Tag: long island investment management

How To Use A Legacy Letter

Your legacy isn’t just about your assets.

 

Of course, as part of our Life-Centered Planning process, we will help you coordinate with attorneys and tax experts to create an estate plan that will provide for your heirs in accordance with your last wishes.

 

But hopefully, after years of planning for a better Return on Life, you’ve come to appreciate what your money can and cannot buy. That’s why we recommend that our clients write a Legacy Letter to help their heirs think about their own relationships to money in more meaningful ways.

 

What is a Legacy Letter?

 

A Legacy Letter is a way for you to share your values, life lessons, cherished memories, hopes for your family’s future. It also covers anything else that is really important to you.

 

This isn’t a will, so you won’t be assigning any of your assets. And this isn’t a family history, although you might include things you learned from your own parents and grandparents that you want your heirs to be mindful of in their own lives. This is you, reflecting on a life well-lived, passing on everything you’ve accumulated that can’t be bought or sold.

 

One of the great things about this exercise is that your Legacy Letter can be whatever you want it to be. It could be a typed or hand-written letter. It could be an audio or video recording. It could even be a mix, such as a printed list of your most cherished values accompanied by an mp3 you dictate into your phone. Use whatever media makes it easiest for you to speak to your family in your own voice.

 

What will my heirs want to know?

 

Some folks look at their kids and grandkids, immersed in their cell phones, and think, “My family won’t appreciate a letter like that, they just want the money.”

 

But eventually, your heirs are going to confront many of the same life and money challenges you have. They will face the scary prospect of leaving an unfulfilling career. They likely will also wonder how much support to their children is too much. They’ll be tempted to make a big-ticket purchase just to keep up with the Joneses.

 

Explaining how you did or didn’t stick to your values at these memorable moments will show your heirs that you can’t just throw money at life’s problems. Your Legacy Letter will be a road map leading your family to better decisions and more fulfilling uses of their time and assets. And if your estate plan includes charitable giving, explaining why particular causes were important to you could inspire a tradition of giving in your family that does good for generations.

 

When should I write my Legacy Letter?

 

The golden rule of all estate planning is: don’t wait. If something unexpected happens to you or your spouse, it’s so important that you have a plan in place that protects your assets and distributes them as you see fit.

 

That applies to your Legacy Letter as well. Your values are arguably your most important asset. In years to come, this letter will be a source of comfort and inspiration to your family.

 

And while this might seem like an activity for a retiree, many of our younger clients have told us that they found writing a Legacy Letter very beneficial. You can write a legacy letter at any stage of life. For example, if you’re getting married, you and your spouse could write a joint letter that describes your hopes and dreams for the future. If your children are launching into their careers, you could share your lessons about succeeding in life. The possibilities are endless. Many clients tell us they’re looking forward to updating their Legacy Letters with more life experiences down the road.

Give it some thought…

If you’re having trouble getting started with your own Legacy Letter, we’d be happy to help you jump-start the process. Make an appointment to come in and revisit or complete some of the Return on Life exercises we have available for you. Your stories and your values are every bit as important to us as your money. Let’s do a thorough review of your legacy planning to make sure you’ve secured the things that are most important to you for the people you love the most.

 

 

 

What To Do With Your 401k When Changing Jobs

What To Do With Your 401k When Changing Jobs

By Mike Desepoli, Heritage

Last year, millennials were nicknamed the ‘job-hopping generation’ after a Gallup report revealed that 6 in 10 millennials are open to new job opportunities.

According to this report, millennials have a reputation for job-hopping and are said to move freely from company to company, more so than any other generation.

That being said, I don’t think switching jobs is a trait unique to millennials only, even though they are said to job-hop three times more than other generations.

The job market is ever-changing and is not like it used to be. Fewer companies offer pensions and some entry-level jobs offer very little benefits or stagnant wages. Self-employment, temporary work, and side jobs have all become increasingly popular work options.

Also, there is less loyalty among employees who realize they can be laid off at any given time.

At the end of the day, if you come across a better job opportunity that you think you’ll be happier with and has better pay and benefits, you may feel tempted to switch jobs and there’s nothing wrong with that.

If you have a 401k however, you may be wondering what you can do with it when you do secure another job. You don’t want all the money you saved for retirement to go to waste, so here are a few options.

 

Keep the Money in Your Old 401k

Most companies will let you leave the money you saved for retirement in your 401k where it is. In other cases, there may be a balance requirement.

Employees who move on to another company may choose this option out of default especially if they have no idea what to do with their 401k. The major downside is that you won’t be able to contribute to your 401k anymore.  Also, you’ll have to keep track of more than one retirement account.

If you tend to switch jobs every couple of years, you could wind up with multiple 401k plans that you can’t contribute to which is why it’s best to consider some of these other options first.

 

Roll Over Your 401k to Your New Company’s 401k

If you had a good 401k plan with your old employer, you can easily roll it over to your new 401k. Check to see what the investment options are along with the fees with your new company. If you don’t like your current options as much as your old plan, consider rolling it over.

Most employers will accept a 401k rollover. As long as you have at least $5,000 in your account, it’s your legal right to do roll it over. If you have less than $5,000 in your account, your employer will have the option to cash you out of the plan.

If you’re going with this option, always ask for the rules to be clarified since you may have limitations since you’re no longer with the company. For example, you may be charged extra fees since you no longer work there.

Move Your 401k to an Individual Retirement Account (IRA)

This is another option you’ll have especially if you don’t like your new company’s 401k plan. IRAs and Roth IRAs are great options that typically have lower fees and allow you to have more control over your investment options. With an IRA, you will just have more control overall. You can choose low-fee investments and won’t be limited to name just your spouse as your beneficiary like with most 401k plans.

Keep in mind that there is a difference between a traditional IRA and a Roth IRA. With a traditional IRA, you contribute pre-tax dollars.  The money is not taxable until withdrawals begin. If you withdraw funds before then, you’ll most likely have to pay a penalty fee.

With a Roth IRA, your contributions are taxed when you make them so your earnings will be tax-free. Withdrawals are also tax free once you attain age 59 1/2.

There are also income limits to be eligible for an IRA. In 2017, you must earn less than $118,000 if you’re single and less than $186,000 if you’re married. The maximum contribution you’re allowed to make per year is $5,500 and $6,500 if you’re 50 or older.

Cash Out Your 401k

This isn’t the best option, but it is an option nonetheless. If you want or need the money in your 401k account to pay bills, meet other expenses you have, or even to reinvest another way, you can simply cash out what’s in your retirement account.

A major downside is that you will have to pay taxes on the money along with a penalty. If you cash out a smaller amount, what you receive will be even smaller. If you cash out a large amount, it won’t really be worth it due to your large tax bill.

You could also destroy your retirement nest egg in the process especially if you received a nice 401k company match.

Depending on how many times you switch jobs that provide you with a 401k account, you may need to make the decision of what to do with your old 401k more than once. To determine which option is best for you, determine your current and future needs. Always consider factors like fees along with your investment options.

I’m sure everyone wants to retire some day so it usually the better option to keep money from your 401k and roll it over or put it in an IRA.