I am often asked how to raise a financially literate child. It seems easy enough, right? We help them with some terminology, coach them to have financial discipline and teach them about the stock market. With a combination of an allowance and a lecture about frugality we send them on their way into life on the path to financial freedom. But like so many other aspects of raising a high functioning human, we learn that it does not work like we thought.
One way to strategically transfer wealth to your heirs and build generational wealth is through a strategic gifting plan. Here we illustrate how early contributions can compound into significant values over the recipient’s lifetime. Specifically, gifting $25,000 annually for the first 10 years may have an ending value of more than $14 million in 90 years. Moreover, starting at age 60 the recipient can spend 5% from this portfolio annually over the next 30 years for total distributions of more than $17 million. (Both figures are adjusted for 3% inflation.)
Note: Figures do not take into consideration underlying annuity or mutual fund fees, taxes or trading costs. Performance data depicts historical performance and is not meant to predict future results.
If navigating the complexity of investments, insurance and estate planning is not challenging enough, try figuring out how to find the right financial advisor for you. The marketplace is loaded with brokers, insurance agents and financial advisors promising to put you on the path towards financial security. Nevertheless, how do you differentiate their claims and find the trusted partner that is right for you? To do so, it is important to examine the many differences in advisors, their offerings and their obligations to you – their potential client.
I joined Parsec last November, and one of the big workstreams underway was Parsec advisors working with their clients on their required minimum distributions (RMDs) since the CARES Act waived 2020 RMDs for all IRAs (including inherited IRAs) and tax deferred accounts (SEP IRAs, SIMPLE IRAs, 401k, 403b and Government 457b plans). Should clients defer
The maximum individual retirement account contribution for 2021 is $6,000 ($7,000 if aged 50 and over). The question of choosing between a Traditional IRA and Roth IRA largely comes down to when it’s most opportunistic for you to pay taxes. A Traditional IRA is a great option if you’re in your mid-to-late career and in
The ages between 62 and 70 are a critical time for determining how and when to take Social Security benefits. There are many options when it comes to this program, and which option is best for you will depend on your specific situation.
At the heart of life’s goals is our health. Having good health is central to all the plans we have.
Social Security is a critically important part of your overall financial and retirement plan that will be around for generations to come. The decision to claim or delay benefits should be carefully considered.
Just like you have a financial plan to stay on track with spending and saving, make a plan to manage your health and hopefully reduce the impact of healthcare costs in your retirement.
Normally, we do not make these requests until we are in the throes of tax season but let’s take a proactive look at steps you can take now.