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Financial Planning for Special Needs Families

October 2, 2019 2:10 pm Published by Leave your thoughts

Ask any parent what their number one priority is and they'll all have the same answer. Our children—their health, happiness and well-being—come before anything else. It makes sense that much of our financial planning is centered on giving them the best life we can.

Raising kids isn't cheap, but many families also face additional costs they perhaps never anticipated. More and more children are being diagnosed with emotional challenges that require a significant amount of time, energy and resources to manage. For many parents, it's a full-time job that has very real financial implications.

Lifetime care for someone with autism affected by an intellectual disability comes in at $2.3 million. Similarly, raising a child with attention-deficit/hyperactivity disorder (ADHD) is five times more expensive than raising a child without the diagnosis.

Numbers like these will likely make you flinch, but we help families continue to grow their wealth in the face of all kinds of challenges. All it takes is a little preparation, forethought and expert guidance. If you're raising children with emotional challenges, you certainly aren't alone. Shoring up your finances begins with understanding the financial reality.

The Cost of Therapy and Medication

Every condition, and child, is different. Some of the most common pediatric mental health disorders include ADHD, anxiety and behavior disorders. Autism spectrum disorders make up another large piece of the pie, affecting one in every 59 children in the U.S.

Interventions vary from child to child. The first step is having your child evaluated, which costs some families anywhere between $700 to $2,000. The kicker is that insurance doesn't always foot the bill. if you aren't sure where to begin, your pediatrician is a great starting point for resources and referrals. From there, check with your insurance company to see what's included in your coverage.

Different types of therapies may be part of your child's routine, from speech and play therapy to occupational and physical therapy. Again, insurance plans are unique in terms of what they'll cover. Some services are provided free of charge within the public school system, but some children benefit from more frequent visits, which parents have to pay for out of pocket.

You may be able to get some financial relief when it comes time to file your taxes. Qualifying medical expenses that exceed 10 percent of your income are tax deductible. This includes insurance premiums, therapeutic swimming and more.

The Potential Loss of Income

Your child's health care costs don't paint the whole picture. For many families, one parent is forced to either scale back at work or leave the workforce altogether in order to care for children with emotional challenges. One study found that mothers who have an autistic child, on average, earn 56 percent less income. This loss of cash flow can change your family's financial dynamic, but that doesn't mean you can't adjust and adapt.

Any trusted advisor can tell you that financial planning changes as we move through different stages of life. The earlier you can sit down together to make a plan, the better. Beyond your monthly cash flow, how will a change in your work life affect your retirement contributions? And, most importantly, how can you tweak your financial strategy to accommodate your new income level?

Planning for Your Child's Future

We all know that parenting doesn't end when your child turns 18. Our love for them lasts a lifetime. Children with special needs often require additional supports well into adulthood. Will your child need long-term care as an adult? Or any other long-lasting supports or resources?  This is a long-term savings goal that isn't unlike preparing for retirement—the earlier you begin, the better. And no matter what, it's never too late to start planning.

While none of us can fully predict what the future holds, we can certainly take life's challenges and use them to shape our financial planning. At JJ Burns & Company, we work side by side with families to understand their unique expenses, then customize a wealth management plan that's designed to help them thrive and grow; no matter what life throws their way.

“There’s Talk of Recession. Why Don’t We Get Out Now and Go to Cash?”

September 16, 2019 10:18 am Published by Leave your thoughts

We hear the noise. All the chatter from the doom and gloom media, predicting a coming recession. And naturally, investors become a little rattled and wonder if they should be making any moves now, ahead of a potential market pullback.

Well, we’re here to clarify a few things about what’s really happening in the economy now, and to offer our advice on how an experienced investor should react accordingly.

Let’s Review the Facts About a Recession

A recession is a macro-economic term that refers to a significant decline in general economic activity in a designated region. It is typically confirmed after two consecutive quarters of economic decline, as reflected by GDP numbers, in conjunction with other monthly indicators like employment.

Recessions are frequently characterized by a rash of business failures and often bank failures, slow or negative growth in production, and elevated unemployment.

NONE of those conditions exist in our present economy!

Currently, the U.S. Leading Economic Indicators Index is still positive. Inflation is low, unemployment is low, and jobless claims are not excessively high or rising rapidly.

In our region, we are amazed at the number of help wanted signs posted in local businesses that most likely are not included in official statistics.

Furthermore, recessions are notoriously difficult to predict. So-called pundits in the media often rely on indicators that have long lead times; some up to a TWO YEAR lead.

If nervous investors decide to leave the market based on those kinds of nebulous indicators and predictions, that’s a long time to be out of what could be a potentially profitable market. Especially based on something that might not even occur! Plus, missing out on positive days in the market can have a serious effect on long-term capital growth. Take a close look at the graph below:

To sum up, we are not currently in a recession and there are no leading economic indicators that suggest that one is lurking around the corner.

“The Headlines Say Things are Bad. Why Am I Still in the Market?”

Markets are ALWAYS turbulent. Markets often have daily volatility but it is generally manageable. The market has a reaction, digests the information and moves on.

There is never a perfect time to invest.  Many investors believe they can flawlessly time their deployment of capital at the very bottom of a severe bear market. Two issues pertaining to that strategy are:

  1. Nobody—NOBODY—knows when the bottom of a bear market occurs.
  2. Investors let the fear instinct take over during a decline, preferring to sell stocks rather than buy them. Remember, the adage is “Buy low, sell high,” not the other way around.

Negative headlines play to EMOTIONS. We often make reference to the “Four Horsemen of the Investing Apocalypse,” which are:

  • FEAR
  • HOPE

None of these emotional or mental states involve any kind of rational assessment of prevailing market or economic conditions. Investors who fall prey to The Horsemen are allowing other market participants to make decisions for them about their own finances and portfolios.

The financial media is not an advisor, and is not interested in helping investors. The media is interested in promoting fear and confusion—unleashing The Four Horsemen—and having folks tune in to watch commercials for financial products that claim to help.

There is NO one-size-fits-all portfolio or plan. We customize every plan and portfolio, and we thoroughly know our clients, so that we can effectively make changes to either as necessary.

A talking head on TV doesn’t and can’t.

“If a Recession Occurs, How Will My Portfolio Be Handled?”

Good question. We get asked this all the time. But let’s note a few things before we specifically answer the question.

First, timing the market is almost impossible. But for those who try, there are costs attached. And attempting to time the market could hurt you more than you think.

During what are perceived to be volatile times in the market, investors always focus on the fear instinct to sell, but never focus on the greed instinct of when to re-enter the market. As a result, investors can be their own worst enemy—selling at times of greatest panic, and then potentially missing out on subsequent gains.

The capacity to stay the course, to remain in the market over the long haul, and to take advantage of buying opportunities during a down cycle, is an essential KEY to capital accumulation and meeting long-term plans and goals.

It’s impractical to try to maneuver through market turbulence, trying to guess about short-term events and still maintain a long-term perspective. Portfolios and asset allocations can always be changed to reflect life’s circumstances.

However, constantly trying to time the market makes setting an allocation and sticking with it much more difficult, due to the many factors that influence a plan and a portfolio.

So how will we handle your portfolio? First, here’s what we won’t do. We won’t time your portfolio out of stocks into cash, and then put it back into stocks. This is impossible to do successfully, and many of our clients have long-term goals and financial plans that will not be met with market-guessing trading.

Here’s what we will do. In conjunction with your goals and financial plan, we will establish a long-term investment portfolio and set your asset allocation accordingly.

From time to time, we may adjust the allocation based on your individual circumstances, but it will be a strategic change to your mix of bonds, stocks and cash. We will not try to time trades among asset classes.

Regardless of your ultimate allocation, we will periodically rebalance your portfolio to make sure your asset mix is aligned with your goals. For example, this may entail selling bonds to buy equities, if the stock market suffers a decline during a protracted period such as 2008-09, or like the tech stock sell-off during the early 2000s.

If cash is a requirement for you in the near-term future, we recommend assessing the amount of cash you’ll need and then setting aside the funds from your current allocation. Raising cash during a pullback is not the best solution to meet cash needs.

Let’s Have a Sunny Day Discussion

At JJ Burns & Company, we always recommend to our clients to have a “Sunny Day” discussion with us about economic issues, well before the markets get bumpy and fear kicks in.

It’s the optimal time to examine your personal, long-range goals and plans, and to discuss how your portfolio is designed to achieve them. It’s much better to have a calm and sensible discussion then, as opposed to when the market appears to be in turmoil.

We are long-term optimists about capitalism and markets. We think if an investor is too, then there’s never a truly bad time to be in the market.

Money & Relationships: They’re More Intertwined Than You Think

May 6, 2019 3:58 pm Published by Leave your thoughts

We've all heard the old adage that money can't buy you love. I'd wager to say that this truth runs a bit deeper. It's easy to treat wealth as a relationship safety cushion—something that buoys us up and keeps our relationships floating along toward security. It's a theory that makes sense on a surface level. But if this is the case, then why is money consistently the number one relationship stressor?

We may think this statistic relates solely to scarcity. Struggling to make ends meet would stress out any couple, right? But financial abundance doesn't guarantee relationship bliss. As a wealth advisor, I've seen many family relationships, business relationships and friendships fail, time and time again.

In reality, financial stability is a tool that can move us closer to our goals and afford us the comfort and peace of mind to pursue a life that's in line with our values. But the same goes in reverse: When we're living out of alignment with our core values and not being true to ourselves, our finances tend to suffer.

I've seen this truth play itself out again and again across the board among people of all upbringings and cultural backgrounds. One of the most common scenarios is staying miserable in a toxic marriage in an attempt to preserve the family. It comes from an honorable motivation; wanting to keep the family intact and cause as little disruption as possible to growing children. I've seen many couples "riding it out" until their youngest goes to college. Staying in an unfulfilling marriage, however, isn't a gift to your kids, your spouse or yourself.

Not only do children typically pick up on the relationship tension despite these efforts, this kind of arrangement also lends itself to financial recklessness. Over the years, I've seen serious overspending habits develop as people dig themselves into debt trying to soothe themselves or overcompensate with their children to make them feel happy and secure. Staying in an incompatible relationship also makes it all but impossible to take a team approach to working toward joint financial goals, like living your best life now while building your nest egg, and planning out your retirement dreams. Sometimes this pattern plays out in another way, going through with multiple divorces and remarriages only to continue repeating the same mistakes.

Romantic relationships aren't the only bonds that can lead to financial stress. Business partnerships and friendships, when not tended to and nurtured, can wreak havoc on our financial life. I can't tell you how many times I've advised people against these types of risky financial decisions, from lending a large amount of money to a friend to borrowing against a home to finance an unstable business venture. In almost every scenario, the person's heart is in the right place, but our judgment is easily clouded when emotions come into play. We're more likely to disregard sound advice and leap without looking first. The implications can affect our relationships, our finances and even our health.

Enjoying the wealth we have has everything to do with maintaining healthy core relationships. This is what leads to a rewarding life where our money is empowering us to live the life we really want. So how do we create positive relationships in our lives, and get rid of the negative ones that drag us down? Like anything else, it requires conscious goal-setting.

Take a minute to ask yourself: What is a good relationship to me? What kinds of relationships do I want to have? Whether it's a deep dive or simply an acquaintance who shares your interests, some details should never be compromised. We should surround ourselves with people who share our values and make us feel connected and appreciated; people we can open up to and be vulnerable with, whether it's a friend or significant other. Our closest relationships ought to be ones that make us feel secure and good about ourselves, not worried or stressed.

Healthy relationships are also ones built on mutual respect and kindness—each participant wants the best for the other and is open to learning and growing together during whatever chapter of life you find yourselves in. And while social media has expanded our social circles tremendously, it's no replacement for flesh-and-blood friendships. What we see online isn't always authentic, and spending quality time together in real life is what enriches relationships and fosters authentic human connections.

JJ Burns & Company understands that our personal and business relationships aren't independent from our financial lives. One influences the other, which is why a fresh perspective can go a long way in growing our wealth and making the most out of this one life we have.

Why Putting Off Your Bucket List Is a Bad Idea

February 28, 2019 1:21 pm Published by Leave your thoughts

Retirement is often looked at as the shining light at the end of a long professional career. Ever catch yourself thinking thoughts like these?

When I retire, I'll finally travel the world.

Once my career slows down, I'll get started on that passion project I've been dreaming of.

After my children are grown and out of the house, I'll really begin having some adventures.

The problem with this all-too-common way of thinking is that it isn't rooted in the present. Instead, it glorifies the future—retirement, specifically—as the time when you'll finally honor your truest self and check off the bucket list items that are close to your heart. It makes sense in theory, but it puts a good chunk of your happiness at a future point way down the line. As a longtime wealth advisor, I can say that this is the norm for most folks.

Unfortunately, I've seen this plan backfire more than a few times. The truth is that none of us has a crystal ball. Despite our best-laid plans, we can't control every aspect of what the future will bring. What if you or your spouse experience an unexpected illness in retirement that prevents you from fulfilling those big goals? Or an adult child needs help that takes resources away from turning your dreams into reality. These may sound like extreme circumstances, but things like this happen more often than you'd think.

This is precisely why it's so important not to put off your bucket list until after you retire. The reality is that by then, it may be too late. Sometimes it isn't a serious emergency or health crisis that changes the plan. For many others, it's things like financial restraints or insurance issues that make it near impossible to live out their long-held dreams.

There is a silver lining here, though. These seemingly opposing goals—maintaining financial stability in everyday life and checking off your bucket list—don't have to be at odds with each other. In fact, it's more than possible to nurture both without neglecting either. The answer comes down to smart, values-led financial planning. At JJ Burns & Company, the operative word is "values."

The reason there's no one-size-fits-all approach when it comes to financial planning is that we all have different values, goals and dreams. For some, it's traveling across Europe and experiencing different cultures. For others, it's volunteering and exploring service projects that make a positive impact on the world. Smart financial planning makes room for whatever you value right alongside life's most practical demands, like contributing to retirement, investing wisely, and protecting and growing your net worth. These things go hand in hand, each supporting the other.

Wise planning empowers you to fill more than one bucket at the same time without negatively impacting either. This involves creating realistic timelines and financial plans to allow you to sprinkle bucket-list experiences into everyday life leading up to retirement. The driving force, in life and financial planning, is striking a balance that feels right to you; working toward fulfilling your dreams in a way that doesn't derail your other responsibilities. This may require asking yourself some big questions and contemplating a variety of trade-offs that will ultimately allow you to enjoy the best of both worlds. This task is a lot more manageable when you have the right wealth advisor by your side to help you weigh your options, explore your choices, and ultimately create a plan that's in line with your values.

We only have this one life, and the reality is that we can't predict what the future holds. Delaying your happiness until your golden years could end up being one of your greatest regrets. (Take it from me; I've seen it firsthand!) Thankfully, better financial planning is the secret weapon that allows you to enjoy life now and in the future. It doesn't have to be one or the other.

This truth guides our financial planning at JJ Burns & Company. We're driven to help each and every client live life to the fullest today, while protecting their financial health for tomorrow.

Love & Money: Couples, Are You Managing Finances Equally?

February 14, 2019 12:31 pm Published by Leave your thoughts

Maintaining a successful long-term relationship, and continuing to thrive over the long haul, is a team effort. Both partners have to be all in, both emotionally and logistically. This goes beyond divvying up household duties and co-parenting: one responsibility that's easy to forget about is balancing love and money by managing your joint finances.

There is no ‘best way’ for couples to manage their money—it depends on what works for you and your significant other. Some may feel most comfortable merging all their funds into joint checking and savings accounts, while others prefer the autonomy of separate debit and credit cards. The truth is that both approaches can work, but no matter the option you choose to use, some financial details are indeed intertwined when you're a married couple.

Commingling Your Credit

When newlyweds say "I do," they're uniting more than just their families; their debt also comes under one new umbrella. In other words, your credit score no longer stands alone. Whether you're applying for a mortgage, an auto loan or any other type of financing, lenders will look at your overall financial health, which includes your spouse's credit score. Having the money talk with your partner doesn't have to be complicated. If you haven't already done so, sit down together and put your credit history and current debts on the table. This way you're both on the same page. And if there's any credit repair to be done, you can make a plan for tackling it together.

Learning to Budget Together

An effective budget is really nothing more than a financial game plan that both partners create together. Lead with laying out your joint income, followed by the monthly expenses you have both together and separately. For instance, your mortgage or rent payment would be a joint expense, while your weekly happy hour date with your best friend may be considered an individual spend.

Once you see everything in black and white, communicate openly and honestly to come up with a monthly budgeting plan that works best for the two of you. Some couples may prefer separate checking accounts but joint savings accounts; or you might like the idea of using your spouse's income to cover housing expenses while directing yours to a checking account designated for other bills. At the end of the day, the best option is up to you, but the point is that ironing out the details should be a joint activity—not something that one partner decides and then dictates to the other. Financial knowledge is the foundation of financial empowerment, so no one should be in the dark here.

Planning for the Future as a Team

Equally managing your money also comes down to talking openly about your individual financial goals. Your spouse may be dreaming of traveling the world after retirement, or maybe you've both got your sights set on saving a down payment for a new home. Communicate freely about your big-picture dreams, then strategize as a team about how you'll get there. Building a reliable nest egg that will see you both through retirement doesn't happen overnight. Instead, it requires getting on the same page as your partner early on so that you can begin taking steps to get there—and, hopefully with as little stress as possible.

Whether it's coming up with an investment strategy, a debt payoff plan or a monthly budgeting approach, the most important thing is that you are doing it together. If one partner doesn't have a strong foothold in their finances, what will happen if he or she comes up against an unexpected death or divorce down the road? In the blink of an eye, they may be left to manage their finances on their own.

If making an effective plan feels like tricky terrain, a CFP® professional can help you and your partner clarify your goals and get on the right track together. Communication is key. From there, it's about managing your money as a team.