Start early and stay the course: Tips for handling higher education expenses

College SavingsFor the past 20 years, higher education costs have not only risen (much) faster than inflation, but they’ve increased at a higher rate than costs in just about any other sector, including health care! While total inflation since 1994 has averaged 2.3% a year, health care costs have risen 3.7% yearly on average. But that pales in comparison to college costs, which have risen 5.2% on average every year.

The average in-state school charges $9,139 for tuition annually, while private schools are charging an eye-popping $31,231 (with some well past the $50,000 mark). It’s no wonder there’s a crushing $1.2 trillion in outstanding student debt, with a rising rate of delinquencies.

A key takeaway: The earlier you get started on planning for your children’s education, the better…even if you don’t yet have children! But whether your budding scholar is wrestling with algebra or still learning his ABCs, you can take steps now to help ease the financial burden of college.

Start early if you can, but just start — Saving for college works on the same principle as planning for retirement: the earlier you start, the easier it will be on the other side. Even if it’s a mere $50 a month, commit now to creating a plan that will help you meet your goals. (Hint: We can help.)

Get your student involved — Though we saturate our high achieving kids with higher educationopportunities to acquire knowledge, basic financial “street smarts” often gets overlooked in the classroom and at home, especially when there’s little struggle for needs or wants. Teaching kids early how to save, how to budget, how to avoid debt, and how to be charitable, will pay enormous dividends down the road. When your child earns money from an odd job or a birthday card from Aunt Jane, help them learn the power of compounding by encouraging them to contribute some of it toward their education.

Take advantage of 529 plans — Just as Powerball is not a retirement strategy, it’s not one for paying school bills either. Instead, open up a 529 plan, which is a tax-advantaged savings/investment account that allows parents, grandparents, and other caregivers to save for a child’s education while minimizing taxes. When matriculation time comes, funds in the account can be used for tuition, room and board, books, and other supplies.

Overestimate costs — The 5.2% year-over-year increase in college costs likely isn’t going away anytime soon. When estimating future expenses, plan for the worst. Besides tuition and boarding costs, don’t forget to include costs like books and other incidentals (e.g. late-night pizza).

Consider the public option — Great public schools can be a real “value play” in education, offering a Grade A experience at (relatively) modest expense. Encourage your student (and yourself) to strongly consider affordable public schools, versus expensive private schools that may require the albatross of parental and student debt.

Don’t skimp on your retirement contributions — Your children’s education is important, but so is keeping your retirement goals on track. Continue to fund your 401(k) and IRA plans as you save for college. (And if there’s income to spare, encourage your child to start contributing to an IRA once she starts working.) Besides being tax advantaged, funds in retirement accounts are not considered when colleges determine need-based financial aid packages. (The equity in your primary home, a family-owned business, insurance policies, and annuities are also usually excluded.)

Paying for college can feel daunting, but having the right plan in place can make it smooth sailing. Need help getting started? We can help.

Matt Bauer


Be neighborly this winter…you just might save a life

_JBK5366Brrrr! Thoughts of escaping to spring unscathed by a harsh New England winter evaporated President’s Day weekend when the polar vortex bled into Valentine’s Day, putting a chilly damper on a supposedly spicy night.
Winter is here, no doubt, along with its usual inconveniences. But for the elderly, pets and wildlife, and anyone on the roads in a storm, winter can be not just a cold annoyance, but a deadly force.

The staff at Sinclair Risk is making a point of doing the neighborly thing and making sure the most vulnerable around us stay safe this season. Join us and enjoy the warm glow that comes from doing good for others…no fireplace needed.

Be neighborly, check up on those around you — When snowstorms hit or the temperature drops dramatically, give your elderly neighbor a call or knock on the door. Make sure she has heat, food, water, and electricity and offer to help shovel or blow the snow from sidewalks and driveways. (Better yet, if you have one, nominate your teenager to help!) Check in periodically throughout the storm.

Remember your pets (and everybody else’s) — If it’s too cold outside for you, it’s too cold outside for pets. Cats that like to roam and dogs used to spending time outside need to stay inside when bad weather strikes and temps are below freezing. During walks, short-haired dogs should wear a sweater (Facebookable moment!) But seriously…Pets are sensitive to severe cold and just like us, are at risk for frostbite and hypothermia. Make sure your pets and your neighbor’s pets are safe. Are there outdoor or feral cats in your area? Here’s a great article about how you can help them in winter. And here’s five ways you can help wildlife survive the winter.

iStock_000056466450LargeDrive with care — Driving with caution is always the neighborly thing to do…but especially during winter! Protect yourself and others on the road by slowing down when the white stuff is falling, when ice is on the ground, and when visibility is poor. Drive on slippery roads at reduced speed and increase following distance behind the vehicle ahead. This gives an additional space cushion for safe stopping. Anticipate stops by slowing down gradually and plan ahead for lane changes. Everything should feel like it’s in SLOW motion during winter driving.

Make sure you (and others!) are prepared for an emergency — Storms in our area feel like they are veering toward the extreme. Even a garden variety nor’easter can do significant damage to buildings, roofs, roads, and other infrastructure. A basic emergency supplies kit can help you weather the storm. After creating one for your family, consider helping an elderly neighbor get prepared.

Here are some key items to include in your kit:
• One gallon of water per person per day for at least three days, a smaller amount for pets
• At least a three-day supply of non-perishable food for people AND pets
• Manual can opener for canned food
• Battery-powered radio
• Flashlight
• Plenty of batteries
• First Aid Kit
• Whistle (can signal for help)
• Moist towelettes, garbage bags and plastic ties
• Cell phone with car and wall chargers
• Laptop/Tablet with car and wall chargers
• Prescription medication, glasses, contact lenses
• Cash

Being neighborly can help make winter safer and more fun for everyone. Take some time to lend a hand on your street.

Steve Davis

Sinclair Risk & Financial Management

Higher minimum wage means higher direct & indirect costs for business owners

Higher minimum wage means higher direct & indirect costs for business ownersThe political pressure to enact a $15 federal minimum wage is growing stronger. It’s the stuff of nightmares for business owners, but it may yet become a reality. New York has already passed legislation, with the enthusiastic support of Gov. Andrew Cuomo, to raise the wage bar for fast food workers to $15. It seems inevitable that figure will soon carry the day for all New York workers.

The progressive bastions of San Francisco, Los Angeles, and Seattle are also getting ready to enact a $15 minimum wage.

As goes New York, so goes the country?

President Obama is already committed to a $12 federal minimum wage. His time remaining in office is short, but if Hillary Clinton gets elected next year you can be sure that will add a tremendous amount of oxygen to this dubious movement. (And forget it if Bernie Sanders gets in, but don’t worry, that’s very unlikely to happen.)

Organized labor is already using these early successes to push for an even higher minimum wage: $16.87. Even if highly unlikely to succeed, this “living wage” movement will make it that much easier to get a $15 minimum in place.

Nightmares aside, smart business owners with employees earning below $15 an hour Higher minimum wage means higher direct & indirect costs for business ownersneed to plan now. This is especially true for fast food franchisers and other food service businesses where the $15 movement has the most wind at its back.

Besides the direct costs of a government mandated wage increase to employees, business owners may shoulder the burden of higher indirect costs, such as higher premiums for worker’s compensation insurance. It stands to reason that higher wages mean higher payouts for on-the-job injuries, which will put pressure on premiums.

Underwriters will be watching this movement very closely, as indemnity benefits represent about 40% of worker’s compensation claim costs and are generally based on two-thirds of a worker’s average weekly wage.

My team at Sinclair Risk is keeping a close watch on the minimum wage movement and has the necessary expertise to help business owners control risk management expenses. Talk to us today and learn how we can help protect your interests, regardless of where the minimum wage political football lands.

Dave Sinclair


First step of retirement planning? Figure out your goals

First step of retirement planning? Figure out your goalsAre you ready for retirement? There are a lot of calculators out there, from simple to complex, that claim to help you figure that out by crunching your numbers and spitting some back at you.

Knowing the numbers can be helpful to give you a basic idea of where you stand. (FYI, we like this calculator from Bankrate.) But numbers without context — especially those that require a healthy dose of assumptions and guesstimating — provide little insight.

Everyone’s situation is different. Some people are just focused on not outliving their money. Others are seeking to expand their range of experience as they age, and still others are most concerned about what they leave behind.

Do you want to travel the world? Do you plan to leave a financial legacy for your children, your friends, charitable organizations you’re passionate about? Dreaming of retiring to a relatively high cost area like Cape Cod or Hawaii?

Answers to these kind of questions will fuel the conversation about whether you are “on track” for a “secure” retirement.

Goals don’t have to be set in stone but they begin to form the equation of how much you need to save, what percentage of income you need to replace in retirement, and how much you can safely spend in the meantime.

As for tactics, some truisms apply to nearly everyone:

Only count on what you send ahead — Do not take Social Security for granted. Assume it First step of retirement planning? Figure out your goalswon’t be there and think of saving for retirement as sending supplies ahead before your journey begins.

Pay yourself first — Take advantage of employer sponsored retirement savings plans to put saving and investing on autopilot.

Don’t obsess over taxes — You can’t predict what tax rates you’ll be subject to in the future, especially if retirement is decades away. Sleep soundly and diversify your tax exposure by holding both tax-deferred and tax-free accounts.

Find room for a Roth IRA — We adore the Roth IRA for tax free growth, unlimited investing options, and the ability to serve as a backdoor emergency fund. (More on this in a future blog.) For nearly everyone eligible to contribute, a Roth should be retirement plan bedrock.

These are just some of the very basics. At Sinclair Risk & Financial, we analyze your specific situation and help design a retirement plan tailored just for you…once you have your goals in place. Spend some time early in the New Year thinking about your ideal future and give us a call to help make it happen.

Matt Bauer