REPOST: 60 second guide to financial planning

Looking to have a meeting with a financial planner? Which.co.uk provides a quick guide to understanding financial planning.

Dealing with your finances can be complex and confusing, especially when it comes to investing your money and preparing for your retirement. For many people, taking professional financial advice can help put your finances on the right track.

Here, we explain what financial planning is, and how to make the most of it.

Image Source: www.which.co.uk

What is financial planning?
Financial planning is a term used by some financial advisers to get across what they do and differentiate it from other services.

Unlike fund managers or stockbrokers, who are just concerned with picking the latest hot investment prospects for your portfolio, a financial planner aims to look at all of your circumstances, goals and aspirations, in order to help you plan for your future.

The Institute of Financial Planning (IFP) offers an additional, internationally recognised, qualification for financial advisers who want to achieve Certified Financial Planner status.

What can a financial planner help with?
A financial planner will help you prepare for important life events like retirement but they will also consider issues like debt, estate planning and your tax affairs.

Many financial planners will also be Independent Financial Advisers (IFAs) who consider the whole of the market when making recommendations about everything from investments to pensions, insurance and mortgages.

How much money do you need?
Some IFAs, including those with financial planner status, require you to have assets of more than £50,000 or £100,000, although plenty will consider smaller amounts.

It’s important to talk to a number of advisers to compare their charges, qualifications and find the right fit for you.

How do you find a financial adviser?
If you like the sound of Certified Financial Planners, the IFP website includes a search function. Similarly, unbiased.co.uk contains a directory of IFAs, many of whom will have the financial planning qualification.

And VouchedFor.co.uk – which brands itself Trip Adviser for financial advisers – includes reviews from consumers who have used advisers, as does our own Which? Local.

Vouched For is offering free financial health checks with advisers to mark Financial Planning Week, although most IFAs will offer a free initial consultation before you commit as part of their normal process.

Some of IFP’s Accredited Financial Planning Firms are also offering free surgeries of up to 90 minutes. Click on the link to find out about the firms offering this.

How much will financial advice cost?
If you choose to go ahead and take advice, IFAs can charge you in a variety of ways. Some will offer you an hourly rate for the time it take them to complete the work involved, typically £100 to £200.

Others will charge a fee based on a percentage of your assets up front, typically 3%, or a set fee depending on the task. Fees can vary significantly, so it’s important to shop around and negotiate.

I’m Dana Ray Reynolds, a financial planner. Having taken mandatory classes on the different aspects of financial planning, I have been quite successful in realizing the financial goals of my clients. My plan structure is focused on risk management and tax planning, which are two of the most important factors for any type of business. Follow me on Twitter to get more updates about financial planning.

REPOST: When Your Financial Planner Doesn’t Tell All

What do you do when you suspect your financial planner has violated the profession’s ethical standards? The Wall Street Journal‘s  Jason Zweig discusses how the Certified Financial Planner Board of Standards addresses rogue financial planners.

Image source: wsj.com

Who’s watching your financial planner?

The Certified Financial Planner Board of Standards says it is. The organization, which has awarded the coveted CFP certification to nearly 69,000 financial planners, launches an investigation whenever it suspects a planner might have violated the profession’s ethical standards.

Of course, most CFPs have never been disciplined by a regulator nor had a client lodge a formal complaint against them. But does the CFP Board move fast enough to punish alleged wrongdoers?

In 2011, the CFP Board opened 1,569 investigations, up substantially from 1,324 in 2003. But the number of CFP holders went up even faster, to 64,232 in 2011 from 42,973—so the rate at which CFPs were investigated fell to 2.4% from 3.1%. New investigations fell to 866 last year as the CFP Board worked off the backlog of cases that had built up, says Michael Shaw, who is in charge of professional standards there.

The Wall Street Journal has identified at least 17 recent instances in which the CFP Board stripped a planner of the CFP title more than three years after serious allegations first appeared in the public record. There isn’t any evidence that the public has been harmed by the relatively slow pace of the board’s disciplinary actions.

But these findings are a reminder that financial planners aren’t policed as closely as brokers and investment advisers are, since no government entity specializes in regulating them—and that investors can’t count on someone else to do their due diligence.

“We’re always looking for opportunities to become more efficient and effective,” Mr. Shaw says. “But the more important consideration is that [any CFP being investigated] has the opportunity to have a full and fair hearing.”

Unlike state securities departments, the Financial Industry Regulatory Authority or the Securities and Exchange Commission, the CFP Board isn’t a regulator. As a certifying body, it has no subpoena power.

Nevertheless, “we don’t rubber-stamp any regulatory action,” Mr. Shaw says. “We conduct our own investigations here.” He says the board also shares information with state and national regulators.

In 2012, the board invoked the right to suspend CFPs automatically if one of their financial licenses is revoked or they are convicted of a felony or certain misdemeanors.

But the CFP Board has only six investigators, counting Mr. Shaw, or less than one for every 11,000 CFPs. They have a lot of ground to cover.

Consider the case of David Disraeli, who runs a financial-advice firm called The Personal CFO in Austin, Texas.

In November 2002, the Texas securities board issued a cease-and-desist order against Mr. Disraeli, alleging that he owed more than $39,000 in federal income taxes, had told investors he was an investment adviser when he wasn’t registered and was offering securities that weren’t approved for sale in Texas.

Without admitting or denying the claims, Mr. Disraeli consented to the order in April 2003.

In December 2007, the Securities and Exchange Commission found that Mr. Disraeli had borrowed $84,300 from his clients’ investments in his firm—and used much of the money to pay his back taxes and expenditures on “coffee, ice cream, groceries, restaurants and videos.” The agency barred Mr. Disraeli from working at a brokerage or investment-advisory firm and ordered him to pay more than $194,000 in penalties and other sanctions.

Texas denied Mr. Disraeli’s application as an investment adviser in February 2008, citing multiple instances of what the state called “fraudulent business practice.”

On Aug. 13, 2010, citing the SEC bar, the board revoked Mr. Disraeli’s CFP certification.

That didn’t stop Mr. Disraeli from using his CFP credential, however. Although he no longer manages money for outside clients, he sells insurance and offers advice on business transactions and financial planning. His primary website features a 5-by-7-inch replica of his CFP diploma; the “about me” section on his blog, where he posted most recently last November, says he is a “Certified Financial Planner”; a May 27 post on his business-finance site identifies him as “David Disraeli, CFP.”

“I’m not still using it knowingly,” Mr. Disraeli says. “If it shows up and I haven’t taken it down, that’s something I need to do.”

The SEC “never proved that I misappropriated anything,” he says. “I don’t feel I did anything wrong. Maybe my accounting wasn’t the best, but none of my clients asked for their money back.” As to the Texas allegations, “I denied it then and I deny it now,” Mr. Disraeli says. “That whole thing was a circus.”

Mr. Disraeli unsuccessfully appealed the SEC decision and the CFP revocation. His final court appeal, to the U.S. Supreme Court, wasn’t denied until 2010. Those hearings, says Mr. Shaw, explain why the CFP Board—which doesn’t take disciplinary action until appeals are resolved—didn’t act sooner.

Mr. Shaw says the board is “not aware of” any CFPs who have been suspended or revoked who are still using the title. He says the board regularly monitors defrocked CFPs to prevent them from using the credential.

“They haven’t said a word about that,” says Mr. Disraeli, although the board did admonish him in 2009 that he must always add the ® trademark symbol when using the CFP letters next to his name.

In 2011, the CFP board found that Steve Rice, a financial planner in Los Gatos, Calif. and former mayor of that town, had provided faulty insurance advice to several clients. The board suspended his CFP certification until November 2014.

This week, however, Mr. Rice was identifying himself on at least three websites, including SteveRiceCFP.com, as “Steve Rice CFP.”

Mr. Rice didn’t respond to requests for comment; his appeal of the CFP Board’s ruling was denied by a board committee. Mr. Rice’s public record on brokercheck.finra.org shows one insurance dispute that he settled personally; the client withdrew the complaint after Mr. Rice paid $5,000.

Or consider Louis Mohlman Jr., of Mohlman Asset Management in Fort Wayne, Ind. This past week, Mr. Mohlman’s biography on his website read: “Throughout his career he has continued education and specialty training to hold designations of Certified Financial Planner,” among other titles.

In June 2009, Mr. Mohlman consented to a Finra order without admitting or denying the findings. According to Finra, he had offered to pay a bank employee $500 to obtain confidential account information for several of the bank’s customers. He paid a $10,000 fine and was suspended for three months. In April 1993, the state of Indiana fined Mr. Mohlman $1,000 for allegedly misrepresenting the risks of a unit investment trust; around the same time, he paid $10,000 to settle a customer complaint over a limited partnership.

In March 2010, citing the Finra case, the CFP Board revoked Mr. Mohlman’s certification; according to the board, he didn’t reply to its inquiry.

When I asked about the biography on his website, Mr. Mohlman replied by email, “Thank you for alerting us to this typo.” He didn’t respond to requests for further comment.

I’m Dana Ray Reynolds, an independent financial planner. There are three things that I tell my clients: that I work professionally, efficiently, and effectively. Follow me on Facebook for more discussion on smart money management.

REPOST: 7 financial decisions made in your 30s that may haunt you in your 50s

Life is a long-term numbers game that favors both those that act tactfully and those that plan ahead. Forbes.com’s Nancy Anderson discusses the ramifications of the decisions adults make that will have an impact on their lives in the future.

Young women at Miami Beach, Florida. Image source: flickr.com

People often say “life is short” as a justification to do or buy something immediately rather than waiting. But the truth is, life is not short. Life is long. The average life expectancy for an American male is 76.2 years, and 81 years for a female. A thirty-year-old discussing a short life may actually be looking at another 50 long years.

This is good news! And, financially speaking, a long outlook on life is important, because the decisions we make early on have a significant impact on the remainder of our lives. Specifically, these decisions can make or break our retirement plans.

Here are seven important financial decisions 30-year-olds make that could come back to haunt them in their 50s:

The company you work for.

There are many things to consider when choosing a job, but the retirement benefits offered are vital to wealth-building in the long term. A 30-year-old who doesn’t carefully research his or her benefits and chooses to work for a company with no company match or retirement contribution could be way behind someone who works for a company with robust benefits. For example, a 30-year-old making $75,000 a year who saves 10% of his or her income in a 401(k) and earns an 8% average return would have a balance of just under $600,000 at age 55. Compare that to a 30-year-old who saves 10% at a company that matches 5% and adds a profit sharing contribution that averages 5% a year. He or she would have almost $1.2 million in their retirement account—double our first example’s amount—at age 55.

Your starting salary.

Even a slightly higher starting salary can jump start your earning potential. A study by George Mason University and Temple University showed that employees who negotiated their starting salaries averaged a $5,000 increase compared to those who didn’t negotiate. Due to the effects of compounding, the researchers estimate that an employee who starts his or her career with a salary of $55,000 instead of $50,000 (with 5% increases each year) would earn over $600,000 more in income over a 40-year career.

Your choice of a partner.

Who you marry is one of the most important financial decisions you can make. I’m not advocating you marry for money—quite the contrary. Marrying for love and staying together is a smart financial move. Whether the 50% divorce rate is an accurate statistic or not, we can all agree that when it happens to you, it is devastating both emotionally and financially. The divorce itself can be expensive and dividing financial assets unravels your financial planning. Just ask Robin Williams, who is returning to television after two expensive divorces!

Your choice of a mate isn’t only about love and commitment; it’s also about financial compatibility. If you and your partner are compatible money-wise and commit to setting up a financial plan to save, invest and build your future, you can enjoy life and create financial security at the same time.

When you have children.

Americans are delaying having children. In fact, according to National Health Statistics Report, more than one in three college-educated women will have children after the age of 30. In the past few decades, the average age of American first-time mothers has increased by four years, and first-time fathers are aging at the same rate. Since the recession in 2008, the only age group that has continued to have more babies than in years past is the “over 40” group.

In Sheryl Sandberg’s book, “Lean In,” she encourages women not to pass up promotions because of plans to have children. If you have plenty of support at home, this can be a great idea. Another way to look at it is, if you plan on having children, don’t wait because you are focusing on your career or waiting for financial security. There are advantages to having children earlier.

One reason has to do with timing of kids’ expenses. Consider a couple that has children when they are 25 years old. Before they hit their 50s, their kids are past the very expensive college years. These parents, still young themselves, have 15 years to focus on their own retirement savings if they plan to retire at 65. Couples that have children when they are 35 years old may not see the light at the end of the “empty nest” tunnel until they are 60—much closer to retirement age.

How you invest.

Investing in high-cost managed accounts can take a heavy toll on investment returns over time. According to Forbes contributor Rick Ferri, founder of Portfolio Solutions, those fees can add up to 40% of your return each year. Rick shares an example of how, with annual mutual fund management fees of 1.1% and an additional advisor fee of 1% (on the first $1 million of your assets), an investor trying to squeak out a return of 5.3% (the expected return) of a portfolio of 60% global stocks/40% U.S. bonds could actually pay 40% of that return in fees. Make sure you weigh the long-term impact of fees when investing; consider choosing low-cost mutual funds or index funds for retirement savings.

Whether you rent or buy a house.

There are instances when it is better to rent than to buy a house. If you need mobility, don’t plan on staying in your area for long or aren’t interested in potentially being a long-distance landlord, you may be better off renting. However, in the long term, owning your home can be a coup for pre-retirees. Without even taking home equity into account, a homeowner with a fixed-rate mortgage won’t have to worry about a rent increase. Having a fixed housing cost is increasingly important as you get older, since rents can increase with inflation and you are attempting to estimate future expenses. As a homeowner, the mortgage will eventually be paid off and your housing budget will only have to cover taxes and repairs, so there may be more money to enjoy during your retirement.

How you pay attention to your dollars.

If I could take back what I spent in the past twenty years on coffee, clothes I bought on sale but rarely wore and my “guilty pleasure” books, I’d be a wealthy woman. Tracking expenses to see where your money is going which you can do with your bank, Quicken, or in the LearnVest Money Center (*disclosure – I work for LearnVest Planning Services) and identifying blind spots can help you save more and spend less. First of all, when you are tracking expenses, you have a heightened awareness of your money and subsequently are more reluctant to part with your dollars. I hear clients exclaim all the time, “I had no idea I spend $600 a month on restaurants (or $800 a month on shopping). I am shocked!” When tracking, you can more easily identify areas for cost savings and put those savings toward your financial goals.

Mickey Mantle said, “If I knew I was going to live this long, I’d have taken better care of myself.” I suggest that if 30-year-olds knew just how young they’d feel in their 50s and how much life is left to live, they’d take much better care of their finances.

Life is long. Make decisions accordingly.

I’m Dana Ray Reynolds, and I work as a financial planner. Get updates on other related matters on my Twitter page.

REPOST: Five Ways To Reduce College Costs

In America, a college education is one of the most expensive goals in life. The costs of tertiary education have become burdensome in recent times. Lucie Lapovsky describes how college costs can be reduced in the following article.

Unless you’ve been in a cave somewhere, by now you’re aware that last Thursday President Obama put forward a proposal to reduce the cost of higher education. The basis of this initiative is a ratings system that will help the federal government better allocate taxpayers’ $150 billion in student aid to schools by increasing aid to those that demonstrate lower costs and better outcomes. While the devil is in the details, and the details are yet to be worked out, the White House release says that the ratings will be based on access, for example, percentage of students receiving Pell grants; affordability, for example, net cost; and outcomes, for example, graduation rates and achievement after graduation.

While any encouragement from the federal government to improve access to and outcomes from higher education is welcome, the proposals seem to miss a significant point that I’ve made in earlier posts: the price of college, that is what you pay to attend the school, and the cost of college, that is what it costs to provide your education, are not highly correlated, and on average the net revenue from tuition is not generally indicative of the institution’s costs.

Image source: Forbes.com

Real improvement to the affordability of higher education needs to begin with what it costs the industry to educate a student. More than a third of the cost of education at most colleges is attributable to the cost of instruction: how the school delivers instruction. For hundreds of years, the traditional method of higher education has been one faculty member lecturing to 20 or so students. Are we willing to consider new and different ways?

Let’s consider but a few examples of how we might reduce the cost of instruction.

1. Much has been said about the potential for MOOC’s (Massive Open Online Courses), where professors can reach thousands, or in some cases, hundreds of thousands, of students via the internet. The power of that system has yet to be embraced in any systematic or substantial way by the higher education industry. The introduction of the MOOC concept into higher education today has the potential to significantly improve both costs and outcomes if incorporated creatively into traditional colleges.
2. At most schools, the cost of a course taught by a full-time faculty member is between three and 15 times greater than the cost of a course taught by a part-time faculty member. The percentage of courses taught by part-time faculty varies from about 15% to more than 50%, depending on the institution. Given that there’s no evidence that student outcomes are better when classes are taught by full-time faculty, perhaps we should be looking at our dependence on full-time faculty and the accompanying costs.
3. Average institutional class size can vary from about eight students per class to more than 20. All things being equal, a school with an average class size of 20 will have instructional costs that are half that of an institution with an average class size of 10. Of course there are pedagological reasons for some classes to be smaller than others, but there are also many classes that could be effectively taught in larger sizes.
4. Schools of similar size can offer significantly different numbers of majors and there can be large differences in the number of courses that are offered by each department. Course creep—that is the tendency of institutions to add courses and majors without eliminating those that are no longer in demand can be a source of inefficiency and unnecessary cost.
5. Thanks to technology, information is much more readily available today than at any time in our history. Many students may already be proficient in some subjects that are taught in the classroom. A competency-based model, that is, one that measures proficiency, not the amount of time spent in the classroom, would reduce instructional and facilities costs while rewarding those who choose to learn outside the classroom.

Not all of these concepts will be right for every institution or for every academic department. But if we are serious about improving outcomes and reducing costs, we must be willing to consider those things that might at one time have been unthinkable. Perhaps the Obama plan will encourage conversation, regulatory flexibility and much-needed research into the effectiveness of the delivery methods that we have come to take as givens in higher education today.

Dana Ray Reynolds here. For more updates on personal financial planning, visit my blog.

REPOST: 4 Mistakes to Avoid in Parents’ Financial Plans

US News’ Scott Holsopple notes that there are currently over 42 million Americans who provide care for an aging parent or relative.  But doing so, at times, can be really costly, especially when their parents don’t have savings or investments that they can use to fund their retirement.  To avoid such financial trap, Holsopple lists down four mistakes parents can avoid as they plan for their retirement.

Image source: usnews.com

As you create your own saving and investing plan for retirement, you likely ask yourself questions such as: How much do I need to save? What kind of lifestyle do I want to be able to support in retirement? If you have children, your planning process includes considering whether or not paying for college or weddings would compete with your retirement savings. There’s another consideration, however, that many people overlook.

As you create your own saving and investing plan for retirement, you likely ask yourself questions such as: How much do I need to save? What kind of lifestyle do I want to be able to support in retirement?

If you have children, your planning process includes considering whether or not paying for college or weddings would compete with your retirement savings. As people live longer, caring for aging parents is becoming more and more common.

Currently, over 42 million Americans provide care for an aging parent or relative. You may find yourself in the same situation at some point, and it can take a costly toll on your retirement strategy, especially if your parents haven’t done some advance planning of their own.

Here are four mistakes you can help your parents avoid as they create a financial plan for their golden years:

Mistake 1: Not having a financial plan for retirement. Having a financial plan is akin to having a road map. If your parents have a map, they can deviate from their route and still get where they want to go. They can take a shortcut, knowing it’s a back road that could be bumpier. A financial plan, like a road map, doesn’t guarantee a perfect retirement (or a perfect road trip). But it’s a necessary tool to keep your parents on track. It will help them understand where they can and cannot go. They’ll be able to see how financial decisions will affect their ability to go places and do things now and in the future, and it hopefully will reduce the impact of those decisions upon your finances. So if they don’t already have a financial plan to see them through retirement, encourage them to put one together as soon as possible.

Mistake 2: Not planning for the worst-case scenario. You may think your parents will remain healthy, but they need to have saved enough to live if either of them develops an injury or illness that requires expensive care. Even if your mom says she’ll never make it past 80 because no one in her family has, she should have enough money to cover several years beyond that, because modern medicine has some great tricks up its sleeve. Cars break down, roofs develop leaks, furnaces break, and mom or dad likely can’t get a well-paid job during retirement to pay for unexpected expenses. Their budget and investing decisions should be made with worst-case scenarios in mind.

Mistake 3: Not remaining invested. You or your parents may think it’s best to leave the world of investing and move to cash during retirement in order to avoid all investment risks. Every situation is different, but remaining invested in a conservative blend of cash, bonds and equities can help many retirees deal with inflation and continue to grow their assets. Keeping pace with inflation is important, so if your mom or dad retires with an amount of money that should provide their desired monthly income during retirement, find out whether they’ve planned to increase that income over time. Their mix of investments should position them to grow their assets enough to allow for cost-of-living adjustments.

Mistake 4: Forgetting there’s more to life. If you’ve helped meticulously plan your parents’ retirement budget to keep them healthy, warm and well-fed, don’t forget they want to have fun during their golden years! The chance to explore new hobbies and lifelong interests is a brilliant aspect of retirement. The budget doesn’t need to be huge, but be sure your parents have enough money set aside to have some fun during retirement. That will help lessen any urges you may have to spend part of your nest egg to send them on that dream vacation. Nobody can predict what the future will hold, and you may still find yourself having to provide some level of financial support to your parents when they are older. But the more advance planning they can do, the better prepared they will be to carry that responsibility themselves when the time comes.

As a financial planner, Dana Ray Reynolds helps clients identify and use resources that will best serve their financial interests. More tips on how to create a secure financial future are available from this Twitter account.

Germany hailed world’s most popular country based on global perceptions

Image source: bbcimg.co.uk

A BBC survey positions Germany as the most popular country in 2013, voted for by nearly 60 per cent of the poll’s global participants. Europe’s largest economy moved to the top spot to displace Japan, whose positive ratings fell from 58 percent to 51 percent.

“There are lots of reasons why Germany is admired,” Alastair Newton, a political analyst at Japanese investment bank Nomura, was quoted in reports. “It is a large and important world economy, a world-class manufacturer, and has a chancellor who demonstrates genuine leadership. The question also is, where else would it be? It is hardly likely to be the US, given their attitude to the Middle East, or China given Western and Japanese concerns on the country.”

Image source: travelfox.com

Germany’s leap to number one was helped by agreeable reviews from respondents in Spain, France, Ghana, and Australia.

It is worth noting that an equally positive assessment for Germany was not shared by some of its neighbors in the Euro in the wake of sovereign debt and financial crises. In stark contrast to its poll showing, Germany had scored in the red by the hand of respondents from Greece, which had suffered a particularly thorny economic life. Chancellor Angela Merkel’s government was largely looked upon for financial bailouts, which it had strained to release in favor of high-handed fiscal reforms. Other Euro members, such as Italy, are raising hackles at Germany’s strict debt management solutions, as social welfare in financially challenged European economies takes a beating.

Image source: merriam-webster.com

The United Kingdom, following a successful hosting of the 2012 Olympic Games, also improved its ratings and climbed to the third spot. Israel, North Korea, Pakistan, and Iran got the least favorable ratings.

I am Dana Ray Reynolds, a financial planner who provides assistance to businesses and individuals on their investment decisions, particularly in the areas of risk management and tax planning. Follow me on Twitter for more updates.

Another global recession: PIMCO believes there is a 60 percent chance

Image source: 24sevenpost.com

Leading US investment firm PIMCO is forecasting a 60 percent chance of another global recession in the next few years. Although inflation rates will remain stable in the medium-term, the global economy is feared to plunge to new record lows.

In a research note, portfolio manager and PIMCO managing director Saumil Parikh wrote, “Given that the last global recession was four years ago, and also given that the global economy is significantly more indebted today than it was four years ago, we believe there is now a greater than 60 percent probability that we will experience another global recession in the next three to five years.”

Image source: jdkellyenterprises.org

Characterized by very low growth rates in many countries around the world, the decline of robust financial activities in Europe, and the growth in trade and currency tensions between developed markets, the anticipated global economic disaster will force investors of all sizes to temper their return expectations.

The US economy grew at a 2.4 percent annual pace in the first quarter of the year—a remarkable sign of recovery from recession. In contrast, the 17 Eurozone nations have remained stagnant. The region’s economy contracted for a record sixth consecutive quarter at the start of 2013 and is believed to be the epicenter of the approaching recession. Even China, the world’s most resilient major economy, has fallen prey to fluctuating growth rates over the last few years, causing the IMF to lower its forecast on the country’s economic projections.

PIMCO’s founder and co-chief investment officer, Bill Gross, argued that while the global central banks’ policies may have pacified some economies, they never completely succeeded in returning them to stable growth rates.

Image source: worldbulletin.net

I am Dana Ray Reynolds, a Los Angeles, California-based financial planner specializing in risk management and tax planning. Visit my blog for more insights into business, finance, and investing.

Plan your finances before Alzheimer’s gets in the way

Image Source: tricitypsychology.com

My friend and I had a lengthy conversation about Alzheimer’s last night. At 70, she was showing symptoms of the disease. She wanted to see a doctor but was worried about how she would handle the news in case her assumption was true. Aside from worrying about how her family would react to her possible condition, she was also worrying about her family’s finances. Apparently, she won’t be able to make sound financial judgment if the sickness progresses.

For those of you who are in the same situation as my friend’s, I recommend that immediately after the diagnosis, gather your family and tell them about your plans—where you want to live, how you want your properties to be managed, and what type of elder care you want to receive. To make your plans legal, hire an elder law attorney and have him draft the necessary documents.

Image Source: health.com

Since you will not be able to decide for yourself in the future, you should make sure that your family members will carry on these plans once the symptoms of Alzheimer’s progresses in severity. In addition, make sure that your bank honors your prepared legal documents. Your children may need access to your financial accounts in the future to pay for your medication and other elder care expenses.

Alzheimer’s is a debilitating disease that often manifests in old age. If you develop this condition, you will experience gradual memory loss. This will make it difficult for you to manage your day-to-day activities, including your finances. But because the disease is progressive, you can still make important plans and decisions during its early stage.

Don’t wait until Alzheimer’s takes away your future. Instead, plan your finances now.

Image Source: alz.org

Dana Ray Reynolds is a financial planner who specializes in risk management and tax planning. Follow this Twitter page for more money management tips.