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Setting Financial Goals for Your Future

By Elizabeth Higman,

Setting short-term, mid-term, and long-term financial goals is an important step toward becoming financially secure. If you aren’t working toward anything specific, you’re likely to spend more than you should. You’ll then come up short when you need money for unexpected bills, not to mention when you want to retire. You might get stuck in a vicious cycle of credit card debt and feel like you never have enough cash to get properly insured, leaving you more vulnerable than you need to be to handle some of life’s major risks.

Annual financial planning gives you an opportunity to formally review your goals, update them, and review your progress since last year. If you’ve never set goals before, this planning period gives you the opportunity to formulate them for the first time so that you can get—or stay—on firm financial footing.

Here are goals, from near-term to distant, that financial experts recommend setting to help you learn to live comfortably within your means and reduce your money troubles.

Short-Term Financial Goals

  • Establish a Budget
  • Create an Emergency Fund
  • Pay off Credit Cards

Mid-Term Financial Goals

  • Get Life Insurance and Disability Income Insurance
  • Pay off Student Loans
  • Consider Your Dreams

Long-Term Financial Goals

  • Estimate Your Retirement Needs
  • Increase Retirement Savings With These Strategies

Bottom Line

You probably won’t make perfect, linear progress toward achieving any of your goals, but the important thing is not to be perfect but to be consistent. If you get hit with an unexpected car repair or medical bill one month and can’t contribute to your emergency fund but have to take money out of it instead, don’t beat yourself up; that’s what the fund is there for. Just get back on track as soon as you can.

The same is true if you lose your job or get sick. You’ll have to create a new plan to get through that difficult period, and you may not be able to pay down debt or save for retirement during that time, but you can resume your original plan—or perhaps a revised version—once you come out on the other side.

That’s the beauty of annual financial planning: You can review and update your goals and monitor your progress in reaching them throughout life’s ups and downs. In the process, you will find that both the small things you do on a daily and monthly basis and the large things you do every year and over the decades will help you achieve your financial goals.

to read the full article, visit Investopedia.

Understanding the U.S. Tax Withholding System

By Elizabeth Higman,

Income taxes weren’t always withheld from people’s paychecks. In fact, income tax withholding is a relatively recent development. Before 1943, taxes were only withheld in spurts when the government needed to raise extra revenue. This article explains how we arrived at the current system that takes income taxes out of your paycheck and how this withholding process works.

How Does Tax Withholding Work?

In the early days of the income tax, when there was no withholding, people paid their full income tax bills for the previous year once a year on March 15, or in quarterly installments. Under today’s tax withholding system, taxes are collected at the source. This means that wage earners never see the money that they owe in taxes—it’s taken by their employers out of their paychecks and transmitted directly to the federal government.

The amount of income tax that is withheld from each paycheck depends on how an employee fills out IRS Form W-4. This form is not submitted to the government—it is only used by the employee and the employer to determine how much tax to withhold. Form W-4 includes a worksheet to help taxpayers determine their withholdings, based on the number of jobs they hold, marital status, and dependents.

It doesn’t really matter how this form is filled out, as long as it results in at least 90% of the tax ultimately due in April being withheld from the employee’s paychecks throughout the year. If less than 90% is withheld, taxpayers are subject to penalties and fines. Under the current withholding system, each April, people either pay the remainder of what they owe, or, if too much tax has been withheld, get a refund. Social Security and Medicare taxes are also withheld from every paycheck.

With today’s system, only the wages earned by employees are subject to withholding (for the most part). There are many other ways of earning income, however. For example, independent contractors aren’t subject to withholding, and neither is the income earned by investors. The 90% rule still applies, but individuals are responsible for calculating and remitting their own tax payments on a quarterly basis.

An exception to this rule arises if an individual becomes subject to backup withholding. If a taxpayer hasn’t paid taxes in the past, or the name and Social Security number reported don’t match, independent contractor and investment income (and some other uncommon categories of income) become subject to backup withholding at a rate of 28% (as of 2009). This situation is rare, though, because most Americans are exempt from backup withholding.

The federal withholding system provides the model that 41 states use to withhold state income taxes. Nine states—Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming—don’t have a state income tax. Some states use IRS Form W-4, while others have their own withholding worksheets.

Form W-4 doesn’t give taxpayers a way to actually see how much income will be withheld from each paycheck. A good way to get a clear picture of how claiming different numbers of exemptions on form W-4 will affect your income tax withholding is to use an online calculator.

The Bottom Line

Most of us take the tax withholding system for granted, but it’s not really a given. It has come and gone over the years with the government’s desire to finance expensive projects and wars, and in response to the reactions of taxpayers to the system. Understanding how the system works can help you make informed decisions about both your political views and your personal finances.

To read the original article, please visit Investopedia.

How Secure Are Your Digital Habits?

By Julie Leone,

October is National Cyber Security Awareness Month and a great time to check your digital awareness. As scams become more sophisticated, it’s important to stay up-to-date on keeping your account and personal information secure.

Identify your approach to cyber security by answering a few questions, and perhaps you’ll learn some simple habits to help make your digital life more secure.

Click here and test your online security knowledge.


This Is Exactly How Much Money Experts Say You Should Stash in an Emergency Fund

By Elizabeth Higman,

An emergency fund is one of the basic pillars of financial security. When you have a stash of cash set aside to cover unexpected expenses, you can avoid costly problems like racking up credit card debt or pulling money from your retirement fund.

However, too many people don’t have a solid emergency fund. Only around 60% of Americans say they have enough savings to cover a $400 unexpected expense, according to research from the Federal Reserve Bank.

Although not having an emergency fund can put your financial health at risk, the thought of establishing one can be overwhelming. Most experts advise saving enough to cover three to six months’ worth of living expenses, which will likely amount to several thousands of dollars. If that sounds intimidating, there’s good news: New research shows you might actually need much less than that stashed away in your emergency fund.

This Is Exactly How Much Money Experts Say You Should Stash in an Emergency Fund

Your emergency fund: How much should you save?

Economists may have found the exact amount you should stash in your emergency fund: $2,467.

Researchers from the Federal Reserve Bank of St. Louis and the Universidad Diego Portales in Chile studied lower-income households (since this group of people is least likely to already have an emergency fund) to see how much money it takes to lower the risk of financial disaster in the event of an unexpected expense. They discovered that, for every dollar a household saves up to $2,467, it significantly lowers the risk of experiencing financial hardship (such as skipping paying rent or bills or not receiving necessary medical care) if an unexpected expense occurs. But for every dollar households save more than $2,467, it doesn’t have the same effect — meaning that saving more than that amount doesn’t necessarily provide extra protection against financial hardship.

Of course, that’s not to say that if you save $2,467 you’re safe from every single financial obstacle that could be thrown your way. The research itself said that there’s uncertainty in the exact amount, noting with 95% confidence that the number is somewhere between $1,814 and $3,011. Moreover, it’s still always possible that you could face a significant unexpected expense that could quickly wipe out your emergency fund. However, the figure represents about one month’s worth of savings for a typical low-income household — well below the three to six months that most experts recommend.

Keep in mind, too, that researchers based this number on lower-income households, or those who fall into the bottom 30% of income distribution. Higher-earning households can struggle with emergency savings, as well, and if you have more expensive living expenses, you may need more than around $2,500 to be able to cover unexpected costs.

Building your emergency fund one dollar at a time

If you’re struggling to save anything in an emergency fund, take a look at where your money is going to see if there’s any room in your budget to make cuts. If you’re not tracking your spending, it’s easy to overspend on non-essential costs without realizing it — making it feel like you’re more strapped for cash than you really are.

Once you’ve found some extra money you can put toward your savings, make sure you’re storing your cash in the right place. A high-yield savings account is one of the best places to establish an emergency fund because you’re earning a relatively high interest rate, yet you can still withdraw the money whenever you need it. The best high-yield savings accounts earn interest rates of around 2% per year, which is far better than the dismal fraction of a percent you’ll likely receive by putting your money in a checking account or standard bank savings account.

Some people may choose to forgo the emergency fund because they’re too focused on other financial goals. You may be trying your hardest to save for retirement, for instance, and it might seem counterintuitive to change gears and start putting your money toward your emergency fund. So if you’re facing multiple financial priorities, how should you balance them?

It helps to think about the consequences of not saving for each goal. Of course, not saving for retirement can lead to problems down the road. But what happens if you don’t have an emergency fund and you’re hit with a major unexpected cost? Do you rack up credit card debt, which can hurt your credit score and make it harder to save? Or perhaps you might pull the cash from your 401(k) or IRA, which might result in getting hit with an early withdrawal fee (plus you’ll be sabotaging the hard work you’ve put into saving for retirement). Neither of those situations is ideal, but they could both be avoided with an emergency fund.

That’s not to say that other goals, like saving for retirement, aren’t important. But if an unexpected expense could potentially wreck your entire financial situation, it might be wise to prioritize your emergency fund, at least until you have a couple thousand dollars socked away. Then, once you know you’re not risking going into debt or hurting your retirement savings if you face an emergency expense, you can go back to working toward your other goals.

Establishing a stash of emergency savings may not seem like the most crucial task on your priority list, but not having a rainy day fund could lead to a domino effect of consequences if you face a significant unexpected cost. But if you prepare for these types of expenses by setting aside a couple thousand dollars in savings, you can ensure these financial obstacles won’t get in the way of achieving your goals.

To read the original article, please visit The Motley Fool.

Doing This Simple Thing Once a Year Can Help You Save More for Retirement

By Elizabeth Higman,

When you’re trying to balance multiple financial responsibilities at the same time, saving for retirement may seem like a lesser priority than your other tasks. In fact, 42% of workers say they don’t want to think about retirement planning until they get closer to retirement age, a survey from the Transamerica Center for Retirement Studies found.

Although retirement planning is not the most exciting topic to think about, you should be thinking about it long before you actually leave your job. If you put off saving or don’t know whether you’re on track, by the time you realize you’re behind, it might be too late to do anything about it.

However, if you want to ensure you’re as prepared as possible for retirement, there’s one simple thing you can do every year: Give your savings a checkup.

there's one simple thing you can do every year: Give your savings a checkup.

Why an annual (financial) checkup is crucial

If you’re saving anything at all for retirement, it’s easy to feel like you’re on the right track simply because you’re doing something. But if you’re blindly throwing money in your 401(k) or IRA without knowing whether that’s going to be enough to retire comfortably, you may be putting your financial future in jeopardy.

Saving for the future isn’t a set-it-and-forget-it situation. To make sure you’re doing enough to prepare, you’ll need to check in on your savings at least once a year, then make any necessary adjustments to ensure you’ll reach your goal by retirement age.

What exactly does a yearly checkup look like, though? To start, double-check that your retirement goal hasn’t changed. Even if you’ve already calculated the amount you should have saved by the time you retire, that number isn’t set in stone. Your annual living expenses could increase, meaning you’ll need to save more for retirement to keep up your current lifestyle. Or you might decide you’re going to move to a more expensive city once you retire, which can completely change how much you’ll be spending each year in retirement.

Run your numbers through a retirement calculator to get an estimate of how much you should be saving, as well as what you’ll have to save each month to reach that goal. If your overall retirement goal has changed, you might find you need to be saving more or less each month. It’s better to find that out early while you still have time to adjust your plan rather than wait until you reach retirement age and realize you don’t have enough saved to live comfortably.

What to do if you’re already behind on your savings

Say you’re performing your yearly checkup and realize you’ll need to start saving more than you can afford if you want to reach your goal. It may be tempting to give up, thinking that there’s nothing you can do now to catch up. But it’s still important to save what you can, even if it’s not much.

The hard truth is that depending on just how far behind you are, it might not be possible to save as much as you need. If you’re in your 50s with nothing saved, for example, you likely won’t be able to save $1 million in the next 10 or 15 years. However, that doesn’t mean you can’t save anything, and having even a little saved for retirement is far better than nothing.

If you’re behind on your savings, you’ll need to set a new, more realistic retirement goal. Think about your future expenses in retirement and consider whether there are ways to reduce them. If you’d planned on taking several expensive vacations, for instance, consider nixing those and finding more affordable ways to entertain yourself in retirement. Or if you’re currently living in an expensive city, it might be worthwhile to think about moving to dramatically lower your everyday living expenses. Of course, you can’t predict all your future costs, especially when retirement is still decades away. But by planning on living a more frugal lifestyle, you can get by on less during your golden years.

Next, see if there are ways you can start saving more now. If you don’t already, begin tracking your spending to determine if there are areas of your budget where you can cut back. Even if you feel like you don’t have a penny to spare for retirement, you might be surprised by how much room you have in your budget if you look for it. Saving even a few dollars per week in each spending category can potentially amount to hundreds of dollars per month, so it may not be as painful as it sounds to cut costs.

Finally, make sure you’re investing your money wisely. When you don’t have much extra cash to put toward retirement, every dollar counts. If you’re throwing your money in a savings account earning 1% annual interest, your savings won’t go nearly as far as if you’re investing it in a 401(k) or IRA earning a, say, 8% annual rate of return.

Managing your money can be tough, but it’s even more challenging when you don’t know whether you’re on the right track to reach your goals. To ensure your financial situation is as healthy as possible, make sure you’re regularly giving yourself a checkup. It can’ only help you save more for retirement, but it can also give you peace of mind that your finances are in order and that you’re doing everything possible to be successful.

To read the original article, please visit The Motley Fool.

BOSC’s Marie Norkett

By Julie Leone,

BOSC’s Marie Norkett attended the 3rd Annual Ladies Tea Party at Sarah’s Guest House.

Sarah’s Guest House provides lodging, transportation, meals and comfort to patients and families of patients receiving medical care in Central New York.


Do You Need a Budget If You’re Already Saving Money?

By Elizabeth Higman,

Budgeting can lend to better savings — but what if you’re already excelling in that arena?

Woman sitting on floor planning a budget

There’s a reason we’re generally told to stick to a budget: Without one, you’ll have no idea where your money goes month after month, and if that’s the case, you might struggle to eke out cash for savings. (Incidentally, you might also land in serious debt if you consistently spend more than what you earn.)

But what if you’re naturally a good saver? What if you have a healthy emergency fund and are already making consistent contributions to a retirement plan, like an IRA or 401(k)? In that case, do you really need to go through the motions of setting up a budget and reviewing it month after month? Or can you get by without one?

The benefit of budgeting

The beauty of having a budget is that it can give you real insight as to where you’re spending more money than necessary, thereby prompting you to make positive changes to your financial situation. For example, you might think you only spend $300 a month on groceries, but if it turns out that figure is closer to $400, it might serve as a wakeup call to shop more frugally and get better about seeking out bargains.

Now, many people find it difficult to save money without a budget, because they’re not only clueless about where their income goes, but they also have trouble exercising self-control. If you’re not one of those people, then technically you don’t need a budget. This especially holds true if you have your savings automated so that you’re putting money into either a bank account or a retirement plan off the bat.

Even if your savings aren’t automated, you can probably get by without a budget if you’re in the habit of living considerably below your means and your main expenses eat up a relatively small portion of your income. For example, we’re generally advised to keep our housing costs to 30% of our earnings or less. If housing only takes up about 12% of your income, that’s extremely low, and that alone might make saving money pretty easy, even if you don’t have a budget to follow. The same holds true if you’re a generally frugal person and don’t tend to spend a lot relative to what you earn.

That said, you never know when your bills might take a turn for the more expensive. Your rent could increase by $80 a month. Your car insurance could climb by $150 a year, and your promotional cable plan might expire, thereby adding $50 a month to your total spending. These costs can add up before you know it, so just because you’re managing to save now doesn’t mean you’ll continue doing so in the future. But if you take the time to create a budget, you’ll be better-equipped to handle changes in your finances without your savings taking a hit.

Creating your budget

If your absent budget is due to the fact that you don’t know how to set one up, fear not — it’s a fairly easy process. Just open up a spreadsheet and list your recurring monthly expenses. Then, factor in once-a-year expenses you should be setting money aside for each month (like your roadside assistance plan or warehouse club membership fee). Once you’ve totaled those numbers, you can see how your spending compares to your earnings. And if at any point you find that you’re no longer able to save as well as you are at present, you’ll be able to make adjustments easily.

Of course, if you’re really opposed to having a budget and are a strong saver, then you can probably continue living budget-free. But if you’re willing to put in the time, a budget could be just the thing that helps your savings stay on course.

Savings account rates are skyrocketing — Earn 23x your bank

Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts can earn you more than 25x the national average savings account rate.

To read the original article, please visit The Ascent.

10 Questions to Ask Your Financial Advisor About Retirement

By Elizabeth Higman,

Whether you’re just starting to save for retirement, or you’ve been investing for years, it can be a smart move to turn to a professional for guidance. But before you choose one, here are 10 questions to ask a financial advisor about retirement.

1. What do you like about your job?

No matter what type of professional you’re looking for, it helps to find someone who likes their job—and who isn’t just punching a clock.

Ideally, your financial advisor will enjoy helping people and have a passion for all things finance, whether that’s helping you budget, pay down debt, manage healthcare costs, develop tax strategies, build wealth, and ensure you have enough income in retirement.

Body language says a lot. Is the advisor making eye contact with you, smiling, and using hand gestures while speaking (that’s good)? Or are they slumped in a chair, distracted, and staring at their phone (that’s a red flag)?

2. Which services do you provide to your clients?

Your financial advisor should offer services that will help you solve the problems you may face in retirement. That includes helping you:

  • Figure out how much you need to retire, and set savings benchmarks to get you there
  • Pick investments that match your risk tolerance and time horizon
  • Develop a long-term investment strategy
  • Rebalance your investment portfolio
  • Manage your expenses now and in retirement
  • Make plans for long-term care
  • Create a favorable tax strategy

3. What are your qualifications?

In general, you’re looking for someone with advanced financial and retirement-planning education. Designations to consider include Certified Financial Planner (CFP®), Chartered Financial Consultant (ChFC®), and Chartered Life Underwriter (CLU®).

Another credential high on the list is Retirement Income Certified Professional (RICP®), which involves retirement-specific planning training and education. Verification sites such as Designation Check can help you search for a qualified professional, or verify that the certification he or she claims is accurate.

4. Are you a fiduciary?

“Fiduciary duty” is a legal term that means that one party has the obligation to act in the best interests of the other party. You want your advisor to be pointing you toward investments that are in your best interest—not theirs.

It’s great if the two coincide, but yours should come first. A hint: Fee-only advisors are more likely to assume fiduciary duty than those who work on commissions.

5. How will I compensate you?

It’s important to know upfront how you’ll compensate a potential retirement advisor. You should ask whether you’ll pay hourly, per transaction, or annually, based on the value of your assets. Other advisors may be compensated through commissions on the products they provide.

This isn’t to say you should necessarily avoid someone who charges more. A high-priced advisor may well be worth the fee you pay if the results are valuable to you. Be wary of commission-based compensation, however, as it could mean the advisor will steer you into buying products with higher fees.

6. Does your firm hold my money and investments?

Your financial advisors shouldn’t come into contact with your assets (except for the fees you pay for their services). Instead, the advisor should contract with a reputable custodian, which could be a third party or owned by their firm.

The custodian holds your assets and will also process transactions, collect dividend and interest payments, make distributions, and produce monthly statements. Well-known third-part custodians include Charles Schwab, Fidelity Institutional, Pershing/BNY Mellon, TD Ameritrade, and LPL Financial.

7. What’s your investment philosophy?

This is the most basic of questions and one any retirement advisor should be able to answer without hesitation. You should hear about the discipline behind investment strategies and how those strategies will help you achieve an annual return designed to reach your investment goals. This should all be provided in simple terms you can understand.

Also, you should receive information designed to make sure you understand and are able to navigate tax laws and avoid emotional responses to market fluctuations.

8. How will we touch base about my investments?

You should expect contact on a quarterly basis at a minimum. Monthly is even better. Your advisor should explain every buy or sell transaction. And they should provide periodic reviews of the status of your portfolio, including educational resources if appropriate (or if you ask for them).

9. What happens to my money if something happens to you?

Your advisor should be able to answer this question in enough detail that you’re confident there’s an exit plan if he or she retires, leaves the firm for another job, or is otherwise unable to continue serving you. You should know how your financial affairs will be handled and who would handle them.

10. Is there anything I forgot to ask you?

Ending an interview with this question can be very revealing. Even if you think the answer is no, it can demonstrate a level of engagement with a potential financial advisor. Still, there’s a chance you missed something during your conversation, and this is a good time for the advisor to bring up anything important.

The Bottom Line

Asking the right questions and listening carefully to the answers you receive helps you decide if there’s a good match. If you’re part of a couple, both partners should feel comfortable with the financial advisor. Philosophy, fees, qualifications, and more all come into play.

Remember, choosing a retirement advisor is not an easy task. You may have to interview several candidates before you find the right one.

To read the original article, please visit Investopedia.

Our Office Hours

By Julie Leone,

We will resume normal offices starting this Friday, September 6th- our office will remain open until 5 pm Monday-Friday.

Fall is a wonderful time to schedule an appointment so that we can sit down one on one and review your financial path.

We are here for you at 315-471-2672.

Interesting Study: Benefits of Working with an Investment Advisor

By Julie Leone,

A recent study performed by Charles Schwab found that only one in five self-directed brokerage account participants worked with an advisor in the second quarter of 2019, but those who did had larger balances than non-advised participants. Past performance is no indication of future performance.

To read the entire reports please click on the link here: Study Investment Advisory


Blue Ocean Strategic Capital, LLC was established in 1997.  Our continuous dedication to high-quality service along with a client-centric approach has allowed the company to grow significantly and we now provide planning and asset management for individuals, retirement plans and charitable organizations in fifteen states. We are here to assist you in your individual concerns and goals.