At Mid-Year, Keep Your January 1st Pledges

At Mid-Year, Keep Your January 1st Pledges

August 07, 2020

Do you have a will, investing in education or building a Freedom Fund?

Amid the heat of mid-summer, do you remember your New Year’s resolutions regarding your personal financial planning? How are you coming with your to-do list?

It seems like only yesterday that, in late 1999, the worry du jour was Y2K, a fear that obsolete computer programs that did not allow for year 2000 would lead to widespread technology breakdowns and chaos. Did you hold your breath at midnight on January 1st of 2000, expecting the lights to go out? What happened? Nothing. We continued partying like it was 1999 (the reference is too easy).

Those who remember the media’s focus on a potential crisis now wonder what all of the fuss was about. Since then, we survived the tech wreck market decline and the 2008 stock market and real estate debacle, 9/11, two wars, the euro crisis, never ending Middle Eastern turmoil, a deep recession, a slow-growth recovery, the longest bull market in history, and now we’re in the midst of a pandemic. Yet here we are, 20 years later, with the stock market at new highs and interest rates still at relative bargain levels.


Our children grow up and we get older. Sand keeps passing through the hourglass of our earthly sojourn. The year 2020 is over half gone. In less than a month, children will (hopefully) start back to school and traffic will worsen. The summer break for most will be over. So it’s high time to get done what you need to get done.

As a financial professional, it’s amazing to see the number of people with no wills or obsolete wills. Such a lapse in planning is especially critical in a marriage with minor children in the mix. An old will is better than no will, but it carries potential problems for minors, especially if both parents die at once, or a single parent passes on.

Often the bulk of a couple’s savings, or that of a single parent, resides in retirement plans. There too, money passing to a minor presents problems. Have you checked both the primary and contingent beneficiary designations on retirement accounts, and personal and group insurance policies?


For those with young children, have you funded a 529 college savings plan for 2020? Anyone, a parent or a grandparent, annually may gift up to $15,000 each per beneficiary to such a college plan. Gifts are made with after-tax dollars, but the money grows tax-free and may be spent tax-free to meet qualified school expenses.

Individuals may contribute as much as $75,000 to a 529 plan in 2020 if they treat the contribution as if it were spread over a 5-year period (the 5-year election must be reported for each of the 5 years). For example, a $60,000 529 plan deposit in 2020 can be applied as $12,000 per year, leaving $3,000 in unused annual exclusion per year.

Parents of children with special needs, which may last into adulthood, should not delay trust and other planning measures.


How are you coming with plans to pay down debt and build savings outside of your retirement plans? We urge individuals and couples to have a Freedom Fund, a pool of liquid capital equal to at least one-year’s worth of living expenses. Living paycheck to paycheck is motivation-draining stress. Liquid and available capital creates peace of mind and freedom to roll with the punches or pursue opportunities.

If you are a key breadwinner in a family or household, are you adequately insured against the consequences of disability or death? As financial professionals, we ask the same question of key persons in an enterprise, including business owners. Is there a succession plan? Is it up to date?

August is almost upon us. In slightly over three short months, holiday decorations will pop up on your street. The poet Irving Layton wrote, “Time flames like a paraffin stove, and what burns are the minutes I live.” (A Wild Peculiar Joy, 1982).

Your 2020 resolutions? Time to get cookin’ and keep them.

Important Disclosures

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal advisor.

Prior to investing in a 529 Plan investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.

This article was prepared by AdviceIQ.

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