At Warren Street Wealth Advisors, we place a heavy emphasis on continuing education and increasing service offerings for our clients.
Today, we would like to congratulate Veronica Torres on becoming a Notary Public of the state of California, and with the event of her passing, we would like to offer complimentary Notary Public services to all of our clients here at Warren Street.
As we continue to grow as a company, we hope to continue our dedication to increasing our knowledge and service offering to our clients.
Contact Us if you have any questions on our Notary services here at Warren Street.
12 Keys To Retiring From the Oil & Gas Industry with Confidence
Retirement is coming soon, and you know you should be excited. But some of us have so many questions and concerns about retirement that we’re more nervous than anything else.
At Warren Street Wealth Advisors, we’ve helped those inside the oil & gas industry navigate this crucial but confusing time. In the process, we’ve learned local companies’ retirement programs and employee benefits inside and out. So we put together a list of our 12 keys to retiring from the oil & gas industry with confidence.
1. Have A Plan
Nothing else in this post matters if you don’t have a personalized financial plan. We believe this so strongly that building a personalized financial plan is the first thing we do with every one of our clients.
A personalized financial plan is the roadmap to your comfortable, stress-free retirement. You can know your benefits inside-out and be clever about taxes and investments. But if you don’t have a map for navigating your retirement, you’ll never feel confident along the way.
2. Seriously, Have A Plan
I wrote that twice because I wanted to be certain you see how important this is.
Having a plan is essential for any major life decision, and navigating your retirement with wisdom and confidence is certainly part of a major life decision!
OK, let’s move on…
3. Make Sure Your Retirement Timing is Correct
When you go to retire, make sure you are doing so at an advantageous time. Eligibility for annual bonuses, vacation days, or vacation payouts could all be dependent on when you retire from the company.
For some local companies, retiring in April will make you eligible for your next year’s bonus. If you do not work the first quarter, you will be ineligible for the bonus.
So at this company, for example, if you retire in May of 2016, then you would be qualified for 5 months (or 5/12ths) of the 2017 bonus. Remember, it all adds up, and this can be helpful as you begin to transition into retirement.
4. Utilize Your Vacation Time
If you retire at a time where you are eligible for vacation days or can get paid out on the vacation days, use them! You earned the time!
For some companies, each year on January 1st, your vacation time resets and for every month of work, you are eligible for 1/12th of your vacation time (whatever that may be depending on how long you’ve been with the company).
If you don’t want to use your vacation time, then some companies will pay you for the vacation days you do not use. If you had 2 weeks of vacation, they you would get 2 weeks worth of pay.
5. Retire After 55 But Before 59½ Without Paying Penalties
Here’s a scenario we see all the time: you’re 57. You want to retire. You don’t want to wait until you’re 59½ to do it. But you know that there’s a 10% federal tax penalty and a 2.5% California state tax penalty if you take money out of your 401(k) before then. So are you stuck?
Leave some money in the 401(k) to avoid penalties. Some oil & gas companies have provisions in their plans that allow flexibility when it comes to taking withdrawals. Whether this be a one time withdrawal or setting up a monthly distribution, there may be a way to get around those pesky penalties.
There are a lot of moving parts here, but at WSWA, we use these rules to make certain that none of our clients pay penalties. Ever.
6. Budget Your Medical Subsidy
Medical benefits can cost substantially more from some companies in the oil & gas industry while you’re in retirement. Make sure you are properly planning for medical coverage in retirement and making it a part of your budget. We recommend a quick call to your benefits department and ask them to run a calculation of expected cost for your medical insurance in retirement.
A spouse may have a better or more affordable medical benefit. Be sure to examine all of your options.
7. Say “Goodbye” To Credit Card Debt
If you have significant credit card debt, then it’s time for a plan (there it is again!), a budget, and some hard work.
Credit card debt can be intimidating, but you can pay it off! At WSWA, one of our favorite things to see is a client freeing himself or herself from the stress of mounting credit card debt. You may just need some help and a plan.
8. Build Up 6 Months Worth Of Emergency Savings
We’re always optimistic about the future, but sometimes life takes surprising and difficult turns. Wise financial planning means being prepared for those situations.
We recommend that you save at least 6 months worth of living expenses in case of an emergency. So if you need $4,000/month to live, then have around $24,000 saved in savings and checking. That way, you’re prepared for the ups and downs that can happen.
9. Build And Keep A Budget
We get it: it’s no fun to build a budget. But writing down all your income and expenses will help you identify where you can save.
Building a budget doesn’t mean eliminating all of your fun, either. Get rid of the stuff you don’t use and keep what makes you happy! Do shop your auto insurance around for a better rate. Do call your phone company and reduce your bill. Don’t quit your bowling league if bowling makes you happy.
Not sure where to start with your budget? No problem. Use our free budget builder to make it easy.
10. Wait Until Full Retirement Age To Take Social Security
There is all kinds of information out there about what to do about your social security. Let me boil it all down to one simple point for you: you don’t have to take it at 62! When we build a financial plan for a client, we use a tool that calculates all options for optimizing social security. And no matter how many times we do it and how many ways we look at it, one thing becomes clear every time: it’s usually best to wait at least until your full retirement age (66-67) to take social security.
There is also plenty of evidence to support waiting until age 70 too as the 32% increase in benefit can prove worth the wait. These decisions are typically based around your health at age 62 when deciding to collect or to continue to defer. It’s ultimately your decision, and we suggest weighing your options before committing to collecting the 25% reduced benefit at age 62. *Note if your full retirement age is 67, collection social security at age 62 is 30% decrease in benefits. Long story short… it pays to be patient.
11. Use Your 401k Efficiently
Max it out. Diversify your investments. You could hire a pro (like us!) if you don’t love following the markets.
Maybe your 401(k) program allows you to buy common stock shares or has an ESOP programs. These can be hard to understand at times and also have significant tax implications. NUA? Ordinary rates vs. capital gains rate? What?
Make sure you are being tax efficient with your 401(k) when it comes to planning for retirement and managing your tax bill when you retire.
Plus, hiring a pro means you’ll have more time for bowling.
12. Have A Plan
You didn’t think this was going to end without one more reminder, did you? If you’re not sure where to start with your financial plan, that’s OK: we can help.
Plus, if you’re confused about any of the information above, then setting up a plan with a CERTIFIED FINANCIAL PLANNER™ (like our very own Aileen Danley, CFP®) is the easiest way to walk through all of it.
Schedule a free consultation to talk through your finances and take the first step toward building a confident retirement.
It’s no secret that streamers don’t like paying taxes, we don’t either. Don’t let taxes drag down your profits as a streamer or content creator.
Using bookkeeping software should be one of the first things you do to take control of your stream as a business and attempt to reduce your tax liability. Bookkeeping will allow you to classify your stream expenses and potentially turn them into tax write offs.
What can you write off you might be asking? Well let’s start with some of the easy ones:
Computer Equipment & Software – Yes this means games. Since you are most likely using games or other pieces of software to entertain your audience, this is a necessary business expense for you. Don’t forget that if you purchase computer parts, upgrades, or even a whole new system that this is necessary for you to complete your work they can be written off
Your Streaming Space – Also known as your home office. Most people are streaming out of their homes, and that means that part of your mortgage or rent goes towards the space for your stream. This percentage of space can be written off every year. As a simple example, if you use 25% of your space for your stream, and your rent is $1,000, then you can write of $250 per month for a total of $3,000 per year.
Travel Expenses – I’m assuming you went to Twitchcon. Well, you guessed it, that travel expense can be deducted. You went to a location to help promote your business, maybe took some meetings, and tried to grow your brand. All of which are very legitimate business expenses.
Meals & Entertainment – Do you have a partner for your stream? Are you collaborating with other streamers? Well, if you go meet with them for coffee, lunch, or dinner, and discuss business during the meals, then the meal expense can be written off as a tax deduction. Up to 50% of the total expenses associated with meals & entertainment can be deducted as long as you are conducting business.
As you can see, if you are spending money on your business, the stream, then there is a possibility that the expense can be written off to lower your taxable income.
Contact Us to learn more about what you can do to lower your taxable income and protect your earnings as a streamer.
Joe Occhipinti is an Investment Advisor Representative of Warren Street Wealth Advisors, a Registered Investment Advisor. The information posted here represents his opinions and is not meant as personal or actionable advice to any individual, corporation, or other entity. Any investments discussed carry unique risks and should be carefully considered and reviewed by you and your financial professional. Nothing in this commentary is a solicitation to buy, or sell, any securities, or an attempt to furnish personal investment advice. We may hold securities referenced in the blog and due to the static nature of content, those securities held may change over time and trades may be contrary to outdated posts.
Warren Street Wealth Advisors, LLC
17822 E 17th Street, Suite 208
Tustin, CA 92780
As a Registered Investment Advisor, Warren Street Wealth Advisors, LLC is required to file form ADV to report our business practices and conflicts of interest. Please call to request a copy at 714-876-6200.