Wealth Management Blog

Recent Posts

Let’s Talk Gray Divorces

By JJ Burns

September 12, 2018

Breaking up is hard to do, and it's something that's made even harder when it happens later in life. "Gray divorces," as they're called, are indeed on the rise. According to Pew Research Center, the divorce rate among folks aged 50 and over has doubled since the '90s. Most people in this boat find themselves in completely new terrain. The single life can be a disorienting new reality for those who've built a decades-long life with their partner.

Divvying up your assets and debts comes with the territory for any divorce, but I've learned over the years that those who split up later in life usually have more moving parts to consider. If emotional heartbreak is one side of the stress coin, disentangling your finances is the other.

Being thrown into new financial waters is often jolting for both parties, especially if you're the spouse who wasn't the breadwinner during the marriage. For the first time ever, you may find yourself 100% financially on your own. Do you know how to confidently manage your budget, long-term goals, and investment portfolio? Taking over the financial reins can be an intimidating experience for anyone, particularly those reeling from a midlife divorce.

Even if you were the primary earner, splitting up could majorly rock the lifestyle you've grown accustomed to living. Transitioning to the single life—which may or may not include alimony—is bound to disrupt your financial health. At JJ Burns & Company, we sit down with our clients and help them develop a detailed, customized financial strategy before any divorce plans are in motion. This is the best way to get a realistic snapshot of your new financial norm.

If you're contemplating a gray divorce of your own, it's wise to check in with your financial advisor about the best way to move forward. Doing so can help you sidestep these common pitfalls.

How it Might Impact Your Lifestyle (Especially in Retirement)

When all is said and done, the average cost of a divorce comes in at about $15,500, with some paying more than $100,000. This could potentially put a major dent in your retirement nest egg, especially if you're already behind on saving. What's more, your retirement accounts could very well be considered joint assets, and how they're split up varies from state to state. I won't dive too deeply into the legal technicalities here, but before you do anything, you need to know if you live in an equitable distribution state or a community property state. This directly dictates how your assets and debts are divided.

So what does this have to do with your retirement? While your original plan may have been to live out your golden years together, drawing on the same funds, a divorce may translate to a smaller payout for you. If you're approaching retirement age, this could mean downsizing your lifestyle or finding ways to make up the difference (i.e. delaying retirement or picking up a part-time job after you retire). Divorcing also means eventually cashing in on one person's Social Security benefits instead of two.

Again, there are a lot of moving parts. Every couple is different, but knowledge is power. Before making any decisions, we always advise our clients to zoom out and look at the big picture. The end goal is knowing you can still enjoy a comfortable quality of life should you divorce.

How the New Tax Law Factors into the Equation

Making the decision to divorce is one that's inherently emotional. Be that as it may, some couples know deep in their bones that going their separate ways is the healthiest path forward for everyone. Couples who agree that divorce is the best option are in somewhat of an unorthodox situation these days—thanks to the new tax reform plan taking effect January 2019, it might be in your financial best interest to split up sooner rather than later. Why? As the law reads right now, alimony payments count as a tax deduction. Once the new tax reform goes through, the tax break for spousal support payments will be eliminated.

In simple terms, divorcing will most likely get even more expensive. In no way are we encouraging married couples to break up—anyone who's endured a divorce knows how painful it is. However, if divorce already feels right in your heart, the new tax reform is worth your attention.

While money certainly can't buy happiness, it can empower us to live a life that's more in line with our values. As gray divorces continue trending, it's definitely worthwhile to weigh the financial repercussions before signing on the dotted line. At the end of the day, being our client means knowing that we're taking the long view when it comes to your financial health, whether you're partnered or single.

Budgeting for Charity: Figuring Out How Much You Can Give to Your Favorite Cause

By JJ Burns

September 10, 2018

Everyone believes in a good cause and wants to support a charity close to their hearts. Whether it’s donating goods or services, volunteering or making a financial contribution, any contribution helps.

While some people have more financial resources than others, there is a chance that may change at various times in your life. When you’re just starting out, you’re learning about savings and how to create a budget. Then, you may be thinking about a family and looking to purchase a home. Later on, it’s time to retire and you may have more disposable income to allocate.

As CFP® professionals, we can help you evaluate your financial situation to include the right amount of giving to an organization that means a lot to you—without impacting your other goals. Here are some key ways to determine how much you can reasonably give.

  1. Look closely at your current situation. What are your regular expenses each month such as housing, entertainment, personal services and loans? No matter what your financial situation, before you give to charity, you want to ensure that all the basics are taken care of – including long term retirement savings goals. 
  2. Determine a percentage of your income. A rule of thumb for most people is to give about two percent of their yearly income. However, if you tithe, it may be 10 percent or more. With this number in mind, you can plan on how to reach your giving goals.
  3. Be strategic – and creative. If your company offers matching contributions, take advantage of their generosity. Perhaps decide on putting aside a certain percentage of your yearly bonus to charity. Or maybe you have an interest or a skill that you can use as an entrepreneurial business and donate the proceeds.
  4. Examine the trade-offs. If giving is important to you, you may want to rearrange things in other areas of your life. Does leasing your vehicle rather than purchasing give you additional financial options? Can offering a week at your vacation home when you’re not using it provide something extra for your favorite charity? Simple changes can make a big difference.
  5. Prioritize your giving. If you regularly offer $500 here, $2,500 there, as well as purchase a table at a couple of benefit auctions, you can quickly derail your charitable budget without realizing it. Lead with your head instead of your heart and select a few organizations that are most important to you to maximize your giving impact.
  6. Consider monthly vs. yearly contributions. If your income fluctuates each month, it may make sense to make a one-time donation each year; if you like the feeling of having a recurring payment made each month, that’s terrific, too. It all comes down to your preference. Whether it’s monthly or yearly, your charity will be most appreciative.
  7. Make your money count. Take the time to research how the organization spends its money. What percentage goes to salaries and overhead costs compared to the charity’s mission? Charity Navigator, BBB Wise Giving Alliance and Charity Watch are watchdog groups that can help you make informed decisions.
  8. Maximize your tax deductions. When you give, you not only want the personal satisfaction of helping a good cause, but also a financial benefit. While it’s fun to attend a gala or participate in a golf tournament, you may make your money go farther if you write a check directly to the charity. If you itemize your taxes, you can deduct the full amount of your donation. On the other hand, when you attend an event, you can only write off a portion of your ticket, because the costs associated with the event, such as dinner or entertainment, are not counted as part of your donation.

As always, do your due diligence. Not every charity is what it says it is – in fact, it may not be a charity at all and simply use a similar-sounding name. The above-mentioned charitable watchdog organizations are a good place to start when choosing which organizations to support.

For more information and guidance on charitable giving, a CFP® professional can help you clarify your financial objectives and determine which charitable giving options are best suited to help you meet your goals.

My Company Gave Me an Incentive to Retire. Now What?

By JJ Burns

August 22, 2018

Early retirement incentive programs (ERIPs)—commonly referred to as buyout packages—are hardly new, but that doesn't make it any less jarring to be on the receiving end of one. A thousand thoughts will likely rush to the forefront of your mind:

  • Why are they offering this? Is my job unsafe?
  • Does my employer think I'm disposable?
  • Is the package enough to really see me through retirement?
  • Will I regret it if I decline?

Take heart in knowing that this a perfectly normal reaction! The decision to accept an early retirement incentive is indeed a huge one that could have potentially lifelong repercussions on your financial life. In all my years serving clients and helping them manage and grow their wealth, what I've learned time and time again is that knowledge is power. Financial awareness is by far your best weapon when it comes to navigating the tricky terrain of retirement, especially if your employer just threw an unexpected wrench in your plans by dangling an ERIP in front of you.

The most important thing is to go into these discussions with both eyes open and a firm grasp of what's being offered. Here's how to evaluate the package details so that you can make an informed decision.

What Is an Early Retirement Incentive Program?

These programs often come out of the woodwork when a company is hoping to dial down their internal roster (a.k.a. downsizing). ERIPs, by design, are meant to entice employees into making a voluntary exit. They come in all shapes and sizes, but most include a variety of attractive incentives to sweeten the deal, from additional severance pay to an extension on the employee's medical benefits to help bridge the gap to Medicare.

What Questions Do I Need to Ask?

Of course, not all ERIPs are created equal. This is why it's always wise to read through every line of the proposal with a compassionate and knowledgeable financial advisor by your side. This is the pro you want in your corner because they can calm your emotions and evaluate the package like any other financial document. Whether or not you should accept the offer hinges on your current nest egg, which requires running some numbers.

If you accept the package and begin drawing on your other retirement funds, will it be enough to see you through your golden years? Or will the ERIP be more of a springboard between your current job and your next career move, like pursuing work at another company, venturing out as a consultant in your industry, or starting your own business altogether? Depending on the terms of the offer, it could provide a very nice cushion if you were already hoping to retire sooner rather than later.

Should I Negotiate My Early Retirement Offer?

The driving force that I echo to all my clients in this position is that it all comes down to what matters to you and your family. If you accept the package as is, will your health care needs be covered? After breaking down all the numbers with your advisor, does the math come out in your favor, or do you run the risk of outliving your money? If the proposal itself doesn't come with substantial incentives to make it worth your while, you may want to call on the power of negotiation. Remember, they want you to take the offer, so you do have some degree of leverage.

If you have a robust nest egg as is, but are concerned about rising health care costs in retirement, maybe your employer would be open to, say, swapping additional severance pay for extended medical care, or some such deal. Again, everyone's needs are different. The main takeaway here is that you're under no obligation to blindly accept the initial package, and there may very well be room for negotiation.

What Are the Risks?

We're human beings, which means that, to some degree, we're wired to fear the unknown. Uncertainty, especially where our financial health is concerned, can be a terrifying prospect. Most people fear that if they're being offered an early retirement incentive, it must mean they're already on their employer's chopping block. What if they decline the offer only to be let go later down the line—and with a less attractive severance package?

The truth is that there's really no way to know any of these things for sure, which makes the weight of the decision all the more heavy. However, what we can be sure of is whether or not the deal they're offering supports your big-picture retirement strategy. If you're on the home stretch anyway, an attractive package could hold you over (with some nice extras thrown in to boot).

No matter what decision you make, be sure to take your time so that you thoroughly understand what you're agreeing to when you sign on the dotted line. If you have your sights set on starting your own business, for example, you'll want to make sure the agreement doesn't include a non-compete clause. The thing to remember is that you're not alone, and if something doesn't feel right, it never hurts to seek out an employment lawyer.

At JJ Burns & Company, you can rest easy knowing that you're with a financial advisor who empathizes with your position and is truly putting themselves in your shoes. We're dedicated to helping you make your way through these unknown waters with your retirement goals intact.

Does Money Really Buy Happiness?

By JJ Burns

July 19, 2018

Can lasting happiness be traced back to the almighty dollar? It's an age-old question, and the answer tends to vary depending on who you ask. Some say they'd sure be happier if they could afford to pay off their debts and live out the rest of their days in stress-free retirement bliss. Others swear that real happiness, like the feeling you get when your child wraps you in a warm hug, simply can't be bought.

In all my years of helping people manage their wealth and investments, I've learned that both are true. Happiness is hard to come by if you're plagued by financial insecurity. This is because what financial peace of mind really gives us is freedom. At its core, money is a resource that, if used wisely, opens the door for what matters to you most—things that don't have a price tag, like taking time to help your child with a school project or connect with your significant other.

When financial stress is down, we have more mental space and attention for life's true treasures, like family and friends. It makes sense that those struggling to make ends meet seem to have lower happiness levels. A now-famous 2010 research study out of Princeton University found that earning less than $75,000 a year was linked to more stress and everyday sadness. It stands to reason that once our basic needs are met, day-to-day stress tends to go down.

But the research also had one other particularly interesting finding: general happiness levels didn't improve much for folks who excelled beyond that $75,000 mark. In other words, someone making $200,000 wasn't all that much happier than someone earning $100,000 less.

Thanks to inflation, that $75,000 figure has surely gone up a tick since 2010. So how much do you need to be financially comfortable these days? According to Charles Schwab's annual Modern Wealth Index, an average net worth of $1.4 million should do it; $2.4 million to be considered wealthy. But these findings also come with a non-financial twist "Living stress-free/peace of mind" and "Loving relationships with my family and friends" are among the top definitions of personal wealth.

In many ways, true and lasting wealth has less to do with our net worth and more to do with our outlooks and values. On the same note, building wealth isn't so much about how much money and assets we accumulate—instead, it really depends on how we choose to spend our money. At JJ Burns & Company, our wealthiest clients (i.e. those whose financial choices are in line with their values) all have one thing in common: they've put their money to work for them by way of a diversified, long-term written investment plan.

Taking the long view is best here. Whether your idea of real wealth is the ability to put your kids through college stress-free, retire early and spend more time with family, or have the opportunity to travel the world and feed your wanderlust, smart investing is the best way to get there—and the time to start is always now. Thanks to the magic of compounding interest, those who start early typically reap the biggest returns.

All this means, in simple terms, is to keep our investments balanced. This is diversification, and it's essential to putting some muscle behind your money in order to ultimately fund your long-term goals. Why? The market is a notoriously volatile place, and ups and downs are simply par for the course. Diversifying is your best protection; if one area of your portfolio dips, it's not enough to tank your whole plan. The best analogy for long-term stability is to avoid putting all your eggs in one basket.

Many of us zero in on hitting a specific salary milestone or amassing a certain degree of assets to measure how wealthy we are. But I've learned that true wealth has much more to do with freedom—more specifically, having the freedom to use your time in a way that fosters true happiness. Spending quality time with family and friends, and making memories with loved ones, are easily life's greatest riches. The same goes for having the financial freedom to pursue our passions, nurture our health, and attend to our life's purpose. Our money is perhaps our most powerful resource for achieving all these things.

Being our client means knowing that when it comes to your personal vision of wealth and happiness, we're right behind you, echoing your values every step of the way. The most important part of the equation is putting a stable plan in place to help you get there.

Concierge Medicine: The Doctor’s Office Reinvented

By JJ Burns

June 26, 2018

The other day I was talking with a client and she mentioned that her husband was recently hospitalized. He’d unexpectedly lost consciousness during dinner, and while he came to within a few seconds, it was still a worrisome event.

Thankfully, their doctor met them at the hospital and already had the admissions paperwork completed, as well as a series of tests ordered. After a few days in the hospital, the husband left with a clean bill of health.

The reason why the couple was able to speed through the health care system: they belonged to a concierge care group.

Think how different your long-term health might be if your primary care physician had the time to focus on disease prevention rather than hospitalization? Or if your doctor could help reduce the risk of expensive chronic conditions like heart disease and diabetes?

Concierge care is more than just a buzzword. Today it’s a growing practice amongst physicians who want to provide more personalized health care. Think of it like a family office for medicine where for a retainer fee ranging from $1,200 to $30,000 a year per individual, you can have a select team of medical professionals at your service when you need it.

More than anything, a true benefit of concierge medicine is the freedom it can give. Here’s what you should know about concierge care:

  • ASAP access. With concierge care, you don’t have to wait to see your physician. Typically, it takes 29 days to book an appointment with a regular family care physician. If you have a kidney stone in the middle of the night or your son breaks his arm during soccer, as a concierge medicine member, like my client, you’ll be seen right away. No more hours-long urgent care or emergency room visits—and the associated costs.
  • Customized care. Another benefit of concierge medical care is the personal touch. Unlike many traditional care practices, you have an opportunity to build a deeper relationship with your doctor. He or she takes the time to know your health history and can recommend more advanced diagnostic tests than what your yearly preventive care visit may cover. Additionally, with concierge medicine, your doctor will give you the results sooner than a general primary care physician.
  • Integrated medicine. Even better, your concierge doctor can work with other members of your health care team, such as specialists, naturopaths or chiropractors, to ensure that all your health care is aligned.
  • VIP treatment. Most concierge doctors accept no more than 50 families in their practice. This means that you can avoid the assembly-line atmosphere of even the best primary care groups. Like the days of long ago, many concierge physicians will make house calls—or meet busy patients at work or the airport.
  • Worry-free travel. Your concierge doctor can also arrange care anywhere in the world. If an emergency arises, a private jet or helicopter can be chartered so you can receive the best care possible.

While affluent individuals appreciate how to use their money and the art of delegation, they may not always be aware that the option of concierge medicine is available to them.

Once clients understand the advantages of concierge medicine, two of the biggest questions they ask us are if concierge care is covered by their current health insurance policy and if their costs are tax deductible. Because insurance coverage varies from state to state, as well as practice to practice, it’s important to ask your insurance provider and prospective concierge physicians about your specific situation. Additionally, if you itemize medical expenses on your tax return, you may be able to deduct the annual subscription fee. As with all things tax-related, consult your tax advisor.

While we serve as wealth and investment managers for our clients, we also believe in looking at the total life picture, which includes health planning. We discuss the often-difficult “what if’s,” the financial impact of dealing with a chronic or debilitating illness, and the various ways to develop a sound yet flexible plan. That could include long-term care insurance, a special needs trust or considering joining a concierge care practice. As a client of JJ Burns, you can rely upon us to make the full range of your financial interests a priority.