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We are pleased to provide you with additional financial information to assist you with your financial well-being. Please check this page every Wednesday for our updates.

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Money Matters

Honest conversations regarding money.

Honest conversations are key to a relationship’s success, but having these talks with your spouse or partner can be challenging. Relationships can be destroyed by financial problems that might have been averted with good communication. 

What is the primary financial issue couples need to face?

It is the need to be transparent. When there is a lack of transparency it creates distrust, and when there is distrust, it creates problems within a relationship.

How do couples struggle with a lack of transparency?

Having separate credit cards or checking accounts without allowing your spouse access to that information can be a source of conflict. It is critical for individuals to be honest about where their money is going and what they are spending money on. Not knowing what your partner is spending money on can be a problem.

How can couples enhance transparency?

Each spouse needs to understand where the money is going and know that nothing is being “stashed” or hidden away. Granting access to account statements is the primary way to ensure a sense of trust. 

How can new couples begin strong financial communications?

It is important that they communicate and understand their goals. They should also understand the importance of sharing information, budgeting and living within their means. If couples are not communicating, it can create mistrust about where money is going and what your partner is doing with the money.

 

February To Do List

  • Organize your tax documents as they arrive, so when it’s time to file, everything will be in order.
  • Review your insurance policies, including property and casualty, liability, health, disability and life insurance.  It’s important to periodically review your coverage and beneficiaries.

 

Should You Pay Off Your Mortgage Before You Retire? 

Most people would be better off not having mortgages in retirement. Relatively few will receive any tax benefit from this debt, and the payments can get more difficult to manage on a fixed income. For many, paying off a mortgage before they retire is not always possible. 

When a payoff is not possible, minimize the mortgage 

You may want to consider refinancing your home before retirement to lower the payments. Refinancing is generally easier before retirement than after. Refinancing can spread the remaining mortgage balance out over 30 years, greatly reducing the portion of your budget a mortgage payment takes up. 

Another potential solution is to downsize to eliminate or at least reduce mortgage debt. 

Please see an Old Fort Banker to help you plan your retirement strategy.  

 

Safe Deposit Boxes, Home Safes And Your Valuables

 Over time, your valuables change, and so do your options to protect them.  Here are a few choices:

  • Think about what should or should not be kept in a bank’s safe deposit box. Good candidates include originals of key documents, such as birth certificates, property deeds, car titles and U.S. Savings Bonds that have not been converted into electronic securities. 
  • You are better off keeping your cash in a bank deposit account, such as a savings account or certificate of deposit, than in a home safe or a safe deposit box.  Cash that is not in a deposit account is not protected by FDIC insurance.  And unlike money in a savings account, money in a home safe or safe deposit box cannot earn interest. 
  • A home safe is not a true replacement for a bank’s safe deposit box. A thief could more easily break into your home and open the safe than get inside your safe deposit box at the bank. 
  • No safe deposit box or home safe is completely protected from theft, fire, flood or other loss or damage.  Consider taking precautions, such as protecting against water damage by placing items in water-safe plastic storage bags or other plastic containers that can be resealed. 
  • Be mindful of whom you allow to access your safe deposit box. You can jointly rent a safe deposit box with one or more people whom you would like to give unrestricted access.  Keep in mind, though, that the bank would likely not be responsible for anything that people you authorize to enter the box remove without your permission.  And, who has access to your safe deposit box if you die?  That also depends on state law.

 Please see an Old Fort banker today to open your safe deposit box.  

   

The Advantage of a Health Savings Account:

These accounts, available to individuals, who are enrolled in a qualified high-deductible health insurance plan, allow participants to save pre-tax contributions for future health-care costs.

The money in these accounts has the potential to grow tax-free, and withdrawals are also tax-free as long as they are used to pay for qualified health expenses.

If you use your HSA for non-medical reasons, the amount you withdraw is subject to income tax and, potentially, an additional federal tax. There may also be limits on highly compensated employees.

HSA funds that you do not use to pay qualified medical expenses today can continue to grow tax-free until you need to use them for medical expenses in retirement. Also, after age 65, you can use the HSA money for non-medical expenses, but the money you take out will be subject to ordinary income taxes.

Please see an Old Fort banker for information regarding our HSA accounts.

 

2019 Financial Preparation Timeline

 January To Do List:

  • Pay your holiday bills as soon as they arrive to avoid high credit card interest rates.
  • Obtain your tax-form information at IRS.gov or by visiting the post office or library.
  • Double-check your employer retirement plan contributions and take advantage of any available employer match.

February To Do List:

  • Organize your tax documents as they arrive, so when it’s time to file, everything will be in order.
  • Review your insurance policies, including property and casualty, liability, health, disability and life insurance.  It’s important to periodically review your coverage and beneficiaries.

 March To Do List:

  • Ensure you have prepared all necessary tax paperwork to avoid a panic when you file.
  • Contribute the maximum to your IRA; you have until mid-April to do so for the previous year.  Are you 50 or over?  Don’t forget the catch-up contributions.
  • Find out when you will be required to take distributions from your IRA.  You must begin required minimum distributions (RMD’s) by April 1 the year after you turn 70 ½.

 April To Do List:

  • Consult with your tax advisor to discuss the possibility of filing an extension with the IRS, particularly if you hold securities subject to income reallocation.
  • Ensure your portfolio’s asset allocation is aligned with your goals and overall financial plan.

 

 

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