YOUR FINANCIAL FUTURE

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1 YOUR FINANCIAL FUTURE April 2014 In This Issue Independent Investor April 2014 There are many creative ways to teach children about forming healthy savings habits. Here are a few tips to consider. Women Are Saving Less We hope this educational resource proves helpful. We believe an educated investor is a better investor. Please call us if you have questions. Robert Vettorel Washington Financial Wealth Management Division Senior Vice-President 77 South Main Street Washington, PA Fax: robert.vettorel@lpl.com inancial.com One of the findings in Aon Hewitt's 2013 Universe Benchmarks Report is that women are saving less for retirement than men. Planning for Long-Term Care According to the U.S. Department of Health and Human Services, 70% of people turning 65 can expect to use some form of long-term care during their lives. But less than one-third of Americans who are 50 or older have begun saving for long-term care. College Savings 101 The gift of a college education is within your reach if you start planning early. Heres our guide to funding a college education for your children or grandchildren. How Much Will That Little Bundle of Joy Cost You? Try $163,000 It certainly comes as no surprise to parents that raising a child can be expensive. But just how expensive?

2 2 Independent Investor April 2014 Kids & Money: Nurturing Your Child's Financial Growth "Reading, writing, mathematics"-- too bad that list doesn't include personal finance. Most kids learn the basics of money and making change in elementary school, but probably won't learn how to manage money unless they choose finance as a career path. That means it is up to all of us to see that our children reach adulthood prepared to face life's fiscal challenges. Earlier Is Better The benefits of teaching children about money early on are both immediate and long term. In the short term, they may develop strong saving habits, learn how to make smart purchases, begin to understand the true meaning of "investment" and perhaps even learn why they can't always get everything they want. In the long term, you can help them avoid accumulating debt. And by teaching the value of saving for the future, you can help them plan for financial security. Where Does Money Come From? Even very young children can begin to understand the concept of earning money. Explain that money is earned by working, and that you can only spend what you earn. To help them understand what it is like to get paid on a schedule, begin paying an allowance. Then help them to set goals for spending and saving their money. It is important, however, to make sure that you stick to the payment schedule; otherwise the lesson may be lost. Experts differ on whether or not allowances should be tied to household chores. Although many people say children will learn more about personal responsibility if they do not receive money for pitching in around the home, others feel paying an allowance teaches them valuable lessons about working and earning. You also might consider paying your child for "extra credit" chores that they complete outside of their daily duties, such as helping out in the garden or washing the family car. Make Saving Interesting You hear it every time you enter a store with your child: "I want... Buy me this...!" Before reacting, pause and take a minute to collect your thoughts. This situation presents a great opportunity to teach another important lesson about personal finance: savings and interest. Explain that people often save their money for items they want to buy. A simple savings lesson involves using a piggy bank, shoe box or empty peanut butter jar. Make the lesson fun by having your children decorate the "bank," while explaining to them how you also use a real bank to save your money. Encourage your children to save a portion of their allowance for a special goal. As they save money, you might reward them with a small additional amount, just like a bank pays interest. At the end of each month, calculate how much they have saved and then chip in a certain percentage as interest. Last, to further encourage the learning process, you might consider plotting a visual chart of their savings (include the goal) so they can easily see their savings grow. Remember to keep it as simple as possible, geared toward each child's level of understanding. Banking and Investing Once your children have been saving enough to accumulate $50 or $100, take them to the bank to open their first savings account. Most community banks will allow children to open accounts with low minimum deposits. Some even have accounts especially marketed to kids to make the learning process fun. Make sure that your children receive a passbook so they can see the progress of their savings efforts, as well as the interest that accrues. Once they have mastered banking with an institution, you can begin to teach kids about investing. For instance, when your child wants something that he or she can't quite afford, discuss the value of saving versus borrowing. If you do extend credit, use a written IOU, establish a repayment schedule and charge interest. By doing this, you establish the framework for teaching your children that bonds and certificates of deposit are IOUs representing loans from investors to institutions.

3 3 Compounding As your children get older and perhaps take on part-time jobs, their savings will likely amass at a quicker rate. Now is the time to review the lesson of compounding, or the ability of earnings to build upon themselves. Explain how compounding can be more dramatic over time; the longer money is left alone, the greater the effect. This can lead into a discussion about investing and how certain investments can have a greater ability to compound over time. Giving a gift of stocks of well-established or kid-oriented companies can be an ideal way to teach your children about investing. 1 Most children would love to think of themselves as owners of McDonald's, Disney, or Toys "R" Us. Some companies even have shareholder meetings directed to children. A Little Learning Can Pay Off Teaching your children about our complex financial system may seem daunting, but you can help put them on the right track by encouraging smart habits now. Is it worth your time and effort? As Benjamin Franklin once said, "An investment in knowledge always pays the best interest." Answering your children's questions honestly and in terms they will understand may set the stage for a lifetime of smart financial moves. The Lesson Plan Ages 4 to 6 -- Introduce the concept of value--how money buys things. Point out the difference between nickels, dimes and quarters. Ages 7 to 9 -- Expand the money discussion with the notion of having short- and long-term savings goals. Ages 10 to Consider opening a savings account in your child's name. By this age most kids are able to calculate interest and make a simple budget. Ages 13 to Discuss the difference between saving and investing. Reward avid savers with a "grown up" investment in a kid-friendly stock. 1 Ages Get serious about checking accounts and possibly credit cards. Make sure your kids understand the difference between debit card and credit card transactions. 1 Investing in stocks involves risks, including loss of principal. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. We suggest that you discuss your specific situation with a qualified tax or legal advisor. This article was prepared by Wealth Management Systems Inc., and is not intended to provide specific investment advice or recommendations for any individual. Please consult me if you have any questions. All company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. Because of the possibility of human or mechanical error by Wealth Management Systems Inc., or its sources, neither Wealth Management Systems Inc., nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscribers' or others' use of the content. Tracking #

4 4 Women Are Saving Less One of the findings in Aon Hewitt's 2013 Universe Benchmarks Report is that women are saving less for retirement than men. Although men and women participate in their employers' defined contribution plans at the same rate, women are saving less: 6.9% of pay for women versus 7.6% for men. Also, women are contributing below the threshold for the employer match in greater numbers than men. While women and men receive loans from their retirement savings plans at relatively equal rates, women are more likely than men to default on a loan upon terminating employment. Almost three-quarters (71%) of women defaulted following termination, while only 64% of men defaulted. Aon Hewitt recommends that women start investing earlier and contribute more, take full advantage of the employer match, and use automatic features, such as automatic contribution increases. Details of Aon Hewitt's study are at For Plan Sponsor Use Only- Not for use with participants or the general public. This information is not intended as authoritative guidance or tax or legal advice. You should consult with your attorney or tax advisor for guidance on your specific situation. Kmotion, Inc., P.O. Box 1456, Tualatin, OR 97062; ; Kmotion, Inc. This newsletter is a publication of Kmotion, Inc., whose role is solely that of publisher. The articles and opinions in this publication are for general information only and are not intended to provide tax or legal advice or recommendations for any particular situation or type of retirement plan. Nothing in this publication should be construed as legal or tax guidance, nor as the sole authority on any regulation, law, or ruling as it applies to a specific plan or situation. Plan sponsors should consult the plan's legal counsel or tax advisor for advice regarding plan-specific issues. RP Tracking #

5 5 Planning for Long-Term Care According to the U.S. Department of Health and Human Services, 70% of people turning 65 can expect to use some form of long-term care during their lives. But less than one-third of Americans who are 50 or older have begun saving for long-term care. Long-term care includes a range of personal daily living services. Most long-term care isn't related to medical care, but rather assistance with daily bathing, dressing, using the toilet or eating. Other types of long-term support include help with housework, managing money, taking medication and shopping. Many Americans mistakenly believe that Medicare pays for the bulk of long-term care. In fact, Medicare only pays for long-term care if you require skilled services or rehabilitative services, and it will only do so in a nursing home for a maximum of 100 days (the average is 22 days), or at home for a much shorter period. Long-term care insurance can be expensive, but not having it may endanger your retirement and other savings. Here are some tips to consider before you buy: Don't buy more insurance than you think you may need, or too little. You may have enough income to cover the bulk of your costs and so may only need a small policy to cover the remainder. Family members also may be willing and able to provide support. It is also far more difficult to increase coverage than decrease coverage, especially if your health has deteriorated. It costs less to buy coverage when you are young. The average age of people buying long-term care insurance is about 60, but it's significantly less expensive if you buy it in your late 40s or early 50s. Research and consider different options, and talk with a financial advisor before finalizing your decision. For more information about the basics of long-term care, its costs, and guidelines to help you make a decision, check with a financial advisor or visit Disclosure: This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. LPL Financial and its advisors are providing educational services only and are not able to provide participants with investment advice specific to their particular needs. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own, separate from this education material. Kmotion, Inc., P.O. Box 1456, Tualatin, OR 97062; ; Kmotion, Inc. This newsletter is a publication of Kmotion, Inc., whose role is solely that of publisher. The articles and opinions in this newsletter are those of Kmotion. The articles and opinions are for general information only and are not intended to provide specific advice or recommendations for any individual. Nothing in this publication shall be construed as providing investment counseling or directing employees to participate in any investment program in any way. Please consult your financial advisor or other appropriate professional for further assistance with regard to your individual situation. Securities are offered through, LPL Financial, member FINRA/SIPC. To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial is not an affiliate of and makes no representation with respect to such entity. RP Tracking #

6 6 College Savings 101 The gift of a college education is within your reach if you start planning early. Here's our guide to funding a college education for your children or grandchildren. Breathe a sigh of relief: Although the cost of college has been rising well above the rate of inflation for more than a decade, there are some signs that annual increases are moderating, according to the College Board. Its Trends in College Pricing report for the school year shows a 3.2% average increase in total year-over-year costs at public four-year in-state schools (to $18,391), and a 3.7% increase at private four-year colleges and universities (to $40,917). Despite the significant cost of attending a two- or four-year college, the lifetime-earning premium of a bachelor's degree is significantly higher than that of a high school diploma, even after deducting the costs of loan repayments, as the chart below shows. Source: Sandy Baum, Jennifer Ma and Kathleen Payea, Education Pays 2013: The Benefits of Higher Education for Individuals and Society, College Board. Paying for college can seem like buying a new car every year, but the sticker shock can be lessened if you plan ahead. Here are seven tips to help you get started. 1. Get your retirement in order first - Your kids will have access to more sources of college money than you will once you stop working, so make sure you're on the right path for your own retirement before you set aside money for college. 2. Start early - Even small contributions can add up if you give them time to grow. Investing just $100 a month for 18 years can yield $48,000, assuming an 8% average annual return Consider a 529 savings plan for big tax advantages - Qualified withdrawals are free of federal taxes (and some state tax benefits, too), and the amounts you can put in are substantial (more than $300,000 per beneficiary in many plans). Plus, you can open a 529 no matter how much you make or the age of the beneficiary, which makes it a particularly attractive vehicle for grandparents who want to lower the value of their taxable estate. 4. Custodial accounts give the child more control over the money - Gifting assets through the Uniform Gifts to Minors Act (UGMA) accounts or transferring assets through the Uniform Transfers to Minors Act (UTMA) accounts can be a practical way to expand the universe of available investment options, but they come with a caveat. UGMA and UTMA accounts weigh more heavily on financial aid decisions because they are

7 7 considered an asset of the child, not the parent. Plus, their tax benefits are limited when compared to a 529. The biggest consideration, however, is that the money saved becomes the child's at a certain age (18 or 21, depending on the state), regardless of whether he or she goes to college. 5. Set up a Coverdell Education Savings Account for simpler needs - The Coverdell ESA offers tax advantages that are similar to those of the 529 plan but limits contributions to $2,000 per year. If you're contributing less than $2,000 a year, it can be simple to set up and manage. Plus, you can select from a broad range of investment options, including mutual funds. 6. Take advantage of federal tax breaks - Depending on your modified adjusted gross income, you may be able to take the "American Opportunity Tax Credit and Lifetime Learning Credit" in the years you pay tuition. 7. Look for flexible repayment plans - There are still ways to cut costs after your student graduates and begins repaying student loans. For instance, there is often a one-quarter percentage point interest-rate decrease if you set up automatic debit, in which monthly payments are automatically taken from your account. Federal student loan programs generally have more lenient provisions than private education loans. Need more information on college affordability? Contact a financial advisor, or visit 8 Hypothetical example is intended to illustrate the benefit of long-term investing. It is not intended to predict the return of any investment, which will fluctuate with market conditions. All investing involves risk, including loss of principal. Disclosure: This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. LPL Financial and its advisors are providing educational services only and are not able to provide participants with investment advice specific to their particular needs. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own, separate from this education material. Kmotion, Inc., P.O. Box 1456, Tualatin, OR 97062; ; Kmotion, Inc. This newsletter is a publication of Kmotion, Inc., whose role is solely that of publisher. The articles and opinions in this newsletter are those of Kmotion. The articles and opinions are for general information only and are not intended to provide specific advice or recommendations for any individual. Nothing in this publication shall be construed as providing investment counseling or directing employees to participate in any investment program in any way. Please consult your financial advisor or other appropriate professional for further assistance with regard to your individual situation. Securities are offered through, LPL Financial, member FINRA/SIPC. To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial is not an affiliate of and makes no representation with respect to such entity. RP Tracking #

8 8 How Much Will That Little Bundle of Joy Cost You? Try $163,000 It certainly comes as no surprise to parents that raising a child can be expensive. But just how expensive? While many financial studies focus solely on college costs, research by the U.S. Department of Agriculture (USDA) provides parents and prospective parents with a general idea of the cumulative expenses for a child before college kicks in. The average total child-rearing costs for a child born in 2010 and living at home through age 17 range from $163,440 to $377,040, depending on the family's income level. The results are sobering. The average total child-rearing costs for a child born in 2012 and living at home through age 17 is now $241,080. The USDA calculations include a wide variety of expenses, including housing, child care and education, health care, clothing, transportation, food, personal care, and entertainment. Estimated Cumulative Child-Rearing Expenditures, Lowest Income Group (<$60,640) Middle Income Group (between $60,640 and $105,000) Highest Income Group (>$105,000) $173,490 $241,080 $399,780 Source: USDA, News Release No , August 14, Households in the lowest income group (those earning under $60,640 per year) are estimated to spend between $8,480 to $9,630 per year on average; those in the medium income group (those earning between $60,640 and $105,000) can expect to spend between $12,600 and $14,700 per year; and those in the highest income group (those with incomes above $105,000) can expect to spend between $20,930 and $25,180 on average. For a middle-income family with two children, the largest expenditures are: Housing, at an average of 30% of total expenses. Child care/education, 18%. Food, 16%. Transportation, 14%. Health care, 8%. Not surprisingly, geography matters. Parents in the "Urban Northeast" had the highest average expenses, while those in "Rural" areas had the lowest. It also should come as no surprise to parents that it is generally more expensive to raise a child today than it was when they were children. The USDA website has a free calculator that can help parents estimate their child care costs. The Cost of Raising a Child Calculator factors in geography, single or two-parent status, and the costs of additional children Wealth Management Systems Inc. All rights reserved. Tracking #

9 The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. Robert Vettorel is a Registered Representative with and Securities are offered through LPL Financial, member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates. Washington Financial Wealth Management Division is not a registered Broker/Dealer and is not affiliated with LPL Financial Not Bank/Credit Union Not FDIC/NCUA Insured Guaranteed Not Insured by any Federal Government Agency May Lose Value Not a Bank Deposit This newsletter was created using Newsletter OnDemand, powered by Wealth Management Systems Inc.