Unrealized Capital Gains? Consider Gifting Stock Instead of Cash

One of the most tax-efficient ways to give a financial gift to your favorite charity is with long-term appreciated securities.  While gifts of cash are easy to make by simply writing a check, don’t overlook the potential benefits of gifting stock that has gone up in value.  By considering both options, you may be able to increase the tax benefit and make the most of your year-end tax planning and gifting goals. 

Here are four tips to consider:

1. If you own stock investments (held longer than 12 months) with unrealized capital gains, the best way to give may be with a portion of stock rather than an all cash donation.  By gifting stock, you receive a deduction for the market value and reduce future capital gains tax liability.  

2. If you own stock with short-term gains (owned for less than 12 months) the strategy is not optimal because your tax deduction will be limited to the amount you paid for the shares. 

3. If you think the gifted stock still has upside potential, you can use the cash you would have otherwise donated to replace the shares of stock you donated.  This will reset the stock cost basis to the current market value, reducing future capital gains tax liability.

4. If you are holding taxable investments that have lost ground, it may be preferable to sell the investment, claim a capital loss, take the charitable deduction and gift the cash.  In this scenario, the combined tax deductions may make this strategy a winner.

Making the Call between Gifting Cash or Appreciated Stock 

If you are looking to support organizations important to you and maximize your tax benefits, it is important to consult with your tax advisor and include your financial planner to make the most of your tax planning and lifetime gifting goals.  

Laurie Renchik, CFP®, MBA is a Partner and Senior Financial Planner at Center for Financial Planning, Inc. In addition to working with women who are in the midst of a transition (career change, receiving an inheritance, losing a life partner, divorce or remarriage), Laurie works with clients who are planning for retirement. Laurie was named to the 2013 Five Star Wealth Managers list in Detroit Hour magazine, is a member of the Leadership Oakland Alumni Association and in addition to her frequent contributions to Money Centered, she manages and is a frequent contributor to Center Connections at The Center.

Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Center for Financial Planning, Inc. and not necessarily those of Raymond James. C14-036845

Establishing Clear Direction for your Retirement Plan

Retirement planning is an exercise in imagining your future.  We all posses the ability to think ahead and plan for the future; whether it is making plans for tomorrow, arrangements for a trip next year or planning ahead for retirement in 5 years, 10 years or even longer. Thinking ahead allows us to carefully arrange our financial lives to align with our future vision.

Be Ready to Adjust Your Plan

Like life, adjustments will be necessary along the way.   It is more common than you may think for couples to approach retirement with an agreed upon plan, only to have divergent thoughts surface before reaching the goal.  Financial planning and thoughtful conversation can help to reestablish clear direction and a workable plan to follow together. Here is a simplified case study to help illustrate crucial planning steps leading to retirement.

Try 3 Action Steps to Jumpstart Your Plan

When Jack and Sally began to think about retirement, they had more questions than answers.  Sally was looking forward to relaxing and spending time in a warmer climate, while Jack couldn’t imagine moving to another state away from his volunteer work and grandchildren.  This is not a unique situation.  With a goal of retirement in 5 years, we established these three action steps:

• First they needed to review assets, future income sources and anticipated expenses to determine how much money they will need to live their retirement plan.  Increased longevity is factored into the financial analysis.

• They were in agreement to be debt free and have enough assets and income sources that cash flow would not be a limiting factor in retirement.  That gave them a clear picture of how much they needed to save and invest leading up to retirement.

• Jack and Sally agreed they would downsize their home to accommodate the goal of renting in a warmer climate for 5 months during the coldest part of Michigan winters.

Test your pre-retirement plan by laying out your unique objectives to see if you have a clear direction and workable plan to follow together.  The most successful transitions hold the promise of retiring to something, not away from something.  Contact me if you need help getting started or making adjustments along the way to your retirement goals.

Laurie Renchik, CFP®, MBA is a Partner and Senior Financial Planner at Center for Financial Planning, Inc. In addition to working with women who are in the midst of a transition (career change, receiving an inheritance, losing a life partner, divorce or remarriage), Laurie works with clients who are planning for retirement. Laurie was named to the 2013 Five Star Wealth Managers list in Detroit Hour magazine, is a member of the Leadership Oakland Alumni Association and in addition to her frequent contributions to Money Centered, she manages and is a frequent contributor to Center Connections at The Center.

Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served.

Any opinions are those of Center for Financial Planning, Inc. and not necessarily those of Raymond James. C14-034237

Financial Lessons for College Students

A college education holds the promise of a great career start for many students.  The excitement of choosing a college, getting accepted, and actually starting classes will eventually die down. Then your student is likely to encounter some financial lessons that won’t be taught in the classroom.  Lessons like:

• How continuous spending can take a bank balance to zero and then the bank piles on additional service fees 

• Or how spending on small things like getting a pizza or a school sweatshirt can quickly add up

Here are three time-tested financial tips to help students develop habits that will serve them well during college years and into their adult life.

Keep Track of Spending

If you don’t know what you are spending, you don’t know what is left or what you can afford or not afford. The key is to create a spending plan for necessary purchases like food, gas, and cellphone service before spending on discretionary items. Take the guesswork out of budgeting by using an online tool like Mint.com to automatically categorize transactions.

Don’t Underestimate the Importance of Managing Debt

While credit cards are great for convenience and emergency situations, be wary of running up a balance that you cannot pay off every month.  Use the plastic cautiously.  Establishing good credit during college will make it easier to apply for a car loan, rent an apartment, or even purchase a first home. If student loans are needed to fund college expenses, take the time to read the fine print.  Don’t take more than you need today because piecing together student loans for 4 or more years can add up. Your student may not realize they are easily signing up for substantial payments for twenty years or more after graduation.

Think Twice before Lending Money to a Friend

Everyone has had an experience where a friend comes up short and says, “Can I borrow some money?  I promise I’ll pay you back!” Recognize that lending money is a risk, even if a friend is completely trustworthy.  Just because your friend is asking you don’t have to say yes. Many of life’s lessons your student will have to learn on their own, but if they think carefully before they lend, are cautious of debt, and track spending, they can avoid some common financial mistakes.

Laurie Renchik, CFP®, MBA is a Partner and Senior Financial Planner at Center for Financial Planning, Inc. In addition to working with women who are in the midst of a transition (career change, receiving an inheritance, losing a life partner, divorce or remarriage), Laurie works with clients who are planning for retirement. Laurie was named to the 2013 Five Star Wealth Managers list in Detroit Hour magazine, is a member of the Leadership Oakland Alumni Association and in addition to her frequent contributions to Money Centered, she manages and is a frequent contributor to Center Connections at The Center.

Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served. A14-025160

Is Retirement Too Late to Find a Financial Planner?

Let’s say you are approaching retirement or you have already taken the plunge. Let’s also say you have not worked with a financial planner along the way. Is there a reason to consider forming a relationship at this stage of the game? 

Even at this stage in life, it may help to seek out a financial planner to be a thinking partner leading up to and along your retirement journey. But finding the right fit may not be easy. A successful financial planning engagement starts with you figuring out what is most important.  Details about your money are equally as important when put in context with your envisioned life. 

Here are two steps that will help you pull together your overall financial picture:

1. Create a financial plan: This will be a roadmap to help you see your financial picture in one coordinated view. 

• This plan is all about you, your priorities and needs.  The goal is to help you feel secure and at ease about your financial future.

• It will show you how you are currently invested and make suggestions for appropriate changes.

• Analyze how your investments could be working to supplement your income, either on a regular basis or as needs arise.

• Make sure that your estate plan is the way you want it. 

2. Consolidate: If your accounts are spread around with many different companies, it may come with a financial and organizational cost.

• With consolidation you can easily access all of your information in one place.

• You’ll simplify the ongoing paperwork you receive and streamline information gathering at tax time and when you must take required distributions.

• It provides more consistent management and ongoing monitoring in a cohesive framework.

Even if you have the individual areas of your finances under control, it is still important to pull all the pieces together.  Perhaps you have multiple IRA’s that too closely mirror each other, investments you have inherited that aren’t worked into your overall strategy, or your life circumstances have changed and your investments have not. 

The right fit might take some trial and error.  You don’t have to settle.  A financial planner that truly understands your financial story will be able to guide you to think about areas of your financial life you may not have considered up to this point. If you’re nearing, at, or past retirement and need help exploring your financial planning options, don’t hesitate to contact me about building a relationship and shaping your plan.

Laurie Renchik, CFP®, MBA is a Partner and Senior Financial Planner at Center for Financial Planning, Inc. In addition to working with women who are in the midst of a transition (career change, receiving an inheritance, losing a life partner, divorce or remarriage), Laurie works with clients who are planning for retirement. Laurie was named to the 2013 Five Star Wealth Managers list in Detroit Hour magazine, is a member of the Leadership Oakland Alumni Association and in addition to her frequent contributions to Money Centered, she manages and is a frequent contributor to Center Connections at The Center.

Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served.

Any opinions are those of Center for Financial Planning, Inc. and not necessarily those of Raymond James. You should compare your current and prospective account features, including any fees and charges, before making consolidation decisions. This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. C14-022519

Rewriting Retirement: 5 Steps to Your Plan

Life, after work, has been completely redefined. Those leaving the 9 to 5 behind, in favor of a more relaxed, enriched or exciting lifestyle, are rewriting the meaning of retirement.  Part of the credit for retirement’s overhaul can be given to longer and healthier lifestyle trends.  Leaving the workforce does not have to be the endgame, but rather your signature version of a rich life after retirement that could last a long time!

Here are five steps to help you get ready for what comes next:

1. Create a retirement budget and track expenses

2. Shore up cash reserves

3. Know how you will deal with unexpected financial needs

4. Identify income sources that contribute to cash flow

5. Take the time to ensure that you are psychologically ready for the change of pace

On the most basic level, we all have goals and aspirations for our life after work.  Some are big, some small, but most importantly, they are unique to each retiree.   If you are stressed thinking about retirement, talk to your financial planner about the five steps above.  Take the time to double-check that you are ready for what comes next.  Today’s retirement holds the promise of being more fulfilling than ever before – but could be longer and more expensive too. 

Laurie Renchik, CFP®, MBA is a Partner and Senior Financial Planner at Center for Financial Planning, Inc. In addition to working with women who are in the midst of a transition (career change, receiving an inheritance, losing a life partner, divorce or remarriage), Laurie works with clients who are planning for retirement. Laurie was named to the 2013 Five Star Wealth Managers list in Detroit Hour magazine, is a member of the Leadership Oakland Alumni Association and in addition to her frequent contributions to Money Centered, she manages and is a frequent contributor to Center Connections at The Center.

Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served.

Any opinions are those of Center for Financial Planning, Inc. and not necessarily those of RJFS or Raymond James. C14-017445

Joint Planning Doesn’t Replace Individual Financial Planning

Are you a casual observer or a committed participant when it comes to mapping out a strategy for your financial future?    Maybe you are already a planner and organizer, or perhaps a visionary that lives in the future, or maybe you are happy to be working on one thing at a time.  Regardless of your starting point managing your finances is like managing your health --- you have to be involved. 

A question that women often ask me is, “Should I be thinking about my financial future separately from my spouse or partner?”  My answer is an unequivocal yes.  This doesn’t mean to disregard your partner or forego joint financial planning.  What it does mean is this:

1. You will be better prepared if you are on your own at some point in your life

2. Financial health and well-being is not a “one-size-fits-all” prescription

3. Involvement provides the opportunity to step back and really ask yourself, “Are we on the right track?”

4. Looking at individual planning and then coordinating with your spouse can be a way to ensure you both are planning for financial independence when partners handle money matters differently. 

It would be simple if we could decide exactly where we want to go and chart a course accordingly, but remember, life is no ordinary journey. It all starts with the commitment to pull together the different aspects of your individual financial picture and collaborate with a spouse or partner.  Ultimately, the goal is to commit to a game plan because standing on the sidelines is for spectators.

Laurie Renchik, CFP®, MBA is a Partner and Senior Financial Planner at Center for Financial Planning, Inc. In addition to working with women who are in the midst of a transition (career change, receiving an inheritance, losing a life partner, divorce or remarriage), Laurie works with clients who are planning for retirement. Laurie was named to the 2013 Five Star Wealth Managers list in Detroit Hour magazine, is a member of the Leadership Oakland Alumni Association and in addition to her frequent contributions to Money Centered, she manages and is a frequent contributor to Center Connections at The Center.

Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served. C14-011216

6 Tips for Your Tax Return

This March, in honor of Women’s History Month, I’d like to share a little about Muriel Siebert, a legend on Wall Street and a trailblazer for women.  In 1967, she was the first woman to buy a seat on the New York Stock Exchange. This accomplishment, as well as her other successful business ventures and philanthropic activities, helped to expand opportunities for women in finance. 

As March exits and we transition to April, many of us are busy with tax preparation leading up to the April 15th deadline for filing. Now is the time to follow the trailblazing example of Muriel Siebert and blaze a path to your own financial independence. Are you getting a refund?

Here are some tips to help you make the most of this once in a year windfall:

• Ask why you have a refund.  Did you pay too much in the first place? Has something changed in your financial picture? Or is it a forced saving strategy?

• Set some aside. Treat the refund as income and save a minimum of 15% for longer-term goals that are important to you.

• Pay down debt obligations. Especially credit card debt or student loan debt with high interest charges.

• Not maxing out your 401k? A strategy for reducing future taxes is to increase your 401k contribution and then set aside the current refund to help with monthly cash flow if needed.

• Are you saving for college educations? If additional funds are needed, use the refund to put savings goals back on track.

• Splurge! Set it aside for gifts, vacations and other lifestyle choices.

As Women’s History month comes to an end and April  15th approaches, celebrate your commitment to making the most of your financial opportunities. Take a look back at the success you have experienced along the way and continue to step forward into your financial plan for the future.

Laurie Renchik, CFP®, MBA is a Partner and Senior Financial Planner at Center for Financial Planning, Inc. In addition to working with women who are in the midst of a transition (career change, receiving an inheritance, losing a life partner, divorce or remarriage), Laurie works with clients who are planning for retirement. Laurie was named to the 2013 Five Star Wealth Managers list in Detroit Hour magazine, is a member of the Leadership Oakland Alumni Association and in addition to her frequent contributions to Money Centered, she manages and is a frequent contributor to Center Connections at The Center.

Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served. C14-006593

Taking Charge: Why Every Woman Should Get Involved in Financial Planning

You may have spent decades building a life with a significant other or spouse, perhaps even leaving the important questions about assets and investments up to them. In fact, it is not uncommon for couples to pick and choose household responsibilities and slide into a routine to divide and conquer.  All the ducks are in a row so what is missing?  Some things like picking up the laundry, getting your oil changed or planning that much-needed vacation can easily be delegated.  But a mistake I see women making is delegating away personal financial planning.  You can leverage your time by letting others take on this task, but there are some pitfalls that come with this strategy. 

Risks of Delegating Financial Decisions

• If you are suddenly put in a position where there is no one but you to make the decisions, you may be unprepared.

• Others may not fully understand the vision you have for your future. If you aren’t actively involved, you risk losing your say.

• You may be delegating to save yourself time, but playing catch-up when the duties fall on you can be very time-consuming.

Making Yourself a Priority

If properly planning for the future of your design has been shuffled to the bottom of your inbox, it is time to reprioritize and here is why:

1. Your vision is like a best friend.  It reminds you of what is most important in your life.

2. Putting your vision in the context of a financial plan helps connect values and money.

3. Financial planning doesn’t mean planning for the day your health begins to fail, it means asking, “Where do I want to be in 3 years?”

4. For those who are more risk-averse, having a plan can change unknowns into quantifiable nuggets of information to reflect upon and serves as the basis for decision making.

5. While it might seem ok now to let a spouse or someone you trust steer your financial plan, if you don’t have an active role or solid understanding of desired goals you may be disappointed at the end result.

Here’s my challenge to women of all ages and stages of life:  Let’s not kid ourselves – things get missed.  Think of yourself first and give your personal financial life the kind of attention it deserves!

Laurie Renchik, CFP®, MBA is a Senior Financial Planner at Center for Financial Planning, Inc. In addition to working with women who are in the midst of a transition (career change, receiving an inheritance, losing a life partner, divorce or remarriage), Laurie works with clients who are planning for retirement. Laurie was named to the 2013 Five Star Wealth Managers list in Detroit Hour magazine, is a member of the Leadership Oakland Alumni Association and in addition to her frequent contributions to Money Centered, she manages and is a frequent contributor to Center Connections at The Center.

Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served.

Any opinions of Center for Financial Planning, Inc. are not necessarily those of Raymond James C14-004276

Financial Life Planning Gets Beneath the Raw Numbers

 I recently traveled to Beverly, MA to attend the Kinder Institute’s 5-day Life Planning training.  The Kinder Institute is internationally recognized and founder George Kinder is a thought leader in the Life Planning movement. The 5-day advanced training was well structured and the experiential teaching format was powerful. I walked away with a deeper understanding of how to promote a stronger relationship between financial resources, personal values and aspirational goals.

One example that comes to mind is that money matters are often thought about in terms of numbers:

1. I make $X
2. I’d like to save $X for retirement
3. Our debt is $X
4. I own a home worth $X
5. My investments are worth $X

These concerns represent the raw data, facts and resources that make up your financial life.  To get beneath the numbers takes some additional exploration. Spending time up front to figure out what's most important to you creates a bridge between financial numbers and the life you strive to live.  A personal vision statement is an inspirational document that goes hand in hand with your financial plan. 

At The Center, we are fortunate to have many long-term relationships with clients. My experience at the Kinder Institute was an exceptional opportunity to learn new skills to better serve our clients and the financial planning process that is core to The Center.

Laurie Renchik, CFP®, MBA is a Partner at Center for Financial Planning, Inc. In addition to working with women who are in the midst of a transition (career change, receiving an inheritance, losing a life partner, divorce or remarriage), Laurie works with clients who are planning for retirement. Laurie was named to the 2013 Five Star Wealth Managers list in Detroit Hour magazine, is a member of the Leadership Oakland Alumni Association and in addition to her frequent contributions to Money Centered, she manages and is a frequent contributor to Center Connections at The Center.

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Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served.

George Kinder and the Kinder Institute are independent of Raymond James. C14-000816

One of the Biggest Investing Mistakes for Women

There is so much information out there for women about investing … news stories, case studies, research reports, white papers and books try to answer common investment questions.  But this well-intentioned information should come with a warning label: Lumping women investors together in one big category is a cliché’ to be avoided at all costs. 

Similar But Not the Same

While the similarities among women investors can be significant, cookie cutter advice is not specific enough to rely on over the long term. Over the last 20 years I have had the pleasure of working with many women with backgrounds as diverse as snowflakes. A couple of common themes I see working with women investors is a high degree of importance placed on the personal connection with an advisor, and an intuitive sense that links investment decisions to heartfelt priorities including family and charitable causes.

Differences Abound

Differences are also abundant and unique to each individual.  For example, a woman in her 50’s who is immersed in her career and has launched children is in a different place than a woman who is recently widowed or divorced.  Even women who have achieved similar career goals cannot be lumped together.  Some have built investment savvy along the way and some have not.  The real work begins with the discovery of how each woman investor is different from other women even when they share general characteristics.   

Creating Your Vision

Discovery starts with a personal vision that is linked to your unique financial life planning.   Vision implies you have a view of exactly where you want to go and you chart a course accordingly. It’s like plotting a journey on a map – straightforward with no distractions or alternate routes.  The reality is that, for many women, the vision diverges into quite a lot of directions.  It is at these points where the advisor you work with really can make a difference.

Hitting mile markers where life and money intersect including career changes, divorce, loss of a spouse or retirement are all opportunities to regroup resources, refocus on the vision, and move forward with plans for the future.  Avoiding clichés associated with being a woman investor is an important part of the process. 

Laurie Renchik, CFP®, MBA is a Senior Financial Planner at Center for Financial Planning, Inc. In addition to working with women who are in the midst of a transition (career change, receiving an inheritance, losing a life partner, divorce or remarriage), Laurie works with clients who are planning for retirement. Laurie was named to the 2013 Five Star Wealth Managers list in Detroit Hour magazine, is a member of the Leadership Oakland Alumni Association and in addition to her frequent contributions to Money Centered, she manages and is a frequent contributor to Center Connections at The Center.

Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served.

Any opinions are those of Center for Financial Planning, Inc., and not necessary those of Raymond James. #C13-002513