Financial Planning

Some financial pundits suggest that all you need for financial success is a “set it and forget it” approach with passive index fund investing. While long-term investing is indeed advantageous, is that truly all you need to do? What about tax-saving strategies, generating retirement income, or establishing a solid estate plan? And how should you respond to major life changes or significant market volatility? The simple fact is that managing wealth is complex, especially for high-net-worth individuals. From investment choices to tax planning and business succession, navigating these areas without professional guidance can lead to costly oversights. Partnering with a skilled fiduciary advisor can simplify the process, helping you focus on long-term success while steering clear of potential pitfalls. Breakwater Capital Group provides advanced wealth management solutions rooted in integrity and transparency. Our team of fee-only fiduciary advisors brings clarity and strategic insight to clients across the country.  This article explores the benefits of professional wealth management advice, highlighting the value of a fiduciary advisor who provides comprehensive and personalized financial solutions.

Spring is a time for renewal—a season to declutter, reorganize, and bring fresh energy into our lives. While cleaning out closets and tidying up your home, why not do the same for your finances? A cluttered financial situation can lead to stress, missed opportunities, and hidden costs that can throw off your long-term plans. Taking the time to organize your finances can help you feel more in control and ready for the future. With over five decades of combined experience, Breakwater Capital Group helps clients nationwide manage their assets, offering personalized guidance through our Massachusetts, New Jersey, and Colorado wealth management offices.  In this blog, we’ll explore why financial organization matters and the key steps you can take to refresh your financial life this spring.

Congratulations! Your student has been accepted to college. Now, the crucial question is: How do you pay for it? This is an exciting yet challenging time for students and parents across Massachusetts. As graduating seniors eagerly anticipate their next chapter, families face the logistical, emotional, and, most importantly, financial adjustments that come with higher education. Effective planning is key to navigating these transitions successfully.

Every New Year’s, millions of people prepare resolutions in the hopes of making their lives a little better. However, when it comes to financial resolutions, most are abandoned by February due to a lack of planning or follow-through.  Setting high goals at the beginning of the year, like “save more money” or “pay off debt,” is a great starting point toward financial stability and growth. These require, however, a well-defined roadmap to success — a guide that provides steps and directions through which these goals can be converted into reality. This is the point where your financial goals call for an effective financial plan. Professional management is crucial in mapping a way to accomplish financial goals. Breakwater Capital Group offers experienced guidance in this process.

Getting yourself into great financial shape isn’t confined to your asset allocation or developing smart saving and spending habits. It truly is about financial wellness. Like an annual physical, keeping up with your financial wellness should be an important part of your routine. If you are working, making sure you are taking the time maximizing your benefits through your current employer is a perfect example. Benefit election season is just around the corner. It might not be as exciting as some of the other holiday season traditions that are celebrated toward the end of the year, but it can have a greater impact either positively or negatively. This will be a discussion of Health Savings Accounts or HSAs for short. This often overlooked or under appreciated tool can play a significant role in reducing current taxable income, growing assets for retirement (tax free!) and building up a war-chest to help pay for health expenses are highest for most people. Let’s dive in.

So often, we see articles written asking if a person can retire on $1 Million or “how much do I need to retire”? Perhaps the equally important question is when do I have enough or too much? The concept of too much may seem a little foreign, you are not likely to hear that phrase from your financial professional, where the mantra is the more the merrier. There may be some merit to that, as life tends to throw us curve balls, but there is also the inherent conflict of having you amass wealth, so your advisor has more money to manage. We will make every effort to balance out this important question below.  First off, so much of this depends on lifestyle and the choices you make along the path of accumulation. If you live in Manhattan, it’s more than likely that $1 Million won’t cut it, given how expensive nearly everything is in the Big Apple. I surmise that a sizable portion of anyone’s monthly expenses would be spent on dining out at all the fabulous spots that pop up, seemingly weekly! On the other hand, if you live in a remote area in the mountains of Vermont, you may be very comfortable on $1 Million, if you’re not too close to a ski resort that is. Recall that when you started on your path to saving for retirement it was about having the right amount when it was time to wind down your career, but over time the savings itself often becomes the goal which can lead to some unhealthy habits or relationships with our money. Does anyone work in sales? If so, no doubt you are familiar with the concept of moving goal posts, but that is not unique to that profession. Part of what makes our culture (and markets) so successful is the constant drive to achieve more but there can and should be limits. As a thought exercise over the years, we have asked our clients how much they needed to feel comfortable (I draw a distinction here between what they feel they need and actually need) and inevitably the response was a figure greater than what they had presently. Now when we circled back 3-5 years later, when that aspirational target had been met or in many instances exceeded, we hoped there would be a degree of satisfaction or contentment. Alas, no such luck, it seemed in nearly every instance there was a new number greater than where they were today. If you think about this, much like Sisyphus whose unending quest to roll the rock up the hill only to see if come crashing down time and again, this can mean unnecessary stress or sacrifices or working too long (yes there is such a thing, my wife keeps insisting) With any project or journey, it’s important to define the objectives. In finance, the goals differ from one person to the next. For many it’s about enjoying the “golden years”, buying that second home where the family will congregate, or others may feel it’s important to leave a larger financial legacy to loved ones or charities. Often, it’s some combination of all of those things. Having been in this business for nearly 25 years it’s clear that even some of the “smartest” or “wealthiest”, have a poor understanding of the true power of their wealth and the comfort level to spend it. Here are a few foundational pieces that you need to have in place to start to build confidence, these are not for those just getting started but for anyone at any time along the journey. Budget: What you don’t know, can hurt you. For an exercise that should not take more than a couple of hours when done thoughtfully, there is a real hesitation on the part of many savers as if knowing what you spend may make you feel a sense of guilt or fear. This should be more liberating than anything else. Cataloging what you are spending on a monthly or annual basis is a great first step. It’s unfair to you or your advisor to not have this information readily available, if you were a business and didn’t know how much went out the door each month, you would have a hard time finding any investors. Emergency fund: Fortunately, with cash now offering a mid-single digit return, this safe money will actually offer you something beyond simple peace of mind. While rates may rise and fall, having a healthy reserve can allow you to weather any financial storm from job loss to maternal leave or a home repair project. Emergency funds are there to cover unexpected expenses with ready cash. The industry standards suggest anywhere from 3-6 months of expenses be set aside, but you may have a different figure in mind that allows you to sleep well at night. Insurance: A catchall category, whether we are talking about life insurance, health insurance, long term care Insurance or an umbrella policy, having the proper coverage in place prevents the best of plans being derailed by a catastrophe. We sympathize with the idea that many of these recurring premiums will not result in an actual return on investment, but they allow you to facilitate other strategies. Okay, so you have those bases covered, now you can shift gears to what may be the more fun part of savings and investing like how you plan to spend that money in the future or what you intend to leave behind. Being realistic about your discretionary spending is critically important, if you like to travel and dine out frequently, safe to assume you may need to set aside more than a homebody. Also, you need to be mindful of the fact that when you have more free time you are apt to spend more money, it’s reasonable to think that you spent more money on Saturday than you did Monday through Friday when you were working. When you have a solid number in place your advisor can help determine what that figure may look like in the future accounting for inflation. Really good advisors will use sophisticated financial planning software where tinkering with assumptions can produce countless scenarios based on your personal model. For example, you may want to be conservative with your investment strategy if market volatility makes you uncomfortable, or you may decide to use below average return expectations as you would prefer to be “pleasantly surprised” if the markets deliver better results. Or you may opt to model in buying that second home when you are 65 and selling it when you are 85. Many of our clients have spending bands where from one decade to the next their spending patterns adjust based on their ambitions and health, spending more in the early years and perhaps a bit less after the “retirement honeymoon.” In the end much of this is about probability theory and just plain math. Harness the power there, accept its limitations but most importantly trust the process. It’s far better to have the facts and figures rather than keep throwing money at the problem or burying our heads in the sand as the task may seem daunting or downright pointless. Hopefully having gone through this exercise you will feel more empowered that your path looks promising, and you can also start to think more about defining your monetary/material legacy for when your time on this planet comes to a close. What is your vision for your wealth after you are gone? Leave each child $1 Million? Endowing a scholarship for young people attending your alma mater? Providing for charitable causes near and dear to your heart at your death and into the future. Take some time to think about this, it’s not about acknowledging your mortality so much as seeing your plan to its rightful end. This may be the right time to incorporate the next generation into the planning, identifying your power of attorney or executor or handing the baton to the family’s future CFO. For the most part, people believe in the concept that we don’t take our worldly wealth with us when we pass away. So, when our income and savings exceed our own needs, it is perfectly okay to start incorporating more of the wants/desires into the equation. There is nothing better when as a financial professional you can help facilitate some of this work with your clients. Here are some real-life examples where our clients have spent both human and financial capital: Experiences: Are there places that you would like to see? Should you stay at a nicer hotel in a better location? Fly business versus coach for that long international flight. Or do you already have a special place that you love to get away to and you are wondering if you can buy a property? Celebrating a family milestone with the entire family at a destination with a great draw. Time with friends and family: While we have all heard it’s the most precious commodity you can’t create more of it, something we have a more profound appreciation of when we get older, using it more wisely to engage with the important people in our lives has been proven to provide happiness and improve quality of life. Maybe it’s organizing a tailgate at your college’s football game or having a girl’s weekend, these are often priceless experiences. Family support: Giving with a warm hand as the saying goes. Perhaps picking up the tab for a family member’s education or helping a child to be able to take a career pivot to follow a passion. Personal Fulfillment: This could be a more expensive hobby, learning a language or taking a few college courses. Staying stimulated mentally and socially will improve those later years in life. Odds are that you do not need all your money squirreled away for your time in the nursing home and just maybe these things help you avoid that stay all together. We wouldn’t be doing our job well if we did not help you really understand the facts and how very empowering that information is to have at your disposal. Think about how your life might be different if you knew that you could live at your current standard of living with ease and, in fact, you could spend an additional $5,000 or more on a monthly basis. Consider all the things that you personally could do with an extra $60,000 in a year? Would you travel? Would you give it away to family, friends, or charity? Knowing your numbers and giving yourself permission to spend can be a substantial change if you are a natural saver. The psychology of money plays a crucial role in determining how much is too much. Some individuals find comfort and security in amassing wealth, while others derive satisfaction from spending and sharing their resources. Fear of financial insecurity, even among the wealthy, can lead to excessive saving and reluctance to spend. Addressing these psychological factors through financial education and counseling can help individuals find a healthy balance. Get a little outside of your comfort zone with the planning and put your advisor’s objectivity and expertise to good use. The views expressed represent the opinions of Breakwater Capital Group as of the date noted and are subject to change. These views are not intended as a forecast, a guarantee of future results, investment recommendation, or an offer to buy or sell any securities. The information provided is of a general nature and should not be construed as investment advice or to provide any investment, tax, financial or legal advice or service to any person. The information contained has been compiled from sources deemed reliable, yet accuracy is not guaranteed. Additional information, including management fees and expenses, is provided on our Form ADV Part 2 available upon request or at the SEC’s Investment Adviser Public Disclosure website. Past performance is not a guarantee of future results.

Is Massachusetts a great place to live? In a word, yes. Whether it is the beautiful beaches of Cape Cod, the relaxing vibe of the Berkshires or the charming capital city of Boston steeped in history, the “Commonwealth” as it is often referred to by the locals, is as desirable a destination as any. For someone who has spent more than 20 years here I may be a little biased, but there are many reasons one could point to that make it a desirable destination. Don’t take my word for it. In 2024, Wallethub.com ranked Massachusetts the #1 state to raise a family for the second year in a row. It has consistently been considered as having among the best public-school education in the nation. ( Yahoo News- #1 , U.S. News and World Report – #3 ). The husband of a teacher and with three children in these well-regarded schools, they have earned that reputation.  Despite my love for the Commonwealth, the state does not stack up nearly as favorably when it comes to planning for and living in retirement. The challenge for many retirees comes in the form of affordability, where Massachusetts ranks 44th. The higher cost of living coupled with the flat income tax and a comparatively lower estate tax exemption are hardly reasons to stay. There are a few key areas that are burdensome such as total tax burden- 20th, property tax – 35th and cost of a single-family home is 3rd. If Massachusetts wants to retain its older residents, there is an opportunity to modify the tax code, like many other states to help seniors manage their tax outlays. On a bright note, known for its world class hospitals and thriving Biotech industry, that same WalletHub study ranked the Bay State in the top three for healthcare and quality of life, which is remarkable! Let’s get into the particulars…. Education & College Funding: As mentioned above, education is a big draw for the state. With 13.6 students per teacher, well below the national average of 15.5, young families look to educate their children here to give them a leg up. Higher education brings college students from across the globe, ebbing and flowing in and out of the towns and cities every fall and spring bringing a sense of perpetual vitality. Massachusetts is home to some of the most prestigious educational institutions, including Harvard University, MIT, Tufts University, and Boston College. Massachusetts recently enacted laws designed to encourage funding education including a 529 plan called the U.Plan which offers a tax deduction of up to $1,000 for an individual and up to $2,000 for a couple, to prepaid tuition programs for those residents that contribute to the state sponsored plan. Estate Tax/Inheritance Tax: Whereas the Federal estate tax exemption is up over $13.6 million, any estate above $2 Million is subject to 0.8% – 16% marginal rates. Proper planning can help protect families against onerous and often unexpected tax bills while grieving the loss of a loved one. Taxation of retirement funds: Government pensions are not taxed in Massachusetts but distributions from retirement plans that have not yet been taxed by Massachusetts, are taxable in the state. IRA accounts, private pensions and annuities fit this bill. Taxation of Social Security: Social Security is not taxed at the state level in Massachusetts. Federally, Social Security benefits are taxable at the following levels. Up to 50 percent of your benefits will be taxed if you file an individual tax return and make $25,000 to $34,000 in total income — or if you file jointly and as a couple make $32,000 to $44,000 in total income. Up to 85 percent of your benefits will be taxed by the federal government if your total income is more than $34,000 individually or $44,000 as a couple. If you receive less than $25,000 as an individual and $32,000 as a couple, Social Security benefits are not taxed. Property Tax Credit for Seniors: This is for residents who are over the age of sixty-five and is referred to as the Senior Circuit Breaker Tax Credit, which was $2,590 for 2023 and rises with inflation. Millionaire Tax: This tax was introduced in 2023 and equates to an extra 4% on income over $1 Million. There are planning options here to help mitigate the impact. Pass Through Entity Tax: This applies to Pass Through Entities such as S Corps, LLCs, partnerships, and certain trusts, allowing an elective pass-through entity (PTE) excise in response to the $10,000 cap on the federal state and local tax (SALT) deduction added in the 2017 federal Tax Cuts and Jobs Act. History & Culture: The birthplace of 4 US Presidents, Massachusetts’ history spans the country’s existence from the Mayflower to the Boston Tea Party, and the many battles from Bunker Hill to Lexington. For history buffs it is a popular vacation destination; it is not uncommon to find a visitor walking parts of Paul Revere’s Freedom Trail during the day before heading to Fenway Park to take in a ball game at night. Or head to Salem which sees huge crowds around Halloween as it was made famous for the witch trials from the late 1600’s. The sandy beaches off Cape Cod, Nantucket and Martha’s Vineyard have been a popular escape for politicians, artists, performers alike for over a century. Did I mention the food? As one of the early homes to immigrant populations, the state is a melting pot offering great cuisine from Italian (North End) to seafood (Gloucester/Provincetown) or the sausage and peppers on Jersey St (formerly Yawkey Way). For those looking for some of the “finer arts” with world-class museums, theaters, galleries, and performance venues, for a state with a population less than the island of Manhattan, it punches above its weight. The Museum of Fine Arts and the Boston Symphony Orchestra are bucket list worthy, I can assure you. Sports: Once referred to as Title Town, Massachusetts tradition from the Beanpot to the Boston Marathon complement sustainably successful organizations like the Celtics, Bruins, Patriots and Red Sox. Walk up and down any city in the US and you are likely to see a transplant whose loyalty to their Boston teams ranks right up there with religion. Economic Opportunities: Massachusetts has a robust economy driven by industries such as biotechnology, healthcare, finance, education, and technology. The Greater Boston area is a hub for innovation and entrepreneurship, offering abundant job opportunities and a high standard of living. The professional success that so many experience during working years helps to buffer resident balance sheets. Healthcare: Massachusetts is known for its excellent healthcare system, with top-rated hospitals, medical research facilities, and healthcare professionals. The state pioneered healthcare reform with the implementation of mandatory health insurance coverage which was the model for the Affordable Care Act which many consider a transformational piece of legislation. As we age, access to world class doctors and medical facilities make Massachusetts an appealing place to spend our later years if we can afford it. In summary, Massachusetts is not only a great place to visit, but also a great place to live. Despite a higher cost of living, the state offers a four-season climate, culture, history, and opportunity. With its mix of urban entertainment and natural beauty, the state truly offers its residents a high quality of life, at any stage. Like most living decisions there is a lot that goes into it and having an advisor that knows the landscape well makes for an even better experience. Knowledge of what is available to residents and proper planning can help families navigate both obstacles and opportunities alike. Sources: irs.gov, mass.gov, wallethub.com, yahoo.com, usnews.com The views expressed represent the opinions of Breakwater Capital Group as of the date noted and are subject to change. These views are not intended as a forecast, a guarantee of future results, investment recommendation, or an offer to buy or sell any securities. The information provided is of a general nature and should not be construed as investment advice or to provide any investment, tax, financial or legal advice or service to any person. The information contained has been compiled from sources deemed reliable, yet accuracy is not guaranteed. Additional information, including management fees and expenses, is provided on our Form ADV Part 2 available upon request or at the SEC’s Investment Adviser Public Disclosure website www.adviserinfo.sec.gov Past performance is not a guarantee of future results.

The “American Dream” has been defined in a myriad of ways, but one of the more common elements revolves around the concept of home ownership. We’ll try to distill the question of whether to buy or rent, down into a handful of key factors and while we realize that everyone’s circumstances are a bit unique, there are some important elements that apply to anyone making this decision. It is also worth looking at the current market through a historical context, so we have added some additional detail below. We acknowledge for many given the affordability challenges that exist today there may be no choice but to rent for now, but that may very well turn out to be a blessing versus a curse with home affordability at historically low levels.  For someone that spent much of his adult life renting, I can say that decision worked well in that I avoided buying in during the housing boom that would turn into an epic bust at the turn of the century. Had I followed the conventional wisdom at the time, I would have drastically overpaid for a place that I would have resented a few years later. In addition to avoiding that calamity, the excess savings each month allowed me to set aside funds, much of which found its way into the market which has not been a bad thing for the last 15 years. It also meant that I could maintain a degree of flexibility with where I lived which had some qualitative positives. For those of you adamant that homeownership is the best path, all is not lost. The housing market has cycles and it stands to reason in the future there may be better times ahead. Patience is a virtue as they say… Let’s dive in: