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Late-Career Women and Burn-Out or When Can I Retire?

Photo Cred: Noah Silliman, Unsplash

Does this sound like you?
– 50-60 ish,
– have been working for 30-40 years,
– salaried employee,
– your boss is a pain,
– co-workers are all 20-30 years younger than you,
– some days are better than others,
– someone asks: when do you want to retire? and you say “tomorrow.”

If you answered yes, you aren’t alone. One of the most common reasons mid-life women seek financial help is to figure out if they can quit their jobs.

And, if you don’t have a clue whether this is possible or not, unless you dig in, look at the numbers, and project into the future, you won’t get the clarity you need to make such a big life-changing decision.

So, where do you start?

Things You Need To Know

– How much do you have saved?
– Are you getting the return you need on your investments?
– How much do you spend?
– When you retire and start withdrawing from your savings, what will your withdrawal rate be? Is it sustainable?
– Will your spending habits change once you quit your job?
– If you continue to work, what do you project your income to be?
– What do you want to do differently in this next phase of life? How much will it cost?
– What are your assumptions for inflation rates in the future?
– How much will health insurance cost if you are retiring before reaching Medicare eligibility?
– Will you be able to afford healthcare costs not covered by insurance in your older years (long term care)?

The decision to semi-retire or retire is a big one not to be taken lightly. You can assess the viability of reaching your goal by taking a hard look at the facts and numbers and doing some analysis.

Best, Worst and Most Likely Outcomes

Best case outcome: You find out that you can retire or semi-retire when you want to. Worst case outcome: You have to work until you can’t any longer. Most likely case: You find out that you need to work and save for a few more years before reaching your goal.

And surprisingly, once you have clarity and a solid goal, you might find that work and your boss aren’t so bad after all.

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Real Life Tips for Your Home Remodel Project

Photo by Milivoj Kuhar on Unsplash
Photo by Milivoj Kuhar on Unsplash
Photo by Milivoj Kuhar on Unsplash

Homes are like bodies, to look their best, maintenance is critical and sometimes a makeover is necessary. If neglected for too long, the time and cost can be prohibitive to repair. Lastly, calling on a team of experts to help will increase the chances that the job will be successful.

I recently spoke with three women who live in the San Francisco Bay Area about their recent home remodels: Jane lives in the Noe Valley neighborhood in San Francisco, Lucy lives in the town of Piedmont in the East Bay, and Marcy lives in the Lakeshore neighborhood in Oakland. I wanted to gather some tips on how to make the process less costly and cumbersome. I think their feedback will be invaluable to anyone who is thinking about a major home project.

Jane likened the process of the major remodel of her San Francisco Noe Valley home to being pregnant, “once it happens, you are on the ride until the end, and it’s different than what you expected, at least in some ways. Try to avoid disaster; a little luck helps.”

Your Team
She recommends hiring a designer especially if the remodel involves a kitchen or bathroom, even though she acknowledges “it’s another significant cost to have one.” Designers will act as the go-between with you, the architect and the contractor and if the designer is good, can help to cut down on problems afterward. Jane offered that it helps if all three know one another or have worked together before, but that they don’t necessarily need to work for the same construction company. Lucy agreed on this point and added “I interviewed three general contractors, and I was very glad that I chose the one the architect had a close working relationship with – the partnership has worked out very well, and that is one of the reasons that there has been no drama throughout the construction.”

Another key piece of advice from Jane: move out. The mess and disruption make this a must-do in her mind. Of course, you have to plan for the extra cost of rent and the storage of household items.

Lucy, who took her aging home in Piedmont down to the studs added some valuable tips about controlling costs:

– Read the contract carefully, and make sure all items are accounted for. Try to have an allowance for all the things for which the price can’t be determined, pending owner’s election.

-Fees for the architect, surveyor, structural engineer, permits, rental, moving cost, etc. can add significantly to the total cost of the project – be sure and add these to your budget.

-Watch out for “scope creep” -many times when walls come down, contractors find things – rot, drainage issues, support issues, etc. and work cannot continue on the original project until these are fixed. It’s best to add these to your time and cost budget in advance.

Scope Creep
Marcy experienced scope creep in a big way, in fact, she estimates that it added 30% of costs to the original bid. Hers is an older house built in 1925 with many structural and drainage problems that required repair before the remodel could begin.

All three women warned that you need to be prepared to make a ton of decisions both big and small and it can be overwhelming at times. Given all this, one wonders whether undergoing a  home remodel project is worth it? When asked this question these were the responses:

Jane said: “I don’t know. I think it’s all worth it in the end, but you have to get beyond it in a way before you can really settle in and enjoy it. And since it’s all new, depending on what you do, there’s a learning curve to being in your own home.”

Lucy said: “Yes, I am glad that we did it. A lot of pain though, and a lot of money, like 60% more than what we thought it would be. But yes, glad I did it. Now the house performs very well, and the design is more modern and contemporary.”

And Marcy said: “I’m glad we did it but wish we hadn’t spent so much money.”

It’s clear from these women’s experience that being realistic about the cost is critical and so is choosing the right people to do the job. Please take a moment to share your own experience with remodeling. Was it different or the same from these Bay Area women?

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Forward-Thinking Tax Strategies to Implement This Year

Many people dread tax season. The idea of digging through all of your financial records, working through the filing process, and hoping you submitted everything correctly to avoid an audit is stressful.

And the worst part? It kind of feels like you can’t win. If you have your employer withhold too much money from your paychecks for taxes, you’re essentially giving the government an interest-free loan (even if the refund is a fun windfall). On the other side of the equation, if you underpay on our taxes over the course of the year, you could owe a significant amount of money.

As much as we may wish that we could wave a magic wand and have the tax season stress eliminated from our lives – that’s not a real possibility. As the old quote from Benjamin Franklin goes, “Nothing can be said to be certain, except death and taxes.”

If we can’t avoid dealing with taxes, we need to find positive ways to incorporate them into our financial plan. Luckily, there are a few things you can do to lower your taxable income and make next filing season easier.

Check Your W-4

According to NerdWallet’s 2018 Tax Study, only 35% of Americans are aware that they can adjust their federal tax withholdings anytime over the course of the year. Your withholdings can help you to adjust the amount of taxes you pay out of your paychecks to ensure that it’s correctly calculated based on your current income and your total number of exemptions you claim.

As your lifestyle changes over time, the information on your W-4 should change. For example, if you don’t claim your spouse, children, or other dependents on your W-4 as exemptions, you might consider making adjustments to reflect your current living situation.

Look to Reduce Your Taxable Income

If paying taxes overwhelms or frustrates you, you may be able to take advantage of a variety of savings accounts that help you to save money on your taxes. These accounts also help you to achieve long term financial goals – like growing your wealth for retirement planning, saving for your children’s college education, or covering medical expenses.

Retirement Planning

Your workplace 401(k) is a tax-efficient account. In other words, it’s funded with a portion of your income that’s pre-tax. Other retirement savings vehicles that are funded with pre-tax income are:

  • 403(b)
  • 457 plan
  • Traditional IRA
  • SEP IRA

Using these retirement savings accounts to lower your taxable income is a wonderful way to lower your current taxable income while maximizing your money and preparing for future success.

529 Plans

As a result of the new tax code, 529 Plans are no longer just for college education expenses. Parents can use a 529 plan to fund their child’s education from elementary to high school, as well. However you choose to use the funds in your child’s 529 plan, it’s important to note the tax benefits of these accounts. All earnings from a 529 plan grow federal tax-free, and you won’t be taxed when you or your child choose to tap the account.

Although this account doesn’t technically lower your total taxable income, being able to save for your children’s education and not face a capital gains tax when you finally access the funds is a tax benefit that’s essentially unmatched.

HSA and FSA

A Health Savings Account and Flexible Spending Account are two other key ways to save money on taxes for next year. Although you may need to meet certain healthcare plan requirements to open them, if you’re eligible – they offer another opportunity to reduce your taxable income.

HSAs, in particular, are instrumental in tax efficient financial plans. As they’re funded with pre-tax money, just like your 401(k) or other workplace retirement plan, they lower the amount of income that’s viewed as taxable by the IRS. However, they also roll over from year to year and can be used for qualifying medical expenses.

Whether you have large medical expenses in your future that you’re planning for, or you just want to save for the inevitable increased health-related costs associated with aging, HSAs are an excellent savings vehicle to use.

Get Organized and Speak With a Professional

No matter what strategy you choose to implement, it’s wise to get organized now. Don’t wait until next filing season to get started, you’ll only cause yourself equal amounts of overwhelm and frustration. Instead, stop the cycle by reaching out to a financial planning professional to learn more about these and other options to optimize your finances and reduce tax-related stress.

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A New Resource for your Financial Planning Education

This month I was honored to be asked to be part of the inaugural CNBC Digital Financial Advisor Council. The council was conceived by Jim Pavia, formerly editor of InvestmentNews and now the money editor at CNBC digital. Jim’s mission as a journalist is to educate the public about personal finance and the importance of long-term planning. This council is unique in that it is made up of working independent financial advisors (not talking heads) who are meeting with clients regularly and helping to guide them through all the complexities of personal finance from building a diversified investment portfolio, to creating a workable budget, to retirement planning.

The ultimate goal of the council is to provide investors with straightforward, informative and relevant content that is transparent, timely and useful.

The 20 council members all have expertise in comprehensive financial planning and investment management but also have particular specialties such as divorce planning, women’s financial issues, wealth psychology, healthcare, life-threatening illnesses, and business planning. Several of the members are well-known researchers and thought leaders in the financial community and add a breadth of knowledge and experience that is invaluable.

You can benefit from this brain trust by logging into the “FA Hub” on the CNBC Site and checking out recent articles and videos, or by following the members on twitter.

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Alice Anna Disse, My Mother July 26,1921- July 18, 2012

Painting by Alice Anna Disse
Painting by Alice Anna Disse

> Painting by Alice Anna Disse

July 26, 2012

This past week I’ve been thinking about mom non-stop. So many images and memories flashing through my head from the past.

And then writing this eulogy…how can a few paragraphs portray this wonderful woman and all the love we had for her?

Imagine this: Raising six children: Patty, Steph, Me, Clare, Greg and Bill – some of us just one year apart – living in a two bedroom, one bath house – many times with something malfunctioning: the clothes dryer, the shower, the car – and all the while mostly keeping your sanity and sense of humor.

That was mom.

My dad was busy working and had an aversion to hiring help, so my mom in her usual way, would take things into her own hands, literally. She fixed leaks, plastered and painted walls, refinished floors, reupholstered furniture – whatever it took. The day she moved out of 414 Rivera in 2005 was a sad day, not only because she had lived there for 46 years, but because she had put so much into that house emotionally and physically!

I see her standing on the doorstep on summer nights calling out our names one after the other at the top of her lungs to corral us in for dinner.

I see her sitting at the piano playing her favorite tunes — anything from Chopin to a polka.

I see her loading us up in our 50’s pale green Plymouth for a drive to Marin or San Bruno to get out of the fog of San Francisco.

My mother loved music, playing the piano, art, painting, flowers and gardening, laughter, parties, swimming, traveling and being around her family. She was disciplined and strived to instill her sense of discipline in us…especially when it came to the piano…I can still hear her insisting, “You have to practice…it’s the only way to improve and get good at anything.” When she wanted to learn something new, she would take classes. She finally got her college degree at San Francisco State when she was 63 years old – a life-long dream.

When my brother Bill was sick, she learned everything she could about mental illness to try and help him.

She gave up a lot to raise six kids, something I didn’t realize until I was much older. With her talents, personality and energy she could have had many opportunities. But she didn’t complain. She never made us feel like we got in the way in her life. On the contrary she was our champion. She encouraged us when we needed it, was there when we were sick or sad. And I know we tried her patience. We all laugh at the image of our mom chasing us around the house with her broom, knowing she would never catch us, but so frustrated she didn’t know what else to do!

I’m glad that my mom had many years of relative freedom after we grew up. She taught young children in the public schools in San Francisco. Besides being an accomplished pianist, she was an artist. She took classes and studied on her own and produced a huge amount of work in oil, watercolor, acrylic and other mediums. She took trips and spent time with friends. She approached all of these things like a kid – with great enthusiasm.

When I asked my sisters and brother to express their thoughts about mom, the words they used were: strength, commitment, positive outlook, inspiring, strong faith, supportive, enjoying life, adventure and unconditional love for her family. Our friends remember her as being a sweet and classy woman. And I might add, she had a killer figure and great sense of style.

What I’m going to miss the most, and I’m sure my siblings will agree, is the way her face would light up and she would smile her big beautiful smile whenever we showed up…anywhere, anytime. She was so proud of us.

The only time I saw my mom cry was when her mother died. I remember she was sweeping the floor, quietly weeping. It scared me because that wasn’t like mom. Now I understand her grief and how hard it is to lose someone that means so much to you.

My mom’s strength and energy carried her through up until the end. She did her level best to refuse every possible limitation that her age and state of health imposed. She loved her independence and kept it until she couldn’t any longer. She died with dignity and grace and with loving care from the staff at Sunrise and from Hospice of Petaluma.

We were all able to say good-bye and tell her how much we loved her.

We know she is watching over us now. May she rest in peace.

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Strategic Philanthropy: How to Feel Good About Your Giving

Does this sound familiar? December rolls around and your mailbox is full of solicitations from charities and non-profit organizations that need your money. You get busy with the holidays—parties, family, travel—and on December 31, you realize that you haven’t made any donations. You kick yourself but realize there is no way you’re going to get to it, and you resolve to be more proactive about your giving next year. Or, you scramble to write a bunch of checks, stuff them in their envelopes and drop them in the mailbox, hoping you didn’t forget anyone.

You haven’t kept track of what you might have given these organizations and others during the year. You put it out of your mind until taxes are due and you are compelled to make the calculations in order to take advantage of the tax deduction. As you look over your list of donations, some of you may be proud of what you see—you’re happy with both the level of giving and who you chose to give money too. On the other hand, some of you are horrified that you gave too little or too much.

There is a better way.

Why not be more strategic about your charitable giving? Here’s how:

  • Early in the year, identify charities and non-profits that do things you care about. Think about your values and ideals and find organizations that support them.
  • Consider your charitable giving as an expense just as you would any other discretionary expense, like travel, dining out or entertainment. Start with how much you would like to give annually, and then determine whether you can afford it. Realize that you may have to cut back on another expense to meet your charitable goal.
  • Take your budgeted amount and divide it amongst your chosen organizations.
  • Schedule your donations to fit optimally with your cash flow.

You may realize in the process that you can’t afford to give as much as you would like. This gives you an opportunity to find other ways to help: by volunteering, donating goods or helping to spread that word about the cause. Either way, you will have a strategic giving plan that you can feel good about.

If you’re stumped on the first step (identifying organizations to give your money or time too) here are some online tools you can turn to:

Charitynavigator.org: is an independent charity finder that has some interesting features like top 10 lists to help you narrow your search.

Justgive.org: Type your zip code in the “act locally” search feature and find organizations near you.

Charitywatch.org/toprated.html: This website provides a list of top-rated charities.

Happy giving!

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Deductions For Charity Donations

Donating to charity does not only have positive spiritual effects on an individual but it can also provide them with some useful tax deductions. If you are interested in learning more about charity tax deductions, read on.

 

Charity Tax Deduction Mechanisms  

First of all, keep in mind it is crucial to start itemizing your deductions on your tax return. This way, you will manage to more easily take income tax deductions for gifts to money raising charity organizations. These charity organizations need to be fully qualified, so make sure you get some information regarding the legitimacy of the charity before pulling out your checkbook. Taxpayers are allowed to enjoy certain deductions of their taxes, which has a standard value. The pay off of the respective itemization will occur only after you will exceed the respective deductions.

The standard value of this deduction does not have a fixed value and it tends to vary from one year to another. Be one step ahead of things and inquire about the value of the standard for the year you are filing your taxes for. You will need Form 1040 and Schedule A to itemize your deductions and also to deduct your donations to charity.  

 

Only Pick Qualified Charities

Moreover, know that the majority of charities do qualify for donations that are tax-deducible. However, there are some who will not be able to help you out in this regard. You need to keep an eye on the 501 (c)(3) designation so there are no questions about it. There are also plenty of charities that are tax-exempt – small nonprofit organizations or churches are some fine examples here. They can still receive donations that are tax-deductible. Get in touch with the organization you are considering donating money to and ask about the tax-deductible character of the donation you are about to make. The official IRS web site should also provide you with all the required data. Donating money to an individual or a foreign charity organization or foreign government is not considered to be a donation you can deduct taxes out of. The same goes for donating to support political campaigns or parties or social welfare organizations.

 

When Dies A Donation Become Deductible?

Briefly put, the same year in which it has been made. You will have paid your contribution when you will have laced your check in the mail, or when the donation has been charged to your credit card. You will also need to make sure that your donation will be made by the 31st of December the same year when you are planning on claiming your tax deduction. International donations to charities registered in the United States are tax deductible. The lack such registration will attract the lack of deductibility. If you would like to earn more money so you can donate more, go to LotteryMaster.com and purchase your tickets for the biggest lotteries in the world. Look at the online lottery results for the previous draws and pick your lucky numbers online either manually or by letting your destiny decide using the autobuy option.   

 

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Hello again my lovely blog!

Cathy Curtis

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Cathy Curtis
Cathy Curtis

Dear Of Independent Means Blog:

I know you don’t understand why I abandoned you right after you got such a gorgeous face-lift (thanks to Stephanie Sammons), but it’s not your fault. You’ve never looked better. It’s just that I’ve been awfully busy helping clients with their finances, speaking about investments at the Commonwealth Club, attending conferences with the FPA, NAPFA and Morningstar and yes, I admit it, writing for other blogs. I think about you all the time and feel terribly guilty that I haven’t visited. I know that when I don’t write for you, you lose fans that may never come back! I hope you will accept my apology and trust me when I tell you I will be back very soon.

In the meantime, I thought I would share those other blog posts I mentioned…just because there is some good stuff that readers Of Independent Means might enjoy!  But don’t worry, you’re the only blog for me!

Blog post for the Morningstar Advisor Markets & The Economy Blog: A Quick Trip Around the World with Ian Bremmer. Ian Bremmer is a brilliant political economist who has written several books. He gave a talk based on his latest book: The End of the Free Market: Who Wins the War  Between States and Corporations at the FPA conference in Denver. Some of his insights and predictions are shared in this post.

Sharp Talk for the Sharp Skirts Blog. Sharp Skirts is a knowledge network focused on helping women entrepreneurs. This blog post is about how women can become better managers of their finances.

Blog post for the San Francisco Bay Area Women’s Journal: Personal Wealth: How To Handle A Financial Windfall. The San Francisco Bay Area Women’s Journal is an online lifestyle magazine for savvy women founded and edited by Debbie Josendale.

See you soon,

Sincerely,

Cathy Curtis
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