Success, and a New Set of Challenges

You've worked hard and shown special abilities that are being recognized by your employer. With that comes a new level of success as you climb the ladder at your company.

We all know that usually means more responsibilities at work, and more to yourself from a financial perspective. You now have new concerns and challenges to face that may not have required a second thought earlier in your career. Here are factors you should take a closer look at:

Additional life insurance needs
As you've enjoyed increasing success in your career, your earnings have risen as well. That means your family is becoming accustomed to a higher standard of living. Chances are costs for housing, transportation and many other needs have become larger than they were just a few years ago.

So what happens if that stream of income suddenly stops? Is the insurance coverage you may have established years ago still sufficient to cover your family's needs in the future? Along with term insurance policies you may have in place, you now may have more sophisticated protection needs. A variable universal life policy or other cash value insurance plan may be more appropriate in answering a broad range of needs that now exist for you.

Building wealth for retirement and other needs
In the early years of your career, you may not have been able to afford to save as you would have liked to help meet your future needs. Now, as your income level has increased, it is critical that you take advantage of the extra cash to be better prepared for your future. The options include:

• Maximizing contributions to your workplace retirement plan.
• Building additional retirement savings with IRAs and variable annuities.
• Making systematic contributions (either directly from a paycheck or from your checking account) to investments that can build in taxable accounts.
• Setting up a tax-advantaged education funding vehicle, such as an Education IRA or 529 college savings plan for your children.

Tax burden on different income levels
Based on marginal tax brackets for 2001 married filing jointly tax status
Taxable income	Federal tax due	Effective tax rate
$50,000	$7,500.00	15%
$75,000	$14,375.00	19.2%
$100,000	$21,250.00	21.3%
$150,000	$36,222.50	24.1%

While taxes are an inevitable fact of life, there are steps you can take to offset the impact.

• Make pre-tax contributions to your workplace retirement plan and to a health-care savings account to help offset out-of-pocket medical expenses.
• Consider selling securities that will generate tax losses, which can be used to offset a portion of your income.
• If possible, have income shifted into the next tax year, such as bonus payments, to avoid putting you in a higher tax bracket for the current year.
• Make charitable contributions before the end of the calendar year.
• Be sure to take all available deductions (mortgage interest, property taxes, state taxes, excessive medical expenses) to reduce your taxable income.

Content is for informational purposes only and may not accurately reflect your specific situation. Information is not intended to provide financial, legal, tax, or accounting advice. You should consult a qualified advisor for advice specific to your own circumstances.