FAQ
You Have Questions – We Have Answers
We begin every relationship with an introductory phone call or virtual meeting to explore mutual fit, answer your questions and discuss your financial goals. Following this initial call, we’ll conduct several in-depth meetings, either in personal or virtually, during which we set up your customized financial planning website, review your current statements and tax returns and prepare a comprehensive financial plan.
We would then work with you on an ongoing basis as this plan is implemented, making adjustments as needed based on changes in your family situation, changes in the tax code and estate laws, and more.
Give us a call and we’ll schedule an introductory meeting. We are here to help provide peace of mind for you and your future generations.
Our advisors are all CERTIFIED FINANCIAL PLANNERS™ and have deep, technical knowledge of the tax and estate laws to cater to our high-net-worth clients. We differentiate ourselves through our proactive, relationship-focused approach, ensuring your financial plan is continuously aligned with your goals through meticulous monitoring and timely implementation of necessary adjustments.
Shakespeare combines technical knowledge with ongoing advice and the ability to invest your assets in a manner that meets your specific needs.
We are a Fee-Only firm, which means we do not accept any form of commission. This creates a higher level of transparency and eliminates the conflicts of interest present with many financial advisors. Our ongoing fee is determined during your initial meeting with Shakespeare and is based on the level of complexity in your financial situation and breadth of services required. We charge an asset management fee comparable to most advisors and mutual funds but provide significantly more value to our clients. Our fees range between 0.50% and 1.0%.
'Fee-Only' advisors like Shakespeare earn solely from the transparent, agreed upon client fee set during your initial meeting. A ‘Fee-Based’ advisor is able to charge an advisory fee to manage assets, but also has the ability to sell you financial products that pay commissions such as annuities and insurance products. This creates conflicts of interest, with the advisor having the ability to earn higher compensation if they steer you into certain products.
To verify an advisor's status, check if their website or business cards includes terms related to securities sales or broker-dealer affiliations, such as SIPC and FINRA, followed by legal disclaimers. As a Fee-Only firm, we are registered only with the SEC, focused exclusively on your best interest.
Yes, Shakespeare always operates as a Fiduciary. We are committed and legally obligated to prioritize your interests above all else. If you’ve never worked with a fiduciary advisor, now is the time to experience the difference.
We do not sell any financial products. Given our deep understanding of your financial situation, we provide advice based on your needs and goals. We will then work with professionals such as insurance agents and attorneys alongside you to ensure you get the right product at the right price. Having Shakespeare properly quantify your needs, and then serve as your advocate ensures you get the best results.
The world is rapidly changing. If you are not actively monitoring your financial plan and making adjustments, you will not achieve optimal results. Clients experience changes to tax laws, estate laws, employment, income, family situations, health, and more. You need an adviser who will make necessary adjustments to your plan as things change.
Our experience shows the best financial outcomes result from ongoing relationships. Constant updates in laws and personal circumstances make one-time plans less effective over time. Therefore, we focus on establishing long-term partnerships with our clients to maintain the relevance and effectiveness of financial strategies.
Shakespeare serves high-net-worth individuals with a minimum of $1 million to invest.
This minimum includes:
- Cash, checking and savings accounts
- CDs and money market accounts
- Stocks, bonds and mutual funds
- Retirement accounts and trusts
*Property and physical assets like your home, vehicles, real estate investment properties, art, jewelry or collectibles are not considered liquid or near-liquid investable assets.
Our clients have several commonalities, including:
- A more complex financial situation relative to the average investor.
- Several moving parts to a financial plan, including multiple retirement accounts, investment accounts, real estate investments, second homes, businesses, LLC investments, complex family dynamics and more.
- You have saved consistently throughout your life; and your asset levels now require the guidance of a more sophisticated advisor.
- You are preparing for retirement, needing help navigating Social Security, Medicare, 401k Rollovers, Pension distributions, tax planning, etc.
- You may be experiencing life transitions, such as loss of a loved one, divorce, widowed, business sale, retirement, career change, and more.
- Your number one asset is your family, and you have a strong desire to provide contingency planning for them. You want to make sure to have a trusted advisor in place to help manage the family’s finances before a sickness or death occurs.
Yes, our investment management is customized to best meet the needs identified in your financial plan. Our process is built on academic research and is continuously monitored by our team of advisors. We have taken the guesswork out of the investment process and instead rely on trusted disciplines to add value. We build and manage portfolios based on your real-world needs, such as income replacement and risk management. We have software to help us implement and monitor your portfolio to keep you moving forward.
Yes, we have clients located throughout the country. Based on our sophisticated financial planning software that allows for easy collaboration, we are able to offer our services remotely without compromising the quality and responsiveness of our engagement.
To determine if you have enough money to retire, you’ll need a comprehensive financial plan. This should account for all your current and future income, expenses, and assets. It’s also important to stress-test your plan against various 'What If' scenarios to prepare for potential surprises. Working with a skilled financial advisor can help ensure you’re on the right track.
Properly structuring withdrawals from various types of accounts to coincide with your tax situation, both present and future, is critical in helping you maximize your finances. Anticipating future Required Minimum Distributions (RMDs), as well as Social Security and pension payments, is key to making informed decisions.
Medicare, which begins at age 65, is a cost-effective choice for most retirees. Before age 65, you can explore options like COBRA or individual health insurance through the Healthcare Exchange/Marketplace. It's important to determine if you qualify for tax credits and understand how to structure your individual policy. Navigating these choices can be complex, so careful planning is essential.
The age of your spouse impacts Social Security claiming strategies, pension elections, insurance decisions (life, disability, LTC, health), required minimum distributions (RMDs), investment allocations, withdrawal strategies, tax planning and more. Your advisor should incorporate your age differential into your financial plan and stress tests various planning strategies and scenarios.
Additional earnings can make your financial plan last longer, even if you earn a modest income. When it comes to earnings, more is almost always better. Running a ‘What If’ scenario on your financial plan will show the impact of the extra earnings.
Retirement planning is a process that lasts throughout the entirety of your life. You should be regularly reviewing your budget, income plan, tax plan, RMDs, charitable contributions, estate planning, insurance planning, gifting and more. Identifying potential surprises early can help minimize their impact on your financial future.
The answer to this question is hidden in your financial plan. Understanding your current and future income, assets and expenses will guide you to the best answer. If your employer offers a 401k matching contribution, you should always try to earn this ‘free’ money before considering other options. After that, the answer is truly dependent on your specific circumstances and goals.
If you have to choose between the two, we recommend saving for retirement first and paying tuition next. The old adage is you can borrow money to pay for college, but you can’t borrow money to pay for retirement. If you aren’t able to pay as much of your children’s tuition as you wanted, keep in mind you can help them pay back student loans in the future if your employment and finances allow for it.
The simple answer is if you think you’ll be in a similar or higher tax bracket in the future, then you should convert. In addition, if you hope to leave assets to children, the Roth IRA is the ultimate asset to leave them because of its tax-free status. For the most accurate answer, a comprehensive financial plan is required, along with consultation between your financial and tax advisors.
A beneficiary form trumps a Will or Trust, and should be coordinated with your overall estate plan. Making sure the beneficiary form is properly worded is imperative to fulfilling your intentions.
Many people initially spend 80-100% of their typical pre-retirement budgets, then settle into a pattern of spending that is closer to 80% of their final working years’ expenses. Everyone’s situation is different. The key is quantifying your expenses, making sure you account for all spending, including potential unexpected costs.
It's understandable to be concerned about market fluctuations, but moving your assets to cash can often be counterproductive. Market timing is a concept that’s proven to fail. When you make short-term changes to your asset allocation, you need to be correct twice – when you sell and when you buy back. The markets are designed to win, appreciating 75% of the time since 1926. Pick an appropriate asset allocation for your risk tolerance and stay with it. Along the way, rebalance your portfolio to maintain your target mixture.
Active mutual funds often fail to consistently outperform their benchmarks over the long term. While passive index funds generally offer lower costs and broad market exposure, they do have their own limitations, such as lack of flexibility in responding to market conditions. No investment strategy is perfect; it’s important to consider your individual goals and risk tolerance when choosing between active and passive funds.
Most index funds are cap-weighted, meaning the bigger companies encompass a larger share of the index. As a result, most index funds overweight companies that are overvalued. This results in higher volatility, which is felt the most during market downturns or when asset bubbles are present.
A person’s asset allocation is determined by a number of factors, including current age, time horizon, risk tolerance, income needs, return objectives, legacy goals and more. For example, it may be appropriate for a retired client to have an aggressive portfolio and a younger client to have a conservative portfolio. Asset allocation is highly personalized and should be adjusted as circumstances change. A financial advisor can help tailor a specific allocation strategy based on your unique situation and goals.
The three years leading up to and into retirement are when a person should have the most conservative investment strategy. This is the stage of life when you can no longer rebuild your assets from a significant market downturn, and when the withdrawal timeline (life expectancy) is the longest. Be sure to meet with your advisor regularly to review your asset mixture.
Investing in individual stocks can be challenging because you’re competing against institutional investors and mutual funds that control vast amounts of capital. The odds of consistently outperforming these large players are generally low, especially over the long term. It’s important to work with a knowledgeable advisor who understands market dynamics and employs sophisticated tools to help manage your investments effectively.
While lower investment fees are generally preferable, it's important to remember you often get what you pay for. Just as we might pay a little extra for safer cars, specialty brands or premium tickets, in investing, it’s important to balance cost with value. Seek mutual funds that offer a good combination of low fees and strong performance or features, rather than focusing solely on minimizing costs.
Not necessarily. If you own the same types of securities in each account, you’re not diversified. Know what you own and strive to own asset classes that work differently from each other in order to minimize risk and maximize return. Consolidating your assets into one account or with one advisor can actually provide a more diversified account, which is easier to administer.
While transitioning to bonds and income-generating securities can provide stability and income in retirement, it's crucial to maintain a strategy that also includes a hedge against inflation. A well-balanced approach should ensure income while also protecting your purchasing power over time. Diversifying your investments can help achieve both stability and growth.
A Fiduciary Advisor is required to work in your best interest and stay current with various financial products, laws, rules, research, planning strategies and more. In addition to shifting this responsibility to an advisor, you can also shift the risk to them. Few of us fix our own cars, prescribe ourselves medications, write our own Wills, fill our own cavities or complete our own tax returns; recognizing that others are better trained for the job. Having a trusted partner to guide you through unexpected events (market crashes, asset bubbles, financial data, risks of the markets, an appropriate withdrawal strategy, tax & estate issues, etc.), provides peace of mind and is a priceless resource. Finally, if you become incapacitated or die pre-maturely, having an advisor to take care of your family is an incredible asset.
It’s crucial both spouses have a firm grasp of their family’s financial situation. Start with a conversation and begin attending all financial meetings together. Tell your spouse and advisor you’d like to be involved and included in all correspondence related to your finances. Additionally, take advantage of available resources to enhance your financial knowledge. Even if you’re new to finance, trust your instincts and seek guidance from your advisor.
This is a common and legitimate concern. The first step to any problem is knowledge. Work with an advisor to learn about your situation and develop a financial plan. Part of this process will include a review of your budget and savings habits to determine any risks and opportunities. In addition, stress test the plan for ‘What If’ scenarios such as the premature death of a spouse, divorce or job loss. Once you understand the financial impacts of these situations, you’re able to prepare. If your concern still persists, ask your advisor to introduce you to others who have had similar concerns to learn more. Knowledge is power.
A good advisor represents the interests of both spouses and communicates openly with each of you. Have a conversation with your advisor about your concerns and ask to be included in correspondence and all decisions. If you’re not taken seriously, it’s time to find a new advisor.
There's no need to feel embarrassed about reviewing your 401(k) investment options. Navigating these choices can be complex and often requires extensive research. An investment professional can help you understand your options and make informed decisions. Consult your financial advisor to ensure your 401(k) allocation aligns with your overall financial plan and other assets. Additionally, review your beneficiary designations to ensure they match your estate plan.
If necessary, consult with a divorce attorney to learn more about the legal process. Although divorce can be emotionally challenging, the legal aspects are generally straightforward, especially in 'no-fault' states where the reasons for the divorce are not considered.
Work with a financial advisor who specializes in divorce. They will assist the attorney in structuring the divorce decree, helping calculate the division of assets and income. Develop a new budget reflecting your single life, covering expenses such as housing, savings, insurance, and entertainment. Your advisor can help you plan for these changes to ensure your financial plan aligns with your new circumstances. After the divorce, meet frequently with your advisor to review issues that develop. After 6-12 months, you’ll have a much clearer picture of how your new life and finances are working.
Losing a spouse is incredibly challenging. It’s important to have peace of mind related to your finances so you can properly grieve and cope with other components of your life. A skilled advisor will meet with you a few weeks after your husband’s passing to handle a few critical issues. In this meeting, they will lay out what needs to be done in the next 6-12 months to deal with other action items. Consider incorporating adult children or a trusted family friend in the conversation to assist, as two sets of ears and eyes are better than one. Don’t hesitate to ask any questions or seek additional information. It’s important you feel empowered and listened to as you learn to handle the financial decisions.
You should be communicating your concerns both to your husband and to your advisor and schedule a meeting to specifically address this issue. The advisor should provide education along with potential solutions and recommendations that address both of your perspectives. If you’re still not comfortable with the result, get a second opinion.
Teaching your children about financial issues can be both educational and empowering. For children aged 10-14, Junior Achievement offers valuable resources and programs. You can coordinate with their school to bring in a speaker. For teenagers aged 14-18, check if their high school offers financial literacy classes, as many schools now include these in their curriculum.
In addition to formal programs, teach practical money management skills such as saving, budgeting, and charitable giving. Involve them in understanding basic financial concepts by showing them how to write a check, what happens when you withdraw money from an ATM, and how your paystub has deductions for taxes and savings. Have a financial advisor consult with your adult children to help them build a solid foundation for their financial future.
Begin planning at least five years prior to selling your business to maximize value. Ideally, consider this from the first day you’re in business. Every decision should be made with a potential buyer in mind, ensuring that each choice enhances the business’s appeal and value.
There are planning opportunities for business owners, even if your assets are not liquid. These include maximizing retirement plan contributions, taking advantage of all available tax deductions and credits, diversifying your assets when possible, and more. Additionally, employing your children is a great way for them to learn the business, shift income to a lower tax bracket, and begin saving for their college tuition or even retirement.
An income replacement plan will utilize the proceeds from your business sale to efficiently create an income stream (synthetic paycheck) to live on.
There are several strategies available to reduce current income taxes. Maximizing retirement accounts with a 401k and Profit Sharing Plan is a nice first step. A Cash Balance Pension Plan can also be utilized with a Profit Sharing Plan to defer up to $250,000+/year. There are several other advanced strategies depending on your entity type, time horizon and business plan. Contact us if you would like to learn more.
Yes. If the majority of your net worth is invested in a privately held business, your other assets should likely be invested more conservatively. You want to refrain from owning investments that perform similarly to your business. For example, don’t own REITs if you are in a real estate-intensive business.
There are multiple strategies for passing your business to your children. You might consider advanced techniques such as selling or gifting the business with valuation discounts to reduce tax implications. Additionally, you can maintain control of the business during your lifetime or until you're ready to fully transfer control. Consulting with a financial advisor and estate planning attorney can help tailor the best approach for your specific situation and goals.
Losing a loved one is hard enough and having to deal with financial issues can be extremely difficult. Review this checklist as a starting point to identify key areas to address: Checklist – Death Of A Loved One.
A few weeks after the funeral, get in touch with a trusted financial advisor to sort through the remaining issues. Start by taking inventory of your financial situation and gathering all relevant documents. Your advisor will help you prioritize immediate needs and begin addressing them systematically. It's important to approach this process with patience and seek education and support. Your advisor will guide you through each step, helping you navigate the financial landscape and prepare for the future with clarity and confidence.
When a spouse passes away, the surviving spouse keeps the higher of their two social security benefits, with the lessor benefit being eliminated. For pensions, the surviving spouse's benefits depend on the payout option chosen before the pension payments began. Options vary, from a 100% life-only option, which ceases upon the recipient’s death, to a 100% joint-and-survivor option, which continues for the lifetime of the surviving spouse. It's important to review the specific terms of the pension plan to understand the available options and their implications.
Typically when one spouse passes away, the survivor’s family budget is reduced by at least 20%. Keep in mind there is typically a reduction in income if the deceased spouse was still working or if both spouses were receiving social security benefits.
Some planning issues to consider include a review of all beneficiary designations to retirement accounts, life insurance policies and bank accounts (POD). Beneficiary designations trump what is written in a Will, so it’s critical your designations reflect your intentions.
Consider the tax implications of any taxable assets, as survivors receive a step-up in basis, which can impact decisions about selling investments. It might be advantageous to sell assets with gains before death or to realize losses if appropriate. A Roth Conversion may make sense prior to death, especially if there is a surviving spouse. Additionally, planning for a joint tax return in the year of death may present opportunities for tax optimization.
Dealing with banks, brokerage firms and insurance companies can be difficult. Being organized will help the process. Use a notebook or computer program to track your conversations and follow-ups. Have at least 15 copies of the death certificate made, which will be needed to prove the death of your loved one. Additionally, you may need an Affidavit of Domicile, a legal document signed by the executor of the estate, for transferring assets. This affidavit confirms the deceased's residence and helps facilitate the transfer of assets according to their estate plan.
It depends on your situation. Contact an attorney who specializes in estate law to have a discussion. Generally, the estate tax return is due nine months after the date of death.
If you’re the beneficiary to your spouse’s IRA and you are younger than your spouse, you may want to roll the IRA to your own. Their account becomes yours, and you can access it based on the normal distribution rules. Alternatively, if you are under age 59½ and anticipate needing access to the funds before reaching that age, it might be advantageous to keep the IRA in your spouse’s name. Be sure to review your own beneficiary designation now that your spouse is gone, remembering that this form trumps what is written in your estate plan.
If you’re the beneficiary on a parent’s IRA, you will likely want to roll this IRA into an Inherited IRA in your name. Distributions must be taken beginning the year after death. Current rules require you to take a minimum distribution each year and to fully distribute the account within 10 years. You may also be required to take annual distributions, depending on the age of the IRA owner when they died. While you can opt to take a lump-sum distribution, be aware that this will result in a significant tax liability based on the IRA’s value and your income, and it will forfeit the opportunity for tax deferral in future years.
If you have appreciated securities in a taxable account, it’s more tax efficient to give shares of the security to the charity than to write a check. By giving shares of the security, you and the charity avoid paying a capital gain tax when it is sold, and yet receive the full value of the gift as a deduction.
If you’re currently in a high tax bracket but expect to be in a lower bracket soon, consider using a Donor-Advised Fund (DAF). A DAF allows you to make a charitable contribution and receive a tax deduction in the current high-tax year. For example, if you contribute $10,000 to a DAF now, you can deduct the full amount this year, while distributing the funds to charities over several years according to your preferences. This strategy can help you maximize your tax benefits while continuing to support your chosen causes.
Teaching children about your values is an incredible gift. Include children or grandchildren in your gifting decisions, allowing them to determine where some of your gifts will be given. If their choices differ from yours, use it as an opportunity to discuss the reasons behind different causes and the impact of giving. This approach not only educates them about philanthropy but also fosters meaningful conversations about values and generosity.
There are several ways to approach this situation. First, many people name charities in their Will, making a bequest upon their death. There are also charitable gift annuities and charitable trusts that provide you an income stream and a tax deduction for making the gift, with remaining proceeds going to the charity. Consult with your advisor to learn more about these sophisticated techniques.
Yes, you can set aside money to support specific causes after your death through charitable foundations or planned giving strategies. You can make a gift to a foundation during your lifetime or designate it to be given upon your passing. This becomes a gift that keeps on giving and allows you to impact future generations long after you’re gone.
There are several effective ways to support children and grandchildren while you’re alive and after you’re gone. You are allowed to gift $18,000 (2024 limit) per year to any individual without filing a gift tax return. You’re allowed to pay an unlimited amount of health expenses or educational expenses directly for another person, and it’s not considered a gift. Gifting money above the annual exemption would require you to file a gift tax return; but it’s a great way to give family and friends assets while you’re alive which allows an opportunity to impart valuable financial lessons. In your estate plan, you can also establish various trusts to benefit your family, allowing you to set specific terms and conditions to manage and distribute assets according to your wishes.
Consolidating retirement accounts makes it easier to administer, maintaining a uniform beneficiary designation, asset allocation, and investment holdings. Rolling the old 401(k)s into an IRA offers unlimited investment holdings with lower administrative expenses than maintaining multiple 401(k) plans. Rolling the assets to a new 401(k) may be a consideration, especially if you wish to convert non-deductible IRA contributions into a Roth. Consider discussing these options with your financial advisor to determine the best strategy for your situation.
When you change careers, your old pension plan may offer several options. You might be able to take a lump sum distribution and roll it into an IRA, providing you with more control over the investment and potential tax benefits. Alternatively, you can leave the pension with your former employer and begin receiving monthly annuity payments when you reach retirement age. To decide which option is best for you, consider having a net present value (NPV) calculation done to compare the lump sum option with the ongoing pension benefits. Consulting with a financial advisor can help you make an informed choice based on your financial goals and retirement plans.
When you quit your job, you lose your group benefits of life and disability insurance. Review your individual insurance situation prior to quitting to make sure your family is protected in the event you get sick or pass away while between jobs. Review your cash flow situation to make sure you can withstand a long period without a paycheck. Any unpaid 401(k) loans become a tax distribution upon termination, so pay those off before leaving.
Your ability to earn income is an extremely important asset, especially for those under the age of 50. Before you quit your job, review your financial plan and consider all your options. Transitioning into a new job you would enjoy more, even if you made less money, might be a consideration that would allow you to work longer.
Look before you leap into the world of consulting. You’re far more valuable as a consultant when you are employed than you are when you are unemployed. Make sure your financial plan can tolerate the loss of income and benefits when you transition into consulting, and be ultra-conservative in your revenue estimates. Having a significant cash reserve is important. Establishing a corporation (S-Corp or LLC) is a consideration to mitigate risk, provides the corporate structure to demonstrate you’re a serious business and allows you to establish benefit plans.
When considering a job transfer, evaluate the full range of impacts on your financial and personal well-being. Compare the changes in income and benefits, and assess how the cost of living in the new location will affect your overall finances. Factor in moving expenses, quality of life improvements or drawbacks, and access to services and amenities. Consider the local cultural activities, school quality, and state income taxes. Sometimes a higher salary can be offset by increased living costs or other lifestyle changes, so a thorough assessment will help ensure the move aligns with your long-term goals.
529 plans are tax-advantaged savings accounts designed to help individuals save money for a family member’s education expenses. The money invested grows tax-free if the withdrawals are used on qualified educational expenses. Depending on your state of residency, you may qualify for a state income tax deduction on a portion of the contribution. There are penalties and taxes due if the money withdrawn is not used for qualified expenses.
Each person has different goals in funding their children’s education. Start by estimating the total cost of education, including tuition, fees, and living expenses, and assess how much you can contribute. Regularly review and adjust your savings plan as needed. It’s also helpful to discuss your funding strategy with your children during high school, so they understand your approach and can plan accordingly.
With multiple children attending college, potentially at the same time, mapping out your future cash flow and expenses is vital. Consider creating a detailed financial plan that includes projected tuition costs, financial aid eligibility, and potential timing of expenses. It will be far more achievable to save money over time for this expense, than to try to cover these costs all at once.
The four-pronged approach to funding college education includes:
- Parent Cash Flow & Savings: Contributions from your own savings and income.
- Child Cash Flow & Savings: Funds the student has saved or earned through part-time work.
- Scholarships & Grants: Financial aid from universities, private organizations, or other sources.
- Student Loans: Borrowed funds that will need to be repaid after graduation.
Consider each of these sources to create a comprehensive funding strategy. As a parent, you might also need to assist with loan repayments depending on your financial situation and your child’s future earnings.
While it is possible, it won’t be easy. College tuition costs have increased at a significant rate over the last two decades. As a result, even the best students with a strong work history will have a hard time covering the full cost. Finding a low-cost college, scholarships, student jobs and student loans can definitely help. Paying for college has become a family expense, using time and a team effort to pay the bills.
Feeling wary of talking to an insurance agent is understandable, but consider the implications of not having adequate coverage. If you were disabled or passed away unexpectedly, could your loved ones survive without your income? Would their standard of living decrease as a result? We insure our cars and our homes, yet the single greatest asset for most people is our ability to earn an income. It’s important to insure your family for the potential loss of your income. Ask a parent, grandparent or mentor if they know anyone your age who died or was disabled. Find out how their family survived without them and if they should have done anything differently.
Have an advisor review your financial plan, incorporating current and future income, assets, and expenses. Don’t forget about unexpected expenses like college tuition, health insurance, mortgages, travel, weddings and more. Next, stress test the plan for a disability or premature death. If your plan works, you likely don’t need insurance. If not, you can cover any shortfall by purchasing insurance. If you anticipate support from extended family in the event of your death or disability, be sure to include them in your discussions so everyone has a common understanding.
If you think your budget can’t afford insurance premiums, then your family really can’t afford to live without your future income stream. Prioritize your expenses. It’s not uncommon for people to realize they spend more money on coffee, tobacco, alcohol, gym memberships, cell phones or eating out (each individually) than they would on purchasing proper insurance. Find out how much $50 or $100/month of insurance would buy you. You may be pleasantly surprised at how affordable it is.
Review your old insurance policy with a financial advisor to understand your options based on your current financial plan. For a permanent life insurance policy, consider these options:
- Redeem the Cash Value: You can cash out the policy and terminate it, though you’ll pay income tax on any gains.
- Evaluate Policy Sustainability: Check if the policy can remain in force without further premiums, or if adjustments can optimize its value.
- Keep the Policy: Maintain it as a safety net, since life insurance proceeds can provide valuable support to your family upon your death.
Additionally, if you face long-term disability and lack proper coverage, the policy’s cash value could help cover expenses, or the death benefit might be used to offset your loved one’s potential out-of-pocket costs for end-of-life care.
Most insurance policies are based on one person’s life. Second to die is based on the lives of two people, and pays beneficiaries after the second insured individual passes away. This type of insurance is often used by couples who want to leave a specific financial legacy to their children or charitable organizations after both of them have passed away. Some families use this type of insurance to provide needed liquidity at their death. If you have substantial assets invested in a business, farm or real estate, then second to die insurance could be used to pay any estate taxes that may be due on the second death, or simply provide liquidity to your heirs. Second to die insurance, because it is based on two lives, allows for easier underwriting, even if one spouse is considered uninsurable.
A thorough financial plan will stress test various LTC scenarios to see how you can manage with a long-term illness. Even if your assets can withstand an extended illness, many people choose to shift the risk to an insurance company. Be sure to review non-financial considerations, including whether your children or spouse are able to assist in your care, if your spouse could maintain the same standard of living during and after an extended long-term illness, and if you would opt for a higher level of care if you had insurance.
If your children or their spouses are disabled or die pre-maturely, your grandchildren will likely suffer if their parents aren’t properly insured. Inquire about the specifics of their insurance coverage. Suggest they meet with an advisor to review their risks. Offering to pay for appropriate insurance lets your children know how serious you feel about this issue. Insurance makes the ultimate gift. It protects your assets in the event the unexpected happens to your children, as most grandparents feel compelled to support their grandchildren if necessary.
Although rules of thumb are convenient, the amount of life insurance needed is different for every person and changes over time. Completing a financial plan will look at your specific needs today and in the future.
Term insurance offers substantial coverage at a lower cost but is temporary, typically lasting for a set period (e.g., 10, 20, or 30 years). One presumption of term insurance is that your financial assets will grow and/or your expenses will decline in the future such that you can self-insure a future loss. If you have term insurance, make sure you’re diligently saving and growing your assets.
Permanent insurance is better if you want to guarantee coverage into old age. It also provides cash value that could be used in the future, unlike term insurance. Keep in mind that term insurance policies should have a convertibility feature that lets you convert the policy into a permanent policy in the future. Your specific situation will dictate which one to choose.
Your group insurance at work typically doesn’t cover your entire insurance need. If you switch employment or lose your job, you may lose your group insurance. In addition, you may become uninsurable in future years, so obtaining proper individual insurance coverage that you keep regardless of employment protects your family. Purchasing individual insurance while you’re younger and healthier often results in lower premiums. Overall, individual insurance provides tailored coverage and long-term security that complements your work-based benefits.
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Shakespeare Wealth Management, LLC
N22 W27847 Edgewater Drive
Suite 101
Pewaukee, WI 53072-5260
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