FAQs
Frequently Asked Financial Questions
How do I choose the right financial advisor or wealth manager?
The relationship with your advisor or wealth manager should feel like a true partnership—one where you’re seen and heard, and your values are aligned. During initial meetings, pay attention to whether they ask thoughtful questions about your financial situation and life goals rather than immediately pushing specific products. A good advisor will take time to understand your complete picture and explain their recommendations in terms you can understand.
Remember that not every advisor will be the right fit for every person. Some advisors specialize in retirement planning, others in trust services, and some focus on faith-based investing approaches. Take your time to find someone who understands both your financial goals and personal values.
What’s the difference between a revocable and irrevocable trust?
A revocable trust (also called a living trust) gives you complete control and flexibility. You can change the terms, add or remove assets, or dissolve it entirely during your lifetime. You also continue to pay taxes on the trust’s income as if you still own the assets directly. Many people choose a revocable trust when they want to avoid probate and ensure a smooth transition of assets to their heirs.
With an irrevocable trust, you generally can’t change the terms once it’s established. You also give up ownership and control of the assets placed inside the trust, which will be controlled by the trustee. While this sounds restrictive, irrevocable trusts offer significant benefits, including potential estate tax savings. The best fit depends on your specific goals, whether you prioritize flexibility or tax benefits, and your overall estate planning needs.
When should I file for Social Security?
There’s truly no one-size-fits-all answer to when you should start taking Social Security benefits. It depends entirely on your unique circumstances. You can start collecting retirement or spousal benefits as early as age 62, but your benefits will be permanently reduced. If you wait until your full retirement age (66 or 67, depending on when you were born), you’ll receive your full benefit amount. Or you could also delay until age 70 and increase your benefits for each year you wait from when you reach your full retirement age.
Your health, financial needs, work status, family situation, and retirement savings will all play into your decision. If married, your spouse’s benefits will also be a factor to consider, as your filing decision affects how much they’ll receive when you pass away. We encourage you to work with an advisor who understands your complete financial picture and can help you make wise decisions based on your unique circumstances.
What are the best ways to track my spending?
The best method for tracking your expenses is the one you’ll use consistently. Some people prefer manually categorizing transactions in a spreadsheet or notebook. Others do well with automatic tools that connect to their accounts and categorize expenses for them. Choose a system that matches your preferences, whether that’s high-tech automation or old-school pen and paper.
A good place to start is tracking everything for at least a month to see your spending patterns. Look for both obvious payments and small recurring expenses that add up over time. Many people are surprised by how much they’re spending on subscription costs, dining out, or impulse purchases. The goal isn’t perfect tracking; it’s gaining awareness so you can make intentional decisions about your money.
What savings vehicle should I use to save for mine or my child’s college?
If you or someone in your family is thinking about attending college, beginning to save now or as soon as possible will help significantly. One popular option is a 529 education savings plan, which offers tax-free growth and withdrawals for qualified education expenses. You may also be able to deduct contributions at the state level depending on the rules for the state you reside in.
You can also consider flexible options like Roth IRAs, which allow penalty-free withdrawals of contributions for education. Plus, regular taxable accounts offer a way to save for college without tax advantages. Many families combine options to maximize their education savings without increasing their tax bill.
What financial steps should I take when starting a new job?
Start with the essentials: enroll in health insurance, sign up for the company’s retirement plan (especially if there’s an employer match), and review benefit options such as life insurance, disability coverage, and tuition reimbursement. You should also calculate your W-4 withholdings to avoid overpaying or underpaying taxes throughout the year, especially if your salary has changed significantly from a previous role.
Next, reassess your financial picture. Adjust your emergency fund target and budget based on your new income and any expense changes like commuting costs. If you had a retirement account at your previous job, decide whether to leave it or roll it into your new employer’s plan or an IRA. Finally, review your insurance needs and investment strategy to ensure they’re still a good fit.
What financial considerations should I take into account if my spouse/family member passes away?
As soon as you are able to, it is important to secure essential documents and accounts. Start by obtaining multiple copies of the death certificate. Contact any trusted professionals you or your family member worked with, such as a financial advisor, estate planning attorney, CPA or insurance agent. They can guide you with next steps related to financial accounts, insurance policies, Social Security benefits, and more.
Once you’re ready, focus on understanding your new financial picture. Work with your advisor to review insurance policies, retirement accounts, and investments to get a clear view of what you’ve inherited and any benefits you’re entitled to receive. Update your beneficiaries on wills, trusts, insurance policies, retirement accounts (IRAs and workplace plans) and savings accounts.
Lean on your trusted community for support during this difficult time. We also encourage you to work with an advisor who understands both the financial complexities and the emotional weight of loss. He or she can help you navigate practical matters while you focus on healing from your loss. Finally, be careful about making any big financial decisions right away unless you have to address it in the near term after conferring with a trusted financial advisor.
What’s the difference between a Traditional IRA and a Roth IRA?
The main difference is when you pay taxes on the money in the account. With a traditional IRA, you generally get a tax deduction when you contribute, but you’ll pay taxes on any money you take out in retirement. A Roth IRA is the opposite: you pay taxes upfront on contributions, but withdrawals in retirement are tax-free as long as the account has been open for five years with an initial contribution and you are also at least 59 ½ years old.
There are other key differences to consider. Traditional IRAs require you to take minimum distributions starting by April 1st of the year after you turn age 73, while Roth IRAs have no required distributions during your lifetime. Roth IRAs also allow penalty-free withdrawals of contributions anytime, which you can use to cover emergencies or education expenses. However, income limits may restrict your ability to contribute to a Roth IRA directly. Your advisor can review the options and help you find the right fit based on your current tax situation, retirement timeline, and long-term financial goals.
How do I balance saving for my retirement and my child’s education at the same time?
While you are able to take out loans for college, you can’t borrow for retirement. This doesn’t mean you should ignore education savings, but it does mean retirement should generally take priority in your financial planning. Your children have options like scholarships and work-study programs, while you’ll need to be financially self-sufficient in retirement.
A common approach is to first maximize any employer retirement plan match, then split additional savings between retirement and education goals. Consider your family’s situation when determining the right balance. If you’re behind on retirement savings or have a shorter timeline until retirement, focus more heavily on that area. If you’re on track for retirement and have young children, you might allocate more toward education savings. The amount you allocate to each goal will likely change over time as your life evolves and your family grows.
Is life insurance important for me?
Life insurance is essential if anyone depends on your income, whether that’s a spouse, children, or other family members whose lives would be altered financially if you weren’t there to provide. If you’re single with no dependents and sufficient assets to cover financial expenses, you might not need coverage. But if you have a mortgage, future education costs, or a spouse who would lose significant household income, life insurance could be crucial.
What kind of life insurance and how much coverage you’ll need will depend on your family’s specific needs. As a general guideline, many advisors recommend coverage of 10-12 times your annual income; however, the actual amount may vary depending on your specific circumstances. The important thing to remember is that you’re not simply buying life insurance; you’re actually buying the peace of mind that comes from knowing your loved ones will be financially secure and protecting the people God has entrusted to you.