Don’t Buy into the Hype

If you’re watching the markets you’ll have seen them enter record territory, and people predicting all sorts of potential endings. At the end of the day it doesn’t matter what the market is going to do in the immediate future unless you plan on withdrawing from your accounts. And if you’re planning on withdrawals, my hope is you’ve already shifted to a more conservative stance.

Here’s my view – markets are going to go up, until at some point they correct themselves and drop. Over the long term the money invested is going to grow, barring any mistakes on the part of the investor(s) – for example trying to time the market and buying high/selling low. I have yet to see proof anyone can predict the next winner with regards to asset classes, and in my opinion the best thing you can do for yourself is diversify your portfolio – considering when you will need the money and how comfortable you are with your accounts going up/down.

As a further hedge for yourself, set aside (2) years of cash for retirement. This way if the market bottoms out the year you retire, in most cases you will not need to withdraw from your accounts; providing yourself an opportunity to potentially gain some of the losses before taking distributions. This could be limited by age, if you must take required minimum distributions; but it will still lessen the damage by reducing the amount withdrawn.

Most of us have, or know someone who has; made an emotional decision they regret. That’s exactly what is happening when you sell because of fear of what the market will do after the inauguration, or Brexit, or any other headline that is bound to pop up. It’s also what happens when we buy something because it’s done so well – for example all those who were buying gold not too long ago.

If it’s not part of your plan, or the only reason you’re doing it is because of how you’re feeling in a moment, then take a step back and reconsider. Get an impartial opinion, from someone who isn’t living in the moment you are; and stay open to what they say. Of course, if this was easy I’d have nothing to write about. The first thing you can do to help yourself is create a plan, because it’s what you will come back to whenever you are in doubt. If you’re not sure where to start, or in what order you should do things, find a professional you can trust and work with her/him.


Pooled Trusts

This month rather than focusing on just one non-profit, I’m highlighting (3). Living in the DC metro area those of us with a family member with a disability are fortunate enough to have several options available to us – in Maryland, The First Maryland Disability Trust; Shared Horizons in DC; and The Arc of Northern Virginia Trust. It’s important to note, they are not geographically bound, meaning you don’t need to be a resident of where they are based to take advantage of their services.

So, what is a pooled trust? The Center for Disability Rights  provides a more detailed overview, but in a nut shell it’s either a first or third party (or both) Special Needs Trust managed by a non-profit. The advantage to using a pooled trust is the money for multiple beneficiaries is “pooled” together, allowing institutional level investing for each individual account. This benefits individuals who may not have a lot of money to invest, or don’t have anyone to act as a Trustee.

Pooled trusts offer the same protections individual special needs trusts provide, allowing individuals to accumulate more than $2k in assets while maintaining eligibility for SSI and Medicaid. Although there are costs, as there would be with any trust solution managing assets, I consider the fees very reasonable; and realistically speaking, when you have smaller investment accounts it can be difficult to find professionals willing to manage them.

Let’s explore each of the above organizations in a little more detail. First Maryland Disability Trust will serve as the Trustee for Payback Trusts, Pooled Asset Trust, Medicare Set-Aside Trusts, Third Party Pooled Asset Trust and Testamentary Trust (more information of each on their website). At this time they only manage investable assets, no real estate or anything else. They have also established a Charitable Funds Program to provide emergency assistance to their clients.

Shared Horizons administers two types of Pooled Special Needs Trusts – the Wesley Vinner Trust (1st party) and the Third Party Community Trust. Similar to First Maryland Disability Trust, they only manage investable assets – no real estate. All beneficiaries of the Trust receive quality of life planning services, starting with an assessment. This provides the beneficiaries with a voice when creating their budget. Finally, they also offer Charitable Fund Awards three times a year to anyone with a disability and financial need, living in Maryland, DC or Virginia.

The Arc of Northern Virginia offers The Family-Funded Personal Trust and the Self-Funded Personal Trust. What I find unique is their ability to manage real estate as well. So if you, or a loved one, has property without a mortgage and you want it left to an individual with a disability this is the only Pooled Trust option in our area (to the best of my knowledge).

Like any other solution, Pooled Trusts are not the answer for everyone. Other options include using an attorney or a bank as a Trustee and establishing your own Trust. I recommend against doing this when the Trust will be funded with less than $750,000, because of the associated costs with managing the funds and difficulty in finding a qualified resource willing to be the Trustee. ABLE accounts do not replace the need for Special Needs Trusts, they should be seen as another tool to be used in conjunction with. It’s critical people do not leave assets to individuals who are receiving SSI directly, because of the risk of losing their benefits. It’s equally important that this not be a reason to avoid leaving an inheritance of any sort to the individual – Special Needs Trusts allow individuals to receive financial assets without fear of losing benefits. Pooled Trusts, like the ones listed above, have staff specifically trained to help families through the process and take care of their loved ones when they’re gone.


Get Rich, Quick?!


In my experience, there are (3) time proven methods to getting “rich” consistently. And much like losing weight and keeping it off, none of them are magic buttons or are going to happen overnight. Sure, there will always be those who win the lottery or inherit, but for most of us this is not our reality. For us it comes down to increasing income, decreasing living expenses, and/or decreasing debt.

Since many of us have “day” jobs, earning extra income will likely come in the form of a “side hustle” or second job. Could be as an Uber/Lyft driver, renting rooms out for Air BnB, or just picking up hours at a local bar/restaurant. Whatever you’re doing, don’t lose sight of any costs. The extra money coming in should be weighed against what it’s costing you – lost productivity at work, extra miles on your car (leading to more frequent maintenance visits) or incurring additional liability. There are other, non-traditional, avenues available as well.

Many of these opportunities are Multilevel Marketing companies, and the way to make more money is to continue recruiting people below you. These aren’t all scams, Avon and Mary Kay have been around for years, and seem to do right by those willing to put in the time and energy. However, with today’s technology it doesn’t take much to put the infrastructure in place and start selling people on the idea of making money, especially when it doesn’t seem to require much effort.

If you’re willing to do your homework and understand the risks associated with Multilevel Marketing, more power to you. But please don’t delude yourself into thinking it’s going to be the answer to all your problems right away. Like anything else, it’s going to take time; and you’re going to have to work for it.

No time and/or energy to work a second job? Then look at decreasing your living expenses and debt. Interest on credit cards and loans chip away at savings – through the opportunity cost of not being able to save those dollars and taking advantage of compounding. You do not need to be in debt to have a great credit score, paying off cards monthly and doing your best to keep overall household debt below 20% of your income will go a long way towards allowing you to accumulate wealth.

This includes housing and education costs – be honest with how much you need, versus what you want. When purchasing your home don’t lose sight of the other costs you incur – heating/cooling it, maintenance, cleaning, etc. The mortgage you qualify for is almost never the mortgage I want my clients to get. Paying less for housing leaves more to save. The same is true for education. Depending on your degree path, do you need to attend a University right away; or would attending a community college or even using services like DANTES (veterans, active duty)CLEP and Excelsior exams be a better fit. They’re certainly much friendlier for your wallet.

I know, nothing in this talks about how you can get rich today – and I’m not going to apologize. True wealth requires dedication, hard-work and sacrifice, and even with these there’s no guarantees. It also requires honesty with yourself, what does it mean to you to be financially independent? I don’t believe in setting standards based upon what I see actors and sports professionals doing; it’s more important to understand what makes YOU happy, and work towards that. Professionals, like me, can certainly help and will give you tools to use; but ultimately it comes down to you deciding what you’re willing to save and how much you can live without now for the future you desire.



Luke’s Wings

Luke’s Wings is an organization dedicated to the support of service members who have been wounded in battle. They help families travel to wherever their loved one(s) are being treated, at no cost to the families. They do this through charitable contributions, they are a 501(c)3 so all contributions are tax deductible within your individual limits.

Who They Are

They’re a small company, 6 employees, who have made it their mission to ensure injured service members do not need to spend holidays in hospitals by themselves. Luke’s Wings was started in 2008, and has been expanding its reach annually through corporate partnerships and the media. 

What They Do

Luke’s Wings purchases the plane tickets and plans the trips, then Luke’s Wings partners with other non-profit organizations that can provide other services including, but not limited to, free or discounted accommodations, meals, entertainment, local travel vouchers, city tours, etc. This allows families to be “present” with their loved ones when they’re needed the most.

 Hospitals are not warm and cozy locations, they’re not meant to be. Unlike many of us, injured Soldiers, Sailors, Airmen and Marines have little to no say in where they’ll be treated, and could end up on the other side of the country from their wives & children, or mothers & fathers. Having served at Walter Reed National Military Medical Center I can tell you with 100% certainty having family around makes a difference! 

Luke’s Wings has expanded, they now have (4) separate programs – The Wounded Warrior Transportation Assistance Program (WWTAP); Veterans in Hospice Transportation Assistance Program (HTAP); Texas Veterans Transportation Assistance Program (VTAP); and Special Operations Command Transportation Assistance Program (SOTAP). 

What Else Should I Know

Just about everything Luke’s Wings does is funded from charitable donations, they don’t make or sell anything – their mission is to help veterans and their families spend time together. I encourage people reading this to visit the website, do your homework and learn more about them. If you’re so inclined, they accept volunteers and are currently seeking to fill an intern position. I’ve been fortunate enough to not have been a patient during holidays, but I have been deployed for more holidays than I care to count – and it sucked, but at least I was doing something. Holidays are a time to spend with friends and family, and thanks to Luke’s Wings those who have been injured serving our country have opportunities they would not have otherwise. 


I am not an employee of Luke’s Wings  and any errors noted are my own. If I have misrepresented, or misstated anything please provide constructive feedback so I may make the appropriate change(s). I’m doing my best to continue posting about one organization a month, using information and notes I took when I met with them – as well as additional research I completed online. All opinions and views are my own.

Why you should wait until 70 to file for Social Security when you have disabled child

Social Security makes up a very large portion of the income most people receive in retirement, and it makes sense why they would want to start collecting it as soon as possible. However, according to the social security administration, if you start collecting it before your full retirement age you could be leaving between 20 – 30% of your benefit on the table – meaning you will forever miss out on this money. However, if you wait until age 70 before collecting benefits you could earn an additional 5.5 – 8% each year you delay past your full retirement age (delayed retirement credits).

If you’re single this may not be a big deal, you only have to provide for yourself and you (should) know how much income you need in retirement. It gets trickier when you’re married and/or have a disabled child. If you are married and your spouse files at their full retirement age after you die they will get 100% of your benefit. If you have a disabled child, who meets social security’s definition of permanently disabled; he/she could receive up to 75% of your benefits for their lifetime.

Take a moment and think about that. Do you have life insurance? How long will it be in-force? How much income does your family need if you’re not around? From my personal experience I can tell you going from two parents of a disabled child to one can get expensive. SSI is only $735/month, and there are rules to meet to get the full amount. When a parent passes the disabled child will receive SSDI (75% of parent’s social security) or SSI – whichever is greater.

This is all well and good, but let’s use me as an example to illustrate how delaying social security until 70 can impact the benefit my son will receive. For simple math I will assume I receive $1,500/mth (and all subsequent numbers are approximations) at full retirement age (67), and my son’s benefit would be $1,125/mth. If I were to start taking benefits at age 62, my benefit would be reduced to $1,000; and when I die my son’s benefit would be $750/mth. However, if I were to wait 3 years, until age 70, my benefit would increase to $1,800 and my son would now receive almost $1,400/mth. My son is 25 years younger than me, so assuming we live to the same age I would need ~$100,000 of life insurance to make up the $4,800/year difference in social security – from age 67 to 70. If I took it at 62, I would need ~$200,000 of life insurance to make up the difference in what he would earn in social security.

Sure, it may not sound like a lot to some people – but there are those who may not be insurable or cannot afford to purchase $100, 000 – $200,000 of insurance (or want to). The other factor to consider is the income the surviving spouse would receive. This can be a game changer, especially if the spouse is still caring for the disabled child. Obviously each person will need to make a determination on when to take social security based upon their own circumstances; but I believe waiting until 70, especially when you have a child with a disability, is generally the best course of action because of the increased income it provides. You don’t need to make this decision on your own, or in vacuum – sit down with a financial planner and ask for an impartial opinion. They’ll factor in your circumstances: average life expectancies of you, your spouse and child; income needed, etc. and give you a recommendation.




Gifts – It’s Okay to say “No”

I’m always a little nervous about sharing this particular opinion, especially during this time of year; because of the passion people seem to have about gift giving. I find myself wondering if they’re truly caught up in the spirit and overwhelmed with generosity, or do they feel an overpowering sense of duty to give because they “know” they’ll be getting something and/or it’s expected. Maybe there is a little bit of both going on.

Financial professionals don’t make it much better, do we – with our thoughtful and creative ways to save on gifts or options to earn some extra income during the holidays to afford our generosity. I’d like to offer a different take, and I will be the first to admit it may not be very popular. Instead of worrying about what to buy or how much you should spend, instead agree not to give gifts. Has anybody else ever wondered how many more toy cars their kid really needs, or when you would find an occasion to wear the outfit you were given? Right about here is when I’m usually being called a Scrooge or told that I don’t understand the meaning of the season.

I’m not religious, and I’m not taking this down that rabbit hole – that’s a whole other topic better left alone. And don’t misunderstand my intention; I’m certainly not saying you shouldn’t be generous or thoughtful – but I challenge you to do so in a way that doesn’t affect your wallet. Below are some options I’d like people to consider, because I think they meet the underlying intent of the season – to let those you care about know how you feel.

Provide an experience. Does your loved one reminisce of days gone by, or talk about how much they enjoy the fall foliage or snow? Recreate some of those memories – carve some time out of that busy schedule to just “be” with the person. Perhaps you go out for a hot chocolate and stop at a local pond to watch the ice skaters; or you just drive the back roads with no particular destination in mind – just looking at the changing leaves (I’m from New England – it’s amazing if you’ve never had the opportunity). Or maybe they love animals – volunteer with them at a shelter or animal rescue.

The point is to take a step back from the material world. This is not going to be for everyone, I admit that. And it will probably feel weird and/or forced at first. But think about what you would like somebody to do with you, or in your name; then turn it around and imagine the same thing for those you care about. This time of year doesn’t have to be stressful and expensive. You don’t have to dread January, already thinking to yourself what you’re going to resolve so this doesn’t happen again. Sometimes all it really takes is a K.I.S.S. (keep it simple, silly.). : )

Holidays and Gifts

It’s getting to be that time of year, when people’s hearts swell with generosity and good will. This often translates into the desire to make donations to charities, or substantial gifts to friends and family – without much thought put towards tax efficiency or how it can fit into an overall plan (am I a mood killer or what?!). So this article is going to focus on a few things people can do to make sure their gifts do the most for them as well.

Currently the annual gift tax exclusion is $14,000 per taxpayer per gift to individual. This means you can give $14,000 (cash or other assets) to as many people as you would like, and not have to file a gift tax return. If you exceed this amount in any given year; you won’t necessarily have to pay any taxes, but you will have to file a gift tax return the following year. Taxpayers have a lifetime exemption of over $5M ($5.43M to be exact), which seems like quite a bit but when considered relative to  60+ years of gifting it’s easy to see how it may be exceeded.


Contributing to 529 plans can serve dual purposes, if you have a state income tax – saving towards college and reducing your taxable income with the state. Or, if the family member is already in college; you could pay the tuition to the school directly. This does NOT count towards your annual gift tax exclusion, so if you were feeling really generous you could not only pay for the semester you could also gift the student $14,000 and not have to file a gift tax return.


Frequently I’m asked if a family should make a gift of long held investments, because they don’t “need” them for their own plan. The down side to making a gift of any long held stock or mutual fund is the amount of gains it has earned since you purchased it. These gains will be passed to the family member, and they will be responsible for any capital gains. A better solution, if the money isn’t needed right away, would be to pass it to them when you pass away – because the basis will reset.

For example, you own $100,000 of Facebook stock, which you bought for $10,000. If you gift the stock outright to your child, and then they sell it, they will owe taxes on $90,000 of capital gains. However, if you pass it to them upon your death, and they sell it for $100,000, they will not owe any taxes at all – because the basis will reset from $10,000 to $100,000.

Charitable Giving

Donations to charities do not count against the gift tax exclusion, and they can give you a tax deduction – win/.win. However, you need to ensure the donation is made no later than 31 December of the year you would like to claim the deduction for. If mailing a check, it must be postmarked before 31 December, regardless of the date on the check itself. I’ve seen people with the best intentions wait until after the new year to mail their donation, with the check dated the week of Christmas – but because it was postmarked after 1 January it counted for the new year. Taxpayers can use the IRS’ online search tool to verify the organization they have, or would like to, donate to is tax-deductible.

Recently the donation of required minimum distributions (RMDs) have been authorized. This could be appropriate for individuals and families who do not “need” the RMD. The advantages to this, instead of taking the RMD and then donating it to charity, is it’s not counted towards your adjusted gross income (AGI). For example, your income after social security and pensions is $80,000, and your RMD is $80,000. This would increase your taxable income to $160,000; putting you into another tax bracket – ouch! If you don’t itemize your deductions you wouldn’t receive any benefit from taking the RMD and then donating it to charity. However, if you donated the RMD to charity directly from your IRA (not your 401k) then your taxable income remains at $80,000. Here’s the catch – you need to be 70 1/2 AND you can only donate from your IRA, RMDs cannot be taken from 401ks.

 This is not an all-inclusive list of ways to give and save on taxes, but it is some of the more common themes I’ve run into over the years. Gifting is personal, nobody should be telling you what or how much to give; however I believe everyone deserves to know their options. Now is the time to sit down with your Advisor, before the holiday rush is upon us. Plan out your giving, it doesn’t make you any less generous and ultimately may allow you to give more.