You know the FAANGs, now meet the DANG and Is America Prepared to Retire and Why You Might Want to Create a Donor-Advised Fund
by rwilczek on Mar 8, 2019
Thought you might find a bit of commentary and perspective on the markets of interest (see link below) or topics in the attached articles. Take what you like and leave the rest.
If you’d like assistance on aligning your retirement income strategy with your risk tolerance, let us know.
Thanks and be well. Rita
Is America Prepared to Retire?
A look at some ways to get ready.
Provided by Rita Wilczek
Are Americans saving enough? Only 19% of U.S. adults describe themselves as “very confident” when asked about their savings. Worry spots include retiring without enough money saved (16%) and anxiety about having a “rainy day” emergency fund (14%). These findings come from the 2018 Consumer Financial Literacy Survey conducted by the National Foundation for Credit Counseling. (The survey collected data from 2,017 U.S. adults.)1
Only 41% of us keep a regular budget. If you are one of those roughly two-out-of-five Americans, you’re on the right track. While this percentage is on par with findings going back to 2007, the study also finds that while 65% of Americans are saving part of their annual income towards retirement, 29% indicate they are “not at all confident” that their savings will be enough to sustain them.1
Relatively few seek the help of a financial professional. When asked “Considering what I already know about personal finance, I could still benefit from some advice and answers to everyday financial questions from a professional,” 79% of respondents agreed with the statement. Yet only 13% indicated that they would seek out the help of some sort of financial professional if they had “financial problems related to debt.” While it isn’t surprising to think that 24% of respondents would turn to friends and family, it may be alarming to learn that 18% would choose to turn to no one at all.1
Why don’t more people seek help? After all, Americans of all incomes and savings levels certainly are free to set financial goals. They may feel embarrassed about speaking to a stranger about personal financial issues. It may also be the case that they feel like they don’t make enough money to speak to a professional, or perhaps, a financial professional is something that millionaires and billionaires have, not the average American worker. Another possibility is that they feel like they have a good handle on their financial future; they have a budget and stick to it, and they contribute to an IRA, 401(k), or have some other investments. But that 79% admission, mentioned above, indicates that a vast majority of Americans are not as confident.1
Defined goals lead to definite strategies. If you set financial objectives, you vault ahead of most Americans – at least according to these findings. A written financial strategy does not imply or guarantee wealth, of course, nor does it ensure that you will reach your goals. Yet that financial strategy does give you an understanding of the distance between your current financial situation (where you are) and where you want to be.
How much have you strategized? Retiring without a financial strategy is an enormous risk; retiring with a strategy that hasn’t been reviewed in several years is also chancy. A relationship with a financial professional can help to bring you up to date about what you need to do and provide you with more clarity and confidence when it comes to the financial future.
Rita Wilczek may be reached at (952) 542-8911 or firstname.lastname@example.org
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.
1 - nfcc.org/wp-content/uploads/2018/04/NFCC_BECU_2018-FLS_datasheet-with-key-findings_031318-002.pdf [3/13/18]
Why You Might Want to Create a Donor-Advised Fund
A DAF can be a great way to give, with potentially great tax breaks.
Provided by Rita Wilczek
Do you regularly donate to charities and other non-profit organizations? Then you may want to open a donor-advised fund.
Donor-advised funds are becoming popular. It is easy to see why. They offer potential tax perks, and in some instances, a chance to grow money set aside for charitable gifting.1,2
It is all too easy to think of charitable gifting in either very small or very large terms: that “Norman Rockwell” moment when someone puts a few dollars into a metal box during the holiday season, and that big moment when a billionaire CEO donates millions to a college or hospital through a private foundation. Donor-advised funds represent a middle ground, a way for you to make significant gifts without having to deal with a private foundation’s paperwork and time commitment.
Financial institutions manage some of these accounts; others are overseen by community organizations. DAFs can be started with relatively small sums: a minimum of $5,000 is not unusual. Please note that contributions to DAFs are irrevocable.1
These funds offer you a tax break and a degree of flexibility. You can claim an immediate charitable tax deduction for the amount you direct into a donor-advised fund, and you advise the fund where the money should go. It can go to multiple charities, not just one.1,3
You decide when you want donations to be made; you can go years without making any if you wish. (In contrast, private family foundations must distribute 5% or more of their net investment assets each year, by law.) You may make ongoing contributions to your DAF, and you can often choose to have the assets invested and professionally managed once the account balance hits a certain (high) level.1,2
A donor-advised fund may even provide a triple tax break. Besides the upfront charitable deduction, there are two other opportunities for tax savings here. When you transfer highly appreciated securities into a DAF, you avoid the capital gains tax you would pay if you simply sold them (and that could mean saving thousands of dollars). In addition, those securities can benefit from tax-free growth once they are in the DAF.3
If you are wealthy enough to initially fund a DAF with a big lump sum, it may be better to itemize and take a large charitable deduction in the year of its creation rather than simply take the standard deduction. Additionally, thanks to the fund’s flexibility, you do not need to plan how that lump sum should be distributed to charities in that first year. Perhaps $0 comes out of the DAF in the first year, with charitable distributions beginning in successive years.1,3
Donor-advised funds also allow you to easily track your charitable gifting. Use one of these financial vehicles, and the assets you earmark for charity can be distributed from a single source.1
Whether you routinely or occasionally donate to non-profit organizations, a donor-advised fund is worth considering. It may give you a great way to do good.
Rita Wilczek may be reached at 952-542-8911 or email@example.com
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.
1 - cnbc.com/2018/10/04/sheryl-sandberg-used-this-strategy-to-donate-surveymonkey-shares.html [10/4/18]
2 - theatlantic.com/business/archive/2017/12/donor-advised-funds-deduction-charity/548324/ [12/13/17]
3 - dailycamera.com/business-columnists/ci_32200646/dave-gardner-make-your-generosity-count-come-tax [10/14/18]