Wealth Planning and Advisory

Financial Planning 20 years ago was considerably less complicated than it is today. People still had pensions and also started investing early, whether in a 401k or other retirement account.  You contributed regularly, and shifted your investment portfolio as you moved through the stages of your life. You saved for your children’s education and planned for a retirement filled with world travel and relaxation.

Today, this has become much more like “Life Planning” than Financial Planning.  Not only is timing shifting because of longevity of life, but many of us are now more concerned with multi-generational issues than ever before.  It’s really more than compartmentalized planning, such as planning for your own retirement; it’s making sure that your parents have what they need into their golden years, even as you join them in retirement; it’s being there for your children who are living at home longer or even moving back in with you, sometimes with families of their own; and it’s dealing with the passing of a loved-one, which caps emotional upheaval with logistical turmoil that few of us are equipped to deal with in the moment.

The days of getting your kids just through college and your parents not living much past your retirement years are gone. Financial planning now needs to account for the potential needs of three separate generations.

This may be happening to you as we speak, all at once, or approaching in the foreseeable future.  Of course this will not be everyone’s situation – but it is no longer the rare exception to the rule – it’s becoming increasingly more common and should at least part of any financial planning conversation.

Planning now has new and significant challenges to contend with! In this complicated life we now lead, some basic tenets still hold true.  Let’s break it down to basics before layering in all the rest.


Prioritize Your Retirement

It’s like the old saying goes, “if you can’t take care of yourself, how can you take care of anybody else?”

This aspect of financial planning is little changed. Pay yourself first! What that means is saving should be the first line item in your budget once basic necessities are provided for, followed closely by investing. Think of it as paying yourself for all the fun and wonderful things you are going to do.

If your company offers a 401k, enroll and contribute. Most companies will provide some sort of match providing you put something in too. Again, it’s not enough to just sign up for the 401k.  Take advantage of all the matching you receive! This is just about the only free money in the world.  If your company does not offer a 401k, open an IRA and once again contribute to it every year and if possible throughout the year, not just at tax time, to get the deduction.

All this doesn’t mean don’t enjoy life!  But you have to live within your means. The absolute best way to this is with a budget. Put together a budget for your household and teach your children how to do one too. It will be one of the most valuable skills you can teach them. It’s not good enough to just come up with a budget, you have to stick to it. Far too often we work with clients helping them get on the right financial path only to meet with them a year later and find they haven’t followed that path.  Most often the budget is the first thing to go.  However, that is the foundation to the plan you’re building.


Save for School Early

Admittedly, this can be daunting!  This is an area, where we can easily tell ourselves that we can hold off on saving now because we’ll be making more money when our kids are in school and pay for it then.  However, the unfortunate truth is that most of us receive annual raises that are close to the rate of inflation (2%-3%), and with the cost of tuition rising at closer to 6% a year, having a savings and investment plan is critical.  You can’t “catch up” any other way.

Teach your kids about the value of earning, saving, and investing.  Enlist them in the effort of saving for school.

There are many education savings vehicles, 529 Plans, Coverdale IRAs, etc. Each has their pros and cons and is designed for different situations. Make sure you take advantage of the plan that makes sense for you and your children.


And Speaking of Dependents…

You may be faced with taking care of many dependents at the same time, which can include both your kids and your parents.  That could mean three generations under one roof, or it may also mean three generations under one budget.  Either way, plan for it before it happens!

Even as grown adults people find it difficult to talk to their parents about financial matters. Do they have savings, long term care insurance, etc? If your parents haven’t planned to take care of themselves you may wind up bearing the financial responsibility for them. Talk to an expert. Things like long term care insurance can be very complicated and benefits can vary wildly.

If you do find yourselves in the situation where your parents have become your financial responsibility you may actually be able to get Social Security dependent benefits. This may sound crazy, but Social Security law provides for this. Once again it can be very complicated, talk to an expert.


Get an Estate Plan

None of us want to deal with our own mortality, but it’s worse to think about leaving our friends and family with a mess to clean up after we’re gone.  Putting together a basic will is relatively straight forward.  As you layer on the various aspects of your estate with a professional you’ll build a comprehensive estate plan.  If you think of it was “who gets what when I’m gone”, stop and reframe.  It’s really more about getting things set up for your family, your friends and/or your community to thrive for years to come.  It’s about building a legacy that can live on far beyond one or two generations.


These topics can be extremely complex.  Especially as you start layering on other considerations like putting together a Succession Plan for your company, setting a up a Trust of any kind, Tax Planning and many more. The good news is that there are tremendous amounts of resources and experts available to assist you in dealing with them. Monroe Bank & Trust’s Wealth Planning and Advisory Team has the expertise and knowledge to help. If you would like to speak with someone about your particular situation please contact us.

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