As soon as the pile of Thanksgiving dishes had been cleared, we now find ourselves in the fast lane towards New Year’s Eve. To make this mad dash to the end of the year just a little more exciting, let’s pretend we all have a financial planning version of an Advent calendar with only 25 days left to open.

Let’s get started by highlighting a couple of pitfalls to avoid and some tips to consider.

Retired readers recently received their annual letter from Social Security. For the lucky few, some are slated to pay extra monthly premiums for their Medicare Part B and Part D benefits in 2020. This premium surcharge was triggered by making too much money way back in 2018; two tax years ago! The tax planning maneuvers you make in the next 23 days may save you a little financial heartache in 2021.

Medicare’s premium surcharges kick in at different modified adjusted gross income levels. The first surcharge adds about $800 per year more to your Medicare premium and is tripped at income levels of $87,000 for singles and $174,000 for couples. The second surcharge adds yet another $1,200 more per year and is triggered at income levels not much higher; $109,000 for singles and $218,000 for couples.

Avoiding or lowering the impact of these surcharges can take just a little bit of planning. Two common techniques are to deliberately harvest capital losses to offset any capital gains you have or to make charitable donations directly from your IRA to help reduce your required minimum distributions.

Now, moving on from the enviable challenges faced by higher income retirees, this next bit of planning advice is for those who qualify to receive health insurance premium subsidies under the Affordable Care Act.

The basic idea of Obamacare is simple enough. The law first aims to determine the premium level you can afford based on your income. In a nutshell, the law says you shouldn’t be expected to devote more than about 10% of your income to buy a decent health insurance policy. Naturally, the lower your income, the less the government expects you to devote to your health insurance coverage.

After you make your best guess about your income for the year ahead and you are told what you can afford toward the cost of a decent health plan, the government will provide you with an allowance to make up the difference between what can pay and what it actually costs. Once that allowance is set, you can then shop for the plan that’s best for you. You might even choose a plan that’s not quite as decent, such as a lower premium, high-deductible plan. The government allowance might even cover a significant portion of your monthly premium.

But, it’s very important to think of this monthly allowance as a government loan. If your best guess about your income turns out to be spot on, the loan is completely forgiven. If your best guess is too low, the government will want that loan paid back!

However, the Affordable Care Act is downright ruthless to those who make even $1 more than the qualifying income limit set at four times the poverty line. As soon as you cross that income threshold – again, even by $1 – the government says you could have afforded the full cost of your health insurance coverage and they’ll bill you at tax time for the entire loan they gave you.

To avoid this painful surprise, throughout the year you should closely monitor your projected income against the guess you made before the start of the year. If you think you will be close to the edge of becoming completely disqualified and if you did choose a lower premium, high-deductible plan, strongly consider making a contribution to a health savings account to get back below the income threshold. That one small maneuver alone might just save you thousands of dollars.

Jason P. Tank, CFA is both the owner of Front Street Wealth Management, a purely fee-only advisory firm and the founder of the Money Series, a non-profit program committed to providing open-access to financial education, for all. Contact him at (231) 947-3775, by email at Jason@FrontStreet.com and at www.FrontStreet.com

To say that today’s jobs picture is one of the best we’ve seen in modern U.S. history is not an exaggeration.

As I write this column, the official unemployment rate is 3.6%. The last time the jobless rate was this low was in the late ‘60s. That was about a half century ago.

It’s hard to argue that the labor market is anything but “tight.” That’s an economist’s way of saying that it’s not too tough to find a job. Of course, the flip side is equally true for businesses searching to fill an opening.

In this tight labor market, keeping talented and productive employees is even more imperative. The investment made in employee training cannot be understated. To watch a talented employee walk out the door for the final time is one of the quickest ways to put a business in reverse.

Beyond competitive wages, one way to retain valuable employees is by providing attractive benefits. Among the lengthy list, near the top sits an employer sponsored retirement plan.

For the small business owners and self-employed among my readers, investment adviser Derek Dall’Olmo of Tremonte Financial Consultants will offer his expertise to the Money Series on December 4th where he’ll discuss in detail Simple IRAs, SEPs, and 401(k)s.

Simple IRAs are, naturally, simple to set up. They also relieve you of many intimidating employer responsibilities. Beyond making contributions of up to 3% of your payroll, each employee can add their own voluntary contributions to their account, up to $13,000 for this tax year. At age 50, they can add another $3,000. To keep it truly simple as the employer, you don’t have to create or monitor an investment menu for them and your employees get to manage their own Simple-IRA accounts.

SEP-IRAs can be viewed as a one trick pony. They are most often used by self-employed people, but that’s not always the case. As the employer, you get to choose the fixed percentage to contribute to each and every employee’s account. The maximum is quite high at about 25% of your payroll. Importantly, there are no voluntary employee contributions in a SEP-IRA plan. Every dollar comes from you, the employer.

The 401(k) is definitely more complex than other retirement plan types. It comes with added employer responsibilities and it is more expensive to create and manage. In exchange, however, 401(k)s offer greater flexibility in their design and allow for larger employee contributions. While they are typically used by more mature businesses, their single-employee version, called a Solo or Individual 401(k), is an especially attractive solution for high earners or super savers.

To help kickstart your business planning, please join us for the Money Series on Dec. 4th at 6:30 pm in the McGuire Room at the Traverse Area District Library. The non-profit Money Series provides open-access to financial education, for all. Register at MoneySeries.org or call (231) 668-6894.

There isn’t much time left until New Year’s. It’s only 69 days away. For me, this has been my quickest year on record. That’s a function of age. But, in all honesty, it’s also a result of not pausing long enough to smell a few roses along the way. For this, I’ll blame my mom for her repeated reminders to act like a duck. Stay calm on the surface and paddle like mad underneath!

In the spirit of lost time and important reminders, this is the time of year to remember to take your required minimum distribution – your RMD – from your IRA. After you reach that odd age of 70 ½, it’s time to pay the taxman. Thankfully, paying the taxes you owe on your retirement savings only happens little by little.

The IRS publishes two tables to determine how much of your IRA you’ll need to include as taxable income each year. One is for you and your spouse, if you happen to pass away first. The other table will be used if you are a non-spousal beneficiary. These tables are designed to slowly push your IRA’s untaxed money onto your tax return. The idea is to allow you to stretch out your IRA’s tax deferral over the rest of your life.

Fortunately, after your first RMD is initiated, you can have your subsequent required distributions done for you automatically. However, if you happen to inherit an IRA and you weren’t the spouse, you’ll need to remember to take your annual distributions each year. If you forget, the penalty is a whopping 50% of your distribution amount.

Now, just as you get comfortable with these rules, our esteemed politicians in Washington DC are chomping at the bit to change them. Even with total gridlock, a bill called the SECURE Act amazingly passed the House earlier this year by a near unanimous vote of 417-3.

Naturally, most thought a Senate vote would then quickly follow and make it law. Not so fast. Under the Senate’s rules, it only takes one member to put the bill on a very slow track. True to form, three Senators pushed pause for political purposes and it sits in limbo.

Assuming the delay ends, the SECURE Act resets the start date of your RMDs to age 72 from age 70 ½ and your non-spousal beneficiaries won’t be allowed to stretch out their inherited IRA over their remaining lifetime. For them, it will all get taxed within ten years. Even their inherited Roth IRA will need to be liquidated over a decade. Finally, among many changes to small business retirement plans, the SECURE Act also ends the current 70 ½ age restriction on making IRA contributions.

To learn more about how RMDs work and the changes that might be coming, attend the Money Series on Wed., November 6 at 3pm at the Leland Township Library. Go online to MoneySeries.org or call (231) 668-6894 to register.

Jason P. Tank, CFA is both the owner of Front Street Wealth Management, a purely fee-only advisory firm and the founder of the Money Series, a non-profit program committed to providing open-access to financial education, for all.

Sunshine is often the best disinfectant. That couldn’t be more true as we launched our fourth season of the Money Series last week. For our season opener, I am proud to have revisited a topic that I believe is one of the most important we’ve ever covered; the prevention of financial scams perpetrated against senior citizens.

The best defense against this scourge is education and awareness. Too often financial scams go unreported due to embarrassment and fear. According to some studies, only one out of 44 cases of elder financial exploitation get reported. In other words, what we read in the paper is just the tip of an iceberg.

Despite the unreported nature of these crimes, I can say with total confidence that our public officials have upped their game since the Money Series first presented on the topic back in 2016.

Today, senior organizations and government departments have marshaled significant resources to both train fraud prevention specialists and encourage the reporting of these crimes. For example, AARP launched their Fraud Watch Network with a hotline at (877) 908-3360. Their hotline is staffed by volunteers who work with victims to file a complaint with the Federal Trade Commission that supports further prevention efforts.

Right here in our backyard, Grand Traverse County’s efforts are also commendable. They have a scam alert system that broadcasts warnings, by phone and by email, to our region’s seniors and caregivers. Signing up for the alert is easy, just visit GrandTraverse.org and follow the link to the No Scam Zone.

For our kick-off at the Money Series, we covered five of the most common scams to avoid. I’ll highlight one of them here and invite you to watch the full video replay posted on MoneySeries.org.

The “family emergency” scam is near and dear to my heart as it affected my wife’s grandmother a few years ago. This scam preys off of an inherent desire of many seniors to help those in need. It usually begins with an urgent call from an imposter, often posing as a grandchild, who is supposedly in need of help after an accident or an arrest. The scammer’s aim is always to get your money, and do it quick!

The surefire way to prevent financial fraud targeting seniors is to keep our lines of communication wide open. This is a perfect example of it taking a village to care for one another. By encouraging our area’s growing population of seniors to develop and maintain a vibrant connection to our community, we can not only prevent financial abuse but also meet a whole host of other vital needs.

Now, I cannot think of a more compelling reason to support the effort to replace our inadequate Senior Center in Traverse City with an intentionally-designed facility right in the heart of our community! Our Senior Center network is a public asset like none other and their effort for a new building sincerely deserves our county-wide, public support.

Jason P. Tank, CFA is both the owner of Front Street Wealth Management, a purely fee-only advisory firm and the founder of the Money Series, a non-profit program committed to providing open-access to financial education, for all. Contact him at (231) 947-3775, by email at Jason@FrontStreet.com and at www.FrontStreet.com

As has been our family’s tradition for nearly two decades, we spent last weekend on Mackinac Island. It was certainly a very busy place to relax, thanks to the invasion of the Republicans, their famous dignitary, and his Secret Service detail.

Our main event is a family bike ride around the island. And, since we’ve always had a young child (or three or four) along for the ride, a stop at the half-way point for an ice cream cone is required. Denying them, for any reason, just doesn’t feel like an option!

This year’s ride struck me as especially relevant to today’s economic situation. Our whole weekend felt under threat of rain, but enough pockets of sun peeked through to keep us optimistic. It felt a bit like watching the global economy stumble while ours grinds forward.

Our weekend plans, similar to the way business leaders, consumers and central bankers feel today, were somewhat impacted by the weather forecast. Just like the Fed did last week with their second straight interest rate cut, we decided to plow ahead with our predetermined plans and mounted our bikes.

A debate has been going on for years about how the Fed and other global central bankers will deal with the next recession. In a world of super-low interest rates and super-large budget deficits, the fear is the traditional tools of interest rate cuts and fiscal stimulus will be unavailable next time around. All that would remain would be the unconventional tool of quantitative easing and, possibly, even the untested tool of negative interest rates.

While the forecast is still uncertain, the future is fast approaching and the debate is growing more intense. Like children with thoughts of ice cream dancing in their heads, investors don’t typically sit around waiting for rate cuts. They often act up and force the action. So, the Fed is now pedaling around the island, too, and investors have a strong hunch about where they are going to stop.

As we approached the halfway point, our youngest knew we’d stop. It’s what we always do. We placed our ice cream orders just as we heard the thunder in the distance. Moments after we took our first licks, the rest of our family didn’t even hesitate and hopped back on their bikes.

After our ice cream bliss, and as the dark clouds grew closer, we finally headed back. Of course, the rain arrived immediately, and the cold wind began to really hit us in the face. As the Fed likely feels today, we weren’t at all dressed appropriately. And, just as the Fed so obviously wants for investors, even if it’s not their mandated purpose, all I wanted was to be a hero for my kid!

Wet and cold and pedaling uncomfortably fast, it was then that my daughter delivered her piercing wisdom, “Hey Dad, sometimes ice cream isn’t worth it!” It really made me wonder if the Fed was listening.

Jason P. Tank, CFA is both the owner of Front Street Wealth Management, a purely fee-only advisory firm and the founder of the Money Series, a non-profit program committed to providing open-access to financial education, for all. Contact him at (231) 947-3775, by email at Jason@FrontStreet.com and at www.FrontStreet.com