News

By Liz Behlke

It seems that part of parenting is imagining what your kid is going to do when they grow up. A child who enjoys tinkering may be destined to be an engineer. One who loves to put on a show might become a director one day. We’re always on the lookout for the spark that will determine where a child will go in life. But we also know that some form of education beyond high school will often be the way they’re going to get there.

When my daughter started elementary school, I noticed that parents had a whole variety of ideas about how they were going to afford higher education. Some parents would reflect on their own experience and assume their child will pay their own way by juggling a job and schoolwork. Others wanted their kid to attend two years at a community college to save money. Many people figure student loans are inevitable and hope their financial situation will change by the time high school graduation is on the horizon. But a lot of these plans simply amount to putting off saving and hoping for the best.

Other parents I’ve encountered thought they could position their child for generous scholarships. Perhaps their offspring would take up an activity, like robotics or the bassoon, or a sport, like lacrosse or fencing, that will get the attention of college admissions officers. There’s also the traditional method of parents demanding high grades and stellar SAT scores in the hopes of earning more merit aid. The fact is most college-bound kids are not getting lavished with hefty scholarships. And some kids decide to take a different route, like learning a specialized trade.

More money means more options

One way or another, the families we know were able to send their children to college if that’s where their path was leading them. But some had to make hard choices about whether they could realistically afford their child’s favorite school. When you’ve got the funds to support your child’s dream, they have more options. Maybe the in-state school is a lot cheaper, but your child has found a program a few states away that really feeds their passion. You don’t want to crush their dreams for lack of money.

Saving for college means giving your child more options when the time comes to choose a school. More options to study what they want, where they want, without missing out on an enriching campus experience. By starting early, you can build a healthy fund that can minimize—or even eliminate—the burden of student debt. Here’s how it works:

Start young. When your child is born, you’ve got 18 years to save for their post-secondary education, whether that’s college or a trade school. When they enter high school, you’ve got four. Money builds on itself the longer you have it invested, so the earlier you start, the more money you can accumulate.

Save tax free. 529 savings plans allow you to invest tax free, and if your child decides not to further their education, you can transfer the money to a sibling or grandchild. You can even use it to further your own education. Every state offers a 529 plan, but you don’t have to use the one in your state. 529 plans can cover tuition, books and supplies, and even housing expenses.

Prioritize. Start with a plan to put away regular amounts of money in a designated higher education savings account. Then take a look at your spending choices to see if there are other sources of money that can help you build that fund. For example, an inheritance or work bonus can be put away to boost your savings. The point is, don’t wait.

When my daughter started kindergarten, her grandfather opened 529 plans for each of his grandchildren. By the time she was ready for college, there was enough saved so she didn’t have to worry about the cost when she was looking at schools. So now for my last piece of advice: If grandparents are contributing to a college fund, be sure your child thanks them often for giving them such a generous opportunity.

Wherever your kids—or grandkids—are on their journey through life, make a plan to talk to your financial planner about investing for higher education so they have options when the time comes.

Please contact us at 206.217.2583 or info@arrivity.com if we can assist you or someone you know with financial planning.

Liz is a Late Boomer in the sandwich generation who started an independent writing and brand consulting practice after years as a senior marketing executive. She lives in Seattle, Washington. Her mother lives nearby and her daughter comes home during college breaks.

The foregoing content reflects the opinions of Liz Behlke and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns Securities investing involves risk, including the potential for loss of principal. There is no assurance that any investment plan or strategy will be successful.

By Liz Behlke

When my 20-year-old daughter looked over the wage summary for her summer job, she zeroed in on the money that was taken out before the paycheck even hit her account. She grudgingly acknowledged the income taxes, hoping she may get some back as a refund. But Social Security? From the buzz she’s hearing among her generation, Social Security will be dried up long before they near retirement age. It seems unfair to have to pay for something they feel like they may never see.

There’s certainly a lot for the younger generation to worry about as they look into the future. So how should they be thinking about Social Security?

Let’s start with the obvious: Predicting the future is fraught. So while nobody can say exactly what’s going to happen 30, 40, and 50 years from now, there are people whose job it is to carefully track the longevity of the Social Security fund. In fact, the latest estimates by actuaries – the statisticians who crunch all the numbers around lifespan and economics – shows that Social Security will run out of funds in 2034. That’s not too far into the future at all. Even someone like myself, who is thinking about the when and how of retirement, could start feeling pretty anxious about this news.

Looming demise, or a high-pressure deadline?

It turns out that for financial professionals, politicians, and other Social Security watchers, there’s nothing at all surprising about the projection that the fund will run out of money in 2034. And this isn’t the first time Social Security had a looming crisis. It also happened in 1983. That was when the government enacted a set of changes that put it in the black. And that’s when they predicted it would be solvent until the year 2035. (New projections that take into account pandemic-related demographic and economic shocks have moved the date forward by a year).

Sensible people may wonder why the government is waiting until the very brink to fix Social Security. One word: Politicians. The solutions aren’t complex: It’s a matter of finding an acceptable balance of cost-cutting and income generating measures. But the necessary actions are never popular with politicians since they mean a combination of increasing taxes and decreasing benefits.

Most experts predict, however, that the changes will get made – probably as the deadline becomes unavoidable. Social Security is one of the most popular entitlement programs in the U.S., and senior citizens are active voters. Politicians have plenty of incentive to make sure Social Security sticks around. The changes, when they come, will probably mean that people who are still working will have to pay more into the fund. They may also have to wait longer to reach an age when they can take full retirement benefits. In addition, future benefits themselves may not cover as much in retirement expenses.

Social Security and you

While it looks like Social Security will get a new lease on life in the next decade or so, the potential changes are a reminder to plan carefully for the financial resources that will fund your retirement. The truth is, even now Social Security payments only cover a fraction of retirement expenses for the average senior. My 86-year-old mom, for example, covers about 40% of her budget with Social Security, but her spending has been low, especially during the pandemic when she hasn’t been able to travel or eat out. Thankfully, my parents participated in employer pension plans and socked away money in IRAs, so she has enough to be comfortable.

I’ve already helped my daughter set up her first IRA, just as my dad did for me when I began earning real money. Maybe it’s good that my daughter assumes she can’t depend on Social Security. That way she’ll have incentive to start saving early and actively think about retirement even in her 20s and 30s. Money saved now has a longer time to accumulate, giving her more flexibility as she gets older.

If predicting the future feels daunting, your Arrivity financial planner can help. They’ll make a careful assessment of your current financials and factor in your plans for the future, including when you hope to retire. Then, they’ll design a roadmap that helps you get there.

Please contact us at 206.217.2583 or info@arrivity.com if we can assist you or someone you know with financial planning.

Liz is a Late Boomer in the sandwich generation who started an independent writing and brand consulting practice after years as a senior marketing executive. She lives in Seattle, Washington. Her mother lives nearby and her daughter comes home during college breaks.

The foregoing content reflects the opinions of Liz Behlke and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns Securities investing involves risk, including the potential for loss of principal. There is no assurance that any investment plan or strategy will be successful.

By Liz Behlke

Remember when the pandemic was going to disrupt life for a few months – okay, maybe a year – and then everything was going to get back to normal? Just when it looked like we had a handle on the virus, the global supply chain falls apart. Then came the crazy swings in the stock market. Now it’s inflation. Sure, wages have been going up for a lot of people, but by many metrics, inflation is wiping out those income gains. It’s enough to make a person want to stop looking at the news.

You’d have to be more than 40 years old to remember inflation like what we’re experiencing today. Breaking news alerts announce new record prices for a gallon of gas. Grocery store receipts contain eye-popping numbers. Everyone is ready to take a much-needed vacation, but it’s hard to relax when all you can think about is the cost of travel. With prices rising as fast as a Covid surge, it’s hard to know whether it’s time to make changes in your financial portfolio – or just hang in there and hope.

Just as no one could predict we’d start 2022 with war in Eastern Europe, there’s no way to accurately anticipate the trajectory of inflation numbers. That said, economists and market analysts spend their lives tracking trends, assessing underlying market conditions, and looking at comparable times in history. Here are some data points that help put today’s inflation in perspective:

• The overall Consumer Price Index (CPI) is up 8% year-over-year. That’s the highest it’s been since the 1980s. A lot of the rise in prices is being driven by the cost of fuel and food. But there are still impacts related to supply and demand imbalances, which will ease as knots in the supply chain get worked out.

• Economists and experts expect inflation to increase a bit more before it goes down, but believe that the current trend is transitory, meaning they expect that inflation will slow over the next 12-18 months.

• The expectation is that long-term stock returns won’t be significantly impacted by inflation since companies tend to pass costs onto consumers over time. But if inflation persists, companies may end up having to take a hit to profits, which could lead to continued weakness in stock prices over the short term.

• While rising interest rates are the current talk of the town, if the economy does head into a recession, the Federal Reserve may respond by cutting interest rates. This would likely lead to increased bond prices and a reversal of the recent rise in savings rates.

How inflation impacts your financial planning

It’s time again to go back to the basics: A balanced portfolio with a long-term planning horizon continues to be the best formula for protecting against inflation and growing your assets. What you do in response to inflation depends very much on where you are in your life. Strategies will be different for someone who is at or near retirement versus an early-career professional with many years of income ahead of them. A few things to consider include:

• Your household cash flow. When income doesn’t keep up with inflation, that results in lower purchasing power. In practical terms, it can mean that your exact same lifestyle could be cutting into savings or your ability to accumulate money for retirement. Consider where you may make some short-term adjustments if needed, to stay within your means.

• Rebalancing your portfolio. Unless you are in retirement and drawing on your portfolio, it’s not a good idea to park long-term investment dollars in low-interest savings accounts, because when inflation is higher than the yield on savings, you’re actually losing money. However, if you haven’t rebalanced your portfolio in a while, consider setting a meeting with your financial planner to look at your options.

• Social Security timing. Your monthly Social Security benefits will be higher each year you put off receiving them. Payments are also automatically adjusted for inflation. This means waiting to collect Social Security could be beneficial if it works in your overall financial plan.

The economy runs in cycles, and market watchers have been anticipating a cooling off of the stock market for a while. But the past two years have seen so many unique events. It’s difficult to predict what the pandemic, supply chain disruption, war, food and energy shortages, and inflation will do to anyone’s portfolio. A balanced, long-term approach continues to be the best bet for weathering any storm.

If you’re feeling uncertain about whether your portfolio is structured to serve your needs

and in the future, contact your Arrivity financial planner so we can review your situation together.

Please contact us at 206.217.2583 or

if we can assist you or someone you know with financial planning.

Please contact us at 206.217.2583 or info@arrivity.com if we can assist you or someone you know with financial planning.

Liz is a Late Boomer in the sandwich generation who started an independent writing and brand consulting practice after years as a senior marketing executive. She lives in Seattle, Washington. Her mother lives nearby and her daughter comes home during college breaks.

The foregoing content reflects the opinions of Liz Behlke and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns Securities investing involves risk, including the potential for loss of principal. There is no assurance that any investment plan or strategy will be successful.