Planning

529

Facts about 529 Plans

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Getting the Facts Straight about 529 Plans

As many of us are sending our children back to school this month, I thought it would be a good time to clear up some misconceptions about 529 savings plans. A 529 savings plan is an investment program offered by each state. It offers tax-free growth on money invested to pay for education expenses. Here are some common questions that arise regarding these savings plans:

Do I lose the money if my child doesn’t go to college? You will always have access access to the money in your 529 account. If withdrawn for anything other than qualified expenses, you will be subject to income taxes and a 10% penalty on the earnings. The account is funded with after-tax money, so the principal isn’t subject to taxes or the penalty. For example, let’s say you withdraw $10,000 from your plan and $8,000 is principal and $2,000 is earnings. If the money is used for anything other than an educational expense, $2000 is subject to taxes and penalty. If your child doesn’t need the money for education, you can also change the beneficiary to another family member or fund your own continuing education. There are no tax consequences or penalty to change the beneficiary.

What qualifies for an educational expense? A qualifying expense doesn’t have to be tuition or fees to a 4-year college. It could also be used for community college, graduate school, eligible vocational or trade schools, or adult continuing education classes. Funds can also be used for off campus housing, books and supplies, and computers. This year’s Tax Cuts and Jobs Act has expanded qualified expenses to distribute up to $10,000 per student to cover elementary or secondary schools.

What if my child gets a scholarship? You will be exempt from the 10% penalty on withdrawals up to the amount of the scholarship. You will still be subject to income taxes on the earnings. An exemption of the penalty is also applied if the beneficiary dies or becomes disabled, or decides to attend a U.S. Military Academy.

Do I have to use my home state’s plan or choose a school in my home state? You are not limited to using your home state’s plan, but there may be tax advantages. Some states offer a state tax deductions for 529 contributions if you make them to a plan in your home state. Your child can attend any eligible school regardless of where the plan is set up.

Will a 529 plan affect my child’s chances of receiving financial aid? Financial aid eligibility can vary depending on the institution, but it will have some impact. Since the account will be considered assets of the owner of the account and not the child, the impact will be small. An asset of a parent will reduce your eligibility by up to 5.64% of the value of the account. If the account were in the child’s name, it would be reduced by 20% of the value of the account. Also, the distributions will not be counted as income to your child for financial aid purposes.

With education expenses continuing to outpace inflation, a 529 plan can be a valuable tool to help cover the costs. A great resource for researching the different plans available is www.savingforcollege.com. If you are still unsure, reach out and I can help you determine the best way to save for your family’s education expenses.

 

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual, nor 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 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.

401(k) loan

Borrowing From Your 401(k)

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Why You Shouldn’t Borrow From Your 401(k)

It’s tempting. The money is sitting there in an account that is doing nothing for you right now. You may be years or even decades away from needing it. Why not put it to work for you now to buy a home, make a renovation, or pay down some debt? You are paying yourself back with interest anyway! Outside of an emergency event, a loan from your current 401(k) is probably not worth it. Here are 5 things to consider before taking out a loan:

Your retirement could suffer a setback. – The time you are repaying the loan could be spent building your retirement savings. You could also be missing out on potential gains that the loan amount won’t realize. This could be a huge opportunity cost when these gains compound over long periods.

Missing out on an employer match. – At least part of your monthly retirement contributions will now go towards repaying the loan. By replacing your elective deferrals with loan repayments, you could also be missing out on a company’s matching contribution.

A pre-tax contribution is now repaid with after tax dollars. – You may have initially made the contributions with pre-tax dollars but the money that you use to repay the loan will be after-tax dollars. When you retire, all distributions will be subject to tax even though money has been added back to the plan with after-tax dollars. You are essentially paying taxes twice on the loan amount.

What if you can’t pay it back? – If you don’t pay back the loan within the given repayment period, usually 5 years, the balance of the loan is an early distribution and becomes taxable. You could also be subject to a penalty, if you are under age 59 ½.

If you change jobs, the loan becomes due…even if you’re fired– If you leave your job, you’ll have to pay back the entire balance. Otherwise, it will be treated as an early distribution and you’ll pay taxes and potentially a penalty on the balance. This is even the case if you are fired from your job. You would have to pay back a loan at what may be the most inopportune time.

We are in an age of uncertainty surrounding Social Security and pension plans are being diminished in the workforce. Retirement savings will need to provide the difference to cover expenses. If you still decide that a loan is right for you, check with the administrator of your plan about associated fees. If you are still unsure, reach out and I can help you make this important decision.

 

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual, nor 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 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.

 

Considerations when Receiving a Pension

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What to Consider When Determining How to Receive a Pension Benefit

One of the biggest decisions that a retiree receiving a pension benefit will face could be the decision to take the benefit as a lump sum or receive it in the form of an annuity distribution. The benefit of the annuity is clear. It can provide a predictable income stream for your life and potentially your spouse’s. The income is guaranteed by the company paying the benefit and at least some of it may be guaranteed by the Pension Benefit Guarantee Corporation (PBGC).

The downside to annuity income is that you lose control of how you take the benefit. You don’t have the flexibility to take out more or less of your benefit as needed. There is also the potential loss of purchasing power due to inflation if the benefit doesn’t have a cost of living adjustment.

So what questions should you ask yourself before making this decision?

Do you need more guaranteed income? What will your expected living expenses be in retirement and how much is covered by Social Security and other sources? Is the monthly pension benefit needed to make up the difference? If it is more than you need, see if you could take distributions on a portion of the lump sum and invest the rest.

How is your health? The longer you live the better the annuity option looks. We don’t have a crystal ball, but if you have concerns about your health and outliving your life expectancy, an annuity payment may not be for you.

What is your risk tolerance? If you don’t feel that you have the discipline to stick with an investment plan and ride out market volatility, the annuity payments may be a better option.

What about your significant other? Make sure the annuity would pay an adequate survivor benefit for your spouse if they were to outlive you.

Do you want to leave behind a legacy? Most annuities only make a payment for yours and possibly your spouse’s life, so there will be nothing left to leave behind as a legacy. If you were to take the lump sum, there is the potential for funds to be left over for your heirs or charity if invested properly.

What is the financial strength of your company? If your benefit isn’t fully guaranteed by PBGC, you may run the risk that your company may not be able to fulfill the benefit if they were to run into financial trouble.

Shop Around Even if you decide that the annuity payment option is the way to go, compare the monthly benefit you are being offered to current rates on an immediate annuity from an insurance company. You may be able to rollover the lump sum to an IRA and purchase an annuity with more favorable terms.

How to receive a benefit that you have worked a lifetime for is a difficult choice and depends on your personal needs. Once you make a choice, you can’t change your mind, so it is important to factor in all these considerations before making a decision.

 

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.

 

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.

 

 

This is Not Your Father’s Retirement

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This is Not Your Father’s Retirement

In 1988, when most Baby Boomers were focused on starting families and advancing their careers, Oldsmobile came out with the ad slogan, “This is not your father’s Oldsmobile.” Thirty years later, this same generation is facing a retirement that will probably look a lot different than their parents’. The generation that was once ridiculed for driving outdated Oldsmobile Cutlasses typically enjoyed more stability when they retired. They were more likely to retire at 65 and generate most of the income they needed from a pension plan and Social Security.  This may not be the case for their children. Here are some of the new challenges that retirees face:

 

Longer Retirements- The good news is that we are living longer lives. The average life expectancy has been increasing over the past several decades (For women it’s 81.2 years and men it’s 76.3 years).[1] For those age 65 today, the average life expectancy continues to increase. The downside to living longer lives is the increased potential of outliving our money. With fewer people having defined benefits (i.e., pensions), it’s crucial to have a strong investment plan with a conservative spending policy. This “longevity” risk that retirees face is causing more Baby Boomers to remain in the workforce.

 

Social (In)Security- The retirement of Baby Boomers has led to a demographic shift in our workforce and the ratio of workers to beneficiaries is declining[2]. This trend is likely to continue. The Social Security Administration projects that the trust fund that pays retirees may not be able to meet its obligations by 2034. There have been several proposals by Congress to fix the problem but there is uncertainty around who will carry the burden of reform[3]. Changes to retirement age and payroll taxes would impact the existing workforce, while reducing benefits to above-average earners and reductions to cost of living increases would impact current retirees.

 

Losing Purchasing Power- Although inflation has been manageable over the last several decades, it can be particularly damaging to retirees when you consider the impact it has on purchasing power, the value of our money in terms of purchasing goods and services, over long periods of time. Keeping most of your money in fixed investments may seem prudent, but given the low interest rate environment, investments with the potential for capital appreciation are necessary if we are to stay ahead of inflation.

 

Rising Health Care Costs- As health care costs continue to outpace inflation, fewer retirees have employer or union sponsored health benefits. According to Fidelity Investments[4], an average retired couple age 65 in 2018 may need approximately $280,000 saved (after tax) to cover health care costs in retirement. These costs need to be factored in to a retirement plan and for those still working who are in a high deductible plan, a health savings account (HSA) could be a valuable savings vehicle.

 

Growing Need for Long-Term Care- According to the U.S. Department of Health and Human Services, slightly more than half (52%) of individuals turning age 65 will have a high need for long term care over their lifetime[5]. So, who is paying the bill? In 2014, Medicaid and Medicare accounted for 63% of all long-term care spending[6]. As more retirees are faced with these costs our public programs could face challenges in funding quality care. When possible, a plan to fund these potential costs out of pocket or through insurance should be considered.

 

Regardless of where you are in the financial planning process, working with a professional can help you make the most of your days in retirement. The Oldsmobile slogan may have been short lived, but these challenges are not going away any time soon.

 

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.

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.

 

[1] Centers for Disease Control and Prevention, “Mortality in the United States, 2015,” December 2016

[2] Social Security Administration, Fast Facts & Figures About Social Security, 2016

[3] Center for Retirement Research at Boston College, Social Security’s Financial Outlook: The 2017 Update in Perspective, 2017

[4] Fidelity Investments, How to Plan for Rising Health Care Costs, 2018

[5] National Association of Insurance Commissioners, The State of Long-Term Care Insurance: The Market, Challenges and Future Innovations, 2016

[6] The Centers for Medicare & Medicaid Services, National Health Expenditures Survey, 2014

Housing Decisions in Retirement

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How Housing Figures Into Planning For A Longer Retirement

As featured in the Winter 2017 issue of Westchester Senior Voice magazine

In my work as a CERTIFIED FINANCIAL PLANNER™ professional, I always discuss the topic of housing with my clients as they plan for retirement. Since, according to the U.S. Bureau of Labor Statistics*, housing costs are the single largest expense for every age group – whether you’re 50, 60, 70 or older, we need to consider what makes sense as we approach, or are already in, the retirement years.

Evaluating housing costs is especially important given the fact that we are living longer and we may need to support an extended retirement. In Westchester County, we are also subject to the higher insurance costs, maintenance costs, and property taxes that come with higher home values. Certainly, if you’re still in your working years, paying off any remaining mortgage debt should be a priority.

Most people want to stay in their homes throughout retirement, but haven’t thought about all the costs involved. We may need to renovate to maintain our home’s value, household tasks may become more difficult – requiring the need to hire outside help, and we also have to consider modifications to keep our homes safe and compatible with our changing needs as we age.

Reevaluating your priorities may help you create the means to support a more fulfilling retirement. If you’re concerned about maintaining your lifestyle in retirement, given the potentially increasing costs of staying in your home, the rest of this article is for you.

The good news is there are plenty of options, especially when you consider that lowering your monthly expenses in retirement can be just as effective as an increase in income. One possibility, which may be difficult – but necessary – to consider is selling the family home.

For most of us, it’s not an easy decision to sell the home where we’ve created a lifetime of memories. But if you can get past that, the financial benefits could be considerable. Start with trading in those heating and lawn maintenance bills…and how about property taxes!

Selling your home and downsizing to a smaller one may not only lower your expenses, but could actually increase your income: the added liquidity from the home sale could be reinvested into a portfolio that could provide additional income.

Another option that may enable you to better afford your housing costs is to rent out extra space. Also, consider that home ownership is not always the best option for empty nesters. Housing decisions should take into account other factors: perhaps a move to a better climate or being closer to adult children and grandkids. Renting, for instance, allows you to test out a new community before you decide to purchase, and can save you unwanted costs in the future if you realize you made the wrong choice.

Whether you decide to buy or rent your next home, your objective should be to do it on your own terms: before a financial situation dictates the move. When choosing your next home, consider how you will maintain or build a strong social network and be able to do the things you enjoy. Having easy access to health care, dining, and the activities you enjoy are all important considerations. If a car is a necessity, what will you do if driving is no longer an option? The Westchester County legislature’s recent decision to allow ride hailing services, like Uber and Lyft, may make getting around easier and less expensive.

Being able to envision what will be important to you in a home during retirement and having a better idea of what your housing expenses might be is an important first step in planning for a successful retirement. Take the initiative and speak with a qualified professional who can assist you with your plan.

 

*Consumer Expenditure Survey, 2014, https://www.bls.gov/opub/btn/volume-5/spending-patterns-of-older-americans.htm

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.

 

My Day at the Fed

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My Day at the Fed

As many of you know, cognitive impairment is an issue that is very important to me. I lost my father earlier this year to Lewy Body dementia. The experience gave me a new perspective on managing a family’s finances. Without a plan and the right advice, it can be like walking through a minefield.

I was recently asked by the Federal Reserve Bank of Philadelphia to share my personal and professional experiences working with retirees with diminished capacity. The Fed was hosting a conference on Aging, Cognition, and Financial Health. The purpose was to bring thought leaders in the financial services community together to combat financial exploitation instead of waiting for regulation from above. At this event, I was able to meet with many federal regulators, advocacy groups, and executive leadership within the financial services industry. These individuals can shape policy, increase awareness, and influence the financial professionals that work with retirees. Here are some of the points that I made when given the opportunity:

New FINRA Rules 4512 and 2165 are a good start

Effective February 5th, 2018, two new FINRA regulations will go into effect that are a step in the right direction to combat potential financial abuse of the elderly. An amendment was made to FINRA Rule 4512 that:

“require members to make reasonable efforts to obtain the name of and contact information for a trusted contact person for a customer’s account; and (2) adopt new FINRA Rule 2165 (Financial Exploitation of Specified Adults) to permit members to place temporary holds on disbursements of funds or securities from the accounts of specified customers where there is a reasonable belief of financial exploitation of these customers.”*

Although many financial service professionals are already making an effort to discover trusted persons in a client’s life, this amendment will make it a requirement. The ability given by Rule 2165 to slow down a transaction if there is suspicion of financial exploitation will also be a useful tool. However, there is still more that needs to be done. The reality is that a large percentage of financial abuse comes from one of the “trusted” persons in a victim’s life. Compliance departments at financial institutions need more leeway to address financial exploitation when it involves a trusted person.

POA isn’t foolproof

Although a power of attorney (POA) is an important legal document for a retiree, they aren’t always enough to prevent financial exploitation. Most POAs are durable which means the chosen agent has the power to make financial, legal or health decisions on someone else’s behalf regardless of the mental capacity of the person who drafted the POA. In the case where the agent is the “trusted” person committing financial fraud, this document can actually make it easier for them to exploit their victim.

Another potential shortcoming of a POA involves the inclusion of a springing provision. Instead of giving an agent the power to make decisions immediately, this provision makes the agent’s power effective at some point in the future. It is usually when the person who appointed the agent is diagnosed with a cognitive impairment by a doctor. Even if the agent has the best intentions, a diagnosis may come well after the point of actual cognitive decline. The damage may be done by the time the POA goes into effect.

Know your client

In some cases, financial exploitation can be uncovered by a financial professional simply knowing their client, the people in their life, their spending habits, and their lifestyle. This will require more training for employees of financial institutions that work directly with clients. There is also optimism that advances in data gathering technology will make it easier to spot any abnormalities in transactions that could be a sign of financial abuse.

It’s also important to remember that the issue of financial exploitation with the elderly is not limited to persons with a mental incapacity. It’s an issue for all retirees. Those in the financial services industry that work with the public are on the front lines and have an opportunity to get ahead of it.

More That Can Be Done

It’s not uncommon for me to meet with a retiree for the first time and learn that they have little understanding of the mechanics of certain financial products that they own. They could be unclear about what is actually guaranteed or what a reasonable expectation should be for investment returns. Marketing material for variable annuities, market linked CDs, and permanent insurance products can be very difficult for many to understand, let alone someone whose cognition is in decline. The material that is used to market many of these products should be appropriate given the prospective audience is typically older individuals.

I suggested basic product questionnaires be used during the sales process to assess the prospective buyer’s understanding of what they are getting into. I emphasize the word “basic”, because, in my opinion, most prospectuses and applications of financial products have pages of disclosures that do very little to assess the client’s capacity to understand how the product will function.

Over the years our retirement system has transitioned from one of defined benefits (pensions), which took a lot of the decision making out of the hands of retirees, to one of defined contributions (retirement accounts) which puts the onus on the retiree to manage their finances. As retirees continue to live longer lives due to medical advancements, the need to put a better system in place to service their finances will continue to grow. It was a great experience to be in a room with those that recognize the need for this change and are acting on it.

*Source: FINRA.org

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.

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.

Giving Through a Donor Advised Fund

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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.

 

Resolutions

Instead of Resolutions, Have a Plan

Instead of Resolutions, Have a Plan

The last weeks of the year are a good time to reflect on all that we have achieved in 2016. It’s also a time to think about areas where we could improve. If you have put off addressing your personal finances, here is how working with a financial planner can help you reach your goals in the New Year.

  • Setting up the ground rules. When you meet with a financial planner, the first objective is to establish the services that you need and determine the scope of the relationship. If there are any conflicts of interest, they should be presented at this time. You should leave the first meeting with a clear understanding of your responsibilities, as well as the role that the financial planner will play and their compensation.
  • What are you planning for? In order for a financial planner to effectively help, you need to be able to define your personal and professional goals. Whether you are saving for college, preparing for your own retirement, or planning to open a new business, they can work with you on prioritizing your goals. It is important to understand your background, needs, and values in order to put together a plan that you will stick with.
  • Start with what you have. A financial planner will work with you to determine what you already have and how you are managing your cash flow. Many of us have self-directed investment accounts, employer retirement plans from an old job, investment products that we purchased from our bank or insurance policies that haven’t been reviewed in a while. A financial planner can look at the big picture to make sure these accounts are in line with the goals that have been established. When analyzing your cash flow, it’s important that you are contributing to these goals on a regular and defined basis.
  • Bringing it all together. The financial planner will now determine if your current course of action is adequate to achieve your goals and if not, recommend alternatives to your current situation. Assumptions used to arrive at a recommendation should be clearly explained as well as the potential risks involved.
  • Putting the plan to work. Once the plan has been established, it is time to put it into action. This could involve making changes to current investments, insurance policies, or consulting with outside professionals when necessary.
  • Making changes and being proactive. A financial planner will monitor your situation on an ongoing basis to make sure you are following through with your plan. When life brings changes, your plan should reflect them. By partnering with a financial planner, they will work with you to anticipate these changes and adjust your plan when necessary. They will help you take the emotion out of important financial decisions.

Take the initiative, and speak with a financial planner to help you make the most of 2017.

All the best in the New Year.

 

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.

Securing Tomorrow

Preparing for Tomorrow

Preparing for Tomorrow

What is your plan for optimizing your quality of life as you grow older?

When a loved one is diagnosed with a cognitive disorder, it can have a lasting effect on the entire family. I recognize that financial planning increasingly becomes a family issue. In addition to professional investment management, I aim to partner with my clients in preparing for the challenges that potentially lie ahead.

To assist my clients, I offer the following services:

  • Organization of Assets- Do you still have stock certificates, paper bonds, or accounts at several financial institutions? We will start by cleaning up your financial house by consolidating accounts and converting paper stocks or bonds into electronic records.
  • Comprehensive Investment Management- Whether it’s paying for a home aide, making changes to a family member’s housing situation, or having a desire to leave a legacy to family or charity, we can implement an investment strategy with the goal of keeping you in control of these important decisions.
  • Cash Flow Analysis- In retirement, it is important to have a plan to replace working income with investment income. We can establish a disciplined distribution strategy to help manage the day to day cash flow needs of your household and reduce the risk of outliving your retirement money.
  • Long Term Care Planning- According to the Department of Health and Human Services*, 52% of people turning 65 can expect to use some form of long-term care during their lives. The rising costs of long term care can become a significant financial burden on a family. We will explore all options to help mitigate this risk, including insurance or allocating existing assets to cover the potential need.
  • Integrated Tax Planning Strategies- After reviewing your current situation, we can work with your tax professional to determine if you are taking advantage of all current and newly adopted tax laws. In regards to planning, gifting and trust strategies can minimize-or potentially eliminate-the taxes for you and your heirs.
  • Estate & Trust Strategies- You worked hard to build your nest egg, and it’s important to ensure your wishes are met when you are no longer able to advocate for yourself. By working closely with your attorney, we can help ensure that your current needs and expectations are being fulfilled through your estate plan.
  • Analysis of Social Security and Medicare Benefits- In retirement, Social Security will typically be the foundation of your income, so it is critical to develop a claiming strategy that maximizes the amount that you are entitled to. When it comes to Medicare, the enrollment process and timelines can be overwhelming. Missing a deadline can leave you without healthcare for months and result in costly penalties or delays.
  • Access To Your Most Important Documents- Over the years, we accumulate a lot of important paperwork that we may need to access quickly. This becomes difficult if we are splitting our time between two homes or we have authorized a trusted person to represent or act on our behalf. To offer confidence, insurance policies, wills and estate documents, legal contracts and financial statements can be categorized, filed, and retrieved online 24/7.
  • Help Protect Against Elder Scams- During tax season, fraud that targets taxpayers is on the rise. Whether it is tax identity theft or an IRS imposter scam, senior citizens are becoming the most likely victim. I can help prepare your family to be aware of possible threats.
  • Access to a Trusted Network of Senior and Elder Care Specialists- I understand the growing need for elder care services and I strive to work with the best professionals in the industry. Whether it is navigating through the Medicaid process, getting guidance on housing, or finding an Aging in Place association nearby, I can help connect you with reputable resources.

Through working with families, I aim to reduce the risk of having to react to a bad situation. With a plan in place, families can concentrate on supporting a loved one and getting them the care they need.

*Long-Term Services and Supports for Older American: Risks and Financing Research Brief, 07/01/2015, https://aspe.hhs.gov/basic-report/long-term-services-and-supports-older-americans-risks-and-financing-research-brief

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.

5 Things I Wish I Told My Dad

5 Things I Wish I Told My Dad

5 Things I Wish I Told My Dad

In 2014 my father was diagnosed with Lewy Body Dementia which is the second most common type of dementia after Alzheimer’s disease. Little did my family know the difficult road that would lie ahead to provide my father with appropriate care as the disease continues to progress. As a financial advisor, I find comfort in being able to alleviate the stress my mother has of managing their finances through this difficult situation.

My father never liked to seek outside help with his personal finances, but five years ago, while he was still well enough to make his own decisions he brought me down to his office in the basement to go over his accounts in case his health were to diminish. At the time, I was a trader on Wall Street and knew very little about how a retiree should manage their finances. But if I knew what I now know, this is what I would have told him on that day:

  • For your family’s sake, consolidate. The binder my father used to keep track of his accounts was always up to date and accurate, but as I thumbed through the graph paper with numbers carefully penciled in, I noticed that as time went on the pages weren’t as detailed and the time between entries were further apart. I didn’t know it at the time, but this was one of the earliest signs of his cognitive issues. When his condition worsened and I took over managing the accounts, there were checking and savings accounts at several banks, CDs reinvesting at almost no interest, paper savings bonds stashed away with no copies stored online or in another physical location, and a portfolio which had very little direction. It comprised investments that were collected over the years that were never revisited to determine if they were still suitable. We have since consolidated these accounts, and come up with a portfolio that reflects their current needs. At any time, my mother has online access to a snapshot of her accounts where she can see everything in one place. 
  • Dust off those estate plans. It isn’t uncommon for a young family to establish their estate plans when they get married or have their first child and never revisit them again. This is a mistake. I cannot emphasize enough how important it is to have a durable power of attorney with clear direction. The power of attorney has been an important tool in managing my father’s finances. His will and health care proxy will take a lot of the difficult decisions away from our family. We are able to spend our time with him and focus on providing him with the best quality of life that we can, knowing what his wishes are.
  • Long term care isn’t cheap, so what’s the plan? The cost of long term care can easily dwarf the cost of attending a four year university. We spend years planning how we are going to pay for our children’s education, but very little time is spent on how we will manage the cost to maintain our quality of life in our later years. Long term care insurance isn’t always feasible, but if added to the picture, can be an extremely valuable tool. Some form of it should be considered sooner rather than later as policies become more cost prohibitive as one gets older. My father does not have a long term care policy, and it would have made the planning process easier.
  • Can anyone help pay the bills? In addition to long term care insurance, other options to subsidize the cost of long term care include Medicaid, VA Benefits, and certain supplemental insurance policies. These were all areas that we explored after my father was already sick and in the early days it took time away from getting him the proper help. Understand these programs and policies before you actually need them to see if they will be available to you. Even if you are eligible, the paperwork can be overwhelming and it is better to be prepared.
  • Work with the pros. Talking to your children about your finances and your wishes in case your health were to decline is a great first step, but have a team of professionals and their contact information available for your family members so they can step in and do the heavy lifting when needed. A financial planner can act as the quarterback for your family and work between you and the other professionals that you entrusted. I was fortunate to work with my family’s estate attorney and accountant to guide me through the planning process. A geriatric social worker or elder care consultant could also be a valuable resource.

Nobody wants to think about the possibility of losing their cognitive abilities, but establishing a plan will assist your loved ones in the event that they need to oversee your care. Reacting to unfortunate events leads to worse outcomes than planning for their possibility. Take the initiative, and speak with a qualified professional to assist you with your plan.

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.

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.