HELP MAKE THE MOST OF YOUR ASSETS AND ACHIEVE YOUR GOALS
Personal wealth management often takes a back seat to other tasks in the life of a time-crunched business owner. Daily demands can edge out the time required to focus on opportunities to help protect, manage and build the money you have worked hard to earn.
Take some easy steps now to plan for your future. A small investment of time and help from the right resources can enable you to move onto the right track toward preserving your wealth. City National Bank's 2013-2014 Tax and Financial Planning Guide has the latest wealth planning information. Download it here.
The following tips identify the key considerations of five essential aspects of financial management. Use them to assess the steps you may need to take for your own planning.
1. Retirement planning
Are you saving enough for retirement? It's common for business owners to shortchange retirement planning both because they are so busy with their companies and because of the natural tendency to pay current expenses first.
Be sure to:
- Determine how much you need to retire comfortably. There are many books and websites available to get you started. You may want to rely on a financial advisor to help build or update targets based on income and projections.
- Calculate what you can save each month. There are many websites and apps to help track your monthly spending so you can see what you can safely put aside.
- Contribute as much as you can to your company retirement plan. Don't offer one? Consider it — it can be a great way to shelter your own income and to attract and retain employees.
Get help: Retirement planning can be confusing. Learn how City National Bank can help you develop a retirement plan tailored to your needs.
2. Estate planning
Whether you know it or not, you have an estate — the sum of all the wealth you have accumulated over your lifetime. It's never too early — or too late — to think about how to safeguard those assets with an estate plan and transfer them to your heirs.
Even if you think your wealth doesn't justify an estate plan, it can be a terrific investment since estate taxes can be steep. Protecting your assets does not mean losing control of them. Done right, assets can be liquid and accessible.
Get help: Learn how City National Bank uses a disciplined six-step process to help you design an estate plan customized for your situation.
3. Business succession planning
Roughly 8,000 baby boomers retire every day in the United States. Many are business owners who need to ease out of the business they built. Making a smooth transition is one of the most critical aspects of managing a business. Key steps include:
- Decide how you want to exit. For example, will you sell the business to a third party (or your own employees) or give it to your family?
- Decide when you want to exit. Will you do it all at once or ease out after a transition period?
- Decide who will manage the business. This is especially important if you give it to family members.
- Develop a timeline. Careful preparation is essential for a successful transition, which can turn into a multiyear affair.
Get help: Learn how City National Bank's planning professionals can help you create a successful transition plan.
When you put money aside, you want those funds to work as hard as possible for you. A key area of focus in protecting your wealth is to allocate money so you can attain returns and growth. You may want to change your asset allocation over time: start your career with a more growth- and risk-oriented approach and move to less risky investments as retirement nears.
Here are three options:
- Cash. Many financial planners recommend having savings on hand equal to six months' worth of expenses. This way, you can survive an extended period with reduced or no income — for example, if your business suffers an outage or your spouse is out of work. Creating this nest egg and ensuring it is safe and accessible in a bank or money market account should be your first priority.
- Stocks. Over the long haul, the U.S. stock market has returned roughly 6% per year in real terms, though it has had big swings along the way. There are many ways to take advantage of the growth potential of stocks, from buying individual stocks to mutual funds, index funds to more complex and risky options.
- Bonds. Corporate bonds have returned roughly 3% per year in real terms since 1930. While this is lower than stocks, bonds offer two major benefits. One is that they tend to be more stable in their performance, so they make a good counterbalance to stocks in down years. The second is that some bonds offer tax benefits.
Get help: Learn how City National Bank can help you develop a diversified portfolio.
5. Education funding
Tuition rates have increased roughly 8% per year since the 1960s, averaging between 1-1/2 and 2 times the rate of inflation. This means that saving for a child's education requires careful planning. For example, you need to:
- Ensure that saving for a child's education does not interfere with your retirement savings. Most financial planners will tell you to make your retirement a priority.
- Determine how much you need to save. For example, what kind of tuition expense will you face, how much can you borrow to pay for it and how much do you want your child to borrow for tuition?
- Carefully assess how much you can save and save regularly.
- Consider the benefit of education savings vehicles such as 529 college savings plans.
Get help: Learn how City National Bank can help you develop a strategy to give the gift of education.
Download City National Bank's 2013-2014 Tax and Financial Planning Guide for the latest information on wealth and financial planning. Let City National Bank help you achieve your personal and business goals. Call us at (800) 773-7100 or request that a Relationship Manager contact you.
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• May Lose Value
Brokerage services are provided by City National Securities, Inc., member FINRA / SIPC, a wholly owned broker/dealer subsidiary of City National Bank.