"Set goals and take action to achieve them" was the advice repeated over and over by speakers at Garden State Woman magazine's third Annual Financial Conference. Rutgers Cooperative Extension was an exhibitor at this program. Below is a summary of remarks made by the program speakers:
Keynote speaker Llnon Slossberg, a financial advisor with American Express, talked about her indirect path from a science degree in college to a career in financial planning. She urged listeners to "find the one thing you can be passionate about" and noted that, if you love your job, you will gladly work long hours because it doesn't feel like work. If you dislike your job, you'll resent working any longer than you have to. Slossberg noted that financial planners help people understand their current financial status (e.g., net worth) and clarify their future goals and what they cost. Three key questions to ask an investment advisor are: 1. How much do I need to save?, 2. Where should I put the money?, and 3. What should my portfolio look like?
A panel on estate planning began with a startling statistic: 70% of people have no estate plans for the disposition of their assets. Federal estate taxes are assessed on the privilege of transferring assets and affect estates of over $1.5 million in 2004 at rates as high as 48%. One way to reduce estate taxes is through a process of lifetime gifting. In 2004, donors can transfer up to the $11,000 annual exclusion amount to any number of recipients. Attorney Anita Siegel stressed the importance of having a will. Without one, the state's intestacy law specifies where your property will go. A surviving spouse will not receive everything if there are children in a family and a court-appointed administrator must be appointed, versus an executor named in a will that serves without bond. New intestacy laws are currently being drafted in New Jersey and will include stepchildren and even former stepchildren.
Siegel stressed that some assets, such as an individual retirement account, a 401(k), and joint property with a spouse are not subject to transfer by probate but are still part of a decedent's taxable federal estate. She also noted that New Jersey's estate tax exemption has remained fixed at the 2001 federal level of $675,000 while the federal estate tax exemption will continue to rise throughout the coming decade. This will result in a New Jersey estate tax of $67,000 on a $1.5 million estate and $100,000 on a $2 million estate. New Jersey also assesses an inheritance tax on people who inherit a decedent's assets and the rate charged is determined by a person's blood relationship to the donor. In addition to a will, three other legal documents are strongly recommended: a durable power of attorney, a living will, and a health care proxy.
A panel speaker on insurance and elder care noted that 80% of widows now living in poverty were not poor until their husbands died and 72% of family caregivers are women. Audience members were urged to purchase an adequate amount of life insurance and to also consider long-term care insurance. Eldercare residential options were explained and range from adult communities to companion care to assisted living to skilled nursing care. Attendees were urged to plan ahead, for themselves or elderly parents or both, by one of the panelists: "Don't wait until a crisis occurs and you are rushed and forced to make a decision.
Divorce attorney Susan Reach Winters discussed the importance of women keeping contact with professional colleagues and associations if they drop out of the work force "so that, if you have to go back suddenly into the workforce, you are prepared." She also admonished conference attendees not to relinquish control of family finances. Women experiencing divorce have two options: "you can be a victim or you can be empowered and take control of your life." Winters employs a "team approach" to divorce and often has her clients consult with a financial planner, career planner, real estate and/or estate planning attorney, and therapist. She noted that this is often more cost-effective than using just one attorney, noting "It is a waste of money to call a lawyer to discuss emotional issues that a therapist is trained to handle, usually at a lower hourly rate.
The investment panel covered a gamut of options including real estate, stock, bonds, and mutual funds. Pat Hoferkamp, President of Burgdorff ERA, noted that townhomes are popular with both empty nesters and first-time buyers and predicted demand will continue for some time. Speakers on investments stressed diversification, discipline through dollar-cost averaging (adding regular amounts to an investment account on a regular basis), and periodic portfolio rebalancing. "Develop a long-term plan and stick with it," urged a panelist. Three common investment errors are chasing returns, "being guied by the stars" (star ratings on mutual funds), and pulling money in and out of the market.
The final keynote speaker was Georgette Geller-Petro, a Vice President for AXA Advisors. She urged attendees to "Choose your destination- where do you want to end up financially?," noting a widely quoted study of Harvard Business School graduates that showed that the 10% who planned and set goals did much better than the 90% who didn't. "Without a written plan," she noted, "the chance of you meeting your goals is unlikely." Geller-Petro recommended knowing where you stand financially and working on a plan to get where you want. Putting money in a tax-deferred retirement savings plan and checking the beneficiary designation on life insurance policies were also mentioned, as was reviewing one's portfolio. "Women's portfolios are often like their wardrobes," she said. "Nothing goes together." Here final piece of advice was to get started by taking one or more actions to improve your finances. "Anything you do today is going to get you closer to your goal and is better than doing nothing. Just empower yourself to start and it will get a lot easier.