Financial Planning 2025 by Ballantine Communications

Financial PLANNING 2025

Ballantine Communications uses reasonable effort to include accurate and upto-date information for its special magazine publications. However, all information comes from a variety of sources and may change at any time for any reason. To verify specific information, refer to the organization or business noted. To view the online version of this publication, visit: durangoherald.com.

ContentsTABLE OF

CHIEF EXECUTIVE OFFICER

John Blais

VP OF BUSINESS DEVELOPMENT

Jamie Opalenik

MEDIA & CREATIVE OPERATIONS DIRECTOR

Joann Sonday

LAYOUT & DESIGN

Tad Smith manager of creative services

Ryan Brown

Wade Campbell

Gabriel Glenn

EDITORIAL

Hunter Harrell

special sections editor

ADVERTISING OPERATIONS

Kirby Earl

Gayle Vitarius

ADVERTISING SALES

Natalie Martin

Joe Nelson

Kelly Ozier

Shell Simonson

Michele Wayne AUDIENCE

MARKETING MANAGER

Raye Burton

How to find a financial planner

No matter where professionals may be in their careers, some may note that retirement may arrive sooner than expected, and it also applies as much to young professionals just starting their careers as it does to seasoned workers for whom retirement is just over the horizon.

The notion that retirement can quickly creep up on professionals underscores the significance of planning for those days when workers will no longer be drawing a paycheck. Going it alone when planning for retirement can be a risky endeavor, not to mention an unnecessary one. Financial planners can help anyone get on the road to retirement. Professionals can keep these three tips in mind as they look for a financial planner to help meet their retirement goals.

1. RECOGNIZE WHY YOU NEED A PLANNER.

Financial planning firms provide a range of services, and individuals should identify what they’re hoping a planner can do for them prior to their search. Some individuals may be looking for advice to get out of debt so they can focus more on retirement, while others may not have any debt and instead want investment advice so they can begin to grow their wealth. Each person is unique, so individuals must identify what makes them unique and then seek a planner whose experience and specialty aligns with their needs.

2. PREPARE FOR THE PROCESS.

Hiring a financial planner should be seen as a series of job interviews in which the prospective client is the interviewer and the planner is the person trying to land a job. When seeking a financial planner, prepare a list of questions covering everything from compensation structure to the adviser’s personal approach to planning to his or her existing client profile. Answers to these questions and others can give investors a detailed picture of a financial professional. The more information investors gather about a financial planner, the more likely they are to find one they will be comfortable working with.

3. INQUIRE ABOUT FIDUCIARY STATUS.

According to the U.S. Securities and Exchange Commission, a fiduciary is an investment adviser who is obligated to choose investment products that are in the best interest of the client regardless of the impact on the fiduciary or his or her firm. That can provide investors some added peace of mind when hiring individuals who will be handling their money. However, it’s still important that individuals who hire a fiduciary pay attention

n How much you earn after tax on a monthly and annual basis

n How much you pay in fees

to their investments. Fiduciaries are not immune to unethical conduct, and some may still make mistakes when choosing investments. It’s important that investors acknowledge that even the most well-meaning fiduciary can choose investments that don’t work out. There’s always risk involved with investing, but working with a fiduciary can help investors feel better about taking on such risk.

Financial planners can be invaluable as individuals seek ways to secure their financial futures. Prospective investors should be patient and diligent as they begin the process of finding a financial planner they can work with to achieve long-term goals.

The basics of financial literacy

Afinancial safety net can help people navigate the ups and downs of life. Developing that safety net requires a measure of financial literacy that anyone can nurture.

n What is financial literacy?

Understanding how to earn, manage and invest money is financial literacy. That recognition can increase the chances that individuals make sound financial decisions, thus setting them up for independence, stability and long-term success.

n What makes financial literacy so important?

The benefits of financial literacy are not limited to theoretical notions such as the ability to understand money makes individuals more likely to make sound decisions regarding their finances. Indeed, the Financial Industry Regulatory Authority (FINRA) notes that financial literacy is proven to produce positive results. In its National Financial Capability Study released in 2022, FINRA found that respondents who exhibited higher financial literacy were more likely to make ends meet than those without such knowledge. In addition, 65% of respondents with higher financial literacy were able to set aside three months’ of emergency funds at higher levels than respondents with lower literacy levels. The study also linked financial literacy to longterm stability, as more than half of respondents (52%) with higher financial literacy calculated their retirement savings needs, an important step that fewer than one in three (29%) with lower literacy levels had taken.

n What are some additional benefits of financial literacy?

Individuals are often confronted with a host of options when making financial decisions. That includes choices regarding bank accounts and credit cards, which are two variables related to financial literacy that individuals encounter every day. Individuals with financial literacy can pick a bank account that most suits their needs, whether that’s standard accounts like checking and savings or something more unique like a highyield savings account. Knowledge of financial basics also can prepare individuals to choose the right credit

card, which can be a more difficult decision than choosing a bank account given the number of different cards available. Low-APR, no-APR, travel rewards, cash-back cards and balance transfer cards are some of the options consumers can choose from when picking a credit card. Financial literacy increases the chances consumers pick the card that best suits both their short- and long-term needs.

Financial literacy can help people navigate challenges that periodically arise during the course of everyone’s life. Taking time to learn some financial basics can set people up for long-term economic health.

9 WAYS TO TEACH CHILDREN ABOUT MONEY

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Tips to improve financial literacy

Financial planning is a key component of successful money management. When financial plans are established, people often emerge in a better position to achieve both short-term goals, like financing a dream vacation, and longterm aspirations, like retiring with enough money to live without worry.

No one is born knowing how to handle and manage money. Financial literacy is an acquired skill, which means anyone can learn how to manage money effectively. The following are a handful of ways individuals from all walks of life can improve their financial literacy.

n Crack the books (and magazines).

A wealth of resources are available to anyone looking to become better at managing money, and many of those resources are books and magazines. Printed works are available for people with varying levels of financial literacy, so it’s unlikely that any single text or magazine will benefit everyone equally. Find a text that speaks to your level of literacy and build from there.

n Pay attention to financial news.

The days when financial news was limited to industry insiders or a handful of industry publications are long gone. Various online entities and cable television channels are now exclusively devoted to financial news. Anyone can benefit from paying attention to financial news, which can shed light on investments, real estate and financial industry trends that can help people better understand their portfolios and assets.

n Read your emails.

Adults who already have retirement accounts and other investments may also have an invaluable resource right inside their email inboxes. Investment management firms like The Vanguard Group, Inc., routinely host online information sessions and discussions for investors that are promoted through email and other lines of communication with account holders. When promotional emails offering these sessions are announced, take note and resolve to participate. Many don’t require active participation, but they often provide insight into financial products, markets and strategies to successful investing.

n Ask questions.

It seems simple, but one of the most effective ways to gain greater financial literacy is to ask questions. If you work with a financial planner or are interviewing professionals to help you manage your money, ask that person to explain their financial strategy and the strategy espoused by their firms. When a new short- or even long-term goal pops up on your radar, ask your financial planner to explain ways in which you can achieve that goal. Such discussions can reveal strategies that even wellinformed individuals may not know. Financial literacy can help people live comfortably, it can also help them accomplish goals. These are just a few ways individuals can improve their financial knowledge and take greater control of their finances and futures.

How to avoid falling into debt

Avoiding debt is a key to long-term financial stability. However, data from the Federal Reserve Bank of New York indicates households throughout the United States began 2024 with a record high of $17.3 trillion of debt. Debt may seem unavoidable in a time marked by high inflation, when the cost of everything from groceries to entertainment has increased significantly. Thankfully, various strategies can help individuals avoid falling into debt.

n Prioritize an emergency fund. Unforeseen expenses, whether it’s major auto repairs or unexpected medical bills, can quickly land consumers in financial hot water. In fact, a recent survey from the Kaiser Family Foundation found that more than half of all adults in the United States report going into debt in the previous five years due to medical or dental bills. Roughly one in five respondents indicate they don’t ever anticipate paying off such debts. One way to avoid such a fate is to prioritize building an emergency fund that can be accessed whenever sizable, unforeseen expenses threaten to derail your finances. Resist any temptation to tap into an emergency fund during non-emergencies, and continue to grow the fund with routine contributions each month.

n Automate transfers via the bank. Banks enable account holders to set up automatic transfers, which make it easier than ever to save money and thus avoid debt. Consumers can examine their finances and determine how much from each paycheck they can automatically transfer into a

7 MONEY-SAVING TIPS

n Stop upgrading your phone

n Brew your own coffee

n Eat less meat

n Carry bills of larger denominations

n Compare every cost

n Shop for food online

n Bring lunch to work

savings or retirement account. Once that number is determined, set up the transfers so you are not tempted to spend the money come payday.

n Maintain a good credit rating. A strong credit rating is advantageous for many reasons, not the least of which is the cost savings associated with such a reputation. When borrowing money for bigticket items like homes and vehicles, individuals with high credit scores generally receive better lending terms,

including lower interest rates. Over time, the money saved by earning a lower interest rate on a mortgage can equal tens of thousands of dollars, and those cost savings can help consumers avoid utilizing credit cards to pay for unforeseen expenses like home repairs or medical bills.

n Become a disciplined consumer Online shopping has made it easier than ever to spend beyond one’s means. A new wardrobe and expensive concert tickets are only a few mouse clicks away, and that accessibility can tempt consumers to spend beyond their means and accrue a substantial amount of debt. By resolving to remain a disciplined, savings-first consumer, individuals can avoid the pitfalls of debt. Debt can have both short- and longterm consequences. A few simple strategies can decrease the chances individuals join the debt-riddled masses even during a time when cost of living is especially high.

Tips for young professionals

Young adults confront something of a juggling act once they begin their professional lives. For many, that challenge begins with landing and starting a first job, arranging a payment plan for student loans, finding a place to live, and determining savings and personal finance goals. Although entering the workforce and taking a big step toward financial independence can be exciting, it also comes with financial responsibility. Setting a strong financial foundation as early as possible helps establish long-term financial security. These tips can help young professionals manage their money more effectively.

6

STEPS TO FINANCIAL EMPOWERMENT

n Take a money management course. Young professionals may be tired of heading to class or making the grade at this point in life, but educating oneself about some of the basic rules of personal finance can help bridge knowledge gaps in this arena. Many young adults have never been taught the basics of applying for credit and staying out of debt. If you’ve been riding the financial coattails of a parent throughout school, now is the time to learn more, whether it’s through an online course or reading up on the subject.

n Set SMART goals.

The acronym SMART stands for Specific, Measurable, Achievable, Relevant and Time-bound, and can serve as a roadmap to achieving various goals, including those related to money. Develop a clear financial plan, which can make it easier to budget and achieve savings-related goals.

n Minimize debt.

The Education Data Initiative says university graduates owe an average of $28,244 on student loans after they leave school, with a monthly payment between $200 and $299. Some graduates have even more debt and higher payments. Managing debt is vital to one's finances. So, it's crucial to establish a debt repayment plan at the earliest opportunity. There are multiple approaches to debt repayment. With a “snowball” strategy, borrowers pay off their smallest debts first. Once a debt is paid off, the payment amount for that debt is then applied to the next smallest debt, gaining momentum with each payment. The “avalanche” approach involves paying off the debt with the highest interest rate first.

n Aim to pay with cash more often. Unless you can afford to pay off the balance in full every month, using credit cards a lot can contribute to debt accumulation. LendingTree says that, as of September 2024, the average APR on all new card offers was 24.92%. Buying items with cash or debit will reduce the likelihood of spending what you don’t have, offers Investopedia.

n Set up an emergency fund. It might be challenging to set aside a lot of money right now when you have an entry-level position and some debt. But setting aside as little as $1,000 for unexpected life events separate from your own personal savings can shield you from issues that arise from unexpected expenses.

n Participate in employer benefit plans. Look for the various ways that your employer can help you save money. This may include participating in retirement plans (including those with employer contribution matches), health spending accounts, gym memberships and additional opportunities.

n Start saving and investing now. According to SmartAsset, if you start investing $150 per paycheck at age 25 and your investments have an average annualized return of 8%, after 40 years you’ll have about $1.1 million in your account. Investing the same at age 35 means cutting nearly half of that total simply by procrastinating. It takes practice to develop strong financial skills. Working with a certified financial planner also can help young professionals grow wealth over the course of their lives.

Steps toward estate planning

Managing and planning one’s estate sounds like a task reserved for the rich. But that’s a common, and potentially costly, misconception. Indeed, estate planning is a necessary component of long-term financial planning no matter the size of a person’s investment portfolio.

Estate planning is an umbrella term that encompasses anything from asset allocation after death to end-of-life health care decisions to power of attorney should an individual become incapacitated. Key components of an estate plan typically include wills, trusts, power of attorney and health care directives. According to a 2021 survey by Caring.com, only 33% of Americans have a will in place, and 60% of respondents in the same survey cited “not having enough assets” as reasons for not creating an estate plan.

The following actions are some basic steps anyone can take to establish an estate plan.

n Create a will.

A will is a legal document that specifies how assets will be distributed after death. Although a will can be set up without an attorney, relying on an attorney to create or update a will can ensure that it is legally sound and reflects your intentions. In the will, you can name an executor who will carry out the plans of the will. Without a will, intestacy laws where you live will dictate the distribution of your assets.

n Establish trusts.

Morgan Legal Group says trusts are tools that can protect assets, minimize estate taxes and provide for beneficiaries. Trusts can be revocable or irrevocable. Special needs trusts also can be set up. Trusts can help avoid probate and reduce estate taxes. The National Bureau of Economic Research indicates trusts can reduce estate taxes by up to 40%. Trusts also can shield some of your assets, so they cannot be counted as part

of your responsibility to pay for skilled nursing home admittance.

n Determine powers of attorney and health care proxies.

If someone becomes incapacitated, that person will need responsible people who can act on their behalf. A financial or legal power of attorney can help with paying bills, accessing accounts and managing finances and other needs. A health care proxy can be listed on an advanced health care directive, known as a living will. The proxy will communicate your wishes indicated on the directive and see that your wishes are honored.

Knowing what’s included in an estate plan can ensure that people make informed choices about their assets, beneficiaries and financial futures. It is always best to work with legal, medical and tax professionals when drawing up estate plans to avoid any issues that can arise when matters are not decided ahead of time.

Arete Mortgage

Arete

www.arete.us (970)

| arete@arete.us

Priority Financial Partners

(720) 319-8885 | inquiry@priorityfp.com

Comparing types of accounts

Financial security in retirement is a goal worth pursuing, but it’s one that a significant percentage of individuals feel is out of reach. According to a February 2024 report from the National Institute on Retirement Security, 55% of Americans are concerned they cannot achieve financial security in retirement.

Saving for retirement is an integral component of securing long-term

TRADITIONAL IRA

Eligibility: Anyone with earned income is eligible to open a traditional IRA. It may suit those who will be in the same or a lower tax bracket in the future.

Funding: A traditional IRA can be funded with after-tax dollars or as tax-deductible contributions.

Contribution limits: $7,000 annual limit in 2024, though individuals age 50 or older can contribute an additional $1,000 if they choose to do so.

Employer match: None.

Investment selection: Account holders can choose their own investments.

financial security. There are many ways to save for retirement, and individual retirement accounts (IRAs) and employer-sponsored 401(k) plans are among the more popular ways investors build a nest egg for their golden years.

IRAs and 401(k) plans differ in some notable ways, and recognition of what distinguishes these types of accounts can help people choose the right vehicle

ROTH IRA

Eligibility: Individuals aspiring to open a Roth IRA are urged to speak with a financial planner or accountant, as certain contribution criteria and tax filing requirements must be fulfilled.

Funding: A Roth IRA is funded with after-tax dollars.

Contribution limits: $7,000 annual limit in 2025, though individuals age 50 or older can contribute an additional $1,000 if they choose to do so.

Employer match: None.

Investment selection: Account holders can choose their own investments.

for them. When considering these vehicles, it’s important to point out that contribution limits can change from year to year, so individuals can expect to increase their contributions in future years if they hope to maximize the allowable amounts. The following breakdown, courtesy of US Bank, notes some key differences between a traditional IRA, a Roth IRA and a 401(k).

401(K)

Eligibility: Individuals are urged to speak with human resources professionals at their place of employment, as US Banks notes most employers have certain qualifications their workers must meet in order for them to participate in these plans. Those qualifications can vary between firms.

Funding: A 401(k) is funded with pretax dollars deducted directly from participants’ paychecks.

Contribution limits: The annual limit for 2025 is $23,500, though participants age 50 and older can contribute an additional $7,500.

Employer match: Some employers match employee contributions up to a certain percentage. Investopedia notes the average match was 4.5% in 2023.

Investment selection: Various portfolios may be offered, but those available are generally chosen by employers.

Individuals aspiring to create financial security in retirement are urged to consider investing via a 401(k) or a traditional or Roth IRA.

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