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
November 25, 2015
There is an endless amount of terminology that surrounds the finance and investment industries. It can certainly be confusing to the average investor, and may be responsible for some uncertainty when it comes to how to invest and which advisor...
November 20, 2015
Recently, Congress included surprising Social Security rule changes in the 2016 budget legislation. The bill has now become law and the updated rules will become permanent over a phase-in time period. We wanted to reach out to all of our...
November 16, 2015
The holidays are right around the corner, and it’s time to start thinking about gift shopping, parties, and all the other spending that goes along with them. It’s nothing new that the holidays are expensive. However, it is important to...
November 3, 2015
Last week, Congress passed their “Bipartisan Budget Act of 2015.” Among the typical budgetary items, there are a few alterations that will impact the Social Security benefit filing system. Anyone who turns 62 in 2016 or later will no longer...
November 2, 2015
In this recent WSJ article, they talk about the how smart phone "investment apps" are causing investors to react to short-term market swings and abandoning their long-term established financial plans. Behavioral economists call this tendency, "myopic loss aversion"- and it can...