CarolCeltics

The Boston Celtics, A Super Fan Named Carol and Retirement: The Surprising Parallels

The Boston Celtics are the NBA Champions for the 18th time!!  WooHoo. A world record. Wowza.

As a life-long Celtics Fan-atic I’ve been dreaming about this day for a while. My late mom, Carol, dreamed about it too. I will never again be able to think about the Celtics without thinking about my mom. A basketball player herself back in the 50’s and a HUGE Celtics fan. Perhaps their number one fan. She referred to Jayson Tatum as “Her” Jayson.

Last season, the Celtics (and Dana Farber Cancer Institute in Boston), kept my mom cheering and going strong until she gave in to her battle with Ovarian cancer last April. During the 22/23 season, Jayson’s number one fan endured a blockage in her kidney, a blockage in her stomach, two surgeries and stays in four different medical facilities. Throughout all of this my hero mamma NEVER missed a game! The Celtics were her medicine. Her dream was to see them win the championship last year. Neither the Celtics nor my mom, however, could pull it off.

But alas, the Celtics came back with vengeance for the 23/24 season and are now the NBA champs (with a little help from an angel in heaven named Carol). I think she was on the rim at the Garden Monday night. I also think she’ll be watching from above as banner number 18 is raised to the rafters.

My mom was fortunate to have witnessed years of Celtics games and championships. She was also fortunate and grateful to have had a long happy and mostly healthy life. She retired early at 58 and enjoyed a 30-year retirement! A life and retirement like this doesn’t just happen. Just like an NBA championship doesn’t just happen. It’s all a battle from the start.

The battle requires strategy, perseverance, commitment, consistency and teamwork. A little luck from an angel helps too.

So, let me break it down and see what lessons we can learn from the Celtics’ championship (and my mom) that you can apply to your own life and retirement.

  1. A Strong Game Plan

Boston Celtics: The Celtics didn’t just stumble onto the court and hope for the best. They had a well-thought-out strategy, focusing on both offense and defense. Every play was designed to maximize their strengths and exploit their opponents’ weaknesses.

My Mom: Divorced at 38 with four kids, my mom figured out a new strategy for her life. She had good offense and a good defense. She was one tough lady.

Your Retirement: Similarly, your retirement plan should be strategic. According to the Employee Benefit Research Institute, only 48% of Americans have calculated how much money they need for retirement and the average retirement is over 20 years in duration. Creating a detailed financial plan, which includes budgeting, saving, and investing, is crucial. Just like the Celtics, you need a solid game plan to ensure you’re financially prepared for the long run.

  1. Consistent Training and Adaptation

Boston Celtics: The Celtics’ success didn’t happen overnight. It took years of training, adapting to new players, and learning from losses. They kept refining their skills and strategies to stay at the top of their game.

My Mom: Lucky for my siblings and I, my mom had a career as a school teacher, which meant a reliable income (albeit small for a family of 5) and a retirement pension. Leaving our family home with kids in tow, she was the queen of adaptability. She was both a dad and a mom for many years, honing her skills on the job. Her plan: to get through each day, one day at a time and focus on being a good mother.

Your Retirement: Retirement planning is a long-term commitment. Saving significantly for retirement takes consistency and starting as soon as possible. Learning about money, finances and retirement early on is critical. Regularly reviewing and adjusting your financial plan is essential. Keeping up with changes in the market, adjusting your investments, and ensuring you’re on track to meet your goals is essential.

  1. Teamwork Makes the Dream Work

Boston Celtics: Basketball is a team sport. The Celtics’ victory was a result of excellent teamwork. Each player knew their role and worked together seamlessly, from the starting five to their incredibly talented bench. The team is steeped in talent.

My Mom: She kept us all close and we learned what it meant to function as a family team. We all chipped in to make daily tasks easier, we appreciated what we had, and every day ended with love and a smile.

Your Retirement: Your retirement plan should also involve teamwork. Financial advisors, accountants, and even family members can play vital roles in your retirement planning. According to a study by Vanguard, working with a financial advisor can add up to 3% in net returns on your investments. Surround yourself with a supportive team to help guide you through complex decisions and keep you motivated.

  1. Staying Healthy and Prepared

Boston Celtics: Physical fitness and injury prevention are crucial for NBA players. The Celtics maintained peak physical condition to ensure they could perform at their best throughout the season and playoffs.

My Mom: Physical and mental health was a priority for my mom, throughout her life. While not an exercise fanatic, my mom always took good care of herself and her kids. She had a good balance and instilled an active lifestyle in all of us.

Your Retirement: Health is equally important in retirement as it is in all the years before retirement. Medical expenses are a significant concern as we age, with Fidelity estimating that a 65-year-old couple retiring in 2023 may need about $315,000 for out-of-pocket healthcare costs in retirement. Maintaining a healthy lifestyle now can reduce future medical expenses and improve your quality of life.

  1. Handling Pressure Like a Pro

Boston Celtics: Performing well in high-pressure moments defines championship teams. The Celtics excelled under pressure, making clutch plays and rising to the occasion when it mattered most.

My Mom: The term cool as a cucumber was coined in my mom’s honor. JK. Seriously, my mom faced some pretty high-pressure moments in her life, but she handled these moments mostly with calm, courage and practicality. She always told us, “Where there’s a will, there’s a way.”

Your Retirement: Retirement planning can be stressful, especially when facing financial uncertainties or unexpected expenses. However, staying calm and making informed decisions under pressure is key. Diversifying your investments, having an emergency fund, and planning for contingencies can help you handle financial and retirement pressures like a pro.

  1. Celebrating Wins Along the Way

Boston Celtics: Every win during the season was a cause for celebration and motivation to keep going. The Celtics didn’t wait until the championship to acknowledge their successes.

My Mom: Celebrations in our family were a regular occurrence. Birthday parties, Christmas, and even everyday life, my mom was celebrating life and being grateful. My mom celebrated and appreciated the smallest things in life. A sunset was one of her favorites.

Your Retirement: Celebrate your retirement planning milestones too! Whether it’s hitting a savings goal, paying off debt, opening a Health Savings Account or making a smart investment decision, recognizing your achievements can keep you motivated and on track.

Conclusion

Winning an NBA Championship, being a single mom, fighting cancer, or planning a successful retirement all require determination, strategic planning, courage, teamwork, and the ability to adapt and perform under pressure. By applying these lessons from the Boston Celtics’ championship run, and from my mom Carol, you can set yourself up for a victorious and enjoyable retirement. So, lace up those sneakers—and let’s get her done.

Remember, whether you’re aiming for a championship ring or a comfortable retirement, the journey is just as important as the destination. Here’s to enjoying every season of life. Happy planning!

If you’d like some help with your financial plan for retirement, reach out to us. We can hook you up with a team of experts: retire@herretirement.com.

 

older-person-using-video-call-feature-their-device_23-2150165549

When it Comes to Having an Investment Advisor…is Nice, Enough?

Recently I had a Get Her Done Chat with a lovely lady named Susan who’s turning 60 soon. She’s starting to think seriously about retirement (because she’s been watching me and all my tips on YouTube and TikTok).

She has $500,000 managed by one of the big investment firms and she’s paying a 1.5% management fee. That’s $7,500 per annum or $625/month. Not an insignificant amount. However, fees are an issue in the absence of value.

I asked her what services the advisor is providing (i.e. value)? Other than meeting once a year to review her portfolio and making some adjustments, she really couldn’t come up with any other value.

She also admitted she doesn’t really understand what the firm/advisor is doing with her money, or why. She did say the advisor, who she’s had for several years, is likable and nice.

But….when it comes to your money and retirement, is nice enough?

We talked a bit more, and it became clear the nice advisor has never had the proper money and retirement conversation (nor provided any education). A conversation and education that my new friend Susan really needs (and deserves), by the way.

Me: “So has your advisor brought up (and educated you about)…

  • Retirement risks and how to mitigate them? Longevity, volatility, sequence of return, inflation, interest rates, etc.?
  • Optimized retirement portfolios?
  • Retirement income planning (generating protected income for life)?
  • Social Security timing & maximization?
  • Healthcare planning?
  • Long-term care planning?
  • Life insurance planning?
  • Tax planning for retirement?
  • Using home equity as an income buffer?
  • Estate planning?
  • Non-financial topics such as: lifestyle planning (where you’ll live, what you’ll do, purpose, mental and physical health, social connections, etc.)?

Susan: “Nope. Nada. Just my investments. I did ask him about Social Security and he said I can take it whenever I feel like it (me: ugh). I also asked him about annuities and he said, “Run. If anyone ever brings up annuities to you, run away from that advisor.”  (me: ugh again)

Before I could respond, Susan added, “I don’t even know when I can retire or how much money I can take from my 401k or when? Or if, god forbid, I run out of money and become a bag lady. I’m just feeling a little panicked and the thought of not having a regular paycheck from working is frightening.”

Wow…so much to unpack from her response. It was crystal clear that Susan’s nice advisor was clueless about retirement planning. As I explained to Susan, “There’s many, many investment-only advisors. This doesn’t make him bad at his job. I’m not here to judge that. It just makes him inappropriate for the “retirement planning” job you need done now. And, for an equal to or potentially lower fee than what you’re currently paying, you could be benefiting from FULL retirement planning vs. just investment advice.”

Susan decided to schedule another chat with me to dig into her details (yay). I encouraged her to take my free Her Retirement Masterclass and to check out a preview of my retirement readiness software platform before our next chat.

I explained that getting foundational retirement literacy is a key part of the Her Retirement process. This will allow her to have more informed conversations with retirement experts and make more informed decisions. She’ll also be taking a complete financial inventory within my software and will benefit from a personalized G.R.O.W. guide the software produces for her. The guide will identify her Gaps, Risks and Opportunities, which is a foundational element to her ultimate retirement plan.

I’m looking forward to being an active listener and collaborator with Susan on her journey to “more.”

Unfortunately, there’s many conversations going on across the country that are similar to Susan’s with her investment advisor. Approximately 5,200 women are turning 60 every day in the United States.  It scares me to think of the lost opportunity many women will have to improve their retirement outcome, simply because they aren’t getting the quality advice and education around retirement they deserve. Sometimes, it’s simply because they don’t know what they don’t know. They don’t know who to turn to and who to trust.

In addition, as the Great Wealth Transfer unfolds over the next decade, women will become increasingly vulnerable as they inherit significant wealth. This demographic shift, which will see trillions of dollars transferred from the older generation to their heirs, places women at a unique risk. Many women, especially those who may not have been the primary financial decision-makers in their households, could find themselves navigating unfamiliar financial terrain. This vulnerability is exacerbated by the potential influx of unscrupulous advisors looking to exploit their lack of financial literacy or experience. These predatory advisors may offer seemingly attractive financial products or services with hidden fees, poor returns, or outright fraud. It is crucial for women to seek out trustworthy, transparent, and knowledgeable financial/retirement advisors to safeguard their newfound wealth and ensure their financial security for the future.

My mission with Her Retirement is to encourage more women to become students and stewards of their life and retirement. With my “More for Her Movement,” I want all women to Know More. Have More & Live More (now and in retirement).

I also connect women with professionals who are nice AND knowledgeable about all this retirement planning stuff…while also providing A LOT more value than the average Joe investment advisor. If you’re a single or suddenly single professional woman who wants more, I can help you Get Her Done.  Reach out because no, nice is not enough.

 

 

PODCAST COVER (3)

Episode 119: Camp Reinvention…Because Age is Just a Number

In this enlightening podcast episode, Wendy Perrotti and Dana Hilmer from Camp Reinvention, seasoned coaches and mentors, share invaluable wisdom and guidance for women navigating life transitions. Wendy, a seasoned life coach, and Dana, a successful entrepreneur, emphasize the transformative potential of their 12-week program, designed to help women rediscover their passions and chart a fulfilling path forward.

They encourage listeners to take action and approach life with curiosity, highlighting the importance of embracing imperfection and challenging limiting beliefs. Wendy underscores the notion that past experiences do not define one’s future, emphasizing the opportunity for growth and change at any age.

Host Lynn, who also leads “Never Too Late to Launch” a community for women over 50 who are launching businesses, finds resonance in empowering women to explore new opportunities. As the conversation unfolds, they delve into topics such as retirement, entrepreneurship, and the endless possibilities for personal and professional fulfillment. Listeners are invited to explore Camp Reinvention and ponder the empowering question: “Wouldn’t it be cool if…”  Click here to learn more and to register for the next Camp Reinvention starting via Zoom on April 30.  

Episode 42

Episode 42: Is Retiring at 65 Possible (and Smart)?

Are you thinking about retiring at age Sixty-five? Is it possible? Is it even smart? Life expectancy continues to increase, which can often mean a longer retirement and may mean collecting Social Security longer. Sixty-five has long been thought of as the magic age for retirement. Join Lynn this week as she explores how this is changing, why it may be harder than previously thought and some tips to help you make the retirement decision.

Listen to more episodes here!

Read the transcription of this episode here!

The CARES Act Explained

The Coronavirus pandemic has affected virtually every facet of American life and severely impacted the markets and economy. Congress and the federal government have acted to help individuals and businesses get through this difficult time.

Most recently, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act on March 27, 2020. The House passed the bill by voice vote earlier that day, and the Senate unanimously passed it on March 25. The $2.2 trillion bipartisan bill, the most expensive legislation ever enacted, resulted from negotiations between Treasury Security Steven Mnuchin and Congressional leaders on both sides of the aisle. The following are highlights of many of the federal relief opportunities created thus far which may benefit you.

 

Tax Relief for Individuals:

  • Extension of federal tax filing due date. The IRS postponed to July 15, 2020 the due date for both filing an income tax return and for making income tax payments originally due April 15, 2020. The postponement is automatic. Payments that may be postponed are limited to federal income tax payments in respect of a taxpayer’s 2019 taxable year and federal estimated income tax payments due on April 15, 2020 for a taxpayer’s 2020 taxable year. The extension is available to all taxpayers, including individuals, trusts and estates, corporations and other non-corporate entities, including those who pay self-employment tax. As a result of the extension, any interest, penalty, or addition to tax for failure to file or pay tax will not begin to accrue until July 16, 2020.

 

  • IRA contribution deadline extended. The deadline for making 2019 IRA contributions has also been extended until July 15, 2020.

 

  • HSA and MSA contribution deadline extended. The deadline for making 2019 contributions to health savings accounts (HSAs) and Archer medical savings accounts (MSAs) has been extended until July 15, 2020.

 

  • Recovery rebates. Cash payments called “recovery rebates” are available to U.S. residents with income below certain levels who cannot be claimed as a dependent of another taxpayer and who have a Social Security Number. Technically, the rebates are advance refunds of credits against 2020 taxes. The rebate amounts are $1,200 for individuals and $2,400 for married joint filers, with an additional $500 for each qualifying child under age 17. The amount of each rebate phases out by $5 for each $100 of adjusted gross income (AGI) greater than $75,000 (single filers) or $150,000 (married joint filers), based upon AGI as reported on the 2018 federal tax return (or 2019 tax return, if filed). Thus, rebates are fully phased out at $99,000 (single filers) and $198,000 (married joint filers). Individuals do not need to do anything to receive the rebate; the IRS will make payments electronically, if possible, and will send a notice (to the taxpayer’s last known address) within 15 days of payment stating the payment amount and method.

 

  • Required minimum distributions (RMDs). All 2020 RMDs from IRAs and retirement plans are waived, including RMDs from inherited IRAs (both traditional and Roth). The RMD waiver includes 2019 RMDs that were previously due by April 1, 2020.

 

  • Tax-favored early distributions from retirement plans. The CARES Act waives the 10% penalty applicable to early distributions for coronavirus related distributions up to $100,000 from IRAs and qualified defined contribution retirement plans such as 401(k), 403(b), and governmental 457(b) plans. A coronavirus related distribution is a distribution made during calendar year 2020 to an individual (or spouse) diagnosed with COVID-19 by a CDC-approved test, or to one who experiences adverse financial consequences as a result of quarantine, business closure, layoff, or reduced hours due to the coronavirus. In addition, any income attributable to an early withdrawal is subject to income tax over a 3-year period unless the individual elects to have it all included in their 2020 income. Finally, individuals may recontribute the withdrawn amounts back into an IRA or plan within 3 years without violating the 60-day rollover rule or annual contribution limits.

 

  • Retirement Plan Loans. Before the CARES Act, a participant could borrow from a retirement plan the lesser of 50% of the vested account balance or $50,000 (reduced by other outstanding loans). Beginning March 27, 2020 through 180 days thereafter, the maximum loan amount increases to the lesser of 100% of the vested account balance or $100,000 (reduced by other outstanding loans). In addition, participants who had outstanding loans as of March 27, 2020 may defer for one year any payments normally due from March 27 through December 31, 2020.

 

  • Charitable Contributions. Individuals who claim the standard deduction may also claim a new above-the-line deduction up to $300 for cash contributions made in 2020 to certain charities. Individuals who itemize deductions and make cash contributions in 2020 to certain charities may claim an itemized deduction up to 100% of AGI (increased from 60%). Eligible charities are those described in Section 170(b)(1)(A) of the Internal Revenue Code (for instance churches, educational organizations, and organizations providing medical or hospital care or research) and do not include donor advised funds or Section 509(a)(3) supporting organizations.

 

  • Student Loans. Payments (principal and interest) on federal student loans are suspended through September 30, 2020 without penalty. Interest will not accrue on these loans during this suspension period. In addition, from March 27 through December 31, 2020, an employer may contribute up to $5,250 annually toward an employee’s student loans, and such payment will be excluded from the employee’s income.

 

  • Unemployment Benefits. Unemployment benefits have been expanded to assist those who have lost their job during the current economic crisis. Because unemployment benefits are administered by the states (although each state follows the same guidelines established by federal law), check with your state program to determine eligibility requirements and how to file a claim.

 

Tax Relief for Businesses:

  • Employer Payroll Taxes. Employers and self-employed individuals may delay the payment of the employer portion of payroll taxes due between March 27 and December 31, 2020. 50% of any payroll taxes deferred under this provision must be paid by December 31, 2021, with the remaining 50% paid by December 31, 2022.

 

  • Employee Retention Credit. Employers whose operations were fully or partially suspended due to a coronavirus-related shut-down order or whose gross receipts declined by more than 50% (compared to the same quarter in the prior year) have a new tax benefit if they continue to pay employees. The above employers will receive a refundable quarterly payroll tax credit equal to 50% of qualified wages paid to an employee from March 13 through December 31, 2020. For purposes of the credit, up to $10,000 of qualified wages paid per employee during this period is taken into account. Excess credits are refundable.

 

  • Retirement Plan Funding & Documentation. The deadline for employers to make contributions to certain workplace-based retirement plans has been extended. In addition, employers sponsoring retirement plans may immediately adopt provisions allowing coronavirus related distributions and plan loans based on the CARES Act but formally amend the plan at a later date.

 

  • Net operating losses (NOLs). Generally, a NOL means deductions (for expenses from operating a business) are greater than the income generated from operating a business. A NOL incurred in one tax year generally may be used to reduce taxable income in a future tax year. The Tax Cuts and Jobs Act of 2017 significantly pared back the ability of businesses to carry forward/carry back NOLs, but the CARES Act substantially liberalizes the NOL rules – please consult a tax professional to learn more.

 

  • Business Interest Deduction. The CARES Act temporarily increases the amount of interest expense businesses are allowed to deduct on their tax returns, by increasing the 30-percent limitation to 50 percent of taxable income (with adjustments) for 2019 and 2020.

 

  • Small Business Administration (SBA) loans. To assist small businesses, the CARES Act greatly expands the availability and features of loans under the SBA’s Section 7(a) loan program. Businesses with 500 or fewer employees are eligible for the expanded loan program, as are sole proprietors, independent contractors, and self-employed individuals. There are many important details and benefits, including potential forgiveness. To learn more, please visit the SBA website at sba.gov or U.S. Chamber of Commerce website at www.uschamber.com.

 

As you can see, the federal government has created many ways individuals and businesses may receive assistance to get through current financial difficulties. Additionally, most states have provided their own relief such as a delay of the state income tax filing deadline or a temporary grace period for making mortgage payments. Here at Her Retirement we can connect you with a retirement specialist to answer any questions on the above relief or if you would like to discuss the effect of the current economic crisis on your portfolio or financial situation. Her Retirement is here to continue to help you pursue your financial goals during these unprecedented times.

This communication is designed to provide accurate and authoritative information on the subjects covered. It is not, however, intended to provide specific legal, tax, or other professional advice. For specific professional assistance, the services of an appropriate professional should be sought.

Talk to a Retirement Specialist today

5 Ways to Save for Retirement

It seems like “retirement savings” is a huge stress factor in many people’s lives, in some surveys, Baby Boomers have even cited that they lose sleep over how they’ll fund their golden years.  With people living longer, recovering from the biggest recession since the Great Depression and having more costs in their lives to keep up with, many Baby Boomers either don’t have enough saved or *gasp* don’t have anything saved at all for retirement! But, not to fear, even if you don’t have a single penny saved towards retirement (because you saved for your child’s college education, were hit big by the recession or simply were always trying to catch up), there are still things that you can do to create a retirement income for your golden years.

  • Save: This one might seem like a no brainer, but actively begin putting money aside and looking at your budget.  How much can you afford a week or month to put aside?  What could you absolutely live without?  Even putting away $100 a month will help to begin supplementing your retirement income. Also, think about what kind of saver or spender you are.  Are you the type of person who goes to the store and buys strictly what’s on the list?  Or do you get reeled in at checkout by all those products to buy?  Figure out where your weakness and strengths are when it comes to spending and saving and address them accordingly.
  • Where to put all this money you’re saving? If you’re employer doesn’t offer a retirement savings program through them (if they do, and they will match anything, put in as much as you can afford to!)  set up a 401(k) and/or a Roth IRA.  Although Roth IRAs aren’t tax deductible, the positive aspect of a Roth IRA is that, when you do begin to use the money, you can withdraw it tax free.
  • Set a goal: It is a proven fact, that when we set goals, we tend to perform better.  Ask any athlete, and they’ll tell you the goal they’re working towards.  Same goes for saving.
  • Unfortunately, the window to invest conservatively has passed for many who are trying to catch up with their retirement savings. But, that also doesn’t mean that you can just invest on a whim.  Finding a balance in investing is key at this point, look into stocks and mutual funds, but make sure to research diligently.
  • Work on eliminating debt: This is a biggie and probably the hardest to do. Employing some of the tactics mentioned in the points above may help: putting money aside, reviewing your budget and reallocating funds, can be a good way to start.

Even though many Baby Boomers are losing sleep, realizing that they may well live into their 90s and beyond, there is still hope for saving for retirement.  Following these steps, taking a good, honest look at your budget and consulting with a financial advisor can help you get on the right path towards a healthy, happy and prosperous golden years.

Thinking of Relocating During Retirement?

They’re known as snowbirds.  During the winter months, thousands of them descend from the north and enjoy the warmer climate of the southern states.  You’ll find them throughout Arizona and Florida, enjoying the warm weather and basking in the sun.  Unlike other migratory creatures, they do not do this yearly, but rather towards the end of their life.

Snowbirds, otherwise known as the retired population of American citizens, sometimes dream and excitedly talk about their retirement relocation plans.  After all, what is not to love about warm weather, away from snow and ice, clearing the driveway and cars and bundling up in freezing temperatures?  But before moving, here are a few things to consider:

  • Have you spent time here before? Living somewhere verse seeing that life on television or print can be drastically different.  It is important to note what life is really like there.  Have you vacationed here often? Have you been here only a few times?  The more you are familiar with the area, the better you’ll be able to gauge if this is really a place where you want to relocate.
  • What is the difference between vacationing and living? Vacationing somewhere and living there can be drastically different. When on vacation, we tend to eat at restaurants more and see tourist attractions.  But once you live somewhere, is this going to be too much (as far as eating at a restaurant) and enough (eventually, you will have seen all the tourist attractions in the area).  Can you live here as a resident and not just a visitor?
  • How much does a plane or train ticket cost to come “home” for the holidays? If your children still live nearby, how involved are you in their daily life?  Do you have regular meals together?  Do you work as a grandparent daycare for your grandchildren?  Being used to being involved in someone’s life every day to not seeing them but a few times a year can be a drastic change and tough for some snowbirds to handle.  The solution then to consider is how much does it cost to fly between the two destinations?  Make sure to also consider the influx of price during the busy seasons, holidays and summer travel.
  • How much will it cost to live there? This is a practical consideration to research.  Just as when you considered where to live to start your family, what are the property taxes for the area?  What about the average mortgage?
  • What amenities are there for the retired population? Is there a doctor’s office nearby?  What about a pharmacy?  As health needs increase in retirement, it is important to make sure there are necessary amenities, as well as leisure amenities.  Do you enjoy swimming?  Is there a swimming pool nearby?  Do you like hiking?  Are there reasonable hiking trails in the area?  All of these will help to make sure that you don’t regret your move and yearn to move back “home”.
  • Do you know people in the area, to help with household chores? As we become more comfortable and further into our retirement, it is important to note that there will be certain household chores that you will not want to or cannot do.  Do you have friends in the area who will come and mow the lawn?  Or are there affordable businesses who will take care of such chores?  What about fixing household repairs?

Relocating is meant to be an adventure, but making sure that the adventure is fulfilled and worthwhile is the realistic portion of living the dream and may guard against any regret you may have about leaving “home” in the rearview mirror.

Are you worried about outliving your retirement?

What is the number one fear of retirees?  According to a recent Allianz study, 60% of individuals’ feared that they would outlive their income or their portfolios’ ability to create an income for the remainder of their life.  According to research conducted by Transamerican Center for Retirement Studies, only 11% of people have even thought about how much they should invest in their retirement.  But of those who have already begun to plan on how much they’ll need for retirement, half admit that they are merely guessing as to how much they’ll actually need.  To continue with this study, 61% cited that they have a retirement strategy, but only 14% have it written down somewhere.  And less than a quarter have a Plan B in case their retirement plan doesn’t pan out.

To look at the current soon-to-be retirees, there are 76 million individuals who are part of the “Baby Boom” generation (those who were born shortly after the end of World War II). Yet these Baby Boomers are facing unprecedented hurdles when it comes to planning for their retirement:

  1. Previously dependable retirement income is disappearing or becoming less dependable (i.e. Social Security). 55% of those categorized as moderate wealthy consumers, felt they were more likely to be struck by lightning than to receive what they were promised from Social Security).
  2. With less dependable retirement income, such as Social Security, more Baby Boomers are forced to privately and personally finance their retirement.
  3. Increased life expectancy from previous retirees.

According to the Allianz study, Americans fear that a retirement crisis is developing (92% among all applicants and 97% of those in their late 40s), 61% were more scared of outliving their retirement income than facing death.  Among those aged in their late 40s, this number rose to 77%.

With all this uncertainty about traditional retirement planning being sufficient for the future, it is no wonder that many soon to be retirees are apprehensive about what the future will bring.  The good news is that there are financial experts to help guide those who are beginning or have been planning their retirement financing.  In order to quell the worry, make sure that your retirement affairs are in order and are working the hardest they can to keep you safe and secure during your most enjoyable years.

Part 3: Americans fear outliving their income more than they fear death… Have You Been Putting Off a Retirement Evaluation? The Truth will Empower You.

Part 3 of a 3 part series of articles on the value of retirement evaluations

The Value of a Retirement Portfolio Review…uncovering a portfolio’s true value

As stated in part 2 of this series of articles, it’s amazing that most individuals spend more time planning their summer vacation than planning their retirement.

When meeting with potential clients, the primary focus of our first introduction meeting (or complimentary consultation) is to discuss the client’s current retirement situation, including their investments, their retirement goals and aspirations, and risk tolerance. The primary focus of this initial consultation is to find out if the client and/or their advisor has run a recent portfolio evaluation, at least on an annual basis. This is extremely important in the retirement planning process because without an annual review of the current portfolio, one cannot ascertain whether the asset allocation is correct or not.  For instance, proper asset allocation looks at how much stock, bonds, international stock, small cap or large cap stock are in the portfolio and at what percentage. Without this review, an individual could be too heavily weighted in one particular area or another, while also assuming too much risk or not enough risk to get the return they need.

It’s also imperative to look at each individual stock, bond or mutual fund position on a micro analysis level to assure each component or each manager or stock or bond is performing to its maximum ability. For instance, we frequently explain to clients that there’s two types of returns: absolute return and relative return. Absolute return simply tells you that you earned a 5% return over the past five years, but there is no context nor any ability with an absolute return to determine if this 5% was good, bad or ugly. An absolute return tells us nothing.

The more important factor to look at is relative return which tells you how well your portfolio is doing, or how well each individual component within the portfolio performed against the appropriate benchmark. This is the more important factor when reviewing a portfolio on a regular basis. This tells the true story. When looking at relative returns, for instance, that same five year period we discussed in the absolute return section above the results look a little different.  If over the past five years you got the same 5% return, but the appropriate benchmark did 4%, that means you out performed that benchmark on a relative basis by 1% a year over a five year period. That would be a positive relative return performance. However, if you did that same 5% return and you weighted it against the appropriate benchmark, and the appropriate benchmark did 6.25% return over that same period of time, you would have a negative relative return over that five year period of minus 1.25%.

So as you can see, it’s imperative when working with an advisor or doing your own investing, that you perform an overview of your portfolio on a regular basis to assure your asset allocation is appropriate for whatever stage of life you’re in. It’s also absolutely essential that you do both a micro and macro component review against the appropriate benchmarks on a regular basis to maintain the positive relative performance on the portfolio over time.

This is the next factor that is extremely important to understand. When working with your own investments, or with a financial professional or advisor, make sure that you prepare (or have he/she prepare) these relative performance reports and portfolio overviews at least annually. And if you’re not getting this done, our advisors can offer a comprehensive current portfolio analysis to show you how has your portfolio performed based upon the exact make-up of your portfolio over the past year or years.  A 1% positive relative return versus a minus 1% negative relative return means a tremendous amount of additional monies in your pocket while in retirement, and it’s essential to the overall longevity and survival rate of your portfolio.

The second piece to the equation in the complementary consultation is running a sophisticated retirement projection.  The retirement projection takes all factors into consideration such as inflation, estimated rates of return, volatility of the portfolio, Social Security income, pension income, and any and all other factors entered into the system. We then project out your retirement income needs to assure that your portfolio and your overall retirement income scenario will continue and your income will continue for your entire lifetime.  Not all retirement projections are created equally.  Let us repeat, not all retirement projections are created equally. There is a definite advantage to using a more sophisticated retirement projection analysis system, especially when it comes to tracking the volatility of a portfolio within the projection and looking at what is known as Monte Carlo simulations, or viewing your portfolio and testing it in retirement against sequence of return risks.  If your retirement projection has a straight line percentage and does not factor in volatility, either through Monte Carlo simulation or sequence of return risk environment simulations, then the projection is really not giving you what you need.

It’s extremely perplexing when a perspective client nearing retirement does not take this complimentary consultation offer into consideration. Especially after we discover that they or their advisor have never done a retirement income projection, looking at absolute and relative return results. This is the most important and crucial step in determining where an individual is with regards to their retirement planning. Once again, it’s imperative to understand where you are with your portfolio, to maximize the returns within that portfolio, as well as understanding where you are currently in your retirement planning process. Will your portfolio last to age 100? Will your portfolio last until age 80? These are crucial questions that must be answered in advance of retirement. Our advisors provide a complementary consultation to assess each individual’s current portfolio and retirement projection values and needs. Don’t you owe it to yourself to make this happen? If you or a friend of family member could benefit from this complimentary consultation, let us know.