Annrose Isaac CPA, CFP®, MBA | Wade Financial Advisory | Fee-Only Financial Advisor serving Silicon Valley

Why You Should Work with a Financial Advisor After the Death of Your Spouse

Life Transitions, Uncategorized, Wealth Management / Annrose Isaac CPA, CFP®, MBA

How an Advisor Can Offer You Support and Guidance During This Difficult Time

The loss of a spouse or partner is often traumatic and in the midst of the grieving it can be difficult for the surviving spouse or partner to sort through the myriad financial tasks and decisions that will impact his/her (and the family’s) future well-being. Well-meaning family and friends can often offer conflicting advice or advice that isn’t financially appropriate. At such a time, a surviving spouse or partner needs an objective professional who will listen patiently to his/her concerns, help to focus attention on those decisions that need to be made sooner than others and then over time help him/her obtain a holistic view of his/her financial picture while offering advice on a range of topics that will impact his/her life for the years to come.

One of the most beneficial roles of a financial professional is to offer guidance in the midst of a life-changing event. Working with the right qualified financial advisor can bring calm In the midst of a chaotic time and provide a path to make sound financial decisions that can ultimately help the surviving spouse/partner regain his/her sense of financial independence and enable a good quality of life. Below, are a few key ways a financial advisor can be of assistance as you navigate changing finances.

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Millennials with High Salaries Should Consider These Financial Moves

Tax Planning, Uncategorized, Wealth Management / Annrose Isaac CPA, CFP®, MBA

Set Yourself Up for Future Success by Making the Most of Your High Income

If you’re a Millennial and you’ve found yourself with a high-earning job, you may be considered a HENRY, which stands for High Earner, Not Rich Yet. Coined by Shawn Tully in 2003, the acronym refers to a group of people who, despite making a lot of money, have not yet built their wealth and may need some guidance to take full advantage of their high salaries. Many HENRYs find themselves worried about achieving true financial stability due to high tax rates, a cost of living that continues to skyrocket, and a savings account that needs more attention.

Here are some financial planning moves you should be making if you’re a HENRY and looking to make the most of your high income.

Invest, Invest, Invest

First and foremost, you should be contributing to your workplace 401(k) account. Many employers offer to match employee contributions, so at the very least try to contribute enough to get any employer match available to you. Failing to do so means leaving money on the table – sometimes a significant amount.

In addition to your 401(k), consider opening a personal Individual Retirement Account (IRA) for yourself so that you can start making contributions there as you grow in your career, too. Currently, the annual IRA contribution limit is $6,000 per year, which can be a valuable boost to your retirement savings.

If you’re contributing to both your 401(k) and an IRA and you still have some disposable income on hand, consider building an investment portfolio for yourself, too. Think about opening a taxable brokerage account so that you can begin investing in stocks, EFTs, index funds, or mutual funds. As a millennial, you have the ability to take on more risk with your investment portfolio since you have decades ahead of you to cushion any market volatility your investments might experience. Though, if you’re nervous about taking on risk, index funds are a solid starting point. Broadly diversified index funds allow for you to invest money into many companies at once with low fees and significantly less risk than investing in a single company.

Investing can be complicated when you’re new to it, so if you’re unsure where to begin or how to go about building a portfolio, you may want to consult with a professional you trust to help you determine the best options for your situation.

Lower Your Taxable Income

Building out a smart tax strategy is crucial for high-income earners of any age, millennials included. Luckily, there are tried and true strategies out there that you can use to help reduce your taxable income so that you can put those savings towards other long-term financial goals you may have.

The best way to be sure that you’re being smart with your tax strategy is to work with a professional who understands the ins and outs of ever-changing tax laws. However, investing money into your 401(k) and IRA accounts can be an easy way to lower your bottom line, as contributions to retirement accounts can typically be deducted from your taxable income.

Another valuable way to lower your taxable income while also putting money away for your future is to open a Health Savings Account (HSA). HSAs are a fan favorite because they come with a triple-tax benefit: you can contribute funds tax-free, the money in your account grows tax-free, and any withdrawals you make from your account are tax-free – so long as you’re using the funds to pay for qualified health expenses. Note that you do need to have a high deductible health plan (HDHP) to qualify for an HSA. If you do qualify, it’s a valuable tool to take advantage of.

Develop a Strong Retirement Strategy

Along with a smart tax plan, you should also have a comprehensive retirement plan in place to help you stay on track to meet your future goals. If you’re fortunate to have a high salary, it’s important that you’re making the most of your income by setting yourself up for future success. Working with a professional advisor to develop a retirement strategy that addresses your unique values, goals, and dreams for the future can give you the confidence that you’re on the right path as you move through your career.

Find a professional you trust and talk with them about what your dream retirement looks. This will help you and your advisor determine how much you’ll want to save to support that retirement lifestyle. They’ll be able to help you solidify what steps you should be taking at which points in your life to make those dreams a reality. Often, HENRYs are able to save much more than they need to for retirement, which means they also have a great need to plan for the disposition of their estate to their chosen beneficiaries. And while leaving a legacy behind is a great feeling, you may also end up realizing that you could have enjoyed more of life than you had realized.

Work Smart, Not Harder

As a millennial earning a high income, you’re most likely in a place where you can begin making big financial moves outside of the basics like having an emergency fund in place that allows for you to build some real wealth for yourself and your family. Getting smart about investing your money and lowering your taxable income can give you even more money to work with as you begin tackling your long-term financial goals. It can be especially helpful to work with a financial advisor to make sure you’re utilizing the best options and resources available to you in your unique situation.

At Wade Financial Advisory, our team of advisors are committed to taking care of what’s important so that you can focus on what matters most to you. We understand that your financial needs will change throughout your life, and we provide a high level of care and attention through personalized, relationship-based services. If you feel that you might benefit from speaking with one of our professionals about your financial plans, please contact us today.

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Money Moves to Make in a Down Market

Tax Planning, Uncategorized, Wealth Management / Annrose Isaac CPA, CFP®, MBA

7 Tips to Help Your Investment Portfolio Stay on Track During a Downturn

When the economic climate takes a turn for the worse, it can be nerve-wracking for investors. But fear not—there are smart money moves to make in a down market. If you have significant assets in play, market declines can put your hard-earned wealth at risk, yet they also present a unique and interesting opportunity for those who are well informed. Markets usually recover, and while jumping ship at the lowest point may help quell your nervousness, it can also mean your wallet could end up leaner than you’d like. So, read on for the tips you can use to prosper even when the market is not.

1. Boost Retirement Contributions

Boosting your retirement contributions, especially if you have a matching contribution from your employer, is a great idea no matter the market circumstances. But it can be a particularly good idea to up your retirement savings when the market is down, especially for younger investors with longer time horizons. That way, when the market does recover, your investments can flourish.

2. Take Stock of Your Stocks

One advantageous money move to make in a down market is rebalancing your portfolio. If you’ve been relying on a certain investment mix to work for you in a thriving market, switching things up could help you stay ahead. If you’re close to retirement, consider transferring more of your assets to more stable investments like CDs and bonds. If you’re just starting out with investing, you should look at strategically investing in the stock market.

Wherever you are in your investment journey, it’s always a good idea to reexamine your portfolio to make sure you have a healthy mix. Diversifying your investments is one of the best ways to reduce your risk.

3. Maximizing Tax Losses

Tax-loss harvesting can help when the market isn’t going the way you hoped, but only if you’ve experienced an investment loss. The next step: writing off those losses on your tax return. It’s a solid strategy to consider in order to reduce your tax burden when the economy isn’t cooperating. It’s important to note that you can buy back your investments after selling them, but you have to wait at least 31 days to avoid violating federal regulations.

4. Consider Roth Conversions

When you’re experiencing market growth and your investments are at top value, converting from a traditional taxable IRA to a tax-free Roth IRA means you’re likely on the hook for a significant amount of taxes. During a decline in the market, however, that’s not the case. You can save some significant money during a Roth conversion because the value of your investments isn’t as high, meaning you will pay much less in taxes. It’s even more advantageous if your income is also lower than it normally would be.

5. Give and You Shall Receive

If gifting assets to your friends or family members is something you’ve considered, you may want to think about making that move during a market downturn when assets are valued lower than usual. The one catch: you have to be fairly confident that the assets will appreciate when market health returns. Being strategic when considering giving assets away can be a very good way to ensure your loved ones can make the most of your gift.

6. Make Money Work for You

If looking at your portfolio is making you more stressed than satisfied, it’s probably time to shift your attention to something you can control: your goals. It’s one of the best money moves to make in a down market. Depending on your situation, it might be smart to take a look at your investment portfolio’s goals, timeframe, and objectives. Take a look at whether or not your documentation is up to date, and update what you need to.

If you have a big expense coming up or a big milestone like retirement, you may be thinking about how your investments can be maximized in the short term. That makes it all the more important to track your goals and reassess your investments to ensure you stay on track.

7. Embrace the Inevitable

Market downturns are inevitable, but you have control over both your strategy and your mindset. When you’re investing, it’s easy to get discouraged by an unexpected swing, but it’s important to remember that history shows us that your investments will likely still be successful and grow steadily over time.

Are You Making the Right Money Moves in a Down Market?

Just like you should be on the lookout for good investments when the market is performing well, you should also be ready to embrace the downturns when they come. By being prepared, you may just find that you can take advantage of a great opportunity.

At Wade Financial Advisory, our experienced team of professionals is ready to help you build a portfolio that is designed to achieve your goals while moderating risk – regardless of current market conditions. If you’re interested in learning more about our investment management services, please reach out to us today.

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Tips for Creating a Multigenerational Estate Plan

Tax Planning, Uncategorized, Wealth Management / Annrose Isaac CPA, CFP®, MBA

Often, estate plans are made one generation at a time. However, if you want to ensure that your family’s wealth remains protected for multiple generations, you may want to undertake a multigenerational estate plan.

Rethinking your approach to estate planning in this way can help ensure your family doesn’t fall prey to this troubling statistic: It’s been estimated that 90% of affluent families end up losing their wealth by the third generation. This could be due to the fragmentation that occurs when an inheritance is spread out, from poor communication, or from poor planning. Whatever the reason, for families that are looking to optimize generational wealth, it’s imperative to have a plan that looks far into the future.

Use the tips below to help guide you if you’re looking to create an estate plan that will support your family’s financial legacy for generations to come.

Establish lines of clear and open communication.

It can feel awkward to talk about money with your family, especially in a society such as ours where we’ve been taught that it’s taboo to talk openly about finances. However, not having that transparency among your family can ultimately end up hurting you because future generations are never given the opportunity to learn about the importance of wealth management, financial planning, or estate planning.

Instead, start establishing lines of communication with your family early on that are highlighted by respect and transparency. Think about holding semi-regular family meetings where you can discuss things like family values, money values, and visions for the future of the family, and create a safe space for any questions your family members may have. Having a high level of transparency ensures that everyone is on the same page and understands what your family values and expects.

Create a smart and comprehensive financial plan.

Having a strong estate plan is necessary in its own right if you’re looking to prolong your family’s wealth, however, it’s only one piece of the puzzle. Having an underlying financial plan that addresses the comprehensive needs of the younger generation as well as the needs of the older generation is also crucial.

Financial Planning for Younger Generations

As your children grow, look for opportunities to teach them about wealth management and smart money habits early on. Let them contribute by working part-time and using that money to pay bills, donate to charities, or invest in their future. This might include contributing to a plan for college expenses, as the cost of tuition and living expenses continue to rise.

Educate the younger generation.

You cannot expect your children, grandchildren and beyond to be smart with their inheritance and the family’s wealth if you don’t take the time to teach them about personal finance and smart money habits. Invest time in teaching your children and grandchildren financial literacy, starting with the basics such as spending, saving, and giving. As they get older, their financial education could include internships, mentorships, and investing strategies. The more you empower the younger generation with the tools they need to be smart with their money, the more peace of mind you can have knowing that your vision for your family’s financial future will remain intact even when you’re gone. Wade Financial Advisory offers services that are intended to provide financial guidance to your children who have started their careers and we encourage you to discuss these services with your advisor.

Financial Planning for Older Generations

Taking care of an aging parent or grandparent can put a huge financial strain on the entire family if not properly planned for. Difficult as it may be, start discussions with your parents about their finances, how they are planning for their future, and what they want for themselves as they age. You’ll want to ensure that they’re saving enough for retirement, setting up any insurance policies they may need, investing wisely, paying attention to taxes and putting aside some savings for healthcare costs.

Establish a trust and appoint a trustee you can depend on.

A trust is a powerful legal vehicle that allows you to protect your assets over the long term. It can provide protections and tax advantages and work well hand-in-hand with your will. Be sure that when you’re setting up your trust you appoint a trustee who is neutral and objective and can assist in ensuring the wealth is properly managed and distributed. Inform those whom you have named as a Trustee and let them know who your professional advisors are so that they know who to contact when needed.

Protect your legacy with a well-thought-out estate plan.

Estate planning is already a complex journey to navigate, and when you decide to take a multigenerational approach it can become even more overwhelming. Taking the time to embrace the younger generation and educate and empower them with the tools that they need gives your family the best opportunity to preserve and grow wealth. Consider lifetime gifting as well as future inheritance as a method of passing wealth on to the next generation. Your Wade Financial Advisor can help you understand the tax impacts of various gifting and inheritance strategies so that you can minimize income and estate taxes. Coupled with open communication, transparency, and a robust financial plan, your estate plan can help your legacy last for generations to come.

At Wade Financial Advisory, we understand the intricacies of multigenerational wealth management and how important it is to ensure your family is taken care of. If you’d like to start a conversation with one of our financial advisors about your estate plan and vision for your family’s financial future, please contact us today.

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Five Benefits of RSUs: Understanding the Nuances of Restricted Stock

Tax Planning, Uncategorized / Annrose Isaac CPA, CFP®, MBA

If your employer has granted you equity compensation in the form of restricted stock units (RSUs), it’s important to understand the potential benefits and what they mean for you. RSUs offer a future promise of uncertain value but, when vested, that value becomes more concrete. It is essential to understand the nuances of RSUs and how they can benefit you so that you can develop a savvy strategy for managing restricted stock in your financial plan. Below, we’ll discuss five benefits of RSUs.

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Understanding the Biden Tax Plan

Tax Planning, Uncategorized / Annrose Isaac CPA, CFP®, MBA

Below we will discuss the current tax proposals that are being debated in Washington. Wade Financial Advisory will be evaluating the final enacted legislation to advise on its impact on our clients.

September saw the release of the Democrats’ full tax proposal, which details their plan to pay for expanding access to paid family leave, education, and healthcare, as well as efforts to combat climate change. The proposal is expected to provide more than $2 trillion in new revenue over the next ten years, mostly from high-income households and companies, and negotiations are currently underway.

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Considerations for Passing an Inheritance to Your Children

Trust & Estate Planning, Uncategorized, Wealth Management / Annrose Isaac CPA, CFP®, MBA

For many people, building wealth means the opportunity to leave an inheritance to their heirs. If you’d like to leave something behind for your children or grandchildren, it’s important to understand that it will impact much of your financial planning. For example, you’ll likely need to increase your savings and explore which tax-advantaged retirement plans are right for your unique situation, as well as thoughtfully consider your future health care needs.

In order to ensure your desire to leave some of your wealth to your children matches your financial capabilities, we’ll review eight essential personal finance considerations.

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Strategies for Optimizing Employee Stock Options

Equity Compensation, Investment Management, Wealth Management / Annrose Isaac CPA, CFP®, MBA

In recent years, generating income from stock options has regained its popularity in executive compensation packages, after falling out of favor during the dot-com bust. Their recent resurgence means there are also growing numbers of executives making poor choices, often because they lack good advice or because they have unwarranted optimism about their companies’ stock prices. Making good decisions and maximizing the value of your stock options starts with understanding what you have. Then, you can begin to develop a strategy that optimizes their value by incorporating tax consequences, your personal risk appetite, the company’s outlook, and more.

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Multi-Generational Planning: Funding a 529 Plan for Your Grandchildren

College Planning, Multi-Generational Planning, Trust & Estate Planning, Wealth Management / Annrose Isaac CPA, CFP®, MBA

A college education does not come cheaply. Forbes has estimated that the price of a college education has increased 8 times faster than wages, making it important for families to plan ahead in order to fund educational expenses. At Wade Financial Advisory, Inc. (WFA), we routinely discuss the benefits of establishing an Education Savings Plan account (commonly known as a 529 plan account) with our clients. These accounts provide a cost-effective way to benefit the future generation because grandparents and other family members can easily contribute to a child’s existing 529 plan account. Setting up a 529 plan account as early as possible and adding funds to the account regularly allows for maximum growth opportunity.

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Maximizing the Tax Benefits of Charitable Giving

Tax Planning, Trust & Estate Planning, Wealth Management / Annrose Isaac CPA, CFP®, MBA

Recent changes in income tax laws have made it even more important for you to be strategic with your charitable giving during the year so that you can maximize tax benefits while supporting your favorite charities. As you contemplate gifts to your favorite charities in 2020, keep in mind that strategizing early in the year may allow you to take advantage of several methods for maximizing your tax savings. Here are a few tax-wise methods for charitable giving that you may be able to take advantage of depending on your financial circumstances.

You may be able to realize significant tax savings by “bunching” several years of charitable contributions in one year rather than spreading those contributions out over multiple years. Talk to your Financial Advisor if you plan to donate to charities every year so that you can determine if bunching your charitable donations will generate meaningful tax savings.

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