Financial Planning Archives - Page 8 of 14

Preventing Fraud: Common Scams & How to Avoid Them

Posted on November 11, 2022November 28, 2022 by Robert Blakely

Fraud has become an increasingly common issue facing individuals of all ages, especially when it comes to their finances. In an attempt to curb fraud, we have compiled some common scams, as well as tactics to avoid them. Seniors and those without strong technology skills are more likely to fall victim to scams that come in the form of emails, texts, or phone calls. Knowing how to recognize fraud can prevent you from having your identity, money, or banking information stolen.

Phishing

If you receive a text or email message asking you to click on a suspicious link, don’t do it! If you are unsure of the source of the message, directly contact the company the sender is claiming to represent. These texts and emails often make dramatic claims to grab your attention. For instance, many phishing emails will tell you that your payment information is incorrect, or that there has been a suspicious attempt to log into your account. To prevent these types of messages, make sure your phone and computer are updated with security software, and opt-in to multi-factor authentication on any important accounts you create.

If you believe a message is fraudulent, you can report it to the Anti-Phishing Working Group. This organization seeks to identify trends in cybercrime and prevent others from falling victim to fraud.

Confirm Your Financial Institutions

If you receive texts, calls, or emails requesting your banking information, contact the institution separately to confirm the validity of the message. Scammers will often pretend to be a representative of a bank or financial institution to get information such as your credit card number, social security number, or account password. These messages are meant to alarm you, and often claim your account has been placed on hold or is under some form of investigation.

Sometimes scammers will ask you to call a phone number so a “representative” can walk you through the process of restoring your account. In this case, it is always best to call the institution using a verified phone number from the company’s website. Even if a message or phone call seems very urgent- take a deep breath and don’t click any links or give out information before confirming it is safe to do so.

Monitor Your Credit Report

Examining your credit report regularly can help you spot fraud. Incorrect personal information, accounts you don’t recognize, or a sudden change in credit score could all be signs that your credit may have been compromised by a scammer. You are entitled to a free credit report each year from each of the nationwide credit reporting companies. Also, many credit card providers monitor your credit as part of your membership. Be sure to keep an eye on your credit to avoid any fraudulent accounts open in your name!

Wire Fraud

Wire fraud typically involves a phone call and is usually directed at seniors. One scam involves a caller pretending to be a grandchild in distress asking for an emergency wire transfer. Another involves a fake IRS agent threatening arrest if you don’t wire funds immediately. Any time you send money through a wire transfer, be sure to confirm the identity of the recipient and don’t be rushed by a sense of false urgency. To research the phone number calling you, enter the number into Google and see if others have reported it as fraud. It can also help to add your number to the National Do Not Call Registry, or to silence unknown callers, anyone with an important message will typically leave a voicemail.

Protect yourself from scams by keeping a close eye on your finances- working with a trusted financial advisor can provide you with a complete understanding of your accounts so you will not be as likely to fall victim to fraud.

Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM to see what other financial tips we can provide towards your financial well-being.

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals.

Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser.

Financial Horror Stories

Posted on October 18, 2022October 31, 2022 by Steve LaFrance

After celebrating Halloween, we wanted to share some financial horror stories we encounter all too frequently. Making mistakes when it comes to your finances is perfectly normal, however, when it comes to these horror stories, the impact can be significant, and frankly, quite scary.

Not Saving Enough for Retirement

Even if retirement is 10, 20 or even 30+ years away, it’s essential to know how much you need to save in order to live comfortably. Years can fly by and leave you in a precarious position when it comes to your retirement. Don’t leave your future self in a bad position: take action now and make sure you’re doing what you can to set yourself up for a comfortable retirement that meets your lifestyle goals.

Saving for retirement does not have to be complicated. Start early, identify your goals, stay on budget, and maximize any matching money available to you, and you will be on the road to a secure and comfortable retirement.

Living Beyond Your Means

Living a financially comfortable life is on almost everyone’s list of priorities. But, many want more than they can afford–which can lead to lifestyle inflation and living beyond your means. Be sure to practice smart shopping habits, and always maintain a strong understanding of your financial wellness to be sure you are fully informed before making any large purchases.

It’s vital to be realistic with your financial goals, and your spending, to avoid ending up with more debt than income. The saying is true: you can’t out-earn bad financial habits.

Uneducated Investments

With a quick Google search you can find millions of articles and videos telling you how to invest your money, but making uneducated investments can be more than scary, it can be detrimental to your portfolio and your financial wellness! Before you click the ‘submit’ button on any of the dozen investment apps, contact a professional.

When meeting with a financial planner, the full picture of your financial health will be reviewed, taking into account your income, expenses, goals, and more. By planning appropriately with the help of a professional, and diversifying your portfolio with asset allocation based on your investment objectives, you can pursue your financial goals with greater confidence and less risk.

Finance doesn’t have to be scary- working with an experienced advisor can help you avoid financial horror stories and free you from any money-related fears you may have!

Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM to see what other financial tips we can provide towards your financial well-being.

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals.

Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser.

Why Do I Need Life Insurance?

Posted on September 6, 2022September 6, 2022 by Steve LaFrance

If you’re like most people, it’s not that you don’t appreciate the value of life insurance. In fact, many people believe they need more coverage. You probably wouldn’t mind owning additional life insurance. It’s just that you don’t want to buy it.

Thinking about buying life insurance, talking about buying life insurance, discussing the reasons for buying life insurance–all of this makes many people feel uncomfortable. Here are just some of the reasons why you may be putting off buying the life insurance you know you need.

1. I don’t have enough time

You’ll get around to buying life insurance, but not today. With all the things you’ve got to do, buying life insurance can come off as a low priority–just one more thing you ought to do. Plus, the whole idea of discussing life insurance isn’t a whole lot of fun. Who wouldn’t rather take the dogs for a walk on the beach, attend a child’s softball game, or spend those precious few hours of free time in the evening visiting with friends?

Nonetheless, buying life insurance is really an important task that should be addressed. Life insurance can help ensure that your family will have enough money to meet their financial obligations in the event of your death.

2. The subject is boring and morbid

If you really don’t like to think about death, you’re not alone. Death is an unpleasant subject, and life insurance raises issues of our own mortality. Some people say that the very thought of starting the life insurance buying process makes them feel stressed out. There’s no great appeal to contemplating our own mortality. It’s a subject we’d rather ignore than address. The result can be inertia or denial.

It doesn’t have to be that way. People who do act on their life insurance needs tend to focus on the positive aspects: the idea of meeting their responsibilities to provide for, and care for, their loved ones. They think of it as contingency planning, protecting their families against the uncertainties of life. They also recognize that life insurance is really about life and love, about helping to ensure a positive quality of life for their spouse and children if they die prematurely.

3. I don’t know where to start

If you don’t have a clue about which type of policy is right for you, or how much life insurance you need, join the club. Few of us truly understand life insurance: why we need it, what type of policy is best, how much we need, when and how benefits are paid, how benefits may be taxed, and more. That’s okay. It’s not your job to know everything about life insurance. That’s the job of an insurance professional.

Thinking you need to have all of the answers about which type of life insurance is best for you is sort of like needing surgery and thinking you need to know which type of scalpel to use. That’s the surgeon’s job. In the same respect, the right insurance professional can guide you through the process of selecting the policy that best suits your needs, budget, and objectives, and can answer your questions.

4. Life insurance isn’t a high priority compared with the other expenses I have

For many underinsured people, it’s not so much that they don’t want the life insurance they need; it’s just difficult to find the extra dollars to pay for it.

Buying life insurance you can’t afford doesn’t benefit anyone. If it causes your family hardship or requires you to make choices that seem incongruous (“Gee kids, I’d love to take you on vacation, but our life insurance premium is due”), you’ll eventually discontinue the policy. Then you lose, and your family loses.

That’s why it’s important to purchase a policy that meets your needs and your budget. Fortunately, there are many types of life insurance available. These include term life insurance policies and various types of permanent (cash value) life insurance policies. Term policies provide life insurance protection for a specific period of time. If you die during the coverage period, your beneficiary receives the policy’s death benefit. If you live to the end of the term, the policy simply terminates, unless it automatically renews for a new period.

Permanent insurance policies offer protection for your entire life, regardless of future health changes, provided you pay the premium to keep the policy in force. As you pay your premiums, a portion of each payment goes toward building up the policy’s cash value, which may be accessed through loans or withdrawals. (Keep in mind, though, that loans and withdrawals will reduce the cash value and the death benefit, and could cause the policy to lapse, which may result in a tax liability if the policy terminates before the death of the insured). The cash value continues to grow–tax deferred–as long as the policy is in force.

Several different types of permanent life insurance are available, including:

Whole life insurance
Universal life insurance
Variable life
Variable universal life

Variable life and variable universal life insurance policies are offered by prospectus, which you can obtain from your financial professional or the insurance company. The prospectus contains detailed information about investment objectives, risks, charges, and expenses. You should read the prospectus and consider this information carefully before purchasing a variable life or variable universal life insurance policy. There are contract limitations, fees, and charges associated with variable life and variable universal life insurance, which can include mortality and expense risk charges, sales and surrender charges, investment management fees, administrative fees, and charges for optional benefits. Variable life and variable universal life insurance is not guaranteed by the FDIC or any other government agency; they are not deposits of, nor are they guaranteed or endorsed by, any bank or savings association. The investment return and principal value of the investment options will fluctuate. Your cash value, and perhaps the death benefit, will be determined by the performance of the chosen investment options and is not guaranteed. Withdrawals may be subject to surrender charges and are taxable if you withdraw more than your basis in the policy.

The bottom line

It’s easy to understand why people tend to put off purchasing the life insurance they know they need. But look at it this way: buying life insurance is one way you can help secure your family’s financial future. And what could be better than knowing your loved ones will be protected, even if you’re no longer around to take care of them?

People who do act on their life insurance needs tend to focus on the positive aspects: the idea of meeting their responsibilities to provide for, and care for, their loved ones.

Five reasons to buy life insurance

To provide continuing income for your family members
To pay off debts you leave behind
To pay final expenses and taxes
To provide an estate for your loved ones
To leave money to charity

There may be surrender charges at the time of surrender or withdrawal and are taxable if you withdraw more than your basis in the policy.

Any guarantees are contingent on the claims-paying ability and financial strength of the issuing company.

The cost and availability of life insurance depend on factors such as age, health, and the type and amount of insurance purchased.

Life insurance policies have exclusions, limitations, and terms for keeping them in force.

Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM to see what other financial tips we can provide towards your financial well-being.

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals.

Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser.

Understanding Your 401(k) – Key Terms to Know

Posted on September 1, 2022September 6, 2022 by Emily Promise

Planning for retirement is a key point of financial wellness- but how can you make the most of your 401(k) plan without understanding all of the vocabulary? We’ve compiled a list of the most common terms used in employer-sponsored retirement plans to help you invest with confidence.

Types of Retirement Plans

401(k): A 401(k) plan is a company-sponsored retirement plan that eligible employees can contribute a portion of their salary into through a variety of investment options. In some instances, employers may also offer to make matching contributions. Many people find success in using both a 401(k) and a Roth IRA to fund their retirement.

IRAs: IRAs are a type of savings account designed to help you put money away for retirement in a tax-advantaged way. Two of the most common types are traditional and Roth IRAs. Though they are quite similar, the key differences lie in the tax restrictions and in the fact that traditional IRA’s require minimum distributions starting at age 72.

Types of 401(k) Contributions

By employees

401(k) contributions are typically ‘before tax’ money. The amount you choose to contribute is deducted from your paycheck before taxes are taken out. This means you are paying taxes on a smaller portion of your salary. There are limits each year on just how much you can put in your 401(k). In 2021, the maximum amount one can contribute was $19,500. If you are 50 or older, you can make a catch-up contribution of $6,500 in addition to the $19,500 for a total of $26,000.

Roth contributions: Many plans also offer options for employees to make post-tax ROTH 401(k) contributions from their paychecks. Post-tax ROTH contributions do not lower an employee’s taxable income, but they do grow tax free and aren’t taxed upon withdrawal.

Rollovers: After a job change, you have a few options for how to proceed with moving your retirement funds. This is a personal decision that depends on the employee offerings, read our blog to learn more about this transition!

By employers

Matching: Many employers offer matching contributions. For example, your employer may offer a 4 percent match. This means they will contribute the same amount that you do, up to 4 percent. Of course, you can personally contribute more, but the company will match only 4 percent. If you are not contributing to your company’s 401(k) plan and they have a match, you are leaving money on the table!

Profit sharing contributions: Your employer may choose to make a voluntary contribution to your 401(k) plan called a profit share. This contribution is not based on how much you contribute and is completely voluntary on the part of your employer, meaning it can vary one year to the next.

Investment Options

Most employer-sponsored plans give you a selection of mutual funds or other investments to choose from. Make your choices carefully. The right investment mix for your employer’s plan could be one of your keys to a comfortable retirement. That’s because over the long term, varying rates of return can make a big difference in the size of your balance.

If you have questions, it is always a great idea to call your financial advisor for guidance. But no matter what, please take advantage of any type of savings plan your current employer offers as the earlier and more aggressive you are, the closer you will come to achieving your financial goals.

Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM to see what other financial tips we can provide towards your financial well-being.

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals.

Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser.

What You Need to Know About President Biden’s Student Debt Relief Plans

Posted on August 26, 2022September 27, 2023 by Robert Blakely

On August 24, 2022, President Biden announced plans to offer student loan forgiveness to selected individuals. Below is a summary of the executive action that the Biden Administration plans to effectuate. It’s important to note that strong legal challenges to these provisions are likely because the changes are sought to be implemented without Congressional approval. Many of you or your family members may be affected, so the team at Blakely Financial wanted to update you with the information that we have so far.

Final Extension of Student Loan Repayment Moratorium

Borrowers won’t be required to make payments on their federal student loans through December 31, 2022. Borrowers haven’t been required to make student loan payments for more than two years thanks to pandemic-related relief for borrowers. No interest has accrued on federal student loans during the repayment pause. President Biden has indicated that this will be the final extension, and that borrowers will have to resume student loan repayments in early 2023.

Forgiveness of $10,000–$20,000 from Student Loan Balances

Individuals making less than $125,000 per year ($250,000 for married couples) in income will be eligible to have up to $10,000 of student loan debt canceled. For Pell Grant recipients, the cancellation amount may increase to $20,000. In most circumstances, the Department of Education will have individual income data to be able to automatically process the debt cancellation. In the event the government doesn’t have the relevant data, it anticipates providing applications in short order.

Proposed Changes to Existing Repayment System

The Biden Administration also announced proposed changes to income-based student loan repayment programs, whereby individuals could potentially be required to pay a lower proportion of their income to service their student loan debt. In addition, student loan forgiveness could be accelerated for some borrowers, depending on their student loan balances. The timeline or definitiveness of these changes is unclear; they have been announced as “proposed rules.”

Additional Resources

As with any government policy announcement, details are sparse; more information should be forthcoming in the coming days and weeks. For more information on debt relief actions, visit these resources:

You can also subscribe to updates directly from the Department of Education.

As always, we are here to help. Thank you for your continued trust and confidence.

Sincerely,

The Blakely Financial Team

These hyperlinks are being provided as a courtesy and are for informational purposes only. We make no representation as to the completeness or accuracy of information provided at these websites.

Blakely Financial, Inc. is located at 1022 Hutton Lane Suite 109, High Point, NC 27262 and can be reached at 336-885-2530. Securities and Advisory Services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. Fixed insurance products and services are separate from and not offered through Commonwealth Financial Network®.

Financial Planning After a Divorce: What Women Should Know

Posted on August 10, 2022August 17, 2022 by Emily Promise

The truth is, after a divorce, women tend to be hit harder financially than men. And, given that women experienced the highest rates of job losses in 2020, divorce in the current environment is even more likely to disrupt their financial stability. For women who find themselves experiencing the increasingly common “gray” or late-life divorce, the financial consequences may be even more acute. The decision to end a marriage after age 50 could mean unraveling assets and finances that have been shared for decades.

If you’re facing financial challenges or decisions after divorce, how can you better understand and take control of your financial future? To start, consider seeking guidance on some of the planning issues discussed below.

Splitting Marital Assets

This topic can become highly complicated. Assets acquired during the marriage are split according to your state’s law. Generally speaking, most states follow equitable distribution rules that will consider all marital assets, and a court will determine their distribution between you and your former spouse. There are nine states that have community property laws, which means each spouse owns 50 percent of the assets acquired during their marriage (with certain exceptions). When it comes to debts, in community property states the same approach holds. Debts acquired during the marriage are generally attributable to both spouses. In noncommunity property states, however, debts usually stay with the spouse who incurred the debt, unless the other spouse cosigned or otherwise guaranteed it.

Retirement savings

The contributions you or your former spouse make to employer-sponsored retirement plans and IRAs during the marriage are generally considered marital property, with some exceptions. Contributions made outside of the marriage, for example, can be considered separate property. Pay particular attention to any qualified plans you may have, such as pensions or 401(k)s, as these should be divided according to a qualified domestic relations order (QDRO).

A QDRO allows for a tax and penalty-free transfer to a nonowner ex-spouse. Neither the original owner nor the divorcing nonowner should be taxed or penalized if the nonowner rolls the assets directly into a qualified plan or an IRA. Keep in mind, if the nonowner spouse receiving the distribution uses the funds in any other fashion, a tax will be imposed on that distribution—but only to that spouse.

We can discuss the QDRO with you in greater detail, as options can vary from plan to plan. Pensions, for example, will generally not pay a lump sum but will make payments to the ex-spouse the same way they would be made to the employee-owner. The sooner a QDRO is presented to a plan administrator, the clearer the understanding you’ll have about your options.

Creditor protection is another consideration. Keep in mind that 401(k) plans are covered by the Employee Retirement Income Security Act (ERISA), so they have creditor protection. If the 401(k) is rolled into an IRA, it will continue to be protected from bankruptcy creditors, but it will only receive general creditor protection as provided by state law.

Dividing an IRA is different, though. ERISA does not cover IRAs, and the division of an IRA does not require a QDRO. For federal tax purposes, if the division follows a court-issued divorce decree and is made as a trustee-to-trustee transfer as opposed to an outright distribution, an IRA owner can avoid tax and penalties. Once the asset is transferred, each spouse becomes solely responsible for tax and penalties of any future distributions.

Family Home

If you or your ex-spouse want to hold on to the home, the marital estate can be equalized from other assets, if necessary. Current circumstances related to the pandemic may complicate the equalization, though. Because inventories and interest rates remain low, demand exceeds the supply of homes for sale. In this seller’s market, we’re seeing homes sold immediately after the Coming Soon sign is posted. Plus, the rise in home values across the U.S. increases the likelihood that the equalization may involve the exchange of additional liquid assets to keep the house.

If you’re interested in keeping the family home, we can help you factor ongoing mortgage payments, property taxes, and maintenance expenses into your current cash flow and long-term financial plan to see whether it’s feasible. If not, there are other alternatives we can look at, including refinancing or downsizing.

Life insurance.

The accumulated cash value of a life insurance policy is subject to division—much like any other marital asset. If it’s necessary to divide the cash value, transferring a policy’s ownership can be included as part of your divorce decree. If you are transferring a policy, be sure to update beneficiary designations before doing so.

Considering Income and Cash Flow

If you or your spouse was the breadwinner, income may need to be equalized in the division of assets. State family laws determine any alimony amounts. Whether you’re paying or receiving alimony payments, we can help factor the effect into your monthly or annual cash flow plan.

Alimony

Under the Tax Cuts and Jobs Act of 2017, alimony payments are no longer deductible by the payer, and, consequently, the payee can’t include the money as taxable income. This change applies to divorce settlements made after December 31, 2018. It can also apply to existing agreements that are modified after that date, but only if the modification explicitly states that the new rule applies.

Social security

You may be able to collect social security income on your ex-spouse’s working record (even if your ex-spouse remarries) as long as you have not remarried, your marriage lasted more than 10 years, and you have been divorced for more than two years. To qualify, you and your former spouse must be 62 or older. If you were born before December 31, 1953, you can file a restricted application allowing you to receive up to 50 percent of your ex-spouse’s full retirement age benefit amount, and your own benefit can grow with delayed retirement credits. Your ex-spouse will not be aware of or involved in your claim.

If you’re caring for a child younger than 16 and you’re not remarried, children’s social security benefits may be available to you, regardless of your age.

Child support

Based on their sensitive nature, child support issues, including financial support and physical care, are usually resolved in court. The divorce decree should specify the amounts, if any, of child support paid from one spouse to the other, as well as who will be entitled to claim the children as dependents for tax purposes. Although the pandemic’s impact on women has been largely disproportionate, one positive outgrowth is a growing consensus that childcare is, in fact, infrastructure. This focus may ease the childcare burden if you are the custodial parent.

Estate Planning

Following your divorce, it’s important to update your estate plan to accommodate any adjustments. Although most state laws nullify a beneficiary or fiduciary designation of an ex-spouse, you may need to amend or get new trusts, wills, and powers of attorney, as well as change beneficiary designations. If you named your former spouse as your trusted person or beneficiary in documents or on accounts, these designations should be changed as soon as possible. And, if you retain custody—even partial custody— of a minor, your estate planning documents should address the issue of guardianship for your child and the child’s estate.

Taking the Long-Term View

If you feel financially unprepared for the breakup of your marriage, you’re not alone. Only about one-third of divorcées have a comprehensive plan in place (see chart below), according to a 2017 Fidelity Investments survey. That’s one reason it’s critical to get the guidance you need to help you navigate the financial challenges of a divorce.

Need Additional Information?

As a Certified Divorce Financial Analyst (CDFA®) I am able to guide women through all of the financial implications of a divorce. Join me on Wednesday, August 31st at 12pm for a Live Webinar: Financial Independence: A Divorced Woman’s Guide. REGISTER TODAY!

This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.

3 Financial Items to Consider Before Marriage

Posted on August 5, 2022August 17, 2022 by Steve LaFrance

Divorce is hard enough without the many financial issues it brings. In fact, disagreements about money are one of the leading causes of divorce. This is why it is important to save yourself from future distress by considering certain pre-marriage steps. Having smart family discussions about money and forming legal agreements can not only prevent marital problems but save you from stressful legal arguments in the unfortunate event of a divorce.

1. Prenuptial Agreement

Regardless of how you divide financial responsibilities within a marriage, divorce can raise difficult questions about each spouse’s legal rights and responsibilities. A prenuptial agreement can be a wise choice; by settling all of those issues before they arise. A prenup can limit your debt liability by ensuring that creditors cannot go after you to collect on your spouse’s debts. It can also protect the inheritance rights of your children from a previous relationship, as well as the ownership rights to your business.

It is important to enter a marriage with a solid sense of assets and liabilities- a prenup is not just for the event of divorce, but for full disclosure of financials within a partnership.

Prenups may also set provisions for financial responsibility during the marriage. They can even contain a sunset provision, meaning that conditions in the prenup will expire after a certain length of time.

2. Property

If you and your spouse eventually part ways, you may not agree on who owns certain property acquired during the marriage. Depending on the state you live in, property acquired during a marriage may be divided up 50-50 during a divorce, or be divided as a judge deems fair, which may not be strictly equal. Establishing which property will be marital or separate should be considered before entering into a marriage, and separate property acquired as a gift or inheritance during a marriage should be carefully documented as such:

“Determining whether property is separate or marital can become a very fact-specific inquiry. Especially in community property states, a judge may presume that all the property in a couple’s possession during their marriage is marital property unless they present evidence to suggest that an asset is separate property.”

3. Children and Estate Planning

You may have already made some estate planning considerations, but they should be reevaluated before marriage. Whether this is your first marriage or your third, it is important to consider how it may legally impact your spouse, as well as your obligations and children from previous relationships. Estate planning will provide you the flexibility to name someone else to oversee the money you leave to your children. If you have remarried, an estate plan can provide support for your surviving spouse, as well as protect your children’s potential inheritance should your surviving spouse remarry.

Before getting married, your will should reflect your desires as they impact your children and those of your new spouse. Don’t make the mistake of assuming a change in your circumstances will make a prior beneficiary designation null and void. Always make beneficiary changes on the correct paperwork specific to the financial institution.

In Conclusion

Avoiding financial stress in a marital partnership is vital to protecting your assets and those of your spouse. Taking these measures before entering into a marriage not only simplifies the process of a divorce, but ensures that you and your spouse are on the same page in terms of the division of assets within a marriage. Consulting with a professional before you tie the knot will answer any hypothetical questions you both may have about a possible divorce. Though it may sound like a disheartening way to begin a marriage, it is a practical and mutually beneficial choice for you and your spouse!

As a Certified Divorce Financial Analyst (CDFA®) Emily Promise is able to guide women through all of the financial implications of a divorce. Join her on Wednesday, August 31st at 12pm for a Live Webinar: Financial Independence: A Divorced Woman’s Guide. Register Today!

Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM to see what other financial tips we can provide towards your financial well-being.

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals.

Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser.

At What Age Should I Teach my Child about Money?

Posted on July 26, 2022July 26, 2022 by Robert Blakely

There is no agreed-upon age to begin teaching your child about money. Some sources claim they should learn around age 7, while others say they need to be familiarized with the concepts at age 3. There are plenty of ways to teach your young child about money, especially in subtle ways that help them build the skills they will later need for financial literacy.

Does a toddler really need to know about money?

As with many financial matters, our team at Blakely Financial believes the best advice is to start early. The sooner children learn financial fundamentals, the more likely they will become informed investors later in life. You never know; you may even benefit from learning alongside your child! If there are areas where you could use a refresher, take the time to review those topics as you approach them with your son or daughter. Remember to always consult with your financial advisor for guidance on investing and saving.

Obviously, a toddler will not understand the importance of a diverse portfolio. There are ways, however, to provide children with skills that will help them make smart financial decisions as they age. The first few years of life are critical for mental development. Toys that incorporate counting, such as building blocks, can help your child develop mathematical skills. Many young kids books also cover important topics like saving, spending, and the value of a dollar.

How can I teach money skills to a young child?

Teaching your child about money doesn’t just mean describing how to create a budget. Forming a positive association with the concept of money is essential to future financial wellness. Be sure you and your partner don’t instill a negative association with money in your child by arguing about finances in front of them. Do not avoid the topic of money altogether, but be careful not to speak in such a way that could cause your child to associate negativity and stress with the concept of money. Your child could develop “money avoidance” tendencies where they resist acknowledging their finances or learning more about budgeting and saving.

Consider using physical cash more often. If your young child only sees things being purchased with a card, they may take longer to understand the concept of money and the value of a dollar!

Another way to indirectly teach a young child about money is to educate them on the difference between wants and needs. When you are very young, it can feel as if you need something that is actually just a want. Be sure to discuss the difference between these terms with your child so that they can learn to categorize the two by themselves. Talk about wants and needs in terms of the consequences they will face if they don’t get to have/do the thing they want or need. This line of thinking will help them prioritize their needs over wants; an essential skill for dealing with money later in life.

How can these skills be expanded as my child grows?

The skills they learn (physical cash, wants vs needs, math) can be applied to their own purchases as they begin to earn and possess their own money. If your child receives money from family members for birthdays or holidays, consider how you will help them use it wisely! Maybe you will offer to hold on to some of the money for them or get them a piggy bank. Try to discuss what they would like to do with the money and make suggestions, but don’t go overboard!

Let them make mistakes. Though it may be tempting to take full control over your child’s money, you need to allow them the freedom to slip up. If, for instance, they immediately spend all of their birthday cash on a video game, they will learn the consequences when they want something else and don’t have any money left over. This is a far more effective lesson than simply being told what to do, so be sure to give your child a reasonable amount of freedom when it comes to spending! By the time they become a teenager, these skills will help them navigate the financial freedom of their first job and beyond.

Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM to see what other specialized advice we can provide towards your financial well-being.

5 Common Factors Affecting Retirement Income

Posted on June 22, 2022June 23, 2022 by Steve LaFrance

When it comes to planning for your retirement income, it’s easy to overlook some of the common factors that can affect how much you’ll have available to spend. If you don’t consider how your retirement income can be impacted by investment risk, inflation risk, catastrophic illness or long-term care, and taxes, you may not be able to enjoy the retirement you envision.

1. Investment Risk

Different types of investments carry with them different risks. Sound retirement income planning involves understanding these risks and how they can influence your available income in retirement. Investment or market risk is the risk that fluctuations in the securities market may result in the reduction and/or depletion of the value of your retirement savings. If you need to withdraw from your investments to supplement your retirement income, two important factors in determining how long your investments will last are the amount of the withdrawals you take and the growth and/or earnings your investments experience. You might base the anticipated rate of return of your investments on the presumption that market fluctuations will average out over time, and estimate how long your savings will last based on an anticipated, average rate of return.

Unfortunately, the market doesn’t always generate positive returns. Sometimes there are periods lasting for a few years or longer when the market provides negative returns. During these periods, constant withdrawals from your savings combined with prolonged negative market returns can result in the depletion of your savings far sooner than planned. Reinvestment risk is the risk that proceeds available for reinvestment must be reinvested at an interest rate that’s lower than the rate of the instrument that generated the proceeds. This could mean that you have to reinvest at a lower rate of return, or take on additional risk to achieve the same level of return.

This type of risk is often associated with fixed interest savings instruments such as bonds or bank certificates of deposit. When the instrument matures, comparable instruments may not be paying the same return or a better return as the matured investment. Interest rate risk occurs when interest rates rise and the prices of some existing investments drop. For example, during periods of rising interest rates, newer bond issues will likely yield higher coupon rates than older bonds issued during periods of lower interest rates, thus decreasing the market value of the older bonds. You also might see the market value of some stocks and mutual funds drop due to interest rate hikes because some investors will shift their money from these stocks and mutual funds to lower-risk fixed investments paying higher interest rates compared to prior years.

*All investments are subject to risk and loss of principal. When sold, investments may be worth more or less than their original cost. Mutual funds are sold by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company, can be obtained from your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.

2. Inflation Risk

Inflation is the risk that the purchasing power of a dollar will decline over time, due to the rising cost of goods and services. If inflation runs at its historical long term average of about 3%, the purchasing power of a given sum of money will be cut in half in 23 years. If it jumps to 4%, the purchasing power is cut in half in 18 years. A simple example illustrates the impact of inflation on retirement income. Assuming a consistent annual inflation rate of 3%, and excluding taxes and investment returns in general, if $50,000 satisfies your retirement income needs this year, you’ll need $51,500 of income next year to meet the same income needs. In 10 years, you’ll need about $67,195 to equal the purchasing power of $50,000 this year. Therefore, to outpace inflation, you should try to have some strategy in place that allows your income stream to grow throughout retirement. (The following hypothetical example is for illustrative purposes only and assumes a 3% annual rate of inflation without considering fees, expenses, and taxes. It does not reflect the performance of any particular investment.)

3. Long-Term Care Expenses

Long-term care may be needed when physical or mental disabilities impair your capacity to perform everyday basic tasks. As life expectancies increase, so does the potential need for long-term care. Paying for long-term care can have a significant impact on retirement income and savings, especially for the healthy spouse. While not everyone needs long-term care during their lives, ignoring the possibility of such care and failing to plan for it can leave you or your spouse with little or no income or savings if such care is needed. Even if you decide to buy long-term care insurance, don’t forget to factor the premium cost into your retirement income needs. A complete statement of coverage, including exclusions, exceptions, and limitations, is found only in the long-term care policy. It should be noted that carriers have the discretion to raise their rates and remove their products from the marketplace.

4. The Costs of Catastrophic Care

As the number of employers providing retirement healthcare benefits dwindles and the cost of medical care continues to spiral upward, planning for catastrophic health-care costs in retirement is becoming more important. If you recently retired from a job that provided health insurance, you may not fully appreciate how much health care really costs. Despite the availability of Medicare coverage, you’ll likely have to pay for additional health-related expenses out-of-pocket. You may have to pay the rising premium costs of Medicare optional Part B coverage (which helps pay for outpatient services) and/or Part D prescription drug coverage. You may also want to buy supplemental Medigap insurance, which is used to pay Medicare deductibles and co-payments and to provide protection against catastrophic expenses that either exceed Medicare benefits or are not covered by Medicare at all. Otherwise, you may need to cover Medicare deductibles, co-payments, and other costs out-of-pocket.

5. Taxes

The effect of taxes on your retirement savings and income is an often overlooked but significant aspect of retirement income planning. Taxes can eat into your income, significantly reducing the amount you have available to spend in retirement. It’s important to understand how your investments are taxed. Some income, like interest, is taxed at ordinary income tax rates. Other income, like long-term capital gains and qualifying dividends, currently benefit from special–generally lower–maximum tax rates. Some specific investments, like certain municipal bonds,* generate income that is exempt from federal income tax altogether. You should understand how the income generated by your investments is taxed, so that you can factor the tax into your overall projection. Taxes can impact your available retirement income, especially if a significant portion of your savings and/or income comes from tax-qualified accounts such as pensions, 401(k)s, and traditional IRAs, since most, if not all, of the income from these accounts is subject to income taxes. Understanding the tax consequences of these investments is important when making retirement income projections.

*Interest earned on tax-free municipal bonds is generally exempt from state tax if the bond was issued in the state in which you reside, as well as from federal income tax (though earnings on certain private activity bonds may be subject to regular federal income tax or to the alternative minimum tax). But if purchased as part of a tax-exempt municipal money market or bond mutual fund, any capital gains earned by the fund are subject to tax, just as any capital gains from selling an individual bond are. Note also that tax-exempt interest is included in determining if a portion of any Social Security benefit you receive is taxable.

Have you planned for these factors?

When planning for your retirement, consider these common factors that can affect your income and savings. While many of these same issues can affect your income during your working years, you may not notice their influence because you’re not depending on your savings as a major source of income. However, investment risk, inflation, taxes, and health-related expenses can greatly affect your retirement income.

This blog has been developed by an independent third party. Commonwealth Financial Network is not responsible for their content and does not guarantee their accuracy or completeness, and they should not be relied upon as such. These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your representative. Commonwealth does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice. Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser.

Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM to see what other financial tips we can provide towards your financial well-being.

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals.

Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser.

Food Inflation: What is Behind It and How to Cope

Posted on May 23, 2022May 23, 2022 by Emily Promise

As measured by the Consumer Price Index for food at home, grocery prices increased 3.4% in 2020, a faster rate than the 20-year historical average of 2.4%.¹ More recently, food inflation accelerated by 6.5% during the 12 months ending in December 2021, while prices for the category that includes meat, poultry, fish, and eggs spiked 12.5%.²

Food prices have long been prone to volatility, in part because the crops grown to feed people and livestock are vulnerable to pests and extreme weather. But in 2021, U.S. food prices were hit hard by many of the same global supply-chain woes that drove up broader inflation.

The pandemic spurred shifts in consumer demand, slowed factory production in the United States and overseas, and caused disruptions in domestic commerce and international trade that worsened as economic activity picked up steam. A shortage of metal containers and backups at busy ports and railways caused long shipping delays and drove up costs. Severe labor shortages, and the resulting wage hikes, have made it more difficult and costly to manufacture and transport many types of unfinished and finished goods.³

As long as businesses must pay more for the raw ingredients, packaging materials, labor, transportation, and fuel needed to produce, process, and distribute food products to grocery stores, some portion of these additional costs will be passed on to consumers. And any lasting strain on household budgets could prompt consumers to rethink their meal choices and shopping behavior.

Seven Ways to Master the Supermarket

The U.S. Department of Agriculture expects food inflation to moderate in 2022, but no one knows for certain how long prices might stay elevated.⁴ In the meantime, it may take more effort and some planning to control your family’s grocery bills.

Annual Change in Consumer Price Indexes for Food (through December 2021)

Set a budget for spending on groceries and do your best not to exceed it. In 2021, a typical family of four with a modest grocery budget spent about $1,150 per month on meals and snacks prepared at home. Your spending limit could be higher or lower depending on your household income, family size, where you live, and food preferences.⁵
To avoid wasting food, be aware that food date labels such as “sell by,” “use by,” and “best before” are not based on safety, but rather on the manufacturer’s guess of when the food will reach peak quality. With fresh foods like meat and dairy products, you can usually add five to seven days to the “sell by” date. The look and smell can help you determine whether food is still fresh, and freezing can extend the shelf life of many foods.
Grocery stores often rotate advertised specials for beef, chicken, and pork, so you may want to plan meals around sale-priced cuts and buy extra to freeze for later. With meat prices soaring, it may be a good time to experiment with “meatless” meals that substitute plant-based proteins such as beans, lentils, chickpeas, or tofu.
Stock up on affordable and nonperishable food such as rice, pasta, dried beans, canned goods, and frozen fruits and vegetables when they are on sale.
Select fresh produce in season and forgo more expensive pre-cut and pre-washed options.
Keep in mind that a store’s private-label brands may offer similar quality at a significant discount from national brands.
Consider joining store loyalty programs that offer weekly promotions and personalized deals.

1, 4–5) U.S. Department of Agriculture, 2021
2) U.S. Bureau of Labor Statistics, 2022
3) Bloomberg Businessweek, September 15, 2021

This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to ensure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.

Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM to see what other financial tips we can provide towards your financial well-being.

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals.

Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser.