Submitted by Patrick Cote on August 23, 2017
How to avoid “shirtsleeves to shirtsleeves in three generations”
Congratulations! You are on track to accumulate enough wealth to consider yourself wealthy (or maybe you are already there)! Now what? If you have kids (or nieces and nephews), one of your biggest concerns is likely to be to ensure that they, as well as future generations of your family, are able to benefit from the wealth in a positive manner. Even if you don’t think the amount you will leave to future generations is going to be that substantial, many of the tips below will still help.
At AssetGrade, we have had a number of clients ask for help with multiple generations of their family. In particular, we are focusing on ensuring that the priorities and goals of each generation are aligned where possible. We have seen our clients be most successful when they have kept the multi-generation goals specific and manageable.
For most folks who are the original creators of wealth for their family, whether they are HENRYs (High Earners, Not Rich Yet) or already wealthy, they want to see their children and future generations benefit from the family wealth by getting a great education and helping them with a head-start to lead fulfilling, productive lives. They want to avoid scenarios in which the wealth becomes a negative influence on the family. A good financial plan can help define these specific goals for your family.
Submitted by Susan Powers on June 6, 2017
When you can retire is more dependent on how much you’re spending than how much you’re earning. Here’s why:
With interest rates low and people living longer, the correct rule of thumb says you’ll need to save 33x the amount you spend annually to reduce the risk of running out of money.
First figure out your monthly expenses. For example, if they run $10,000-$15,000 a month, that’s $120,000 - $180,000 a year you’ll need to fund in retirement. However, you may live in a part of the country where the cost of living is much higher.
A married couple (both collecting their maximum Social Security benefit) will collect about $30,000 each annually. That leaves them a gap of $60,000 to $120,000 annually to cover from other sources.
With interest rates and people expected to live longer, the correct rule of thumb says you need to save 33x that amount (that’s $2 million-$4 million) to reduce the risk of running out of money.
Don’t panic. Instead, take these three steps now to avoid being forced into difficult decisions later.
Submitted by Susan Powers on November 15th, 2016
According to the IRS, cash balance plans are the fastest growing type of retirement plan in the United States.
What makes them attractive?
If you are a business owner, you can put up to $53K (or $59K if you are over age 50) each year into a 401(k). If business owners are interested in saving more than their 401(k) limit, cash balance plans may let them save up to an additional $237K on a tax-deferred basis each year.
The December 31st deadline to establish a cash balance plan is quickly approaching but you still have time if they are attractive for you.
The ideal retirement has evolved over time. There are a growing number of people who want a mix of work and play, especially if they are able to do so at a younger age.
James Fine has been able to do what many people dream of: setting up his business so that he can take several months off periodically to sail the Pacific. James runs Téléciné, a media company specializing in digital signage. If you have been to London City Airport or the Bloomberg headquarters in NYC, you will have seen spectacular examples of giant, customized screens streaming online data that James and his team design and implement
As any business leader knows, it takes a lot of energy to run a business. James was starting to feel burnt out after the downturn in 2009 and knew he would need to take some time off. He spent two years preparing Téléciné for his first sabbatical to ensure that the business would be OK with James being completely out of touch for an extended period. He knew that sailing would be one of the few scenarios in today’s world in which he really would be out of touch.