Markets During Election Cycles

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For investors, keeping politics and their wealth separate is not always an easy task. With less than 100 days until election day, these topics are at the forefront for many investors. Investors tend to let political views dictate investment decisions when emotions are involved. We encourage investors to vote through the ballot box and not through their portfolios to stay on track. In this month’s video, we will discuss our perspective on why investors should stick to their financial plans during election cycles and what we will be looking for after the election results.

If you have further questions about the video, please reach out to a member of your client service team or contact us.

Watch here: https://youtu.be/VHGLv0h6-JA

Your College Piggy Bank – The 529 Savings Account

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If you are sending that first child off to college in the next few weeks, you have probably already started to consider how you will pay that first tuition bill.  If you diligently saved for your child’s college education and used a 529 Plan Account, it will likely be your first source of funds.

So how do you get the money out?  Most plans will have a Withdrawal Request Form which can be found on the plan’s website. Complete the form, fax or mail it in, and you can receive your funds via 1) a check to the address of record, 2) an EFT to your checking (however, the EFT instructions cannot be set up at the time of the withdrawal request), or 3) you can have a check sent to the eligible college (I would be careful with this one).  Many plans also allow you to call in the withdrawal request.

Sounds easy, and it is, however, let’s start waving some red flags….

First: Timing is important when it comes to the withdrawals. I would not, for example, take a distribution in August to cover the school year ending in May of the following year (That’s one school year but two tax years.). Let’s go through the back-end reporting that is going to happen and how this impacts your tax return so you can see the importance of good timing.

When you take a withdrawal from a 529 account, the custodian will record that withdrawal on a Form 1099-Q which will be sent to you and the IRS in late January. The school will also send you and the IRS a Form 1098-T showing how much they billed in tuition and how much your child received in scholarships and other aid.  Behind the scenes of your tax return, there is a schedule that calculates if your “qualified expenses” were equal to or exceeded your 529 withdrawal. As long as they did, no tax is owed, and nothing shows up on the tax return. The problem is this tax schedule doesn’t go to the IRS so they can’t match the 1099-Q to anything (Hmmm… seems like something the IRS should fix.). As a result, many people end up getting an IRS notice saying that they owe tax on the 529 earnings when, in fact, they do not.  Matching up the tuition and the withdrawal may help with this, but don’t be alarmed if you get an IRS notice anyway.

Second: “He who documents best, wins.” If you get a notice from the IRS, you will simply supply a summary of the qualified expenses that you paid, which equals or exceeds the withdrawal amount, and that should resolve it; however, if the agent should come calling, having precise records and receipts will give you the win!

What are qualified expenses? The IRS limits the expenses that “qualify” for payment with 529 accounts.  Tuition, fees, books, supplies, and equipment (if required by the institution) are qualified. Computers, printers, and school-related software are qualified if necessary for school-related work. Gaming systems are not qualified. Room and board are a qualified expense but are limited to the lesser of actual cost or what the university allows per its cost of attendance figures (In other words, you can’t rent him a $10,000/month apartment rather than putting him in a $2,000/semester dorm room and use 529 money to pay for it.). 

Here’s how I would handle the process:

1.  Set up electronic instructions to send withdrawals from the 529 account to your checking account.

2.  Most schools have an online student account that shows how much is owed at the start of the semester. Once you see that number, request a withdrawal for that exact amount and have it sent to your checking account (per the instructions you set in #1 above). 

3.  Make an electronic check payment through your bank’s online system to pay the school bill. Make sure your timing works to pay the fees before the deadline! You’ll want to investigate how long it takes to set up the EFT instructions and then process a request.

4.  Print out/save a PDF copy of the student account screen showing all of the charges and the payment, copy the withdrawal request form, and the bank statement (or screenshot) showing the money coming in and then, going out to the school.

5.  Once you pay for the non-tuition items like books, supplies, and equipment, get all the receipts from your child (scan should be fine), total them up, and request a withdrawal for that exact amount (make sure there aren’t any Snickers bars or t-shirts on that bookstore receipt). Again, attach all of the receipts to the withdrawal request.

6.  Keep everything with your other tax return documents. Your accountant will love you!

Yes, I am a geeky accountant and an ex-auditor, so I would totally over-kill the documentation, but if I ever got audited, I would be ready. I would also know that I got reimbursed for everything out of the 529 account. The other benefit is that there is a clear record of what the “hard” college costs are. It can help a lot with planning for other kids.

Whoops!  If your timing has gotten a little off, or you didn’t perfectly document it, don’t worry. You can backtrack and pull together your documentation or show the 2-year history to prove that an overage one year covered the shortage the next.  In the worst case of a nonqualified withdrawal, you would only pay tax on the earnings related to that withdrawal. 

Plan ahead, document well, save everything, and pat yourself on the back for having saved money to fund college. 

If you aren’t at that stage with your kids yet, consider a 529 savings plan. The Georgia plan does provide for a tax benefit on top of the tax-free growth of the investments. If you are within five years of your child starting college, it may not be worth it to use a 529 account but talk to your accountant and he/she can run the estimates for you. Any savings is better than none so start stashing away some cash for your kids; the college years come around faster than you think!

To your financial success!

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To learn more or get help planning your financial goals, please email me at gildea@homrichberg.com.

Is Downsizing Or Moving Closer To Family The Right Move For Me?

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One of the first questions clients grapple with as they find themselves on the path toward divorce or soon after hearing the devastating news that their spouse has a terminal illness is, “How is life going to change?” With insurance proceeds or a meaningful divorce settlement, day-to-day life from a financial perspective may not need to change dramatically. Without the benefit of spousal income, many women may unfortunately find that reducing expenses becomes necessary. Oftentimes the first asset to consider downsizing is the family residence and the question becomes – where would I go; and should I move closer to my parents/children/grandchildren? These decisions are deeply personal and involve both emotional and practical considerations.

Emotional Considerations

  1. Family Proximity and Support: Moving closer to your parents, children or grandchildren can provide emotional comfort and a support system during this transitional phase. Many clients have reported that being active in their grandchildren’s lives has strengthened family bonds and offered them a sense of purpose and joy. They have enjoyed creating lasting memories and being present for milestone birthdays and events.
  • Maintaining Independence: While being close to family may be comforting, it is also crucial to maintain a sense of independence. Consider whether you will feel comfortable relying on family for support (do you want to move in with others?) or if you prefer to establish a life that balances family time with personal space. This will impact the proximity of your next residence – do you look to move down the street from family members or a neighboring town?
  • Community Connections: Reflect on your current social connections. Moving might mean leaving behind friends, familiar places, and routines that provide stability and comfort. Weigh the importance of these connections against the benefits of being closer to family. How easily will you be able to establish new networks and community groups?

Practical Considerations

  1. Financial Implications: Downsizing can be a financially sound decision. A smaller home with fewer vehicles can reduce maintenance costs, utility bills, and property taxes. Consider the current real estate markets both for your area and where you are considering – are houses selling quickly? Do you currently have a low-interest-rate mortgage? How will your monthly payment change when you finance the next residence? Is there a significant difference in the cost of living? If you have young children, how are the schools? Would you need to consider a private school?
  • Accessibility and Convenience: Consider the logistics of your daily life. How accessible are essential services like healthcare, grocery stores, and recreational activities for your current location versus the potential new one? Proximity to such services can significantly impact your quality of life. Are you moving far enough away that you may need to find new doctors or a new place of worship?
  • Transportation Needs: If you are considering downsizing your vehicles to reduce expenses (e.g., insurance, maintenance, etc.), assess your transportation needs. In urban areas with good public transportation, you might not need a car at all. However, in suburban or rural areas, having a reliable vehicle may still be necessary. Evaluate the cost of maintaining multiple vehicles versus the practicality of having just one or relying on public transportation.

Steps to Make an Informed Decision

  1. Consult with Professionals: At HB, we often help our clients understand the financial implications of downsizing and moving. We can help you create a budget, understand the tax implications, and plan for future expenses. Other advisors, including an experienced real estate agent, can provide insights into the housing market trends in both your current and prospective locations.
  • Visit and Explore: Spend time visiting the area where your family lives. Explore neighborhoods, meet potential new neighbors, and gauge the community feel. This firsthand experience can help you envision your life in this new setting.
  • Long-Term Planning: Think about your long-term needs. Will the children soon be out of the house? For retired clients, a single-story accessible home or one with fewer stairs might be more suitable and manageable in the long run.
  • Engage in Honest Conversations: Discuss your thoughts and plans with your family. Understand their perspective and express your desires and concerns. A supportive family can provide valuable insights and help you make a balanced and well-informed decision.

Conclusion

Deciding whether to downsize and move closer to your parents, children, and grandchildren involves a blend of emotional reflection and practical planning. By carefully weighing the pros and cons, consulting with professionals, and having open conversations with your family, you can make a decision that best suits your needs and enhances your quality of life. Embrace this new chapter with confidence, knowing that you are making a choice that aligns with your personal and financial goals.

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To learn more about aligning your financial strategies with your life’s goals, or if you need assistance starting these conversations, visit homrichberg.com, email us at info@homrichberg.com, or call 404.264.1400. Your retirement should be as vibrant and fulfilling as the years that got you here.

HB Economic & Investment Outlook – Q2 2024

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Inflation is once again trending downward, but there are still risks with the ongoing impact of the Fed’s “higher-for-longer” rate policy on the economy and corporate earnings. The jobs market has remained strong which has supported the U.S. consumer; however, recent softer job data indicates that a shift may be underway. Although markets are now expecting the first rate cut in September, inflation has remained sticky and has yet to break below 3%. The Fed is still waiting on additional inflation data to confirm the downward trend before it cuts rates. Rate cut expectations and solid earnings have fueled the stock market to new highs in July. In this video and accompanying slides, we discuss our outlook and positioning on how each of these factors may impact the U.S. economy and the markets. We will also discuss current market themes including the impact of the “Magnificent 7” stocks on the broader market, our allocation between U.S. and international stocks, and how election cycles have impacted markets historically.

Watch here: https://youtu.be/2j9QoSYTtM8?si=kLkLYRIo5xps8YSl

Homrich Berg Makes Financial Advisor Magazine’s Top RIA List Again

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Financial Advisor Magazine recently released its 2024 TOP RIAs list and Homberg Berg was #36 in the asset category of RIAs with $1 billion and over of assets under management.

The ranking includes 431 firms and is based on total assets as of December 31, 2023, which are verified by ADV forms filed with the SEC.

View the full list here: https://www.fa-mag.com/news/2024-ria-survey-and-ranking-rias-confront-their-own-success-78697.html?section=133

Atlanta Business Chronicle’s 2024 Best Places to Work – No. 15

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Atlanta Business Chronicle has named us one of Atlanta’s 2024 Best Places to Work! We’re proud to be recognized as a business that appreciates our employees and their contributions for the fifth year.

Take a look here for the lists and methodology Quantum Workplace used for the rankings: https://www.bizjournals.com/atlanta/news/2024/06/21/best-places-to-work-2024.html?utm_source=st&utm_medium=en&utm_campaign=ae&utm_content=AT&j=35799525&senddate=2024-06-21&empos=p4

Five Tips To Embrace Solo Travel As A Suddenly Single Woman

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The prospect of traveling alone after a significant life event (such as divorce or the loss of a spouse) can be daunting. Several friends and clients have reported that the trips turned out to be quite exhilarating! New places were explored, and they had time to rediscover themselves and listen to their heart away from the memories and day-to-day chores…though it did require the courage to step outside of their comfort zones. One friend told me that she had never made decisions solely for herself, and she came home with a newfound sense of independence. Based on those conversations, below is a guide on how to make the most out of your solo travel adventures, including some helpful links.

1. Choosing Your Destination and Embracing the Experience

Selecting the right destination is crucial when traveling solo to allow yourself the time to reflect, grow, and challenge yourself. Think about what you enjoy…is it history, art, nature, food, or something else? Have you always been fascinated about hiking the hills of Scotland, or considered the joys of a culinary experience in Italy? Choose places that are known to be safe and friendly towards solo travelers. Cities with good public transportation, reputable hospitality services, and a welcoming atmosphere towards tourists can make your trip more enjoyable and less stressful. Use this link to explore some destinations: www.lonelyplanet.com/.

2. Planning and Preparation

As with all things in life, being well-prepared is key. Research your destination thoroughly—learn about the local culture, customs, and any travel advisories. Book accommodations in safe neighborhoods and keep copies of important documents like your passport and travel insurance in multiple places. Before you leave, contact your bank and credit cards to let them know of your travel plans to avoid fraud alerts. Technology can be a great assistant; use apps on your phone for maps, translation, and recommendations to enhance your travel experience. TripAdvisor can be a helpful tool: https://www.tripadvisor.com/.

3. Packing Smart

It is always best to pack light. Focus on the essentials and be sure to include versatile clothing that can be easily mixed and matched. A good rule of thumb is to pack less than you think you will need. Essentials like a good pair of walking shoes, a versatile jacket, and layers for changing weather conditions are important. Don’t forget a good book to keep you company during those quiet café shops or beach afternoons and a journal to document your trip. This website can help with your packing: https://www.travelfashiongirl.com.

4. Connecting with Locals and Other Travelers

Clients and friends routinely report that one of the best aspects of solo travel is the opportunity to meet new people. Engage with locals to learn more about their culture and way of life. You can also connect with other travelers through group tours or events…with any luck, this could lead to a lasting friendship and perhaps a travel partner for your next adventure. Meetup or Facebook groups can help you find community activities or fellow travelers in the area.

5. Staying Safe

Above all, safety should always be your top priority. Always let someone know about your travel plans and check in regularly. Trust your instincts and be cautious about sharing information on social media (post pictures when you get back) and with strangers that you meet while traveling. Keep your belongings secure and avoid drawing attention to yourself with flashy jewelry or gadgets. Visit this website for some helpful tips to stay safe while traveling.

Traveling solo as a newly single woman can transform what might feel like a lonely path into an enriching journey of self-discovery and personal freedom. Every trip is a step forward in your new chapter—embrace it with joy and anticipation. Remember, the world is vast, and your possibilities are endless.

If you are a suddenly single woman and would like to discuss your finances, and life goals, or if you need assistance starting these conversations, visit homrichberg.com, email us at info@homrichberg.com, or call 404.264.1400.

Download this article.

Important Disclosures

This article may not be copied, reproduced, or distributed without Homrich Berg’s prior written consent.

All information is as of the date above unless otherwise disclosed.  The information is provided for informational purposes only and should not be considered a recommendation to purchase or sell any financial instrument, product, or service sponsored by Homrich Berg or its affiliates or agents. The information does not represent legal, tax, accounting, or investment advice; recipients should consult their respective advisors regarding such matters. This material may not be suitable for all investors. Neither Homrich Berg nor any affiliates make any representation or warranty as to the accuracy or merit of this analysis for individual use. Information contained herein has been obtained from sources believed to be reliable but are not guaranteed. Investors are advised to consult with their investment professional about their specific financial needs and goals before making any investment decision.

©2024 Homrich Berg.

The Unexpected Retirement: Planning Beyond The Finances

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When envisioning retirement, many of us picture a phase of life marked by relaxation, travel, or pursuing long-held passions. The financial aspects are often our sole focus and the reason so many continue working…worried that their savings balances are not high enough or wondering how they will be able to cover the escalating costs for healthcare…leaving many to feel like they will have to work “forever.”

When “suddenly single” women find themselves unexpectedly managing their own finances following the passing of a spouse or a divorce, it is important to focus on their goals and plans for the next phase of life. While it is critical to ensure that one has enough money to last, it is equally as important to plan how you want to enjoy your remaining years. Unfortunately, many aren’t having these critical goal-setting and lifestyle-planning conversations as they plan for retirement.

Here are a few ways to start these essential conversations with yourself, family, friends, and your financial advisor:

  1. Identify Your Retirement Vision: What does a fulfilling retirement look like to you? Is it volunteering, starting a new hobby, or perhaps continuing education? Define what brings joy and purpose to your life.
  • Consult with Professionals: Even if you’re accustomed to handling your finances, a financial advisor may be able to provide you with new insights to align your financial strategies with your retirement dreams. Oftentimes the most rewarding conversations with clients stem from goal planning versus reviewing a portfolio’s performance or allocation. At the end of the day, our goal is to ensure that your investments support your envisioned lifestyle.
  • Set Clear Goals: Define both financial and personal goals. What milestones do you wish to achieve? Whether it’s buying a lakeside cottage, traveling to new destinations, or funding a grandchild’s education, make these goals an integral part of your financial planning.
  • Plan for the Unexpected and Get Educated Now About Future Retirement: Unforeseen health issues can derail even the most thorough plans. Incorporating health care strategies, insurance, and an emergency fund can safeguard your finances and independence. Unfortunately, many of my clients fear that they will not be able to afford health care in retirement and count the minutes until they turn 65 to start Medicare. We begin these conversations years before Medicare starts and use cash flow modeling to analyze monthly spending and anticipated healthcare expenses in the coming years.
  • Engage in Life’s Next Chapter: Retirement is not the end of an active life but the beginning of a new chapter with both freedom and responsibilities. Embrace it with a plan that reflects your values and aspirations. One client recently told me that she’s entered “rewirement” since she’s active, intellectually bright, experienced, under 65 and social, and eager to build a community of like-minded women beyond the walls of her employer. This client wakes up daily to embrace “Time for Myself.” As a mother and daughter, she was constantly putting others first, bouncing between her now adult daughter and her aging father.

For many, especially those recently finding themselves managing their own finances, the idea of planning for retirement alone might seem daunting. Yet, with the right guidance, tools, and a clear understanding of not just the “how much” but the “why” and “what for,” it becomes not just a possibility but an exciting new venture into a well-deserved phase of life.

To learn more about aligning your financial strategies with your life’s goals, or if you need assistance starting these conversations, visit homrichberg.com, email us at info@homrichberg.com, or call 404.264.1400. Your retirement should be as vibrant and fulfilling as the years that got you here.

Important Disclosures

This article may not be copied, reproduced, or distributed without Homrich Berg’s prior written consent.

All information is as of the date above unless otherwise disclosed.  The information is provided for informational purposes only and should not be considered a recommendation to purchase or sell any financial instrument, product, or service sponsored by Homrich Berg or its affiliates or agents. The information does not represent legal, tax, accounting, or investment advice; recipients should consult their respective advisors regarding such matters. This material may not be suitable for all investors. Neither Homrich Berg nor any affiliates make any representation or warranty as to the accuracy or merit of this analysis for individual use. Information contained herein has been obtained from sources believed to be reliable but are not guaranteed. Investors are advised to consult with their investment professional about their specific financial needs and goals before making any investment decision.

©2024 Homrich Berg.