Understand Your Big Picture

You probably have competing financial goals and none of them exist in a vacuum, meaning, a decision to direct cash flow towards one often comes at the expense of another. So how do you make sure you are creating the balance you need to achieve your most important goals? It starts with viewing your financial picture through a broad lens and prioritizing what’s most important to you.


Put very simply, your financial planning goals are things that cost money in the future. Some goals happen every year, while others may be one-time expenses. Getting a better understanding of the big picture starts with more clearly defining your goals. Here are a few that many of our clients consider:

  • Basic Living Expenses
  • Starting a Business
  • Healthcare
  • College
  • Travel
  • Car Replacement
  • Private School
  • Home Improvement
  • Gifts or Donations
  • Wedding
  • Major Purchase

Your goals are constantly evolving, often looking very different 3, 5 or 10 years in the future. That’s okay! Once you have this framework in place, you can start crafting the strategies that will put you on the road to success. “If you don’t know where you are going, you’ll end up someplace else,” Yogi Berra is famous for saying.

All too often these words from Yogi Berra are prophetic when it comes to financial planning. People spend a lot of time trying to figure out the “someplace else” they’ve landed, rather than focusing on where they really want to go.


Much of financial planning is dedicated to BIG goals that sometimes are decades out on the horizon. For example, a reasonable goal may read “I need to accumulate enough capital to sustain $150k in after-tax annual spending to fund a retirement that is going to begin in January of 2030.” That’s great but how are you going to actually get there? Breaking big goals into smaller, more manageable actions always makes more sense. Here’s how it might actually look in reality:

  • Set my monthly payroll deduction to maximize my 401(k) contribution ($19,000 limit or $25,000 after the age 50) over the full calendar year.
  • Setup a weekly auto-debit to transfer $500 to my investment account.
  • Schedule a quarterly alert to rebalance my portfolios (401(k), Trust, Roth IRA) to a target allocation of 75% Stocks and 25% Bonds.
  • In January, make a non-deductible IRA contribution ($6,000 limit or $7,000 after the age of 50) and convert that contribution to my Roth IRA in February.

Many external factors will impact the progress you make towards your goals (think investment returns) but all of the above actions are completely under your control. Automate these much smaller actions and let the power of compounding work for you!

Planning for the Possibility of Diminished Capacity: Ensuring Peace of Mind to You and Your Family

As our loved ones age, we are often faced with uncertainty surrounding the future. Being the trusted person to care for an aging family member can be a daunting responsibility. With old age comes the potential for uncharacteristic behavior, including missing payments, struggling to balance a checkbook, difficulty with decision-making, and so on. A tough reality is that these ‘diminished capacity’ scenarios are unfolding with increasing frequency across households as the baby boomer population ages and life expectancy continues to rise. For individuals experiencing cognitive decline, such as those living with dementia, diminishing financial competence is often among the first symptoms to emerge. Not only are these situations stressful, but they can also lead to unforeseen issues like unwanted fees, legal disputes or exposure to fraud. One way we can prepare to protect the overall well-being of our loved ones is putting a comprehensive plan in place well before symptoms of diminished capacity occur.

Planning for a time when a family member may be unable to handle their own financial affairs is never a fun undertaking; however, we have found that it can be a huge help to families. As financial advisors, we partner with tax and estate planning professionals. We do this because these professionals specialize in areas of expertise that fall outside our own; in partnering, we can better serve clients in all aspects of their financial situation. The most effective financial plans materialize when clients and their full team of professional advisors work together towards a client’s financial goals. Planning for the possibility of diminished capacity represents just one of these goals, however, it is a critical detail of any financial plan. We recognize the importance of planning for the long-term implications a diminished capacity scenario has on our clients’ financial and overall well-being.

Have you created a plan to support your aging loved ones in decline and protect their assets? Get to know your options:

A living trust is a very common recommendation to clients who wish to manage their property and assets while allowing trusted family members access to the account in the case of diminished capacity. A living trust is created by a written document that establishes a fiduciary relationship between the owner of the trust and a trustee, which means the trustee must act in a manner he or she reasonably believes to be in the best interest of the owner. In this trust document, the creator of the trust (trustor) establishes the trust’s terms with the trustee, who is often the same person in the case of a living trust. An additional trustee can be added and named either co-trustee or successor trustee. Co-trustees assume fiduciary duty upon execution of the document. Successor trustees, on the other hand, step in when the trustor/trustee can no longer do so due to limited capacity, resignation, or death. A living trust offers several advantages in relation to other estate planning options:

  • Transparent: With living trusts, everything is documented upfront, and there is a clear path of action for the creator of the trust and the beneficiaries.
  • Autonomous: Most living trusts are revocable, meaning the trustor can cancel or make amendments to the agreement.
  • Less hassle: Assets which remain solely in one individual’s name generally cannot be transferred elsewhere upon incapacity without a court order, and that process requires extensive time and money. A person lacking capacity who has transferred assets into a living trust and has signed a Power of Attorney (more on this later) avoids the cost and hassle of a legal proceeding.

Although the costs to establish a living trust are not insignificant, the benefits down the line far outweigh the time and money spent up-front. A living trust is a very effective method to ensure an elder loved one peace of mind.

A Power of Attorney is a legal document that grants an individual (Attorney-In-Fact) the right to act on the primary owner’s (Principal) behalf in the case of diminished capacity. The Attorney-In-Fact is legally obligated to act as a fiduciary in the best interest of the Principal—just like the trustor/trustee relationship with a living trust agreement. While there are many different types of Powers of Attorney, we recommend using a Durable Power of Attorney when planning for a potential diminished capacity situation for a few reasons:

  • Clarity: Some Power of Attorney documents require licensed physicians to verify incapacity if there is a suspected issue, which can quickly turn into complicated—sometimes hostile—situation. A Durable Power of Attorney document is effective upon execution and generally expires when the Principal dies, removing the significant potential for turbulence in the process.
  • Preparing for 70½: When you are first subject to taking required minimum distributions (RMD) from an individual retirement account at age 70½, a Durable Power of Attorney can be an effective way to manage and make decisions surrounding your retirement savings.

The options we’ve discussed in this article are just a few of your options when planning for potential diminished capacity, but every situation has different nuances. There is no cure-all financial plan—just like there is no cure-all medical solution for cognitive decline. The most important aspect, however, is having regular conversations with your advisors and family members to ensure you are preparing for life’s unexpected.

Having a plan in place now will allow your family to focus on the health issues at hand, rather than being distracted by financial complications. Although it’s never an easy conversation to have, the sooner you address the potential of diminished capacity, the better off all parties involved will be.




To Work or Not To Work: No Longer the Sole Retirement Question

Retirement is changing.  The idea of retirement is no longer a binary decision of choosing to work or not work. The idea is increasingly morphing into a discussion of flexibility. When can I afford to scale back? Can I do it sooner rather than later? What was once seen as “retirement planning” has moved more towards “career planning.” This has created new financial planning challenges, along with new opportunities.

The notion of retirement as a significant period of leisure at the end of life is a pretty recent phenomenon, only becoming widespread after World War II. With life expectancies increasing, so are the years you will be spending in retirement. People still want a sense of purpose and to feel intellectually challenged, even as they move beyond what has been seen as a normal retirement age.

This re-envisioned balance between work and leisure can take on many forms:

  • Taking on a reduced workload or different role with your current company
  • Pursuing an interest completely outside of your profession
  • Consulting
  • Starting a new business
  • Going back to school
  • Volunteering

The list of possibilities is as broad as your creativity.  You can design the work-leisure balance that you want to feel fulfilled. If one of these scenarios is a serious possibility, or you have your own version, it should be accounted for as part of your financial plan.

Questions to consider when you dial-back or make a career shift:

  • How much will healthcare benefits cost? Will you still have coverage if you work part-time?
  • How will this change impact your ability to save? Will you still be on track?
  • How much can you afford to invest in a new business or additional education?
  • Is the decision permanent or do you have the option of re-entering your old position, industry or company?

This doesn’t mean that a retirement of leisure is off the table. A more traditional retirement will still be the goal for many. The point is this: put some serious thought into how you envision your lifestyle because it is likely not going to be an off-the-shelf answer. The earlier you can start defining what the future may look like, the sooner you can start planning for it.


Closing the Retirement Savings Gap: 3 Ways to Catch Up

Do you feel behind in your retirement savings? If everyone had to do it over again, we’d all start saving 10-15% of our income at the outset of our careers and continue uninterrupted until that magical retirement date decades into the future. In reality, our financial lives rarely follow this linear path, and retirement is no longer viewed as a binary decision.

As parents, if you’ve ever paid for preschool, while also saving for college, this topic is right up your alley! Recent research by Boston College’s Center for Retirement Research has found that many retirement savers fall behind during the child-rearing years. For obvious reasons, this appears to be the budget casualty that parents utilize to manage their cash flow. The research also finds that this doesn’t have to be a permanent setback, as long as there is a plan to catch up after these expenses subside.

To close the retirement gap, you may be able to take advantage of these 3 ways to catch-up on your savings:

  1. THE ‘CATCH-UP CONTRIBUTION’: Once you hit the round age of 50, you’re provided an additional benefit of being catch-up eligible. This allows you to defer even more of your income into your 401(k) plan or IRA. In 2018 and 2019, the additional catch-up contribution is $6,000 for 401(k) participants, increasing the maximum salary deferral to $24,500 (2018) and $25,000 (2019). For IRAs, it is $1,000, bringing the maximum contribution to $6,500 in 2018 and $7,000 in 2019. Take advantage of this milestone!


  1. SPOUSAL IRA CONTRIBUTION To make any type of IRA contribution, you must have earned income equal to or greater than the amount of the IRA contribution. For a spousal IRA contribution, as long as one of you has enough earned income, you can make a spousal IRA contribution for a spouse that has no earned income. This means you can contribute to a spousal IRA for a non- working spouse. There are additional considerations you need to take into account (deductibility, income limits, Roth vs. Traditional IRA) but if used correctly, a spousal IRA contribution can allow you to put more money into tax-advantaged accounts.


  1. BUSINESS OWNERS’ OPTIONS: The self-employed individual has even more ways to supercharge their retirement savings. Depending on the size and structure of your business, a defined benefit plan or a cash balance plan are definitely worth some investigation. They won’t be a good fit for the majority of business owners, but when they do fit, they can be an absolute home run. For solopreneurs or couples who run a business together, you may be able to take advantage of an Individual 401(k) and receive employee deferral and employer contributions. These options are more complicated, but open up your savings’ possibilities.


Closing the retirement savings gap is a challenge, but it is definitely not an insurmountable one. Catching-up requires a plan and some good old-fashioned financial discipline.