Section 529 Plans were created under the Small Business Job Protection Act of 1996 for the purpose of allowing people a tax advantaged way to save for the higher education expenses of a beneficiary.

At a high level, the account is owned by one person, and a successor owner is also named. Usually, these are parents of a child who is the beneficiary of the account, however anyone can own a 529 plan for the benefit of a child. Anyone can make a contribution to the account for the beneficiary.

Deposits into 529 plans are considered gifts.

Thoughts On The Outlook For 2019

David R.

According to industry sources, almost 46% of adults responded to surveys by admitting they either did not contribute to an employer’s retirement plan, or contributed very little into such plans.  Only 16% of the respondents said they invested more than 15% of their income, and virtually all of the respondents acknowledged that they knew more should be invested toward retirement goals.

Someday we will all retire, or at least slow down.  The question is, how prepared will you be for that day? 

It seems that after a relatively quiet and positive 2017, that 2018 has seen the resurgence of volatility.  Remember that markets are discounting mechanisms.  This means that assumptions about the future are priced into current values.  Market valuations of one year ago had priced into themselves an assumption about the coming year, in terms of economic activity, earnings, interest rates, and other quantifiable metrics.  Since that time, we’ve seen the passage of the Tax Cuts and Jobs Act, and the imposition of tariffs among other things. 

Death, sickness, disability, and other happen.  They just do.  Often times, situations such as these appear suddenly.  An unforeseen diagnosis, or a disability caused by an accident, or death, can be devastating to otherwise solid financial plans.  Sudden and unforeseen are two words that you never want associated with long term financial plans.  Therefore, the management of risk must be proactive.  It can’t be reactive.

I help clients with situations like these is by encouraging them to insure their lives, health, and income long before a catastrophe occurs. 

The term durable, as it pertains to retirement income, implies that you can’t outlive the income, and neither can the market take away, or erode the income.  Examples of durable income would include Social Security, or pension income.  For the income to be durable, the source must offer guarantees upon which the investor can rely for the production of that income.  In contrast, non durable income would simply be the amount that we hope to sustain from a non guaranteed source, over time. 

I’ve written about “tools” in previous articles.  June happens to be “annuity awareness month” in our industry, so I thought I would cast a spotlight on them within this article.  Annuities are simply tools that offer a few distinctive and unique benefits.  Primarily, I’ve made use of annuities within client plans to the extent we’ve needed durable income.  “Durable” implies that you can neither outlive the income, nor can the market take it away.

Only an annuity can provide such an income to compliment a pension, or Social Security. 

Needs of long term care can fall upon anyone, not just those nearing or transitioning into retirement.  Some of these statistics may be surprising.  In the State of Alabama, the average cost of a nursing home private room was $76,267 per year.  The median yearly cost for all nursing homes in the United States was just over $80,000 per year in 2016.

Nearly 70% of people over the age of 65 will need long term care support services at some point in their lives according to the 2016 publication of Medicare and You. 

We could create the best, and most dynamic financial plan in the world, but it will fail miserably if your ability to earn an income is interrupted or lost completely.  Everything that we do is predicated on the idea that you will have an income, from which you will make retirement plan contributions, and pay medical insurance premiums, mortgages, utility bills, and meet other required living expenses.