Virtuity – The Unexpected Windfall

Here we are at the beginning of 2018.  Just 4 months before 2017 taxes are due.  As a financial professional, I am always thinking in the future.  Cashflow forecasts, how current financial decisions impact the future, retirement, the potential need for long term care, and wills & trusts are areas I specialize in and affect each one of us.

So, why am I writing about windfalls?  Well, this is the month most people will receive unexpected cash in the form of their annual bonuses at work, notification of the coming year’s pay increase, promotions on their jobs, and receive cash gifts for Christmas.  Additionally, ones CPA may recommend accelerating their income by taking IRA distributions this year instead of next; selling stocks or other assets with taxable gains this year to lower next year’s tax bracket.  Oh, and let’s not leave out an inheritance and a lucky lotto win.

Everyone’s situation is different, and the amount of the windfall can vary as well.  Nonetheless, here are some smart tips for those unexpected windfalls:

  • If the amount is large, don’t quit your day job or purchase a big-ticket item right away. These can be very costly decisions that can quickly cause that windfall to disappear and you do not want to underestimate how much income you will need to replace.
  • Seek advice from your financial professional immediately.  It is essential to develop a plan that is suitable for your situation (current and future)
  • Pay the IRS. Ignoring taxes can lead to huge headaches and a big tax bill.
  • Invest in yourself.  The best way is to create an emergency fund.  “Rainy Day” money for those unexpected expenses.
  • Revisit your estate plan.  Perfect time to consider your legacy and your heirs
  • Splurge a little.  Yes, once your financial house is in order, go ahead and treat yourself and your family.

At Virtuity Financial Partners, we want to help you design a plan to enjoy the freedom that the windfall provides and give yourself the additional gift of time.  Taking a planned approach will allow you to enjoy the process and make better decisions that you will be happy with for a long time.


Written by Jewel Johnson and Gillian Giorgio                                                                                        

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