Women Starting Over
How to take charge of your financial future
Women are more educated, earn higher incomes and have a more powerful role in the workplace than women of previous generations. But in spite of this progress, 90 percent of women say they feel financially insecure, according to the 2007 Allianz Women, Money and Power Study. The vast majority of women will need to take financial responsibility at some point in their lives, so it is vital that they have the knowledge and confidence to take charge of their financial future.
A 2009 report by The Women's Institute for a Secure Retirement (WISER) says that women are particularly vulnerable going into retirement. The findings in "How Can Women's Income Last as Long as They Do?" show that:
* Women at age 65 are expected to live, on average, another 20 years - four years longer than men. That means they will need to save more for retirement.
* Less than one third of retired women today receive pension income. And less than half of today's working women have access to a pension or retirement savings plan through their jobs.
* For more than 40 percent of older women living alone, Social Security is virtually all that they have. This group is four to five times more likely to be poor than married couples.
"Each stage of life holds events that can shape your financial needs and impact your ability to achieve long-term goals," says Katie Libbe, vice president of Marketing Solutions for Allianz Life. "Divorce and widowhood are two stages that have significant financial impact for women, so they need to learn how to take control of their financial futures."
Here are some tips to help begin the process of starting over.
Gather all the information you need to evaluate your current financial situation. These include:
* Checking and savings account statements
* Credit card information
* Tax returns
* Social Security records
* Investment information - stocks and bonds certificates, mutual fund statements
* Insurance policies - homeowner's, life, auto, health, long-term care
* Retirement assets - 401(k), pension, IRA, ROTH IRA, annuity statements
* Deeds
* Wills and powers of attorney
Evaluate how much money you will need for the next six to 12 months and keep that money in an easily accessible account in your own name.
* Pay Your Bills. Failure to pay your bills can result in bigger problems due to late payment fees, interest charges, and damage to your credit history.
* Take it Slow. Don't make any major purchases or changes right away. Give yourself time to heal emotionally before rushing into major decisions.
If you don't already have a financial advisor, it may be advisable to get one. "A professional financial planner can help you improve your current financial management and help you through these challenging changes," says Libbe. "Their expertise and objective perspective can save you time, and help you invest for your future."
To find a qualified financial advisor, you can ask trusted friends or professionals, such as lawyers and accountants, for references. You can also get references from professional associations such as the Financial Planning Association, the National Association of Personal Financial Advisors, or the American Institute of Certified Public Accountants.
Make sure that you have a support network made up of trusted family, friends and professionals who can give you feedback, go with you to meetings and help you follow up on the actions you need to take.
For more information on finding a financial advisor and to download free financial checklists for the widowed or divorced, visit allianzlife.com/WomenMoneyPower.
Illustration courtesy of Getty Images
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Want to Go Back to School?
ProjectWorkingMom is a scholarship program that provides college funding for working moms and dads. To date, the program has awarded nearly $6 million in scholarships. This year, the program is awarding another $5 million in full-ride scholarships. The program is made possible by its sponsors, including The Tyra Show.
You can learn more and enter your application for a scholarship to earn an online degree.
... Continue reading Want to Go Back to School?.
Love & Money
According to a Pew research report, the percentage of married women making more money than their husbands has gone up to 22%--sixteen points higher then in 1970. Read what AV Flox, a blogger on the BlogHer network, has to say about that in her post, Does Money Make a Man More Attractive? Income Disparity in Love
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Take Steps to Prepare for the Cost of a Bigger Family
A couple's decision to start a family leads to one of the most significant periods of transition in their lives. Along with a host of new responsibilities comes the financial impact that children have on a household. This is not something to be taken lightly. You may be focused on immediate expenses like diapers, booties and baby food, but that's just the start. By some estimates, the cost of raising a child from birth to age 18 can fall in the range of $200,000, and possibly much more depending on any number of variables related to lifestyle, education and healthcare costs.
These numbers make it apparent that it takes not just a village to raise a child, but a fair amount of money as well. But take heart: families have been managing to make this work since people first roamed the earth. The key is to make sure you have your financial house in order before the new arrival comes on the scene. Here are some critical factors you can't afford to overlook:
Medical costs
The first expense that comes to mind is the cost of delivering a baby. Are you covered by medical insurance? How about dealing with any potential complications, either for the mother or child? Beyond that, will you have to pay additional costs to add the child to your existing insurance policy?
Child care expenses
Some new families prefer to have a parent stay home to raise the child. Though ideal in many respects, this option also comes at the cost of one potential income, which can put a big squeeze on a family budget just at the time when the headcount has expanded by one. On the other hand, if both parents plan to be back at work full-time, daycare costs become part of the equation. Depending on where you live and the options available to you, this can easily amount to several hundred dollars of additional expense per week--a significant cash outflow even in most dual-income households.
Other everyday living expenses
Is your house or apartment big enough to handle the arrival of a new child? If not, you may need to move into a larger space. A new addition to the family also means another mouth to feed, so your grocery bill is likely to go up. Clothing is another ongoing cost, and your entertainment budget may rise as well, if for no other reason than the need to pay a babysitter when you want to go out.
Education expenses
If you choose to send your child to a private school for grade school and high school, you could be in store for some hefty tuition bills. And the cost only escalates for higher education. If you're planning to assist your child with college expenses, you may want to consider making monthly contributions to an education savings fund. The sooner you begin saving, the better financial shape you'll be in when it comes time to write out the checks.
The arrival of a new child into the family is an exciting and exhausting time in a parent's life. On top of the day-to-day tasks involved in running an expanded household, you'll have new responsibilities related to the development and well-being of your new son or daughter. Given all you'll have to juggle, you won't want to waste time worrying about whether your financial future is secure. Talk to a financial advisor to etch out a plan to reach your long-term goals. Being proactive today will mean more time to enjoy the treasures of parenthood that lie ahead.
Julie Meany,
7101 York Avenue South Edina, MN 55435
Julie.a.meany@ampf.com
www.ameripriseadvisors.com/julie.a.meany/
© 2010 Ameriprise Financial, Inc. All rights reserved.
... Continue reading Take Steps to Prepare for the Cost of a Bigger Family.
Not the Same Old Tax Return
New rules for this year's tax season
by Julie Meany, Financial Advisor, Ameriprise Financial Inc
Few things induce more anxiety this time of year than the looming April 15 tax return file deadline. As you begin the process this year, keep in mind that changes to the tax rules could affect your tax liability and possibly make you eligible for new tax reduction opportunities. More details can be found at the Internal Revenue Service website (www.irs.gov) or by talking to your tax advisor. Here are some of the more prominent changes that could affect your final 2009 tax bill:
Homebuyer Tax Credit -- This has been one of the most highly publicized changes of the past year. First-time homebuyers--i.e. those who have not owned a principal residence for the three years prior to purchase--may be eligible for up to an $8,000 tax credit. (A credit is a dollar-for-dollar reduction of your tax bill). Generally, the purchase must have been completed in 2009 to qualify for the tax credit on your 2009 return. However, the credit will continue to be available for new home purchases under written contract by April 30, 2010 and closed by June 30, 2010. A special election exists to claim the 2010 purchase on your 2009 tax return. A similar credit of up to $6,500 is available for existing homeowners who purchased a replacement home. This credit applies only for purchases made after November 6, 2009 and by the above deadlines. To qualify, existing homeowners must have owned and used the same home as their principal residence for five consecutive years in the eight-year period prior to the purchase of a new home. Note that income and other limits apply to qualify for both credits. If your tax liability is less than the amount of the credit, you still qualify to receive the entire credit in the form of a refund.
Tax Credit for Post-Secondary Education -- A tax credit of up to $2,500 per student attending a four-year college is available (for taxpayers who meet income and other requirements). If the credit is more than your income tax liability in 2009 and 2010, 40 percent of it can be returned as a refund. To learn more about the American Opportunity Tax Credit, visit www.irs.gov.
Making Work Pay Tax Credit -- Many employees saw a slight reduction in the amount of tax withholding from their paychecks earlier in the year, an adjustment made due to the Making Work Pay Tax Credit. The credit amount is 6.2 percent of the taxpayer's earned income up to a maximum of $400 for a single tax filer and $800 for married couples filing a joint return. The credit must be claimed on your tax return. If the credit has not already been reflected in your paycheck or if you are self-employed and have not accounted for the credit, you will adjust the amount of your tax liability as you complete your 2009 tax return. Income limits apply to qualify for the credit.
Sales Tax Deduction for the Purchase of New Vehicles -- If you purchased a new car, motor home, light truck or motorcycle between February 16, 2009 and December 31, 2009, the sales or excise tax amount you paid can be deducted from your income even if you do not itemize deductions (a deduction reduces your taxable income and, as a result, the amount of tax you pay).
Energy Tax Credits -- Various credits tied to making homes more energy efficient are available. These include a tax credit valued at 30 percent of the amount paid for qualified solar water heating equipment, solar electric equipment, small wind energy property, or geothermal heat pumps installed in your U.S. residence. A similar credit with maximum credit limits exists for the installation of qualified fuel cell property in your principal residence. Also, 30 percent of the cost, up to an aggregate of $1,500, is provided for energy-saving home improvements such as qualified windows, outside doors, insulation, roofing, high-efficiency furnaces, water heaters, heat pumps, biomass fuel stoves, air circulating fans, and central air conditioners that are placed in your U.S. principal residence in 2009 and 2010.
Other pointers as April 15 approaches
As you prepare for the tax filing deadline, here are a few things you can do today to help make the process easier:
• Gather your records - if you haven't already, you should be receiving statements from banks, investment firms and mortgage companies with tax information. Keep it filed in one safe place. Make sure you receive W-2s or 1099s (reporting income received) from employers or firms you may have contracted with.
• Determine your most efficient way to complete a return - there are numerous software programs available, many of which are accessible online, to complete the job. Or make sure you have your accountant or tax preparer in place and ready to deliver a timely return.
• Take more time if you need it, but let the IRS know - you can receive an automatic six-month extension by filing form 4868 with the IRS by the April 15 deadline to avoid interest and potential penalties. You must make payment for any tax that may be due by April 15.
This column is for informational purposes only. The information may not be suitable for every situation and should not be relied on without the advice of your tax, legal and/or financial advisors. Neither Ameriprise Financial nor its financial advisors provide tax or legal advice. Consult with qualified tax and legal advisors about your tax and legal situation. This column was prepared by Ameriprise Financial.
Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC. Some products and services may not be available in all jurisdictions or to all clients.
Julie Meany, Financial Advisor, Ameriprise Financial Inc
7101 York Avenue South Edina, MN 55435
952-921-4969
Julie.a.meany@ampf.com
www.ameripriseadvisors.com/julie.a.meany/
© 2010 Ameriprise Financial, Inc. All rights reserved.
File # 95014
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Investing in You: Tips for Financing an Advanced Degree
by Christina Boyd, Merrill Lynch Senior Financial Advisor in Wayzata, Minn.
As a busy mother of two, I understand that it is easy to put off things that seem like a luxury--like going back to school. But it's important to keep in mind that an advanced degree is an investment, and it can yield significant returns.
For many, the main obstacle to overcome is how to afford it. You may be surprised to learn that financing options, including financial aid and 529 savings plans, are not just for your children. In fact, there are several options to make funding your advanced degree more feasible. But as with any good investment, you'll need to do your homework to determine which option, or combination of options, best suits your unique needs.
Ask your Employer
A good place to start is to ask your employer. Many companies offer some form of tuition reimbursement as part of its benefit package, but be aware that there are often strings attached. For example, to be eligible you may need to pursue a course of study that contributes to your professional development and is relevant to the company's overall business. You might also be required to work at the company for a number of years after graduation to fulfill your commitment.
Consider Financial Aid
Anyone thinking of returning to school should consider applying for financial aid, even if you're not sure that you will qualify. Although grants are often limited to undergraduate students, many adults are eligible for loans, scholarships and work-study programs. As a first step, you can file a Free Application for Federal Student Aid (FAFSA), which is the federal government's application for financial aid to calculate your financial eligibility based on your prior year's income tax return.
Set Up a 529 Plan
Though many families have set up a 529 plan for saving for their child's future education expenses, most adults don't realize that they're eligible for this savings option, as well.
A Section 529 plan is a state-sponsored college savings plan that offers different strategies and investment options to choose from that align to your risk tolerance and investment objectives. It is available to all individuals, regardless of income, and offers high contribution limits.
Among the benefits of Section 529 plans are the tax-deferred growth of your investment within the account along with tax-free withdrawals, as long as the funds are used for qualified higher education expenses. If you close the account, you may encounter a 10 percent federal penalty tax on the portion of the withdrawal attributable to earnings. Nonqualified withdrawals will also be subject to federal (and maybe state) income taxes.
Even if you do not plan to take classes full time or pursue a degree, you are eligible to invest in a 529 plan, and if you are not able to use all of the funds you have set aside, you can gift them to children, grandchildren, nieces or nephews for their college education, simply by changing the beneficiary on the plan.
Savings and Loans Options
Tapping into your savings or taking out a personal loan is another option for financing your degree.
Particularly in a down market, you may want to consider a revolving line of credit that borrows against your invested assets. Check with your financial advisor to see if their firm has an option that allows you to borrow against the assets you have invested with them, and thus you can avoid disrupting your investment strategy by selling assets or depleting cash reserves.
Keep in mind that it is typically not wise to use your IRA or other retirement savings plans to finance your education. Even if the usual early-withdrawal penalty of 10 percent doesn't apply, since the funds would go toward education expenses, these funds have been designated for retirement. Although pursuing an advanced degree may lead to a more lucrative career, you should not neglect your long-term retirement goals in the process.
Christina Boyd, recently recognized by Barron's magazine on their "Top 100 Women Financial Advisors" list, is a First Vice President-Investments and Financial Advisor with Merrill Lynch in Wayzata, MN. She resides in Orono with her husband, Dustin and two children. Christina can be contacted via www.fa.ml.com/ebbgroup, by email: Christina_Boyd@ml.com.
Before you invest in a Section 529 plan, you should obtain a copy of the plan's Program Description and read it carefully. The Program Description contains more complete information, including investment objectives, charges, expenses and risks of investing in the plan, which you should consider carefully before investing. You should also consider whether your or your designated beneficiary's home state offers any state tax or other benefits that are only available for investments in such state's 529 plan.
Merrill Lynch, Pierce, Fenner & Smith Incorporated is a registered broker-dealer and a wholly owned subsidiary of Bank of America Corporation.
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Summer Project: Your Family's Finances
by Christina Boyd, Merrill Lynch Senior Financial Advisor in Wayzata, MN
Getting a hold of your family's finances may seem like a daunting task, especially in these economic times. But it is important that we all take time to evaluate our family's financial footing so we can make smart choices about our saving and spending - especially now.
As we know from our busy lives, the better organized and knowledgeable we are, the more in control we will feel and the better prepared we will be to handle unexpected situations. Although it may not be the most fun summer project, getting a handle on your family's finances will help empower you to position your family for future financial growth. Here are a few tips to help you get started.
1. Determine your family's net worth
Determining your family's net worth is the first step for getting your finances in order. To do so, add up your assets (cash, bank account balances, retirement savings, home value, automobile value, et cetera) and subtract your liabilities (mortgage balance, balance on all loans and credit cards, outstanding tax obligations or insurance premiums, etc). The total of your assets minus your liabilities is your net worth. It's important to be as honest as possible - ignoring money you owe will not help you in the long run, and in fact, will likely only make matters worse.
2. Budget for short-term expenses and long-term goals
Once you know your family's net worth its time to think about your family's goals - both in the immediate future and more long term. These may include purchasing a new automobile or paying off the balance on your student loans, or possibly even taking the European vacation with your friends that you have been talking about for years. Whatever it may be, develop a budget that accounts for your everyday expenses and allocates money to help you achieve your goals.
3. Critically assess your investments
Having taken a look at your investments when totaling your assets in Step 1, now is the time to determine if your investments are properly allocated. Oftentimes when the needs of our family change (a baby is born, a child begins applying to college or graduate school or a family member has an unexpected illness or injury) and in all of the excitement, we forget to account for the change in our financial strategy. If you have had a significant change in your family, it is worth taking inventory of your investments to see if it may be time to rebalance.
4. Take advantage of your tax refund
If you have or will be receiving a tax refund this year make sure to use it wisely. The cash might be best used to pay down debt or to set up an emergency fund. By using this "bonus" money in a strategic way, you may be able to free up some money in future paychecks for items on your wish list.
5. Don't go it alone
Although there is a lot you can do on your own to get your family's finances in order, you can't expect yourself to be an expert. Schedule a time with your tax and financial advisors to review your financial situation and tax minimization strategies. Take advantage of their knowledge and ask any tough questions that have been plaguing you. By working together you will be better able to achieve financial stability, and ultimately, the lifestyle you desire.
Christina Boyd, recently recognized by Barron's magazine as the #2 Financial Advisor in Minnesota*, is a First Vice President-Investments and Financial Advisor with Merrill Lynch in Wayzata, MN. She resides in Orono with her husband, Dustin and two children. Christina can be contacted via www.fa.ml.com/ebbgroup, by email: Christina_Boyd@ml.com or by phone: (952) 476-5613.
* Financial advisors considered for Barron's "State-by-State" ranking have a minimum of seven years financial services experience and have been employed at their current firm for at least one year. Quantitative and qualitative measures used to determine the financial advisor rankings include: client assets, return on assets, client satisfaction/retention, compliance records, community involvement, etc.
... Continue reading Summer Project: Your Family's Finances.
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