Posts

Raising Financially Independent Kids

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In a world of instant gratification and “cash apps” and online payments, the next generation is slowly losing the ability to comprehend the purpose of saving, investing and more importantly, the power of compounding returns.

Teaching children and specifically those middle school to high school ages, the immense impact of saving and spending according to a percentage of their budgets could in fact be the best lesson ever taught.  The ability to manage money does not happen with a financial class or a “self-help” book; it’s a life style, that when taught early, in steps, will yield rewards for parents as well as their children.

This article from one of my favorite money gurus, Dave Ramsey offers some great tips and activities to engage your children in managing their own money, early on in life:

https://www.daveramsey.com/blog/how-to-teach-kids-about-money

Gender Roles and Investing – “Men buy shares from Venus and women have investment savings from Mars”

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There may in fact be gender differences in approaches to investing and history has confirmed that there is a net positive benefit for women investors; however, the approach may go beyond just gender.  The article below from Investopedia is enlightening and includes several pieces of research from England and Germany:

 

https://www.investopedia.com/articles/basics/11/myths-and-realities-gender-finance.asp

Lessons for Teenagers – understanding debt and the cost of a loan

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As so many adolescents and young adults head off to college during this season, they are faced with various financial decisions, many of which are completely new and in uncharted territories.
Starting early with small lessons can help better prepare, especially our young women, to develop the tools needed to engage with a knowledge base instead of emotion when seeking financing for college or a car to get to work.
This article posted by Women Who Money provides some good insights and tools to assist in guiding our younger generation:

https://womenwhomoney.com/help-teenager-understand-loans/

SECURE Act Legislation heads to the Senate……..and what that could mean for your non-spouse beneficiaries.

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I have had a few clients email requesting information on how the SECURE act could impact their future financial plans related to RMD’s and passing the asset to their children.  As traditional pensions are fading away, people are mostly responsible for fully funding their retirement income.  The main vehicle by which this is accomplished is a 401k and an IRA.  The SECURE Act focus is to encourage and “simplify” the qualified saving process for the average person.

One item that is favorable would be extending RMD’s, required minimum distributions from 70 ½ to 72 but the main impact for those who have truly been ardent savers and plan to pass along the tax deferred growth account to non-spouse beneficiaries would be limited if not extinct.  A non-spouse beneficiary would have only 10 years by which to completely withdraw the account and yes, pay the respective income taxes on those withdrawals.

Kiplinger posted a good article that I wanted to share and have included the link:

https://www.kiplinger.com/slideshow/retirement/T047-S001-how-the-secure-act-could-impact-retirement-savings/index.html

Should you have any questions about your specific circumstance related to passing along your hard earned asset to a non-spouse beneficiary and what planning choices are available to preserve the asset in a tax efficient manner, contact us at www.arkagosadvisors.com as we are happy to work with you and review your options.

Do you have a plan for long-term care?

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Developing a LONG-TERM CARE Plan is quickly becoming a necessity just as planning for retirement has evolved over the past 20 years into a true necessity.  The needs could be for yourself or your aging parents, regardless there is a quickly rising need to understand and plan for future expenses:

Centenarians, those living to (or beyond) the age of 100, now number 82,000 up from 50,000 in 2002. Those 100-plus are America’s second-fastest growing age group, just after those 85 and older.  -WSJ, May 20, 2019

 Arka̅gos Advisors is a holistic planning firm and as a standard part of our financial planning assessment for all clients we calculate a needs analysis for future care needs and help the client creating a viable plan that is sustainable.  Let us know if we can assist you and your family to ensure that your needs are covered for late in life expenses.

Inflation vs. The Cost of Living – Quantifying a Female Variable

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When planning for retirement, remember it is key to understand that difference between factoring standard inflation (the cost / purchasing power that is lost over time) and the cost of living that is specific to you.  One of the key components to planning for a retirement that will last, is to understand what your standard of living will cost in the future and to plan accordingly with a sustainable investment design:

https://www.nj.com/business/2017/03/growing_poorer_inflation_vs_cost-of-living_biz_bra.html

The Australian Economic Miracle

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According to the Organization for Economic Cooperation and Development, Australia has the longest sustained expansion on record, at 28 years. They have not experienced a recession since 1991.

-The New York Times, April 6, 2019

Get Your Financial Ducks in a Row

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A shocking 32% of Americans would rather do their taxes, get a root canal, or give up sex for a month than create a will! Prince, unfortunately, was in that group. In the three years since the musician Prince has passed away without a will (leaving behind roughly $200 million), the estate has blown through $45 million in administration costs alone.-Forbes, April 29, 2019

This is a useful overview of the documents essential to estate planning, including wills, trusts and powers of attorney:
https://financialducksinarow.com/12964/estate-planning-essentials/

The costs of estate planning can be critical for the average family if the basics are not in order.  As previously mentioned, when working with clients, I also incorporate a list of digital documents, passwords and access that can be protected to be accessed after death. Most of the TOA (Terms of Service Agreements) generally default to closing the account and restricting any transfer outside of the account owner’s instruction.  There are currently no legal provisions in place within a standard TOA to transfer digital assets in the event of death; therefore, planning is critical.  If you would like assistance with reviewing any current estate planning documents or developing a plan to transfer assets, whether physical or digital, I would welcome the opportunity to work with you and your family.