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History is the best way to understand many things that are happening in present times. Taxes are a complicated subject for most people, but learning taxation is important in understanding its effects your retirement. Even though you may never want to retire (you will know it when you can’t work anymore), taxes will follow you even after your death certificate has been stamped and filed. Yes, there is such a thing as “death taxes”.

You may be surprised by the fact that currently we are having one of the lowest tax rates in history and that significant tax breaks are scheduled to end on January 1, 2026. Congress will need to act for that not to happen. But think about the huge deficit we have in our country, if we count the added expending generated from stimulus payments to citizens during COVID-19 alone, that creates a huge challenge for congress to lower taxes. They may be forced to increase taxes significantly.

I invite you to think about that four-letter word that can explain everything: MATH. The way the finances of our country are being handled, is like you hoping to put everything on a credit card for your future income whilst unemployed. Even though you may find a regular paying job, it is going to be nearly impossible to pay off all your debt.

We the people in USA are going to pay more taxes in order to pay our bills for generations to come. I invite you to take a look at the tax history in U.S.A.

As you can see our country has reached very high rates across history. Our present situation as of February 2021 includes an outstanding debt of 27 trillion dollars¹. If we add off-books debt (Social Security Pensions, for example) we get a much scarier number. That is what the experts call a FISCAL GAP. The fiscal gap can be up to 100 times more than the “on the books” debt we currently have. 

This situation we are currently facing, makes it very difficult to predict how much money one needs to save for retirement. David McKnight said “You can have a million dollars in your IRA but unless you can accurately predict what taxes are going to be in the year you take that money out; you do not really know how much money you have and it is hard to plan for retirement, if you really do not know how much money you have.” I encourage you to watch the movie “The Power of Zero: The Tax Train is Coming” thetaxtrain.com. This movie explains in detail the truthful realities that our country is facing.

At Janix Assurance, we advise in order to create sound strategies that might remove you from the Tax Train track that is coming for all of us, by insulating and buffering you from the impact of future higher taxes. As you know there are different venues for investment to save for retirement. All those types of investments fit only in three types of accounts: We explain it here as buckets of money.

• TAXABLE BUCKET: Here, every year your money grows you pay a tax. (Stocks, bonds, mutual funds, CDs, Money Market Accounts. If you have too much money here, you have the risk of paying higher taxes. That it does not count the management fee-based that some of your accounts are subject to. “You may have too much money in this bucket from the tax efficiency prospective” (David McKnight). Here we advise you have just the right amount for emergency money.
• TAX DEFERRED BUCKET: Here, you pay the taxes at the time you withdraw the money (401k, IRAs, 457, SEP simples, 403b). The most important question for this type of bucket is what it will the tax rate be when you take your money out. Remember the tax is not deferred, is postponed! What it happens here is that the money will get taxed on the harvest not the seed. That means higher taxes because the government will need higher taxes to pay its deficit.

The IRS will want you to take the minimum required distributions at age 70 ½ . If that does not happen, you get a tax penalty of 50% plus Federal Income Tax let say 30%, there goes 80% of your money!

When you take too much money from your tax deferred bucket the IRS tracks your money with the provisional income to determine if they tax your social security income.

What counts towards the provisional income? 1099s, distributions from your tax deferred bucket, and ½ of your social security income. For 2021 social security tax is 85% for a single person with income of $34,000 or greater and married couples filing jointly with income of $44,000 or greater.

Just think what it happens when your social security gets taxed… You guest it! You run out the money faster!

Janix Assurance will help you to plan to have the right amount in your deferred tax bucket to minimize or avoid the social security taxation.

• TAX FREE BUCKET:  In order to qualify money for this bucket is necessary that it is not subject to federal/state income taxes, social security taxes, and capital gains taxes. At Janix Assurance, we will guide you in the right direction to allocate your money in the best tax-free alternatives available to you and your family.

Your goal for your retirement should be to have a sustainable retirement distribution with less or none of the tax burden that affects the longevity of your retirement money. We are here when you need us. Please contact us for a non-obligation consultation https://janixlife.com/contact.html

Resources:

1. Dave Manuel: U.S National Debt Clock February 2021

https://www.davemanuel.com/us-national-debt-clock.php

• David McKnight: The Power of Zero book

https://powerofzero.com

• David McKnight: The Power of Zero: The Tax Train is Coming

https://thetaxtrain.com

• Bradford Tax Institute. History of Federal Income Taxes Rates: 1913 – 2021

https://bradfordtaxinstitute.com/Free_Resources/Federal-Income-Tax-Rates.aspx

• Internal Revenue Service. Tax Summary 2021

www.irs.gov

As an Insurance Agent, one may encounter people who cannot qualify for a life insurance because of their credit rating. If you are a business owner and need a loan to improve your business, your credit score is key to obtain the loan and a life insurance policy to protect the debt in the event the borrower dies early.

Here I am giving you my personal, educated opinions on how to improve your credit score, these opinions do not represent legal advice or expressed recommendations.

A credit score is a number that lenders use to gauge if they will grant you credit, the higher your score the more than likely your ability to obtain financing. Along with your credit score, other determining factors include your current debt to income ratio, which means the amount of money you make in order to meet your current obligations. To determine your debt to ratio income (DTI) divided your debt by your income. Example; your total debt is 45000 and your income is 85000 your DTR= 45000/85000= 52%.

Having a debt to income ratio that is not a source of constant stress is always a good idea. The lower the DTI the more relaxed your life and it allows you to save for rainy days and retirement. In the event you need financing, lenders prefer to see a DTI lower than 36%. If you are looking to buy a home, mortgage companies prefer you have less than 28%.

If your current credit score is dipping into the lower numbers, here are some tips on how to improve it.

• Pull your credit report online: This will give you clear information on the factors that are affecting your credit score. Once you analyze it, you can start drawing a plan on the changes you need to achieve improvement of your credit score.
• Age of the accounts matters: Building your credit takes time and planning of your budget and finances. Negative reporting on your credit report such past due accounts, collections, bankruptcies, and hard inquiries when applying for loans or credit cards, remain in your report for several years.
  • Delinquencies remain for seven years
  • Bankruptcies may remain for 10 years
  • Hard credit inquiries remain for two years.
• Take action: If you have accounts in collections, call the collection agency and negotiate a payment arrangement. Once you begin making payments, they will begin reporting that you are paying as agreed.
  If you have a record longer than the maximum reporting time, you could call directly to the reporting agency and ask it to be removed on your report.

If you have credit cards that are too high and you feel that you cannot  pay them, you can call the credit card company, close the credit card and initiate payment arrangements on the current balance. The outstanding balance, normally, will not accrue additional interest and you can concentrate on paying the principle. The credit card company, will need to keep reporting that you are paying as agreed on a closed credit card with outstanding balance.  

If you have trouble paying a car loan due to hardship or layoff, call directly to the finance company to get a loan extension. The balance due may be added at the end of the loan if the finance company agrees. Try to avoid repossession of your vehicle because it will remain on your credit report for seven years. When companies repossess a vehicle, normally it is sold at auction for half of your financial obligation. This is a loss for the lender and for you as you will have a long term negative mark on your report in addition to the loss of your vehicle. A loan extension is a win-win situation for both parties.

In the event that you have been victim of identity theft do not wait a second and call all reporting agencies and report the issue. Do not forget to notify the social security administration, your employer, and all the parties that may be impacted by the theft of your identity.  Seek help; you can reach out to an identity theft resolution company. I personally use InfoArmor because it has up to $1,000,000 identity theft insurance and they monitor any inconsistencies relating to your credit.

• Dispute Inaccuracies on your credit report: By law you have a free access to your credit report once a year every year. It is a good idea to review for inconsistencies or bad information before any damages occur.
• Do not apply for too many loans or credit cards: Having too many inquiries will have an impact on your credit score and those inquiries last for two years. Instead seek to negotiate your current debt directly with the lender or credit card company to lower your payments and help you to build your credit score.
• Apply only for credit when absolutely necessary: If you have no other avenue than, for example a debt consolidation. Before signing a contract, assess the total cost interest you will be paying vs. the debt negotiation with your current lender, this way you can figure out if the debt consolidation makes sense for you and your wallet.
• Decide to close or not close unused credit cards: The credit reports advise not to close unused credit cards because it may increase your credit utilization ratio. In my personal experience, I have closed unused credit cards and focused only on the outstanding credit to be repaid. As long I have a good payment history, my credit report has been satisfactory without any impact on my credit score.

My personal opinion is that credit is only for strictly necessary things that are very difficult to obtain otherwise. However, many people do not know that they can create their own banking opportunity by utilizing tools and strategies that could help pay your home, car, education and retirement without any consequences.

I encourage you to seek out information about financial strategies that can impact in a positive way your future and the future of your family.

If you want to learn more about how you can create your own banking opportunity, please do not hesitate to contact me with questions. Visit www.janixlife.com

For many, retirement is becoming more and more like a dream. I was looking at the USA Census statistics in 2000. At that time, the number of people retiring per day was 10,000. This means that 3,650,000 people were retired in 2001. The 2020 Census has not started yet, but you can picture the new numbers that are going to show in the next census reports? The projections are 12,000 people a day, which I feel it is extremely conservative.
Have you ever thought what it means to you? How might this trend affect you?

More and more people are banking on social security income to supplement their retirement. The Social Security Administration must provide higher and higher funding to pay for the onslaught of new claimants. We are talking about billions of dollars per year. With the senior citizen count outnumbering the younger generations for first time in history, this means that less and less workforce are available to contribute towards social security. Consequently, the USA debt clock keeps growing exponentially. What are the consequences? TAXES! TAXES! TAXES! and more TAXES!

Seriously! We are living in times with the lowest tax breaks in history! In your opinion, do you feel that taxes are going to be same when you reach retirement age? Do you feel that the retirement crisis we are currently in is going to decrease or increase?

According to an article published in Yahoo Finance by Sean Dennison, 64% of Americans aren’t prepared for retirement and will go broke!

As you can see from this chart, 83.8% of people have less than $100,000 in retirement savings, in addition 45.5% have nothing! Here, we are not referring to any of those people having critical or chronic illnesses with long-term care needs. If you think about it for a minute, who will end up paying for the care of those people? You guessed it! You, through Medicaid! This means that the Federal Government must increase taxes to keep paying for Social Security Income, Medicaid, Medicare and many other programs.
How does this reality make you feel?

Let’s now talk about longevity… General statistics show that an approximately 65 year old man can expect to live approximately 18 years into retirement. Women can expect to live 20 years. In your opinion, how do you think this group of people is doing ensuring appropriate savings? Most people are running out the money and depend only on social security income to survive. What about those dreams people had for retirement? GONE!
If you are a woman, you will need to plan longer than a man, because you will live longer! You and your spouse can start planning now, on how much is needed to save for retirement. The younger you are the more time to accumulate you will have. Use a retirement calculator to begin understanding what realistic number that will be. Once you arrive to that number, it is time to speak with your advisor to discuss solutions that will contribute to tax free retirement distributions.
For more information contact your agent at www.janixlife.com 

Copyright – Janix Assurance LLC.

Resources:
Social Security Administration https://www.ssa.gov/planners/taxes.html
USA.GOV https://www.usa.gov/retirement
Yahoo Finance https://finance.yahoo.com/news/

Let’s have this conversation! how many business owners do you think do not have retirement savings plan and business valuation strategies?

According to an article of CNBC published on July 2017, about 37% of small business owners do not have any retirement plan because they have challenges on cash flow and business capital; therefore, they struggle maintaining a sustainable business valuation strategy.  

21 % used their previous retirement to create a business. Many of which, just withdraw their retirement paying tax penalties.

18% plan to sell their business to fund their retirement. For them, business valuation is imperative to get the best bit possible on their business.

12% do not see any need to save for retirement, but the true is that a serious illness can wipeout all their assets in no time! Same happens with people who does not want to retire, but life can make their lives turn from one day to another.

Can we all agreed that we became business owners for a better future for ourselves, our families, and to be a contribution to society in many ways? However, driving a business has many challenges to build a solid business equity an it takes great effort and years to generate it.

Some of those challenges must be with the sales cycle being season driven. Therefore; the business faces capital problems. Their income depends on seasonal peaks, while their expenses are fix year-round. Marketing becomes crucial to attract buyers to the business. The U.S. Small Business Administration recommends spending 7 to 8 percent of the gross revenue for marketing and advertising. In some cases, more it may be needed especially if the business faces high competence with national chains.

This pressure during seasonal times, pushes the business to depend highly on lines of credit and credit from banks, as well as, high dependency on suppliers to keep the ball rolling. It is very clear that seasonal businesses have high difficulty attracting large pools of permanent fund for capitalization.

Most business owners are too busy keeping up with the business demands to put a high level of financial planning, which requires a lot attention and time. Therefore, during off-peak season, the business has high risk of insolvency. Banks are not to willing to lend during off-season times.

This situation becomes a vicious cycle that traps the business owner into many financial constraints. So, what potential solutions could be utilized to have a better balance of the business?

First, make the decision to create a financial exit strategy and income sustainability strategy that help you to get by in the off-season times. Janix Assurance can help you on preparing the business exit strategy by providing several options to capitalize your business without depending on bank financing. It may sound impossible. Most business owners are not aware of the possible ways to create your own financial circle.

Second, grow and cultivate your clientele base. Any business needs customers who are loyal and buy repetitive. Having a dedicated team for customer service it may be an expense that minimize the cost of acquisition of a new clientele. A solid customer-based is an important aspect on the business valuation and future growth of the business.

Third,

1) Earnings history

Income is a major factor in the valuation of any business. Particularly, someone appraising the value of a business will look at historical trends in your income. For example, an increase in gross income over the past five years will have a positive impact on the valuation, while a downward trend in income may serve to devalue the business.

2) Location

As with real estate, business is all about location, location, location. Your company’s location is a major factor in its value. If you have an incredibly innovative idea and a fantastic business model, it may not mean much if you are in a location with little potential to grow or succeed. Conversely, if your business isn’t that successful, but you are in a prime location, this can be a major positive when it comes to valuation.

3) Concentration

When it comes to business valuation, the concept of concentration can also be viewed as diversity across a wide variety of factors in your business. For example, client concentration can be a significant factor in the valuation of a business. If your business is doing very well but only has a couple of key clients, this would have a negative impact on the value of your business since the loss of one client could potentially be ruinous for the business. On the other hand, an extremely diverse client base would be a positive factor. Similarly, product concentration and market concentration can also be major factors in valuation. If you only sell one product, or your products only appeal to a very specific market segment, that is not considered as valuable as a company that successfully sells diverse products and appeals to a diverse market.

4) Staff and Management

What kinds of employees will a buyer be inheriting if they purchase your business? A skilled staff and effective, reliable management team can have a strong impact on the value of your company.

5) Reputation

Your company’s reputation and goodwill within your community can be incredibly valuable. It can be relatively difficult to place a number value on this type of intangible asset, but it is nonetheless incredibly important. An overwhelmingly positive reputation could significantly boost the value of your company, while a negative reputation could be detrimental to your prospects for selling your business.

If you are interested in buying or selling a business, there are numerous factors which you must consider when it comes to the value of the company being bought or sold. Contact Janix and let us guide you from start to finish throughout the transaction and work to protect your best interests.

https://www.cnbc.com/2017/07/27/survey-34-percent-of-entrepreneurs-lack-retirement-savings-plan.html

https://www.forbes.com/sites/sageworks/2017/02/05/these-8-stats-show-why-many-business-owners-cant-sell-when-they-want-to/#1764617f44bd

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