Financial Planning

Keeping Up with the Joneses

Keeping Up with the Joneses

If you are the owner or the recent inheritor of a large IRA, the SECURE Act is likely to have a material impact on you and/or your heirs. The SECURE Act made significant changes to the way heirs are required to withdraw funds from these accounts, which will likely produce larger tax bills for many beneficiaries. This Navigator outlines strategies for both IRA owners and beneficiaries to minimize the adverse impacts of the SECURE Act.

The SECURE Act Part 2: Inherited IRAs

The SECURE Act Part 2: Inherited IRAs

If you are the owner or the recent inheritor of a large IRA, the SECURE Act is likely to have a material impact on you and/or your heirs. The SECURE Act made significant changes to the way heirs are required to withdraw funds from these accounts, which will likely produce larger tax bills for many beneficiaries. This Navigator outlines strategies for both IRA owners and beneficiaries to minimize the adverse impacts of the SECURE Act.

Preparing for Retirement? Follow These 3 Steps

The Vital Importance of IRAs

We have published this Navigator at this same time each of the past several years in order to highlight the importance of IRAs and to encourage our clients to make their annual IRA contributions prior to the tax filing deadline.

FSA or HSA: Choosing a Medical Savings Account

FSA or HSA: Choosing a Medical Savings Account

Flexible spending accounts (FSAs) and health savings accounts (HSAs) are both tax-advantaged accounts that allow you to pay for qualified medical expenses using pretax dollars. During open enrollment season for employment benefits,you may have the opportunity to choose between an FSA and an HSA. Understanding the advantages and disadvantages of each type of account is essential when it comes to making the right decision for you and your family.

Navigating the Challenges of Giving and Receiving Wealth

Navigating the Challenges of Giving and Receiving Wealth

Although Millennials are usurping them in other areas, Baby Boomers still have a firm grip on much of the country’s wealth. According to a Cerulli Associates study, Boomers should remain the wealthiest generation until 2030 at the earliest. Moreover, it is expected that Boomers will transfer $68 trillion to their successors over the next 25 years. Such an enormous transition of wealth can create challenges for both grantors and their beneficiaries. In this Navigator, we first discuss some strategies that older investors should consider in order to help ensure a smooth and efficient transition of wealth to their heirs or other beneficiaries; furthermore, we discuss how those beneficiaries can prepare themselves for the complexities that often accompany newfound wealth.

Women and the Wealth Gap

Women and the Wealth Gap

In personal finance, women face a different set of challenges than men. Some of these challenges are well known, like the wage gap, and some have only recently begun to be discussed, like the effect that has become known as the “wealth gap.”

Making the Most of Your Mortgage

Making the Most of Your Mortgage

For many Americans, their home is their single largest investment, usually representing a major proportion of their net worth. Given that homes typically sell for several times a buyer’s annual income, the majority of homebuyers borrow the bulk of the money needed to buy a home and then spend the majority of their working lives paying the money back, along with substantial amounts of interest. In this Navigator,  we  discuss  the  most common mortgage types and their defining characteristics in order to help readers, especially those who are less familiar with the mortgage market, better understand these products; we follow this with an examination of some key mortgage questions and considerations that homeowners or potential homeowners may face.

The CARES Act: An Overview

The CARES Act: An Overview

This is the third article in a three-part series on the CARES Act, a $2 trillion stimulus bill that was signed into law on March 27th, 2020. The law is designed to offer wide-ranging assistance to households and businesses, providing everything from cash infusions to hospitals and expanded access to COVID-19 testing to small business loans to expanded unemployment benefits.

The CARES Act: Relief for Individuals and Families

The CARES Act: Relief for Individuals and Families

This is the second article in a three-part series on the CARES Act, a $2 trillion stimulus bill that was signed into law on March 27, 2020. The law is designed to offer wide-ranging assistance to households and businesses, providing everything from cash infusions to hospitals and expanded access to COVID-19 testing to small business loans to expanded unemployment benefits.

The CARES Act: Relief for Small Business Owners

The CARES Act: Relief for Small Business Owners

This is the first article in a three-part series on the CARES Act, a $2 trillion stimulus bill that was signed into law on March 27, 2020. The law is designed to offer wide-ranging assistance to households and businesses alike, providing everything from cash infusions to hospitals and expanded access to COVID-19 testing to small business loans to expanded unemployment benefits.

The SECURE Act

The SECURE Act

The SECURE Act, which was signed into law at the beginning of the year, introduces new provisions intended to make retirement more secure for people across the country. Investors should be cognizant of the fact that the Act makes significant changes to IRAs, employer-sponsored retirement plans, and some aspects of the tax code, and will likely play a role in retirement planning.

Qualified Retirement Plans: Big Benefits for Small Businesses

Qualified Retirement Plans: Big Benefits for Small Businesses

In this Navigator, we examine the most common types of small business retirement plans and discuss their suitability for various types of businesses. Not participating in some sort of a qualified retirement plan is generally a mistake, in our estimation, as business owners can use retirement plans to cut tax liabilities and improve after-tax investment returns.

The Costs of Long-Term Care

The Costs of Long-Term Care

Those preparing for retirement today should also seek to prepare themselves for a growing financial concern: long-term care. Long-term care is increasingly needed by people over the age of 65, can be very expensive, and is generally not covered by standard insurances, so retirees may find themselves unexpectedly facing large bills. With preparation, these costs are manageable, so those looking ahead to retirement should factor long-term care expenses into their planning.

Five Tax-Saving Strategies for the Trump Era

Five Tax-Saving Strategies for the Trump Era

Minimizing taxes is important in building and protecting wealth over the long-term.  However, navigating the highly complex and ever-changing tax code is not an easy task.  The Tax Cuts & Jobs Act (often referred to as the “Trump Tax Cuts”) included a number of changes to the Federal tax code that will have a material impact on many Americans. You should understand these changes and be aware of tax strategies that could reduce your taxes under this new act.

The Navigator – Identity Theft & Data Breach: What Do I Do?

The Navigator – Identity Theft & Data Breach: What Do I Do?

As identity theft and data breaches become ever-more-common occurrences, protecting personal information and monitoring accounts for fraud have become increasingly important practices. In the aftermath of the 2017 Equifax breach, in which the personal information of 143 million Americans was stolen by hackers, it has become absolutely essential to take a proactive approach to your personal security. Fortunately, there are many ways to monitor your credit and reduce your risk of suffering from identity theft. Below are some steps that you should consider taking in order to better protect your personal information.

Why You Should Consider A Password Manager

Why You Should Consider A Password Manager

Password managers are digital vaults that help create and store passwords for online accounts and are an essential tool for ensuring your online security. Properly using a password manager can simplify your online life and, more importantly, make you less susceptible to problems like identity theft.

Focusing on the Controllable

Focusing on the Controllable

All of us have various concerns in our lives that command our time and energy. However, there is often little if anything that one can do to affect or control these worries.  This is especially true in the context of managing one’s personal finances: many investors spend far too much time and energy focusing on issues that they cannot control.

The Basics of Estate Planning

The Basics of Estate Planning

Estate  planning  matters;  you  want  to  ensure that, after your death, your hard-earned assets are distributed to the people or organizations about which you care in an efficient, inexpensive, and tax-advantageous manner. Proper estate planning adds complexity to your life, but a well thought-out estate plan can make a big difference in the inheritance left for your loved ones.

The Back-Door Roth IRA

The Back-Door Roth IRA

Roth IRAs can be highly useful retirement savings vehicles for investors. While it is true that you cannot deduct contributions to your Roth IRA, you can withdraw your money tax-free down the road in retirement if the appropriate holding period and age requirements are met. If your income level is above the minimum threshold, however, direct Roth IRA contributions are not permitted; thus, the back-door Roth IRA strategy allows savers who have a high income to nevertheless make annual Roth IRA contributions.

Fixed Annuities

Fixed Annuities

In a prior issue of the Navigator (Fall 2016), we delved into the complex and controversial world of variable annuities. In this Navigator, we tackle the somewhat simpler and less controversial but still very important topic of fixed annuities.

The Navigator – Fiduciary Duty

The Navigator – Fiduciary Duty

To achieve their financial goals, clients must be able to trust their financial advisors. Unfortunately, the financial advice industry is rife with conflicting interests, misguided incentives, and confusing terminology.

The Navigator – Behavioral Finance 101

The Navigator – Behavioral Finance 101

Behavioral finance combines psychology and economics to explain how investors act. Instead of assuming that people (e.g., investors) always make rational financial decisions, behavioral finance proponents argue that behavioral biases strongly influence financial decisions. Unfortunately, behavioral biases can have a detrimental impact on investment results; thus, it is crucial for investors to be aware of, understand, and be able to identify the various behavioral biases that may impact their investment decisions.

The Basics of Estate Planning

Roadmap for Heirs

When a loved one passes away, heirs are often burdened with substantial responsibilities relating to the estate division and other personal matters. Heirs’ responsibilities may include preparing funeral arrangements, reconciling financial accounts, selling assets, and coordinating various commitments. These tasks add stress to an already difficult and emotional time. To mitigate the stress and confusion that your heirs will inevitably experience after your death, we recommend you assemble a detailed outline of your personal affairs, which we are calling a “Roadmap for Heirs”.

Variable Annuities

Variable Annuities

Variable annuities are highly complex financial instruments that, despite their popularity, appear to be unsuitable for most investors. While these vehicles offer various theoretical guarantees that may appear attractive to certain investors, the exorbitant costs, poor liquidity, and potentially low returns offered by variable annuities raise questions about their appropriateness for many investors.

Custodial Services

Custodial Services

In our financial advisory role, we seek to work with clients to address the full spectrum of their financial needs. The investments we manage are on the asset side of our clients’ balance sheets, but it is just as important to make good judgments on the liability side. This Navigator is intended to provide useful and actionable information regarding the lending capabilities available at the two main custodians our clients use: Pershing, a division of Bank of New York Mellon, and Charles Schwab. In addition, we discuss other services that these custodians, and their affiliates, offer to Pekin Hardy clients.

Managing the Growing Cost of Education

Managing the Growing Cost of Education

The costs associated with college education in the United States have skyrocketed over the past 40 years, creating significant financial challenges for families who wish to provide for their children’s education. The large and growing financial burden posed by college education calls for thoughtful planning and disciplined saving on the part of parents. Fortunately, valuable savings tools are available to help families meet their education savings goals. This article discusses the most common education savings vehicles and provides guidance regarding the extent to which families should consider saving for education. Additionally, we discuss alternative strategies for helping families meet the financial challenges posed by college education costs.

A Social Security Primer

A Social Security Primer

The purpose of this Navigator is to explain the basics of Social Security benefits, to discuss a few particularly useful strategies, and to provide additional resources that may be useful for anyone who is thinking about how to optimize his or her Social Security benefits. We are providing a general summary and approach towards Social Security, while recognizing that each individual’s situation will undoubtedly be unique. Your specific questions about Social Security may not be addressed through this overview; please reach out to us for more personalized advice on this topic if you have such questions.

Life Insurance: A Risk Mitigation Tool that Should Not be Considered an Investment

Life Insurance: A Risk Mitigation Tool that Should Not be Considered an Investment

Life insurance can be a highly effective risk management tool that should have a place in most Americans’ comprehensive financial plans, but life insurance products should not be viewed as investments for a number of reasons. For most people, a term life insurance policy should provide cost-effective protection against the financial repercussions of the untimely demise of a family member while leaving the policyholder free to invest his or her capital in suitable investments.

Personal Liability Protection:  Umbrella Insurance for  High Net Worth Individuals

Personal Liability Protection: Umbrella Insurance for High Net Worth Individuals

For many individuals, an Umbrella insurance policy is an important form of added protection; for affluent individuals, such coverage can be critical. The maximum possible loss that can impact a policyholder’s possessions is generally quantifiable and limited by their value; loss from liability to third- parties is both unknown and potentially devastating. An Umbrella policy serves to greatly reduce this exposure and can be an essential part of an individual’s portfolio of personal protection coverages.

The Costs of Long-Term Care

Long-Term Care Insurance: Pitfalls and Advantages

The cost of long-term care has risen materially over the past few decades, creating financial hardship for millions of aging Americans and their families. As the cost of care continues to increase, so too does the need for a sound strategy for managing these potential costs. Purchasing long-term care insurance is one such strategy. This article discusses the structure of long-term care insurance, its advantages and drawbacks, and some key points to consider when deciding if long-term care insurance should be a part of your broader financial plan. In addition, we examine some alternative methods of managing this potential risk.

The Growing Threat of Identity Theft

The Growing Threat of Identity Theft

The risk of becoming a victim of identity theft or fraud has risen to an alarming level for most Americans, yet both the frequency and severity of these crimes continue to accelerate. Investors must be especially wary of this risk, given the potential consequences that could occur if their confidential personal information were to fall into the wrong hands. In this article, we discuss some of the specific risks that investors face with regard to identity theft, as well as some of the measures that they can take to reduce their risk of becoming a victim and to minimize the damage that could be caused if they do, in fact, fall victim to identity theft.