Ballin' on a Budget

Contributed by: Josh Bitel

When I was fresh out of college, one of the most important things for me to learn was how to budget properly. Considering I was taking on my first job with level, predictable income, I knew that it was critical for me to understand where my money goes each month. If I didn’t identify opportunities for savings, I knew I would blow through my money quickly, but I wasn’t sure where to start!

Identifying Financial Goals

Before I could create a budget, I had to identify some goals in order to give my budget a sense of direction. My goals were more short term in nature (pay down student loans, save for vacation, etc.), but long term goals are just as important. If you aim to retire someday, or a child’s education expenses are a concern, budgeting with these goals in mind is certainly a good idea. Once you have a clear picture of what you want to achieve with your budget, it can become much easier to accomplish these goals.

Understanding Monthly Income and Expenses

One of the more difficult, but most important, components of a budget is identifying monthly income and expenses. There is software available that you can leverage, or you can use the old school method and take pen to paper. Regardless of how you come to a conclusion, it is imperative to cover all the bases.

When considering income (outside of the obvious salary or wages), be sure to include any dividends or interest received. Alimony or child support expenses may also come into play depending on your situation. Expenses may be divided into two categories: fixed and discretionary. Fixed expenses are generally easier to document --  these will be your recurring bills or debt payments (Food and transportation can also be captured here). Discretionary expenses are generally more difficult to record (Entertainment expenses, or hobbies and miscellaneous shopping trips are common line items here). It’s also important to keep in mind any out of pattern expenses, like seasonal or holiday gifts, or car and home maintenance. Remember to always keep your goals in mind when crafting your budget!

Once you’ve gotten grasp on your monthly income and expenses, compare the two totals. If you are spending less than you earn, you’re on the right track and can explore ways to use the extra income (save!). Conversely, if you find that you are earning less than you spend, use your budget to identify ways to cut back your discretionary spending. With a little bit of discipline you can start finding capacity to save in no time!

Monitor your Budget & Stay on Track.

Be sure you keep an eye on your budget and make changes when necessary. This doesn’t mean you have to track every nickel you spend; you can be flexible and still be comfortable! It is important to stay disciplined with your budget however, and be aware that unexpected expenses may pop up. With proper cash management, these unexpected events can feel less crippling. To help stay on track, you may find a budgeting software that you like to use, do your research and find one that is suitable for you. A vital takeaway, and something that can go a long way to help increase savings, is being able to identify a need vs. a want. If you can limit your “want” spending, you may be surprised how quickly you can save!

Josh Bitel is a Client Service Associate at Center for Financial Planning, Inc.®

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The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Josh Bitel and not necessarily those of Raymond James.

Finding the Right Professional Partner: A Personal Story

Contributed by: Sandra Adams, CFP®, CeFT™

I suffer from migraine headaches. Soon after I graduated from college, I began to get these debilitating headaches more and more often (up to 3 or 4 times a week), sometimes lasting entire days at a time.  I have spent years working with numerous medical doctors, as well as tracking the headaches -- what I eat and drink, how I sleep and various other life habits in an attempt to find a way to stop them from occurring.  The traditional medical doctors I’ve seen have prescribed numerous medications (and subsequently increased dosages of those medications) in an attempt to treat the headaches – but with no results. Until recently, when I took a different approach…

I found a different professional partner to consult with about my headaches – a doctor who consults on the whole body/body systems and does not try to treat just one symptom. 

By working with a doctor who was looking at how my entire body was functioning, I found out that there were some underlying problems that existed with how my body was handling stress and by adjusting a few small things with my diet and sleep, I have all but eliminated by migraine headaches over the last several months.

What, you might ask, does this have to do with financial planning? 

Choosing the right professional partner, no matter what facet of your life, is extremely important.  Just as it made a world of difference for me to find the right medical partner, it is important for clients to find the right financial partner.  A partner who only focuses on investments or just on insurance may not be the right partner for you if you truly need someone to look at your entire financial “body” to make sure everything is working together in perfect harmony.  If you have not yet found the right professional financial partner and are looking for someone to look at your entire financial lives, contact our Center Team – we are here to help!

Sandra Adams, CFP® , CeFT™ is a Partner and Financial Planner at Center for Financial Planning, Inc.® Sandy specializes in Elder Care Financial Planning and is a frequent speaker on related topics. In addition to her frequent contributions to Money Centered, she is regularly quoted in national media publications such as The Wall Street Journal, Research Magazine and Journal of Financial Planning.

Guide to the 2017 Benefits Open Enrollment

Contributed by: Nick Defenthaler, CFP®

As summer winds down and we quickly approach the holiday season, many employees will soon be updating their benefit options at work during open enrollment (click here to check out our webinar from last year on this topic).  It’s extremely easy to procrastinate and set that employer benefit booklet off to the side and put it off until you receive the e-mail from HR reminding you it’s due in a few days.  You scramble to complete the forms and more than likely, not spend as much time as you should on electing the benefits that will impact you for the next 365 days.  We’ve all been there, but it’s important to carve out a few hours several weeks before your benefit elections are due to ensure you put in enough time to thoroughly review your options.

If offered by your employer, below are some benefits that you should have on your radar:

• 401k Contributions

  • Are you maximizing your account? ($18,000 or $24,000 if you’re over 50 in 2017)

  • Traditional vs. Roth – click here to learn more about which option could make sense for you  

• Health Insurance

  • HMO vs. PPO - Click here to learn more about how these plans differ from a cost and functionality standpoint  

• Flex Spending Accounts (FSA)

  • “Use it or lose it” – click here to learn more 

  • Medical FSA maximum annual contribution 2017 is $2,550

  • Dependent care FSA maximum annual contribution for 2017 is $5,000

• Health Savings Accounts (HSA)

  • Can only be used if covered under a high-deductible health care plan

  • Click here to learn more about the basics of utilizing a HSA 

    • $3,400 maximum annual contribution in 2017 if single ($4,400 if over 50)

    • $6,750 maximum annual contribution in 2017 for a family ($7,750 if over 50)

• Life and Disability Insurance

  • Most employers will offer a standard level of coverage that does not carry a cost to you as the employee (example – 1X earnings)

  • If you’re in your 20s, 30s and 40s, in most cases, the base level of coverage is not sufficient, therefore, it’s important to consult with your advisor on the on appropriate amount of coverage given your own unique situation  

As with anything related to financial planning, every situation is different.  The benefits you choose for you and your family more than likely will not make the most sense for your lunch buddy co-worker.  We encourage all clients to loop us in when reviewing their benefit options during open enrollment – don’t hesitate to pass along any questions you might have to ensure you’re making the proper elections that align with your own personal financial goals.

Nick Defenthaler, CFP® is a CERTIFIED FINANCIAL PLANNER™ at Center for Financial Planning, Inc.® Nick works closely with Center clients and is also the Director of The Center’s Financial Planning Department. He is also a frequent contributor to the firm’s blogs and educational webinars.

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This information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete.

Qualified Charitable Distributions: Giving Money While Saving It

Contributed by: Nick Defenthaler, CFP®

Late last year, the Qualified Charitable Distribution (QCD) from IRAs for those over the age of 70 ½ was permanently extended through the Protecting Americans from Tax Hikes (PATH) Act of 2015. Previously, the QCD was constantly being renewed at the 11th hour in late December, making it extremely difficult for clients and financial planners to properly plan throughout the year. If you’re over the age of 70 ½ and give to charity each year, the QCD could potentially make sense for you. 

QCD Refresher

The Qualified Charitable Distribution only applies if you’re at least 70 ½ years old. It essentially allows you to donate your entire Required Minimum Distribution (RMD) directly to a charity and avoid taxation on the dollars coming from your IRA. Normally, any distribution from an IRA is considered ordinary income from a tax perspective, however, by utilizing the QCD the distribution from the IRA is not considered taxable if the dollars go directly to a charity or 501(c)(3) organization.    

Let’s look at an example:

Sandy, let’s say, recently turned 70 ½ in July 2016 – this is the first year she has to take a Required Minimum Distribution (RMD) from her IRA which happens to be $25,000. Sandy is very charitably inclined and on average, gifts nearly $30,000/year to her church. Being that she does not really need the proceeds from her RMD, but has to take it out of her IRA this year, she can have the $25,000 directly transferred to her church either by check or electronic deposit. She would then avoid paying tax on the distribution. Since Sandy is in the 28% tax bracket, this will save her approximately $7,000 in federal taxes!

Rules to Consider

As with any strategy such as the QCD, there are rules and nuances that are important to keep in mind to ensure proper execution:

• Only distributions from IRAs are permitted for the QCD. Simple and SEP IRAs must be “inactive.”

  • Employer plans such as a 401k, 403b, 457 do not allow for the QCD.

  • The QCD is permitted within a Roth IRA but this would not make sense from a tax perspective being that Roth IRA withdrawals are tax-free by age 70 ½. *

• Must be 70 ½ at the time the QCD is processed.

• The funds from the QCD must go directly to the charity – the funds cannot go to you as the client first and then out to the charity.

• The most you can give to charity through the QCD in a given year is $100,000, even if this figure exceeds the actual amount of your RMD.

The QCD can be a powerful way to achieve one’s philanthropic goals while also being tax-efficient. The amount of money saved from being intentional with how you gift funds to charity can potentially keep more money in your pocket, which ultimately means there’s more to give to the organizations you are passionate about. Later this month, we will be hosting an educational webinar on philanthropic giving – click here to learn more and register, we hope to “see” you there!

Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals are permitted.

Nick Defenthaler, CFP® is a CERTIFIED FINANCIAL PLANNER™ at Center for Financial Planning, Inc.® Nick works closely with Center clients and is also the Director of The Center’s Financial Planning Department. He is also a frequent contributor to the firm’s blogs and educational webinars.

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The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete. Any opinions are those of Nick Defenthaler and are not necessarily those of Raymond James. Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person's situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.

Adjusting the Secret Sauce in your Financial Plan

Contributed by: Laurie Renchik, CFP®, MBA

Investing in your financial future is a journey that doesn’t start or stop at retirement. Creating financial independence to support your future is a work in progress practiced over a lifetime. While it is reasonable to assume that the approach for a 35-year-old may not be appropriate for a 55-year-old, there is a common thread that emerges regardless of age. As priorities shift and circumstances change, financial plans and investment portfolios need periodic adjustments to stay in sync with your life. If your life journey is anything like mine, some plans work out perfectly and others may require course corrections to stay on track. I have found that the secret sauce is not just THE financial plan; but rather the consistent financial planning process along the way.

Let’s consider a 55-year old with a plan to retire in five years at the age of 60. In this transition period, the focus is shifting from saving and accumulating to preparing to withdraw income from retirement accounts; commonly referred to as the distribution phase. Having the confidence to retire without worry of spending down the nest egg too quickly is a common concern for folks in this transition phase. Sustaining the nest egg especially in the face of events that are beyond control—like market corrections, changing economic backdrops, and business cycles—are why financial plans and investment management go hand and hand.

I have found that considering a range of “what-if” scenarios in order to address concerns before retirement is a productive approach to addressing an unknown future that could unfold during your retired years.

1. Market corrections:  In the early years of retirement, a portfolio that goes down in value during a market correction may suffer initially and cause stress for the recent retiree.
   
   ACTION: Don’t panic. When things go in directions we don’t like, the natural inclination is to take action. To avoid a reactive response, start out with a properly diversified portfolio which includes appropriate asset allocation, ready cash on hand to support income needs, as well as a process for monitoring the big picture. Review your plan for confirmation.    
    

2.  Inflation is higher than expected: With inflation, things cost more over time eroding the value of savings especially when considering a 30 or 40-year retirement.
   
   ACTION: We don’t know how much inflation will spike or fall in the future. Model a range of scenarios in your baseline income assumptions to understand the potential impact. Revisit the areas of rising costs in your plan as part of your review process. Your financial plan should be built to withstand uncertainties.
    

3. Lower than anticipated market returns: A plan that is monitored consistently and customized to your long-term retirement goals can include the analysis and financial independence calculations to easily take into consideration lower than expected returns. 

ACTION: Build in a margin of safety in your baseline assumptions as a buffer to absorb the impact of lower than expected market returns. Put yourself in the best position to achieve your goals by prioritizing in advance where you can make incremental changes so that clarity and purpose are fundamental to your decision. 

Life has a wonderful, unpredictable way of introducing lots of sticky details into the mix. Your financial planner can help with the details and changes needed to take care of your nest egg by working with you to adjust the secret sauce as needed along the way.

Laurie Renchik, CFP®, MBA is a Partner and Senior Financial Planner at Center for Financial Planning, Inc.® In addition to working with women who are in the midst of a transition (career change, receiving an inheritance, losing a life partner, divorce or remarriage), Laurie works with clients who are planning for retirement. Laurie is a member of the Leadership Oakland Alumni Association and is a frequent contributor to Money Centered.

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Asset allocation and diversification do not ensure a profit or guarantee against loss.

Medicare Open Enrollment

Contributed by: Kali Hassinger, CFP®

As the weather changes and fall begins, there seems to be a general shift from the summer mindset to a more focused fall mentality.  Maybe it’s because, even well into adulthood, we’re accustomed to that “back-to-school” switch.  If you are currently enrolled in Medicare (not quite school, but significant nonetheless!), fall will continue to mark an important time of year because the Medicare open enrollment period begins on October 15th and lasts until December 7th.  This is the time when Medicare participants can update their health plans and prescription drug coverage for the following year. 

If you participate in a Medicare health and/or prescription plan, it’s important to be sure that your coverage will continue to meet your needs in the year to come.  Plans will send out notification materials if coverage is changing, but, even if it isn’t, it may be worth comparing your current coverage to other options.  If you are thinking of updating your coverage, there are several items that you should consider. 

Other coverage options:

If you are currently covered by or eligible for coverage through another provider, such as your former employer, you’ll want to understand how this plan works with Medicare.  Most retiree plans are designed to coincide with Medicare for those 65 and older, but you’ll want to be sure that the premiums and plan benefits are more advantageous than the open market Medicare options.

Cost:

This may seem like a given, but there are several cost factors to take into consideration.  Premiums, deductibles, and other costs can add up throughout the year, so it’s important to have a grasp of the plan’s monthly AND annual expenses.

Accessibility: 

Are the doctors and pharmacies who participate in this plan convenient for you?  If you have a current doctor or pharmacy that you want to continue using, be sure that they are in network.

Quality of Coverage:

Perhaps another seemingly obvious but important consideration, quality of coverage means how well does the plan actually cover the services you need.   Some plans require referrals and limit (or won’t provide) coverage if you go out of network.  If you have ongoing prescriptions, make sure the drugs are covered and that you understand any rules that may affect your prescription in the future.  

It’s important to understand and compare your Medicare options, but it’s easy to be overwhelmed by the process.  Raymond James partners with a group called Health Plan One to help clients strike the right balance between appropriate coverage and healthcare costs.  Our office has the opportunity to host a webinar with HPOne on October 23rd at 1:00 PM, and you can register for the webinar by clicking here.

Kali Hassinger, CFP® is an Associate Financial Planner at Center for Financial Planning, Inc.®

Planning for Health Insurance and Medical Expenses in Retirement

Contributed by: Matt Trujillo, CFP®

At any age, health care is a priority. However, when you retire, you will probably focus more on health care than ever before. Staying healthy is your goal, and this can mean more visits to the doctor for preventive tests and routine checkups. There's also a chance that your health will decline as you grow older, increasing your need for costly prescription drugs or medical treatments. That's why having the right health insurance for you is extremely important.

If you are 65 or older when you retire, your worries may lessen when it comes to paying for health care--you are most likely eligible for certain health benefits from Medicare, a federal health insurance program available upon your 65th birthday. But if you retire before age 65, you'll need some way to pay for your health care until Medicare kicks in. Generous employers may offer extensive health insurance coverage to their retiring employees, but this is the exception rather than the rule. If your employer doesn't extend health benefits to you, you may need to buy a private health insurance policy (which may be costly), extend your employer-sponsored coverage through COBRA, or purchase an individual health insurance policy through either a state-based or the federal health insurance Exchange Marketplace.

But remember, Medicare won't pay for long-term care if you ever need it. You'll need to pay for that out of pocket, rely on benefits from long-term care insurance (LTCI), or if your assets and/or income are low enough, you may qualify for Medicaid.

As mentioned, most Americans automatically become entitled to Medicare when they turn 65. In fact, if you're already receiving Social Security benefits, you won't even have to apply--you'll be automatically enrolled in Medicare. However, you will have to decide whether you need only Part A coverage (which is premium-free for most retirees) or if you want to also purchase Part B coverage. Part A, commonly referred to as the hospital insurance portion of Medicare, can help pay for your home health care, hospice care, and inpatient hospital care. Part B helps cover other medical care such as physician care, laboratory tests, and physical therapy. If you want to pay fewer out-of-pocket health-care costs, you may also choose to enroll in a managed care plan, or private fee-for-service plan under Medicare Part C (Medicare Advantage). If you don't already have adequate prescription drug coverage, you should also consider joining a Medicare prescription drug plan offered in your area by a private company or insurer that has been approved by Medicare.

Medigap Policies:

Unfortunately, Medicare won't cover all of your health-care expenses. For some types of care, you'll have to satisfy a deductible and make co-payments. That's why many retirees purchase a Medigap policy.

Unless you can afford to pay for the things that Medicare doesn't cover, including the annual co-payments and deductibles that apply to certain types of care, you may want to buy some type of Medigap policy when you sign up for Medicare Part B. There are 10 standard Medigap policies available. Each of these policies offers certain basic core benefits, and all but the most basic policy (Plan A) offer various combinations of additional benefits designed to cover what Medicare does not. Although not all Medigap plans are available in every state, you should be able to find a plan that best meets your needs and your budget.

When you first enroll in Medicare Part B at age 65 or older, you have a six-month Medigap open enrollment period. During that time, you have a right to buy the Medigap policy of your choice from a private insurance company, regardless of any health problems you may have. The company cannot refuse you a policy or charge you more than other open enrollment applicants.

Long-term care insurance and Medicaid:

The possibility of a prolonged stay in a nursing home weighs heavily on the minds of many older Americans and their families. That's hardly surprising, especially considering the high cost of long-term care.

Many people in their 50s and 60s look into purchasing Long Term Care Insurance (LTCI). A good LTCI policy can cover the cost of care in a nursing home, an assisted-living facility, or even your own home. If you're interested, don't wait too long to buy it--you'll need to be in good health. In addition, the older you are, the higher the premium you'll pay.

You may also be able to rely on Medicaid to pay for long-term care if your assets and/or income are low enough to allow you to qualify. But check first with a financial professional or an attorney experienced in Medicaid planning. The rules surrounding this issue are numerous, complicated and can affect you, your spouse, and your beneficiaries and/or heirs.

The issue of how to properly plan for health insurance in retirement is complex and multi-faceted. As with many aspects of good financial health I recommend working with a qualified professional to address your evolving health care needs, and to ensure that you and your family have the proper coverage for your circumstances.

Matthew Trujillo, CFP®, is a Certified Financial Planner™ at Center for Financial Planning, Inc.® Matt currently assists Center planners and clients, and is a contributor to Money Centered.

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This information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete. Long Term Care insurance policies have exclusions and/or limitations. The cost and availability of Long Term Care insurance depend on factors such as age, health, and the type and amount of insurance purchased. As with most financial decisions, there are expenses associated with the purchase of Long Term Care insurance. Guarantees are based on the claims paying ability of the insurance company.

Is it Time for You to “Come Clean” with Your Financial Planner?

Contributed by: Sandra Adams, CFP®, CeFT™

Recently, I had an awakening experience with a long time client.  For years, my client has been very focused on investment returns and fees.  We began working together during the downturn in 2008 (he had been with the firm, but working with another planner for years before that).  This client is always worried about losing too much or not taking enough risk; when in reality, he needs no more than his current risk profile to help reach his goals.  I struggle to find ways to prove to him how solid his financial and investment plan is.

During our recent meeting, our conversation took a different turn than conversations of the past.  He got very emotional and disclosed to me that money really makes him very anxious.  He went on to tell me about some very personal things that have happened in his past, both with personal relationships and in his business life that made him distrust his ability to make good financial decisions.  To this day, he still gets nervous about every financial decision, and is never sure he is making the right one – he is always waiting for the something to go horribly wrong. 

Our meeting lasted much longer than normal and he apologized for “breaking down”.  I, in turn, thanked him for giving me the profound insight I needed to serve him better as his planner.  I now understand his view of money, and can find ways to address his fears and anxieties like I never could have before.  I thanked him for having enough trust in me to share his story.

Many of us have “money” stories that are not kind – those that cause us to feel fear and anxiety, and those that may still interfere with our ability to make rational financial decisions. 

If you have things in your history that you feel impact your financial decision making, share them with your financial planner.  With the understanding of your money fears, your financial planner will be able to assist you, on an even deeper level, in making the best financial decisions for your future.

Sandra Adams, CFP® , CeFT™ is a Partner and Financial Planner at Center for Financial Planning, Inc.® Sandy specializes in Elder Care Financial Planning and is a frequent speaker on related topics. In addition to her frequent contributions to Money Centered, she is regularly quoted in national media publications such as The Wall Street Journal, Research Magazine and Journal of Financial Planning.

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Any opinions are those of Sandra D. Adams and not necessarily those of Raymond James. Every investor's situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

Managing our Minds as We Age

Contributed by: Matthew E. Chope, CFP®

I recently read an article about cognitive decline as we age.  The article shocked me and made me realize why a strong partnership with a good financial planner can be absolutely vital as we get older.  The research article by Michael Finke, John Howe, and Sandra Huston called “Old Age and the Decline in Financial Literacy” describes the situation well. The authors provided a financial literacy test to older populations and found that while financial literacy tends to decline by about 1% per year after age sixty, financial confidence remains the same.  The chart below illustrates this dangerous paradox:

Source: retriementresearcher.com, August 4, 2017

One of our most important responsibilities as financial planners is to make sure that our clients are thoughtful about their financial decisions.  We consider ourselves managers of risk even more than managers of return, especially for our older clients.  This is paramount in what we do because many clients are focused more on matters of living – health, family, etc. – than on diving into the details of their investments or retirement cash flow in order to know their best path forward. 

As I was reading the article about the average confidence vs. literacy I was stunned at the widening differential gap between financial literacy and financial confidence. The gap at age 70 was 15% but widened to over 40% by age 80! This gap is where people become permanently financially damaged by poor decisions.  Most of the work we do is focused on helping reduce the probability of poor decisions.  It’s akin to the doctors Hippocratic Oath, “first do no harm”.  Our goal is not to make people rich, but to structure a solid foundation to ensure our clients never become destitute.

Here are some questions to consider:

• Do you have the time, energy, interest, knowledge, and desire to implement all kinds of financial decisions on your own? Do you enjoy financial planning?

• Will you overcome the inertia of inaction to put together all the various pieces needed to create and implement an effective and coherent overall plan?

• Will you continue to periodically update your plan?

• Have you determined how to make sure your planning will be maintained properly if other family members need to take control of it?

• Are you working with a financial planner who does more than just manage investment portfolios – who helps you with all aspects of your financial picture -- and helps you to implement suitable financial planning decisions?

If the answer to any of these questions is “I’m not sure” or “no,” please reach out to a Certified Financial Planner™ professional to discuss how they can help.

Matthew E. Chope, CFP ® is a Partner and Financial Planner at Center for Financial Planning, Inc.® Matt has been quoted in various investment professional newspapers and magazines. He is active in the community and his profession and helps local corporations and nonprofits in the areas of strategic planning and money and business management decisions.

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The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Matt Chope and not necessarily those of Raymond James. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Prior to making an investment decision, please consult with your financial advisor about your individual situation.
Source: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1948627

The Importance of Being Involved In Your Parents’ Financial Planning in Later Life

Contributed by: Sandra Adams, CFP®, CeFT™

There are a million reasons why we don’t talk to our parents about their financial situation…

• “I don’t want to be nosy.  What if I offend them by asking them about something so personal?”

• “What if they think I am asking because I don’t think they can handle their finances any longer?”

• “I have my own problems to deal with. I am not going to bother trying to handle my parents’ issues, too.”

• “I don’t need to know anything until they tell me, or until they’re gone.”

• And, the list goes on and on. 

And some of our parents may have their own hesitations about offering information to their adult children:  fear of loss of control, not wanting their children to be aware of all of their financial resources for fear that they will want/need more from them before they are able to give it, or simply discomfort with the conversations that may be involved about their own longevity and/or mortality.  However, in my experience, the majority of older adult clients are more than willing to begin to invite adult children, (at least those that are will be in charge of assisting with financial affairs in the case of incapacity or after death), into meetings to help them get a better understanding of the overall financial and estate planning picture.  We strongly encourage this with our clients and their adult children!

Some of the strongest and most successful family relationships we have are with generations of families that take advantage of these kinds of meetings.  Not only do they give us an opportunity to meet the family members that we will be working with if and when anything ever happens to mom and dad, but a number of additional items are uncovered during the annual meetings that can be extremely beneficial for the families:

• They can develop a strong understanding of the overall financial status and financial plan

• They have conversations about long term care planning, and reveal mom and dad’s preferences on how the finances fit into the plan

• They have conversations about the overall estate plan and structure (who will be in charge, the flow of the estate, etc.)

• They have conversations about charitable giving and its importance during life and after death

• They have conversations about how they wish their assets to be passed on to future generations (how, why, etc.)

It has been an amazing experience for many of our families, some of whom have grown so much closer through the experience.  If you have older adult parents and have hesitated to get involved or been afraid to approach the subject and need help getting started, please reach out.  We are happy to help!  We promise it will be worth the effort.

Sandra Adams, CFP® , CeFT™ is a Partner and Financial Planner at Center for Financial Planning, Inc.® Sandy specializes in Elder Care Financial Planning and is a frequent speaker on related topics. In addition to her frequent contributions to Money Centered, she is regularly quoted in national media publications such as The Wall Street Journal, Research Magazine and Journal of Financial Planning.

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Any opinions are those of Sandra D. Adams and not necessarily those of Raymond James. Every investor's situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation.