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Could retiring out of the country be a good idea?

Article taken from Karin Price Mueller/NJMoneyHelp.com and posted on NJ101.5.com

Q. I’ve heard that tax-wise, moving out of the country when you retire is a good idea. I have no kids so I’m open to the idea. What places — warm weather — could make sense? I would still stay a few months in America.

— Thinking

A. Whoa! Moving out of the country to avoid taxes is an extreme move.

Let’s take a step back and look at the big picture.

“The nice thing about living in New Jersey is that virtually every state in the nation will be less taxing and less expensive to live — maybe with the exception of California, New York and Connecticut, said Jerry Lynch, a certified financial planner with JFL Total Wealth Management in Boonton.

He said you should never move anywhere for tax purposes. Instead, you should move because you really want to and it fits your lifestyle.

Lynch said even if you move out of the country and become a resident of another country, it will not eliminate taxes that you pay in the U.S.

For example, he said, your IRA distributions, pensions and Social Security are still subject to federal income tax.

“Taking your IRAs and pension as a lump sum before you leave means that you will lose half in state and federal income taxes,” he said.

The benefit of many of these warm weather islands is that the cost of living is substantially less they the cost of living in New Jersey, but there are other things to consider, Lynch said.

The number one issue is health care.

“I would not want to have emergency surgery in many of these areas,” he said.

There are other potential drawbacks.

“These islands may have great seafood, but I like a steak and a pizza every once in a while as well,” he said. “Also, getting off these islands when they have big storms is not as easy as it is here. Things are different and you need to see if long-term it fits what you want.”

Lynch suggests you take a few steps before you go any further.

Start with doing a financial plan to see if the numbers work if you stay in New Jersey.

“If yes, and you have no kids to leave your money to, then option No. 1is stay here,” Lynch said. “Option No. 2 would be if it doesn’t work by staying in New Jersey, can it work in other areas of the U.S. that are less expensive.?”

Next, he said, make a list of what you are looking for in retirement.

“Cost of living is definitely an issue, but medical care, physical activities — golf, tennis, etc. — people your age, etc.,” he said. “You need to take the emotion out of this decision as everyone on vacation never wants to go home.”

He said the reality is living there is much different then visiting for a few weeks.

“If you really do want to move, sit with a certified public accountant who is familiar with these types of moves and develop a long-term tax plan that will discuss the issues and work on some alternatives,” he said.

And if you decide you really want to move outside the U.S., he recommends you rent for a year and make sure it is what you are looking for.

“Stick your toe in before you jump into the deep end,” he said.

Email your questions to This email address is being protected from spambots. You need JavaScript enabled to view it. .

Karin Price Mueller writes the Bamboozled column for The Star-Ledger and she’s the founder of NJMoneyHelp.com. Click here to sign up for the NJMoneyHelp.com weekly e-newsletter. Like NJMoneyHelp.com on Facebook and follow it on Twitter.

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Work with one of NJs top financial planning firms!


Position Title:

Director of 1st Impressions/Director of Marketing 


Immediate Supervisor:

Jerry Lynch, CFP(R) CLU(R) ChFC(R)


Summary/Purpose of Position:

Assist Jerry Lynch and the firm with developing, coordinating and implementing a marketing program to attract, retain and service Ideal Clients. Expand and further develop relationships with existing Ideal Clients and add prospective Ideal Clients to our client base. Communicate and reinforce our “Gold Medal Services” to our most important clients and prospective clients.


Primary Goal:

To attract new clients into the firm that match our firm’s capacities for both individuals and 401(k)’s


Duties and Responsibilities:

Marketing and Lead Generation:


  • Actively participate in developing the firm’s “Growth Initiative” program and marketing campaigns/activities
  • Develop, Coordinate and Implement our multi-touch 12 month “Marketing Calendar”
  • Manage and Implement our “Prospect Awareness” program
  • Coordinate Client/Prospect Newsletters and other marketing pieces
  • Produce and Manage “Client Education Events” and “Client Appreciation Events”
  • Manage and track all aspects of prospect relations from inception (cold calls, referrals and client events) through Initial Client Interview
  • Schedule appointments with client and prospects using CRM Software 
  • Review and coordinate all Web, Social Network, Electronic and Printed Marketing materials with Team and various regulating agencies.
  • Send out Client greeting cards/gifts (birthday, anniversary, wedding, etc)
  • Develop and implement strategic alliance programs with professional advisers
  • Maintain and Track “Cycle of Operations” for existing and potential Idea Clients.


Client Management:


  • Contact and schedule all clients for new business opportunities
  • Maintain & coordinate Jerry’s calendar and appointments with Team
  • Prepare Initial Client Interview packets.
  • Maintain Client Contact System and Smart Pad Notes.
  • Attend Client meetings when appropriate


  • Review and Monitor compliance procedures of Jerry.
  • Monitor Registered Investment Advisor compliance for FINRA and State of NJ.
  • Monitor Privacy Notices and procedures for clients.
  • Monitor client files for required documentation.
  • Monitor all out going marketing correspondence for compliance purposes.
  • Maintain marketing and product resource materials including product information, procedures contacts, addresses and forms.


Knowledge and Skills:

  • Goal Orientated and Self Starting
  • Multi-tasking Ability
  • Organizational Skills
  • Marketing Skills
  • Social Media
  • Basic business correspondence including proper letter/memo formats and grammar/punctuation/spelling accuracy
  • Proofreading accuracy
  • Telephone Etiquette
  • Computer Software skills including Microsoft Office, Internet, Client Database CRM


Decision-Making (Degree of Independence):

As the Director of 1st Impression/Marketing Manager masters knowledge and skill areas, more control over decisions affecting areas of responsibility will relinquish. It is hoped that the Director of 1st Impression/Marketing Manager will have knowledge and skills necessary within 12-18 months from the date of hire. 


Scope of Accountability:

The Director of 1st Impression/Marketing Manager position is critical to the overall success of our Wealth Management Team; as such this team member has total accountability for all duties and areas of responsibility associated with this position.

The Director of 1st Impression/Marketing Manager will have access to Client and prospective Client Personal and Financial information and data and will be required to sign and abide with Privacy and Confidentiality Agreements. A Credit and Background check will be completed prior to hire. 



Individual will need to have a securities license or to obtain one. 


Work Schedule:

The Director of 1st Impression/Marketing Manager is expected to be a Full Time position. The candidate will have flexibility to control his or her schedule provided that the Goals, Duties and Responsibilities of this position are being met.



The Director of 1st Impression/Marketing Manager will receive base compensation and incentive bonuses based upon meeting and achieving Goals, Duties and Responsibilities of this position.


Call 973-439-1190 to apply or email This email address is being protected from spambots. You need JavaScript enabled to view it. .

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Thoughts on the current market volatility

A long time ago I was a ski instructor…when I was skinny and had more hair.  The biggest issue that I would see with beginner skiers is that they would always be looking at their skis instead of down the hill.  By doing this, they were always reacting to problems happening now, as opposed to the more advanced skier who was looking down the hill and simply avoiding the problems.  Avoiding the problems is a lot easier and a heck of a lot less stressful.

As you are all aware, there was a pretty big selloff in the stock market last week that resulted in the Dow dropping 5.82%, the Nasdaq 6.78%, and the S&P 5.77%.  It was the worst week for the US stock market for the year and oil prices dipped below $40 a barrel.  This was driven mainly due to a report from China that showed factory activity at a 6 year low.  They are not sure if China can maintain 7% growth annually like they have been doing.

So here are my thoughts.  Any time I sit down with an individual discussing how to set up a portfolio, we first discuss the potential pain that’s associated with investments.  The reason why I ask is so that they can invest within their pain threshold, and remain consistent in their long term approach.  The stock market goes up and down, but over time, it goes up!  The only way to get average returns that you are aiming for is to remain consistent and not sell every time there is a little dip in the market.

So what does this mean?  A 100% stock portfolio (S&P 500) had its largest loss in 2008 with a 42.9% drop.  So if you so not want to experience 42.9% losses, you should not be invested 100% in the S&P 500!  If the most you are willing to lose is let’s say 20%, then you should not be more than 45% stocks!  So the first thing you need to do is look at your asset allocation and make sure that you are within your “pain threshold”!

Second- can China sustain 7% annual growth for ever….no.  Nobody can, so yes that will create some volatility.  Also, we have had a huge 6 year market run-up and it is very reasonable to see some form of correction, definitely.  So should we change our asset allocation and move into cash….no!  If you are invested within your pain threshold, remain consistent in your approach.

Here is what is making me feel much better.  First, the US job market continues to get better…slowly but consistently.  If people have jobs, they spend money, which helps the economy.  Second, the housing market is also continuing to get better.  This stimulates local jobs in the US economy as well.  Third, companies and especially the banks are much better capitalized then they were back in 2008.  Market volatility has less of an impact then it did back in 2008.

If you are living on your income at this time, the most important thing are not rates of return….it I is cash flow.  If you have protected your cash flow, this allows you to ride through this and not sell investments at a loss.  Everything corrects itself over time and you will be fine.  

For those investing, take advantage of this dip and continue to buy, and if possible, accelerate your buying.  The stock market historically is the only thing people do not buy on sale.  If you are in a 401(k) plan, continue investing and make sure that the account is set up to automatically rebalance so we are taking advantage of these dips.  The best time to invest in my mind is during a volatile market with a long term horizon.

I realize that most people walking into my office for the first time expect me to get them out of the market right before it drops, then get them back in right before it comes back up.  That is not an option and I have never met any investment manager that could do this effectively!  Also, if they could do it effectively, why would then ever do it for you?  Wouldn’t they just do it for themselves, make a billion dollars, and take time off with their family?  If you are meeting with someone who says that they can do this effectively….run!  

Market volatility makes you look at your overall plan and see how it works under bad conditions.  Here are a few rules that I always suggest we stick to.

1)Cash is King!- I don’t care that it is getting .25%...it’s not designed to do much more than that.  Cash is the foundation of any financial plan and it is what gets you through any bad times in your life and allows you to take advantage of opportunities during market dips.

2)Consistent approach- invest always, remain consistent in your asset allocation, over time reduce the risk (stock allocation), and take advantage of opportunities (such as market dips).

3)Never make an emotional decision with money!  Money does not care.  Take a step back and think about your approach.  If it based upon logic or emotion.  Emotional investing will get you destroyed.

4)Don’t look at the market daily and don’t listen to the business news.  Bad news sells and it keeps you tied to the TV, watching their ads and making them money.  Look at this quarterly so that you are not seeing as much volatility…just the trends.

So yes, big spikes are always concerning but never change your long term strategy over a short term situation.  Just as I would tell my beginner skiers, look farther out then right in front of your face and things get a lot easier over time.

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Taxes: Are Bill and Hillary paying too much?

Some people relax by reading, going to a gym or just taking a walk. I like to review tax returns! I like to see where, if I was doing their return, I might be able to lower their taxes. Bill and Hillary Clinton just released their tax returns, so here's a peek at where I think they could've saved some money:

Income assessment

Total income: For 2013 and 2014, their income was $27 million and $28 million dollars, respectively. This puts them in a 39.6-percent federal tax bracket. New York State charges them 8.82 percent. On top of that, there are the new Obamacare surcharges that add an additional 0.9 percent on earned income and 3.8-percent on investment income. What this means is that, for every additional dollar they earn, they lose about half (49.32 percent). In investment income, for every additional dollar they earn, they lose 52.22 percent. If you lose half your money in taxes, you need to have a proactive tax plan.

Interest income: This is money in the bank and generally banks are paying nothing. In 2013, they received $27,143 in interest and in 2014, they received $25,171. In 2014, their interest income cost them $13,144 in taxes. Assuming they're earning half a percent interest (the average for savings accounts, according to Bankrate.com), they should have about $12.5 million in cash in the bank, which is way too much.

Where to save

Investment tips: Why not look into New York state muni bonds? They are exempt from federal and New York state income tax and pay pretty competitive rates for high-income earners. Why not invest some of the money in dividend-producing stocks? The S&P 500 has a yield of 2.01 percent and that yield is taxed at capital-gains rates vs. ordinary income. What this means is that their tax rate would drop to 32.62 percent from 52.22 percent. That is a significant reduction in their tax liability, plus the yield is four times what they're getting on their cash!

Business income: In reviewing the Schedule C (which reports business income) there are a few things that could have a big impact on their income.

  • 401(k) — both Hillary and Bill have their own businesses which means that they can put aside $59,000 each ($53,000 plus a $6,000 catch-up contribution as they are over age 50). This would save then around $59,000 in taxes annually.
  • Pension — On top of the 401(k), they can also do a pension plan that allows for much larger contributions than traditional 401(k) plans. The older you are and the higher your income, the larger the tax deductions and contributions that you can make. Easily, they could get an additional $250,000 each in deductions saving them around $250,000 in taxes annually.
  • Long-term care — Owners of companies can deduct the cost of long-term care insurance policies as a business expense and it is an "above-the-line" deduction on their personal taxes. Since they are both over 60, they can get a $3,800 deduction each for a total of $7,600 annually. This would save them around $3,800 in taxes. This deduction increases to over $9,300 after they hit age 71.
  • Why not an "S" corp.? In an LLC (which is what they both have), all wages are subject to Social Security and Medicare taxes. While they are way above the limits on Social Security wages, they still have to tax (1.45 percent as both an employer and employee — 2.9 percent combined). They had about $13 million in profits that cost them an additional $377,000 in Medicare taxes. If they had an "S" corp., they would have to take a "reasonable salary," but any additional profits would not be subject to Medicare wages.
  • Loss carry-forward — I am seeing a $3,000 loss, which indicates to me that they have a long-term loss carry-forward ($702,540). We can use this to offset ordinary income with a maximum of $3,000 per year (which will take 234 years) or we can take some gains and use that loss to offset any taxes, which would be much better (and a lot faster.)

Charitable contributions: Cash is probably the least effective asset to give to charity and they gave around $3 million last year. So this is how it works using the $3 million that they gave to their foundation in 2014.

To give away $3 million, they would've had to have earned at least $6 million —and pay taxes on that, which we've already established is at a rate of almost 50 percent for the Clintons. Sure, they can deduct the charitable donation, but that would only save them about $1.5 million. If they'd used appreciated securities, they would not have to pay capital gains on the gain and would get the same tax deduction on the value of the gift. That would save them around 33 percent, or $2 million, on the gain in their investments.

With some proactive planning, the Clintons could save hundreds of thousands of dollars. For most people, tax planning is collecting receipts, putting them in a shoe box and giving them to their CPA. If they get money back, their CPA is great. If they have to pay, they yell at their CPA and threaten to fire them. That is not tax planning…that is scorekeeping.

Proactive tax planning means that you review your tax situation today, and develop plans to be proactive, during the tax year. You have 5 months left in the tax year. What is your proactive tax strategy?

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Divorced woman, unemployed, faces unplanned early retirement

At age 56, Claudine wasn’t quite ready to retire, but she lost her job eight months ago, and she hasn’t found work yet.

The divorced woman has been living off her savings because her unemployment benefits have ended. She’s concerned about what her savings can do for her in the short and long term.

And, it’s not just about her. She has a 20-year-old child who goes to college, and Claudia has been paying the college bills. She has an expected $21,000 expense for tuition, and those payments should be done by January 2016.

Claudine has accumulated $506,800 in 401(k) plans, $99,200 in an annuity, $30,300 in IRAs, $25,700 in a brokerage account, $61,200 in mutual funds, $16,000 in options and $500 in checking.

Jerry Lynch, a certified financial planner with JFL Total Wealth Management in Boonton, reviewed Claudia’s prospects for NJMoneyHelp.com.

This thing is a foot race to see if she can get to Social Security before she runs out of money,” Lynch says. “My concern for her is that she is almost 100 percent in stock. I have seen this happen before where they go for it as they feel that they have to”.

She is not in a bad place yet, but if she does not find employment, it is going to get bad rather fast,” Lynch says.


Net Worth:


Checking: $500

IRAs: $30,300

401(k): $506,800

Annuity: $99,200

Brokerage Account: $25,700

Mutual Funds: $61,200

Options: $16,000

Primary Home: $425,000

Personal Property: $15,000

Autos: $20,000

Total Assets: $1,199,700


Mortgage: $182,000

Car Loans: $18,000

Total Liabilities: $200,000

Total Net Worth: $999,700


Salary: none

Income Taxes: $530

Housing: $1,640

Utilities: $702

Food: $450

Tuition: $1,220

Personal Care: $30

Transportation: $727

Medical: $875

Entertainment: $30

Charity: $120

Lynch says you are financially successful when your passive income — income that does not require you to work — is greater than your expenses.

So he took a look at the expenses Claudine will not have when she’s retired — per Social Security’s guidelines — at age 66 and 8 months.

When you remove her COBRA health payments, the college payments and her mortgage, Claudine she would have expenses of around $2,250 per month. To make sure it’s not too con

servative, Lynch boosted that monthly number to $3,000.

Her Social Security benefit at normal retirement age is $2,389, so we are pretty close to being there,” he said.

Claudine has $250,000 in equity in her current home, and retirement accounts are worth about $640,000. She also has taxable investments worth about $100,000.

Assuming that she moves out of New Jersey for retirement, she can buy a home with no loan, her property taxes will be much lower, and it frees up here money to spend on herself in retirement,” Lynch says. “So in my mind. the challenge is: how do we get from age 56 to age 66 without spending all her money?”

Lynch says at a 6 percent growth rate, Claudine’s portfolio would be worth around $1.14 million at age 66.

That should reasonably generate somewhere in the range of $34,000 to $45,000 annually, plus her Social Security, and that should cover her cost in retirement — and then some,” he says. “The key in not making any really big mistakes and she should be able to have a great retirement.”


First, she wanted to know what would happen if she couldn’t get another job at a similar income level. Then she wanted to know if her investments were too aggressive, and finally, she wanted to know if she’d be ready for retirement.

Let’s focus on what happens if she can’t get a job.

You do what you must to get by,” Lynch says. “Everything is on the table to potentially be cut.”

One area to consider is college.

“You can get a loan for college but not for retirement,” he says. “College should be an investment, so if her child takes on reasonable debt, I’m okay with that. This frees up money.”

Next, Claudine should consider her home.

“New Jersey is an incredibly expensive place to live,” he says. “Moving out of state would probably cut her property taxes by 70 percent or more.”

Lynch says a move would also allow her to pay cash for a new home so she wouldn’t have to worry about a mortgage payment. This would free up around $20,000-plus a year, he said.

Changes like those mean Claudine wouldn’t need to find a high-paying job.

Even if she found a position that only paid $35,000 per year, it would allow her money to continue to grow,” he says.


Lynch says he has serious concerns about Claudine’s asset allocation. She has 96 percent of her investments in stocks, and of that, 32 percent is in international equities. Lynch calls that “incredibly aggressive.”

For the past five years, Lynch says, Claudine’s portfolio has averaged over 17 percent.

“That’s great, however, in 2008, the portfolio was down 45 percent,” Lynch says. “Claudine should not put herself be in a position where she can lose almost half her money. That would blow up the plan and keep her from retiring.”

So what should she do? Lynch recommends Claudine take down her stock allocation substantially. He suggests a range of 40 to 60 percent in stocks, tops.

“It is more important to protect what you have then to continue to invest that aggressively,” he says.


To Claudine’s question about whether or not she’s okay for retirement, Lynch says the answer depends.

“As long as she does not make any really big mistakes between now and then, she should be fine,” he says.

So what is the biggest mistake she could make at this time? He says it would be investing with a 90-plus percent stock allocation.

“If she is that aggressive and she is right, she will probably not spend more in retirement,” he says. “However, if she is wrong and loses half her money, she will not be retiring. There is too much to risk with very limited upside.”

Lynch says one of the hardest things to do as you prepare for retirement is to reduce the stock allocation in your portfolio. For the past 30 or 40 years, you’ve tried to get the highest rate of return that you could, he says, and now you are supposed to focus more on not losing money, than on higher returns.

“It is not natural!” he says. “One of the common questions that I hear in our client review meeting is that the S&P was up 14 percent in the past year, but our portfolio is only up 8 percent. What is wrong with our portfolio?”

Nothing is wrong with that kind of portfolio, Lynch says. If your portfolio is 40 percent stock and you still returned almost 60 percent of the index, you actually did incredibly well based upon the risk that was taken.

Lynch says when he reviews performance, he generally breaks out performance into a variety of different sectors. This may include U.S., international and emerging markets stocks, U.S. and international fixed income, and so on.

“After we have broken out the performance by sector, we then compare it to the indexes that are the sectors that you are invested in,” he says. “This is really the only way that you can really tell if your performance is good, bad or indifferent.”

Lynch wanted to add to the conversation a quote from economist John Maynard Keynes: The market can stay irrational longer than you can remain solvent.”

Lynch says he believes in the law of averages and that over time, the stock market will return the 10 percent-plus that it has historically returned. But, you can’t count on that over the short term, he says.

“If you are fortunate where your retirement dream is possible, take the risk out of the portfolio,” he says. “Even if you can afford to lose 45 percent of your money — and Claudine can’t — I guarantee you that it will make you miserable.”

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