Financial Focus | February 15, 2018

Valentine’s Day is almost here – and it’s a pretty big business. In fact, U.S. consumers spent about $18 billion on their valentines in 2017, according to the National Retail Federation.

Of course, recipients certainly appreciate flowers, candy, jewelry and so on, but this year, consider going beyond the traditional favorites to give your loved ones something more long-lasting – a financial gift.

And, while you’re doing so, why not also go beyond the traditional definition of a “valentine”? After all, not all that $18 billion went to spouses or significant others. A sizable amount also went to non-romantic connections, including children, parents, friends, teachers – even pets. So, in the spirit of ecumenical Valentine’s Day gift-giving, here are some suggestions for financial gifts for your loved ones:

For spouse or significant other – One valuable gift to your spouse or significant other might be an IRA contribution. While you can’t directly contribute to someone else’s IRA, you can certainly write a check to that person for that purpose. This gift is particularly valuable because many people have trouble coming up with the maximum annual IRA contribution, which, in 2018, is $5,500, or $6,500 for individuals 50 and older. As an alternative to an IRA contribution, you could give shares of a stock issued by a company whose products or services are enjoyed by your spouse or significant other.

For your children – It’s never too soon to start saving for college for your children. Fortunately, you have a few attractive college-funding vehicles available, one of which is the 529 Savings Plan. You can generally invest in the plan offered by any state, even if you don’t live there. If you do invest in your own state’s plan, you might receive a tax incentive, which could include a deduction, match or credit. Plus, all withdrawals from 529 Savings Plans will be free from federal income taxes and, in most cases, state income taxes as well, as long as the money is used for qualified college or graduate school expenses of the beneficiary you’ve named. (If a withdrawal is taken from a 529 Savings Plan but not used for a qualified expense, the portion of the withdrawal representing earnings is subject to ordinary income tax and a 10% federal penalty.)

For your parents – You can probably find a number of thoughtful and valuable financial gifts for your parents. You could, for example, off er to pay a month’s worth of their premiums for their auto or health insurance. Even if they are on Medicare, they may still be paying for a supplemental policy,  so your gift may well be appreciated. But you might want to go beyond helping them with just a single component of their financial situation and instead provide them with assistance for their “big picture.” To do so, you could arrange a visit with a trusted financial professional, assuming your parents aren’t already using one. This person could look at all issues, including investments, retirement accounts, long-term care and estate-related financial strategies, and then make appropriate recommendations and even referrals to other professionals. Everyone likes the hearts, flowers and sweets of Valentine’s Day. Nonetheless, give some thought to making financial gifts – they can make a difference in your loved ones’ lives long after the chocolates are eaten and the roses have faded.

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