Ameriprise Abney Associates

Meeting with an Ameriprise financial advisor is an important first step. It's an opportunity to get to know an advisor and share your goals and dreams. You're under no obligation; your initial meeting with an Ameriprise financial advisor will be relaxed and informal.

 

Your meeting will include a review of your existing financial situation and potential opportunities, gaps or general strategies. While you won't receive a comprehensive review or financial planning services for which fees are charged, you should expect to get a sense of what it might be like to work together.

 

What to expect

 

-          Professional help in clarifying your financial goals and priorities

 

-          If you decide to purchase a financial planning service, you will receive sound financial advice at a fair price, tailored to your investment objectives.

 

-          Accurate information about our tailored solutions, including risks, benefits and costs

 

What to bring

 

-          A list of any questions you have regarding your current financial situation.

 

-          Any account statements, budget information or other areas of your financial life that you feel deserve immediate attention.

 

-          A list of future dreams and financial goals you would like to achieve, including both short- and long-term goals.

 

Go out into your yard and dig a big hole. Every month, throw $50 into it, but don't take any money out until you're ready to buy a house, send your child to college, or retire. It sounds a little crazy, doesn't it? But that's what investing without setting clear-cut goals is like. If you're lucky, you may end up with enough money to meet your needs, but you have no way to know for sure.

 

HOW DO YOU SET GOALS?

 

The first step in investing is defining your dreams for the future. If you are married or in a long-term relationship, spend some time together discussing your joint and individual goals. It's best to be as specific as possible. For instance, you may know you want to retire, but when? If you want to send your child to college, does that mean an Ivy League school or the community college down the street?

 

You'll end up with a list of goals. Some of these goals will be long term (you have more than 15 years to plan), some will be short term (5 years or less to plan), and some will be intermediate (between 5 and 15 years to plan). You can then decide how much money you'll need to accumulate and which investments can best help you meet your goals. Remember that there can be no guarantee that any investment strategy will be successful and that all investing involves risk, including the possible loss of principal.

 

LOOKING FORWARD TO RETIREMENT

 

After a hard day at the office, do you ask, "Is it time to retire yet?" Retirement may seem a long way off, but it's never too early to start planning--especially if you want your retirement to be a secure one. The sooner you start, the more ability you have to let time do some of the work of making your money grow.

 

Let's say that your goal is to retire at age 65 with $500,000 in your retirement fund. At age 25 you decide to begin contributing $250 per month to your company's 401(k) plan. If your investment earns 6 percent per year, compounded monthly, you would have more than $500,000 in your 401(k) account when you retire. (This is a hypothetical example, of course, and does not represent the results of any specific investment.)

 

But what would happen if you left things to chance instead? Let's say you wait until you're 35 to begin investing. Assuming you contributed the same amount to your 401(k) and the rate of return on your investment dollars was the same, you would end up with only about half the amount in the first example. Though it's never too late to start working toward your goals, as you can see, early decisions can have enormous consequences later on.

 

Some other points to keep in mind as you're planning your retirement saving and investing strategy:

 

-Plan for a long life. Average life expectancies in this country have been increasing for many years. And many people live even longer than those averages.

 

-Think about how much time you have until retirement, then invest accordingly. For instance, if retirement is a long way off and you can handle some risk, you might choose to put a larger percentage of your money in stock (equity) investments that, though more volatile, offer a higher potential for long-term return than do more conservative investments. Ameriprise Abney Associates, if you're nearing retirement, a greater portion of your nest egg might be devoted to investments focused on income and preservation of your capital.

 

-Consider how inflation will affect your retirement savings. When determining how much you'll need to save for retirement, don't forget that the higher the cost of living, the lower your real rate of return on your investment dollars.

 

FACING THE TRUTH ABOUT COLLEGE SAVINGS

 

Whether you're saving for a child's education or planning to return to school yourself, paying tuition costs definitely requires forethought-Financial Advisory Abney Associates and the sooner the better. With college costs typically rising faster than the rate of inflation, getting an early start and understanding how to use tax advantages and investment strategy to make the most of your savings can make an enormous difference in reducing or eliminating any post-graduation debt burden. The more time you have before you need the money, the more you're able to take advantage of compounding to build a substantial college fund. With a longer investment time frame and a tolerance for some risk, you might also be willing to put some of your money into investments that offer the potential for growth.

 

Consider these tips as well:

 

- Estimate how much it will cost to send your child to college and plan accordingly.

 

 -Estimates of the average future cost of tuition at two-year and four-year public and private colleges and universities are widely available.

 

- Research financial aid packages that can help offset part of the cost of college.

 

- Although there's no guarantee your child will receive financial aid, at least you'll know what kind of help is available should you need it.

 

- Look into state-sponsored tuition plans that put your money into investments tailored to your financial needs and time frame. For instance, most of your dollars may be allocated to growth investments initially; later, as your child approaches college, more conservative investments can help conserve principal.

- Think about how you might resolve conflicts between goals. For instance, if you need to save for your child's education and your own retirement at the same time, how will you do it?

 

INVESTING FOR SOMETHING BIG

 

At some point, you'll probably want to buy a home, a car, maybe even that yacht that you've always wanted. Although they're hardly impulse items, large purchases often have a shorter time frame than other financial goals; one to five years is common.

 

Because you don't have much time to invest, you'll have to budget your investment dollars wisely. Rather than choosing growth investments, you may want to put your money into less volatile, highly liquid investments that have some potential for growth, but that offer you quick and easy access to your money should you need it.

 

 

These days, it's hard to talk about college without mentioning financial aid. Yet this pairing isn't a marriage of love, but one of necessity. In many cases, financial aid may be the deciding factor in whether your child attends the college of his or her choice or even attends college at all. That's why it's important to develop a basic understanding of financial aid before your child applies to college. Without such knowledge, you may have trouble understanding the process of aid determination, filling out the proper aid applications, and comparing the financial aid awards that your child receives.

 

But let's face it. Financial aid information is probably not on anyone's top ten list of bedtime reading material. It can be an intimidating and confusing topic. There are different types, different sources, and different formulas for evaluating your child's eligibility. Here are some of the basics to help you get started.

 

WHAT IS FINANCIAL AID?

 

Financial aid is money distributed primarily by the federal government and colleges in the form of loans, grants, scholarships, or work-study jobs. A student can receive both federal and college aid.

 

Grants and scholarships are more favorable than loans because they don't have to be repaid--they're free money. In a work-study program, your child works for a certain number of hours per week (either on or off campus) to earn money for college expenses. Obviously, an ideal financial aid package will contain more grants and scholarships than loans.

 

NEED-BASED AID VS. MERIT AID

 

Financial aid can be further broken down into two categories--need-based aid, which is based on your child's financial need; and merit aid (Abney Associates Team A financial advisory practice of Ameriprise Financial Services, Inc.), which is awarded according to your child's academic, athletic, musical, or artistic merit.

 

The majority of financial aid is need-based aid. However, in recent years, merit aid has been making a comeback as colleges (particularly private colleges) use favorable merit aid packages to lure the best and brightest students to their campuses, regardless of their financial need. However, the availability of merit aid tends to fluctuate from year to year as colleges decide how much of their endowments to spend, as well as which specific academic and extracurricular programs they want to target.

 

SOURCES OF MERIT AID

 

The best place to look for merit aid is at the colleges that your child is applying to. Does the college offer any grants or scholarships for academic, athletic, musical, or other abilities? If so, what is the application procedure? College guidebooks and individual college websites can give you an idea of how much merit aid (as a percentage of a general student's overall aid package) each college has provided in past years. Financial Advisory Abney Associates

 

Besides colleges, a wide variety of private and public companies, associations, and foundations offer merit scholarships and grants. Many have specific eligibility criteria. In the past, sifting through the possibilities could be a daunting task. Now, there are websites where your child can input his or her background, abilities, and interests and receive (free of charge) a matching list of potential scholarships. Then it's up to your child to meet the various application deadlines. However, though this avenue is certainly worth exploring, such research (and subsequent work to complete any applications) shouldn't come at the expense of researching and applying for the more common need-based financial aid and/or college merit aid.

 

SOURCES OF NEED-BASED AID

 

The main provider of need-based financial aid is the federal government, followed by colleges. States come in at a distant third. The amount of federal aid available in any given year depends on the amount that the federal budget appropriates, and this aid is spread over several different financial aid programs. For colleges, need-based aid comes from a college's endowment, and policies may differ from year to year, resulting in an uneven availability of funds. States, like the federal government, must appropriate the money in their budgets.

 

The federal government's aid application is known as the FAFSA, which stands for Free Application for Federal Student Aid. The federal government and colleges use the FAFSA when federal funds are being distributed (colleges are responsible for administering certain federal financial aid programs). When colleges distribute their own financial aid, they use one of two forms. The majority of colleges use the PROFILE application, created by the College Scholarship Service of Princeton, New Jersey. A minority of colleges use their own institutional applications. The states may use the FAFSA or may require their own application. Contact your state's higher education authority to learn about the state aid programs available and the applications that you'll need to complete.

 

The FAFSA is filed as soon after January 1 as possible in the year your child will be attending college. You must wait until after January 1 because the FAFSA relies on your tax information from the previous year. The PROFILE (or individual college application) can usually be filed earlier than the FAFSA. The specific deadline is left up to the individual college, and you'll need to keep track of it.

 

HOW IS MY CHILD'S FINANCIAL NEED DETERMINED?

 

The way your child's financial need is determined depends on which aid application you're filling out. The FAFSA uses a formula known as the federal methodology; the PROFILE (or a college's own application) uses a formula known as the institutional methodology. The general process of aid assessment is called needs analysis.

 

Under the FAFSA, your current income and assets and your child's current income and assets are run through a formula. You are allowed certain deductions and allowances against your income, and you're able to exclude certain assets from consideration. The result is a figure known as the expected family contribution, or EFC. It's the amount of money that you'll be expected to contribute to college costs before you are eligible for aid.

 

Your EFC remains constant, no matter which college your child applies to. An important point: Your EFC is not the same as your child's financial need. To calculate your child's financial need, subtract your EFC from the cost of attendance at your child's college. Because colleges aren't all the same price, your child's financial need will fluctuate with the cost of a particular college.

 

For example, you fill out the FAFSA, and your EFC is calculated to be $5,000. Assuming that the cost of attendance at College A is $18,000 per year and the cost at College B is $25,000, your child's financial need is $13,000 at College A and $20,000 at College B.

 

The PROFILE application (or the college's own application) basically works the same way. However, the PROFILE generally takes a more thorough look at your income and assets to determine what you can really afford to pay (for example, the PROFILE looks at your home equity and retirement assets). In this way, colleges attempt to target those students with the greatest financial need.

 

What factors the most in needs analysis? Your current income is the most important factor, but other criteria play a role, such as your total assets, how many family members are in college at the same time, and how close you are to retirement age.

 

HOW DOES FINANCIAL NEED RELATE TO MY CHILD'S FINANCIAL AID AWARD?

 

When your child is accepted at a particular college, the college's financial aid administrator will attempt to create a financial aid package to meet your child's financial need. Sometime in early spring, your child will receive these financial aid award letters that detail the specific amount and type of financial aid that each college is offering.

 

When comparing awards, first check to see if each college is meeting all of your child's need (colleges aren't obligated to meet all of it). In fact, it's not uncommon for colleges to meet only a portion of a student's need, a phenomenon known as getting "gapped." If this happens to you, you'll have to make up the shortfall, in addition to paying your EFC. College guidebooks can give you an idea of how well individual colleges meet their students' financial need under the entry "average percentage of need met" or something similar. Next, look at the loan component of each award and compare actual out-of-pocket costs. Remember, grants and scholarships don't have to be repaid and so don't count toward out-of-pocket costs. Again, you would like your child's need met with the highest percentage of grants, scholarships, and work-study jobs and the least amount of loans.

 

If you'd like to lobby a particular school for more aid, tread carefully. A polite letter to the financial aid administrator followed up by a telephone call is appropriate. Your chances for getting more aid are best if you can document a change in circumstances that affects your ability to pay, such as a recent job loss, unusually high medical bills, or some other unforeseen event. Also, your chances improve if your child has been offered more aid from a direct competitor college, because colleges generally don't like to lose a prospective student to a direct competitor.

 

HOW MUCH SHOULD OUR FAMILY RELY ON FINANCIAL AID?

 

With all this talk of financial aid, it's easy to assume that it will do most of the heavy lifting when it comes time to pay the college bills. But the reality is you shouldn't rely too heavily on financial aid. Although aid can certainly help cover your child's college costs, student loans make up the largest percentage of the typical aid package, not grants and scholarships. As a general rule of thumb, plan on student loans covering up to 50 percent of college expenses, grants and scholarships covering up to 15 percent, and work-study jobs covering a variable amount. But remember, parents and students who rely mainly on loans to finance college can end up with a considerable debt burden.

 

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So you're going to have or adopt a baby. Congratulations! Parenthood may be one of the most rewarding experiences you'll ever have. As you prepare for life with your baby, here are a few things you should think about.

                                                                                                                                                    

REASSESS YOUR BUDGET

 

You'll have to buy a lot of things before (or soon after) your baby arrives. Buying a new crib, stroller, car seat, and other items you'll need could cost you well over $1,000. But if you do your homework, you can save money without sacrificing quality and safety. Discount stores or Internet retailers may offer some items at lower prices than you'll find elsewhere. If you don't mind used items, poke around for bargains at yard sales and flea markets. Abney Associates Team A financial advisory practice of Ameriprise Financial Services, Inc. . Finally, you'll probably get hand-me-downs and shower gifts from family and friends, so some items will be free.

 

Buying all of the gear you need is pretty much a one-shot deal, but you'll also have many ongoing expenses that will affect your monthly budget. These may include baby formula and food, diapers, clothing, child care (day care and/or baby-sitters), medical costs not covered by insurance (such as co-payments for doctor's visits), and increased housing costs (if you move to accommodate your larger family, for example). Redo your budget to figure out how much your total monthly expenses will increase after the birth of your baby. If you've never created a budget before, now's the time to start. Chances are, you'll be spending at least an extra few hundred dollars a month. If it looks like the added expenses will strain your budget, you'll want to think about ways to cut back on your expenses.

 

DECIDE IF ONE OF YOU SHOULD STAY HOME

 

Will it make sense for both of you to work outside the home, or should one person stay home? That's a question only you and your spouse can answer. Maybe both of you want to work because you enjoy your jobs. Or maybe you have no choice if the only way you can get by financially is for both of you to work. But don't be too hasty--the financial benefits of two incomes may not be as great as you think. Remember, you may have to pay for expensive day care if both of you work. You'll also pay more in taxes because your household income will be higher. Ameriprise Abney Associates , the working spouse will have commuting and other work-related expenses. Run the numbers to see how much of a financial benefit you really get if both of you work. Then, weigh that benefit against the peace of mind you would get from having one spouse stay home with the baby. A compromise might be for one of you to work only part-time.

 

REVIEW YOUR INSURANCE NEEDS

 

You'll incur high medical expenses during the pregnancy and delivery, so check the maternity coverage that your health insurance offers. And, of course, you'll have another person to insure after the birth. Good medical coverage for your baby is critical, because trips to the pediatrician, prescriptions, and other health-care costs can really add up over time. Financial Advisory Abney Associates, adding your baby to your employer-sponsored health plan or your own private plan is usually not a problem. Just ask your employer or insurer what you need to do (and when, usually within 30 days of birth or adoption) to make sure your baby will be covered from the moment of birth. An employer-sponsored plan (if available) is often the best way to insure your baby, because these plans typically provide good coverage at a lower cost. But expect additional premiums and out-of-pocket costs (such as co-payments) after adding your baby to any health plan.

 

It's also time to think about life insurance. Though it's unlikely that you'll die prematurely, you should be prepared anyway. Life insurance can protect your family's financial security if something unexpected happens to you. Your spouse can use the death benefit to pay off debts (e.g., a mortgage, car loan, credit cards), support your child, and meet other expenses. Some of the funds could also be set aside for your child's future education. If you don't have any life insurance, now may be a good time to get some. The cost of an individual policy typically depends on your age, your health, whether you smoke, and other factors. Even if you already have life insurance (through your employer, for example), you should consider buying more now that you have a baby to care for. An insurance agent or financial professional can help you figure out how much coverage you need.

 

UPDATE YOUR ESTATE PLAN

 

With a new baby to think about, you and your spouse should update your wills (or prepare wills, if you haven't already) with the help of an attorney. You'll need to address what will happen if an unexpected tragedy strikes. Who would be the best person to raise your child if you and your spouse died at the same time? If the person you choose accepts this responsibility, you'll need to designate him or her in your wills as your minor child's legal guardian. You should also name a contingent guardian, in case the primary guardian dies. Guardianship typically involves managing money and other assets that you leave your minor child. You may also want to ask your attorney about setting up a trust for your child and naming trustees separate from the suggested guardians.

 

While working with your attorney, you and your spouse should also complete a health-care proxy and durable power of attorney. These documents allow you to designate someone to act on your behalf for medical and financial decisions if you should become incapacitated.

 

START SAVING FOR YOUR LITTLE ONE'S EDUCATION

 

The price of a college education is high and keeps getting higher. By the time your baby is college-bound, the annual cost of a good private college could be almost triple what it is today, including tuition, room and board, books, and so on. How will you afford this? Your child may receive financial aid (e.g., grants, scholarships, and loans), but you need to plan in case aid is unavailable or insufficient. Set up a college fund to save for your child's education--you can arrange for funds to be deducted from your paycheck and invested in the account(s) that you choose. You can also suggest that family members who want to give gifts could contribute directly to this account. Start as soon as possible (it's never too early), and save as much as your budget permits. Many different savings vehicles are available for this purpose, some of which have tax advantages. Talk to a financial professional about which ones are best for you.

 

DON'T FORGET ABOUT YOUR TAXES

 

There's no way around it: Having children costs money. However, you may be entitled to some tax breaks that can help defray the cost of raising your child. First, you may be eligible for an extra exemption if your annual income is below a certain level for your filing status. This will reduce your income tax bill for every year that you're eligible to claim the exemption. You may also qualify for one or more child-related tax credits: the child tax credit (a $1,000 credit for each qualifying child), the child and dependent care credit (if you have qualifying child-care expenses), and the earned income credit (if your annual income is below a certain level). To claim any of these exemptions and credits on your federal tax return, you'll need a Social Security number for your child. You may be able to apply for this number (as well as a birth certificate) right at the hospital after your baby's birth. For more information about tax issues, talk to a tax professional.

 

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Organizing your finances when your spouse has died

 

Losing a spouse is a stressful transition. And the added pressure of having to settle the estate and organize finances can be overwhelming. Fortunately, there are steps you can take to make dealing with these matters less difficult. Financial Advisory Abney Associates

 

NOTIFY OTHERS

 

When your spouse dies, your first step should be to contact anyone who is close to you and your spouse, and anyone who may help you with funeral preparations. Next, you should contact your attorney and other financial professionals. You'll also want to contact life insurance companies, government agencies, and your spouse's employer for information on how you can file for benefits.

 

GET ADVICE

 

Getting expert advice when you need it is essential. An attorney can help you go over your spouse's will and start estate settlement procedures. Your funeral director can also be an excellent source of information and may help you obtain copies of the death certificate and applications for Social Security and veterans benefits. Your life insurance agent can assist you with the claims process, or you can contact the company's policyholder service department directly. You may also wish to consult with a financial professional, accountant, or tax advisor to help you organize your finances.

 

LOCATE IMPORTANT DOCUMENTS AND FINANCIAL RECORDS

 

Before you can begin to settle your spouse's estate or apply for insurance proceeds or government benefits, you'll need to locate important documents and financial records (e.g., birth certificates, marriage certificates, life insurance policies). Keep in mind that you may need to obtain certified copies of certain documents. For example, you'll need a certified copy of your spouse's death certificate to apply for life insurance proceeds. And to apply for Social Security benefits, you'll need to provide birth, marriage, and death certificates.

 

SET UP A FILING SYSTEM

 

If you've ever felt frustrated because you couldn't find an important document, you already know the importance of setting up a filing system. Start by reviewing all important documents and organizing them by topic area. Next, set up a file for each topic area. For example, you may want to set up separate files for estate records, insurance, government benefits, tax information, and so on. Finally, be sure to store your files in a safe but readily accessible place. That way, you'll be able to locate the information when you need it. Ameriprise Abney Associates

 

SET UP A PHONE AND MAIL SYSTEM

 

During this stressful time, you probably have a lot on your mind. To help you keep track of certain tasks and details, set up a phone and mail system to record incoming and outgoing calls and mail. For phone calls, keep a sheet of paper or notebook by the phone and write down the date of the call, the caller's name, and a description of what you talked about. For mail, write down whom the mail came from, the date you received it, and, if you sent a response, the date it was sent.

 

Also, if you don't already have one, make a list of the names and phone numbers of organizations and people you might need to contact, and post it near your phone. For example, the list may include the phone numbers of your attorney, insurance agent, financial professionals, and friends--all of whom you can contact for advice.

 

EVALUATE SHORT-TERM INCOME AND EXPENSES

 

When your spouse dies, you may have some immediate expenses to take care of, such as funeral costs and any outstanding debts that your spouse may have incurred (e.g., credit cards, car loan). Even if you are expecting money from an insurance or estate settlement, you may lack the funds to pay for those expenses right away. If that is the case, don't panic--you have several options. If your spouse had a life insurance policy that named you as the beneficiary, you may be able to get the life insurance proceeds within a few days after you file. And you can always ask the insurance company if they'll give you an advance. In the meantime, you can use credit cards for certain expenses. Or, if you need the cash, you can take out a cash advance against a credit card. Also, you can try to negotiate with creditors to allow you to postpone payment of certain debts for 30 days or more, if necessary.

 

AVOID HASTY DECISIONS

 

- Don't think about moving from your current home until you can make a decision based on reason rather than emotion.

- Don't spend money impulsively. When you're grieving, you may be especially vulnerable to pressure from salespeople.

- Don't cave in to pressure to sell or give away your spouse's possessions. Wait until you can make clear-headed decisions.

- Don't give or loan money to others without reviewing your finances first, taking into account your present and future needs and obligations.

 

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John Tappan founded Ameriprise Financial in 1894 with a singular vision, to help ordinary Americans achieve their financial dreams and feel confident about their futures. Throughout our long history, Financial Advisory Abney Associates have remained steadfast to this vision of putting our clients’ needs first, always.

 

The strength of this commitment is matched only by our strength as a company. Through downturns, recessions, booms, the Great Depression and the recent Great Recession, we have honored every financial obligation to our clients and have never taken a bailout.

 

Over the years, we’ve helped millions of people invest billions of dollars for what’s important to them. Today, we are America’s largest financial planning company and a leading global financial institution, with more than $650 billion in assets under management and administration.

 

Every day – true to Tappan’s vision -- our 10,000 financial advisors2 work with our clients one-to-one, to help put their dreams and goals more within reach.