1. Keep ‘we should invite’ to a minimum and invite just those you really want to have celebrate with you.
2. Before you open a bride magazine or see a venue, both of you sit down and independently write down what the morning, afternoon, and night for your wedding look like to each of you.
3. If you’ve done #2, you realize you have many more options than we usually consider:  time:  weekday, Sunday, weeknight, place:  loved one’s home/garden/pool, place of worship, state and local parks, universities (my oldest son was married at the beautiful College of Charleston’s President’s home), any place that has real significance for the two of you.
4. Breakfast, Brunch and Lunch are all less expensive than dinner and food stations can be a wonderful way to spread out the room and have very good food in smaller portions
5. Picking a theme and sticking with it can make less expensive choices unnoticeable.  An example is a garden party:  crudités with dips, other small light food/spiked iced tea, plain iced tea/cake pops springing from a green (like grass) sheetcake, wildflowers for flowers.
6. Invitations – there are many competitive sites and I like this one – www.invitationbox.com, sort by price and you will find many attractive ones under $1 each.
7. The dress.  Buy used and spend some money on alterations.  Buy new but a good designer knockoff and spend some money on alterations.  Alterations are what make any dress beautiful on you.
8. Music.  Everyone knows someone with a great iPod system.  Borrow it and create your own playlist.
9. The rehearsal dinner.  Take a cue from Southerners.  Friends and family of the couple host this nice tradition in their homes and often on a scale of an elegant barbeque.  It’s a very fresh, fun party at a reasonable cost and the evening is truly shared love.
10. The honeymoon.  First, avoid all things marketed with ‘honeymoon’.  Vacations marked ‘honeymoon’ cost up to 3 times as much as plain old ‘travel’.  Just plan a fabulous trip smartly. 

You could decide to throw caution to the wind and choose a last minute destination practically guaranteeing big savings.  Life in a marriage is full of adventurous twists and turns so why not jump in with both feet?  Seeing how each of you manages in the unknown and unexpected could be the best mutual gift you give each other.  Enjoy your day your way.  And remember that marital financial planning starting with your wedding and honeymoon is a great foundation for a fun, meaningful life together. 

I can tell you from both my divorce work and financial planning; it is the unusual person who overestimates what they’ll need in terms of resources later in life.  Why would we continually trap women in a spousal support situation by discouraging re-marriage, discouraging high paying work and simultaneously committing the paying party to a life without work relief – in some cases – ever.  Permanent and/or punitive spousal support still keeps women at risk.  If the ex-spouse becomes disabled and cannot work they’ll lose that court-ordered income.  The new law in Massachusetts has alimony ending at retirement most of the time.  There are other boundaries too including one based on how long the couple was married.  The worry that women who raise children will be penalized later calls for better marital financial planning and the splitting of assets as they grow – not waiting until a divorce. 

The other myth in divorce settlements seems to center on the money. That matters most definitely for both parties and there are two parts to the money – assets towards net worth and income that provides cash flow.  Unfortunately, even if we manage to get an equitable financial settlement, I’m seeing very poorly written paragraphs around other issues such as reimbursements for some children’s expenses that force the divorcing couple to interact/beg/pay each other directly every month.  That should never happen.  Settlements should be reviewed to make certain all aspects of them make sense to the parties who will have to live with them.  Remember, unless spousal support is specifically modifiable, child support is the only modifiable part of a settlement agreement.  Since there are no do-overs, it pays to get it done right the first (and only) time.

In Wilmington, NC (best beaches in the world for my money), the paper reports the unemployment rate rose in 91 of 100 counties in June.  They attribute much of those losses in government jobs.  In Minnesota, they report a small net gain in jobs and talk about the ‘price of austerity’.  Reuters joined in with more of a summary report, http://tinyurl.com/44uymae, and noted some of the jobs lost are because all states except Vermont have to balance their budgets and layoffs were made to do that.

What’s worth paying attention to between now and the end of the year?  Start here, http://tinyurl.com/3nqedbr, that little story of the town in Rhode Island that chose bankruptcy as an answer to the tug of dollars between what has been promised and what can be taxed in order to pay for those promises.  The riots across the globe over austerity programs are a reaction to people realizing the future will be very different from what they believed.

It’s true here too and it includes more towns making tough decisions about how to pay for what they’ve promised.  It includes corporations who will deal (or not) with unhappy workers who believe they should receive a certain level of pension and be relieved from contributing a certain amount to their health care costs, http://tinyurl.com/3cxlm4n.   It includes whomever we hire to make policy about our entitlement programs.  If you read the annual report from the folks who run Social Security, http://www.ssa.gov/oact/TRSUM/index.html, you’ll know what they’ve been saying for many years now and what our policy makers have failed to acknowledge.

Getting back to our four letter word – JOBS – they make it possible for people to buy things, buy homes, contribute taxes, fund retirement plans, fund entitlement programs, they keep people mentally engaged in the community.  We have a very expensive education system stuffed with folks who are not studying things that will enable their employment later.  This disconnect between the bodies we have and the bodies we need will haunt us for as long as it takes to connect the two.   We need more jobs and we need to connect education to jobs.

• The stock market has fallen more than 10% – yes, this is a market correction and it may fall further in the short term.  The stock market does not always go up.  Markets hate uncertainty. The future could be awful, could be fabulous and it seems very uncertain at this moment in time, which will win out.  But our companies have cash and good earnings and as an investor, unless you believe capitalism is dying or dead, the market will eventually reflect the health of companies.
• Of the 3 major ratings agencies, S & P has downgraded its long-term sovereign rating for the US to AA+ from AAA.  I believe what they’re saying with the downgrade is the current path is unsustainable.  There was a story recently in the Washington Post http://tinyurl.com/3kqvgsp that may help make the point that we are part of the problem – a significant number of Americans get a check in some form from the government every month.   You can read it their report  at:   http://tinyurl.com/44xrv4f
• The Bureau of Labor Statistics reported a stubborn 9.1 % unemployment rate in July of this year. This one’s a doozy and in my opinion should be where we put a majority of our focus.  When people are unemployed or underemployed, the community toll is immense.   It’s the flip side to the fabulous news of being alive at a time when so many amazing changes and developments and improvements are happening but with millions fewer workers.  http://www.bls.gov/news.release/pdf/empsit.pdf
• Zillow reported last quarter that home values fell faster in the first quarter of 2011 than they had in any quarter since 2008 and that indicated they’ve now fallen 29.5 % since the peak in June 2006.  This should turn around when employment does.  http://zillow.mediaroom.com/index.php?s=159&item=228

I think it’s normal to be nervous if you watch TV.  I don’t watch much TV but in order to do my job, I read.  A LOT.  And it’s normal to be nervous if you read too.  We have some legitimate things to worry about (unemployment, lack of leadership amongst those who make our policies, regulations, and laws, and the increasing dependency of a once fiercely independent populace).  There is much we can safely ignore (i.e. the screaming heads on TV and its estimated that Americans watch no less than 5 hours of television each day) http://tinyurl.com/3c7z93h.  That’s 1825 hours a year – an incredible number.  I don’t have answers for the some of the lingering issues above and I think we have power and time we’re not using to our advantage. 

The recipe for real wealth never really changes: 

Work and play hard (keeps us away from that TV J)

Save a lot (research shows us 20% of gross is a good rate)

Invest wisely (across asset classes, keep costs low, stay in for the long term)

Stay healthy (real dollars saved here)

Get outside and into your community (fresh air, good friends, helping others)

Sense of humor

Think about it, for those who work hard, have saved a lot, invested carefully what they don’t need today, are blessed with good health (or a healthy outlook), have friends, help others, and keep their sense of humor, the past few weeks are just part of life.  And life goes on.

Divorce planning is different from everyday financial planning.  In financial planning, as advisors, we routinely and specifically advise our clients to do one thing or another in a specified time frame and particular dollar amount.  When I work with clients on divorce planning, I do not advise them to do one thing or another.  Instead my work is to present, translate, and confirm understanding of the financial results of a particular decision.  In other words, rather than tell the client what I believe they should do, I present several scenarios based on the assets and income available and let them decide what they would like to settle on.  You might be surprised though at how often very smart, capable people do not understand the basic characteristics of financial assets.  And you shouldn’t be surprised that they then also remain in the dark about the tax implications of dividing income, assets, and property. 

In the September issue of the Journal of Financial Planning, I have a column talking about divorce planning.  Part of that article discusses the advantages for any couple who does fair and equitable financial planning for both parties in a healthy, happy marriage.  This topic was covered recently by my colleague, Jeff Landers, President of Bedrock Divorce Advisors, LLC in a story by CBS News.  Find it here – http://newyork.cbslocal.com/video/6108555-idea-of-divorce-101-angers-many-happily-married-men/. 

As you’ll see in the story, the men have very strong reactions to the wives who are proactively learning about the family income and assets in the event of a future divorce.  I believe strong marriages include both parties understanding the family economics and participating in the growth of family assets.  For example, if the family decides someone takes time off to raise children, we’d want both husband and wife’s retirement accounts to be funded in equal amounts.  As the family moves through the decades of a financial life together, we’d want their estate planning to include the thoughtful titling of assets to reflect balance as well. 

Although it may feel threatening to some folks to have their spouses plan their divorce while supposedly happily married, it seems to me that understanding your family’s financial assets is a prudent and grown up thing to do and may even strengthen a marriage.

How do we know it’s a need?  According to the Bureau of Economic Analysis, in 2011, personal savings as a percent of Disposable Personal Income (DPI) was 5.8% in February, compared with 6.1 percent in January.  There is a very old rule of thumb that suggests everyone save at least 10% of their income for future needs.  That rule of thumb is seriously out of date – recent research by Wade Pfau, an associate professor at the National Graduate Institute for Policy Studies (GRIPS) in Tokyo who earned his Ph.D. in economics at Princeton, indicates a far higher rate of savings is needed to avoid running out of money later.  The amount needed changes when you change the variables, but in general, if you can save for 30 working years, you’ll need to save about 17%.  If you can save for 40 working years, the amount drops to just under 9%.  But if you only save for 20 years, the rates soars to over 30%.  Investment returns can rarely overcome a lack of savings.  We NEED to save more – much more and for far longer than we’ve ever been advised to. 

See below for all the specifics if you need to get started now:

Fee is $750 with ½ paid two weeks in advance**.

A.     A two-and-one-half hour, one-time planning session*.  This is a one-time, two-and-a half hour financial planning session on a Monday evening for new clients.  Money on Mondays serves as a check-up to see where improvements can be made quickly and easily.  This service is designed to answer your most pressing financial questions.  You will leave the meeting with specific recommendations and three important books for your personal library. 

B.     Check-Up.  The advisor will review your current financial situation plus address your financial concerns or goals as listed in your Personal Questionnaire.  These may include, and are not limited to: retirement, investment review, tax planning, college planning, home purchase/refinancing analysis, and cash flow analysis.

 C.      Telephone Follow-Up.  We also include telephone and email assistance on the items covered in our meeting for 30 days post meeting.

*The client is required to complete and deliver back to the advisor a questionnaire, requested documents, contract, and deposit two weeks prior to scheduled meeting.  If client is unable to do this, the meeting will be cancelled.

**Because our time together is short, this offering is not designed for complex situations.  It is not a comprehensive plan.  In complex situations, we will recommend our Classic Financial Planning service.

Client(s) and Advisor agree that neither party shall have any obligation to the other beyond the services described above.  Client(s) understands that the services provided do not constitute a comprehensive financial plan and should not be relied upon as such.

1. When you were growing up, did you believe your family had enough money, not enough money, lots of money, or it never came up?
2. When you grew older, was what you believed about the money in your family true?
3. Was money discussed in your family? How, how often, in what context?
4. Were you given any instruction around money as a child? (Save for a rainy day, tithe, work odd jobs for pay or ‘don’t worry your pretty little head about that, Daddy’s got it covered’)
5. Did you receive allowance as a child?
6. Did you perceive your parents were similar in their money habits or different?
7. Did you identify with one parent over another in the way they handled their money?

1. Do you think of yourself as a spender or a saver?
2. Do you have a checking account and if so, do you balance it monthly?
3. Do you pay for most things with cash, credit card, debit card, or a check?
4. How many credit cards do you have and how many do you use?
5. Do you carry a balance on any of them?
6. Have you ever maxed out your credit cards or made late payments?
7. Do you know your credit score? If so, what is it?
8. Do you research major purchases?
9. Do you track your expenses?
10. Do you make many impulse purchases?
11. What are the terms (rate, term, payment, total amount owed) of the debts you have?
12. Do you understand each line of your paystub?
13. Do you have health, disability, and life insurance?
14. Do you have any outstanding debt collection issues (taxes, liens, past due accounts)?
15. Do you own any investments?
16. Are you working with a financial planner?

1. Would you be willing to work with a financial planner to let them to establish a relationship, collect all our data, work with us to develop our mutual goals, develop recommendations for us, implement those recommendations on our behalf, and then help us monitor our plan going forward?
2. Is either of us planning additional schooling?
3. What is our approximate timeline for starting a family if that is in our plans?
4. What are our mutual goals (owning a home, starting a business, travel)?
5. What constraints are we facing (one of us may have to re-locate; one of us may have to assist an elderly relative)?
6. Is either of us expected to inherit money? This can be a source of sharing resources but the couple will want to explore legal options for keeping the inheritance separate from shared monies.

 Because even a few dollars a week put toward a Roth IRA can reap enormous benefits over the 40-50 years of a career lifetime that today’s average college student will complete after graduation. Take the example of an 18-year-old who contributes $5,000 each year of school until she graduates. Assume that $20,000 grows at 7.5 percent a year until age 65 – that would mean more than a half million dollars from that initial four-year investment without adding another dime.

 Consider what would happen if she added more. 

 There are a few considerations before a student starts to accumulate funds for the IRA.  First, students should try and avoid or extinguish as much debt – particularly high-rate credit card debt – as possible.  Then, it’s time to establish an emergency fund of 3-6 months of living expenses to make sure that a student can continue to afford the basics at school if an unexpected problem occurs.

Certainly $5,000 a year sounds like an enormous amount of outside money for today’s student to gather, but it’s not impossible.  Here’s some information about Roth IRAs and ideas for students to find the money to fund them.

The basics of Roth IRAs: It’s good to start with describing the difference between a traditional IRA and a Roth IRA and why Roths might be a better choice for the average student. Traditional IRAs allow investors to save money tax-deferred with deductible contributions until they’re ready to begin withdrawals anytime between age 59 ½ and 70 ½.  Roth IRAs don’t allow tax-deductible contributions, but they allow tax-free withdrawal of funds with no mandatory distribution age and allow these assets to pass to heirs tax-free as well. If someone leaves their savings in the Roth for at least five years and waits until they’re 59 1/2 to take withdrawals, they’ll never pay taxes on the gains. For someone in their late teens and early 20s, that offers the potential for significant earnings over decades with great tax consequences later.

Getting started is easy: Some banks, brokerages and mutual fund companies will let an investor open a Roth IRA for as little as $50 and $25 a month afterward. It’s a good idea to check around for the lowest minimum amounts that can get a student in the game so they can plan to increase those contributions as their income goes up over time.  Also, some institutions offer cash bonuses for starting an account. Go with the best deal and start by putting that bonus right into the account.

 It’s wise to get advice first: Every student’s financial situation is different. One of the best gifts a student can get is an early visit – accompanied by their parents – to a financial advisor such as a Certified Financial Planner™ professional.  A planner trained in working with students can certainly talk about this IRA idea, but also provide a broader viewpoint on a student’s overall goals and challenges. While starting an early IRA is a great idea for everyone, students may also need to know how to find scholarships and grants and smart ideas for borrowing to stay in school. A good planner is a one-stop source of advice for all those issues unique to the student’s situation.

Plan to invest a set percentage from the student’s vacation, part-time or work/study paychecks: People who save in excess of 10 percent of their earnings are much better positioned for retirement than anyone else. Remarkably few people set that goal. One of the benefits of the IRA idea is it gets students committing early to the 10 percent figure every time they deposit a paycheck. It’s a habit that will help them build a good life.

Get relatives to contribute: If a student regularly gets gifts of money from relatives, it might not be a bad idea to mention the IRA idea to those relatives.  Adults like to help kids who are smart with money, and if the student can commit to this savings plan rather than blowing it at the mall, they might feel considerably better about the money they give away.  At a minimum, the student should earmark a set amount of “found” money like birthday and holiday gift money toward a Roth IRA in excess of the 10 percent figure.

-30-

August 2009 — This column is produced by the Financial Planning Association, the membership organization for the financial planning community, and is provided by Bonnie A.Hughes, CFP®,  a local member of FPA.

A question was posed recently by a columnist: Besides having a grandmother whom you like a lot, what qualifies you to work with seniors?

Dave Demming, a planner in Ohio, might answer that by sharing that he has had many of the same clients for the last 30 years and as they have aged, he’s helped them in lots of ways that go beyond the typical planning engagement. The problem for him is that this kind of help bleeds into some new areas for hispractice and he has been active in seeking out conferences, continuing education, and other resources to serve his clients at the level they’ve enjoyed these past decades.Many more advisors are getting into the area of eldercare as their clients become seniors. If you want to work in this area, what are some best practices that help your clients and protect you? We’re going to cover two areas. The first involves due diligence and best practices of documentation, and the second involves education and a qualified referral network.

Want to know more about Eldercare and how  ACP works with Seniors and their families?  Contact Bonnie at bonnie@americancapitalplanning.com

In most cases, says Hughes, IRA beneficiaries should be actual, named people — known as designated beneficiaries — rather than simply “my estate” or “my living trust.” Another no-no: leaving blank the space on the IRA beneficiary form (available from the financial institution that holds the account) in the mistaken assumption that the account automatically will be distributed to heirs as part of their will.

Why? “Trusts, estates and other entities don’t have life expectancies,” says Hughes. If they ‘receive’ an inherited IRA, they must draw down,and pay taxes on, the entire IRA account within five years or according to distribution plan of the original owner, if the owner had already begun taking distributions before his or her death, says Hughes.”

By Teri Cettina • Bankrate.com  2004

Want to know more and the most up to date rules?  Contact American Capital Planning at 703.579.7031 or meeting@americancapitalplanning.com.