For most of our lives many of us have heard the old adage “Money can’t buy happiness.” And we can all think of numerous examples of individuals where this certainly seems to be true – whether among the powerful and famous, or within our own family or group of friends. But is that really true? Research over the last few decades suggests “NO!” In fact, many studies show that in one sense money can buy happiness. But it’s not the amount of money we have, but rather how we SPEND our money that can indeed increase our happiness – although perhaps not in the way Madison Avenue or Amazon Prime would like us to think. First, let’s address the skeptics among you who feel sure that if you simply had MORE money you would indeed be happier. Statistics show that certainly isn’t true, since 70% of all lottery winners or those with a sudden financial windfall end up bankrupt within a few years.1 Carl Jung, famous psychologist, said in fact that the keys to happiness were five things.
Atlanta Financial Blog
Nine for ‘19: Financial Steps You Should Take Now
With the start of a new year, most of us begin making plans in all aspects of our lives for the year ahead – and beyond. One area we should consider is financial well-being —not only our tax outlook, but also investment and retirement strategies, property and personal insurance coverage, and more.
Here is a helpful list of actions you can take now that will cultivate a more fruitful 2019.
- Locate and Organize Important Documents: It’s the start of a new year and there is no better way to begin than by organizing your files and streamlining your documents. Having all your financial documents from 2018 organized and ready for review with your financial advisor and tax professional will make tax season much more efficient and less stressful.
- Review Tax Withholding and Payments: Make sure to address this with your tax professional. The new tax law enacted in 2018 was very comprehensive. If you end up with a refund for the year (or if you owe money to the IRS), make sure to review your tax withholding to ensure your 2019 withholding levels are set properly to avoid tax season surprises.
- Evaluate Retirement Plan Contributions: The start of the year is a great time to explore new investment opportunities through employer-sponsored plans or changes to employer-match contribution criteria or percentages. For those with a 401k, 2019 contribution limits are now $500 higher than 2018 levels, allowing you to save up to $19,000. Participants aged 50 or older are still eligible to save an additional $6,000 in “catch up” contributions.
- Examine Retirement Account Allocations: If your employer-sponsored retirement accounts are not set to automatically rebalance, determine whether adjustments are appropriate, and whether you want to adjust your risk profile. If automatic rebalancing is available and you have not signed up for it, consider adding that to your account to ensure this happens every year without any action required by you. Given recent market volatility, this is especially important now.
- Assess Gifting Strategies: In 2018, the annual gift exclusion to individuals increased to $15,000 and remains the same in 2019. Charitable gifting still remains a wonderful way to help charities of your choices while getting a tax deduction for doing so. It is also possible to gift appreciated assets to individuals or charities which gets the value of those assets to the desired party without having to pay capital gains taxes to do so. If you are making regular gifts to children or others, now is a good time to evaluate your 2019 gifiting strategy.
- Explore Education Funding: With the passage of the new tax bill last year, 529 plans are now more attractive than ever. Funds in these plans may now be used to fund K-12 private or religious school expenses, up to $10,000 per year. Also, families can roll 529 funds over to ABLE accounts, which offer tax advantages for those with disabilities. As always, funds held in 529 plans are outside of your estate for estate tax purposes. (Please see my related blog post on 529s.)
- Evaluate Your Housing Situation: Have you been thinking about moving but are concerned about doing so now because of recent interest rate increases? Remember that mortgage rates are still at very low levels but may not stay there much longer. While you don’t want prevailing interest rates to drive this kind of important decision, it may be prudent to make a decision now rather than continuing to wait.
- Check Insurance Coverage: Has your home increased in value, or have you acquired art or other valuables that make an insurance coverage increase appropriate? Have you gotten married, retired, had a child, or experienced any other major life change? Any of these events may necessitate a reevaluation of insurance coverage, from property and casualty coverage to life and disability plans.
- Don’t Forget Your Dreams: As you are adjusting your allocations and examining and organizing your documents, don’t forget to consider upcoming goals or plans that may affect your financial strategy. Even if your bank balances are sizeable enough to give you discretionary freedom, it’s always a good idea to account for major upcoming expenditures to determine if you should build your balances further to accomplish your financial dreams and goals for 2019.
At AFA, we are always ready to help you evaluate your specific situation and strategize with you to help you achieve your goals. To discuss these or any other considerations, please give us a call at 770-261-5380. Here’s to a healthy and prosperous 2019!
“How did the new tax bill affect me?” was the question on everyone’s minds this tax season, and for good reason. Even though this was touted as the greatest simplification of the tax code in my lifetime, I didn’t notice any reduction in time spent preparing returns. Those of you who reviewed your returns in detail noticed that the schedules look drastically different although contain all the same information. The short answer for many is that it didn’t materially change your overall tax liability. The outliers fell into one of a few buckets…
No one enjoys thinking about what will happen after they’re gone, but we all want our families to be well cared for. Many people set up trusts to provide for their loved ones, but the trust is only as good as its trustee.Choosing a trustee is one of the more difficult decisions in creating your estate plan. Some attorneys suggest choosing several trustees to promote checks and balances, but sometimes choosing just one trustee can be difficult in light of family relationships and other factors. Choosing a trustee is a very personal and complex decision, but there are some basic guidelines one should consider.
It is that time of year again where school years are coming to a close and many parents are gearing up for a bitter-sweet high school graduation or are celebrating their child being one year closer to a hard-earned college diploma. Whatever the case may be, it is hard to deny the heavy lift education costs can be. You may not be able to shrink the bottom-line cost of attendance any further, and you surely can’t impact how fast many costs are going up, but, you can reduce the weight this line-item carries within your financial plan by remembering these 5 things: