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A PRACTICAL GUIDE TO
A Dignitas Briefing Paper
MANAGING YOUR ANNUAL BONUS
SMART TIPS FOR NAVIGATING THE 2013 BONUS SEASON
BALANCE SHEET ADVISORY: Dignitas serves as a fiduciary to your family and provides tested and untarnished financial advice. Incentive compensation provides individuals the chance to enjoy the fruits of their labor. Request a Consultation Video Overview Share Dignitas’ Briefing Paper A Practical Guide to Managing Your Annual Bonus By Nicholas Delgado 2 . So how do you know if you are making good financial decisions? Dignitas’ Briefing Paper is your guide for considering your options on how to optimize your 2013 bonus compensation. Through planning and smart decision making. individuals can leverage their annual bonus into an opportunity to achieve their savings and investment goals.Incentive Compensation 2013: Leveraging Hard Work and Opportunity. while also making the types of purchases that will increase their overall happiness and satisfaction. as the firm does not participate in any third party commissions or fees. Dignitas Service Offering WEALTH COACHING: Dignitas wealth coaching provides executives and entrepreneurs a unique platform to concentrate on developing the habits and maximizing the skills to help you meet your financial goals. It covers five important tips for how to allocate your bonus compensation that will help protect you and your family over the long-run. PERSONAL BENCHMARKING: Benchmarking allows families to understand where their current position is in relation to a particular goal.
seasoned executives and individuals entering their second life. With 15+ years of experience in the financial services and wealth advisory industry.About the Author A Practical Guide to Managing Your Bonus By Nicholas Delgado Nicholas Delgado founded Dignitas to provide clients with personalized. Follow Nick on Twitter @DignitasCWO Share Dignitas’ Briefing Paper A Practical Guide to Managing Your Annual Bonus By Nicholas Delgado 3 . Nick has become a go-to advisor for start-up/high growth entrepreneurs. high quality and independent advice and solutions that allow them to simplify their lives.
Share Dignitas’ Briefing Paper A Practical Guide to Managing Your Annual Bonus By Nicholas Delgado 4 .1 1) Internal Revenue Service Guide 1036 http://www. The catch-up contribution limit for employees age 50 and over is $5.2% payroll tax for the remainder of the year.pdf Decrease your taxable income by up to $17. consider saving all or part of the 6.000. Once you’ve achieved your retirement savings contribution limits.500.One: Pay Yourself First. which for 2013 is at $17.irs. work towards achieving your 2013 savings targets early in the year.500.700. for a total of $23. If after you’ve received your bonus you have surpassed the 2013 Social Security wage base of $113. Consider maxing out on your annual 401(k) contribution.gov/pub/irs-pdf/n1036.500 by maxing out your 401(k) in 2013.
A new 3.000 for joint filers will also take effect in 2013.000 for individuals and $250.6% for high income earners. Because income is deferred to a later date.000 for individuals and $450.gov/pub/irs-pdf/n1036.000 for individuals and $250.45 percent to 2. Share Dignitas’ Briefing Paper A Practical Guide to Managing Your Annual Bonus By Nicholas Delgado 5 . Deferred compensation refers to a financial arrangement where a portion of an employee’s earned income is paid at a later date from when it was earned.2 Consider deferring a portion of your bonus if you expect your 2013 bonus to be higher than normal to mitigate higher marginal tax rates.irs.8% Medicare tax on some investment income for taxpayers with earnings in excess of $200. Have you calculated whether or not you are impacted by the new marginal federal income tax rates and Medicare taxes? Marginal income tax rates are now at 39.000 for joint filers. Tax rates have gone up. an employee does not pay income tax on deferred amounts until the funds are actually paid to the employee. Medicare taxes have gone up from 1.6 percent for income in excess of $400.pdf Marginal income tax rates are now at 39. Many companies offer non-retirement deferred compensation plans to highly compensated employees. 2) Source Internal Revenue Service Guide 1036 http://www.35 percent for earnings in excess of $200.Two: Defer Compensation. In addition.000 for joint filers.
For maximum savings.Three: Pay Off Debt. households had a median of $8. High income U. This can lead to substantial long-term savings over time by decreasing the duration of the loan and the amount of interest payments you will make. 3) Source: Federal Reserve Bulletin http://www. If you have a significant amount of consumer debt. start by paying off credit cards with the highest interest rates first.federalreserve.S.000 in 3 credit card debt in 2010. consider using any excess reserves in low yielding cash or deposit accounts to pay down lower cost debt such as your home mortgage or any outstanding student loans. After you’ve allocated money for short and long-term savings and paid off consumer debt.pdf Share Dignitas’ Briefing Paper A Practical Guide to Managing Your Annual Bonus By Nicholas Delgado 6 .gov/pubs/bulletin/2012/pdf/scf12. paying down existing debts should be a high priority.
Umbrella premiums can be as low as $200 to $300 per year for $1 million of additional liability protection. Premiums for term insurance are relatively inexpensive for people in good health up to about age 50. Share Dignitas’ Briefing Paper A Practical Guide to Managing Your Annual Bonus By Nicholas Delgado 7 . or when you have significant changes in income. and income replacement needs. Confirm that you have sufficient insurance. Calculate your insurable needs to determine if you are adequately insured. A full-time employee with a family should factor in final burial expenses. If your income and assets have increased significantly over the past few years you might want to also consider an umbrella policy. An umbrella provides liability coverage over and above your standard auto insurance or homeowners insurance.Four: Update Your Insurance Plans. outstanding mortgage balances and other debts. It offers protection against large liability claims or judgments. Review your need for additional insurance coverage after major life events such as marriage. having a child. education expenses.
com/2010/08/08/business/08consume. then consider spending resources on family activities such as family passes to cultural attractions or a family vacation. If spending more time with your family is a priority. and even the timing of the spending all affect long-term happiness.4 Source: The New Yoork Times http://www.Five: Align Discretionary Spending to Your Goals Enjoying the reward of receiving an annual bonus can be amplified when you align discretionary spending to your goals. Spending money for an experience such as a dream vacation. Share Dignitas’ Briefing Paper A Practical Guide to Managing Your Annual Bonus By Nicholas Delgado 8 .html Research has found that spending money on an experience produces longer lasting satisfaction than spending money on material objects. then you might want to consider purchases such as a new bicycle. Researchers at Harvard and the University of Virginia have found that the types of purchases. or hiring a nutritionist or personal trainer. Or. cooking classes or sporting events has been shown to produce longer-lasting satisfaction than spending money on material objects. if you are planning on achieving a healthier lifestyle in 2013. their size and frequency. concert tickets.nytimes.
Share Dignitas’ Briefing Paper A Practical Guide to Managing Your Annual Bonus By Nicholas Delgado 9 . We provide clients with independent and objective advice and solutions beyond the traditional investment management and financial planning model.651. IL 60601 www.mydignitas. Wacker Drive Suite 2606 Chicago.com Dignitas is an Investment Advisor Registered with the State of Illinois. Dignitas is a multi-family office and wealth management firm. To continue the conversation.Dignitas Can help you achieve results. Our full-service life management platform orchestrates a collection of business and personal services to support our clients’ whole life needs.6131 Dignitas 111 E. please contact: Nicholas Delgado Principal | Chief Wealth Officer firstname.lastname@example.org Twitter: @dignitascwo 312.
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