MAKING CENTS: MAKING CENTS: Insurance you don’t need

You can insure just about anything. From “hole in one” insurance to losses of body parts while on the job, there’s a policy for just about everything. The questions are whether you need that coverage and if it is cost effective.

A simple rule to go by for coverage that is a bit out of the ordinary is to size up the risk.

If you were going to give a vehicle for a hole in one, that risk is relatively large. In these situations, you will likely conclude that the premium for the coverage is a good idea even though the occurrence of a hole in one is not likely.

But in the case of getting extra money because you broke your leg or lost an eye while on the job, that is not often a wise choice. Let’s say that you are injured away from work. Is your trauma and financial loss any less because you were riding a bike through the woods when it happened rather than at work? Not likely. In either case you are going to miss work, incur medical bills and either recover or not. But the financial loss is identical in either situation.

The conclusion is that for those with adequate insurance, these extras are typically not needed. This leads one to question: are you properly covered? The answer to that is different for everyone, but basic insurance to me means health, life, disability, long term care, homeowners, liability and auto. Everyone needs to budget the cost for these basic policies into their cost of living. It is not safe to assume that you are adequately covered for all of these risks through your job. Sometimes group coverage offered at work does not have as strong a benefit as you can buy on your own.

Also remember that most insurance acquired through the workplace is only in place while you are an employee. Your life, disability and health insurance frequently do not come with you upon retirement, changing jobs or getting laid off.

For some, extended warranties make a lot of sense, and for others, not so much. If you are a buy-and-hold person who is hard on cars, then perhaps it makes sense to purchase this for your auto. Similarly, if you do a lot of city driving, and spend time dodging pot holes, then the tire warranty is probably a pretty good deal.

Many consumer scholars think extended warranties are i a waste of money. But as a professional consumer, I think the correct answer for you lies in your particular facts and circumstances.

MAKING CENTS: Five strategies for tax-efficient investing

Once upon a time, retirement was defined as sipping lemonade on the front porch

waiting for the grandchildren to visit. Today, however, things are different. The grandchildren may be visiting the house to feed the cat or walk the dog because the grandparents are busy. They are traveling, going out to dinner, and working.

Some work to supplement their cash flow. Some work to support their grandchildren’s 529 accounts. And some work because they simply love what they do – either for pay or as a volunteer.

The key to making this fulfilling is to find an organization where your passions are awakened. It will be most beneficial to the organization and their constituents. . From a financial perspective, there is no compensation for volunteer positions, but that does not mean that it will not cost you money to participate.

You may incur travel expenses, which may be deducted as a charitable contribution on your tax return if you itemize. You may have other out of pocket expenses on behalf of the organization. To simplify your deducting expenses, consider writing checks directly to the institution as a contribution and ask them to pay their own expenses.

You should also get a legal opinion to be sure that you are protected against any liability arising from your service. Be careful when investing time with an organization that does not have proper insurance, disclaimers and other protections in place for its volunteers.

If your work is for money and you need it to support your lifestyle, congratulations. You’ve made one very significant decision to stay fiscally fit. But if you are working to fulfill a challenge or fund a lifestyle improvement, you may have the luxury of making a few fiscal maneuvers that may help.

Just because you’ve retired once doesn’t mean that you cannot contribute to a new 401K plan. .

If you are doing consulting for one or more companies, you are likely to get paid as a consultant and receive a form 1099 at the end of the year.

From here you will file a self-employed tax return (typically schedule C of form 1040) which also allows you to deduct your reasonable and ordinary expenses in connection with the production of that income. Amongst the allowable expenses is the opportunity for a retirement plan deduction. With good planning, it is possible to establish a plan for you as the sole employee where the deduction can be as large as 100% of your net income.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. John Napolitano is a registered principal with and securities offered through LPL Financial. Member FINRA/SIPC. He can be reached at 781-849-9200.

MAKING CENTS: Review estate plans now, rest in peace later

Talking about the follies of wealthy or famous people is so popular that even the lousy estate plans they leave make headline news. Think about all the celebs, like James Gandolfini, who have left a mess for their children and other loved ones.

Very few, on the other hand, are motivated by these stories to get their own estate plans in order.

The truth is that the overwhelming majority of those reading this right now have an estate just as messy as the celebs.

I won’t get too nerdy on you and throw around code sections or advanced estate planning topics, but rather the basics that everyone needs to button down and keep current.

The first issue is to ask whether you even have a will, trust, durable power of attorney and a health-care power of attorney. All but the trust is needed for even the simplest of estates. A trust becomes more important if there are any matters that may need further guidance or attention after your passing, such as managing money for minor children until they are capable of receiving it. Another reason for trusts may be your desire for privacy and avoiding your state’s probate process.

Sometimes a will or trust that is very old is as dangerous as not having one at all. Provisions may be outdated or superfluous, and badly in need of updating. For example, are you sure that your former spouse is not named in any of the documents? Is it set up to minimize both federal and state death taxes? Are people named as executors or trustees no longer significant in your life or not even living?

Beyond your documents, you should look at how you own property. For example, if you own an inherited rental property jointly with rights of survivorship with your brother, and you pass away; guess what happens? Your brother gets the entire property regardless what your will says.

Similar problems can occur with improper beneficiary designations of your retirement accounts, annuities or life insurance policies. It is very easy to change beneficiaries, but you must take action.

The good news about having a lousy estate plan is that you’ll never know what a mess you created. The bad news is that your heirs will have this experience as one of their last memories of you. Estate plans need to be reviewed every five years or more often. Unfortunately, this is one element of your financial plan that you don’t know when you’ll need, so time is of the essence.