When Should You Apply for Social Security?

When it comes to the question of Social Security income, the choice looms large. Should you apply now to get earlier payments? Or wait for a few years to get larger checks? The first thing you want to do is consider what you do and don’t know. You know how much retirement money you have; you may have a clear projection of retirement income from other potential sources. Other factors aren’t as foreseeable. You don’t know exactly how long you will live, so you can’t predict your lifetime Social Security payout. You may even end up returning to work again. In terms of your eligibility to receive full benefits, the answer may be found on the Social Security website. If you haven’t already created a profile, you should do that.

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Financial Planning for the Middle Class

It’s no secret that financial advisors prefer to work with wealthy people. Speaking from experience, managing a $2,000,000 account only takes a little more time and energy than managing a $500,000 account, yet the $2,000,000 account generates nearly 4x more revenue for the advisor. An advisor who fills their practice with smaller accounts will deal with more headaches while receiving lower compensation. I’m pointing this out to illustrate why advisors don’t spend as much time going after the middle class. That doesn’t mean middle class people don’t need good financial advice! They very much do.

Fortunately, many advisors (at least in the independent channel) are willing to work with people that aren’t multi millionaires. In many ways they need more help because planning their eventual retirements, how they might pay for kid’s education costs, etc, is much more of a careful balancing act. So don’t be shy about getting some good financial advice. We all know navigating everything from investments to taxes to estate planning and life insurance requires a huge amount of knowledge which many people don’t have.

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The IRS Recently Announced New Rollover Limitation

What was once allowed is now prohibited – In 2008, an affluent New York City couple made a series of withdrawals and transfers among contributory IRAs, rollover IRAs and non-IRA investment accounts, all with the long-established 60-day deadline for tax-free IRA rollovers in mind. As esteemed tax attorney Alvan Bobrow and his wife withdrew and rolled over a series of five-figure sums within a six-month period, they assumed their actions were permissible under the Internal Revenue Code. In January 2014, a U.S. Tax Court judge ruled otherwise.*

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Is Sustainable Investing Catching On?

Well, according to an article in the most recent issue of Financial Advisor Magazine, it isn’t. The article indicates that sustainable investing (when one considers environmental, social and corporate governance criteria to generate long-term financial returns and positive societal impact) isn’t something which clients prioritize. It’s more something the advisor will ask about and sometimes learn that it’s on a client’s spectrum of importance but not a front burner issue. I’ve got to say, in my office we have many clients who have indicated at the very first meeting how important sustainable and socially responsible investing issues are to them. More below:

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How Financial Planning Has Changed for Same-Sex Couples

When the Supreme Court affirmed the legality of same-sex marriage in June, its ruling profoundly altered the financial planning landscape for gay and lesbian couples – resulting in some “night and day” differences. Yet in looking at the financial “before and after,” same-sex spouses and their advisors must also consider the “when and where” – because the Supreme Court ruling only applies to the 13 states that allow same-sex marriage (and the District of Columbia). Gay and lesbian spouses are still waiting to see if financial benefits will be granted in all 50 states.* Here is how the landscape has changed for married gay and lesbian couples in states recognizing same-sex marriage.

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How Financial Advisors Can Help Retain Female Clients

No advisor wants to hear the words: “You’re fired!” — but you are more likely to hear them when a female client becomes a widow. According to the guide Women Are Not a ‘Niche’ Market, 70% of women fire their current male financial advisor after the husband dies, and 90% of those women hire a female advisor. Considering that women control $18.4 trillion in consumer spending and 30% of global wealth, this is a segment which advisors can’t afford to lose. But it’s not all bad news. According to the Journal of Financial Planning, “Women believe advice from a financial advisor is the most important factor when making investment decisions.” There are steps you can take to retain these women and be the financial advisor they seek, and you can start that process now.

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Estate Planning Strategies & Mistakes

At some point during your life, you may start thinking about issues including transferring money to your heirs and protecting your assets from becoming subject to unnecessarily high taxes when you die. In my experience, people with up to 2M generally are satisfied with having a Will along with annual reviews of their beneficiary elections and checking the registration and titling of investment accounts and real estate. Most of that can be done with a financial advisor with add-on services from an estate planning attorney – usually the “Will package” which includes a Will, Living Will, Health Proxy and Durable Power of Attorney. What happens when your net worth balloons to 5M, 10M, or 100M? Estate planning gets a bit more complicated and you need to be extra cautious, as we will discuss below:

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Financial Advisor Compensation

People often wonder about the different ways financial advisors get paid. The issue is discussed not only by investors but also within the industry by professionals as compensation methods have been hotly debated over the past decade. I thought this would make an interesting post because I’m in touch with many different advisors and have a good knowledge of how they earn a living and what the average fee schedules look like. Let’s start with the first important breakdown: fees vs. commissions.

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Retirement and Systematic Portfolio Withdrawals

Retirement planning is certainly one of the most debated and important areas of financial planning. Each advisor and firm has a different approach when it comes to how they plan for retirement and how they help clients in retirement ensure that they have adequate income to last the rest of their lives. At its core, the components needed to plan for retirement are fairly clear: what are your guaranteed income sources during retirement and what are your variable sources? Similarly, what will your fixed expenses be and what will vary? Most retirees have social security, some have pension income, and most have financial portfolios from which they can take withdrawals over the course of several decades to complement those other income sources. That last point is our focus for today’s blog article: How much does one need to save and at what rate can one safely withdraw? Also, what is the ideal asset mix during those retirement years?

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Why is Generation Y Ditching Retirement Plans Including the 401K?

Most of my clients embrace payroll deduction retirement plans including the 401(k) and 403(b) which offer the benefit of tax deductible contributions and tax-deferred growth. However, once in a while I’ll meet someone who prefers not to participate in these sorts of plans because they don’t like the idea of giving up liquidity until they are much older. Also, tax-deferral still means paying tax when that money is withdrawn, creating a tax headache which often requires careful planning during retirement. According to research firm Hearts and Wallets, short-term goals and financial independence take precedence over traditional tax-deferred retirement savings accounts for many of the more affluent Generation Y investors.*

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New York Financial Planner – NYC Financial Advisor