Finances for New Families

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Sunday, 15 May 2011 08:35 Last Updated on Saturday, 29 October 2011 16:08 Written by Erin Baehr, CFP

by Erin Baehr

Published in the Pocono Record, May 15, 2011

Pocono Record

 

While the birth or adoption of a baby brings blessings and joy in many ways, a whole host of financial issues are born along with them. If you're a new mom or dad, you no doubt are buried (maybe literally) in diapers, toys and feedings, and taking care of household business can fall to the bottom of the pile.

But now that you have that precious little one, you're going to need to take care of a few things. First on your list is a will — especially naming a guardian should something happen to both of you. There's a great book called "Wear Clean Underwear" by Alexis Martin Neely that can help you think through what can be a difficult choice and guide you in the process. I urge you, if you don't have a will, make that a top priority, right now.

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Boldly Go to Social Security's Website for Great Info

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Friday, 13 May 2011 12:52 Last Updated on Saturday, 29 October 2011 16:09 Written by Erin Baehr, CFP

The Social Security Administration has graciously provided articles and information to share.

Below is the first installment.  If you haven't been to the website lately, take a look; you'll find lots of information and helpful calculators.

www.socialsecurity.gov

 

GEORGE TAKEI AND PATTY DUKE BOLDLY GO
TO SOCIAL SECURITY’S WEBSITE


By Corrie Drosnock
Social Security Public Affairs Specialist in the Lehigh Valley    


Are you ready to set course for retirement? Then follow the advice of entertainment icons George Takei and Patty Duke and Boldly Go to www.socialsecurity.gov.  The two celebrities have teamed up in a new campaign to help Social Security promote its online services as an easy and secure way for people to apply for retirement, disability, Medicare, and so much more.


Those ready to retire, apply for disability benefits, or delay retirement and apply only for Medicare, can do so from the comfort of their home or from any computer.  And don’t forget to sign up for direct deposit so you’ll get your benefits at warp speed.


Already receiving Social Security benefits? Go online to let Social Security know about a change of address or phone number, start or change direct deposit, get a proof of income letter, or replace a lost Medicare card.


As Patty tells George, Social Security’s website “is for everyone.” Workers can get an online estimate of their future retirement benefits and use Social Security’s planners to plan for a secure retirement and “Young people can help their grandparents with retiring online or getting extra help with their Medicare prescription drug costs.” To which George concludes, “Everyone, of all ages, should go to www.socialsecurity.gov.”


So Boldly Go to www.socialsecurity.gov. Like George, you may find yourself saying, “Oh my!”  Then, in retirement, live long and prosper.

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Getting Started in Your Own Business

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Wednesday, 11 May 2011 08:30 Last Updated on Wednesday, 11 May 2011 08:33 Written by Erin Baehr, CFP

Getting Started in Your Own Business

by Erin Baehr

Published in the Pocono Business Journal April 27, 2011

Whether out of entrepreneurial desire or financial necessity, many people are starting their own businesses during this recession. I’d like to offer a few tips on getting started.

Once you have a viable business idea, your first stop is the PA Open 4 Business website, www.paopen4business.state.pa, where you can register your fictitious name, register your enterprise with the state, and register for taxes you may need, such as employment or sales tax.

It is recommended to consult an accountant and an attorney before choosing an entity, because it involves both liability protection needs and tax considerations. You will also need to apply for an Employer Identification Number from the Internal Revenue Service, which can be completed online at www.irs.gov.

You should have a business bank account to run all income and expenses through. I recommend two accounts; an operating account and a separate tax account, where you can deposit one third of your profits to cover self employment and income taxes (make quarterly tax payments from this account).

Estimate your overhead costs (such as rent, phone, utilities, and insurance) and variable expenses related to the cost of manufacturing or distributing your product or service (such as inventory, supplies, marketing, and packaging). Limit your commitment to fixed overhead as much as possible, to be adaptable to market conditions as well as changes that develop in the early stages of your business. Set a goal of how much you want to take home from the business, and back into the amount of gross sales you will need, considering projected expenses and taxes.

 Read the rest here:

http://poconobusinessjournal.com/category/columnist/erin-baehr-columnist

 

 

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ABCs of Saving for College

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Monday, 09 May 2011 20:35 Written by Erin Baehr, CFP

by Erin Baehr

 Originally published in the Pocono Record May 1, 2011

http://www.poconorecord.com/apps/pbcs.dll/article?AID=/20110501/NEWS0290/105010312&cid=sitesearch

Our last child is getting ready to graduate high school next month. It seems like just a few short months ago we were spending our days at parks and playgrounds, and college seemed a lifetime away. If you are living the parks and playground days now, the college days will be here before you know it, with tuition bills right behind.

Providing at least some funding for a college education is important to many parents, and looking at the numbers can be scary. Parents of young children have many competing goals — paying off debt, building an emergency fund, saving for retirement. Frankly, if a family's financial position is precarious and the fundamentals are not being addressed, saving for college may not be appropriate until the foundation is solid. For those who have the basics down and are already saving for retirement, saving even a little at a time on a regular basis will help in the long run.

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Insider's Guide to Annuities Part 2

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Sunday, 27 March 2011 08:30 Last Updated on Saturday, 29 October 2011 16:09 Written by Erin Baehr, CFP

by Erin Baehr

Originally published in the Pocono Record, March 27, 2011

http://www.poconorecord.com/apps/pbcs.dll/article?AID=/20110327/NEWS0290/103270322/-1/NEWS02

 

Annuities.  No other product in the financial services industry causes as much confusion for consumers.  Heck, I used to sell them and they still confuse me.  I hope this explanation will help clear some of that confusion for you.

 

Recently, we talked about fixed annuities, which are annuities that are driven by interest rates and not the stock market.  While fixed annuities are primarily insurance products and sales representatives are not required to hold a securities license, variable annuities are considered investment products and are regulated by the SEC.  When you invest in a variable annuity, your money is invested in “subaccounts,” which are investment choices that mirror retail mutual funds.   Whereas a fixed annuity has a predetermined return, the growth of a variable annuity depends on the performance of those subaccounts.  Like fixed annuities, earnings on variable annuities are tax deferred until withdrawal. 

 

That tax deferral is often touted as a big plus for annuities.  But tax deferral can be accomplished just as well with a plain old brokerage account.  You are not taxed on the growth of stocks or mutual funds until you sell them, and as long as you hold the investment for at least a year that growth is taxed at capital gains rates, which are lower than ordinary income rates.  Any dividends or capital gain distributions paid out in the meantime are taxed, true, but these also may be taxed at capital gains rates.  Annuity distributions, on the other hand, are taxed at (usually higher) ordinary income rates.   Annuities also are not eligible for the “step up” in value that other inherited property receives when the contract owner dies.  This means a bigger tax bill for beneficiaries.  One more note about tax deferral- when you invest your retirement account in an annuity, as my Alliance of Cambridge Advisors colleagues would say, it’s like wearing a raincoat in the desert.  Your retirement account is already tax deferred.  No need for further tax protection.

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