Jeffrey Thatcher: Financial Planning

Retiree Challenge: Making Your Money Last

2012-05-22T07:42:00.000-07:00

The ultimate goal for most retirees is making sure their assets last as long as they live. Due to increased longevity, managing cash flow is more critical than ever. While many variables come into play, there are a number of planning moves that can help retirees live within their means and make appropriate adjustments in response to changes in income and expenses.

Tools for the Task

If you are retired or about to retire, you will need to clarify your current financial situation, as well as any significant changes you expect. Two sources will provide this information:

· A net-worth statement, which provides a snapshot of your assets, debt, and cash reserves.

· Your monthly or annual budget, with itemized breakdowns of your income and expenses. If you haven't retired yet, it's a good idea to prepare a projected budget of your retirement income and expenses.

Even with reasonable assumptions about investment returns, inflation, and retirement living costs, it is likely you will encounter numerous changes to your cash flow over time. Experts often recommend a monthly review of your budget, as well as a comprehensive annual review of your financial situation and goals.

What to Look For

What should you look for as you monitor your finances? Following are potential developments that could affect your cash flow and require adjustments to your plan.

· Interest rate trends and market moves may result in an increase or decrease in income from your savings and investments.

· You may also encounter changes in federal, state, and local tax rates and regulations. Watch for changes in Social Security or Medicare benefits or eligibility, as well as new rules affecting employer-sponsored retirement benefits and private insurance coverage.

· Inflation and health care costs are two other variables that may have an impact on living costs and, hence, your retirement planning assumptions.

· Life events such as marriage, the death of a spouse, and the addition or loss of a dependent may also affect your cash flow. In addition, cash flow is impacted by both small and significant choices you make over the course of your retirement, such as how much you spend on travel and entertainment and whether you live in a lower-cost or a higher-cost locale.

It is worth paying close attention to cash flow, making sure you budget carefully, and monitor income and expenses frequently. Take action whenever you believe that significant changes may be necessary.

While you may have a good understanding of what to expect in your retirement years, unforeseen changes can occur. Having a well-planned strategy may assist in making your money last longer after you retire.

Jeffrey Thatcher is a CERTIFIED FINANCIAL PLANNER ™ and Director of HVFCU Financial Services, the investment division at Hudson Valley Federal Credit Union.

Securities offered through LPL Financial, member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates.

Not NCUA Insured

No Credit Union Guarantee

May Lose Value

Hudson Valley Federal Credit Union and HVFCU Financial Services are not registered broker/dealers and are not affiliated with LPL Financial. This material was prepared for Jeff Thatcher’s use.

Calculating Your Retirement Needs

2012-05-08T07:32:00.000-07:00

When retirement was years away, calculating how much income you may need may have involved a lot of estimates. Now you can be more accurate. Consider the following factors:

The length of your retirement. The average 65-year-old man can expect to live about 17 more years; the average 65-year-old woman, 20 more years, according to the National Center for Health Statistics. Have you accounted for a retirement of 20 years or more?
Earned income. Working during retirement, even on a part-time basis, can reduce your need to tap into retirement assets for ongoing living expenses.
Your retirement lifestyle. Your lifestyle will help determine how much income you'll need to support yourself. A typical guideline is 60% to 80% of your final working year's salary, but if you want to take luxury cruises or start a business, you may need 100% or more.
Health care costs and insurance. Most Americans are not eligible for Medicare until age 65, and even then, Medicare doesn't cover everything. You can purchase Medigap supplemental insurance to cover some of the extras, but even Medigap does not pay for long-term custodial care, eyeglasses, hearing aids, and other ongoing essentials. For more on Medicare and health insurance, visit www.medicare.gov.
Inflation. Because the rate of inflation can vary over time, it's a good idea to tack on an additional 4% each year to help compensate for increases in the cost of living.

Running the Numbers

The next step is to identify potential income sources, including Social Security, pensions, and personal investments. Also review your asset allocation -- namely, how you divide your portfolio among stocks, bonds, and cash.¹Are you tempted to convert all of your assets to low-risk securities? Such a move may place your assets at risk of losing purchasing power due to inflation. You may live in retirement for a long time, so try to keep your portfolio working for you both now and in the future.

A New Phase of Planning

Once you've assessed your needs and income sources, it's time to look at tapping your nest egg. First, determine a prudent withdrawal rate. A common approach is to liquidate a maximum of 5% of your principal each year in retirement; however, your income needs may differ.

Next, you'll need to decide when and how much to withdraw from your tax-deferred and taxable investments. Investors are required to take annual withdrawals from employer-sponsored retirement plans and traditional IRAs after age 70 1/2. Be aware that these withdrawals are subject to federal income tax.²

The advantage of maintaining tax-deferred investments for as long as possible is their ability to compound on a pre-tax basis and thus offer greater earning potential than their taxable counterparts. In contrast, long-term capital gains from the sale of taxable investments are currently taxed at a maximum of 15%.

It is never too early to start planning for retirement. Considering some of the recommendations above can be helpful in determining what the best options are for your post retirement years.

¹Asset allocation does not assure a profit or protect against a loss in a declining market.

²Withdrawals from tax-deferred accounts made prior to age 59 1/2 may be subject to an additional 10% penalty. In the case of employer-sponsored plans, there are special rules that apply to plan participants aged 55 and older who separate from service.

Jeffrey Thatcher is a CERTIFIED FINANCIAL PLANNER ™ and Director of HVFCU Financial Services, the investment division at Hudson Valley Federal Credit Union.

Securities offered through LPL Financial, member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates.

Not NCUA Insured

No Credit Union Guarantee

May Lose Value

Hudson Valley Federal Credit Union and HVFCU Financial Services are not registered broker/dealers and are not affiliated with LPL Financial. This material was prepared for Jeff Thatcher’s use.

Should You Tap Your Retirement Account?

2012-04-24T07:19:00.000-07:00

Since the housing and stock markets collapsed a few years ago, millions of Americans have found themselves in need of cash, either for short-term or long-term expenses. Those who have contributed regularly to a workplace retirement plan, such as a 401(k) or 403(b), may find it tempting to tap into those accounts to help cover their bills, either through a loan or a distribution. Before any pre-retirement withdrawal is made, it's important to know the facts and consider the consequences.

Your decision should be influenced, in part, by the severity of your needs and the tax implications of the option you choose. Loans are not considered taxable distributions unless they fail to satisfy plan rules regarding the amount, duration, or repayment terms. However, distributions (including hardship withdrawals) are generally taxable as ordinary income, and workers who receive retirement plan distributions before reaching age 59 1/2 may be required to pay an additional 10% early withdrawal penalty.

Loan Considerations

When considering a loan, there are several rules to keep in mind.

· The IRS generally limits the amount of a loan to 50% of your vested account balance, up to a maximum of $50,000.

· Most retirement plan loans must be repaid within five years, although loans used to purchase the participant's primary residence may be paid back over a longer period of time.

· You may not be able to make new contributions to your plan until the loan is paid off. Additionally, loans are repaid with after-tax contributions, and interest (usually 1% or 2% above the prime rate) is due.

It's important to remember that not all plans allow loans. A violation of any of the plan's loan rules may cause the loan to be treated as a taxable distribution. Additionally, an employer may require participants who have taken a loan to repay the entire amount immediately upon leaving the company, regardless of the original repayment schedule. If an ex-employee fails to do so, the employer is required to report the loan to the IRS as a distribution.

Hardship: A Last Resort

The government has made the rules around applying for and receiving a hardship withdrawal of your retirement plan assets difficult for a reason: they want to ensure that the need for those funds is vital. Most plans only allow a hardship if all other means (including loans) have been exhausted.

Hardships can be taken if they meet certain requirements, including:

· Unreimbursed medical expenses for you, your spouse, or dependents.

· Purchase of a principal residence.

· Payment of college tuition and related educational costs (such as room and board) for you, your spouse, dependents, or nondependent children.

· Payments necessary to prevent eviction from your home, or foreclosure on the mortgage of your principal residence.

· For funeral expenses.

· Certain expenses for the repair of damage to the employee's principal residence.

Ordinary income taxes (both federal and state, if applicable) are due on the withdrawal amount, but the 10% early withdrawal penalty may not apply in certain situations, such as when the distribution is made:

· Because of a qualifying disability.

· To pay medical expenses that exceed 7.5% of the participant's adjusted gross income.

· Due to a "separation from service" (i.e., ceased to be employed by the company sponsoring the plan) during or after the calendar year in which the participant reaches age 55.

· To an alternate payee under the terms of a qualified domestic relations order (QDRO).

· On account of certain disasters for which IRS relief has been granted.

Note also that a hardship withdrawal cannot be repaid into your account. Your retirement plan administrator and financial professional can help you determine your options. Be sure to consider all options and consult a professional before making decisions that could effect on your financial future.

Jeffrey Thatcher is a CERTIFIED FINANCIAL PLANNER ™ and Director of HVFCU Financial Services, the investment division at Hudson Valley Federal Credit Union.

Securities offered through LPL Financial, member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates.

Not NCUA Insured

No Credit Union Guarantee

May Lose Value

Hudson Valley Federal Credit Union and HVFCU Financial Services are not registered broker/dealers and are not affiliated with LPL Financial. This material was prepared for Jeff Thatcher’s use.

Financial Planning Tips for Unmarried Couples

2012-04-10T07:24:00.000-07:00

Today's "modern family" is decidedly nontraditional. According to the latest Census data, fewer than 25% of American households currently consist of married couples with dependent children, while more than 40% of unmarried couples have children under the age of 18. Even the term "married" can be defined differently depending on where you live. Some states allow and recognize same-sex marriage, but the majority of states and the federal government do not. Therefore, it's important for domestic partners to ensure they have legal protections in place to protect their families and themselves.

Legal Protections

Unmarried partners lack many of the legal protections granted to spouses in the event of divorce or death. Although most states will consider a claim by an unmarried partner, there is no specific legal precedent in the absence of a written contract. Domestic partners may wish to consider creating a domestic partnership agreement that details the sharing of expenses as well as the ownership and distribution of assets should the relationship end. Unmarried couples with children should consider signing a written agreement acknowledging parental rights and responsibilities and having each partner name the other as primary guardian in their respective wills.

Retirement Considerations

Unmarried couples are not eligible for their partner's Social Security benefits and, in some cases, employer sponsored retirement plan distributions. The IRS allows a non-spousal beneficiary of an IRA to take required distributions over his or her lifetime rather than in a lump sum, allowing for potential tax-deferred growth over a longer period of time. Domestic partners who can afford to do so may want to contribute the annual maximum to an IRA to capitalize on this benefit.

Estate Planning Issues

If an unmarried individual dies without a will, the state may distribute assets to his or her closest blood relatives, leaving out the surviving domestic partner. To help rebut a challenge to a will, domestic partners may want to videotape their wishes in the presence of an attorney.

Federal tax law allows all assets to pass to a spouse tax free and no applicable estate taxes are due until the second spouse dies. Unmarried couples, however, do not enjoy this tax advantage. For those with significant taxable assets, it will be necessary to pursue other avenues to avoid estate tax. One strategy is to purchase life insurance to pay any potential federal and state estate taxes. The surviving partner must own the insurance to avoid it becoming part of the estate of the deceased. Therefore, each partner should own enough insurance to pay anticipated taxes on the assets of his or her partner.

Protecting your family’s financial future is important. If you are part of a “modern family”, it is important to understand the benefits and limitations of the laws and regulations in your state, as they could have long-term financial effects.

This communication is not intended to be legal and/or tax advice and should not be treated as such. Each individual's situation is different. You should contact your legal and/or tax professional to discuss your personal situation.

Jeffrey Thatcher is a CERTIFIED FINANCIAL PLANNER ™ and Director of HVFCU Financial Services, the investment division at Hudson Valley Federal Credit Union.

Securities offered through LPL Financial, member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates.

Not NCUA Insured

No Credit Union Guarantee

May Lose Value

Hudson Valley Federal Credit Union and HVFCU Financial Services are not registered broker/dealers and are not affiliated with LPL Financial. This material was prepared for Jeff Thatcher’s use.

Transferring Assets to a 529 Plan

2012-03-20T13:13:00.000-07:00

A 529 College Savings Plan may be an attractive vehicle for those looking to save for a child's education.¹ If you have already committed college-earmarked assets to another type of financial vehicle, such as a Coverdell Education Savings Account or a custodial account for a minor beneficiary, you may want to investigate transferring those assets into a 529 plan.

Making the Move from a Coverdell

Amounts transferred from a Coverdell account to a "qualified tuition program" (IRS lingo for a 529 plan) are viewed as qualified education expenses by the IRS and are therefore tax free as long as the amount of the withdrawal is not more than the designated beneficiary's qualified education expenses.

There are several reasons why a college saver may want to take this course of action:

Consolidation with a more generous contribution limit. Whereas Coverdell accounts limit contributions to $2,000 per beneficiary per year, 529 plans typically allow much higher lifetime contribution limits in excess of $200,000 per beneficiary in many states.
No income restrictions. Unlike Coverdells, 529 plans generally do not impose income limits that restrict the ability of higher-income taxpayers to contribute.
No taxes or penalties. Moving assets from a Coverdell to a 529 does not trigger taxes or penalties.

There are also some drawbacks. Keep in mind that Coverdells and 529 plans are still relatively new, so legal and procedural precedents for specific strategies may not be well established yet. Since the funds in a Coverdell are owned by the beneficiary, any assets moved to a 529 plan owned by a parent could be construed as a transfer of ownership from the beneficiary to the parent. This could raise legal issues down the road if the parent subsequently changes the beneficiary. What's more, Coverdells can be used to pay for primary or secondary school costs, whereas 529 plans are limited to college expenses.

Relocating UGMA/UTMA Assets

Many 529 plans accept rollovers from custodial accounts established for minor beneficiaries, such as those created under the provisions of the Uniform Gifts/Uniform Transfers to Minors Act (UGMA/UTMA). Be aware that the money in an UGMA/UTMA account belongs to the minor, so any subsequent withdrawals after a transfer to a 529 plan may only be used for that minor. Also, since contributions to 529 plans must be in cash, UGMA/UTMA assets first need to be liquidated, with any capital gains taxable to the minor.

Moving Savings Bond Assets

The third option for a transfer to a 529 plan involves cashing in qualified U.S. savings bonds and contributing the proceeds to the plan, in accordance with the guidelines established by the IRS and the Treasury Department's Education Bond Program.² You can find more information at the Treasury Department's Treasury Direct Web site: http://www.treasurydirect.gov/indiv/planning/plan_education.htm.

¹By investing in a 529 plan outside of the state in which you pay taxes, you may lose the tax benefits offered by that state's plan. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary.

²Government bonds and Treasury bills are guaranteed by the U.S. government as to the timely payment of principal and interest, and, if held to maturity, offer a fixed rate of return and fixed principal value.

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 benefits 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. Please consult with your tax advisor before investing "Investors should consider the investment objectives, risks, charges and expenses associated with the municipal fund securities carefully before investing. The issuer's official statement contains this and other information about the investment. You can obtain an official statement from your financial representative. Read carefully before investing.

Jeffrey Thatcher is a CERTIFIED FINANCIAL PLANNER ™ and Director of HVFCU Financial Services, the investment division at Hudson Valley Federal Credit Union.

Securities offered through LPL Financial, member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates.

Not NCUA Insured

No Credit Union Guarantee

May Lose Value

Hudson Valley Federal Credit Union and HVFCU Financial Services are not registered broker/dealers and are not affiliated with LPL Financial. This material was prepared for Jeff Thatcher’s use.

Budget Your Way to Extra Savings

2012-03-09T06:07:00.000-08:00

Investing a few hours to create and maintain a household budget may be the key to identifying opportunities to save more for the future, including long-term goals such as retirement. Yet it's surprising how few households take the time to commit to a budget. Many financial experts recommend making time for this task, which could pay dividends down the road.

Get a Grip on Your Money

Finding the extra money to save is not always easy. The good news is that many families realize they spend money on nonessentials -- such as eating out and specialty coffees. These are expenses that can often be reduced with the aid of a budget. A budget may also help you reduce large expenses to make room for savings. For example, if your transportation costs are considerable because of a long commute to work, look into carpooling with a colleague or working at home periodically.

Budget Basics

The first step is to understand and summarize your various sources of income, which may include earnings from a job, alimony, real estate income, and income or dividends from investments. Next, determine how you spend your money. Start by tracking your spending for a month. Gather bills and receipts and don't forget things like an occasional splurge on new shoes or a cup of coffee.

You may want to group expenses into the following categories:

Fixed committed expenses, such as mortgage, loan, and insurance payments that are the same from month to month.

Other committed expenses, which are things you can't live without, such as food and clothing.
Luxury expenses, which are things you like but don't necessarily need.

You can tally your income and expenses in writing if you prefer. Or consider trying one of the many online budgeting programs to help get you started.

At the end of each month, see how your actual spending stacks up against your budget and how much income is left over. When looking for places to cut additional costs, start with luxury expenses, followed by other committed expenses.

Budgeting will initially require some extra work and organization. But a little extra effort now can go a long way toward helping you pursue your financial goals.

Jeffrey Thatcher is a CERTIFIED FINANCIAL PLANNER ™ and Director of HVFCU Financial Services, the investment division at Hudson Valley Federal Credit Union.

Securities offered through LPL Financial, member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates.

Not NCUA Insured

No Credit Union Guarantee

May Lose Value

Hudson Valley Federal Credit Union and HVFCU Financial Services are not registered broker/dealers and are not affiliated with LPL Financial. This material was prepared for Jeff Thatcher’s use.

Kids and Money: A Little Education Pays Off

2012-02-21T13:56:00.000-08:00

Just about anyone who's ever watched a child or grandchild go from the crib to kindergarten and beyond has uttered the phrase, "They grow up so fast." Although you can't really freeze a youngster's precious moments in time, you can take steps to make sure that his or her journey to adulthood starts with a sound understanding of money, investments, and personal financial responsibility. The following activities will help.

Count on Counting Your Change

Smart shopping might begin with a hunt for bargains, but it should end with a review of your transactions. To drive this message home, encourage your kids to unload the groceries and simultaneously compare price tags with the receipt. If they find a mistake, let them hold on to the refund.

Play "The Stock Market Game™"

Get online and go to www.smg2000.org. There you'll find "The Stock Market Game," sponsored by the Foundation for Investment Education. It lets kids in grades 4 through 12 assemble and monitor a hypothetical $100,000 portfolio for 10 weeks.

Make a Matching Contribution

Want to motivate a child to save? Just offer to "match" a portion of each savings account deposit he or she makes. And don't be afraid to set a few rules — for example, matching contributions can't be spent on candy or pizza.

Take Stock of Household Products

If your child is old enough to understand the concept of stocks and publicly traded companies, go through the house together and identify favorite items, such as computers and clothing. Then look up the manufacturer's stock price and monitor it over time.

Learning about money doesn’t have to be focused on boring numbers and theory. A little creativity when children are young can help cement some good habits now that will pay huge dividends for them in the future.

Jeffrey Thatcher is a CERTIFIED FINANCIAL PLANNER ™ and Director of HVFCU Financial Services, the investment division at Hudson Valley Federal Credit Union.

Securities offered through LPL Financial, member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates.

Not NCUA Insured

No Credit Union Guarantee

May Lose Value

Hudson Valley Federal Credit Union and HVFCU Financial Services are not registered broker/dealers and are not affiliated with LPL Financial. This material was prepared for Jeff Thatcher’s use.

Annuities May Help Make Your Income Last a Lifetime

2012-02-08T13:38:00.000-08:00

Today, many people are living longer than in the past. That means that the length of retirement can be 25 to 30 years or more. So it's important to develop a retirement investment strategy that generates an income stream that you won't outlive. If you're looking for an investment vehicle that promises a guaranteed income for life, then you may want to consider annuities.

Annuities Defined

Simply put, annuities can help ensure that you won't outlive your savings. Annuities are insurance contracts that promise future payments. They’re long-term, tax-deferred investment vehicles designed for retirement purposes. There are two distinct phases to annuity investing: the "accumulation phase" occurs when you are contributing, while the "annuitization or distribution phase" occurs when you withdraw money.

While annuities may be attractive because they usually impose no contribution limits and offer tax deferral, they also have other appealing features as well, including numerous "payout" options in the distribution stage. For instance, during retirement you can receive your money from an annuity in a single lump sum or as a series of regular payments over your life or a predetermined number of years. Some retired clients find it easier and less stressful to manage their household expenses through a regular income stream, just as they did while working.

But getting a regular income stream doesn't necessarily limit your options. Today's annuities offer the flexibility, access and control over your money that often wasn't available in the past. Product innovations have resulted in optional benefits that provide downside guarantees¹, the ability to capture the market's upside, inflation protection and cost-of-living increase features, all of which may help investors plan for a long retirement.

In short, annuity payouts through a regular income stream may be an important part of your retirement portfolio. If you own an annuity now, you might want to consider using it to potentially generate income. For more detailed information about the role that annuities might play in your financial future, contact a qualified financial professional.

¹Riders are additional guarantee options that are available to an annuity or life insurance contract holder. While some riders are part of an existing contract, many others may carry additional fees, charges and restrictions, and the policyholder should review their contract carefully before purchasing.

Variable and fixed annuities are long-term, tax-deferred investment vehicles designed for retirement purposes; but the variable annuity contains both an investment and insurance component. Variable annuities are sold only by prospectus. Guarantees are based on the claims paying ability of the issuer. Withdrawals made prior to age 59 ½ are subject to 10% IRS penalty tax and surrender charges may apply. Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. The investment returns and principal value of the available sub-account portfolios will fluctuate so that the value of an investor’s unit, when redeemed, may be worth more or less than their original value.

Investors should consider the investment objectives, risks, charges and expenses of the variable annuity contract and sub-accounts carefully before investing. The prospectus contains this and other information about the variable annuity contract and sub-accounts. You can obtain contract and underlying sub-account prospectuses from your financial representative. Read the prospectuses carefully before investing.

Jeffrey Thatcher is a CERTIFIED FINANCIAL PLANNER ™ and Director of HVFCU Financial Services, the investment division at Hudson Valley Federal Credit Union.

Securities offered through LPL Financial, member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates.

Not NCUA Insured

No Credit Union Guarantee

May Lose Value

Hudson Valley Federal Credit Union and HVFCU Financial Services are not registered broker/dealers and are not affiliated with LPL Financial. This material was prepared for Jeff Thatcher’s use.

Portions of this material prepared by Standard & Poor’s Financial Communications.

Considerations for Owning Company Stock

2012-01-25T06:02:00.000-08:00

Owning company stock within your employer-sponsored retirement plan is not necessarily a bad thing. The issue, however, is that for some investors, company stock may represent too large a percentage of their retirement plan assets. Here are some tips to help you determine if your portfolio is too heavily weighted with your employer’s stock:

Know your plan. Does your employer make matching contributions in the form of company stock? Are there rules governing management of the stock within your account? You can request a Summary Plan Description, which details the rules. Ask your employer to explain any rules you don't understand.

Consider how much company stock you own. What percentage of your total assets does it represent? There are no fixed guidelines, but some experts recommend a maximum of 10% to 15%. Owning more could expose you to financial risk if the stock suddenly declined in value. The ideal allocation for you will depend on your goals, risk tolerance, and time horizon, factors you may want to review with a financial professional.

Review your overall investment strategy. Sometimes employees cannot fully control the allocation of company stock within their account. Some employers require matching contributions to be invested in company stock or they may limit employees' ability to sell the stock prior to a certain age. If you determine that company stock represents too much of your portfolio, there are things you can do to manage the risk. You may want to consider allocating a portion of your assets to different types of investments. If your employer is a retail company, for example, you may be able to diversify and consider other types of stocks.

Capitalize on other retirement vehicles. Do you maintain an individual retirement account (IRA)? Does your spouse have a retirement plan at his or her place of employment? If you cannot control the level of diversification within your employer-sponsored retirement plan, you may be able to enhance diversification elsewhere.

Even critics of current plan rules have pointed out that a matching contribution of company stock is better than no matching contribution at all. When evaluating your holdings in company stock, be sure to take an opportunity to conduct a comprehensive review of your plan assets, your investment strategy, and your investments outside of your plan.

Jeffrey Thatcher is a CERTIFIED FINANCIAL PLANNER ™ and director of HVFCU Financial Services, the investment division of the Hudson Valley Federal Credit Union, which is based in Poughkeepsie.

Securities and advisory services offered through LPL Financial, a registered investement advisor. Member FINRA/SIPC. Insurance products offered through LPL financial or its licensed affiliates. Hudson Valley Federal Credit Union and HVFCU Financial Services are not registered broker/dealers and are not affiliated with LPL Financial.

Not NCUA Insured

No Credit Union Guarantee

May Lose Value

Hudson Valley Federal Credit Union and HVFCU Financial Services are not registered broker/dealers and are not affiliated with LPL Financial. This material was prepared for Jeff Thatcher’s use.

The Impact of a Divorce on Your Finances

2012-01-11T08:20:00.000-08:00

Divorce can extract a heavy price -- both emotionally and financially. Protecting your financial health during a divorce is crucial. If you and your spouse are headed toward a split, be sure to learn about the laws that shape divorce proceedings and the impact they can have on your assets.

Dividing the Assets
Typically, everything you and your spouse acquired from the day you were married is subject to division. The exceptions are individual inheritances, gifts to an individual spouse and assets acquired before marriage. When assets are divided, the court considers each spouse's earning potential, the length of the marriage, and each spouse's contribution to building household assets.

There is, however, one important exception. Within the nine community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin) almost all assets typically are divided equally.

Dealing with Debt
If you live in a community property state, you will be responsible for half of all debt in jointly held accounts and, in some cases, for half of a spouse's individual debt as well. If you don't live in a community property state, you remain responsible for your individual debt (but not your spouse's) and any debt in jointly held accounts. You should seek legal advice on how to handle your finances, during the separation period, before your divorce is finalized. As soon as the divorce is finalized, freeze your joint accounts and ask your creditors to reclassify them as individual accounts.

In addition, include the payment of debt as part of the settlement. Take on the responsibility for the debt yourself, if necessary, and take a share of the assets to pay the debt down.

Your Retirement Assets
Money in your 401(k) or pension plan may legally be divided during a divorce. The divisible amount typically begins to accumulate on the day you are married and ends on the day you are divorced.

To claim a share of a spouse's 401(k) or pension benefit, you need to obtain a court order called a Qualified Domestic Relations Order (QDRO) and provide it to your spouse's plan sponsor before distributions are completed to your spouse, which prevents your spouse from making withdrawals. You and your spouse can decide to not divide your 401(k) assets or pension plan benefits, but you should make this agreement in writing and include it as part of the settlement to prevent the courts from declaring the money divisible.

If you find yourself faced with divorce, it is essential to protect your financial future. Enlisting the help of an attorney and carefully monitoring the process can ensure that your interests are considered and that you won't need to revisit the proceeding later on.

Jeffrey Thatcher is a CERTIFIED FINANCIAL PLANNER ™ and Director of HVFCU Financial Services, the investment division at Hudson Valley Federal Credit Union.

Securities offered through LPL Financial, member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates.

Not NCUA Insured

No Credit Union Guarantee

May Lose Value

Hudson Valley Federal Credit Union and HVFCU Financial Services are not registered broker/dealers and are not affiliated with LPL Financial. This material was prepared for Jeff Thatcher’s use.

Portions of this material prepared by Standard & Poor’s Financial Communications.

Getting to know bonds

2011-12-21T10:15:00.000-08:00

Many investors own bonds or debt-based investments as a strategy for balancing the short-term market risk historically associated with stocks.¹ It’s important to understand the characteristics of bonds when making decisions about how to invest.
A bond is an “IOU” for money loaned by an investor to the bond’s issuer. In return for the use of that money, the issuer agrees to pay interest at a stated rate known as the “coupon rate.” When the bond matures, the issuer repays the investor’s principal.

Benefits and Risks of Bonds
Because bonds may not move in tandem with stock investments, they may help provide diversification within an investor’s portfolio.² Bonds frequently provide investors with a steady income stream, although zero-coupon bonds and Treasury bills are exceptions: The interest income is deducted from their purchase price, and the investor then receives the full value of the bond at maturity. Government bonds and Treasury bills are guaranteed by the U.S. government as to the timely payment of principal and interest, and, if held to maturity, offer a fixed rate of return and fixed principal value.

Some bonds carry credit risk, or the risk that the bond issuer will default before the bond reaches maturity. In that case, you may lose some or allof the principal amount invested and any outstanding income that is due. Bonds are often rated by Moody's and Standard & Poor's (S&P), with ratings based on the issuer's creditworthiness.

High yield “junk” bonds (so-called because of their lower credit ratings) are fairly common investment vehicles. Lower-quality debt securities involve greater risk of default or price changes due to changes in the credit quality of the issuer and may not be suitable for all investors.

Like stocks, bonds can present the risk of price fluctuation, or market risk, to an investor who is unable to hold them until the maturity date when the principal and interest are paid to the bondholder. If the investor is forced to sell or liquidate a bond before it matures, and the bond’s price has fallen, the investor will lose part of the principal investment as well as the future income stream.

An Inverse Relationship: Interest Rate Risk
Another risk common to all bonds is interest rate risk. When interest rates rise, a bond’s price usually will drop. When interest rates fall, the price of a bond usually rises. Historically, bond prices have been more stable than their stock counterparts. Moreover, because bond investors may be concerned primarily with receiving income (instead of capital appreciation) from their bonds, they may not be as concerned with fluctuating bond prices.

Types of Bonds
Most bonds fall into four general categories: corporate, government, government agency and municipal.

· Corporate bonds can provide an investor with a steady stream of income at a generally higher rate than other bonds.

· Government bonds include long-term and U.S. Treasury bonds. Intermediate-term bonds mature in three to 10 years, whereas long-term bonds generally mature in periods of up to 30 years.

· Government agency and government-sponsored entity bonds include those issued by the Federal National Mortgage Association (“Fannie Mae”) and the Government National Mortgage Association (“Ginnie Mae”).

· Municipal bonds are issued by a government authority to raise funds for general use or particular public works projects. Municipal bonds are subject to availability and change in price. They are also subject to market and interest rate risk if sold prior to maturity. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax free, but other state and local taxes may apply.

¹Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and are subject to availability and change in price.

²There is no guarantee that a diversified portfolio will enhance overall returns or outperform a nondiversified portfolio. Diversification does not ensure against market risk.

GNMA’s are guaranteed by the U.S. government as to the timely payment of principal and interest, however this guarantee does not apply to the yield, nor does it protect against loss of principal if the bonds are sold prior to the payment of all underlying mortgages.

High yield/junk bonds are not investment grade securities, involve substantial risks and generally should be part of the diversified portfolio of sophisticated investors.

Jeffrey Thatcher is a CERTIFIED FINANCIAL PLANNER ™ and Director of HVFCU Financial Services, the investment division at Hudson Valley Federal Credit Union.

Securities offered through LPL Financial, member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates.

Not NCUA Insured

No Credit Union Guarantee

May Lose Value

Hudson Valley Federal Credit Union and HVFCU Financial Services are not registered broker/dealers and are not affiliated with LPL Financial. This material was prepared for Jeff Thatcher’s use.

The Rules of Responsible Financial Parenting

2011-12-06T10:49:00.000-08:00

Today, many families are concerned about the potentially adverse effect of wealth on the financial values of the younger generation. The goals that many parents and grandparents have set for their children or grandchildren reflect core values, an honest work ethic and a desire to “give something back” to their communities.

The skills and knowledge needed to help children adhere to these values should be developed early in life and continue well into adulthood. The following strategies can assist family members in becoming positive financial role models for younger generations.

Start early — According to recent research, parents can start talking to children about money by age three. Between four and five, you can explain the importance of good spending habits, and by age six or seven, you can help children open their own savings account. By the time children reach their mid-teens, after-school and summer employment can help cement a work ethic as well as provide teaching moments for budgeting and savings plans.

Support education — Personal financial education helps instill such pragmatic money management skills as setting a budget, balancing a checkbook, understanding the role of debt/credit, and developing strategies for funding college. Encourage your child’s school to offer personal finance as an elective “life skills” course, send your teen to a community college/adult education class, or tap the many educational resources on the Internet.

Lead by example — Your children will learn their most valuable lessons about money from the examples you set. A few simple rules: enjoy the fruits of your labor — but don't go overboard. Set a healthy example regarding credit/debt. Pay bills on time. Review your savings plan on a regular basis.

Practice incentive planning — To ensure that important life goals remain at the forefront of your children’s/heirs’ priorities throughout their lifetimes, incorporate the use of incentives in your estate plan. What exactly is an incentive trust? It is an estate planning tool that allows you to reward desired behavior or impose appropriate penalties for undesirable activities. It also provides a way to address the needs of beneficiaries who require special assistance. Common themes guiding incentive trusts are education, moral and family values, and business/vocational choices, as well as charitable and religious opportunities.

Encourage philanthropy — Wealthy families often use philanthropy to convey the message that their success has been the result of hard work and good fortune and that success comes with the responsibility to give something back. If you want to ensure future generations of volunteers and donors, you must teach children how to give of their time, their skills and their money. Once children understand the scope of their contributions, philanthropy becomes a real and prominent part of their lives.

Jeffrey Thatcher is a CERTIFIED FINANCIAL PLANNER ™ and Director of HVFCU Financial Services, the investment division at Hudson Valley Federal Credit Union.

Securities offered through LPL Financial, member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates.

Not NCUA Insured

No Credit Union Guarantee

May Lose Value

Hudson Valley Federal Credit Union and HVFCU Financial Services are not registered broker/dealers and are not affiliated with LPL Financial. This material was prepared for Jeff Thatcher’s use.

Portions of this material prepared by Standard & Poor’s Financial Communications.

Tips for Transitions: Make the most of your retirement account options

2011-11-15T09:11:00.000-08:00

It's a fact: The average American holds nine different jobs before the age of 34, according to the Bureau of Labor Statistics. The decisions you make about how to manage retirement assets when changing jobs can have a direct impact on your future financial health.

Case in point: “Cashing out” retirement plan assets before age 59½ (55 in some cases) can expose your savings to immediate income taxes and a 10 percent IRS early withdrawal penalty. Taking your money in cash also means that you’ll no longer enjoy the benefits of tax deferral that a qualified income plan offers. There are several different strategies that could preserve the full value of your assets while allowing you to maintain tax-deferred growth potential.

Well Informed = Well Prepared

Option 1: Leave the Money Where It Is: If the vested portion of the account balance in your former employer's plan has exceeded $5,000, you can generally leave the money in that plan. Any money that remains in an old plan still belongs to you and still has the potential for tax-deferred growth.^** However, you won't be able to make additional contributions to that account.

Option 2: Rollover the Money to Your New Plan: You may be able to roll over assets from an old plan to a new plan without triggering any penalty or immediate taxation. A primary benefit of this strategy is your ability to consolidate retirement assets into one account.^**

Option 3: Transfer the Money to an IRA: To avoid incurring any taxation or penalties, you can enact a direct rollover from your previous plan to an individual retirement account (IRA).^** If you opt for an indirect transfer, you will receive a distribution check from your previous plan equal to the amount of your balance minus an automatic 20% tax withholding. You then have 60 days to deposit the entire amount of your previous balance into an IRA which means you will need to make up the 20% withholding out of your own pocket.^***

Option 4: Take the Cash: Due to the income tax obligations and potential 10% penalty described above, this approach could take the biggest bite out of your assets. Not only will the value of your savings drop immediately, but also you'll no longer have that money earmarked for retirement in a tax-advantaged account.

Research Your Options: Since rules vary from company to company, you need to explore your alternatives. If you have specific questions about your retirement plan distribution options, contact your employer’s benefits coordinator or a qualified financial consultant.

**Withdrawals will be taxed at ordinary income tax rates. Early withdrawals may trigger a 10% penalty tax.

***You will receive credit for the withholding when you file your next tax return.

Jeffrey Thatcher is a CERTIFIED FINANCIAL PLANNER ™ and Director of HVFCU Financial Services, the investment division at Hudson Valley Federal Credit Union.

Securities offered through LPL Financial, member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates.

Not NCUA Insured

No Credit Union Guarantee

May Lose Value

Hudson Valley Federal Credit Union and HVFCU Financial Services are not registered broker/dealers and are not affiliated with LPL Financial. This material was prepared for Jeff Thatcher’s use.

Portions of this material prepared by Standard & Poor’s Financial Communications.

Mid-life investing — Making the most of your asset-building years

2011-11-01T07:16:00.000-07:00

As you move through your peak earning years, you'll probably see your net worth steadily rise. At the same time, you'll still have some work to do before you realize your financial goals. That's why it's important to have a solid plan in place. Here are some steps to help keep your portfolio on track.

Organize your portfolio. Asset allocation is a straightforward and effective strategy whereby you divide your portfolio among the major asset classes of equities, fixed-income securities, and cash equivalents. The division should be based on your goals, your tolerance for risk and your time horizons. Generally speaking, the larger the equity portion of your portfolio, the greater the potential for growth and the greater amount of risk.

On the other hand, the more fixed-income securities you include, the greater the potential for income and preservation of principal. There are also risks associated with fixed income investments that may incur less risk than equities. You may need to periodically rebalance your portfolio — to remain consistent with your original allocation — or modify it as you come closer to realizing your goals.

Don't overlook tax planning. Chances are your income tax bracket is higher now than it was during your early years and higher than it will be when you retire. Consider maximizing pretax contributions to your employer-sponsored retirement plan or making deductible contributions to an IRA (if you're eligible) to help reduce current income while providing tax-deferred savings opportunities.

Also, keep in mind that short-term capital gains are taxed as income, while long-term capital gains and dividends are taxed at lower rates. Finally, explore the potential benefit of including tax-exempt bonds in your portfolio.^*

Protect what you've saved. As your wealth continues to increase, it's important to preserve what you've accumulated and safeguard your future. That's why estate planning and life insurance are two of the cornerstones of a sound financial plan.

A qualified legal professional can help you implement an estate plan that is best for your situation or review an existing plan to ensure it is still consistent with your goals. Also, be sure you have enough life insurance in place to help cover any liabilities — such as your mortgage — and protect your family's financial future.

Financially speaking, mid-life shouldn't be a time of crisis. Instead, it's a time to take advantage of some of your most productive years. In the long run, you may be in a better position to enjoy the fruits of your labor.

*Some tax-exempt investments may be subject to the federal alternative minimum tax as well as federal or state capital gains taxes.

Jeffrey Thatcher is a CERTIFIED FINANCIAL PLANNER ™ and Director of HVFCU Financial Services, the investment division at Hudson Valley Federal Credit Union.

Securities offered through LPL Financial, member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates.

Not NCUA Insured

No Credit Union Guarantee

May Lose Value

Hudson Valley Federal Credit Union and HVFCU Financial Services are not registered broker/dealers and are not affiliated with LPL Financial. This material was prepared for Jeff Thatcher’s use.

Safety in numbers: Why diversification matters

2011-10-14T09:49:00.000-07:00

Diversifying your investment portfolio—by dividing your investment dollars among different types of investments—is an important way to help you reach your financial goals. Don't rely on a single investment vehicle; rather, build your portfolio with a selection of investments designed to work together.

This theory is based on the concept that asset classes tend to react differently to market conditions. With a diversified portfolio of investments, you may help reduce the risk that a loss in one asset class will adversely affect your entire portfolio.

Diversity within and among asset classes

To diversify your employer-sponsored retirement plan portfolio, select a mix of investments that are not too similar but that will pursue your overall financial objectives. First, try diversifying among different asset classes, such as stocks, bonds, and money market investment vehicles.
Second, consider diversifying within an asset class, such as stocks. For example, if your primary objective is growth, you might choose to invest the majority of your money in "blue-chip" stocks and small-capitalization stocks.

Sometimes more is too much

Diversification is often described as putting your eggs in different baskets. The combination of “baskets” you choose depends on your goals, time frame and risk tolerance. Long-term investors may choose more stocks, while shorter-term investors may select a more conservative mix weighted toward bond and money market investments.

No matter what combination you choose, make sure each fund plays a specific role in your overall objective. In investing, more is not always better — strategic diversification is the key.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not ensure against market risk.

Stocks of small companies involve greater risk than securities of larger, more established companies, as they may have limited product lines, markers and/or financial resources and may be exposed to more erratic and abrupt market movements.

Jeffrey Thatcher is a CERTIFIED FINANCIAL PLANNER ™ and Director of HVFCU Financial Services, the investment division at Hudson Valley Federal Credit Union.

Securities offered through LPL Financial, member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates.

Not NCUA Insured

No Credit Union Guarantee

May Lose Value

Hudson Valley Federal Credit Union and HVFCU Financial Services are not registered broker/dealers and are not affiliated with LPL Financial. This material was prepared for Jeff Thatcher’s use.

Marriage: Entering a New Investment Life

2011-09-23T12:18:00.000-07:00

There are a lot of issues that couples need to think about when tying the knot — wedding preparations, family, and, of course, finances. Addressing personal finance and investment issues before the big day may help improve your odds of being together years later. Here are some financial issues that you should consider when embarking on a matrimonial journey.

Discuss financial styles before marriage — Start your marriage off on the right foot by having an honest discussion about financial habits and objectives. Are you a saver, but your prospective spouse lives paycheck to paycheck? Do you prefer investing heavily in stocks, but your fiancé’s portfolio is filled with bonds? What are each of your short- and long-term financial goals?

Think holistically — Consider each spouse's investment portfolio as part of a whole. For instance, if both you and your significant other contribute to 401(k) plans and IRAs, see how your investment choices match up. Depending on your goals for retirement and your ages, one or both of you might want to invest more aggressively. Or you might find that your combined portfolio is more exposed to risk than the two of you can tolerate. Either way, you can rebalance your asset allocation by shifting money from one asset class (stocks, bonds and money market instruments) to another or by adding new money to the underrepresented asset class.

Review documents — Along with other legal documents, remember to update your beneficiaries on life insurance policies, IRAs, employer-sponsored retirement plans and pensions. Also, be sure to either create or modify your wills.

Determine your tax status — Once married, you'll need to decide whether it's best to file your taxes jointly or separately. Usually, the "married filing jointly" status results in a lower tax liability, but in some instances — depending on deductions and income earned — “married filing separately” may be more advantageous. You should consult a tax professional for guidance with filing status.

Meet with a professional — Make an appointment to meet with a qualified financial professional to discuss your financial goals, such as buying a home or investing for retirement. Then, after making sure that all of your financial bases are covered, relax and enjoy the beginning of your new life together.

Jeffrey Thatcher is a CERTIFIED FINANCIAL PLANNER ™ and Director of HVFCU Financial Services, the investment division at Hudson Valley Federal Credit Union.

Securities offered through LPL Financial, member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates.

Not NCUA Insured

No Credit Union Guarantee

May Lose Value

Hudson Valley Federal Credit Union and HVFCU Financial Services are not registered broker/dealers and are not affiliated with LPL Financial. This material was prepared for Jeff Thatcher’s use.

The basics of long-term care insurance

2011-08-16T08:11:00.000-07:00

Long-term care insurance is a tough topic. Thinking about your possible need for long-term care and the costs involved is enough to make anyone uncomfortable. It’s even more difficult to discuss with a spouse, child, or even a financial adviser. And, of course, it’s undesirable to pay for something on a monthly or annual basis that you hope you will never need.

But it's also a topic that often generates lots of questions and misunderstanding. You have many choices in long-term care insurance policies, so there is a range of care options and benefits to meet your individual needs. These insurance policies offer a level of security to your portfolio that is unmatched if the need arises and you need long-term care.

This type of insurance covers the costs of long-term care services, many of which are not covered by traditional health insurance. These services can be in your home or in a specialized facility.

These services typically come at a steep price. According to AARP, the average cost of nursing home care in the United States now exceeds $70,000 per year, with wide ranging variations from state to state.

For the most part, those who need long-term care are left to foot the bill on their own. Medicare, Medicare supplemental coverage, and standard health insurance policies don’t cover long-term care unless you are impoverished. That's why long-term care insurance is so important. Since premium costs are based on your age and health at the time of purchase, the younger and healthier you are when you purchase a policy, the lower the premium you're apt to pay during the life of the plan.

As you evaluate long-term care insurance, keep the following variables in mind:

Coverage parameters: Policies will differ in the types of services they support. Be sure to choose a policy that best meets your particular needs.

Benefits payout: How much does the policy pay per day for care in a particular setting? How does the policy pay out? (e.g., a fixed daily amount, as reimbursement for the cost of care up to a daily maximum?) Does the policy have a maximum lifetime limit?

Eligibility: Does the policy use certain "triggers" to determine benefits eligibility, such as the formal diagnosis of an illness or disability? What is the maximum issue age for the policy?

Women may need more: Longer life spans for women may signal the need for additional coverage.

Finally, keep in mind that most long-term care policies sold today are federally tax-qualified, which means paid premiums and out-of-pocket expenses are deductible. Also, long-term care benefits received are not taxed as income up to certain limits.

Jeffrey Thatcher is a CERTIFIED FINANCIAL PLANNER ™ and director of HVFCU Financial Services, the personal-investment division of the Hudson Valley Federal Credit Union, which is based in Poughkeepsie, NY.

Not NCUA Insured

No Credit Union Guarantee

May Lose Value

¹Source: Income of the Population 55 or Older, 2008, Social Security Administration (most current data available).

College prep: Five reasons to study up on 529 plans

2011-07-27T08:42:00.000-07:00

Millions of families striving to meet the mounting costs of college have flocked to 529 college savings plans. For most investors, the plans main attractions are the potential for federal tax-deferred earnings growth and federal tax-free qualified withdrawals.¹ The plans' aggregate asset limits, which often exceed $200,000, also appeal to contributors concerned about the potential for a six-figure price tag on a four-year degree. But a closer look at the rules governing 529 plans may reveal other attractive reasons to consider putting them to work as you make one of your most important investments — in your child's or grandchild's future.

Avoid federal gift taxes and accelerate giving — You can contribute up to $13,000 (or $26,000 if you and your spouse give and file jointly) to a 529 plan each year without owing federal gift taxes, provided you haven't made other financial gifts to the plan beneficiary in the same year. In addition, you can elect to make a lump-sum contribution of up to $65,000 ($130,000 for married couples filing jointly) in the first year of a five-year period, provided you don't give the beneficiary additional taxable gifts during the five year period.

Create an educational funding legacy — A 529 plan offers the owner control over the plan, including flexibility in naming and changing its beneficiary. The beneficiary can be any age and generally can be changed to a qualified relative when needed. For example, if the original beneficiary decides not to attend college, you can designate a new beneficiary. This flexibility may enable you to establish a college funding legacy for current and future generations. For example, you could open a 529 plan account to pay your child's college bills. Then, if there's money left over after he or she finishes college, you can change the beneficiary to another qualified family member and perhaps later to a grandchild.

Consolidate assets — Consolidating college funding assets for one beneficiary in a single 529 plan can make them easier to manage. Depending on plan rules, you may be able to arrange transfers from a Coverdell Education Savings Account, a custodial account or another 529 plan without triggering federal income taxes. Be sure to review the tax implications with a tax professional. Transfers of assets from Series EE and I bonds may also be allowed under certain conditions.

Maximize financial aid eligibility — Money in a 529 account is usually considered by colleges to be the account owner's asset, which often means the parents' asset. As a result, a maximum of 5.6% of the balance is generally assumed to be available for college annually, compared with 35% if the assets were the student's. With a custodial account, on the other hand, the assets are considered the student's. And according to the Department of Education, qualified distributions from a 529 plan are not counted as parent or student income and therefore do not affect aid eligibility.

Look into state tax savings — Depending on the state you reside in, plan contributions to that state's 529 plan may be eligible for state tax deductions. Don't overlook this potential benefit when choosing a plan.

There may be other advantages of 529 plans to consider, as well. Be sure to talk with your financial advisor and tax professional for help assessing how a 529 plan may affect your tax situation.

Lastly, you should consider a 529 plan’s fees and expenses such as administrative fees, enrollment fees, annual maintenance fees, sales charges, and underlying fund expenses, which will fluctuate depending on the 529 plan invested in the investments chosen within the plan.

¹The earnings portion of nonqualified withdrawals is subject to federal income taxes, a 10% federal tax penalty and possible state taxes and penalties.

Jeffrey Thatcher is a CERTIFIED FINANCIAL PLANNER ™ and Director of HVFCU Financial Services, the investment division at Hudson Valley Federal Credit Union.

Securities offered through LPL Financial, member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates.

Not NCUA Insured

No Credit Union Guarantee

May Lose Value

Hudson Valley Federal Credit Union and HVFCU Financial Services are not registered broker/dealers and are not affiliated with LPL Financial. This material was prepared for Jeff Thatcher’s use.

Proper financial planning is critical for women

2011-07-12T11:16:00.000-07:00

A key goal of investing for retirement is making sure you save enough to make your money last throughout your lifetime. On this score, women may need to save more than men.

The current life expectancy for females is almost 81 years, compared with 75 years for males, according to the Center for Disease Control’s National Center for Health Statistics. Although six years may not appear significant, many people in this age group incur expenses for health care and other items while living off of Social Security and personal assets.

Keep in mind that life expectancy statistics are averages and many people live much longer. It is not unusual for a person’s retirement to last 20 or 30 years or more. There is also the issue of the length of a person's career and how much time a person has to build retirement assets. Many women take time off for care-giving responsibilities, and during these years they may not add to their retirement portfolio.

In addition, time off from work may affect Social Security benefits because those who are not working do not earn credits that are used to determine retirement benefits. Also, parents, children and other loved ones often have financial needs, and both women and men may provide help for family members, which may divert funds from retirement savings.

Estimating how much you'll need

Many women capitalize on the benefits available to them, including participating in an employer-sponsored retirement plan or funding an IRA, to build the assets needed for their later years. It's important not to underestimate how much you may need or the importance of ongoing contributions to retirement accounts to build assets over time. Although there are no guarantees, the longer you stay invested, the more likely that your contributions may benefit from compounding, when investment gains are reinvested and potentially earn even more over time.

Your financial adviser can help you calculate how much you are likely to need for your later years. Be sure to consider how you will pay for health care expenses not covered by Medicare or other medical insurance. When considering sources of retirement income, log on to www.ssa.gov or review your annual statement to estimate your retirement benefit from Social Security. If you find that your retirement assets are coming up short, delaying retirement or saving more while you continue to work may be helpful strategies.

Jeffrey Thatcher is a CERTIFIED FINANCIAL PLANNER ™ and Director of HVFCU Financial Services, the investment division at Hudson Valley Federal Credit Union.

Securities offered through LPL Financial, member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates.

Not NCUA Insured

No Credit Union Guarantee

May Lose Value

Hudson Valley Federal Credit Union and HVFCU Financial Services are not registered broker/dealers and are not affiliated with LPL Financial. This material was prepared for Jeff Thatcher’s use.

Considerations for owning company stock

2011-06-21T08:02:00.000-07:00

Welcome to my new bi-weekly blog. I’ll use it to share my insights on financial planning. My hope is that you use them to help you work toward your financial goals. Since this is my first post, let me share a few things about myself. I am a lifelong resident of the Hudson Valley, and I’ve spent the past 22 years advising local residents on how to plan for a more secure financial future. I’m passionate about community service and serve as a Board Member for the Dutchess County Arts Council and a member of the Investment and Finance Committee for the Community Foundations of the Hudson Valley.

So, thank you for visiting and I hope you keep coming back to learn more. I welcome your feedback, so please let me know your thoughts, including topics you’d like me to cover in the future. Let’s go right into understanding a little about owning stock in the company where you work.

Owning company stock within your employer-sponsored retirement plan is not necessarily a bad thing. The issue, however, is that for some investors, company stock may represent too large a percentage of their retirement plan assets. Here are some tips to help you determine if your portfolio is too heavily weighted with your employer's stock.

1. Know your plan. Does your employer make matching contributions in the form of company stock? Are there rules governing management of the stock within your account? You can request a Summary Plan Description, which details the rules. Ask your employer to explain any rules you don't understand.

Consider how much company stock you own. What percentage of your total assets does it represent? There are no fixed guidelines, but some experts recommend a maximum of 10% to 15%. Owning more could expose you to financial risk if the stock suddenly declined in value. The ideal allocation for you will depend on your goals, risk tolerance, and time horizon — factors you may want to review with a financial professional.
Review your overall investment strategy. Sometimes employees cannot fully control the allocation of company stock within their account. Some employers require matching contributions to be invested in company stock or they may limit employees' ability to sell the stock prior to a certain age. If you determine that company stock represents too much of your portfolio, there are things you can do to manage the risk. You may want to consider allocating a portion of your assets to different types of investments. If your employer is a retail company, for example, you may be able to diversify and consider other types of stocks.
Capitalize on other retirement vehicles. Do you maintain an individual retirement account (IRA)? Does your spouse have a retirement plan at his or her place of employment? If you cannot control the level of diversification within your employer-sponsored retirement plan, you may be able to enhance diversification elsewhere.

Jeffrey Thatcher is a CERTIFIED FINANCIAL PLANNER ™ and Director of HVFCU Financial Services, the investment division at Hudson Valley Federal Credit Union.

Securities offered through LPL Financial, member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates.

Not NCUA Insured

No Credit Union Guarantee

May Lose Value

Hudson Valley Federal Credit Union and HVFCU Financial Services are not registered broker/dealers and are not affiliated with LPL Financial. This material was prepared for Jeff Thatcher’s use.

Jeffrey Thatcher: Financial Planning

Retiree Challenge: Making Your Money Last

Tools for the Task

What to Look For

Calculating Your Retirement Needs

Running the Numbers

A New Phase of Planning

Should You Tap Your Retirement Account?

Loan Considerations

Hardship: A Last Resort

Financial Planning Tips for Unmarried Couples

Transferring Assets to a 529 Plan

Making the Move from a Coverdell

Relocating UGMA/UTMA Assets

Moving Savings Bond Assets

Budget Your Way to Extra Savings

Get a Grip on Your Money

Budget Basics

Kids and Money: A Little Education Pays Off

Count on Counting Your Change

Play "The Stock Market Game™"

Make a Matching Contribution

Take Stock of Household Products

Annuities May Help Make Your Income Last a Lifetime

Considerations for Owning Company Stock

The Impact of a Divorce on Your Finances

Your Retirement AssetsMoney in your 401(k) or pension plan may legally be divided during a divorce. The divisible amount typically begins to accumulate on the day you are married and ends on the day you are divorced.

Getting to know bonds

Types of BondsMost bonds fall into four general categories: corporate, government, government agency and municipal.

The Rules of Responsible Financial Parenting

Tips for Transitions: Make the most of your retirement account options

Well Informed = Well Prepared

Mid-life investing — Making the most of your asset-building years

Safety in numbers: Why diversification matters

Diversity within and among asset classes

Sometimes more is too much

Marriage: Entering a New Investment Life

The basics of long-term care insurance

College prep: Five reasons to study up on 529 plans

Proper financial planning is critical for women

Estimating how much you'll need

Considerations for owning company stock

Your Retirement Assets
Money in your 401(k) or pension plan may legally be divided during a divorce. The divisible amount typically begins to accumulate on the day you are married and ends on the day you are divorced.

Types of Bonds
Most bonds fall into four general categories: corporate, government, government agency and municipal.