Author Archives: Sue Danson

Open Enrollment Serves Up a Bowl of Alphabet Soup

The fall tends to be open enrollment time and you are likely in the middle of it now, or will be soon, so I thought this month would be a great time to review some of the crazy acronyms you see as your eyes glaze over the 50+ page benefits guide from your employer.

I can’t say here which benefits are the “best fit” for you.  Reviewing benefit options is part of what I do with my clients each year. Lives change. Jobs change. Families change. Benefit packages change. For many, the confusion stays the same.

The Biggest Offenders

FSA – Flexible Spending Account

HSA – Health Savings Account

HRA –  Health Reimbursement Account

These are very similar acronyms, but these are NOT the same thing.

I’ll get the HRA out of the way, as it is not as common as the other two. This is an EMPLOYER owned and funded account an employee can use for medical expenses. It generally stays with your employer if you leave, unless they offer a retirement continuation.

FSAs are offered with a standard HMO or PPO (I’m going to assume you know these two old friends).

I wrote a newsletter on HSAs a few months ago and the triple tax benefit they offer. They are only offered in conjunction with a HDHP. Yes, here’s yet another acronym for you!

HDHP – High Deductible Health Plan


  • Both are employee funded, although some employers will make contributions as an added benefit.
  • Both are funded with pre-tax dollars. Always a PLUS.
  • Both are used to pay for qualified medical expenses.


  • Pre-tax contribution limits are higher for the HSA than the FSA. The HSA also offers a catch up contribution for those over age 55.
  • The up front, out of pocket medical expenses are higher for Team HSA/HDHP.
  • FSA contributions are forfeited if not used in the same calendar year. There is some flexibility for carry over and grace periods, but forfeiture is the general rule. Use it or lose it.
  • HSA contributions are yours forever. No “use it or lose it” here. AND they can be invested. AND they grow tax deferred/tax free. As long as used for medical expenses, it’s tax free growth and distributions forever.
  • Your FSA is not portable. If you leave your company, the funds in the account do not go with you. Assets in your HSA are yours forever.

While the HSA offers more flexibility and tax advantaged benefits than the FLEXIBLE Spending Account (oh the irony), it does not mean it is the right choice for you, even if both are offered by your employer. Every situation is unique.

So those are the big acronym offenders for your health care options, but a distinction I explain in this next section is REALLY important.

STD  – Short Term Disability

LTD – Long Term Disability

Granted, you may actually know these two acronyms already, but are you aware of the distinction when it comes to whether this benefit it taxable or not?

It all comes down to how the premium is paid. I’ve worked with many clients who were not aware of the key difference because most benefit guides don’t do a great job of explaining it.

It makes a big difference in how much money you actually take home, should you become disabled.

  • If premiums are paid by you with after-tax dollars, then the disability benefit will not be taxable.
  • If premiums are paid by your employer, then the disability benefit will be taxable.

Most LTD benefits offer coverage for “60% of salary”. If that 60% is not taxed, you are in OK shape.

If that 60% is taxed, your monthly benefit will be significantly less than your regular pay.

One final scenario offering a TAX FREE disability benefit:

  • Your employer pays the premium BUT adds the amount paid on your behalf to your gross earnings and you pay tax on the “phantom income” with each paycheck.
  • Because you pay the taxes on the premium, any disability benefit you receive will be tax free.

If your employer offers a tax free disability benefit option, this is usually the option you want. Otherwise, you may want to consider a private policy to supplement your employer plan.


Your mind is a garden, your thoughts are the seeds. You can grow flowers, or you can grow weeds.


Ways You May Be Losing Money EVERY Year

A friend recently came to me with a business idea that she felt could be really useful to many.

She felt quite strongly about it because she knew it would be very useful to HER, and she correctly assumed that many (many) others are in the same position.

Let’s call it:

I PAY LITTLE TO NO ATTENTION TO WHERE MY MONEY IS ACTUALLY GOING, and I could really use some help trimming the fat.

Her request was not so much about budgeting, but simply about TUNING IN, knowing where the dollars are going and trying to cut out the fat.

And let’s face it, with inflation having snuck up on us with a vengeance this year, we all need to covet and stretch every dollar, because our dollar can no longer afford what it could just 8 months ago.

Sometimes money “lost” is simply due to our failure to tune into things, like is that medical bill accurate, did you actually get the sales price advertised or are you sitting on unreturned merchandise.

I recently received a medical bill for almost $3,500. It looked right. I mean, we did use that provider on that date, and we do have a high deductible plan. BUT, because I tune into the EOBs (explanation of benefits) that come from our insurance provider, I knew our portion was only supposed to be about $1,500.

I potentially could have tossed $1,500 out the window if I had just paid it without tuning in.

I’m also a grocery store Ninja, I’ll admit it, even pre inflationary times.  I should be on THE PRICE IS RIGHT.

And never more than now do I play their game because with three teenage football players in my house, you would not believe my grocery bill.

So while investing is an important aspect of your financial health, and it is disconcerting when the markets are down, it’s the day to day spending that you have the most control over that can make tangible differences.

If you feel like your spending could use some trimming (mine definitely could) and especially if you are finding you need every dollar just to cover the basics, here are some “tuning in” tips to think about:


  • Get rid of Door Dash. I will not let my kids order anything on my dime through Door Dash. I never have. What a money suck that is! Old fashioned pizza delivery, sure, but not Door Dash. I saw a receipt once that showed my son paid $9+ to have an $11 burrito delivered!
  • Tune into shipping costs and try to avoid. They can really add up.
  • Shop the grocery store circulars. Use the apps if you need to for certain “big” deals. Stick to what you would normally buy, don’t buy it because it’s on sale. But if it’s on sale AND it’s on your list for the week-fantastic. Check the receipt before you walk out the door to be sure you received the sale price. Head straight to customer service if you did not.
  • Buy store brand/generic wherever it truly does not matter, which is most of the time. But hey, we all have our favorites. I won’t give up my Charmin.  
  • Buy cards at The Dollar Store. Honestly, you should never again purchase a card anywhere else. They have great ones.  And let’s face it, your money literally gets thrown in the trash after it’s opened!
  • Return items you bought but will not be using. I’m a nut about returns. We all buy things either in store or on line that don’t work out as we had hoped, but you MUST return it or you are just throwing your money away.
  • If you are a Target shopper, use the app to place your order ahead of time and have it delivered to your car. My personal experience is you end up spending much less when you are not walking the aisles. And unlike some of the on line grocery delivery services, there are no extra fees (yet).

I wish I could say “get rid of Amazon”  but I’m trying to be realistic.  😊


  • Employer benefits I’ve seen not insignificant amounts of money left on the table when people have not used plan benefits to their best advantage.
  • Pay attention to bills you are receiving, even if you have them set to autopay. And medical bills for sure.
  • Don’t carry a balance on your credit card. For every dollar you save with smart shopping, you’ll be paying way more in interest rate charges.
  • Ask yourself the age old question, “do I need this or do I want this”?

Whatever your financial situation, remember the mantra to pay yourself first (savings) and spend less than you make. You’ll be on your way to sound financial footing!


Do not LET what you cannot do interfere WITH what you can do.

– John Wooden

The Protection Plan I Always Recommend

This past July 4th marked the 20th year in our home. TWENTY YEARS.

Holy cow, I don’t know where the time has gone. With my oldest having just graduated from high school, I seem to be saying this a lot lately. Cue the tissue box.  

When we first bought our home, we had my dad around for all the newbie homeowner’s advice we needed. One thing he always said was to buy the service contract for the furnace. His advice has proved prudent over the years!

I’m sure I’ll be giving the same advice to my kids someday when they become homeowners, but as a homeowner or not, there’s a much bigger investment that often goes unprotected and  has the potential to cost you a lot more than an unexpected furnace repair.

What is this investment? I’m glad you asked!


YOU and your EARNING POTENTIAL are your single most valuable asset, yet many fail to properly protect this asset.

Most carry some level of life insurance, especially if they have a spouse or children, but that’s not what I’m talking about here.

The protection that is most overlooked and often skipped altogether is DISABILITY protection, which protects your income if you are unable to work due to injury or illness.

Let me ask you this. Is your monthly income instrumental in supporting your day to day living essentials? I’m talking things like food, gas, a mortgage or car payment?

If you answered yes, and I’m guessing you did, then you should have disability coverage.

And a misguided perception is that if your employer offers disability coverage, you are good to go. You’ll keep getting your paycheck should you go out on disability. You’ll receive something, but not necessarily an amount that can continue to cover all of your expenses.

I review employer benefits for my clients during open enrollment and often see disability benefits that provide less than adequate income replacement, especially if your employer pays the premium. This is where I would recommend a private policy to supplement your employer plan.

If you happen to be an employee in Massachusetts, there is a newish program that was rolled out in January 2021 called Paid Family Medical Leave, or PFML, not to be confused with the Federal program FMLA, which is unpaid leave.

PFML offers compensation for up to 26 weeks, of course with a special mathematical equation used to calculate how much you will actually receive.

Who pays for this program? Well, the state of Massachusetts of course! And you know what that is code for: YOU are paying for it, along with your employer.

As the saying goes, nothing in this life is free.

If you are not sure if you are covered by this state run benefit, take a look at your paystub. If you are paying into it, you will see a small deduction each pay period for “MA PFML”, or something along those lines.

MA resident or not, state coverage like this or basic coverage through your employer are often not enough to most effectively insure this risk. Look into what you have and take steps to insure your most valuable asset.


Time you enjoy wasting is not wasted time.

-Marthe Troly-Curtin

With the markets in turmoil, should I be doing anything different with my 401(k)?

I took a spin class last week and the instructor kept reiterating two things as we climbed a hill, and it got me thinking about the two recommendations I referenced above. I know, I think about work WAY too much.

The two things she was selling to us tired riders were “discipline” and “add one more”.

I will explain.

The instructor was expressing (aka shouting over the music) how we must maintain discipline to make it up this hill. That it is long and strenuous and we must pace ourselves to reach the top.

Have you ever heard the term “disciplined investor”? I’m not making it up, it’s a real thing. Here’s one clip describing the disciplined investor in a Forbes article:

  1. Have a long term investment philosophy.
  2. Form a prudent asset allocation based on this philosophy.
  3. Select low cost funds to represent asset classes in the allocation.
  4. Maintain this portfolio through all market conditions.
  5. Don’t change the asset allocation due to recent market activity.

You have probably figured out by now how our discussion went.

This client has a well-diversified portfolio with an appropriate asset allocation for her time horizon and goals. She is also making regular contributions to her retirement savings. Outside of a possible need to rebalance, she is good to go and should maintain this disciplined approach and keep climbing that hill.

Most important to me was that she came away from our conversation feeling better about the current situation with an understanding that her plan was still in motion and she is on track.

Unless retirement is right around the corner for you, in which case you should have a plan in place well before that date, you will ride out this storm like you have all the others in your years of saving and investing. If you are a younger investor and haven’t yet experienced these market “thrills”, don’t fret, as time is really on your side.

History has shown time and again that the disciplined, long game will reward your portfolio, and investors have seen A LOT of reward over the past 10 years alone.

Now to my last point on the other recommendation I threw in there for this client. It relates to the final point below from the Forbes article and the spin instructors quip to “add one more”.

Don’t hold back on new investments while waiting for market clarity.

Non-disciplined investors tend to want to pull back or stop adding to their portfolio when the line is trending down. If you’ve ever had this reaction, it’s completely normal, but I want to help you understand why, in most situations, this is not the way to go.

Think about this. If you are OK with making a purchase when the cost of a product is at Think about this. If you are OK with making a purchase when the cost of a product is at a premium, but it’s really what you want and you know it’s worth the investment (literally), then why would you NOT be OK with purchasing the SAME PRODUCT when it’s at a steep discount?

It’s a bargain to be buying into the market when it’s down, so if you are not already maxing out your 401(k) or other retirement plan, try to “add one more” (increase your contributions).

If you know your company will do a true up match at the end of the year (mentioned here in last month’s newsletter), you may want to consider frontloading your contributions now while the market is down. Yes, it may still be down in December, but there is no crystal ball and we know it’s down now, so it can’t hurt. But ONLY if your company does a true up. You don’t want to max out too soon and leave free money sitting on the table.

Stick with it. You’ll get there!


“The ability to learn is the most important quality a leader can have”.

– Sheryl Sandberg, Facebook COO

Do You Have Your Umbrella?

I was working with a new client recently and one of my recommendations was to secure an umbrella policy. It’s probably the least thought about coverage for the average person or family, but one that should not be overlooked.

What is Umbrella Insurance?

In simplest terms, it’s a policy that protects you over and above other forms of liability coverages, like your auto and homeowners. These latter policies are your raincoat, the umbrella policy is, well, your umbrella, for when the raincoat just doesn’t get the job done.

Umbrella policies do not stand alone. They offer excess protection only after your underlying liability limits are exhausted and this makes them relatively inexpensive.

What are you trying to protect?

You are protecting all of your hard earned personal assets. You are potentially even protecting your future income stream.

Don’t assume that because you have auto insurance that a claim can’t be brought against you personally above and beyond your limits if you are deemed at fault and injuries are significant. And this would include anyone driving your car – your nanny, teenage child or anyone your teenage child might let borrow the car that you don’t even know about.

Who Should Have an Umbrella Policy?

Personally, I think anyone who owns a home or car should also carry umbrella insurance. I already gave an “anything can happen” car scenario above.

Liability coverage for homeowner’s insurance works a little differently. You don’t actually have to be “at fault” for what happened, but if it happened on your property, you are liable for the damages. So again, at fault? Not necessarily. But responsible for injury that occurred on your property? Yes, absolutely.

Think trampolines, swimming pools, icy walkways or nasty dogs. Think teenagers drinking in your home when you’re not around. Think Amazon driver falling down your front steps while being chased by your dog and subsequently falling into the swimming pool and getting a concussion and no more packages can be delivered to you ever again (which is the real tragedy) – not likely, but thought I’d add a little humor.

Protecting our family or assets is never a fun topic because it makes us think about yucky “what-if’s” that we’d rather not think about.

The chances of you ever needing it are relatively small, but securing this inexpensive coverage could absolutely save you from financial ruin in the event of unforeseen circumstances.

I know which side of that coin I’d want to land on.

Favorite Quote

In a conversation with my 13 year old earlier today, I was trying to explain to him the concept of the self-fulfilling prophecy. I’m a BIG believer, so here is one we’ve all heard but is always a good reminder:
“Whether you think you can or think you can’t – you’re right.” -Henry Ford

My Two Cents on Cryptos

A friend of mine recently posed a question on her blog about Cryptocurrency.

You know-Bitcoin, Dogecoin, Ethereum-to name a few.

She was asking her followers what they knew about it, had they invested in it, and she made the statement that she thinks it may be here to stay.

I think she’s right, but whether I think the average person should be investing in it is another question.

Around the same time, I was talking with my oldest about needing to get his taxes filed so we could make a Roth contribution.  I was trying to educate him about why this was a great investment for his future. I liken what he was probably hearing was akin to the teacher’s voice from Charlie Brown.

His response, to my surprise, “I want to buy Dogecoin.”

My darling first born, you don’t even know what FICA taxes are or the difference between owning a stock vs a mutual fund, and you don’t necessarily need to understand all of this right now, but it’s also why you should not be buying Dogecoin with your very few hard earned dollars.

“Crypto” – it’s all the hype, I know. And don’t get me wrong, I’m not saying it’s a scam or investors haven’t or won’t in the future make money by investing in it. They have and they will. They’ve also lost a lot of money over the past month as well, at least on paper.

At this stage of the game, it is unregulated (which is kind of its modus operandi ), extremely volatile and very speculative. Its “buy in” has grown exponentially since its inception. I do think it has the POTENTIAL to EVENTUALLY be a small part of every investor’s diversified portfolio. Maybe. Time will tell.

It is my opinion, and only my opinion, that the AVERAGE investor, of which most of us are and why the term “average investor” was coined, should not be pouring our hard earned money into crypto, at least not for the hyped up reasons of turning a quick profit or easily becoming uber rich.

Unless you plan to “set it and forget it” like you would your 401(k) contributions and savings, and earmark it for the long term, then don’t do it.

Unless you are OK with potentially losing whatever you invest, don’t do it.

If you want to buy it to ride the wave and think it’s a get rich quick option,


Because honestly, no one knows for sure what direction this is heading and I’m just not comfortable with the fact that a tweet from Elon Musk can singlehandedly make it soar or tank in a 24 hour period.  Are you???

For the majority of us, investing is meant for the long term, using investment strategies that are tried and true, and have proven to pay off for 100% of those of us who follow a disciplined and diversified approach to saving and investing.

A very small percentage of your portfolio…for the long term…with money you don’t need and are OK with losing?  OK, if you must, but do your research. Be aware, be informed and understand your decision.  

To be buying and selling crypto currencies on a regular basis is nothing short of day trading or trying to time the market. Most lose at that game in the long run.

That’s my two cents…I wonder what it’s worth in Crypto?

Financial Fitness

When you make an IRA contribution of any kind during the tax year, the institution where you made the contribution is required to file Form 5498 with the IRS. You will also receive a copy and it should be kept with your tax records. It is usually right around now.

For a deductible IRA contribution, this filing “proves” to the IRS that you did indeed make the contribution for which you are getting a tax break.

For non-deductible IRA contributions, keeping track of the contributions you make is important because you don’t want to pay taxes on that portion (known as your cost basis) of the IRA again in the future.

The usual deadline for these filings is May 31st and you would receive your copy in June. Since the tax filing deadline was extended this year, they have until June 30th, so don’t be concerned if you don’t see it until July.

There is no action on your part other than to make sure it is accurate and keep it for your records.

Favorite Quote

This month I’m taking a proud auntie moment to congratulate my nephew Jimmy, who is Valedictorian of his Class of 2021 and off to West Point in just a few weeks. He gave an awesome speech to his Senior class this past weekend and used this quote from Mark Twain that I really loved:

“The two most important days in your life are the day you are born and the day you find out why.”

Someone Had to Say It

Memorial Day Weekend- 2016: My Mom, Dad, sister, brother and me, celebrating my parents’ 50th Wedding Anniversary at The Hotel Manisses on Block Island.

You do know Sue, if something happens to Mom at this point, there’s no way Dad can stay in the house by himself”.

I still remember where I was parked when my sister spoke these words to me. Although our mom’s terminal cancer was “stable” at the time, our dad had entered into early stages of dementia and without her, would not be able to care for himself. Someone had to say it.

But we didn’t need to worry about that now, mom was finewe had time.  

I also remember the intense fight my sister and I had after our mother passed, while having a discussion about our father, moving him out, selling the house. My brother was in on this one too. It was not a discussion at all actually, it was a screaming match between me and my sister, wrought with grief. Two against one, and I was the odd man out. I knew intellectually what needed to be done, I just wasn’t ready emotionally for all that it meant. Someone had to say it.

I will add, my sister and I are extremely close, yet there we were.

It’s very difficult to have these conversations during a time of crises or grief.  

There are many articles written about how adult children should approach these tough topics with their parents because it is so hard for any of us to face getting older and what these changes mean for all family members. I think there should be more written for parents along the lines of, “Talk to Your Adult Children Before Things Get Ugly, Because It Can Get Ugly”.

Have these conversations with your adult children now. Let them know what you want, but keep in mind their lives as well if what you want has a heavy impact on them. Don’t be afraid of hurting anyone’s feelings. You know your kids better than anyone. There’s potential for worse fall out and hard feelings amongst your children after you are gone. When you have these hard conversations ahead of time when things are good, your kids are secure in knowing your wishes and that they are doing the right thing by you in the future, because “Mom and Dad said so”.

Some pointers for families:

1. Start Early
The sooner you begin to open up these conversations the better. No one is in crisis and it’s much less threatening for all involved.

2. Ensure your Estate Planning is in proper orderEstate Planning is one of the most important things a family can be sure is buttoned up tight. Work with a qualified estate planning attorney to be sure your wishes/concerns are addressed fully in a legal capacity. Documents such as health care proxies and durable powers of attorney are critical to have in place at all times, but especially as we age.

While these may be generic legal documents, their impact is anything but. There’s a heavy human component to those pieces of paper, and you must be sure to choose a person(s) you know you can trust explicitly to carry out things the way you would want. A conversation should be had with anyone involved in your wishes. These directives will potentially be a huge responsibility for this person at some point. Be sure the person(s) you are choosing are up for the task that may one day fall on them. Don’t be afraid of hurting anyone’s feelings when making your choices. It’s too important for that.

3. Organize Important Documents Personal, financial and legal documents should be organized and kept in one place. Tell a trusted family member or friend where they are should they need to be accessed.

4. Talk About the What IfsHave open conversations about what things might look like if things were to either suddenly, or over time, change. Discuss what options there are, what that might look like for all of you as a family, what would be the ideal solution if you could have it, what monies might be needed, who may need access to certain things like financial or legal documents. It’s a lot to think about, and not pleasant to talk about, but it’s harder when there’s been no discussion at all.

5. Enlist the Help of OthersIf you find starting these types of conversations too difficult on your own or fear emotions escalating, enlist the help of a trusted professional who is well versed in your wishes. It may be your estate attorney, financial advisor, doctor, or clergy member that could help facilitate a family discussion and help keep emotions in balance. We work with clients and families touching the most personal side of their lives every day. We can help here too.

There are no easy answers, I’m not going to pretend there are. Facing one’s mortality or that of someone we hold dear is as real as it gets when it comes to human emotion, but having these conversations in an open and honest manner may be one of the greatest gifts you can give to each other. 

Financial Fitness Tip

If your income was too high in 2019 or 2020 to receive the latest round of recovery stimulus, you will again have the opportunity to receive the recovery rebate (January 2021) as a tax credit when you file your 2021 return.  If you made too much prior to now but have since lost a job, or were close to the threshold and will be close to the threshold again in 2021, you can take steps now to reduce your taxable income.
The AGI income thresholds are more stringent for this latest round than they were for the previous two:
Single/MFS:        $75,000 – $80,000
HOH:                   $112,500 – $120,000
MFJ:                    $150,000 – $160,000

My Favorite Quotes

This one is for the Class of 2021 all over the world who had their moments big and small rocked by this pandemic for the past 14 months (or really, any of us):
“The Oak fought the wind and was broken, the Willow bent when it must and survived.”
                                                                       -Robert Jordan, The Fires of Heaven

Introducing the “Pink Tax”…and why it is worth being aware of.

Have you ever heard of the Pink Tax? This is not an actual tax levied by the state or federal government, but rather refers to what has been described as “ a discriminatory pricing practice” that lends itself to charging women more for “substantially similar” products and services. That part is real. 

If you have daughters, you’ve probably uttered the words, “geez, girls are expensive”, at least once. 

Health and beauty care products, kids’ toys, clothing, dry cleaning and car repair services are found to be the biggest offenders of the pink tax. 

Not for nothing, but in my house, regardless of gender, we don’t know what is legit for car repairs. But I suppose, “generally speaking”, men have (or are perceived to have) more general car knowledge and may be less likely to be quoted an unreasonable price. 

Toy pricing came as a surprise to me. One example cited in the piece I read was a blue bike helmet costing less than the same helmet in pink. Same manufacturer, same product, different color. Maybe pink decals cost more? 

Probably not. 

The State of New York actually passed a “Pink Tax Ban” in 2020, prohibiting this practice and requiring certain service providers to present price lists for standard services upon request. 

“Upon request” being the key words there. I’m not sure how the state will effectively police this. Time will tell, but it’s a start. 

The point I want to make on this topic is this:
I believe the best defense for stuff like this is a good offense. 

How do you create a good offense? 

AWARENESS. Through awareness you create knowledge and power, and that goes for anything. 

As women, are we always unaware we are paying more? Of course not. Sometimes we make the choice to. I am fully aware I am paying more for my “spa” shampoo, which is why I treasure every drop and don’t share it with the men in my house, but I do have the choice to buy a lower cost product and still get my hair clean. 

If you’ve never heard of the pink tax before this, now you are aware that it is actually a thing and you can be an informed consumer. Granted, you probably don’t want to smell like Axe body spray or Old Spice just to pay a lower price, but you can still make choices of one product over another or ask informed questions of a service provider. 

Be AWARE. Stay INFORMED. The best defense is a good OFFENSE. 

Financial Fitness Tip

I have been involved with a wonderful organization for a number of years called The Fresh Air Fund. April is financial literacy month and they asked me to sit on a panel with some teens to talk about what I do for a living as they learned about financial topics. 

Kudos to The Fresh Air Fund for putting this program together for their teens!

They shared a short You Tube video offering some basic, and some not so basic, financial education in an easy to understand format, which I am always a big fan of. 

Take some time to view the video and share it with others you think might benefit!

My Favorite Quotes

Since it’s financial literacy month, I am sharing a quote that promotes one of the single most important tenets of growing your wealth over time:

“Do not save what is left after spending. Spend what is left after saving”

– Warren Buffet (and me)

Alleviate This Planning Headache Now, Before it Becomes a Bigger One

I’ve noticed that the older my kids get, the further away my marker gets for true adulthood.

When I was the mother of toddlers, older kids in high school and college seemed so grown up to me, ready to support themselves and make smart decisions. I’d see them driving around town, getting their first jobs, heading off to college, starting a career. Adults, right?

But then your own kids start to get to that age and you learn that despite this outward appearance of “young adulthood”, they are still just KIDS. Sure, they are getting there, but they won’t truly arrive for years to come.

In most states, they legally become adults at 18. As any parent of a 17 year old knows, that’s crazy talk.

The idea of not being “here” to get them all the way “there” is not a thought we like to ponder.

One of the things you can do as a parent is put an effective estate plan in place in the event something should happen.

This is even more critical if you are a single parent, as you are the last line of defense. Even if there is an ex-spouse involved in their lives, once the horse has left the gate (i.e. they inherit all of your assets outright), that parent has no legal say about how those assets are spent.  

I shared last month that my husband and I were in the process of updating our estate documents. When we last updated them, age 25 seemed fairly adult to me, an appropriate time for our children to receive our assets should something happen to us.

Wait, what??? No way. I’ve changed my mind. At least not all of it, at once, for any old thing they wanted.

Pay off college loans? Sure. Buy a (reasonable) car? That makes sense. Maybe take a chance of a lifetime trip around the world before they start their career? Well, maybe.

Depending on what is going on in my kids’ lives at that time, I’ve legally entrusted their Auntie Beth to guide them in making good decisions around money while they continue to learn to make those sound decisions on their own.
When I meet with prospects and clients, I tell them that a financial plan is a living, breathing thing. It’s not just one and done. Life is always changing.

Estate planning, as part of your overall financial plan, is very much the same. You first create an estate plan when you are newly married or have young children. You can’t possibly create a single document that addresses all situations forever. You have no idea what life will look like in 5 years, never mind 25.

In addition, estate tax laws are ALWAYS changing and with that, estate planning techniques are adjusted to meet your needs within the context of these changes.

Life happens. If you haven’t updated your estate documents in the last 3-5 years, take time to review them now and answer these questions: 

  • If the proverbial “hit by a bus tomorrow” happens to you, is your estate in proper order for the person you trust with your life to step in, literally that day, and take over with as little roadblock as possible?
  • Does this plan still reflect your wishes and the wishes you have for your beneficiaries?
  • Are the people you’ve named as health care proxy, power of attorney and/or trustee still the ones you trust the most to handle these responsibilities? Are they getting older and maybe no longer the best choice? Are their values similar to yours? Remember, they may be making major decisions in your place.
  • If you’ve created trusts, are your assets titled appropriately to “fund” the trust?
  • IRA, 401(k) and life insurance assets pass by way of beneficiary designation and NOT by will or trust. Do you have beneficiaries named appropriately? Again, it does not matter who or what you have in a will or trust. It won’t apply to these types of assets. 

Honestly, there are many other pieces of the estate planning puzzle to consider. A qualified estate planning attorney will walk you through it all.

You can’t take away the heartache, but you can alleviate some of the headache.

Financial Fitness Tip

Last March, I reminded you that you have until the current tax filing deadline to make IRA contributions for LAST YEAR.
But my tip this month is to point out that your child who works a part-time job can also still make a 2020 contribution – and it should be to a Roth IRA.
If they had earned income in 2020, consider opening a Roth IRA and having them fund it with their earnings or, if you are in a financial position to do so, fund it for them, or a combination of both.
They can contribute up to the lesser of $6,000 or their earned income for 2020.
They are most likely earning too little to owe any federal or state income taxes, which means this “income tax free” money is being invested into an account that will grow tax free forever. NO TAXES EVER, even when they take it out.
Of course, as with all qualified accounts, there are rules as to when distributions can be taken tax and penalty free, but as long as they follow the rules, this savings vehicle is a slam dunk.

My Favorite Quotes

I’m sure many of the women being honored this March for Women’s History Month followed this type of mindset:
“You can never leave footprints that last if you are always walking on tiptoe” – Leymah Gbowee

Calling All Young Females: I Have a Career for You!

Following a recent client meeting, I finished the Zoom call on a natural high, with the feeling of “this is why I LOVE what I do”.
This high did not come from landing a big sale (I don’t sell anything) or growing a portfolio by a certain percent. It came from knowing I had helped them and from their recognition that our work together is having a positive impact on their financial security.
It did not require me to be great with numbers or love statistics, or economics, or analyze the stock market, or any of those other topics one might associate with this profession.
It required my passion to help others by sharing my expertise. To listen, to truly hear them, to understand their concerns, fears and hopes for their financial future and to offer my guidance and expertise on that path.
I’ll add EMPATHY, TRUST and COMPASSIONATE COMMUNICATION skills. Personal finances are extremely PERSONAL. 
Attention to detail is also very important. There are a lot of details to someone’s personal finances.
Women, in general, have a natural proclivity to this skill set and it can really help set them apart in this profession. Unfortunately, female advisors only represent about 15%-20% of all advisors.
Being a woman in this profession, and also being a small business owner, I want to help educate young women about the opportunities and rewards of what I do. 
If you have a young woman in your life who ever wants to learn more, you know how to reach me. I am always happy to have a conversation!

Financial Fitness Tip

For the second month in a row, I’m hitting on a teen related tip.

If you have a child who has turned or will be turning 18, you should have them sign three important documents: 

  1. Healthcare proxy
  2. HIPPA authorization
  3. Durable Power of Attorney 

My oldest turns 18 this year and my estate attorney is in the process of drafting his forms following our estate update meeting last week, just so they are ready and we don’t forget.

You can read more about the importance of it here.

My Favorite Quotes

When my mom was diagnosed with breast cancer, a friend who’s like family gave her a plaque with this quote:
“A woman is like a teabag. You never know how strong she is until you put her in a little hot water.”
I couldn’t agree more – here’s to all the strong women out there!