Smart Travel Planning

Ray’s Take: It’s been a long, cold, rainy winter here in the Bluff City, and everyone is looking forward to Spring Break, sunshine, warmer weather and possibly making plans for a summer vacation.


When thinking about a trip, it’s always a good idea to start with your budget before you make any plans. I’ve seen many clients splurge on large, expensive vacations they simply cannot afford. They end up paying them off for years, long after the memories have faded.


If you are a frequent traveler or would like to take a big trip with your family, look for credit cards that offer travel rewards when you make purchases. There are so many credit cards to choose from depending on what kind of traveling you want to do.


Some offer airline miles, others offer discounted hotel stays, domestic and international travel deals, no foreign transaction fees and even customized travel portals to help you plan your trip through their website. But don’t be fooled. Always be sure to read the fine print when signing up for one of these reward credit cards. Many have blackout dates throughout the year and some offer miles that are non-transferable.


When planning a large trip, make a list of the big-ticket items you will be spending money on, such as ski lift tickets, Disney World passes or seats at a Broadway show. Then work your remaining budget around those items. Sometimes it’s fun to live like a local and sample local fare in exchange for a fancy, expensive dinner. But if you have the money, then splurge and don’t feel guilty!


Last year, U.S. News and World Report ranked Memphis No. 6 on the list of the “Top Most Affordable Destinations.” So if an expensive trip is not in your family’s budget this year, visit the Memphis Convention and Visitors Bureau website at for things to do in Memphis that are “off the beaten path.”


Dana’s Take: Everybody splurges on something, whether it’s a golf trip, season tickets to a Grizzlies basketball game or a designer wardrobe. In relationships, trouble emerges when one or both members hide their splurges. The intent of hiding a splurge is to avoid the blame game, but the unfortunate result is usually a loss of trust.


To avoid splurge wars, start a savings fund. If you both agree to splurge on travel, save for a blowout trip. If you have individual whims, establish a fund for each of you. It can be used to splurge without judgment from the partner.


Two people can love each other without sharing the same priorities for spending money. Communicate and allocate money for each of your passions and watch the love grow.


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No Luck Investing

Ray’s Take: A rabbit’s foot on a string. A silver dollar. A four-leaf clover. A lucky penny. These are all lyrics from a 1961 song by our very own Memphis legend, Elvis Presley, titled “Good Luck Charm.”


But the truth is, when it comes to successful investing, it isn’t about good luck or any luck at all. Creating a successful investment plan requires a sound strategy, time, research and, in most cases, guidance from a financial services professional. Investing is not a one-time event.


The key to making wise investment choices starts with matching risk and allocation with your time horizon. For example, if you are 45 and want to retire at age 65, you have 20 years to get there. How much money will you need when that time comes? If the risk required is too high, reduce the goal or extend the working period.


You also need to learn the market and select an investment path. If you are new to investing, start small. A sudden swoon or spike is always possible. It’s not “bad luck” or investment genius. But it can imprint on you for the rest of your investing life.


Always diversify and review performance, but not too often. Quarterly at most. Watch your investments and learn what’s working and what isn’t. If you have more time, risk is your friend. If you have less time, don’t tempt fate. Most asset classes will regress to their mean. Your own greed and fear are your enemies.


Be careful not to get sucked into the latest market craze or seek short-term profits that may be short-lived. Committing to a long-term investment strategy is best.


Warren Buffet, one of the most successful investors ever, once said, “If I cannot understand it, I won’t invest in it.” This may seem simple, but it is sound and effective investment advice.


In the end, making wise investment choices isn’t about luck. And I think even Elvis would agree with me on that.


Dana’s Take: Can luck apply to money or just to love? I was lucky in love when I met Ray, but with money? Not so much. Now that I’ve seen how a financial planner handles money, I realize that it’s more about good habits and financial realities, than luck.


When I was single, I lived in financial denial. I paid all my bills and didn’t run up credit cards, but I wasn’t accumulating for my financial future. Even saving 10 percent of my earnings would have been a good start.


Visit your company’s human resources department and make sure you’re maximizing savings plans and any company matching. Also, visit with a financial planner to plan for a wedding, children, college or retirement. Odds are your financial “luck” will improve.

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Trust Funds 101

Ray’s Take: Most people have heard the expression, “He/she is a trust fund baby.” But what does that mean exactly?


Most people do not understand the basics of a trust and think they are only applicable to children or heirs of high-wealth individuals and businesses. While many times this is true, there are certain situations when a trust might serve as an integral part of your overall planning.


So what is a trust? By definition, a trust allows a third party, or “trustee,” to hold your assets on behalf of a beneficiary or beniciaries. A trust is made up of three parties: the “trustmaker” (you); the “trustee,” which is the person responsible for managing the property or asset until it is transferred; and the last party, the “beneficiary,” which is the person or entity you name as the recipient of the benefits you leave for them.


Before the option of 529 accounts became available, I’ve seen families use trusts to help save for their children’s college and professional education. In addition to professional management, there are a number of estate and income tax advantages. Further, there are asset protection opportunities that are not insignificant in this litigious world.


A trust may be useful when a family has a special needs or grown adult child that may not be able to handle a large sum of money if given to them through a traditional will.


Putting money into a trust allows the trustee to distribute the funds within your selected timeframe and parameters. It also protects those assets from judgments should the beneficiary be liable for damages or divorce settlements. Money in a trust does not go through the court system, allowing access to it more efficiently.


It’s important to understand that once you place assets into the trust, they are no longer yours. But since they are not yours, you will not pay income taxes on the money. It’s a useful tool that can help reduce your estate taxes.


Don’t be afraid of trusts; just know when it’s appropriate to use one. And always consult with your financial adviser or attorney when trying to decide if a trust is right for you.


Dana’s Take: Think of people you know who have inherited wealth. Did it bring them happiness or problems? A gift of money might sap a child’s drive to work and could even cause friction in their relationships. Inherited money often becomes “my” money in a marriage, while earned money is usually “ours.” However, leaving money to worthy causes, instead of family, can breed resentment.


Experienced financial planners and estate planning attorneys have seen every variation and can advise you of options that may achieve a balance that reflects your wishes and values.


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Revisiting Your Will

Ray’s Take: The start of a new year is a great time to get out your will and really read it. If you don’t have one, call your attorney today and get one. I do not recommend that you try and do this yourself or through an online program. Most people do not have financial situations that are so specific that you won’t need a lawyer. And oftentimes self-prepared wills are not executed correctly. I have lived through too many disasters of flawed wills to go there.


If you do have a will, make it a priority to read it annually. You will be amazed at what might need attention. Things change in our lives and estate planning should not be static.


Most people find creating and reviewing their will to be an uncomfortable task, but in actuality you are creating an invaluable resource for your friends and family should something happen to you. Having an updated and comprehensive plan upon death saves those closest to you lots of time and energy during an already difficult time.


When reviewing your will, double-check your beneficiaries. Have you had a birth or death in your family? Did you get married or divorced and need to add or remove a spouse or other family member? Re-evaluate your executor, guardian and trustee. Are these still the people you want in charge of making important decisions about your estate?


At the same time you are reviewing your will, you should also think about other essential estate planning documents like financial and health care-related powers of attorney. These ensure your wishes are carried out while you are still alive but unable to speak for yourself.


Keep in mind that some insurance and retirement policies are not included under your will, so you will want to review the beneficiaries on those documents separately. Beneficiary designations in these areas will override what’s outlined in your will.


Dana’s Take: I think we can all agree that thinking about death, especially our own, is an unpleasant topic that we would all like to avoid. But death is a natural part of life. And having an up-to-date, clear and concise will should give everyone peace of mind, especially you.


Don’t be afraid to communicate your wishes with your loved ones. While it can be scary and uncomfortable to discuss this topic with friends and family, it’s important that those closest to you know what their role is and what to expect.


Your children should know who will take care of them should something happen to you. Creating open dialogue in your home around this topic, may even help you in your decision-making process. Communication provides security and peace of mind that everyone will be taken care of and supported both emotionally and financially should the unthinkable happen.


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Living By Giving

Ray’s Take: “We make a living by what we get. We make a life by what we give.” This was the wisdom of Winston S. Churchill, but living a life of generosity is beneficial for you, your family and your community. Some of the most successful and powerful people in the world have tapped into the power of giving.


Since our kids were young, Dana and I have tried to model the importance of giving back. We have been blessed in many ways. Tuesdays have always been Rotary Day, and at dinner I try to share what happened that day at the meeting and the important things our club is doing both locally and internationally. Creating a charitable culture in your family should be a fun bonding experience. Even the youngest members of your family play an important role and you should listen to them. Having buy-in from each member of your family is crucial to creating a family-giving plan.


Start by meeting once a year to determine what causes are important to each member of your family. Then start creating a plan to help you support those causes financially and with your time.


The causes you support may change from year to year as kids grow and life takes different directions. Be sure to have an annual report from each charity you are considering at your family meeting. This will help determine what resources they need and where your money can make the most difference.


Typically, people donate anywhere from 3 percent to 10 percent of their taxed income. However you decide to divide up your donations, charitable giving requires forethought. You may want to single out one charity and make a sizable donation through a monthly pledge or you may choose to shotgun money to different charities if your income fluctuates each month.


The Community Foundation of Greater Memphis is an invaluable resource in the Memphis area. For more information about the organization, visit


Dana’s Take: I have chronic guilt that I’m not giving enough money to all the great causes in Memphis. What I need is a phone app to automate giving a gift every day of the year to my favorite charitable organizations. I would like to be able to check off organizations from a list and have a fixed amount gifted daily from my bank account. Is that so much to ask?


Perhaps every Sunday a gift would be sent to our church, but Mondays to a health care organization like the Church Health Center, St. Jude or Le Bonheur. Tuesdays could be homeless and food scarcity missions. Wednesday could be women’s causes like YWCA women’s shelters, Women’s Foundation of Greater Memphis or Dress for Success. Thursdays could be blanket organizations like the Community Foundation of Greater Memphis and United Way. Fridays could be for schools and youth programs like Streets Ministries and Youth Villages. You get the idea.


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Tax Time Tips

Ray’s Take: It’s that time of year when many people find themselves scrambling through file cabinets, sorting through stacks of papers and gathering receipts in preparation for filing their yearly tax return. If you are unhappy with the lack of organization in your tax preparation, that could be your resolution for the coming year.


In a perfect world, your refund should be minimal, if you get one at all. Your personal situation will determine how accurately you can calculate your total tax liability for the year.


If you estimate your refund to be substantial, you may be over-withholding (giving the IRS an interest-free loan and missing out on last year’s market gains). If you are overpaying, the easiest correction is to complete a new W-4 form through your employer. If you’d like to get some extra money back each paycheck, increase the number of withholding allowances you claim.


If your refund is more reasonable in size, you are right on track. But don’t run out and spend it all in one place. Create a savings/spending “contract” with yourself. Commit to a fixed percent of certain windfalls (bonus, tax refund, etc.) that must be saved and the rest you can spend guilt-free.


It’s important to remember that the personal exemption, under the new tax bill, will disappear starting with 2018 taxes, but it still operates for your 2017 taxes according to the number of withholding allowances you claimed on your W-4 form.


And don’t wait until the last minute to file your return. This can set you up for a late-filing penalty of up to 5 percent of the amount due every month. Avoid the common mistake of thinking that getting an extension means that you don’t have to pay your tax bill in April; you will still owe interest and a late-payment penalty.


Dana’s Take: If you had a toothache, would you pull your own tooth? Unlikely. So why do non-accountants file their own taxes?


When I was single, I filed my own taxes. I didn’t know that emptying my 401(k) to buy a used Honda Civic was a big no-no. Well, the IRS took their sweet time to discover my error. The penalties and interest they charged me totaled more than the cost of the car.


Now, I pay a dentist to pull teeth and an accountant to file my taxes.


I know that CPAs charge a lot of money. But not only will they save you penalties and jail time, a CPA will provide you with organizing tools to make your job, and theirs, much easier. Most everything is handled via email.


I remember my father sitting at his desk preparing our taxes, looking miserable and overwhelmed. If you can afford it, give yourself a break and hire a CPA. He or she might even save you some money.


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Setting Financial Goals

Ray’s Take: A new year for many brings with it thoughts of New Year’s resolutions. Whether it’s stopping smoking, losing weight, saving money or spending less time at work, resolutions too often feel negative or depriving. Instead of talking about “making resolutions,” we should be talking about “setting goals.”


One of the most important things you can do to set yourself up for financial success is to set financial goals each year. There are a lot of people who make lots of money but wind up broke because they did not set financial goals and manage their money accordingly along the way.


These goals should not be vague. Your goal should not be to be “rich” or to retire “someday.” It should be to retire on a specific date with a certain amount of resources. If you want a vacation home, your goal should be to buy the home at a specific location, costing a specific amount, by a specific date.


Once you create your goals, then you can start working backward to create the plan to get there.


Success is rarely a sudden event. It is a series of consistent choices. Think of small things you can do each month to help you reach your ultimate financial destination. And don’t forget to create measurable goals so that you can keep track of how you are doing and build off your success or clearly see areas that need to be reevaluated or improved upon.


Review your financial goals at least once a year. Some things that may have been important at the first of the year may not be important by the end of the year. And some goals you set in your 40s may not be important in your 60s. Your financial goals will change, so review them periodically to ensure you are on the right track.


Dana’s Take: On cold winter days, I dream of sugar-white beaches. It’s a pre-retirement fantasy of spending more long weekends in sunny places. I guess you could call that a financial goal. So, I must ask myself, “What I can do now to make those dreams a reality?”


First, I could delay replacing my car. Even though the car has passed its 10-year birthday, it works great and I could drive it for at least another year.


Second, I may be investing too much in renovations and redecorating of our Memphis home. I could free up some of that cash for a sandcastle on the beach.


Third, I can look in the trash. What am I giving away to Goodwill that I can stop buying in the first place? Target and Amazon impulse purchases will be a good starting point.


By reining in home renovations, car purchases and impulse shopping, I can already smell the sea. I’ll see you there.


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23 Hits

Job Hopping and Your Retirement Plans

Ray’s Take: There was a time when you worked your entire career at one company and retired with a pension and a gold watch after 40 or so years of service. But, like so many things, that picture has changed over the years. Job hopping – once a red flag on your resume – is now the norm.


In the short term changing jobs can be a winning proposition. It’s a quicker way to move up the ladder and often offers quick cash incentives. Changing jobs can work in your favor. But before you jump on the opportunity, stop and do the math on some important factors that may impact you negatively down the line.


The first thing to assess is how long have you been at your current company. Some companies require you to work for them for a specific period of time before you can contribute to a 401(k). And once you’ve hit that number of years, many require you to remain for a specific number of years, usually five, in order to keep any company matching contributions. Are you losing retirement savings money by making the change to another employer? Review other benefits as well. Health insurance, life insurance, disability insurance, HSA’s all cost money. Some companies short on those “boring” details in order to “fluff up” that salary number.


According to the Bureau of Labor Statistics, workers currently stay at a job for 4.4 years. So if you’re at any company that requires five years to keep your company matching funds, the odds are that you will never see that money. That can really add up over time. If you do leap, be sure to move your retirement account with you.


There are alternatives to company sponsored 401(k) plans to start putting money aside for your independence. It’s important to create a retirement saving plan early and stick to it. The earlier you start, the better off you will be once you close in on retirement. It’s hard to make up money lost by not saving early. And even harder to be old and broke.


Dana’s Take: Young people entering the job market now have never seen the 40-years-and-a-gold-watch retirement plan. For most of them, their experience with the working world is watching their parents struggle with being downsized. So it’s really no surprise that they have a different mindset toward employment than previous generations.


That experience created a sense that companies are not loyal to their employees. And so, why should the employee be loyal to the company in this new world view. It’s become kind of a chicken and the egg conundrum. Which came first?


Whether working in the gig economy or for a lifetime employer, saving for the future is something that never changes, and being smart about it won’t go out of style.


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Midlife Look at Insurance Needs

Ray’s Take: Life insurance is an important part of most overall financial plans. Replacing the capital value of the significant providers is critical should they not be able to provide. Owning the right insurance for the right price at the right time in your life is a crucial element to your financial well-being.


It’s usually true when you’re young and want to have a way to provide for your family in the event something happens to you. But as time goes by and you have saved and invested, by your 50s or 60s you may no longer need some types and as much of the coverage you’ve had.


Further, you could be overpaying for what you do need and might be inadvertently underinsured against some other risks.


As you start your flight path towards retirement you should consider ways to reduce risk while still preserving wealth. It may be time to reduce focus on life insurance and put it on health insurance and liability protection. The right coverage is crucial since, according to the Center for Disease Control and Prevention, three out of every four people age 65 or older have a chronic health condition.


Long-term care is something to be evaluated. These policies can help shield funds you intended to leave to loved ones.


While life insurance may no longer play as important a role as it once did, it still doesn’t mean that you don’t need it in some form. Take a look at your existing policies and see if they can be adjusted to meet current life needs – or needs you anticipate down the road a few years. As your wealth grows and your working career winds down, your need for liability increases as your need for life insurance goes down.


Re-shop homeowners and auto insurance at least every three years. You may be qualified for discounts related to age or no claims that you’re not getting. We tend to let these types of insurance policies just automatically renew without doing a review.


Working with a good financial adviser can help you to figure out what types of insurance, and how much, can take you comfortably into your retirement years.


Dana’s Take: Who’s driving the bus in your life? You? Your family? The fickle wind of life’s circumstances?


The best way to ensure your life is healthy and happy is to make sure you take care of yourself first. That sounds extremely selfish. But it’s counterintuitive. If you are not nourished and happy, you don’t have those things to give others.


Address any issues head on. And if you need professional help to handle them, then be sure to get it. Pick the one change you see that you feel would make the biggest positive impact on your life and go after it. Self-care is your best insurance.


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26 Hits

Stash More Cash

Ray’s Take: On the surface it seems simple. Most of us know we need to save more cash – especially to bolster an emergency fund. And yet savings are at historic lows and many are a couple of paychecks away from serious financial problems.


We believe we can just sweep that “leftover” cash from the month to our emergency fund, but somehow it’s just not there. We have had a robust economy for a good many years and many have forgotten how things go when we hit “bumps.”


Most Americans are willing to work and pay their bills, and that’s certainly a good start. The next step is to learn to “PYF.” Pay yourself first. Building more savings, like retirement accounts and college savings funds, must be treated like your mortgage and utility bills.


To save a significant amount of money, you have to make more than an intermittent effort. You have to make a lifestyle changes.


It seems simple and obvious, but writing down everything you spend is a great way to get a handle on where your money is going and spotting ways to make some changes that will open the door to more savings opportunities. Whether you do the list old-school style and write it in notebook or use an app, that visual creates a psychological cause and effect.


My bank is very old-school about one thing – they only let me spend a dollar once. Once it’s gone to my savings goal or creditor, there’s nothing left for eating out, going to Starbucks or the latest I gadget. The key is to start working backwards with the budget. Don’t start with the depravation of something, look at everything you are spending toward.


Try automating deposits from every paycheck and use only cash. You don’t spend money you don’t see in your account and by using cash instead of your debit card, you are more aware of spending.


Financial planning includes achieving long-term goals, but it’s also about making sure you have what you need in the short term too. Those dollars will add up much more quickly than you think.


Dana’s Take: My debit card cracked in early December and I had to order a replacement card. Due to mix-ups, I had to go without a debit card until Dec. 23. As a result, my holiday shopping became very inconvenient. I had to write checks at the bank, old school, if I wanted cash. It was like living in the 1950s with no card access to cash.


Turns out, slowing down access to money proved to be a good thing. If I ran out of cash, I couldn’t spend any more. In short, I had to plan my spending. And guess what? Little impulse purchases disappeared.


Consider hiding your debit card and see how much you can save in a month. Maybe grandfather knew best, after all.


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Save More This Year

Ray’s Take: January is the time of year when many people make decisions about how they want to improve their lives in the coming year. Part of your plans for improvement should be to figure out if there are any places in your life where you can save more than you did last year (and the year before). 


One definition of insanity is to keep doing the same thing but expecting the results to be different. Coming up with some simple strategies now can help you end the year with a lot more put aside than you had at the beginning of the year.


It can’t be said often enough that planning and conscious spending are two tools that have the biggest impact on growing your retirement fund and savings account.


Automatic saving is a certain way to increase your savings account. If the money isn’t in your checking account, you’re much less likely to spend it. Put your credit cards in the freezer. Then put ALL discretionary spending in a “no sacred cow” pile and work backward. Alternate picks until there’s no available spending money left in the budget. You have just set your priorities. Are you expecting to receive an income tax refund? Make good use of that money by putting it into your emergency fund. 


Review your contributions to your retirement plans. Are you on target for the amount you’ve projected that you’ll need? Can you increase any of your contributions or start a different account for a need that wasn’t apparent last year? Increases now will pay big dividends in the future. Money you don’t see is more difficult to spend.


Make it a point to become familiar with the new tax laws that just passed and see if there are things you need to adjust, depending on if you are retiring within the next five years or so. Some of the new laws sunset rather than stay permanent.


Sitting down with a financial adviser and a tax expert could lead to changes in your retirement planning that you didn’t know you needed to make. 


Dana’s Take: January. A new year. Time for new goals and getting rid of old bad habits. 


This month is the biggest one of the year for making resolutions to change. Lose weight. Save more. Go back to school. The options are endless. And should be. Reflection is good for everyone. Sitting down quietly and really thinking can open our eyes to things we want or need that we didn’t notice in the hectic rush of day-to-day living where we are moving from one thing to another almost mindlessly, trying to keep our schedule.


When was the last time you made an appointment with yourself to just sit down and reflect on life and your circumstances? 


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Powers of Attorney: A Big Part of the Plan

Ray’s Take: There are multiple moving parts to a good estate plan and various powers of attorney are an important element. Power of attorney basically gives someone else the right to act on your behalf; there are two types of powers of attorney.

A medical power of attorney names someone to make medical decisions for you if you’re unable to make them yourself. It can be very broad and general powers or very specific powers they may have.

A financial power of attorney allows someone to manage your financial affairs. You can limit it to certain functions or make it all-encompassing. This is different than your power of attorney for personal care; you need to have them both in your financial planning process.

Spouses just assume they will be able to act for each other if such trouble strikes, but that’s not necessarily true. For example, you would not be able to make any financial decisions relating to investments or retirement accounts held solely in your spouse’s name without a power of attorney.

When it comes to health care decisions, under the Health Insurance Portability and Accountability Act (HIPAA), health care providers can only talk with and release information to authorized representatives.

Once you’ve decided to execute these powers of attorney, sit down with the person to whom you are giving the authority. It can be a difficult conversation, but it’s crucial that this person understands your wishes and agrees to act on your behalf.

In many cases they can and should be different people. Not everyone is good in financial matters. Not everyone can keep a cool head in the face of life-and-death decisions at the hospital. Having this conversation in advance can spare your family from having to make difficult decisions on your behalf – often on short notice and in a state of emotional distress.

The potential cost of not having these documents in your plan could be very high in the event you become incapacitated.

Dana’s Take: At age 18, your child is an adult in the eyes of the law. And that means you no longer automatically have access to their medical or financial information or have the right to make medical decisions on their behalf. Increasingly protective privacy rules, while they are beneficial in the big picture, limit your powers as a parent.

For example, if your child goes to college in another town, or even out of state, and a medical emergency arises, most likely the medical staff will not discuss your child’s condition with you. When your child turns 18, make arrangements to have him/her execute both of these powers of attorney. Hopefully you will never need it, but better to have it in place just in case.

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Estate Planning For Unmarried Couples

Ray’s Take Times change. And more couples put off getting married for numerous reasons. People are marrying at a later age and sometimes not at all. Older Americans who have been widowed or previously divorced are deciding to cohabit instead of marrying.

While there are many good reasons to make these choices, it is important to know what rights you are giving up when you choose not to marry. 

For example, legally married couples are allowed to leave their entire estate to the surviving spouse, free of estate taxes. Everyone else is subject to pay tax on amounts over the exclusion amount. State laws generally award assets to biological relatives unless there is a will or other beneficiary documentation in place. 

Additionally, should there be a medical crisis, without the proper power of attorney in place, biological relatives will make all the decisions. Be sure to title any property appropriately so that your loved one isn’t turned out of the home in the event of your death.

There is a common misperception that if you live together for a certain number of years you are married in a common-law union with all the rights of a couple that was married by license. That is not true.

Without additional planning, if one person in an unmarried couple dies, the survivor is not entitled to any benefits, notice in a probate proceeding or continuing support that is afforded to legally married spouses. 

Know the costs and benefits of your choices and do appropriate planning around them. Laws vary from state to state, so it’s important to be aware of how they work in the state where you live. If you haven’t created an estate plan, your state has a default plan for you. A good financial planner can help you create a plan that works for you.

Dana’s Take The average age for marriage is now at an all-time high: 27 for women and 29 for men, according to the 2012 American Community Survey. 

According to Pew Research Center, of all Americans ages 18-29, only 20 percent are currently married, compared with 59 percent in 1960. Delaying marriage leaves time for developing careers, exploring alternatives and developing as an individual before tying the knot.

Ray and I married after age 35, so I get it. But if you’re committed enough to share a home, wouldn’t you want to protect your partner in the event of your death or illness? In the case of your unexpected disability, wouldn’t your spouse feel more committed to care for you than a roommate would? 

For numerous legal, financial and emotional reasons, legalize that union. A lavish wedding is not required, just a trip to city hall.

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Avoid 401(k) Loans

Ray’s Take Many employers offer 401(k) plans that grant participants the option to take out a loan. And when times are tough – or maybe you really, really want to renovate your kitchen – it’s tempting to withdraw money from your 401(k) for a loan.

The loan gets paid back over time by payroll deductions. After all, you’re borrowing money from yourself – what could go wrong? It looks easy and painless on the surface. But digging deeper, there are some very good reasons not to do it.

If you leave your job, the full balance left on the loan becomes due immediately. And the same rule may apply if you are downsized from your job. Defaulting on a 401(k) loan makes the outstanding loan balance into a withdrawal subject to full income tax and, if the borrower is not 59 1/2, the 10 percent penalty too.

The debt typically has to be repaid within five years, or tax and penalty apply to the balance. These sound like some pretty good reasons not to take a loan from your 401(k), but there’s an even bigger one.

The biggest drawback to these loans is opportunity cost that comes with the missed potential growth of your investments. In addition to the lower balance in the account making less money, people typically reduce or stop contributions to their 401(k) while repaying a loan, which means they’re missing out not only on their normal contribution but also on their employer match.

People are living longer than ever, with fewer safety nets. That makes taking loans from your 401(k) even less of a good idea than ever. When you borrow from your 401(k), you are borrowing from your future self and even when you pay back the principal and interest, you probably still won’t break even in terms of lost investment growth by the time you retire.

Dana’s Take Seeing money in your 401(k) account is like smelling freshly baked brownies – it’s hard to keep your hands off. Those of us who are more impulsive may have a hard time leaving that big pile of money alone.

Having a financial planner on retainer to manage your investments can be like having your mother in the kitchen when those delicious brownies emerge from the oven. While a financial planner cannot stop you from raiding your savings, he or she can go over the benefits of leaving that money to grow and compound for decades.

As Ray’s father, Denby Brandon Jr., used to say, “It’s very inconvenient to be old and broke.”

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Bridging the Gap

Ray’s Take: After years of working, planning and saving, many retirees are well-prepared financially to stop going to work in order to earn a living. But many are less prepared for how to fill the space previously filled by work.

Most of us envision retirement as that golden age at a predetermined point in the future where we’ll be free to do all the things we want to do but don’t have time for now. Do you have actual activities that you’re already trying to fit into your routine? Or are they more idealized, hazy, abstract things that you intend to figure out once you reach retirement?

A great question to ask yourself before you retire is: What do I feel like I missed out on? Or What resonates with me now that I want to know more about? Let that be a guide to some things you might want to begin exploring before taking the retirement plunge.

It’s hard to break the routine of a career, but now is the time to get your feet wet in other areas. Retirement may provide more time to do the things we’ve thought about for years, but it still doesn’t provide magic pixie dust – or energy – that will give us the motivation to engage in those activities. Retirement tends to magnify existing behaviors and habits. Putting a foundation in place now to build on later can be one of the best retirement plans you make.

As I have said before, retirement is nothing short of creating an entirely new identity. The transition from full-time worker bee to fully retired can be far more challenging than asset accumulation. If you’re already squeezing in some interests, then you’re ahead of the game. Building a bridge by starting on interesting and fulfilling projects or exploring interests now, before you retire, can make the transition a lot smoother.

Retirement is about more than money. It’s also about creating a new, engaged and fulfilling life.

Dana’s Take: The retirement decision is as much, or maybe more, psychological as it is financial. Some people enjoy what they do so much that it could be unwise to retire without a solid replacement activity or passion established before leaving the workforce. Others are waiting avidly for the day when they can walk out the door of work for the last time and celebrate. Knowing which personality type you are will help you plan the best way to build your retirement lifestyle.

Are you already involved in hobbies or volunteering and passionate about it? If not, it may be unreasonable to expect that you’ll suddenly develop that passion the day after you retire. The most successful retirees plan their post-working lives.

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Playing It Safe

Ray’s Take: With the rise in major hacking instances, it’s more important than ever to be safe, savvy and vigilant when it comes to online accounts. Not only were there major hacks to some of the big-box stores like Target and Home Depot, but they also happened at sites that are perceived to be much more secure. Like Experian – and the federal government. Remember the hack into the personnel database?

What’s the average person to do in the face of all this hacking? A few preventive measures you can take would be these.

Start with a fraud alert. Very effective and not as cumbersome as a credit freeze. Check your bank and credit card transactions online regularly – no less than once a week. Banks and credit card companies are much more vigilant and effective at spotting suspicious activity and reaching out to you, but no one knows your business better than you.

Try not to sign up for every website and web service that asks you to. This spreads your information so far across the web that you’ll never remember where you have accounts. Keep an eye on your email and junk folder. If a website you’ve forgotten about sends you an email, let it be a flag to go there and delete your information and close the account. I’d like to say read what you’re accepting when you sign up for things, but that’s hardly realistic.

Minimize the information you share on any website. If your phone number and address are required to create the account, go back after you’ve signed up to see if you can change or remove information. Try editing the phone number to 1234, or street address to Property SearchCrime ReportNeighborhood ReportWatch Service" style="color: #7d0200; text-decoration-line: underline;">100 Main St. for sites that don’t truly need that information.

Be as careful, and as vigilant, as you can. Keep an eagle eye on all of your accounts. But the harsh cold facts of the new world are that true privacy does not currently exist.

Dana’s Take: When it comes to privacy on the internet, the younger generation seems to be unfamiliar with the concept. Every aspect of their lives is splashed across social media like the latest movie trailer or hot book.

Keeping privacy settings up to date can seem like a full-time job – and sometimes a nightmare. How public are your posts on social media? Have you ever thought about Facebook “about” information like high school and colleges attended? We could be supplying a scammer with a script to say he or she attended the same class. I suppose one has to think like a criminal to set security settings. Or opt out.

Think about how much information you’ve made public already before sharing access to your life and family.

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Medical Planning for Two

Ray’s Take: Planning how you’ll handle health expenses is one of the crucial jobs for any couple when planning for retirement. While many elements of health insurance are based on the individual, it’s important to evaluate these expenses as a couple because what happens to one person inevitably affects the couple as a whole. From a financial point of view and also from a caregiver point of view.

Trying to figure the impact can be difficult. The range of what health care costs could be in retirement can run from nominal to explosive. You can plan for “average,” but you have to look at best case and worst case as well. Remember that retirement is like a cross-country car trip with no gas stations. What’s in the tank at the beginning is likely to be all there is!

Take a realistic look at your health and your spouse’s health. Know the family history of health issues like heart disease and Alzheimer’s. It’s important to take these factors into consideration when planning for retirement. And to make contingency plans to cover the possibilities. Will your spouse be your main caregiver and vice versa? Or do you have another preference?

People tend to assume Medicare will cover health expenses in retirement, but this simply isn’t true. Medicare covered 62 percent of an individual’s medical expenses in 2013, according to a 2017 report from the Employee Benefit Research Institute (EBRI). That’s on average. Even with Medicare, retirees are going to pay more for health care than many are accustomed to under their current employer-sponsored health plans.

You may not be able to reduce your risk of some diseases, but you cantake care of your health, which will keep your costs down. Retirement is a complex and expensive phase of life, and all aspects should be calculated as carefully as possible prior to taking the plunge. It’s usually not inflation or even market performance that presents the biggest risk to your retirement plan. It’s unexpected medical expenses.

Dana’s Take: Dreaming about retirement with your significant other can be a thoroughly enjoyable experience. Planning for that retirement, however, can be less pleasant. One spouse may take the role of optimist, assuming today’s health and wealth will continue forever. This can place the other spouse in the role of pessimist if he or she wants to plan for assisted living and significant health care expenses.

A couple of good tips for these conversations. Be ready to compromise and be respectful of each other’s views. Nobody wants to feel like they’re being railroaded into something.

Meeting with a financial professional can take some of the pressure off.

Having a third party who sees things from outside can help a couple to bring their differing ideas into a cohesive plan that works for both.

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Estate Planning for Blended Families


Ray’s Take: Estate planning has undergone a lot of changes over the years, and one of the most significant doesn’t have anything to do with the tax laws. It is the change in family relationships. Chances are, you or someone you know is part of a blended family. This was once an uncommon situation, but in today’s world fully 42 percent of adults have some kind of step-relationship, according to Pew Research.

This state of affairs can make things extra tricky when it comes to estate planning. In these blended family situations, there are more opportunities to get it wrong, and your intentions – like your assets distributed to a current spouse, or that your children and stepchildren are treated according to your wishes – need closer attention to make sure everything is set up correctly.

One area where the wheels are most likely to come off of the best-laid plans is in beneficiary designations on retirement accounts and insurance policies. A perfect plan can be destroyed by an incorrect beneficiary designation because the beneficiary designation trumps everything else – including your will.

Another area where issues may arise is a will that leaves everything to the surviving spouse in the belief that the surviving spouse will provide for all of the children fairly and equally. That’s a lot to expect, and it doesn’t always happen in reality, and the better way to ensure the distribution of assets is to set up a trust that will handle this particular situation.

When it comes to estate planning for a blended family, the concept of “yours, mine and ours” can complicate the process to the point that family dynamics become permanently strained. The alternative is denial resulting in nothing being done, virtually guaranteeing disaster. Working through these details not only can avoid future estate planning hassles but also help maintain healthy relationships between all parties involved. A good estate attorney can help ensure things happen the way you intend.

Dana’s Take: Those of us of a certain age remember “The Brady Bunch” on TV with fondness. Who couldn’t love them?

But that’s TV, not real life. Seriously, six kids and one bathroom? Further, the show didn’t address the anger children and teens can feel when asked to share a parent, home and resources with siblings they did not choose. This is particularly difficult when a family of lesser means blends with one of greater means; issues like a teen’s first car can create fireworks.

No one can predict the way the emotions will make them feel when one parent is gone and there’s nothing in writing about where the assets are going.

Blended families can represent the beauty of new beginnings. But they can also be heartache waiting to happen down the road if solid plans are not put into place early.

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Maximize Your Retirement

Ray’s Take: One day you’ll be able to take a deep breath and say you’ve made it.

All the planning and worry and strategizing has paid off, and you’re retired – or at least have the choice of whether or not you want to work. A wide array of new possibilities has become available to you. You now have the opportunity to create a life that’s determined by your interests, desires and priorities, without the constraint of having to earn a living.

But many people don’t take advantage of the possibilities that retirement offers. They just continue with their daily routine, minus the job.

Expect life changes when you retire – both positive and challenging. Step back and take a look. This stage of your life deserves a more big-picture thought process and plan than simply assuming that you’re beginning a very extended long weekend. Put some thought into what you want your life to look like. How will you get the most out of each and every day?

Successful retirees balance leisure over a lot of different activities and take the opportunity to participate in new things and avoid getting into a rut. You probably have some ideas about what you want to do after you retire, places you want to travel, hobbies you want to spend time on or new things you want to learn. Taking care to manage your money well will open doors to many new experiences.

Money buys options. Maintaining and creating new relationships is another key to a successful retirement. In real-life terms, having people close to you who will share your life and be there for you will not only add to your overall life enjoyment, but will also add years to your life.

Being retired shouldn’t mean there’s nothing interesting about you or that you’re bored with your life. Spend money wisely while creating your new life. Celebrate family events and holidays. Create a new network of friends and an array of activities. Keep growing and learning.

Dana’s Take: Post-retirement can be a good time to look into part-time work that may provide lifestyle perks as well as extra income. Think about airlines with flying privileges and hotel chains with discounted stays. You can even search other countries or cities for an opportunity. How about working as an English tutor in China or as a nanny in New York? The sky is the limit.

Job listing websites like are searchable for categories like part-time work or work in a particular industry, or location. Think about your dream job or favorite hobby and start searching.

Retirement is a time of maximum flexibility. That can mean new work options in new places and more time to enjoy the fruits of your labor.

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Bookends of Retirement Planning

Ray’s Take: Planning for your financial independence can seem overwhelming with a minefield of moving parts. Achieving the dream of a secure, comfortable retirement is much easier when you know the significant numbers involved.

The first four are expenditures, portfolio return, inflation and estimated life expectancy. While the sequence of portfolio returns really doesn’t matter during the accumulation phase of life, it matters a great deal during the distribution phase. Certain retirement planning events are triggered at specific ages and knowing those ages and their significance can save you from problems, such as when you are required to take IRA distributions and the early withdrawal penalties.

Two numbers you should pay very close attention to are age 59 1/2 and age 70 1/2. They can have a serious impact on your finances.

For those with hopes to retire early, it’s imperative you know and take into consideration the 10 percent penalty for early withdrawal from certain types of accounts so you can factor that eventuality into your plan by making different decisions about which vehicles you will use to fund your finances in the early years. Life is expensive enough without paying additional penalties.

The other end of the bookend of retirement ages is 70 1/2. This is the age at which you are required to begin taking Required Minimum Distributions (RMDs) from your tax-deferred accounts, whether you want to take them or not.

Withdrawals from traditional retirement accounts become required after age 70 1/2, and each distribution is taxed at your ordinary income tax rate. If you fail to take a required minimum distribution or you withdraw the incorrect amount, the amount you should have withdrawn is penalized at 50 percent, in addition to the regular income tax you owe on it.

Without a solid retirement plan, that light at the end of the tunnel might turn out to be the headlight on a financial train wreck bearing down on you with all the speed and weight of unexpected expenses.

Dana’s Take: Why do people retire early?

Sometimes it’s unplanned like a company downsizing you out of your position. Other times, it’s a conscious decision to give you time to pursue personal interests like traveling or having more time to dedicate to hobbies or volunteering. Early retirement can also serve as a means of getting away from an uninspiring career, a toxic work environment or a frustrating job where you have no room to advance.

If you fall under the second scenario, keep in mind that retiring early may not be the answer you’re looking for. Retiring early has its own challenges – some of them financial. A career change or working part-time might be a better financial choice. And have a more positive impact on finances.

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The Magic Numbers

Ray’s Take: Saving for retirement doesn’t just happen by accident. It takes meaningful thought, discipline, and action to create and execute a plan that will sustain you in your golden years. Yet, according to the Employee Benefit Research Institute, only 18 percent of U.S. workers say they are very confident of having enough money to live comfortably during their retirement years. There seems to be a big disconnect going on between knowledge and execution.

Adding to that mix, the shakeup of the markets in 2008 shook up a lot of existing retirement plans. Many investors found they couldn’t stand as much risk as they thought they could and made some costly mistakes. That led to postponing retirement for many Americans. Many of them were too heavily invested in stocks and hadn’t adjusted their mix as they approached retirement.

Many people think they will just work longer to make up for any shortfall they discover in their retirement funds. And it makes perfect sense that people would think that since we’re all living longer and in mostly better health. After all, 70 is the new 50. Right? But, for any number of reasons, this may not work out. Unfortunately, this thought process ignores the reality that unemployment rates for those older than 50 are increasing faster than for any other group.

So, how do we find the magic numbers and the way to execute that plan?

Solid retirement planning is the best thing you can do for yourself. Diversification. Adjusting your mix as you get closer to retirement to help protect the funds you’ve saved. Lose the emotions when it comes to your money. Emotion makes for a bad partner when it comes to your retirement plan. A cool head is a big asset.

Planning for a sufficient nest egg may seem to be an intangible retirement savings goal. Trying to set benchmarks along the way, based on your age and earnings, might be more realistic. A good financial planner can set you on your way to achieving your goals.

Dana’s Take: It seems like everyone is looking for magic, the magic amount of money that will make retirement living easy. For most of us, that amount is simply more than we have now.

Today, I spoke with a teacher who is looking into multiple work options after she retires from teaching. She is aware that her retirement fund isn’t adequate for the rest of her life, so she is starting to plan the next chapter. I admired her openness to new work opportunities in midlife.

To make retirement living easy, you must have a solid plan in place and stick to it. Magic does exist, but it’s in the smile of your child, the joy in your life and the blessings of each day.

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Let It Go: Stress, Finances Don’t Mix Well

Ray’s Take: Worrying is a way that our brain prepares us for the next challenge or opportunity, and it’s healthy in low doses. But too many of us are consumed by worry, which creates stress. And stressful thinking can sabotage your finances. A 2015 study by the American Psychological Association found that money is the leading cause of stress for many Americans.

Worrying affects not only your quality of life but also the quality of life of those around you. And worrying about money can lead you to make bad financial decisions. And actually lead to poor health and strained relationships, which may cause more financial issues. It can become an endless circle leading to a downward spiral.

Some deal with worry by ignoring reality and any constructive ways of dealing with it. This rarely helps.

We all deal with stress in different ways, but a good approach to reducing money worries is to take an active role in taking charge of your finances. Money is a wonderful servant but a terrible master. Always be aware of how much debt you owe and take steps to reduce it. Set some goals and develop a plan to pay off that debt or buy the house you’ve been dreaming of.

Changing the way you think and changing the things you are doing can have a big impact on your stress levels. These are two things that you have control over in a world that sometimes seems to be taking us for a roller coaster ride. Taking a hard look at the worst-case scenario, and figuring out that you would survive it somehow, can take the worst of the edge off of your stress level.

If you’re a worrier, it’s time to let it go. Assessing the details of your situation can seem like an overwhelmingly stressful practice, but if you use stress-reducing tips to keep you on track, you might finally have the control you need to diminish those anxiety levels for the long term.

Dana’s Take: Do you remember the Travelers Insurance commercial with the shaggy white dog that constantly moved his bone because he was worried it would disappear?

It’s easy to become like that poor dog without even realizing we’re doing it.

It’s possible we learned to worry about money from our parents. Or use worry to stay on top of our finances as a kind of safety valve. Or we may simply worry because we don’t know where all of our money disappears to each month.

Worry less. Starting now. Start by figuring out the difference between irrational worries that you can set aside and valid concerns that need action. Once you start figuring things out, all of that worry starts to melt away.

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Realistic Returns

Ray’s Take: It’s common among investors to fall into the “short-term mindset” with investments. The financial media tends to make things worse. If you do not see the returns you want on cue, you decide to move your funds around to the ones that are showing higher short-term returns.

The danger of short-term thinking is that you might have gotten restless when you didn’t see big returns and decided to part with your stake. The daily quote makes it seem like the value is staying the same. This business is getting better and better behind the scenes in a way that’s not reflected in the short-term returns you’re obsessing over.

There are always going to be fluctuations – that’s just the way the investing world shakes out. The behavior of the stock market is inherently so complex that no single variable – or person – can predict how the market is going to behave next or what would be its future returns – at least not on a regular and consistent basis.

The market swings like a pendulum from optimistic to pessimistic, and sometimes overshooting the mark can cause a panic or greed reaction. Be wary about promises of big returns. They usually turn out to be for the person promising them and not for you.

Think about and settle on a long-term portfolio. Once you’ve done that via a good financial adviser, it’s best for your accounts if you stop looking at them. Delete the bookmark from your web browser. Limit yourself to one peek per quarter and only one or two changes per year. Check it at the one-year mark and rebalance it. Move the amounts around in such a way that the money is back at the percentages you want.

Allocating your assets across financial markets is always a smart decision. But being realistic about your expectations is the most important step in achieving success in the financial markets.

Dana’s Take: Being realistic about finances is something we all need to be aware of. Not only about returns on our investments, but about finances in general.

Having ideas of living the life of your dreams in your golden years is great. You may want to retire in five years. But, you only have enough money put aside to last you 10 years.

Is it realistic to think you can save enough money in five years to last for 30? You need to be realistic about where you stand right now, and about what actually needs to happen if you want to make your financial dreams come true.

You may still be able to live the life of your dreams; you’ll just have to save a bit longer to make it happen.

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Keeping Up With The Joneses Can Be a Financial Catastrophe

Ray’s Take: There’s nothing quite like the feeling of seeing your neighbor drive up in their beautiful new car or hearing about their fabulous planned vacation. It can make you forget about every other plan or goal you’ve made for yourself. Keeping up with the Joneses can eat away at your financial dreams.

According to, the phrase “keeping up with the Joneses” means to try to own all the same things as people you know in order to seem as good as them. But when you’re making purchases that have no value beyond impressing others, you’re shortchanging your future.

For starters, it takes away your joy in life. Nothing is ever quite good enough anymore. There’s always a nicer, newer something that’s siphoning off your money. Houses, cars, electronics. The list is endless. And none of it makes you happy because it’s a continuous cycle.

Financially, it’s a catastrophe. Trying to keep up with those around you who appear to have it all is devastating financial accounts all over the country. Many times, those others you are trying to keep up with are in crippling debt themselves. It’s all a house of cards.

Taking a good, hard look at previous expenditures is a key way to determine if you’ve fallen into spending based on others vs. your own plan. As you look at those expenditures, ask yourself if you’d buy them if you had the opportunity to do it over. Keep a list of purchases you regret and review regularly as a reality check on where you’re putting your money.

Next time you’re about to make a big purchase, especially one that will put you into debt, take some time to examine your motives. Ask yourself if you truly want or need to buy that expensive item that will be replaced in a few years, or do you want to retire early? If your real goal is financial freedom, keeping up with the Joneses is not the way to achieve it.

Dana’s Take: In today’s FOMO (Fear Of Missing Out) world, it’s easy to fall into the “keeping up with the Joneses” mentality. No one wants to be perceived as being “less than.” But that kind of thinking can not only eat away at your long-term dreams, it’s teaching your kids a lot of bad habits. Overspending on material things can, and eventually will, drag down your financial stability. Which will only make you more stressed out and unhappy in the long run.

It’s time to take some pressure off yourself and stop trying to keep up with the Joneses. As a class="learn" href="" rel="

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Name SearchWatch Service" style="color: #7d0200; text-decoration-line: underline;">Will Rogers once said, “Too many people spend money they haven’t earned to buy things they don’t want to impress people they don’t like.”

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Create an Investment Policy Statement

Ray’s Take: Financial professionals have long used an investment policy statement for their clients. It’s a guiding set of principles, of sorts, to help make decisions along the way. It’s an excellent tool for anyone to use to keep themselves on track when it comes to financial planning.

By putting things down in writing, you are making a clear statement of what your goals are and how you plan to reach those goals. Write down the key reasons why you’re investing and your expected time horizon for your goals. Like when you plan to retire. Include any big-ticket items that will affect your plan along the way, like buying a home or saving for college. Want to spend six months touring Europe once you retire? Be sure to include it, or any one-time big expenses that are part of your intended retirement.

Once you have your goals and major expectations mapped out, take a look at your investments and determine what funds will be available to cover these big-ticket items along the way and make investment decisions that will support them.

Include a Plan B, just in case life happens and you need Plan A to go. One day you will likely be tempted to make a major purchase or change. As you consider the options, pull out your IPS and reread it. If it isn’t consistent with the IPS, it’s time to slow down.

An IPS doesn’t need to be, nor should it be, complicated. The idea is to establish a set of guidelines so you’ll know if you’re on course or veering off the road.

Like any important part of life, an investment policy statement needs regular attention, maintenance and rebalancing. It should be flexible enough to accommodate changes in your life like caring for aging parents, children returning home and inheritance.

Once you get the map drawn, a financial planner can help refine it in the beginning and adjust it as time goes by.

Dana’s Take: While we’re on the topic of writing down plans, how about a life plan? It may seem a bit ridiculous to write down the things you want to do in your life. After all, it’s all right there in your head. And your heart. But like an investment strategy plan, having it in writing makes your life plan more concrete and real.

When you’re writing out your plan, use first person. Writing “I will,” followed by your goals makes them more concrete and gives them more power.

Dare to dream outside the box as you write your plan. Our world has changed since the market crash in 2008. At a time when so many established options no longer appear to exist, it’s a perfect time to envision and create and try something new.

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Catching Up In the Home Stretch

Ray’s Take: There aren’t a lot of benefits to getting older, but when it comes to saving for retirement, there are a few. If you’re 50 or older and feel like you haven’t saved quite as much as you would like for your retirement plan, you could be in luck when it comes to contributions.

This savings bonus is called catch-up contributions. These are special provisions that allow you to contribute additional funds to your retirement accounts as you get closer to retirement. These contributions have the double benefit of helping beef up your retirement savings while deferring taxes.

The IRS allows those who will turn 50 or older by the end of the 2017 calendar year to make an additional $6,500 in elective contributions. And you can make those contributions each year as you move closer to retirement. The amount of catch-up contributions, historically, has increased approximately every 24 months. Catch-up contributions can really add up over time to a tidy additional amount of funds in your retirement accounts.

There are – of course – some rules relating to what kind of accounts you can use to make these catch-up contributions, and there are specific amounts that can be contributed to each type of account. Additionally, catch-up contributions only come into play if you max out the elective deferral amounts in your 401(k) or reach the contribution maximums in your IRAs. Aiming to meet maximum deferral amounts is a good starting goal.

If you have a Health Savings Account-eligible insurance policy that meets deductible requirements, that HSA is also eligible for catch-up contributions at age fifty-five and older. This can be an asset for saving additional money for health care expenses.

A financial adviser can assist you with determining the best plan for your circumstances. Time is a non-renewable resource and a critical factor to successful retirement planning.

Dana’s Take: Having the opportunity to get caught up on any of the important things in life is a great opportunity. Funding our retirements dreams are just one of those things. What about getting caught up on you? Are there things in your life that you’ve always wanted to accomplish? Or at least try?

Many of us come up with too many activities and pressures on ourselves in an effort to be everything to everyone in our lives and somehow never reaching our goals of perfection.

Take a little extra time to get to know you. When you get caught up on yourself, you see the best way to get the life you want for yourself and your family. Not just now, but all along the road of life.

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Retirement Worries to Tackle Ahead of Time

Ray’s Take: A long, happy retirement is one of the great American dreams.

Maybe you’ve watched as friends and family have stepped into that long awaited golden time. Watched as they traded in the daily grind of working for a more leisurely lifestyle on their terms. At least, that’s what it looks like on the outside.

But looks can be deceiving because there might be more lurking behind this rosy picture. Without careful planning, retirement can come with some really big surprises. A recent AICPA survey of financial planners found that running out of money in retirement was the top concern of their clients. A close second was health care. Retirement includes creating an entirely new identity, and that’s a lot harder than you may think.

Retirement planning would be a lot easier if you had a magic eight ball that could tell you how long you’ll live. That way, you’d know how many years you’ll need to support yourself without income from a job. We have 12 clients in their 90s and three over 100, and most are in very good health. That wasn’t on their radar when they retired.

The high cost of health care in retirement can be a surprise. Medicare doesn’t cover everything. The cost of health care is soaring and projected to keep going up. Do you have the reserves to pay for those rising health care costs? It’s a big thing that may change the age at which you decide to retire. And be sure to factor in long-term care in the mix. According to the Department of Health and Human Services, 70 percent of people who reach age 65 will need some form of long-term care in their lives. Often my clients think I’m planning for their kids when I try to slow the spending rate in retirement. I’m just trying to make sure they don’t have to move in with them.

Since people are living longer, not having enough money in retirement is a legitimate concern. So is the possibility that a catastrophic illness will drain retirement funds. And these worries can become obsessive, robbing you of your well-deserved retirement. So take some time to plan for the later stages of retirement long before you reach them.

Dana’s Take: There’s an old saying that proper preparation prevents poor performance. But being prepared takes time and commitment. All too often, we end up “winging it” rather than putting in the time necessary to be prepared.

Start by knowing what you want to accomplish. Focus on those things that you’ll need to do to be successful. Understand what you are preparing for so that you’re not doing extra work later to correct errors. Take your time and do it right. Success isn’t about how fast you accomplish your plan. Life is a journey. And it’s one worth taking the time to make the best we can have.

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80 Hits

Net Worth is Like GPS for Your Retirement

Ray’s Take: When you have your annual physical, your physician looks at a number of your vital indicators; so does your financial planner. Net worth is the value of all assets, minus the total of all liabilities. In other words, net worth is what you own minus what you owe.

And, often, income is not an indicator of net worth. It’s possible for someone with an average income to have a substantial net worth if they’re careful about debt and save money regularly. It’s also possible for someone with a very high income to spend every penny they make and then some, resulting in a negative net worth.

A regular accounting of your net worth is like GPS for your retirement. It tells you where you are now and gives you an idea of the course corrections you need to take to get to your destination.

If your net worth is not consistent with your hopes for the future, take steps to raise it. As a general rule, if the numbers come up low, spending is the culprit. You generally have more control over the outflow than the inflow. Cutting back on discretionary spending is the first step toward turning your situation around. Paying off debts is the next. Taking steps to eliminate credit cards debt, canceling memberships to things you don’t use and being more mindful of where your dollars are going are great ways to raise your net worth without having to resort to a second job.

If your net worth is high, keep building on your momentum. You can include more asset classes and further diversify. The money you’ve saved may enable you to change your lifestyle, provide the funds to travel during retirement or engage in hobbies that you couldn’t afford or didn’t have time to indulge in during your working years.

One last thing, don’t kid yourself that your assets (home, cars, etc.) are wealth. In my world, assets pay me interest, dividends and capital gains. I’m still waiting for the first check from my home.

Dana’s Take: Navigating life can be a tricky business. From deciding where to live to where to send our kids to school, we’re bombarded with decisions we know will have far-reaching impacts not only on ourselves but also on our children. Having a clear-eyed view of what we want to accomplish makes for an easier journey.

So many things in life are outside our ability to control, so taking the time to handle the things we can control gives us a much more peaceful feeling.

There’s no better feeling in life than the feeling you’re in charge. Be it your trip to the beach or your destiny.

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115 Hits

How Many Funds Make a Good Mix?

Ray’s Take: When it comes to building a portfolio for retirement, your goal shouldn’t be to load up with as many different types of investments as you can in the hopes that you’ll outsmart any fluctuations in the market. Diversification, like all things, has its limits.

Instead, you should work to build a well-diversified group of funds that can help you harness the power of the capital markets in a way that’s consistent with your financial needs, risk tolerance and goals. The idea is to put together a portfolio that can generate the returns needed to achieve your financial goals but won’t be so volatile that you’ll be tempted to make mistakes – from fear or greed – when the market goes through its inevitable swings. If you think you can just nimbly time your entry and exits to the capital markets, prepare to be humbled. If your adviser claims to be able to do it, you should consider finding another adviser.

There are many strategies for creating a great portfolio, but each portfolio shares some basic features. Before choosing your funds, you need to have a good idea of your goals and how much risk you can tolerate. Only then can you determine your appropriate asset allocation, which is the mix of investment assets that make up your portfolio.

When it comes to the number of funds to own in your portfolio, which can range from few to many, less is usually more, as with many things in life. If you start throwing more and more funds into the mix, you run the risk of turning your portfolio into a confusing mix of overlapping holdings. And this strategy can impact each fund in your portfolio, reducing the chances of success in reaching your goal.

Your focus should be on the diversity within your portfolio rather than the number of funds. You can own dozens of funds and still not be well-diversified. Conversely, you can own one fund that is well-diversified if that fund covers the entire stock market spectrum.

A good financial planner can assist you with makes the best decisions for your own portfolio.

Dana’s Take: According to Aristotle, temperance, or balance, is a virtue. Balance and restraint are two keys to long-term financial success. Unfortunately, our culture has changed since the 1930s from one of restraint and caution to one of instant gratification and impulsivity. While we are encouraged by the media to “just do it,” better advice might be your grandparents’ “look before you leap.”

Our grandparents’ over-cautiousness led them to live frugally and save ample amounts for their non-working years. Perhaps today’s younger generation will prefer to leave behind the overspending and consumer habits of the last few decades and pursue a simpler life with less energy spent on acquiring possessions and more spent on living.

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104 Hits

Early Retirement – Can You Do It?

Ray’s Take: Many people dream of making an early exit from the work routine, but making that dream a reality has some challenges. By retiring at, say, age 55 instead of 65, you have 10 fewer years of saving and investing for building a nest egg that has to support you through an extra 10 years of retirement. That double-whammy of fewer working years to save and more retirement years to spend is what makes early retirement tough to pull off.

Where will your funds come from to cover expenses? Will you be making withdrawals from deferred retirement accounts? Many have an early withdrawal penalty of 10 percent if you begin drawing from them before age 59 1/2. If you want to make the early retirement dream happen, you’ll have to plan well so that you have funds you can use that aren’t affected by those penalties until you reach the age at which those penalties aren’t a worry. Withdrawing early and incurring the penalties will reduce the amount of funds you have available to pay for your extended retirement.

Health care is another big item to consider and plan for before deciding to retire early. Medicare doesn’t become available until age 65, and even then doesn’t cover everything. How will you pay for health care prior to age 65? You’ll have to buy health care coverage on your own. That can be a budget wrecker if you’re not prepared. And estimating how much you’ll pay for health care in the future is somewhat of a guessing game.

Think about your life after early retirement before you take that leap, not after. Making it happen is entirely possible, but it will take some serious, disciplined planning. The sooner you create a plan and put it into action, the better the chance your early retirement dream will become a reality.

Dana’s Take: Early retirement and a life of leisure may sound like the stuff of daydreams, but the reality can be a big letdown for people who are used to being busy – and important. Once the newness is gone, an ugly reality can raise its head.

Boredom, a feeling of isolation because your friends and family are still working, and loss of identity due to not having somewhere to be and something to do every day are potential realities.

Creating a social network, finding hobbies you love and being physically active prior to pulling the trigger on early retirement all combine to create a much more positive retirement life.

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101 Hits

Managing Money is a Marathon, Not a Sprint

Ray’s Take: Training to run a marathon and creating a financial plan have a lot in common if you’re going to succeed. An overall plan includes short-term and long-term goals and the ability to stick to the plan through thick and thin. No pain, no gain. Right? And that applies to money as well as running.

It can be a painstaking process to go through and determine exactly how much you spend and where it’s going. Where can you cut those expenses? Dig deep to find those expenses and get them in the picture of your plan. It can sometimes require both a financial planner and a marriage counselor.

Plugging small leaks may seem tedious, but cumulatively can take you a good bit of the distance. They can be an invisible drain on your money if you’re not making sure you’re aware of them. Take the time to talk to your financial planner to discover the management fees for all of your accounts. Know your banking fees too. All these little expenses can add up over time. There should be no sacred cows in the process either. Everything must be on the table.

Once you have all this detailed information at your fingertips, you can create a better and clearer picture of how you’re going to reach your goal. This leads to another aspect of the marathon – the decision to hold fast to the plan in times of market turmoil and the decision to reallocate in an upward trending market because that’s the step to take to remain on track.

There will be times along the way when you have doubts or stumble. There are times when life happens, and you have to adjust the plan. Staying strong and in the race will be worth it in the end. It doesn’t do any good to quit. You aren’t the only one who has struggled.

These can be time-consuming and difficult tasks and decisions. But if you’ve done them and seen the payoff, you understand that doing hard things financially is often good for you and gets you where you want to be.

Dana’s Take: A healthy mind and body lead to clearer thinking and better financial decisions. And the steps of training your body can be applied equally well to creating healthy finances.

Step one: Have a clear mental picture of why you are doing these things and what you hope to achieve from them. Is buying things you don’t need from that specialty store a priority, or is saving for your family’s future a priority? What is important to you?

It can be very motivating to have concrete short- and long-term goals and rituals in place. Get expert advice. Use discipline. Create a plan.

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82 Hits

Finding Your Best Bank – It’s Worth It

Ray’s Take: There’s a perception that all banks are the same and offer the same services and have the same fees. That may have been true at one time, but in today’s world, it pays to investigate a broad range of financial institutions to find the one that has the best products and services geared toward your individual needs.

For many, your bank is the hub of your financial life. It’s where your paycheck is deposited, where bills are paid and where savings are directed to other accounts. It’s also where you work toward some of your most important short-term financial goals like building an emergency fund and saving for a down payment for a car or home.

Look closely at fees vs. interest rates. If you’ve got your emergency fund or your fund for a down payment on a home in a bank that charges more per year in fees than you are making in interest, you’re actually losing money rather than growing it.

Look closely at maintenance fees, out-of-network ATM fees and overdraft fees. Most fees are avoidable these days if you know where to look. How about requirements? Some banks require you to keep a certain balance in your account or make a certain number of transactions each month to avoid paying a fee. That is probably something that will not serve you well over time. Do you prefer to do your banking online or via your phone? A bank with a user-friendly and safe environment for that is a must. Cybersecurity is a growing need in today’s world.

Be sure to include online banks and credit unions in your search to find the best options for yourself. Varying rewards are up for grabs. The world and our financial needs are changing quickly. The bottom line is you’re your money is always working; the question is for whom.

You probably interact with your bank more than any other financial institution. You should put in the time to find one that is the best fit for your plans and rewards you for using them.

Dana’s Take: When it comes to choosing where to do business, we all have different wants and needs.

For some, it’s nice to feel personally valued at a business where people call them by name. For others, that’s not a priority and the more arms-length way of doing business online works best for those folks – no warm fuzzies are necessary.

There’s no right or wrong way to feel comfortable in the way you conduct your business. Your banking needs are unique, so take your time to think about what’s most important to you, then find the bank that offers it.

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104 Hits

Be Boring

Ray’s Take: Sometimes, it’s tempting to try to beat the market through the excitement of stock picking or by choosing riskier investments with the promise of a higher return. It seems like everyone has a friend of a friend with a great investment story.

Maybe he bought a high-flying tech stock that tripled in price within a week. Or maybe she put a huge chunk of money in some stocks near their bottom during the banking crisis and rode the rally all the way up to today.

It’s tempting to believe these stories. But they are rarely true – or complete.

The truth is usually a bit more boring. Starting early and investing consistently is the key to maximizing investment gains over time. Choosing investments with consistent, realistic returns that manage risk, rather than looking for those get-rich-quick stocks, is the way to obtain consistent results in the long run. Having a good plan and sticking to it is essential.

The stock market will rise and fall, and recessions will come and go, but if you invest steadily over the course of years, your overall return will likely be a good one. If you observe life, you’ll notice we’re all out spending money on goods and services. By investing, we’re acting as owners of the same companies we’re buying stuff from. Owners tend to be compensated better than loaners. Fear and greed are your enemies. Your long-term plan is your shield.

In many ways, our society conditions us to think that anything that is boring is undesirable. Investing isn’t supposed to be exciting. Any stock that can rocket to the moon today can crash and burn tomorrow. Set aside some money in a play account if you feel the need to get your blood pressure up from trying to time the market.

But, when you’re planning your retirement, steady, well-thought-out plans will get you where you want to go. If you need more thrills, go to Vegas – at least you’ll get dinner and a show.

Dana’s Take

It may be boring, but it’s true: Habits can move mountains, especially with money. Our children and teens witness our habits and will probably follow them – both good and bad.

A habit where I could improve is checking the budget before going shopping. Usually I head out shopping and hope it works out in the end. If, however, our kids saw me stop and go to the computer and say, “First, let me see how much we have saved for clothes/camp/patio furniture.”

If I did that before every trip to the grocery, Target and Home Depot, we’d have extra money for that trip to France I want to take and our children would learn more disciplined habits with money. Sounds like a win-win to me.

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103 Hits

Keys to Great Financial Planning

Ray’s Take: It would be nice if you had a magic formula or an easy trick that made it so you never had to worry about money again, but life doesn’t work that way. You need a plan to help you reach your goals, and the plan should have multiple steps.

Starting young is key. The earlier you start, the more money you will accrue. Compound interest and return on investments have a much longer timeframe to grow the younger you start planning. Plus, you have time for false starts and poorly considered plans. The biggest mistake you can make in financial planning is not to plan at all.

Communicating with your spouse is another key. Discussing the future you want and how each of you envisions it will open the door to merging your vision and making the right decisions to create it. Discussing your retirement strategy may not be your idea of a dream date, but it’s also not something couples can afford to put off.

Set priorities. At its most basic level, financial planning is about effective prioritization. Prioritizing in financial planning is about more than just allocating financial resources; it’s also about allocating time, attention and effort toward making the changes necessary to implement those goals.

Review regularly. Your priorities may change over the years, or your road to reaching your existing priorities may change. The key to staying on track is to make the time to ensure you’re doing everything right to make it happen.

The market will go up and down, and there’s nothing you can do about that. There will always be events that pop up and rattle you. Focus on what you can control. Saving for retirement is a long-term goal that requires years of planning and an understanding of deferred gratification. With a solid plan, you can feel better about your future.

Dana’s Take: Plan with a purpose and do your best at every stage of your life. Take into account your retirement horizon, your needs and your family’s needs, and your goals and dreams for yourself and your family. We all dream of a stress-free retirement with oodles of time to do the things we love and the funds to make it happen.

If you’re trying to get to retirement, or you’re already there and you don’t want to fail, you have to have a plan that makes sense for you. Not your friends or co-workers. Not the pro at your golf club. Not the friend who always knows the latest thing to invest your money in. Just you.

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130 Hits

Boomerang – When Adult Children Come Home

Ray’s Take: A changing economy, a sluggish job market and student loan debt have created a perfect storm for delaying the empty nest parents have expected, and had, in the past. According to a recent Census Bureau report, 30 percent of young adults ages 18 to 34 live with their parents. That’s a big number, and the trend is driven in part by unemployment or underemployment of millennials.

If this happens at your house, there are a lot of things to consider because caring for adult children for longer than expected, with no exit plan in sight, could easily lead to emotional and financial chaos. Some questions should be answered at the beginning: How long are they staying? What are the expectations? Do we charge rent? What stuff do we still pay for? And how do we navigate all this?

Clear communication is key. Get as much as possible on the table up front to minimize frustrations and clarify expectations and boundaries. Adult children need to understand that when they move back home, it increases their parents’ cost of living and it impacts their lives and finances.

Have an exit strategy for when the adult child will move out once they locate a job. Immediately? Once a specific amount of money has been saved? How can you monitor that a reasonable percentage of earnings is saved?

Decide if you will provide cash for the needs of your adult child, how much and for how long. It can lead to problems if you are resentful of paying for cellphone bills and your adult child is spending evenings out with friends funded by you.

Write all the parameters down and revisit them within an agreed-upon timeframe to see if everything is still on track and working for all parties. Don’t leave an open invitation on the table that confuses everyone involved. A well-thought-out plan can save a lot of headaches (and heartaches) before they happen. Always remember that the best gift you can ever give your children is to protect your own independence.

Dana’s Take: The phenomenon of boomerang kids returning home isn’t easy for parents. Finances can be tight as we save for retirement, and the added expense of taking care of adult children can sabotage plans. Then there’s the other part: Who takes out the trash? Am I back to doing everyone’s laundry and putting dinner on the table every night?

When you fly, flight attendants instruct you to put on your own oxygen mask first. That’s because it’s difficult to help others if you’re unconscious. The same is true financially and emotionally. Parents should take care not to let their desire to love and nurture their children irreparably damage their own financial and mental well-being.

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100 Hits

Estate Planning – It’s Not Just Taxes

Ray’s Take: Many people think estate planning is only for the super wealthy, but that’s not the case. Do you have a home? Children or grandchildren? Elderly parents? Bank accounts or other assets? If you have any of these, you need an estate plan. And it’s about more than just taxes.

An estate plan helps protect your family when – not if – you pass away. There are a number of things to include in estate planning.

A big item is a last will and testament. According to a Gallup poll, only 44 percent of Americans had a last will and testament in 2016. This is the document that tells everyone your final wishes and yet over half of Americans have not made a will. That leaves a lot up to chance, court fees and possible legal battles.

You can name beneficiaries on tax-deferred accounts, and those will pass directly to the specified individual outside of the will. Things like life insurance and retirement accounts fall into this category as well. But you can’t name minors. Further, a pile of cash with no strings attached falling into the hands of a college student may not be in their best interest. Without a named beneficiary on these accounts, they will pass into probate, and if you don’t have a will, your state will write one for you, and you might not like it.

It’s important to review your estate planning documents regularly to make sure you’ve designated people where needed and want to keep the same beneficiaries. For example, if your executor, trustee or guardian has moved across the country, you’re likely better off naming someone local. You’ll also want to review your estate plan every time there’s a major life event, such as the birth of a child or grandchild, the death of a parent or a divorce.

These are only a few of the items in a good estate plan. An attorney or financial expert can help you set up your estate plan so that your assets go where you want rather than where a judge designates.

Dana’s Take: Estate planning is planning what to leave behind and to whom. But what about the impressions and memories you will leave with family and friends?

I read about a retired CEO who made a mission to thank all of the people in his life who helped him along the way. First, he wrote to each person and asked to meet face-to-face. Then he flew or drove to meet each one. Imagine the joy he spread by expressing his gratitude.

Ray’s father, Denby Brandon Jr., also made a lifelong habit of expressing appreciation to clients, friends and loved ones.

It’s never too late to create a legacy of gratitude.

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128 Hits

Match Game: Employer Matching Funds

Ray’s Take: I am amazed at how many times when I ask people how much they are contributing to their 401(k) the answer comes back, “Whatever the match my company gives is – I love free money!” There’s a much better way to make that decision, but that is a topic for another column. There are a number of reasons companies offer some form of match and they may not all be charitable.

While it’s good advice to never leave money on the table, you should always do a financial plan that includes all investment options first to get a truer picture of where you are in relation to where you want to be.

401(k) matching funds are touted as “free money,” but there usually are strings attached. As a general rule, employer-matching funds are not fully vested for a specified period of years. On average, five. So, what happens to those funds if you leave your job before you’re fully vested? They don’t all go with you.

With the trend away from spending your career in one company, you shouldn’t count your chickens before they are hatched. But don’t worry about your own money that you have deferred. It’s yours from day one and goes with you when you go. According to the Bureau of Labor and Statistics, workers between ages 25 and 34 have been in their jobs, on average, less than three years.

Take a close look and be sure you understand the particular 401(k) plan you are thinking about investing in so that you understand the vesting schedule along with when the company matches. It could be with each paycheck – or it could be once a year. That can also make a big difference in gains.

Contributions to a 401(k) lower your taxable income. A point for a 401(k) investment, but calculate the actual value of that over time to be sure you make the correct decision for you. It’s harder to be tempted to spend money that never hits your checking account.

Depending on your personal circumstances, the company matching funds might be a good fit up to the amount that the company matches, but it’s best to look at all your options and have a clear picture of your long-term plans before signing up.

Dana’s Take: Saving with a 401(k) account can pave the path to financial security. I’ve been reading the book “Everything That Remains,” by two young men who call themselves “The Minimalists.”

In their popular social media sites, they advocate giving away possessions and even leaving non-fulfilling jobs in order to experience life more fully. They point to the vicious cycle of consuming and then working to pay for our excessive consumption.

Our time is actually more valuable than money, they say, because we can always make more money but we can never make more time. Ouch.

Become conscious of the balance between spending money and spending life.

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130 Hits

Retirement Paychecks – Reversing the Flow

Ray’s Take Retirement planning doesn’t end when you stop working, and one of the biggest concerns for any retiree is running out of money. As you move into retirement, you move from the accumulation phase to the distribution phase of planning, and it has a lot of moving parts. Retirement is like a car trip, but there are no gas stations along the way. What you have in the tank is it.

A good starting point for creating this new paycheck is to determine your “fixed” expenses each month. Budgets don’t stop when you retire, they get even more important. Sit down and create a list. Next, you need to list other fixed expenses that occur more sporadically, like clothing, gifts, annual insurance premiums and taxes. Then you need to “amortize” costs that are random but inevitable, such as replacement cars or major home repairs. Finally you want to put in a budget for discretionary costs and luxuries like trips. Discretionary expenses can be put on hold in more difficult years to recover from surprises and extend the life of your assets.

This works a lot like the budget you have when you’re in the planning phase of your life, but in retirement, your employer becomes your retirement assets. Your current budget is a good place to start your projected retirement budget, and you can factor in changes you anticipate, like cars or a mortgage that will be paid before you retire.

Keep in mind that it’s not only how much you withdraw, but also the order in which you tap your assets that will give you the best chances at future financial security. Sit down with a professional planner who can help you make the best decisions on which accounts to withdraw funds from to maximize your income and minimize your taxes. Take time each year to review your withdrawal strategy and make any necessary changes. Don’t leave it to chance.

Developing a plan well before retirement can help relieve some of the fear of running out of money. It can be emotionally difficult to “reverse the flow,” but having arrangements to get a regular paycheck can ease the conversion.

Dana’s Take As a couple, deciding how to spend our retirement years is a tricky thing. It’s completely based on imagination. What if we guess wrong? Sometimes I think I’d like to live near a beach someday. What if I’m wrong and we end up in a hurricane in a two-bedroom condo wishing we still had the comforts of our Memphis home?

Should Ray work longer and save more or work less and make time for those exotic trips of our dreams? If we spend more of our savings on travel, then where will we spend less? Can we agree on where to cut?

Start the conversation about the retirement of your dreams and start saving to make it happen.

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161 Hits

529 Plans – What You Should Know

Ray’s Take This August, I will be the proud parent of college freshman. With that pride comes the bills for tuition, room and board, books, etc. 

Dana and I have long believed that an education is the best gift to a child, but not at the expense of our own retirement. We started saving for college the moment we had social security numbers for our kids. With college tuition costs rising every year, saving early for education is one of the most important decisions parents can make. One vehicle for saving is the 529 plan. 

These plans offer a way to save for college by putting money into a specific account that is exempt from federal taxes. For states that have a state income tax, these accounts may also be exempt from state taxes for in-state residents. 

Adults typically open these accounts on behalf of a minor, but adults can utilize them for their own education. There are no age limits on these accounts.

For college savings plans, most colleges and graduate schools, along with professional and trade schools, are eligible. Funds from these plans can also be used to cover fees other than tuition, such as books and room and board.

When setting up these accounts, it’s important to take care with how they are named. Only one person can own the account, and there can only be one beneficiary. But individuals other than the owner can make contributions to the account.

When it comes to making withdrawals from these accounts, pay special attention to what is considered a qualifying expense. Also be careful not to withdraw over the limit to avoid tax consequences. 

Additionally, something to watch out for: These two scenarios can create a tax liability at the owner’s tax rate rather than the beneficiary’s tax rate, along with federal, and possibly state, penalties. To avoid potential tax headaches, withdrawal checks should be made out to the beneficiary of the account, or directly to the college on behalf of the beneficiary.

These plans vary from state to state. Consulting a planning professional can help you navigate the requirements and benefits of these accounts such as tax deductions, fees and expenses to build the account that is most suitable for the beneficiary.

Dana’s Take Saving for college can put a financial burden on families. Especially those with more than one child who will be attending college at the same time. A 529 plan could be a good option for your family. Another great option is to look into grants and/or scholarship requirements and use those as a way to pay for college along with work-study programs and student loans. 

Saving for your kid’s college education is a wonderful gift, just make sure it’s not at the expense of your retirement. They have a lifetime to pay back student loans, but your time to save for retirement is limited. 

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142 Hits

New Rules for Emergency Funds

Ray’s Take The old rule of thumb for an emergency savings account was three to six months of living expenses. It was created at a time when the workforce experience was more monolithic and predictable. This was when there more likely was a single breadwinner who worked at the same company their entire life and retired with a gold watch and a big send-off party. 

Those days are behind us now. Changes in the workforce and economy have led to a much more fluid society. Years ago, changing jobs multiple times was considered “job hopping,” and it was a big red flag on an employment application. Nowadays, it’s the norm. So when creating an emergency fund, the new rules should include time and resources for career changes. 

Bear markets come and go. Real financial distress tends to occur when people didn’t properly prepare for reasonably predictable financial challenges. The time to fix the roof is when the sun is shining! Build those reserves while you have cash flow coming in. Give yourself the freedom of finding the career that’s best for you by creating a fund large enough to support yourself and your family for a longer period of time – whether that timeframe is by choice or thrust upon you. 

You need to have a money plan in place before making a career change, not just a career plan. You need a financial plan to protect you from the downside risks you take on in making such a dramatic life transition. And a bigger emergency fund is a vital part of that plan.

The era of lifetime employment is over for more and more, and we need to plan for multiple careers throughout our working lives. An expanded emergency fund will allow us to make better long-term decisions without worrying about losing the house or eating, but it’s hard not to tap into those resources when tempted!

Dana’s Take Employment gaps and transitions do require a greater savings cushion. To minimize those gaps and get ahead of the competition, Gov. Bill Haslam is offering free tuition and fees at Tennessee Colleges of Applied Technology (TCATs). His Drive to 55 and Reconnect programs ( aim to retrain adults for higher-tech – and higher-paying – jobs.

Before turning up your nose at technical or vocational training, look into the salaries for some of these skilled tracks. A surgical technician, the person who hands the surgeon sterilized tools, requires three semesters of training at community college and salaries start at $40,000 to $45,000 plus full benefits. Try matching that with a history degree. 

Peruse the fields of study offered at TCATs to find specialties tailored to current job openings. I know it’s hard to teach an old dog new tricks, but gaining cutting-edge skills may make you feel like a much younger dog. 

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142 Hits

Uncertain Times

Ray’s Take We live in uncertain times. There are no guarantees; there is only planning and adapting. A sound financial plan is a great hedge against uncertain times, and the inability to predict future tax rates or the direction of the stock market should not be a deterrent to having a good financial plan.

A generation ago, not many people really cared what “the market” was doing. We worked, retired, and lived on a pension. Trained investment professionals worried about asset allocations, interest rates and longevity risk. Now it’s up to us.

With the demise of pensions, uncertainty in home prices, generation low interest rates and a volatile stock market, in addition to ongoing changes to Social Security, Medicare and employer-sponsored retirement plans, setting financial goals and sticking to them is more important than ever before.

The fact is, we are living in a new normal and 21st-century retirees have a slew of things to plan for, so it’s important to devote some time to thinking about the areas of your financial plan that you can control. And the sooner the better.

Start with the amount you put into retirement accounts and how those accounts are managed. Next up, review the tools in place to manage unexpected future expenses like a long-term health care plan, a power of attorney and a will. Additionally, have an emergency cash fund to cover short-term expenses.

Short-term volatility is no reason to change your long-term financial plan. But media stories of an alarming nature can give rise to doubts and concerns. An annual review is an important part of making sure you’re still on track. Financial planning in uncertain times requires thoughtful decision-making and a decision to do nothing is as important a decision as is to do something.

A qualified financial planner who is on top of the changing face of the world of planning and investments can help you navigate the murky waters.

Dana’s Take The baby boomer generation is creating a new retirement lifestyle. But what will our kids’ retirement look like? Will there be a new new normal by the time they reach retirement age? And what will retirement look like for them?

With all the changes taking place in the financial world in everything from how we handle paying bills to how we save for the future, it’s very hard to imagine what tools we need to give our kids in order for them to achieve the type of retirement we’ve dreamed of for ourselves.

But will they even want the same type of retirement that we envision for ourselves? It’s important to teach our children money skills based on the world as it is today, but make sure they adapt those skills to match changing trends as they mature into their own retirement dreams.

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Financial Spring Cleaning

Ray’s Take: This time of year our thoughts turn to spring – and cleaning. Sprucing up our yard. Clearing out closets and other clutter. But how about our finances? Spring is a great time to take a look at debt, savings, budgets and retirement plans with an eye to getting them all in shape.

Take a look at any holiday debt you incurred and make plans to pay it off. According to Consumer Reports, approximately 7 percent of shoppers go into the new holiday season still paying off debt from the previous one. If there’s any interest being incurred, that’s the place to start. Taking steps to pay it now will leave money to save before the next holiday season rolls around.

Take a look at your credit reports to make sure there’s nothing on them that’s incorrect, and if there is, take steps to get it corrected. You can get a free report every 12 months to help ensure there is no false information reported about you. Line up all debt in order of interest rate and start knocking them down.

How about your budget? If you don’t have one, do it now. If you do, how have you been doing with it? Over it? Under it? Now is a good time to review your budget and make any adjustments to get back on track if you’ve swerved off it, or to tweak it to make it work even better for you.

Multiple 401(k) accounts should be consolidated if possible. Look at your options and choose the plan with the lowest fees. Make sure your asset allocation is consistent with your plan. If you have changed jobs a few times, you may have left your 401(k) to continue being handled by your previous employer. Combining multiple 401(k)’s makes it easier to manage these accounts and to avoid paying fees to multiple managers.

Taking steps to keep your financial house in order will pay dividends all year long. Once you’ve done that, you can relax in the knowledge that you’ve checked that off your to-do list.

Dana’s Take: While you have your mind on spring-cleaning, take a look in your purse or wallet. Did you find any partially used or unused gift cards languishing in there? If you don’t plan to use them, investigate websites that will pay you cash to take them off your hands.

How about your closet? Do you constantly feel like you have nothing to wear, but the closet is bursting at the seams? Winnow that wardrobe down and sell the rest. Your closet will thank you.

Go through your loyalty cards and frequent flyer points. Tally everything up and use points that are on the verge of expiration.

Doing simple spring-cleaning chores like these can result in more cash in your life. What’s not to love?

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Financial Freedom

Ray’s Take We have been trying to move away from using the word “retirement” and instead focus on achieving “financial freedom.” But have you ever asked yourself what financial freedom is? 

It may have a different meaning to you than to your friends or your spouse. There are bound to be many opinions and some disagreement, even with a spouse or other family member.

In other words, there are many routes to financial freedom and many pictures of what financial freedom looks like.

The first step to financial freedom for a couple is to have a discussion with your spouse and family about what financial freedom means to each of you. It’s difficult to create a plan to get to your destination if you aren’t working toward the same point.

Does financial freedom mean no required work with no debt at all? Or is some debt OK? And if so, what debt? Mortgage? This knowledge can free you. It may include supporting your favorite causes with time, money or both. With a plan, you won’t be wondering if what you’re doing is “right” or “wrong.” In most cases, there is no right or wrong answer – it will depend on your situation.

People often view financial freedom as an enormous task that requires years of saving and investing while concentrating on that distant goal of retirement. It’s important to plan for that day, but it’s also important to enjoy life as you work toward that goal. Financial freedom doesn’t need to wait until retirement; it’s much more beneficial to focus on each victory along the way. That balance can be financial freedom right now.

Have that discussion and put your feet on the road to your destination. It’s up to you to define financial freedom for yourself – and then to create a plan that will help you methodically reach that goal. A financial planner can help you set up the plan to take you there. 

Dana’s Take I might define post-retirement financial freedom as having no worries about money, living in pleasant surroundings with reliable transportation and being able to pay my health care expenses. Plus having the liquidity to travel often and eat out a few times a week. But, is that doable?

In my mind, the key to achieving that freedom is keeping overhead manageable, post-retirement. Hitting that mark does not necessarily require a huge nest egg. Finding a super-affordable rental or sharing a home could drop expenses a lot. I’m surprised that more senior adults don’t share a home. Even if installing a second kitchen were required, the savings might justify the remodel. 

Think about your definition of financial freedom and brainstorm creative ways to get there.

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The Optimal Retirement Age

Ray’s Take Most of us say we want to do it – retire, that is. Given that, how do we find that perfect time to do it? Retirement at the optimal age isn’t something to be left to chance; it is something that needs to be a rational decision that takes into consideration a variety of variables. Financial variables include how much income you’ll be receiving from all sources and factoring in life expectancy and health issues. Emotional variables include considering that your spouse may have taken you for better or worse, but not for lunch.

Choosing the right retirement age is a trade-off between time and money. The traditional retirement age of 65 was chosen when most people didn’t live much past 70, so clearly the math has changed.

Many people would like to retire early but are unsure if they can afford to. Numerous retirement-planning events are triggered at specific ages, such as when you can begin drawing on Social Security or when you are required to take IRA distributions. These need to be factored into your decision along with health insurance options. Consider if retiring early leaves a gap in health insurance coverage.

A harsh reality of the globally competitive world in which we live is that the notion of lifetime employment is increasingly unlikely. Employment, like retirement, will be considered in phases. An “all or none” approach to either one won’t be an option for more and more people. Most people will need to consider working longer to accumulate additional funds for the extended life expectancies we are enjoying.

Finding the right balance is hard. Careers and skill sets will need to evolve. Retirement plans will be like the flight plan for Apollo 13 – scrapped and rewritten as conditions change. Meeting with a financial planner to discuss your options is a good step in the right direction, then buckle up!

Dana’s Take Assuming steady employment with your current employer until the age you choose may be wishful thinking. Ray and I have a college-educated friend who was laid off from his job at age 50. Was that his financial plan? Not even close. 

Saving more into an emergency fund and maxing out retirement savings while fully employed might pay off big if blindsided by an employment gap. 

One area where most of us could cut costs is in extravagant spending on our kids and teens. If your teen’s not working, particularly in the summer, your emergency fund needs that money more than your teen needs to work on his tan. (When did travel “experiences” replace cutting yards in the summer?) 

Include contingencies for employment gaps in your retirement plan. Then, if all goes well, retire early and splurge a little. 

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Target-Date Funds and Taxes

Ray’s Take Target-date funds are mutual funds that contain a collection of other mutual funds that are designed to invest aggressively at the beginning and, over a long time horizon, move money into progressively more conservative holdings as the target date approaches.

These type of funds have become very popular in recent years in company-sponsored retirement plans. They’re a kind of ‘set it and forget it’ retirement savings vehicle. The fund should adjust itself to meet your time horizon. These plans may be a good choice inside a tax-deferred plan, but outside of that the consequences are different.

A tax-deferred plan, like a company-sponsored 401(k), does exactly what it says – defers any taxes on the funds until withdrawal. But if these type of accounts are held outside of a tax-deferred plan, the tax hit at the end of the year may come as an unpleasant surprise.

Because of the integrated strategy in a target-date fund, current holdings must be periodically sold and new ones that are less aggressive in nature must be purchased. This means that investors in these funds in taxable accounts will be hit with capital gains/losses when the fund exercises its reallocation procedure, as well as when positions within a given fund are sold and gains are realized.

Additionally, investors will have to pay taxes on any gains/losses, dividends or interest income generated from the fund that year. These are over and above any gains/losses generated by the reallocation procedure. 

Target-date funds can provide automated investment management for those who don’t want to actively manage their portfolios, but their taxability might make them a less-effective choice to hold outside an employer-sponsored retirement plan.

Having said all of that, it is still better to invest than not. Further, no one ever went broke making a profit.

Dana’s Take Target dates can be a good thing when it comes to what you want to do with your life, such as purchasing your first home by the age of 30, or getting that dream job by 25. Targets like these give you a time frame that can help motivate you to reach those goals since you know there are steps you have to take to meet that target date. 

Along with target dates, add photos to your visions. Whether you call it the laws of attraction, vision boards, or simply prayer, committing your dreams to positive thoughts and images can help move those dreams toward reality. 

Before I met Ray, I wrote a list on an index card of the traits I would like to find in a partner. Within a month, I met had Ray and checked off every item. A coincidence? Perhaps. 

Target the life you want and achieve it. 

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Retirement Planning Illusions

Ray’s Take By its nature, retirement planning requires making plans without being able to know the future. When it comes to retirement planning, there’s no shortage of conventional wisdom.

According to an Employee Benefits Research Institute 2013 Retirement Confidence Survey, despite roughly half of retirees finding they actually spend as much or more in the early stages of retirement than they did before they retired, only 11 percent of current workers expect to spend more in retirement, with nearly 60 percent expecting to spend less. 

There’s that conventional wisdom at work here – assumptions that may not hold true for everyone.

First there’s the conventional wisdom that you’ll only need 70 to 80 percent of your pre-retirement income. It is true that work-related costs go away when you retire, but other expenses can move into that slot, particularly health care costs. Even if you wait until age 65, Medicare doesn’t cover everything. Freed from the limits of work schedules, most people find time to spend more money, not less, especially with travel.

Another assumption is that you’ll be in a lower tax bracket when you retire. You may find that taxable portfolio income, retirement account distributions, pensions (if you have one) and Social Security income could combine to keep you in the same, or perhaps a higher, tax bracket. 

Unless you have a crystal ball, it’s better to really run the numbers on where your retirement income will come from and estimate the tax liability. Taxable distributions in nonqualified portfolios are still taxable even if you’re reinvesting them. The IRS doesn’t care whether or not you are spending them.

No other factor comes close to helping you achieve retirement success as the amount that you’re able to save. Financial planning advice is generally focused on helping you understand the likely outcomes of your financial choices, and a financial planner can assist you with looking at the variables of your individual needs and goals to create a plan that will serve you well.

Dana’s Take Conventional wisdom comes from a generally accepted principle and is often passed down in families from generation to generation. 

Ray’s father, E. Denby Brandon Jr., and his grandfather, E. Denby Brandon Sr., had a number of favorite aphorisms. Senior liked to say, “Just take one stoplight at a time,” meaning don’t tackle every problem at once. Junior’s favorite was probably, “It’s bad to be old and broke,” and he dedicated his career to preventing that outcome. 

Other maxims regarding finances included, “Anyone who says money doesn’t matter, usually has lots of it,” and, “Money can’t buy happiness but it allows you to look for it in some interesting places.” Ray likes to remind us “not to mistake luck for smarts.” Lastly, Denby Jr. advised, “It’s easier to not spend money than it is to earn it.” 

What conventional wisdom did your parents and grandparents share? If it still rings true, pass it on. 

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Growth Funds for Tax Efficiency

Ray’s Take When it comes to real return, it’s not what you make, but what you keep after taxes and inflation that counts. 

Being mindful of taxes is more important than ever. Tax-efficiency in taxable portfolios is imperative, whether they’re pre-retirement accumulation accounts or retirement distribution portfolios. It’s incumbent upon investors to understand the tax implications for the various funds in their portfolios to plan the best strategy for their retirement.

Tax-efficient funds generate fewer dividends or capital gains. So you will want to find mutual fund types that do this if you want to minimize taxes. One way to accomplish this is using growth funds. 

These companies typically reinvest their profits back into the company to grow it rather than paying dividends. Hence, the name “growth fund.” Managers of these funds prefer longer holding periods allowing for fewer capital gain distributions. So a mutual fund with a growth objective tends to be more tax-efficient. 

Growth funds are typically long-term investment vehicles and vary widely in their risk forecast. Over the long term, returns tend to be higher but much more volatile. Gains from growth funds come from an increase in stock prices over time.

Diversifying by tax treatment can be especially important if you’re uncertain about the tax bracket you’ll be in down the road. Utilizing a tax-efficient strategy is a component of building that diversity.

Having said all of that, you don’t want to let the tax tail wag the dog. Remember that your objective is to increase your wealth after taxes and inflation. Tax codes come and go just like congressmen. Predicting future tax rates is speculative at best. Unless you have a crystal ball, it’s best to cover a variety of tax treatments in addition to investments. 

Dana’s Take Long-term goals for parents tend to focus a lot on their kids – such as getting them the best education possible, as well as helping them get a good start in life as adults and leaving them a little something after we’re gone. So efficiency is something that works in a lot of different aspects when planning for those events.

What does efficiency look like when planning for your kids? Like any good strategy, plan early for best results. That way, when life takes an unexpected turn, you’ll be able to reassess better.

Take the time to look around you, to gauge your kids’ interests, and where they may lead, to give you a direction to start. Success is built over the long term and starting with an efficiently built foundation makes for a strong platform to build out.

Do you want your days to have a plain brick wall or a cathedral? Make the future happen, don’t let it happen by accident.

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After Losing a Loved One

Ray’s Take The loss of a loved one can shatter your life. As you adjust to not having that person as a part of your world any longer, the painful grieving process can feel never-ending. 

Coping with death is never easy, and facing the mountain of things that need to be handled while dealing with that grief can feel overwhelming. Many people are unprepared to deal with navigating all the laws and requirements surrounding someone’s passing. 

As a first step, you should locate all documents needed to sort things out, including insurance policies, deeds, stock and bond certificates, retirement plans, and bank and brokerage statements. After a death occurs, many legal issues arise which need addressing. Some of them include, but are not limited to: dealing with creditors; locating and probating a last will and testament; handling estate taxes; property transfers and last wishes.

After a loved one passes away, there is a lot more to do than just prepare a final income tax return. It can take a year or longer after your loved one dies before you start feeling emotionally ready to take on major lifestyle decisions. That’s why it’s OK, actually preferable, to wait until you’re closer to ready before you make any financial decisions that aren’t imperative. However, address anything imperative right away, such as changes in tax status and beneficiary designations and re-titling jointly owned assets. 

Settling the estate means safeguarding your loved one’s property during the administration process, paying debts and taxes, and distributing the assets of the estate to those who are entitled to receive it. An experienced financial planner and/or an estate attorney can help you navigate the complex tasks.


Dana’s Take Having recently lost a patriarch in our family, I have been floored to see the quantity of estate-, insurance- and tax-related work required. Add a family business with a transfer of ownership, and the volume becomes staggering. This work can go on for up to a year or more. The surviving spouse is left responsible for complex financial and tax matters. Further, his or her will must be updated after the loss to reflect new powers of attorney and more.

In a family of certified financial planners, you just call one of your sons to handle the mail, trips to the safe deposit box, scheduling with attorneys and so on. Otherwise, be sure that the surviving spouse or beneficiary retains a financial planner, estate attorney or tax attorney. The loss is overwhelming and detailed business matters may get overlooked in the grieving process. 

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Keeping Your Information Private (and Safe)

Ray’s Take We live in an increasingly online world. You can trade stocks, buy groceries, pay bills or order a ride, all on your computer or smartphone. Almost any financial transaction you need to make can be done in the comfort of your own home. With identity theft posing a real threat, keeping financial data private requires that consumers be proactive in the way they approach online security.

Your credit report is your window into your ID security. The Fair and Accurate Credit Transaction Act, passed by the federal government in 2003, mandates that each of the major credit bureaus supply consumers with a free copy of their credit report each year. This report is an excellent tool to see what’s going on with your personal information. But a lot can happen in a year.

Keeping your network secure is another great tool to protect yourself. If you have a wireless network, make sure you keep it secure. A hacker can gain access to anything you do over an unsecured network in a matter of seconds. Purchasing a protection program for your computer is a great investment.

Lock your smartphone. A smartphone is a mini computer that carries access to all your personal information if you use it to make purchases or do online banking with it. Just like securing your home computer, you should secure your phone. Checking to see what has been charged to your credit or debit card should be a daily ritual. The sooner you catch it, the less damage done.

You can also protect yourself offline by limiting what you carry. When you go out, take only the identification, credit and debit cards you need, and make sure you have a physical copy of all debit, credit and loyalty cards in case they get stolen.

Identity theft is a significant risk that affects the lives (and credit scores) of millions of people each year. Taking just a few extra precautions can help protect you from being another statistic.

Dana’s Take I recently recorded my fingerprint online for “security” purposes. Later, I reflected that I had just sent my fingerprint over the internet. Could someone copy it and claim to be me? Possibly. Did I feel like a fool? Absolutely.

Being safe with your personal information is a big issue today, especially with the ease of shopping online. Make sure that any online store you use either has “https” at the beginning of the web address or displays a closed padlock symbol.

Be wary of any public Wi-Fi connection, like those offered at coffee shops or libraries. They carry extra risks since they aren’t private.

Many online merchants ask you to store information, like mailing address and credit card information, for the sake of convenience. Given the number of data breaches that have occurred at major retailers, this may not be the best choice. The benefit of this convenience is far outweighed by the inconvenience of having your identity stolen.

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What’s Wrong With the 4 Percent Strategy?

Ray’s Take: When you finally reach your retirement date, one of your first questions will be: How much of my savings can I spend?

The seat-of-the-pants guideline for retirement withdrawals has been 4 percent for many years. That’s all well and good when 10-year treasuries were yielding 6 percent. Now they are under 2.5 percent so that approach and the rule are less clear. Retirement readiness is too complex to be bound by a simple rule of thumb. Further, that rule doesn’t necessarily take into account investment expenses.

Americans are living longer after retirement, which means savings have to last longer. Pensions are increasingly rare. Like the sequence of investment returns, retirement spending follows an irregular pattern. Retirees are commonly spending more money during the earlier years of retirement. This is intuitive as you suddenly have the time to do more things and feel like doing them. As the years pass these types of expenses tail off as you age and tend to lose interest in traveling or just become less energetic. Later in your retirement years the cost of medical care might increase.

You should strive to strike a balance between spending too much money early on and being broke later. Staying flexible and reviewing your plan annually can go a long way toward maintaining the retirement lifestyle you worked for. Better portfolio performance years should be followed by nicer trips while bear markets call for more austerity.

You need to take into account your health, your family’s history of longevity, variable rates of return, your risk tolerance and your goals, including the financial legacy you may want to leave.

The truth is that using the right withdrawal rate year after year is a lot more complicated than applying a simple rule of thumb. Everyone’s situation is different. Sustainable withdrawal rates are very closely related to the risk and returns provided by the underlying investment portfolio. 

Work with a financial adviser who is familiar with using all the tools available for building a retirement-income plan. You’ll thank yourself when you’re older, and you’ll be able to enjoy retirement with more peace of mind.

Dana’s Take: Sometimes the best advice is the simplest. After all, if it wasn’t short and sweet, “stop, drop and roll” probably wouldn’t do much for someone on fire. In the same way, financial rules of thumb are useful to many of us when making big decisions.

Simplicity is good. It helps us to keep things in order in our lives because we use these axioms to make decisions that take us along the road towards our goals, both financial and personal. Rules like don’t spend more than one-third of your income on your mortgage or more than two months’ salary on an engagement ring. These rules give us a starting point from which we can make decisions based on our own circumstances.  

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