Gilbert Wealth Articles

What is a Testamentary Trust?

A testamentary trust is a type of trust that is established upon the death of an individual, typically as part of a last will and testament. Unlike living trusts, which are created and become active during a person's lifetime, a testamentary trust is created by instructions left in a will, and only comes into effect after the testator's (the person who created the will) death. The assets that are to be transferred into the trust are usually part of the deceased’s estate, and the trust is governed by the terms specified in the will. A trustee is appointed to manage…
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The Power of Assumptions in Retirement Planning: Why They Shape Your Financial Future

Retirement planning is not just about building a nest egg; it’s about creating a roadmap for how your finances will unfold over what may be decades of retirement. As with any long-term financial projection, this process is built on a foundation of assumptions. Which assumptions you use when planning your retirement will heavily influence which strategies shine and which may fail. Thus, being comfortable with these assumptions is crucial, as they will guide the financial strategies you’ll work with for the rest of your life.Let’s explore the key assumptions that form the bedrock of any retirement plan and the importance…
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Navigating Variable Income Strategies in Retirement

Retirement income planning involves careful consideration of how to fund your lifestyle and future goals. Variable income strategies provide a flexible approach to withdrawing from a retirement portfolio by adjusting the amount withdrawn based on various factors like market performance, life expectancy, and portfolio sustainability. Unlike reliable income strategies, where income is drawn from sources like social security, pensions, or annuities, variable strategies seek to adapt over time to create a balance between spending and optimizing portfolio longevity.Nearly every retirement planner uses some variation of the strategies discussed here. However, there are many strategies out there, so I'll just be…
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Understanding the Types of Retirement Projections

Financial Planning has a number of different tools available to provide analysis at different levels. In addition to the assumptions that are used within a plan, the method used to project your retirement income and expenses will heavily influence how outcomes are evaluated.There are three main types of retirement projections out there: Flat Average Projections Flat average projections use fixed assumptions for life expectancy, return rates, and inflation, applying them consistently throughout the retirement period. While this approach is straightforward, it does not account for variability in market returns or life events. For instance, if you assume a flat 5%…
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What Estate Documents are Effective and When

When planning your estate documents, it's important to understand when each document is effective and used within your plan. In general, there are 5 life periods that determine when documents are effective or not:During Life, Capable: This period is likely where you are if you're reading this article. You're not dead yet, and you have the ability to made decisions.During Life, Incapacitated: This period describes when you are alive but unable to make decisions.During Life, End of Life: There is a special period when you are deciding end of life treatments. At Death Immediate Settlement: This is the period following death…
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How Insurance Works: The Law of Large Numbers

Insurance is a financial product that helps individuals and businesses protect themselves from financial losses. At its core, insurance works by pooling risks. By spreading the risk among many, the insurance company can provide financial protection to each individual without any one person bearing the full burden of a catastrophic loss.  The Law of Large Numbers The foundation of insurance is built on a key principle in statistics: the Law of Large Numbers. This law states that as the size of a group of insured people (the "pool") increases, the actual results will become more predictable and stable, aligning closely with the…
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Retirement Income Strategies

When planning for retirement, choosing how to convert savings into income involves balancing certainty with flexibility. Broadly, retirement income strategies can be divided into two categories: Reliable Income Strategies and Variable Income Strategies. Each has its own advantages and considerations depending on personal risk tolerance, financial goals, and the need for predictable income.1. Reliable Income Strategies (Guaranteed)Reliable income strategies focus on creating income streams that are consistent and predictable, providing retirees with a "floor" of guaranteed income that typically lasts for life. These strategies are ideal for covering essential expenses, such as housing, healthcare, and daily living costs, since they…
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Understanding Benefit Base vs. Cash Value in an Annuity

Annuities are a staple in retirement planning, offering a mix of benefits that can provide peace of mind in the later stages of life. However, navigating the components of an annuity, particularly the distinction between the benefit base and the cash value, can be confusing. To simplify this, let's explore these concepts using a relatable analogy: a store coupon. The Benefit Base: Your Special Store CouponImagine you receive a coupon from your favorite store. This coupon is not cash; it has no value outside the store. It’s only useful for getting a discount on a future purchase or redeeming a…
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Guide to Market Volatility

It is easy to get caught up in the news cycles when market volatility hits and begin to question your portfolio. Here are some valuable tips for managing market volatility that are useful for investors of all levels:Stay Informed, But Don't OverreactMarket volatility is not generally caused by a single source but a combination of factors:Economic Data: Changes in unemployment rates, inflation, and GDP growth can influence market movements.Geopolitical Events: Political instability, elections, or conflicts can cause uncertainty and market swings.Monetary Policy: Central bank decisions on interest rates and monetary policy often impact investor sentiment.Investor Sentiment: Market psychology plays a…
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Understanding Per Stirpes: A Guide with Examples

Estate planning is a critical process that ensures your assets are distributed according to your wishes after you pass away. One important concept in estate planning is "per stirpes." This legal term, derived from Latin, means "by branch" and plays a significant role in how your estate may be divided among your heirs. This article will explain the concept of per stirpes, provide examples to illustrate its application, and discuss how and where per stirpes can be included in your estate planning documents. Additionally, we will explore the implications of minors inheriting under a per stirpes distribution.What is Per Stirpes?Per stirpes…
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