One of the great joys of financially independent clients is gifting to family members during their lifetime. Unfortunately, there are many gifting myth's that linger. We routinely receive questions that go something like, "How much am I allowed to gift to my daughter this year without having to pay gift tax?"
Pessimism and an overly dramatic world view saps your faith in the future. However, when armed with the facts, your faith in the future (and your portfolio) can be restored - resulting in a better overall investment experience and optimistic outlook on life.
If you are over age 70.5, taking the standard deduction, and would like to make a gift to charity, consider taking advantage of the Qualified Charitable Distribution.
Retired homeowners likely have some equity in their homes that is actually a large "asset" that they don't think about, or consider valuable in any way. However, for most clients, their home equity is a large asset that should be evaluated and considered as part of their overall "portfolio". The best way to do this is to think of your home’s equity the same way you would think about an IRA. They are both assets that are available for withdrawals. Spending down your IRA is easy to understand and to execute, but how do you spend down your home?
Paying for college is a partnership! It is not a test of endurance. It is not an obligation. It should not take precedence to saving for retirement. It should not result in your own personal bankruptcy. Paying for college is a partnership shared by those vested in its benefits!
Those considering retiring ask questions such as, "How will my early retirement impact my future Social Security benefits?" or "If I work longer, will that boost my benefit?"
Financial independence does not result from a jackpot or inheritance. Instead, financial independence results from a lifetime of making prudent financial decisions. Over time, this incremental progress results in massive improvement in our financial lives.
Regardless of which decade of life you are in, financial responsibility usually comes down to managing a few basic goals: generating income, saving/investing money, controlling your living expenses, and protecting yourself from risks.
Life is filled with risks. While stock market, economic, or political risk is widely discussed in the press, there are other risks that financial advisors and clients must consider. One of the biggest and most uncertain risks has to do with the future high-cost medical care that is not covered by insurance.
In my last blog post, I discussed Faith in the Future as the first key to investment success. The second key is Patience.
The first key needed to obtain investment success is to have a resounding "faith in the future".
Aging in place.
Most individuals are covered for personal liability under their homeowners and automobile policies. There are limits, however, to the amount of protection these primary policies provide.
Sequence of return risk is a major factor in retirement security.
Rising markets have two very negative and interconnected effects. First, a rising market facilitates unrealistic hopes and high expectations about future stock returns. Second, a rising stock market actually lowers the future expected returns.
There are two basic categories of life insurance: term and various forms of cash value life insurance. Today, I am going to talk about term life insurance and ways to use it more creatively to not only obtain a more appropriate amount of long-term protection, but also to save money.
In my last blog post, I wrote about the use of Tax Bracket Smoothing as a technique to build wealth. In the video below, I expand on the concepts presented in the newsletter, and provide some demonstrations of how the strategy works, and how to confirm the value of such strategies.
What if I told you that you could build wealth by paying taxes—and paying them now instead of later? Most clients don’t want to pay taxes at all, let alone sooner rather than later. In fact it is common wisdom to defer income taxes as long as possible. How do you defer income and therefore taxes? The table to the right shows some typical income acceleration / deferral strategies.