Financial Planning

As you can tell by looking at our bios, we at Platt WM like to get involved in charitable organizations! There are a number of ways to have an impact with your giving.

Impact of Tax Cuts & Jobs Act (TCJA) on charitable giving

Previously, individuals who donated to charity were able to take tax deductions for their contributions. Donors enjoyed the emotional benefits that come with giving gifts. According to new research, it turns out that giving is more pleasurable for the human brain than receiving is! They also received a tax benefit from their giving.

The deductions for charity could only be taken for those who itemized their deductions. Which pretty much anyone with a mortgage did anyway, to capture the interest deduction.

Certain other deductions are known as “above-the-line”, because you don’t have to itemize to take them. IRA and Health Savings Account (HSA) contributions are examples of above-the-line deductions.

The TCJA increased the standard deduction significantly, so fewer people will itemize. Most taxpayers will save more money if they use the new standard deduction instead of itemizing.  Unfortunately for Californians and others who live in states with higher taxes, the TCJA limited state and local tax deductions. Even those with significant mortgage interest will probably not itemize either.

This has a big impact on 501(c)3 charities, who relied on donors able to itemize their deductions and save taxes on their donations. Although we’d like to think that people donate out of pure altruism, in reality the tax deduction provided a great incentive for people to give.

Which charitable organization to give to

Many of our clients (as well as our planners) have causes that are near and dear to our hearts. Charitable giving may already be mapped out for the year.

But if not, treat your philanthropy like an investment. You can make a bigger impact if you choose a small number of recipients and divide your money and time between them. As opposed to giving randomly as people ask you for donations.

Research the organization online. It’s also a good idea to see if any of your friends and family give to them, and if they have an opinion on it. You can always visit a local organization, though in some cases you might need to call first and make an appointment. There are online websites such as Charity Navigator, GiveWell, and Impact Matters that provide scorecards on effectiveness.

To be a qualified charity, the organization has to be a 501(c)3 group that qualifies for tax exemption per the US Treasury. Generally, qualified charities will be able to furnish their tax-exempt letter that states their qualifications.

Be aware that some charitable missions require a bigger administration budget in order for the organization to do its work properly. Don’t automatically discount a charity on the basis of budget. Of course after doing your due diligence you might cross them off your list anyway.

Find out what will actually be achieved with your charity dollars. For example, you might be offered a chance to donate to a training program for offenders going through rehab. But what you want to know is how many of the offenders will find jobs with this training program, not how much the training program itself costs.

How much money does the organization have? Your charity dollar often goes farther in an organization that doesn’t have much money or is underfunded, compared to a large, well-funded charity.

Donating to a charitable organization

Some higher-income people may still find that they itemize, so they’ll still be able to take a charitable deduction. Charities still need donations and will welcome them! Many donors make an effort around Christmas and Thanksgiving to donate, but groups usually need money and help year-round.

Consider making recurring donations. Household budgeting is much easier when you’re getting a steady paycheck every couple of weeks instead of large project deposits every few months. Similarly, it’s much easier for charities to allocate resources when they have some consistent income.

Check to see if your employer matches a portion of your contribution. It’s a great way to maximize your donations.

Have a lot of friends and family who are always asking for money for their pet charities? Or constantly run into different groups in front of your local grocery store? Just because someone asks you to give doesn’t mean that you have to say yes.

It’s best to have a polite “no” ready to go in all of these situations. You might say that your charity money is already allocated, or that you’ve chosen your charities for the year. Don’t feel bad about saying no. There are plenty of qualified charities and most of them need help, but you can’t help all of them.

Volunteering with a charitable organization

Time is another valuable commodity that many nonprofits could use more of! This is a great way to get the whole family involved, especially if you have young children. They get to see the impact of their efforts, while you’re all spending time together.

Ladling out the food at Thanksgiving is fun, but many groups have more urgent needs. Frequently their need is for expertise in some aspect of business, which you can help with. Smaller charities can almost always use marketing help, for example. They might need copywriters to help with their fundraising letters. Accountants to keep an eye on the books.

Fundraising – especially now that fewer people are donating the way they used to because they no longer have the tax incentive!

Qualified Charitable Deduction (QCD)

This deduction is still alive and well. It’s not a deduction, exactly, but it can help you avoid taxes at the same time you donate to charitable organizations of your choice. And you can donate up to $100,000 each year.

Rather than taking your required minimum distribution (RMD) as income and paying tax on it, you can redirect the distribution to a qualified 501(c)3 charity of your choice.

It’s very important that the money does not come to you first.  Then it still is considered income, and you’ll pay tax on it. Sending it to the charity up-front means that it’s not income to you.

This tactic works best if you’re at the age where you need to take RMDs, and you don’t need the income from your RMD to supplement your portfolio.

You may now be wondering if the new SECURE Act will change this equation. As a reminder, SECURE shifts the RMD start age to 72, for anyone who turned 70 ½ after 12/31/19.

However, although you still need to be at least age 70 ½ to make a QCD, you don’t have to wait until you turn 72 to do it. In other words, even though your RMD age is pushed back by a year and a half, your ability to do the QCD doesn’t change from age 70 ½.

If you’re a 5% business owner, you too will need to begin RMDs at age 72. Even if you’re still working for the company at that age.

In other words, don’t be discouraged by the lack of a tax deduction. There are still plenty of ways to support your favorite nonprofit.

Interested in talking to one of our planners? You can email us or call 619.255.9554.

Many clients enjoy looking up news and information about personal finance online, even when they have a financial advisor. Educating yourself is great! However, not all sites are equal. Some have false information, and others are simply designed to sell you something. They’re not always obvious.

How do you know which sites on finance are credible, and which aren’t?

Background on financial industry rules

Have you ever noticed that every chart you’ve seen from the mutual fund company has paragraphs and paragraphs of disclosures on it? All the indices used for comparison are spelled out. The time period of the performance is also detailed.

That’s not an accident, and it’s not because mutual fund companies enjoy making their charts look small and surrounding them with words. All of the disclosure is an industry requirement; the regulatory agencies are very picky about how performance numbers can be disclosed.

SEC (Securities and Exchange Commission) rules are strict, yet they are only for those who hold themselves out as providing financial advice, services or products.

If a company acts as a publisher or in some other way does not provide financial advice, then they can show performance in any crazy way they like. The SEC also binds financial companies from many different ways of advertising, but not other companies.

In other words, those who are not in any way experts in finance, have any credentials in finance, or know what they’re talking about, can put anything they like on their websites. You can sell anything you like, as long as you don’t claim to be a financial advisor.

We have seen some websites that trick a lot of people, because they look reasonable at first glance. There are some warning signs and red flags that you need to pay attention to when you’re studying an unfamiliar website.

It costs nothing, or very little, to run a website yourself. Depending on who’s hosting it, you can get decent-looking templates that you simply fill out with your own information.

It’s very easy for someone who knows absolutely nothing about the topic, and who is not a legitimate source, to set up a website that appears to be reputable. Don’t be thrown off by a nice-looking website, because they’re easy to do even if you don’t have a graphic designer.

Some people still have their old Geocities websites up! If the site looks old and the navigation is hard or impossible, don’t bother with it. Whatever information you’re searching for, you can find on a modern website. One that is run by a financial services person or company, and that you can easily navigate.

What does the site look like?

Chances are, if the financial site you’ve landed on has lots of bright primary colors and lots of moving ads and popups and looks interesting instead of boring, you’ve landed on an unregulated site. Therefore none of their information can be taken seriously or assumed to be true or factual. Is there a “Buy now” button on the site? Fake news! Stay away.

If, on the other hand, it’s a little on the boring side, and all of the charts and graphs have plenty of disclosures along with them, congratulations! You’ve probably found a reputable site.

However, there are no guarantees. Just because the site isn’t gaudy and bright doesn’t necessarily mean that it belongs to a credible authority.

Are there a lot of spelling and grammar mistakes? A credible financial site has the resources to spell-check and hire contributors and/or editors! A poorly written site points to someone who doesn’t know what they’re doing.

In general, when you’re websurfing for anything and you come across a site with too many mistakes, move on. The information you want is out there, and it’s spelled correctly.

Whose site are you looking at?

A good website will tell you exactly whose website you’re looking at. Wherever you go on our site, for example, you’ll see our name, logo and contact information. We’ve tried to make it very clear as to who we are and what we do.

It’s the same with mutual fund companies, trading platforms like Charles Schwab or e*trade, or financial planning associations such as NAPFA or CFP board, etc. The regulatory agencies such as FINRA and the SEC have some good information for investors on their websites as well.

Sites that are trying to trick you may hide the information about the owners or the company. Or make it difficult to figure out how to get in touch with them.

What kind of financial information or product is being sold?

Mutual fund and trading websites are up-front about what’s being sold. There may be a featured fund or product, but more often not. Financial planners and advisors usually won’t sell you anything on their websites, but will encourage you to come in for a consultation. (Like so!) That way you and the advisor can both determine if the relationship is right.

If you see a site where the owner isn’t obvious (or it’s a company you’ve never heard of), you may very well see all kinds of products and services for sale! We would advise against buying any of them, because they’re most likely a ripoff.

How often is the site updated?

As you’re aware, the financial markets move fast. A credible website should be fairly current. Avoid ones that are out-of-date. We try to blog every week, so we have fresh content consistently.

Is there a lot of click-bait?

If you’re not familiar with the term, “click-bait” is used to refer to a sensational headline that doesn’t match up with the content of the article or the post. It’s a headline that baits you to click on the site.

Not all sensational headlines are click-bait. Sometimes they’re just attention-grabbing! The content will answer the question posed by the headline. On a reputable financial website, you shouldn’t see too many sensational headlines.

See a lot of click-bait on a website? Don’t trust it.

Who’s engaging with the content?

Not all sites enable comments, and not all sites have a lot of comments. But if you see a lot of commentary by financial professionals who have alphabet soup after their names (CFP, ChFC, CDFA, CFA, etc.) then the site is likely trustworthy.

If there are comments and none of them are from professionals, think again. This rule isn’t as cut-and-dried as some of the others, because there may be good reasons that you don’t see a lot of commentary from professionals. However, best practice is to treat a site with lots of amateur commenters with suspicion.

Be skeptical out there

Unfortunately, when it comes to financial services, it’s the relatively boring websites that provide you with good information. The above rules work well for any kind of websites, not just financial information. The rules about what you can and can’t say may be different for other industries, but you need to be careful about who’s putting up the site, and whether they’re credible or not.

Interested in talking to one of our planners? You can email us or call 619.255.9554.

Women experience unique financial obstacles and need custom solutions.

This is the third article in a series on Women Investors.

You’re probably familiar with the studies showing the gender pay gap, that women are paid 10 to 20% less than men for the same jobs. Books like Lean In by Sheryl Sandberg and the research-based Women Don’t Ask by Linda Babcock and Sara Laschever suggest this is because women are much less likely to negotiate job offers and raises, leading to hundreds of thousands of dollars less over their lifetime.

However, recent research was presented in the Harvard Business Review that found women were asking just as often as men, but men were more likely to be successful. There was positive news when the researchers looked at different age groups. Younger women and men in the job market had almost no difference in asking and getting, possibly signaling that negotiating behavior has begun to change.

Culture is shifting too, with the #MeToo movement is just one part of a shift toward fairer treatment for women. Millennials are demanding more equitable and transparent workplaces.

Gender pay gap continues to be a financial obstacle.

Companies are under increasing pressure to report on gender pay disparities. Women are more likely to stay at companies that commit to pay parity, which in turn leads to more women in leadership positions.

Women face other challenges beside the gender pay gap. Women have fewer years in the workforce earning income, with an average of 12 years out of workforce. This is mostly due to maternity leave and caring for family, either children or parents, or both. Taking time off can also face a pay gap due to lost promotions and opportunities as well as decreased salaries from taking a less demanding role. Time out of the workforce can also result in lower Social Security benefits since your benefit is based on a formula using your 35 highest-earning years.

Female employees are less likely to participate in workplace retirement plans, partly due to taking time off. Women are also more likely to work part-time or in jobs that don’t offer retirement plans.

Despite challenges in the workplace and in our own desires to take a different career path, there are things you can do to make sure you are prepared.

Overcome financial obstacles by participating in workplace savings plans.

Start saving as soon as you start working and encourage the women around you to do the same. Participate in your workplace retirement plan. If you aren’t eligible or your employer doesn’t offer one, open an IRA (Individual Retirement Account).

Hone your negotiating skills to overcome financial obstacles.

Prepare for negotiations using these tips from the Harvard Business Review:

Do research and gather salary data to understand your value. Know what you want, and be prepared with some alternatives that are acceptable.

Go into the negotiation with explanations of your achievements and skills that justify a higher salary or other perks. Increase your confidence with practice. Role play with a friend to get more comfortable.

Negotiate communally. Focusing on how what you want helps the team / company (and not just you) can minimize being viewed as too aggressive.

Use multi-issue negations. Negotiating issues one-by-one seems more adversarial, while having multiple issues on the table at once allows you to make trade-offs and been seen as collaborative. Look at the total compensation package since things like more PTO or stock options have monetary value just like your salary.

Find a financial advisor who understands the financial obstacles women face.

Talk to a financial advisor to come up with a plan that takes your goals and needs into account. Revisit the plan as your circumstances and priorities change.

Platt Wealth Management offers financial plans to answer your important financial questions. Where are you? Where do you want to be? How can you get there? Our four-step financial planning process is designed to be a road map to get you where you want to go while providing flexibility to adapt to changes along the route. We offer stand alone plans or full wealth management plans that include our investment management services. Give us a call today to set up a complimentary meeting. 619-255-9554.

Retirement is arguably the largest saving goal you’ll have in your life. While saving for your golden years may not always seem like a top priority, it can creep up on you — fast.

Retirement planning requires a strong strategy to support the goals and dreams you have for your future. Your retirement plan will take a comprehensive look at your finances, your physical and mental wellbeing, and your lifestyle. The best way to be assured that your retirement plan is in order is to have a certified financial planner or a fee-only financial advisor work with you.

How retirement planning with a financial advisor can help

Your finances are at the heart of your retirement plan. After all, your goals for retirement rely on your financial ability to support those goals, and that is where a financial advisor comes into play for support and guidance.

One of the main goals of retirement planning is to understand your financial state. This way, when you want to go on a trip around the world, you’ll be able to do so (with no financial surprises).

A financial planner will be able to help you make a plan for your finances in retirement by looking at:

• Your changing risk tolerance and how that will impact your future investments
• Your current and expected cash flow 
• Additional options for income (if needed)
• Creating a plan for Social Security benefits
• Implementing a tax planning strategy
• Charitable contributions

Even though the average cost of retirement was $49,000 per year in 2014, that does not mean that specific number will fit into your lifestyle. All aspects of your financial plan will help work to support the life you want to live in retirement. Your financial planner will be able to help you create a strong plan for your finances that aligns with your future goals and current values.

Retirement planning analyzes your future health costs

Healthcare is one of the leading costs for retirees over the course of their lives and more often than not, it can be one of the most overlooked. Retirement planning can help you know how much you will need to prepare.

According to a Fidelity study, a 65-year old couple retiring in 2019 could expect to pay an average of $285,000 over the course of their retirement on medical expenses alone. This makes healthcare one of the most important parts of your retirement plan.

Health insurance in retirement has many moving parts, making it crucial to understand the options you have. When you’re employed, your employer pays a majority of your health insurance, but when you’re retired, it gets far more complicated. This is another area where strong retirement planning can be truly invaluable.

It’s imperative to have a discussion with your financial planner about Medicare so that they are able to create a plan that will provide you with suitable coverage and payment options. 

The Medicare system often leaves people with many questions, so it is important that you know what your plans will and will not cover along with the payments (copay, coinsurance, deductibles, premiums, etc.) you will be responsible for. On average, Medicare will only cover between 50-60% of your healthcare expenses.

In addition to the above, you will need to make a plan for your physical and mental health. Staying active in retirement can boost your metabolism — keeping you healthier and stronger for longer. 

Your mental health is also an extremely important facet of your health plan. Mental health is arguably just as important as physical health, if not more so. Staying mentally healthy can include engaging in activities and communities that challenge you, are in line with your passions, and force you to think in new, interesting ways.

Your retirement planning should support the lifestyle that you love

The last pillar of retirement planning is to build a life that you are excited about living — one that makes you happy to wake up in the morning.

Retirement can be a time for you to pursue passions and find joy, meaning, and fulfillment in the things you do. Your financial planner will be able to help shape your plan to accommodate whatever you wish to do — the sky’s the limit. 

Lifestyle planning is an intricate process and asks you to think through many parts of your day-to-day life that may come naturally to you now, but can drastically change when you retire. These areas can include:

• Where and how you want to live
• How you want to spend your time
• The ways you will develop a community and relationships
• How you find fulfillment

These areas look very different for each person. You may be interested in pursuing an encore career, sitting on a board, volunteering regularly, going back to school, or spending time with your grandchildren and loved ones. Whatever your goals are, your retirement planner will help create a plan tailored to your future aspirations.

More golden retirement planning with Platt Wealth Management

It can feel intimidating, almost impossible, to plan for all of the moving parts within the retirement world. Don’t worry — you’re not expected to do it alone! 

If you are searching for a certified financial planner that you can trust to help plan the next stage in your life, look no further. At Platt Wealth Management, our financial advisors put your needs first and provide completely transparent services to best prepare you for all stages of retirement. 

Are you ready to take control of your retirement plans? Give us a call at (619) 255-9554 to set up a complimentary review or email us here. 

Contrary to what you may have been told in the past, financial planning is so much more than simply crunching numbers and filing taxes to the IRS. A comprehensive plan can uncover wealth, reveal new opportunities and show possible pitfalls. Financial planning is a diverse field — aimed to help you use your money to enhance your life and well-being.

While some financial advisors may focus on just the number crunching, at Platt Wealth Management we are interested in pursuing the entire financial landscape. We don’t stop at one facet or one event — we dig deeper. 

Our process is about seeing how each aspect of your plan functions unilaterally, but more importantly how they talk to each other and work together to depict the full scope of your financial life. 

This is what true comprehensive financial planning is all about: the ability to blend personal and financial goals that capture the broadest scope of your financial landscape.

What is comprehensive financial planning?

For us, comprehensive financial planning is always about moving forward. It doesn’t stop at one life goal or stall after a milestone — it continues to grow and build as you do. As you know, life is known for throwing unexpected curveballs, and a comprehensive financial plan is able to handle them with grace (and hit a home run in the process).

A comprehensive financial will:

• Foster a solid relationship with you and your advisor
• State your explicit goals and the steps to achieving those goals
• Consist of a synopsis of your current financial status and assets
• Be a unique plan perfectly tailored for you
• Be consistently monitored and adjusted as needed

Our 4 step financial planning process does just that. It gives you a roadmap that will outline your financial goals but also leaves space for growth, development, and change. The foundation of this process is the relationship between you and your certified financial advisor. Through that relationship, you and your advisor will discuss your goals and any concerns that you may have in-depth. 

With a comprehensive financial plan, you are able to create a ‘health plan’ for your finances. It is a detailed record of your goals, resources, risk, and timeline. All of these aspects of your financial plan are analyzed and put together to give you the best chance of financial success. 

How does a certified financial advisor deliver a comprehensive financial plan?

A comprehensive financial plan is best executed by a certified financial advisor — someone with intimate knowledge of the field and who is completely dedicated to your financial growth and development. A financial advisor paints the whole picture for you by helping you define your goals, analyzing your situation, developing and implementing your plan, and continually monitoring its health.

A certified financial advisor will take into account every aspect of your financial situation while developing a comprehensive financial plan. This can include, but is not limited to:

• Management and strategic investments
• Risk (ex: investments)
• Estate, Legacy, College, and Retirement planning
• Taxes
• Debt
• Insurance

By taking into account all of these specific areas, your finances have a greater chance of growing and succeeding. When these areas work and mold together, you will be better able to use each aspect of your financial life to your advantage. These areas all work together to form your financial life. 

What can a comprehensive financial plan do for you?

The advantages of having a comprehensive financial plan are countless: it better protects you, your family, and your assets. The beauty of a comprehensive plan is that it’s prepared for the unexpected detours that life throws your way.

They provide a realistic sense of where you are on your financial journey and concrete steps to get to where you want to go. It’s a step by step process that allows you to reach your goals and gives you the financial confidence you need to have a peace of mind.

A comprehensive financial plan also challenges you by requiring you to think more about your long-term financial goals and what current financial habits need to change to help get you there. Your certified financial advisor is there to help you develop these positive financial habits.

Throughout this process, you’ll develop a deeper, trusting relationship with your certified financial advisor.

A comprehensive financial plan with Platt Wealth Management

A comprehensive plan leaves no stone unturned. Not every financial plan is comprehensive. Unfortunately, more often than not, there are pieces of the financial puzzle that are overlooked and therefore put you, the client, in jeopardy.

At Platt Wealth Management, we analyze every puzzle piece so you, your family, and your assets are protected from any unforeseen financial circumstances.

If you are searching for a complete comprehensive financial plan from someone you can trust, look no further. At Platt Wealth Management, our certified financial advisors put client’s needs first and provide completely transparent services. Are you ready to take control of your financial health? 

Give us a call at (619) 255-9554 to set up a complimentary review or email us here. Let us help you succeed!