Wolf Retirement Navigation February 2019

RET IREMENT NAV IGAT ION

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4230 Pablo Professional Court Ste. 101 Jacksonville, FL 32224

4711 US Highway 17, Suite C-5 Fleming Island, FL 32003

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February 2019

Tax Season Starts Early The 3 Biggest Tax Threats in Retirement

T ime for a reality check: Tax season doesn’t stop just because you no longer have an employer writing you a paycheck. Each year, my retired clients still have to take a step back from enjoying their retirement to pay Uncle Sam. Paying taxes in retirement can get a little more confusing when you start tapping into your traditional IRA or 401(k) tax- deferred accounts. As we get into tax season, here are the three biggest tax areas in which retirees need to be informed. Social Security When it comes to Social Security, your benefits can be taxed depending on your income. If your Modified Adjusted Gross Income —“MAGI” —is less than $25,000 for single filers or $32,000 for married filers, your Social Security benefits are tax-free. However, if you are filing a single return with MAGI ranging from $25,000 to $34,000, you’ll include up to 50 percent of your benefits as income. Filing on over $34,000 in MAGI? You could include up to 85 percent of your benefits as income. For married couples filing a joint return, they could include up to 50 percent of their benefits in income if their MAGI ranges from $32,000 to $44,000 and 85 Investment Advisory Services offered through Retirement Wealth Advisors (RWA), a Registered Investment Advisor. Wolf Retirement Navigation LLC and RWA are not affiliated. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Consult your financial

percent of their benefits if their MAGI exceeds $44,000. Advanced planning to increase tax-free retirement saving buckets — utilizing Roth IRAs and Roth 401(k)s, cash-value life insurance, and lump-sum pension planning — may help to reduce the taxability of your Social Security benefits, thus saving you significant tax bills for many years to come. Mandatory Distributions When you contribute to a traditional IRA or an employer-sponsorred 401(k), it’s able to grow tax-deferred until you need it. But the tax deferrals on retirement savings don’t last forever. You are required to take withdrawals from your traditional IRA or 401(k) by April 1 the year after you turn 70 1/2 and by Dec. 31 every year after. If you fail to take the required minimum distribution (RMD), you’ll face a penalty of 50 percent of the amount you failed to withdraw. The income from traditional 401(k)s and IRAs is taxable as ordinary income and is added to your other income, but the biggest risk RMDs pose to you during tax season is the possibility of bumping you into a higher tax bracket. Make sure you have a plan to avoid penalty by taking your RMD as needed while simultaneously keeping yourself professional before making any investment decision. This information is designed to provide general information on the subjects covered; it is not, however, intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement. Please note that Wolf Retirement Navigation LLC and its affiliates do not give legal or tax advice. You are encouraged to consult your tax advisor or attorney.

from unexpectedly being on the hook for higher taxes.

Pensions Do you have an employer-sponsored retirement plan that includes pension payments? That’s great! These can be excellent sources of income during retirement. But, don’t forget that, much like traditional IRA and 401(k) accounts, income from these plans is fully taxable as you receive your benefit payment. When you start taking money from your pension, be ready to pay for it. Fortunately, much like with Social Security benefits, you might be able to have federal income taxes withheld from your pension or annuity check, which can really reduce your headache when it’s time to file your tax returns. Additionally, if your company offers a lump-sum pension option upon retirement, you are able to roll over the lump-sum pension into an IRA to control taxability and investment options. when you’re in retirement, it’s important to have a strategy for dealing with taxes year round. These are just a few of the heavy tax hitters retirees need to keep in mind. As always, we are here to help. -Adam Wolf, CPA, CFP ® Annuity guarantees rely on the financial strength and claims-paying ability of the issuing insurer. Any comments regarding safe and secure investments, and guaranteed income streams refer only to fixed insurance products. They do not refer in any way to securities or investment advisory products. Fixed Insurance and Annuity product guarantees are subject to the claims‐paying ability of the issuing company and are not offered by Retirement Wealth Advisors. The tax filing deadline for 2018 isn’t technically until April 15, 2019, but

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THE 5-SECOND RULE WILL MAKE YOU SICK

3 Health Myths You Probably Believe

according to a 2006 study published by Dr. Paul Dawson. He found conclusive evidence that when food comes into contact with a contaminated surface, bacteria are transferred immediately. Even one second spent on tile, wood, or carpet is enough to infest your food with salmonella or another serious contaminant. Bottled Water Is Safer Than Tap Water People seeking out safer water alternatives increases the sales of bottled “spring water” each year. However, bottled water is more expensive, bad for the environment, and, as Dr. Morton Tavel of the Indiana University School of Medicine pointed out, over 50 percent of bottled water is just filtered tap water. The same effect can be achieved with a home filtration system. Of course, if the tap water in your area has been contaminated, bottled water is a safer alternative. However, in most knows how long you need your savings to last? Travel, however, is one thing you can indulge in early without feeling guilty. Even the most leisurely trips can be physically demanding, so it’s better to see the world at 70 rather than wait until you’re 90. To keep yourself on track financially, use the bucket system to set up a separate savings account just for travel. days a week, you’ll be in your home more often, so why not make it amazing? An in-ground pool or a private tennis court might be outside your budget, but new kitchen countertops or a deeper tub will add a touch of luxury to the space you spend the most time in. Upgrading your home is almost always a good investment because it adds equity, which will pay off down the road. That extra cash will come in handy if you decide to sell later on in order to downsize or you plan to enter assisted living. Don’t forget to set aside Invest in Your Home Once you no longer have to work five

circumstances, bottled water is no healthier than tap water.

Cracking Your Knuckles Causes Arthritis The connection between knuckle-cracking and arthritis came from studies where participants self-reported their habits. Modern medical research has shown these results to be false. The official stance from the John Hopkins Arthritis Center states, “There is no evidence that cracking knuckles causes any damage such as arthritis in the joints.” Still, chronic knuckle-cracking can lead to reduced grip strength, so you might want to break the habit anyway. You’ve probably heard these myths for years, but just because something is common knowledge doesn’t mean it is true. With information so easily available, always take the time to research the facts, especially when it comes to your health.

W e live in the golden age of information. The answers to many of life’s questions are just an internet search away. Despite this readily available wisdom, we still have a bad habit of believing health-related myths. Here are three popular health “facts” that are total works of fiction. The 5-Second Rule Keeps Food Safe Obviously germs and bacteria don’t really wait five seconds to pounce, but snatching your chip off the floor fast keeps most of the germs away, right? Not You’ve spent your entire life being told to save, save, save. Now you’re finally retired, so it’s time to spend some of that money — but you’re scared! This is only natural because it means breaking a lifelong habit of socking away money and refusing to touch it. You’re not alone. A recent study of retirees’ spending habits showed many people actually spend less than they can afford to. They’re scared of the “what ifs” that come with living on a fixed income. However, at age 70 1/2, you have to start taking the required minimum distributions (RMDs) from your traditional IRA and 401(k) whether you want to or not. Instead of stressing over the fact that you’re pulling money out of these accounts, embrace the opportunity to do something for yourself. Travel It can be tempting to hold off spending money as long as possible. After all, who

Embracing ‘Spendophobia’ 3 Ways to Invest in Yourself After Retirement

money for ongoing maintenance, such as a new water heater or roof repairs.

Go Back to College It might sound counterintuitive to go to college when you’re not planning to go back to work, but continuing your education after retirement offers many benefits. Many individuals find themselves with more time on their hands than they’re accustomed to, and without a plan to fill this time, it’s easy to become depressed or isolated. Numerous studies have shown that continuing to exercise your brain has a positive impact on cognitive function, so taking a few classes can be the perfect way to stay busy and keep your mind sharp. Attending school late in life is also a great opportunity to indulge your passions and learn more about subjects you’ve always been interested in. Many colleges offer free classes or reduced tuition to seniors, so check with your local schools and see what classes or programs they have available.

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Plan for the Best It takes a lot to prepare for a succesful retirement. There are many uncertainties when leaving a stable work environment, and making sure you don’t outlive your retirement savings.

4 Tips for a Great Retirement

3. Work on Your Relationship Retirement can be challenging for married couples. No matter how much spouses love each other, after retirement, it’s not uncommon for couples to get annoyed of their partner always being in their space. Take this time to strengthen

But money isn’t the only thing you should think about when planning for retirement. Here are four tips to help you enjoy your retirement for years to come. 1. Stay Social During our working years, we spend most of our time at our jobs surrounded by coworkers. Whether you love your job or not, leaving the office means losing a lot of daily social interactions. It’s okay to

your relationship. Go on a second honeymoon, try some new activities together, or learn how to respect each other’s alone time.

4. Don’t Stop Planning Reaching retirement isn’t like crossing the finish line at the end of a marathon — you can’t stop thinking about the next step just because you’ve left the workforce. Careful planning empowered you to retire when you wanted to, so you need to keep planning in order to enjoy the rest of your retirement. Talk to your financial advisor throughout the year, review your tax situation each year, and update your estate plan regularly, especially when life-altering changes occur. Do you have a solid plan that will take you to retirement and beyond? Whether you do or don’t, we can help you build a smart – or smarter — written plan aimed for success! Call 904-232-8760 to schedule a meeting with the retirement professionals at Wolf Retirement Navigation. Learn how you can realize your retirement dreams.

enjoy your alone time, but don’t let yourself get lonely. Register for classes at your local rec center, join a club, spend time with your grandkids, volunteer in your community, or make plans to have dinner with friends. 2. Stay Active Health care costs will drain your retirement savings faster than any vacation. And poor health can greatly diminish how much you enjoy your golden years. Maintain your health and independence with a solid nutrition and exercise plan. Even taking a brisk walk once a day can improve cognitive strength, heart health, and longevity.

SUDOKU

This easy, delicious vegan chocolate bark is the perfect Valentine’s Day treat. Make it a few days in advance, bag it up, and share it with your loved ones.

INGREDIENTS

• 7 ounces dark chocolate • 1/4 cup roasted hazelnuts

• 1/4 cup dried cranberries • 1/4 cup dried cherries

DIRECTIONS

1. Chop chocolate and place into a mixing bowl. 2. In a double boiler, melt

3. Once melted, pour

chocolate into a baking sheet lined with parchment paper. Spread evenly. 4. Add hazelnuts and dried fruits. Let sit at room temperature until set. 5. Break into shards and serve.

chocolate. Stir frequently and remove from heat as needed to prevent burning. Keep chocolate under 115 F.

Answer on page 4

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PRST STD US POSTAGE PAID BOISE, ID PERMIT 411

904-232-8760 www.wolfretirement.com 4230 Pablo Professional Court Ste. 101 Jacksonville, FL 32224

INSIDE

Solution to puzzle on page 3

• Tax Planning for Retirees PAGE 1

• Let’s Retire These Health Myths PAGE 2

• 3 Ways to Invest in Yourself After Retirement PAGE 2

• Will You Love Retirement? PAGE 3

• Hazelnut Berry Chocolate Bark PAGE 3

• Prepare for an Adventure in Lapland PAGE 4

Into the Arctic Circle Adventure in Swedish Lapland

Tips forYourTripBack inTime

If you’re eager for a new adventure in 2019, you’ll surely find it in Swedish Lapland. With trail systems that take you into the Arctic Circle, the northernmost region of Sweden is home to national parks, glaciers, reindeer, the beguiling midnight sun, and spectacular night skies. Though winters are cold, one benefit of traveling to the region in this season is to catch a glimpse of the night sky. The northern lights are visible from a few remote locations like Abisko National Park, one of the first established national parks in Sweden. Traveling to Abisko is an adventure in and of itself. From Stockholm, the fastest option is to take one of only two airlines that fly into Kiruna, then travel by train to Abisko. Despite the challenge of getting there, adventure-seeking

visitors from around the world arrive each winter to experience the Arctic beauty. Winter attractions include ice skating, snowshoeing, and the Scandinavian sauna (this last one is a must any time of the year). Befriend a Scandinavian and you might be treated to some pickled herring or even a princess cake, a raspberry-filled dessert covered in marzipan. Scandinavians cherish their public lands, and the trail systems are well taken care of. Hikers and backpackers can enjoy the stunning beauty in both late spring and summer, as well as a chance to see the midnight sun. Because of its far-north location, Swedish Lapland receives close to 24 hours of sunlight from June through early August. Between the boulder fields, mountains, and stunning glacial lakes, hiking here is a treat.

While hiking, you may spot reindeer herds or lemmings (a small rodent similar to a hamster) racing around rocks. The Sami people have herded reindeer for thousands of years through this very land. In the summer, keep an eye out for blueberries, lingonberries, and the brightly colored cloudberries. Because of the Arctic climate, weather conditions can change quickly from sunshine to rain and heavy fog, so it’s best to dress in layers and bring wind and rain protection if you plan to venture into the backcountry. The fantastic scenery of Swedish Lapland awaits you, no matter when you decide to take your trip. What are you waiting for?

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