The following is Part I of a four-part series from Senior Financial Advisor Winfred Jacob, CFP®

Over the course of our lifetime, we will accumulate various forms of “property”.   One of the decisions we need to make about our property is how we want it distributed at our death someday.  This may seem fairly straight forward, yet the concept of transferring property to heirs is a bit more complicated than people often assume.   In reality it’s easy to make some common errors that lead to unintended and unfortunate results.   Here are some of the issues or misconceptions that may cause us problems: Property transfers to heirs in different ways.  A will is an important tool in transferring property to our heirs, but it’s important to understand that some of our property may transfer via a different route entirely, not controlled by our will. For instance, life insurance policies, IRAs and employer sponsored retirement plans like 401k plans transfer via their beneficiary designations.  They will distribute the proceeds accordingly,...

For many individuals, the family home is both a significant asset and a major expense item.  But it may also provide an emotional connection to important interpersonal relationships.  And lastly, where we live in our older years has a practical side based upon our physical limitations and preferences.  How do you go about making the decision to downsize?  Here are some of the factors to consider. Lower housing expenses could put more cash in your pocket. If your home isn’t paid off yet, have you considered how much money is going toward the home loan?  What percentage of your gross income are you devoting to your mortgage payments today? Even if your home loan is 15 or 20 years old, you still may be devoting a significant part of your gross income to it. When you move to a smaller home, your mortgage expenses may decrease (or disappear) and your cash...

When pondering retirement during our working careers, it’s common to assume that our spouse or life partner will decide to retire at the same time.  In reality, that is often not the case and for any number of reasons, you might consider retiring years before your spouse or partner.  And while it’s important to model the financial complications and crunch the numbers carefully, it’s also important to consider the emotional and interpersonal dynamics.  Here are some common issues to think about and discuss with the important people in your life before pulling the trigger on this life-changing event. How will retiring affect your identity? If you are one of those people who derive a great deal of pride and sense of self from your profession, leaving that career for life around the house may feel odd.  Hopefully, your spouse recognizes that you will experience some adjustments and soul-searching, even enough to...

There are two important discussions most parents and children would like to avoid.  To everyone’s relief, one of them can be delegated to our children’s health class teacher.  So let’s talk about the other one: The financial independence discussion that parents and children should have as parents age and become concerned about things like custodial care, competency, and control. This is a difficult and emotional discussion at many levels.  My parents were first generation German immigrants.  Being stoic was a way of life and money was private.  Discussing their finances with children (at any age) broke with cultural norms.   It was an admission that we might be vulnerable and no longer in control.  However, for all of us, it is an inevitable reality. It’s no mystery that as we age, we increase the possibility of suffering an episode of incapacity.  It may be for a specific time period followed by recovery or...

  Many of us, if employed, are eligible to participate in a company sponsored retirement plan which allows us to personally defer (contribute) a significant amount of our earnings to the plan on a tax-favored basis.  In essence, our Federal and State tax codes incentivize us to save for our retirement.  For those of us who are self-employed, it’s easy to establish a similar plan.  Depending on the plan type, the contribution limits are as follows: 401k, 403b, and 457 plans: $18,000 per year ($24,000 per year if age 50 or older). SIMPLE IRA and SIMPLE 401k plans: $12,500 per year ($15,500 per year if age 50 or older). In theory, contributing the maximum to our retirement plan seems like a really good idea.  And given the pressures on Social Security and the steady decline in pension plans that pay retirees a guaranteed income at retirement, there is an overwhelming need to do so. ...

Financial wellness is fast becoming the topic of the day within the workplace.  Employers make a significant investment in the health and financial security of their employees hoping that this will enhance productivity and creativity.  They understand that the well-being of the organization is directly impacted by the well-being of its employees. However, there is mounting evidence that many employees, across all ages and occupational levels, struggle with basic financial life skills.  Their lives can be stressed by excessive debt, tax issues and budgeting pressures. In addition, some individuals may experience financial pressures caused by external factors largely beyond their control such as the sickness, incapacity, or unemployment of a family member.  In either circumstance, an employee will be hard pressed to excel and reach their full potential. Lastly, these factors will make it very difficult for employees to save and invest for their future.  As time goes by, the opportunity to take...