The last part of our “Why to Use a Financial Advisor” series involves missed opportunities. Knowing there are unknowns out there in financial planning is the first step in identifying areas that can be improved. A few examples of common missed items that we optimize for clients are:
529 Savings Plan in NYS – New York allows a state tax deduction for 529 contributions on up to $10,000 of yearly additions. At a rate of 6.85%, that is an extra $685 annually just to save for college in the right bucket. This can even be contributed in the years where college tuition is being paid.
Savings Buckets – There are many investment vehicles to save money for retirement, college or even a rainy day. Using the optimal buckets (401(k), IRA, Roth IRA, 529, 403(b), Simple IRA, etc.) can help reduce your tax responsibility
Optimal Diversification – Diversification is becoming easier with target date funds, but many clients have suboptimal portfolios causing them to take an increased level of risk for a given return.
Tax Efficiency – If you are fortunate enough to have savings in both taxable and tax-deferred accounts, the portfolio should be optimized to include both account type characteristics. In short, bonds and REITs should be in tax-deferred accounts and stocks should be in taxable accounts (using the same asset allocation for a level of risk tolerance).
Simplification – As the years go on, the various number of financial accounts continue to accumulate and complicate the picture. A financial advisor can help sort through the accounts, combine some, eliminate others and come up with a simplified optimal solution customized to you.
Large Transactions – House purchases, car purchases, and new student loans are just three examples of large purchases that could make or break your financial strategy. A financial planner can assist you in these transactions, sometimes saving thousands of dollars over the course of a loan.
Legal Documents –Wills, Estates, Trusts, Power of Attorneys, and Health Care Proxies are just as important as savings and investing. A financial advisor can make sure you have the proper documents in place and recommend excellent professionals who can take care of the paperwork.
Social Security –With Social Security being the primary source of retirement income for most Americans, optimizing lifetime benefits is essential for most retirees. By delaying and utilizing techniques like “file and suspend with spousal benefit,” a married couple could increase the overall lifetime value of Social Security by up to $500,000.
Other articles filed under Family Finances
April 24, 2017
Stock Markets The accompanying chart illustrates the diversification story. It shows returns in several markets over both the March and December quarters. The upward sloping blue columns of the December 2016 quarter show an increase from the low (4% loss)...
April 21, 2017
On March 15, 2017, the Federal Reserve increased interest rates for just the third time since the financial crisis in 2008-2009. Investment theory tells us when interest rates rise, bond prices fall, so rising interest rates are bad for bond...
April 17, 2017
The stock market crash of 2008-2009 is a very recent memory for many investors who still bear the scars from the experience. At Rockbridge, we also have prospective clients who walk into our offices saying that they haven’t recovered yet...
March 23, 2017
Teachers Insurance and Annuity Association, better known as TIAA was founded almost 100 years ago (1918). TIAA provides retirement plan solutions for a majority of the higher education institutions in the United States. One type of investment, called the TIAA...
January 23, 2017
Stock Markets While markets were down early in the quarter, most, but not all, have bounced back since the Election with small company stocks and value stocks leading the way. Stocks traded in international markets and emerging markets have not...