Love Notes From a Financial Advisor

Andrea McClelland, CFP^®

It’s Valentine’s Day, and love is in the air. While many think of roses, chocolates, and champagne, as a financial advisor, I see a perfect opportunity to express our love through actions that protect and enhance the lives of our loved ones. Such gestures might not have the immediate appeal of a five-course dinner or a bottle of bubbly, but the long-term benefits they offer are invaluable. Below are some thoughtful ways to invest in your family's financial security and well-being this Valentine's Day - or any day of the year!

For Our Children and Grandchildren

Protect Their Identity

Minors are especially vulnerable to credit fraud and identity theft, as they may not realize they are a victim until they apply for a job or credit card. Check to see whether they have a credit report – a minor typically should not have one.  You can choose to go a step further and initiate a credit freeze at each of the three major credit bureaus - Equifax, Experian, and Transunion - which can be lifted when they turn 18.

Set Them Up With a Roth IRA

Help teens or young adults in your life kickstart their retirement planning by guiding them to open a Roth IRA. They can contribute as long as they have documented earned income, up to the lesser of their earned income or the annual IRA contribution limit ($7,000 in 2024). You can support them by funding their contribution, offering a match if they contribute a portion of their income, or simply helping them set up the account. For minors, you can set up a Custodial Roth IRA.

Show them why investing early can be such a boon to their financial future with these illustrations from the St. Louis Fed. An added bonus - if you’ve set up 529 plans for the young ones in your life, per Secure Act 2.0, excess 529 funds may be eligible for tax- and penalty-free Roth rollovers of up to $35,000.¹

Set Up Powers of Attorney for Young Adults

At the age of 18 (or the age of majority in their state of residence), young adults are considered legally independent. At this point, parents lose the automatic right to access information and step in if their child has a financial or health emergency (such as a hospitalization while away at college). Help your young adult set up legal documents such as a Durable Power of Attorney, Medical Power of Attorney and HIPAA authorization to allow for continued parental support in emergencies. 

For Our Parents and Grandparents

Prepare for Emergencies

Offer to assist with creating or filling out an organizer, such as our Essential Personal Information document. A comprehensive organizer detailing accounts and assets, insurance policies, important documents, and key advisors and contacts (including doctors), can be incredibly valuable in emergencies, ensuring that loved ones can find necessary information. If they’re open to it, go one step further and offer to help them organize their files. This provides opportunities to clear clutter and foster peace of mind, and may open the door to conversations about important estate documents such as their will and any trusts, Durable Power of Attorney, Medical Power of Attorney, and HIPAA authorization. 

Safeguard Against Scams

In 2023, over $10 billion was reported lost to financial scams, and seniors are often targeted. Share this quick guide from the Federal Trade Commission to help loved ones avoid falling for a scam.  Sophisticated new scams using AI to duplicate a loved one’s voice are on the rise and are of particular concern for seniors. Check fraud is another scam that commonly affects seniors - help set up electronic payments or encourage the use of protective measures like mailing checks directly from the post office and closely monitoring bank transactions.

For All of Our Loved Ones

Review Your Estate Plan

If you’ve experienced major life changes, or it’s been over a decade since your last review, consult with your estate attorney to ensure your plan aligns with current laws and adequately protects your loved ones. Make sure your estate plan includes your digital assets. Let your loved ones know how to access your online accounts, social media, and electronic devices. A password manager with an emergency access feature is a practical solution.

Update Beneficiary Designations

Periodically review the beneficiary designations on your retirement accounts, life insurance policies, annuities, pensions, and any other account with a beneficiary designation. These assets pass outside of wills or trusts, so keeping them current is crucial, especially after life changes like marriage, divorce, death, birth, or adoption.

This Valentine's Day, along with the roses and chocolates, consider picking a few of these gestures to show love in ways that truly last!

1. Subject to $35,000 lifetime rollover limit, annual contribution limits, and earned income requirements. 529 must be open for 15 years before rollovers.

This content is developed from sources believed to be providing accurate information as of the date of publication and is intended for informational purposes only. No content should be construed as legal or tax advice. Please consult your financial professionals for specific information regarding your individual situation. Past performance does not guarantee future results. All investing involves risk, including risk of loss.