Recently, I attended a funeral for a much-loved, elderly friend. He adored his wife and spoiled her every day. Throughout their marriage, he took care of the bills, handled their portfolio, and never bothered her with investment worries. However, after his passing, she found herself in the dark about their personal finances and did not even have the password to access their Quicken account. Days later, a family member was able to remedy this, but it was just the beginning of many financial mysteries left to be solved. This scenario is all too common, especially for the senior generation.
After a funeral, when the dining room table is covered in condolence cards and medical bills, the last thing a widowed spouse needs to worry about is how to access a password-protected financial account. Or worse, have to wonder if there are enough funds to cover incoming bills.
Fortunately, with some planning, there are steps we can take now to ensure our loved ones can easily access the information they need when this time comes..
With a trip to the store and a couple of hours, you can put together a financial book that will provide the key to unlocking your financial life. The sole purpose of this book is to record account numbers, approximate balances, mortgage information, contact names, retirement account institutions and everything in-between for those left to sort through our financial matters. A book with every account, every contact and every balance written down in black and white will greatly ease the frustrations of a bewildered spouse or executor of an estate.
The sooner you start, the better. Like a will, a well thought-out estate plan is essential. Grab a notebook and make a list of all of your personal financial life information and place it in a safety deposit box with your will. Some items to include:
- Bank Account – institution, address, account numbers, passwords, balance range, Payable on Death names, phone number
- Retirement Accounts – institution, address, phone number, password, beneficiary, balance range
- Insurance Policies – company and agent names, phone numbers, account numbers, amounts, beneficiaries. Include in this list, life, home, car, umbrella, medical and any policy you own.
- Stocks – brokerage firm, phone number, account number, stocks held, amount of stock, beneficiary
- Employer – company contact, phone number, employee number. List any life insurance, stock options, survivor benefits and anything else that would be needed.
- Credit cards – account numbers, passwords, phone numbers
- Password to computers and any relevant accounts such as online banking, brokerage accounts, Quicken
- Mortgages – institution, accounts, phone numbers, balances, location of deeds
- Auto Loans – loan Holder, account number, phone numbers, balances, location of titles
- Bonds – bond Issuer, account number, phone number, bond amount
- Will – location of will, name of executor
- Funeral instructions
- Safety Deposit Box – bank, location of key, contents
- Location of any hidden cash or jewelry in the house
While not extensive, this list is a good start. Remember, our financial lives can be complex and complicated. Ease the burden for your loved ones and leave behind the key to help them navigate your financial life.
Guest Contributor: Dana Chitwood, AFC®
Encourage Your Clients to Save with MyRA
Most people know that saving for retirement is important, but many Americans don’t have an easy way to get started. A recent report from the Pew Charitable Trusts found that more than 30 million full-time employees in the United States don’t have access to retirement savings plans at work. Other barriers, like account fees and minimum contribution requirements, can make it even more difficult for people to start saving.
Now, there’s an easy way to save that can help eliminate these common barriers. myRA was developed by the U.S. Department of the Treasury to make saving for retirement simple, safe, and affordable.
- It costs nothing to open an account and there are no fees
- Savers can contribute any amount they choose ($5, $50, $500 – whatever fits your budget!)¹
- Withdraw the money you put into your account at any time without paying tax and penalty.
- The account safely earns interest2
Saving for retirement has never been easier
Getting started with myRA is quick and easy. In fact, it only takes about 10 minutes to enroll. Each saver will need their social security number, driver’s license or other ID, and the name and birthdate of at least one beneficiary.
myRA also gives people the flexibility to choose how they want to fund their account. Savers can contribute to a myRA account from a paycheck via direct deposit, or from a checking or savings account. During tax season, savers can choose to direct some or all or their federal tax refund dollars to their myRA accounts.
See how others have started saving with myRA
Many people have already started taking steps to secure a brighter future by saving with myRA.
Lakesha Douglas is a store manager at E-Z Mart, a convenience store chain in Texarkana, Texas. She hadn’t thought much about retirement until she heard about myRA. Her growing family led her to recognize the need to plan for retirement, and myRA was an easy way to start. “I feel like I’m taking a step in the right direction with myRA,” says Lakesha.
Like Lakesha, Mariela Ortiz was introduced to myRA by her employer. An employee at Coral Gables La Salle Cleaners near Miami, Florida, Mariela had been thinking about saving for a long time, but found that getting started was difficult. She decided to open a myRA account after her human resources manager told her about the program, and since that time has been saving a small amount from her paycheck each week. “It is important for me because it’s my future,” she says.
Help people start saving today
Talk to your clients and help them start saving for a brighter future with myRA. Visit myRA.gov for more information and to download free materials you can share.
1 Annual and lifetime contribution limits and annual earned income limits apply, as do conditions for tax-free withdrawal of interest. To learn about key features of a Roth IRA and for other requirements and details, visit myRA.gov/roth-ira.
2 Accounts earn interest at the same rate as investments in the Government Securities Fund, which earned 2.04 percent in 2015 and had an average annual return of 2.94 percent over the ten-year period ending December 2015.
Guest Contributor: U.S. Department of the Treasury, myRA
There are many middle aged adults who see further education as a path to a better paying career or an opportunity to pursue new interests. However, with the ever-rising cost of higher education, it’s important to decide: Is it worth taking on debt to go back to school?
If you are asking yourself this question, here are some tips to help you make your decision:
- Try one class and see how it goes. It may seem like a big cost up front, but being able to “try on a class for size” may give you the motivation and desire to pursue a new certificate or degree, or you might realize that school is not for you.
- See if your current company will pay for classes. Many companies allocate funds for employee professional development. If a degree or certification will enhance your work and their business model, then it is a win-win for both you and the organization
- Weigh the costs and ask hard questions. How much will it cost to go back to school? What if you have to quit your current job and go full-time? Can you go to school part-time? Are you a stay-at-home spouse looking to get into a professional field now that the kids are in school? Is the career field you are looking to enter a high demand career field where you can easily get a job once you complete your education? Analyze the entry level salaries of those jobs in your area including the cost of student loans. Sit down with a professional counselor to do a budget with your current situation and then do a budget of how much you could make in a new career field while paying off student loans.
- Contact a few different schools that offer your program of interest. Speak directly with their financial aid offices and see what they can offer in scholarships and grants.
- File your FAFSA and apply for scholarships and grants. Your first visit should be to the official FAFSA website since colleges often require this to be completed before they will offer you other scholarships. There are many other platforms to search for scholarships as well. Here is a list to get you going: Edudaris, Fastweb, Collegenet, SuperCollege. By no means is this list exhaustive but it provides a good diving board into the world of available scholarships.
- Speak to others who have taken that leap and listen to their advice. They have personal experiences to help you both academically, professionally, and financially. Ask your prospective schools for recent graduates’ names from your prospective field of interest.
- Get the support of your family and friends.
Going back to school can be a daunting and exciting opportunity. Don’t let fear or the cost of the unknown prevent you from bettering yourself and your family.
Guest Contributor: Ester Johnson, AFC®
For many military families, summertime means moving time. With the approach of a PCS, you may find yourself faced with decisions about what to do with the home you have purchased at your current duty station. Should you sell or should you keep the home as a rental property? What if you are under water on your mortgage or cannot sell the home? Items to consider when making your decision:
Do you want to be a Landlord? Some people really like owning rental property and may have several at prior duty stations. While others hate the idea of someone else living in their house or do not like the stress of dealing with tenants. Think about which category you fall into and factor that into your decision.
What are the terms of your Mortgage? Does your mortgage allow you to use the home as a long term rental unit or does it specify that the owner must occupy the dwelling? Contact your mortgage company, or read your loan papers, to determine what is required in order to rent the home out.
Don’t forget about Insurance. You will need to notify your insurance company regarding the change in status of the home and make sure your policy covers you adequately, not only for damage to the home but also gives you liability coverage in case of an accident or injury to future tenants.
Do you have an Emergency Fund? If an appliance needs to be replaced or something needs to be fixed, the tenant will contact the landlord (you) or the property management company. This will be your responsibility and you will need to have funds set aside to meet these needs. Your renter rightly expects to have everything functioning as intended and as spelled out in the lease.
How will you Manage the Property? You can manage the property yourself or use a property management company. If you decide to manage the property yourself you will need to track all income and expenses, screen potential renters and be familiar with the Landlord rights and responsibilities in the state where the rental unit is located. When deciding to use a property management company get referrals and references. Ask what sort of statements and services the management company provides and look them up on the local Better Business Bureau website for any potential complaints.
A good Contract is key. Whether you manage the rental or use a company, make sure everything is spelled out in the lease agreement, using addenda to the standard lease agreement as necessary. Every state has different legal requirements. Who will be responsible for lawn maintenance; when is the tenant responsible for repairs or pest control; will you allow pets; are there HOA rules or parking regulations that need to be followed; will the rental include access to HOA facilities such as pools? Once you become a landlord this is a business and you will need to treat it as one.
What is the Condition of the Home? Make sure the home is well maintained and all appliances and systems are in working order before you list the property for rent. If there are any items in the home that are costly or sentimental, consider replacing that item with a less expensive alternative while the home is rented. Take photos or video of the home to document the condition it is in prior to renting and make sure to repair any items that need it. You may have tolerated something because it was not important to you, or you “learned to live with it,” but renters will expect everything in functioning condition. Leaving a broken or non-functioning item may also expose you to liability if someone is injured because you did not repair something.
Remember your Taxes. With a rental you will need to file a Form 1040 with Schedule E, where you will deduct the following from the rent you actually receive: mortgage interest, taxes, insurance, HOA fees, lawn maintenance, repairs and any other expenses. Payments on the principal are deducted from income as depreciation, which is the way that the cost of any asset is deducted over the time that it is generating income. To depreciate the property, you will need to know the value of the home and the land. In most cases you will use the purchase price of the home less the value of the land, which should be listed on the initial property tax statement. If the home has decreased in value before it is converted into a rental you will use the value of the home and land on the day it was converted. You will always use the lowest value of the home for depreciation. It can be tempting to skip this part on your tax return, but do not skip it. When you sell the home you will be required to pay capital gains tax at a specific rate on the amount you took, or could have taken, as depreciation. Even if you normally complete your own tax return, the first and last year of having a rental may be the time to see a professional. More information is available in Pub 527-Residential Rental Property and in Pub 534-Depreciation, which can be downloaded at Irs.gov.
What sort of emergency fund would you recommend to a client who wants to be a landlord?
How would you advise a client who does not want to rent a home but cannot sell before a PCS?
Guest Contributor: Cheryl Myrick, AFC®
As President and CEO of the Investor Protection Trust and the Investor Protection Institute, Don Blandin is passionate about investor education and protection. He has worked on programs that address topics including elder fraud and financial exploitation, as well as saving and investing for retirement. This month, take a few minutes to get to know fellow AFCPE® member, Don Blandin. Find out how you can get involved with the When I’m 65 engagement program and help expand and share the important message of saving for a secure retirement.
Tell us a little about your path into the nonprofit sector and the field of personal finance?
Throughout my career, I have been building educational coalitions and partnerships. I’ve worked in and with a wide variety of sectors, including business and industry, nonprofit, academia, philanthropic foundations, and federal, state and local government, both in the U.S. and globally.
What issues are you most passionate about?
The biggest issues that I care about are investor education and protection – educating individuals to be wise and safe investors. Through my work, I’m always connecting investors to independent, unbiased and noncommercial investor education materials, including materials from IPT, IPI and other trusted non-profit organizations.
The financial services industry has several types of investment products that are constantly being put in front of individuals, through advertisements, phone calls, an invitation for a free dinner and so on. It is up to the investor to do the research in deciding what the product actually is and whether it is appropriate for them. I cannot emphasize enough how important it is to be well-informed and cautious about your investments – know where your money is going, how it can grow and who is involved.
Tell us about the When I’m 65 documentary and how AFCPE Members can utilize it as a financial education resource?
The When I’m 65 engagement program has a variety of tools and resources that AFCPE members can utilize in their classrooms, workshops, community meetings and in their personal lives to educate their families and friends. Program materials are tailored to each generational cohort (Millennials, Gen Xers, and Baby Boomers).
You can share screenings of the documentary in your classrooms and workshops to stimulate discussions and utilize online activities to encourage active learning about planning ahead for retirement. The full documentary is available online at www.WI65.org, along with excerpts useful in training workshops, as well as bonus interviews and engagement extras.
Through the program, you can also engage in partnerships with public television stations and state and local community groups to bring retirement saving and investment education to both local communities and individuals across the country. Let us know if you would be interested in participating in a community event (e.g. Investors Town Meeting) and we can connect you to your local public television station and/or State Securities office.
Other tools and resources in development:
- Materials to support multiple workshop topics that can be facilitated by a professional trainer, HR manager, or financial planner in group settings. Want to lead your own virtual workshop? You will have access to a self-guided curriculum with resource materials.
- Lively blog featuring guest commentators and writers
- Newsletter promoting new video, local events, and excerpts from blogs, research, and news about retirement planning.
- Monthly interactive streaming events – widely distributed and embeddable on third party websites – focused on investor education and protection, featuring special guests and educators, and sharing personal stories.
- Marketing kits with digital and print-ready materials.
- Quizzes, worksheets and planning tools
- Social media toolkits, including scripts, reinforcing follow-up messages for workshop participants, direction to video and online resources, texting, etc.
In what ways can AFCPE Members help expand and tailor the reach of this important message?
We want the When I’m 65 program to work for you and meet your needs. Please visit the film’s web page (www.WI65.org) and share your outreach suggestions with us by filling out the survey you find there. Tell us about organizations in your area that you think might be interested in learning about the film and who would be good candidates to sponsor workshops for people in your area. These might include professional organizations around financial planning, administrators of 401(k) plans, community resources that help people with financial literacy, your local library, etc. You can also register to receive educational and promotional materials as well as film updates as they are released.
While the full documentary is available, we encourage you to contact your local PBS station to ask when they plan to air When I’m 65. Don’t know the station? Go to valuepbs.org for an interactive map to locate the stations in your community.
Introduce the Investor Protection Trust (www.investorprotection.org), the Investor Protection Institute (www.iInvest.org) and/or Detroit Public Television (www.dptv.org) to your partners and local organizations that are interested in using When I’m 65 as an educational tool.
We also encourage AFCPE members to promote When I’m 65 via social media. You can share When I’m 65’s posts or create your own including the When I’m 65 handle and #WI65 hashtag.
- When I’m 65 on Twitter: @WI65project (twitter.com/WI65project)
- When I’m 65 on Facebook: facebook.com/WI65project
IPI and IPT regularly share the documentary broadcast dates via social media which AFCPE members can share, particularly when the documentary will be aired in their market. Follow IPI and IPT on Twitter and like IPI and IPT on Facebook:
- IPT on Twitter: @IPT_Info (twitter.com/IPT_Info)
- IPT on Facebook: facebook.com/InvestorProtectionTrust
- IPI on Twitter: @IPI_News (twitter.com/IPI_News)
- IPI on Facebook: facebook.com/InvestorProtectionInstitute
And the question we ask in every Member Spotlight: if you had to choose, what is your favorite personal finance advice?
Saving and investing is not one-size-fits-all. To be a wise and safe investor, you have to assess your financial situation, investigate before you invest, adjust your plan according to different phases and resources in your life and never stop educating yourself. And, just as important, help others along the way! This is something I’ve seen many AFCPE members do over the years. Let’s continue to build bridges whenever possible.
I will also share IPT and IPI’s five keys to investing success:
Key #1: Make investing a habit
Key #2: Set exciting goals
Key #3: Don’t take unnecessary risks
Key #4: Keep time on your side
Key #5: Diversify
Have questions for Don? Reach out to him at firstname.lastname@example.org.
Interested in connecting with other AFCPE members living in your area or sharing your professional interests? Use the AFCPE Member Search portal: https://my.afcpe.org/member_search.