by Robert P. Lalicki
Financial planning should be an important part of our lives. Most of us spend more time planning out next vacation than we do on securing our financial future. Laws of this nation were not written with LGBT people in mind. So we have to develop strategies to build successful lives and households. Listed here are just a couple of smart ideas for you to consider.
The Emergency Fund
Pay yourself first. How many times have we heard this one? How many of us have followed this old rule of thumb? Many financial planners will tell you that as a group, the gay and lesbian community isn't very good about establishing funds or savings in general. So we have some work to do. In this tough economic world we live in, if you don't have an emergency savings account sufficient to cover at least four to six months.
of living expenses you are headed for financial disaster. Have your employer deposit a portion of your paycheck into a separate savings account specifically for emergency purposes. (Don't have the account at your regular bank and don't even think about getting a debit or ATM card for this account)! You'll be surprised how quickly it will add up. Should you ever need to dip into it, you'll be glad you had established this account ahead of time. A couple less cocktails at the bar on the weekend or skipping a few fancy lattes, will save you plenty in no time.
The Retirement Account
Many people are market savvy these days. Subscriptions to the Wall Street Journal, Smart Money, and Barron's are on the rise and give their readers everything they need to know to keep tabs on the investment world. However, as individual as your finger print is, so is your individual financial situation. Don't risk making mistakes. This is your future your dealing with. I leave mine up to an expert. Maximizing your contributions to your 401K is one of the smartest things you can do. Pre-taxed dollars is the way to save money. Some employers even have a plan to match the dollars you sock away. But what happens after an unfortunate situation occurs? Your long-term partner suddenly dies. What happens to his/her 401k they've been saving? Have you heard of the Pension Protection Act? This went into effect Jan. 1, 2007. Now an employer deferred compensation plan such as a 401K can carry a non-spousal beneficiary. This can be rolled over into another retirement account without causing a taxable event for the surviving partner.
Example: The deceased partner had $100,000 in their 401K The other partner is named beneficiary but would normally have a minimum of at least 20-percent taxation upon receipt of the funds. With this new law that went into effect this year, the non-spousal beneficiary can roll over these funds allowing you, the surviving partner to put these funds into another retirement account, yet deferment will continue and you won't be taxed until you take a distribution.
If you're not working with a gay professional financial consultant to help you with the paperwork to set this up with your employer, there is no going back later to fix it if you've checked the wrong box.
How you name your financial accounts can become an issue as well. If the accounts are not held jointly and only names you as beneficiary on your partners accounts, the laws aren't in place yet to protect you from your deceased partners family inheriting it instead of you! Reid mentioned that if you decide not to hold accounts jointly, at least make sure the beneficiaries are current on all your accounts. This includes your regular checking /savings accounts as well as your retirement accounts. Make sure they are named who you want them to be.
My suggestion to you in this new year, contact a trusted advisor. Someone who knows the community and its needs. Someone who is committed to your financial success.
BTL/Pride Source Financial Advisors:
Search our online site to learn more at www.pridesource.com
Rebecca Grams, CFP
Ameriprise Financial Inc.
2851 Charlevoix Dr. SE, Ste. 200
Grand Rapids, MI 49546
616-285-3247
Alan T. Semonian, C.P.A.
Ameritax
3336 West 12 Mile Road
Berkley, MI 48072
248-584-1040
Linda Giroux & Jim Sullivan
Crest Financial
13818 S.W. Bay Shore Dr.
Traverse City, MI 49684
906-387-1700
Reid Beyerlein
Edward Jones
31621 Bellvine Ct.
Beverly Hills, MI 48025
248-443-7454
http://www.edwardjones.com
Aaron Sanders
Peak Financial Group
17117 W 9 Mile, Ste. 1005
Southfield, MI 48075
248-569-9531
http://www.peakfinancialgroup.com
Virginia Hommel
Raymond James & Associates
344 N. Old Woodward
Birmingham, MI 48009
248-901-3916
http://www.raymondjames.com
Mehul Mistry
Secure Planning Strategies
40 Oak Hollow Ste. 315
Southfield, MI 48034
248-350-3400
http://www.secureplanning.com
