September ViewPoint Newsletter from Steve Stanganelli CFP(R)

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Welcome to the September 2011 edition of the ViewPoint Newsletter from Steve Stanganelli, CFP(R) of Clear View Wealth Advisors, a fee-only RIA located in Massachusetts. In this issue, retirement income planning, college funding strategies and tax tips for business owners and those going through divorce are shared.

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September ViewPoint Newsletter from Steve Stanganelli CFP(R)

  1. 1. V IEWPOINT Four Retirement Financing Risks By Steve Stanganelli, CFP® September 2011 As Americans live longer, the task of managing money after retirement gets more complex. A retiree in his or her mid-60s typically has a different risk profile than an individual approaching 90. It may be helpful to look at various types of risk from the vantage point of how they affect retirees at different life stages. Here are four key risks to consider. 1.Investment Risk -- Balancing risk and return takes on a different meaning for indi- viduals as they age. A negative rate of return during the early years of retirement could leave an individual with a significantly smaller nest egg when compared with negative returns later in the retirement life cycle. We can help you craft an investment mix with the goal of smoothing out returns over the long term and increasing the chances that your assets will last throughout your lifetime.Steve Stanganelli, CFP®, CRPC® 2. Longevity Risk -- Withdrawing too much from a portfolio during the early years of retirement may heighten the chance of depleting your assets during your later years. For this reason, many financial advisors recommend limiting annual withdrawals to About Clear View 5% or less of a portfolios value, adjusted for inflation, to make assets last as long as possible. A better tactic is to prepare a personalized withdrawal plan based on theClear View Wealth Advisors, LLC “endowment” spending policy highlighted in a prior issue of the ViewPoint.is an independent Registered In-vestment Advisor providing finan- 3. Inflation Risk -- Because younger retirees typically are planning for a time horizoncial planning, tax preparation, and of 20 years or more, it’s important that their portfolios include a source of growth thatinvestment advisory services to is likely to exceed inflation over the long term. To complement this potential growth,individuals and couples throughoutMassachusetts. many retirees rely on more conservative investments that may generate income and help to balance risk and potential return. One way to counter this risk is by includingClear View works on a FEE ON- dividend-paying stocks and alternative investments like REITs, commodities andLY/FEE-for-SERVICE basis. convertible bonds to your investment mix. 4. Health Care Risk -- It is not unusual for medical costs to increase as retirees age, and it may be prudent to plan for these costs before the need is immediate. Pre-www.ClearViewWealthAdvisors.com retirees and younger retirees may want to explore options for medical insurance that supplements Medicare, as well as long-term care insurance, to reduce the possibility of dipping into personal assets to finance illness- or accident-related expenses. Also, remember that those who retire before age 65 need to find an alternate source of medical insurance prior to becoming eligible for Medicare. Reviewing these and other challenges associated with retirement planning with a Clear View financial advisor may increase your confidence that you “Using Convertibles to Protect & Grow Wealth” have considered all scenarios. er Free Rollover Helpline 978-388-0020 While it may not be possible to FREE White Pap prepare for every situation, plan- Call for Your Free Guide Clear View Wealth Advisors, LLC ning ahead may help you cope Amesbury * Wilmington * Woburn“Six Best & Worst IRA Rollover with financial issues that come Decisions” your way.
  2. 2. Page 2 September 2011 Clear View Wealth Advisors, LLC 978-388-0020 or 617-398-7494ASK THE ADVISER court order qualifies as a QDRO according toWhat Happens to My Retirement Assets If I Get the rules of the labor department.Divorced ? by Steve Stanganelli, CFP®Federal law requires that participants in em- Note that retirement assets are part of aployer-sponsored retirement plans designate broader financial picture that may include yourtheir spouse as their beneficiary unless the home, taxable investments, personal property,spouse waives this right in writing. Assuming and other assets. It is not mandated that yourthat you and your spouse adhered to this prac- spouse receive a portion of your retirement as-tice, a document known as a Qualified Domes- sets in the event of a divorce. You and yourtic Relations Order (QDRO), which is part of a spouse may negotiate another type of arrange-divorce settlement, specifies how retirement ment that permits you to retain your retire-assets are divided. ment assets while granting other assets to your spouse.A QDRO specifies the amount or portion of aplan participants benefits that are paid to a In addition, a prenuptial agreement, dependingspouse, former spouse, child, or other party. on its provisions, could potentially limit your spouses rights to your assets.A QDRO typically governs assets within a re-tirement plan such as a pension, profit-sharing You may want to consult a divorce lawyer andplan, or a tax-sheltered annuity. Benefits paid your financial advisor to determine whetherto a former spouse typically are considered in- federal laws relating to retirement accounts ap-come for tax purposes. If you contributed to ply to your situation.your retirement plan, a prorated share of yourinvestment is used to determine the taxable Source: Financial Planning Association,amount.Former spouses on the receiving end of a lump Looking to Refinance? Looking for a Mortgage?-sum distribution mandated by a QDRO may beable to roll over the money tax free to a tradi- Clear View Wealth Advisors can help you or someonetional individual retirement account or to an- you know who is looking at buying or refinancing a home orother qualified retirement plan. Following such real estate investment.a transfer, assets within the plan are subject to Don’t just borrow money. Get a plan to borrow smart andrules that would normally apply to the retire- repay smart.ment plan. If you transfer assets within a tradi-tional IRA to your spouse as part of a divorce With the help of a qualified financial planner, you can havedecree, the transfer is not considered taxable a Personal Action Plan that compares your borrowing op-and the assets are treated as your former tions and provides a repayment plan that pays off the loanspouses IRA. quicker and still fund your other goals for college, retire- ment or whatever is important to you.Procedural Issues We use specialized software tools to help look at your cashQDROs are governed by rules established by flow and your big picture—not just your loan.the U.S. Department of Labor. In most instanc-es, a judge must formally issue a judgment or We can work with you, your Realtor® and mortgage lenderapprove a settlement agreement before it is to analyze different options to find the one that makes theconsidered a QDRO. The fact that you and your most sense for your situation.soon-to-be-former spouse have signed an Before you spend thousands on interest, talk with the Clearagreement is not adequate for a QDRO to take View team. For less than the cost of a property appraisal,effect. you can have a plan … and peace of mind.Also, following an order issued by a judge, the Mortgage Helpline …administrator of the retirement plan affected 978-388-0020 or 617-398-7494by the QDRO must determine whether theViewpoint is produced by Clear View Wealth Advisors, LLC for the benefit of its clients and allied professionals. Although the information here is gathered from reliable sources, readers should notact upon it without professional advice. Past performance is no guarantee of future results. Examples with hypothetical returns illustrated are not representative of a specific investment. Clear ViewWealth Advisors, LLC 12 Amidon Ave., Amesbury, MA 01913 & 25 Lowell St., Wilmington, MA 01887 Tel: 978 388-0020 Email: Steve@ClearViewWealthAdvisors.com
  3. 3. Page 3 September 2011 Clear View Wealth Advisors, LLC 978-388-0020 or 617-398-7494WELCOME OUR NEW TEAM MEMBER To view other pictures, please visit:Stork Arrives with Spencer’s Brother, MagicZack by Steve Stanganelli, CFP® http://www.carepages.com/carepages/MagicZach “Your Guide to Finding Financial Aid”Zachary Douglas Stanganelli (8/30/2011) - MagicZackAt the crack of dawn on Tuesday, August 30, after atotal of about 14 hours of labor, Zachary Douglas waswelcomed by his new mom and dad at Exeter Hospi- FREE Guide Clear View Wealth Advisors, LLCtal. Amesbury * Wilmington * WoburnWeighing in at 8 lbs. 2 oz. and 20 inches, our newestteam member, affectionately known as MagicZack,arrived as the sun rose on abeautiful late-summer morning.Zack arrived two days early butif you ask Kristin it was not soonenough.Zack’s older brother Spencer Introducing Personal Financial Index™happily met his new brother for the first time onWednesday morning and really appreciated the new Planning your future should be more than just guess-toy train set that his new brother gave him as a pre- work.sent. Zack’s new grandparents are Clear View now offers an integrated diagnostic tool that overjoyed. And while my dad you can use that provides you with your own personal was not alive to see him, I see benchmark. him in Zack’s features and cer- tain behaviors peculiar to Fred. The Personal Financial Index™ is much like your All members of Team Stang are credit score: You have a simple to understand number home, doing well (though a little and visual tool that tells you how well you are doing insleep-deprived) and adjusting to a new schedule. key areas that you can track:  Savings  Positioning Yourself Toward Your Goals  Retirement  Major Purchases or College FundingSpecial Offers & Coupons  ProtectionCall or go to Google Placestm, search for Clear ViewWealth Advisors in Wilmington or Amesbury Try out this complimentary service by visiting the Clear View website or by using the URL below:20% Off Advisor On CallPeace of Mind Help When You Need It. Phone andEmail support throughout the year to help you with www.personalfinancialindex.com/c/clearviewwealthadvisorsANY financial planning questions. Flat rate. ^ŵĂƌƚ ŽŶĞLJD Žǀ ĞƐ ĞƩ Ğƌ Žŵ D Θ ŽƩ ŝŶĞƐ ^ƚĂƌƚ ĞƌĞ ,Visit: www.hotfrog.com/Companies/Clear-View-Wealth-Advisors_24556279 Viewpoint is produced by Clear View Wealth Advisors, LLC for the benefit of its clients and allied professionals. Although the information here is gathered from reliable sources, readers should not act upon it without professional advice. Past performance is no guarantee of future results. Examples with hypothetical returns illustrated are not representative of a specific investment. Clear View Wealth Advisors, LLC 12 Amidon Ave., Amesbury, MA 01913 25 Lowell St., Wilmington, MA 01887 Tel: 978 388-0020 Email: Steve@ClearViewWealthAdvisors.com
  4. 4. Page 4 Clear View Wealth Advisors, LLC 978-388-0020 or 617-398-7494 September 2011Late-Stage College Planning—Strategies to Lower Your Costs by Steve Stanganelli, CFP® financial aid in January of your student’s senior year ofSpecial points of interest: high school Complete a financial aid form for every year your student  Don’t rule out schools based on “sticker price”: In many attends college. schools fewer than 20% of students actually pay full price. And “pricier” private schools may actually offer Don’t overestimate asset values on financial aid forms. more aid than public schools.  Control what you can: The biggest determinant of aid Consider summer school and AP tests to finish earlier is the Expected Family Contribution (EFC). By taking Call the Clear View Financial Planning Helpline for help with proactive steps with assets, income and tax liability in personalized education funding strategies at 978-388-0020 the Base Year, the year before your student files for or 617-398-7494. financial aid, you may be able to qualify for more aid or reduce your after-tax cost of college.As noted in the charts below, a college degree is still  Lower Your Income: If you are self-employed,economically worth it in the long run. But college costs consider hiring your kids which lowers your busi-continue to soar. ness and personal income.  Reduce assets held in a student’s name.As tuitions and fees continue to climb at double or tri-  Don’t cash-in savings bonds. This will increaseple the average inflation rate, the amount that parents reported income. Wait until after aid packages areare able to cover directly has been dropping from awarded.about 25% in 2007 to about 16% for this academic  Don’t have grandparents or relatives gift to theyear. This has contributed to the increasing amount of child or pay the school directly. While a gooddebt that has saddled new grads from under $10,000 estate planning tactic for relatives, this will countin 1993 to nearly $30,000 projected in 2012. as a resource and reduce potential aid. Instead, set aside the money and have the grandparentsTo help lower the cost, consider these tactics: gift it when the student is out of school.  Use gifting to your advantage. Instead of selling Don’t count out financial aid. There are a number appreciated assets to write a check, gift them to of factors that influence whether a student is eligi- your child in the lower bracket or shift them to a ble for aid. Household income is only one factor. 529 account and withdraw them tax-free. So don’t short-change yourself. Plan on filing for COLLEGE HELPLINE: 978-388-0020 or 978-416-4107 Viewpoint is produced by Clear View Wealth Advisors, LLC for the benefit of its clients and allied professionals. Although the information here is gathered from reliable sources, readers should not act upon it without professional advice. Past performance is no guarantee of future results. Examples with hypothetical returns illustrated are not representative of a specific investment. Clear View Wealth Advisors, LLC 12 Amidon Ave., Amesbury, MA 01913 25 Lowell St., Wilmington, MA 01887 Tel: 978 388-0020 Email: Steve@ClearViewWealthAdvisors.com
  5. 5. Page 5 Clear View Wealth Advisors, LLC 978-388-0020 or 617-398-7494 September 2011The Tax Corner (from National Association of Tax Professionals, natptax.com)Special points of interest: Tax Tips for Divorce Clear View Wealth Advisors provides tax preparation Case Study: Filing Status After Divorce services for individuals and businesses. Question: Taxpayer and spouse obtained a divorce in Financial planning clients are eligible for discounts on 2011. The divorce decree states that the couple have to bundled services. file Married Filing Jointly for the year of the divorce. Can Call the Clear View Financial Planning Helpline for they do this? help in preparing your income taxes or help with a Answer: No. divorce plan at 978-388-0020 or 617-398-7494. A taxpayer is only able to file Married Filing Jointly if the taxpayer is married on the last day of the year. Since theDeducting Business Miles taxpayer was divorced prior to the end of the year, the tax- payer is ineligible to file Married Filing Jointly. The CourtsQuestion: You are in the business of delivering have repeatedly stated that divorce courts cannot overridepackages, documents, and other items for custom- the tax laws.ers. You are using your own vehicle for these de-liveries. Are you allowed to use the standard mile- Case Study: Legal Fees and Divorceage rate for all business miles you drive? Question: Are legal fees incurred during a divorce a de-Answer: Yes. ductible expense?The standard mileage rate is allowed in lieu of us- Answer: No.ing your actual automobile expenses. The rule thatdisallows the use of the standard mileage rate Legal fees relating to a divorce are not deductible, exceptwhen your vehicle is used for hire does not apply if amounts paid for tax advice or preparation or amountsyou are providing courier services. paid in relation to collecting taxable income.Business Owners: QuickBooks the IRS Any portion of the legal fees paid for efforts to obtain taxa- ble income such as alimony are deductible.The IRS has announced that its agents will requirea copy of your QuickBooks data, if used, to help Any portion of the legal fees paid to avoid paying alimonythem with any audit. are not deductible. Legal fees paid for any of the following are also not deductible: Custody of children; Breach ofWhat do taxpayers need to know? You can make promise; Civil or criminal charges resulting from a personalany audit go more smoothly by having good rec- relationship; Damages for personal injury; Preparation of aords which start with how your electronic title or defense against a title; Preparation of a will; Proper-bookkeeping records are saved. ty claims or property settlements (even if it involves theEach version of QuickBooks comes out of the box risk of losing income-producing property).with one user built in — Administrator. This user isnot password protected. To help maintain dataintegrity, taxpayers should assign QuickBooks file TAX HELPLINE: 978-388-0020 or 978-416-4107users with separate passwords.QuickBooks will maintain an “audit trail” of data that “Divorce Your Money”is entered or changed by each password-protected FREE Bookletuser.If your accountant or bookkeeper makes changes, Clear View Wealth Advisors, LLCtaxpayers should make a copy that matches the Amesbury * Wilmington * Woburnadjusted version created. Viewpoint is produced by Clear View Wealth Advisors, LLC for the benefit of its clients and allied professionals. Although the information here is gathered from reliable sources, readers should not act upon it without professional advice. Past performance is no guarantee of future results. Examples with hypothetical returns illustrated are not representative of a specific investment. Clear View Wealth Advisors, LLC 12 Amidon Ave., Amesbury, MA 01913 25 Lowell St., Wilmington, MA 01887 Tel: 978 388-0020 Email: Steve@ClearViewWealthAdvisors.com
  6. 6. Page 6 September 2011 Clear View Wealth Advisors, LLC 978-388-0020 or 617-398-7494 About Clear View Wealth Advisors, LLC Clear View is a Registered Investment Advisor providing fee-only / fee-for-service financial planning, consulting and investment management services.Primary Business Address We help clients make smarter money choices.12 Amidon AvenueAmesbury, MA 01913 THE BOTTOM LINEConvenient Meeting Locations in the Merrimack Valley to Boston: When your life savings are at stake, you want advice youNewburyport Woburn Wilmington Lawrence Boston can trust and someone you can count on. You need a trusted advisor that is objective, an advisor that is notPhone: 978-388-0020 or 617-398-7494 paid more to sell you one product over another. YouFax: 866-654-4301 need a relationship with a firm and an advisor that prom-Email: steve@ClearViewWealthAdvisors.com ises to always put your interest first, a firm with proven experience and the right professional credentials.Visit us on the Web!More Financial Tools: www.ClearViewWealthAdvisors.comDivorce Help: www.DivorceFinancePros.com To explore how Clear View and Steve Stanganelli, CFP®College Funding Help: www.CollegeCashPros.com can help you, call 978-388-0020 today to schedule anPersonal Financial Index: exploratory meeting (via phone or in-person). There is no www.personalfinancialindex.com/c/clearviewwealthadvisors charge or obligation.FREE Road Map Tool: www.BabyBoomerRetirementPro.com ————————————————My Blog: www.MoneyLinkPro.Wordpress.com Complimentary 30-Minute Money Tune-Up + $100 Off Any Road Map Financial Plan ProgramVisit our website to find out more about our approach and services.Specials Coupons Available Online at Yelp.com Google.com Late-Stage College Planning The More You Know, The Less You Pay Steve Stanganelli and Clear View Part of a Series for Clear View’s Exclusive College Planning Service offer help in the following services: For parents with high school juniors and seniors, college is just around the  Retirement Income Planning corner. This doesn’t mean that it’s too late to plan.  IRA Rollovers  Roth IRA Conversion Analysis In fact, by taking the time to plan now, parents will be in a better position to  College Funding Strategies manage their cash flows and fund their retirement. 529 Plans  Divorce Settlement Analysis As the “buyer” of a college education for your student, you have a choice to  Qualified Plans for Businesses be an “informed” buyer or an “uninformed” buyer. What you don’t know about  One-to-One Money Coaching  Periodic or One-Time Invest- the financial aid process and strategies to help pay for college may end up ment Advice costing you more now and in retirement.  On-Going Investment Manage- ment Monitoring Need Help Understanding Your Options? Read on. Or join a free webinar.  Financial Education Programs for Groups FREE Online Planning Tool “The Money Coach Road Map Series:” FREE Webinars Clear View Wealth Advisors, LLC Get Yours at www.SmartMoneyRoadMap.com Check the Clear View Site Viewpoint is produced by Clear View Wealth Advisors, LLC for the benefit of its clients and allied professionals. Although the information here is gathered from reliable sources, readers should not act upon it without professional advice. Past performance is no guarantee of future results. Examples with hypothetical returns illustrated are not representative of a specific investment. Clear View Wealth Advisors, LLC 12 Amidon Ave., Amesbury, MA 01913 25 Lowell St., Wilmington, MA 01887 Tel: 978 388-0020 Email: Steve@ClearViewWealthAdvisors.com

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