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
January 21, 2016
Stock Markets In 2015, domestic large cap stocks (S&P 500) and REITs were up while other markets were down – emerging markets were off big! The positive results in the S&P 500 were driven by just two stocks – Amazon...
January 20, 2016
One of the tenets of successful long-term investing is the practice of portfolio diversification. Through diversification, investors can increase their expected long-term return for a given level of risk (volatility). This is accomplished by investing in assets that are not...
January 19, 2016
2015 was an exciting year of growth and change at Rockbridge. Market returns were less than ideal for the year, but we continue to see growth in our fee-only business model as prospective clients seek out unbiased advice and professional...
January 15, 2016
When we go to a good action flick, we enjoy the suspense and surprises, but no one wants that experience when investing. James Bond and Mission Impossible would not be box office hits without some interesting plot twists, and an...
January 13, 2016
Our Rockbridge team is continuing to grow, and as a new member, I would like to take a moment to introduce myself. My name is Lisa Cellucci. I was born, raised, and educated right here in Syracuse. Even as a...