Top Financial Hazards for Professional Baseball Players and How to Navigate Them

Top Financial Hazards for Professional Baseball Players

Professional baseball players face many of the same financial hurdles that we all do such as curbing our spending, increasing our savings, and financially preparing for the future. However, they face the unique challenge of earning a high-income for a short period of time early on in their lives, making long-term financial planning seem less pertinent. This unusual earning structure, combined with limited experience handling money, is most often why professional athletes are notorious for blowing through a lifetime of income with a lot of life left to live. With so much focus on perfecting their athletic abilities, financial planning often falls by the wayside.

Here’s a closer look at some of the top financial hazards professional baseball players encounter in their lifetime and how they can handle them for a healthy financial future long after they’ve left the field.

Overestimating How Long Their Money Will Last

In traditional careers, individuals typically work to increase their income over time, whether that is by moving up the corporate ladder or improving the client base of their own business. As such, the majority of individuals will end their career at their highest earning potential, giving them ample time to learn how to manage their money.

The opposite is true of professional baseball players. These athletes certainly earn a great deal of income, but it is earned very quickly and at a very young age. In these cases, as is often the case with lottery winners and inheritors of large lump sums, this sudden influx of money can provide a false sense of security, promoting both overspending in the near-term and underpreparing for the long-term.

Continue reading

5 Surprising Medical Costs NOT Covered by Medicare

5 Surprising Medical Costs NOT Covered by Medicare

When it comes to budgeting for retirement, well-prepared pre-retirees will need to evaluate how their future income and expenses may change in retirement to be financially prepared to leave the workforce and enjoy their golden years. For most individuals, Medicare and supplemental Medigap plans will be a part of the healthcare piece of this puzzle; however, all too often, new enrollees are surprised to find that many of the expenses they expected would be covered are not. And with the average couple over age 65 spending an estimated $280,000 on healthcare during retirement, these aren’t expenses to be brushed off.

Luckily, supplemental plans are available to purchase for retirees who have more extensive healthcare needs than basic Medicare coverage will provide, but the plans vary and should be considered in their entirety before purchase. Before you shop for a Medicare plan, it’s best to do your research to find out what’s covered and what’s not. With this in mind, we’ve compiled this list of expenses that are not covered under Original Medicare in order to help you prepare for the most common budget-busting healthcare expenses.

1. Long-Term Care

Long-term care costs can be one of the most overlooked aspects of retirement planning, but can provide the most needed benefits for many individuals. In fact, the U.S. government estimates that nearly 70% of Americans over age 65 will require some form of long-term care in their lifetime, 40% over age 65 will go into a nursing home, and 10% will remain there for five years or longer.

Many people mistakenly believe that Medicare will cover long-term care services; however, Medicare Part A will only cover portions of hospital care and Medicare-approved Skilled Nursing Facility Care (SNF) for a limited amount of time (no longer than 100 days) and only when certain conditions and prerequisites are met. This very limited coverage does not cover non-skilled assistance with daily living activities, which make up the majority of long-term care services.

Continue reading

Suffering the Loss of a Parent: Financial First Steps

Suffering the Loss of a Parent Financial First Steps

There is no way to fully prepare for the emotional turmoil and grief that accompanies the loss of a parent. Losing a parent forces us to face some difficult realities whether we are ready to or not, and financial “next steps” may not be ones we want to face right away.

It may be tempting to let money matters fall by the wayside, especially if financial “next steps” weren’t discussed before your parent’s passing. However, it is important to keep in mind that delaying certain responsibilities may eventually complicate matters that could have been avoided if action had been taken sooner.

After a death, there is much to attend to, but you don’t have to tackle it alone, which is why the first step in our checklist is to enlist support.

1. Enlist Support: Support comes in many forms and none is any less important than another. Some supports help us to cope emotionally, while others assist us in navigating new legal and financial territory.

- Friends and Family: Lean on your friends and family to assist you in completing daily tasks such as transporting the kids to and from school, picking up prescriptions, or bringing you a meal. Having a good support system in place can help ease the burdens of this transitional period.

- Financial Advisors, CPAs, and Attorneys: The financial advisors, CPAs, and attorneys of the deceased should be notified of the individual’s death immediately. The deceased’s estate planning attorney will have the latest copy of the deceased’s will and the financial advisor and CPA will have working knowledge of his or her assets, debts, account locations, and business dealings.

This team of professionals will be able to walk you through the complex process of settling the estate, filling out important paperwork, updating legal forms, and closing out the deceased’s accounts (when necessary), hopefully easing the burden of these important, but potentially overwhelming tasks.

Contacting your own team of professionals will be equally important, especially if you are positioned to receive any type of inheritance from the deceased parent. Your team can help you to manage your sudden influx of money, mitigate the tax burdens on that money, and set up an estate plan of your own.

Continue reading

Top 5 Financial Topics Every Couple Should Discuss Before Marriage

AdobeStock 142239782

Marriage isn’t just a romantic relationship; it is also a fiscal one. You and your spouse will not only share a home, but likely a bank account and it’s no secret that money troubles can be one of the most formidable foes to a happy marriage. Being fiscally transparent and setting clear expectations up front can help you and your future spouse thrive both personally and financially long after your special day.

1. Debts and Outstanding Financial Obligations: Marriage legally binds each individual’s assets and debts together, so any outstanding financial obligations, especially debts, should be revealed up front. Nothing will ruin the “honeymoon period” like suddenly learning your partner’s monthly loan and consumer debt payments devour the majority of your income. Not only will surprise debt put a strain on your lifestyle, it can create trust issues in the relationship early on.

Other outstanding financial obligations, such as ongoing assistance to a family member, child support, or alimony from a previous marriage should also be discussed. If your spouse owns a business, a business valuation could provide some insight as to whether or not the business could become a financial liability in the near future.

2. Assets: For younger couples who haven’t had much time to save, discussing assets might be a relatively simple conversation, but for higher-income individuals and those with more mature finances, the conversation could become a bit more in-depth. A pre-nuptial agreement, or a legally binding, pre-determined division of assets, may even be on the table for couples who demonstrate a significant imbalance of wealth between them.

Continue reading

Beware of Lifestyle Inflation

Beware of Lifestyle Inflation 1

Have you ever found yourself postponing retirement contributions, debt repayment, or perhaps opening a college savings plan for the hypothetical day when you make more money? You keep promising yourself that when you get that bonus or receive that promotion, you’ll finally get back on track. If so, you aren’t alone. And there is not doubt that these are great aspirations to have.

However, the problem most individuals have is in following through on these long-term financial goals once the thrill of the increased spending power arrives in hand. This is the insidious phenomenon of Lifestyle Inflation and effects individuals of all ages and all income levels.

What is Lifestyle Inflation?

Lifestyle Inflation refers to increasing one’s spending when income increases. Rather than using the extra income to pay off debt, make larger retirement contributions, or fund to a long-term savings goals, individuals tend to escalate their spending to match their income—thus perpetuating the habit of living paycheck to paycheck and making it increasingly difficult to get ahead.

The Emotional Root of the Problem

Logically, the concept of lifestyle inflation is simple: if we spend all the extra money we earn, we make it impossible for ourselves to actually get ahead. It is for this very reason that lifestyle inflation affects individuals of all income levels—if you make x dollars and spend x dollars each month or each year, you’re left with zero at the end of the day (no matter how big or small x was to begin with). But emotionally, it’s not so simple.

Continue reading

3 Questions Every Woman Should Answer Before Claiming Social Security Benefits

AdobeStock 128053044

Although Social Security was never designed to sustain retirees’ living costs in its entirety, it has become a reliable source of income many Americans utilize to help bridge the gap between other sources of retirement income and total expenses, especially for women.

According to the Social Security Administration, women make up 56% of the 37.8 million beneficiaries aged 65 and older. Why? Women enjoy longer lifespans than men and have less saved for retirement due to the gender wage gap and years spent outside the workforce in caretaking roles. As a result, women between the ages of 60 and 64 are estimated to have $40K less in retirement savings than their male counterparts, making social security benefits a more integral part of their retirement plan.

Maximizing social security benefits, then, should be a retirement planning factor women take care not to overlook.

  • Should I Continue Working to Make Up for Years Out of the Workforce?

Social security benefits are based on lifetime earnings and are calculated using your average indexed monthly earnings during the thirty-five year period when you earned the most income. However, since many women leave the workforce to raise their own children or help care for aging parents, they may not have had an opportunity to log a full thirty-five years or, if they did, inevitably earned less over that duration due to the gender wage gap (which still exists today).

One option women can exercise is to continue working past their initial projected retirement date in order to (a) inflate the income average that will be used to calculate their benefits or (b) avoid having zeros factored in for the number of years under 35 that they did not pay into the system.

Social security benefits are considered earned benefits, so if you don’t work for a full 35 years, and subsequently do not pay into the system for a full 35 years, you’ll have zeros factored into your calculation for the number of years you did not show an income. Since working full-time at an older age is not always feasible or desirable, some women choose to take on part-time work from home in order to avoid having zeros factored into their lifetime benefit calculation.

Continue reading

The Top 3 Financial Challenges Hispanic-Americans Face

Top Financial Challenges Hispanics Face

Hispanic Americans make up one of the fastest growing segments of the U.S. population, and with more Hispanics being birthed in the U.S. then ever before, the growth of this group shows no signs of slowing down. The US Census Bureau projects the Hispanic American population to increase 115% by 2060, at which point they will represent 30% of the entire population.

And this burgeoning segment is not growing without prosperity. According to the Hispanic Access Foundation, the buying power of Hispanics is exceeding $1 trillion and is expected to grow another 50% over the next five years. Hispanic business owners alone contribute more than $70 billion to the US economy.

But despite their entrepreneurial and financial success, nearly half of all Hispanic Americans surveyed by Mass Mutual still reported feeling less financially secure than other groups. So how do we explain this disconnect? For many Hispanics, the following factors tend to get in the way of preparing for long-term financial success and, subsequently, create feelings of financial insecurity.

1) Language and Monetary System Barriers

For native-born Hispanic Americans, the language barrier and US monetary system are far less problematic than they are for older members of the population who immigrated to the U.S. at an older age with limited language skills and resources.

Being a non-native English speaker entering a country with a completely different monetary system can pose huge problems for individuals trying to decipher complicated US tax forms, legal contracts, or applications for credit. Many times, the less fluent, older Hispanic populations will rely on help from their teenage children (or even grandchildren) to translate and interpret such forms!

Continue reading

WHAT WOMEN NEED TO KNOW TO TAKE CONTROL OF THEIR FINANCIAL FUTURE - PART II

What Women Need to Know to Take Control of Their Financial Future Part II

Insuring Against the Unexpected

Risk management is a vital element of any financial plan. There are events and occurrences in life that we simply cannot predict. However, we can help to guard ourselves against financial devastation in the face of these unfortunate changes with different types of insurance tools.

  • Life Insurance: Traditionally, life insurance policies are purchased with the intention of financially aiding the surviving widow or widower after the unfortunate loss of a spouse. These policies pay death benefits to surviving spouses or beneficiaries upon the owner’s passing in exchange for premiums paid during the owner’s lifetime. There are two basic types of life insurance policies: term life insurance and permanent. Term life insurance policies expire after a certain term, or number of years, whereas permanent, whole life insurance policies provide lifetime coverage.

Life Insurance policies can provide many benefits. For women who are the primary breadwinner of the family, life insurance policies can provide financial security for the family in her absence. The hybrid policies with cash allocations allow the owner to borrow against the cash value of the benefit, which could help a woman pay off debt, start a new business, or finance her children’s education. And policies which combine life insurance with long-term care riders can provide financial resources should the owner become terminally ill. The type of policy you choose, though, should not be a decision made in isolation, but in the perspective of your overall financial circumstances and available resources.

  • Long-term Care Insurance: According to the most recent data presented by the US government, at least 70% of Americans over the age of 65 will need some form of long-term care in their lifetime. Long-term care needs range from periodic in-home help with daily activities to full-time nursing home living. However, planning to pay for the high costs of assisted living or in-home aids is often overlooked.
Continue reading

What Women Need to Know to Take Control of Their Financial Future - Part I

What Women Need to Know to Take Control of Their Financial Future

Here are the facts: Women are living longer than men[i] and nearly 50% of all marriages are likely to end in divorce (with even higher rates of “Gray Divorce,” or divorces amongst those over age 50). What does this mean for women? That at some point in their lives, whether through divorce, widowhood, or personal choice, the responsibility of financial management will land squarely on their shoulders.

Women have made impressive strides over the past few generations with more than half of American women acting as the primary breadwinner in their household. Today, women are working and earning more than ever before.

But when it comes to money matters, a striking number of women statistically still leave the responsibility of financial management up to men. Experts attribute this trend to a lack of confidence in financial decision making, the female focus on caregiving and homemaking, and even just traditional, societal norms; but regardless of this tendency, longer life expectancies and higher divorce rates indicate that women should empower themselves to take control of their financial futures sooner rather than later.

The main problem, however, is that many women are unsure of where to begin. In fact, over 40% of women say that a lack of knowledge regarding their financial affairs is the single largest deterrent to becoming more involved in money management.[ii]

With this in mind, we have formatted this article into two installments to help women overcome their financial challenges and take control of their future.

Continue reading

The Right Way to Help Your Child Get into the College of Their Choice

The Right Way to Help Your Child Get into the College of Their Choice

On March 12, 2019, United States prosecutors revealed the largest and most prominent college admissions scandal in US history to date. Allegedly, at least thirty-three affluent actresses, business leaders, and other wealthy parents of college applicants fraudulently inflated entrance exam scores, bribed college officials, and spent more than $25 million dollars between 2011 and 2018 to help their children get into the colleges of their choice. These parents and school officials face countless charges for mail fraud, felony conspiracy, and money laundering. The scandal has been dubbed “Operation Varsity Blues” and is the perfect lesson for how not to help your children get into the schools of their choice.

Parents with ethical standards, though, may be wondering about the right steps to take to help their son or daughter gain admission to their dream schools. With that in mind, we’ve compiled a list of the top 6 things you can do to help give your child the best chance of opening that college admissions letter that reads, “Congratulations!”

Focus on What You Can Control

When it comes to college admissions, the ultimate decision about a student’s acceptance or denial isn’t up to anyone except the decision-making board at the college. This lack of control can drive parents crazy. But, focusing on the elements you can control can make all the difference in boosting your child’s chances for a positive result.

Continue reading

The Do’s and Don’ts of Pre-Retirement Planning for Professional Athletes

The Dos and Donts of Pre Retirement Planning for Professional Athletes

As much as professional athletes are known for their stellar athletic abilities, they are equally notorious for living extravagant lifestyles and blowing their earnings in a flash. According to a Sports Illustrated article published in 2009, 78% of NFL players are either bankrupt or under financial stress within 2 years of retirement, and 60% of NBA players go bankrupt within five years of leaving the league.

A host of famous professional athletes are earning more than “the average Joe” will in his lifetime, but struggle with transitioning their short-term paychecks into lifelong financial security.

On a fundamental level, earners of all income levels face similar financial hurdles, such as staying out of debt, fighting the temptation to overspend, and saving for the future. But due to the nature of their careers, professional athletes are faced with some pretty unique challenges of their own.

The Game Plan

1) DO Become Financially Literate

Athletes often earn a great deal of money at a young age when they have had little to no experience handling their own finances. Not only does this increase the likelihood of mismanagement, but also leaves them vulnerable to financial salespeople who prey on those who come into sudden money.

Continue reading

What You Need to Know About Estimating Taxes in Retirement

AdobeStock 226035672 2

Income is income, in retirement or otherwise, and where there is income, there is tax. Even though your income in retirement will be coming from different sources, such as IRAs, pensions, or social security, in most cases you’ll still be responsible for paying taxes on what you receive or withdraw.

Many, if not most, retirees rely on multiple different sources of income to fund their golden years including, but not limited to, the following:

• Social Security Income
• Pension Plans
• Traditional IRA and 401(k) withdrawals
• Roth IRA or Roth 401 (k)s withdrawals
• Investment Income

Each type of income incurs unique tax rules and liabilities and will affect your take-home amount in different ways. In order to minimize the tax burden on your overall income and accommodate for those taxes in your budget, you’ll need to understand how each different type of income is taxed.

Continue reading

Tax planning for 2019: What did tax reform impact?

Tax planning for 2019 What did tax reform impact

Now that 2019 is off and running, it's time to start thinking about taxes. The tax reform bill, which was signed into law in December 2017, means changes for your taxes this year. Here are a few things to think about:

The marriage penalty is gone. The new law does away with the decidedly unromantic situation in which spouses were pushed into a higher tax bracket when they married. It’s all part of an overhaul in the tax bracket structure. If you’re single, you’ll probably see your tax bracket lowered, too.

Standard deduction. It’s the age-old question. Should you itemize or take the standard deduction? This year, thanks to the new tax laws, the answer to that question just got a lot easier. The standard deduction is now twice what it has been in previous years. For 2019, that means $12,200 for individuals, and $24,400 for married couples filing jointly. It means more people are going to be opting for the standard deduction, especially with the new limits on state, local or property tax deductions, capped at $10,000.

Continue reading

Benefit bafflement? Here's how divorce or spousal death could affect your Social Security

WORRYING MAN

 

 

 

 

 

 

 

 

 

 

As you approach your retirement years, you may think you understand everything about how Social Security works. But the timing of getting that first check can be tricky, especially if you've experienced a spousal death or divorce.

In general, you may start withdrawing your guaranteed payments starting at age 62; however, for each year those withdrawals are postponed through age 70, you will receive an additional 8 percent or so based on inflation. Unmarried widows, widowers and divorcees may receive the greater of their own benefits or half of their late or former spouse’s benefits, but either way the amount received will be reduced according to when withdrawals start.

That means the strategy you choose could make a big difference in your income throughout your golden years. As of May, 59.3 million Americans were receiving Social Security benefits, but only 45 million were 65 or older. And a survey this year found a full 74 percent of American women were taking such benefits before age 70.

“For many people, when to claim Social Security is one of the most significant choices they will ever make,” notes Stan Hinden on AARP.com. “The timing of the first check affects how much they'll get from Social Security and what benefits will be available for spouses, children and eventually survivors.”

Continue reading

How the New Tax Laws Impact Your Dental Practice

TAX_PLANNING

The tax reform bill passed by Congress earlier this year was the first major overhaul of the tax code in three decades. If you're a dentist, you might be wondering how it could affect you and your practice. Here are some changes worth noting:

Continue reading

HOW TAX REFORM EFFECTS YOUR RETIREMENT NEST EGG

TAX REFORMHow Tax Reform Effects Your Retirement Nest Egg

Wondering how the new tax laws will affect your retirement account? Some Americans will greatly benefit from the new tax laws, including those who see a reduction in their tax brackets. One group for whom the new tax laws are a mix of good and bad news is retirees.

Here are some of the ways the new tax laws will affect retirees and those saving for retirement.

Continue reading

Busting financial myths about retirement savings

MYTHS BUSTEDWe all know we should be saving for retirement, but from that baseline, myriad variables exist. How much in savings is enough? What role does Social Security play in your overall financial picture? At what age should you retire?

What you don’t know about building wealth and saving for retirement might surprise you. There are a lot of misconceptions floating around out there. Here are some common myths about retirement strategies and the reality behind them.

Continue reading

Five Financial Facts to be Aware of Before Your Divorce

DIVORCE GRAPHICThe costs of divorce are many. There's the emotional cost of the breakdown of a family, the pain of a failed marriage and the anger that can come with the reasons for the split. Divorce can take a physical toll, too, as the stress of it all wreaks havoc with your sleep, your blood pressure and your immune system.

Continue reading

Get Our Free EBook - 10 Things to Consider Before a Divorce

* indicates required
 

Financial Strategies for Dentists

* indicates required
 

cfp board9534FD1045B5478FF01F5336
Regulatory Disclosure: The information on this website has been obtained from sources considered reliable, but its accuracy and completeness are not guaranteed. This website is neither an offer to sell nor a solicitation to buy any securities. Gerard Gruber offers Securities and Investment Advisory and Financial Planning service through Geneos Wealth Management, Inc, Member FINRA/SIPC.  Investments are not FDIC insured. Investments are not deposits of the financial institution and are not guaranteed by a financial institution. Investments are subject to investment risks including loss of principal amount invested.