Financial Planning

Submitted by Kate Hennessy on March 19, 2019

Recently my husband, Pat Hennessy, and I were looking for something important - one thing led to another and the next thing we knew we were spring cleaning. We don’t consider ourselves pack rats, but when we started cleaning we realized we had tax returns dating back to 2002!  So, maybe we are pack rats? We both agreed it was time to organize and shred.  Let’s face it – life goes by fast –there are big milestones (moving, marriages, births, deaths), but there are also little events leading up to the big milestones. Getting your financial house organized isn’t a top priority for most people.

Pat and I found what we were looking for, but we learned a valuable lesson.  The importance of getting your “ducks in a row.” For me as a financial planner – it means the following:

Registered Investment Advisor vs. Broker - is there a difference and does it matter? Yes, it does!

How the professionals you hire are paid is an important question you should always ask. Let's see how they compare.

Know the difference! Work with a fiduciary, someone that puts your interests ahead of their own compensation.

Submitted by Pat Cote on February 17, 2019

Politics aside, it was tragic to hear that many government workers ran into trouble paying their bills when they did not have a paycheck for a month.  Unfortunately, this cash shortfall is not unusual, as a Federal Reserve survey last year showed that 40% of American adults would not be able to cover a $400 emergency expense or would do so by borrowing or selling something.

Although many HENRYs (High Earners, Not Rich Yet) make more than the maximum government salary of $140K per year and may have substantial 401(k) balances, even HENRYs can sometimes run into trouble if they have not put enough emergency cash aside.  In fact, one of the key pillars of a financial plan is to make sure that emergency cash is available if needed.

The rule of thumb for the right amount of emergency cash is anywhere from three to twelve months’ worth of expenses.  The more risk in your personal situation, the higher the amount of emergency cash needed.

Submitted by Kate Hennessy on January 14, 2019

Although I’ve been in the financial industry for 20 years, I made a few mistakes before I became a financial advisor.  Here’s a quick run-down of three and what I did to right the ship-

Submitted by Pat Cote on January 14, 2019

Many of us have New Year’s resolutions, as Susan talks about in her Financial Fitness article.  Once you have addressed the key elements of financial fitness, the next step is to get or keep your financial house in order.

The first step is to know your finances.  What do you have and what do you make/spend?  You can put in many hours and make a very detailed spreadsheet if you are so inclined.  We find about 1% of people actually want that level of detail.  For the rest of us, a top-down, simple approach works fine and is a lot easier to maintain.

Submitted by Susan Powers on January 14, 2019

Feeling the need to take control?  You’re not alone. 

• The average American household owes $16,425 in credit card debt, which is an increase of 10% since 2013
• The Average Student Loan Debt is almost $48,000
• Only 32% of Americans maintain a household budget
• 56% of millennials don’t have any money saved in a retirement account
• 39% of both Baby Boomers and Gen-Xers have nothing put away for their golden years

Don’t panic, let’s define a few achievable goals to get 2019 off to a great start.

3 steps you should take now:

1.  Payoff debt

2.  Spend less by saving first

3. Utilize tax-efficient savings and withdrawal strategies

Submitted by Susan Powers on December 11, 2018

Do you need to take action now to get a retirement plan is place? It all depends on the type of plan that’s right for you.

Submitted by Pat Cote on December 11, 2018

Between holiday parties and family/work activities, this time of year things tend to be hectic.

We have been writing about tax tips all year long, particularly since there are a number of areas that are different now with the new tax law. The list below summarizes the items we covered before that you still have time to address before December 31.  If your taxable income is unusually low for you in 2018, be sure to see our blog called "Tax Tips If You Have Low Income This Year."

Submitted by Pat Cote on December 7, 2018

If you went back to school in 2018 or recently started a business and are incurring start-up losses, your income might be unusually low in 2018. If so, the tax strategies to address by December 31 are likely quite different than a typical income year: in particular, you should consider realizing unrealized capital gains or converting tax-deferred IRAs to Roth IRAs. 

Both of these strategies aim to take advantage of the lower marginal income tax rates at lower incomes. For example, the following tax rates apply in 2018 if your taxable income is $77,400 if married filing jointly or $38,700 if single: 

• 12% Federal income tax 
• 0% Long-term capital gains tax 

Submitted by Kate Hennessy on November 27, 2018

On this #GivingTuesday….check out my article about charitable gifting and year end tax planning. Donating appreciated assets is easier and more beneficial than you may realize.

At this time of year, it’s common for individuals to make charitable contributions. We recently had an opportunity to make a donation to a non-profit organization. In lieu of writing a check to the organization, I reviewed our holdings within our taxable account and identified that we could make the same donation by gifting a mutual fund. The mutual fund had a long term unrealized gain (profit that exists on paper from an investment that has yet to be sold in return for cash.) The benefit of gifting an appreciated asset is we avoided recognizing a long-term capital gain and also received a tax deduction. The non-profit organization was easy to work with and required minimal paperwork. If you have any unrealized capital gains in your taxable brokerage account, you might want to read this article on how to donate an appreciated asset - you might come out further ahead.