LeTort Trust Announces the Appointment of Aimee Hultzapple as Communications Manager

Mechanicsburg, PA (January 23, 2024) – LeTort Trust is pleased to announce the recent appointment of Aimee Hultzapple as Communications Manager.

Communication Manager LeTort Trust

Aimee is responsible for overseeing the strategic planning of all our internal and external communications, including client communications, press releases, website administration, and the maintenance of the Financial Literacy program. She plays a key role in preserving LeTort’s story and mission. Before joining LeTort Trust, Aimee held the position of Head of Communications, where she managed strategic and corporate communications, media relations, and event planning.

Aimee earned her Bachelor of Arts Degree in Communication and Media Studies from Penn State University.

“We are thrilled to welcome Aimee to the LeTort Trust team,” said Katie Clarke, President of LeTort Trust. “We are confident in her ability to foster effective communication strategies through her art of visual storytelling and compelling narratives. Aimee brings a touch of innovation that will be critical in continuing to evolve LeTort’s digital presence and strengthen our relationships with clients and the community.”

LeTort Trust is an Independent Trust Company, providing comprehensive Qualified Retirement Plan, Personal Trust and Wealth Management services designed for the complex financial needs of businesses, institutions and individuals. For further information on LeTort Trust, please visit our website at www.letorttrust.com.

LeTort Trust Announces the Appointments of Tya Rumbel and Katrina Douglas

Camp Hill, PA (September 7, 2023) – LeTort Trust is pleased to announce growth to our Operations Team through the recent additions of Tya Rumbel as Operations Specialist and Katrina Douglas as Client Concierge.

Tya provides support to the Personal Trust department, focusing on essential functions such as client bill pay, distributions, and compiling documentation for new accounts. Tya has an extensive background in the financial services and banking industry, most recently working as a Financial Service Representative for Ameri Choice Federal Credit Union.

Katrina plays a pivotal role in creating a welcoming environment for our clients, partners, and team members. She manages front office operations and is the point of contact for clients needing assistance. Prior to joining LeTort Trust, she worked as an Administrative Assistant for Ross Buehler Falk & Co.

“We are thrilled to welcome Tya and Katrina to our growing Operations Team. Their unique skill sets align seamlessly with LeTort’s values, and their expertise will undoubtedly contribute to our mission of providing clients with top-of-the-line customer service and account management,” said Greg Campbell, Director of Operations.

LeTort Trust is an Independent Trust Company, providing comprehensive Qualified Retirement Plan, Personal Trust and Wealth Management services designed for the complex financial needs of businesses, institutions, and individuals.

IRS announces administrative transition period for new Roth catch up requirement; catch-up contributions still permitted after 2023

Washington (August 25, 2023) – Today, the Internal Revenue Service announced an administrative transition period that extends until 2026 the new requirement that any catch-up contributions made by higher‑income participants in 401(k) and similar retirement plans must be designated as after-tax Roth contributions.

At the same time, the IRS also clarified that plan participants who are age 50 and over can continue to make catch‑up contributions after 2023, regardless of income.

Today’s announcements were included in Notice 2023-62PDF, now posted on IRS.gov. This notice provides initial guidance for section 603 of the SECURE 2.0 Act, enacted in December 2022. Under that provision, starting in 2024, the new Roth catch-up contribution rule applies to an employee who participates in a 401(k), 403(b) or governmental 457(b) plan and whose prior-year Social Security wages exceeded $145,000.

The administrative transition period will help taxpayers transition smoothly to the new Roth catch-up requirement and is designed to facilitate an orderly transition for compliance with that requirement. The notice also clarifies that the SECURE 2.0 Act does not prohibit plans from permitting catch-up contributions, so plan participants who are age 50 and over can still make catch-up contributions after 2023.

The Treasury Department and the IRS plan to issue future guidance to help taxpayers, and the notice describes several positions that are expected to be included. In addition, the notice invites public comment on the matters discussed in the notice and suggestions for the future. The notice provides details on how to submit comments.

Five Ways SECURE 2.0 Changes the Required Minimum Distribution Rules

The SECURE 2.0 legislation included in the $1.7 trillion appropriations bill passed late last year builds on changes established by the original Setting Every Community Up for Retirement Enhancement Act (SECURE 1.0) enacted in 2019. SECURE 2.0 includes significant changes to the rules that apply to required minimum distributions from IRAs and employer retirement plans. Here’s what you need to know.

What Are Required Minimum Distributions (RMDs)?

Required minimum distributions, sometimes referred to as RMDs or minimum required distributions, are amounts that the federal government requires you to withdraw annually from traditional IRAs and employer retirement plans after you reach a certain age, or in some cases, retire. You can withdraw more than the minimum amount from your IRA or plan in any year, but if you withdraw less than the required minimum, you will be subject to a federal tax penalty.

These lifetime distribution rules apply to traditional IRAs, Simplified Employee Pension (SEP) IRAs and Savings Incentive Match Plan for Employees (SIMPLE) IRAs, as well as qualified pension plans, qualified stock bonus plans, and qualified profit-sharing plans, including 401(k) plans. Section 457(b) plans and Section 403(b) plans are also generally subject to these rules. (If you are uncertain whether the RMD rules apply to your employer plan, you should consult your plan administrator or a tax professional.)

Here is a brief overview of the top five ways that the new legislation changes the RMD rules.

1.  Applicable Age for RMDs Increased

Prior to passage of the SECURE 1.0 legislation in 2019, RMDs were generally required to start after reaching age 70½. The 2019 legislation changed the required starting age to 72 for those who had not yet reached age 70½ before January 1, 2020.

SECURE 2.0 raises the trigger age for required minimum distributions to age 73 for those who reach age 72 after 2022. It increases the age again, to age 75, starting in 2033. So, here’s when you have to start taking RMDs based on your date of birth:

 Your first required minimum distribution is for the year that you reach the age specified in the chart, and generally must be taken by April 1 of the year following the year that you reached that age. Subsequent required distributions must be taken by the end of each calendar year (so if you wait until April 1 of the year after you attain your required beginning age, you’ll have to take two required distributions during that calendar year). If you continue working past your required beginning age, you may delay RMDs from your current employer’s retirement plan until after you retire.

2.  RMD Penalty Tax Decreased

The penalty for failing to take a required minimum distribution is steep — historically, a 50% excise tax on the amount by which you fell short of the required distribution amount.

SECURE 2.0 reduces the RMD tax penalty to 25% of the shortfall, effective this year (still steep, but better than 50%).

Also effective this year, the Act establishes a two-year period to correct a failure to take a timely RMD distribution, with a resulting reduction in the tax penalty to 10%. Basically, if you self-correct the error by withdrawing the required funds and filing a return reflecting the tax during that two-year period, you can qualify for the lower penalty tax rate.

3.  Lifetime Required Minimum Distributions from Roth Employer Accounts Eliminated

Roth IRAs have never been subject to lifetime Required Minimum Distributions. That is, a Roth IRA owner does not have to take RMDs from the Roth IRA while he or she is alive. (Distributions to beneficiaries are required after the Roth IRA owner’s death, however.)

The same has not been true for Roth employer plan accounts, including Roth 401(k) and Roth 403(b) accounts. Plan participants have been required to take minimum distributions from these accounts upon reaching their RMD age or avoid the requirement by rolling over the funds in the Roth employer plan account to a Roth IRA.

Beginning in 2024, the SECURE 2.0 legislation eliminates the lifetime RMD requirements for all Roth employer plan account participants, even those participants who had already commenced lifetime RMDs. (Any lifetime RMD from a Roth employer account attributable to 2023, but payable in 2024, is still required.)

4.  Additional Option for Spouse Beneficiaries of Employer Plans

The SECURE 2.0 legislation provides that, beginning in 2024, when a participant has designated his or her spouse as the sole beneficiary of an employer plan, a special option is available if the participant dies before required minimum distributions have commenced.

This provision will permit a surviving spouse to elect to be treated as the employee, similar to the already existing provision that allows a surviving spouse who is the sole designated beneficiary of an inherited IRA to elect to be treated as the IRA owner. This will generally allow a surviving spouse the option to delay the start of required minimum distributions until the deceased employee would have reached the appropriate RMD age, or until the surviving spouse reaches the appropriate RMD age, whichever is more beneficial. This will also generally allow the surviving spouse to utilize a more favorable RMD life expectancy table to calculate distribution amounts.

5.  New Flexibility Regarding Annuity Options

Starting in 2023, the SECURE 2.0 legislation makes specific changes to the required minimum distribution rules that allow for some additional flexibility for annuities held within qualified employer retirement plans and IRAs. Allowable options may include:

  • Annuity payments that increase by a constant percentage, provided certain requirements are met
  • Lump-sum payment options that shorten the annuity payment period
  • Acceleration of annuity payments payable over the ensuing 12 months
  • Payments in the nature of dividends
  • A final payment upon death that does not exceed premiums paid less total distributions made

These are just a few of the many provisions in the SECURE 2.0 legislation. The rules regarding required minimum distributions are complicated. While the changes described here provide significant benefit to individuals, the rules remain difficult to navigate, and you should consult a tax professional to discuss your individual situation.

It is important to understand that purchasing an annuity in an IRA or an employer-sponsored retirement plan provides no additional tax benefits beyond those available through the tax-deferred retirement plan. Qualified annuities are typically purchased with pre-tax money, so withdrawals are fully taxable as ordinary income, and withdrawals prior to age 59½ may be subject to a 10% federal tax penalty.


LeTort Trust does not provide tax or legal advice. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax
professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources
believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2023

LeTort Trust Assists Hampden Township Police Department with Backpack Project 2022

Camp Hill, PA (August 23, 2022) LeTort Trust was delighted to assist our friends at the Hampden Township Police Department with Backpack Project 2022 which will help get essential school supplies to students in need.
Detective Redifer with the police department started this project, knowing first-hand, how important it is for kids to feel prepared on their first day of school and how detrimental it can be when they don’t. She said she saw a need in the community and wanted to do everything in her power to make sure the local students have the supplies they need.
 Hampden Township Police is hosting the school supply giveaway event on August 27th and asking you to contact Detective Redifer (credifer@hampdentownship.us) if you know of a child who could benefit.

IRA and Retirement Plan Limits for 2023

Phyllis Harmon Selected for Tribute to Women of Excellence Class of 2022

The YWCA Greater Harrisburg has announced their nominations for the 33rd Annual Tribute to Women of Excellence, Class of 2022, including LeTort’s Chief Operating Officer & Director of Wealth Management, Phyllis Harmon. Phyllis is passionate about helping our clients, a mentor to our staff, and dedicated to giving back to our community. She has made a difference in so many lives. 

During the last 33 years, the YWCA has honored well over 700 extraordinary women for their contributions to our region, both professionally and philanthropically.


  • participates actively in the community as a mentor, volunteer or role model
  • demonstrates integrity, strength of character and leadership
  • and embraces the vision and mission of the YWCA.

The full class of 2022:

Lynn Brooks, Life’s Journey Therapy Solutions

Melisa Burnett, Hamilton Health Center

Raeann Buskey – EMERGING LEADER, The Foundation for Enhancing Communities

Susan Cort, JPL

Katharine Dalke, MD, Penn State Health

Joyce Davis – LEGACY AWARD, PA Media Group

Lindsay Drew, iChase Solutions Marketing, LLC

Heather Eickhoff, PHR, SHRM-CP, Gannett Fleming

Suzanne Engels, Capital Blue Cross

Tracy Fleager, Penn National Insurance

Jeshanah Fox, Brown Schultz Sheridan & Fritz

Dr. Oralia Garcia Dominic, Highmark

Annie Garner, Dauphin County Library System

Becky Giannelli, PSECU

Shannon Gierasch, West Shore Home

Jodi Griffis, M&T Bank

Dr. Kimberly Harbaugh, Penn State Health

Phyllis Harmon, LeTort Trust

Brenna Kernan, Members 1st Federal Credit Union

Emily Lewis, The Hospital and Healthsystem Association of Pennsylvania

Dr. Kit Lu, UPMC

Ashley Mentzer, Thrive Fit Co.

Rosie Mesich, KPMG

Elizabeth Mihmet, Hospice of Central PA

Meera Modi, McNees Wallace & Nurick

Leah Payne, Christian Churches United

Susan Roof, Board of the Central PA Food Bank

Lauren Turnbull, Hershey Entertainment & Resorts

The Tribute to Women of Excellence event also raises essential funds so that the YWCA Greater Harrisburg can continue providing life-changing programs and services.

Saving for College and Retirement

What is it?

These days it’s not uncommon for parents to postpone starting a family until both spouses are settled in their marriage and careers, often well into their 30s and 40s. Though this financial security can be an advantage, it can also present a dilemma–the need to save for college and retirement at the same time.

The prevailing wisdom has parents saving for both goals at the same time. The reason is that older parents can’t afford to put off saving for retirement until the college years are over, because to do so means missing out on years of tax-deferred growth. Moreover, because generous corporate pensions (and lifetime job security) are now the exception rather than the rule, employees must take greater responsibility for funding their own retirements.

First, determine your monetary needs

The first step is to determine your projected monetary needs, both for retirement and college. This analysis will reveal whether you are on a savings course to meet both goals, or whether some modifications will be necessary.

You’ve come up short: what are your options?

You’ve run the numbers on both your anticipated retirement and college expenses, and you’ve come up short. The numbers say you won’t be able to afford to educate your children and retire with the lifestyle you expected based on your current earnings. Now what? It’s time to sit down and make some tough decisions about your expectations and, ultimately, how to compromise.

The following options can help you in that effort. Some parents may need to combine more than one strategy to meet their goals.

Defer retirement

Staying in the workforce longer is one way of meeting your retirement and education goals. The longer you wait to dip into your retirement funds, the longer the money will last.

Reduce standard of living now or in retirement

You may be able to adjust your spending habits now in order to have more money later. Consider making a written budget to track your monthly income and expenses. If your monetary needs have fallen far short of the mark, you will need to make a bigger spending adjustment than you would with a lesser shortfall. The following are some suggested changes:

  • Move to a less-expensive home or apartment
  • Sell your second car and carpool whenever possible
  • Reduce your entertainment budget (e.g., bring your lunch to work, eat out once a month instead of every week, rent movies instead of going to the cinema)
  • Get books and magazines from the library instead of the bookstore
  • Cancel any club memberships (e.g., golf club, health club)
  • Set a limit on birthday and holiday gifts for family members
  • Forgo expensive vacations
  • Shop for clothes in the off-season, when they’re likely to be on sale
  • Buy used furniture and used big-ticket items
  • Limit your child’s extracurricular activities, like music lessons or hockey camp

If you’re unable or unwilling to lower your standard of living now, perhaps you can lower it in retirement. This may mean revising your expectations about a luxurious, vacation-filled retirement. The key is to recognize the difference between the things you want and the things you need. The following are a few suggestions to help reduce your standard of living in retirement:

  • Reduce your housing expectations
  • Cut back on travel plans
  • Own a less-expensive automobile
  • Lower household expenses

Note: There’s a difference between reducing your standard of living in retirement and drastically reducing your standard of living in retirement. Most professionals discourage the use of retirement funds for your child’s education if paying college bills will leave you high and dry in your retirement years.

Work part-time during retirement

About 25 percent of retirees work part-time. You may find that the extra income enables you to enjoy the kind of retirement you had anticipated.

Increase earnings (i.e., spouse returns to work)

Increasing earnings may be another way to meet both your education and retirement goals. The usual scenario is that a stay-at-home spouse returns to the workforce. This has the benefit of increasing the family’s earnings so there’s more money available to save for education and/or retirement. However, there are drawbacks. The additional income may push the family into a higher tax bracket, and incidental expenses like day care and commuting costs may eat into your overall take-home pay.

In addition to a spouse returning to work, one spouse may decide to increase his or her hours at work, take another job with better compensation, or moonlight at a second job. Factors to consider here include the expectation of increased job pressure, less availability for child rearing and household management, the amount of extra income, the opportunity for advancement, and job security. Another way to create extra income is for a spouse to turn a hobby into a business.

Be more aggressive in investments

Your analysis has shown that your current savings (and the accompanying investment vehicles) will leave you short of your education and retirement goals. One option is to try to earn a greater rate of return on your savings. This may mean choosing more aggressive investments (e.g., growth stocks) over more conservative investments (e.g., bonds, certificates of deposit, savings accounts). This strategy works best the more years you have until retirement.

The more aggressive the investment, the greater the risk of loss of your principal. This strategy isn’t for people who shudder at the slightest downturn in the stock market. If you’ll have trouble sleeping at night, you probably shouldn’t take on greater risk in your investment portfolio.

Reduce education goal

One of the realities parents may have to face is that they can’t afford to fund 100 percent (or 75 percent, or 50 percent, as the case may be) of their child’s college education. This is often an emotional issue. Parents naturally want the best for their children. For many parents, this translates into sending them to (and paying for) college (especially in cases where one or both parents didn’t have such an opportunity).

You may have dreamed that your child would go to a prestigious Ivy League school. Well, with a year’s cost at such a school hovering at the $40,000 mark, maybe you need to lower your expectations. That small liberal arts college or the big state school may challenge your child just as much and at a far lower cost. Remember, there are loans available for college, but none for retirement.

Children pay more and/or assume more responsibility for loans

With college costs continuing to increase at a rate faster than most family incomes, and with perhaps more than one child in the family picture, chances are that more responsibility will fall on your child to help fund college costs. This money can come from part-time jobs or gifts, though the majority of your child’s contribution is likely to come from student loans.

Though student loans can be a financial burden in the early years, when graduates are just starting out in their careers, many loan providers offer flexible repayment options in anticipation of this common situation. In addition, if your child meets certain income limits, he or she can deduct the interest paid on qualified student loans.

When children take out student loans, parents can always decide to help financially rather than mortgaging their house before college. Students who take out student loans to pay for college may have a more vested interest in their education than students who receive help from their parents.

Other ways to lower cost of college

In addition to reducing your education goal and having your child pay a portion of college costs, there are other ways to lower the cost of college. For example, your child can choose a college with an accelerated program that allows students to graduate in three years instead of four. Likewise, your child may choose to attend a community college for two years and then transfer to a four-year private institution. The diploma will reflect the four-year college, but your pocketbook won’t.

How do you decide what strategy is best for you?

This decision must be made on a case-by-case basis. What works for one family may not work for another family. In some cases, more than one strategy will be necessary to deal with the demands of educating children and retiring successfully. Factors influencing your decision may include the following:

  • The amount of your financial need
  • Your current income and assets and any expectation of significant future income (e.g., a bonus at work, exercise of stock options, an inheritance)
  • The number of years you have until retirement
  • Your willingness to reduce your standard of living (now or in the future) for the sake of your children
  • The number of children in your family who plan on attending college
  • The academic, athletic, or other notable skills of your child that may raise the possibility of a college scholarship

Can retirement accounts be used to save for college?

Yes. But should you? Probably not. Many financial advisors recommend against dipping into your retirement account to pay college expenses as a preferred strategy. But if you must, there are some tax breaks available.

It’s now possible to withdraw money from either a traditional IRA or Roth IRA before age 59½ to pay college expenses without incurring the 10 percent early withdrawal penalty that normally applies to such withdrawals. However, any distributions of earnings and deductible contributions from a traditional IRA and any nonqualified distributions of earnings from a Roth IRA may be included in your income for the year, which may push you into a higher tax bracket.

This college exception to the 10 percent early withdrawal penalty is a good reason to funnel your child’s income from a part-time job into an IRA.

Unfortunately, there’s no similar college exception for employer-sponsored retirement plans, such as a 401(k) plan. So, if you’re under age 59½, you’ll pay a 10 percent early withdrawal penalty on any withdrawals. As with an IRA, any withdrawals are added into your income for the year, which may push you into a higher tax bracket. Nevertheless, saving in a 401(k) plan can be an attractive option for some parents because the company may match employee contributions and because most employer plans allow you to borrow against your contributions (and possibly earnings) before age 59½ without penalty.

Some parents who have built a college fund within their 401(k) accounts, but who are not yet 59½ when the kids are in college, take out what’s called a bridge loan (such as a home equity loan) to pay their child’s college bills. A bridge loan is a source of funds that tides you over until it’s more economical to tap your retirement account. Although you pay interest on a bridge loan, it may still cost less than what your 401(k) funds can earn. Then, when you turn 59½, you can start tapping your 401(k) plan to pay off the bridge loan with no early withdrawal penalty.

A benefit of using retirement accounts to save for college is that the federal government doesn’t consider the value of your retirement accounts in awarding financial aid (the federal formula also excludes annuities, cash value life insurance, and home equity from consideration). However, most private colleges do consider the value of your retirement accounts in deciding which students are the most deserving of campus-based aid.

LeTort Trust does not provide tax or legal advice. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax
professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources
believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2023

Financial Basics for Millennials

With age comes responsibility, so if you’re a young adult in your 20s or 30s, chances are you’ve been introduced to the realities of adulthood. While you’re excited by all the opportunities life has to offer, you’re also aware of your emerging financial responsibility. In the financial realm, the millennial generation (young adults born between 1981 and 1997) faces a unique set of challenges, including a competitive job market and significant student loan debt that can make it difficult to obtain financial stability.

Poor money management can lead to debt, stress, and dependency on others. Fortunately, good money management skills can make it easier for you to accomplish your personal goals. Become familiar with the basics of planning now, and your future self will thank you for being responsible.

Figure out your financial goals

Setting goals is an important part of life, particularly when it comes to your finances. Over time, your goals will probably change, which will likely require you to make some adjustments. Start by asking yourself the following questions:

  • What are my short-term goals (e.g., new car, vacation)?
  • What are my intermediate-term goals (e.g., buying a home)?
  • What are my long-term goals (e.g., saving for your child’s college education, retirement)?
  • How important is it for me to achieve each goal?
  • How much will I need to save for each goal?

Once you have a clear picture of your goals, you can establish a budget that will help you target them.

Build a budget

A budget helps you stay on track with your finances. There are several steps you’ll need to take to establish a budget. Start by identifying your current monthly income and expenses. This is easier than it sounds: Simply add up all of your sources of income. Do the same thing with your expenses, making sure to include discretionary expenses (e.g., entertainment, travel, hobbies) as well as fixed expenses (e.g., housing, food, utilities, transportation).

Compare the totals. Are you spending more than you earn? This means you’ll need to make some adjustments to get back on track. Look at your discretionary expenses to identify where you can scale back your spending. It might take some time and self-discipline to get your budget where it needs to be, but you’ll develop healthy financial habits along the way.

On the other hand, you may discover that you have extra money that you can put toward savings. Pay yourself first by adding to your retirement account or emergency fund. Building up your savings using extra income can help ensure that you accomplish your financial goals over the long term.

Establish an emergency fund

It’s an unpleasant thought, but a financial crisis could strike when you least expect it, so you’ll want to be prepared. Protect yourself by setting up a cash reserve so you have funds available in the event you’re confronted with an unexpected expense. Otherwise you may need to use money that you have earmarked for another purpose–such as a down payment on a home–or go into debt.

You may be familiar with advice that you should have three to six months’ worth of living expenses in your cash reserve. In reality, though, the amount you should save depends on your particular circumstances. Consider factors like job security, health, income, and debts owed when deciding how much money should be in your cash reserve.

A good way to accumulate emergency funds is to earmark a percentage of your paycheck each pay period. When you reach your goal, don’t stop adding money–the more you have saved, the better off you’ll be.

Review your cash reserve either annually or when your financial situation changes. Major milestones like a new baby or homeownership will likely require some adjustments.

Be careful with credit cards

Credit cards can be useful in helping you monitor how much you spend, but they can also lead you to spend more than you can afford. Before accepting a credit card offer, evaluate it carefully by doing the following:

  • Read the terms and conditions closely
  • Know what the interest rate is and how it is calculated
  • Understand hidden fees such as late-payment charges and over-limit fees
  • Look for rewards and/or incentive programs that will be most beneficial to you

Contact the credit card issuer if you have questions about the language used in an offer. And if you are trying to decide between two or more credit card offers, be sure to evaluate them to determine which will work best for you.

Bear in mind that your credit card use affects your credit score. Avoid overspending by setting a balance that you’re able to pay off fully each month. That way, you can safely build credit while being financially responsible. Take into account that missed payments of any sort can cause your credit score to suffer. In turn, this could make it more difficult and expensive to borrow money later.

Deal with your existing debt

At this stage in your life, you might be dealing with student loan debt and wondering how you can pay it off. Fortunately, there are many repayment plans that make it easier to pay off student loans. Check to see whether you qualify for income-sensitive repayment options or Income-Based Repayment. Even if you’re not eligible, you may be able to refinance or consolidate your loans to make the repayment schedule easier on your budget. Explore all your options to find out what works best for you.

Beware of new borrowing

You’re doing your best to pay off your existing debt, but you might find that you need to borrow more (for example, for graduate school or a car). Think carefully before you borrow.

Ask yourself the following questions before you do:

  • Is this purchase necessary?
  • Have you comparison-shopped to make sure you’re getting the best possible deal?
  • How much will this loan or line of credit cost over time?
  • Can you afford to add another monthly payment to your budget?
  • Will the interest rate change if you miss a payment?
  • Are your personal finances in good shape at this time, or should you wait to borrow until you’ve paid off pre-existing debt?

Weigh your pre-existing debt against your need to borrow more and determine whether this is a wise decision at this particular point in your life.

Take advantage of technology

Access to technology at a young age is one major advantage that benefits millennials, compared with their parents and grandparents when they were starting out. These days, there’s virtually an app or a program for everything, and that includes financial basics. Do your homework and find out which ones could be the most helpful to you. Do you need alerts to remind you to pay bills on time? Do you need help organizing your finances? Are you looking for a program that allows you to examine your bank, credit card, investment, and loan account activities all at once?

Researching different programs can also help with number crunching. Many financial apps offer built-in calculators that simplify tasks that may seem overwhelming, such as breaking down a monthly budget or figuring out a loan repayment plan. Experiment with what you find, and you’ll most likely develop skills and insight that you can use as a starting point for future planning.

Although apps are one way to get started, consider working with a financial professional for a more personalized strategy.

LeTort Trust does not provide tax or legal advice. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2023

Retirement Income: The Transition Into Retirement

The retirement “zone”

If you’re considering retirement within the next five years or so, you’re in the retirement “zone.” This is a critical time period during which you’ll be faced with a number of important choices, and the decisions you make can have long-lasting consequences. It’s a period of transition: a shift from a mindset that’s focused on accumulating assets for retirement to one that’s focused on distributing wealth and drawing down resources. It can be confusing and chaotic, but it doesn’t have to be. The key is to understand the underlying issues, and to recognize the long-term effects of the decisions you make today.

If you’ve recently retired, you’re also in the retirement zone. You’ll want to evaluate your financial situation in light of the decisions that you’ve already made, and consider adjusting your overall plan to reflect your current expectations and circumstances.

Are you ready to retire?

The first question that you should ask yourself is: “Am I ready to retire?” For many, the question isn’t as easy to answer as it might seem. That’s because it needs to be considered on two levels. The first, and probably the most obvious, is the financial side. Can you afford to retire? More specifically, can you afford the retirement you want? On another level, though, the question relates to the emotional issues surrounding retirement — how prepared are you for this new phase of your life? Consider both the financial and emotional aspects of retirement carefully; retiring before you’re ready can put a strain on the best-devised retirement plan.

There’s not always a “right” time to retire. There can be, though, a wrong time to retire. If you’re not emotionally ready to retire, it may not make sense to do so simply because you’ve reached age 62 (or 65, or 70). In fact, postponing retirement can pay dividends on the financial side of the equation. Similarly, if you’re emotionally ready to retire, but come up short financially, consider whether your plans for retirement are realistic. Evaluate how much of a difference postponing retirement could make, and then weigh your options.

Transitioning into retirement: Financial issues

Start with the basics:

  • If you do not already have a projection of the annual income you’ll need in retirement, spend the time now to develop one. Factor in anticipated costs relating to basic needs, housing, health care, and long-term care. If you plan to travel in retirement, estimate a corresponding annual dollar amount. If you’re financially responsible for other family members, or plan to make monetary gifts, you’ll want to include these commitments in your calculations. Be as specific as you can. If it’s been more than a year since you’ve done this exercise, revisit your numbers. Consider and account for inflation.
  • Estimate the income that you’ll be able to rely on from Social Security and any benefits from a traditional employer pension, and compare the result with your projected retirement income need. The difference may need to be funded through your personal savings.
  • Take stock of your personal savings. Are your personal savings sufficient to provide you with the annual income that you’ll need?
  • When will you retire? The age at which you retire can have an enormous impact on your overall retirement income situation, so you’ll want to make sure you’ve considered your decision from every angle. Why does the timing of your retirement make such a difference? The earlier you retire, the sooner you need to start drawing on your retirement savings. You’re also giving up what could be prime earning years, when you could be making substantial additions to your retirement savings. That combination, even for just a few years, can make a tremendous difference.

Other factors to consider:

  • The longer the retirement period that you need to plan for, the greater the potential that inflation will eat away at your purchasing power. That means the earlier you retire, the more important it is to account for inflation in your overall plan.
  • You can begin receiving Social Security retirement benefits as early as age 62. However, your benefit may be as much as 25% to 30% less than if you waited until full retirement age (66 to 67, depending on the year you were born). Weigh your options, and choose the start date that makes the most sense for your individual financial circumstances.
  • If you’re covered by a traditional employer pension plan, check to make sure it won’t be negatively affected by your early retirement. Because the greatest accrual of benefits generally occurs during the final years of employment, it’s possible that early retirement could effectively reduce the benefits you receive. Make sure that you understand how the plan calculates benefits and any payout options under the plan.
  • If you plan to start using your 401(k) or traditional IRA savings before you turn 59½ [55 in the case of distributions from a 401(k) plan after you terminate employment], you may have to pay a 10% early distribution penalty tax in addition to any regular income taxes (with some exceptions, this includes payments made due to disability). Consider as well the order in which you’ll tap your personal savings during retirement. For example, you might consider withdrawing from tax-advantaged accounts like IRAs and 401(k)s last. If you postpone retirement beyond age 72 (age 70½ if reached before January 1, 2020), you’ll need to begin taking required minimum distributions from any traditional IRAs and employer-sponsored retirement plans (other than your current employer’s retirement plan), even if you do not need the funds.
  • You’re not eligible for Medicare until you turn 65. Unless you’ll be eligible for retiree health benefits through your employer (or have coverage through your spouse’s plan), or you take another job that offers health insurance, you’ll need to calculate the cost of paying for insurance or health care out-of-pocket, at least until you can receive Medicare coverage.

Transitioning into retirement: Non-financial issues

When it comes to retirement, it’s easy to focus on the financial aspects of your decision to the exclusion of all other issues. After all, we’ve spent much of our lives saving for retirement, and for many of us, the retirement lifestyle we hope to enjoy depends primarily on the wealth that we’ve accumulated during our working years. But, there are a number of non-financial issues and concerns that are just as important.

Fundamentally, your retirement income plan is just a means to an end: having the ability to do the things you want to do in retirement, for as long as you want to do them. But that presupposes that you know what it is you want to do in retirement. Many of us have never thought beyond the vague notion we’ve held during most of our working lives: that retirement — if properly planned for — will be something of an extended vacation, a reward for a lifetime of hard work. Retirement may be just that … for the first few weeks or months. The fact is, though, that your job likely demanded your attention for a majority of your waking hours. No longer having that job leaves you with a lot of free time to fill. Just as you have a financial plan when it comes to your retirement, you should consider the type of lifestyle you want and expect from retirement as well.

What do you want to do in retirement? Do you intend to travel? Pursue a hobby? Give some real thought to how you’re going to spend a typical week, and consider actually writing down a hypothetical schedule. If you haven’t already, consider:

  • Volunteering your time — You can provide a valuable service to the community, while sharing your unique skills and interests. Hospitals, community centers, day-care centers, and tutoring programs are just a few of the places where you could make a difference.
  • Going to school — Retirement can be the perfect time to pursue a degree, advance your knowledge in your current field or in a new field, or just take classes that interest you. In fact, many institutions offer special rates and programs for retirees.
  • Starting a new career or business — Retirement can be the perfect opportunity to try something different. If you’ve ever dreamed of starting your own business, now may be your chance.

Having concrete plans can also help overcome problems commonly experienced by those who transition into retirement without thinking ahead:

  • Loss of identity — Many people identify themselves by their professions. Affirmation and self-worth may have come from the success that you’ve had in your career, and giving up that career can be disconcerting on a number of levels.
  • Loss of structure — Your job provides a certain structure to your life. You may also have work relationships that are important to you. Without something to fill the void, you may find yourself needing to address unmet emotional needs.
  • Fear of mortality — Rather than a “new beginning,” some see the “beginning of the end.” This can be exacerbated by the mental shift that accompanies the transition from accumulating assets to drawing down wealth.
  • Marital discord — If you’re married, consider whether your spouse is as ready as you are for you to retire. Does he or she share your ideas of how you want to spend your retirement? Many married couples find the first few years of retirement a period of rough transition. If you haven’t discussed your plans with your spouse, you should do so; think through what the repercussions will be — both positive and negative — on your roles and relationship.

Working in retirement

Many individuals choose to work in retirement for both financial and non-financial reasons. The obvious advantage of working during retirement is that you’ll earn money and rely less on your retirement savings — leaving more to potentially grow for the future, and helping your savings last longer. But many retirees also work for personal fulfillment — to stay mentally and physically active, to enjoy the social benefits of working, or to try their hand at something new. If you are thinking of working during your retirement, you’ll want to make sure that you understand how your continued employment will affect other aspects of your retirement. For example:

  • If you continue to work, will you have access to affordable health care through your employer? If so, this could be an incredibly valuable benefit.
  • Will working in retirement allow you to delay receiving Social Security retirement benefits? If so, your annual benefit when you begin receiving benefits may be higher.
  • If you’ll be receiving Social Security benefits while working, how will your work income affect the amount of Social Security benefits that you receive? Additional earnings can increase benefits in future years. However, for years before you reach full retirement age, $1 in benefits will generally be withheld for every $2 you earn over the annual earnings limit. Special rules apply in the year that you reach full retirement age.

Some employer pension plan programs allow for “phased retirement.” These programs allow you to continue to work on a part-time basis while accessing all or part of your pension benefit. Federal law encourages these phased retirement programs by allowing pension plans to start paying benefits once you reach age 62, even if you’re still working and haven’t yet reached the plan’s normal retirement age.

Many people who count on working in retirement find that health problems or job loss prevents them from doing so. When making your retirement plans, it may be wise to consider a fallback plan in case everything doesn’t go as you expect.

LeTort Trust does not provide tax or legal advice. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax
professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources
believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2023