The Cost Of A Fragmented Financial Life

3102The Cost Of A Fragmented Financial Life

Anthony J. Ogorek | ED.D., CFP®

If you’ve been living in your home for any length of time you have probably accumulated a lot of STUFF in your garage, basement or attic. You may have saved items for a future that never came, or just hung onto things for sentimental reasons.

 

The trigger for cleaning up our act is usually moving to a new home. Unfortunately, there is no clear trigger for cleaning out our “financial garage.” We just continue to collect accounts and insurance policies with no strategy in mind. There is a cost to a discombobulated balance sheet. For example:

  • By not coordinating your 401(k) plan with that of your partner, you may be paying higher expenses, and holding inferior investments. Treating both accounts as one can help maximize returns and the power of tax-deferred compounding.
  • If you are over 59.5, you may be able to rollover your company retirement plan assets to an IRA. If your plan has high expense ratios or an inferior investment menu, a rollover can help increase returns, without taking more risk.
  • Old life insurance policies may no longer be relevant. Premium dollars or cash values may be better deployed to areas of your life that are more relevant.
  • If you are charitably inclined, giving shares of appreciated stock rather than cash can cut your tax bill more than you realize.
  • Multiple investment accounts can make it difficult to track investment returns. Controlling taxes can help you to keep as much as possible of what you earn.

 

Leaving a financial mess to your survivors can be very costly, and deprive you of tax savings and higher returns during your lifetime – not to mention the peace of mind knowing that your affairs are in order. It’s never too late to start earning higher returns, and paying less tax.

OWM provides financial planning, investment management, and retirement coaching to affluent individuals, business owners, and families.