Wealthtender Ask an Advisor Feature: Is $5.5 Million the Magic Number to Retire Comfortably and Pass Wealth to Your Children?→

Andrew Van Alstyne had the privilege to be featured in Wealthtender’s “Ask an Advisor” for how much money is needed for retirement.

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Andrew discusses that it is important to focus what you want retirement to look like when calculating the amount you’ll need. He also discusses a different way of thinking as to how to leave a legacy to your loved ones while still alive.

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Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

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The Power of Backdoor Roth for Sales Professionals

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Sales Professionals are constantly trying to figure out how to gain an extra edge over their competitors and better position themselves for customers. This should extend to navigating their financial picture and creating a solid retirement plan. Here’s where the backdoor Roth IRA enters the picture. While this financial planning strategy is open to many high-income professionals, it is uniquely advantageous for professionals with a variable income. While this approach doesn’t make sense for all high-income earners, it is worth keeping in your back pocket for when the time is right. In this post, we dive into this strategy, how it is utilized, and who should and shouldn't consider using it.

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What is a backdoor Roth?

You may have heard of this strategy, but what exactly is it? A backdoor Roth IRA is not a type of account but rather a method to contribute to a Roth IRA even if your income exceeds the IRS income phase-out limits. You contribute to a traditional IRA with a contribution that is not tax deductible and then transfer those funds to a Roth IRA. Once completed, you can invest those funds within your Roth IRA, giving you access to the long-term tax advantage of a Roth IRA.

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Why is it useful?

To understand why this is a beneficial strategy, we must first differentiate between a Roth IRA and a traditional IRA. Both are Individual Retirement Accounts (IRAs) used to invest money for retirement purposes. A traditional IRA has contributions that are tax-deductible in the year you contribute. When that money is pulled out in retirement, it is taxed at your regular income rate. Conversely, Roth IRA contributions aren’t tax deductible but grow tax-free. Withdrawals in retirement aren’t taxed, assuming you are 59 ½ or older and the account has been open for five years. The other perk of having Roth assets is the lack of required minimum distributions (RMDs), unlike traditional assets, which necessitate distributions starting at age 72, whether you desire them or not.

This strategy is useful for two groups of people. This isn’t a blanket recommendation for these groups, but if you fall into one of these groups, it may be worth considering. If you are a relatively young, high-income individual or household, a backdoor Roth might make sense since you have plenty of time for your investments to grow tax-free. The other category of people that should investigate this strategy would be someone who exceeds the income limits to contribute to a Roth and is anticipating their retirement income and tax bracket to be higher than their current income and tax bracket. However, it’s crucial to consult with an advisor for personalized analysis.

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Should you utilize it?

The first criterion for this strategy is an income that exceeds the IRS phase-out limit to contribute to a Roth IRA directly. In 2024, the phase-out is from $146,000 to $161,000 for singles and heads of households. The phase-out for married couples filing jointly is between $230,000 to $240,000. These limits can change annually, making it important to check the IRS website for the current year's standards. If your income exceeds these limits, working with a financial advisor to ensure it is the most prudent strategy in that given year is critical. It is essential to proceed correctly; you should work with an advisor and CPA as you make this decision.

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Who Shouldn’t Do This?

While there are numerous advantages to doing a backdoor Roth conversion, it is important to weigh the downsides. There can often be tax implications that come alongside a backdoor Roth that could ultimately make the strategy less attractive, especially if you cannot afford the taxes. The other consideration is your investment timeline. The shorter the investment horizon, the less likely a backdoor Roth is a wise strategy. This often comes into play for those late in their careers. While other circumstances make a backdoor Roth a less attractive option, these are the two primary considerations that a financial advisor and CPA should be able to help you work through.

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Final Thoughts

It's important to remember that the decision to use this strategy is not a one-time event. It's a discussion you should have with your financial advisor and CPA to ensure it's still the best approach for you. This strategy is not a one-size-fits-all solution and should be carefully analyzed before considering it. When used correctly, it can be one of the most powerful tools in your financial planning arsenal. Feel free to reach out if you need clarification on whether this approach is right for you.

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References

https://www.fidelity.com/learning-center/personal-finance/backdoor-roth-ira#:~:text=A%20backdoor%20Roth%20IRA%20strategy,to%20income%20limits%20on%20contributing.

https://www.irs.gov/newsroom/401k-limit-increases-to-23000-for-2024-ira-limit-rises-to-7000

Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. The information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.

Wealthtender Ask an Advisor Feature: How Can a 24-Year-Old Married Couple Strike a Balance Between Short-Term Saving and Long-Term Financial Security?→

Andrew Van Alstyne had the privilege to be featured in Wealthtender’s “Ask an Advisor” for what to focus on financially as a young couple.

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Andrew discusses the importance of planning ahead for major life events, communicating with your spouse, and optimizing your savings strategy to be tax efficient.

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Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

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KAJ Masterclass Live: Managing Multi-Generational Wealth

Andrew Van Alstyne had the privilege to be featured on the
KAJ Masterclass Live Podcast.

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Andrew discusses the importance of early discussions amongst family members to instill financial literacy. Andrew also shares his insights on how these open discussions can prevent financial under-preparedness. He also talks about the role of including all family members in wealth management, the benefits of starting inter-generational wealth transfers before death, and how to overcome the tension of talking about money in families with difficult financial histories.

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MSN Ask an Advisor Feature: What steps can a couple in their early forties with tweens take to balance saving for retirement and funding their children’s education?

Andrew Van Alstyne had the privilege to be featured in MSN to talk to readers about saving for both your children’s education and for retirement.

Andrew discusses the importance of setting goals and priorities while remaining adaptable to the variabilities that life may bring you.

Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

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How Healthcare Professionals should use the Synergy of Health and Wealth to be Successful

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Is it easier to be healthy when you are wealthy? Is it easier to be wealthy when you are healthy? I would say yes to both questions since health and wealth have synergy. Let’s explore a few habits that can assist healthcare professionals to be successful with both.

Downward Spiral versus Upward Spiral

Struggling to maintain both physical health and financial stability can be a common issue for many healthcare professionals. Health challenges can include poor diet, lack of exercise, insufficient sleep, or poor stress management. Wealth challenges can include overspending, low savings rates, poor investment decisions, or the absence of a financial plan.

Instead of focusing on health OR wealth, it is crucial to focus on BOTH since they are interconnected. Poor health can limit work capacity and increase medical expenses, reducing financial security. Conversely — limited finances can cause increased stress and decrease the time available for exercise/relaxation, which is detrimental to health. By focusing on both, you can create a positive feedback loop where improvements in one area support improvements in the other.

Habits to Adopt

The hardest part is usually just getting started. It takes a lot of hard work and dedication to move from out of shape to in shape. Once in shape, it is much easier to maintain and stay in shape. The same is true regarding finances. It takes a lot of hard work and dedication to pay off debt, balance the budget, and start setting money aside for the future. Once a financial plan is in place and followed, it is much easier to maintain and stay on track. Fortunately, the same habits can help enhance health and wealth.

Goal Setting: Setting clear and achievable goals

• Example: Set a savings target for your retirement account for the year

• Example: Set an activity goal for the number of times you plan to exercise every month

Discipline and Routine: Establishing and sticking to a routine

• Example: Set up automatic monthly payments into your retirement account

• Example: Carve out specific times each week for consistent exercise

• Small actions every day can lead to significant results over a long period of time

Monitoring Progress: Regular check-ins and adjustments to stay on track:

• Example: Review your budget and expenses regularly

• Example: Calculate your net worth and update it every 6 months or every year

• Example: Track your weight, strength, and cardiovascular health

Accountability: Seeking professional help when needed:

• If you struggle with eating or exercise habits, consider working with a dietician or personal trainer to achieve your health goals

• If you struggle with finances, budgeting, or expenses, consider working with a fee-only fiduciary financial advisor to achieve your financial goals

• Having another person to assist with accountability and goal tracking can be immensely helpful

Encouragement Moving Forward

No one is perfect, but striving for continual improvement can lead to a healthier and more financially secure tomorrow. Here are a few key thoughts to remember.

• Consistency is Key: Small, incremental changes can lead to significant improvements over time

• Start Today: Don’t put things off until tomorrow. Make the harder first steps now so your future self will thank you

If you would like help improving your financial situation, please Schedule a Time to Meet. I would be happy to connect and assist.

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Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.

Money Talk with Skyler Fleming: How Family Conversations Shield You from Financial Under-Preparedness

Andrew Van Alstyne had the privilege to be featured on the
Money Talk with Skyler Fleming Podcast.

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Andrew discusses the importance of family conversations in financial planning. Andrew also shares his insights on how open discussions can prevent financial under-preparedness. He also talks about the role of including all family members in wealth management, the benefits of inter-generational wealth transfers, and how to overcome the tension of talking about money in families with difficult financial histories.

Click the Links Below to Watch or Listen to the Full Episode:

Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

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Sales Gravy Podcast Feature: Personal Finance Strategies for Sales Professionals

Ben Lex had the privilege to be featured on the Sales Gravy Podcast.

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Ben discusses the importance of personal financial well-being for sales professionals and how to improve their current circumstances with their variable income.

Click Below to Watch or Listen to the Full Episode:

Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

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Route 664 Podcast Feature: Wealth Planning

Andrew Van Alstyne had the privilege to be featured on the Route 664 Podcast.

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Andrew discusses the significance that proper financial planning can have on multi-generational wealth and the importance of doing thorough, comprehensive financial reviews.

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Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

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MarketWatch Feature: Before your teen starts a summer job, have ‘the talk’ about taxes

Ben Lex was recently featured in a MarketWatch article titled “Before your teen starts a summer job, have ‘the talk’ about taxes”.

In it, he dives into ways to teach your kids about personal finance. Check out Ben’s insights - they’re golden nuggets for teaching your kids the foundations of personal finance.

Financial Freedom and Wealth Trailblazers Podcast Feature: Financial Guidance and Planning

Andrew Van Alstyne had the privilege to be featured on the Financial Freedom and Wealth Trailblazers Podcast.

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Andrew discusses the importance of finding an advisor that aligns with your needs and who understands your relationship with money. He also discusses the significance that proper financial planning can have on multi-generational wealth.

Click the Links Below to Watch or Listen to the Full Episode:

Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

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How Much Should You Invest for Retirement?

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When it comes to investing, we all have to start somewhere. It can be easy to look for a set number or percentage of income to invest and stick with it. While that may be the simple approach, I believe more needs to be considered when choosing an amount to invest continually. With that being said, this should not be so complicated; it takes forever to figure out. While investing will look different for everyone, there are some helpful guidelines to establish what investing should look like for you.

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The Importance of Investing

We must first establish why you should invest in the first place before diving into how to invest. Investing gives you the advantage of putting your money into a vehicle designed to grow wealth. This is the classic case of risk vs reward. You could leave your money in a savings account but will get minimal growth, if any. The alternative is investing some of that money into the stock market strategically to take advantage of a multiple percentage return.

When investing, it is crucial to know your goals with that money. This could be anything from saving for vacation to retirement planning and anything in between. Knowing what you are investing for is one piece of the puzzle. The second piece to consider is the timeline of your investment. If you are investing money that you plan to use for a vacation six months from now, your strategy will look significantly different than the money you invest towards your retirement, which is 20 years away. The final consideration is the risk you are comfortable taking with your investment. The timeline plays a role in this, but a personal component needs to be considered and talked through with a financial advisor.

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How Much To Invest

When it comes to establishing the amount you are investing, it again depends on multiple factors. You must take into consideration the end goal as well as your own capacity to invest. The overarching recommendation is to invest 15%-25% of your income toward retirement. While this can be a helpful target to shoot for, this amount could be too little with the end goal. Instead of picking an arbitrary amount, I suggest doing a retirement expense inventory. Doing this will allow you to get a goal that is tailored to your cost of living and retirement expectations. This takes into account life expectancy, healthcare costs, and expected retirement lifestyle. From here, you can reverse solve to find a proper investment target using a compound interest calculator. Keep in mind that this target is going to move on you throughout your life. What makes sense at 30 years old will be different at 40 years old because you’ve gained more clarity on the components used to establish your target.

As great as it would be for everyone to understand their retirement expenses, it can often be challenging to project. What about someone with significant student loans who can't swing 15% of their income to retirement? This is where capacity comes into play. The above scenario is the goal, but it may not be feasible for your current financial situation. If that describes you, then the mentality you should have is to start small but start now. You will be better off by investing a little bit each month and building the habit of investing, as opposed to waiting until your circumstances are perfect to start. I recommend you find an amount that works with your budget and commit to investing that amount for a year. By doing this, you have built the habit of investing and allowed your money to start working through compounding interest.

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Where to Invest

Now that you have established your goals and an amount of money to invest, you can consider what investment vehicle you want to use. If this is new territory for you, read my article “The Order of Operations for Retirement Savings.” This can give you a baseline of where to begin with investing.

All the pieces we have discussed up to this point will influence the strategy you choose for investing. At the end of the day, diversification is one of the most essential components of retirement investing. You’ve heard the phrase, “Don’t put all your eggs in one basket,” which holds true when investing. The stock market is volatile and should be approached with a well-thought-out strategy. Diversify your investment across multiple asset classes such as stocks, bonds, real estate, etc. This will help you have a robust strategy when the market is up and protect you from downsides when the market is down.

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Adjust and Review

I’ve mentioned it once, but it deserves to be revisited. The amount you contribute to retirement savings will be a moving target. It will change as you get closer to retirement, have income fluctuations, and gain clarity on your financial goals. This change is not something to shy away from. It creates the opportunity to revisit this topic regularly. If you work with a financial advisor, this conversation should be part of a standard cadence between you and them. Having a plan is important, but understanding how that plan should flex over time is equally important.

Keep in mind that these are general guidelines around investing toward retirement. As I mentioned, everybody has a different situation and should consult a financial advisor to help consider all factors of your financial picture. If I can leave you with any piece of advice, it is that the best time to start investing was yesterday. The second best time is today.

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References

https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator

https://smartasset.com/investing/how-much-money-to-invest-in-stocks-per-paycheck

Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. The information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.

Yahoo! Finance Feature: Transitioning Into Retirement: A 2024 Financial Checklist→

Andrew Van Alstyne had the privilege to be featured in Yahoo! Finance to talk to readers about the preparing for retirement in 2024.

Andrew discusses a systematized checklist that can be utilized in the years leading up to, and then through, retirement.

Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

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Financial Planning Feature: American's Top 5 Financial Regrets of 2023→

Andrew Van Alstyne had the privilege to be featured in Financial Planning to talk to readers about the financial regrets of 2023.

Andrew discusses how one of the biggest missed opportunities was missing out on higher yield savings accounts and how inflationary risk is all too often under valued for the impact in can have on the real rate of return of an investment.

Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

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Yahoo! Finance Feature: 13 Key Signs You’ll Always Be Middle Class→

Andrew Van Alstyne had the privilege to be featured in Yahoo! Finance to talk to readers about the behaviors keeping them middle class.

Andrew discusses how certain financial habits are keeping high-income earners from elevating their socioeconomic position.

Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

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Yahoo! Finance Feature: How Much the Average Florida Retiree Should Have in Their Savings Account→

Andrew Van Alstyne had the privilege to be featured in Yahoo! Finance to talk to readers about the factors to consider if you want to retire to the sunshine state.

Andrew discusses the benefits to consider when retiring to a state without income tax as well as strategies that can be applied more broadly.

Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

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GoBankingRates Feature: Net Worth for Baby Boomers: How To Tell Whether You’re Poor, Middle Class, Upper Middle Class or Rich→

Andrew Van Alstyne had the privilege to be featured in GoBankingRates to talk to readers about gaining clarity on the blurred lines between classes in America.

Andrew discusses the differentiating factors in each wealth segment, and how to properly manage your assets based on the one you’re in.

Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

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