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C.H. Robinson

We specialize in working with C.H. Robinson employees across the U.S.

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Are You Struggling to Save for Higher Education AND Retirement?

Written by Summit Wealth on .

A recent survey by the Certified Financial Planning board found that costly living expenses are preventing many parents from saving for their children's higher education. The findings also show that one-third of American parents are still repaying their own student loan debt, limiting their ability to save for their children's education.

More than two-thirds of parents surveyed reported that they have not started saving for their children's higher education because their everyday living expenses have left no additional funds to save. 48% say that their own student loan debt has prevented them from saving for any of their priorities including an emergency fund or retirement.

As the parent of a high-school senior and sophomore, it is scary to think how many young people are struggling with their everyday expenses and student loans, let alone saving money. Unfortunately, many kids graduate college with no clue of how finances work and how to make ends meet. It's about learning to live within one's means and not giving into the desire to have everything now. Making the tough choices early in life can have a major impact on one's financial situation in their 30s and 40s. As a client of SWA, if we can help provide counsel to your child as to how to get on the right financial path, please let us know as we would be glad to help.

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How Can You Plan For Your Longevity?

Written by Summit Wealth on .

How long will you live? If you could tell us with any precision, we could design the ideal withdrawal strategy for your portfolio. However, given the fact that no one (that we know) has a crystal ball, we have to make the best of what we can control. Here are a few stats for you:

  • The average life expectancy of a 65-year-old female is currently about 85, with a 50% chance she will live past that age.
  • The average life expectancy of a 65-year-old male is 82.5.
  • The joint life expectancy of a 65-year-old couple is about 27 years. That is to say that at least one is expected to live to age 92.

So, what can you do to protect yourself against what might be a 30 to 40 year retirement? Well, there are several options, some of which you might not like:

  • Save more aggressively while you are working. The average savings rate in the US is pitifully low and if you want to protect yourself against outliving your portfolio, save more aggressively earlier on in life. Also, utilizing tax-free savings vehicles (like a Roth IRA or Roth 401(k)) can create a tax-free account for you to draw from in retirement.
  • Work longer. While this is not likely very appealing option, working at least part-time into your 60s can reduce the stress of having your portfolio provide the bulk of your retirement cash flow needs.
  • Spend less in retirement. Again, not a very attractive option but there are ways you can reduce the amount you may need in retirement. Examples include:
    • Downsizing or maintaining only one property versus two
    • Moving to a lower tax state
    • Living with one vehicle instead of two (or three, or four)
  • Maximize your Social Security benefits. There are a considerable number of benefit withdrawal options to choose from. Work with an advisor that can analyze your options and create a strategy customized to your unique circumstances. With proper planning, you could increase the amount of benefits you receive by over $100,000 over your lifetime.
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10 Best Cities for Retirement

Written by Summit Wealth on .

The personal finance website WalletHub has analyzed 150 of the largest US cities and have come up with their most "wallet-friendly" locations for retirees to spend their retirement years. Using 25 unique factors, ranging from recreational activities, cost of living and job prospects for workers + age 65, the site chose the following cities as its top 10:

  • Number 10: Peoria, Arizona
  • Number 9: Plano, Texas
  • Number 8: Cape Coral, Florida
  • Number 7: Port St. Lucie, Florida
  • Number 6: Overland Park, Kansas
  • Number 5: Scottsdale, Arizona
  • Number 4: St. Petersburg, Florida
  • Number 3: Orlando, Florida
  • Number 2: Grand Prairie, Texas
  • Number 1: Tampa, Florida

Funny how no Minnesota cities made the top 10. I wonder why??

Please contact us so we can help you plan your ideal retirement in the city of your dreams.

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Why Multi-Generational Financial Planning is Important

Written by Summit Wealth on .

We work with a number of clients that have engaged us in planning across the generations. Here are a few examples of why we are convinced that this type of planning makes sense:

  • An SWA client owns a small business and has teenage children. We counseled the client to have her children perform some basic, administrative tasks (filing, shredding, cleaning, etc.) and to pay them through her company. She is able to pay her kids through her business (income shifting) and her kids pay no tax on that income (versus the client paying 35% federal tax and another 8% Minnesota tax). She then uses that income to fund Roth IRA accounts for each child (growing income tax free). The principal contributions of Roth IRA accounts can be used for college costs, to purchase a child's first home, or they can be left in the Roth IRA accounts to grow, income tax free, until each child needs them in retirement.
  • An SWA client has an elderly parent who is in the zero percent federal and Minnesota income tax brackets and owns a modest Traditional IRA account that they will not likely need to tap for their own lifestyle needs. We prepare a tax projection for that parent each year and counsel the client as to how much of that Traditional IRA could be converted to a Roth IRA (income tax free) each year. The converted Roth IRA assets grow income tax free and, if / when that client eventually inherits that Roth IRA at some point in the future, they will receive those funds free from income tax.
  • The parents of an SWA client have a significant net worth that will likely result in a federal and Minnesota estate tax bill at their death. The client's parents will not likely need all of their wealth to live out the balance of their lives comfortably. We counseled that client to work with their parents to begin gifting assets to them and their children annually, so they reduce their taxable estate and potentially save 40% or more federal estate tax plus 10% or more Minnesota estate tax at their deaths.

There are many more examples we could provide of the multi-generational planning we do, but we certainly don't have the space to do so here. Please contact us if we can help your family plan across multiple generations. It could amount to a considerable amount of money staying in your family's pockets instead of going to Uncle Sam.

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How Long Before You Anticipate Retiring?

Written by Summit Wealth on .

According to a Retirement Confidence Survey conducted by the Employee Benefit Research Institute, about 49% of Americans find themselves retiring unexpectedly. The reasons include:

  • Health problems
  • Disability
  • Downsizing and spousal care demands

When this happens, there can typically be a lot of emotions involved. Clients may feel like they haven't accumulated enough assets to retire. So what can you do to be prepared if an unexpected, forced retirement situation does happen to you? We have several ideas for you to consider:

  • First, don't aggressively pay down / off your mortgage with extra principal payments. Instead, invest those extra payments in a taxable account via a globally diversified, balanced asset allocation. This way, if you need to tap that account due to an unforeseen event, you can do so. If you pay down / off your home and attempt to refinance after a disability, the bank may not allow for it.
  • Second, maintain a great disability policy that will continue to pay you a benefit until you reach full retirement age. Pay for this policy with after-tax dollars so any benefit you receive is tax-free to you.
  • Third, as you approach retirement, consider transitioning from long-term disability coverage to long-term care coverage.

These are just a few ideas that you can employ to protect yourself in the event of an unplanned, early retirement. If you have concerns about your specific situation, please reach out to us as we are happy to assist you.

North Metro: 763.355.5873
227 East River Parkway
Champlin, MN 55316-5873

South Metro: 612.987.9112
5871 Crossandra Street SE
Prior Lake, MN 55372-3337

West Metro: 763.639.3425
322 Greenhill Lane
Long Lake, MN 55356

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