Open Enrollment: Health Insurance

 At this time of year, many of you might have an opportunity to select a medical plan as part of your employer’s open enrollment period.  Selecting the appropriate medical plan is one of the most important decisions each year.  We all have heard stories, unfortunate stories, of hard working folks that have significant financial issues due to extreme medical expenses.  This blog post isn’t written to convince anyone that they need adequate health insurance – rather it is meant to provide some thoughts and tips on how to make the best choice for you and your family. 

Employers that offer multiple medical plan options generally offer three types: 

• Traditional
• Preferred Provider Organization (PPO)
• Health Maintenance Organization (HMO).  

Traditional:  This option usually provides the greatest flexibility in accessing doctors and hospitals. And, as you might expect, usually carries the highest monthly premium, deductible, and copay on services.

PPO:  This option provides for lower premiums and copays as compared to the traditional plans if you visit doctors and hospitals within the PPO network.  There is some flexibility in that you can seek services out of the network if desired, albeit at a higher cost in terms of deductible and/or copayment.

HMO: The HMO option generally features the lowest cost in terms of monthly premiums, deductibles and copayments in exchange for less flexibility.  Each person must select a primary care physician whom is responsible for directing your overall care.

Here are some more tips and considerations in selecting medical insurance during open enrollment period:

✔ Coordinate with your spouse:  It may make sense to both be covered by one employer’s plan depending upon your premium sharing requirements. 

✔ New children: Sometimes the plan that was appropriate for a couple is no longer the best plan with kids. If your family is growing, consider a plan with a lower doctor visit copayment.

✔ High(er) deductible plan:  These can be great options as they reduce your monthly premiums in return for potentially higher deductibles.  Be sure that you have adequate cash reserves.

This is the second blog in our 8-part open enrollment series. Check back in the upcoming days for more important tips to help you make the best choices for the upcoming year.

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Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.  Any opinions are those of Center for Financial Planning and not necessarily those of RJFS or Raymond James.

Pre-Paid Funeral Plans

 Historically, end-of-life issues, especially death and funerals, were the last topics people wanted to discuss.  With more information and resources available, it seems that Americans are more at ease having these conversations.  And they are willing to plan for these events in advance!

Recently, I had a client ask me about pre-paid funeral/cremation plans and whether these were something she should consider.  In doing some research on the topic, I found that there can be pros and cons to these types of plans:

Pros:

• Prepaying for your funeral can ease the burden on already grieving family members when the time comes, and you are able to choose the options you want.
• Using a prepaid plan can provide peace of mind.  If you choose the right method and plan, you can feel confident that there are funds available to pay your final expenses. 
• A prepaid funeral plan is a non-countable asset if you need government assistance for long-term care expenses down the line (Medicaid or VA Aid & Attendance Benefits).

Cons:

• Purchasing a pre-paid funeral plan directly with a funeral home can be risky.  If the funeral home goes out of business or misappropriates the funds, you could be out the money invested.
• You must carefully read any contract to ensure that there will not be added costs later on (i.e. the casket that was chosen is no longer available and the replacement model is much more costly).
• If you purchase a plan with a specific funeral home, you may not have the flexibility you want/need later on if you need to relocate and wish to change funeral plans.

There are pre-paid funeral insurance plans sold by insurance companies that provide the flexibility of using any funeral home in any state.  The policies ensure that the premium you pay will cover the costs you plan for when the time comes.  Again, it is important to read the fine print and consider the costs for any type of pre-paid funeral plan.  Additional information and FAQs can be found in the Federal Trade Commission’s publication “Funerals:  A Consumer Guide”.

There are many ways outside of the pre-paid funeral plans to ensure that your plans are in place and that the funds are available.  Discuss these and other important issues with your financial planner.

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The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material.  Any information is not a complete summary or statement of all available data necessary for making an investment decision and does don constitute a recommendation.  Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.

Need help making good financial decisions?

 You are not alone. There are few people who should even attempt charting their financial course without consulting someone else. Even experts ask others for advice! So, I offer 7 key components to helping you find the right person to help you make the best decisions possible for you:

1. Experience: Reflecting back on my career, I am always amazed at how green we are in the first 10 years of our careers.  I would recommend that you seek an advisor with a minimum of 10 years of on-the-job work experience before handing over the keys to your largest financial decisions. Make sure that the work experience is hands-on and specific to your needs. Ask them about their experimental practice history.   What was their greatest mistake or great new awareness surrounding the people they help?
2. Qualifications: Make sure the financial professional is a CFP® practitioner, a Certified Public Accountant-Personal Financial Specialist (CPA-PFS), or a Chartered Financial Consultant (ChFC).
3. Services: Ideally, the first meeting is free so you can see if the relationship is a good fit.  At the first meeting, spend time trying to understand if your values are aligned and if the financial planning professional really cares about you and your goals.  Ask for a list of services the financial planner offers or the scope of the engagement options. This should define the scope of work and the costs.  Ask the planner to provide you with a written agreement that details the services that will be provided. Keep this document in your files for future reference.
4. How their firm works: The financial planner may work with you or have others in the office assist. You may want to meet everyone who will be working with you. If the planner works with professionals outside his/her own practice (such as attorneys, insurance agents or tax specialists) to develop or carry out financial planning recommendations, get a list of their names to check on them all out.
5. Compensation: As part of your financial planning agreement, the financial planner should clearly tell you in writing how he/she will be paid for the services to be provided. Planners can be paid in several ways (i.e. Commissions, fees, or a combination).
6. Other costs: While the amount you pay the planner will depend on your particular needs, the financial planner should be able to provide you with an estimate of possible costs based on the work to be performed. Such costs should include the planner’s hourly rates or fees or the percentage he would receive as commission on products you may purchase as part of the financial planning recommendations.
7. Complaint history: Ask what organizations the planner is regulated by and contact these groups to conduct a background check. All financial planners who have registered as investment advisers with the Securities and Exchange Commission or state securities agencies. Or, if they are associated with a company that is registered as an investment adviser, they must be able to provide you with a disclosure form called Form ADV Part II or the state equivalent of that form.

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The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material.  The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.  Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.

The Perfect Recipe for a Balanced Life for the Sandwich Generation

 I think I’m like many Americans that struggle to find personal time amongst the chaos of working full time, raising two children, balancing family relationships, and other obligations (school, church, volunteer work, etc.).  And I am not even one of the many Americans between the ages of 40 and 60 who are raising children AND assisting aging parents.  If I have trouble finding time to balance my life with only one family to raise, how can these members of the “Sandwich Generation” do it?

I had a client of mine explain it this way, “You have to run your family like a business, that’s the bottom line.”  While there are certainly feelings and emotions that complicate the dynamics of these family situations, there has to be a way to get things done without sacrificing all of your time, your relationships, or your sanity. 

Here are 3 ways to managing your multi-tiered family like a business:

1. Plan Strategically – The key here is to have a plan; to be proactive rather than reactive.  Know what has to be done, when it needs to be done, and how it will be paid for.   This includes creating master calendars for who needs to be where and arranging transportation).
2. Manage Resources – Make sure you have the tools in place to make things happen (legal documents, financial resources, and human resources).  If you don’t have the pieces in place to make things happen when the time comes, you end up in crisis mode.  This involves making sure legal documents like durable powers of attorney are in place and arranging for help that is either paid or volunteer for things like care assistance, bill paying, etc.
3. Departmentalize – You are the manager of the family business, which means you oversee but do not need to perform every task.  Make sure that the right people are handling the right tasks, and that everyone is doing their part.  This means involving all family members to do their share (including adult siblings) and hiring the right professionals to handle the duties that are outside your area of expertise (Geriatric Care Managers, Elder Law Attorneys, Financial Planners, etc.).

Before trying to handle every duty that comes managing a multi-tiered family, consider viewing your family like a business.  Doing so will ensure that everyone is served best, and will provide you time to maintain a balanced and quality life.

Please feel free to contact me for additional tips on establishing and managing your family business.

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The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material.  The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.  Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.

Downsizing: Tough decisions and new beginnings

 What do we keep? What do we give away? Who do we give it to?  These are all questions that come when it's time to downsize. Selling a home to move into a smaller living space is a decision many retirees are faced with today.  Downsizing is not a simple task because it not only involves finding a different home, it also means problem-solving the practical logistics of a move, and the emotional work of sorting through the personal belongings we accumulate over a lifetime.  Securing smaller quarters and reducing personal possessions is a process that can include multiple family members coming together to make decisions about the disposition of treasured belongings and mementos.

According to Catherine Lysack, PhD, an occupational therapist and the Deputy Director of the Institute of Gerontology at Wayne State, these questions about keeping and getting rid of things resonate with older adults and their families.  The answers are often based in emotion because they involve personal evaluations of value and worth. Downsizing is therefore a very personal process that reflects who we are and what we envision for the future.  Dr. Lysack cautions, “While some items are easily given to charity and sold in yard sales the most cherished items require special placement—most often with family and friends.”

While the reasons for downsizing are many and varied for seniors here are 5 common triggering events:

• Health reasons
• Death of a spouse
• Desire to live closer to family
• Financial limitations
• Desire for a new beginning

Downsizing is so much more than packing boxes and moving.  Demographic trends today highlight the fact that baby boomers are on the march to middle and older age.  The downsizing conversation is an important discussion to have with your financial planner and family members. To learn more about an upcoming educational event where Dr. Lysack will be the featured speaker contact me at laurie.renchik@centerfinplan.com.

What is Your Greatest Investment in Life?

 A common perception of the phrase “return on Investment” is what you make on your money.  Contrary to usual thinking, I am not talking about monetary investment.  In this case, I am referring to the people we hire to help us achieve the important goals in our lives.  We may not realize how vital this investment is.  After we invest in ourselves, investing our resources in others is the most important thing we can do.  These investments in various relationships come in many forms.

It might be your doctor, a therapist, a trainer, or even a nutritionist.  What could be more important than investing in these relationships to manage your health?   Health is a quintessential asset of life.  Relationships with people are important investments of time and/or money.  The distinguishing factor about money and time are that they are finite resources for most of us. 

For most, time is even more precious than money, and we can’t take it - we can only spend it!  We never seem to have enough time, to do all the things we want to see and do.  After family, work, exercise, and all of our various commitments, there is very little time left.  Therefore, delegation becomes a tool of utmost importance.  Learning how to leverage our time is vital. Focus on giving up almost everything except those components of your life that you consider the most important and fulfilling.

Try brainstorming a list of the top 50 ways to spend your time that are fulfilling, meaningful, and necessary in your work/life balance.  If financial management did not come up or it lies outside your area of interest, consider hiring a specialist. 

Grasping a clear understanding of life goals and the progress made toward achieving those goals is a good “return on investment.”  Holistic Financial Planning is one way to connect your values with your resources. Your time is valuable.  It’s sacred!  Working together, we are determining the roadmap of your life.   

Charting progress toward goals and objectives on an ongoing basis helps keep time, resources and energy working in tandem, so that the financial management piece of the puzzle integrates seamlessly into your life plan.  You desire a return on your time and money.  Know that all of our energy is focused on this being a positive outcome.  Know that our goal for this relationship is to provide value.  Working with The Center, know that we strive to help clients enjoy richer more fulfilling lives because of our discussions and the stewardship of your finances.

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Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.  Any opinions are those of RJFS or Raymond James.

Financial Empowerment for Women Today

 How do you keep control and focus in your busy life? For many, the creation of a to-do list and the eventual checking off of items is essential.  Busy multi-taskers (code word for most women) have made lists work for them for generations.  My problem, however, is that I make too many lists and then forget where I put them.  They exist all over – on the back of envelopes, on my smart phone, or zipped securely in a pocket in my purse. 

Whether you have one list or ten, are diligent or more creative with your check list system I think it is fair to say that clearly, to-do lists empower those who partake.  Check!  When I talk with groups of women; either informally with my friends and family or professionally with clients and colleagues, the subject of financial empowerment is a popular topic and many times comes to the top of everyone’s to-do list.  Especially in today’s economy, with new financial realities affecting many families in many different ways.

What does financial empowerment look like for women today?  In my experience there is no single correct answer to this question.   Creating your own financial to-do list is one way to focus your energy and check your progress toward achieving financial empowerment.  Here is a “list” of anecdotal responses, in no particular order, culled from the many conversations I have had with women on this important topic.

What Needs to be on Your Financial To-Do List?

• My decisions about spending money will be made in a way that honors my values and responsibilities
• I will learn from my financial mistakes
• I will understand that taking care of myself financially is just as important as taking care of others
• I will delegate without abdicating responsibility for managing my money
• I will set and make progress toward financial goals
• I will know my value in the marketplace and initiate the compensation conversation

Imagine the satisfaction and confidence you will feel, and the empowerment that will emerge crossing the financial to-dos off your list. 

Want to share your financial to-do list with me?   Send me an email or give me a call! 

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.  Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.

Donor Advised Fund – A Way to Manage Your Charitable Giving

 It is better to give than to receive.

Whether it is giving of your time, talents or financial resources, there is a lot to be gained by simply being generous. As a professional financial advisor, one of my many great pleasures is helping clients plan and then efficiently give to causes near and dear to them.  Recently, I helped long-time clients do just that.  After conducting a Financial Independence analysis that provided confidence that they were in a position to provide financial assistance to others, they decided to earmark a significant amount for charitable giving.  However, like many, these clients were not sure which charity to give support … just yet.

Enter the DONOR ADVISED FUND. Donor Advised Funds have been around for a while – but I am still surprised at how little they are used. Many firms and organizations offer them – Southeast MI Community Foundation, Fidelity, Raymond James, etc. There are many situations where a donor advised fund might make sense.

Hopefully you are aware of the advantages of gifting appreciated securities, which allow you to avoid capital gains taxation (note that I said avoid and not evade).  When you gift appreciated securities to a charity or donor advised fund held for longer than 12 months, you are able to deduct the fair market value of the securities and avoid capital gains. I like to say that there are three parties to a charitable donation; you, the charity, and your silent partner the IRS.  We want you and the charity to benefit the most.

A donor advised fund allows you to lock in the gain by transferring the shares to the donor advised fund. Next, you get an immediate income tax deduction. And then, you can decide on the specific charity or charities to benefit at a later date. For more information visit the web site www.myfamilyfoundation.org. If you would like additional assistance – give us a call – we’d like nothing more than to help you with your charitable giving.

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The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material.  The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.  Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.  Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.

Charitable Giving: Your Annual Giving Plan

 Once you have determined the causes you want to support and have done your homework on those chosen charities, it’s time to put together your giving plan.  A giving plan can help you track your giving on an annual basis, to document your legacy giving wishes, and to communicate your giving desires to your family. 

Your annual giving plan could look something like this and helps you outline your giving based on:

• Funding areas – Cultural arts, education, social programs, the environment, animals, religious affiliations, support programs, health/research, etc.
• Local versus Global reach – Determine your desire to support organizations that serve close to home versus those that serve a broader/global community.
• Identify the Specific Organization(s) in each funding area
• Identify specific organizations and specific gifting – Determine your annual giving amount in dollars and/or percentages and track when you’ve met each annual goal.
• Identify your Legacy Gifting Wishes – Document the organizations you have identified to receive charitable dollars from your estate.  While this form does not have any legal authority and does not replace the needed legal documents (trusts, wills, etc.), it is a way to communicate your charitable giving desires.

Your annual giving plan will help you (1) plan and track your annual giving and (2) provide a tool with which to communicate your charitable giving with your family.  Feel free to use our Giving Plan (link form here) form, or develop a format that works best for you.  The important part is to develop your personal giving goals based on what is important to you, to verify the organizations you choose use your gifts to provide the most good, and to make sure that your gifting fits into your overall financial plan.

“What we have done for ourselves alone dies with us; what we have done for others and the world remains and is immortal.” ~Albert Pike

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Changes in tax laws may occur at any time and could have a substantial impact upon each person’s situation.  Please discuss tax matters with the appropriate professional.  Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.

Charitable Giving: Researching Your Charities

 In my previous post, I addressed the reasons that individuals decide to give to charities.  Once you have made the conscious decision to give, how do you make sure your contributions are making a real difference and not just funding the salaries of the organization’s executives?

The internet makes it easier than ever to do your own investigating.  By doing your own due diligence, you can make better decisions about which charitable organizations most deserve your hard-earned dollars.  Here are a few things to look for:

• Look for IRS-Approved Charities – Verifying that a charity is an IRS-approved nonprofit organization will not only ensure that your contribution will be tax deductible, but IRS-approved charities have stringent application and reporting requirements, which generally weeds out those organizations that are ill-intended.
• Look at the Financial Strength and Practices of the Charities – Web sites like Charity Navigator (also a tax-exempt charity) rates over 3,000 of the largest charities by looking at their financial practices (revenue spent on executing programs and services, overall financial strength, etc.). You may have to dig a little deeper on the web to get information on smaller charities.  Your local United Way may be of assistance with local charities.
• Look at the Programs and Services Provided by the Charities – The name of the charity itself may not define the scope of the programs or services provided.  Be sure you understand whom the organization serves and how they serve them. This way you can make sure you are supporting the cause you are aiming to support.

Once you’ve narrowed down your list of high-quality charities that satisfy your desire to give, you need to put together an annual giving plan. Watch for my next post where I discuss how to put together such a plan.

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Changes in tax laws may occur at any time and could have a substantial impact upon each person’s situation.  Please discuss tax matters with the appropriate professional.  Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.