How to Choose the Perfect Retirement Destination

It used to be that climate was the biggest factor when choosing a place for your retirement.

Not anymore.

Nowadays, there are more important factors in the minds of future retirees, such as affordable housing and low cost of living. But for many these days, fitting into the social and political landscape may be even more important. You don't want to buy a house only to find out that you detest your neighbors because their worldview is lightyears from your own.

Experts also say you should seek out places with populations of over 10,000. Less populated areas may have inferior amenities and services.

Decent public transportation and hospitals are necessities for many older Americans.

Another important consideration is ample parks and recreational opportunities. Live near sites rich in history with lots of historical monuments, buildings, and museums, and your brain stays sharp even in old age.

Your retirement shortlist should also have places on it with low crime rates and close to markets and shopping centers.

College towns are becoming meccas for retirees. One reason for this is that they often have excellent public transportation and walkable neighborhoods loaded with interesting shops. And they provide you with a rich educational culture, full of intellectual stimulation.

State capitals have many of the same amenities, and for this reason, they are also becoming incredibly popular retirement destinations.

You also need to think about taxes. There are seven states that don't impose income taxes on their citizenry. Another 20 offer big tax breaks on retirement income.

But remember that sales taxes and property taxes can take a big bite out of your income.

For example, Florida doesn't have an income tax, but it's property and sales taxes are high. In the end, your focus should be on life planning, and not on tax planning. Where you want to spend your days is a much better question, because lower taxes aren't the only thing you need to be happy.

Start your search years before you retire, and then visit the places you're interested in.

Once you've made your decision, spend at least a couple of weeks in each place. And visit in different seasons so you can see each choice at its meteorological worst. Get out into the different neighborhoods to experience their life and vibrancy for yourself.

Meet with realtors to get schooled on home prices.

And really dig into online resources.

There's so much information there. For example, you can go to the local Chamber of Commerce website and get a relocation pack containing information about local neighborhoods, attractions, and educational opportunities. If you need weather data, go to the National Climatic Data Center.

There are sites that list the areas that have the best hospitals in the country, the best libraries, and even the best nudist resorts.

If you do your research, you'll be more likely to find a retirement destination you'll be happy with.

3 Ways to Pay Less Taxes on Your Mutual Funds

If your mutual fund strategy emphasizes growth more than income, you'll want to find ways to ease your tax burden. This way, you'll save a bundle as you watch your fund increase in value.

Here are some ways to do this:

1. Avoid the temptation of a lump sum distribution.

A lump sum distribution is a payment within a single tax year of the entire amount of the fund. In other words, "cashing out." When you do this, you'll have to pay all the taxes that you didn't pay in earlier years.

If you're no longer working at the job where you have your tax-deferred account like a 401(k), what should you do?

To avoid a colossal tax bill, do a rollover into another qualified account, such as an IRA. You can also take smaller distributions spread over more than one calendar year. This will lessen your tax burden.

2. Know when to use tax loss harvesting.

If you sell your mutual fund for a higher price than you bought it for, you'll have a capital gain. If you sell it for less, you'll have a capital loss. Tax loss harvesting is a strategy that uses capital losses to offset capital gains. When you generate a capital gain, you may incur a capital gain tax. This doesn't happen if the investment is in a tax-deferred account, such as an IRA or a 401(k).

If there were no capital gains during the year, you can use up to $3,000 to offset your regular income. If net losses exceed $3,000, an investor can carry forward any unused losses into future tax years.

3. Use the strategies of asset location and tax efficiency.

Place funds that generate taxes into tax-deferred accounts, and funds that are more tax efficient into regular brokerage accounts. This is a strategy known as asset location. Managers reinvest capital gains back into the underlying funds of tax-deferred accounts.

A fund is tax efficient if it taxed at a lower rate relative to other funds. These funds generate fewer dividends and/or capital gains and thus, taxes are less. Mutual funds invested in large companies usually produce higher dividends. Bond funds produce income received from the underlying bond holdings.

Therefore, both of these types of funds aren't tax-efficient.

You also need to be wary of actively-managed funds. These funds generate more capital gains than passively managed funds. A better bet are small-cap stock funds, index funds, or ETFs. You can usually tell if a fund is tax-efficient by looking at its stated goal.

If this goal is growth, it's most likely a tax-efficient fund that plows its profits back into the business.

Tax Considerations When Working for Yourself

There are 15 million self-employed Americans.

If you're one of them, there are some tax considerations you need to consider. But first, you have to make sure all your records are up to date. Record keeping is particularly important when you're self-employed. This is because it gives you a good idea how well your business is performing.

But maybe even more importantly, it can save you some major headaches come tax time.

When you file your taxes, you'll need the following documents:

You'll need to fill out an IRS Schedule C if your income was over $400. Even if it wasn't, you still may have to file if you meet any of the requirements listed in Schedule C (Form 1040) "Profit or Loss from Business (Sole Proprietorship)."

If your business expenses were less than $5,000, you may be able to use Schedule C-EZ.

You should also file if you're eligible for any of the following:

Schedule C has five parts. In part I, you list all your business income and calculate your gross profit. In part II, you subtract all your business expenses. Next, you calculate your net profit or loss and report this number on Schedule SE (Form 1040). You only have to fill out the rest of the sections if your business requires you to:

Make sure you take all the deductions you're entitled to take. Deducting business expenses reduces the tax you owe.

Remember things like the following:

Keep track of your expenses year-round and don't wait until the last minute.

You also have to figure out if you owe estimated taxes. If you do, you need to pay them quarterly. Traditional employees get taxes withheld from their paycheck.

And the IRS wants to make sure freelancers do this too.

But you only need to do this if you expect to have a tax bill of $1,000 or more. Use Form 1040-ES for this purpose. You can pay your taxes using the blank vouchers in this form. Or, you can use the Electronic Federal Tax Payment System (EFTPS).

If you're self-employed, you must take taxes into account when setting prices for clients. Make sure you're careful about tracking business expenses, so you can deduct them at the end of the year.

You must also pay an SE tax as well as an income tax. SE tax is Social Security and Medicare tax (FICA). Although you have to pay the entire 15.3%, you're entitled to write off half of this.

Even if it's a side hustle, you still have to report that income.

• New computer
• Home office deduction
• Startup costs
• Dedicated phone line
• Mileage and vehicle costs
• Health insurance premiums
• Training
• Money paid to subcontractors
• Trade association membership
• Accounting and tax preparation fees
• Contributions towards retirement savings

Important Tips When Starting a Business

The first thing you need to do when starting a business is to decide which customer problem are you going to solve. This will be your value proposition. One way you can do this is by researching the demographics of your potential customer base.

By doing this, you'll start to understand their buying habits, know their pain points, and be able to supply them with a solution to their problem.

Start small and try to fund your business yourself, because you don't want to incur a lot of debt when you're starting out.

Watch competitors like a hawk and browse their websites. You'll garner a lot of competitive intelligence this way that will prove to be invaluable.

Consider social media and email marketing to cut costs. These methods are way cheaper than traditional advertising methods.

Have a passion for what you're doing. If you don't have any, find another business idea that will energize you. Otherwise, there's a good chance you'll fail. Forget about the statistic that 95% of all businesses failing in their first year. This will only make it easy for you to give up. The truth of the matter is that many of these entrepreneurs gave up at the first sign of hardship.

There's a fine line between dedication and obsession. Remember, your family matters more than your business. Business success won't mean a thing if you sacrifice your family in the process.

Focus on your higher priority tasks. These are the things on your "to do" list that will generate most of your value for your business.

It's so easy to get caught up in the trivial minutiae of everyday life.

And in doing so, we neglect the things that will make our businesses thrive.

Read a lot, but not just business books. Being well rounded and educated will give you insights that you can apply to anything in your life.

Know when you need to hire professionals. Accountants, lawyers, copywriters, web designers, and others can help you a lot. Surround yourself with advisors who know what it takes to make a business thrive. One thing that can make a big difference is hiring a SCORE mentor.

For over 50 years, this program has been providing guidance to business newbies. Its volunteer team of mentors will give you invaluable advice.

You're not going to be able to know everything without relying on others, so don't even try.

It's particularly important to make sure you have a good accountant. You may think you don't need one.

Or, that you can't afford one. But think how long it would take you to do your taxes yourself.

Your time is valuable-is a better use of it getting your taxes done, or working on growing your business?

Plus, there's always the possibility you'll make a mistake, and you can't afford that. Accountants can also help you write a business plan. And they can help you make it more realistic by adding in financial projections based on sound data.

An accountant can prevent you from getting overwhelmed. The myriad financial details of your business can easily do this to you. By letting an accountant handle these details, life becomes so much easier.