Financing Your Future – Excerpt From The Financial Shepherd

When thinking about wealth, it’s natural to consider personal finance, investments, and retirement. But have you thought about the legacy you want to leave behind? What steps can you take to create and preserve wealth for your loved ones? According to Trust & Will, creating and preserving multigenerational family wealth involves careful planning and education. Legacy and family are inherent parts of wealth planning, and taking steps now can ensure your hard-earned wealth benefits future generations. Multigenerational wealth planning isn’t just about amassing wealth but sustaining it across generations.

According to Forbes, 90% of wealthy families lose their wealth within three generations. This loss often results from poor decisions by heirs and a lack of estate planning, which can lead to significant taxes and probate costs. Even if you successfully build wealth, maintaining it over generations is challenging. Protecting and preserving wealth is as important as creating it. Here’s how you can start planning for multigenerational wealth.

Educating the Younger Generation

Financial education is crucial. According to NBC News, one in four U.S. adults says their parents didn’t teach them about money. Schools also lack financial literacy education, though some are starting to address this gap. Early on, teaching children about money management helps them develop strong financial habits. Discuss basic principles like giving, saving, and spending. This early education increases the likelihood that your heirs will manage their inheritances responsibly, protecting family wealth for years. There are several finance books that teenagers can use to help educate themselves about money:

• The Teen’s Guide to Personal Finance: Basic Concepts in Personal Finance that Every Teen Should Know by Joshua Holmberg and David Bruzzese
• I Want More Pizza: Real World Money Skills For High School, College, And Beyond by Steve Burkholder 
• Smart Money Smart Kids: Raising the Next Generation to Win with Money by Dave Ramsey and Rachel Cruze
• The 7 Habits of Highly Effective Teens by Sean Covey
• Rich Dad Poor Dad for Teens: The Secrets About Money – That You Don’t Learn in School! by Robert T. Kiyosaki –

Teaching children basic money principles in a safe environment helps them develop strong financial habits for adulthood. This practice enhances the likelihood of preserving your family’s wealth across generations. You can start by teaching your children about budgeting, saving, and the value of money. Including them in age-appropriate family financial discussions can provide practical learning experiences reinforcing these concepts.

Fostering Financial Transparency

Open discussions about money are essential. Many families avoid talking about finances, considering it taboo. This silence can be harmful because younger generations won’t understand the importance of financial planning. Hold family meetings to discuss financial values and estate plans. This transparency helps ensure everyone understands and supports the family’s financial goals.

Fostering financial transparency builds trust and ensures everyone is on the same page. Regular updates and open communication help keep all family members informed and aligned with the financial plan. By openly discussing financial matters, you can prevent misunderstandings and conflicts. This practice also prepares younger members to handle financial responsibilities confidently. Including all family members in financial planning discussions can make sure that the legacy you leave behind is honored and sustained.

Build & Shape A Legacy with Worth Advisors 

Planning for multigenerational wealth involves educating the younger generation and fostering open financial discussions. These steps help ensure your family’s wealth is preserved and responsibly managed across generations. Schedule a consultation with Worth Advisors today for personalized advice on creating a comprehensive wealth plan tailored to your family’s needs. Together, we can build a strategy that supports your family’s financial legacy.

Disclaimer: Always consult a financial, tax, or legal professional familiar with your unique circumstances before making any financial decisions. This material is intended for educational purposes only. Nothing in this material constitutes a solicitation to sell or purchase any securities. Any rates of return are historical or hypothetical in nature and are not a guarantee of future returns, which may be lower or higher. Investments involve risk. Investment values will fluctuate with market conditions and security positions, which, when sold, may be worth less or more than their original cost.

Selecting suitable income sources to fund your retirement planning is paramount. With this in mind,  annuities are an option for many retirees. They offer consistent payments throughout your life, which leads to financial stability in retirement. Such features make annuities a valuable component of retirement planning. 

They provide predictable income, which can be customized to align with your specific retirement needs and objectives. Annuities also ensure income continuity for a surviving spouse, offering financial security beyond the retiree’s life. Typically, you fund these annuities well before retirement, either making a one-time lump sum payment or spreading your contributions over several years. While annuities are often viewed as having upfront costs and penalties for early withdrawal, they offer a secure income stream for retirement.

Understanding Annuities 

An annuity is a contractual agreement with an insurance provider. You commit capital upfront, either all at once or over time and in exchange, you start receiving regular financial disbursements at a predetermined future date. This setup is particularly effective in mitigating the risk of depleting your retirement funds prematurely. Annuities come in two primary forms: immediate and deferred. Immediate annuities begin disbursing funds shortly after the initial investment, making them ideal for retirees needing immediate income. In contrast, deferred annuities delay payments until a future date, offering an opportunity for your investment to accrue value. 

The latter could lead to higher payouts. Integrating annuities with other retirement income, like Social Security or pensions, is crucial for a well-rounded retirement plan. Though annuities might carry sizable initial costs and penalties for early access, they are instrumental in ensuring a reliable income stream in retirement. Immediate annuities provide a financial safety net shortly after investment, whereas deferred annuities are a long-term economic strategy, allowing your funds to grow.

Fixed vs. Variable Annuities

Deciding between fixed and variable annuities depends on your financial goals and risk tolerance. Fixed annuities guarantee a specific payment amount, providing a dependable income stream and reducing uncertainty in your financial planning.

Conversely, variable annuities tie your returns to the performance of chosen investment options, such as stocks or bonds, which introduces a higher degree of risk but also a chance for increased gains. These are particularly useful in managing the impact of inflation. You should be familiar with the terms associated with your annuity, including any fees and potential charges for accessing funds prematurely. 

While fixed annuities appeal to those seeking financial stability, variable annuities might suit those willing to take on more risk for greater returns. Fees related to annuities can be significant, and they are an essential factor to consider when evaluating the suitability of this investment. Moreover, timing the annuity payouts to coordinate with your retirement plan ensures they meet your living expenses when needed. Fixed annuities provide security with known returns, while variable annuities offer growth potential tied to market performance. Navigating these options requires careful consideration of long-term financial goals and current market conditions.

Let Us Serve You

Planning for retirement involves comprehensive strategies and understanding all available financial instruments. Annuities, while complex, offer a structured way to secure a reliable income throughout retirement. If you’re contemplating including an annuity in your retirement portfolio, assessing how it fits your broader financial goals is vital.

Financial advisors provide tailored strategies to your unique situation. At Worth Advisors, we guide you through complex retirement planning choices, focusing on securing a prosperous and stable future. Contact us so we can help you build a resilient financial retirement plan.

Disclaimer: Always consult a financial, tax, or legal professional familiar with your unique circumstances before making any financial decisions. This material is intended for educational purposes only. Nothing in this material constitutes a solicitation to sell or purchase any securities. Any rates of return are historical or hypothetical in nature and are not a guarantee of future returns, which may be lower or higher. Investments involve risk. Investment values will fluctuate with market conditions, and security positions, which, when sold, may be worth less or more than their original cost.

Saving for your child’s education is more than just a financial goal; it’s about ensuring a bright and secure future for them. Education opens doors and opportunities; your role is to give your child the tools to succeed. However, with the rising cost of education, starting early and planning wisely has never been more important.

Ways to Fund Your Children’s Education 

It begins with understanding the options available for education funding. Savings accounts dedicated to education, such as the 529 plan, offer a way to invest in your child’s future. These plans are beneficial because they grow tax-free if the funds are used for qualified educational expenses. Starting early takes advantage of the power of compounding, allowing small, regular contributions to develop into a significant educational fund over time. 

Involving family members in contributing to these funds can bolster the savings, giving your child a robust financial start when they reach college age. Investing in a dedicated account from an early age supports your child’s educational aspirations and demonstrates the importance of planning and saving. Additionally, this approach allows for adjusting your financial strategies over time, ensuring you can react to changes in your financial situation or educational costs. Engaging in this planning process early on sets a solid foundation for your child’s future. You’re giving them a chance to have an education without the financial burdens that come with it.

The Added Benefits of Planning

A crucial benefit of early education planning is reducing the future financial burden on your child. The reality is that higher education comes with high costs, which often leads students to take on loans. The average current costs range from $10,000-$40,000 a year. (The lower end is for in-state public schools, and the higher number is for private schools.) Student loans burden your child with debt for many years after graduation. Early planning and saving minimizes or eliminates the need for such loans, freeing your child from the stress and financial strain of debt. You also teach your child valuable financial lessons by saving for their education. They learn the importance of saving, investing, and planning for the future. 

These lessons in financial responsibility and the value of education inspire them to work hard and achieve their dreams. A plan helps your child focus on their studies and career goals, knowing their educational expenses are covered. Planning and saving for education instills a sense of responsibility and appreciation for the value of education in your child, encouraging them to make the most of the opportunities it provides. It also allows them to enter adulthood with fewer financial burdens, giving them greater freedom in their career choices and future financial decisions. This thoughtful approach to education funding has a lasting impact, influencing their financial habits and decisions for the better.

You Deserve to Be Supported Too

We understand the importance of this journey and are here to guide you. Scheduling a consultation with us can give you the insights and strategies to make informed decisions about funding your child’s education. 

Disclaimer: Always consult a financial, tax, or legal professional familiar with your unique circumstances before making any financial decisions. This material is intended for educational purposes only. Nothing in this material constitutes a solicitation for the sale or purchase of any securities. Any rates of return are historical or hypothetical in nature and are not a guarantee of future returns, which may be lower or higher. Investments involve risk. Investment values will fluctuate with market conditions, and security positions, which, when sold, may be worth less or more than their original cost.

Charitable contributions are much more than acts of kindness; they’re pivotal elements of a well-rounded financial strategy. Close to $500 billion ($499.3M) was donated to charities in 2022. Ireland’s Gross Domestic Product (GDP) is around $530 billion, demonstrating how staggering that number actually is. When your charitable contributions are thoughtfully integrated into your financial planning, it can lead to tax advantages and establish your legacy.

Tailoring Donations to Reflect Your Values

Charitable donations and financial planning stand out because they exemplify how your values and financial objectives can align. Unlike other investment decisions focused on returns, philanthropic contributions are driven by the aspiration to effect positive change.

This is particularly significant for high-income individuals. They offer a way to balance tax management with support for causes that you are passionate about. This balance is important for those prioritizing impactful legacy-building alongside wealth conservation.

Diverse Strategies for Charitable Contributions

There are several different ways to approach charitable donations. Each one varies from the other, and this allows for a customized approach. Choices range from direct cash gifts to donating assets like stocks or property.

Donor-advised funds (DAFs) and private foundations are attractive for donors seeking greater control over their philanthropic initiatives. These methods allow you to take advantage of financial perks such as tax deductions and the potential for tax-free growth of contributions.

Navigating Tax Benefits & Financial Planning

Understanding charitable donations’ tax nuances and financial aspects is key to optimizing financial plans. Donations typically offer tax deductions against taxable income, lowering overall tax obligations. This benefit varies based on donation type, amount, and income bracket.

Cash donations are generally deductible up to a percentage of your adjusted gross income (AGI). Donating appreciated assets directly to charities circumvents capital gains taxes upon sale. This offers a dual advantage: a tax deduction for the donor and a more substantial benefit for the charity.

Strategically timing donations, such as ‘bunching’ contributions in a specific year, can help surpass the standard deduction threshold and enhance your tax benefits. This tactic has gained attention because of the increased standard deduction under our current tax laws.

Establishing a DAF or a private foundation can be a practical approach for sustained philanthropic involvement. These vehicles facilitate charitable donations and allow for tax deductions and strategic fund distribution.

Worth Advisors, LLC

At Worth Advisors, we understand the significance of incorporating charitable giving into comprehensive financial plans. We bust through the door to serve, respect, and appreciate your desire to do the same for others. 

Our team is dedicated to guiding you through your philanthropic activities’ tax implications and benefits. We invite you to book a consultation to discuss integrating charitable donations into your financial strategy. We can also help you manage tax liabilities, support the causes that you’re passionate about, and craft a meaningful legacy.