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C.H. Robinson

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List of Top Cars for Parents Worried About Their Teenage Drivers:

Written by Summit Wealth on .

I just finished reading an article in Financial Advisor magazine about the top cars for teenage drivers for parents worried about their child's safety (which likely includes every parent).
While some parents can afford to buy their teenager a brand new car, a national phone survey conducted for the Insurance Institute for Highway Safety found that 83% of parents bought their teenager a used, rather than new, car. Unfortunately, older cars can be associated with higher accident rates. Here are a few tips that were highlighted in the article:

  • Young drivers should stay away from high horsepower cars.
  • Bigger, heavier vehicles provide better protection in a crash.
  • Electronic stability is a must.
  • Vehicles should have the best safety ratings possible.

Here are the recommended used, mid-sized vehicles for teens priced under $10,000:

  • Saab 9-3, 2005 and later
  • Volkswagen Passat, 2006 – 2008
  • Audi A4, 2005 – 2008
  • Volvo S60, 2007 – 2009
  • Suzuki Kizashi, 2010 and later
  • Mercedes Benz C Class Sedan, 2005 – 2008
  • Audi A3, 2006 – 2007
  • Volvo S40, 2007 and later
  • Acura TL, 2004 and later
  • Saturn Aura, 2009
  • Mazda 6, 2009 and later
  • BMW 3-Series Sedan, 2006 and later
  • Subaru Legacy, 2009
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Are You Wealthy Enough?

Written by Summit Wealth on .

I have been helping clients design financial plans for about 15 years now and the question above is certainly an interesting one. We've all seen the commercials where the guy is following the green arrow around as it guides him to the "promised land." Another commercial features people walking around with an orange number in their hands, as if achieving that portfolio total will lead them to a happy retirement life. At SWA, we have a different view of what wealth is and how it should be used.

  • Wealth is something you accumulate over your lifetime that will allow you to do many of the things you want, when you want. It certainly doesn't mean you forgo living life along the way so you can quit at an earlier-than-others age.
  • We feel it should be viewed as a mechanism that allows you the freedom to transition from a full-time, stress-filled work life to a slower-paced, perhaps more rewarding goal-based life. That could mean you:
    • Work part time
    • Volunteer with charitable organizations
    • Coach your children in sports
    • Travel
    • Pursue hobbies
    • Or do whatever your heart tells you to do.

It's a fine line we all walk, whether to save more than we do now. My belief has always been to be disciplined and save as aggressively as is comfortable but also to make sure I am creating memories with my family along the way. We all get one trip through this life and I can't imagine that anyone wishes in the end that they had worked more.

If this is a topic you or someone you know has been struggling with, and you'd like to talk to someone about it, please reach out to us as we are happy to help.

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Should You Be Purchasing Longevity in Your Retirement Account?

Written by Summit Wealth on .

A new Treasury ruling clears the way for participants in Traditional IRAs, 401(k)s, 403(b)s, 457 plans and qualified defined contribution plans (but not Roth IRAs or defined benefit plans) to purchase longevity insurance within their retirement account. So the questions are, what is longevity insurance and why should I consider purchasing it? Let's take them one at a time:

  • Longevity Insurance is an annuity contract designed to pay the purchaser a benefit if he/she survives to a pre-established future age. The benefit is typically paid in the form of a guaranteed income stream for the remainder of an individual's life and helps to protect one against an unusually long life.
  • You should consider purchasing this type of coverage (according to the insurance companies selling them) if you are concerned about outliving your money. These contracts must start to pay the owner by age 85 but can start paying benefits prior to that age. The idea is that if the investor runs out of money by living "too long," the longevity insurance will kick in.

However, these contracts are not without potential negative ramifications. For example:

  • If the investor does not reach age 85, they may not have received any payments from the contract (and, obviously won't in the future).
  • The monthly benefit purchased is in today's dollars and not future dollars. This means that if you purchase a $1,000 monthly benefit in 2014 and begin to receive that $1,000 / month benefit in 2034, it will not be worth $1,000, due to inflation. In other words, this product is not an inflation-adjusting annuity.

If running out of money in retirement is a concern of yours, please contact an SWA advisor today and we can discuss the pros and cons of longevity insurance and whether it is a fit with your retirement game plan.

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Taking the Mystery out of the Cost of College

Written by Summit Wealth on .

For those with children that have not yet experienced the joy of paying college tuition, the cost of a college education is a mystery. I have a high school senior and a sophomore, and I can tell you from first-hand experience that the total cost of a college education can vary considerably from school to school.

We've heard stories of children that have attended college for as little as $12,000 to 15,000 per year. We've also heard stories of $40,000 to $50,000 tuition bills per year. What can you do to get a better feel for what it will actually cost for your child?

To give you a feel for how hard your pocketbook will get hit, each college has a "Net Price Calculator" on its website that you can use to help calculate what your first-year undergraduate student can expect to pay. For example, my daughter Alycia and I just visited Gustavus Adolphus College in St. Peter, MN--a wonderful, private, liberal arts school with a beautiful campus.

I went to the Gustavus website and searched for the "Net Price Calculator" and it brought me directly to the screen I needed. From there, I answered a variety of questions about our family, income, etc. and, at the end of the questionnaire, it laid out for me the estimated costs of attendance, grants and scholarships and Federal Direct Student Loans.

If you haven't already taken a look at these options for yourself, my counsel to you would be this:

  • If you haven't gone through this exercise with your high school student, you need to.
  • It will show them that you are sincerely interested in their college education.
  • It will make you both comfortable with how much you will be committing towards their tuition, as well as what the potential gap in funding might be.

The sooner you can engage your high school student in this process the better as it can certainly be an eye-opening experience for you both.

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Charitable Giving and Passing Your Values On To Your Children:

Written by Summit Wealth on .

Many of our clients are charitable in their giving (both cash and goods) to various charities. However, one concern some clients voice is how to pass on their charitable values / intentions to their children. One way we suggest they get their kids involved is by using a Donor Advised Fund (DAF). Here's how a DAF works:

  • We encourage clients to contribute appreciated securities (if they have them) instead of cash to a DAF as these securities can be diversified with no income tax impact. This way the client can keep the cash they were going to donate (and do something different with it).
  • The client gets a charitable tax deduction in the year the securities (or cash) are contributed to the DAF, regardless of whether the dollars are actually distributed to a charity(s) in that same year.
  • The DAF is typically invested in a balanced, globally diversified asset allocation.
  • The client periodically requests distributions from the DAF to the charity(s) of their choosing.

How you can involve your children is to have them research a few charities they would like to donate $500 or $1,000 to and then make a recommendation to you as to which charity should receive a donation and why. Another idea to incorporate is that they cannot choose to donate to the same charity a second time (so they have to spread the donations around).

If you'd like more information about Donor Advised Funds and whether they may be a fit for your situation, please contact your SWA advisor.

North Metro: 763.355.5873
227 East River Parkway
Champlin, MN 55316-5873

South Metro: 612.987.9112
5871 Crossandra Street SE
Prior Lake, MN 55372-3337

West Metro: 763.639.3425
322 Greenhill Lane
Long Lake, MN 55356

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