For many of us, the COVID-19 pandemic might be putting a hold on dinner at the charming local bistro, but the spirit of Valentine’s Day cannot be extinguished. This year, perhaps more so than in the past, you may want to make your Valentine’s Day gifts even more meaningful. So, for example, what can you give your loved ones to help them along on the road to financial security?
Here are a few possibilities:
• Contribute (indirectly) to an IRA. Virtually anyone with earned income can contribute to an IRA, which offers tax benefits and an almost unlimited array of investment options. Yet, most people never contribute the maximum amount allowable each year, which, in 2021, is $6,000, or $7,000 for those 50 and older.
You can’t contribute to another person’s IRA, but you can give that person the money for that purpose. However, an individual can’t contribute more to an IRA than he or she earned during that year.
So, if you were to give someone $1,000 to be placed in an IRA, that individual must have at least $1,000 in earnings. Be aware, though, that the recipient can use the money for any purpose.
• Give shares of stock. You probably are already familiar with the products your loved ones use – so why not give them shares of stock in the companies that make those goods or services?
Most people enjoy being “owners” of businesses whose products they use. Furthermore, owning stocks for the long term can be a valuable component of anyone’s financial strategy. If you are unsure of how to give stocks, you may want to consult with a financial professional.
• Stay protected. If your valentine also happens to be your spouse, you can give a gift of tremendous value by simply working to protect what you have. For example, if something happened to you, would your spouse be able to maintain the household, educate children, pay the mortgage and so on?
A financial professional can help you find the protection you need, as well as suggest ways to defend yourself against the devasting costs of long-term care. A private room in a nursing home can cost $100,000 or more each year, according to the insurance company Genworth, and Medicare typically pays few of these expenses, so you’ll want to be prepared.
• Create (or revise) your estate plans. It doesn’t sound very romantic but making sure your estate plans are in order is one of the best gifts you can give to all your loved ones. If you haven’t created your plan yet, contact an attorney who specializes in estate planning.
You might also want to involve your tax and financial advisers. And if it’s been a while since you looked at your existing plan, take the time to review it – this is especially important if you’ve had changes in your family situation.
On Valentine’s Day, the chocolate hearts and flowers are certainly always appreciated. But financial gifts can help you make a truly lasting impact on your loved ones’ lives.