Allergies and April 18

Photo by  Nimai Malle

Photo by Nimai Malle

Remember being young and wanting nothing more than to be a grown-up? Your parents would tell you not to be in a hurry because, before you know it, you will be grown up wondering where all the time went.

Just turn on the radio for further proof that time flies. Musicians as varied as Kenny Chesney (“Don‘t Blink”), Bowling for Soup (“1985”), and Fleetwood Mac (“Landslide”), make regular fare of the fact that we grow old too fast. As I get older, it seems that more and more songs, sights, and experiences cause my allergies to flare up as I think of days long ago that seem just like yesterday.

One of those days was when my 16 year old (pictured above) recently became licensed to operate a motor vehicle. I flashed back to my mid teen years and the multiple fender benders or worse that I somehow walked away from. Those vivid memories (or are they nightmares?) keep me awake any time he is out on the road. It seems like yesterday that he was learning to ride a bike with me running alongside in case he lost his balance. If only I could always be looking right over his shoulder to warn of impending hazards.

Another was during practice for my 12 year old daughter’s softball team. On an adjacent field, a tee-ball game was underway for 6 year olds'. If you’ve ever been to one of these games, then you are familiar with the drill. There are 12-15 kids in the field while the other team bats. Twice that many parents and grandparents are in the stands screaming at the top of their lungs every time a ball is put into play. Usually the entire throng of fielders will converge on the ball at once, with one emerging, ball in hand, to chase the baserunner around the bases. It has got to be one of the greatest scenes in sports.

I glanced over at my daughter and couldn’t fathom how she had seemingly gone from that plodding huddle of first graders' to the rapidly maturing adolescent that can throw a ball as hard as her old man. Those damn allergies were really bad that day, must have been the cedar.

It has gotten to the point that I can’t do anything without feeling the need for a couple of antihistamines. TBT pics on Facebook, listening to the “oldies” by Journey or Garth Brooks, or just recognizing a familiar smell can prompt me to reach for a box of tissues. Maybe it’s all just a consequence of growing old when you start realizing that days that once seemed limitless are actually in short supply. Or, that you better make every one count.

Another thing that can make you teary eyed, but not for the warm and fuzzy feelings evoked by Steve Perry, are taxes. Next Monday, April 18, is the deadline for filing yours unless you get an extension. Also, Monday is the last day for making your 2015 IRA contributions. You will never have the opportunity to put away IRA money for 2015 after Monday. Don’t regret not taking action.

Traditional IRA’s allow you to put away up to $5,500 a year (or $6,500 if you are 50 or older) in a tax advantaged way. If your income is under certain levels, you may be able to deduct the contribution from your taxes or even qualify for a tax credit. If you don’t qualify for the deduction or credit, but have earned income, you can still defer taxes on the growth of your after-tax contribution until you withdraw the funds.

There is also a Roth IRA alternative, which has some income limitations for contributions, but allows you to make after-tax contributions that allow for TAX FREE growth. The tax code even allows for a “Back Door” for people that exceed the income eligibility limits. The current code allows you to make an after-tax Traditional IRA contribution, but convert to a Roth IRA to enjoy the tax free growth. If you are converting an “after-tax” contribution before it has any earnings, the net result is the same as being able to make a Roth IRA contribution.

It may not seem like that big of a deal to skip this year’s contribution, but once you do, all you can do is think about “what if” later on. Depending on how old you are, consider just how expensive of a mistake you may be making by not making this one count. (Warning, the following illustration may cause serious allergic reactions!)

IRA’s have penalties for withdrawals before age 59.5, but look at how much ONE $5,500 contribution today can potentially grow to at age 65 with a hypothetical 10% return based on different ages:

Age        What if $5500 @ 10%
Today    Until Age 65

25           $248,926
35           $ 95,972
45           $ 37,000
55           $ 14,266

If you are self-employed, there are options that may allow you to put even more away, but April 18th still looms as an important date.

If you would like some help in planning for or managing your retirement savings, get in touch for a (allergy) free Retirement Review. You’ll be retired before you know it!

By the way, if you put it off until Monday April 18th and want my help, better call early in the morning. In the afternoon I’ll be at the Westlake Chap Club Golf Tournament at Lost Creek CC. You can find me on the 8th Tee manning the ATX Portfolio Advisors Sponsorship Table where I’ll be giving away cold waters and a golf membership to Lost Creek CC. Hope to see you by Monday one way or the other!