Vail Daily column: Put Thanksgiving lessons to work in your financial plans
Thanksgiving Day has now past us by again. Throughout the years, this holiday has taken on a variety of meanings, most of them centered on family, caring and sharing. You can carry these same values past Thanksgiving and incorporate them into financial strategies for taking care of loved ones.
A few suggestions:
• Protect your family. If something were to happen to you, could your family pay the mortgage? Could your children still afford to go to college? To protect your family’s lifestyle and long-term goals, you may need to maintain adequate life and disability insurance.
Your employer may offer these as employee benefits, but the coverage might be insufficient for your needs. You might need to supplement employer-paid insurance with additional policies.
• Invest in your children. If you have young children, and you’d like to see them go to college someday, then you may want to start putting some money away toward that goal in regular installments.
You can save and invest for college in a variety of ways, but one popular method is through a 529 plan, which offers high contribution limits and potential tax advantages.
Plus, a 529 plan gives you a good mount of control and flexibility: If you establish a plan for one child, but he or she decides not to go to college, then you can name another child as the recipient.
• Be generous. You don’t have to be a millionaire to make financial gifts to your family. For example, if you have grown children, consider helping them fund IRAs.
You can’t contribute directly to a child’s IRA, but you can write checks to your children for that purpose — though they are then free to do whatever they want with the money you have provided.
It’s not always easy for a young person to max out”on an IRA, which has an annual contribution limit of $5,500 for workers under 50, so any help is usually appreciated.
• Safeguard your own financial independence. Almost certainly, one of the most undesirable outcomes you can imagine is to become financially dependent on your grown children. Even if you save and invest diligently throughout your working years, you could still be vulnerable to financial dependency if you need an extensive period of long-term care, such as a nursing home stay. These costs can be enormous, and Medicare typically pays a small percentage for just a limited time.
It is almost always a good idea to communicate your wishes to your family. Draw up estate plans, which could include a will, a living trust, a durable power of attorney, a health care directive and other documents. To be fair to your children and other family members, you should communicate your wishes while you are still around.
Thanksgiving means more than turkey and football. And if you can successfully apply the lessons of this holiday to your financial plans, then both you and your family will have reason to be thankful.
This article was written by Edward Jones for use by your local Edward Jones financial adviser. Edward Jones associates and financial advisers do not provide tax or legal advice. Chuck Smallwood, Bret Hooper, Tina DeWitt, Charlie Wick, Chris Murray and Kevin Brubeck are financial advisers. They can be reached in Edwards at 970-926-1728 or in Eagle at 970-328-4959 or 970-328-0361.