Gain harvesting is where investors can sell taxable investments with long-term capital gains and not owe capital gains taxes. For 2018, you must have taxable income below $38,600 if single, $77,200 if married filing jointly and $51,700 if head of household to not owe taxes on long-term capital gains and qualified dividends. Any long-term capital gains above this taxable income threshold will be subject to the regular 15% tax on long-term capital gains, while the gains below the threshold are tax-free. Income is often much lower in retirement, especially before taking the required minimum distributions from retirement accounts at age 70.5, so many retirees have room to realize gains without tax consequences. (more…)
Do you work for Amazon, or are you considering a career at Amazon?
Navigating the different benefit options can feel overwhelming. That’s why Merriman has created a new resource for Amazonians that has everything you need to know about what’s available to you.
You can find tips and advice on how to get the most out of Amazon’s 401(k), learn about health insurance options and guidance on how to handle the Amazon restricted stock units. We encourage you to take a look and if you have any questions or if you want to discuss in detail how Merriman can help put together a personalized plan, please feel free to reach out.
The Washington Guaranteed Education Trust (GET) is a prepaid college tuition plan that is guaranteed to keep pace with the cost of college tuition. The GET account is measured and purchased in units, where 100 units equals the cost of one year of resident, undergraduate tuition and state-mandated fees at Washington’s most expensive public university. It can be used nationwide, and those who sign up for GET can purchase current units at a premium, to lock in the guarantee. GET units today cost $113, and their current value is $104. (more…)
Many U.S. citizens live abroad for a period during their schooling, career or retirement. Foreign countries, even ones sharing borders with the United States, have different currencies than the U.S. dollar. When you exchange or otherwise convert U.S. dollars into a foreign currency, you may be able to buy more or fewer dollars in the local currency, depending on that day’s exchange rate movements. These currency fluctuations in relation to the U.S. dollar can be substantial. As a result, it’s important that you develop a plan when converting large sums of money from one currency to another to reduce your chances of losing a lot of value. (more…)
In this article, we discuss the Smiths’ and the Jones’ different lifestyle spending needs, and the annual savings necessary to maintain their lifestyle in retirement. Let’s walk through the steps these families should take each year to help them stay on track to achieve their goals.
1. Determine the cost of your annual lifestyle spending needs, and how much of that will continue into retirement.
- Smiths – They currently earn $150,000 a year. After excluding retirement savings and expenses that wouldn’t continue into retirement, such as the cost of commuting to work, they determine that their annual spending is $90,000.
- Joneses – They currently earn $500,000 a year. After backing out retirement savings and expenses that wouldn’t continue into retirement, this couple finds their annual spending is $250,000. This higher spending need is in part due to living in an expensive city and having a mortgage on their home and vacation property. About 10 years ago, this couple’s income was $175,000, with spending needs of $115,000.
Take-away: To determine your lifestyle spending needs, you need to exclude retirement savings and expenses that wouldn’t continue into retirement. Expenses that remain include utilities, taxes, food, entertainment, travel, etc. Many households carry a mortgage for the first 10-15 years into retirement. If you don’t think you’ll pay off your mortgage by the time you retire, make sure to include this housing cost in your spending estimate. You need to be aware of how much your lifestyle spending changes over time to make sure it’s sustainable in retirement. It’s far easier to spend more money than to cut back on your lifestyle. (more…)
Do you wish you could have done more to lower your tax bill or increase your refund for 2017? The Tax Cuts and Jobs Act of 2017 will have a major impact on many families, so it’s especially important to re-evaluate your tax strategies this year.
Check out our latest eBook for things you can do now to save on your tax bill in 2018. Topics include:
Highlights from tax reform
Itemized deductions – what’s left?
New strategies to consider
Classic strategies that still work