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Fiscal Fitness - In Transition
Welcome to the latest edition of Fiscal Fitness! As I write this article most of us are in the process of preparing to file our tax returns. It is also Women’s History Month. As many of you know, I am a big advocate for financial education, particularly for young women. My “Fiscal Fitness for Women” workshops have been well received over the years and are a constant reminder for me that no matter what your education or profession, sometimes you still need a little help. That being said, I thought it would be appropriate to focus on a few issues my female clients are currently dealing with.
Definition: State of constant change, alteration, metamorphosis, realignment. You get the idea. I guess it describes how many feel who have been through a divorce or who may have recently lost their spouse or partner. For the first time ever, many women become the decision maker after years of having relied upon their spouses for important financial decisions.
That trend has certainly changed over the years and still continues as more and more wealth is being managed by women. However, if you are still juggling work and a household with kids, it doesn’t leave much time to pay attention to the financial details that will be imperative for your future financial success.
One of the biggest concerns I hear from my female clients is trying to maintain their current standard of living. Higher taxes, inflation, unexpected medical bills, long-term care costs. If you have young children, what about the spiraling costs of college? Numerous studies have indicated women are more conservative in nature when it comes to investing, even more so after a major transition such as divorce or death of a spouse. Protecting my principal is the constant theme I hear. Growing the portfolio is not always paramount. With interest rates at record lows, how will you keep pace with inflation and taxes? The question you have to ask yourself- will I outlive my money or will my money outlive me?
Definition: leery, cynical, doubtful, suspicious. Sound familiar? When being asked to make financial decisions, it’s understandable how you might feel if you have never made those decisions before. It’s much easier to procrastinate. Finding a professional you feel comfortable with while developing a sense of trust is not easy. There comes a time when you might have to let someone else guide you. It’s no different for me when I sit across from my accountant or estate planning attorney – I have the confidence in their ability to guide me in the right direction. Although I know a lot about taxes and estate planning- why leave it to chance?
Did you know
If you are not working but receiving alimony, you can still contribute to a traditional Individual Retirement Account (IRA) or Roth IRA to help fund your future retirement? The contribution limits for both are $5,500 per year, plus an additional catch-up provision of $1,000 if age 50 or over. The Roth is subject to income limitations – please speak to your tax advisor.
As always, please seek the help of qualified and experienced professionals when making any investment, accounting or legal decision.
If the divorce is being filed under one of the seven fault grounds (including extreme cruelty, adultery, abandonment, substance or alcohol addiction, institutionalization, deviant sexual conduct and incarceration), the 18 month separation period, required for a no-fault divorce, is waived. However, each ground for divorce has its own stipulations.
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