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
October 24, 2016
Stock Markets It was a pretty good quarter for stocks, with the riskier small-cap and emerging market stocks leading the way. REIT’s gave back some of their robust returns of prior periods. The year-to-date numbers for stocks are solid as...
October 21, 2016
Managing clients’ financial assets is at the heart of what we do here at Rockbridge. However, having a well thought out investment portfolio will only get you so far if every facet of your financial life is not addressed correctly...
October 19, 2016
Once Upon a Time... When we started an investment advisory firm in 1991, it seemed obvious to Bob Ryan and me that structuring portfolios by focusing on asset allocation was superior to the stock picking culture of the day. The...
October 17, 2016
With less than a month to go before the Presidential election, many clients and friends have asked me how the markets will respond to the voters’ choice. While there will be no shortage of prognostications in the media, investors would...
October 6, 2016
October is National Cyber Security Awareness Month. With more and more financial transactions happening online, we wanted to share a very helpful infographic (shown below). Please be mindful of the personal information you provide online! Infographic by Digital Guardian