Financial Planning

The average monthly cost of a room in an assisted-living facility ranges from $3,000–$4,000 in most states, including California, Texas, and Florida. The states with the least expensive costs are Arkansas ($2,355) and North Dakota ($2,617); those with the most expensive are New Hampshire ($5,086) and Maine ($4,881). None of these dollar figures include the following monthly charges (source: WSJ):

A December 2012 WSJ poll shows what its readers invest in for income, beyond conservative bonds: dividend-paying stocks (47%), high-yield bonds (19%), REITs (15%), energy MLPs (12%), and emerging markets bond funds (7%). A separate December 2012 survey by the WSJ asked financial advisors, mutual fund experts, and academics what they felt were the best books about investment basics:

There are 29 states with “financial support” laws that could result in a patient’s adult children having to pay for any unpaid long-term care bills. For example, in May 2012, a court of appeals ruled that a nursing home was entitled to $93,000 from the son of a patient who received care during 2007 and 2008.

Suppose you had a client with a $1 million nest egg (½ stocks and ½ bonds) who began taking withdrawals at age 65 at the beginning of 1973. Depending on the inflation-adjusted withdrawal rate, the client would have been broke before age 77 (January 1977) if the withdrawal rate had been 7–8% per year; the entire nest egg would not have been wiped out until age 89 (January 1997) if the rate had been 5% (age 82–83 at a 6% rate).

As of November 2012, roughly 46 million U.S. households (two out of five) held a combined $5 trillion in IRA assets. According to the IRS, some of the most common (and costly) IRA mistakes made by taxpayers are as follows:

Each day, 182,000 people visit a Social Security office. One strategy considered by married couples is “claim and suspend.” The strategy is to have both working spouses wait until age 70 to collect the maximum benefit. Every year, the benefit is delayed after “normal retirement age” (NRA), which means an 8% annual increase in benefits (note: NRA is between age 65–67, depending upon the worker’s date of birth). Here is how the strategy works:

Advisors who have clients converting a traditional IRA into a Roth IRA should consider the following strategy: use several accounts and then cherry-pick at year-end if there are possible tax savings. The IRS allows a taxpayer to “undo” a conversion by October 15 of the year following the conversion to a Roth IRA. 

According to Fidelity Investments, typical wage earners should aim to save at least eight times their final annual pay to help ensure they can afford basic living expenses in retirement. By age 35, the goal should be to have saved at least an amount equal to your gross salary; by age 45, the goal is to have cumulatively saved three times one’s annual salary.

For the 2011–2012 academic year, the average tuition and fees across the U.S. were $8,244 at four-year public universities and $28,500 at private institutions (source: the College Board). At the end of March 2012, Americans owed $904 billion in student loans compared with $679 billion owed on credit cards.