3 Investment Tips to Balance Saving & Raising a Family

Is It Possible to Raise a Family and Save for Your Own Future?

Building a career and raising a family requires management-level skills. Juggling your time, priorities, and money now while planning for the future can be daunting. Saving now to send your kids to college and take care of your parents as they age, all while pursuing a comfortable retirement, can be challenging.

Consider taking these steps to support your family financially through a program of smart investing.

Tip 1: Why savings alone may not be enough

Saving part of your monthly income is the first step toward building wealth, but with current interest and inflation rates, saving may not be able to do the job on its own. After putting aside enough cash for an emergency fund, you may want to consider investing in a diversified set of investments such as stocks, bonds, mutual funds, real estate, and more.

Start with building your retirement nest egg. Most often, parents put their children’s future first by building a college fund. While this is certainly important, preparing for retirement should take precedence because you must live on Social Security and the wealth you’ve accumulated.

Your children have options that you don’t. Your kids can use a combination of savings, loans, and scholarships to attend college. The last thing you want is to depend on your children’s financial support when they begin working and you stop.

Tip 2: Use the tax code to help build wealth

If you’re covered by a qualified employer retirement plan, you should not only should consider making the largest contributions you can afford, but you should make sure the money is invested in assets with the potential to provide long-term growth.

And if you are self-employed or not covered at work, consider an Individual Retirement Account (IRA) and/or Self-Employed 401(k), preferably self-directed ones, to hold your investment portfolio. Not only are the contributions tax-deductible each year (subject to income and contribution limits), but all your earnings are tax-deferred until you start making withdrawals. You can delay withdrawals until age 701⁄2, giving you many years of tax-deferred growth potential.

Tip 3: Take advantage of other tax breaks

While contributions to a 529 education savings plan are not deductible from your taxes, account growth is tax-deferred, and if used for qualified educational purposes, withdrawals are tax-free.

Your employer may offer tax-advantaged benefits like cafeteria plans.

As your wealth grows, consider if it’s appropriate to allocate money into investment vehicles like tax-free municipal bonds*, Treasury Inflation- Protected Securities, whole life insurance, Real Estate Investment Trusts (REITs), and qualified annuities, to name a few.

Raising a family is rewarding—and expensive!

It's important to be a good parent, while being good to yourself. How you invest your money is critical to the financial health of you and your family. If you're interested in learning how you can better support your family financially through a program of smart investing, contact me to learn about your options.

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Disclosures

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal.

*Interest income may be subject to the alternative minimum tax. Municipal bonds are federally taxfree but other state and local taxes may apply.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a nondiversified portfolio. Diversification does not protect against market risks.

Qualified accounts such as 401(k)s and traditional IRAs are accounts funded with tax deductible contributions in which any earnings are tax deferred until withdrawn, usually after retirement age. Unless certain criteria are met, IRS penalties and income taxes may apply on any withdrawals taken prior to age 591⁄2. RMDs (required minimum distributions) must generally be taken by the account holder within the year after turning 701⁄2.

Prior to investing in a 529 Plan investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary.

This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty.

Tracking 1-05187376 Exp. 10/23