MONEY Financial Planning

Get Free Help Getting Your Retirement Off the Ground

Lipsticks in the shape of a dollar sign
Anthony Lee—Getty Images

As a millennial or Gen Xer, you face unique challenges when it comes to retirement. If you need some help getting going, share your story for a chance at a free financial makeover.

The two youngest generations of workers could use a hand with retirement planning.

Gen Xers have had a run of bad luck: a recession that slowed down their careers, a brutal bear market that hit in their early years as investors, and a housing crash that set in just as many had bought a first home.

No wonder they are feeling gloomy about retirement, according to a new survey from the Transamerica Center for Retirement Studies. Only 12% of Gen X workers say they have fully recovered from the recession.

Millennials, on the other hand, are off to a strong start, outpacing Baby Boomers and Gen Xers when it comes to saving for retirement. According to the Transamerica survey, 70% of millennials with jobs are putting money aside. They began saving at a median age of 22. Still, this group faces steep student loan debts, high unemployment, and uncertain entitlement programs in the future.

If you’re like a lot of people your age, you could use some help getting started, whether it’s tips on how to tame your debts and find money to save or advice on what investments to choose and how to best allocate the funds you’ve built up.

For an upcoming issue of Money magazine and Money.com, we’ll pair several novice retirement savers with financial planners to get a full financial makeover. To participate, you should be comfortable sharing details of your financial life, and keep in mind that story subjects will be photographed for the story.

If you’d like to participate, please fill in the form below. Briefly tell us how you’re doing and what your biggest challenges are. And include a little about your family’s finances, including your income, assets, and debts. All of this information will be kept confidential unless we follow up with you for an interview, and you agree to appear in the story.

We look forward to hearing from you.

MONEY Estate Planning

When Tragedy Strikes a Young Family

hospital bracelet on patient
Fuse—Getty Images

A cancer diagnosis prompts a financial planner to reflect on the fragility of life and the importance of preparing for the worst.

I have a client who is 39. He’s married and has two young children. He has an extremely successful career. He and his family are really hitting their stride.

One day he started to feel unwell. Eventual checkups led to a diagnosis of cancer. His wife called me on a Saturday morning to discuss the shock of what they were going through, and to get some basic sense of what to expect next, financially.

There’s no way to prepare yourself for this kind of devastating news. Brené Brown discusses this eloquently when she talks about “foreboding joy” — the sense we sometimes have, when things are going well, that something terrible will happen to us or someone we love.

This mental rehearsal for the worst-case scenario doesn’t make it any easier when we get tragic news; instead, it gets in the way of our truly feeling joyful and present in the moment right now.

What can give us a lot of peace of mind is financial preparation — the knowledge that our families will be taken care of if something happens to us. Here are some important elements of that planning:

  • Life Insurance: If you have young children who are depending on your income, a good 20- to 30-year level term policy is a solid foundation to help support your family through the children’s school years.
  • Disability Insurance: Being injured or sick and unable to work is often more financially catastrophic than death, since your expenses have likely increased to deal with your treatment, but your income has gone away. A good disability policy through your employer or through a private insurer is great protection, since it will provide at least part of your income while you’re unable to earn a living. This coverage is more expensive than life insurance, since it is far more likely a person will become disabled rather than die early, but disability insurance has substantial benefits.
  • Emergency Fund: A baseline amount of cash is the protective foundation to any financial plan. This isn’t because cash is such a great deal, since returns in savings accounts nowadays are minimal at best. Emergency funds are a great deal because they allow us to weather financial storms — for example, covering waiting period before the benefits on a disability insurance policy kick in — and ultimately to take advantage of opportunities when they present themselves.
  • Wills, Living Wills, and Powers of Attorney: If you have young children, this is essential. The issue isn’t if you or your spouse die; it’s if both of you die, since those kids will inherit life insurance proceeds, retirement plan benefits, and more. If you and your partner both get run over by the proverbial bus, you need to make provisions for who will take care of your children. You should make that decision, and not leave the courts to decide if you’re not around. Living wills allow you to state your end-of-life choices; while never easy to carry out, they always provide a level of peace to families who know they’re carrying out their loved one’s wishes.

A few weeks later, I had lunch with this couple. The husband was about to have surgery. “If I don’t wake up,” he asked, “what’s going to happen?”

It was the best of a bad situation: He had insurance. They had an emergency fund. They had the necessary end-of-life and estate-planning documents. Were he to not pull through, his wife and children would be in a position to try to find a new normal. (In fact, he did pull through, and he’s working on his recovery.)

The most important thing for any patient with a long-term illness is to focus on his overall health and mental outlook. Having financial plans in place allows a patient to set other worries aside. He can tell himself, “In the worst-case scenario, my family will be all right. Now I can focus on ‘What can I do to be well?'”

All our days are numbered. The question is, can you be present for the time that you have? The right financial plan can ease the way.

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H. Jude Boudreaux, CFP, is the founder of Upperline Financial Planning, a fee-only financial planning firm based in New Orleans. He is an adjunct professor at Loyola University New Orleans, a past president of the Financial Planning Association‘s NexGen community, and an advocate for new and alternative business models for the financial planning industry.

MONEY financial advisers

How to Be Nosy About Your Financial Adviser’s Finances

magnifying glass looking at new $100 bills
LM Otero—AP

You probably want to know how rich your financial adviser is. Here are some better ways to pry about his or her money.

What’s your net worth?

We financial professionals think nothing of asking clients this question. If the tables were turned, though, and clients or prospective clients asked the same question of us, how would we respond?

Every now and then this issue comes up in conversations among financial planners. Some advisers think their net worth is none of their clients’ business, any more than doctors’ cholesterol levels are any business of their patients.

Others are concerned that a single number like net worth is incomplete information and can even be misleading. Knowing a financial professional has a net worth of, say, $5 million doesn’t necessarily mean the person is a trustworthy or capable financial planner. Net worth tells prospective clients nothing about where the money came from. The planner may have inherited it, won the lottery, made it through a business other than financial planning, earned it from commissions on poor investments, or even obtained it illegally.

Nor does net worth reveal anything useful about someone’s understanding of money or knowledge of financial planning. I’ve worked with plenty of multi-millionaires who were horrible money managers and inept at investing. There are also many brilliant young planners who haven’t had the time to accumulate a large net worth.

I suspect that most clients who want to know about their planners’ net worth actually have several deeper questions in mind. Some may be asking if the professional actually follows his or her own advice. Imagine how troubling it might be to find out your financial planner doesn’t have a retirement plan, is a habitual over-spender, or hasn’t gotten around to making a will.

Another reason for the question may be a concern whether the planner is financially stable and will be around in the future. During the Great Recession, many financial professionals saw their revenues fall by 30% to 40%. Some who did not have a business emergency reserve had to resort to laying off staff, cutting services, or in some cases closing their doors.

Still another concern may be whether the planner is familiar with a potential client’s particular financial issues. This is especially true of high-net-worth clients. They need to know a planner can relate to the complexities, responsibilities, and emotional challenges of managing wealth.

All of these are legitimate concerns. Knowing a financial planner’s net worth, however, doesn’t address those concerns. It would be more useful for clients to get answers to questions like the following:

  • Do you follow the same advice you give clients? Give me some examples.
  • Do you have six months’ living expenses in an emergency account?
  • Do you invest your money in the same manner you will invest mine?
  • If I were to run a credit report on you, what would it tell me?
  • What are some of the things you have learned from your financial mistakes?
  • Tell me what your company has in place for emergency planning and succession planning.
  • Tell me why you can relate to someone with my net worth and the issues I am facing.

Very few prospective clients are likely to ask questions like these. That doesn’t mean they don’t want to know the answers.

Planners who want to provide exceptional service to their clients might consider providing such answers freely and transparently, without waiting to be asked. We expect clients to trust us with their financial information. One way to build that trust may be to share some information of our own.

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Rick Kahler, ChFC, is president of Kahler Financial Group, a fee-only financial planning firm. His work and research regarding the integration of financial planning and psychology has been featured or cited in scores of broadcast media, periodicals and books. He is a co-author of four books on financial planning and therapy. He is a faculty member at Golden Gate University and the president of the Financial Therapy Association.

MONEY financial advisers

Dealing With the ‘Personal’ in Personal Finance

Two people shaking hands above restaurant table with laptop
Tom Merton—Getty Images

To really help people, financial planners have to delve into the the feelings and emotions that drive their clients' financial decisions. One planner explains why that's so hard.

While most of us financial advisers want to do the best for our clients, we often struggle at the task.

The main problem, as I recently wrote: We don’t know our clients well enough. We may say that a client’s values and goals are important, but most of us don’t adequately explore these more personal (a.k.a. “touchy-feely”) parts of a client’s life.

Why is this?

One reason we avoid deeper discovery with clients: No matter how we’re paid—whether by commissions or fees—most of us don’t get compensated until the financial planning process has neared its end.

Let’s use the six-step Certified Financial Planner model as an example. The information-gathering stage, when we have the chance to really understand who our clients are, is the second step. But most advisers don’t get paid until step five, when clients implement our recommendations.

Advisers, therefore, have an inherent economic bias to get to step five as soon as possible.

The second reason we don’t dig deep: Having in-depth conversations with clients can be uncomfortable—mostly for us. We, as advisers, may feel underqualified or inadequately trained to delve into the beliefs, feelings and emotions that drive their financial decisions.

I get it. About seven years ago, I decided that I needed to give and get more out of client interactions, not merely through questions at opportunistic times, but by a deliberate process.

On the day I decided to implement this new strategy, I saw I had a data-gathering meeting on my schedule. Perfect. I was ready to jump right in.

I had met the woman in this husband-and-wife household before—she was a human resources executive at a large company—but not the man. And he turned out to be a “man’s man.” His shoulders were so broad that he had to turn sideways to get through the doorway to my conference room. Scowling, he extended a bear-sized arm and squeezed my hand hard enough to send the clear message that he’d rather be anyplace but there.

“Really?” I asked myself. “I’m going to ask this guy about his values and goals? About his history with money and about the feelings and emotions evoked by his personal financial dealings?”

After I could delay no longer, we got down to it. My assumption that this guy would recoil from an introspective conversation was completely wrong. In fact, my nonfinancial questions clearly set this visibly hesitant client at ease.

The truth is that we’re all capable of communicating more meaningfully with our clients. We do it with our family and close friends all the time. Aren’t we capable of simply getting to know someone?

To claim lack of expertise is a cop-out. There is plenty of help out there for gathering information about intangibles. Here are three resources I’ve found extremely useful:

  • George Kinder: Kinder is a Harvard-educated financial planner who is often dubbed the “Father of Life Planning.” Personally, I find the term “life planning” problematic. It seems to brand intangible data-gathering as something apart from good financial planning, which lets the rest of us off the hook. Kinder’s work, however, should not be discounted. Kinder’s book, The Seven Stages of Money Maturity, effectively started a movement that continues to grow as new generations of planners look for more personally rewarding practices. Another of his books, Lighting the Torch, provides planners with a practical methodology to incorporate into their process.
  • Rick Kahler, Ted Klonz, and Brad Klontz: Kahler, a financial planner in South Dakota, teamed up with psychotherapists Ted and Brad Klontz on two projects that have immeasurable value to the financial planning community. The Financial Wisdom of Ebenezer Scrooge is a short, easy-to-read volume that will help both advisers and their clients examine the motives behind our financial decisions, successes and failures. I had the privilege of studying with Ted and Rick immediately following the release of their second collaboration, Facilitating Financial Health. Written for the serious practitioner, it’s one of the most highlighted books in my library.
  • Carol Anderson and Amy Mullen: Last, but in my opinion the most important, is what I believe to be the ideal resource for financial advisers who truly want to institute more meaningful conversations with their clients. With Money Quotient, Anderson and Mullen have created something very special: a nonprofit devoted to providing advisers with tangible tools designed to elicit intangible information from clients. Various degrees of licensing allow advisers to merely dabble with some of Money Quotient’s tools or transform their entire practice in a way that puts client values and goals at the center of their process.

Acknowledging that personal finance is more personal than it is finance is a great beginning. But the light-bulb moment is only valuable if it leads to the application of the associated theories and concepts.

—————————————-

Financial planner, speaker, and author Tim Maurer, is a wealth adviser at Buckingham Asset Management and the director of personal finance for the BAM Alliance. A certified financial planner practitioner working with individuals, families and organizations, he also educates at private events and via TV, radio, print, and online media. “Personal finance is more personal than it is finance” is the central theme that drives his writing and speaking.

MONEY Financial Planning

Why Millennials Aren’t Getting Love from Financial Advisers

Financial advisers are aging and mostly targeting their peer group. Where can a dedicated Millennial saver get answers?

“Follow the money” was sage advice in All the President’s Men, and “show me the money” worked well enough for the characters in Jerry Maguire. Now financial advisers are taking the same approach in their pursuit of new clients.

A third say they aren’t interested in your business if you have less than $500,000 to invest and 57% want at least $250,000 in assets to get on the phone, according to a survey from Principal Financial Group. Okay. These are business people following the money in their quest for higher fees and more commissions.

Yet this approach pretty much ignores the next mega-generation—the 80 million Millennials, the oldest of which are now turning the corner on 30. Just 18% of financial advisers say they are prospecting in this demographic. Millennials don’t have a lot of assets at this point in their life, and 29% of advisers say this generation has little interest in their services because of the cost, Principal found. So why bother?

Well, anyone building a wealth management business for the long term might find plenty of gold in this group. Millennials are hell-bent on saving and investing long term, and providing for their own financial security. Eight in 10 Millennials say the recession convinced them they must save more now, according to the 2014 Wells Fargo Millennial Study. Meanwhile, the financial industry, banks in particular, have a long way to go win this generation’s trust. They might want to get started.

Most wealth advisers are focused on Baby Boomers (64%), high net worth clients (64%) and business owners (62%). For those willing to work with the less well-heeled—advisers who just getting started and willing to build a practice over time—these twenty-somethings offer a huge opportunity. One issue, though, is that there aren’t a lot of young wealth advisers out there. Like bus drivers and clergy, this profession has a slow replacement rate and is aging fast. Among the 300,000 or so full-time financial advisers, the average age is about 50, and 21% are over 60.

The result is an industry filled with people that largely do not relate to Millennials and do not care because they have so little to invest. At the same time, we have a generation that has got the message on saving and wants to get serious about investing for its financial future. So it’s not surprising that a growing number are turning instead to online financial advice firms—start-ups such as Betterment, Wealthfront and Personal Capital—to get investment guidance with little or no minimum and at lower cost. Millennials may be broke and fee averse. But they won’t be that way forever. This time, “show me the money” may be bad strategy.

MONEY Kids and Money

Go Figure, Grandkids Want to Hear About Your Money Memories

Having seen tough times already, young adults crave money conversations with grandparents who have seen it all before.

What young person doesn’t enjoy a good story? And it doesn’t have to be about vampires or super heroes. The top thing young adults want to hear from grandparents is about experiences and decisions that shaped their life, new research shows.

This is especially true of events having to do with money, according to a survey from TIAA-CREF, a financial firm with $613 billion under management. The finding suggests that grandparents who are willing to talk about their financial follies can play an important role in helping their grandkids learn early to save, manage debt and stick to a budget.

Only 8% of grandparents say they are willing to start a conversation with their grandkids about money, the survey found. Yet 85% of grandkids aged 18 to 24 say they are open to such a conversation. In a further sign of this divide: only 30% of grandparents believe they could have an influence over their grandkids’ money habits; but 73% of young adults say their grandparents already have such influence.

How can perceptions be so different? For one thing, young adults have got the message and are intensely interested in understanding how to manage their money. In the survey, 97% said they were concerned about saving for their future. They see their grandparents as a role model: 59% rated their grandparents as very good or excellent savers.

Grandparents may be missing their influence due to cultural differences, the survey authors say. Many grandparents today are Baby Boomers, the generation that once upon a time didn’t trust anyone over 30. They wonder why young people would listen to them about anything.

But Millennials are coming of age in different times. They embrace the new multi-generational workplace and family. Through the Great Recession, they have seen first hand how tough life can be and they tend to respect elders who have muddled through despite life’s many ups and downs, says Joe Coughlin, director of the Massachusetts Institute of Technology AgeLab, which collaborated with TIAA-CREF on the study.

Coughlin suggests initiating the money conversation with grandkids when they are teens or earlier. Saving for college is a great starting topic. This may require crossing another divide, however. Grandparents are largely in the dark as to how expensive college has become. Four-year university costs easily run to $100,000 and can shoot to $160,00 or more at a private school. Yet one in five grandparents believe the total to be under $50,000 and a quarter believe it to be $50,000 to $75,000, TIAA-CREF found.

In speaking to grandkids about money, the trick is framing the discussion as a personal experience. Kids love to hear stories about rituals, big decisions, frugality and home life, he says. Grandparents can find ideas and conversation starters for teens here and for younger kids here and here.

Taking on this subject can be a fun and rewarding way to get to know a grandchild better—and it may be a huge help to parents. “Life has gotten very busy for dual income households,” Coughlin says. “Grandparents can fill in the gaps. They have the time and the stories to tell.” They just need to understand that, unlike themselves in younger days, the kids will listen.

Related stories:

 

MONEY First-Time Dad

Why New Parents Deserve to Splurge on Themselves Sometimes

Illustration of parents eating at elevated table above baby toys
Leif Parsons

Living in an apartment stuffed with all kinds of toys for his son, this reporter found that spending $350 to create an oasis for himself and his wife was totally worth it.

Part of the joy of raising an infant is accumulating his toys and books and play mats and teethers and clothes and pacifiers and chairs and bottles and strollers and carriers and … well, you get the idea. Clutter is a part of life, and the fact that Luke, our 6-month-old son, is gathering enough junk to take over our apartment means he’s becoming a person. I own, therefore I am.

Still, there is one tiny section of our tiny Brooklyn home that’s off-limits to Luke’s stuff. It’s an alcove just big enough to hold a circular marble table and two tall cushioned chairs. If the rest of our home is a Gymboree, this patch of paradise is the Four Seasons.

We carved out this island of adulthood a few weeks ago, buying the $200 marble table secondhand and plucking the marked-down chairs off the Internet for $150.

Spending $350 on ourselves might not sound like a big deal, but Luke’s goodies aren’t cheap, so most of our discretionary spending is earmarked for the little guy. My wife is a teacher and I’m a journalist. We’re in the early stages of our careers and must make rent while still chipping away at our student loans. In our world of limited sleep and vanishing funds, a vacation, dinner out, or even a night at the movies is a rare treat.

Yes, we could have used the dining set we already owned. But our old furniture felt as though it belonged to cohabitating grad students, not a married couple. My wife and I tied the knot a few months before Luke’s birth, so our friends and family look at us more as new parents than as newlyweds. That’s usually the way we see ourselves too. Marriage, though, requires as much attention and devotion as parenting. You can easily get lost in the wonder of watching your son explore the world around him and forget that less than a year ago you stood in front of the people you love and pledged to be with each other forever.

Now, after Luke falls asleep, Ali and I sit down in our new cream-colored chairs. We rest our glasses of wine on the table and talk about our day. And for a moment, it’s only us.

Taylor Tepper is a reporter at Money. His column on being a new dad, a millennial, and (pretty) broke appears weekly. More First-Time Dad:

MONEY Savings

5 Ways to Keep a Crisis From Crushing You

Falling anvil with inadequate parachute
A majority of Americans are unprepared for a financial emergency. Michael Crichton + Leigh MacMill; Prop Styling by Jason MacIsaac

What would you do if you suffered an emergency that's bigger than your safety net? These strategies can cushion the blow.

You’ve no doubt diligently socked away a chunk of cash for a rainy day. But chances are it isn’t enough to keep you from worrying about being swept under by a passing financial storm. In a MONEY survey of 1,000 Americans conducted earlier this year, 60% of respondents said they didn’t feel they had enough emergency savings.

They’re probably right to be ­concerned: A new survey by Bankrate.com found that the majority of Americans making $75,000-plus have less than six months of emergency savings on hand. Meanwhile, experts typically recommend having at least that much and often as much as 12 months’ worth—lofty goals even for those who are otherwise well-off.

While you’re in the process of bulking up your kitty, lessen your anxiety by figuring out how you’d quickly lay your hands on cash if the roof fell in, literally and figuratively. “The goal is to reduce long-term damage to your finances,” says Scottsdale financial planner Brian Frederick. Putting the bills on a credit card can be a reasonable option for those able to pay off their debt in a jiffy, but carrying a balance for longer gets pricey when you’re talking about a 15% interest rate. Instead, keep these five better options in the back of your mind:

1. Crack a CD

In hopes of discouraging customers from fleeing when rates rise, banks have been hiking penalties for tapping a CD before its maturity date—six months’ interest is now common on a one-year certificate, and six to 12 months’ is typical on a five-year. Even so, “the interest is so small these days that a six-month penalty is almost meaningless,” says Oradell, N.J., financial planner Eric Mancini. On a $100,000, five-year CD at 2%, you’d give up just $100.

2. Sell Some Securities

Ditching money-losing stocks is clearly a better move than borrowing, says Frederick, given that you can use losses to offset up to $3,000 of capital gains for this year and carry any overage into future years. Everything in your portfolio on the up and up? While you’ll pay a 15% capital gains tax on the profits from any security you’ve held for more than a year, it might make sense to pare back on winners if your allocation has gotten out of whack.

3. Take Out a 401(k) Loan

Most plans allow you to borrow half your vested amount, up to $50,000, with generous terms: no setup fees and a 4% to 5% interest rate, paid to yourself. Moreover, as long as you keep making contributions, you probably won’t sacrifice much growth. A five-year, $20,000 loan against a $250,000 401(k) would reduce your balance by just $9,000 after 20 years, assuming you continued to save $500 a month during the loan term. But should loan payments require you to pull back on contributions, your nest egg will take a hit (see the graphic). Another risk: If you leave your job for any reason before repaying, you must cough up the entire balance within 60 days, or else you’ll owe income taxes and a 10% penalty on the funds. “You can end up feeling stuck in your job,” says Edina, Minn., ­financial planner Kathleen Longo.

the 20k loan

4. Tap the House

Whether or not you have a home-equity line of credit already, you’ll benefit from today’s low rates. The average on a new line is about 5%, but if your credit is nearly perfect, you can get closer to 3%, with no setup fee, Bank­rate.com reports. Plus, interest payments are usually tax-deductible. The caveats: It may take a few weeks to open a new line. Also, HELOCs are var­iable rate, so your payments may rise if the Fed hikes interest rates. Finally, some banks charge a fee if you close the line early; look for one that doesn’t.

5. Borrow from a Stranger

Those who don’t have adequate home equity can still beat rates on credit cards and personal bank loans by nabbing a loan from a peer-lending site like LendingClub or Prosper. Rates on those sites can be less than 7%, plus an origination fee of 1% to 3%. Peer loans are a good option for those with sterling credit histories, says Steve Nicastro, investing editor at NerdWallet. Check what rate you’d get using the sites’ tools. Look good for you? After you fill out an online form, the sites will take a few days to verify your info, then send your loan out to prospective lenders. Most loans are funded within a week.

More on building a stronger safety net:

MONEY Financial Planning

What My 3-Hour Lunch Says About Good Financial Advice

Women at a lunch meeting
Colorblind—Getty Images

Financial planning isn't about investing for retirement or saving for college; it's about turning your vision into reality.

It was Suzanne’s birthday. I really wanted her to have the next best thing to a day off. So I, the adviser, and Suzanne, my client, scheduled our meeting at Guglhupf, a lovely local restaurant.

In 2005, when I formed my company, I was sitting at one of Guglhupf’s upstairs tables when I came up with the tagline of my firm: “Driven by a Vision.” Now, years later, spending a sunny afternoon on Guglhuph’s patio with Suzanne, I had a powerful moment of living that ideal.

Suzanne is a visionary, an entrepreneur. She first came to me as a client because she wanted to be sure that the various ventures she had underway didn’t encumber too much of her wealth — that her assets wouldn’t all be at risk and that she would have enough set aside for her family’s future needs and her own retirement.

At its core, financial planning is helping people realize their vision. And for my entrepreneurial clients, I’m helping them navigate some very complicated waters at a time that’s emotionally charged due to hope, desire, exhaustion, and frankly, being stretched too thin.

These conversations can’t happen inside financial planning software, and they don’t happen on the pages of a financial plan. They aren’t about “Do I have enough money to fund my financial goals?” These conversations are about figuring out how to make those goals come to life.

And this is without my being a business consultant. I don’t know the trades of the businesses my clients start. What I do know is that there are risks associated with what they’re doing, and that likely their venture’s cash flow isn’t going to be as healthy as the projections project. I expect that there’ll be a need for another capital infusion. All of these things are going to impact their other financial planning goals: paying for their child’s education, for example, and being financially independent one day. They know all this too.

However, I believe that when a person has a strong vision for a world they want to impact — their community, their life’s energy making that impact — that inner urge trumps saving for retirement. It doesn’t trump it to the point of being reckless and blinded by today’s enthusiasm, but we recognize that they’re standing at the center point of the see saw, one foot on either arm, finding that balance between today and the long-term tomorrow.

I’ve never snuffed out their flame by saying, “You can’t do that.” I think that’s because I know what it’s like to be driven by a vision. It is my role to identify the risks I see, offer suggestions of how to look at it from another angle, ask them to name a Plan B, and beat the drum of the importance of managing cash flow. Then, I support them in their new venture, in whatever way reasonable.

At this meeting with Suzanne, there was an extra-special payoff. While I do try to stay out of the specifics of my clients’ businesses, over the course of our three-hour lunch we brainstormed about how she might finance one of her new ventures. I realized I knew some people who might be interested in funding it, and I promised to put Suzanne in contact with them. I later did, and they ended up providing money to Suzanne for this project.

So this meeting epitomized my work: My clients are driven by a vision, and I am driven to help them achieve that vision. And if we can enjoy a decadent dessert together, that’s even better.

MONEY Financial Planning

The One Time Raiding Your Kid’s College Savings Makes Sense

Broken money jar
Normally, breaking into your college savings accounts is a no-no. Jeffrey Coolidge—Getty Images

It's never a great idea, but in an emergency tapping funds earmarked for education beats sabotaging your retirement plans.

Lauren Greutman felt sick.

She and her husband Mark were about $40,000 in debt, and were having trouble paying their monthly bills. As recent homebuyers, the Syracuse, N.Y. couple were already underwater on their mortgage and getting by on one income as Lauren focused on being a stay-at-home mom.

“We were in a really bad financial position, and just didn’t have the money to make ends meet,” remembers Greutman, now 33 and a mom of four.

There was one pot of money just sitting there: their son’s college savings, about $6,500 at the time. That is when they had to make a tough decision.

“We had to pull money out of the account,” she says. “We thought long and hard about it and felt almost dishonest. But it was either leave it in there, or pay the mortgage and be able to eat.”

It is a quandary faced by parents in dire financial straits: Should you treat your kids’ college savings—often housed in so-called 529 plans—as a sacred lockbox, or as a ready source of funds that may be tapped when necessary.

Precise figures are not available, since those making 529-plan withdrawals do not have to tell administrators whether or not the funds are being used for qualified higher education expenses, according to the College Savings Plans Network. That is a matter between the account owner and the Internal Revenue Service.

TIAA-CREF, which administrates many 529 plans for states, estimates that between 10% to 20% of plan withdrawals are non-qualified and not being used for their intended purpose of covering educational expenses.

It is never a first option to draw college money down early, of course. Private four-year colleges cost an average of $30,094 in tuition and fees for 2013/14, according to the College Board. Since that number will presumably rise much more by the time your toddler graduates from high school, parents need to be stocking those financial cupboards rather than emptying them out.

Joe Hurley, founder of Savingforcollege.com, has a message for stressed-out parents: Don’t beat yourselves up about it.

“The plans were designed to give account owners flexible access to their funds,” Hurley says. “I imagine parents would feel some guilt. But I don’t think they should. After all, it is their money.”

Why the Alternative Might Be Worse

Keep in mind that there are often significant financial penalties involved. With non-qualified distributions from a 529 plan, in most cases you are looking at a 10% penalty on the earnings. Withdrawn earnings will also be treated as income on your tax return, and if you took a state tax deduction on the original investment, withdrawn contributions often count as income as well.

Not ideal, of course. But if your other option for emergency funds is to raid your own retirement accounts, tapping college savings is a last-ditch avenue to consider. That’s not only because you do not want to blow up your own nest egg, but because it could make relative sense tax-wise. And as the saying goes, you can borrow money for college, but not for retirement.

“If you think about it, a parent who has a choice between tapping the 529 and tapping a retirement account might be better off tapping the 529,” says James Kinney, a planner with Financial Pathway Advisors in Bridgewater, N.J.

If the account is comprised of 30% earnings, then only 30% would be subject to tax and penalty, Kinney explains. And that compares favorably to a premature distribution from a 401(k) or IRA, where 100% of the distribution will be subject to taxes plus a penalty.

Lauren Greutman’s story has a happy ending. She and her husband made a pledge to restock their son’s college savings as soon as they were financially able. It is a pledge they kept: Now eight-years-old, their son has a healthy $12,000 growing in his account.

She even runs a site about budgeting and frugal living at iamthatlady.com. Still, the wrenching decision to tap college savings certainly was not easy—especially since other family members had contributed to that account.

“We tried to take emotion out of it, even though we felt so bad,” Greutman says. “Since we didn’t have money for groceries at that point, we knew our family would understand.”

Related: 4 Reasons You Shouldn’t Be Saving for College Just Yet

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