How to Plan Your Income for Retirement

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Planning for retirement is important if you want to cope with life after your days in the office. According to the Employee Benefit Research Institute, 4 out of 10 American workers are saving money for their retirement. Do you want to be part of these smart employees or the lost majority? Here are some of the things you need to know about preparing for retirement.

Setting Financial Goals
Saving is a process that demands commitment. Since retirement is definitely not your only saving goal, you should try striking a balance or prioritizing what is necessary and weighty. For instance, you could comfortably do away with lingering debts and saving for vacations, cars, homes, and lattes.

Saving for Retirement
Retirement involves more than just assessing the amount of saving you need. When planning for retirement, it’s is also important that you pay attention to where you save your money. Find the best investment or saving account. Take time to calculate how much you need to save for retirement as well.

Investing
While saving is simply amassing wealth, investing is the process of multiplying the wealth. Cash is not a great way to store your wealth, and there are thousands of reasons why. Before investing your money in any project, assess the reward-to-risk ratio and the return on investment. Which investments are more diversified, and when do you get in for maximum gains.

What Do You Invest In?
Are you ready to have your retirement saving work for you? Well, if that’s the case, setting up an investment portfolio should not be complicated. Acquaint yourself with principal retirement investment rules. Are you a DIY person, or will you need to hire the services of a financial adviser? If you want to manage your retirement saving yourself, it is recommended that you gather sufficient knowledge on investment strategies. If you will choose to work with a professional, get to know about the related costs.

Building Wealth
Retirement investing is not a phenomenon that occurs in one sitting. It is a process that will change with the dynamics of your employment as you move from one job to another or up the promotion ladder. You will also have to endure changes in the stock markets and meet family obligations. However, that does not necessarily mean that you will have to babysit your retirement investment. There are numerous ways to protect and manage your wealth and savings in the long haul.

Post-PPP Taxes to Understand

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The Paycheck Protection Program loans were a top priority for most struggling businesses due to the COVID 19 pandemic. Although these loans were beneficial to small businesses, most business owners find it hard to understand the tax implications. Below is a comprehensive description of the Post-PPP tax obligations.

Paycheck Protection Program Loans

PPP loans were awarded to small business owners to prevent them from going out of business and to retain their employees. Under the PPP program, small and medium business owners received a loan of up to two-and-a-half times the average monthly payroll. This loan had a cup of about $10 million.

The PPP loan intent was to cover the payroll and other business expenses during the COVID 19 pandemic. If properly appropriated on the approved expenditure, these loans are forgivable. However, if not, repayment of the funds will attract low interest and extended repayment periods. Although these funds have been beneficial to most small businesses and their employees, confusion about the tax implications has arisen.

Tax Implications of The PPP loans

Will the businesses that received the Paycheck Protection Program loan have a different tax situation than the previous years? This question was the concern of most business owners. The possibility that the loans would get considered as the taxable expense was another confusing aspect of these funds.

Although the Paycheck Protection Program (PPP) was seen by many as a lifeline, experts warned that the legislation could become a tax-laden time bomb. In May 2020, the IRS issued Notice 2020-32. This notice declared that if PPP loans were not taxable. However, the expenses usually not considered as tax-deductible wouldn’t be deductible. These expenses include utilities and rent.

This declaration threatened to kneecap the most attractive part of the PPP loans. However, Congress came to the rescue when they passed the recent PPP funding through the (C.R.R.S.A.A) Coronavirus Response and Relief Supplemental Appropriation Act. This act reversed the decision of the IRS made on the Notice 2020-32.

The Congress act declared that any forgiven PPP loan would be tax-exempted income. Thanks to this clarification, business owners can now take a Paycheck Protection Program loan and still get the (ERTC) employee retention tax.

Raising Money-Savvy Kids

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Unfortunately, money management does not fall under the curriculum taught in school. Parents are responsible for leading by example and teaching the basics of money management. It may seem like a daunting task, because most people do not remember how they were taught about money, they just know it now. That’s why I put together this list in order to give you ideas on how to start raising money-savvy kids.

Talk About Money

The first step in teaching your children about money is constructing an ongoing, open discussion about money. Talking about money is something we don’t normally deem acceptable. We do not disclose salaries, we try not to lead onto how much we have, and we certainly do not ask other people about their money. These social norms have their place within our society and it’s important to stress that to your children as well. There’s a time and a place for everything. When it comes to money, let your children know they can talk to you about it, ask questions, and not fear making you uncomfortable.

Budget Together

Budgeting is a huge part of money management. Keeping track of spending and setting restrictions on yourself is a great habit to establish early. Budgets are hard to implement after bad habits are formed, so to avoid forming them, budget together. You can be as open about this as you’d like. If you want to be completely transparent and work on the household budget, go for it! If that seems too daunting, work on a personal budget with your child. Have them outline goals and also learn how to work with the income (allowance) they receive.

Utilize Teachable Moments

There will be many teachable moments throughout your money management lessons. Identifying them and knowing how to come out the other side with a lesson is a great way to further instill all you both have been working towards. There are opportunities for real world application everywhere. Include your children in on the family grocery shop. Explain how much you plan on spending and how you came up with that number. Then work together to stick to it!

Use Tough Love (even when it’s hard)

Tough love is a necessary evil when it comes to learning about money. You more than likely ran into some financial trouble at one point or another. After you recovered and stabilized your finances, you learned a valuable lesson about what not to do. Providing children with these realizations early on can firmly cement your teachings into their minds. They may have to find out the hard way that it wasn’t a good idea to blow all their money on a toy the day they receive their allowance. Your child won’t even learn that lesson until a few weeks later when they do not have enough money for something else they desperately want. By not giving in and buying it for them, you’re practicing tough love so they can learn a valuable lesson.