toomeyinvest
Finance
October 21, 2024

Ensuring Your Legacy: How to Plan Your Estate for a Secure Future

While few people may find retirement planning “fun,” what it represents is generally positive: a time when you can cease the daily grind of work, set your own life pace, and enjoy hobbies, friends, and families.

Estate planning, however, is most certainly not an enjoyable activity, as it generally involves addressing a time after one’s death. There are good reasons, however, why estate planning should be an important complement to retirement planning. There is enough cross-over in the two activities that it makes sense to engage in them at the same time.

Having a comprehensive estate plan ensures that your assets are distributed according to your wishes, minimizes taxes to maximize what you pass on to your heirs, and prevents court intervention, providing peace of mind for you and your loved ones.

Because retirement planning and estate planning are intertwined, it’s a good idea to work with a financial advisor who specializes in both: this individual can help you arrange your estate in a way that will maximize what you leave to your heirs and minimize the work they will have to do in the event of your death.

Some elements to consider when planning your estate include:

Whether you will create trusts. There may be a variety of reasons to create trusts. In the case of dependents, you may wish to set up trusts that will ensure they have enough money to finish school, train for a career, or reach a certain age before they can access an inheritance. For family members who require special help or care, a trust can ensure that the care is funded for the rest of their lives.

Minimizing tax burdens. Improper estate planning – similar to improper retirement planning – can expose you to the risk of paying more taxes than necessary or leaving less to your heirs. A professional advisor can address strategies for both retirement and estate planning to ensure that you are minimizing your overall tax burden.

Protecting personal assets from business losses. As a business owner, you’ll know that retirement or death does not end the possibility of lawsuits against your nest egg or your estate, particularly if you operated a business in a high-risk category such as healthcare or construction. A careful estate plan will protect your assets from lawsuits that might be filed after you’ve retired or after you have passed away, protecting both your retirement funds and your heirs.

Integrating Retirement Planning and Estate Planning

In your financial planning, you may tap the resources of a financial advisor, a tax professional, and a lawyer. Are these professionals working together to ensure that your retirement planning and your estate planning are complementary? Ideally, retirement professionals, estate planners, accountants, and attorneys should all work together to produce an all-encompassing personal financial strategy.

At Toomey Investment Management, we understand the importance of a cohesive approach to your financial future. By integrating retirement planning and estate planning, we help ensure that all aspects of your financial life are aligned and working together. Let our experienced team guide you through a seamless strategy that meets your unique needs. Contact us today!

toomeyinvest
Wealth
October 21, 2024

Choosing the Right Investment Strategy

When it comes to investing, one size does not fit all. The key to successful investing is choosing the right strategy that aligns with your personal financial goals, risk tolerance, and time horizon. Making informed decisions in these areas can significantly impact your financial future and overall peace of mind.

Aligning with Your Financial Goals

The first step in crafting a sound investment strategy is to define your financial goals. Are you saving for retirement, funding a child’s education, or building wealth for a major purchase? Your goals will determine the types of investments you should consider. For example, long-term goals like retirement might benefit from growth-oriented investments such as stocks, while short-term goals may require more conservative options like bonds or money market accounts.

Understanding Risk Tolerance

Risk tolerance is the degree of variability in investment returns that you are willing to withstand. It’s essential to assess how comfortable you are with potential losses in the short term. If you have a higher risk tolerance, you may be more inclined to invest in equities, which can offer higher returns but also come with higher volatility. Conversely, if you are risk-averse, you might prefer fixed-income securities that provide more stability but lower returns. Understanding your risk tolerance helps in selecting an investment mix that you can stick with, even during market downturns.

Considering Your Time Horizon

Your investment time horizon, or the length of time you plan to hold an investment before taking money out, is a crucial factor in determining your investment strategy. A longer time horizon allows you to ride out market fluctuations, making higher-risk investments more viable. However, if your time horizon is short, you may need to focus on more conservative investments to preserve your capital.

Seek Professional Guidance

Choosing the right investment strategy involves balancing your financial goals, risk tolerance, and time horizon. It can be a complex process that requires careful planning and a deep understanding of the financial markets. This is where professional guidance becomes invaluable. At Toomey Investment Management, we help clients develop tailored investment strategies that align with their unique circumstances. Our experienced advisors work closely with you to understand your goals and craft a plan that fits your needs.

Don’t leave your financial future to chance. Contact Toomey Investment Management today to learn how we can help you create an investment strategy that positions you for success.

toomeyinvest
Retirement, Social Security
October 21, 2024

The Three Pillars of Retirement: Pension, Social Security, and Personal Investment Income

We all have plans (or dreams) to retire one day. While dreams are important, the foundation for retirement is just as critical. Will you have enough money to fund your retirement?

Three Types of Retirement Income

For many Americans, there are three elements of a solid retirement: pension income, social security income, and personal investment income. In this blog, we’ll provide an overview of these three types of income.

Pension income. Once a common thing among U.S. employers, traditional pensions in the United States are on the decline, with more companies switching from providing direct pensions to outsourcing the process to defined contribution plans such as 401Ks.

According to the Bureau of Labor Statistics using data from March 2023, 73 percent of civilian workers had access to retirement benefits. The take-up rate (which is defined as the percentage of workers with access to an employer-sponsored benefit who choose to participate in the benefit) for retirement benefits was 77 percent.

Social Security. While social security can provide some income for day-to-day living, living on social security alone is nearly impossible for people in many parts of the country.

“A popular rule of thumb is that you’ll need about 80 percent of your pre-retirement income to maintain your current lifestyle. Unfortunately, Social Security benefits supply only about half of that if you’re an average earner,” according to SmartAsset.com. Individuals still working can check their estimated benefits on the Social Security website, and see estimates of their benefits at early, standard and late retirement ages.

Personal investment income. Personal investment income is money earned from the buying, owning and selling of investments. These investments not only provide capital for living expenses during retirement, but they also generate other income streams, including capital gains (money that results when investments increase in value), dividends (shares of company earnings based on investments) and interest on the investments from products such as corporate or government bonds or CDs.

Not Everyone Qualifies for All Three

Not all Americans are entitled to or have access to all three of these income vehicles, which means it’s even more important to consult with a knowledgeable financial advisor who can make a substitution to ensure plan stability. This substitution begins with a comprehensive needs analysis, which enables investors and advisors to construct a proposal that highlights the strengths, weaknesses or limitations plan circumstances may present.

Choose an Experienced Retirement Planning Partner

Toomey Investment Management, Inc. is a Wallingford, Connecticut-based independent registered investment adviser (RIA) advisory firm that offers clients expertise in independent portfolio management, tax planning and preparation, risk management and estate planning.

A prudently designed retirement income plan is crafted to client specifications with a central focus on flexibility and durability.

When we partner with clients, there is a shared interest in the longevity of the plan. We tell our clients on day one: this is a business of variables, and we aren’t doing our jobs if the product we provide isn’t a durable one.

toomeyinvest
Investment
April 29, 2024

Understanding Investment Options: Stocks, Bonds, and More

If you’re looking to invest or to expand your existing investments, you’re not alone. According to the Wall Street Journal, the percentage of Americans who own stocks is at an all-time high, with approximately 58 percent of U.S. households owning stocks in 2022, according to a study of consumer finances conducted by the Federal Reserve. This figure is up from 53 percent in 2019 and marks the highest household stock-ownership rate ever recorded in the triennial survey.

Stocks, of course, aren’t the only types of investments open to Americans, and today investors and would-be investors are arming themselves with the knowledge they need to save and invest effectively. To do so, it’s important to understand the differences between common investment products.

Stocks

Stocks represent ownership shares in a company, with common stockholders typically enjoying voting rights and a claim on the company’s profits and assets. The value of stocks can fluctuate significantly based on market conditions and company performance, offering the potential for high returns but also posing considerable risks. Companies may issue different classes of stock; common stocks, which allow voting on corporate matters, and preferred stocks, which usually lack voting rights but offer fixed dividends and have priority over common stocks in asset claims during liquidation. Additionally, stocks can be held directly, allowing personal control and voting rights, or indirectly through mutual funds or ETFs, where investors own shares of the fund rather than the underlying stocks. Some stocks are restricted or come as options, often part of employee compensation packages, which may have specific conditions or benefits attached.

Bonds

Bonds are issued by governments or companies and represent a long-term loan from the investor, who receives regular interest payments and the return of the bond’s face value at maturity. Bonds are generally seen as safer than stocks but typically offer lower returns. Treasury Bonds, issued by the federal government, offer tax advantages as their interest income is exempt from state and local taxes. Municipal Bonds, issued by local governments, provide tax-exempt income at the federal level, and sometimes state and local taxes, appealing particularly to those in higher tax brackets.

Mutual Funds

Mutual funds allow investors to pool their money to purchase a diversified portfolio managed by financial professionals. These funds can invest in stocks, bonds, or other assets and are valued at the end of each trading day. Mutual funds offer diversification and professional management but come with management fees that can impact returns.

Exchange-Traded Funds (ETFs)

ETFs are similar to mutual funds but trade on stock exchanges like individual stocks. They offer the benefits of diversification and lower operational costs and can be bought and sold throughout the trading day. ETFs often track specific indices, sectors, or commodities, providing an efficient way to gain exposure to diverse investment areas.

Certificates of Deposit (CDs)

CDs are timed deposits made with banks that offer fixed interest rates over a specified period. They are FDIC-insured up to certain limits, making them a secure investment, though generally yielding lower returns compared to stocks or bonds. CDs are best for investors looking for guaranteed returns without exposure to market volatility.

Real Estate Investment Trusts (REITs)

REITs are companies that own or finance income-producing real estate across a range of property sectors. They offer investors regular income streams, diversification, and the potential for capital appreciation. Most REITs are publicly traded on major securities exchanges, and their tax advantage includes the requirement to distribute at least 90% of taxable income to shareholders as dividends.

Annuities

Annuities are financial products that pay out a fixed stream of payments to an individual, typically used as an income stream for retirees. They are divided into immediate and deferred annuities, depending on the payout timing. One significant tax advantage of annuities is that the money invested grows tax-deferred until withdrawal, which can be strategically planned for a period when the individual is in a lower tax bracket.

What Investment Products Are Right for Your Portfolio?

The ideal investments will depend on how much money you have to invest, how close you are to retirement, how much risk you can tolerate, and what you plan to use the money for. It’s a good idea to consult with a professional investment specialist before you get started or expand your investment portfolio.

Toomey Investment Management offers a client-centric approach to investing by focusing on individual financial goals. Our business model is designed to treat all of our clients equally and fairly. We realized long ago that the financial industry dedicated many resources to capture money from prospective clients but much less on service and accountability for existing clients. At Wallingford, Connecticut-based TIMI, we listen carefully, keep in touch, and return your calls and communications quickly, so you can count on us. Call us at 203-949-1710 or visit our website for more information.

toomeyinvest
Wealth
April 24, 2024

Legacy Planning Tips for Baby Boomers

Data from the U.S. Census Bureau show that there are 76.4 million Americans from the “Baby Boom” generation living today. Baby Boomers – those individuals born between 1946 and 1964 – are currently of an age to retire or prepare to retire (even the youngest ones). In the coming years, the wealth transfer from the Baby Boomers to younger generations is expected to be record-breaking: estimates have found that approximately $72 trillion worth of assets are currently possessed by Baby Boomers, and much of this wealth will ultimately be transferred to heirs.

At the same time, many Americans from this generation have failed to properly build an estate plan. One study found that only 43 percent of Americans have a will. This is an issue of concern, particularly for Americans with dependents such as a spouse, children, or even elderly parents – who may rely on them for financial support. Estate planning is a critical way property owners and investors can protect their loved ones in the future. With the right guidance, individuals can create a legacy that will maximize the amount of wealth they transfer to heirs by limiting taxes, errors, and unnecessary administrative costs.

Strategies for Preserving and Passing on Wealth

Generally speaking, these strategies involve the creation of wills or living wills. At its core, a will is a comprehensive legal document that outlines an individual’s final wishes and how they want their assets distributed. A will also identify who will manage an estate and care for any minor children or dependents after an individual’s death. Legacy planning may also include the creation of trusts. A benefit of a trust is that it will generally allow heirs to bypass the expensive and time-consuming process of probate and make an individual’s assets immediately accessible upon death. Trusts can also be used to reduce estate taxes, protect heirs from creditors, and ensure that assets that are designated for dependents are distributed according to the legacy holder’s wishes.

Planning for Philanthropy

The Baby Boomers have traditionally been generous when it comes to charitable causes, and many may wish to include these favored causes in their estate planning. Charitable giving can result in disputes among family heirs, however, so it’s critical that these charitable legacies be crafted properly so they are not legally open to challenges.

Legal and Tax Considerations for Legacy Planning

Few people today are hoping to pay as much as possible in taxes when their estates are transferred. That said, an improperly planned estate can be costly to heirs when tax considerations are not carefully weighed. Estate taxes are those that are levied on the value of an individual’s assets at the time of their death. This tax is calculated based on the total value of an individual’s estate, including personal property, cash, investments, and real estate. Tax considerations are highly complex and may be affected by state, federal and even local law. Estate taxes can significantly reduce the amount of wealth available to heirs, so proper legacy planning needs to involve understanding the rules and planning ahead to minimize taxation. An experienced financial advisory firm can ensure that clients have a comprehensive and legally binding plan in place that is designed to eliminate confusion, family conflict, unnecessary costs, and taxation when the time comes to transfer a legacy.

In addition to wills and trusts, inter-vivos trusts, also known as living trusts, play a crucial role in estate planning. These trusts allow individuals to transfer assets during their lifetime, effectively removing them from the probate estate. Living trusts provide numerous benefits, including avoiding the probate process, ensuring privacy, and facilitating a smoother distribution of assets to beneficiaries. Furthermore, within the context of wills, it’s essential to include advanced healthcare directives. These directives outline an individual’s medical preferences in case of incapacity, ensuring their wishes are honored and providing clarity to loved ones during difficult times.

An experienced financial advisory firm can ensure that clients have a comprehensive and legally binding plan in place that is designed to eliminate confusion, family conflict unnecessary costs, and taxation when the time comes to transfer a legacy.

toomeyinvest
Estate
April 24, 2024

Maximizing Your Estate: Advanced Wealth Transfer Techniques

You spend a lifetime building up wealth. The last thing you want to see is the entirety of your estate going into the pockets of nursing homes, tax agencies, or hospitals. Most people strive to leave as much of their estate as possible for future generations, friends, and charitable causes. Unfortunately, many people leave their heirs with little due to medical and care requirements that come with advancing age.

To safeguard the wealth you’ve worked tirelessly to accumulate and ensure it benefits your loved ones and chosen causes, strategic planning is crucial. Here are some of the many strategies often used to maximize an estate transfer:

Generation-Skipping Trusts (GST): A GST is a legally binding trust agreement that directs assets to grandchildren instead of children, primarily for tax efficiency. By sidestepping a generation in inheritance, estate taxes can be minimized. This doesn’t imply neglect of children but rather a strategic tax planning approach.

Charitable Giving: Donations to charitable organizations not only fulfill philanthropic goals but also offer significant tax advantages. Whether through direct contributions, donor-advised funds, or charitable trusts, structuring your giving can yield tax benefits during your lifetime and within your estate plan. This proactive approach can reduce tax burdens on both your heirs and your estate.

Tax-Efficient Gifting: Leveraging annual gifting limits is an effective way to diminish the size of your taxable estate. As of 2023, the annual gift limit stood at $17,000 per giver/receiver, with provisions for doubling or quadrupling for married couples. Exceeding these limits necessitates filing IRS Form 709 and accounting for gifts against the lifetime giving allowance.

In addition to these strategies, it’s crucial to be aware of asset spend-downs to qualify for Medicaid, especially if long-term care becomes necessary. Medicaid eligibility often requires individuals to meet specific asset thresholds, and spending down assets to qualify is a common practice. This can involve utilizing assets for approved expenses such as medical bills, home modifications, or prepaid funeral expenses.

Moreover, a Medicaid annuity can be a valuable tool in asset protection and Medicaid planning. By converting excess assets into an annuity, individuals can create a stream of income that is exempt from Medicaid asset calculations. This strategy allows for the preservation of assets while meeting Medicaid eligibility requirements. However, it’s essential to navigate the complex rules and regulations surrounding Medicaid annuities with the guidance of knowledgeable financial and legal professionals.

By implementing these strategies and understanding the nuances of asset spend-downs and Medicaid planning, you can effectively protect your estate and ensure that your wealth serves its intended purposes for future generations, charitable causes, and personal legacies.

Seek Professional Investment Advice

To engage in the best possible estate planning, it’s worth seeking advice from a professional who can help you protect as much of your assets as possible. Toomey Investment Management, Inc. is a Wallingford, Connecticut-based financial advisory company that offers clients expertise in portfolio management.

At TIMI, our business model is designed to treat all of our clients equally and fairly. We realized long ago that the financial industry dedicated many resources to capture money from prospective clients but much less on service and accountability for existing clients. At Wallingford, Connecticut-based TIMI, we listen carefully, keep in touch, and return your calls and communications quickly, so you can count on us. We will work effectively to optimize your financial situation and solve your problems. Call us at 203-949-1710 or visit our website for more information.

toomeyinvest
Investment
April 24, 2024

A Client-Centric Approach to Financial Planning

You may have had some experience with financial planning companies in the past. You wonder: is this person really looking out for my best interests, or are they steering me toward investments that benefit them and their employer? Why did they just give me a long pitch about one particular type of investment when it doesn’t even seem like a good fit for me? These are good questions.

In your quest for financial stability and growth, selecting the right advisor is paramount. You’ve likely encountered various types of financial professionals, each with its own approach and incentives. Understanding these differences can empower you to make informed decisions that align with your goals and values.

Broker-Dealers: Navigating Conflicting Interests

Broker-dealers act as intermediaries for financial products, providing investors with a diverse range of options. However, advisors within broker-dealers may encounter pressures to meet production minimums or conform to pay grid structures that prioritize specific products or entail higher fees based on certain types of investments. While this approach may benefit some investors, there are other firm structures that may offer the advisor, and thus the client, greater overall flexibility.

A Shift towards Your Advantage: Independent RIAs

On the other hand, Independent Registered Investment Advisors (RIAs) stand out as professional advisory firms that prioritize personalized financial guidance. Their commitment to independence allows them to optimize their services entirely in the interest of their clients. Unlike broker-dealers, RIAs do not limit themselves to specific funds or investment vehicles, likely affording them enhanced flexibility to tailor recommendations to each client’s unique financial situation and goals. This independence ensures that RIAs do not succumb to pressures to push products that may not align with their client’s best interests. As fiduciaries, RIAs are legally obligated to uphold the highest standard of care, ensuring transparency and accountability throughout the investment process. This fiduciary responsibility, mandated by the Investment Advisors Act of 1940, underscores the paramount importance of prioritizing clients’ needs above all else. By adhering to this legal standard, RIAs provide clients with peace of mind, knowing that their financial well-being remains the top priority. When selecting a financial advisor, verifying their adherence to the fiduciary standard is essential. Registered fiduciaries, whether overseen by the Securities and Exchange Commission or state securities regulators, offer an additional layer of assurance, providing clients with confidence in their advisor’s commitment to acting in their best interests.

A Dual-Registered Firm: Combining Independence with Flexibility

Dual-registered firms, which encompass independent RIAs with broker-dealer affiliations, may offer a unique blend of independence and flexibility. By maintaining their RIA status, these firms uphold the fiduciary duty to prioritize clients’ interests above all else, ensuring transparency and accountability in their recommendations. Simultaneously, their affiliation with a Broker Dealer provides access to a broader range of financial products and services. However, unlike standalone broker-dealers, dual-registered firms typically operate with fewer guardrails, allowing advisors greater freedom to tailor recommendations without the constraints often imposed by traditional broker-dealer structures. This combination enables dual-registered firms to deliver comprehensive financial guidance while retaining the flexibility necessary to adapt to client’s evolving needs and goals.

Independent Portfolio Management

Toomey Investment Management, Inc. is a dual-registered Wallingford, Connecticut-based financial advisory company that offers clients expertise in independent portfolio management. Toomey Investment Management’s independence enables a client-centric approach to wealth management, where the focus is on understanding individual financial goals and crafting personalized strategies to achieve them.

toomeyinvest
Wealth
April 9, 2024

Navigating Financial Success: Wealth Management in Connecticut

While many Connecticut residents love our state and wouldn’t live anywhere else, there’s no denying that life in the Constitution State is expensive. According to the Cost of Living Index, Connecticut residents pay 13 percent more than the national average for living expenses. Housing in Connecticut is 24 percent higher than the national average, and utilities clock in at 30 percent higher. For everyday living items such as food and clothing, groceries cost about nine percent more than the national average, and clothing is also nine percent more expensive.

The good news is that incomes are higher in Connecticut. Per capita personal income in Connecticut notched in at $52,034 in 2022, second only to Massachusetts. Median household income stands at $90,213.

Building wealth in a high-cost, high-income state looks a bit different than it does in other parts of the country. Higher taxes make tax abatement strategies more urgent, for starters. A high cost of living makes retirement more challenging. For this reason, it’s essential to engage in proactive wealth management.

What is Wealth Management?

Wealth management is an essential, multifaceted process designed to strategically plan and manage your assets, incorporating a range of activities from financial investments to tax planning, retirement planning, estate planning, and beyond. While it’s possible to undertake wealth management on your own, the complexity of the financial landscape often necessitates the expertise of a wealth management professional. The ultimate aim of wealth management is not just to maintain but to significantly enhance your financial security and grow your wealth over time, ensuring it is well-protected against potential uncertainties.

Navigating the intricacies of wealth management without professional guidance can be daunting and might lead to missed opportunities for enhancing and preserving your wealth. A private wealth advisor plays a critical role in your financial journey, leveraging expertise to potentially enhance the performance of your investments, minimize your tax liabilities, and tailor your financial plans to fit the unique contours of your life and family dynamics.

In a high-cost, high-income environment like Connecticut, the value of a local wealth manager becomes even more pronounced. Connecticut-based wealth managers possess a deep understanding of the state’s economic climate and are well-versed in navigating its specific challenges and opportunities. These professionals have a proven track record of helping clients develop and refine effective wealth management strategies, staying abreast of relevant state laws and regulations to ensure a seamless and efficient wealth-building process.

Why Choose a Private Wealth Advisor?

Choosing to work with a private wealth advisor means opting for a partner who can provide personalized, strategic guidance tailored to your financial landscape. This partnership is invaluable for those committed to achieving long-term financial goals and ensuring their wealth not only grows but thrives, in today’s ever-changing financial environment. With their expertise, private wealth advisors offer peace of mind and a path to financial confidence, making them an indispensable resource for anyone serious about securing and enhancing their financial future.

Toomey Investment Management, Inc. is a Wallingford, Connecticut-based financial advisory company that offers clients expertise in independent portfolio management. Toomey Investment Management’s independence enables a client-centric approach to wealth management, focusing on understanding individual financial goals and crafting personalized strategies to achieve them.

toomeyinvest
Investment
April 9, 2024

Evolving Investment Trends for Younger Americans in 2024

As Millennials stand on the cusp of the largest intergenerational wealth transfer in history, their distinct approach to investments is poised to redefine the financial landscape. By 2045, it’s estimated that up to $73 trillion will transition to this younger generation. Yet, their investment behaviors diverge significantly from those of previous generations, influenced by unique values and technological advancements.

Sustainable Investing: A Core Focus

Millennials are reshaping investment priorities to focus on sustainability. The appeal of sustainable investing has surged among Millennials, with an overwhelming majority expressing interest in 2021. This shift is not just about financial returns but also about contributing positively to the planet’s future. The financial market has responded to this demand by significantly expanding offerings in sustainable funds, reflecting a broader trend of integrating environmental concerns into investment decisions.

Retirement Savings Challenges

Despite being proactive in sustainable investing, Millennials face a looming retirement crisis. Data suggests that many in this generation are not saving adequately for retirement, a situation exacerbated by several factors, including stagnant wages, the burden of student loan debt, and rising living costs. This shortfall in savings could lead to a significant gap in their financial security later in life, making it crucial for Millennials to consider strategies that can enhance their retirement savings, such as starting to save earlier, taking advantage of employer retirement plans, and seeking financial advice tailored to their specific circumstances.

A Move Away from Traditional Advisory

In the evolving landscape of the financial sector, Millennials are leading a transformative shift, demonstrating a pronounced preference for the novel solutions and conveniences offered by fintech, paralleled by a deep appreciation for personalized advisory services. This generation’s move away from the generic offerings of traditional banks is driving a surge in demand for financial institutions that marry the latest in technological innovation with a commitment to individualized client service.

Despite their enthusiasm for digital solutions, Millennials underscore the importance of maintaining personal connections within their financial dealings. The inclination towards fintech does not eclipse the value they place on relationships and trust when it comes to financial advice. This juxtaposition of desires signals a sophisticated approach to managing finances, where the advancements in technology serve to bolster the nuanced counsel provided by trusted advisors.

This demand for a hybrid approach signals a crucial evolution in the financial advisory sector. Advisors who skillfully combine the insights offered by digital tools with a personalized touch are setting a new standard, demonstrating how technology and human insight can merge to create more comprehensive, responsive, and personalized financial planning experiences. For Millennials, the ideal financial advisor is not just a person or a platform but a fusion of both—someone who leverages the power of technology to enhance the depth and quality of their advice, ensuring that financial strategies are both highly personalized and at the forefront of innovation.

Consult with a Professional

Toomey Investment Management, Inc. is a Wallingford, Connecticut-based financial advisory firm that offers guidance on sustainable and socially conscious investing.

At TIMI, our business model is designed to treat all of our clients equally and fairly. We realized long ago that the financial industry dedicated many resources to capture money from prospective clients but much less on service and accountability for existing clients. At Wallingford, Connecticut-based TIMI, we listen carefully, keep in touch, and return your calls and communications quickly so that you can count on us. We will work effectively to optimize your financial situation and solve your problems. Call us at 203-949-1710 or visit our website for more information.

toomeyinvest
Estate
October 11, 2023

The Great Wealth Shift from Baby Boomers to Millennials

There is much being written today about the “great wealth transfer.” What it refers to is a massive shift in assets from the aging Baby Boomer generation to their children, who are primarily of the Millennial generation. In this blog, we’ll take a look at some of the issues involved in the transfer.

Baby Boomer Wealth

Baby boomers are still the most significant generation when it comes to wealth, primarily because of historical circumstances. They began their careers in an economy that provided them with a relatively low-cost education followed by the strong availability of jobs and affordable housing. Because of a variety of socioeconomic and environmental factors, Baby Boomers were able to build wealth in a way no other generation before them had.

Millennial Wealth

Millennials, on the other hand, saw an unprecedented spike in the cost of education, and many of them are still saddled with student loan debt even into middle age. Home prices soared, as well, shutting many of them out of home purchases. The result is millennials often have far fewer assets than their parents did at the same age. The coming wealth transfer should be a massive, long-term financial opportunity to restore personal financial health.

So Where Is the Shift Originating?

As Baby Boomers continue to age, many will sell massively appreciated homes to downsize and reduce their expenses with less travel and mobility, all while continuing to grow their wealth through various investment vehicles. The oldest Boomers are reaching a fairly advanced age, meaning that their passing is the start of the largest generational wealth transfer in history. This wealth is in the form of a variety of inherited assets, such as retirement accounts, taxable brokerage accounts, annuities, personal property, real estate, life insurance, and much more.

What Are the Tax Implications?

As the transfer of wealth takes place, the government will effectively shift the tax burden (as well as tax revenue) from Baby Boomers living on a fixed income at a lower marginal tax rate to millennials in the prime earning phase of their careers. The result is that Millennials may face an enormous tax burden particularly when it comes to inheriting pre-tax assets.

Prior to 2020, the beneficiaries of inherited IRAs or similar plans such as 401ks, were able to transfer money into an inherited IRA and elect to “stretch” the distributions over their lifetime. This allowed them to minimize, or stretch the distributions and subsequent tax burden out over many years.

The Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 essentially eliminated the inherited IRAs stretch election. Under the new legislation, heirs of pre-tax assets have only two options: they can take a lump sum distribution and pay all the taxes at once, or transfer the money to an inherited IRA. If they choose the latter, the funds must be withdrawn and taxed over 10 years following the death of the decedent. Both these options increase the tax burden.

Minimizing the Tax Burden

There are tools that can be used to minimize the tax burden, and the best place for guidance is with a professional financial advisor and tax firm. Toomey Investment Management, Inc. is a Wallingford, Connecticut-based financial advisory company that offers clients expertise in portfolio management.