SC Financial Group, LLC.
1417 116th Ave NE
Bellevue, WA 98004
Fax: (425) 451-2888
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Quiz: How Much Have You Thought About
Health and Health-Care Costs in Retirement?
Four Reasons Your Parents Might Be in
What records do I need to file my taxes?
What are some ways to prepare financially for
SC Financial Group
March 2019 Newsletter
Due Date Approaches for 2018 Federal Income Tax Returns
Tax filing season is here again. If you haven’t done so already, you’ll want to start pulling things together — that includes getting your hands on a copy of your 2017 tax return and gathering W-2s, 1099s, and deduction records. You’ll need these records whether you’re preparing your own return or paying someone else to prepare your tax return for you.
The filing deadline for most individuals is Monday, April 15, 2019. Residents of Maine and Massachusetts have until April 17, 2019, to file their 2018 tax return because April 15, 2019, is Patriots’ Day and April 16, 2019, is Emancipation Day
Filing for an extension
If you don’t think you’re going to be able to file your federal income tax return by the due date, you can file for and obtain an extension using IRS Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. Filing this extension gives you an additional six months (to October 15, 2019) to file your federal income tax return. You can also file for an extension electronically — instructions on how to do so can be found in the Form 4868 instructions.
Filing for an automatic extension does not provide any additional time to pay your tax. When you file for an extension, you have to estimate the amount of tax you will owe and pay this amount by the April filing due date. If you don’t pay the amount you’ve estimated, you may owe interest and penalties. In fact, if the
IRS believes that your estimate was not reasonable, it may void your extension.
Note: Special rules apply if you’re living outside the country or serving in the military and on duty outside the United States. In these circumstances you are generally allowed an automatic two-month extension (to June 17, 2019) without filing Form 4868, though interest will be owed on any taxes due that are paid after the April filing due date. If you served in a combat zone or qualified hazardous duty area, you may be eligible for a longer extension of time to file.
What if you owe?
One of the biggest mistakes you can make is not filing your return because you owe money. If your return shows a balance due, file and pay the amount due in full by the due date if possible. If there’s no way that you can pay what you owe, file the return and pay as much as you can afford. You’ll owe interest and possibly penalties on the unpaid tax, but you’ll limit the penalties assessed by filing your return on time, and you may be able to work with the IRS to pay the remaining balance (options can include paying the unpaid balance in installments).
Expecting a refund?
The IRS is stepping up efforts to combat identity theft and tax refund fraud. New, more aggressive filters that are intended to curtail fraudulent refunds may inadvertently delay some legitimate refund requests. In fact, the IRS is now required to hold refunds on all tax returns claiming the earned income tax credit or the refundable portion of the child tax credit until at least February 15.
Most filers, though, can expect a refund check to be issued within 21 days of the IRS receiving a return. However, delays may be possible due to the government shutdown.
According to the 2018 Senior Report from America’s Health Rankings, social isolation is associated with increased mortality, poor health status, and greater use of health-care resources. The
risk of social isolation for seniors is highest in Mississippi and Louisiana and lowest in Utah and New Hampshire.
Quiz: How Much Have You Thought About Health and Health-Care
Costs in Retirement?
When planning for retirement, it’s important to consider a wide variety of factors. One of the most important is health and its associated costs. Thinking about your future health and the rising cost of health care can help you better plan for retirement in terms of both your finances and overall well-being. This quiz can help you assess your current knowledge of health and health-care costs in retirement.
Health-care costs typically rise faster than the rate of inflation.
You could need more than $500,000 just to cover health-care costs in retirement.
Medicare covers the costs of long-term care, as well as most other medical costs.
The southern, warmer states are generally the healthiest places for seniors to live.
If you’re concerned about health-care costs in retirement, you can just delay your retirement in order to maintain your employer-sponsored health benefits.
True. The average inflation rate from 2010 to 2017 was less than 2%, while the average spending on prescriptions, doctors, and hospitals grew between 4% and 5%. From 1970 to 2017, annual per-capita out-of-pocket spending on health care grew from about $600 to approximately $1,100 (in 2017 dollars).1
True. In 2017, America’s Health Rankings projected that a 45-year-old couple retiring in 20 years could need about $600,000 to cover their health-care costs, excluding the cost of long-term care. The same report projected that about 70% of those age 65 and older will need some form of long-term care services. And according to the Department of Health and Human Services, the average cost of a one-year stay in a nursing home (semi-private room) was $82,000 in 2016.2
False. Original Medicare Parts A and B help cover inpatient hospital care, physicians’ visits, preventive care, certain laboratory and rehabilitative services such as physical therapy, and skilled nursing care and home health care that are not long term. Medicare Part D helps cover the cost of prescriptions (within certain guidelines and limits). Medicare does not cover several other costs, including long-term care, dental care, eye exams related to eye glasses, and hearing aids. Seniors may need to purchase additional insurance to cover these and other services not covered by Medicare.3
False. Interestingly, America’s Health Rankings found that the five healthiest states for seniors were (1) Utah, (2) Hawaii, (3) New Hampshire, (4) Minnesota, and (5) Colorado.4
Maybe true, maybe false. Many people believe they will work well into their traditional retirement years, both to accumulate as large a nest egg as possible and to take advantage of employer-sponsored health benefits (if offered beyond Medicare age). While this is an admirable goal, you may not be able to control when you actually retire. In a 2018 retirement survey, nearly 70% of workers said they planned to work beyond age 65; 31% said they would retire at age 70 or older. But the reality is that nearly 70% of current retirees retired before age 65. Many of those individuals retired earlier than planned due to a health problem, disability, or other unforeseen hardship.5
The bottom line is that while it’s hard, if not impossible, to predict your future health needs and health-care costs, it’s important to work these considerations into your overall retirement planning strategies. Take steps now to keep yourself healthy — eat right, exercise, get enough sleep, and manage stress. And be sure to account for health-care expenses in your savings and investment strategies
1 Consumer Price Index, Bureau of Labor Statistics, 2018, and Peterson-Kaiser Health System Tracker, 2018
2 Preparing for Health Care Costs in Retirement, America’s Health Rankings, 2017, and LongTermCare.gov, 2018
4 Senior Report, America’s Health Rankings, 2018
5 2018 Retirement Confidence Survey, Employee Benefit Research Institute
When retirees were asked about their overall expenses and spending in retirement, 37% said they were higher than expected, 52% said they were about what they expected, and just 8% said they were lower than expected.
Source: 2018 Retirement Confidence Survey, Employee Benefit Research Institute
Know Your Mutual Funds
As your parents age, they will probably need more help from you. But it may be difficult to provide the help they need, especially if they’re experiencing financial trouble.
Money can be a sensitive subject to discuss, but you’ll need to talk to your parents about it in order to get to the root of their problems and come up with a solution. Before you start the conversation, consider the following four scenarios as signs that your parents might be experiencing financial challenges, and how you can make things easier for them.
1. They are dealing with debt
Perhaps your parents have fallen behind on their mortgage or credit card payments. Maybe they’re dealing with the aftermath of a large, unexpected medical bill. Or it could be that years of generously supporting their children and grandchildren have left their finances in shambles.
Whatever the cause, debt among older Americans is a growing trend. In 2010, the average debt for a family in which the head of household was age 75 or older was $30,288. In 2016 (most recent data available), that number grew to $36,757.1
2. They are falling for fraud
According to a report by the Federal Trade Commission, older adults have been targeted or disproportionately affected by fraud. Moreover, older adults have reported much higher dollar losses to certain types of fraud than younger consumers.2
Why do scammers target older individuals? There are many explanations for this trend. Some older individuals lack an awareness about major financial issues. Others may be attractive targets for scammers because they have access to retirement account assets or have built up home equity. Additional factors that increase an older adult’s vulnerability to scams include cognitive decline and isolation from family and friends.
3. They aren’t used to managing finances
The loss of a spouse can create many challenges for the survivor, especially if the deceased spouse was in charge of finances. Many widows or widowers might find themselves keeping track of statements, paying bills, budgeting, and handling other financial matters for the first time, which can be a complicated reality to face.
4. They struggle with change
As financial institutions continue to innovate and increase online and mobile access to customer accounts, it can be difficult for older consumers to keep up. For example, some older adults may struggle with accessing their financial information online. Others might get frustrated or confused when financial institutions implement new policies and procedures, especially if they’ve had an account with an institution for decades.
One report described the most common issues that older consumers identified with bank accounts or services. The top three complaints involved account management (47%), deposits and withdrawals (27%), and problems caused by low funds (12%).3
Ways you can help
Regardless of the reasons why your parents might be having money problems, there are steps you can take to help them.
Set up a meeting with a financial professional. Encourage your parents to meet with a professional to evaluate their financial situation.
Help them reduce spending. Look for big and small ways that they can scale back on expenses, such as downsizing to a smaller home, cutting cable plans, or canceling unnecessary memberships/subscriptions.
Have them tested for dementia. If you’ve noticed behavioral or memory changes in one or both of your parents, share your concerns with a medical professional. Cognitive decline can result in difficulty managing finances.
Lend money (using caution). If you decide to help your parents monetarily, consider paying your parents’ expenses directly rather than giving them cash so you can ensure that their bills are paid on time.
Help them apply for assistance. The National Council on Aging has a website, BenefitsCheckUp.org, that can help you determine your parents’ eligibility for federal, state, and private benefit programs.
1 Debt of the Elderly and Near Elderly, 1992-2016, Employee Benefit Research Institute, 2018
2 Protecting Older Consumers: 2017-2018, Federal Trade Commission, 2018
SC Financial Group, LLC.
1417 116th Ave NE
Bellevue, WA 98004
Fax: (425) 451-2888
IMPORTANT DISCLOSURES Securities offered through Cadaret, Grant & Co, Inc., Member FINRA/SIPC. SC Financial Group, LLC and Cadaret, Grant & Co, Inc. are separate entities.
Cadaret, Grant & Co, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual’s personal circumstances.
To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
What records do I need to file my taxes?
Tax season is a good time to get your financial records in order. And whether you are doing it on your own or hiring a tax preparer to assist you, you’ll want to make sure that you have all of your information organized to make the process of filing your taxes easier.
Sometime in January you should have received your W-2 form from your employer. Your W-2 form lists your gross income, taxable income, and the amount of state and federal taxes withheld from your pay. It also will show any 401(k), health insurance, and flexible spending account contributions you have made.
Around the same time that you got your W-2, you should also have received 1099 forms from financial institutions for any dividend and interest income.
And if you have a mortgage, your mortgage servicer sent you a 1098 form, which contains information on interest paid along with other mortgage-related expenses.
In addition to the above-referenced forms, you’ll need to provide your personal information, including your date of birth and Social Security or tax ID number. If you are married and/or have children, you will need their information as well. You should also have documents that list any additional sources of income, such as self-employment, rental, retirement, or unemployment income.
Depending on whether you qualify for any tax deductions or credits, you may also need the following information:
Records of cash and noncash charitable donations
Amounts paid toward medical, dental, and vision expenses
Federal, state, and local taxes paid (including quarterly estimated tax payments) • Dependent-care provider information
Receipts for education-related expenses
Make sure that you keep all your financial records in a safe and easy-to-find place. Being organized is not just a good idea during tax time, but is also helpful at other times of the year (e.g., when you apply for a loan or financial aid for college).
What are some ways to prepare financially for severe weather?
Floods, tornadoes, lightning, and hail are common spring events in many parts of the country and may result in widespread damage. Severe weather often strikes suddenly, so take measures now to protect yourself and your property.
Review your insurance coverage. Make sure your homeowners and auto insurance coverage is sufficient. While standard homeowners insurance covers losses from fire, lightning, and hail (up to policy limits), you may need to buy separate coverage for hurricanes, floods, earthquakes, and other disasters. Consult your insurance professional, who can help determine whether you have adequate coverage for the risks you face.
Create a financial emergency kit. Collect financial records and documents that may help you recover more quickly after a disaster.
This kit might contain a list of key contacts and copies of important documents, including identification cards, birth and marriage certificates, insurance policies, home inventories, wills, trusts, and deeds. Make sure your kit is stored in a secure fireproof and In addition to the above-referenced forms, you’ll need to provide your personal information, including your date of birth and Social Security or tax ID number. If you are married and/or have children, you will need their information as waterproof container that is accessible and easy to carry. The Emergency Financial First Aid Kit, available online at ready.gov, offers a number of checklists and forms that may help you prepare your own kit, as well as tips to guide you through the process.
Protect your assets. Take some commonsense precautions to safeguard your home, vehicles, and other possessions against damage. For example, to prepare for a possible power outage, you might want to install an emergency generator and a sump pump with a battery backup if you have a basement or garage that is prone to flooding. Inspect your yard and make sure you have somewhere to store loose objects (e.g., grills and patio furniture) in a hurry, cut down overhanging tree limbs, and clean your gutters and down spouts. Check your home’s exterior, too, to make sure that your roof and siding are in good condition, and invest in storm windows, doors, and shutters. In addition, make sure you know how to turn off your gas, electricity, and water should an emergency arise. And if you have a garage, make sure your vehicles are parked inside when a storm is imminent.
IMPORTANT DISCLOSURES Securities offered through Cadaret, Grant & Co, Inc., Member FINRA/SIPC. SC Financial Group, LLC and Cadaret, Grant & Co, Inc. are separate entities. Cadaret, Grant & Co, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.