There is a lot of wedding talk in our office lately, with employees and employee’s children getting married. Weddings cost money and can be stressful, but is there a correlation between the cost of a wedding and the duration of the marriage? Emory University published a study called “A Diamond is Forever” and Other Fairy Tales: The Relationship between Wedding Expenses and Marriage Duration”. Below are some interesting facts:
A 401(k) is a retirement savings plan sponsored by an employer that lets workers save and invest a portion of their paycheck before taxes are taken out. 401(k) plans emerged in the 1980’s as a supplement to pensions. Pensions known as defined benefit plans became more and more expensive for large corporations as the aging demographics required more workers and fund performance to guarantee pension income for retired workers. But as the cost of running pensions escalated, employers started replacing them with 401(k) plans, a type of defined contribution plan.
Many of our parents and grandparent clients are hoping financial aid will be available to defray the ever rising cost of tuition for college. Yet, it is often confusing which type of assets influence their qualification for financial aid. The following is a quick summary of the assets guardians must disclose when completing the two top financial aid documents.
Since retirement accounts are not part of a previously established Will, they are not governed by its provisions. Hence, it is important to keep the beneficiaries on such accounts up- to-date as any changes made on your Will/Estate will not be reflected on your retirement accounts. Furthermore, any designations on retirement accounts would supersede the designations on Wills.
If you are a non-spousal beneficiary on an annuity contract, there is a lesser known tax strategy that can significantly reduce the income tax you may pay if there is a built up gain in the policy. Distributions from a non-qualified annuity contract are taxed “gain first” as ordinary income called income in respect to a decedent. When the owner of a non-qualified deferred annuity dies and leaves the money to a non-spouse individual beneficiary, that beneficiary has several different distribution options: 1) The Five-year Rule 2) Nonqualified Stretch or 3) Annuitization
We all remember the old adage “If you aim at nothing, you’re sure to hit it”. There are numerous studies out that confirm those who have written goals will more likely achieve them. Dr. Gail Matthews, a psychology professor at Dominican University in California, did a study on goal-setting with 267 participants. She found that you are 42 percent more likely to achieve your goals just by writing them down. The obvious alternative to not putting them in writing is drifting through life aimlessly reacting to events and circumstances, allowing them to dictate our purpose and accomplishments.
Imagine trying to hold 20 plus ping pong balls under water in a bath tub with just your two hands. Whether you’re a successful small business entrepreneur, corporate executive or medical professional, there are endless responsibilities to juggle. There is only so much brain band-width capacity to maintain and monitor those multiple duties. A few of these include financial record keeping, insurance issues, estate plans, portfolio management, business and personal cash flow, retirement planning, health care, home maintenance, family issues, the list goes on and on. The danger is the lack of time or a “ceiling of complexity” preventing you from managing all the details of your family’s financial affairs. The possible reasons people haven’t organized their affairs are many: Avoidance, procrastination, ambivalence, or they think they can just figure it all out on their own or will get around to it someday.
As we meet with prospective clients, we like to start with a simple but provocative question, “Suppose we’re meeting here three years from today, what has to have happened in your life personally or professionally for you to be happy with your progress?” This could be anything generically related to financial, health, spiritual, professional development or family matters. For example, common answers are: “Retirement income, Growth in liquid assets, Maintain health, Debt reduction or more family travel” to name a few.
Once we list these items, we organize them 1-5 to capture levels of priority for each. Undoubtedly, there are usually impediments or dangers lurking that could prevent them from achieving these key areas of progress. A few most noted are: Lack of a coordinated strategy, health concerns, unprepared for death of spouse, out of date estate plan, disorganized financial matters, higher income taxes or running out of money.
In times like these of market volatility, it’s easy to imagine the sum of all fears and let our emotions dictate our investing decisions. Historically, markets have trended upward over time, but not always on a smooth slope. As long term investors, we understand that periods of high volatility, while uncomfortable, can be expected. More importantly, short-term turbulence can present opportunities to add value over the long term.
How many of us, left to our own devices, will take the steps necessary on the critical financial matters that have a significant impact on our family? We tend to relegate them to the bottom of the urgent pile and hope they just never become an issue. We know they’re important but avoid dealing with them.
Here are a few of the most common issues that we find folks usually put off, procrastinate on or try to avoid:
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