Early adulthood is assumed to be a time of becoming financially independent. But a study conducted by Agewave reveals that many adults ages 18-34 are not economically independent despite their adulthood. Many still rely on the financial support of their parents or extended family. The study reveals complex reasons leading to financial interdependence; something not experienced by earlier generations:
The financial condition of this generation is rapidly changing the societal ideas of ‘life milestones,’ such as when to marry, buy a house, start a family, or save for retirement. Despite this societal change in financial interdependence, many young adults view the help they’re receiving as reciprocal. They plan to provide support for their parents both financially and as a caregiver, later when their parents need it.
Other findings from the study reveal that young adults are open to working with others for financial help and advice, such as financial advisors and educators. Being open to learning and listening helps young adults to ‘launch faster’ and overcome their financial obstacles. Additional study findings indicate women are often launching faster than men, covering more of their living expenses while paying off their debt at a faster rate.
If you’re a young adult or a parent of a young adult and are seeking advice and a plan to lessen the financial interdependence in your relationship, I welcome meeting with all of you. Unless we have had the same experiences and economic conditions during our young adulthood, we can’t assume we know what it’s like to be a young adult today.
Couple’s spend many hours planning and a significant amount
of money on their wedding, but personal finances and protecting assets deserve
just as much attention and planning. When both parties are in agreement on discussing
their finances, reviewing credit reports, and asset and liability information, long
term asset appreciation and protection should take priority before the wedding
day.
The most common way to protect assets is through insurance,
and many times a prenuptial agreement (prenup). Although it’s not as much fun
as discussing wedding plans, both have a place in pre-wedding planning when
significant assets and liabilities are involved.
Traditionally thought of as a planning tool only for
divorcing and retaining assets, prenups are a way to protect both spouses. Here’s how:
Deciding if a prenup agreement is right for you and your
future spouse is a personal decision that shouldn’t be dismissed without consideration and consultation with an attorney.
Growing and protecting assets through financial advice for
both spouses is at the core of our financial planning, as is disclosure and
honesty between parties. I’m here to help both of you manage your own, and your
combined assets, as you start your lives together regardless of your decision
to utilize a prenup agreement or not.
Market risk is something all investors worry about, but
those close to retirement have limited time to recover from the loss. If you’re
within ten years of retirement, your investments are at a critical stage to continue
to gain value and avoid loss. Without thinking through the dynamics of gains
and losses, investors leave themselves open to market risk that could prematurely deplete their retirement assets.
One way investors avoid loss is by including annuities in their
retirement portfolio. Annuities, which are becoming more widely used in the
financial services industry, are a contract with an insurance company to
provide investors with a guaranteed stream of income in retirement. They offer
tax-deferred growth of earnings similar to other traditional tax-deferred
investments. However, many investors still don’t fully understand the different
types of annuities, how they work, or the fees associated with them.
The three types of annuities widely used in financial
planning are fixed annuities, fixed-indexed
annuities, and variable annuities. Like any financial product, there are
pros and cons to each type of annuity, and due diligence of investigating any annuity should take precedence before
purchasing one for your retirement portfolio:
Fixed Annuity Pros:
The Cons:
Fixed-Indexed Annuity Pros:
The Cons:
Variable Annuity Pros:
The Cons:
Additional Disclosure: Optional riders have limitations and come at an
additional cost. Variable annuities are sold by prospectus only. Investors
should carefully consider objectives, risks, charges and expenses carefully
before investing. The contract prospectus and the underlying fund prospectus
contain this and other important information. Investors should read the
prospectus carefully before investing. For a copy of the prospectus contact
your financial advisor.
Annuities offer benefits to many investors and have their place
in retirement planning, but only if suitable for the investor and a part of an
investment strategy using other types of investments and accounts. Investors should fully understand the risks
associated with annuities before purchasing them.
Additional Disclosure: Guarantees are backed by the claims paying ability
of the issuing insurance company.
The average American worker stays at a job only 4.2 years,
and many had funded retirement accounts they’ve left with the employer’s plan
custodian when they moved to a new job. Leaving retirement savings at multiple
employers can create higher investment costs to keep the account in former
employer plans or create an inconvenience to maintain and rebalance.
This drawback may lead investors to consider rolling over
their retirement savings plans or other investments to another advisor to
manage or to a new fund custodian. Many times your new advisor will assist with
you with the transfer paperwork, but what can you do before completing the Transfer
Initiation Form (TIF) to understand the process
and help ensure a efficient rollover’?
1. Check with the custodian of the account
regardless of the type of account you have to see if a roll over is even
possible. Considerations for a roll-over include the time the account has been
open and any fees associated with the ‘outgoing transfer.’ If you’re still
employed and your assets are in your employer plan, and you want to move them
to another advisor or custodian to manage, additional rules may apply.
2. Ask for all transfer out paperwork from the
custodian and if other signatures or a ‘signature medallion stamp’ will be required
on the paperwork to complete the transfer. Signature Medallion stamps guarantee
the account. Your financial institution or new fund company may be able to
provide the medallion stamp for you.
3. Include the account statement with your transfer paperwork that includes your name and
address, the account number(s), and is dated in the last six months.
4. Realize that you have options where you
transfer your account and the type of investments available to you. Discuss these options with your advisor.
5. Understand the fees associated with
moving your money to a new account. Your advisor will explain the charges to
you during the rollover initiation meeting as you’re reviewing the TIF form and
associated paperwork.
6. Be patient. Some fund custodians process their TIFs very slowly. Ask your financial advisor to keep in touch with you regarding the progress of the transfer. If you aren’t informed that the transfer has completed within a month, check in with your advisor for followup.
If you have retirement savings plans at multiple former employers or with multiple advisors, I can help you manage your assets in one place and help navigate the transfer process for you. Having an active tole in financial planning includes bringing assets together to allow you more investment choices and on-going monitoring, not leaving them where you can't actively manage them.