Jul 15

Squished! What to Do When Financially Supporting Two Generations

 

 

Washington, D.C., July 15, 2014 – Many middle-aged Americans are beginning to find themselves in a tight spot, financially “sandwiched” between caring for older and younger generations. While juggling their own financial needs and obligations, these pre-retirees are responsible for supporting adult children grounded by a tough economy and aging parents requiring care and assistance.

 

Certified Financial Planner Board of Standards (CFP Board) Ambassador Paul Jarvis, CFP® shares ways Americans can prepare for and navigate supporting children and parents while maintaining their own financial goals.

 

“It can be overwhelming simultaneously supporting aging parents and your own children.  A focused financial plan will help you balance your willingness to help with your own financial well-being,” Jarvis says.

 

In the latest installment of “Let’s Talk Planning” blog and its “Financial Planning is for Everyone” series, the CFP Board shares best practices to ensure that Americans in the “accumulation years” – the two decades before retirement – can help their family without hurting themselves financially:

 

  • Define expectations and set boundaries.  If a young adult can’t find a job and turns to the Bank of Mom and Dad, or checks into the Mom and Dad Hotel, it’s important to define some terms. Similarly, the type and amount of care for elderly adults should be clearly articulated and put in writing, especially for other siblings or family members. Make sure that aging parents have documents in place specifying wishes for advanced and end-of-life care, as well as designating power-of-attorney for medical care and financial matters. 

 

  • Do not compromise your capacity to earn a living Sometimes working while taking care of others becomes just too much, and it seems necessary or easier to quit.  Avoid this if at all possible, as retirement and Social Security benefits will be permanently reduced, and re-entry into the workforce at a comparable level can be extremely difficult. 

 

  • Learn what assistance is available from the government, community, and other resources.  In some cases, you may be eligible for payment for taking care of an aging relative on Medicaid.  Call your local Medicaid office and see if your state offers reimbursement to caretakers under the Cash & Counseling program. 

 

  • Talk to a CFP® professional.  Financial and physical caretaking has all sorts of ramifications, including in terms of taxes, cash flow, insurance coverage, and asset management.  Identifying and managing all these issues are what a CFP® professional does best. 

 

Being sandwiched between the needs of your parents and children should not come at the cost of your own financial goals. Reaching out to the people and organizations that can help you and taking some financially-wise steps – such as meeting with a CFP® professional – can transform the job of supporting family from a burden to an obligation of love and pride.

 

 

ABOUT LET’S TALK PLANNING

“Let’s Talk Planning” is a blog by CFP Board Consumer Advocate Eleanor Blayney, CFP®, with posts each week with practical financial planning tips for consumers, as well as insights into the latest developments at CFP Board.  In addition to offering counsel on timely and evergreen financial planning topics, once a month Blayney will remind readers that “financial planning is for everyone,” with tips for consumers of all ages and life stages.

 

ABOUT CFP BOARD

The mission of Certified Financial Planner Board of Standards, Inc. is to benefit the public by granting the CFP® certification and upholding it as the recognized standard of excellence for competent and ethical personal financial planning. The Board of Directors, in furthering CFP Board’s mission, acts on behalf of the public, CFP® professionals and other stakeholders. CFP Board owns the certification marks CFP®,Certified Financial Planner™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.  CFP Board currently authorizes more than 70,000 individuals to use these marks in the U.S.

 

CONTACT: Jessica Lewis, Communications Specialist P: 202-379-2256 M:202-550-8259 E: jlewis@cfpboard.org Twitter: @cfpboardmedia

 

he information in this article is not intended to be tax and/or legal advice and should not be treated as such. You should consult with your tax advisor and/or attorney to discuss your personal situation before making any decisions.

Additionally, If you are looking for additional help, seek help from a CERTIFIED FINANCIAL PLANNER™ Professional that can look at your individual situation holistically.

 

May 20

The Selfless Job of Motherhood: Supporting Your Child’s Financial Future at Every Age

CFP Board Advises Mothers on Instilling Children with Financial Responsibility

 

Fargo, ND, May 20, 2014 – Mothers make all kinds of sacrifices for their families, including financial sacrifices to help and protect them, from covering countless childhood expenses to helping an older child during his or her own financial challenges. Mother’s Day is just one special day to honor her and recognize her willingness to make such financial sacrifices while also taking important steps to reduce their need.

 

Certified Financial Planner Board of Standards (CFP Board) Ambassador Paul Jarvis, CFP® shares ways in which mothers can improve their children’s financial situation and their own at the same time

 

“My mother kept me engaged with money very early on by teaching me to save with a goal in mind.  I still carry that engagement today and share that enthusiasm to improve my clients’ lives,” Jarvis says.

 

In the latest installment of “Let’s Talk Planning” blog and its “Financial Planning is for Everyone” series, the CFP Board provides advice for raising financially smart and prepared children of all ages:

 

  • Preschoolers: Cultivate the early awareness of money by giving your 4 or 5 year old a small allowance. Explain that money has various uses – for spending, saving, or giving – and reinforce this concept by designating three jars or piggy banks for these purposes.

 

  • Elementary school age and pre-teens: Open up a savings account for your child, making sure there are no account fees or minimum balances. Let your kids carry small amounts of cash so that they learn what things cost and master the mathematics of transactions.

 

  • Teenagers: Provide an allowance for personal items and teach teens to use a budget to manage these funds. If appropriate, it’s a great time to set up a Roth IRA as a first lesson in long-term, retirement savings.

 

  • College students and young adults: Introduce your children to your financial advisor and accountant, and ask these professionals to spend an hour or so providing some basic counsel on investing, money management, and taxes. Get your college-bound student fully engaged with the finances of higher education, including creating a contract with your child for expenses you will be financing, outlining expectations and any repayment terms.

 

  • Adult children with kids of their own: Respect their independence and financial choices. If you offer help, consider paying for a CFP® professional to guide them out of trouble, rather than you using your own resources to make things “all better.”

 

Teaching children about finances, no matter what age they are, involves a lot of effort and patience from already busy moms. Enlist the help of a CERTIFIED FINANCIAL PLANNER™ Professional who, through careful planning, can help position both mother and child for long-term financial success.

 

 

ABOUT LET’S TALK PLANNING

“Let’s Talk Planning” is a blog by CFP Board Consumer Advocate Eleanor Blayney, CFP®, with posts each week with practical financial planning tips for consumers, as well as insights into the latest developments at CFP Board.  In addition to offering counsel on timely and evergreen financial planning topics, once a month Blayney will remind readers that “financial planning is for everyone,” with tips for consumers of all ages and life stages.

 

ABOUT CFP BOARD

The mission of Certified Financial Planner Board of Standards, Inc. is to benefit the public by granting the CFP® certification and upholding it as the recognized standard of excellence for competent and ethical personal financial planning. The Board of Directors, in furthering CFP Board’s mission, acts on behalf of the public, CFP® professionals and other stakeholders. CFP Board owns the certification marks CFP®, Certified Financial Planner™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.  CFP Board currently authorizes more than 69,000 individuals to use these marks in the U.S.

 

CONTACT: Dan Drummond, Director of External Relations P: 202-379-2252 M: 202-550-4372 E: ddrummond@cfpboard.org Twitter: @cfpboardmedia

 

The information in this article is not intended to be tax and/or legal advice and should not be treated as such. You should consult with your tax advisor and/or attorney to discuss your personal situation before making any decisions.

Additionally, If you are looking for additional help, seek help from a CERTIFIED FINANCIAL PLANNER™ Professional that can look at your individual situation holistically.

 

Apr 22

There’s No Place Like Home: Steps to Take When Buying Your First Home

 

 

Washington, D.C., April 22, 2014 –Preparing to buy your first home is one of life’s most monumental steps. As with other milestones, such as getting married or having a baby, new homeowners must face the financial realities that come with investing in a home of their own.

 Certified Financial Planner Board of Standards (“CFP Board”) Ambassador Paul Jarvis, CFP® provides guidance on the “realty realities” that all new homeowners should be prepared to address.

 “Buying your first home is a wonderful endeavor but requires thoughtfulness and planning.  Taking the time to adequately budget, title, and protect your investment allows you to have a home you own not a home that owns you,” says Jarvis.

 In the latest installment of CFP Board’s “Let’s Talk Planning” blog and its “Financial Planning is for Everyone” series, the CFP Board shares three aspects of home ownership to consider when you close on and get the keys to your new home.

 

  1. Titling your home: There are several ways to own a house. What’s best for you depends on several factors:  For example, are you the sole purchaser, or are you buying it with another individual? If it’s just you, make sure you have a will to direct where the house should go in the event of your death. If you will be a co-owner, the important question is whether you want the home to automatically transfer to the other individual at your death.

 

  1. Insuring your home: If you have a mortgage, you must have insurance, but you do have choices about the kind of protection you buy. Homeowner’s policies differ with respect to the types of perils they cover, such as whether they include what’s inside your home and the monetary benefit you would receive if your home is destroyed.

 

  1. Maintaining your home: No more calling the landlord when there’s a water leak or the dishwasher dies. You need to plan for these events by setting up a “repair” account and funding it monthly. Once you move into your new home, get the names of some reputable contractors who do good work at reasonable costs.

 

Homeownership comes with more than enough new responsibilities. But there are two options new homeowners need not consider: mortgage insurance and bimonthly payment plans offered by the mortgage servicer. Mortgage insurance only makes sense it you cannot qualify for traditional life insurance because of health issues.  And you can increase your monthly payments on your own, shortening the duration of your mortgage and lowering your interest costs, without incurring bank service fees.

 If the homeownership process seems complicated, talk to a CFP® professional to prepare and plan. A Certified Financial Planner™ professional can help you focus on the important issues of owning a home: protection, preservation, and a plan for transfer. A home is an investment that needs your constant attention; enlist the help of a professional to take care of it.

  

ABOUT LET’S TALK PLANNING

“Let’s Talk Planning” is a blog by CFP Board Consumer Advocate Eleanor Blayney, CFP®, with posts each week with practical financial planning tips for consumers, as well as insights into the latest developments at CFP Board.  In addition to offering counsel on timely and evergreen financial planning topics, once a month Blayney will remind readers that “financial planning is for everyone,” with tips for consumers of all ages and life stages.

 

ABOUT CFP BOARD

The mission of Certified Financial Planner Board of Standards, Inc. is to benefit the public by granting the CFP® certification and upholding it as the recognized standard of excellence for competent and ethical personal financial planning. The Board of Directors, in furthering CFP Board’s mission, acts on behalf of the public, CFP® professionals and other stakeholders. CFP Board owns the certification marks CFP®, Certified Financial Planner™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.  CFP Board currently authorizes more than 69,000 individuals to use these marks in the U.S.

 

CONTACT: Paul Jarvis, CFP Board Ambassador P: 701-451-3059 E: pjarvis@cfpboardambassador.org

 

The information in this article is not intended to be tax and/or legal advice and should not be treated as such. You should consult with your tax advisor and/or attorney to discuss your personal situation before making any decisions.

Additionally, If you are looking for additional help, seek help from a CERTIFIED FINANCIAL PLANNER™ Professional that can look at your individual situation holistically.

Mar 17

Three Key Retirement Income Considerations

 

 

Average life expectancy has risen steadily in the United States, so retirees and soon-to-be retirees need to ensure that they don’t tap their nest eggs too heavily.

 

Notice

There are two factors that can determine whether you’ll have a comfortable retirement: The amount of money you’ve saved and how quickly you spend that nest egg after you retire. 

 

The rate of annual withdrawals from personal savings and investments helps determine how long those assets will last and whether the assets may be able to generate a sustainable stream of income over the course of retirement. A number of factors will influence your choice of annual withdrawal rate.

 

The following are three key considerations.

 

Consideration 1: Your Age and Health

As you think about what your withdrawal rate should be, begin by considering your age and health. Although you can’t predict for certain how long you will live, you can make an estimate. However, it may not be wise to base your estimate on average life expectancy for your age and sex, particularly if you are healthy. The average life expectancy has risen steadily in the United States, reaching 78.2 years.¹

 

Consideration 2: Inflation

Inflation is the tendency for prices to increase over time. Keep in mind that inflation not only raises the future cost of goods and services, but also affects the value of assets set aside to meet those costs. To account for the impact of inflation, include an annual percentage increase in your retirement income plan.

 

How much inflation should you plan for? Although the rate varies from year to year, U.S. consumer price inflation has averaged under 3% over the past 30 years.2 So, for long-term planning purposes, you may want to assume that inflation would average in the range of 3% to 4% a year. If, however, inflation flares up after you have retired, you may need to adjust your withdrawal rate to reflect the impact of higher inflation on both your expenses and investment returns. Also, once you retire you should assess your investment portfolio regularly to ensure that it continues to generate income that will at least keep pace with inflation.

 

Consideration 3: Variability of Investment Returns

When considering how much your investments may earn over the course of your retirement, you might think you could base assumptions on historical stock market averages, as you may have done when projecting how many years you needed to reach your retirement savings goal. But once you start taking income from your portfolio, you no longer have the luxury of time to recover from possible market losses, as retirees and near-retirees during this latest market downturn have experienced firsthand.

 

For example, if a portfolio worth $250,000 incurred successive annual declines of 12% and 7%, its value would be reduced to $204,600, and it would require a gain of nearly 23% the next year to restore its value to $250,000.3 When a retiree’s need for annual withdrawals is added to poor performance, the result can be a much earlier depletion of assets than would have occurred if the portfolio returns had increased steadily. While it’s possible that your portfolio will not experience any losses and will even grow to generate more income than you expected, it’s safer to assume some setbacks will occur.

 

Your financial professional can help you determine a withdrawal strategy that can minimize the drain on your portfolio.

 

Source/Disclaimer:

1Source: Center for Disease Control, March 2012 (based on 2009 data, latest available).
2Source: Bureau of Labor Statistics, January 2014.
3Example is hypothetical and for illustrative purposes only. Your results will vary.

 

The information in this article is not intended to be tax and/or legal advice and should not be treated as such. You should consult with your tax advisor and/or attorney to discuss your personal situation before making any decisions.

Additionally, If you are looking for additional help, seek help from a CERTIFIED FINANCIAL PLANNER™ Professional that can look at your individual situation holistically.

 

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Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management Systems Inc. nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber’s or others’ use of the content.

© 2014 Wealth Management Systems Inc. All rights reserved.

“United Capital and Wealth Management Systems Inc. are separate and unrelated companies.”

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