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Fourth of July Office Hours

By Elizabeth Higman,

Our offices will be closed Thursday, July 4th and Friday, July 5th in observance of the holiday. We will resume normal business hours on Monday, July 8th.Fourth of July Office Hours

Here’s How Much You Should Be Saving Every Month to Retire Comfortably

By Elizabeth Higman,

Saving for retirement can feel like a lofty, abstract goal. You know you should be saving for the future, but exactly how much may be a mystery.

Retirement planning is complicated, and a variety of factors contribute to how much you need to save. The short answer, though, is that you’ll likely need to save more than you think to live comfortably in retirement. The average person age 65 and older spends around $46,000 per year, the U.S. Bureau of Labor Statistics reports, and the Social Security Administration estimates that a third of today’s 65-year-olds can expect to live past age 90. So if you were to spend $46,000 every year for 25 years (not accounting for inflation), retirement could cost around $1.2 million.


here's how much you need to save each month to retire comfortably

Of course, Social Security benefits will help cover a portion of those costs, but they likely won’t cover all (or even most) of your expenses — which is why it’s critical to be able to lean on your personal savings in retirement to bridge the gap.

Financial experts typically recommend saving between 10% and 15% of your salary to accumulate enough to retire comfortably, but new research suggests you may need to save even more to reach your financial goals.

What it takes to retire comfortably

If you start saving early, it will be easier to set aside enough for retirement (thanks to compound interest). Those who begin saving at age 25 will need to contribute between 10% and 17% of their salary, a report from the Stanford Center of Longevity explains. Those numbers are assuming individuals will be retiring at age 65 and that their income in retirement will be enough to replace 70% of their preretirement income. So if you plan to retire earlier than 65 or expect to need more than 70% of your current income in retirement, you may need to save more.

Those who are a little late to the saving game will need to save even more to catch up. Wait until age 35 to begin saving, and you’ll need to contribute between 15% and 20% of your income, researchers found. And if you were to wait until 45 to start preparing for retirement, you’d need to stash away at least 25% of your salary.

The report also noted that the majority of Americans are nowhere near those savings goals. Across all age groups, the average worker contributed 4% to 5% of their income and received an additional contribution of 2% to 3% from their employer — bringing their total retirement savings to around 6% to 8% of their income.

To ensure you’re doing enough to prepare for retirement, you first have to have a goal in mind. Next, find a way to financially reach that goal, or have a backup plan in mind.

Preparing for retirement one step at a time

Depending on your age and how much you already have saved for retirement, you may need to make some serious sacrifices to stash enough cash to retire comfortably. But if you take it one step at a time, it’s not such a daunting task.

Start by taking a hard look at your budget and slashing any unnecessary expenses. Maybe you’re paying for monthly subscription services you don’t even use, or perhaps you could cut cable if you rarely watch it.

Next, start trimming not-so-necessary-but-still-important costs — like dining out or hobbies. You don’t need to completely eliminate these costs, but try to cut back at least a little in multiple spending categories. By cutting costs slightly in several areas of your budget, you won’t feel like you’re missing out on anything like you would by taking a machete to your finances and eliminating everything you love. This type of approach makes it more likely you’ll stick to your budget and not give up after a month when you’re miserable.

If that’s still not enough to reach your saving goal, consider whether you’re willing and able to make more drastic changes — like downsizing your home. Housing is likely one of your biggest expenses, and saving a couple hundred dollars on your mortgage or rent each month can go a long way toward retirement. This is a big step, though, so be sure to weigh the pros and cons before calling a real estate agent and packing your bags.

When simply cutting back isn’t enough

If you’re far behind on your retirement planning and can’t afford to scrape together enough cash to reach your saving goal, you have a couple of options: increase your income or rethink your retirement expectations.

Picking up a side hustle can bring in some additional income each month, and if you put all that money toward your savings, it could seriously beef up your retirement fund. Even an extra couple hundred dollars per month could go a long way, so don’t discount the power of spending a few hours a week on a side job.

Simply working more might not be an option for everyone, though, so if that’s the case, you may have to reconsider what retirement will look like. Perhaps you’ll need to work a few more years to continue saving, or you might not be able to travel as much as you’d hoped in retirement. If your savings run dry a few years into retirement, it could force you to depend on Social Security benefits to make ends meet. The average Social Security check comes out to around $1,400 per month, so consider the type of lifestyle you’d need to live if it ever came to that point. Could you still pay all your bills with Social Security benefits alone? Would you need to move to a less expensive neighborhood?

Saving for retirement can seem like an impossible task, but it’s more manageable when you break it down into a step-by-step process. You don’t need to save $1 million overnight, but if you take it one month at a time and stick to a series of smaller goals along the way, you can achieve your overarching goal and enjoy a comfortable and stress-free retirement.

The $16,728 Social Security bonus most retirees completely overlook

If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $16,728 more… each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we’re all after. Simply click here to discover how to learn more about these strategies.

Article from Motley Fool.

Rules for Converting Your 401(k) to a Roth IRA

By Elizabeth Higman,

Be sure you know the tax consequences before making the change.

The benefits of investing in a Roth IRA rather than a traditional IRA are clear. The biggest is not owing federal income taxes on the money you withdraw after retirement. But did you know that after you leave your employer you might be able to convert your 401(k) or other company retirement plan into a Roth IRA?

That was previously prohibited, but the Pension Protection Act of 2006 changed the rules, and the IRS issued guidelines for how to go about it. It’s something to consider once you know how these conversions work and why you might want to make the switch.


  • When you leave your employer you may be able to roll over your 401(k) or other retirement plan into a Roth IRA.
  • If you roll it over to a Roth, you’ll owe taxes on the income in that tax year.
  • Roth IRAs have other advantages over traditional IRAs, such as no required minimum distributions.
  • You may be able to avoid immediate taxes by allocating the after-tax funds in your retirement plan to a Roth IRA and the pre-tax funds to a traditional IRA.

Roth vs. Traditional IRA

A traditional IRA allows an individual to defer the income tax owed on the portion of income that is saved for retirement. If the person is saving through an employer plan, the money is deducted from pre-tax salary. The self-employed can open an IRA account and contribute pre-tax income to it.

In either case, the tax break is immediate. The person has effectively shielded a percentage of current income from taxation. The taxes will be owed on both the contribution and the profits on it when the money is withdrawn after retirement.

A Roth IRA takes the income taxes up front. The person gets no immediate tax break. That means sacrificing a bit more take-home income during your working years. But when it’s time to tap into the funds, both the contribution and the profits will be exempt from federal taxes and, in most cases, free of state taxes as well.

How the Rules Differ
The rules differ a bit between traditional and Roth IRAs.

The annual maximum contributions are the same. In 2019, that means a maximum of $6,000 per year for those under age 50 and $7,000 for those age 50 and over.

There is no income cap on eligibility for a traditional IRA. There is, however, an upper limit for a Roth IRA. In 2019, a single filer can earn no more than $122,000 for full eligibility, though a partial contribution can be made for those earning up to $137,000. Singles with an income above that cannot use the Roth IRA.

One important point: You can have both, unless your income is above the Roth limit. The maximum stays the same, at a total of $6,000 or $7,000, but it can be split between the two types of IRAs.

What the Financial Advisors Say
Some financial advisors suggest that the choice between a traditional IRA and a Roth IRA comes down to whether a person will be in a higher or lower tax bracket after retiring. If the answer is a higher bracket, the Roth IRA is the obvious choice. If it’s a lower bracket, go with the traditional IRA.

As if any of us has a crystal ball to tell us what the tax rates will be in the future. That said, it seems unlikely that taxes will go lower than they are in 2019.

How 401(k)-to-Roth-IRA Conversions Work

There are a few basic rules that apply to rolling over your company retirement plan account into a Roth IRA:

  • Company retirement plan assets, including those from 401(k), 403(b), and 457(b) governmental plans, are eligible to be converted into Roth IRAs.
  • Roth IRAs can only accept rollovers of money that has already been taxed, such as the after-tax contributions made to a company plan. Any money you roll over into a Roth IRA that would otherwise be taxable (such as pre-tax contributions to your company plan) must be included in your income for the year of the conversion.
  • You have the option of rolling after-tax money into a Roth IRA and pretax money into a traditional IRA, where it won’t be taxed until you withdraw it. Pretax money includes any earnings on your after-tax contributions.
  • Direct rollovers into a Roth IRA will not be subject to a mandatory 20% withholding. However, 60-day rollovers are, so it is best to do a direct trustee-to-trustee transfer.


rules for converting your 401(k) to Roth IRA

1. Qualified plans include, for example, profit-sharing, 401(k), money purchase, and defined benefit plans.
2. Only one rollover is allowed in any 12-month period
3. The money must be reported as income
4. Must have separate accounts
5. Must be an in-plan rollover
6. Any nontaxable amounts distributed must be rolled over by direct trustee-to-trustee transfer.

When Do 401(k)-to-Roth Conversions Make Sense?

First of all, keep in mind that you’ll have to come up with the income tax owed in the year you convert a 401(k) to a Roth IRA. Based on current income tax brackets, figure on 10% to 37% of the total balance transferred for the federal tax owed, plus your state’s share.

The best candidates for rolling an employer retirement plan into a Roth IRA are people who do not foresee a need to take a distribution from the account for many years or don’t plan to take any distributions at all. You will have to pay a 10% penalty on any money you withdraw from the Roth IRA, if the following applies:

  • You withdraw funds from the Roth IRA within five years of the conversion.
  • You are younger than 59½ and don’t qualify for an exception to the 10% penalty.

One important exception is that first-time homebuyers may take out up to $10,000 to help finance the purchase of a home, without penalty, if they have held the Roth IRA for five years. Money can also be withdrawn without penalty if it’s used to pay for education, such as college tuition.

Finally, if you die before rolling over your company retirement plan, your beneficiaries may have the option of rolling it over into an inherited Roth IRA. By contrast, they cannot convert inherited IRA funds into Roth IRAs.

Beneficiaries should note that a different set of required minimum distribution rules applies to inherited Roth IRAs.

Article from Investopedia.

How to Teach Your Kids the Right Financial Lessons

By Elizabeth Higman,

With a few helpful pointers, your kids will be on track for financial success.

It’s safe to say that parenting comes with a whole slew of responsibilities. You have to keep your kids happy and healthy. You have to ensure they get a good education. And, if you want to avoid hearing them ask you for gas money until they’re 30, you have to teach them about money.

Giving your kids financial advice can be tough. It’s very easy to bore them and have your advice go in one ear and out the other. After all, there aren’t a lot of middle schoolers who want to learn about 401(k)s.

The key to teaching your kids financial lessons that they remember is to tailor your advice to their age group. With the lesson plan below, your kids will know the ins and outs of personal finance by the time they leave home.

Introduce the concept of money in preschool/kindergarten

When your kids are barely past their toddler years, you need to stick to the basics. At about four to five years old, it’s a good time to introduce them to the concept of money and how money is used.

Studies have shown that children can grasp the idea of exchanging money for goods at this point, but they might have trouble understanding the values of different pieces of money.

Here are some simple ways to start teaching your kids about money:

  • Show them different coins and bills.
  • Explain that you use money to buy things you need.
  • Demonstrate how this works when you go to the store. Pick out a product and show them the money you’ll use to buy it or have them give the money to the cashier.

Teach them about earning and saving money in elementary school

By the time your kids are seven or eight years old, they’ll have some understanding that adults work for their money, so you can introduce how earning money works.

A popular way to do this is to give them money when they do their chores. You could even make a chart with the chores they can do and how much you’ll pay them for each one.

This age range is also when children can comprehend the value of money and when they develop the ability to plan ahead, which makes it perfect for their first lessons on saving.

Encourage them to set savings goals for the things they want. For example, if they want to buy a game, explain how they’ll need to set aside some of their chore money for the next two weeks instead of spending it all.

Open their first bank account in middle school

Once your kids are in middle school, they’ll be ready for more advanced financial concepts. They’ll probably be doing more challenging chores and earning more as a result, and they’ll have a few years of experience with saving money.

With more pocket money and more knowledge about saving, setting them up with their own bank account is a logical next step.

You may want to take them to your own bank, or you can check out the best bank accounts to find one that won’t charge any maintenance fees, even for accounts that don’t have large balances.

After opening a bank account, make sure you go over:

  • how to check their balance online or through the bank’s app,
  • using their debit card for purchases and withdrawals and the dangers of expensive overdraft fees if they don’t keep track of their balance, and
  • how their balance will grow through interest.

Cover budgeting and borrowing money in high school

These could be the last years of you and your kids living together before they set out on their own, so this is where you get them ready for “the real world.” There are two key concepts they’ll need to understand: making a budget and borrowing money.

Teenagers tend to have more expenses than younger kids, and they also earn more money, whether that’s still from chores or from a job. That means you’ll have the opportunity to draw up a budget with them. Here’s how:

  • Calculate how much they’ll earn every month.
  • Figure out what their typical monthly costs are, such as gas and food. You could determine this by reviewing their most recent bank statements with them.
  • Compare what they spend to what they earn to see if they need to cut back.
  • Stress the importance of paying themselves first by always saving a portion of what they earn immediately after they get paid.

High school is also when you can explain how borrowing money works, and that when you borrow money, the lender will charge you interest. From there, you can go into the subject of credit scores, explaining how credit scores are calculated and how your score affects the amount of interest you pay.

Since credit cards are one of the first ways many young adults borrow money, you should make sure to cover the dangers of carrying a balance on a credit card. One smart way to teach your kids about responsible credit card use is to make them authorized users on your own card to show them exactly how it works.

The final financial check before moving out

Sooner or later, your kids will be ready to move out and start their own lives. At this stage, it’s wise to go over a few things with them to ensure that they’re prepared:

  • Confirm that they’ve made a budget and that they’re going to be able to afford all their expenses, ideally with those expenses amounting to 50% of their income or less.
  • Check that they have an emergency fund. While they may not have three to six months of expenses saved yet, they should have at least $500 to $1,000 in case they ever need some extra money.
  • Advise them to get a credit card of their own to build their credit and consider being their cosigner to help them get approved.
  • Recommend that they save for retirement as soon as possible. Most young adults don’t think about this much, but starting early can help grow a retirement nest egg much more quickly.
Article from The Motley Fool.

Planning Ahead This Summer Can Keep Your Finances In Check

By Julie Leone,

It’s summertime and a time when we are often a time for stretching wallets. A few simple steps and a little extra effort can change that without taking away from all that’s enjoyable during these summer months. Below are some helpful money tips.

1. Commit to that Extra Step

 It is amazing how split-decision indulgences can quickly drain our finances. For example, choosing to stop at the local ice cream stand can add up when there is a car full of kids in the back! Instead, stop at a grocery store for ice cream and cones. The small inconvenience creates a significant savings each time. Similarly, take some cold water in a cooler with you when hitting the road, this will cure the temptation to purchase pricey water on the while on the road.

Identify these kinds of last-second splurges and take a few extra steps to avoid them.

2. Plan ahead

Summer road trips can be adventurous and fun. However, paying full price for everything isn’t so much fun. Planning ahead, on the other hand, is a great way to allow for deal searching and bargaining. It will also spread out the excitement and lengthen the anticipation!

When planning ahead it allows the ability to secure a hotel or campground at a discount, plan meals ahead of time rather than eat every meal at a restaurant, and seek out activities in advance that are free or discounted. Groupon is a great resource for discounts.

3. Review Subscriptions and Memberships

The summer weather is a good time to cancel or freeze those online streaming subscription or gym membership. Most families can find save at least $100/month on such extra expenses. However, be mindful of any early termination contracts.  No doubt these companies will welcome back the business in the fall.

4. Let the Deals Dictate

Taking the time to look for deals and letting that determine where (and sometimes when) you can go to the movies, out to eat can save big bucks. Groupon and other social media sites are great places to start looking for discounts. Often movie theaters will have a day of the week where admission is discounted.

5. Get Creative

There is so much to do in the summer that is free! Look for free outdoor concerts, movies in the park, free festivals and parades, and much more.

6. Make Bargain Shopping an Activity

Summer allows for great weather for activities like garage sales, farmers markets, and flea markets. They can provide for a fun day out for the family. These provide opportunities to teach kids important lessons like where their food comes from and supporting a local economy (buying local).

This might be a good time to sell your unused goods? Consider hosting a garage sale or sell items online marketplaces. It can be a great family project and provide for some extra summer funds.

7. Set a Budget

Often summer can be a time when we lose our handle on expenses. Especially with the kids home all summer. What a perfect time to review the budget and make a strong plan for how money will be spent. Make a plan and stick to it!


Questions, concerns, or comments please feel free to contact our offices. We provide financial planning and investment management for each stage of life.



Friday Office Hours for Summer 2019

By Julie Leone,

Please note that the offices of Blue Ocean Strategic Capital will be closing at 1:00 pm EST on each Friday

starting Friday, June 1 thru Friday, August 30, 2019.

Unplanned Early Retirement?

By Julie Leone,

How to bridge the gap between when your paycheck stops and Social Security starts.

Key takeaways

  • Review your essential and discretionary expenses.
  • Make smart use of unemployment and savings, severance, or disability money.
  • Formulate a withdrawal strategy that is sensitive to tax considerations.

For some, retiring early is a dream. But for those faced with an unplanned early retirement—they are laid off late in their career or have a medical disability—it may be a different story, especially if you are not yet eligible to claim Social Security beginning at age 62.

“Many people plan to work well into their 60s, but the reality is that you don’t always have control over when you retire,” says Ken Hevert, senior vice president of retirement products at Fidelity. “That’s why careful planning is so critical if you find yourself in this situation, especially when it comes to timing your Social Security benefits.”

The good news is that there are ways to help bridge the gap between when your paycheck stops and when you start taking Social Security—or go back to work.

While you may be eligible to begin taking Social Security at age 62, that might not be the best decision, even if you aren’t working. That’s because after you reach age 62, every year that you delay taking Social Security (up to age 70), you could receive up to 8% more in future monthly payments. (Once you reach age 70, increases stop, so there is no benefit to waiting past age 70.) Also, delaying your own Social Security may increase your spouse’s survivor benefit.

If you find yourself unintentionally retired for any reason, first use the 3 key steps outlined below to assess your situation and income options. Then, take a look at 2 “bridge” strategies—one if you are disabled, and the other if you are laid off. Important note: If you’re in this situation, you’ll be making significant financial decisions and should consult with a financial advisor, like us here at Blue Ocean Strategic Capital, LLC.


To read the original article, please visit Fidelity Viewpoints.

Want to retire with $1 million? Here are 7 rules to live by.

By Elizabeth Higman,

How can you retire with $1 million in assets? The best answer is to make a plan that achieves the savings necessary to get to $1 million.

Let’s say you’re 23 and want to retire at 67. Investing $400 per month, every month, at a 6 percent return, will get you over the million-dollar mark.

We can help you formulate your own plan using the following seven tips.

Make Saving and Budgeting a Priority

Start Early

Whatever you choose to do, do it right away. Start saving well before retirement and you can take full advantage of compounding interest.

By adding regular deposits to your accounts and reinvesting your retirement plan earnings in the market, you can increase your savings by many thousands of dollars. Online calculators are available to help you see the effects over time – and maybe give you the incentive you need to stick to your plan.

Take Advantage of Retirement Plans

April Lewis-Parks, Director of Education and Public Relations for Consolidated Credit, puts it succinctly: “Start a retirement fund as soon as possible.”

If your employer offers a 401(k) plan, take full advantage of it – especially if your employer offers matching funds. At the very least, you should contribute up to the matching limit set by your company. If you fail to do so, you are literally turning down free money.

If a 401(k) is not available to you, establish an IRA instead. Roth IRAs use post-tax dollars, while traditional IRAs use pre-tax dollars and allow you to defer taxes until the funds are withdrawn at retirement. The key is to put your funds in a growth vehicle that isn’t easy for you to raid. On that note…

Don’t Draw on Your Retirement Funds

It’s tempting to borrow against your retirement funds or cash them out to deal with more immediate fiscal hardships, but it’s almost always a bad idea to do so. In addition to the effect of taxes and fees, you will lose the positive effect of compounding on the withdrawn funds.

Take Advantage of IRS Catch-Up Rules

When you turn 50, you can take advantage of the IRS catch-up rules, designed to help those who are behind in their savings track. Fortunately, you can also take advantage of those same rules when you’re ahead.

For 2019, the IRS rules allow those 50 years old and above to contribute an extra $6,000 to a 401(k) plan and $1,000 to an IRA. The regular contribution limits are $19,000 to a 401(k) plan and $6,000 to an IRA.

Keep Debt Low

It’s difficult to save money when you are carrying excessive debt – especially high-interest credit card debt. Try to keep debts manageable and value-based, such as mortgage debt that builds valuable equity.

Using your credit card for purchases is perfectly fine, as long as you avoid interest by only charging what you can afford to pay in full at the end of the month.

Automate Deductions

Set up automatic deductions to emergency funds or other accounts that you don’t regularly access. It doesn’t have to be much – as Lewis-Parks notes, “Even if it’s just $10 a week, that’s something… have it become a habit and keep doing it week after week, month after month, year after year.”

The point is to establish savings reservoirs that you don’t consider as being available for regular spending and contribute to them on a regular basis.

Armed with these tips and a determination to succeed, you can increase your chances to reach a $1 million nest egg at retirement – or maybe even $3 million. You can then enjoy the fruits of your labor with a secure retirement.

To read the original article, please visit Fox Business’ website.

Proud Sponsor of OCC’s Celebration of Success

By Julie Leone,

Thank You Onondaga Community College for allowing Blue Ocean Strategic Capital to be a sponsor of Celebration of Success. Congratulations to all the OCC students and faculty on their achievements.


Pictured in the photo are BOSC’s Barbara Spears and Dennis Hebert.