6 Tips To Save Retirees From Financial Disaster

‘Automatic Millionaire’ David Bach: 6 Tips To Save Retirees From Financial Disaster

Ellie Diamond  Sun, February 2, 2025   GOBankingRates

Money expert David Bach, author of “The Automatic Millionaire,” has dedicated his career to helping people achieve financial freedom. His philosophy centers on making smarter money decisions that keep your assets safe.

1. Save More as You Get Older

When CNBC asked Bach in 2018 how much money people should have in retirement savings, he pointed readers to Fidelity Investments’ age-based roadmap. This guideline suggests that a 30-year-old should have one year of their starting salary in savings, then twice their starting salary by age 35.

If you increase that goal by a factor of one every year, you’d have eight times your salary by age 60. Your final goal, Fidelity states, is to have 10 times your salary in the bank by 67.

Bach called this a general guideline, but warned that your target shouldn’t be lower.

2. It’s Never Too Late

As a money expert, Bach has spoken to people whose savings are far below goals like Fidelity’s. Whatever your circumstances, he said, “It’s never too late to start investing, and the best time to start is now.”

His first recommendation is to increase your retirement plan contribution and participate in a 401(k) match with your employer if one is available. The goal is to gradually save 10% to 15% of your income, or more if you need to and are able.

3. Spend Only on What You Value

In his book “The Latte Factor,” Bach wrote about the power of intentional spending. He teaches people that by paying attention to what they spend their money on, they can waste less and save more.

It’s not about giving up the things that bring you joy, he said. It’s about knowing where your money goes and avoiding spending on things that don’t match your values.

TO READ MORE:  https://finance.yahoo.com/news/automatic-millionaire-david-bach-6-140037796.html

7 Mental Money Traps That Keep You Poor

7 Mental Money Traps That Keep You Poor

Crystal Mayer   GoBankingRates

A recent study shows that over 60% of Americans are living paycheck to paycheck. If you are like one of the millions of people struggling to find financial stability, you might be stuck in the wrong mindset. Avoiding certain mental money traps can help you adjust your spending and start saving for your future.

Creating a budget and sticking to it can help you achieve your financial goals, but you will also need to rethink how you spend money. Prioritizing your spending can help ensure that you have money left over each month to invest. If you are tired of seeing a miniscule balance in your checking account, reconsider these 7 mental money traps that keep you poor.

You Need To Spend Money To Make Money

You have likely heard the old adage, “you need to spend money to make money.” While this may be true for startup businesses, it isn’t a good mindset for most people.

Many people feel that they need to live a specific lifestyle, spending well more than they make to give the perception that they are wealthier than they are. Overspending will only leave you frustrated and won’t help you make money.

Almost all money experts agree that the key to wealth is investing. If you want to stop living paycheck to paycheck, take a look at your non-essential spending and start investing. Even small investments can pay off significantly over time.

Retirement Is Far Away

Many young people fall into the trap of thinking that retirement is far away so they don’t need to worry about it. Unfortunately, waiting to start saving for retirement can cost you big. Fidelity Investments recommends that you have at least 1x your salary saved by the time you are 30 and 3x your salary by the time you are 40.

The longer you wait, the less likely you will have the money you need when you retire. The good news is that even if you haven’t started saving, you can start now. The best way to go about it is by meeting with a financial advisor. Make sure you are also taking full advantage of your company’s 401(k) matching if they offer it.

You’ll Be Happy If You Buy Something

https://finance.yahoo.com/news/7-mental-money-traps-keep-120044792.html

7 Experts Share Their Best Money Advice for Kids

7 Experts Share Their Best Money Advice for Kids

Financial Pilgrimage

There are a million things to worry about when raising children. Often, teaching our kids about money doesn’t rise to the top of the list. If your kids are anything like mine, they care about video games, dolls, sports, and many other things.

There is a push and pull when raising money-smart kids. As parents, we want to provide our kids with the best life. Sometimes that means giving them the toy we always wanted as a kid but could never afford. It feels terrific when your kid is happy.

The hard part is thinking through the downstream impacts of giving them everything they want. Handing everything to them will make it challenging to appreciate hard work. How will they learn to appreciate how fortunate we are to live in the United States of America, one of the wealthiest countries in the world? How do we teach them there is more to life than material things?

I’m not sure I have found the correct answers to these questions. Or at least I am still trying to figure them out. I turned to money experts on Twitter to share their best advice for kids. The responses were excellent, and I took a few notes as a parent. So read on for money advice for kids from seven personal finance experts.

7 Experts Share Their Best Money Advice for Kids

Lesson 1: Make Their Money Work For Them

This article from the Interesting Dollar shared a great idea to use birthday money to demonstrate the value of interest. By gifting $300 a year for birthdays (between parents, grandparents, and aunts/uncles), you could demonstrate the growth provided by interest over a relatively short period. This simple exercise can help teenagers delay gratification and better understand how interest works. Below is an excerpt from the article.

“I did the math and thought that if they received $300 a year from age 10 to 17 and 8% interest, they would receive $2,592 on their 18th birthday. Then, each year they would receive the interest check on the balance in the account.”

Lesson 2: Embrace Minimalism

So much of what makes a person successful with their finances as an adult is being intentional. A high income helps, but many people make a lot of money and still live paycheck to paycheck. I love this article from One Frugal Girl about her conversations with her children. It’s not necessarily about depriving your kids of toys but getting them to be thoughtful about why they want something.

“I want them to learn how to use their imaginations to prevent boredom rather than depending on a room full of toys.“

Lesson 3: Use Money to Buy Your Time

TO READ MORE: https://financialpilgrimage.com/money-advice-for-kids/

6 Life-Winning-Lessons From a “Who Wants to Be A Millionaire” Contestant

Who Wouldn’t Want to Be a Millionaire: 6 Life-Winning-Lessons From a “Who Wants to Be A Millionaire” Contestant

By Financial Imaginer

What would you do if you received a $ 1 million jackpot? How does it actually feel to receive a windfall? What to do with it and how could it impact your life in the short, medium and long run?

Let’s first think about what you could possibly do with a large financial windfall?

– splurge (Sir? The Lamborghini in same gold as the Maybach?)

– take a sabbatical and travel to exotic locations, sipping martinis all day long

– travel to Vegas (all or nothing)

– re-invest in lottery tickets

– buy a house and/or pay-off your mortgage

– invest all into Vanguard ETFs and draw an annual $40,000 forever (Trinity study, 4% withdrawal rate)

– keep calm and carry on

Here’s what a Financial Imagineer would do with a $ 1 million windfall:

Keep calm and carry on!

Keep calm and carry on!

You find this hard to believe?

Looking through all the above options, this clearly appears to be the most boring choice. But hey, I’ve got a rather personal story for you guys today. Let me explain.

Once upon a time, I won a windfall myself.

I wanted to be a Millionaire.

We write the year 2001, my most crazy side-hustling days: During daytime, I was usually studying business administration and economics. Frequently, after sundown, you’d find me baking up to 200 pizzas each night at the first pizza home delivery franchise in my hometown. Saturdays, you’d find me advising clients at a bank counter and Sundays I’d be running the local polling station in our village.

Some wondered if I’d ever catch some sleep.

One evening, I was sitting on our couch watching the Swiss edition of “Who wants to be a Millionaire” on TV3. Somehow, none of the contestants ever seemed to make it past the first 10 questions. It got boring and frustrating. It quickly became painful for me to keep watching. I knew and appreciated the show from abroad and generally liked it because you usually learnt something while watching – infotainment. The entertainment value of the local version was rock-bottom. This tickled a nerve.

Instead of applying the ordinary way, I sent a feedback letter asking them to invite more suitable candidates in order to improve the infotainment value of their show. Little did I know that my written rant would be read and acted upon. Before I knew it, we – my then girlfriend and myself – got invited to participate as contestants at the TV show “Who Wants to Be a Millionaire”.

Turn sound on, click “play” and listen as you read on!   https://www.youtube.com/watch?v=OYVAxLJE1ww

TO READ MORE: https://www.financial-imagineer.com/who-wouldnt-want-to-be-a-millionaire-5-life-winning-lessons-from-a-who-wants-to-be-a-millionaire-contestant-for-anyone/

The ‘Hermit’ Savings Rules & 8 Frugal Tips for Today’s Economy

The ‘Hermit’ Savings Rules & 8 Frugal Tips for Today’s Economy

Cindy Lamothe   Fri, January 31, 2025   GOBankingRates

When your personal finances combine with your personal space, your spending habits and savings account might be working a bit more harmoniously too. Consumer practices across the world have been altered significantly over the past few years — for obvious reasons and otherwise — in what economists have dubbed “the age of the hermit consumer.”

 “For ‘hermit’ consumers, it can be really easy to make impulse purchases and overspend because of how easy and convenient shopping online is,” said Carter Seuthe, CEO of Credit Summit Consolidation. “Something that can be helpful to maintain a more frugal budget is just to define your expectations and priorities when it comes to the amenities you have.”

***********************************

Whether it’s how you approach your visit to the grocery store or price-matching your favorite online retailers, the how, when and where you swipe your credit card has simply changed. If you embrace the hermit lifestyle and prefer your saving and spending to be done in a vacuum, below are some expert frugal living tips to thrive in today’s economy.

Embrace a DIY Mentality

“DIY is my new favorite hobby,” said Andrei Vasilescu, co-founder and CEO of DontPayFull. “It’s cost-effective, and YouTube is a great teacher. About 50% more people are getting into DIY now.”

Syed Lateef, business coach and CEO of SyedBNB, agrees. “We can all see it,” Lateef said. “The focus has shifted towards a more home-oriented lifestyle, and I can personally say that more people are embracing do-it-yourself (DIY) activities.”

He said this is a good thing because mastering basic skills for home and car repairs can lead to considerable savings. Simply put, it’s better to invest your time than a third of your paycheck every time you need some general maintenance or repairs done.

“Nowadays, the hundreds of online tutorials and resources makes it easier than ever to learn and perform these tasks ourselves,” he said, “reducing the need to hire professionals.”

Save Money by Cooking at Home

“The driving force behind the hermit economy isn’t entirely clear,” Lateef said. He said it could be due to the lingering hesitation for close-contact services, the increase in remote work or a shift in social values. Instead of dinner and a movie out, you can now meal-plan and binge on your favorite streaming service.

“What’s obvious, though,” he said, “is that consumers are now more inclined to spend on home-centric activities.”

As a result, he said, many followers of the FIRE (financial independence, retire early) movement have come to realize that frequent dining out can be quite costly. So, frugal individuals are embracing the art of cooking at home, experimenting with budget-friendly and nutritious meals.

He added, “Hermit consumers save money but also encourage healthier eating habits.”

TO READ MORE:    https://www.yahoo.com/finance/news/hermit-savings-rules-8-frugal-140043078.html

5 Major Money Mistakes To Avoid When You’re Nearing Retirement

5 Major Money Mistakes To Avoid When You’re Nearing Retirement

By Jennifer Taylor GOBankingRates

You’ve been working hard your entire adult life and you’re finally nearing retirement. The prospect of having more time to relax and enjoy yourself is exciting, but you’ll need money to do that.

As you wrap up your peak earning years and prepare to step away from the workforce, it’s important to make smart money moves that will protect your nest egg. All it takes is one poor financial choice to throw a wrench in your plans — and financial stability — so take the time to make informed decisions.

When faced with a large amount of cash, it can be tempting to share it with loved ones — i.e., your children — or indulge yourself with luxury items. However, this money needs to last your entire retirement, which could span decades. Here’s a look at common financial blunders you don’t want to make as you get older if you want to avoid a major financial setback.

Building Wealth

Collecting Social Security Benefits Too Soon

Many people make the mistake of taking Social Security income as soon as they can because it’s available. Others start early because they’re afraid the system will run out of money. Neither approach is the best way to maximize benefits.

“You receive more each month if you wait until your full retirement age, and you can even get increases after that — amounting to roughly 8% per year until you’re 70,” said Justin Pritchard, CFP, founder of Approch Financial, Inc. in Montrose, Colorado.

Having patience can literally pay off.

“Instead of claiming as soon as possible, run some numbers to determine how much you’ll earn if you wait,” he said. “Remember that a surviving spouse who takes over your benefit will be affected by your decision, so choose carefully.”

Cashing Out a Retirement Account

When you retire, you might have the option to keep your retirement savings with your employer or move the money into a retirement account — i.e., an IRA — in your name.

“You don’t need to cash out the entire account and put that money in the bank,” Prichard said. “If you do so, 100% of your nest egg may become taxable income, resulting in high tax rates and possibly even underpayment penalties.”

Avoid decreasing the value of your retirement account by making informed decisions.

“Instead of cashing out,

TO READ MORE: https://www.gobankingrates.com/money/financial-planning/major-money-mistakes-avoid-turn-60/

Millionaires Live by These Rules To Build Wealth

Millionaires Live by These Rules To Build Wealth — Experts Explain If They’ll Work for You

Angela Mae  Mon, January 27, 2025   GOBankingRates

There’s an estimated 24.5 million millionaires in the United States. That’s a relatively small percentage of the country’s population, but it’s also not zero — meaning it’s very possible for more people to achieve “millionaire” status. It’s all about being strategic and intentional with your money and financial decisions.

If you’ve decided to truly pursue the goal of becoming a millionaire, you might be wondering how to get started. What types of rules do millionaires — especially self-made ones — follow to build (and maintain) their wealth?

Here’s the answer, according to a Forbes article, and how well the average person can follow those rules to do the same, as per the experts.

Pay Yourself First

Building wealth can take a while, but you can get yourself on the right path by prioritizing saving money before you prioritize spending it. In other words, pay yourself first.

According to the Forbes article, you should be saving 20% to 30% of your total income. This means you should save $20,000 to $30,000 for every $100,000 you make. You can do this based on either net or gross income, but gross will result in greater savings potential.

“By prioritizing savings and investments before any discretionary spending, individuals ensure that they are consistently building wealth,” said Shirley Mueller, founder of VA Loans Texas. “The earlier you begin this habit, the more time your money has to grow, particularly through the power of compound interest.”

Live Below Your Means

Millionaires stay millionaires not because they flaunt what they have or spend their money with abandon, but because they live below their means. But they become millionaires because they also think big.

This means spending less than you earn, which could entail eliminating those unnecessary expenses or reevaluating your budget. And it means dreaming of — and planning for — a bigger future.

“Resist the urge to splurge! Once of the most common financial mistakes people make is to drastically increase their expenses as soon as their income increases,” said Melissa Murphy Pavone, founder at Mindful Financial Partners.

“Avoid the urge to spend more as you make more. Instead save more. Invest the difference. As you get a raise, give yourself a raise. Increase your 401(k) contribution. Add to your emergency fund. Your future self will thank you.”

Be Strategic With Debt

According to Experian, the average U.S. consumer has $104,215 in total debt — including mortgages and other loans. But while some debt is “good” — or rather, useful — much should be avoided.

TO READ MORE:  https://finance.yahoo.com/news/millionaires-live-rules-build-wealth-210100915.html

Millionaires Live by These Rules To Build Wealth

Millionaires Live by These Rules To Build Wealth — Experts Explain If They’ll Work for You

Angela Mae   Mon, January 27, 2025  GOBankingRates

There’s an estimated 24.5 million millionaires in the United States. That’s a relatively small percentage of the country’s population, but it’s also not zero — meaning it’s very possible for more people to achieve “millionaire” status. It’s all about being strategic and intentional with your money and financial decisions.

If you’ve decided to truly pursue the goal of becoming a millionaire, you might be wondering how to get started. What types of rules do millionaires — especially self-made ones — follow to build (and maintain) their wealth?

Here’s the answer, according to a Forbes article, and how well the average person can follow those rules to do the same, as per the experts.

Pay Yourself First

Building wealth can take a while, but you can get yourself on the right path by prioritizing saving money before you prioritize spending it. In other words, pay yourself first.

According to the Forbes article, you should be saving 20% to 30% of your total income. This means you should save $20,000 to $30,000 for every $100,000 you make. You can do this based on either net or gross income, but gross will result in greater savings potential.

“By prioritizing savings and investments before any discretionary spending, individuals ensure that they are consistently building wealth,” said Shirley Mueller, founder of VA Loans Texas. “The earlier you begin this habit, the more time your money has to grow, particularly through the power of compound interest.”

Live Below Your Means

Millionaires stay millionaires not because they flaunt what they have or spend their money with abandon, but because they live below their means. But they become millionaires because they also think big.

This means spending less than you earn, which could entail eliminating those unnecessary expenses or reevaluating your budget. And it means dreaming of — and planning for — a bigger future.

“Resist the urge to splurge! Once of the most common financial mistakes people make is to drastically increase their expenses as soon as their income increases,” said Melissa Murphy Pavone, founder at Mindful Financial Partners.

“Avoid the urge to spend more as you make more. Instead save more. Invest the difference. As you get a raise, give yourself a raise. Increase your 401(k) contribution. Add to your emergency fund. Your future self will thank you.”

Be Strategic With Debt

TO READ MORE:   https://www.yahoo.com/finance/news/millionaires-live-rules-build-wealth-210100915.html

How To Avoid, Prevent 'Financial Infidelity' In Your Relationship

How To Avoid, Prevent 'Financial Infidelity' In Your Relationship

Brad Smith  Mon, January 27,  Yahoo Finance Video

Bankrate Senior Industry analyst Ted Rossman joins Wealth to discuss how couples can avoid financial infidelity in their relationships.

According to Rossman, secret spending is the most common form of financial infidelity, followed by hidden debt and concealed credit cards or bank accounts. He explains that people often hide financial matters because "they feel ashamed about the way they handle money" or they're seeking independence, noting "it's hard for people to mesh those money personalities."

Rossman advocates for the "yours, mine, ours" approach to money management. This strategy allows couples to be transparent about joint expenses while maintaining some financial independence. "Increasingly, people are craving some sort of financial separation, even within a relationship," he states, citing that 60% of couples maintain separate accounts.

Rossman emphasizes transparency as the key distinction: "It's financial infidelity when it's a secret." He stresses the importance of open communication, adding that couples should discuss "not just where it's going today but also where you want it to go in the future."

To watch more expert insights and analysis on the latest market action, check out more Wealth here.

This post was written by Angel Smith

TO READ MORE AND VIEW VIDEO:

https://www.yahoo.com/finance/video/avoid-prevent-financial-infidelity-relationship-200500599.html

When Financial Infidelity Rears Its Ugly Head

When Financial Infidelity Rears Its Ugly Head

Maurie Backman  Mon, January 27, 2025  Moneywise

I found out my wife, 52, has more than $90K stashed in a secret savings account. What do I do now?

Money can be a point of contention in any marriage. And sometimes, the tension it creates can have big consequences.   Roughly two-thirds of U.S. divorces happen to couples in their 20s, 30s and 40s, according to the American Psychological Association. But the rate of divorce among adults 50 and older doubled between 1990 and 2010. And as of 2019, 36% of U.S. divorces were among adults 50 and up.

Now there are various factors that can lead to divorce, but money tends to be a big contributor. And if you're in your 50s and just found out that your wife has been secretly hiding money in a savings account throughout your 20-year marriage, you may be experiencing a range of emotions, from anger to sadness.

You may also be wondering how to cope with the news — especially if you're talking about a large sum of money like $90,000.

But divorce isn't necessarily the answer. There may be ways you can salvage your marriage and move forward in a more open and honest fashion with one another.

When financial infidelity rears its ugly head

Financial infidelity can take on a lot of forms. For some couples, it can mean one person racking up scores of debt and keeping it a secret. In others, it can mean having a hidden savings account that isn't shared with a partner.

A recent study shows that more than 40% of U.S. adults who are married or live with a partner have kept a financial secret from their significant other.

This is consistent with a late 2021 survey by the National Endowment for Financial Education (NEFE) which found that 43% of U.S. adults have engaged in financial deception.

The most common type of financial infidelity identified was hiding specific purchases, bank accounts, statements or cash (39%), followed by racking up debt in secret or lying about money that was earned (21%).

How to cope with financial infidelity

Financial infidelity can be a tough thing to get over. The NEFE says that among couples who experienced it, 32% wound up with less trust in the relationship. And for 16%, it ultimately caused them to separate their finances or get divorced.

TO READ MORE:  https://www.yahoo.com/finance/news/found-wife-52-more-90k-120500120.html

9 Important Financial Emergencies and How To Deal With Them

9 Important Financial Emergencies and How To Deal With Them

Personal Finance - Janice Friedman - May 23, 2019

DO YOU HAVE AN EMERGENCY FUND?

Have you ever encountered a financial emergency? What was it about, and how did you deal with it? Here, we will explore some of the most common financial emergencies and how to deal with them.

9 Important Financial Emergencies and How to Deal with Them

Have you ever been in a situation that requires you to use some finances which you had not anticipated?  In life, we’re sometimes faced with sudden inevitable occurrences.  Whether a sudden sickness, job loss, or sudden demise of a loved one, different financial emergences occurrences require us to dig our pockets deeper to fix them.

I’ve been using Personal Capital to plan for a financial emergency. I can use it to monitor my emergency fund and see how much cash is embedded in my net worth. Best part it’s completely free to use.

Financial freedom is all about having the flexibility to live completely free without any burden even if there is an emergency. Even if you’ve achieved financial freedom, building some sort of buffer in your financial plan for financial emergencies is important.

Before we explore more on the different types of financial emergencies and ways to deal with them, let’s look at what a financial emergency is first.

So, What are Financial Emergencies?

Financial emergencies are unexpected situations that require one to use some money that they didn’t intend. What happens when you find yourself in need of cash abruptly from an unanticipated event is what is referred to as a financial emergency.

If not resolved on time, it can pose immediate grave repercussions. These emergencies can occur at any time and in any circle of life, including at home, and work and more.

Since you can’t prevent some of these emergencies, the prudent thing to do would be to plan for them. That is, make sure that when the unexpected event occurs, you have some cash stashed somewhere to cushion you from the impact.

Although you cannot entirely plan for everything, having a fall back plan or some backup is always crucial.

List of Most Common Financial Emergencies

Here are 9 of the most severe financial emergencies you are likely to encounter.

Major Medical Emergencies

Some health or medical emergencies are beyond our control, and no matter how much we try to stay healthy and fit, they still occur. Although we all want to believe that we won’t get sick, planning for such things before they happen is the best thing to do.

TO READ MORE: https://millionairemob.com/financial-emergencies/

7 Ways to Develop Financial Trust in Your Relationship

7 Ways to Develop Financial Trust in Your Relationship

Harris Financial Coaching

If you find that you're constantly fighting about money or hiding how you spend money from your partner, it may be time to rethink your relationship goals and values. Fighting about money can create tension in a relationship and make it challenging to accomplish future goals. When one spouse gets frustrated with the other, it can seem like you're on an island all on your own, trying to resolve a difficult situation. How can couples develop and build financial trust in their relationship?

From creating a long-term goal to paying bills on time, here are several tips for developing financial trust in your relationship.

Share a Joint Credit Card

Opening a joint credit card is a great way to build and develop financial trust. Being transparent and on the same page when it comes to handling money is a crucial aspect in any relationship.

This allows couples to develop a line of credit that'll benefit future investments if both parties maintain a good credit score. It also helps couples define their combined budget, savings, and expenses more than having completely separate finances.

- Gigi Ji, Head of Brand and Business Development, KOKOLU

Establish Clear Boundaries

Couples can develop and build financial trust in their relationship by establishing clear boundaries. In other words, couples need to define what's theirs and what's not clearly. This can help them avoid unnecessary conflicts and misunderstandings and prevent any nasty surprises when one partner wants to spend money on something they've already agreed not to do.

It's also important for couples to address any financial disagreements as soon as possible so they don't fester and become bigger problems later on. When couples ignore their financial disagreements, it can lead to resentment and even result in divorce. Therefore, I believe couples who can talk about their money issues openly and honestly are much more likely to find a solution that works for both parties. - Tiffany Homan, COO, Texas Divorce Laws

Have Regular, Transparent, and Productive Discussions

One way for couples to develop financial trust in their relationship is to have open and honest conversations about finances. This includes discussing each person's income, debts, expenses, savings goals, and any other financial matters that could affect the relationship. It's important for couples to be transparent with each other about their finances and to come up with a plan that works for both of them.

This could include setting a budget, discussing how to save money, and creating an emergency fund. Having these discussions can help couples build trust in each other and their financial decisions, as well as provide peace of mind knowing that both partners are on the same page. - Michael Alexis, CEO, Tiny Campfire

Be Open and Honest About Financial Situations

In marriage, finances are an important issue. One way for couples to build financial trust is by being open and honest about each of their financial situations. Couples should communicate with each other about their income, debts, and investments. They should also agree on a budget that works for both parties. This will ensure they're each aware of how much money is coming in and where it's going. - Jennie Miller, Co-Founder, Midss

TO READ MORE: https://www.harriscashcoach.com/post/7-ways-to-develop-financial-trust-in-your-relationship?fbclid=IwAR2n1HJnL5Bh_R2jMZNHOU06ddMY8ZG5bKwWwxVhSmhawzLmYu0iZroF8o0

9 Unexpected Obstacles To Plan For Before It’s Too Late

Jordan Rosenfeld  Fri, January 24, 2025  GOBankingRates

If you find yourself in the lucky position of either passing along your wealth to your heirs or receiving a wealth transfer from a relative, this is an exciting thing, but it does come with some legal and financial concerns if not done well.

To save you and your beneficiaries from expensive hassles, experts offered nine obstacles to prepare for and get ahead of to avoid messy court battles or tax implications down the road.

Not Laying Out a Vision

Kevin Landis, a CFP, chartered financial analyst and senior vice president with Wealth Enhancement Group, said there are two main types of wealth transfers for those who are not uber-wealthy. The first is beneficiary wealth, leaving your estate to your beneficiaries, and the second is legacy wealth, setting up something that “goes on in perpetuity” such as a trust. You want to decide what kind of wealth transfer is right for you and your beneficiaries ahead of time.

“The bottom line though is just [creating a] vision of what you’d like to see done with your money,” Landis said.

If you don’t leave instructions for your vision, you not only lose control over how your wealth will be disbursed, but you could leave your heirs with a messy legal process on their hands to figure it out, too.

Not Clarifying Tax-Qualified From Nonqualified Assets

Landis shared that the IRS considers wealth transfers such as IRA and 401(k) accounts as “tax qualified” because they have tax benefits. Nonqualified money includes such things as stocks, bonds, brokerage accounts and certificates of deposit (CD).

“So there’s a 10-year rule now that if the kids receive anything that’s tax-qualified, that money has to come out of that tax preferred environment within 10 years, but they lose up to a third of it in income taxes.”

With preplanning, heirs can create a strategy to offset some of that transferred income with other deductions to minimize taxes, he explained.

Not Getting Things in Writing

It’s not enough to just tell your beneficiaries what you want — it needs to be in writing, just in case anyone else contests the right to your money or assets, Landis said. Not having things in writing can send your estate to probate, a long, expensive and often protracted legal process that can also create bad blood among family members and other beneficiaries.

TO READ MORE:  https://www.yahoo.com/finance/news/wealth-transfers-9-unexpected-obstacles-190015566.html