Tag: Financial Planning

Countdown to College

February 20, 2019
Financial Planning, Guidance, Wisdom

Most parents want to give their children the best opportunity for success, and getting into the right college may help open doors. According to the latest income-per-education-level data available from the Bureau of Labor Statistics, American adults who have a bachelor’s degree had median weekly earnings of $1,173 and a jobless rate of 2.5% in 2017, compared with median earnings of $712 and unemployment of 4.6% for those with just a high school diploma.[i]

Unfortunately, being accepted to the college of one’s choice may not be as easy as it once was. These days, preparing for college means setting goals, staying focused, and tackling a few key milestones along the way.

Before High School

The road to college begins even before high school. As early as elementary and middle school foster your child’s love for learning. Encourage good study habits and get them dreaming about college. A trip to a nearby university or your alma mater may help plant the seed in their minds. When your child reaches middle school, take the time to find out which prerequisite courses may set the right track for math and science in high school.

The earlier you consider how you expect to pay for college costs, the better. The average student loan borrower owes $32,731 in education debt, which amounts to between 65-111% of first-year salary.[ii]

Freshman Year

Before the school year begins, consider meeting with your child’s guidance counselor. Discuss college goals and make sure your child is enrolled in classes that are structured to help them pursue those goals. Also, encourage your child to choose challenging classes. Many universities look for students who push themselves when it comes to learning. At the same time, keep a close eye on grades. Every year on the transcript counts. If your child is struggling in a subject, don’t wait to get a tutor. One-on-one instruction can be a huge benefit when mastering difficult material.

In addition to academic performance, many colleges want prospective students to be well rounded, so encourage your child to engage in extracurricular activities, such as sports, music, art, community service, and social clubs.

Sophomore Year

During their sophomore year, some students may have the opportunity to take a practice SAT. A practice exam is a good way to give your child a feel for what the test entails as well as any possible areas improvement they may have. If your child is enrolled in advanced placement (AP) courses, encourage good performance on AP exams. High exam scores show universities your child can succeed at a higher level of learning.

Sophomore year is also a good time to get some depth in extracurricular activities. Help your child identify passions and stick to them. Encourage your child to read as much as possible. Whether they read Crime and Punishment or Sports Illustrated, they will expand their vocabulary and critical thinking skills. Summer may be a good time for sophomores to get a job, do an internship, or travel to help fill their quiver of experiences.

Junior Year

Near the beginning of junior year, your child can take the Preliminary SAT (PSAT), also known as the National Merit Scholarship Qualifying Test (NMSQT). Even if they won’t need to take the SAT for college, taking the PSAT could open doors for scholarship money. Junior year may be the most challenging in terms of course load. It is also a critical year for showing good grades in difficult classes.

Top colleges look for applicants who are future leaders. Encourage your child to take a leadership role in an extracurricular activity. This doesn’t mean they have to be drum major or captain of the football team. Leading may involve helping an organization with fundraising, marketing, or community outreach.

In the spring of junior year, your child will want to take the SAT or ACT. An early test date may allow time for taking the test again in senior year, if necessary. No matter how many times your child takes the test, colleges will only look at the best score.

Senior Year

For many students, senior year is the most exciting time of high school. They will finally begin to reap the benefits of all their efforts during the previous years. Once your child has decided to which schools they wish to apply, make sure you keep on top of deadlines. Applying early can increase your student’s chance of acceptance.

Now is also the time to apply for scholarships. Your child’s guidance counselor can help you identify scholarships within reach. Also, find out about financial aid and be thorough. According to research by NerdWallet.com, well over $2 billion in free federal grant money is going unclaimed each year simply because students are failing to fill out the free application.[iii]

Finally, talk to your child about living away from home. Help make sure they know how to manage money wisely and pay bills on time. You may also want to talk about social pressures some college freshmen face for the first time when they move away from home.

For many people, college sets the stage for life. Making sure your children have options when it comes to choosing a university can help shape their future. Work with them today to make goals and develop habits that will help ensure their success.

Investment advisory services are offered through CapSouth Partners, Inc., dba CapSouth Wealth Management, an independent registered Investment Advisory firm. Information provided by sources deemed to be reliable. CapSouth does not guarantee the accuracy or completeness of the information. This material has been prepared for planning purposes only and is not intended as specific tax or legal advice. Tax and legal laws are often complex and frequently change. Please consult your tax or legal advisor to discuss your specific situation before making any decisions that may have tax or legal consequences.

This article contains external links to third party content (content hosted on sites unaffiliated with CapSouth Partners). The policies and procedures governing these third-party sites may differ from those effective on the CapSouth company website, as outlined in these Disclaimers. As such, CapSouth makes no representations whatsoever regarding any third-party content/sites that may be accessible directly or indirectly from the CapSouth website. Linking to these third-party sites in no way implies an endorsement or affiliation of any kind between CapSouth and any third party, including legal authorization to use any trademark, trade name, logo, or copyrighted materials belonging to either entity.

[i] https://www.bls.gov/careeroutlook/2018/data-on-display/education-pays.htm

[ii] https://www.valuepenguin.com/average-student-loan-debt

[iii] https://www.azcentral.com/story/money/personalfinance/2018/10/17/free-college-money-unclaimed-fafsa/38172299/

Why Do You Need a Will?

December 18, 2018
Estate Planning, Financial Planning, Wisdom

According to the global analytics firm Gallup, only about 44% of Americans have created a will.[i] This finding may not surprise you. After all, no one wants to be reminded of their mortality or dwell on what might happen upon their death, and writing a last will and testament is seldom on a Millennial or Gen Xer’s to-do list. What may surprise you is the statistic cited by personal finance website The Balance: around 35% of Americans 65 and older lack wills.[ii]

A Will Is an Instrument of Power

By creating one, you gain control over the distribution of your assets. If you die without one, the state decides what becomes of your property, without regard to your priorities.

A will is a legal document by which an individual or a couple (known as “testator”) identifies their wishes regarding the distribution of their assets after death. A will can typically be broken down into four parts.

Executors — Most wills begin by naming an executor. Executors are responsible for carrying out the wishes outlined in a will. This involves assessing the value of the estate, gathering the assets, paying inheritance tax and other debts (if necessary), and distributing assets among beneficiaries. It is recommended that you name an alternate executor in case your first choice is unable to fulfill the obligation. Some families name multiple children as co-executors, with the intention of thwarting sibling discord; this can introduce a logistical headache, as all the executors must act unanimously.²
Guardians — A will allows you to designate a guardian for your minor children. The designated guardian you appoint must be able to assume the responsibility. For many people, this is the most important part of a will, since if you die without naming a guardian, the courts will decide who takes care of your children.
Gifts — This section enables you to identify people or organizations to whom you wish to give gifts of money or specific possessions, such as jewelry or a car. You can also specify conditional gifts, such as a sum of money to a young daughter, but only when she reaches a certain age.
Estate — Your estate encompasses everything you own, including real property, financial investments, cash, and personal possessions. Once you have identified specific gifts you would like to distribute, you can apportion the rest of your estate in equal shares among your heirs, or you can split it into percentages. For example, you may decide to give 45% each to two children and the remaining 10% to your sibling.

A Do-It-Yourself Will May Be Acceptable, It May Not Be Advisable.

You have worked hard to create a legacy for your loved ones. You deserve to decide how that legacy is sustained.

Remember, A Will Puts Power In Your Hands.

The law does not require that a will be drawn up by a professional, so you could create your own will, with or without using a template. The problem is that if you make a mistake, you will not be around to correct it. When you draft a will, consider enlisting the help of a legal, tax, or financial professional who may be able to offer you additional insight, especially if you have a large estate or a complex family situation.

To learn more about estate planning please call our office to meet with a CapSouth advisor or visit our website.

[i] https://news.gallup.com/poll/191651/majority-not.aspx

[ii] https://www.thebalance.com/wills-4073967

https://www.nolo.com/legal-encyclopedia/naming-more-one-executor.html

What is Medigap Insurance and How Do I Get It?

December 18, 2018
Insurance, Retirement Planning, Uncategorized

Establishing a national health insurance plan for senior Americans has followed a sometimes-wayward path through U.S. history.

President Teddy Roosevelt first began discussing the idea of implementing a system of health insurance in the United States more than a century ago. President Harry Truman called for developing a health insurance fund in 1945.[i]

President John F. Kennedy pushed unsuccessfully to create a national health insurance program for senior Americans.

In 1965, President Lyndon B. Johnson signed legislation that established Medicare. More than 58 million people now receive health insurance through Medicare.

Medicare Covers About 80%

Original Medicare—which includes parts A, B, and D—does not cover all medical expenses.[ii] Typically, those on Medicare still must pay 20% of the cost of their doctor’s visits and for other medical procedures.

Medicare.gov provides more in-depth explanations of payment schedules and treatment coverage.

Most people who have Medicare Part A (hospital insurance) don’t pay monthly premiums.[iii]

If you didn’t pay Medicare taxes for at least 30 quarters (7½ years) of work, you’ll have to pay $422 for Part A. If you paid Medicare taxes for 30-39 quarters, your standard Part A premium will be $232 a month.[iv]

A Quarter of Medicare Recipients Have Supplemental Insurance

Nearly 12 million people on Medicare—about one in four—have supplemental Medigap coverage.[v]

Medigap often covers all or most of the difference in health-care costs—that 20% not covered by Medicare.[vi] Policy and coverage choices include plans A, B, C, D, F, G, K, L, M, and N. Private companies provide the government standardized coverage.

Medigap covers copayments, coinsurance, and deductibles.[vii] Some policies provide coverage of services that Medicare doesn’t cover.

Medicare pays its portion of covered approved health-care services first before Medigap insurance pays its share.

Here are eight facts about how Medicare and Medigap work:

You have to have Medicare Parts A and B.
Medigap coverage is not Medicare Advantage, which is offered by private companies contracting with Medicare.[viii] Medicare Advantage includes:

Health Maintenance Organizations
Preferred Provider Organizations
Private Fee-for-Service Plans
Special Needs Plans
Medicare Medical Savings Account Plans

3. Medigap only covers one person per policy. You and your spouse have to get separate policies.

4. Any state-licensed insurance company may offer Medigap coverage.

5. Renewal of standardized Medigap coverage is guaranteed. Your provider cannot cancel your policy if you’re paying your premiums.

6. Some Medigap policies sold before January 1, 2007 provided prescription coverage. Those sold after that date are legally prohibited from providing drug coverage. Medicare’s Part D plans cover prescription drugs.

7. You are not permitted to buy a Medigap policy if you already have a Medicare Advantage Plan, unless you’re dropping the plan to go back to Medicare.

8. If you’d like more information about your financial options or to learn more about your financial needs, we’re happy to help. Contact us at 800.929.1001.

[i] https://www.medicareresources.org/basic-medicare-information/brief-history-of-medicare/

[ii] https://www.investopedia.com/terms/m/medigap-insurance.asp

[iii] https://www.medicare.gov/your-medicare-costs/medicare-costs-at-a-glance

[iv] https://www.medicare.gov/your-medicare-costs/part-a-costs

[v] https://www.gomedigap.com/blog/medicare-supplement-trends/

[vi] https://www.investopedia.com/terms/m/medigap-insurance.asp

[vii] https://www.medicare.gov/supplements-other-insurance/whats-medicare-supplement-insurance-medigap

[viii] https://www.medicare.gov/sign-up-change-plans/types-of-medicare-health-plans/medicare-advantage-plans