It's February: Show Your Retirement Some Love❤️

Posted by Haddad Nadworny on Sat, Feb 08, 2020 @ 06:00 AM

 

The Year in Special Needs Planning

Retirement Planning and The SECURE Act: It really is all about YOU.

grey-ceramic-landmark-during-daytime-62318 (1)The Setting Every Community Up for Retirement Enhancement or SECURE Act and its impact on retirement planning has been outlined extensively in the mainstream media.  The law contains significant changes that are important to understand and talk through with your financial, tax and legal advisors.

Throughout February we will offer a series of 4 blogs focused first upon general retirement planning strategies, followed by a discussion and case examples of the SECURE Act and its potential impact on your planning.

I. Ten Answers You Need to Begin Retirement Planning

We often work with individuals and families having complex life situations. For families of people with disabilities, this means planning for two generations as many children with a disability will need support their entire lives.

Over the past 20 years, we have learned that a broader, multi-dimensional approach is required in order to take into consideration all of a family’s goals and responsibilities.

number-10-text-1339845It is also our experience that families are very busy and when making decisions may provide answers before all of the questions have been asked.  Here are 10 answers you need to have to consider in your analysis before beginning planning for retirement.

1. The ages of you and your spouse.
Are you a 67-year-old with a 55-year-old spouse? Your ages could significantly impact the decision on how to most effectively fund your retirement accounts.


2. Your health status.
Do you and/or your spouse have any significant or potentially significant health considerations? This could be important in funding and withdrawing from retirement accounts; you may consult your accountant to determine tax implications of allowable medical expenses.

 

3. Your health insurance coverage.
Be aware that your employment circumstances, compensation and benefits may change over the remainder of your working life. Understand your options including COBRA eligibility.
Many folks assume Medicare will cover everything they will need when they retire but dental, vision, hearing and long-term care are all examples of additional policies or out-of-pocket expenses,

 

4. If you are divorced, be sure you have designated your beneficiaries to align with your current wishes.
It is relatively common for a divorcing couple to enter into a property settlement agreement in which each spouse waives any interest in the other spouse’s retirement plans. It is still critical to amend your plan documents to reflect your new beneficiary designations. Courts have recognized that Plan Administrators are obliged to act in accordance with Plan documents and this supercedes the legal waiver. (Kennedy v. Plan Administrator For Dupont Savings & Investment Plan, 555 U.S. 285 (2009)).

 

5. You have a family member with a disability.
Individuals with a disability (consistent with IRS regulations) are exceptions to the SECURE Act. Is a Special Needs Trust one of the beneficiaries of your IRA?  The SECURE act may have a significant effect on this planning strategy. See our blog later this month, The SECURE Act: “Stretch” IRA no longer.

 

6. Know your financial position.
Be completely familiar with your personal balance sheet: what you have and what you owe.
Know and understand your marginal tax bracket and implications of state income taxes in retirement.

 

7. How much will you have coming in and what you will spend when you are retired.
Will you receive social security (over a certain level it is taxable), a pension or retirement plan distribution?
Many people assume their expenses will be lower when they retire but sorry, data does not support this assumption. You may want to start by assuming your expenses will be the same less what you contribute to retirement savings.

 

8. Know what percentage of your money is in retirement assets and non-retirement assets. 
This is a key determinant in choosing a strategy determining which accounts should be drawn upon for your income needs.
In the current low interest rate environment, you must be sure your asset allocation provides the opportunity to keep pace with inflation.

 

9. Know your level of financial security and understand what you need for your personal well-being.
It is easy to be mis-led by standard formulas and calculators. Even if you think you know what you want for your future, life is unpredictable. There is no magic number for everyone. How much you will need in retirement depends on how much you will spend when you retire. Think about it and add it all up.

 

10. Know your personal goals and objectives.
What do you want to work toward?  Is it about early retirement, paying off the mortgage, travel, a second home, downsizing, leaving money for your children or paying for college for the grandkids? Write it down and set your priorities!
While it is great to gather information, don’t let other people’s opinions influence your priorities and goals.
One thing is for sure and that is nothing is for certain.  Have a Plan B!

 

Coming next:

II.  The SECURE Act: If you keep working, you can keep saving
III.  The SECURE Act: You and your RMD -
IV.   The SECURE Act: “Stretch” IRA no longer

 

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Asset allocation does not ensure a profit or protect against a loss.

This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor

Financial planning and investment advice offered through Affinia Financial Group, LLC, a registered investment advisor. Securities offered through LPL Financial, member FINRA/SIPC. Special Needs Financial Planning LLC, Affinia Financial Group, LLC and LPL Financial are separate entities.

Tags: Retirement Planning

January is Kickoff Time (even for us Patriots fans🙁)

Posted by Haddad Nadworny on Sat, Jan 11, 2020 @ 06:30 AM

The Special Needs Financial Planning Team John Nadworny, CFP, CTFA | Cynthia Haddad, CFP | Alexandria Nadworny, CFP,  CTFA

We are committed to presenting complimentary educational workshops to  organizations and parent groups. We are currently booking presentations for 2020. Please contact Alex Nadworny(anadworny@affiniafg.com / 781-365-8586) to  schedule a talk for your group. 

 

The Year in Special Needs Planning

Planning for the future is a process; there are many choices and options to learn about, think through, discuss and act upon.  Each month we will highlight a specific element of planning, along with a few possible action items, to help make the process more manageable.

The important thing is to get started!

January – Set Yourself Up

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  1. Set and prioritize your financial goals. A good way to begin might be to make a comprehensive list of goals and then rank them by urgency and achievability. 

 

               Here’s a hypothetical example:

      Need to do in 2020

     Will try to do in 2020.   

    Would be great to do in                     2020

    Replace the car that is          about to break down                    for good.         

    Put $100/month into a     college savings account                for each child.

        Max out my 401K.

 

  Pay down credit card debt.

      Save $5K more in a               retirement account.  

   Replace the deck on the                    house.       

        Make student loan                   payments.      

  Take a class to build skills      and work toward a job       change/promotion/raise.  

Save money for trip to Disney World. 

 

  1. Review your past year’s cash flow and construct your spending and saving plan.

    • Review 2019 cash flow

      1. Here’s why- It's a reality check; you’ve just listed what you want to do now look at what you did do. How in the world did you spend all that money at Target? Reviewing where and what you spent your money on is a great way to bring mindfulness to your spending.

      2. Here’s how- Most banks give account holders the ability to download their transactions and may even categorize the expenditures for you. Determine what was spent on filling needs- e.g. food, shelter, insurance, transportation and what was spent on discretionary items or wants - travel and entertainment, streaming services, the gym, restaurants- the things you choose to spend your money on but can keep calm and carry on without.

    • Build a spending & saving plan.

      1. A spending plan is a summary of how you project spending your money and provides a benchmark to check your actual spending against throughout the year. A general rule of thumb for making a spending & saving plan, also called a budget, is to aim for spending 50% of your after-tax income to pay for your needs, 30% to pay for your wants and 20% to pay yourself – your savings! We prefer to elevate the focus on saving and tweak this practice to be a 50/20/30 rule, when possible. This prioritizes paying yourself 20% before paying for your wants or discretionary expenses. If you know you are realistically unable to save 20% of your after- tax income, consider increasing your savings 1% per year until you get there.

      2. Be a Money Watcher. Keeping track of your money is a key action to help you stay on track and make mindful money decisions throughout the year. Just look at the decades of success subscribers to Weight Watchers have enjoyed. A key – maybe THE key- element of their program is tracking the points in what you eat against the points you are allotted in order to reach your goal weight. Without this tracking, no one will think about that extra half cookie they ate after lunch! The same is true of tracking your spending and keeping your budget and there is all manner of technology available to help you be a Money Watcher.

  1. Be sure your legal and estate planning documents are up to date and your key emergency contacts know how to access them. These documents would include:

    • Power of attorney

    • Health Care proxy

    • Wills & Trusts

  2. Special Needs Planning Focus

In addition to the planning documents above, for a child with a disability please include the following documents, when applicable:

    • Special Needs Trust

    • Guardians

    • Trustees

    • Advocates

    • Asset ownership

    • Beneficiary designations

And last but not least...

😍 Complete/Update a Letter of Intent. These are the details of your child’s daily life that will be an invaluable resource for those who will to carry on their care.  You may download a copy here.

You're on your way! 

landscape-photography-of-snow-pathway-between-trees-during-688660-1

This information is not intended to be a substitute for specific individualized tax or legal advice.  We suggest that you discuss your specific situation with a qualified tax or legal advisor.

 

 

 

 

 

 

Tags: financial planning

Caring for Caregivers: All is Merry, All is Bright, OOPS!

Posted by Haddad Nadworny on Sat, Dec 21, 2019 @ 07:22 AM

We are committed to presenting complimentary educational workshops to  organizations and parent groups. We are currently booking presentations for 2020. Please contact Alex Nadworny(anadworny@affiniafg.com / 781-365-8586) to  schedule a talk for your group. 

The Special Needs Financial Planning Team John Nadworny, CFP, CTFA | Cynthia Haddad, CFP | Alexandria Nadworny, CFP,  CTFA

brown-pinecone-beside-candle-lantern-699372-1It’s the holiday season! Time to gather together with family, friends and neighbors to enjoy all that is merry, bright and delicious. It is also the time of snowstorms, black ice and overloaded electrical systems.  Not to be a Grinch, but the power could go out causing you to slip and fall while carrying a glass of eggnog and a tray of mini hotdogs, hitting your head on a ceramic Rudolf and making a really big mess.

These things most certainly will NOT happen ;) but If you believe the old adage that carrying your umbrella means it won’t rain, then preparing for an emergency is for you.

Why think about this at holiday time? It is the ideal time to talk with your nearest and dearest to be sure they know what the plan is if you are incapacitated or unavailable.

Here are Five Tips to Prepare for the Unexpected

  1. Who are your go-to people; the ones you will depend on when there is an emergency? Be sure they all know the who, what, where and how of your emergency information: who will make health and financial decisions, what your wishes are and where and how to access your important financial and legal documents.
  2. Is there a person who depends upon you for support, for example, an elderly person or a person with a disability? Whom should be contacted to help fill your responsibilities? Where is information relating to their care kept?
  3. Do you have emergency information prominently displayed and easily accessible in your home? This should include emergency contacts and important medical information such as allergies and medications. You may want to reference the Shared Care Plan for a comprehensive list of emergency information to consider.
  4. What about digital access? Does a key person have the access code to your cell phone and knowledge of where your passwords are stored and how to access them?
  5. Communicate your plan with your trusted emergency contacts, neighbors and relatives so everyone is in the loop!

Warm wishes to enjoy a SAFE and wonderful holiday season. Cheers!

assorted-color-sequins-1191710

 

Exciting News! Introducing Affinia Financial Group

Posted by Haddad Nadworny on Sat, Oct 05, 2019 @ 06:00 AM

The Special Needs Financial Planning Team John Nadworny, CFP, CTFA | Cynthia Haddad, CFP | Alexandria Nadworny, CFP,  CTFAVisit our NEW Interactive Workshops Calendar

We are honored to share the exciting news that we have founded our own investment advisory firm, Affinia Financial Group in Burlington, MA.  Special Needs Financial Planning is now a specialty practice of Affinia Financial Group.

Affinia WelcomeAffinia is a legacy firm offering a full range of financial services and is a reflection of our commitment to be there for our clients and their families into the next generation. We chose the name Affinia as a tribute to the affinity we have for our clients, their families and for our team of professionals.

Our advocacy efforts will be uninterrupted; please see our workshops page to attend or schedule a presentation for your group. We will continue to publish innovative, helpful information, as well as techniques and tools for planning for individuals with disabilities on our blog and in the media.

Welcome to Affinia!

John, Cindy, Alex, Jackie, Ben & Patty

Our new contact information: 

Affinia Financial Group

80 Blanchard Road, Suite 201

Burlington, MA 01803

T. 781-365-8586

Logo Side By Side Final - RGB

 

 

 

 

Caring for the CareGiver: Advanced Directives

Posted by Haddad Nadworny on Wed, Aug 21, 2019 @ 07:39 AM

The Special Needs Financial Planning Team John Nadworny, CFP, CTFA | Cynthia Haddad, CFP | Alexandria Nadworny, CFP,  CTFA

Visit our NEW Interactive Workshops Calendar

You’ve completed the Letter of Intent (LOI) for your child, but what about planning for your own care? ambulance-architecture-building-263402Two-thirds of all adults have no living will or other health care directive. Regardless of your age, it is always a good idea to let others know your values, wishes and care preferences should an emergency arise and you are unable to communicate.

An Advanced Care Directive is a legal document in which a person specifies which actions should be taken for their health if they are no longer able to make decisions for themselves due to illness or incapacity. An advanced care directive may go by several names: Living Will, Durable Power of Attorney for Health Care, Medical Power of Attorney or Health Care Proxy.

There are many circumstances to consider and your decisions may change over time, but you may find it helpful to get started by breaking advanced care planning down into 3 steps:

  1. Learning about and thinking through the types of decisions you will have to make
  2. Formalizing your decisions in a legal document
  3. Sharing your decisions with all relevant people, including your appointed health care proxy, your family and friends, legal professionals and your healthcare providers

The types of decisions you will have to make

 It is very difficult to think through what your wishes might be given the infinite number of emergency situations which could occur. An important first step is to think about what you value; those things that make life most meaningful for you. Then you can begin to consider the level of medical treatment you would want to receive.

For example: (Source NIH)

  • if a stroke leaves you unable to move, would you want CPR? If you became mentally impaired by the same stroke, would your decision change?
  • If you are in pain at the end of life, would you want pain medication even if it made you drowsy and non- communicative?
  • If you are permanently unconscious and then develop pneumonia- would you want antibiotics and a ventilator?

Regardless of your wishes for aggressive treatment, palliative care, meaning treatment to mitigate pain and keep you comfortable, should always be considered.

In your advanced care directive you can outline the types of medical treatment you would and would not wish to receive. Included should be your thoughts about life support treatment and your goals for all of these treatments including:

  • Use of equipment such as dialysis and ventilators,
  • DNR or Do Not Resuscitate Orders- meaning you do not want CPR administered
  • Fluids via IV and food supplied by tube feeding,
  • Use of major surgery, blood transfusions, antibiotics
  • Use of Pain medication

In addition, you may specify your wishes regarding organ donation in an advanced care directive.

Who should make care decisions for you?

adults-caucasian-commitment-870901-1You should choose a person you know well and whom you feel knows you well. This person should be capable of handling the responsibility that comes with making decisions and advocating on your behalf.

This person, who may be referred to as your medical proxy or health care agent, does not automatically get called in to make decisions unless you are unable or incapable of speaking for yourself. In addition, if you are able to make decisions for yourself in the case of an emergency situation, you are not bound by the contents of your Advanced Care directive- you may decide whatever you wish at that time and you may revoke your advanced care directive at any time.

You should also name a second individual as an alternate health care proxy.

Formalizing Your Decisions in a Legal Document

Some states have specific documents to be completed to achieve your advanced health care directives. Massachusetts does not have a statute governing the use of living wills and there is no “Massachusetts Living Will” document.

You may request an advanced care directive form from your attorney, however there are high quality free/ very inexpensive online resources to formalize your wishes including Caring Info, a program of the National Hospice and Palliative Care Organization and The Five Wishes.

Once you have completed your advanced care directive be sure to sign it under the appropriate circumstances as many states have notice and signature witnessing requirements.

Communicating Your Decisions & Sharing Your Documents

 It is critically important to discuss and share your decisions with the people you have appointed as your health care agent and your health care providers. You should also share this document with them. You may change your advanced care directive at any time and if you do, you should destroy all copies of prior directives and share the new directive with the appropriate people. 

Sources:

National Institute on Aging, Advanced Care Planning: Health Care Directives

American Cancer Society, Types of Advance Directives

American Bar Association, Myths and Facts about Health Care Directives

National Hospice and Palliative Care Organization, Massachusetts Advance Directive

Aging with Dignity, The Five Wishes

The information provided here is for general information only and should not be considered an individualized recommendation or personalized investment advice.

 

 

 

 

Tags: Aging Caregiver, advanced directives, living will, health care proxy

It's the 4th of July and My Child isn't the Only One Getting Older!

Posted by Haddad Nadworny on Tue, Jul 02, 2019 @ 06:00 AM

The Special Needs Financial Planning Team John Nadworny, CFP, CTFA | Cynthia Haddad, CFP | Alexandria Nadworny, CFP,  CTFA

New call-to-actionIn addition to documenting the details of your child's daily life, The Letter of Intent (LOI) is an appropriate place for you to describe the personal traditions and holiday activities that bring happiness to him or her. The LOI can be a helpful bridge for future caregivers to have insight into how to fulfill their roles.You may download a fillable LOI by clicking here or on the image. 

Sarah and Thomas, Part III

Below, the story of Sarah, and her LOI for her adult son, Thomas, continues.  Since Sarah's "ah-ha!" moment during her injury last winter, she set a goal to work throughout 2019 to complete a very detailed LOI for her son, Thomas.

Allowing herself the time to complete the LOI a bit at a time has been a great gift. It has freed her up to record the  important details of her daily life with Thomas through the lens of both his capabilities and her expectations. It has also led her to expand her thinking about what she does for Thomas to include and focus upon what is meaningful for him, what is comfortable for him, and what is joy for him.

bright-celebrate-celebration-769525

 

The 4th of July

This 4th of July,  will be a great day for my son. I know this because it always is.  He will get up in the AM and put on his Red Sox T-shirt.  While he is no doubt a super-fan, and the Sox always have a game on the 4th,  he wears it today because it's red, white and blue. He will be excited because I will have the day off and he will have friends and family all around and it is the middle of summer - the best time of year to be a New Englander. 

american-flag-flower-july-4th-1093645We always start the day with a neighborhood parade featuring children on their bikes which they have decorated with streamers, a salute to the flag, and coffee and doughnuts on our neighbor’s porch.  Thomas is out of the house by 8AM, as his  job, lining the parade route with miniature flags, needs to happen before any of the festivities begin.  Later, after we help clean up and pick up all the flags and store them in their box in our basement,  we will go to my cousin’s home for a BBQ.  There Thomas will drink too many sodas, eat too many hot dogs and basically have a great time. There will be fireworks, and sparklers for the kids and an infinite number of reasons to be thankful for and celebrate our freedom.  Thomas and I will drive home and go through our nightly routine before collapsing, exhausted by the sweet joy of the day.

Next Steps for Sarah

Sarah has made the LOI into more than a chronicle of Thomas’ daily life; she has created a diary of their life together. While no one will ever fully fill her shoes, the details in this LOI will give them an idea of  Thomas’ favorite things.  It makes sense to keep a diary for others to know these special moments. She is hopeful he will have people in his life to help him continue the traditions he loves.

She will begin by watching Thomas interact with neighbors and family this 4th of July, and mention to them how much joy this holiday tradition brings him. This might be the first step in asking people to be a part of Thomas’ life when she is no longer able to be there for him. She is moving forward.  

(Author's note: While the content in this post may stand alone, you may receive greater context by reading Sarah's story in Parts I and Part II of this series about parents' and caregivers' concerns as they and their children age. )

 

Tags: caregivers for special needs, special needs Letter of Intent, A Team to Carry On, Aging Caregiver

3 Financial Aid Facts for Families of People with Disabilities

Posted by Haddad Nadworny on Wed, Jun 12, 2019 @ 06:00 AM

The Special Needs Financial Planning Team John Nadworny, CFP, CTFA | Cynthia Haddad, CFP | Alexandria Nadworny, CFP,  CTFA

Visit our NEW Interactive Workshops Calendar

Filing FAFSA, filling in a College Scholarship profile or just finding out all you can about student debt forgiveness programs? Here is some information specific to ABLE Accounts, Special Needs Trusts, Social Security Benefits and the student loan process. 

Before we get started, a special shout-out to Mary Rubenis of the Massachusetts Educational Financing Authority (MEFA), sponsors of the Attainable Savings PlanSM  for contributing her insight and key  information. 

A Little Background Info about the ABLE Account & Special Needs Trusts:

The ABLE (or 529A) account is a tax advantaged account for individuals with a disability to pay for qualified disability expenses.  Unlike a typical 529 plan which requires funds be spent on qualified higher education expenses, the funds in an ABLE account may be used to pay for qualified expenses related to living with a disability. Qualified disability expenses may include education, transportation, housing, employment training and support, personal support services, health, basic living and assisted technologies and related support.

As of 2018, it is allowable to rollover up to $15,000/year from a beneficiary’s 529 account into their own or their family member’s ABLE account without penalty.  To read about the basics of the ABLE account, as well as suggested strategies and case studies that use the ABLE, click here

 A Special Needs Trust (SNT), also called a supplemental needs trust, is a vehicle to provide monetary support for a beneficiary without effecting their eligibility for needs-based government benefits, e.g. Social Security Income and Medicaid.  The beneficiary will not have access or control over the money in a SNT.

3 Financial Aid Facts

1. Reporting requirements for Free Application for Federal Student Aid (FAFSA)

FAFSAGuidance from the Federal Student Aid Office states that ABLE accounts, along with interest income and distributions, should be excluded as assets on the beneficiary’s FAFSA. ABLE accounts were created to supplement, and not to replace, eligibility for federal means-tested benefit programs. ABLE accounts would also not be reported on a sibling’s FAFSA, as the assets are considered those of the beneficiary, not the parents.

SNTs are treated as any other trust fund for the purposes of FAFSA and need to be reported. Restrictions on distributions from a SNT are imposed by the grantor of the trust and unless specifically excluded, these funds may be dispensed by the trustee to pay for educational expenses for the beneficiary.  The assets in the SNT are not included on the beneficiary’s siblings’ FAFSA.

Social Security benefits that are not subject to taxation do not have to be included on FAFSA. SSI recipient’s income levels are generally below the taxable threshold, so SSI generally does not need to be reported. If you receive SSDI and have substantial income, your benefits may be taxed at the federal level. For example, if you are single and your income is more than $25,000 per year but less than $34,000, you would have to pay taxes on about half the value of your benefits. If you earn more than $34,000 (or married and earn more than $44,000), 85% of your benefits could be taxed.

2. Reporting Requirements for College Scholarship Service (CSS ) Profile

The Federal Student Aid Office has not yet provided guidance on reporting assets in a SNT or ABLE. Currently, the CSS/Financial Aid Profile does require reporting the assets of siblings and may require the disclosure of assets in a SNT and ABLE.  In these circumstances, families should give details of how these funds are used in the special circumstances section of the application and ask each college for a professional judgment review.  While some financial aid departments will ignore the assets in the trust, most will not.  They may however, consider the high costs of dependent care when making their grant determinations.

3. Student Loan Repayment

student-loan-debt-1160848_960_720If their student loan covers a time period during which the individual had an ABLE account open, repayment may be considered a Qualified Disability Expense and be paid from the ABLE.

If you become totally and permanently disabled (TPD), you may qualify for a TPD discharge of your federal student loans.  Refer to DisabilityDischarge.com for more information. 

Also, If you are employed by a government or not-for-profit organization, you may be able to receive loan forgiveness under the Public Service Loan Forgiveness Program. Refer to StudentAid.ed.gov for more information.

Sources:

MEFA, Massachusetts Educational Financing Authority

Fidelity Investments, Attainable Savings Account

Evisors.com

Ableforalll.com

Nolo.com

Content in this material is for general information only and  not intended to provide specific advice or recommendations for any individual,  nor intended to be a substitute for specific individualized tax or legal advice.  We suggest that you discuss your specific situation with a qualified tax or legal advisor. 

Prior to investing in an ABLE or 529 account investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other benefits that are only available for investments in such state’s ABLE program.  Withdrawals used for qualified disability expenses are federally tax free.  Tax treatment at the state level may vary.

Investing involves risk, including loss of principal.

 

 

Tags: transition planning, Special Needs Trusts, planning for college, ABLE Account, FAFSA, Planning for college with disabilities

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