Graduation season has come and gone! Congratulations to all those with children and grandchildren moving onto their next chapter of life. For those with loved ones heading to college this fall, the next several weeks are a great time to review the financial outlook for the next four years. For those with younger children or grandchildren, it’s never too early to start the conversation! The reality is retirement planning and education planning are inextricably linked. Overpaying for college and not optimizing your accumulated asset base to fund education expenses are some of the biggest deterrents to an on-time retirement. In this article, we will identify some of the critical elements of navigating the college planning discussion successfully.

Understanding the cost

College can be the most significant investment that a family will make, but rarely is it discussed that way—such as buying a house is. The all too frequent adage “if you get in, we will figure it out” can be a detrimental approach to your broader financial health. From 1983 to 2021, college tuition costs have increased approximately 850%, or 5.9% on an annual basis, which outpaces the cost increase seen by other consumer goods during the time period by a wide margin. The rising cost of college is the primary contributor to the $1.7 trillion of student loans owed by borrowers.

Source: BLS, Consumer Price Index, J.P. Morgan Asset Management


If you extend these trends into the future, the projected costs are staggering.


Source: The College Board, Trends in College Pricing and Student Aid 2021. J.P. Morgan Asset Management

While the effects of tuition inflation are shocking and have had massive ramifications to the global economy, the good news is that these statistics are based on the advertised “sticker” price, which can be misleading. Merit scholarships and need based grants paid for over 31% of college costs in 2019, and on average, private colleges discount their tuition 50.9%.

Financial planning for college requires more than just comparing tuition numbers. It is crucial to understand how financial aid is awarded. The following websites can be great resources in your research:

Other important cost considerations include:

Understanding graduation rates

  • 41% of undergraduates finish in 4 years
  • 56% of undergraduates finish in 5 years

Understanding the value of the degree and major

  • Consider starting salaries before choosing a major and deciding how much to spend on college costs and student debt
  • As a rule of thumb, a student’s total loans upon graduation should not exceed their projected 1st year starting salary out of school
  • Researching internship and co-op opportunities

Funding options

A 2019 Sallie Mae study showed that over 70% of families used current income to pay for college, and 14% withdrew from their retirement funds to meet these expenses. While supporting a child’s tuition expenses with employment income may be necessary, retirement accounts should be avoided at all costs – no college or university is worth the cost sacrificing retirement.

With that in mind, what are the best ways to save and pay for college? 529 education plans are a great place to start, especially while your child or grandchild is young.

  • Tax Benefits
    • Contributions are non-deductible, but earnings grow tax-free when the money is taken out for qualified education expenses – room, board, tuition, supplies, etc.
    • Recent changes also allow tax-free withdrawals (up to $10,000 per year, per beneficiary) for elementary and secondary schools, apprenticeship and trade programs, as well as student loans
    • Contributions are considered completed gifts for tax purposes, meaning up to $16,000 per individual/per year qualifies for the annual gift tax exclusion ($32,000 for couples who gift split); there is also a “super-funding” election to contribute as much as $80,000 in one year ($160,000 for couples who gift split) without generating a taxable gift
  • Control, Flexibility, and Low Maintenance
    • Unlike other custodial accounts, the donor keeps control of the account indefinitely which ensures that the money is used for its intended purposesAn account owner can change the beneficiary or rollover funds between accounts at any time without tax consequences, assuming the change is for a member of the family
    • Unlike other custodial accounts, the donor keeps control of the account indefinitely which ensures that the money is used for its intended purposes
    • An account owner can change the beneficiary or rollover funds between accounts at any time without tax consequences, assuming the change is for a member of the family
    • The account owner can change the investment allocation twice per calendar year
    • “Set it and forget it” – all plans offer an automatic investment plan, which keep the contributions coming in periodically as well as putting the investment allocation on a glide path towards starting college

Don’t just save, invest. Whether you start a college fund in a 529 account or a custodial account, the most important thing is to get started in vehicles that maximize growth potential. It’s hard to overstate the benefits of compound interest:

Source: J.P. Morgan Asset Management, assumes an annual investment return of 6%

The End Goal

The earlier your family learns how to plan for college, the greater likelihood of reaching the educational goals for your loved ones. Allow your children to take responsibility in their education by involving them in the financial discussion. This helps put your student in charge of their education, giving it more value in the long run.

2022 Key Financial Data (click to download)

At HCM, we strive to keep clients up to date with changes that affect their finances. With the constant flow of headlines and new information surrounding Covid-19, the invasion of Ukraine, and monetary policy changes, it is often challenging to identify what information applies directly to your personal situation. The IRS makes several changes to the tax code each year, and we wanted to highlight the key changes for the 2022 calendar year and how they may impact your financial picture:

Qualified plan contributions:

  • For 401(k), 403(b), 457, and SARSEP retirement plans, the 2022 contribution limit has increased to $20,500. That represents a $1,000 increase from last year’s limit of $19,500.
  • The “catch-up” contribution remains unchanged at $6,500, meaning those aged 50 and over can add that contribution to the limit above and contribute up to $27,000 into their retirement plans for the year.
  • Notably, these limits are aggregate, applying to both pre-tax and after-tax (Roth) contributions.
  • These limits are not to be confused with the contribution limits for Individual Retirement Account (IRA) contributions, which remain unchanged at $6,000 for those under 50 years of age and $7,000 for those 50 and older.
  • Why it matters: If you are able to maximize your retirement plan contributions without compromising your lifestyle, it is advantageous to do so. Check with your HR to make sure that your elective deferral amounts are set on a path to maximize your savings into your employer plan. At minimum, contributions should be made to take advantage of any employer match.

Required minimum distributions:

  • The IRS updated their Uniform Lifetime Table, which determines the life expectancy factors used when calculating required minimum distributions (RMDs). These changes apply to distributions for 2022 on. The new table can be found on page 2 of the attached infographic.
  • Why it matters: The updated tables reflect a trend toward greater longevity, as the new smaller distribution requirements mean that distributions be withdrawn over a longer time period. This helps reduce the risk of running out of retirement assets if an individual lives past their life expectancy. The smaller distributions also may help reduce annual tax burdens.

Annual gift tax exclusion amount and Estate tax exemption:

  • Annual gift tax exclusion:
    • The annual federal gift tax exclusion allows an individual to give up to $16,000 ($32,000 for couples) to as many people as you wish (family, friends, etc.) without those gifts counting against your lifetime estate exemption. That represents a $1,000 increase from last year’s limit of $15,000.
    • This limit also applies to 529 plan contributions as the annual amount an individual or couple can contribute to an education savings plan.
    • Why it matters: This area can be confusing for people, as there is the common misconception that there will be taxes taken out of gifts that exceed the annual exclusion limit. That is not the case. Rather, gifts that exceed the annual exclusion limit merely require you to file a gift tax return (Form 709). The IRS then tracks the gifts made in excess of the annual exclusion amount in order to calculate your estate tax exemption at the end of your lifetime, which is discussed below.
  • Estate tax exemption:
    • The estate tax exemption has increased to $12,060,000 for individuals, or $24,120,000 for married couples. These numbers represent the value of a person, or couple’s, estate that is exempt from being taxed by the federal government.
    • Tying the annual gift tax exclusion and estate tax exemption together: Gifts that exceed the annual gift tax exclusion will reduce your estate tax exemption proportionately. That means your threshold for having to pay estate tax will be lower, but it doesn’t mean that you will have to pay tax on the gifts.
    • Why it matters: The estate tax exemption was drastically increased by the Tax Cuts and Jobs Act of 2017, which is scheduled to sunset in 2025. There is constant discussion in Washington about reducing the exemption closer to its pre-TCJA level, and a proposal was included in the Build Back Better Act to reduce the exemption to $5M per person. What ensues from here remains to be seen.

Standard deduction:

  • The standard deduction for single taxpayers has increased to $12,950 ($25,900 for those married, filing jointly).
  • Why it matters: An estimated 90% of American taxpayers opt for the standard deduction when filing taxes each year. The $10,000 cap on deductions for state and local taxes, commonly referred to as the SALT deduction, keeps those torn between itemizing and taking the standard deduction sticking with the latter. Removing the SALT cap is another piece of legislation that is frequently discussed on Capitol Hill.


We have included our 2022 Key Financial Data infographic, which lists all the key changes we cited above and is an excellent reference to have handy throughout the year. The infographic can be found and downloaded at the top of this webpage.



This document is provided for informational purposes only; you should not construe any such information as personal legal, tax, investment, financial, or other advice. All information is of a general nature only and does not address the circumstances of any particular individual.  You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information contained herein before making any decisions based on such information.  There are risks associated with investing in securities. Investing in securities, including but not limited to stocks, bonds, mutual funds, and money market funds involves a risk of loss.  Loss of your principal investment is possible.  The past investment performance of either HCM or any individual security is not a guarantee or predictor of future investment performance.  There is no guarantee any individual investor or his or her investment advisor will achieve a particular investment objective.

As we discussed in a previous post, it is no secret that the biggest fear Americans have about retirement is the cost of healthcare. In that piece, we discussed Medicare and provided a Medicare policy selection framework for identifying the coverage that best suits your healthcare needs in retirement. Today, we aim to tackle the other side of the healthcare coin: Long-term Care.

The market for Long-term Care insurance is one that has changed dramatically over the past few decades. Although often conflated with basic Medicare coverage, long-term care insurance is a separate entity that covers different expenses. When Americans cite healthcare costs as their primary concern about retirement, they are often referring to the costs associated with Long-term Care. After all, it is typically not the short-term hospital visits, routine checkups, and prescription drugs that have the financial severity to deplete one’s assets quickly, but rather, it is funding multiple years of assisted living and the services that come along with it.

The piece linked below was provided by the M Financial Group and looks at the different considerations to examine in preparing for long-term care services, and provides a framework for the role LTC coverage could play in your overall financial plan.

LTC Considerations- M Financial Group

We all want to be more organized, especially in our financial lives.

As we age, our situations tend to become more complex, or organization may simply not be our strength. Although important, managing a home, scrutinizing investment and bank accounts, and tracking all our expenses often end up not being high on our list of things we WANT to do.

We have found that for many of our clients hiring a bookkeeper has many benefits.  First and foremost, they organize your monthly finances for you and provide you regular monthly reports for your review. But what can develop over time is even more powerful—they develop as a trusted advisor who can help pay bills either regularly or when there may be an unexpected trip to the hospital or any other emergency.  A quick email by children can verify that mom’s bills are in order.

What are the situations where we have seen clients benefit from having a bookkeeper? Here are just a few:

  • A retired doctor who commented, “I’ve worked hard to get where we are today and want to spend my time doing things I enjoy.  I don’t enjoy wasting my time paying bills or talking to my insurance company for two hours about payments they have misapplied.  My wife and I would rather golf and travel and pay to have someone else manage this for us.”
  • A retired couple with no family in the area and wanted help managing their finances.  They were looking for someone to manage their monthly bills and after mentioning to them the advantages of us working in a team environment, they approved their bookkeeper to send monthly reports to their CPA and financial advisors, and periodically their estate attorney so that all trusted advisors knew exactly where the clients’ finances stood.
  • A business owner with multiple real estate properties that she was managing outside her family office who began to grow concerned about her ability to properly track her expenses and all the bills she was paying each month.  The bookkeeper set her up with to have a centralized place for the bills to be automatically input and reviewed, which also provides various levels of payment authorizations all in one simple package.  In addition, the bookkeeper started tracking her finances in QuickBooks and, after review of her prior year, found numerous bills that the client had erroneously paid twice.
  • Another retiree had no family locally and had perhaps become a little too reliant on an in-home care provider who, after the bookkeeper reviewed her finances, had been “borrowing” funds from her to buy a car for himself and pay back taxes he owed.  He was summarily terminated by the client’s CPA after paying back all borrowed funds. The bookkeeper also noted that her utility bills were more than five times the average monthly amount for a home of her size.  With approval of the client, her family and CPA, they engaged a home energy company which identified and resolved myriad issues including replacing appliances that were 25-45 years old with newer more energy efficient models, sealing drafty areas in the crawlspace and attic and adding attic insulation.

As you can see, there is no one-size-fits-all motivation for hiring a bookkeeper, but the outcomes are often similar: organization, added peace of mind, and a lot of time saved hold true in every situation we have come across. For elderly parents especially, hiring a bookkeeper allows you more time focusing on your family and health without the worry of missing bills.

Because finances are kept up and reviewed monthly, when tax time comes, things are a snap.  Financials can be sent to an accountant so itemized deductions are easy to quantify.  Reliable financial reports make it easier to plan financially and project a true picture of how much money you will need to draw from portfolios in the future.

As financial advisors, the greatest part from our perspective is that we work alongside your bookkeeper along with your CPA and estate attorney. This network comprises your team of trusted advisors who work together with the goal to provide you a comprehensive financial team and ensure that whatever information you authorize is seamlessly provided to your other advisors.

We recognize the importance of having a bookkeeper that specializes in working with individuals and families and are happy to provide local recommendations with firms that we work with and trust.


After the year that we endured in 2020, it comes as no surprise that healthcare is at the forefront of global discussion. If you look at any survey regarding Americans’ biggest fears about retirement, the cost of healthcare is consistently the first or second concern that respondents cite. This holds true across generations and was the case pre-pandemic and certainly remains the case today.

This concern is not unfounded, and the numbers can be daunting. Estimates from Vanguard data suggest the typical American couple will need about $197,000 for healthcare alone over the course of their retirement. The reason that number is shocking for many is because unlike many other budget items, such as groceries or utilities, healthcare costs are far less predictable. Pre-retirement, most have their healthcare subsidized through their employers. This can make it challenging to know what we spend on healthcare today, let alone what the costs might be  in retirement.

Some of the factors that make healthcare costs hard to predict:

  • Health status: High-risk status increases costs
  • Medicare coverage choice: Premium and out-of-pocket trade-offs
  • Retirement age: Bridging to Medicare
  • Employer subsidies: Wide variation for workers versus retirees
  • Geography: Where you live has an impact on coverage and costs
  • Medicare surcharges: Income can increase premiums on Medicare Part B and D

Because of the complexity in predicting healthcare costs, many people treat it as a standalone item outside of their overall cash flow needs. In this article, we hope to provide a framework to help you evaluate your healthcare costs in retirement and be equipped when these expenses arise and decisions come knocking.

Medicare Policy Selection Framework

Medicare is a critical, albeit confusing, element of retirement. The concern of burdensome healthcare costs in retirement can be reduced by a four-step policy selection framework: Prioritize, Evaluate, Choose, and Revisit.

1. Prioritize- What is it you are seeking with your coverage? There are four criteria to consider:

  • Affordability- Many individuals are simply looking to obtain the least expensive coverage over their lifetime. Of course, there are tradeoffs and lower premiums can result in large spikes in years that more health care is needed.
  •  Cost predictability – For some, the predictability of costs may be more important to clients than saving money on lower premiums. Unexpected medical bills for those that operate on a tight budget can be catastrophic. For those that fall into this category, knowing that “everything will be covered” may make pricier premiums worth the expense.
  •  Worst-case scenario protection – Some medicare options offer no limit to the amount an individual might pay for medical expenses in a given year. Other plans offer a cap. The lower that cap is, the more you will pay in premiums up front.
  •  Flexibility – Many coverage options use provider networks such as health maintenance organizations (HMOs) or preferred provider organizations (PPOs). Most networks are limited to one geographic area, which can be a problem if you travel or split time between locations, and network based plans can also limit your ability to see specialists or your preferred provider of choice.

2. Evaluate – Once you have considered the criteria above and prioritized which of these you place the most value in, the next step is to evaluate the types of coverage match your priorities the closest. However, before we look at how each type of coverage meets those criteria, let’s briefly define each of the five separate components of Medicare coverage.

  • Part A (hospital coverage) – Part A pays hospital costs. It also includes some benefits for skilled home care, hospice care, and the first 100 days of skilled nursing care. Importantly, most individuals will not have to pay any premiums for Part A, as they paid for it through payroll taxes while working.
  • Part B (medical coverage) – Part B covers outpatient healthcare visits such as doctors, outpatient surgery, diagnostic medical equipment, and ambulance services. Part B comes at an additional premium that starts at about $150 per month, but as we noted becomes more expensive with income over certain thresholds.
  • Part C (Medicare Advantage) – Part C plans contract with medicare to provide Medicare A and B benefits. These bundled plans are often available for only the cost of the standard Part B premium. The vast majority of these plans follow the network model (HMO or PPO).
  • Part D (prescription drug coverage) – Part D plans are optional prescription drug plans, but are available to everyone who is Medicare eligible. They are available as both standalone plans and as part of Part C Medicare Advantage plans. Like Part B, Part D coverage comes at the cost of an additional monthly premium, which is also subject to income thresholds that make coverage more expensive.
  • Medicare supplemental insurance (Medigap) – Medigap consists of private policies that are designed to cover expenses not covered under Part A or Part B. These policies are commonly used to “fill the gap” that Part A and Part B leaves, namely by covering copayments, deductibles, and coinsurance. Medigap comes at an added cost as well, and you must be enrolled in Part and B in order to be eligible

Depending on the criteria you identified as most important to you in Step 1, the matrix below presents some policy types that might be most appropriate given your priorities.

Source: Vanguard Advisors

3. Choose – Once you have considered Steps 1 and 2 by prioritizing your needs and evaluating the policy type that fit your needs, you should be in a position to make an informed decision regarding your coverage options. While Medicare coverage may be one of the important decisions you may make in retirement, it’s important to note that it is not a binding decision, as there is an open enrollment period for current enrollees every fall. A resource to utilize in selecting your policy is your state’s State Health Insurance Assistance Program (SHIP), which offers free counseling about Medicare options and state-specific benefits you may be eligible for.

4. Revisit – The open-enrollment period mentioned above is open each year from October 15 through December 7. We recommend revisiting your selection annually, even if it means making no changes to your existing coverage.


Healthcare costs are difficult to forecast in both pre and post retirement. They are not easy to forecast for a variety of reasons, however, we do know they will increase for the vast majority of individuals and families. The reason for this is two-fold: 1. Over the past 20 years, healthcare costs have increased at a greater rate than general inflation and 2. As people get older, their need increases. It’s not an easy task to understand what your healthcare may cost in the future, however, we hope that by utilizing this four step process when it comes time to enroll in Medicare, you will be in a position to make an informed decision that fits your needs.

In a world that seems out of control, it can be empowering to focus on the things that are within our control. Easier in theory than in practice. With the constant flow of headlines and new information surrounding the Coronavirus, it is often challenging to identify what information may apply directly to your personal situation and what can be disregarded. The silver lining, however, is that the market drawdown and recent legislative changes have created many opportunities for you to take control of your financial picture. Here are some noteworthy developments and financial planning strategies that should be on your radar:

Tax planning

  • Suspending your Required Minimum Distributions
    • What: The CARES Act waives Required Minimum Distributions (RMDs) during 2020. This provision is far-reaching and applies to traditional IRAs, SEP IRAs, and SIMPLE IRAs in addition to 401(k), 403(b), and Governmental 457(b) plans for both retirement account owners and beneficiaries.
    • Why: Unless you rely on your RMD for your living expense and cash flow needs, it is advantageous to leave your savings in your retirement account where it can grow tax-deferred. You’ll also avoid the income taxes associated with these distributions in 2020.
  • Tax-Loss Harvesting
    • What: Sometimes an investment that has lost value can still do some good—or at least, not be quite so bad. The strategy that changes an investment that has lost money into a tax benefit is called tax-loss harvesting. Tax-loss harvesting allows you to sell investments that are down and then offset realized investment gains with those losses. The end result is that less of your money goes to taxes and more stays invested and working for you
    • Why: Even if you don’t currently have any gains, there are benefits to harvesting losses now, since they can be used to offset income or future gains. If you have more capital losses than gains, you can use up to $3,000 a year to offset ordinary income on federal income taxes, and carry over the rest to future years.
  • Charitable Contributions for Itemizers
    • What: Another important provision from the CARES Act with regard to your taxes is that the legislation temporarily increased the Aggregate Gross Income (AGI) limit on cash contributions to charities from a maximum of 50% or 60% of AGI to a maximum of 100% of AGI.
    • Why: Individuals who itemize deductions can elect to ignore the normal AGI limits for gifts of cash made to public charities in the calendar year 2020. Gifts of cash in excess of 100% would be eligible for the normal 5-year carryforward rule for 2021 and later years subject to the usual 50%/60% limits. Put simply, this is great news for both your favorite public charities as well as your tax bill.
  • Charitable Contributions for Non-Itemizers
    • What: Individuals who do not itemize deductions will be allowed up to a $300 charitable deduction for gifts of cash to public charities during 2020.
    • Why: Presumably, non-itemizing individuals filing a joint return will be allowed a $600 combined deduction.
  • Roth Conversions
    • What: A Roth Conversion refers to taking all or part of an existing Traditional IRA balance and moving it to a Roth IRA account. With Roth Conversions, investors pay ordinary federal and state taxes on the funds in the year of the conversion but are then able to take tax-free withdrawals in retirement. Another benefit is that Roth IRAs are not subject to annual RMDs, so your money can continue to grow tax-free without having to take distributions.
    • Why: The timing may be right for you to consider a Roth IRA conversion to take advantage of lower income and lower taxes in 2020. While current market volatility makes it nearly impossible to know the best time to convert, doing so when your retirement account values are down may lessen the tax impact of the conversion. Since the CARES Act allows you to suspend RMDs for 2020, you can convert assets from a traditional IRA to a Roth IRA this year without first satisfying the typically required RMD. Keep in mind that converted assets can’t be reversed or recharacterized at a later time.

Financial Planning

  • Revisit Your Financial Plan
    • What: Your financial plan should act as a guidepost in these unsettling times and there is a real power in knowing where you stand in relation to your long-term goals. Reviewing your goals reinforces long-term thinking and should lead to better decision making.
    • Why: The economic effects of the Coronavirus have presented an opportunity to reexamine the big picture.
    • How:
      • Scrutinize your discretionary spending. There is never a bad time to review your spending but now is an opportune time to take a fresh look at your budget. It could lead to increased savings, especially with many people being forced to delay travel plans and/or other big-ticket purchases this year.
      • Rebalance your portfolio. Most investors understand the need to have a target asset allocation. When asset values are volatile, as they were in March, your portfolio is going to deviate from your long-term targets. If you remain disciplined to your targets, it is a great way to take the emotion out of buying and selling. It will force you to reduce the assets or asset classes that have performed well and add to the ones that have declined in value. Remaining disciplined to a rebalancing strategy allows you to add a contrarian element to your portfolio that can lead to better long-term results.
      • Review education funding for your children or grandchildren. Because of the market downturn, now may be a good time to consider making a larger contribution or accelerating contributions to your 529 accounts. This is especially true for account owners with children and grandchildren that are younger and therefore have a longer time horizon until these funds are needed to pay for college education expenses. Investing at lower equity valuations has the potential to enhance long-term returns.
      • Establish your next in-line sources of cash. Standard convention tells us to have 3-6 months of living expenses saved in cash and cash alternatives. These dollars may be even more important if you have experienced a financial hardship or anticipate that possibility. The extra liquidity may allow you to keep your long-term investments intact, giving your finances and the economy a chance to recover.

While economic recessions are a normal part of the business cycle, they’re never an enjoyable experience, especially when brought on by a health crisis. Your ability to take advantage of some of these provisions and strategies outlined above will allow you to improve your financial outlook and when this crisis ends, you’ll be better positioned.



This document is provided for informational purposes only; you should not construe any such information as personal legal, tax, investment, financial, or other advice. All information is of a general nature only and does not address the circumstances of any particular individual.  You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information contained herein before making any decisions based on such information.  There are risks associated with investing in securities. Investing in securities, including but not limited to stocks, bonds, mutual funds, and money market funds involves a risk of loss.  Loss of your principal investment is possible.  The past investment performance of either HCM or any individual security is not a guarantee or predictor of future investment performance.  There is no guarantee any individual investor or his or her investment advisor will achieve a particular investment objective.

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!

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.




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.


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.