Jill Ciccarelli Rapps  |  éBella Magazine  |  May 2016

Each of us work hard to improve our life in various ways – to be happy, satisfied, and to have a meaningful impact on those around us. That last point is worth a closer look.  It’s impossible to overstate just how important it is that we do our part to guide future generations to ensure that they not only have the ability to be happy, but that they actually have a world worth living in.

Securing The Future
The future can be scary because of the unknowns, and for that reason, it’s easy for many to simply ignore it outright. But preparing future generations with our guidance is a must!

For many, taking an active part in this is a calling. Teachers, for example, have a huge influence on future generations and as such their actions will directly impact the future in ways that many can’t even begin to appreciate. But for those who aren’t working as teachers or leaders in youth-oriented organizations, what can you do? The answer is to focus on those who are within your “circle” – the ones who will carry your legacy forward.

Tips to Help You Guide Future Generations
So how do you go about planting seeds that will pay off for future generations?

• To begin with, you need to take steps to help protect your children or grandchildren and to make it easier for them to move through their lives. This means that for most, one of the first steps worth taking is to help solidify your finances with the future generations in mind. Setting up the right accounts and determining how you want wealth distributed is a must. Understand your children’s capabilities and prepare their legacy to enhance who they are.  As an example, if they are spenders, perhaps their legacy should be stretched out during their lifetime so it can secure a wonderful livelihood for their lifetime.

• With that set up, there’s something else to consider – do future generations in your family understand the importance of managing finances properly and will they be able to make the most of what you do for them? Spending time discussing this subject with young people is something that’s worth doing and that could bring tremendous rewards with it – for them as well as for your own peace of mind. It is never too early to start; give the gift of a piggy bank as your child or grandchild is born and teach them how to pay themselves first!   Start their first educational savings account when they are born.   Teach them the power of compounding.  As soon as they have a job, let them know you will match what they put into a Roth IRA up to a certain limit.  There are so many ideas, these are just a few.

• Looking beyond money for a moment, have you done your best to help prepare your children or grandchildren for other challenges that life can throw at them? Money is only a small piece of the puzzle for most of us and mastering other aspects of life is important too. Teach your children the power of a positive mental attitude, how they can mold and shape their brain to accomplish their most important goals.  If you are not sure how to do this, look for courses in your community that can help.

• Talk and communicate openly with your loved ones and with any younger person who is looking for guidance or advice. Your own life experiences can directly help those who come after you, and as such, it’s worth starting up a line of dialogue that remains open throughout your life.   Have family meetings that are designed to share values and your most important lessons.  There are so many wonderful gifts that come from family communication.  Seek out who in your community can help you to design and facilitate your family gatherings.

Taking The Right Approach
Helping young people see the way that their actions influence the world is important.  It begins with making sure that they have a clear idea as to how their actions will influence their lives and their future.

We can help you and your heirs understand more about finances and the future. Contact Ciccarelli Advisory Services, Inc. to find out more about what we can do for you and to help yourself rest easier at night.

Jill Ciccarelli Rapps | Life in Naples Magazine | May • June • July 2016

Being satisfied and successful in life means a lot of different things to different people, and what it means to you should be the focal point when setting goals for yourself. Money matters often rank at the top on people’s list of things to focus on.  While you likely have some clear financial goals in place, achieving your goals isn’t just about taking the right steps – it’s about avoiding the wrong ones.

Knowing The Big Mistakes

Many people end up making major financial mistakes without even realizing it. If you want to reach your financial goals, several things are worth keeping in mind. Here are the top financial mistakes you should avoid:

• Managing your Credit Score– Your credit score has a huge impact on your financial health! Having too many credit cards or credit open can damage your score, and is difficult to keep track of.  Not only should you avoid having too many cards, but you need to be cautious about the cards you get. For example, in-store, high interest cards will likely do more damage than good for your finances.  Pull your credit report at least once each year (free at myfloridacredit.com) to make sure it is accurate.

• Failure to Budget – Sure, a budget can seem like a pain in the neck and something that you can do without. But the reality is that setting up even the most basic budget can tremendously impact your finances. Take a moment to list your income and expenses, and then determine how much money you actually have to spend above those expenses. If you ignore a budget, your finances will suffer.

• Failure to Communicate – This especially applies to couples who plan on getting married. Failure to talk about financial goals before you get married could lead to significant problems in the future. A financial advisor can facilitate this conversation, and help you decide if any planning should be accomplished before your wedding day.

• Minimal Investment in Insurance – Insurance can seem like an expense that you can avoid, especially when you’re younger. But one major illness or injury, or a death, and you could find yourself facing a huge bill. Protecting yourself from the “what if’s” in life will help you and your family feel more comfortable.

• Minimal Investment in Retirement – It’s easy to overlook long-term planning when it comes to your finances. But saving a little extra today leads to bigger and better retirement levels in the future. Failure to invest in your retirement plan is a major mistake to avoid.

• Overspending – It’s easy to spend money, especially when you feel financially secure. Americans tend to be over-spenders. Perhaps this is because we have so many choices for how to spend our money! Smart spending is an important outlook to have; thinking not only about today, but also what your spending could mean in the future.

• Assume Things Will Never Change – Let’s face facts here: the future is uncertain, no matter how much you wish the opposite to be true. While you might currently have a stable job, good career trajectory, and fairly low bills, the reality is that things can change. Instead of moving through your life assuming that everything will remain how it is, you should plan for rough waters ahead. Failure to do so can place you in a serious bind. Thoroughly enjoy the great moments in your life; however, when things get rough, be prepared for the change. Keep a positive outlook, knowing that the rough times shall also pass.

The key financial mistakes people make today are related to either unwise spending or just poor planning overall. If you avoid these mistakes, you can take major steps towards ensuring a better, more stable financial future.

To help you feel more comfortable about your financial future, contact Ciccarelli Advisory Services today. We will provide you with guidance to achieve your goals.

Jill Ciccarelli Rapps  |  Life in Naples Magazine  |  April 2016

Thanks to modern technology, it’s more possible now than ever before to get control of your finances and move your current situation towards a better, more stable future. But while there are plenty of tools and resources that can help with this, the fact remains that the wide range of access to financial tools and technologies can often create a situation wherein your overall financial stability is a bit of a jungle.

Easy Tips To Remember

Taming the wilds of your finances isn’t impossible and if you’ll remember a few basic tips, you can get the upper hand and master your financial situation no matter how wild and untamed it might seem. Here are a few of the key tips to keep in mind that can help with this.

• Consolidate Passwords – Start by getting control of your passwords. Experts agree that having the same password for every account isn’t a good idea, and changing your passwords every so often can also help.  Today there are many programs that will keep track and create passwords for you; you only need one password to open it and it will automatically fill in your passwords for your web sites.  Now you only have one password that your family or durable power of attorney needs to know to access your password list.

• Consider Auto Bill Pay – Even more convenient is the ability to set up your bills so that they’re automatically deducted from your account. This lets you avoid the issue of forgetting a specific bill, can make traveling much easier, and can be a good option if you are not fully capable of managing your money effectively. Just be sure you keep a list for your heirs of what bills are on auto pay (monthly, quarterly or annually) and review your statements regularly to be sure there are no signs of identity theft on your accounts.

• Check Your Credit Score – Knowing what your credit score is and taking advantage of pulling your free once a year credit report can be a great window into your finances. This will help you see if you need to modify credit to increase your score or if there are any signs of someone stealing your identity.   With the advancement of identity theft, this is a must!

• Know your Spending Budget – Clearly document what prosperity looks like for you and then align your spending habits to support your most important goals. Know where your money is going and take control of your financial destiny.  This will help you to make future financial decisions quicker and more wisely. 

• Consolidate Accounts and Simplify – If you have too many bank, investment or credit card accounts, it can not only cost you big but be a challenge to manage as well.  Look at what you really need, see if any accounts can be consolidated, and reduce the number of credit cards you use.  This can save you money while also helping save you time when managing your finances.

• Use One Place for all your Important Documents – Most people have documents in their files, safe deposit boxes and maybe even “the cloud”. Here’s a test, if someone had to step up on your behalf, could they in one hour understand where everything is located and what your current financial situation is?  If not, it’s time to review your files, take out your important documents and set up a secure place to keep them.  Give the location and password if applicable to your durable power of attorney or your family members.

• Go Paperless – The clutter of paper bills is tremendous. By simply signing up for paperless billing from most of your accounts you can reduce the hassle of trying to keep up with all those stacks of papers. Not to mention you can save a lot of trees!

Controlling Your Finances for a Better Future

The key to better financial health starts with just being more organized and mindful of your finances. The tips above can make it easier to do just that and to move yourself towards a much healthier and more organized life in terms of your financial state. To obtain assistance with the process and to learn more about how we can help, contact Ciccarelli Advisory Services, Inc. today.

Jill Ciccarelli Rapps  |  Life in Naples Magazine  |  March 2016

Sometimes life can throw a variety of unexpected events at us. When it does, coping with them in the best way possible is very important. When a circumstance arises that requires us to care for a loved one – whether it’s aging parents or a spouse that has been injured in an accident – it can be extremely challenging. However understanding how to best care for a loved one is important and can help you and those in your life carry on in the best way possible.

What You Should Remember

There are a lot of things that can make this more complex. From your emotions to financial challenges to the simple fact that there never seems to be enough time in a day, caring for a loved one can be one of the most stressful things you have to do. There are some tips that can help you.   Here are some of the key things to keep in mind.

• Remember The Love – It can be easy to become so frustrated by the situation that you lose your cool. Remember that the reason you’re providing care is the love you and the person under your care have for one another. The moments you’ve had together often make it all worthwhile and many times just a moment for a hug or another gesture to show how much you love them, can help reduce your stress.

• Find the Positives – Even during the darkest situation, we can train our brain to focus on some glimmers of light. Try to find those flickers of the positive and focus on them. Doing so can help you keep a more positive, upbeat mindset during difficult situations.

• Master Time Management – One of the biggest challenges that you’ll have will be your time. Working, running errands, providing care, and other steps throughout the day all take time. If possible hire help to do the low value activities so that you can spend your time where it is most important.   We suggest for families that they spend a majority of their time as quality time with their loved one, laughing, sharing memories, spending time with each other is what matters.  If you have the financial wherewithal, hire help to be sure medications are taken, doctor appointments are coordinated, bathing and any other basic necessities are handled. This will give you more energy to share positive moments with the person you are caring for.

• Master Your Finances – Not only will providing care be difficult in terms of time, but it can impact your finances significantly as well. Now more than ever creating a solid budget is a must and so is understanding other steps you can take towards improving the overall financial health you have in place. Pay attention to your finances to ensure that you don’t end up struggling with them later.

• Get Help – There’s nothing to be ashamed of when asking for a little help from someone. There are so many wonderful resources in our community, seek and ask for help and support. Seeking out help during this phase of your life for the person you are caring for and for you, is something that is well worth doing.

• Take Time For “You”– We know we just talked about time management, but there’s also something to be said for just how important it is to take a little time out of the day for yourself. Whether your time is used to go for a quiet walk, watch a movie, go shopping, or just sit on the porch with a glass of wine and unwind for a few, giving yourself some time is absolutely vital for your own mental health.

An Unquestionable Challenge

There’s no question that caring for a loved one can be challenging. The tips above can help you with the process, but it is certainly something that will take effort on your part – physical and mental.  Your financial team can help provide guidance during this time that can help you and your loved one in the short and long term.   If you have questions, or would like to learn more about this topic, please feel free to contact Ciccarelli Advisory Services.

Jill Ciccarelli Rapps  |  Life in Naples Magazine  |  February 2016

As you live and go through your life, things will inevitably change. It’s a simple fact of the universe that your situation, thoughts, and life in general will evolve. Sometimes it’s for the better, sometimes for the worse, but no matter what the specific situation is it’s important that you approach the days and years after a major life transition with wisdom.

MAJOR TRANSITIONS

What do we mean when we say a major life transition, exactly? This can refer to any number of things – good and bad – and a few examples include:
Marriage | Birth of a child | Death of a loved one | Divorce | Career change | Move | Lottery win | Inheritance

In general, anything that changes your life in a significant way in terms of your relationships, your finances, or your outlook could be considered a major life transition. And when that change comes, it will create a ripple effect that will impact almost every other aspect of your life. Approaching it with wisdom and understanding is a must.

KEYS TO REMEMBER

Here are a few things that you should keep in mind following a major life transition. They can help ensure that you are able to move through it with grace and wisdom and take yourself to a better place in the future:

• Before you make any major actions or decisions, start off by simply looking at the big picture – each side of the transition. There are likely pros and cons to everything, and even something as seemingly negative like a divorce could have something hidden within it to look forward to. Try to approach each transition as a fresh start for your life and that begins with taking a good, long look at it.
• Consider exactly how the event is going to impact you in the long term and think about how you can impact it. Think about past experiences, what has led you to where you are, and how you may be able to influence the current situation as well as future ones? Understanding that you are in control of your life can help you take a better approach to dealing with any transitional period.
• Don’t take rash steps that are based solely on the ‘now’. You may feel overwhelmed and be in a high emotional state. This usually is not the best time to make major decisions. If possible, work on getting to a better place emotionally first, and unless you absolutely have to make a decision, take your time. You will be thankful when you have more clarity and feel better about the choices you make. You should try to approach things while looking at the way they’ll impact your life throughout the future instead of just thinking about the few days directly after a transition occurs.
• Learn from everything that happens. Treat each life experience as though it is a lesson to learn from and try to use the knowledge you gather over your lifetime to inform your decisions and actions in the future. This can apply to anything and keeping the right mindset is important.
• Stay positive. Even when things seem to be going badly, try to find the things in life that mean something to you and focus on them as you navigate the days and weeks after a major transition. If you’ll stay focused on the positive, it’s easier to stay motivated and to make the most of your life after a significant event occurs.

CARRYING ON

Life can be unpredictable at times and it’s important that you know how to move through new events in the best possible way. The tips above can help you move through major life transitions with wisdom and are well worth remembering no matter what the circumstances might be.

Your advisor can help you do just that. Getting a clearer picture of your finances and your future is a must, so don’t hesitate to contact us today to get the guidance you deserve no matter what life has thrown your way.

Kim Ciccarelli Kantor  |  Naples Daily News  |  September 12, 2012

Money lessons are hard to come by for most people.  Perhaps we want to hear something different from what we know as solid, reasonable advice.

Less-experienced investors want glamour and quick fixes.

It was years before I understood a story my father told me: The lesson he passed on was that wealth would be achieved by doing the right thing, consistently and patiently, as long as you were headed in the right direction.

He would say, “Focus on what you can control—avoiding mistakes.”  Do your homework and think through your decision before taking action.

It was James P. Owen, author of “The Prudent Investor: The Definitive Guide to Professional Money Management,” who wrote of the 10 most common mistakes affluent investors make and how to avoid them.

I have found these to be powerful lessons for any investor and will share them in this and my next two columns:

1. Not Running Your Finances Like a Business

Treating your investments like a part-time job does not place them in a top priority position.  Highly successful people who are casual or haphazard about investing are most likely oblivious to the amount of money it takes to maintain their lifestyle.  No matter what your situation, if you are investing assets of $1 million, $2 million, $5 million or more, you have a great deal at stake.  At this level, managing your money is like running a business.  As the CEO of your investment “company,” you must make sure your assets are invested in a systematic, disciplined way.

To do so, you must have a business plan that covers both the short and the long term; quantifiable goals against which to measure results—incorporating both life goals and investment goals; a strategy to attain your goals; and the right professionals to do the job.

2. Not Defining Your Investment Policy

When you let fad statements like “bonds are safe” or “this isn’t the right time to buy stocks” shape your investment approach, you are vulnerable to missed opportunities at best, and costly errors at worst.  What is an investment policy?  It is a strategic, long-term framework that defines for one, your asset allocation policy.

This lays the foundation for the mix of your investments with the balance of risk and return that is proper for you.

This policy should be in place and created with your financial consultant before hiring any manager or selecting specific investments for your portfolio.

To create a successful investment policy, consider your time horizon, income requirements, tolerance for risk and volatility, and return expectations.

Investment policies, like any other part of your planning, should be periodically reviewed.  You may need to make some adjustments if your goals have shifted in any meaningful way.

3. Trying to Time the Market

It is only human nature to want to time the market.  Many investors continue to try time and time again, despite all evidence they will never succeed.

On Wall Street, and in the homes of seasoned investors, the consensus is clear: It is time—not timing—that makes you successful in the market.

The problem is it is virtually impossible to time the market correctly, consistently.

Historically, markets are an upward trend over time, and stocks make the most gains in short, climatic spurts.  Missing just 30 of the best market days can make for a significant underachievement of your goals.  Waiting for the right time to jump back in after a recovery is a difficult, if not impossible, challenge.

The lessons learned today evolve from mistakes that may be avoided if planned for properly.  The errors investors make are simple yet complex, profound yet clear.  Don’t fall victim to what you might be able to avoid—common mistakes in investing.

Additional common mistakes investors should avoid will be discussed next month in Part II.

Jill Ciccarelli Rapps  |  Life in Naples Magazine  |  January 2016

As you move through life, it’s important that you take the right steps to ensure your financial future and the future of your loved ones. That’s why it is important to consider capitalizing the benefits of a living trust. It could be the right call for you and for your family, and it’s something that deserves a closer look.

Of course, just as with anything else, it’s important to begin by fully understanding the basics behind the process of doing so – not to mention why it’s worth thinking about.

WHAT IS A LIVING TRUST?

• A living trust is a popular estate planning tool that lets you (1) retain control over the trust property while you are alive, (2) avoid guardianship in case you become incapacitated and can no longer handle your own financial affairs, and (3) pass trust property outside of probate when you die.
• Legally, a living trust is a separate entity that you create while you are living to “own” property, such as a house, boat, jewelry, or mutual funds. The trust is revocable, which means that you can make changes to it, or even end it, at any time.

SO WHY SET ONE UP?

There are several reasons that setting up a trust is something well worth taking the time to do. Some of these include:

• Peace of mind for you knowing that your loved ones will receive their legacy without the interference of the courts after your death. This is especially important if you are passing on ownership of a business. Estimates suggest that about 3-5% of the value of your property may be spent on lawyer fees and court costs. That’s money and time that may be wasted for your loved ones, and a living trust allows you to avoid that.
• The ability to better plan for your future and your family’s future if you are unable to manage your assets during your lifetime.
• The possibility to protect your children from litigation or divorce by having them inherit their legacy via trust.

WHAT ARE SOME KEY STEPS TO TAKE?

You’ve likely gone through your life making smart decisions – especially if you’ve reached the point where you’re planning on a living trust. For a living trust, there are a few key steps you’ll need to take:

• Create the trust. This can be drawn up with the help of an attorney and your financial advisor. Because it is likely that your financial advisor knows so much about you and your family, they can assist you in bridging what is most important to you with your legal documents that your attorney will draft.
• Many people forget to put assets in their trust and the benefits of the trust are not realized. There are some assets, because of other lifetime benefits, that should not be owned by your trust. This is an important area to work closely with your financial advisor and attorney so they can help you to properly “fund” your trust.
• Prepare your loved ones. This is often overlooked, but it’s incredibly important. You need to ensure that your heirs are ready for the responsibilities that come with their inheritance. You’ll want to ensure that they understand the basics of asset transition, what to do afterwards, and more. Sometimes, updating your estate planning documents is a great excuse to have a family meeting to educate your heirs about your desires.

Simply put, a living trust is a wise move that could help you capitalize your wealth for yourself and your loved ones. If you are wondering how to get started, contact Ciccarelli Advisory Services, Inc. today.

Jill Ciccarelli Rapps  |  Life In Naples Magazine  |  December 2015

If you’re like most, you have spent a considerable amount of time and energy on developing and growing your current level of wealth. All that hard work really does reward in more ways than just financial – the pride and contentment you can feel knowing that you have created something is very satisfying.

But there is much more to life than just money and wealth; the intangible legacy you leave your family is likely just as important to you as anything else. However, many find that it is hard to involve their family in their wealth management efforts. There are plenty of reasons for this and it’s worth taking a few minutes to look at some basic points to figure out just how involved your family should be.

It’s important to note that no two families, individuals, or wealth management scenarios are the same. As such, the final decision will always be up to you. However, looking at the following things can certainly help you make the right decision.

How Involved Are They Already?  The first step is to look at just how involved your family is in your assets and wealth at the current moment. For example, are you a business partner with a son or sibling? Do you just employ a few loved ones? If your loved ones are already involved in the wealth generation, you may want to take extra steps to involve them further in your wealth management plans.

What Is Your Plan?  Once you move past figuring out who is already involved, you need to figure out your overall financial wealth plan. This can be far more difficult than many realize, especially when you consider things like:

• Will you set up a living trust or a standard trust? Who is the trustee to be?
• Who gets what?
• What about non-monetary assets and wealth?

That last factor can be a hard one to discuss with loved ones, and it is easy for feelings to be hurt and for loved ones to feel slighted.  The more you can communicate to your heirs, the more significant your legacy can be to make a difference in their lives.

Preparing Your Heirs

A lot of time is spent by anyone preparing their living trust, organizing their will, generating wealth, and more. But something that is often overlooked is simply the process of preparing your heirs. While you may decide not to involve your family directly in the process of planning out your wealth management efforts, it’s a good idea to at least prepare them.

There are numerous issues that can come from an ill-prepared heir situation, ranging from hurt feelings to difficulty with asset transition to trouble properly managing the wealth once it is in their name. Preparing your heirs early on can help with this dramatically. A few points to remember:

• Discuss the process of wealth and asset transition with them fully. This can help them understand what to expect so they aren’t frustrated or challenged by the process.
• Explain the basics of the division of assets so nobody faces any surprises. This can help make the transition process a bit easier as well.
• Ensure that the people who are to be in charge of different aspects of your assets understand how to properly manage them and align them in such a way that it benefits the family. Many times, a dress rehearsal is appropriate; giving them a certain amount of money to manage and see how they do.

Taking these basic steps can help you get more from the process of preparing and planning wealth and ensure that you are able to give them everything they deserve.

Why Involve Family?  Obviously, some will feel that involving the family isn’t prudent. But consider the simple fact that these are your loved ones, and that while it can seem like a hassle or a burden, it is something that they will likely want to be a part of to some degree. This in turn can help you rest easy knowing that they are prepared and aware of what is to come and that they can handle the responsibilities.

If you need help with the planning process or want to consult with someone about just what the best steps are for your specific situation, Ciccarelli Advisory Services, Inc. can help. Contact us today to find out more about your options and what we can do to help you and your family prepare for the future in the best way possible.

For most of us, we move through our lives towards goals that we have set for ourselves. And in many instances, one of the key goals is certainly retirement. Being able to reach a point when we can stop working, have flexibility of time, live confidently off our investments, and enjoy the latter part of our lives is something that nearly everyone strives towards.

It’s a great feeling to reach the point when you’re ready to retire. The entire world is in front of you and all the things you never had time to do are now possible; but still many people are overburdened when the time comes.

So once you reach the point where you are ready to retire, what is next?  Luckily, there are a few things that you can do to make sure your transition into retirement is a good one.

The Preparation Process
The first thing you need to do when you think you are ready to retire is to be sure that you are. There are several steps that any good investment professional will give to you and it is important to follow each of them carefully. They include the following:

• Plan Your Life – While each day can be an adventure when you are retired, it is still important that you think seriously about how you’ll be living in retirement. Step away from looking at your financial numbers and consider what you will be doing. Are you moving to a new home? Relocating to a new area? Starting a small business based on your lifetime hobby? Spending focused time on planning how your life will be once you retire is important.

• Set Up Your Spending Budget – The odds are pretty good that you reached your retirement goals by living on a budget and you’ll want to carry that through your retirement. Set up a budget based on your current unavoidable expenses and what you want to do. Don’t forget to consider future health care costs and legacy goals for your heirs.  A sound budget is necessary to ensure you don’t end up short.

• Consider Social Security – Many people take their Social Security benefits as soon as they can. It is worthwhile to review your options with a financial advisor, as there are several, and based on your individual circumstance and your health, picking the right option can make a significant difference. Did you know that waiting about 8 years – until you are 70 – can boost the size of your benefit by as much as 8% a year? If you plan it properly, you may be able to get more. 

Continuing To Draw An Income
Turn your nest egg into a source of sustainable income. Some retirees do so by creating a business that they have dreamed of running, but for others just things like setting up an annuity that may create consistent income to supplement pensions and or social security, or just drawing a percentage of your retirement nest egg each year from specific assets can help. The key here is making sure that you do not end up needing to go back to work, and while you are retired, it is good to put your money to work for you.

Enjoying Life
Once you have made sure that you can afford to retire and considered the steps listed above, all that is left to do is make sure that you enjoy yourself. Many who retire end up unhappy since they feel like they have no focus anymore. But a few steps can help with that, including:

• Retire somewhere with friends nearby. Studies have shown that retirees with friends nearby are about 3 times more likely to be happier.

• Stay focused and create your purpose  Pick out a hobby or passion and devote your time to it.  Consider taking a class on finding your purpose (Blue Zones Project of Southwest Florida presents regular local workshops) or work through a retirement coach.

• Live smart; follow your dreams, stay healthy, stay active, and move your body.

Simply put, your retirement is a time that should be enjoyed and should be special. Friends and family can help, and so can being sure that you’ve planned out your retirement in the best possible way. The tips above should help make it easier to do, and speaking with a retirement specialist can as well. Feel free to contact Ciccarelli Advisory Services, Inc. today to find out more about getting ready for your retirement.

Steven R. Merkel, CFP®, ChFC®  |  Life in Naples Magazine  | August 2015

Without hesitation, most financial professionals will unarguably agree that the Roth IRA is hands down the best individual retirement arrangement on the planet.  Benefits such as tax-free growth, no RMD requirements at age 70 ½, and penalty-free early withdrawal of principal are just a few of the many benefits.

To date, it is the only IRA retirement plan that offers 100% tax-free withdrawals of principal and earnings after age 59 ½, provided that the Roth was established for at least five years before the distribution occurs.  Why wouldn’t everyone have one?

Limitations and Restrictions

Eligibility to contribute directly to a Roth IRA is phased out at certain modified adjusted gross income (MAGI) levels.  Roth contribution eligibility (indexed for 2015) ends at MAGI limits for single tax filers at $131,000 and $193,000 for those married filing jointly.  If you have earned income under these MAGI levels, you can contribute directly to a Roth for both you and your spouse – at a maximum of $5,500 each per year or $6,500 if you’re age 50 or older.

In 2010, the government removed the $100,000 income limitation for Roth conversions.  Roth conversions allow taxpayers to convert full or partial Traditional IRA funds (both deductible and non-deductible) to Roth IRAs by paying tax on the untaxed amount converted in the year of conversion.  The removal of this rule also opened up some amazing strategic planning opportunities for both low and high-income earners.

Backdoor Roth

If your earned income MAGI exceeds the direct contribution limits to the Roth IRA, there’s still a possible solution for you.  The IRA rules allow those individuals that can no longer benefit from deductible IRA contributions to make non-deductible contributions to a Traditional IRA (make sure your CPA files Form 8606 with your tax return to acknowledge the non-deductible contribution).  Immediately after your contribution posts to your non-deductible IRA, you should convert the funds to your Roth IRA account.  Presto… you now have a Roth IRA and you converted it without paying any tax!

How?  There were no earnings in the non-deductible Traditional IRA at the time of conversion and you never took any tax deduction for the contribution, so there was nothing new there for the IRS to tax since your initial contribution was comprised of after-tax dollars.

Watch out for the Pro-Rata Rule

The catch to this strategy is if you already have existing IRA accounts.  In this case, the IRS would look at the aggregate value of all of your Traditional IRA accounts and tax the amount of your conversion based as a percentage of the overall value of all of your IRA accounts.  This is not the best scenario because you would still owe some tax on the conversion amount based on the pro-rata formula. If conversion still interests you, keep in mind that you do not have to convert the entire IRA to a Roth in the same tax year, so many individuals are still able to spread the tax consequence over several years by only converting a partial amount of their deductible (taxable) IRAs each year.

Avoiding the Pro-Rata Rule

Should you desire to reduce your pre-tax IRA values to zero in order to avoid paying tax on the conversion amount, you could consider rolling over your IRA accounts into a 401K plan prior to opening a non-deductible IRA.  Since many employers do not allow outside pre-tax IRA monies to rollover into their plan, if you have self-employment or 1099 income, consider opening a Uni or Solo 401K to rollover the funds.  If you get your aggregate IRA values down to zero, you can then utilize the Backdoor Roth with no tax due.

The Backdoor Roth is an excellent strategy if you do not have any existing pre-tax Traditional IRA accounts or you’re able to roll over those funds into a 401K account.  The ability to convert non-deductible IRA funds to a Roth IRA tax-free is an amazing tax and investment strategy that can provide family generations of tax-free earnings and distributions.  There’s no other product out there like it.  Even retirees with no earned income may want to consider partial Roth conversions (paying tax now on the conversion amount of course).

So what are you waiting for?  Contact your financial planner today to fully understand your personal tax situation and then get the ball rolling on this incredible opportunity before the IRS fully catches on and makes changes to the tax code.

A Roth IRA distribution is qualified if you’ve had the account for at least five years and/or the distribution is made after you’ve reached age 59½, due to total and permanent disability, in the event of your death or for first-time homebuyer expenses.  Distributions made prior to age 59 1/2 may be subject to a federal income tax penalty.  If converting a traditional IRA to a Roth IRA, you will owe ordinary income taxes on any previously deducted traditional IRA contributions and on all earnings. A conversion may place you in a higher tax bracket than you are in now.  Since Roth IRA conversions may not be appropriate for all investors and individual situations vary we suggest that you discuss tax issues with a qualified tax advisor.  There are several choices investors have when rolling over money from one plan to another. Since each choice has its own implications, it is recommended that you discuss and compare all potential fees, expenses, commissions, taxes, and legal ramifications with your qualified advisor before making a rollover decision.