Blog - Leonard Financial Solutions

3 Ways to Get More Money Out of Your Social Security Checks

8/31/2021

Taking home the most money possible from Social Security is a priority for most people in retirement. Thankfully, there are ways to set yourself up for success long before you retire. Keep in mind that Social Security benefits in New Jersey are not enough to live on. They are a safety net designed to support people in retirement and not meant to be a sole source of income.

Here are three ways to get more money out of your Social Security checks.

1. Work a Full 35 Years or More

The Social Security Administration calculates your benefit based on your lifetime earnings. These earnings are taken from the 35 years in which you earned the most income, adjusted for inflation. If you only worked for 30 years, this formula will incorporate five zeroes. Try to work at least 35 years, if you can.

Since the formula focuses on your 35 highest-earning years, working longer also allows you to replace some of your lesser-earning years. If you’re earning significantly more than you were in the past, your new years will erase those lower years, boosting your benefits.

2. Wait to Collect Your Benefits

A simple way to increase your Social Security payments is by waiting to take your benefits. It can be tempting to take your benefits early, but for every year you wait, you can earn an additional 8 percent in benefits.

Each one of us has a full retirement age, which is typically around 66 or 67 these days. So, if you start collecting benefits at 64 instead of 67, your checks will be 80 percent what they could have been. The only time we recommend taking your benefits early is if you believe you’ll have a shorter-than-average lifespan.

3. Avoid Social Security Tax

If you plan on working in retirement to supplement some of your income, be aware of the tax consequences. Anywhere from 50 to 85 percent of your benefit payment can be subject to federal taxes. This happens because the IRS adds your nontaxable interest and half your Social Security income to your adjusted gross income.

If your annual income reaches $25,000-$34,000 for single filers or $35,000-$44,000 for joint filers, up to half of your Social Security income is subject to tax. If you earn more than this, 85 percent of your benefits are subject to tax. For a tax free retirement in New Jersey, be sure to speak with a retirement planner.

These are three of the best ways you can get more money out of your Social Security benefits. To discuss your financial future, contact the top financial advisors from Leonard Financial Solutions. We can take a look at your financial picture and determine the best ways to make your retirement comfortable and tax free.

4 Disadvantages to a 529 College Savings Plan

8/29/2021

The faster you can start saving for college, the better! We know this can be hard to do when your child is only in preschool, but things go by much faster than people realize. By opening a college savings account, you can get into the habit of saving for a higher education.

529 plans are a popular savings tool for educational expenses, but they’re not your only option. Whole life insurance in New Jersey can also be a great savings vehicle. While there is nothing wrong with 529 plans, we want you to be informed on the limitations. Here are four of the biggest drawbacks to 529 college saving plans.

1. Investment options can be limited.

529 plans allow you to invest in a number of different assets such as stock funds, bond funds and FDIC-protected money market accounts. However, they vary based on each individual state, which means your state may not have attractive investment opportunities. Some people don’t mind the limited investment choices, but others prefer to pick their own investments.

2. Penalties are issued for non-educational expenses.

There are strict rules on 529 plans - you cannot use them for just anything. If you do use the money for something non-educational, you’ll owe taxes on the investment gains and have to pay a 10 percent penalty rate. Qualified educational expenses are generous, thankfully, and include tuition and fees, room and board, textbooks and transportation to school.

3. Need-based aid may be reduced.

Another caveat to be aware of is that 529s count against your federal aid. This happens because 529 assets are included in your overall financial picture. The best way to avoid a 529 plan from hurting your chances for financial aid is to move the account into a family member’s name. If your child owns the account, they can take a 20 percent hit!

4. Contributions and fees are high.

Fees can quickly get out of hand with 529 plans. The last thing you want is to find out your savings are actually going to the financial institution or investment manager. Direct-sold 529 plans are cheaper than advisor-sold 529 plans, but expenses vary among portfolios. Also, some plans require a minimum contribution every month, which could be beyond your family’s reach.

Evaluate Alternatives to 529 Plans

Leonard Financial Solutions can help you find the best way to save for college. We have a number of 529 alternatives to look into such as trust funds, custodial accounts and permanent life insurance. Our goal is to educate our clients so they can choose the best option for their needs. Contact our financial experts to learn more about the alternatives to 529 college savings plans.

Is New Jersey a Good State to Retire In?

8/25/2021

Even though New Jersey is often associated with high taxes and a steep cost of living, it’s actually not a bad state to retire in. In fact, a new study named New Jersey as the best state to live in because of its emphasis on safety, education, health and quality of life.

As a top financial advisor in NJ, here are some of the reasons why our state can be a great place to live out your golden years.

Coastal Living

New Jersey is a good state for people who want to live off the coast but don’t want to spend their days in Florida. The Garden State offers 130 miles of coastline, many of which are white sandy beaches along the Atlantic Ocean. Residents in these beachside towns also have access to plenty of amusement parks, boardwalks and tourist destinations.

Moderately Friendly Taxes

New Jersey is a moderately tax-friendly state for retirees. Social Security income is NOT taxed at the state level and withdrawals from retirement accounts are only partially taxed.

If you have taxable income from a pension, annuity or IRA, you may be able to exclude some or all of the amount you received during the year. To qualify, you’ll need a gross income of $100,000 or less and be 62 years of age or older.

However, property taxes in NJ are some of the highest in the nation, so you will need to account for this if you plan on downsizing or staying in your current home.

Access to Good Healthcare

Not only are retirees within reach to New York City hospitals, but also there is excellent healthcare right here in New Jersey. Some of the highest ranked hospitals include Morristown Medical Center, Hackensack University Medical Center and Saint Barnabas Medical Center.

Ample Opportunities to Stay Active

There is plenty to do and see in New Jersey - and the outdoors are no exception. Between hundreds of miles of coastline, 44 beaches, four distinct seasons and sprawling farms, forests and wetlands, there is plenty to do to keep you busy. No wonder why New Jersey is one of the top 10 healthiest states in the country!

Continuing Education Opportunities

New Jersey is ranked high when it comes to education, and this includes for retirees. Most of the public universities and colleges offer senior citizen tuition waivers for students 65 and older. If you’re thinking about pursuing an interest or working part-time after retirement, free schooling can help you succeed.

If you’re planning on retiring soon, contact a financial planner in New Jersey today. Leonard Financial Solutions works with people in all states, but our focus is on NJ. We understand the tax laws and how to help our clients achieve tax-free living. Contact us today to set up an appointment.

Don't Want to Work after Retirement? Here are 5 Ways to Avoid It.

8/20/2021

Some people need to work after retirement, so they take on a part-time job or open a business to provide extra income. However, staying in the workforce isn’t for everyone. If you’d rather use your time to pursue your interests, spend time with the grandkids or travel the world, that’s perfectly acceptable, too. The thing is, you still have bills to pay, so you need to make sure you have enough income to comfortably retire.

If you want to close the chapter on working, here are five ways to ensure you have enough saved up to carry you through retirement.

Meet with a financial advisor.

Meet with a financial planner in NJ to assess your financial picture. While most baby boomers aren’t millionaires, they typically have a decent amount of money saved up for retirement. As long as you’ve been contributing to your savings accounts, you may very well have enough to cover basic expenses.

However, if you don't have enough, use this time to boost your retirement savings. Your financial planner can help you make decisions when it comes to 401(k) contributions, IRAs, automated savings and more.

Consider ways to reduce your living expenses.

Your living expenses should decrease as you retire. With a lower income, your tax bill will be lower, too. You also don’t have to pay into Social Security and you may qualify for senior discounts on your real estate taxes, phone bill, utilities, etc.

Not to mention, there are less expenses when you no longer work. You won’t be commuting, pitching in for company lunches or buying new work clothes. Hopefully, you’re no longer financially supporting your children, which also means you can downsize to a smaller and more affordable home.

Postpone Social Security for as long as possible.

Delay taking Social Security benefits for as long as you can. Retirees can gain up to 8 percent a year in additional benefits just by waiting to claim their benefits. If you’re healthy and financially stable, we recommend waiting until you are at full retirement age (66 years and 2 months). This way, you get 100 percent of your benefits.

Boost your income right now.

If you’re learning that you’re going to need more in retirement than what you have saved, consider boosting your income right now. It’s easier to do this when you’re young and healthy, even if it means working harder at the present moment.

Some of the ways you can boost your income are by:

Tracking your spending habits
Getting on a budget
Downsizing to a smaller home
Trimming your living expenses
Working extra hours or taking on freelance work
Consolidating debt

Consider making money off your favorite hobby.

If you don’t want to work but you know you’re going to need extra income, consider earning money off something you love to do. Some ideas include freelance writing, photography, pet sitting/dog walking, delivering groceries/fast food and driving for Uber or Lyft. If you enjoy doing these things, you can earn extra income without feeling like you’re working.

Many people hope they don’t have to work in retirement - and we can’t blame them. This is YOUR time to do the things you want. Be sure to speak with a retirement planner in New Jersey to make sure you’re on track with your goals. This way, there will be no surprises when you least expect them!

Democrats Want to Expand Medicare Benefits: Everything You Need to Know

8/3/2021

Health expansions may soon be coming to Medicare. One of the biggest health policy goals of this year for Democrats is the expansion of Medicare benefits. They have introduced a bill to include dental, vision and hearing coverage for Medicare beneficiaries. These benefits are not included with Original Medicare and subscribers are often surprised to learn that they’re on their own for these costs.

If Medicare enrollees want such benefits, they must switch to a private Medicare Advantage plan or supplemental coverage. Will adding in these benefits be the right move? Let’s get the facts on this bill and what to expect if Medicare benefits are expanded.

The Argument for Expanding Medicare Benefits

Millions of senior citizens have teeth rotting in their mouths or difficulty hearing or seeing because they can’t afford supplemental coverage. As this article points out, “It’s a cruel irony that older Americans do not have coverage for these benefits at the time when they need it the most.”

For those in favor of expansion, the argument is simple: expanding Medicare benefits will provide essential coverage to older Americans. According to a 2018 Commonwealth Fund report, vision, hearing and dental benefits are out of reach for many beneficiaries.

Forty three percent who have trouble seeing did not have an eye exam in the past year, 75 percent who need a hearing aid did not have one and 70 percent who have difficulty eating because of their teeth had not visited a dentist in the past year. Expanding Medicare would help these beneficiaries get the care they need.

Concerns Over Medicare Expansion

Of course, everything comes with a trade off. Expanding the Medicare program will be expensive, and to offset some of these costs, Democrats will allow Medicare to negotiate drug prices. This is a very controversial idea, but it may be necessary to afford the $358 billion spending over a 10-year period.

If Medicare negotiates the price of certain prescription drugs, this would reduce spending by $345 billion over a decade. The other Medicare change Democrats are looking at is lowering the eligibility age from 65 to 60. This would cost $200 billion over a decade. However, simply expanding Medicare eligibility does not guarantee affordable policies.

Find the Right Medicare Coverage for YOU

So is a Medicare-for-all approach going to be the future? It’s too early to tell how everything will play out as there are many pieces in motion. For now, we recommend speaking with Leonard Financial Solutions to learn about your options for Medicare. We highly recommend taking out a Medigap policy to fill in the gaps - this includes vision, dental and hearing. Contact us today for customized Medicare quotes in NJ.

5 Reasons to Have a Local Independent Life Insurance Agent

8/1/2021

Are you looking for the best life insurance brokers in New Jersey? You’ve come to the right place! Leonard Financial Solutions is an insurance agency that specializes in life insurance and retirement planning. Rather than spending your lunch breaks calling around to different insurance companies, you can find everything you need to build a tax-free retirement with us!

Here are five benefits you get by working with a local independent life insurance agent like Leonard Financial Solutions.

1. You get a wide range of choices - and we’ll handle all the comparisons!

Independent agents represent many different insurance companies, giving you a wide range of coverage options and price points. There is no need to spend time filling out numerous online applications. All you need to do is speak with us once and we’ll gather several life insurance quotes in NJ. We’ll even compare the coverage and rates and present you with the best options.

2. We are your advocates and personal advisors.

Another benefit you get by working with a local life insurance agent is personalized service. At Leonard Financial Solutions, we are YOUR advocate. Because we do not work for one specific insurance company, we’re not biased. We work for you and are committed to finding you the best coverage and rates.

3. We’re right around the corner - and invested in the community.

Independent life insurance agents are your friends and neighbors. They live and work in your community and care about their clients. Leonard Financial Solutions was founded by Jonathan Leonard in 2017 out of the desire to help others build a tax-free retirement. He has a long history of working for nonprofit organizations and church ministry.

4. You’ll receive expert advice in a timely manner.

Life insurance can be confusing at times, especially if you’re using your policy as an investment strategy. How quickly will your cash value accumulate? Can you borrow against it? Local insurance agents are very knowledgeable when it comes to this type of coverage and will answer all of your questions right away.

5. You get one-stop shopping.

Leonard Financial Solutions is committed to helping people build a tax-free retirement. We do not sell car or home insurance but rather assist with all things related to building wealth. You can count on us for life insurance, Medicare supplement plans, disability income insurance, Social Security benefits and more.

When it comes to retirement planning, Leonard Financial Solutions is here for you! Contact us today and we’ll be happy to provide you with a free insurance quote in New Jersey.

Getting Close to Retirement? Read This Checklist.

7/27/2021

Closing in on retirement is a great feeling, especially when you have your ducks in a row. But how do you know that you’re in a good position to retire? Retirement planning is a process, and we recommend starting your preparations as soon as you can. The longer you have to save, the better prepared you will be.

Here is a checklist to follow as you start putting things in motion for retirement. This will help you stay on track with your goals and ensure you’re not missing anything important.

Contribute to Your 401(k) and IRA

If you’re like most, your 401(k) and IRA are your best options for retirement savings. Most people tend to earn the most in their 20s, 30s and 40s, so it's important to start contributing when you’re young. This gives you more time to compound your savings and have a bigger nest egg for retirement.

Check Your Social Security Benefits

While there is some hesitation about the future state of Social Security, it’s not going away any time soon. We recommend checking your statement and benefits on the Social Security Administration website. It’s a good idea to make sure you’re receiving full credit for all of your earnings.

Take Inventory of Your Retirement Accounts

You might have multiple retirement plans from your previous jobs. Now is a great time to make sure you have a list of these old plans. All too often we see people with old pensions and old 401(k) plans that have been left with old employers. They’re probably small accounts, but they can still add up!

Factor in Your Other Assets

You have other financial resources that will count toward your retirement such as taxable investment accounts, annuities, life insurance with cash value and stock options. You may also be expecting an inheritance from your parents or grandparents, though we do not recommend using this as a retirement asset because things can happen.

Determine How Much You’ll Need to Retire

You’ve probably thought about this before, but now it’s time to really start thinking about how you plan to live in retirement. Do you plan on downsizing? Living debt free? Traveling the world? All of these factors will influence the money you need to save. To help you out, use a retirement calculator to find out if your plans are realistic or not.

While this is not an exhaustive checklist, it does get you thinking about retirement and how to get everything in place. Because things rarely go as planned, it helps to work with a financial planner who can help you plan for unforeseen events while also protecting your retirement. Contact Leonard Financial Solutions to speak with a financial planning expert.

Will the COVID-19 Vaccine Affect My Life Insurance?

7/27/2021

Now that the COVID-19 vaccine is widely available to kids and adults 12 and older, many people have questions about what the future looks like if they get vaccinated. Some social media posts have suggested that life insurance companies can deny death benefits to those who are vaccinated because the vaccine is “experimental.”

However, there is absolutely no evidence to support these claims. In fact, the posts have been flagged and removed because they are false. Unfortunately, once people see posts like this, they get mixed information. That’s why we felt it was important to cover this topic and address the question of, “Will the COVID vaccine affect my life insurance?”

The COVID-19 Vaccine Has NO Bearing on Your Life Insurance Coverage

According to the American Council of Life Insurers (ACLI), life insurance companies cannot deny a death benefit because the deceased is vaccinated against COVID. And, they don’t consider whether or not a policyholder had the vaccine when deciding to pay a claim. Life insurance contracts are very clear about how their policies work and what can cause the denial of a claim. But the COVID vaccine is not a factor.

This is important to know as some people are worried about getting the vaccine because they don’t want to lose their insurance coverage. But you can safely tell yourself and other loved ones that the COVID vaccine has no effect on life insurance policies.

Why are Some Life Insurance Claims Being Denied?

As mentioned above, there are clear reasons why a death benefit may be denied. While it might seem like something is being denied because of the COVID timeline, there’s probably something else going on. For example, you can be denied a death benefit if the following applies:

The deceased died within two years of taking out the policy. In most states, the insurance company can deny a death benefit if the policyholder died within two years. Usually, they’ll look at medical records to see if there were any misrepresentations.

The deceased had an Accidental Death and Dismemberment policy. This type of policy does not cover medical-related deaths or suicide deaths.

The deceased was not paying their premiums. Insurance companies are not obligated to pay out a death benefit if the policyholder was not paying their premiums. Usually when this happens, the policy is terminated relatively quickly.

What Happens if You Die from COVID-19 Complications?

Bottom line: If you or a loved one dies from COVID-19 complications, your insurance company will pay out your death benefit. And if you or a loved one dies suddenly after getting the COVID-19 vaccine, the policy will pay out as well, providing that the policy is up to date. To ensure that you have enough coverage to protect your loved ones, schedule a consultation with Leonard Financial Solutions.

Everything You Need to Know About Getting Life Insurance After Age 50

7/12/2021

Life insurance is something that you buy to protect someone after you are gone. This could include a spouse, child, parent or sibling. Many people are aware that a life insurance policy is best taken out when they’re young and healthy, but what happens when that’s not the case? Does life insurance still make sense if you’re older than 50?

Here is everything you need to know about taking out a life insurance policy after age 50.

Consider Your Financial Dependents

If you are still financially responsible for someone, it makes sense to have life insurance. Otherwise, how would they take care of themselves if you were to die? These days, it’s not uncommon for people in their 50s to still have young, financially dependent children.

However, if you don’t have anyone who is financially dependent on you, life insurance is not a necessity. You may still want a policy so that a dependent will receive money when you die, but you can also put that money into other savings tools.

Be Aware You Have to Go Through Underwriting

To get life insurance after 50, you’ll have to go through underwriting. This process involves answering questions and completing a health exam. As long as you’re in good health, underwriting shouldn’t be a problem.

But, if you’re a smoker or have health troubles, expect to pay more than someone who is healthy. Some of the most common reasons why people are denied life insurance are because of obesity, diabetes, mental health problems and line of work.

Choose a Shorter Term Policy

You don’t want to overpay for coverage, so it’s important to weigh your options and determine how much life insurance you need. There are benefits to both whole life insurance and term life insurance, but we generally recommend term policies for those over age 50.

A term policy is meant to protect your family. If you were to die during the length of your policy, your family would receive the coverage amount. A whole life insurance policy lasts a lifetime, but it’s expensive and you might not have enough time to build a cash value.

Compare Life Insurance Quotes in NJ

Lastly, talk to an insurance agent who can run a few insurance quotes for you. This way, you can pick the right policy and term length for your needs. Leonard Financial Solutions is transparent in everything we do. We can help you find the best rates for life insurance, whether you want a term or permanent policy.

If we think that your money could be better invested somewhere else, we’ll let you know. Once you’re older, life insurance is not always a necessity. Schedule a free consultation with our life insurance brokers in NJ to discuss your options for life insurance after 50.

Should You Borrow Money from Your Life Insurance Policy?

7/5/2021

It’s one of the most common questions we hear from clients: “Is it okay to borrow money from my life insurance policy?” The short answer - yes - as long as your policy has cash value. But there are some things to be aware of if you do choose to borrow money from your policy. While doing this can be a quick and easy way to get cash in hand, it also comes with a few caveats.

Yes, You Can Borrow Money from Your Life Insurance Policy

If you have permanent or whole life insurance in NJ, you can borrow against this policy. The reason why you can only borrow against these policies is because they have cash value that builds over time. Term life insurance, on the other hand, does NOT have a cash value. While these policies can be cheaper and more practical, you cannot borrow money from them.

Here are the advantages to borrowing from your life insurance policy:

No approval process or credit check since you’re essentially borrowing money from yourself

No explanation required for how you plan to use the money - you can use it for home improvement projects, medical bills or a fancy cruise

Not recognized by the IRS so there are no taxes to pay

Low interest rates compared to bank loans and credit cards

No mandatory monthly payment - pay back when you want

While there are many benefits to borrowing from your life insurance policy, there are some things to know:

Loan will need to be paid back in a timely manner because the interest will accrue

Skipping payments can put your policy at risk of exceeding its cash value - if this happens your policy will lapse

Can only borrow from your policy once your cash value has reached a certain size (usually within 5-10 years)

The Verdict: Borrowing from a Life Insurance Policy is a Good Move for Some

As long as you have permanent or whole life insurance in NJ with cash value, you can borrow money from it. But it’s important to have a repayment plan so that the interest doesn’t accrue and your death benefit isn’t reduced.

If you still have questions about borrowing from your life insurance policy and if this is the best move for you, contact Leonard Financial Solutions. We have personalized solutions for all types of financial situations!