Women – Ballast Advisors

Five Things That Actually Get Better With Age

Yes, there are good things about being old, such as increased happiness, less stress, better marriages and deeper friendships. You seldom hear that: People tend to focus on the negatives of aging. How old is “old?” I don’t know exactly, but after my recent birthday I can say that it’s much older than 58. My … Read more

Mothers and Money: How Three Generations of Women Approach Financial Planning

Financial planning is a vital aspect of life. Often, the financial lessons and advice passed down from generation to generation shape an individual’s approach to finances. In honor of Mother’s Day, we are delighted to have a multi-generational family of Ballast Advisors clients, Jean, Val, and Amanda, who have agreed to share their experiences and … Read more

9 Motivational Quotes for Women Investors

9 Motivational Quotes for Women Investors According to a study from McKinsey & Company by 2030, American women are expected to control much of the $30 trillion in financial assets that baby boomers will possess—a potential wealth transfer of such magnitude that it approaches the annual GDP of the United States. Here are 9 motivational … Read more

Plan Your Finances as You Would Your Exercise

You exercise to benefit from your sweat equity in the future, right?

Waking up early in the dark mornings of winter to exercise comes hard. Once your workout ends, though, you often begin the day with the payoff of a tremendous energy boost. Can the same process apply to your finances?

If you’re like most people, you exercise for many reasons but expect to benefit from your sweat equity in the future, not just in the current moment. We will all encounter health issues at some time and the medical world assures us that we’ll deal better with problems if we get – and stay – physically fit. Preparation matters.

So, what does exercise have in common with financial planning and investing? The answer: Very few individuals prepare to invest, except maybe when selecting from choices in a retirement plan.

Or not: One study shows that in 2020 – in the teeth of the COVID-pandemic and perhaps the most volatile market year since maybe 2008 – most 401(k) retirement plan participants made no changes to their contributions.

Exercise Helps Limit Our Injuries

Getting back to the fitness analogy, exercise’s greatest benefits come from the stress we intentionally place on our muscles so that when a health problem arises, our bodies are in better condition to deal with the situation. Regarding investments, if you choose to go it alone, you need a methodical (and regularly visited) regimen for taking in and processing market data. You also need a strategy to accommodate unforeseen yet inevitable future events, such as market downturns.

Don’t let random financial news clips guide your decisions when determining how to act. For the record, you need not re-allocate asset classes or otherwise change your portfolio just because something in the market changed.

You do need to be prepared to consider adjustments when the information dictates that conditions shifted, such as stocks increasing to a higher portion of your portfolio than you want.

Your Planning Routine

We call this an investment policy statement or some prefer the term “investment playbook.” The playbook outlines your holdings and specifies how you intend to respond to change with a disciplined approach aimed at particular objectives – as opposed to the usually heated emotions most of us feel in a suddenly rough market.

How are your holdings doing against benchmarks such as the S&P 500 Index? At specifically what point will market shifts make you re-allocate percentages of stocks and bonds in your portfolio?

Your playbook also describes what you’re trying to achieve as an investor – pay for retirement or for college tuition, for example – and how you’ll react to market changes. You might plan to sell or buy only if the S&P 500 hits a certain number or invest in oil if the cost per barrel drops to a pre-set price. A well-designed playbook keeps you from panicky decisions or from freezing up during Wall Street roller coasters.

Your playbook needs to clearly document your investment information sources, the technology involved in your investing and why you bought a particular investment. Remember: Great stock or mutual fund opportunities may arise and shimmer, but if they don’t match your playbook, you pass.

At the gym, you can wander among the clanking weights or plan exactly how to invest your energy. You know which method works better.

Investing is no different

This material is provided for general information and educational purposes only and should not be considered as investment advice. Past performance is not indicative of future results. Nothing contained herein constitutes as an offer or recommendation to buy or sell a particular security or investment product. Ballast Advisors, LLC is a registered investment advisor under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training.

A Retirement Income Roadmap for Women

It’s important for you to be involved in the retirement income planning process even if you’re married. While you may plan to be married forever, many women end up single at some point in their lives due to divorce or death of a spouse. All investing involves risk, including the possible loss of principal, and there can be no assurance that any investment strategy will be successful.

More women are working and taking charge of their own retirement planning than ever before. What does retirement mean to you? Do you dream of traveling? Pursuing a hobby? Volunteering your time, or starting a new career or business? Simply enjoying more time with your grandchildren? Whatever your goal, you’ll need a retirement income plan that’s designed to support the retirement lifestyle that you envision, and minimize the risk that you’ll outlive your savings.

When will you retire?

Establishing a target age is important, because when you retire will significantly affect how much you need to save. For example, if you retire early at age 55 as opposed to waiting until age 67, you’ll shorten the time you have to accumulate funds by 12 years, and you’ll increase the number of years that you’ll be living off of your retirement savings. Also consider:

• The longer you delay retirement, the longer you can build up tax-deferred funds in your IRAs and employer-sponsored plans such as 401(k)s, or accrue benefits in a traditional pension plan if you’re lucky enough to be covered by one.

• Medicare generally doesn’t start until you’re 65. Does your employer provide post-retirement medical benefits? Are you eligible for the coverage if you retire early? Do you have health insurance coverage through your spouse’s employer? If not, you may have to look into COBRA or a private individual policy — which could be expensive.

• You can begin receiving your Social Security retirement benefit as early as age 62. However, your benefit may be 25% to 30% less than if you waited until full retirement age. Conversely, if you delay retirement past full retirement age, you may be able to increase your Social Security retirement benefit.

• If you work part-time during retirement, you’ll be earning money and relying less on your retirement savings, leaving more of your savings to potentially grow for the future (and you may also have access to affordable health care).

• If you’re married, and you and your spouse are both employed and nearing retirement age, think about staggering your retirements. If one spouse is earning significantly more than the other, then it usually makes sense for that spouse to continue to work in order to maximize current income and ease the financial transition into retirement.

How long will retirement last?

We all hope to live to an old age, but a longer life means that you’ll have even more years of retirement to fund. The problem is particularly acute for women, who generally live longer than men. To guard against the risk of outliving your savings, you’ll need to estimate your life expectancy. You can use government statistics, life insurance tables, or life expectancy calculators to get a reasonable estimate of how long you’ll live. Experts base these estimates on your age, gender, race, health, lifestyle, occupation, and family history. But remember, these are just estimates. There’s no way to predict how long you’ll actually live, but with life expectancies on the rise, it’s probably best to assume you’ll live longer than you expect.

Project your retirement expenses

Once you know when your retirement will likely start, how long it may last, and the type of retirement lifestyle you want, it’s time to estimate the amount of money you’ll need to make it all happen. One of the biggest retirement planning mistakes you can make is to underestimate the amount you’ll need to save by the time you retire. It’s often repeated that you’ll need 70% to 80% of your pre-retirement income after you retire. However, the problem with this approach is that it doesn’t account for your specific situation. Focus on your actual expenses today and think about whether they’ll stay the same, increase, decrease, or even disappear by the time you retire. While some expenses may disappear, like a mortgage or costs for commuting to and from work, other expenses, such as health care and insurance, may increase as you age. If travel or hobby activities are going to be part of your retirement, be sure to factor in these costs as well. And don’t forget to take into account the potential impact of inflation and taxes.

Identify your sources of income

Once you have an idea of your retirement income needs, your next step is to assess how prepared you (or you and your spouse) are to meet those needs. In other words, what sources of retirement income will be available to you? Your employer may offer a traditional pension that will pay you monthly benefits. In addition, you can likely count on Social Security to provide a portion of your retirement income. Other sources of retirement income may include a 401(k) or other retirement plan, IRAs, annuities, and other investments. The amount of income you receive from those sources will depend on the amount you invest, the rate of investment return, and other factors. Finally, if you plan to work during retirement, your earnings will be another source of income.

When you compare your projected expenses to your anticipated sources of retirement income, you may find that you won’t have enough income to meet your needs and goals. Closing this difference, or “gap,” is an important part of your retirement income plan. In general, if you face a shortfall, you’ll have five options: save more now, delay retirement or work during retirement, try to increase the earnings on your retirement assets, find new sources of retirement income, or plan to spend less during retirement.

A 65-year-old woman is expected to live another 20.8 years, compared with 19.6 years for a man. (Source: NCHS Data Brief, Number 395, December 2020) *Generally, annuity contracts have fees and expenses, limitations, exclusions, holding periods, termination provisions, and terms for keeping the annuity in force. Most annuities have surrender charges that are assessed if the contract owner surrenders the annuity

Transitioning into retirement

Even after that special day comes, you’ll still have work to do. You’ll need to carefully manage your assets so that your retirement savings will last as long as you need them to.

• Review your portfolio regularly. Traditional wisdom holds that retirees should value the safety of their principal above all else. For this reason, some people shift their investment portfolio to fixed income investments, such as bonds and money market accounts, as they enter retirement. The problem with this approach is that you’ll effectively lose purchasing power if the return on your investments doesn’t keep up with inflation. While it generally makes sense for your portfolio to become progressively more conservative as you grow older, it may be wise to consider maintaining at least a portion in growth investments.

• Spend wisely. You want to be careful not to spend too much too soon. This can be a great temptation, particularly early in retirement. A good guideline is to make sure your annual withdrawal rate isn’t greater than 4% to 6% of your portfolio. (The appropriate percentage for you will depend on a number of factors, including the length of your payout period and your portfolio’s asset allocation.) Remember that if you whittle away your principal too quickly, you may not be able to earn enough on the remaining principal to carry you through the later years.

• Understand your retirement plan distribution options. Most pension plans pay benefits in the form of an annuity. If you’re married, you generally must choose between a higher retirement benefit that ends when your spouse dies, or a smaller benefit that continues in whole or in part to the surviving spouse. A financial professional can help you with this difficult, but important, decision.

• Consider which assets to use first. For many retirees, the answer is simple in theory: withdraw money from taxable accounts first, then tax-deferred accounts, and lastly, tax-free accounts. By using your tax-favored accounts last and avoiding taxes as long as possible, you’ll keep more of your retirement dollars working for you. However, this approach isn’t right for everyone. And don’t forget to plan for required distributions. You must generally begin taking minimum distributions from employer retirement plans and traditional IRAs when you reach age 72, whether you need them or not. Plan to spend these dollars first in retirement.

• Consider purchasing an immediate annuity. Annuities are able to offer something unique — a guaranteed income stream for the rest of your life or for the combined lives of you and your spouse (although that guarantee is subject to the claims-paying ability and financial strength of the issuer). The obvious advantage in the context of retirement income planning is that you can use an annuity to lock in a predictable annual income stream, not subject to investment risk, that you can’t outlive.*

Unfortunately, there’s no one-size-fits-all when it comes to retirement income planning. A financial professional can review your circumstances, help you sort through your options, and help develop a plan that’s right for you.

IMPORTANT DISCLOSURES The opinions expressed herein are those of Ballast Advisors, LLC and are subject to change without notice. The third-party material presented is derived from sources Ballast Advisors consider to be reliable, but the accuracy and completeness cannot be guaranteed. Past performance is not indicative of future results. Nothing contained herein is an offer to purchase or sell any product. This material is for informational purposes only and should not be considered investment advice. Ballast Advisors reserve the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, legal, or retirement advice or recommendations. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice. Ballast Advisors, LLC is a registered investment advisor under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about the firm, including its services, strategies, and fees can be found in our ADV Part 2, which is available without charge upon request.

Advanced Estate Planning Concepts for Women

As you plan your estate, it is important to consider the tax implications. This can range from planning for the income tax basis of your property, to the gift tax, estate tax, and generation-skipping transfer tax potentially applicable to transfers of your property.

You will need to think about the disposition of your assets at your death and any tax implications. Statistically speaking, women live longer than men. So if you are married, you’ll also probably have the last word about the final disposition of all of the assets you’ve accumulated during your marriage. You’ll want to consider whether these concepts and strategies apply to your specific circumstances.

Transfer taxes

When you transfer your property during your lifetime or at your death, your transfers may be subject to federal gift tax, federal estate tax, and federal generation-skipping transfer (GST) tax. (The top estate and gift tax rate is 40%, and the GST tax rate is 40%.) Your transfers may also be subject to state taxes.

Federal gift tax

Gifts you make during your lifetime may be subject to federal gift tax. Not all gifts are subject to the tax, however. You can make annual tax-free gifts of up to $15,000 per recipient. Married couples can effectively make annual tax-free gifts of up to $30,000 per recipient. You can also make tax-free gifts for qualifying expenses paid directly to educational or medical services providers. And you can also make deductible transfers to your spouse and to charity. There is a basic exclusion amount that protects a total of up to $11,700,000 (in 2021, $11,580,000 in 2020) from gift tax and estate tax.

Federal estate tax

Property you own at death is subject to federal estate tax. As with the gift tax, you can make deductible transfers to your spouse and to charity, and there is a basic exclusion amount that protects up to $11,700,000 (in 2021, $11,580,000 in 2020) from tax.

Portability

The estate of someone who dies in 2011 or later can elect to transfer any unused applicable exclusion amount to his or her surviving spouse (a concept referred to as portability). The surviving spouse can use this deceased spousal unused exclusion amount (DSUEA), along with the surviving spouse’s own basic exclusion amount, for federal gift and estate tax purposes. For example, if someone died in 2011 and the estate elected to transfer $5,000,000 of the unused exclusion to the surviving spouse, the surviving spouse effectively has an applicable exclusion amount of about $16,700,000 ($11,700,000 basic exclusion amount plus $5,000,000 DSUEA) to shelter transfers from federal gift or estate tax in 2021.

Federal generation-skipping transfer (GST) tax

The federal GST tax generally applies if you transfer property to a person two or more generations younger than you (for example, a grandchild). The GST tax may apply in addition to any gift or estate tax. Similar to the gift tax provisions above, annual exclusions and exclusions for qualifying educational and medical expenses are available for GST tax. You can protect up to $11,700,000 (in 2021, $11,580,000 in 2020) with the GST tax exemption.

Indexing for inflation

The annual gift tax exclusion, the gift tax and estate tax basic exclusion amount, and the GST tax exemption are all indexed for inflation and may increase in future years.

Income tax basis

Generally, if you give property during your life, your basis (generally, what you paid for the property, with certain up or down adjustments) in the property for federal income tax purposes is carried over to the person who receives the gift. So, if you give your $1 million home that you purchased for $50,000 to your brother, your $50,000 basis carries over to your brother — if he sells the house immediately, income tax will be due on the resulting gain.

In contrast, if you leave property to your heirs at death, they get a “stepped-up” (or “stepped-down”) basis in the property equal to the property’s fair market value at the time of your death. So, if the home that you purchased for $50,000 is worth $1 million when you die, your heirs get the property with a basis of $1 million. If they then sell the home for $1 million, they pay no federal income tax.

Lifetime giving

Making gifts during one’s life is a common estate planning strategy that can also serve to minimize transfer taxes. One way to do this is to take advantage of the annual gift tax exclusion, which lets you give up to $15,000 (in 2020 and 2021) to as many individuals as you want gift tax free. As noted above, there are several other gift tax exclusions and deductions that you can take advantage of. In addition, when you gift property that is expected to appreciate in value, you remove the future appreciation from your taxable estate. In some cases, it may even make sense to make taxable gifts to remove the gift tax from your taxable estate as well.

Women live an average of 5.1 years longer than men.* That’s important because it means that there’s a greater chance that you’ll need your assets to last for a longer period of time. Keep this in mind when you consider making lifetime gifts. Property you give away is no longer available to you. *NCHS Data Brief, No. 395, December 2020.

Trusts

There are a number of trusts that are often used in estate planning. Here is a quick look at a few of them.

• Revocable trust.

You retain the right to change or revoke a revocable trust. A revocable trust can allow you to try out a trust, provide for management of your property in case of your incapacity, and avoid probate at your death.

• Marital trusts.

A marital trust is designed to qualify for the marital deduction. Typically, one spouse gives the other spouse an income interest for life, the right to access principal in certain circumstances, and the right to designate who receives the trust property at his or her death. In a QTIP variation, the spouse who created the trust can retain the right to control who ultimately receives the trust property when the other spouse dies. A marital trust is included in the gross estate of the spouse with the income interest for life.

• Credit shelter bypass trust.

The first spouse to die creates a trust that is sheltered by his or her applicable exclusion amount. The surviving spouse may be given interests in the trust, but the interests are limited enough that the trust is not included in his or her gross estate.

• Grantor retained annuity trust (GRAT).

You retain a right to a fixed stream of annuity payments for a number of years, after which the remainder passes to your beneficiaries, such as your children. Your gift of a remainder interest is discounted for gift tax purposes.

• Charitable remainder unitrust (CRUT).

You retain a stream of payments for a number of years (or for life), after which the remainder passes to charity. You receive a current charitable deduction for the gift of the remainder interest.

• Charitable lead annuity trust (CLAT).

A fixed stream of annuity payments benefits a charity for a number of years, after which the remainder passes to your noncharitable beneficiaries, such as your children. Your gift of a remainder interest is discounted for gift tax purposes.

Life insurance

Life insurance plays a part in many estate plans. In a small estate, life insurance may actually create the estate and be the primary financial resource for your surviving family members. Life insurance can also be used to provide liquidity for your estate, for example, by providing the cash to pay final expenses, outstanding debts, and taxes, so that other assets don’t have to be liquidated to pay these expenses. Life insurance proceeds can generally be received income tax free. Life insurance that you own on your own life will generally be included in your gross estate for federal estate tax purposes. However, it is possible to use an irrevocable life insurance trust (ILIT) to keep the life insurance proceeds out of your gross estate. With an ILIT, you create an irrevocable trust that buys and owns the life insurance policy. You make cash gifts to the trust, which the trust uses to pay the policy premiums. (The trust beneficiaries are offered a limited period of time to withdraw the cash gifts.) If structured properly, the trust receives the life insurance proceeds when you die, tax free, and distributes the funds according to the terms of the trust.

Now is a Fantastic Time to Review Your IPS

An Investment Policy Statement is your guardrail to keep you on your path to retirement.

When markets near high records, you wonder, “Is this a bubble?” When markets dive, you wonder, “Is this a crash?” Your biggest question: How do you keep your head on the recent Wall Street rollercoaster?

After one of the most spectacular recoveries in recent years (from the bottom in late March 2020 to present day) both the Dow Jones Industrial Average and the S&P 500 continue to notch record highs – enough whipsawing to make your neck and your retirement accounts ache.

There’s an effective medium, though, between doing nothing and panicky trading. These guidelines can keep you level-headed even while the markets twist and turn (which they always will).

Your Investment Policy Statement

Revisit or develop your investment policy statement at the beginning of every year. An IPS describes procedures, your investment philosophy and style, guidelines and constraints for you and your advisor to manage your investments.

An IPS serves as your guardrail so you don’t veer all over, chasing investments or changing your strategy as markets change.

To begin creating your IPS, write down your key investing goal and the year in which you hope to reach it. If this goal will take you years (such as funding your retirement or paying for a child’s college education), try to figure your own longevity – then add a few more years. Quantify how much your goal costs and remember to adjust the cost upward to reflect inflation’s likely future impact.

Next, set your asset allocation targets for investments. Your IPS needs to fix a range for your asset allocation rather than a static figure for each class. This increases your options for making investment decisions if the markets rise or dip just a little.

Finally, document specifically the market conditions that will spur you to make investment decisions. That way you’ll know what to do and exactly when – not just when your emotions move you.

Consider Index Funds

These are diversified buckets of holdings that follow general market rises and falls. The odds of one or a few companies dropping to zero at the same time are slim. The odds of all the companies going to zero at the same time in an index are practically non-existent.

You may reduce your worries about losing your money – although index values still go up and down – as well as grow comfortable with changing values and learn how to rein in your exposure to those changes.

Investing in more than one index is also a basic part of protecting your portfolio with diversification and asset allocation (two different tactics).

Three More Tips

Further, consider these three tips:

1. Forget about predicting the future. Correctly guessing one event is lucky. Nailing 10 events – that’s prediction. Nobody accomplishes that regarding the markets. Approach investing with no predictions: Being wrong can carry huge costs.

2. Develop a prudent plan. Include structured processes with decision rules to guide you and that already consider markets always going up and down. The degree of ups and downs you weather depends largely on your tolerance and capacity for risk.

3. Customize your portfolio. Base it on the principles above and tailor it to you and your situation. Don’t invest based on chit-chat around the (virtual) water cooler, structuring financial moves based on someone else’s situation and needs. To do so sends you chasing investments that are merely hot and not necessarily what’s prudent for you.

Combining and using these principles can provide you some comfort during any market.

5 Things Every Woman Should Know About Social Security

Information provided by www.socialsecurity.gov

There are many things a woman should know about Social Security. Here are five of the most important Social Security messages every woman should know.

1. Nothing keeps you from getting your own Social Security benefit

If you’ve worked for at least 10 years and earned a minimum of 40 work credits, you are vested in the Social Security system.
Once you reach age 62, you will be eligible for your own Social Security benefit whether you’re married or not and whether your spouse collects Social Security or not.
Your retirement benefit is figured the same way a man’s retirement benefit is figured. It’s based on a percentage of your average monthly wage using a 35-year base of earnings. If you don’t have 35 years of earnings, we must substitute “zero” years to reach the 35-year base.
If you become disabled before your full retirement age, you might qualify for Social Security disability benefits if you’ve worked and paid Social Security taxes in five of the preceding ten years.
If you also get a pension from a job where you didn’t pay Social Security taxes (e.g., a civil service or teacher’s pension), your Social Security benefit might be reduced.

2. There is no marriage penalty or limit to benefits paid to a married couple

If you are married and both you and your spouse have worked, you will each be paid your own Social Security benefit.
A working woman is not limited to one-half of her spouse’s Social Security. (That rate applies to women who never worked outside the home.)
So, for example, if you are due a Social Security benefit of $1,200 per month and your spouse is due a Social Security benefit of $1,400 per month, you will be paid $2,600 per month in retirement benefits.

3. If you’re due two benefits, you get the one that pays the higher rate, not both

Most women are potentially due two benefits: your own retirement benefit and spousal benefit on your spouse’s record.
But you only get the one that pays the higher rate, not both.
A wife is due between one-third and one-half of her spouse’s Social Security.
Most working women who reach retirement age get their own Social Security benefit because it’s more than one-third to one-half of the spouse’s rate.
But if your spouse dies before you, you can apply for the higher widow’s rate. (See number 5 below).

4. If you’re divorced and were married at least 10 years, you’re eligible for some of your ex’s Social Security

Divorced women married at least 10 years are eligible for Social Security on the ex’s record if they are unmarried at the time they become eligible for Social Security.
Some women sign divorce decrees relinquishing their rights to Social Security on their ex’s record. If you were married at least 10 years, those clauses in divorce decrees are worthless and are never enforced.
Any benefits paid to a divorced spouse DO NOT reduce payments made to the ex or any payments due the ex’s current spouse if he/she remarried.
Generally, the same payment rules apply to divorced wives and widows as to current wives and widows. That means most divorced women collect their own Social Security while the ex is alive, but can apply for higher widow’s rates when he/she dies.

5. When your husband or ex dies, you’re probably due a widow’s benefit

Widows are due between 71 percent (at age 60) and 100 percent (at full retirement age) of what the spouse was getting before he/she died.
But we must pay your own retirement benefit first, then supplement it with whatever extra benefits you are due as a widow, to take your Social Security benefit up to the widow’s rate.
We also can pay you a $255 one-time death benefit if you were living with your spouse when he/she died.
If you made more money than your spouse, then he/she might be due a widower’s benefit on your record if you die before he/she does.

For more information on how Ballast Advisors helps women discover their financial needs and goals, contact Ballast Advisors for a complimentary consultation at a location near you:

Ballast Advisors – Woodbury
683 Bielenberg Dr., Suite 208
Woodbury, MN 55125-1705
Tel: 651.478.4644

Ballast Advisors – St. Paul
3820 Cleveland Ave. N, Ste. 500
St. Paul, MN 55112-3298
Tel: 651.200.3100

Ballast Advisors – Punta Gorda
223 Taylor Street, Suite 1214
Punta Gorda, FL 33950-3901
Tel: 941.621.4015

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice. This material is for informational purposes only and should not be considered investment advice. This material concerns information regarding tax matters, and is not intended or written to be used,and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

Ballast Advisors, LLC is a registered investment advisor under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about the firm,including its services, strategies, and fees can be found in our ADV Part 2, which is available without charge upon request. circumstances.

10 Tips To Help You Save More in 2021

It’s a new year (thank goodness) and the perfect time to renew healthy habits, including those in your financial life. If 2020 taught us anything, it’s the importance of planning ahead. You may have already been working toward your big financial goals, like saving for retirement or planning for your child’s education. However, how you approach these goals may have had to change, depending on how the Pandemic impacted your individual financial plan.

As financial planners and advisors, we are passionate about helping you set intentions and priorities around personal finance goals. A general rule of thumb is to try and save 15-20% of your pre-tax income. We know that our clients who are intentional and diligent about their financial goals have more success.

Here are 10 money saving tips you can consider implementing in 2021 to improve your discipline around your personal financial planning and retirement goals.

Savings Tip #1 – Set a simple savings goal for each paycheck and get that out of the way before paying any bills. Set it to transfer automatically, so you get used to having less money to spend.

Savings Tip #2 – Evaluate your retirement plan. Once you set your budget, work toward taking that first 15% and invest in your 401K, IRA or retirement account. This habit will go a long way toward building your retirement savings.

Savings Tip #3 – If you’re lucky enough to still see a raise or bonus this year, consider using the increased income to step up your savings plan. These incremental savings increases could really add up over time.

Savings Tip #4 – If your company offers a retirement savings plan with a match, you could be leaving money on the table if you’re not contributing to the plan. Consider saving at least the amount your employer is willing to match. Saving the matching amount alone is rarely enough to meet most people’s retirement plans, but it’s a great place to start!

Savings Tip #5 – If you brown bag your lunch vs. eating out, you can save an average of $100 a month. If you invested that money into retirement you could have as much as $103,000 when you retire. (assuming 25 years to retirement, 2.5% inflation rate, and an average of 7% rate of return).

Savings Tip #6 – While you’re cleaning out those closets, consider selling stuff you haven’t used in a year and use the proceeds toward any credit card debt. Don’t forget to check your credit reports once a year for free at annualcreditreport.com.

Savings Tip #7 – Set time aside to review anything that is on auto-payment. $5.99 here and $14.99 there add up quickly over time. Do you still need that music subscription or meditation app you forgot you subscribed to last year?

Savings Tip #8 – This is also a great time to evaluate your rates for things like insurance and other monthly services and fees. Are you getting the best rate?

Savings Tip #9 – If you’re not using a financial planner, consider a free consultation. The process of having a professional review your employer sponsored retirement plan in addition to other investments and savings, can help you determine if you are on track.

Savings Tip #10 – There is a load of free content out there to help you improve your financial acumen. Commit to reading a finance blog weekly, or find a podcast. Make it a routine to listen to your podcast during your workout, or on your commute from work.

Again, it’s easy to say you want to save more money or trim expenses in 2021, but making intentional is key.

For more information on how Ballast Advisors helps clients with personal financial planning, executive benefits, and saving for retirement, and see www.ballastadvisors.com/. Our financial advisors serving the Twin Cities and Southwestern Florida can help you reach your retirement and financial goals. Our offices are located in Woodbury, MN, Arden Hills, MN and Punta Gorda, FL.

IMPORTANT DISCLOSURES

The opinions expressed are those of Ballast Advisors, LLC. The opinions referenced are as of the date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass. These opinions contain references to material provided by third-party sources believed to be reliable but cannot be guaranteed for accuracy.

Ballast Advisors, LLC is a registered investment advisor under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about the firm, including its services, strategies, and fees can be found in our ADV Part 2, which is available without charge upon request. The opinions expressed herein are those of Ballast Advisors, LLC and are subject to change without notice.

Financial Planning for Freelancers

Q&A with writer Kate Racculia

The gig economy accounts for more than one third (36 percent) of U.S. workers — that’s approximately 57 million people — according to a recent article in Forbes. While this cuts across many industries, from part time to full time work, the freelancer faces a set of unique challenges when it comes to financial planning versus the more traditional wage-earner.

Ballast Advisors sat down with client and writer Kate Racculia for a Q&A, to discuss financial planning for freelancers from her perspective. Kate Racculia is a novelist living in Bethlehem, Pennsylvania. She is the author of the novels This Must Be the Place and Bellweather Rhapsody, winner of the American Library Association’s Alex Award. Her third novel, Tuesday Mooney Talks to Ghosts, was published by Houghton Mifflin Harcourt in October 2019. Kate shares her perspective on aspects of personal financial planning, such as budgeting inconsistent income, tax strategies for freelancers, and planning for retirement. Ms. Racculia is a client of Ballast Advisors, a fee-based financial planning firm with offices are located in Woodbury, Minn., Arden Hills, Minn and Punta Gorda, Fla.

Q. Tell us a little about your career path in the freelance writing space?

A. The first time I was compensated for my writing was as a teenager–I was a teen correspondent for my local newspaper, which taught me early on that the freelance life–using my skills with the written word–had value, and I could and should pursue my interests and talents.

But, of course, because neither my life nor my career path has been anything close to a straight line, I went to school for a BFA in illustration and to graduate school, for an MFA from Emerson College in Boston. When I graduated–with a mountain of debt–I found a job as a writer in institutional finance marketing. I wrote my first two novels on weekends while I worked full time, for nearly 4 years in finance marketing and another 4 years in fundraising as a prospect researcher.

Only after my second novel was published, after more than 8 years of full time employment, did I feel comfortable taking the chance on freelance life.

Q. What steps did you take financially to make the transition to full time freelance work?

A.I knew I had to move to a more affordable place to live (Boston, I love you, but MAN are you expensive). And I didn’t have a contract for a book–all my books have been written on spec, which means I just wrote them without knowing if anyone would ever buy them. *Not* the most financially sound strategy! (As a very lovely consulting client said to me once, when we were discussing the perils of freelancing: “Girl, there are easier ways to make money.”)

But eventually I learned how to balance other forms of income and other occupations, that float the writing of novels until I have a manuscript that (thankfully) could account for a significant portion of my income.

So now, I work part time 15 hours a week at the Bethlehem Area Public Library, teach writing online for usually 3-4 10 week courses per year and consult on manuscripts for Grub ad hoc, write for freelance local publications, and the rest of my time is left for novel writing (or, right now, novel promotion!). So approximately 70% of what I do actively each week brings in pretty stable income–it’s not much, but it’s stable, a base I can build on. 30% of the week is spent on being a novelist, and that’s a risk and an investment that pays out over time.

Q. A huge challenge of freelance work is inconsistent income. In your writing career, can you shed any light on how you balance these challenges?

A. Diversifying my income sources has been so key. Both in terms of creating my ideal life balance–I like to be busy, and to have lots of things going on that are different from one another–and in terms of cushioning my budget. I do rely on my novel advances for my primary financial stability, but I can stretch those advances out over years because I have these other, more stable income sources to prop up my daily expenses. It’s also key to keep a low overhead life: I rent, don’t have kids. I paid off my car years ago, and don’t have any debt, which my many years in finance–and my first book advance–helped me eliminate. I like to travel, but I’m not a big impulse spender and always watch my budget for incidentals, the little things that add up over time such as eating out, etc. My biggest expenses, after rent and my healthcare and insurance, are probably my cats, who are aging. But I started my freelance life with a big cushion; I was in a position of terrific economic luck and privilege when I made the leap, and so far, so good. Even so, sometimes I’m not sure the uncertainty and stress is totally worth it, but I do love being the keeper of my own days. I love my flexibility and independence, and I’m going to keep living this life as long as I can.

Q. Another challenge is developing tax strategies when there’s no tax withholding. How has this worked for your writing career? What have you found most helpful?

A. I pay estimated quarterly income, which my accountant calculates as part of my tax package. Though I’ve had a few years when I didn’t pay the estimates; I expected those years to be leaner than they were, and it hurts like crazy to cut that massive tax to the IRS, but at least I have the money to do so. On those years when I have a windfall–I sold my book, or a book was optioned–I very conservatively sock away a portion of the gross in a savings account that I don’t even touch, or try to think about. I take out what I expect to pay in taxes proactively, and then it’s there when I need it.

Q. How have you planned for your retirement goals?

A. Whenever I get a windfall–again, if a book sells or a book is optioned–I put a chunk away to be invested. So instead of a small percentage of weekly salary trickling into my 401k every month, it’s like a deluge every 12-15 months. Again, like the savings account, I put it away, try not to think about it, let that compound interest be my friend.

Q. How do you manage insurance?

A. I do buy my own health insurance, which is kind of a bummer, but, again, I’m lucky: I’m generally healthy, don’t have a chronic condition to manage. So every year I go on the Healthcare.gov exchange, estimate my income, see if I’m eligible for a tax credit, and choose my health insurance. No professional or business liability insurance, thankfully; though the city of Bethlehem does require that I file for a yearly business license (to the tune of $30 or so), which I tack to my bulletin board with pride.

Q. Do you have advice for other writers/freelancers/creatives out there who need help in financial management, planning or strategy?

A. Take your time! It’s a marathon, not a sprint. Though it’s not really a race at all to live a particular kind of creative life–like, you’re still a writer if you’re working full time (with benefits) at an unrelated job. I was! For nearly a decade. And those full-time jobs were what put me in the best possible position to take a risk, at the time it was right for me to take it. Diversify your gigs, look for those other sources of income, too, that are related to your passions (for a writer: bookstores, libraries) but may be more stable or dependable.

Be disciplined–when you’re filling your own days, time can really run away from you, so try to make weekly schedules and habits about showing up–for yourself, for your work, for what you’re working toward. Daily walks (it is so critical to get outside and out of your head), friend and family time, TV time, dedicated, regular time in front of whatever you’re working on with your phone on silent in the other room. (And if you can? Turn off the internet.) Keep track of your receipts. If office supplies do it for you (I love ’em), invest in folders and fun colored sticky notes and keep your records as diligently as you can. And don’t be too hard on yourself. It’s very easy to feel alone when you’re, well, literally the only person in the office of one. Check in and see how you’re feeling, what you need. A freelance life is not one size fits all, but a bespoke balance that’s different for everyone.

Q. Where can we follow your work?

A. I’m on Twitter (occasionally) at @kateracculia, Facebook at @kateracculiawriter, and Instagram (with lots of cat content) at @gomezrac.

Financial Planning with Flexibility

Decisions for financial advice depend highly on the individual and must be built to be flexible with the changes that come along. Ballast Advisors strives to provide sound financial advice, backed not only by analysis and research, but by life experience and observations that can offer you a balanced and flexible investment portfolio.

For more information on how Ballast Advisors helps our clients like Kate, see www.ballastadvisors.com/

IMPORTANT DISCLOSURES

The opinions expressed are those of Ballast Advisors, LLC. The opinions referenced are as of the date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass. Ballast Advisors, LLC is a registered investment advisor under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about the firm, including its services, strategies, and fees can be found in our ADV Part 2, which is available without charge upon request. The opinions expressed herein are those of Ballast Advisors, LLC and are subject to change without notice