Financial Planning

We use a client-centric process focused on pursuing specific milestones we create together. Our comprehensive, three-step planning process is designed to help identify your needs, implement your strategy, and monitor it to help you stay on course.

1. Assessing Your Needs and Finances
We begin by asking you to complete a confidential personal profile that helps us gain a deep understanding of your current financial situation and goals.

2. Preparing Your Plan
We provide a detailed analysis of your finances, develop a variety of customized strategies, and offer recommendations to address your future needs.

3. Implementing and Monitoring Your Strategy
Once you select your desired approach, we put your personalized plan into action. We then maintain consistent communication with you, carefully monitoring your portfolio and making adjustments, when necessary.

Cornerstone Wealth Strategies has provided personalized financial planning services for over a decade. Our extensive financial planning strategies offer clients a comprehensive, full-service and integrated experience. Our detailed planning process ensures that each client’s needs, concerns and goals are considered and planned for in the utmost of detail.

Cornerstone Wealth Strategies focuses on you and the unique set of financial circumstances you and your family face. Getting to know you and understanding your personal needs allows us to create a customized wealth management strategy aligned with your short- and long-term objectives. By building a lasting, personal relationship with you, we’re able to help you anticipate needs and plan for the future.

A key goal of investing for retirement is making sure you save enough to make your money last throughout your lifetime. The current life expectancy of a female at birth is roughly 81 years, compared with 76 years for a male. Keep in mind that life expectancy statistics are averages and many people live much longer. It is not unusual for an individual’s retirement to last 20 or 30 years or more. There is also the issue of the length of a person’s career and how much time an individual has to build retirement assets.

Estimating How Much You’ll Need

Of course, every situation is unique and many people capitalize on the benefits available to them, including participating in an employer-sponsored retirement plan or funding an IRA, to build the assets needed for their later years. It’s important not to underestimate how much you may need or the importance of ongoing contributions to retirement accounts to build assets over time. Although there are no guarantees, the longer you stay invested, the more likely that your contributions may benefit from compounding, when investment gains are reinvested and potentially earn even more over time.

Cornerstone can help you calculate how much you are likely to need for your later years. Be sure to consider how you will pay for health care expenses not covered by Medicare or other medical insurance. When considering sources of retirement income, log on to www.ssa.gov or review your annual statement to estimate your retirement benefit from Social Security. If you find that your retirement assets are coming up short, delaying retirement or saving more while you continue to work may be helpful strategies.

Planning Withdrawals from Your Assets at Retirement

You’ve worked long and hard to accumulate the assets that you are using to help finance your retirement. Now, it’s time to start drawing down those assets. Exactly how you liquidate your assets will affect your tax and impact how long those assets last, so it pays to plan a withdrawal strategy that is efficient and maximizes the benefits of different types of investments.

The first step in planning your withdrawal strategy is to make a precise inventory of all the assets you have in your portfolio, paying particular attention to distinguish between taxable accounts, such as ordinary bank or investment accounts, and tax-deferred accounts such as 401(k), 403(b) and 457 plans, and IRAs. From this inventory, you can estimate how much cash you will receive from dividends, interest payments, redemptions, and distributions in the coming year. You can also assess how much you will need to hold in reserve in order to meet the associated federal and state tax obligations.

If your total net cash flow from the assets in your taxable accounts is strong enough to meet your budgeted cash needs for the year, you may consider yourself to be fortunate. You need not weigh the transaction costs of different asset sale strategies or consider the added income tax effects of withdrawing assets from employer-sponsored plans and IRAs. But if you do need to liquidate assets in order to meet your cash flow targets, then you should consider the plusses and minuses of each withdrawal strategy as outlined in the following savings withdrawal hierarchy.

As you consider these options, keep in mind that no single order can be right for every person and every situation. Among the additional issues you should consider when designing your withdrawal strategy are the management of portfolio risk, your tax bracket, and the cost basis of the investments. With that in mind, below is a high-level summary of guidelines for creating an appropriate strategy. Remember, this is a conceptual ranking. Your circumstances may require a different sequence, so be sure to obtain relevant financial advice before taking any action. Note, too, that estate tax considerations might have an impact on withdrawal priorities.

• Sell losing positions in taxable accounts.
  If you have an investment that is worth less now than when you bought it, you may be able to create a tax deduction by selling that investment. This deduction can be used to offset any investment gains you realize. It can
  also be used to offset up to $3,000 in ordinary income ($1,500 for married individuals who file separate tax returns). Losses in excess of the limits can usually be carried forward for use in future years.

 

• Realize gains from taxable accounts or withdraw assets from tax-deferred
  accounts to which nondeductible contributions have been made, such as after-tax
  contributions to a 401(k) plan.
  Which accounts to tap first within this category will depend on a number of factors, such as the cost basis relative to market value of the accounts to be liquidated and the tax characteristics of the assets in the taxable account. When liquidating taxable account assets, liquidate the holdings with long-term capital gains before those with short-term gains, and liquidate assets with the least unrealized gain first.

 

• Take additional distributions from tax-favored accounts.
  RMD rules, state tax treatment, and other features and characteristics of the different IRAs and employer sponsored plans may make some accounts better candidates for earlier withdrawals. For instance, withdrawals from a traditional IRA would usually precede withdrawals from a Roth IRA.
  

 

• Meet the rules for Required Minimum Distributions (RMDs).
  Owners of traditional IRAs and participants in 401(k), 403(b), and 457 plans must follow IRS schedules for the size and timing of their RMDs (see below). Those who fail to do so face a penalty tax equal to half of any required distribution that has not been taken by the applicable deadline.

 

• Required Minimum Distributions (RMDs)
  For traditional IRAs and employer-sponsored retirement savings plans, individuals must begin taking required minimum distributions no later than April 1 following the year in which they turn 70½. RMDs from a 401(k) can be delayed until actual retirement if the plan participant continues to be employed by the plan sponsor and he or she does not own more than 5% of the company. The size of an RMD is determined by the account owner’s age. An account owner with a spousal beneficiary who is more than 10 years younger can base required minimum distributions on their joint life expectancy.

 

• Estimating the Required Minimum Distribution
  This is the most broadly applicable required minimum distribution table — the Uniform Lifetime Table for unmarried owners, married owners whose spouses are not more than 10 years younger, and married owners whose spouses are not the sole beneficiaries of their accounts. Other tables apply in other situations.

Age	70	75	80	85	90	95	100	105
Actuarily projected life expectancy (in years)	27.4	22.9	18.7	14.8	11.4	8.6	6.3	4.5
RMD (% of assets)	3.6%	4.4%	5.3%	6.8%	8.8%	11.6%	15.9%	22.2%
Source: The Internal Revenue Service

• A Potential Tax Benefit for Company Stock Held in a Retirement Plan
  For individuals who hold company stock in their 401(k) or other qualified retirement plan, the IRS offers certain tax advantages when withdrawing company stock from the plan. Rather than paying ordinary income tax on the entire amount of the withdrawal, you may elect to pay it on the original cost basis of the stock, assuming it was paid for in pre-tax dollars, then pay capital gains tax, usually at a lower rate, on the net unrealized appreciation when you eventually sell the shares.Keep in mind that the IRS has exacting requirements for exploiting all of the tax management strategies discussed above and that tax laws are always subject to change. You should review your cash management plans with your tax and investment advisors before taking any specific action.

Asset Division versus Financial Planning for Dissolution of Marriage:

A typical division of assets in a divorce (presumptive 50/50 split) does not account for the nuances in the assets, growth rates, inflation, market conditions, and budget. Our financial advisors use cutting-edge financial planning software to model various asset divisions with the goal of making a long-term, equitable division. Alternatively, perhaps the financial planning will help a client understand the long-term effects of a divorce and property division on his or her own goals. Our software allows us to change variables and assumptions in real time and we provide an unbiased analysis of the division of assets.

What We Provide:

• A review of all the assets and assumptions for growth and inflation
• A review of all the assets and assumptions for growth and inflation
• Written and graphic depiction of standard 50/50 split (or other formula provided by the divorce attorney which provides the presumptive asset split).
• Written and graphic depiction of alternate division strategies (including an “equitable” split”)
• Comprehensive meeting to review results and offering to change inputs to accommodate other options.

How to Get Started

Schedule initial face-to-face (or phone) interview. The financial advisor will then request that you collect information that will ultimately be used to prepare the financial plan.

How Long Does it Take?

Financial Plan ready for review within 2 weeks of interview.