Women Face a Unique Path to Retirement

Women Face a Unique Path to Retirement


The truth of the matter is that women are controlling more wealth than any other time in our history. They also face unique challenges when it comes to retirement planning. The fact that, on average, women live longer than men make proper planning even more important.

In my experience working with households where women are the sole financial decision maker, women value professional advice and collaboration when it comes to retirement planning. They are confident in their ability to stick with a plan but are not overconfident in their ability to manage risk when markets act up.

Time vs Timing- They embrace the idea that the time spent invested in the market is more valuable than timing the market. Meeting with a financial planner has more in common with working with a personal trainer than going to a doctor. There are no overnight remedies but a disciplined plan over time is proven to be the most effective strategy.

Inflation is the silent killer- The primary goal of retirement planning is not to get rich. It is to save enough for retirement and have our investments outpace inflation. Holding cash feels good in times like these but holding too much over the long run erodes the purchasing power on our savings.

Social Security Can Get Complicated-  If you’ve spent an extended amount of time out of the workforce to raise a family or care for a family member, you may have a lower social security benefit than expected. This is because your Social Security benefit takes into consideration your top 35 working years. If you spent a good amount of time outside of the workforce there are going to be some zeroes averaged in when calculating your benefit. If you are divorced, you should educate yourself on any spousal and/or survivor benefits that you may be eligible for from your ex-spouse.

Confronting Long Term Care- We have all seen the statistics. Women have a longer life expectancy than men. This increases the probability of being a caretaker and also needing outside help to care for themselves. Addressing this potential cost and how it would affect your retirement plan is critical. For many, it could be the largest risk to their retirement savings.

Aligning Your Values with Your Investments- With the rise in interest for sustainable investing, there are many investment companies that can tailor a portfolio to invest in companies with a focus on environmental, social, and governance (ESG) concerns. This is great news for those that want to invest in companies that are having a positive social and environmental impact.

A Smarter Way to Be Charitable- The ability to deduct charitable contributions has become more difficult due to the SECURE Act which was legislation passed by Congress in 2019. However, there are strategies where you can bunch your contributions in a given year to increase the likelihood of being able to receive a deduction.

If you are within 10 years of retirement, now is a good time to get organized and start assembling your trusted team of professionals to help you get the most out of your retirement. If you have questions about any of the above or would like to discuss how I can help you plan, feel free to reach out for a complimentary consultation.

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

Securities offered through LPL Financial, Member FINRA / SIPC. Investment advice offered through Stratos Wealth Partners, Ltd, a registered investment advisor. Stratos Wealth Partners is a separate entity from LPL Financial.

charitable giving with a donor advised fund

Giving Through a Donor Advised Fund


How Your Charitable Giving Can Benefit From a Donor Advised Fund

It’s not easy keeping up with the proposals by the GOP regarding tax reform. However, two common goals that keep coming up are to decrease income tax rates and increase the standard deduction. This could effectively decrease the benefit of charitable deductions. A decrease in income tax rates could ultimately decrease the value of a deduction. Raising the standard deduction, would mean less people itemizing their deductions. This could lead to less charitable deductions altogether.

Why not a Donor Advised Fund?

An overlooked tool for charitable giving in 2017 is a donor advised fund. By putting money into a donor advised fund (DAF), you could take the charitable deduction this year, but direct that money to charitable organizations later on. A donor advised fund is an account that is held with a sponsoring charity where a donor can make a charitable gift. If you are charitably inclined, it is a way to set up a vehicle to manage these funds with ease. Once the gift is made, the donor retains the ability to recommend how the sponsoring charity directs that gift over time.  A successor can even be named to the DAF to continue directing gifts from the fund after the donor passes away.

Still take the Charitable Deduction

The tax benefits are similar to a gift that is made directly to a public charity. It may qualify for a charitable income tax deduction equal to the fair market value of the gift in the year that it was made. It would be subject to the same income limitations as charitable donations. Currently no more than 50% or adjusted gross income can be deducted for cash gifts and 30% for property with a long term capital gain. Unused deductions can be carried forward for up to 5 years.

Taking some gains without paying Uncle Sam

With equity markets at all-time highs, many investors find themselves holding assets with large capital gains. These assets can be donated to a DAF, and once in the fund, can be sold without incurring a capital gain tax. This makes it a great strategy for highly appreciated stock. It can also reduce a concentrated position in your portfolio. The funds can then be professionally managed until they are granted to a charity.

DAF in Action

Let’s say you purchased a stock position with a fair market value of $2,000 and it has increased in value to $10,000. If your intention is to donate $10,000 to a charity, you may want to consider putting the stock position in a DAF now, and direct that money to various charities over time. This way you may receive the $10,000 income tax deduction immediately subject to your income and you will not be obligated to pay a capital gain tax on the $8,000.

You should always consult an accountant before making tax planning decisions and work with a trusted financial advisor to see how your charitable giving may benefit from the use of a donor advised fund.

Securities offered through LPL Financial, Member of FINRA/SIPC and investment advice offered through Stratos Wealth Partners Ltd., a Registered Investment Advisor. Stratos Wealth Partners, Ltd. and Lob Planning Group are separate entities from LPL Financial.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

While donor advised funds have many advantages, some disadvantages to be aware of include but are not limited to possible account minimums, strict limits on grant allocations, management fees and the potential that future tax laws may change at any time that may impact the tax treatment and benefits of donor advised funds.

Stratos Wealth Partners, Lob Planning Group and LPL Financial do not provide legal and/or tax advice or services. Please consult your legal and/or tax advisor regarding your specific situation.