About Mike Larriva

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So far Mike Larriva has created 26 blog entries.

Life Insurance with Perspective

life insurance with perspectiveWhile no one likes talking about their demise, remember this: life insurance is truly about life, not death. It’s important to consider life insurance with perspective.

Think about who is dependent on you financially (i.e., spouse, children, family), and how much income replacement is needed (i.e., seven to 10 years of salary) to sustain them after you’re gone. Are there financial goals (i.e., paying off the mortgage, funding children’s education)? Life insurance benefits can also pay for in-home support like childcare, cooking, cleaning, and other dependent care.

Life insurance helps alleviate financial burdens for your loved ones, so they can grieve and move forward without worrying about money.

Term life is the most common type of life insurance, and the least expensive. It covers you for a fixed period of years; if you outlive the term and your coverage expires, your beneficiaries don’t receive any money. Kind of like car insurance. The chances of a younger adult passing away is very low, which is why these policies are so affordable. With most term policies, the death benefit and your premiums stay the same for the entire term.

I often recommend clients purchase insurance on an individual basis, rather than through an employer group option, if possible. If you switch jobs, there’s no way to know if your new employer will offer similar coverage, if any at all. Locking in a fixed amount of portable coverage with fixed premiums while you are young and healthy makes a lot of sense. Layering two smaller policies of different terms (such as 20 years and 30 years) is cost effective. Over time, your income replacement needs typically decrease; one policy can expire, and you’ll still have an affordable policy in place for another 10 years.

“Make sure your family knows about your life insurance. When my uncle passed, there were no bills or statements for his insurance. The only clue that he had a policy was a premium deduction on his pension statement. Keeping a summary of your coverage in a safe and obvious place will help make a difficult time for your family a little easier.”

By |2022-06-06T15:35:20-07:00June 20th, 2022|Uncategorized|

5 Simple Steps to a Happy Retirement

simple steps to a happy retirementIn my business, I talk extensively about the financial aspects of planning for retirement. But financial independence is only one piece of the big picture. Your financial advisor can help you get that piece solidly in place. The rest of the picture is up to you.

Taking these simple steps to a happy retirement can help you make the most of your golden years.

Explore new interests and activities before you retire. For many people, work is a central part of their identity (I’m a nurse. I’m a business executive. I’m an electrician.).  Discovering new parts of your identity can help provide a new sense of purpose and avoid a sense of loss. Explore volunteer interests or part-time work you can continue after retirement. My father-in-law began a private investigation company after he retired from the FBI. The new activity was interesting and the work made him feel productive.

Create a satisfying daily routine after retirement. Once the “honeymoon” phase of not working wears off, many people get bored in retirement. It’s important to take time to experiment and find a new daily routine that you find enjoyable and that keeps you mentally and physically active.

Keep mentally active and try new things. Keeping mentally sharp helps your overall well-being. Easy everyday activities might be crossword puzzles, sudoku, cards games and reading. You can also gain new knowledge by taking a community college class (either in person or online). My mother took a community college choir class for many years after she retired. It was something she really enjoyed, gave structure to her week, and helped form an important new friend group.

Stay physically active. Regular exercise helps boost the immune system, reduce stress, lower blood pressure, strengthen heart health, and improve sleep. Even something as simple as a daily walk can have significant health benefits.

Remain connected to family and friends. People who are isolated and lonely are at greater risk for dementia and shorter lives. Connecting with your family and friends provides an important sense of closeness and community. Arrange regular get-togethers (i.e. weekly coffee klatch, daily walk with friends, weekend dinner with your parents or children). When you can’t see others in person, meet up with video chat.

For more simple steps to a happy retirement, check out this article from AARP, 10 Secrets of a Happy Retirement.

By |2022-01-13T08:39:34-07:00January 17th, 2022|Retirement|

Early IRA Withdrawals

Larriva-WEBAs you approach retirement, conventional wisdom is to spend down taxable assets and delay IRA & 401k withdrawals until the Required Minimum Distributions (RMDs) begin at age 72. This can be an effective strategy. Yet, in many situations, it may be better to start early IRA withdrawals.

Counter-Intuitive Advice and Early IRA Withdrawals

When does this counter-intuitive strategy make the most sense? It’s relative to your marginal income tax-brackets over a seven- to 10-year period.

For example, a married couple both age 62 can earn up to combined income $106,150 (gross) before the $25,100 standard deduction and still be in only the 12 percent marginal federal tax bracket. If they have $800,000 in IRA/401ks, they can withdrawal some of that money and still be in a low marginal bracket.

If that couple waits until age 72, those retirement assets with 7 percent growth may double to about $1.6 million, and RMDs would start at $62,800 per year. That RMD income along with $57,000 per year for Social Security would put them in a 25 percent marginal tax bracket in the future. (See table.)

Another trap is related to future Medicare premiums (Part B), which typically begin at age 65. The more income you have in retirement, the more you will pay in Medicare premiums. If your adjusted gross income plus municipal bond interest is more than $176,000 for a married couple, then monthly Medicare can increase from about $148 monthly per person up to $505. Paying attention to the nuances in Medicare rules could save a couple up to $8,500 per year.

early IRA withdrawalsDetermining the best time for retirement distributions can be complicated. It’s smart to come up with a plan before you hand in your resignation. Your Perspective advisor will crunch the numbers and help you create the optimal strategy.

By |2021-08-16T13:12:45-07:00September 6th, 2021|Advisors, Health Care, Retirement, Taxes|

Financial Identity in Young Adults

Financial IdentityFinancial identity is critical to success for young adults. The transition from teenager to adult is when we begin to formulate and solidify our character, our beliefs, and our life goals. It’s a significant, often tumultuous, time in life. Family, friends, culture and current events all play a role in how young adults come to understand themselves. Having self-awareness of who you are — of your identity — helps young people navigate the many demands of adult life. It helps provide a sense of control and purpose.

Young Adults and Financial Identity

Understanding your financial beliefs – or financial identity – helps inform decisions for money management. It provides insight about what you need to become financially self-sufficient, an important goal in the transition to adulthood. As a parent of college-age children, this topic is especially meaningful to me. I know each of my kids must forge their own way into adulthood. And making financial decisions will be a big part of that journey.

Brad Klontz, PsyD, CFP® is an expert in behavioral finance. He and fellow researchers identified four common attitudes toward money: Worship, Avoidance, Vigilance and Status. These beliefs are often developed early in life and are frequently passed from one generation to the next. (For more detail, read Lupe Camargo’s article “Understand Your Money Script” at the link below.)

Understanding what influences your decisions can help you better plan for the inevitable twists and turns in the road. While there’s no singular handbook for “adulting,” there are many tools and resources that can help point out the best path for you.

Perhaps you’re at the beginning of your career or independent life. Maybe you know a teen or young adult at that pivotal point. Either way, your financial advisor can help you find the resources you need.




By |2021-02-12T13:15:43-07:00February 16th, 2021|Financial Planning|

Tax Benefits of Roth IRAs and Conversions

Everyone knows saving for retirement is important. Knowing the best options and how to get started isn’t always as obvious. For example, do the tax benefits of Roth IRAs mean they should be part of your retirement plan? Or are traditional retirement accounts a better fit? Here are some retirement account basics to help you understand.

There are two main retirement vehicle categories:

  • Tax-deferred accounts (traditional IRA & 401k savings) allow you to pay no income tax on the retirement savings today; later, all withdrawals (annual deferral and compound growth) will be taxed at future marginal income-tax rates.
  • Tax-free accounts (Roth IRA or Roth 401k) require you to pay taxes now on the savings, but not on any withdrawals in retirement. In 2020 you can contribute $6,000 to a Roth IRA if you have earned income, and you are below the $124,000 to $139,000 phase out range.

Does the difference really matter right now? Current income tax rates are likely the lowest they will be for a decade; and, they’re set to revert to higher rates in 2026. (See chart below.) They could go even higher in the future.

If you’re currently a single 30-year-old grossing $52,000, your tax rate is 12 percent after your  standard deduction of $12,400. In 2026, the rate for the same income will be 15 percent. But, odds are you’ll be making more. Let’s say your income is $150,000 in 20 years; you’ll be in the 28 percent income tax bracket. That’s more than double your rate today. Thus, paying taxes on the deferral now through a Roth can mean significant tax savings in the long-run.  Start investing as soon as you have earned income – say in your teens or 20s – and you’ll benefit from 40 years of compound interest. Talk to the young people in your life about the importance of early investing. Or, ask your financial planner to chat with them.

Those at or near retirement age should look at how Required Minimum Distributions (RMDs) will impact their income taxes. Starting in 2021, RMDs must begin the year you turn 72. It might make sense to take early distributions or make Roth IRA conversions to use up the remaining amounts at the lower tax rates. To watch a brief video in which Mike explains RMDs, click here.

tax benefits of Roth IRAs



By |2020-09-29T15:43:13-07:00October 5th, 2020|Retirement|