association of Unclaimed Property Administrators (NAUPA), $41.7 billion is waiting to be returned by state unclaimed property programs. So how do you find what is owed to you, even if it's not a fortune?

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I have matured U.S. savings bonds. Are they still earning interest and, if not, can I roll them over to another savings bond?

Once U.S savings bonds have reached maturity, they stop earning interest. Prior to 2004, you could convert your Series E or EE savings bonds for Series HH bonds. This would have allowed you to continue earning tax-deferred interest. However, after August 31, 2004, the government discontinued the exchange of any form of savings bonds for HH bonds, so that option is no longer available.

Since matured savings bonds no longer earn interest, there is no financial benefit to holding on to them. If you have paper bonds, you can cash them in at most financial institutions, such as banks or credit unions. However, it's a good idea to call a specific institution before going there to be sure it will redeem your bonds. As an alternative, you can mail them to the Treasury Retail Securities Site, PO Box 214, Minneapolis, MN 55480, where they will be redeemed. If you have electronic bonds, log on to treasurydirect.gov and follow the directions there. The proceeds from your redeemed bonds can be deposited directly into your checking or savings account for a relatively quick turnover.

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How many types of government savings bonds are there, and what's the difference between them?

While the U.S. government has issued 13 types of savings bonds, there are currently only two series available for purchase through the U.S. Treasury Department: Series EE bonds and Series I bonds. U.S. savings bonds are nonmarketable securities, which means you can't resell them unless you're authorized as an issuing or redeeming agent by the U.S. Treasury Department. Savings bonds are guaranteed by the federal government as to the timely payment of principal and interest.

You can buy Series EE bonds and I bonds in any amount from $25 up to $10,000, which is the maximum amount you can purchase for each bond type per calendar year. In other words, you may buy a total of $10,000 annually in both EE and I bonds, for an annual total of $20,000 for the two types combined.

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Know your Market: Retirees and Pre-Retirees

Beyond a Traditional Retirement

Retirement doesn't necessarily need to mean the end of work, but rather the financial freedom to stop working if and when a person wants to.

When working with clients on retirement planning, I often ask them to shift their focus. Instead of thinking about the end goal as retirement, think about the real objective: obtaining financial independence. These two concepts are similar yet very different. Clients should feel confident that when they want to stop working, they can do so without being dependent on a steady paycheck.

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Understanding Stock Market Indexes

No doubt you've seen headlines reporting that a particular stock index is up or down. But do you know what an index is, and how understanding the nuts and bolts of a specific index may be helpful to you?

An index is simply a way to measure and report the fluctuations of a pool of securities or a representative segment of a market. An index is developed by a company that sets specific criteria to determine which securities are included in the index based on factors such as a company's size or location, or the liquidity of its stock. For example, the S&P 500 is an index made up of mostly large-cap U.S.-based companies that Standard & Poor's considers to be leading representatives of a cross-section of industries.

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Four Lessons Grandparents and Grandchildren Can Learn Together

If you're a grandparent, maintaining a strong connection with your grandchildren is important, but that may become harder over the years as they leave for college or become busier building their careers and families. While they're just starting out financially, you have a lifetime of experience. Although you're at opposite ends of the spectrum, you have more in common than you think. Focusing on what you can learn together and what you can teach each other about financial matters may help you see that you're not that different after all.

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How long should I keep financial records?

There's a fine line between keeping financial records for a reasonable period of time and becoming a pack rat. A general rule of thumb is to keep financial records only as long as necessary. For example, you may want to keep ATM receipts only temporarily, until you've reconciled them with your bank statement. But if a document provides legal support and/or is hard to replace, you'll want to keep it for a longer period or even indefinitely. It's ultimately up to you to determine which records you should keep on hand and for how long, but here's a suggested timetable for some common documents.

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Nearing Retirement? Time to Get Focused

If you're within 10 years of retirement, you've probably spent some time thinking about this major life change. The transition to retirement can seem a bit daunting, even overwhelming. If you find yourself wondering where to begin, the following points may help you focus.

Reassess your living expenses

A step you will probably take several times between now and retirement--and maybe several more times thereafter--is thinking about how your living expenses could or should change. For example, while commuting and dry cleaning costs may decrease, other budget items such as travel and health care may rise. Try to estimate what your monthly expense budget will look like in the first few years after you stop working. And then continue to reassess this budget as your vision of retirement becomes reality.

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What are some tips for organizing financial records?

Organizing your financial records is a cyclical process rather than a one-time event. You'll need to set up a system that helps you organize incoming documents and maintain existing files so that you can easily find what you need. Here are a few tips.

Create your system: Where you should keep your records and documents depends on how quickly you want to be able to access them, how long you plan to keep them, and the number and type of records you have. A simple set of labeled folders in a file cabinet may be fine, but electronic storage is another option for certain records if space is tight or if you generally choose to receive and view records online. No matter which storage option(s) you choose, try to keep your records in a central location.

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Six Potential 401(k) Rollover Pitfalls

You're about to receive a distribution from your 401(k) plan, and you're considering a rollover to a traditional IRA. While these transactions are normally straightforward and trouble free, there are some pitfalls you'll want to avoid.

  1. Consider the pros and cons of a rollover. The first mistake some people make is failing to consider the pros and cons of a rollover to an IRA in the first place. You can leave your money in the 401(k) plan if your balance is over $5,000. And if you're changing jobs, you may also be able to roll your distribution over to your new employer's 401(k) plan.

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What's New in the World of Higher Education?

If you're a parent or grandparent of a college student or soon-to-be college student, you might be interested to learn what's new in the world of higher education.

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When Disaster Strikes: Deducting Casualty Losses

Wildfires, tornadoes, storms, landslides, and flooding.... It's almost as if you can't turn on the news without seeing images of a disaster striking somewhere. If you've suffered property loss as the result of these events or other circumstances, you may be able to claim a casualty loss deduction on your federal income tax return.

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What is the federal funds rate?

In December 2015, the Federal Open Market Committee (FOMC) raised the federal funds target rate to a range of 0.25% to 0.50%, the first shift from the rock-bottom 0% to 0.25% level where it had remained since December 2008.

The federal funds rate is the interest rate at which banks lend funds to each other from their deposits at the Federal Reserve, usually overnight, in order to meet reserve requirements. The Fed also raised a number of other rates related to funds moving between Federal Reserve banks and other banks. The Fed does not directly control consumer savings or credit rates, but the federal funds rate serves as a benchmark for many short-term rates, such as savings accounts, money market accounts, and short-term bonds.

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Can You Get to a Million Dollars?

Often in life, you have investment goals that you hope to reach. Say, for example, you have determined that you would like to have $1 million in your investment portfolio by the time you retire. But will you be able to get there?

In trying to accumulate $1 million (or any other amount), you should generally consider how much you have now, how much you can contribute in the future, how much you might earn on your investments, and how long you have to accumulate funds.

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Cost of Living: Where You Live Can Affect How Rich You Feel

Do you find yourself treading water financially even with a relatively healthy household income? Even with your new higher-paying job and your spouse's promotion, do you still find it difficult to get ahead, despite carefully counting your pennies? Does your friend or relative halfway across the country have a better quality of life on less income? If so, the cost of living might be to blame.

The cost of living refers to the cost of various items necessary in everyday life. It includes things like housing, transportation, food, utilities, health care, and taxes.

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Rates on the Rise: Strategies for Fixed-Income Investors

A long period of low yields has been challenging for many fixed-income investors, but owning bond investments in a rising interest-rate environment could become even trickier. When interest rates go up, the prices of existing bonds typically fall. Consequently, the Federal Reserve's rate-setting decisions could affect the entire fixed-income market.

Still, bonds are a mainstay for conservative investors who prioritize the preservation of principal over returns, and for retirees in need of a predictable income stream. Although diversification does not guarantee a profit or protect against investment loss, owning a diversified mix of bond types and maturities is one way to manage interest-rate and credit risk in your portfolio.

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How long will I have to pay for private mortgage insurance?

It depends. There are generally two ways that private mortgage insurance (PMI) can be removed from your mortgage loan. The first is if you request PMI cancellation directly from your lender. The second is through termination by your lender.

You can request PMI cancellation directly from your lender once you have reached the date when the principal balance of your mortgage is scheduled to fall to 80% of the original value of your home. You can find this date on the PMI disclosure form that was given to you when you first obtained your mortgage. The cancellation request can be made earlier if you have made additional mortgage payments that have reduced your principal balance to 80% at an earlier date. Your lender may also require you to meet certain other criteria in order to cancel your PMI, such as certification that there are no subordinate liens on the home and evidence that the property has not declined below the original value.

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Should I loan my child money for a down payment on a house?

For a lot of young people today, it's difficult to purchase a home without at least some financial assistance. As a result, many young adults turn to their parents or other family members for help with a down payment.

If you plan on lending your child money for a down payment on a house, you should try to assume the role of a commercial lender. Setting the terms of the loan in writing will demonstrate to your child that you take both your responsibility as lender and your child's responsibility as borrower seriously.

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Assessing Portfolio Performance: Choose Your Benchmarks Wisely

You can't help but hear about the frequent ups and downs of the Dow Jones Industrial Average or the S&P 500 index. The performance of both major indexes is widely reported and analyzed in detail by financial news outlets around the nation.

Like the Dow, the S&P 500 tracks the stocks of large domestic companies. With 500 stocks compared to the Dow's 30, the S&P 500 comprises a much broader segment of the stock market and is considered to be representative of U.S. stocks in general. Both indexes are generally useful tools for tracking stock market trends, but some investors mistakenly think of them as benchmarks for how well their own portfolios should be doing.

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Estate Planning Strategies in a Low-Interest-Rate Environment

The federal government requires the use of certain published interest rates to value various items used in estate planning, such as an income, annuity, or remainder interest in a trust. The government also specifies interest rates that a taxpayer may be deemed to use in connection with certain installment sales or intra-family loans. These rates are currently at or near historic lows, presenting several estate planning opportunities.

Low interest rates favor certain estate planning strategies over others. For example, low interest rates are generally beneficial for a grantor retained annuity trust (GRAT), a charitable lead annuity trust (CLAT), an installment sale, and a low-interest loan. On the other hand, low interest rates generally have a detrimental effect on a qualified personal residence trust (QPRT) and a charitable gift annuity. But interest rates have little or no effect on a charitable remainder unitrust (CRUT).

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Are There Gaps in Your Insurance Coverage?

Buying insurance is about sharing or shifting risk. For example, health insurance will cover some of the cost of medical care. Homeowners insurance will assume some of the risk of loss in the event your home is damaged or destroyed. But oftentimes we think we're covered for specific losses when, in fact, we're not. Here are some common coverage gaps to consider when reviewing your own insurance coverage.

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I'm thinking about storing financial documents in the cloud. What should I know?

Cloud storage--using Internet-based service providers to store digital assets such as books, music, videos, photos, and even important documents including financial statements and contracts--has become increasingly popular in recent years. But is it right for you?

Opinions vary on whether to store your most sensitive information in the cloud. While some experts say you should physically store items you're not willing to lose or expose publicly, others contend that high-security cloud options are available.

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What's the best way to back up my digital information?

In writing or speaking, redundancy is typically not recommended unless you're really trying to drive a point home. When it comes to your digital life, however, redundancy is not only recommended, it's critical.

Redundancy is the term used to refer to data backups. If you have digital assets that you don't want to risk losing forever--including photos, videos, original recordings, financial documents, and other materials--you'll want to be sure to back them up regularly. And it's not just materials on your personal computer, but your mobile devices as well. Depending on how much you use your devices, you may want to back them up as frequently as every few days.

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Do You Owe Estimated Taxes?

If you are self-employed or have additional sources of income outside of your regular job, you may fall into the category of Americans who are required to file their federal taxes not just once a year in April, but four times annually. While no one likes having to pay estimated taxes to the IRS, you can make the process easier by setting aside money regularly and keeping detailed records.

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Disability Income Insurance: Protecting Your Most Valuable Asset

Have you ever wondered how you would manage financially if you were to sustain an injury or illness that left you unable to work? How long could you maintain your standard of living, pay your bills, and cover your daily expenses? The likelihood of such an event may be greater than you think. According to the Council for Disability Awareness (2013), Americans underestimate their chances of experiencing a long-term disability: 64% of working Americans believe they have a 2% or less chance of being disabled for 3 months or more during their working years; however, the reality is that the odds of experiencing a long-term disability are about 25%.

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Designing an Employee Benefit Plan

When you begin to create an employee benefit plan, you may want to start with a few core benefits, including life insurance, health insurance, and a retirement plan. These benefits form a base from which your company’s benefit plan can grow and evolve in the future. Every year or two, it may be wise to consider the addition of a new benefit to the plan, such as dental insurance or disability income insurance. Rather than bearing the entire burden of cost, you can contribute a portion of the cost, with your employees paying the balance.

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Creating a Long-Term Financial Plan

To help manage your personal finances, you can now purchase computer software that will balance your checkbook, figure out your budget, track your investments, and even help take the sting out of filing your income tax return. Even with the best apps available, you still have to take the initiative to create a strategy that will meet your needs while reducing the stress that goes along with financial planning.

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Estate Planning: A Team Effort

Estate planning often involves a team consisting of an attorney, a financial professional, an insurance professional, and yourself. However, whether you are establishing a new estate plan or revising an existing one, only you can provide the guidance, direction, and information your estate planning team needs to develop an effective plan.

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ESOPs: Rewarding and Motivating Employees

Profit-sharing plans have long been popular with employees because of the opportunity they provide to share in the profitability of a growing firm. Many business owners look beyond shared profitability to shared ownership through employee stock ownership plans (ESOPs).

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Economic Policy and the Fed

While consumers affect the economy by spending according to their own situation and financial pressures, Federal policy decisions also influence the economy. Fiscal policy, enacted by Congress, uses taxation and legislation to boost employment, stabilize prices, and stimulate economic growth. In contrast, monetary policy, which is controlled by the Federal Reserve Bank (the Fed), manipulates short-term interest rates in an effort to spur growth or control inflation.

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Get SMART: Tips for Effective Goal Setting

Regardless of which phase of the business life-cycle you’re in, you can get SMART about setting goals to motivate yourself, move forward to grow your business, and track your success.

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Free Tax Preparation

Did you know that a free, Federal income tax preparation and electronic filing program called Free File is available to U. S. taxpayers with adjusted gross incomes (AGIs) of $58,000 or less?

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Financial Recordkeeping for Tax Purpose

Keeping thorough and accurate financial records is one of the less exciting tasks that business owners face, but it is a necessary one. In addition to enabling you to monitor the progress of your business and make informed decisions on a daily basis, keeping good accounting records is essential when it comes time to prepare your tax returns. While the smallest businesses may be able to get by with the “shoebox method,” having in place a reliable and comprehensive financial recordkeeping system is crucial if you want your business to grow.

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Filing the FAFSA for Higher Education Costs

Even if you expect to cover your child’s college costs through sources other than Federal aid, it usually worthwhile to complete the Free Application for Federal Student Aid (FAFSA). In addition to determining your family’s eligibility for Federal assistance, the FAFSA is the primary qualifying form used by many college, state, local, and private financial assistance programs.

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Estimating Future College Costs

For most people, a child’s college education is the second most expensive purchase (after that of a home) they will ever make. For parents and grandparents who wish to estimate the cost of a college education, the following tables can facilitate an educated guess.

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Your Family Business and Estate Planning

If you are like most entrepreneurs, you don’t expect the business you worked so hard to establish to falter when you are no longer here to run it. But sometimes, when business owners die without leaving wills or estate plans, the business must be liquidated to pay the tax liability, or the company collapses because family members have not been sufficiently prepared to take over operations. If you own a family business, you may want to consider taking steps now to help ensure this valuable asset will remain intact for your children, grandchildren, and others.

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Important Steps in Preserving Your Estate

If you are like most people, wills, trusts, life insurance, disability income insurance, and advance directives are topics you would just as soon avoid. Yet, timely planning is necessary to preserve the assets you have worked so hard to accumulate and to protect your loved ones. Here are some important steps you can take now to help ease your family’s emotional and financial burden in the event of your death:

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Assigning Your Life Insurance Policy

Getting approval for a loan can sometimes depend on, for example, a lender asking a borrower, “How will this loan be repaid in the event of your death?” Your answer may be to assign your life insurance policy, a useful feature that can help provide necessary security for a lender.

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Analyzing Investment Styles: Growth vs. Value

Growth or value—what’s your style? Growth investors look for stocks that will grow at a high rate for a relatively short period of time or mutual funds that focus on growth stock. Value investors look for stocks that are currently undervalued and are expected to increase to their true value over a longer time horizon or mutual funds that focus on value stock.

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An Introduction to Split-Dollar Life Insurance

Contrary to what you may think, split-dollar life insurance is not an insurance policy, at least not in the classic sense. It is a type of arrangement that allows two parties, typically an employer and an employee, to split life insurance protection costs and benefits. The premium payments, rights of ownership, and proceeds payable on the death of the insured are often split between the company and a key employee. In many situations, however, the employer pays all or a greater part of the premiums in exchange for an interest in the policy’s cash value and death benefit. Cash values accumulate, providing repayment security for the employer, who is paying the majority of the premium. In this scenario, business owners have the opportunity to provide an executive with life insurance benefits at a low cost. Another option for companies to consider is to use split-dollar policies in place of insurance-funded nonqualified deferred compensation plans.

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A Financial Review Can Pay Off at Year End

Today, many people find themselves bombarded by a constant stream of financial news from television, radio, and the Internet. Yet, does all this “information age” data really help you manage your finances any better now than in the past? Often, what are considered old-fashioned practices, such as performing periodic financial reviews, can lead to greater success in the long run. Why not spend a few hours reviewing your finances? The changes you make today could result in increased savings. Consider the following seven important items:

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A Budget May Help Boost Your Savings

Whether you have substantial resources or live close to your means, a budget may be an effective foundation for a savings program. It can help you monitor your personal and household expenditures, potentially freeing up income that can be redirected toward savings. Consider the following:

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Budget Basics for College Students

One extracurricular activity that every student can master while in college is personal money management. Typically, a student’s daily spending is done on an improvised basis, meaning that overspending is often the norm rather than the exception.

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Countdown to Retirement: Strategies for Saving in Your 50s

The Baby Boom generation is about to enter another era: retirement. Never known for accepting the status quo, Baby Boomers are ready to redefine the “golden years.” Forget about endless days of leisure. This generation seeks adventure, travel, and new business pursuits. While these changes may redefine retirement, will Boomers be able to finance their plans? Today, many people age 50 and older have not begun to save for retirement or have yet to accumulate sufficient funds.

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Control Your Runaway Expenses

For many of us, the cost of living has risen faster than our income has. In some cases, consumption has increased, as well. If you are looking for ways to control both rising expenses and increasing consumption, here are some timely suggestions.

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Choosing the Right Retirement Plan for Your Business

You’re an entrepreneur and you’re not looking back. You’ve opened your own business, whether alone or with partners, and you’ve achieved success. Now you’re thinking about retirement, not just for you, but also for your employees. Offering a retirement plan can help your business attract and retain employees, while making it easier for you to save for your own retirement. Here are some of the options available to business owners:

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Charitable Giving: Good for the Heart and Your 1040!

It may be better to give than to receive, but it may be even better to give and see your generosity rewarded. Charitable giving can play a valuable role in your financial and tax strategies. A well-planned gift to charity could provide an income tax deduction and a reduction of estate taxes. Your donation could also help you maintain financial security, exercise control over assets both during your lifetime and after death, as well as provide for your heirs in the manner you choose.

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When a Saver Marries a Spender, Every Penny Counts

If you're a penny pincher but your spouse is penny wise and pound foolish, money arguments may frequently erupt. Couples who have opposite philosophies regarding saving and spending often have trouble finding common ground. Thinking of yourselves as two sides of the same coin may help you appreciate your financial differences.

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Give Your Retirement Plan an Annual Checkup

Financial professionals typically recommend that you review your employer-sponsored retirement savings plan annually and when major life changes occur. If you haven't revisited your plan yet in 2015, the end of the year may be an ideal time to do so.

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Periodic Review of Your Estate Plan

An estate plan is a map that explains how you want your personal and financial affairs to be handled in the event of your incapacity or death. It allows you to control what happens to your property if you die or become incapacitated. An estate plan should be reviewed periodically.

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What is a phased retirement?

In its broadest sense, a phased retirement is a gradual change in your work patterns as you head into retirement. Specifically, a phased retirement usually refers to an arrangement that allows employees who have reached retirement age to continue working for the same employer with a reduced work schedule or workload.

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Are federal employees eligible for phased retirement?

Yes, a phased retirement program is authorized by the Moving Ahead for Progress in the 21st Century Act or MAP-21. In 2014, the United States Office of Personnel Management (OPM) issued final rules relative to the program that provide guidance to agencies and employees about who may elect phased retirement, what benefits are provided, how the retirement pension/annuity is computed during and following phased retirement, and how federal employees may exit the phased retirement program.

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Life Insurance: Adapting to Changing Needs

When Jennifer purchased her life insurance policy 10 years ago, she assumed that her life insurance planning was complete. She thought that if she just paid her premiums on time, she could sit back and not worry about life insurance any more. Jennifer’s policy has provided protection for herself and her family over the years. But letting her insurance program run on autopilot may not be the best route to take in the long run.

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Inflation and Your Retirement

Even if your retirement is years away, it’s important to understand how inflation can affect your retirement savings. You probably know that inflation can depreciate your savings over time.

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Mapping the Road to Retirement

It makes sense to periodically review your financial strategy along the road to retirement to make sure you are taking advantage of all available tools and resources that may help build your retirement income. Your ability to save more now, before retirement, will provide you with a nest egg that will help support a comfortable retirement. You may want to consider these five steps to stay on track toward reaching your retirement goals:

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Life Insurance and Divorce: Protecting Your Family’s Future

Sometimes in life, things don’t work out as planned. One of the most trying examples is when a couple decides they can’t make their marriage work and, subsequently, files for divorce. Divorce can take a significant financial and emotional toll on a couple, their children, and other family members. In the midst of immediate financial and legal concerns, couples also need to consider ways to help protect their individual financial futures and that of their children’s in the event of death. Life insurance may offer a solution.

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“Gifting” Your Way to Estate Tax Savings

If you have been fortunate enough to accumulate substantial assets during your lifetime, do you know that estate taxes could reduce the amount you will be able to pass on to your heirs? Federal estate tax rates can reach as high as 35% for estates greater than $5.12 million in 2012. Unless Congress takes further legislative action, starting in 2013, the top estate and gift tax rates will revert to 55%, with exclusion amounts of $1 million. Therefore, it is important to develop an estate planning strategy that helps reduce the impact of estate taxes. By making gifts of existing assets during your lifetime, you can help reduce the size of your estate and lessen your family’s future estate tax burden. .

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Your Assets and Your Children: Dividing Your Estate

When planning the division of your assets, you may endorse the philosophy of “share and share alike” to avoid conflicts and complaints of favoritism. But does the idea of fairness equate with factors such as age, talents/skills, interests, needs, and degrees of material success? A more practical approach to the division of assets may be one in which you recognize and compensate for differences in the abilities and needs of your children, even at the risk of some disagreement.

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Location Matters When Choosing a Retirement Home

Retirees have many options when choosing where to live. While climate, proximity to family, and the cost of housing will likely factor into the decision about where to retire, prospective retirees should also take into account the amount of taxes they will owe in the state and town where they have their primary residence.

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Retirement Savings: Do Yours Measure Up?

When you envision retirement, do you picture yourself living in a warm climate, traveling to exotic places, or doing whatever suits you on any given day? It might surprise you to learn that, regardless of your age or circumstance, a "lifestyle plan" is an important part of retirement planning.

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Traditional IRAs vs Roth IRAs

Currently, there are two popular Individual Retirement Accounts (IRAs) vying for your attention: the traditional IRA and the Roth IRA. While both are long-term savings vehicles with tax benefits, each has different rules concerning contributions, age, and income that may change from one year to the next.

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Social Security and Retirement

When contemplating retirement, you, like many other people today, may be counting on Social Security benefits to provide you with a basic level of income. The age at which you choose to retire is an important part of the equation. In addition, there are many other issues to consider when making that choice.

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Retirement Saving: Let the Journey Begin!

We've all heard the old adage, "a journey of a thousand miles begins with a single step." The same concept applies to saving for your retirement. It's up to you to take that first step. If you wait until you have "enough" money to begin saving, you may never start at all. Instead, focus on the first step. Then, you can begin transforming that thousand-mile journey into smaller, more manageable goals.

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Understanding the Basics of Economic Forecasting

When weather forecasts are inaccurate, we can usually change our plans with little consequence in the greater scheme of things. When economic forecasts are inaccurate, however, the consequences may be more significant. While making financial decisions does involve some guesswork, an educated guess - even with elements of uncertainty - may be better than making a decision with no forecast at all.

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Over 50? Strategies for Retirement Savings

The baby boom generation is about to enter another era: retirement. Never known for accepting the status quo, baby boomers are ready to redefine the "golden years." Forget about endless days of leisure. This generation seeks adventure, travel, and new business pursuits. While these changes may redefine retirement, will boomers be able to finance their plans? Today, many people age 50 and older have not begun to save for retirement or have yet to accumulate sufficient funds.

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Lease or Buy: Understanding the Basics

As leasing continues to grow in popularity, many new car buyers wonder how the option of leasing compares to buying. Let’s look at a hypothetical couple, Peggy and Stan, who have always purchased their vehicles. After hearing friends and relatives tout the benefits of leasing, they now wonder whether it is better to lease or buy.

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The Reality of Early Retirement

Is early retirement on your wish list? Do you envision a relaxing lifestyle in a warmer climate or the leisurely pursuit of a personal hobby? Unfortunately, retiring later than anticipated, rather than sooner, is becoming more and more commonplace. But some people are still managing to retire early. You may be asking yourself, “How do they do it?”

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The Importance of Minimizing Your Retirement Risks

With the median net worth of American families showing signs of stagnation and traditional pension plans disappearing, even as the growing number of retirees places pressure on the Social Security system, workers who are currently trying to plan for retirement are facing an uphill battle, according to a report released by the Society of Actuaries Committee on Post Retirement Needs and Risks (CPRNR), the Urban Institute, and the Women’s Institute for a Secure Retirement (WISER).arrangements.

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Investigating Employee Misconduct

The Federal Fair and Accurate Credit Transactions Act of 2003 (FACTA) relaxed the rules governing employer investigations of employees accused of misconduct such as discrimination, sexual harassment, and workplace violence, etc. A business can hire an outside firm to investigate allegations of employee misconduct without receiving the accused employee’s written consent for the investigation. In addition, businesses are only required to provide a report when adverse action is taken and may withhold the names of interviewed sources.

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The Importance of Conducting Employee Background Checks

If you are planning to hire a new employee, it is important to conduct proper and legal background checks to verify the information that the applicant has provided to ensure that he or she is the best fit for the position. There are many different types of background checks and various ways to obtain records. However, you are required at all times to abide by the laws that regulate background screening, such as the Fair Credit Reporting Act (FCRA).

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Year-End Tax Planning Strategies

Waiting until just before April 15 to start thinking about your taxes may prove to be a costly mistake. Preparing a draft of your tax return before the end of the year will provide you with a more complete picture of what you are likely to owe, and it may leave you with enough time to reduce your tax liability by contributing to tax-advantaged savings accounts or qualifying for deductions. Advance tax planning is especially important if your circumstances have changed over the past year due to events such as marriage, divorce, the birth of a child, or the death of a family member.

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Succession Planning with Buy-Sell Agreements

Planning for certain contingencies, such as death, disability, or retirement, is a concern that affects all business owners. For family businesses, in particular, continuation planning is inevitably intertwined with business, tax, and estate planning. One succession tool that can help ensure a smooth transition is the buy-sell agreement. These multifaceted agreements serve many valuable purposes, such as establishing a sale price for business interests; valuing an estate for estate tax purposes; providing liquidity; and easing the transfer of ownership between partners, family members, or a third party.

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When Giving, Get a Receipt

Charitable contributions can be especially important to help support an organization or a cause that’s close to your heart. As an added benefit, you may be able to deduct a portion of your contributions on your Federal income tax return. However, as with all tax deductions, it’s important to keep accurate records of charitable donations in the event you one day need to substantiate such gifts. Therefore, be sure to obtain a receipt to confirm your charitable contribution.

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Top 10 Tips for Fiscal Fitness

As days turn into weeks and weeks turn into months, it may feel like there is little time to catch up on all of your financial responsibilities. Sometimes it may be easier to simply toss ATM receipts, credit card bills, and bank statements into the “junk drawer” to deal with later. But, later never seems to come. Is it time for you to put fiscal fitness at the top of your to-do list?

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The "Taxing Effects” of Selling Your Home

Because of the generous capital gains exclusion on selling a primary residence, you may find that you do not owe Federal taxes when it comes time to sell your home. But there are situations in which a seller may incur a tax liability, especially if the sale price is very high, if the house is sold soon after purchase, or if the owners are unmarried or are selling as the result of a divorce. In many of these cases, however, the amount owed to the IRS can be minimized, or offset, with some advance planning.

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Non-Working Spouses and Roth IRAs

For many married couples, retirement planning has become not only a personal responsibility but a financial necessity. Since Americans are living longer, retirement funding may need to span several decades beyond the normal retirement age. When you consider the escalating costs of health care, the uncertainty of Social Security and Medicare, and the pace of inflation, it is more important than ever to explore tax-advantaged saving options that can fit into you and your spouse’s overall financial plan for retirement. Let’s take a closer look at some of the benefits of a Roth Individual Retirement Account (IRA).

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Understanding Life Insurance Beneficiary Designations

In the language of life insurance, a beneficiary is the recipient of the proceeds of a policy when the named insured dies. The owner of a life insurance policy has a great deal of flexibility in naming beneficiaries and can generally name anyone he or she chooses. However, it is important to understand the different types of designations and methods of distribution before choosing your beneficiaries.

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Building Your Financial Foundation

Regardless of the path your life takes, money will play an important role at every turn. Certain events, especially graduating from college, entering the work world, getting married, having children, and retiring all require targeted financial strategies. Good habits developed now can go a long way toward helping you achieve your financial goals.

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Paying for College with Help from Uncle Sam

When thinking about funding sources for your children’s college education, you may assume your family earns too much to qualify for Federal grants, loans, and work-study job assistance. However, families with higher incomes are frequently eligible to receive some form of financial aid from the Federal government.

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Your Estate and Life Insurance: It All Adds Up

It can be fairly easy to underestimate your net worth. After all, predicting the future value of your home and savings is merely hypothetical. On the other hand, you can rely on the fixed amount of the death benefit provided by your life insurance policy. However, adding this often significant sum to your asset pool could expose your estate to the Federal estate tax.

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Inflation Affects Your Life Insurance Coverage

Determining your current life insurance needs is important, but your needs may change in the future. Projecting future coverage needs requires you to pay careful attention to inflation, as well as changes in your personal circumstances.

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Minimizing the Risk of Getting Audited

The IRS has been stepping up its efforts to ensure that Americans are accurately reporting the taxes they owe and is auditing a growing number of taxpayers, especially those with high incomes and complex financial arrangements. While all taxpayers are at risk of being audited, you may be more likely to attract the attention of the IRS if certain “red flags” appear on your return.

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How Much Does It Really Cost to Own a Home?

Housing costs have soared over the years. And, while owning your own home may still represent the American dream, many people are unsure at what point it becomes less expensive to buy than rent. There are four key elements in making that decision: 1) the cost of the home; 2) the amount of the down payment and other out-of-pocket expenses required; 3) the interest rate on the mortgage; and 4) your income tax bracket.

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The Tax Consequences of Selling a Business

Business owners who are considering selling their company should take into account the taxes they will owe before putting the "For Sale" sign up. When a sale produces income, owners have to pay taxes on at least part of their gains from the sale. How these gains are taxed depends in large part on the structure of the business, whether the business is being sold as a set of assets or as an entity, as well as the type of assets being sold.

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What is Vesting?

Vesting refers to an employee’s entitlement to funds contributed to a qualified, employer-sponsored retirement plan. An employee’s contributions—and any earnings on these contributions—are fully vested from his or her start in the plan. An employer’s matching contributions, on the other hand, may vest according to a schedule set by the employer, as specified in the plan document and following applicable regulations. Therefore, an employer can arrange his or her contributions to follow a vesting schedule that rewards loyalty by fully vesting plan participants after a specified number of years.

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Succession Planning for Business Owners

If you’re a small business owner, you’ve invested a great deal of time and effort into building your company. With day-to-day demands, it may be difficult to imagine your eventual transition into retirement. Yet, if you want to build personal financial security and ensure business continuation, it is important to plan ahead. Business succession planning can help create retirement income for a retiring business owner and facilitate the transfer of operations and/or ownership to family or another entity. A succession plan can also provide a strategy to handle unforeseen events, such as death or disability.

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Disability Planning and Your Business

Many business owners have life insurance to help protect the financial well-being of their families in the event of their death. They also have property and casualty insurance to help cover the value of their personal belongings in the event of damage, fire, or theft. However, many business owners may overlook one of their most valuable assets, which is their ability to earn an income.

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Exploring Your Retirement Plan Options

You're an entrepreneur and you're not looking back. You've opened your own business, whether alone or with partners, and you've achieved success. Now you're thinking about retirement, not just for you, but also for your employees. Offering a retirement plan can help your business attract and retain employees, while making it easier for you to save for your own retirement. Here are some of the options available to business owners:

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The Tax Implications of Changing Jobs

Whether you are moving to another employer because of a new opportunity or because you were laid off from your previous position, changing jobs can have major tax implications, both for the amount of taxes owed in the year you start a new position, and for your long-term retirement planning.

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Recruiting: Staying One Step Ahead of the Competition

Whether you run a small, family-owned business or a large company, attracting and retaining key employees is challenging in today’s economy. Businesses often compete for skilled and talented employees in the same way they compete for a customer’s business. So, how can your business set itself apart with top performers?

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Whole Life Insurance: What You Should Know

When faced with the wide range of life insurance coverage available, you may wonder what type really fits your needs now and what coverage you should have in place for the future. A good first step is to understand basic whole life insurance coverage.

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Steps for Managing Your Cash Flow

Small business owners inevitably juggle many competitive priorities. While it can be challenging to keep everything running smoothly, “dropping the ball” on cash flow can be a costly oversight. Effectively managing the money flowing in and out of your company is key to staying in business. As you plan for success, three basic steps can help you successfully manage your cash flow: tracking, analysis, and budgeting.

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Options for Financing Your Business

Using many years of experience and industry know-how to establish a business is a goal held by many would-be entrepreneurs. In fact, finding a location, formulating a business plan, and hanging the "Open" sign might be one of your long-cherished dreams. However, securing capital to begin operations can often be frustrating and difficult. But, there are a number of potential sources of financing to explore. Some entrepreneurs are able to secure bank loans or venture capital, while others may turn to family members or friends for financing.

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Why a Home May Still Be Your Best Investment

While everyone’s situation is different, buying a home that you plan to live in for many years may still be one of the best investments you can make. An uncertain market should not necessarily deter prospective buyers, but rather prompt them to develop a more realistic perspective on homeownership.

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Monitoring and Managing Business Credit Reports

Often, large public companies have teams of people dedicated to reporting organizational changes to the business community and credit rating agencies. Smaller private companies, however, must make more of an effort to ensure that their credit reports accurately reflect the current state of their businesses. They need to make certain that reports are free of errors or omissions that could damage their reputation or hinder access to loans or other forms of credit.

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Rent or Own: You Decide

If you’re considering whether or not to buy your first home, it can be an exciting and time-consuming process. For many, the purchase of a home is the largest purchase they will ever make. Therefore, it’s not a decision to be taken lightly. If you feel that you will be better off financially as an owner instead of a renter, one important question remains: What mortgage amount could you afford?

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Key Employees: Protecting Your Most Valuable Assets

Suppose you arrive at your company one morning and discover that a key employee died unexpectedly the night before. Have you ever considered how such a turn of events may affect your company? Along with losing a valued member of your team, you may also be losing knowledge, skill, and important professional relationships cultivated over many years.

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EAPs Help Employees Cope with Personal Challenges

Otherwise dedicated and productive employees can feel overwhelmed by domestic hardships, the death of a family member, mental or physical health issues, financial concerns, substance abuse, or severe work-related stress, which can interfere with their ability to perform effectively on the job. Therefore, a growing number of companies are adding employee assistance programs (EAPs) to their benefit packages to offer professional help. Compared with other types of benefits, EAPs may be relatively inexpensive.

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College Admissions: Thinking Outside the Box

If you were asked how best to prepare your child for college, you might say that a well-rounded high school curriculum would be a good start. It may be true that your child needs to be a good student in order to get a foot in the door of higher education. Today, however, getting to college and finishing college are two distinct challenges.

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Leaving a Legacy

For millions of Americans, “charity begins at home.” Many have decided to make a difference by donating money to local religious, educational, social, or cultural organizations. In addition to the immense satisfaction that comes from giving to others, charitable giving can provide tax benefits for the donor and his or her heirs when done as part of an overall estate plan.

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You’ve Graduated: Now It’s “Payback” Time

It takes four years, on average, to graduate from most colleges and universities. During that time, students can accumulate a large amount of debt. For most, the degree is worth the burden of paying off student loans long after graduation. However, these questions remain: How should the debt be repaid? Are there any plans that can help make “payback” easier? What if a student can’t find a job right away?

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Trimming Your Taxes While Saving for Retirement

Contributing to tax-advantaged retirement plans is one of the most effective financial planning strategies available to U.S. taxpayers: Saving money in a 401(k), IRA, or a Roth IRA account can trim your tax bill, while helping you prepare for the future. Even if you are already contributing to a retirement plan, you should review your retirement savings strategy regularly to ensure that you are making the most of the tax breaks you qualify for.

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The Value of an Appraisal

Television shows featuring auctions and appraisal fairs have ushered the art of appraising into the limelight with fascinating stories—an ancient artifact unknowingly passed down from generation to generation, a rare trinket picked up at a yard sale, or an historic relic found tucked away in the corner of the attic. While appraisals occasionally lead to surprising discoveries, they more often play a key role in developing financial strategies.

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Understanding the Consumer Price Index

The highs and lows of the economy affect people and markets in a variety of ways. While some sectors may be thriving, others may be sluggish. One economic indicator used to gauge the state of the American economy is the Consumer Price Index (CPI), which measures the rate of inflation in the United States.

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The Importance of Advance Directives

Traditionally, estate planning has focused on minimizing estate taxes and directing the disposition of your assets after death. Today, managing your affairs often includes the issue of long-term health care. What would happen if you were to experience a debilitating illness or become incapable of managing your own affairs? Such a situation could occur gradually, due to a progressive medical condition, or suddenly, due to an unexpected accident or illness. If such an event were to happen, who would make important legal, financial, and health care decisions and on what authority?

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The "Value" of an Appraisal

Television shows featuring auctions and appraisal fairs have ushered the art of appraising into the limelight with fascinating stories—an ancient artifact unknowingly passed down from generation to generation, a rare trinket picked up at a yard sale, or an historic relic found tucked away in the corner of the attic. While appraisals occasionally lead to surprising discoveries, they more often play a key role in developing financial strategies.

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Understanding Interest Rates and Your Financial Situation

When discussing bank accounts, investments, loans, and mortgages, it is important to understand the concept of interest rates. Interest is the price you pay for the temporary use of someone else's funds; an interest rate is the percentage of a borrowed amount that is attributable to interest. Whether you are a lender, a borrower, or both, it is important to consider how interest rates may affect your financial decisions.

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Ten Tips for Creating an Effective Estate Plan

Whether your estate plan is simple or complicated, many details can undermine the effectiveness of your plan. But, there are also ways to ensure the effectiveness of your plan. Here are 10 steps to help remedy or avoid some common estate planning mistakes:

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Tax Breaks for Elder Care

Like many Americans, you may find yourself having to help cover the medical costs and caregiving expenses of an aging parent or other close relative. If you and your parent meet certain criteria set by the Internal Revenue Service (IRS), you may qualify for tax breaks that can ease the financial burden of paying for care, even if your parent does not live in your home.

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Tax Planning for A Move Abroad

Many Americans are considering moving abroad to take advantage of professional and personal opportunities in a global economy. But as a U.S. citizen living in a foreign country, your tax situation may become more complex, especially because the U.S. requires all of its citizens and green card holders living abroad to continue to file returns in the U.S., and pay taxes on their worldwide income. Depending on the source and level of your income, however, you may be entitled to a number of tax breaks, chiefly designed to keep you from being taxed doubly by your adopted country, as well as in the United States. Whether you actually come out ahead on taxes will depend on which country you work in and its tax rates, along with your individual financial and employment situations.

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Trusts and Your Estate Plan

Arranging for the distribution of assets after death is not a task most people approach eagerly. It is, however, a necessary task. That's where trusts can come into play. A trust, simply defined, is an arrangement whereby one person holds legal title to an asset and manages it for the benefit of another. For estate planning, trusts may be used in several ways.

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Tax Advantages of Turning a Hobby into a Business

Many people dream of turning their passionate pursuit into a money-making venture. Creating a successful and profitable business is seldom easy, but the Federal government offers tax incentives to business owners that could make converting an avocation into a business start-up an effective part of your overall tax planning strategy. If you are thinking about turning your hobby into a business, you would need to realistically appraise your chances of building a profitable enterprise before you declare yourself a business owner.

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The Four Forms of Property Co Ownership

Owning property with another individual or partner may create a complicated relationship. Due to the complexity of the situation, the way in which you take title or ownership must be determined in advance. Consulting with your legal professional can help you establish the form of ownership in such a way that will benefit you and your future heirs. The four forms of co-ownership, one of which will likely be better suited to your circumstances, are as follows:

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Estate Planning and the Importance of Drafting a Will

The prospect of writing a will can often bring up uncomfortable feelings. Yet, drafting a will is one of the most important components of estate planning. Having a will in place ensures that your heirs will be provided for and your wishes for asset distribution will be met. Like many people, have you postponed writing a will? Or, is it time to review and update it?

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Solidify Your Future: Use Advance Directives

Traditionally, estate planning has focused on minimizing estate taxes and directing the disposition of your assets after death. Today, managing your financial well-being often includes the potential need for long-term health care. If you were to sustain a debilitating illness, or become mentally incapacitated, which can occur gradually due to a progressive medical condition, or suddenly, from an unexpected accident, who would make your important legal, financial, and health care decisions, and on what authority?

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Securing a Business Loan with Term Life

As a business owner, you have probably worked long and hard to build a successful company. Yet, even when profit projections look promising and a project is backed by a sound business plan, your banker may be reluctant to lend the funds necessary for expansion, particularly if the success of your venture depends too heavily on you.

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Subtract Inflation and It All Adds Up!

Some of us may remember the “good old days,” when gasoline prices were as low as 25¢ per gallon. Others may recall when a can of soda cost 15¢. But prices tend to rise over time—sometimes steadily and sometimes abruptly. In the years ahead, inflation will most likely decrease the purchasing power of your money, which means that during retirement, your dollars will buy less than they do today.

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Plan Carefully When Choosing Your Executor

One important decision you will need to make when writing your will is selecting an estate executor. Ideally, your executor should possess the tact of a diplomat and the administrative skills of a professional executive. You may want to choose someone who knows you and your family well enough to faithfully carry out your wishes, but who also has the necessary objectivity to handle any conflicts that may arise.

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Strategies for Making Tax-Free Gifts to Loved Ones

Prospective insurance buyers are often confused about disability income insurance because the features and benefits can vary widely from one policy to another. Essentially, there are a few key elements that could make a big difference when you make your choice. If you are in the market for disability income insurance, here are some significant points to consider:

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Protect Your Estate with an Irrevocable Life Insurance Trust

Many estate planning practitioners view the irrevocable life insurance trust (ILIT) as a flexible and useful tool that can provide a number of benefits to their clients. Because the question of where the ILIT fits into the overall estate planning process can be somewhat confusing, a closer look at its potential advantages may prove helpful.

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Retirement Planning: Keeping Pace with Change

Planning ahead for retirement means setting long- and short-term goals, while deciding how they will be met, within the framework of a changing financial picture. As your golden years approach, consider these factors to better position yourself to enjoy your retirement years:

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Taxes and Your Estate: Reconcile Your Domicile

Increased mobility in today’s society has changed the ways in which we live, work, and play. Compared to previous generations, it is now quite common for work and recreational activities to cross state lines, resulting in ownership of property and formal relationships in more than one state. However, the expanded opportunities created by mobility may come at a price: the increased likelihood that several states may be able to tax your estate when you die. If you were to die today, do you know if more than one state would attempt to levy taxes on your estate?

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Is an Annuity Right for You?

When it comes to your retirement, there are three factors that you may want to take into account when planning for your retirement income needs.

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Planning Your Estate before Remarriage

Despite the best intentions, marriages may not last forever. If you are divorced or widowed, and planning to remarry, you may want to take the opportunity to review and revise your estate conservation strategies. This is especially important if you and your future spouse have children from previous marriages.

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Analyzing Investment Styles: Growth vs. Value

Growth or value-what's your style? Growth investors look for stocks that will grow at a high rate for a relatively short period of time or mutual funds that focus on growth stock. Value investors look for stocks that are currently undervalued and are expected to increase to their true value over a longer time horizon or mutual funds that focus on value stock.

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Newlyweds: Get a Financial Head Start

If you are newly married with no children, you may have a special opportunity to build your savings and investments. Financially, a married couple can be more than the sum of its parts. One spouse can work steadily, while the other studies for a college degree or launches a promising business. Or, if both spouses hold jobs, you can try to live on one paycheck and save or invest the other paycheck.

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Points for Business Succession Planning

  1. Start now—address the issue of business succession—don’t put it off!

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Private Foundations—An Alternative to Charitable Giving

For many individuals with accumulated wealth, occasional gifts to a favorite charity may satisfy their charitable inclinations. The added incentive of an often-substantial tax deduction, coupled with various estate planning benefits, can be the driving force behind such charitable gifts. However, for some individuals, philanthropy is a far more serious endeavor, often involving a succession of substantial gifts of at least $5 to $10 million, which may necessitate an amount of control and general oversight. In these situations, a

private foundation can be an ideal venue for managing a large, ongoing charitable giving program.

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Teach Your Children the Basics of Money Management

A four- or five-year-old child may seem too young to grasp the concept of money management, but even at an early age, children waiting in a supermarket checkout line can see that money buys things. Therefore, it is important to begin as early as possible to help your child understand the value of money.

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Making Your Finances Picture Perfect

While most people find the notion of creating a budget about as appealing as cleaning out closets, most would agree that the result—a well-crafted and useful budget—is worth the work

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Tips for Getting and Staying Out of Debt

Debt management is a practice that is always “in style,” whether economic times are good or bad. Effectively managing your debt prepares you to weather tough economic times, as well as to capitalize on a more robust economy. Here are some tips to help you get out, and stay out, of debt:

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Planning for Your Financial Future

Regardless of the path your life takes, money will play an important role at every turn. Certain events, especially graduating from college, entering the work world, getting married, having children, and retiring all require targeted financial strategies. Developing good financial habits now can go a long way toward helping you achieve your future financial goals.

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Controlling Your Runaway Expenses

For most of us, the cost of living has risen more quickly than our income. In many cases, consumption has increased, as well. If you are looking for ways to control both rising expenses and increasing consumption, here are some timely suggestions.

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Protecting Your Financial Information Online

More consumers are conducting financial transactions online and may become vulnerable to tracking, hacking, identity theft, phishing scams, and other cyberspace risks. While nothing can guarantee complete safety on the Internet, understanding how to protect your privacy can help minimize your exposure to risk.

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It’s Your Money. . .Who Decides How Your Charitable $$ will be Spent?

When you give $100 to your favorite charity, you are probably not overly concerned about how your donation is spent, as long as it advances the mission of the charity. On the other hand, if you are making a large donation, it is more likely that you have specific goals in mind, whether to fund a particular program or support another endeavor. This desire to specify exactly where your donation dollars will go may jeopardize your ability to claim an income tax deduction. Therefore, proper planning is essential.

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The Basics of Financing Your New Home

If you are in the market for a new home, interest rates are favorable, and good deals are not difficult to find in many areas of the country. Buying a home is the single largest purchase most people will ever make, and for first-time homebuyers especially, the financing process can appear complicated. The following information provides you with some preliminary information to understand how mortgages work.

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First-Time Homebuyers: Items to Consider

Contemplating whether or not to buy your first home can be an exciting and time-consuming process. For many, the purchase of a home is the largest purchase they will ever make. Therefore, it is not a decision to be taken lightly. If you feel that you will be better off financially as an owner instead of a renter, one question remains: What mortgage amount can you afford?

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Important Considerations for Workplace Monitoring

Many large U.S. companies and organizations have some form of workplace surveillance system in place for monitoring security. But with advances in technology, workplace monitoring has come of age and is also available to small business owners, to closely observe employee behavior. While many employers may use workplace monitoring for what they believe to be legitimate purposes, such as checking employee productivity, performing business-related quality control, or tracking sources of leaks in confidential company information, companies need to formulate specific guidelines—and adhere to them—for the proper usage of security systems, in order to abide by existing laws that help protect employee privacy.

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Retirement Planning: Let the Journey Begin

The sage advice that a journey of a thousand miles begins with a single step, also applies to saving for your retirement. It’s up to you to take that first step. If you wait until you have “enough” money to begin saving, you may never start at all. Instead, focus on the first step. Then, you can begin transforming that thousand-mile journey to retirement into smaller, more manageable goals.

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