Mattson Financial Services - July 2018

F I N A N C I A L S E R V I C E S , L L C

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www.MattsonFinancial.com

July 2018

WATCH OUT FOR THE RMD TAX BOMB FINANCIAL FIREWORKS

As the Fourth of July rolls around once again, backyard barbecues and fireworks are on everyone’s minds. But as you celebrate America’s independence, kick back, and relax this summer, there is another firework you’ll want to be aware of: the tax time bomb. What am I talking about? This tax time bomb is not a beautiful display of fire and light in the evening sky. Instead, it’s your hard-earned retirement savings going up in flames due to taxes you could have avoided. It all comes back to your required minimum distributions (RMDs). When you reach age 70 1/2, RMDs become a part of your financial life, year to year. When you haven’t taken money for a long period of time from your IRA account, it can grow to be a very high balance, which in turn means a large RMD value. You could be setting yourself up to pay major taxes for the rest of your life. With proper planning, however, you can defuse this tax bomb and get back to enjoying your summers, and fireworks, for years to come. You won’t have to worry about any looming tax bombs. This is planning that can start as early as the first day you leave the workforce and years before your RMDs officially kick in at age 70 1/2. One thing you can do is to begin converting your traditional IRA money into a Roth IRA. Most people don’t realize that you can convert IRA money into Roth IRA money as long as you’re willing to pay the tax — even in

retirement. The great thing about Roth IRAs is that you won’t have to worry about RMDs at all, since the tax is paid earlier on. How much you will owe on that tax is based on the tax step you’re in and how much money you’re looking to take out over that tax year. If, for instance, you’re in the 22 percent tax bracket (and your income is at about $80,000 per year for individuals), taking more income won’t necessarily bump you into the next tax bracket. Any dollar amount above $82,500 for individuals will be taxed at 24 percent rate, but the rest is still only taxed at 22 percent.

for your income to throw off your Medicare and Social Security in terms of taxes. You don’t want this tax time bomb to go off in your hands. It’s important to discuss your plan with a financial professional. Taking on a tax time bomb on your own can be a huge challenge. As you approach age 70 1/2, plan accordingly and don’t let those RMDs go undistributed. So, this summer, as you watch the red glare from the bombs bursting in the air, don’t let good Uncle Sam treat your hard-earned money as gunpowder for his personal tax time bomb. –Gary Mattson

While planning for the future and RMDs, another thing to be aware of is the potential

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THESE MALLS WERE MADE

THE EXERCISE VENUE THAT WILL KEEP YOU COOL AND FIT

If you’re young at heart and looking to stay (or get) in shape this summer, consider taking a trip to the mall. No, not to pick up some hot new exercise product or dietary supplement, but to walk a few laps. Safe and convenient, “mall walking” has become one of the biggest trends in senior fitness. COOL IN THE SUMMER, WARM IN THE WINTER This time of year, heatstroke can be a real concern when exercising outside. But that doesn’t mean you have to be a homebody. Because malls are spacious and climate-controlled, they make great year-round walking venues, especially when summer temperatures spike. You don’t even need to put on sunscreen! REST STOPS ABOUND While the average American shopping center isn’t as scenic as the Appalachian Trail, they are far more convenient. Replete with

bathrooms, cool drinking water, and plenty of benches, the mall lets you focus on exercising and removes all of the “what ifs” that come with aging. Most malls are also outfitted with EMT kits in the event of a medical emergency. SQUEEZE IN SOME SHOPPING It is still a mall, after all. Why not check a few items off your shopping list or reward yourself with a new pair of sneakers? Getting things done as you exercise makes the experience that much more rewarding. Just remember not to overdo it. Carrying too many shopping bags can place undue stress on your back — and your wallet. YOUWON’T BE ALONE Today, malls are the second-most popular places to walk in America, after neighborhoods. Mall walking has become so big that many

DEBT CAN RUIN YOUR RETIREMENT,

But It Doesn’t Have To

When people approaching retirement are asked about their biggest fears, debt consistently ranks near the top of the list. That’s with good reason. According to finance company Comet, roughly 80 percent of American adults have some amount of debt. Many Americans will retire with a mortgage, car payment, or some other form of financial obligation. Obviously, retiring debt-free is the best outcome, but it’s simply not realistic for many people. That said, a little planning can go a long way toward making debt manageable after your career is over. Ideally, paying down debt should begin while retirement is still far off on the horizon. High-cost consumer loans, like those on credit cards, should be the debts you tackle first. A good rule of thumb is to start with the debt that has the highest interest rate. The longer that debt sits, the more you pay in interest. Many of these debts are not tax-deductible, so there’s no point in waiting for the optimal time to pay them off.

As you get nearer to retirement, you should take a look at your mortgage and be ready to do some math. Because mortgages are tax-deductible, you may be in for a significant rate decrease once you retire. While the best strategy for you may be different than your neighbor’s, there are a few principles that apply to all cases. You need to be sure that your payments during retirement will be manageable on your reduced income. You should also never cash in your 401(k) or other retirement accounts early to pay off your mortgage, because you’ll incur serious fees for an early withdrawal. As you transition into retirement, you should reevaluate your budget. The more expenses you can reduce, the longer your resources will last and the less stressful any outstanding debt will be. You should also set aside at least three months of emergency funds if possible so that you won’t need to use credit if something unplanned happens.

Retiring without any debt may not be an option for you, but that shouldn’t stop you from proactively planning to decrease debt before you stop working. Like the proverbial monster under the bed, debt is a lot less scary when you’re willing to stare it straight in the face.

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6 Dog Mayors From Around the US WHEN POLITICS GOES TO THE DOGS

OR WALKING

Most towns and cities around the country play it safe: They elect humans to hold political office. But a few towns decided to do something a little different. They threw political formality to the wind and elected dogs to office. Here are a few popular pups from around the country.

communities and senior living centers have put together official groups to stride together. Your local mall may already open early to accommodate walkers. So if you’re looking to make friends in an active, fun-loving community, do some research. Chances are there’s a mall- walking club near you!

DUKE . This Great Pyrenees became one of the most popular pups to hold elected office. He first ran for mayor in 2014 in Cormorant Township, Minnesota, and won by a landslide. He’s been in the mayoral race every year since then— and he’s won every time! Today, Duke is still in office, where he never misses a photo-op or a pat on the head. MAXIMUSMIGHTY-DOGMUELLER. This golden retriever was first elected to office in 2012 in Idyllwild, California. His election was part of an initiative put together by an organization called Animal Rescue Friends, or ARF. As part of the election, area residents could nominate their cat or dog for mayor. During the inaugural event, 14 dogs and two cats ran for mayor, with Max leading the pack. Max was elected to a second term in 2013, but soon passed away after a battle with cancer. Thankfully, his successor was quickly appointed: Maximus Mighty-Dog Mueller II. BRYNNETH PAWLTRO, LUCY LOU, JUNIOR COCHRAN, AND GOOFY BORNEMAN. These four dogs all hail from Rabbit Hash, Kentucky. Back in 1998, the people of Rabbit Hash decided to elect a dog mayor. That year, Goofy Borneman, a mixed breed, became the first in what would become a continuing tradition. He held the office until 2001, when he passed away at age 16. In 2004, Junior Cochran, a black Labrador, took on the role of mayor, but his termwas plagued by scandal after he spent too much time hanging around the town’s general store — and Health and Safety was called. Then, he too died in office in 2008. Later that year, Lucy Lou, a border collie, was elected into office and became the town’s first female mayor. The good news is she saw her term through to the end, but she didn’t run for a second term. Instead, pitbull Brynneth Pawltro, or Brynn as his friends call him, ran and won. Today, you’ll find Brynn roaming Rabbit Hash, staying carefully out of Health and Safety’s way.

LAUREL’S CHARRED CHILI-CHEESE CORN Inspired by Bon Appetit magazine Ingredients

• 4 ears of corn, husked

• 1/4 cup fresh lime juice

• 4 tablespoons high-smoke-point oil, such as canola or vegetable

• 2 ounces fresh cotija cheese (or feta), crumbled

• 1 large shallot, thinly sliced

• 1/4 cup cilantro

• 1/2 red chili (such as Fresno) or jalapeño, thinly sliced

• Salt and pepper, to taste

Directions

1. Heat grill to medium.

2. Brush corn with 2 tablespoons oil and grill until visibly charred, 10–12 minutes. 3. Cut kernels off cob and combine with shallots, chilis, lime juice, cheese, and remaining oil.

4. Season with salt and pepper, garnish with cilantro, and serve.

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F I N A N C I A L S E R V I C E S , L L C

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3226 28th Street SE Kentwood, MI 49512 INSIDE THIS ISSUE

Watch Out for the RMD Tax Bomb

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The Benefits of Mall Walking How to Manage Debt Before and During Retirement Charred Chili-Cheese Corn 6 Dog Mayors From Around the US

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Must-See Swimming Holes of the World

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**Reminder: If you have any changes to your financial situation, please notify us as soon as possible.

Secret Swimming Holes of the World EXCLUSIVE SPOTS YOU MUST SEE TO BELIEVE Investment advisory services are offered through Mattson Financial Services, LLC, a Registered Investment Advisor in the state of Michigan. Insurance products and services are offered through Lakeview Financial Group, LLC. Mattson Financial Services, LLC and Lakeview Financial Group, LLC are affiliated companies.

Summertime is for swimming, but why settle for a community pool when you can have access to the most beautiful swimming locales in the world? These three exclusive, little-known spots are sure to take your breath away.

what each waterfall does, showcasing a serene experience unlike any other. But the beauty of this one-of-a-kind experience is only outdone by its exclusivity. To reach these pools, you’ll have to hike through dense forest, deep marshes, and wide-open pastures of sugar cane.

the most majestic shades of blue you’ll ever behold. The calling cards for these bodies of water are the Blue Eye and the Black Eye. Both offer unforgettable experiences, but the price of entry is a hefty sense of adventure. You’ll need a full set of scuba gear to get to either hole. THE BATHS, VIRGIN GORDA A day in the Caribbean is like living every moment inside a beautiful pastel painting. The elegance of this location in the British Virgin Islands will make you feel like you’ve been transported into a cathedral. The large boulders and natural rock formations create shallow caves that will captivate your eyes as you wade through the water in wonder. When you exit, you’ll witness the sight that gives this beautiful spot its name. A handful of 40-foot granite boulders form private pools as if that was what they were made for.

HALI’I FALLS, HAWAII With its spiral staircase of waterfalls, this remote jungle location offers up more than one unique spot to take a plunge. Visitors never fail to be awestruck by the deep blue-green hue of each pool created by the four cascading waterfalls. Hali’i means “to spread out,” which is precisely

DOS OJOS, MEXICO

The Spanish translation of the name for this magical system of caves is “two eyes,” and you’ll want to have yours checked after you see this swimming hole. When limestone bedrock collapses, a sinkhole called a “cenote” is formed. The unearthed water from the natural aquifer balances a color palette of earth tones with

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