Author: danika

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ERC – Money for Your Business

The ERC (Employee Retention Credit) is a refundable tax credit for businesses with 2-500 employees who were employed during the first three quarters of 2021. If your business was one of the 37 million impacted by a reduction in revenue or either full or partial shutdown due to COVID-19, you qualify through the CARES Act to receive up to $7,000 per employee per quarter. So far, only 3.3 million small businesses have filed to receive their money. The current deadline for filing is April 2025.

Work with a team of expert CPAs and accountants to receive the money you are entitled to as a small business owner. The process is simple: fill out your company information and answer 5 questions to see if you qualify, provide documentation for filing, sign the authorization letter, then wait for your funds to be sent to you.

If you have questions or would like more information, click here.

If you would like to complete the questionnaire and move forward on getting your money, click here.

If you are self-employed or employ 1099, get information here.

Disclosure: The above contains affiliate links, meaning I get a commission if you decide to make a purchase through my links, at no cost to you.

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5 Life Insurance Mistakes to Avoid – A Professional Opinion

I recently saw an ad promoting “5 Life Insurance Mistakes to Avoid”. Curious as to whether we’d agree, I clicked to read the article. It was from a well-known organization and it quickly enumerated what they consider potential pitfalls of life insurance. Here are my takes on their recommendations as an insurance professional.

Mistake 1: Not buying enough coverage to replace your income

This is one I definitely agree with. Many of the people I speak with have made this particular mistake. It’s not one made on purpose, just lack of education on how insurance works and how it can best serve a person and their loved ones. When thinking about life insurance, most people only consider their burial expenses or think they’ve got time to save up the money. While I’m a huge advocate for having a bank account with 3 to 6 months of expenses saved, reality is we never know when our time is up and life is regularly more expensive than what the average person thinks. Plus, if your family can be taken care of without touching that emergency savings, and get that money tax-free, who wouldn’t want that? Having a policy that is worth 10 to 12 times your income allows your family to replace your income for a year or two while they grieve and find their new normal.

Mistake 2: Waiting too long to get coverage

This is also true. Many people don’t think to insure their children or themselves until they’re older. Part of this is just being human – we feel we’re invincible when we’re younger and none of us like to contemplate our mortality. However, reality is that children become ill and die, people die “before their time” maybe due to an accident or illness, or (more commonly) people develop medical issues of some kind. The average person considers life insurance when someone close to them passes away, when a major medical event occurs, or when they have children and realize that they now have others depending on them. The younger and healthier a person is, the less expensive life insurance is, the easier it is to find coverage options, and the less likely they’re considering insurance. Right after a heart attack or a medical diagnosis is not the time to be looking for affordable life insurance. The future is unknown and not guaranteed; life insurance isn’t available for someone in a coffin.

Mistake 3: Buying too short of a term

I would say purchasing ONLY term would be a mistake. Term life insurance is a policy that terminates after a specified period of anywhere from 10 to 30 years. Generally, it’s less expensive than a permanent policy but, at the end of the term, the insured is that many years older, potentially with medical issues, which can make it prohibitively expensive or impossible to purchase coverage. Also, many of the term policies don’t have living benefits, limiting them to a lump sum payout in the event of death but not supporting the individual should they experience a major medical event or disability that precludes them from working. While term insurance is an important part of securing one’s future, it’s not the only piece needed. Most people benefit from having a permanent policy with the term policy providing extra support while there are children at home or other extenuating circumstances.

Mistake 4: Buying too many riders

The article stated that the cost of riders outweighs the benefits. This one I definitely disagree on. This does not mean I think everyone needs to add every rider to every policy. However, most of the permanent policies offered through the various carriers have at least two or three riders automatically included. The most common included riders are critical illness, chronic illness, and terminal illness. Many also include critical injury. Generally, adding a waiver of premium rider or accidental death rider is very affordable.

These riders provide living benefits and are, I believe, one of the best values on a permanent policy. Basically, riders provide payment for the insured should they experience one of a number of health issues such as heart attack, stroke, cancer, coma, paralysis, ALS or become terminally ill, meaning that they will pass away within 12 to 24 months. Generally, these living benefits allow the insured to access up to 80% of their death benefit while still living. This can eliminate the pressure and stress of needing to provide an income or find a way to pay medical bills while working to get well. The money is tax free to the insured and can be used for anything, with few exceptions or limitations. The waiver of premium rider allows the insured to keep their policy without making payments if they’re temporarily disabled for some reason. And the accidental death rider usually doubles the amount paid out if the person passes due to some type of accident. Since accidents are the number one cause of death for Americans under the age of 44, doubling the money a loved one receives for a nominal amount may be worth it to some.

Mistake 5: Forgetting to review your life insurance policy

This is definitely something that many people forget about and can be devastating. Marriage, divorce, children born, increase in income, home purchase – these are all factors that can impact if one has enough life insurance or not. Some people will need to add coverage based on the changes, others will be able to reduce coverage. Checking on what policies are in place, what they cover, and who benefits should the insured pass away are all details that should be reviewed on a regular basis. Also, insurance companies add to their benefits packages regularly. Checking policies annually allows the insured to take advantage of the new benefits. Annual review is recommended, but definitely any time there is a major life change.

Conclusion

Overall, most of these are mistakes people regularly make. There is one that I think should be added to this list: not speaking with a licensed independent life insurance agent. Starting with that one should eliminate the other mistakes listed above. It’s tempting to try to figure it out by yourself and there’s so much information available. However, there’s no substitute for having someone available to answer questions, ensure that everything is explained clearly, and navigate through the process and options. The security of knowing that your agent is only a phone call or email away can provide an extra layer to your peace of mind.

As a licensed professional, I have a fiduciary duty to my client to advise them on the best coverage for their situation. As an independent agent, I’m able to check with multiple carriers to find the best fit for my clients and their loved ones. As an insurance educator, I always want to make sure questions are answered and policies are fully understood. My recommendations to anyone I meet with are 1) educate yourself, 2) make an informed decision, and 3) find someone you can work with.

Check out my other blogs to learn more about the topics above or schedule a free consultation to deep dive into your situation, questions, and goals.

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Avoid These 5 Wealth Killers to Secure Your Financial Future

In the journey towards financial independence and wealth accumulation, there are pitfalls that can hinder even the most diligent savers and investors. These traps, if left unchecked, can significantly erode your financial stability over time. Let’s delve into five wealth killers that are crucial to recognize and mitigate for a secure financial future.

Failure to Account for Inflation

Inflation is the silent wealth killer that stealthily diminishes the purchasing power of your money over time. It’s like a slow leak in your financial boat, gradually eroding the value of your savings and investments. Yet, many individuals fail to adequately consider inflation when planning for their financial future.

Failing to account for inflation can have profound implications for wealth building over time. Inflation gradually erodes the purchasing power of money, meaning that the same amount of money will buy fewer goods and services in the future. When individuals fail to consider inflation in their financial planning, they risk underestimating the amount of money needed to achieve their long-term financial goals. This can lead to a shortfall in savings and investments, leaving individuals ill-prepared to maintain their desired standard of living in the face of rising prices.

Moreover, failing to account for inflation can result in a false sense of security regarding the value of assets and investment returns. While investments may generate nominal gains, failing to adjust for inflation can mask the true, inflation-adjusted performance of the portfolio. In essence, individuals may perceive their wealth to be growing when, in reality, its purchasing power is diminishing. This can lead to misguided investment decisions and ultimately hinder wealth accumulation efforts in the long run.

Failure to Account for Losses

Investing inevitably involves risk, and losses are an inherent part of the process. However, failing to account for potential losses can have devastating consequences on your wealth accumulation efforts. Whether it’s a market downturn, a failed business venture, or unexpected expenses, losses can quickly derail your financial plans if you’re unprepared.

Failing to account for losses can significantly impede wealth building efforts by undermining the overall stability and growth potential of an individual’s financial portfolio. Investment markets inherently carry risks, and experiencing losses is an inevitable part of the investment journey. However, failing to acknowledge and appropriately address these losses can compound their negative impact over time. Without accounting for potential losses, investors may adopt overly aggressive or speculative strategies, exposing themselves to unnecessary risk and jeopardizing their long-term financial security.

Furthermore, failing to account for losses can disrupt the compounding effect, which is a crucial driver of wealth accumulation. When investments suffer losses, the capital available for reinvestment decreases, slowing the growth trajectory of the portfolio. This can create a significant drag on overall returns, making it more challenging to achieve financial goals over time. By overlooking losses and neglecting to adapt investment strategies accordingly, individuals may find themselves struggling to recover lost ground and falling short of their wealth-building objectives.

Failure to Consider Healthcare Costs

Healthcare expenses can be one of the biggest financial burdens, especially as you age. Failing to account for these costs in your financial planning can lead to significant stress and strain on your finances during retirement.

This can have a profound impact on wealth building, especially as individuals approach retirement age. Healthcare expenses have been consistently rising, outpacing inflation and posing a significant financial burden for many. Underestimating these costs can lead to a shortfall in retirement savings, forcing individuals to dip into their nest egg to cover medical expenses. This not only erodes the principal amount saved but also reduces the amount available for compounding, ultimately hindering long-term wealth accumulation efforts.

Moreover, failing to adequately plan for healthcare costs can result in financial stress and insecurity during retirement. Without a dedicated fund or insurance coverage to address medical expenses, retirees may find themselves facing unexpected bills that deplete their savings and compromise their quality of life. By proactively accounting for healthcare costs in their financial planning, individuals can better prepare for these inevitable expenses and safeguard their wealth-building efforts against the potentially devastating impact of healthcare-related financial shocks.

Failure to Understand Taxation

Taxes can take a significant bite out of your wealth if you’re not strategic in your planning. Failing to understand the tax implications of your financial decisions can result in missed opportunities to minimize your tax burden and maximize your wealth.

Missed opportunities to minimize tax liabilities and optimize financial strategies can result from failing to understand taxation and can have significant implications for building wealth. Tax laws are complex and subject to frequent changes, making it essential for individuals to stay informed and proactive in their tax planning. Without a thorough understanding of the tax implications of various financial decisions, individuals may inadvertently expose themselves to higher tax burdens, reducing the overall returns on their investments and savings. Moreover, overlooking tax-efficient investment strategies or retirement planning vehicles can result in missed opportunities to grow wealth over time.

Additionally, failing to understand taxation can lead to compliance issues and potential penalties, further eroding wealth. Mistakes in tax reporting or failure to meet tax obligations can result in fines, interest charges, or even legal repercussions. By investing in tax education and seeking guidance from qualified professionals, individuals can navigate the complexities of the tax code more effectively, optimize their tax strategies, and maximize their wealth-building potential in a tax-efficient manner.

Failure to Account for Delays

Procrastination and indecision can be detrimental to your financial success. Whether it’s delaying saving for retirement, postponing investment decisions, or neglecting to address financial issues promptly, every delay can compound over time and impede your wealth-building efforts.

Failing to account for delays can severely hinder wealth building by impeding the timely execution of financial plans and reducing the effectiveness of compounding growth. Procrastination and indecision can lead to missed opportunities for saving and investing, delaying the accumulation of wealth over time. Whether it’s postponing retirement savings, deferring investment decisions, or neglecting to address financial goals promptly, every delay can have a compounding effect that diminishes the potential for long-term wealth accumulation.

Moreover, failing to address delays can exacerbate financial challenges and increase the likelihood of encountering unexpected obstacles along the wealth-building journey. Time is a valuable asset in wealth accumulation, and delays can erode its power. By taking proactive steps to address delays, such as setting clear financial goals, creating a timeline for action, and implementing disciplined saving and investing habits, individuals can mitigate the negative impact of delays and position themselves for greater success in building wealth over the long term.

Avoiding these five wealth killers is essential for securing your financial future. By accounting for inflation, preparing for potential losses, considering healthcare costs, understanding taxation, and minimizing delays, you can navigate the complexities of wealth accumulation with confidence and achieve your long-term financial goals. Remember, proactive planning and informed decision-making are the keys to financial success.