It was 1999 when we began financial planning and advisory services for the young couple. Their first-born child was to arrive in a few weeks. Their daughter is now age 14. A son, now age 11, followed a few years later.
It seems like only yesterday that in late 1999 the worry du jour was Y2K, a fear that obsolete computer programs that did not allow for year 2000 would lead to widespread technology breakdowns and chaos. Did you hold your breath at midnight 1/1/2000 expecting the lights to go out? What happened? Nothing. We continued partying like it was 1999!
Those who remember the press focus on a potential crisis now wonder what all of the fuss was about? Since then we survived the tech wreck market decline and the 2008 stock market and real estate debacle, 9/11, two wars, the euro crisis, never ending Middle Eastern turmoil, a deep recession, and a slow-growth recovery. Yet here we are, 13 years later, with the stock market at new highs and interest rates still at relative bargain levels.
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Time passes. Our children grow up and we get older. Sand keeps passing through the hourglass of our earthly sojourn. The year 2013 is over half gone. In less than a month children will be starting back to school and traffic will worsen. The summer break for most will be over.
Remember your New Year’s resolution regarding your personal financial planning? How are you coming with your “to do” list?
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As advisors, we continue to be amazed at the number of people with no wills or obsolete wills. Such a lapse in planning is especially critical in a marriage with minor children in the mix. An old will may be better than no will but we still see potential problems relative to minors, especially in the event of a joint tragedy where both parents are deceased, or at the death of a single parent.
Often the bulk of a couple’s savings, or that of a single parent, reside in retirement plans. There too, money passing to a minor presents problems. Have you checked both the primary and contingent beneficiary designations on retirement accounts and personal and group insurance policies?
For those with young children, have you funded a 529 College Savings Plan for 2013? Anyone, each parent and grandparent, annually may gift up to $14,000 each per beneficiary to such a plan. Gifts are made with after-tax dollars but money grows tax-free and may be applied tax free to qualified college and graduate school expenses.
A Coverdell Education Savings Account (ESA) allows money to grow tax-free and funds may be used for private or religious schools providing elementary or secondary education, as well as college. The maximum annual contribution per beneficiary is $2,000 and the amount would count against the annual $14,000 gift tax exclusion.
Parents of children with special needs that may carry into adulthood should not delay trust and other planning measures.
How are you coming with plans to pay down debt and build savings outside of your retirement plans? We urge individuals and couples to have a Freedom Fund, a pool of liquid capital equal to at least one-year’s worth of living expenses. Living paycheck to paycheck is motivation-draining stress. Liquid and available capital creates peace of mind and freedom to roll with the punches or pursue opportunities.
If you are a key breadwinner in a family or household, are you adequately insured against the consequences of disability or death? We ask the same question of key persons in an enterprise, including business owners? Is there a succession plan? Is it up to date?
August 1st is just around the bend. In slightly over three short months, Christmas and holiday decorations will pop up in your local mall. The poet Irving Layton wrote, “Time flames like a paraffin stove, and what burns are the minutes I live.” (A Wild Peculiar Joy, 1982).
Your 2013 resolutions? Time to get cookin’!
Lewis Walker is President of Walker Capital Management LLC. and Walker Capital Advisory Services, Inc., a Registered Investment Advisor (R.I.A.) Securities and certain advisory services offered through The Strategic Financial Alliance, Inc. (SFA). Lewis Walker is a registered representative of SFA which is otherwise unaffiliated with the Walker Capital Companies. ▪ 3930 East Jones Bridge Road ▪ Suite 150 ▪ Peachtree Corners, GA 30092 ▪ 770-441-2603 ▪ lewisw@theinvestmentcoach.com