Planning for retirement is more than just a routine task; it’s a crucial step toward ensuring a comfortable and secure future. Yet, despite its importance, many people make critical missteps that jeopardize their financial stability during their golden years. From delaying the start of savings to underestimating future expenses, these all-too-common retirement planning mistakes can significantly impact your quality of life once you stop working.

Whether you’re climbing the corporate ladder or approaching retirement age, understanding and proactively addressing these pitfalls is essential for long-term financial success.

Avoid these six common retirement planning mistakes:

#1: Delaying the Start of Retirement Savings

One of the most common and easily avoidable retirement planning mistakes people make is waiting too long to start preparing. Perhaps that’s why 56% of working Americans believe they’re behind on their retirement savings, according to a recent Bankrate survey.

Delaying your planning may require you to save more aggressively as you near retirement and can lead to a savings shortfall later in life. To avoid these potential outcomes, it’s wise to begin saving as early as possible. Even if your initial contributions are modest, the compound interest over time can turn these small amounts into a major portion of your retirement resources.

#2: Failing to Maximize Contributions to Tax-Advantaged Accounts

Tax-advantaged accounts such as Individual Retirement Accounts (IRAs) and 401(k)s are powerful retirement planning tools. These accounts offer significant tax benefits, and contributing to them can provide meaningful tax savings both now and in the future.

Failing to maximize contributions to these accounts can be a missed opportunity, especially if your employer offers a 401(k) match. To avoid leaving money on the table, try to contribute the maximum each year to take full advantage of the tax benefits and compound growth these accounts offer.

In 2024, you can contribute up to $7,000 to an IRA and $23,000 to a 401(k) or similar employer-sponsored plan. If you’re over 50, you can contribute an additional $1,000 to an IRA and an additional $7,500 to a 401(k).

#3: Overlooking the Impact of Inflation

Financial planners often refer to inflation as the “silent thief” in retirement planning because it gradually erodes the purchasing power of your savings without any immediate, noticeable impact. Over time, however, inflation can significantly reduce how far your money goes, posing a threat to your financial security in retirement.

One of the most serious retirement planning mistakes people can make is investing their nest egg too conservatively or not investing at all because they didn’t consider the impact of inflation. Fortunately, if you’re still several years from retiring, you can avoid this pitfall by ensuring your investments have the potential to outpace inflation over time.

Generally, investing in equities is an effective way to combat the long-term effects of inflation. If you’re nearing retirement, holding Treasury Inflation-Protected Securities (TIPS) can help you preserve your purchasing power, as these securities are designed to appreciate with inflation.

#4: Misjudging Tax Implications in Retirement

Tax planning is an integral component of a comprehensive retirement plan. Nevertheless, one of the retirement planning mistakes many people make is neglecting or misjudging the impact of taxes on their retirement resources.

Understanding how different retirement accounts are taxed upon withdrawal is crucial for optimizing your financial resources during retirement. Funds from traditional IRAs and 401(k)s, for instance, are taxed as ordinary income at the time of withdrawal. In contrast, Roth IRAs and Roth 401(k)s offer tax-free withdrawals since you contribute after-tax dollars to these accounts.

Furthermore, working with a fiduciary financial advisor like Benchmark Wealth Management to develop a personalized retirement income strategy can help minimize your tax burden in retirement and avoid other costly penalties that deplete your savings. For example, Medicare beneficiaries whose income exceeds certain thresholds may be subject to a surcharge called IRMAA, which can significantly increase your healthcare costs in retirement if you don’t proactively manage your income.

#5: Choosing the Wrong Investment Strategy

When it comes to retirement planning, another common mistake is investing too conservatively or too aggressively for your goals and time horizon.

An overly aggressive approach can expose you to significant volatility and potential losses, which can be particularly harmful if the market dips near or during your retirement years. Conversely, investing too conservatively can result in an eventual savings shortfall, especially since retirement can last 20 to 30 years or more as healthcare improves and people live longer.

To strike the optimal balance, it’s essential to tailor your investment strategy to your age, financial goals, and risk tolerance, adjusting your portfolio accordingly over time. An experienced financial advisor can help you design an investment portfolio that considers your near-term needs as well as your longer-term financial objectives, ensuring you’re properly positioned for opportunities and challenges that lie ahead.

#6: Underestimating Healthcare Expenses

As we age, healthcare often becomes a more significant expense. Unfortunately, underestimating the potential cost of healthcare can pose a serious threat to your financial security in retirement.

According to the Fidelity Retiree Health Care Cost Estimate, an individual turning 65 in 2023 may need to have about $157,500 saved (after taxes) for healthcare expenses in retirement. Meanwhile, the average married couple may need approximately $315,000 saved to cover their healthcare costs.

While Medicare helps defray many of these costs, beneficiaries are still responsible for expenses like deductibles and copays. Furthermore, Medicare doesn’t cover many services and treatments, most notably long-term care. Since it’s estimated that 48% of people turning 65 will need some form of paid long-term care services in their lifetimes, failing to incorporate this possibility into your retirement plan can jeopardize your financial well-being during your golden years.

There are various strategies you can employ to prepare for the potentially high cost of healthcare and avoid this common retirement planning mistake. Examples include:

• Health Savings Account (HSA). If you have access to an HSA, try to maximize your contributions. These accounts offer triple tax advantages—contributions are tax-deductible, the balance grows tax-free, and withdrawals for qualified medical expenses are also tax-free.
• Long-term Care Insurance. Consider long-term care insurance, which can cover the cost of home care, assisted living, or nursing home care—expenses Medicare doesn’t cover—if you need them.
• Budget for Out-of-Pocket Costs. Be sure to include potential out-of-pocket healthcare expenses in your retirement budget, accounting for the impact of inflation on these costs.

By taking proactive steps to account for healthcare costs, you can help minimize the impact of unexpected medical expenses on your retirement plans.

Partner with Benchmark Wealth Management to Avoid These Retirement Planning Mistakes

The road to retirement is often fraught with challenges, and missteps along the way can be costly. By avoiding these retirement planning mistakes and other common pitfalls, you can reduce the risk of falling short of your financial goals, paving the way for a secure and prosperous future.

Remember, you don’t have to go it alone. Benchmark Wealth Management can offer personalized guidance to help you craft a retirement strategy that reflects your priorities and goals and provides peace of mind in your golden years. Contact us to begin your retirement planning journey today.

 

About Rick

Richard W. Stout III is managing director of Benchmark Wealth Management, LLC, with 25 years of experience in the financial industry. He specializes in financial planning and asset management for individuals, families, and institutions seeking to build and monitor durable and sustainable plans for their financial futures. Rick is a Certified Financial Planner™ professional and holds the Accredited Investment Fiduciary® (AIF®) designation. He obtained his MBA from Rensselaer Polytechnic Institute and his BA in Economics and Anthropology from the University of Connecticut. Rick has earned a Master of Science degree in Personal Financial Planning from the College for Financial Planning. He has extensive background experience in lending, credit review and analysis, and real estate and partnership management. Learn more about Rick by connecting with him on LinkedIn.

About Thomas

Thomas J. Britt is managing director of Benchmark Wealth Management, LLC, with 23 years of experience in the financial industry. He specializes in executive financial planning, retirement planning, investing, as well as the management of trusts and endowments. Thomas is a CERTIFIED FINANCIAL PLANNER™ professional. He holds the Master Planner Advanced StudiesSM, MPAS®, Certified Investment Management Analyst® (CIMA®), and Chartered Retirement Planning Counselor℠, CRPC® designations. Thomas earned a Bachelor of Science in Finance from the University of New Haven, an MBA in financial technology from Rensselaer Polytechnic Institute, and a Master of Science in Personal Financial Planning from the College for Financial Planning. He is also a proud veteran of the United States Navy Submarine Force. Learn more about Tom by connecting with him on LinkedIn.

Additional information, including management fees and expenses, is provided on our Form ADV Part 2, available upon request or at the SEC’s Investment Advisor Public Disclosure site, www.adviserinfo.sec.gov/firm/160192

Securities offered by Registered Representatives through Private Client Services, Member FINRA, SIPC in the following states: AZ, CA, CT, FL, KY, MA, ME, MI, MN, NH, NJ, NY, RI, TX. (Securities-related services may not be provided to individuals residing in any state not previously listed.) Advisory services offered through Benchmark Wealth Management, LLC a Registered Investment Advisor. Benchmark Wealth Management and Private Client Services are unaffiliated entities.

April marks National Financial Literacy Month, an opportunity to dive into the world of personal finance and boost your financial know-how. Whether you’re climbing the corporate ladder or nearing retirement, financial literacy is key for making informed decisions that lead to a secure and prosperous future.

However, sorting through the multitude of available personal finance resources can be daunting, especially if you aren’t sure where to begin. That’s why we’ve curated a list of 10 personal finance books and podcasts that stand out for their engaging content, practical advice, and innovative approaches to managing your finances.

These resources offer valuable insights and strategies that can change the way you think about and manage your money. They’re also accessible, meaning you don’t have to be a financial expert to find them interesting. We hope you find these selections both educational and enjoyable!

Here are 10 books and podcasts to enhance your financial literacy:

#1: The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness by Morgan Housel

The Psychology of Money offers a refreshing and profound exploration of how our behaviors and perceptions shape our financial decisions more than the numbers themselves. By weaving together history, psychology, and economics, author Morgan Housel delves into the reasons behind why we tend to make irrational financial choices and how our backgrounds and personal experiences influence our approach to money.

For those looking to boost your financial literacy, The Psychology of Money doesn’t just offer strategies for accumulating wealth; it provides valuable insights into how to have a more fulfilling relationship with money, so you can live a richer, happier life.

#2: Die With Zero: Getting All You Can from Your Money and Your Life by Bill Perkins

Die With Zero challenges conventional wisdom about saving and investing for the future with a provocative premise: Optimizing your wealth shouldn’t just be about accumulating as much money as possible for retirement. Rather, it should be about using your resources to live a fuller life at every stage.

Author Bill Perkins introduces a framework for spending and enjoying your money through various phases of life, advocating for a more balanced approach to personal financial management. Moreover, he encourages readers to consider the value of their time and experiences, not just their monetary wealth, in financial decision-making.

Ultimately, Perkins offers an enlightening perspective on how to maximize life’s moments without sacrificing financial security. If you’re looking for a fresh take on personal finance this Financial Literacy Month, Die With Zero might change the way you think about accumulating and distributing wealth.

#3: Financial Freedom: A Proven Path to All the Money You Will Ever Need by Grant Sabatier

Financial Freedom: A Proven Path to All the Money You Will Ever Need is a roadmap for anyone aspiring to escape the paycheck-to-paycheck lifestyle and embark on a path toward personal and financial autonomy. Author Grant Sabatier, who achieved financial independence by age 30, shares his journey and the lessons he learned along the way, offering practical advice for earning, saving, investing, and living a life rich in experiences without the burden of financial stress.

For those interested in improving their financial literacy to ultimately achieve financial independence, Financial Freedom serves as an insightful and empowering guide. Sabatier not only provides the tools and techniques to maximize income and grow wealth but also encourages a profound reconsideration of what it means to live a fulfilling life.

#4: Your Money or Your Life by Vicki Robin and Joe Dominguez

Your Money or Your Life is a transformative reference that goes beyond mere financial advice to offer a comprehensive life philosophy. Authors Vicki Robin and Joe Dominguez challenge readers to reassess their relationships with money, work, and consumption, advocating for a life of financial integrity and mindfulness.

What sets this book apart is its step-by-step approach to achieving financial independence through a combination of reducing debt, cultivating frugality, saving diligently, and investing wisely, all while emphasizing the importance of aligning one’s spending with personal values and goals. It stands out for its emphasis on the psychological and emotional aspects of financial decision-making, encouraging readers to make conscious choices about their financial paths.

For those embarking on a financial literacy journey, Your Money or Your Life offers a unique roadmap for redefining success and creating a sustainable lifestyle that values time and freedom over material wealth.

#5: The Millionaire Next Door by Thomas J. Stanley and William D. Danko

The Millionaire Next Door is a classic personal finance book that presents a compelling analysis of America’s affluent, debunking common myths about wealth and how people accumulate it. Authors Thomas Stanley and William Danko reveal that most millionaires live below their means, investing wisely and avoiding debt, unlike the lavish lifestyles the media often portrays.

What sets this work apart is its rigorous research methodology, including surveys and interviews, providing an evidence-based approach to understanding financial success. In addition, the authors highlight the habits and strategies that have enabled individuals to amass wealth over time, emphasizing financial discipline, hard work, and prudent investment.

For anyone seeking to improve their financial literacy, The Millionaire Next Door is a treasure trove of practical advice and insights. It teaches valuable lessons on the importance of living frugally, saving diligently, and investing intelligently, demonstrating that financial independence is achievable for those who commit to smart financial planning and management.

#6: Against the Gods: The Remarkable Story of Risk by Peter L. Bernstein

Against the Gods is an engaging journey through the history and evolution of risk management, illustrating how the concept of risk has shaped society and the financial markets. This book stands out for its thorough exploration of risk, from ancient times to the present day, making complex statistical concepts accessible to a general audience.

For those aiming to enhance their financial literacy, Against the Gods offers invaluable insights into the nature of financial risk and the importance of strategic risk management. By demystifying the complexities of risk, Author Peter Bernstein empowers readers with the knowledge to make more informed financial choices, ultimately leading to a more confident and calculated approach to personal financial planning.

#7: Your Money Briefing Podcast from the Wall Street Journal

Your Money Briefing is a concise, informative audio resource that delivers daily insights into the world of finance, covering a broad spectrum of topics from market trends and investment strategies to personal finance advice. What differentiates this podcast is its ability to distill complex financial news and concepts into understandable, bite-sized pieces, making it accessible to both novices and seasoned investors alike.

Hosted by experienced journalists, each episode leverages the vast reporting resources of the Wall Street Journal, offering listeners up-to-the-minute information and analysis on economic developments, financial planning, and the impact of global events on personal finances. For those seeking to boost their financial literacy, this podcast provides a valuable, time-efficient way to stay informed about the financial world.

#8: The Long View Podcast from Morningstar

The Long View is an insightful series that dives deep into the strategies, philosophies, and experiences of top investors and financial experts. Each episode features in-depth interviews with industry leaders, offering listeners a unique opportunity to learn from the wisdom and mistakes of seasoned professionals.

For those looking to take their financial literacy to the next level, The Long View offers an abundance of knowledge on how to build and maintain a successful investment portfolio over time. It’s an invaluable resource for those who are serious about understanding the intricacies of investing and seeking to apply these lessons to their own financial lives.

#9: ChooseFI Podcast with Brad Barrett and Jonathan Mendonsa

The ChooseFI Podcast stands as a beacon for those navigating the path to financial independence, offering a dynamic and supportive community for listeners at every stage of their financial journey. Hosted by Brad Barrett and Jonathan Mendonsa, ChooseFI delves into a wide array of topics, including saving, investing, tax optimization, debt reduction, and income generation strategies.

What sets this podcast apart is its grassroots approach, emphasizing practical tips and life hacks shared by a diverse community of guests, including financial experts, entrepreneurs, and individuals who have successfully achieved financial independence. It offers inspiration and guidance for anyone looking to boost financial literacy, reduce financial stress, work toward financial freedom, and ultimately, craft a life that values time and choice over material wealth.

#10: Stacking Benjamins Podcast with Joe Saul-Sehy and OG

The Stacking Benjamins Podcast brings a fresh and entertaining approach to personal finance. Set in host Joe Saul-Sehy’s mom’s half-finished basement, the show’s lighthearted and humorous format makes learning about money management both fun and engaging.

Unlike traditional finance podcasts, Stacking Benjamins focuses on a wide variety of topics through a mix of guest interviews, listener questions, and themed episodes, covering everything from saving and investing to earning and creating better money habits. For those looking to improve their financial literacy without the heaviness of jargon-laden discourse, this podcast offers a refreshing alternative.

Boost Your Financial Literacy and Confidence with Benchmark Wealth Management as Your Guide

Each of these resources offers a unique lens through which to view the complexities of personal financial management. However, while these books and podcasts can provide a solid foundation for understanding and improving your personal finances, the journey doesn’t end here.

The pursuit of financial literacy is a lifelong endeavor that can be significantly enhanced with professional guidance. If you’re ready to take the next step toward financial independence, consider reaching out to a fiduciary financial advisor like Benchmark Wealth Management.

At Benchmark Wealth Management, we understand that every financial journey is unique. Our team of experts is here to provide personalized advice tailored to your individual needs and aspirations. Contact us today to find out how we can help you navigate the path to financial freedom with clarity and confidence.

 

About Rick

Richard W. Stout III is managing director of Benchmark Wealth Management, LLC, with 25 years of experience in the financial industry. He specializes in financial planning and asset management for individuals, families, and institutions seeking to build and monitor durable and sustainable plans for their financial futures. Rick is a Certified Financial Planner™ professional and holds the Accredited Investment Fiduciary® (AIF®) designation. He obtained his MBA from Rensselaer Polytechnic Institute and his BA in Economics and Anthropology from the University of Connecticut. Rick has earned a Master of Science degree in Personal Financial Planning from the College for Financial Planning. He has extensive background experience in lending, credit review and analysis, and real estate and partnership management. Learn more about Rick by connecting with him on LinkedIn.

About Thomas

Thomas J. Britt is managing director of Benchmark Wealth Management, LLC, with 23 years of experience in the financial industry. He specializes in executive financial planning, retirement planning, investing, as well as the management of trusts and endowments. Thomas is a CERTIFIED FINANCIAL PLANNER™ professional. He holds the Master Planner Advanced StudiesSM, MPAS®, Certified Investment Management Analyst® (CIMA®), and Chartered Retirement Planning Counselor℠, CRPC® designations. Thomas earned a Bachelor of Science in Finance from the University of New Haven, an MBA in financial technology from Rensselaer Polytechnic Institute, and a Master of Science in Personal Financial Planning from the College for Financial Planning. He is also a proud veteran of the United States Navy Submarine Force. Learn more about Tom by connecting with him on LinkedIn.

Additional information, including management fees and expenses, is provided on our Form ADV Part 2, available upon request or at the SEC’s Investment Advisor Public Disclosure site, www.adviserinfo.sec.gov/firm/160192

Securities offered by Registered Representatives through Private Client Services, Member FINRA, SIPC in the following states: AZ, CA, CT, FL, KY, MA, ME, MI, MN, NH, NJ, NY, RI, TX. (Securities-related services may not be provided to individuals residing in any state not previously listed.) Advisory services offered through Benchmark Wealth Management, LLC a Registered Investment Advisor. Benchmark Wealth Management and Private Client Services are unaffiliated entities.

As financial advisors, we understand that tax season can be a time of stress and complexity for many. But beyond the maze of paperwork and looming deadlines, we see this time of year as a golden opportunity for reflection and strategic planning.

In our line of work, the period leading up to April 15th isn’t just about filing taxes; it’s about diving deep into the financial lives of our clients to unearth opportunities and strategies that can lead to significant savings and smarter financial decisions. Since tax-smart investment management plays a crucial role in helping our clients meet their financial goals, this review and analysis period usually involves identifying strategies to minimize capital gains taxes, which can significantly reduce investment returns over time.

Of course, each client’s financial situation is unique, requiring a tailored approach to tax planning. However, there are key strategies we consistently employ to help our clients manage capital gains taxes and enhance their investment outcomes over time.

Understanding Capital Gains Taxes

When an investor sells an asset outside of a tax-deferred account like a 401(k) or IRA, the difference between the sale price and the original purchase price (the “basis”) is subject to capital gains taxes if it results in a profit. This tax applies to a wide range of assets, including securities like stocks and bonds and tangible assets like real estate and personal property.

The capital gains tax rate is based on how long an investor held an asset before selling it:

• The short-term capital gains rate applies to assets held for one year or less and is the same as the investor’s ordinary income tax rate.
• The long-term capital gains rate applies to assets held for more than a year and is either 0%, 15%, or 20% depending on the investor’s taxable income and filing status.

Most taxpayers pay the long-term capital gains tax rate of 15%. However, the highest earners—single and joint filers with incomes above $518,900 and $583,750, respectively, in 2024—pay a long-term capital gains rate of 20%. Meanwhile, single and joint filers earning less than $47,025 and $94,050, respectively, pay a 0% tax rate on long-term capital gains in 2024.

5 Strategies We Leverage to Help Clients Minimize Capital Gains Taxes

Navigating the complexities of capital gains taxes involves both a clear understanding of the current tax landscape and careful planning. Here are five strategies we often leverage to help our clients minimize capital gains taxes.

#1: Intentional Buying and Selling of Assets

To minimize capital gains taxes, we pay careful attention to two critical pieces of information for any assets our clients intend to sell: the cost basis and the holding periods.

• Cost Basis. This is essentially the original value of an asset for tax purposes, usually the purchase price. Understanding the cost basis allows us to calculate the precise gain or loss upon sale, which in turn determines the client’s potential tax liability.
• Holding Period. The client’s holding period—whether they held an asset for more or less than a year—also plays a pivotal role in our strategy as it affects the tax rate that applies to any capital gains.

Armed with this information, we can strategically plan trades to optimize after-tax returns for our clients.

For instance, we might advise holding an asset a little longer to qualify for the lower long-term capital gains tax rate. Alternatively, we may recommend selling an asset in a year when the client expects a lower taxable income to benefit from a reduced tax rate.

This strategic approach is part of our comprehensive service, ensuring that our clients’ investment decisions are both financially sound and tax efficient.

#2: Account Diversification

Diversifying investments across different account types is a sophisticated strategy we employ to help our clients proactively manage and potentially minimize their capital gains taxes over time. This method takes advantage of the distinct tax treatments applied to various account types, optimizing both current and future tax liabilities for our clients.

Investment accounts generally fall into three categories: tax-free accounts, tax-deferred accounts, and taxable accounts. Each has its own set of tax rules and advantages depending on a client’s unique situation and goals.

• Tax-free accounts, such as Roth IRAs and Roth 401(k)s, provide an opportunity for investments to grow tax-free. Clients can also withdraw their funds tax-free in retirement, provided they meet certain conditions.
• Tax-deferred accounts, including traditional IRAs and 401(k)s, allow investments to grow tax-free until withdrawals begin, typically in retirement. This can significantly defer a client’s tax liabilities until retirement, when a client might be in a lower tax bracket than they are now.
• Taxable accounts, such as individual or joint brokerage accounts, are subject to capital gains taxes on the profits from sales of investments within these accounts. However, they offer clients flexibility with no limits on contributions and the freedom to withdraw at any time without penalties.

By allocating investments across these different account types, we can tailor an account diversification strategy that aligns with our clients’ financial objectives while minimizing capital gains taxes.

#3: Tax-Loss Harvesting

Tax-loss harvesting involves selling investments at a loss to offset capital gains. This strategy plays a critical role in our approach to helping clients minimize capital gains taxes.

By carefully managing losses, we can help our clients lower their overall tax liability in a given tax year. First, it allows clients to offset taxable gains with losses, dollar for dollar. Moreover, if the client’s losses exceed their gains, they can use up to $3,000 of the excess loss to reduce their ordinary taxable income, carrying over any unused losses to future years.

In managing this process for our clients, we can also ensure that they remain compliant with the various rules surrounding tax-loss harvesting, especially the “wash sale rule.”

The IRS prohibits claiming a tax deduction for a loss if an investor repurchases the same security, or one substantially identical, within 30 days before or after the sale. Violating this rule—whether intentional or unintentional—can undo many of the tax benefits associated with tax-loss harvesting.

#4: Managing Taxable Income

Strategically managing taxable income is another crucial method we use to help our clients minimize capital gains taxes. This approach involves advising clients on the optimal timing for realizing income, making charitable donations, contributing to retirement accounts, and leveraging other tax deductions and credits.

Through a combination of these strategies, we provide our clients with a comprehensive plan to manage their taxable income effectively. This proactive approach not only helps minimize their current capital gains taxes but also paves the way for a healthier financial future, ensuring that they keep more of their hard-earned money.

#5: Gifting or Donating Appreciated Assets

For clients interested in financially supporting their loved ones or championing a cause dear to them, we frequently advise on the strategic gifting or donating of appreciated assets. This approach serves a dual purpose: it not only helps minimize capital gains taxes but can also significantly further their philanthropic and estate planning objectives.

Gifting appreciated assets to family members or other beneficiaries is a tax-free method for transferring wealth, provided the gift doesn’t exceed the annual gift tax exclusion ($18,000 per beneficiary as of 2024). Moreover, if the recipient is in a lower tax bracket, gifting an appreciated asset can lower the overall tax impact of selling it, preserving more of the asset’s value for the recipient.

Alternatively, donating appreciated assets directly to a charity or through a donor-advised fund can be an incredibly effective way to avoid the capital gains tax while also potentially realizing a valuable tax deduction. For clients deeply invested in charitable giving, this strategy aligns their investment growth with their philanthropic aspirations, enabling them to contribute more significantly to their chosen causes.

Looking to Minimize Capital Gains Taxes? Benchmark Wealth Management Can Help.

Helping our clients minimize capital gains taxes and optimize their overall tax situation is just one of the ways we add value to their busy lives. By taking the time to understand their values, goals, and full financial picture, we provide personalized, holistic guidance, setting each client on a unique path toward financial freedom.

Benchmark Wealth Management is committed to providing comprehensive financial planning and investment management solutions, ensuring our clients’ assets are handled with care. To get to know us better and see if we may be the right fit for your financial planning needs, please contact us.

 

Please note that the information provided includes references to concepts that have legal, accounting and tax implications. It is not to be construed as legal, accounting or tax advice, and is provided as general information to you to assist in understanding the issues discussed. Please consult your own attorney and/or accountant regarding the application of the information contained in this newsletter as to the facts and circumstances of your particular situation.

 

About Rick

Richard W. Stout III is managing director of Benchmark Wealth Management, LLC, with 25 years of experience in the financial industry. He specializes in financial planning and asset management for individuals, families, and institutions seeking to build and monitor durable and sustainable plans for their financial futures. Rick is a Certified Financial Planner™ professional and holds the Accredited Investment Fiduciary® (AIF®) designation. He obtained his MBA from Rensselaer Polytechnic Institute and his BA in Economics and Anthropology from the University of Connecticut. Rick has earned a Master of Science degree in Personal Financial Planning from the College for Financial Planning. He has extensive background experience in lending, credit review and analysis, and real estate and partnership management. Learn more about Rick by connecting with him on LinkedIn.

About Thomas

Thomas J. Britt is managing director of Benchmark Wealth Management, LLC, with 23 years of experience in the financial industry. He specializes in executive financial planning, retirement planning, investing, as well as the management of trusts and endowments. Thomas is a CERTIFIED FINANCIAL PLANNER™ professional. He holds the Master Planner Advanced StudiesSM, MPAS®, Certified Investment Management Analyst® (CIMA®), and Chartered Retirement Planning Counselor℠, CRPC® designations. Thomas earned a Bachelor of Science in Finance from the University of New Haven, an MBA in financial technology from Rensselaer Polytechnic Institute, and a Master of Science in Personal Financial Planning from the College for Financial Planning. He is also a proud veteran of the United States Navy Submarine Force. Learn more about Tom by connecting with him on LinkedIn.

Additional information, including management fees and expenses, is provided on our Form ADV Part 2, available upon request or at the SEC’s Investment Advisor Public Disclosure site, www.adviserinfo.sec.gov/firm/160192

Securities offered by Registered Representatives through Private Client Services, Member FINRA, SIPC in the following states: AZ, CA, CT, FL, KY, MA, ME, MI, MN, NH, NJ, NY, RI, TX. (Securities-related services may not be provided to individuals residing in any state not previously listed.) Advisory services offered through Benchmark Wealth Management, LLC a Registered Investment Advisor. Benchmark Wealth Management and Private Client Services are unaffiliated entities.

In today’s fast-paced world, our financial choices can often seem disconnected our personal values. Yet, achieving a balance between the two can be both empowering and transformative.

Indeed, aligning your money with your core beliefs isn’t just about making ethical choices. It’s about ensuring that every dollar you spend, save, or invest reflects what’s truly important to you.

Whether it’s through the products you buy, the causes and organizations you support, or the legacy you wish to leave behind, integrating your financial decisions with your core values can lead to a more fulfilling and responsible way of living. It not only opens the door to more personal satisfaction but can also make a positive impact on society and the world around you.

Here are four ways you can align your money with your values:

#1: Spend Intentionally

When you choose to spend intentionally, each purchase you make is a deliberate and thoughtful act—one that reflects a deeper understanding of how your personal values and beliefs intersect with your financial habits.

This approach to spending isn’t just about buying something because you need it or because it’s available. It’s about choosing to support businesses and products that stand for something you believe in.

For instance, if supporting your community and local economy is important to you, you may opt to buy from local artisans and small businesses rather than large chains and corporations. Likewise, if you value sustainability, you might commit to buying products with eco-friendly packaging or supporting companies with transparent supply chains.

Essentially, each dollar you spend on products and businesses that resonate with your values is a vote for the kind of world you want to live in. A mindful spending approach not only helps foster a deeper connection between your financial decisions and your ethical convictions; it can also contribute to a greater collective impact as more people spend intentionally.

#2: Invest with a Purpose

You can also align your money with your values through the investment decisions you make. Investing according to your core values and beliefs involves directing your money toward opportunities that not only offer financial returns but also contribute positively to society, the environment, or both.

This conscious approach to investing continues to gain popularity as more investors seek to make their money work for the causes and principles they believe in. In fact, 59% of Millennials and 45% of Gen-Xers say they’re interested in values-based investing, according to a recent survey from U.S. Bank.

However, while younger generations tend to be at the forefront of this investment trend, it’s gaining momentum among investors of all ages. For instance, the same survey found that 30% of Baby Boomers are interested in investing according to their values.

There are many ways to align your investment dollars with your beliefs, with each approach using a distinct methodology for selecting investments. Three popular examples include Socially Responsible Investing (SRI), Environmental, Social, and Corporate Governance (ESG) Investing, and Impact Investing.

Socially Responsible Investing (SRI)

SRI investors actively seek out companies that contribute positively to the world or avoid specific companies and industries based on certain moral, ethical, or religious criteria. The goal is to invest in a manner that’s consistent with your personal values, with competitive financial returns being a secondary consideration.

Environmental, Social, and Corporate Governance (ESG) Investing

ESG investing tends to take a more inclusive and analytical approach than SRI by focusing on a company’s environmental, social, and governance practices as key indicators of its long-term sustainability and ethical impact. With this approach, identifying financially sound companies and effecting change with your investment dollars are equal objectives.

Impact Investing

The goal of impact investing is to contribute actively to positive solutions by investing in areas like renewable energy, affordable housing, healthcare, education, and sustainable agriculture. The key distinction of this approach is the intentionality behind it—every investment you make aims to achieve specific positive outcomes alongside a financial return.

The choice among SRI, ESG investing, and impact investing—or a different values-based investment approach—depends on your specific beliefs, objectives, and the impact you wish to make. By aligning your investment dollars with causes and businesses you believe in, you can work toward personal financial goals while driving positive change.

#3: Give Strategically

Another way to align your money with your values is to donate to causes and organizations close to your heart.

Indeed, most of us tend to be philanthropic by nature. In 2022, for example, Americans gave nearly $500 billion to charity.

Oftentimes, these donations are spread thinly across many charities. However, focusing your donations on a few organizations that share your values and have a proven track record of making a meaningful impact can help both you and the charities you support make the most of your gifts.

This approach to giving involves going beneath the surface to identify charities that not only resonate with your core beliefs but also have a history of achieving tangible results. Online resources like Charity Navigator can help you identify sound charitable organizations and evaluate the efficacy and transparency of the charities you’re considering.

By aligning your donations with your values and carefully selecting high-impact organizations, you can ensure your gifts reflect your vision for a better world while potentially bringing about significant, positive change.

#4: Plan Your Legacy

Finally, one of the most enduring ways you can align your money with your values is by envisioning the long-term impact you want to leave on the world and taking steps to make it a reality. By thoughtfully planning your legacy, you can ensure your wealth supports your core values and beliefs for generations to come.

A key part of creating a lasting legacy is inspiring others to join you in your cause. This can involve family members, friends, or the wider community.

By sharing your vision and demonstrating the impact of your actions, you can encourage others to reflect on their values and how they can also contribute to meaningful change. This collaborative approach can amplify the impact of your efforts and create a ripple effect that extends far beyond your individual contribution.

Let Benchmark Wealth Management Help You Align Your Money with Your Values

Aligning your money with your values can be a powerful way to ensure your financial actions resonate with your personal beliefs and contribute to the greater good. Whether through intentional spending, purpose-driven investing, strategic giving, or planning your legacy, there are numerous paths to making your money a reflection of your values.

If you’re looking for personalized guidance on how to integrate your financial decisions with your values, Benchmark Wealth Management can help. We can provide tailored advice and strategies to help you achieve a harmonious balance between your financial goals and personal priorities. Contact us today to begin your financial planning journey.

 

About Rick

Richard W. Stout III is managing director of Benchmark Wealth Management, LLC, with 25 years of experience in the financial industry. He specializes in financial planning and asset management for individuals, families, and institutions seeking to build and monitor durable and sustainable plans for their financial futures. Rick is a Certified Financial Planner™ professional and holds the Accredited Investment Fiduciary® (AIF®) designation. He obtained his MBA from Rensselaer Polytechnic Institute and his BA in Economics and Anthropology from the University of Connecticut. Rick has earned a Master of Science degree in Personal Financial Planning from the College for Financial Planning. He has extensive background experience in lending, credit review and analysis, and real estate and partnership management. Learn more about Rick by connecting with him on LinkedIn.

About Thomas

Thomas J. Britt is managing director of Benchmark Wealth Management, LLC, with 23 years of experience in the financial industry. He specializes in executive financial planning, retirement planning, investing, as well as the management of trusts and endowments. Thomas is a CERTIFIED FINANCIAL PLANNER™ professional. He holds the Master Planner Advanced StudiesSM, MPAS®, Certified Investment Management Analyst® (CIMA®), and Chartered Retirement Planning Counselor℠, CRPC® designations. Thomas earned a Bachelor of Science in Finance from the University of New Haven, an MBA in financial technology from Rensselaer Polytechnic Institute, and a Master of Science in Personal Financial Planning from the College for Financial Planning. He is also a proud veteran of the United States Navy Submarine Force. Learn more about Tom by connecting with him on LinkedIn.

Additional information, including management fees and expenses, is provided on our Form ADV Part 2, available upon request or at the SEC’s Investment Advisor Public Disclosure site, www.adviserinfo.sec.gov/firm/160192

Securities offered by Registered Representatives through Private Client Services, Member FINRA, SIPC in the following states: AZ, CA, CT, FL, KY, MA, ME, MI, MN, NH, NJ, NY, RI, TX. (Securities-related services may not be provided to individuals residing in any state not previously listed.) Advisory services offered through Benchmark Wealth Management, LLC a Registered Investment Advisor. Benchmark Wealth Management and Private Client Services are unaffiliated entities.

The terms “self-care” and “financial self-care” have become increasingly prevalent in contemporary discourse. However, despite their widespread use, there’s often a lack of clarity regarding their true meaning.

Contrary to popular belief, self-care isn’t about overindulging or prioritizing instant gratification over longer-term goals. Rather, it’s about finding balance and pursuing activities that support your overall health, happiness, and security.

This is an important distinction, especially in the context of personal financial management. Indeed, true financial self-care means making financial decisions that are in harmony with your priorities, aspirations, and emotional well-being, thereby cultivating a more intentional relationship with your money.

But what does this mean in practice? In this article, we’ll explore the benefits of financial self-care and offer practical strategies for practicing it effectively.

What is Financial Self-Care?

Financial self-care is a concept that focuses on mindfully managing your finances and nurturing your relationship with money. It’s not just about responsible decision-making, however; it’s about making intentional financial choices that reflect your personal values and life goals.

Moreover, financial self-care involves being aware of how financial stress impacts your emotional well-being and taking steps to address these concerns. According to a 2023 Bankrate survey, 52% of U.S. adults said money had a negative impact on their mental health, underscoring the importance of a robust self-care practice.

In many ways, cultivating financial wellness is just as critical as protecting your physical and mental health. By practicing financial self-care, you can feel better about your money and make choices that support a truly rich life.

How to Practice Financial Self-Care

Here are five ways to consistently practice financial self-care, regardless of your financial circumstances and goals:

#1: Schedule Regular Financial Check-ins

Just as you might schedule routine check-ups to assess your physical health, periodic financial check-ins are a key aspect of financial self-care. This involves regularly reviewing your financial progress, prioritizing your goals, and adjusting your financial plan accordingly.

This practice helps ensure you’re on the right track and making informed decisions with respect to your financial needs and ambitions. By taking a big-picture view of your financial life, you can proactively manage your money, adapt to changes, and make meaningful strides toward financial stability and growth.

#2: Practice Mindfulness

Mindfulness plays a pivotal role in financial self-care by bringing a heightened level of awareness to every financial choice, large or small. When you practice mindfulness in spending, for instance, you pause and reflect on each purchase, considering how it aligns with your long-term financial goals and personal values.

This introspective process can help you differentiate between impulsive and intentional spending, ensuring your spending habits are congruent with your broader financial objectives. It can also lead to a deeper understanding of your spending triggers, which is crucial for breaking the cycle of emotional spending and financial regret.

Essentially, mindfulness encourages you to weigh the long-term benefits of each financial decision against the immediate satisfaction it may provide. It helps ensure you’re using your financial resources efficiently and effectively, paving the way for a more sustainable and intentional lifestyle.

#3: Learn to Set Financial Boundaries and Say No

Just as personal self-care involves understanding and setting boundaries, financial self-care requires a similar approach. Learning what you’re willing and unwilling to tolerate financially is crucial for maintaining a healthy financial state.

This often means having the courage and discipline to say no to certain expenses and demands on your money when they don’t support your long-term goals. It’s about balancing generosity and self-preservation, aligning your spending with your values, and making conscious choices that contribute to a stable and stress-free financial future.

For many people, setting and respecting financial boundaries is one of the more challenging aspects of financial self-care. However, mastering this skill is vital for financial growth and well-being.

#4: Invest in Education and Self-Improvement

Investing in personal and professional growth is a critical but frequently underestimated component of financial self-care. It’s about recognizing that spending money on your development isn’t just an expense; it’s an investment that can yield substantial long-term benefits, both financially and personally.

Whether it’s learning new technologies, acquiring a certification, or pursuing advanced studies in your field, education can open doors to higher-paying positions, promotions, or entirely new career opportunities. Meanwhile, an investment in self-improvement often pays dividends in terms of personal satisfaction and confidence, which can lead to a more engaged, productive, and fulfilling life.

However, it’s crucial to approach this aspect of financial self-care strategically to ensure it doesn’t adversely affect your overall financial health. By choosing courses, workshops, and other educational resources that align with your goals and offer the best return on investment, you can set yourself up for a more rewarding and financially secure life.

#5: Create a Reward System for Financial Self-Care

Financial self-care also includes rewarding yourself periodically for reaching key financial milestones. For example, you might aim to pay off a certain amount of debt within a year, save a specific amount for a down payment on a house, or reach a target in your retirement savings.

Once you achieve your goal, rewarding yourself with a thoughtful, pre-planned treat can reinforce the positive behavior that got you there. This practice not only acknowledges the hard work and discipline that goes into managing your finances but also keeps you motivated and emotionally invested in your financial journey.

However, it’s important to make sure the reward is in proportion to the milestone you achieve and doesn’t offset your financial progress. By planning these incentives as part of your overall financial strategy, you can avoid impulsive splurges that set you back.

#6: Partner with Benchmark Wealth Management

While self-directed practices are critical for financial well-being, partnering with an experienced financial advisor adds a professional dimension to your financial self-care routine. This partnership can provide you with the guidance, clarity, and confidence to successfully navigate your financial journey, setting the stage for a more secure and fulfilling future.

Of course, it’s important to choose a financial advisor who shares your values and supports your financial objectives. The right advisor should be someone you trust, who listens to your concerns, understands your goals, and proactively positions you for financial success.

At Benchmark Wealth Management, we’re committed to providing our clients with the highest level of personalized service and care. Our goal is to expertly guide you toward your financial goals, removing financial anxiety so that you can focus on enjoying your life on your terms. Please contact us to learn more and see if we may be the right fit for your financial needs.

 

About Rick

Richard W. Stout III is managing director of Benchmark Wealth Management, LLC, with 25 years of experience in the financial industry. He specializes in financial planning and asset management for individuals, families, and institutions seeking to build and monitor durable and sustainable plans for their financial futures. Rick is a Certified Financial Planner™ professional and holds the Accredited Investment Fiduciary® (AIF®) designation. He obtained his MBA from Rensselaer Polytechnic Institute and his BA in Economics and Anthropology from the University of Connecticut. Rick has earned a Master of Science degree in Personal Financial Planning from the College for Financial Planning. He has extensive background experience in lending, credit review and analysis, and real estate and partnership management. Learn more about Rick by connecting with him on LinkedIn.

About Thomas

Thomas J. Britt is managing director of Benchmark Wealth Management, LLC, with 23 years of experience in the financial industry. He specializes in executive financial planning, retirement planning, investing, as well as the management of trusts and endowments. Thomas is a CERTIFIED FINANCIAL PLANNER™ professional. He holds the Master Planner Advanced StudiesSM, MPAS®, Certified Investment Management Analyst® (CIMA®), and Chartered Retirement Planning Counselor℠, CRPC® designations. Thomas earned a Bachelor of Science in Finance from the University of New Haven, an MBA in financial technology from Rensselaer Polytechnic Institute, and a Master of Science in Personal Financial Planning from the College for Financial Planning. He is also a proud veteran of the United States Navy Submarine Force. Learn more about Tom by connecting with him on LinkedIn.

Additional information, including management fees and expenses, is provided on our Form ADV Part 2, available upon request or at the SEC’s Investment Advisor Public Disclosure site, www.adviserinfo.sec.gov/firm/160192

Securities offered by Registered Representatives through Private Client Services, Member FINRA, SIPC in the following states: AZ, CA, CT, FL, KY, MA, ME, MI, MN, NH, NJ, NY, RI, TX. (Securities-related services may not be provided to individuals residing in any state not previously listed.) Advisory services offered through Benchmark Wealth Management, LLC a Registered Investment Advisor. Benchmark Wealth Management and Private Client Services are unaffiliated entities.

In this blog article, we explore seven financial resolutions you can actually keep in 2024 to set yourself on a path to a more prosperous and fulfilling future.

The New Year often provides an opportunity to wipe the slate clean and start anew—especially when it comes to personal finances. As the clock strikes midnight, many people resolve to break old habits, create new ones, and generally transform their current financial trajectory.

Unfortunately, these resolutions tend to be short-lived, and we eventually revert to our old ways. In fact, a recent Forbes Health/One Poll survey revealed that the average New Year’s resolution lasts just 3.74 months, with nearly a third of respondents giving up on their goals within the first two months of the year.

Rather than making ambitious promises that come with expiration dates, what if you could weave small yet inspiring changes into the very fabric of your everyday financial life?

Here are seven financial resolutions you can actually keep in 2024 (and beyond):

#1: Conduct Periodic “Life Audits”

Financial resolutions aren’t just about arbitrarily setting goals for the year ahead. To make them truly meaningful, they need to resonate with your values and the vision you have for your life.

Conducting a “Life Audit” can be an empowering and strategic move that sets a tone of intentionality and purpose for the coming year. It allows you to take inventory of your current financial position and habits and assess how well they align with your long-term goals.

With the insights you gain from a life audit, you can make more informed decisions about your future spending, saving, and investments. By committing to monthly or quarterly reviews of your financial situation, you can adjust course as necessary, ensuring you stay on track toward your financial objectives.

#2: Invest in Relationships

The adage ‘your network is your net worth’ rings true, as strong relationships can be a significant asset to your financial health. As you set financial resolutions for the new year, consider making a commitment to invest time and genuine effort into nurturing your professional and personal networks.

Building professional relationships can translate into better business prospects, career advancements, and a stronger negotiating position—all of which can increase your income and financial status. Meanwhile, research shows that maintaining strong social connections can boost your longevity and contribute to overall health and well-being, improving your quality of life.

This year, look for opportunities to expand and strengthen your professional network and personal relationships. The connections you make have the potential to yield substantial dividends, both tangible and intangible, well into the future.

#3: Embrace a Minimalist Lifestyle

If you’re looking to gain more control over your financial life, consider embracing a minimalist lifestyle as one of your financial resolutions. In this context, minimalism goes beyond decluttering—it’s about intentional living.

This means that every financial decision you make, be it spending, saving, or investing, has a clear purpose that aligns with your personal values and long-term goals. In addition to potentially lowering your expenses and boosting your nest egg, such an approach can go a long way toward reducing financial stress.

Ultimately, adopting a minimalist mindset means stripping away the non-essentials, allowing you to focus on what matters. It’s not about having less but rather cultivating a sense of abundance from what you already have, paving the way for a truly rich life.

#4: Tackle Difficult Conversations about Money

Initiating difficult conversations about money with loved ones is a pivotal resolution that has the potential to transform your financial future.

Money, often a taboo subject, is intricately tied to our values, experiences, and emotions, making discussions around it particularly sensitive. However, these conversations can be crucial for securing your family’s financial future and preserving your hard-earned wealth for generations to come.

For example, openly discussing topics such as long-term care and estate planning paves the way for strategic planning and collaborative decision-making. It can also prevent misunderstandings and conflicts that often stem from assumptions or lack of information.

Furthermore, these conversations are an opportunity for education and mutual growth. By bringing financial matters to the forefront, you and your loved ones can share knowledge, experiences, and expectations, creating a solid foundation from which to build a stable and prosperous future.

#5: Commit to Lifelong Learning

One of the most valuable financial resolutions you can make at any age is to commit to lifelong learning. Indeed, financial literacy is the cornerstone of independence and empowerment, granting you the knowledge and skills to navigate the complexities of personal financial management.

Financial know-how can also help you avoid many of the pitfalls that tend to derail financial stability, such as accumulating high-interest debt or falling victim to fraudulent schemes. This commitment to ongoing financial education helps ensure that the decisions you make align with the life you envision for yourself, paving the way for long-term financial success.

#6: Shape Your Legacy

Finally, crafting a legacy is about creating a lasting impact that transcends material wealth and resonates with your core values. As you make your financial resolutions for the new year, consider how each one contributes to the mark you wish to leave on the world.

Whether it’s providing for your family, contributing to societal change, or supporting causes that reflect your beliefs, each financial action helps shape the impact you’ll have on future generations. Ultimately, you define your legacy not just by the wealth you accumulate, but by the ideals you exemplify and the change you inspire.

#7: Partner with Benchmark Wealth Management to Maximize Your Results

When considering which financial resolutions to adopt, remember that the journey is as vital as the destination. As you move forward, be sure to monitor your progress, celebrate your successes, and view any setbacks as opportunities to learn and refine your approach.

In addition, keep in mind that you don’t need to navigate the fine points of your financial resolutions alone. A fiduciary financial planner like Benchmark Wealth Management can help you develop a holistic financial plan that reflects your core values and long-term goals, ensuring that your financial resolutions continue to serve you as your life and financial circumstances evolve. To begin your financial journey and take control of your future, please contact us.

 

About Rick

Richard W. Stout III is managing director of Benchmark Wealth Management, LLC, with 25 years of experience in the financial industry. He specializes in financial planning and asset management for individuals, families, and institutions seeking to build and monitor durable and sustainable plans for their financial futures. Rick is a Certified Financial Planner™ professional and holds the Accredited Investment Fiduciary® (AIF®) designation. He obtained his MBA from Rensselaer Polytechnic Institute and his BA in Economics and Anthropology from the University of Connecticut. Rick has earned a Master of Science degree in Personal Financial Planning from the College for Financial Planning. He has extensive background experience in lending, credit review and analysis, and real estate and partnership management. Learn more about Rick by connecting with him on LinkedIn.

About Thomas

Thomas J. Britt is managing director of Benchmark Wealth Management, LLC, with 23 years of experience in the financial industry. He specializes in executive financial planning, retirement planning, investing, as well as the management of trusts and endowments. Thomas is a CERTIFIED FINANCIAL PLANNER™ professional. He holds the Master Planner Advanced StudiesSM, MPAS®, Certified Investment Management Analyst® (CIMA®), and Chartered Retirement Planning Counselor℠, CRPC® designations. Thomas earned a Bachelor of Science in Finance from the University of New Haven, an MBA in financial technology from Rensselaer Polytechnic Institute, and a Master of Science in Personal Financial Planning from the College for Financial Planning. He is also a proud veteran of the United States Navy Submarine Force. Learn more about Tom by connecting with him on LinkedIn.

Additional information, including management fees and expenses, is provided on our Form ADV Part 2, available upon request or at the SEC’s Investment Advisor Public Disclosure site, www.adviserinfo.sec.gov/firm/160192

Securities offered by Registered Representatives through Private Client Services, Member FINRA, SIPC in the following states: AZ, CA, CT, FL, KY, MA, ME, MI, MN, NH, NJ, NY, RI, TX. (Securities-related services may not be provided to individuals residing in any state not previously listed.) Advisory services offered through Benchmark Wealth Management, LLC a Registered Investment Advisor. Benchmark Wealth Management and Private Client Services are unaffiliated entities.

 

When it comes to financial planning, practicing gratitude can help boost your results and keep you on track toward your financial goals.

For many of us, the holiday season can be both thrilling and overwhelming. Festive gatherings and heartfelt gift-giving often come with the financial strain of traveling, entertaining, and shopping. Even when we’re enjoying ourselves, these additional responsibilities can create stress, leading us to lose sight of the true spirit of the season.

Yet amid the holiday frenzy, there lies a simple, transformative practice: gratitude. Gratitude shifts our focus, compelling us to appreciate what we have, make more mindful choices, and navigate the holidays with clarity and purpose.

But beyond just feeling thankful this time of year, practicing gratitude can improve financial habits and decision-making all year long, driving us closer to financial freedom. From making wiser choices with our money to enhancing our generosity and resilience, gratitude can be integral to a sound financial practice.

#1: Gratitude Helps Improve Financial Decision-Making

One of the primary ways gratitude can lead to financial success is through better decision-making. For instance, one study found that people who practice gratitude are less likely to feel pressure to satisfy short-term urges, leading them to make better financial choices over time.

According to a different study, gratitude also tends to make people less materialistic. This finding suggests that those who focus on what they have are less likely to fixate on acquiring more.

When it comes to financial planning, gratitude can help keep you on track toward your financial goals by reducing the desire for instant gratification and material possessions. By consistently recognizing the value of what you already have, it becomes easier to exercise patience and restraint in both routine and longer-term financial decisions.

#2: Gratitude Promotes Generosity

Unsurprisingly, numerous studies have found that gratitude and generosity go hand in hand. In fact, research shows that gratitude and giving share a neural pathway, meaning that when we’re grateful, our brains change in ways to make us more charitable.

Yet, altruism’s benefits extend beyond holiday gift-giving. Gifting and charitable giving are two powerful strategies that can enhance your financial plan due to the associated tax benefits.

For example, taking advantage of the annual gift tax exclusion can help you reduce the value of your taxable estate while making a potentially meaningful difference in the financial life of a loved one. As of 2023, individuals can gift up to $17,000 per beneficiary without triggering the gift tax.

Meanwhile, charitable giving can offer significant tax benefits, both immediate and longer-term. By giving strategically, you can meaningfully reduce your taxable income in above-average earnings years, minimizing your lifetime tax bill.

Incorporating giving into your financial plan can be as simple as setting up a monthly donation to a cause you care deeply about or budgeting for a family tradition of giving back during the holidays. Alternatively, you may want to consider setting up a donor-advised fund (DAF) for greater flexibility in achieving your philanthropic and financial goals. Be sure to consult with a financial planner or tax expert for personalized advice.

When you’re grateful for your own good fortune, giving back provides a way to spread the same good fortune to others. At the same time, you get to reap the personal and financial benefits of giving, amplifying its impact.

#3: Gratitude Can Enhance Financial Resilience

Finally, studies show that gratitude makes us more optimistic and better able to deal with adversity. As such, being grateful encourages a broader perspective that emphasizes long-term aspirations rather than short-term disappointments.

Cultivating this resilience to financial setbacks can be a powerful advantage in the realm of personal finance and investing. Indeed, research repeatedly shows that investors who maintain a long-term perspective and stick to their financial plan tend to fare better over time than those who react to short-term market disruptions.

In addition, keep in mind that financial resilience isn’t just a mental game. You can also make your financial plan more resilient by building up your emergency funds and ensuring your portfolio is properly diversified, among other risk-management strategies.

Gratitude and Your Financial Well-Being

There are many ways you can incorporate gratitude into your daily financial planning routine. Here are a few ideas to help you develop a practice that’s both personal and rewarding:

• Start a Gratitude Journal. Dedicate a few minutes each day to write down things you’re thankful for. This could range from the comfort of a warm home to the satisfaction of a well-balanced budget. These simple acknowledgements can help recalibrate your perception of spending and saving by bringing your priorities into focus.
• Reflect During Financial Activities. Before paying bills or reviewing your bank statements, take a moment to express gratitude for the ability to meet your financial obligations and for the peace of mind that comes from a sound financial plan.
• Appreciate the Value of Experiences. Redirect the focus from acquiring goods to appreciating experiences. Be it a simple walk in the park or a gathering with friends, cherishing these moments can lessen the urge to find happiness in material possessions.
• Practice Mindful Spending. Before making a purchase, consider what you’re grateful for about the item or service, as well as what you already have. This can help you avoid impulsive buys and ensures that your spending aligns with your values.
• Set Grateful Financial Goals. When setting financial goals, start by being thankful for any progress or stability you’ve already achieved. This positive foundation can be motivating and enhance your commitment to your goals.

Incorporating gratitude into your daily life doesn’t require grand gestures. Small, consistent practices can bring about a shift in mindset that transforms not only your view on money but also enriches your life with a deeper sense of satisfaction and fulfillment.

Success Starts with a Sound Financial Plan

While gratitude can no doubt help us navigate the ups and downs of the holiday season, it’s important to remember that it’s more than just a seasonal guest. Indeed, gratitude can be a powerful ally in our financial planning journeys, helping us make smarter decisions, foster generosity, and build the necessary resilience to stay on track toward our financial goals.

However, financial success doesn’t come from gratitude alone. A sound financial plan can help guide your daily decisions, navigate setbacks, and set you on a path toward financial freedom.

Benchmark Wealth Management is here to help. Contact us to take the first step toward a more secure and prosperous future and embrace the power of gratitude and holistic financial planning.

 

About Rick

Richard W. Stout III is managing director of Benchmark Wealth Management, LLC, with 25 years of experience in the financial industry. He specializes in financial planning and asset management for individuals, families, and institutions seeking to build and monitor durable and sustainable plans for their financial futures. Rick is a Certified Financial Planner™ professional and holds the Accredited Investment Fiduciary® (AIF®) designation. He obtained his MBA from Rensselaer Polytechnic Institute and his BA in Economics and Anthropology from the University of Connecticut. Rick has earned a Master of Science degree in Personal Financial Planning from the College for Financial Planning. He has extensive background experience in lending, credit review and analysis, and real estate and partnership management. Learn more about Rick by connecting with him on LinkedIn.

About Thomas

Thomas J. Britt is managing director of Benchmark Wealth Management, LLC, with 23 years of experience in the financial industry. He specializes in executive financial planning, retirement planning, investing, as well as the management of trusts and endowments. Thomas is a CERTIFIED FINANCIAL PLANNER™ professional. He holds the Master Planner Advanced StudiesSM, MPAS®, Certified Investment Management Analyst® (CIMA®), and Chartered Retirement Planning Counselor℠, CRPC® designations. Thomas earned a Bachelor of Science in Finance from the University of New Haven, an MBA in financial technology from Rensselaer Polytechnic Institute, and a Master of Science in Personal Financial Planning from the College for Financial Planning. He is also a proud veteran of the United States Navy Submarine Force. Learn more about Tom by connecting with him on LinkedIn.

Additional information, including management fees and expenses, is provided on our Form ADV Part 2, available upon request or at the SEC’s Investment Advisor Public Disclosure site, www.adviserinfo.sec.gov/firm/160192

Securities offered by Registered Representatives through Private Client Services, Member FINRA, SIPC in the following states: AZ, CA, CT, FL, KY, MA, ME, MI, MN, NH, NJ, NY, RI, TX. (Securities-related services may not be provided to individuals residing in any state not previously listed.) Advisory services offered through Benchmark Wealth Management, LLC a Registered Investment Advisor. Benchmark Wealth Management and Private Client Services are unaffiliated entities.

This article highlights the key differences between a financial advisor and a financial planner.

In today’s complex financial landscape, comprehensive financial planning isn’t just an advantage—it’s a necessity. With countless investment options, evolving tax regulations, and life’s unpredictable twists and turns, having a well-laid plan can make the difference between financial success and unforeseen challenges.

Of course, life comes with many responsibilities, and you may not have the bandwidth or expertise to navigate the intricacies of personal finance on your own. So, who should you turn to for guidance— a financial advisor or a financial planner?

On the surface, the titles may seem interchangeable, but the nuances between them can significantly shape your financial future. As such, it’s crucial to understand the key differences, so you can make the right choice for your financial needs and goals.

Financial Advisor vs. Financial Planner: Delving into Each Role

“Financial advisor” tends to be a catch-all term encompassing a variety of professionals in the finance realm. Many financial advisors operate within larger institutions such as broker-dealers, insurance companies, banks, or investment firms. Their affiliation with these institutions can shape the services they provide and the advice they give.

For instance, some financial advisors may specialize in selling products like mutual funds, insurance policies, or annuities. Others may focus on specific domains, such as retirement advice, estate planning, or tax strategies.

Financial planners, on the other hand, don’t just offer advice. Instead, they take a more holistic and strategic approach to wealth management, understanding each client’s current financial situation and future goals and crafting a comprehensive plan to bridge the gap.

Notably, many financial planners hold the CERTIFIED FINANCIAL PLANNER™ (CFP®) certification. CFP® professionals must meet stringent education, examination, experience, and ethical requirements, ensuring they’re well-equipped to address a broad range of financial planning topics.

4 Key Differences Between a Financial Advisor and a Financial Planner

#1: Fiduciary Responsibility

Not all financial advisors have an obligation to place their clients’ interests above theirs. Those who operate under the “suitability standard,” must only provide suitable recommendations, which may not be the best option for their clients.

In contrast, CFP® professionals must act as fiduciaries. These financial planners have a legal and ethical duty to prioritize their clients’ best interests when giving financial advice, ensuring transparency and trustworthiness in their dealings.

#2: Qualifications

Some financial advisors have degrees or certifications, while others may not. In general, those who give specific investment advice or manage money must pass one or more qualifying exams administered by FINRA.

For financial planners, becoming a CFP® professional is a rigorous process. Indeed, the CFP® certification process has four requirements:

• Education. The two-part education requirement includes completing coursework on financial planning through a CFP Board Registered Program and holding a bachelor’s degree or higher in any discipline from an accredited college or university.
• Examination. Candidates must pass the CFP® certification exam, a 170-question, multiple-choice test that consists of two 3-hour sessions over one day.
• Experience. CFP® professionals must complete either 6,000 hours of professional experience related to the financial planning process or 4,000 hours of apprenticeship experience that meets additional requirements.
• Ethics. All CFP® professionals must adhere to CFP Board’s Code of Ethics and Standards of Conduct and act as fiduciaries when providing financial advice.

#3: Scope of Services

Financial advisors can offer a diverse range of services depending on their qualifications and business model. For example, some advisors may concentrate solely on investments, while others may cover broader domains, such as insurance or tax planning.

Financial planners, however, generally offer comprehensive financial planning services, resulting in a holistic approach. Services may include retirement planning, tax minimization strategies, estate planning, investment management, and more.

The scope of services a financial advisor or financial planner provides can offer important insights into the care you’re likely to receive as a client. While a financial advisor may focus on one area of your financial life, a financial planner strives to understand your complete financial picture, ensuring a more integrated service model.

#4: Compensation Structure

A financial professional’s compensation structure depends on the nature of their practice. The most common compensation models generally include product commissions, asset management fees, hourly fees, or a combination of these options.

Financial advisors who sell financial products like mutual funds, insurance policies, or annuities may receive a commission for each product they sell. While this model may work well for some, it can also lead to potential conflicts of interest, resulting in recommendations that may generate a higher commission for the advisor but aren’t necessarily in the client’s best interest.

Other financial advisors may charge a percentage of the client’s total assets they manage or a flat hourly fee for the services they perform. These compensation methods tend to offer more transparency and can align the advisor’s incentives with the client’s success.

CFP® professionals operate under a distinct ethical framework that requires them to disclose all potential conflicts of interest. For this reason, many financial planners opt for a fee-only model to minimize potential conflicts and ensure objective advice.

Understanding a financial professional’s compensation structure is crucial when seeking financial guidance. Ultimately, it can influence the advice you receive, as well as the quality of service they provide.

Additional Considerations

Beyond the factors above, a financial professional’s commitment to ongoing education and regulatory compliance can help ensure you’re receiving the best advice possible. The following considerations can also distinguish a financial advisor from a financial planner:

• Continuing Education. Many financial advisors proactively stay up to date on topics and trends in wealth management, and some may have periodic training mandates depending on their affiliations and certifications. All CFP® professionals must complete 30 hours of continuing education every two years, ensuring their knowledge is current.
• Disciplinary Oversight: Both financial advisors and financial planners fall under the scrutiny of bodies like FINRA, the SEC, or state regulators. CFP® professionals must also adhere to CFP Board’s Code of Ethics and Standards of Conduct, reflecting their commitment to high standards of competency and ethics. Violations of the board’s standards can lead to disciplinary actions or even certification revocation.

Keep in mind that any professional under the scrutiny of federal or state regulators must publicly disclose if they’ve been the subject of disciplinary action. You can find this information using FINRA’s BrokerCheck tool or the SEC’s Investment Adviser Public Disclosure website.

Financial Advisor or Financial Planner? Choosing the Right Financial Partner for Your Objectives

Choosing a financial partner to guide you along the path to financial freedom is a personal and nuanced decision. While there’s often overlap between a financial advisor and financial planner, their fiduciary responsibilities, qualifications, and services can differ significantly.

It’s important to choose a professional who aligns with your values and needs, upholds your best interests, and steers you towards a prosperous financial future. By conducting thorough research and asking the right questions on the front-end, you can avoid unwanted surprises that may impede your progress toward future financial goals.

At Benchmark Wealth Management, we prioritize your financial well-being, offering holistic planning for high-net-worth individuals. With a fiduciary, fee-only approach, your best interests are our top priority. Contact us to discover how we can help you achieve your financial objectives.

 

About Rick

Richard W. Stout III is managing director of Benchmark Wealth Management, LLC, with 25 years of experience in the financial industry. He specializes in financial planning and asset management for individuals, families, and institutions seeking to build and monitor durable and sustainable plans for their financial futures. Rick is a Certified Financial Planner™ professional and holds the Accredited Investment Fiduciary® (AIF®) designation. He obtained his MBA from Rensselaer Polytechnic Institute and his BA in Economics and Anthropology from the University of Connecticut. Rick has earned a Master of Science degree in Personal Financial Planning from the College for Financial Planning. He has extensive background experience in lending, credit review and analysis, and real estate and partnership management. Learn more about Rick by connecting with him on LinkedIn.

About Thomas

Thomas J. Britt is managing director of Benchmark Wealth Management, LLC, with 23 years of experience in the financial industry. He specializes in executive financial planning, retirement planning, investing, as well as the management of trusts and endowments. Thomas is a CERTIFIED FINANCIAL PLANNER™ professional. He holds the Master Planner Advanced StudiesSM, MPAS®, Certified Investment Management Analyst® (CIMA®), and Chartered Retirement Planning Counselor℠, CRPC® designations. Thomas earned a Bachelor of Science in Finance from the University of New Haven, an MBA in financial technology from Rensselaer Polytechnic Institute, and a Master of Science in Personal Financial Planning from the College for Financial Planning. He is also a proud veteran of the United States Navy Submarine Force. Learn more about Tom by connecting with him on LinkedIn.

Additional information, including management fees and expenses, is provided on our Form ADV Part 2, available upon request or at the SEC’s Investment Advisor Public Disclosure site, www.adviserinfo.sec.gov/firm/160192

Securities offered by Registered Representatives through Private Client Services, Member FINRA, SIPC in the following states: AZ, CA, CT, FL, KY, MA, ME, MI, MN, NH, NJ, NY, RI, TX. (Securities-related services may not be provided to individuals residing in any state not previously listed.) Advisory services offered through Benchmark Wealth Management, LLC a Registered Investment Advisor. Benchmark Wealth Management and Private Client Services are unaffiliated entities.

In this blog article, we’ll explore how insurance can enhance your financial plan and help you reach your goals, particularly as your net worth increases.

When it comes to achieving long-term financial goals, the spotlight tends to fall on the accumulation and growth of assets. However, building wealth is just one side of the coin. An equally critical aspect of the financial planning process is the preservation of wealth.

Indeed, incorporating risk management mechanisms such as insurance into your financial plan can add stability, providing an extra layer of security that helps protect your hard-earned assets from unforeseen setbacks. At the same time, a thoughtful insurance strategy can help ensure that your financial journey remains on track over the long run.

#1: Insurance can protect your assets and reduce risk.

No matter where you are on your financial journey, insurance can help reduce your overall risk exposure if you experience an accident, health issue, or even a lawsuit. However, proper insurance coverage becomes increasingly critical as your net worth increases since you have more to lose in the event of an unforeseen setback.

For example, if you own a home or other valuable property, insurance can help protect you from excessive financial losses. According to the Insurance Information Institute (III), about 5% of homeowners make an insurance claim each year due to property damage, liability, or other reason, highlighting the value of a robust policy.

Meanwhile, the odds of becoming the target of a lawsuit—frivolous or otherwise—often increase as you accumulate more wealth. As a result, liability insurance tends to become more valuable the wealthier you are, as it can help cover legal expenses and potential settlements if someone takes legal action against you.

Most homeowners and auto insurance policies offer liability coverage up to a certain amount. Yet depending on your net worth, you may also benefit from an umbrella policy.

Generally, you should consider purchasing umbrella insurance when your assets exceed the combined liability limits of your home and auto insurance policies. The average umbrella policy costs between $150 and $300 per year for every $1 million in coverage, according to data from III, providing an additional safety net in a worst-case scenario.

#2: Insurance can add predictability and stability to your financial plan.

Life is filled with unexpected events. From medical emergencies to sudden home repairs, surprises can quickly throw your financial plan into disarray.

Even if you have a robust emergency fund, some expenses are simply too massive to cover out of pocket without derailing your progress toward longer-term goals. With the right insurance strategy, an unplanned setback is less likely to undo years of financial progress.

For instance, suppose you own a business that generates the majority of your household income. However, your business earnings are dependent on your involvement in the company.

If you experience a sudden illness or injury, you may not be able to continue earning the same income. This can create countless financial hurdles for your family, who depends on your income to pay fixed expenses and fund your financial goals.

Data show that 5.6% of working Americans experience a short-term disability every year. But with disability insurance, you may be able to recoup a portion of your income you’re unable to work, thereby providing a financial safety net.

Similarly, life insurance can add stability to your financial plan if you have loved ones depending on you financially. The death benefit can replace lost income, pay off debts, and even cover funeral expenses, ensuring that a tragic event doesn’t lead to financial hardship for your family.

#3: Insurance can enhance your estate plan.

Estate planning isn’t just for the ultra-wealthy; it’s crucial for anyone who wants to leave a financial legacy, distribute assets, or make the lives of their loved ones easier after they’re gone. In this regard, insurance can play an instrumental role in fortifying your estate plan, providing financial benefits that extend beyond your lifetime.

For example, long-term care costs can be one of the biggest drains on an estate, particularly if you require specialized care or a nursing home during your lifetime. In certain circumstances, long-term care insurance can help cover these costs, preserving the value of your estate for your beneficiaries.

In addition, a life insurance policy can significantly benefit your heirs by providing a lump-sum payment they can use in various ways, from paying off debts to covering estate taxes. Without this benefit, they may need to liquidate part or all of your estate to cover such costs, which may require them to sell off assets like property or investments at inopportune times.

#4: Insurance may provide tax benefits.

In some cases, insurance can play a pivotal role in your overall tax strategy, providing various tax advantages that can benefit you during your lifetime, as well as your heirs after you’re gone.

During your lifetime, your insurance premiums may be tax-deductible depending on the type of insurance and current regulations. For instance, health insurance premiums are generally tax-deductible in the United States, up to a certain limit.

After your lifetime, the death benefits from any life insurance policies you hold are usually tax-free for your beneficiaries. This can be especially helpful if your estate is large enough to potentially trigger federal or state estate taxes, which can significantly reduce your beneficiaries’ inheritance.

#5: Insurance can help secure your retirement.

Retirement should be a golden period where you get to enjoy the fruits of decades of labor. Yet achieving a financially secure retirement requires meticulous planning and strategic decision-making.

While many focus on savings, investments, and Social Security when preparing for retirement, insurance is also crucial for ensuring that your post-work years meet your expectations.

For instance, the right health insurance coverage in retirement is essential to offset the rising cost of healthcare. Indeed, the average 65-year-old retired couple may need roughly $315,000 to cover healthcare expenses, according to a 2022 Fidelity report.

Even if you qualify for Medicare, supplemental health insurance is often necessary to fill in the coverage gaps, so that out-of-pocket expenses don’t deplete your savings. This may also include long-term care insurance, as Medicare doesn’t cover most long-term care services.

#6: Insurance can give you financial peace of mind.

At its core, insurance is about reducing financial stress. Knowing that you’re financially protected in case of loss or hardship allows you to live life with a little less anxiety and a lot more freedom.

Furthermore, insurance provides a certain level of financial stability, allowing you to take calculated risks like investing in the stock market. In many cases, the rewards that come from taking such risks can be the key to achieving your financial goals and aspirations.

As your life and financial circumstances change, it’s crucial to review your insurance coverages to ensure they continue to meet your needs and align with your financial goals. While Benchmark Wealth Management doesn’t sell insurance policies, we can offer valuable insights into assessing your insurance needs and integrating them cohesively into your broader financial plan. Please contact us to learn more.

The views expressed are those of the author as of the date noted, are subject to change based on market and other various conditions. Material discussed is meant to provide general information and it is not to be construed as specific investment, tax or legal advice. Keep in mind that current and historical facts may not be indicative of future results.

 

About Rick

Richard W. Stout III is managing director of Benchmark Wealth Management, LLC, with 25 years of experience in the financial industry. He specializes in financial planning and asset management for individuals, families, and institutions seeking to build and monitor durable and sustainable plans for their financial futures. Rick is a Certified Financial Planner™ professional and holds the Accredited Investment Fiduciary® (AIF®) designation. He obtained his MBA from Rensselaer Polytechnic Institute and his BA in Economics and Anthropology from the University of Connecticut. Rick has earned a Master of Science degree in Personal Financial Planning from the College for Financial Planning. He has extensive background experience in lending, credit review and analysis, and real estate and partnership management. Learn more about Rick by connecting with him on LinkedIn.

About Thomas

Thomas J. Britt is managing director of Benchmark Wealth Management, LLC, with 23 years of experience in the financial industry. He specializes in executive financial planning, retirement planning, investing, as well as the management of trusts and endowments. Thomas is a CERTIFIED FINANCIAL PLANNER™ professional. He holds the Master Planner Advanced StudiesSM, MPAS®, Certified Investment Management Analyst® (CIMA®), and Chartered Retirement Planning Counselor℠, CRPC® designations. Thomas earned a Bachelor of Science in Finance from the University of New Haven, an MBA in financial technology from Rensselaer Polytechnic Institute, and a Master of Science in Personal Financial Planning from the College for Financial Planning. He is also a proud veteran of the United States Navy Submarine Force. Learn more about Tom by connecting with him on LinkedIn.

Additional information, including management fees and expenses, is provided on our Form ADV Part 2, available upon request or at the SEC’s Investment Advisor Public Disclosure site, www.adviserinfo.sec.gov/firm/160192

Securities offered by Registered Representatives through Private Client Services, Member FINRA, SIPC in the following states: AZ, CA, CT, FL, KY, MA, ME, MI, MN, NH, NJ, NY, RI, TX. (Securities-related services may not be provided to individuals residing in any state not previously listed.) Advisory services offered through Benchmark Wealth Management, LLC a Registered Investment Advisor. Benchmark Wealth Management and Private Client Services are unaffiliated entities.

In the coming decades, we’re set to witness one of the most significant financial shifts in history: The Great Generational Wealth Transfer. Indeed, Gen-Xers and Millennials stand to inherit nearly $73 trillion in assets over the next 20 years, according to Cerulli Associates.

Yet this transfer isn’t just about figures in a bank account; it’s about ensuring each generation is equipped with the right tools and knowledge to preserve their wealth long term. For Baby Boomers, it’s a matter of effective estate planning, whereas, for Gen-Xers and Millennials, it’s about understanding and carefully managing the assets they expect to gain.

In this blog article, we’ll explore the importance of The Great Generational Wealth Transfer and how Baby Boomers, Gen-Xers, and Millennials can prepare accordingly.

Baby Boomers: Today’s Wealth Holders

According to The New York Times, Baby Boomers currently hold about half of the nation’s $140 trillion in family wealth. While a portion of this wealth is likely to go to charity as members of this generation pass, Boomers are expected to transfer most of their assets to their Gen-X and Millennial children.

Yet even though most parents of this generation plan to leave their children some form of inheritance, Edelman recently reported that only 37% say they currently have a wealth transfer plan in place. Thus, if you’re a Baby Boomer who expects to transfer part or all your assets to the next generation, your focus should be on comprehensive estate planning.

It’s important to note that a last will and testament alone may not be sufficient in achieving your wealth transfer goals. You may also want to consider leveraging trusts and other tax-smart strategies to preserve more of your wealth as it passes from generation to generation.

Examples of Tax-Smart Wealth Transfer Strategies

• Revocable Living Trust. A revocable trust allows you, the grantor, to maintain control over the trust assets during your lifetime. You can alter, amend, or revoke the trust entirely if you wish. Upon your death, the trust’s assets bypass the probate process, allowing for a more expeditious distribution to your beneficiaries.
• Irrevocable Trust. Unlike a revocable trust, once you establish an irrevocable trust, you generally can’t alter or revoke it. However, these trusts can offer significant tax advantages, as any assets you transfer to an irrevocable trust typically removes them from your estate.
• Charitable Remainder Trust (CRT): A CRT provides an income stream to either you or your named beneficiaries for a specified term, after which the remaining assets go to a charity of your choice. These trusts can also offer tax benefits, including a charitable income tax deduction.
• Charitable Lead Trust (CLT). The inverse of a CRT, a CLT provides an income stream to a charity for a specified term, after which the remaining assets go to your designated beneficiaries.
• Grantor Retained Annuity Trust (GRAT). With a GRAT, you transfer assets to a trust and receive an annuity payment for a specified term. If you survive the term, the remaining assets go to your beneficiaries, often with tax advantages.
• Strategic Gifting. In 2023, individuals can gift up to $17,000 per recipient without triggering the gift tax. By making systematic annual gifts to your heirs, you can gradually decrease the size of your taxable estate, thereby reducing your potential future estate tax.

While this isn’t a comprehensive list of tax-efficient wealth transfer strategies, it can help you understand the types of estate planning moves available to you. An estate planning attorney or fiduciary financial planner like Benchmark Wealth Management can help you identify the right strategies to achieve your goals.

Open Communication Is Key

Also, keep in mind that effective estate planning isn’t just about tax efficiency. It’s also about open and honest communication with your heirs.

By discussing your values and objectives as well as their inheritance expectations, you may be able to prevent misunderstandings and conflicts down the road. In addition, these conversations can foster a sense of responsibility and stewardship in the next generation, potentially preserving your hard-earned wealth longer.

Gen-Xers: The Sandwich Generation

As the children of elder Baby Boomers, many Gen-Xers stand to inherit significant wealth, potentially altering their financial trajectories. Since Gen-Xers often find themselves sandwiched between the responsibilities of caring for aging parents and supporting their own children, this sudden wealth can be both a boon and a challenge.

Indeed, the intricacies of managing substantial assets are vast and varied. Without the right guidance, it can be easy to make costly missteps.

If you’re a Gen-Xer who stands to inherit significant wealth, now is the time to start assembling your financial dream team. A fiduciary financial planner, estate planning attorney, and tax expert can help you prepare for your inheritance and manage it responsibly, so you can maximize your newfound wealth.

This may mean determining how to allocate funds for your children’s education, planning for your own retirement, or deciding on investment strategies that reflect your values and long-term goals.

Meanwhile, sudden wealth can also affect your own wealth transfer objectives. If you don’t have an estate plan, be sure to consult an attorney or trusted financial planner to ensure you have the right strategies and documents in place. Furthermore, make sure you review and update your estate plan regularly to ensure it reflects your financial circumstances and goals.

Lastly, waiting until you inherit wealth can lead to reactive decision-making, which might not always be in your best interest. By being proactive—educating yourself, seeking expert guidance, and planning strategically—you can position yourself to manage your newfound wealth effectively and use it in ways that best support your life goals.

Millennials: Waiting on Wealth

Due to longer life expectancies and many Baby Boomers retiring later in life, Millennials who stand to inherit wealth from their parents may have a long wait ahead of them. Nevertheless, members of this generation may benefit greatly from The Great Generational Wealth Transfer.

As you wait on your inheritance, use this time to improve your financial literacy and position yourself for future financial success. From online courses to financial podcasts and blogs, there’s no shortage of avenues to enhance your understanding of personal financial management.

In addition, focus on creating a robust financial foundation now, whether that means boosting your emergency savings, contributing to retirement accounts, or simply living within your means. By taking steps to shore up your personal finances, you can ensure you can handle any potential future inheritance responsibly.

Finally, while money remains a taboo topic for many families, fostering open conversations about finances with your parents can be transformative. These discussions can help demystify your family’s financial status, provide insights into your potential inheritance, and even offer lessons from previous generations’ successes and mistakes.

Most importantly, honest communication can help strengthen family bonds, ensuring that when the transfer of wealth takes place, it’s a collaborative and understood process.

Benchmark Wealth Management Can Help Your Family Prepare for The Great Generational Wealth Transfer

The Great Generational Wealth Transfer is more than just a financial shift; it’s a testament to the legacies families can leave behind. For all generations, careful planning and open communication are essential. By arming yourself with knowledge, seeking professional advice, and fostering open conversations, you’ll be in a better position to preserve your family’s legacy for generations to come.

Remember, you don’t have to navigate this journey on your own. Benchmark Wealth Management has the expertise and resources to help you prepare for The Great Generational Wealth Transfer, whether you’re transferring wealth or stand to inherit it. To learn more about how we help our clients achieve their financial goals and reduce financial stress, please contact us. We’d love to hear from you.

 

About Rick

Richard W. Stout III is managing director of Benchmark Wealth Management, LLC, with 25 years of experience in the financial industry. He specializes in financial planning and asset management for individuals, families, and institutions seeking to build and monitor durable and sustainable plans for their financial futures. Rick is a Certified Financial Planner™ professional and holds the Accredited Investment Fiduciary® (AIF®) designation. He obtained his MBA from Rensselaer Polytechnic Institute and his BA in Economics and Anthropology from the University of Connecticut. Rick has earned a Master of Science degree in Personal Financial Planning from the College for Financial Planning. He has extensive background experience in lending, credit review and analysis, and real estate and partnership management. Learn more about Rick by connecting with him on LinkedIn.

About Thomas

Thomas J. Britt is managing director of Benchmark Wealth Management, LLC, with 23 years of experience in the financial industry. He specializes in executive financial planning, retirement planning, investing, as well as the management of trusts and endowments. Thomas is a CERTIFIED FINANCIAL PLANNER™ professional. He holds the Master Planner Advanced StudiesSM, MPAS®, Certified Investment Management Analyst® (CIMA®), and Chartered Retirement Planning Counselor℠, CRPC® designations. Thomas earned a Bachelor of Science in Finance from the University of New Haven, an MBA in financial technology from Rensselaer Polytechnic Institute, and a Master of Science in Personal Financial Planning from the College for Financial Planning. He is also a proud veteran of the United States Navy Submarine Force. Learn more about Tom by connecting with him on LinkedIn.

Additional information, including management fees and expenses, is provided on our Form ADV Part 2, available upon request or at the SEC’s Investment Advisor Public Disclosure site, www.adviserinfo.sec.gov/firm/160192

Securities offered by Registered Representatives through Private Client Services, Member FINRA, SIPC in the following states: AZ, CA, CT, FL, KY, MA, ME, MI, MN, NH, NJ, NY, RI, TX. (Securities-related services may not be provided to individuals residing in any state not previously listed.) Advisory services offered through Benchmark Wealth Management, LLC a Registered Investment Advisor. Benchmark Wealth Management and Private Client Services are unaffiliated entities.