Why You and Your Partner Might Not Want to Retire Together

Why You and Your Partner Might Not Want to Retire Together

Are you thinking of retiring at the same time as your spouse or partner? It might not be the best idea. Staggering retirement can take advantage of higher Social Security benefits, longer access to health insurance before Medicare becomes available, and larger retirement plan withdrawals. Investopedia author Mark P. Cussen and investment advisor Morris Armstrong explain in this helpful article that “Unless couples are the same age, and in the same health, it usually makes more sense for one person to retire earlier. There can be both financial and relationship benefits,” says Morris Armstrong, registered investment advisor, Armstrong Financial Strategies, Cheshire, Conn. Financially speaking, the advantages are threefold. When one spouse works longer, the amount of Social Security benefits the couple is entitled to will increase. In addition, the continued income from the working spouse gives the couple a few more years to save for retirement. Finally, a spouse who works an extra three to five years will likely have a shorter period over which to draw on his or her retirement assets, allowing for larger withdrawal amounts each year. And, given that retirement is a such a significant life transition for most people, Cussen explains that there are often emotional considerations that should be taken into account when couples are deciding whether or not to retire together: Retirement in the modern era can be an emotionally complex proposition. Losing one’s sense of identity through work can be a major adjustment for some, while others are able to make this transition with relatively little difficulty. When a working couple retires, they suddenly find themselves at home together all the...
Why You May Not Want to Use an UGMA for Education Planning

Why You May Not Want to Use an UGMA for Education Planning

We often come across clients who have UGMA or UTMA accounts set up for minor children. These are custodial trust accounts that are set up with a minor as beneficiary and parent or guardian as custodian under the Uniform Gifts/Transfers to Minors Act. These are often set up out of good will as a desire to make a gift to a child. When it comes to education planning, however, UGMA/UTMA accounts are often not the best vehicle for savings. This is because deposits to these accounts are considered irrevocable gifts to the minor, and the asset is considered an asset of the child’s for financial aid purposes. Such assets have a high impact on financial aid eligibility, whereas 529 plans, for example, do not. Transfers can be made from UGMA/UTMA accounts to 529s, but one has to title the account correctly when making the transfer. If you’d like assistance with this and other education planning strategies, contact us today for a complimentary...
Before You Pay for Financial Advice, Read This Guide via The NY Times

Before You Pay for Financial Advice, Read This Guide via The NY Times

Earlier this year our firm was featured in The New York Times in an article about fees and the fiduciary rule. Our thoughts in that article were cited this week in another NY Times article about what consumers need to know before paying for financial advice. Generally I thought the piece was helpful and accurate. I will say that consumers need to be chary of hiring a robo-adviser, which is something the article points out as an option to investors. Investing is best done in the context of a financial plan, and a robo-adviser simply cannot give the kind of holistic and adaptable advice that is often necessary for financial success (e.g. When was the last time a robo-adviser monitored a portfolio with a keen eye so that an appropriate amount was converted to a Roth IRA?). Additionally, the article cites that one can get a financial plan in New York for $1,200. Perhaps this is true, but I hardly know a competent financial planner who would do a financial plan for $1,200. Financial planning fees often vary by complexity, and a better estimate would be a range beginning with $2,500 for less complex plans and $5,000 and up for more complex advice. Other than these minor points, I thought the article pointed consumers in the right direction, and I appreciated its focus on the need for sound fiduciary advice....
Quick Tip: Why You Shouldn’t Use a Roth IRA for Education Planning

Quick Tip: Why You Shouldn’t Use a Roth IRA for Education Planning

When planning to fund a child’s education, there are many vehicles in which one can save for college expenses. These include, but are not limited to, Coverdell Educational Savings Accounts (ESAs), 529 plans, and UGMA/UTMAs. Sometimes one will even save in a Roth IRA. What many people don’t realize, however, is that the FAFSA financial aid form considers withdrawals from a Roth IRA to be untaxed income to the child. Consequently, such withdrawals can adversely affect a child’s ability to obtain financial aid. What is more, it’s generally best to keep retirement savings accounts earmarked for retirement and not to use them for other...
How to Be Prepared for Involuntary Retirement

How to Be Prepared for Involuntary Retirement

Here’s a helpful retirement planning article that I came across this morning over at cbsnews.com Money Watch. I appreciated this piece because it touches on something that I regularly bring up with our clients, which is that saving for retirement should be viewed as something much more than just a time during which one’s savings can be applied to the pleasures of life. Hopefully retirement does create such pleasures but, in many ways, retirement savings should also be viewed as the largest emergency reserve fund that one will ever accumulate. This is because, as the article rightly points out, retirement is not always voluntary: For many older workers, their retirement “plan” is to keep working as long as possible. Unfortunately, life events often intervene and force people to retire sooner than they expected. This may result from job loss, illness, disability, caregiving responsibilities or some other reason. This unanticipated situation can force people to make many decisions quickly and without a lot of forethought, leading to inappropriate choices. To put this differently, many people don’t take saving for retirement seriously because they think they’ll simply be able to work until they die. I genuinely hope that all of us are still going strong like Banana George was when he was still barefoot waterskiing at age 85 (see video below), but, for many Americans, old age will inevitably set in and they simply won’t be able to do the things they once could, which includes not only play, but work. I don’t bring up the realities of aging in an attempt to scare one into saving for retirement; instead, it’s my hope that retirement will...