Ray Brandon is a certified financial planner and CEO of Brandon Financial Planning (brandonplanning.com). His wife, Dana, has a bachelor’s degree in finance and is a licensed clinical social worker. Contact Ray Brandon at raybrandon@brandonplanning.com.

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 glassdoor.com 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 dictionary.com, 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="http://www.memphisdailynews.com/Search/Search.aspx?redir=1&fn=Will&lnRogers" 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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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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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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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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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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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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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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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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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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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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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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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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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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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 (tnreconnect.gov) 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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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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Keep Your Finances on Track

Ray’s Take Not being careful about precisely where your money is going can leave you struggling to pay for necessities like groceries now and retirement later. Taking just a small amount of time to do some tasks now can lead to big financial wins all year long – and into the future.

Two of the best moves are to meet with a financial planner and set up a budget. These go hand in hand and get you on the right road to financial security. Financial choices become much easier once you have a clear vision of where you’re going and when you want to get there.

The budget seems to have a negative connotation for many people as most focus on the limits it seems to place on them. I think just the opposite. Budgets can be built with plenty of flexibility. More importantly, sticking with them is freeing in more ways than most imagine. They can free you to quit work some day and do whatever you want to do. They can allow you to provide the gift of education to your children. Money is a very good servant but a terrible master. Budgets allow you to take charge.

An airplane flying from New York to Los Angeles is off course multiple times on the trip. They use regular course corrects along the way to get back on track. That’s where your planner comes in. Regular annual reviews help your plan deal with the curves that life and the capital markets have on things. 

Don’t kid yourself that your planner has a crystal ball on the markets and interest rates. All of those projections and graphs can be changed in the blink of an eye. If you don’t roll up your sleeves and get back on track, days can turn into years, making it many times harder to get where you want to go.

Seeking out and using a good financial planner can help you make small adjustments that will have a big impact.

Dana’s Take John D. Rockefeller famously carried a pocket notebook where he recorded his expenses. My grandmother, likewise, kept a notebook of daily expenses. This Depression-era practice may be due for a revival.

Staying on top of your personal finances can be challenging, tedious and even discouraging, but for most people, this process is a necessary evil. 

Make it easier for yourself by having a system for recording everything you spend. It doesn’t matter if we use something as simple as a pocket notebook, an Excel spreadsheet, or something more complex like a computer program that categorizes and keeps a running tab. 

Having something in place that gives you a picture at a glance is a great way to alert you to how and where you are spending your money so you can make adjustments. It’s your money – there’s no sense in lying to yourself about how much you’re spending.

Create a system, even if it’s a pocket notebook. The most important part of keeping track of your finances is consistency.  

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Midlife Insurance Audit

Ray’s Take Owning the right type of insurance policies at the right price at the right time of your life is a crucial element to your financial planning. Preparing for retirement is a particularly important time to do a full risk management evaluation, as you may no longer need some types of coverage you’ve had for years. You might be overpaying for others or might be inadvertently underinsured against some potential risks.

Some things to think about might include determining whether your current insurance policies can be used to help supplement retirement income. Can they be used for legacy and estate planning purposes? Can they be used to cover final expenses like outstanding medical bills, funeral and estate-settling costs, outstanding debts, mortgage balance and college costs? 

The estate and gift-tax exemption for 2017 is $5.49 million (that’s $10.98 million for a married couple), so the universe of people who need life insurance for estate taxes has gotten a bit smaller. If you haven’t self-insured your need for life insurance, you should reconsider your ability to retire.

Health insurance needs go up at this point however. That “early” retirement looks good on paper until you check on health insurance eligibility and cost until you are eligible for Medicare. Even after Medicare, many should consider supplements. The cost of long-term care must be evaluated. While many can afford to self-insure this risk, others cannot, or they have in their financial plan a desire to pass along their hard-earned wealth to their heirs.

Liability protection needs have gone up as well, since protecting your wealth has become pretty important at this point. Once you retire, you will probably not want to have to go back to work.

Dana’s Take A close friend just filed for divorce, buried her father and watched her only child move to another city. She’s feeling pretty lost, but I have faith that her midlife reboot will lead in exciting new directions. 

A midlife financial review is a great thing, but it’s not the only review we should be doing. It’s a perfect time to review all aspects of our lives. Midlife can be a stressful time, and many people feel discontented and restless as they struggle with aging and their sense of purpose in life. 

Are you where we want to be? Are you where you envisioned yourself at this point? And if not, how can you make it happen? The key to a happy fulfilled life is to have a range of goals in different areas of life, from health and fitness to money, to friends and family, to personal development. Maybe it’s time to start that hobby you’ve always dreamed of doing. Or, if you’ve already begun, take it to the next step. How about a small business that you’ll enjoy all the way into retirement, with the bonus of an additional income stream?

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Overestimate Health Care Costs for a Healthier Retirement Budget

Ray’s Take It’s not news that health care costs are increasing. Whether you’re just in the planning stages or you’ve already left the workforce, estimating your health care needs is a major cost to consider during retirement. According to Fidelity, a 65-year-old couple that retired in 2015 will need $245,000 to cover future medical costs – not including the cost of long-term care. And yes, that’s with Medicare. Many workers and retirees are totally unprepared for this cost, which can completely wipe out their savings and retirement plans.

Most people, especially healthy ones, will underestimate the potential cost of health care, which can be financially devastating. Don’t assume just because you’re healthy now that you will continue to be throughout retirement.

Most people don’t realize Medicare covers much less than traditional employer plans. People who are near retirement routinely and wildly overestimate the percentage of health care costs covered by Medicare. It covers only 51 percent of health care services, according to the Employee Benefit Research Institute.

Then there’s the issue of long-term care insurance. Various studies estimate that the percentage of people who reach 65 that will need long-term care is 30 to 50 percent. Are you going to pay for that out of your current assets or are you going to get a long-term care policy? While cost is certainly a factor in not buying long-term care insurance, another reason is that many people simply don’t want to think about something as unpleasant as ending their days not being in control of their own lives. Some think they can throw the risk on Medicaid. Go visit one of those facilities before you decide. 

Regardless of the approach you take in planning for health care after retirement, doing some research and consulting a professional planner can help you create a plan that works for you. The harsh, cold truth is that money buys options. And the more options the better.

Dana’s Take According to a 2014 study published in Psychological Science magazine, having a sense of purpose can add years to our lives. Why? Having purpose after retirement brings all those other good things into our lives, like mental stimulation, movement, socialization and even sunshine. Those healthy bonuses can prolong independence and save retirement dollars spent on ill health.

If you can’t find your purpose, think of your elders when you were growing up. What kept them going? Was it work, grandchildren, a garden, a hobby or sport, travel, or a faith-based project or cause? What keeps your peers going? Ask to sit in on a friend’s activities. Try on a few projects to find one that fits. 

Health is wealth. Especially in retirement.

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Retirement Spending Budget

Ray’s Take How much you spend from your retirement savings from year to year is arguably the most important piece in the retirement finance puzzle.

Before developing your spending strategy, you should understand an important overarching philosophy: You can’t control financial market fluctuations. You can only control how much risk you take, how much you spend and how to adapt. When you stay invested during retirement, there will be times when market volatility makes it feel like you’ve lost control. Maintaining a plan can help rein in this feeling.

Budgeting is a lifestyle. Like any other habit that is good for you, the more you practice it, the better you get at it. The most difficult part is getting started. But rest assured, it will become easier over time.

In retirement, things keep getting more and more expensive. Some of the items you buy each day will cost more based on the regular inflation rate. But other things, like health care, long-term care and major household repairs can increase significantly each year. Planning and saving are the best ways to prepare for these expenses.

Few people plan their monthly expenses. Worse, many people guess and are off by thousands of dollars. Additionally, people tend to think they will spend less in retirement, when they will probably spend even more, especially during the early phase. One of the best approaches to the process is to plan three different budgets. One for average years. One for “bonus” years when everything goes right. One for the “lean” years when nothing does. 

Don’t wait until after you’ve retired to deal with changes to your financial circumstances. One helpful way to estimate expenses in advance is to review bank account statements for two years. This way you will catch one-off expenses and gift expenses – two things many retirees don’t think to include when planning their budget. With respect to retirement planning, you need to know what is going out the door each year. 

Dana’s Take My mother is a great example of living well post-retirement on a fraction of her working-life income. What’s her secret? Besides great health, an adventurous spirit (and a younger boyfriend), she keeps her monthly overhead low so she has more cash flow left for travel and discretionary spending. 

Years ago, my mom gave up a suburban house for a two-bedroom, two-bathroom apartment in town. Does one person need much more than that? Also, she’s kept the same car for 10 years or more. As a result of keeping her monthly expenses down, she has taken her grandchildren on trips in the U.S. and abroad, taken European cruises, driven across France and has more trips in the works. 

Living within your means post-retirement is crucial, but living well within your means is even better. 

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Exercise Care When Taking Distributions

Ray’s Take With few exceptions, the IRS requires that investors in traditional tax-deferred accounts begin to draw them down when they reach age 70 1/2. Most people are inclined to think about required minimum distributions (RMDs) once they start having to take them. It’s a good idea to start some projections well in advance of that deadline. If you miss the deadline, the IRS will access a penalty of 50 percent of the amount you should have taken. 

Bracket management is the key here as you put together the pieces of your retirement income puzzle. Juggled in the mix is when to take Social Security benefits and any other pension income along with the size and allocation of your nonqualified investments. If all of those pieces are more than sufficient for your lifestyle, you can consider distribution to your future heirs and charitable beneficiaries.

RMDs have been a planning challenge since the law that created the requirement was passed. Objections revolve around two aspects of the law. First, people don’t like being told when they have to take – and pay taxes on – their money. Second, the rules are so complicated they almost invite noncompliance.

If you don’t currently need the income from your RMD to help cover your retirement expenses, you can reinvest the distribution in one of your taxable accounts to cover future unanticipated expenses, but you still have to pay the taxes. And the tax rate for distributions from qualified plans is your ordinary rate even if it came as a qualified dividend or long-term capital gain.

When choosing how to invest the funds, remember to choose an investment mix that reflects your financial situation, time horizon, and risk tolerance. The chances of one spouse living well into their 90s is north of 40 percent. Invest accordingly. There’s no reason to upset all your careful pre-retirement planning decisions – unless there has been a significant change in your circumstances that needs to be addressed.

Whichever strategy applies to you, RMDs are likely to play an important role in your finances in retirement.

Dana’s Take It’s important to be careful with how we handle our money to make it last comfortably throughout our retirement. Paying attention to returns on funds is smart. 

Another way of being careful and making retirement funds last is to pay close attention to other aspects of our lives that affect expenditures. This means making smart choices for your body, mind and spirit. 

Loneliness is now considered a health risk for seniors. I recently read that lacking social connections is as harmful to our health as smoking 15 cigarettes a day. Who knew? 

“Use it or lose it” applies to more than money. To a large extent, aging well is in your own hands. The decisions you make, your habits and your lifestyle all affect your senior years – and how far your retirement funds will stretch.

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Create a Cash Flow Plan With Taxes in Mind

Ray’s Take When you head out the door on the last day of your job, you want to know that you've made a solid plan to take care of finances during your retirement years. And, even though that regular paycheck from your employer is out of the picture, Uncle Sam will still want his share of your money. Understanding the tax repercussions of distributions from various retirement vehicles and planning accordingly ahead of time can help you be more tax efficient in your planning.

The time to create a cash flow plan that will meet your needs in retirement is well in advance of that last day. Understanding the resources that you have available to meet your retirement goals is the first step in determining your retirement cash flow. 

The second step is to assess and manage the tax efficiency of the income you are collecting. This will help minimize the amount of income taxes you pay both now and down the road. All income is not created equally, and ultimately it’s not what you make but what you keep that matters. Capital gains and qualified dividends are taxed at lower rates in your non-qualified portfolio, but that doesn’t matter when they come from your qualified plan – all distributions are treated as ordinary income.

It is tempting to keep deferring qualified plan distributions as long as possible, but doing so can really bump up required minimum distributions later on. So a little “bracket management” can be useful. Finally, it’s important to remember that tax rates come and go, just like the politicians who write the laws. Don’t bet the farm that a given tax code will be in place forever. No one has a crystal ball. 

It’s important to spend some time understanding all your accounts, their tax status, distribution requirements and your options for handling them. Find a tax professional to ensure you are meeting the IRS requirements – and to help avoid a costly tax mistake.

Dana’s Take I like to think that between YouTube and a Google search I can figure out how to do-it-myself for just about anything. Retirement planning, unfortunately, with its tax and survival consequences, is not one those topics. 

The most important thing to keep in mind when planning for retirement, and preparing to spend your savings during retirement, is that your plan is a roadmap that should be put in place and updated on a regular basis. When you retire, you will have more time. So why not take the time to do things that will save you the thing you likely have less of – money. Nothing is set in stone, but with a solid plan you are putting yourself in a position of success.

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Incorporate Life Planning in Your Financial Plan

Ray’s Take You may already devote considerable attention to the financial side of retirement planning: how much to save, how to invest, different ways of turning your nest egg into a reliable retirement income, etc. But have you given thought to retirement lifestyle planning?

If your goal is to quit work, still be able to pay the bills, take a few trips each year and indulge in your favorite hobby, that’s one type of planning. But, if your goal is to trade in your current career for something you’ve dreamed of doing, like turning your hobby into a small business, that’s another type of planning entirely. Instead of asking, “How much do I need to save,” you need to ask, “How am I willing to change my lifestyle in order to achieve my goal?”

Will a smaller house, less-expensive car or fewer high-priced vacations help you create the life you want for yourself? It’s all about deciding what life you want to live now and in the future and merging those two images to find the point at which you can make both a reality. It is nothing short of creating a new identity.

Once you have that image, it’s more about the mechanics of orchestrating a transition than it is about just saving a certain amount of money or earning a certain rate of return on your investments. Just as each person has his or her own definition of happiness, the decision to pursue a lifestyle change is highly personal. It should be expected that the process will cause some friction between spouses. It can involve enormous upheaval, but it can also result in enormous satisfaction.

Prior to taking the leap, you should carefully examine your motivation and your financial resources. Then all you have to do is come up with the plan that will get you there. A financial planner can help you put the pieces together.

Dana’s Take Baby boomers are changing the face of retirement, so the concept of lifestyle planning isn’t surprising. And it’s vitally important that they have a plan in place for their second act. With all the improvement on the medical front, boomers are reaching the traditional retirement age in better health and with a lot more energy than previous generations. 

For boomers, the concept of a life of full-time leisure or full-time work is being rejected. A happy retirement consists of integrating work, play and volunteer activities. Today’s retirees are the new guinea pigs. As they shift away from the notion of working like crazy for 40 years and goofing around for 20, they are creating the new “normal” of a blend between learning, working and leisure.

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Retirement Budget Busters

Ray’s Take When you’re working, emergencies seem to happen fairly regularly. Whether it’s a new roof or a special vacation, they come up. If there’s not enough money in the emergency fund, you can always adjust the plan – earn a little extra, delay retirement, etc. But after you retire, there’s not as much margin for error. 

Even retirees who have checked off all the boxes on the financial “to do” list before leaving the workforce can be surprised at how challenging it can be to balance a monthly budget. One thing after another conspires to undermine carefully created plans, leading to a level of unwelcomed anxiety.

Your first line of defense is margin for surprises in your budget. If everything has to go perfectly for the budget to work, you’re sunk before you even start. 

Next you should review the larger budget items. If you’re still servicing much debt, you should consider delaying retirement. Those fixed items are merciless. What are your hobbies? Some are much less expensive than others. How expensive your favorite pastime is will have a big impact on your monthly budget. Once you retire, you may start spending more time on your hobby than you originally projected, leading to higher expenditures. 

What about those travel plans you made? Traveling in retirement has become a cliché. Every retirement commercial seems to feature happy couples lying on a beach or dancing on a cruise ship. All that travel can cost you – and the farther you go, the pricier it gets. It doesn’t mean you can’t travel. But you do need to consider the cost of travel in your retirement budget. 

Look at how you are spending money on children and grandchildren. Help them out as long as you aren’t hurting your own finances. Think ice cream cones, not the latest tech gadget. It’s one thing if you have unlimited resources, but if you’re on a strict monthly budget, you need to be cautious. 

Finally, learn to say “no.” That one skill can go a long way to keep a retirement happy. 

Dana’s Take If you have warm feelings toward a grandparent, I doubt it’s because they spent a lot of money entertaining you. It’s more likely that your special grandparent made you feel special by spending time with you.

It’s a shame that grandparents sometimes believe their families look to them to splurge on trips, tuition and gifts. A grandparent’s very existence in a child’s life is a tremendous gift. 

Paying attention to a grandchild may be even more valuable than paying for a trip to Disney World. Plan a special time with each grandchild. If you’re not close enough for a walk or playtime, plan a weekly call, a letter or even a FaceTime chat.  

Measure your legacy by how much time, rather than dollars, you give your grands. 

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Saving More – Can It Be Done?

Ray’s Take When you’re busy focusing on living your life, it’s easy to fall into spending habits that aren’t exactly consistent with your long-term goals. Marketing departments hire some very smart people who can get you to buy things that you didn’t even know you wanted!

A full review of your financial plan is something that you should schedule every year. And part of your annual financial planning should always be figuring out if you are on track for your priorities. If you’re not, it’s time to see whether there are places in your life where you could save more money than you were able to save over the past 12 months.

Apply those savings to your retirement or college fund, use them to pay down existing debt, or put them into an emergency fund. Your plan should also include identifying ways you may be able to save even more in coming years.

Check out the current mortgage rate to see if it’s in your best interest to refinance. And, if it is, redirect the savings into your new plan. The same applies to other debts. Review your car and homeowners insurance. Simply getting alternate bids may be enough. Are you over-insured? Cable/satellite bills are usually an easy target. If you’re well on your way to being self-insured through retirement investments, life insurance should be reviewed for both need and cost.

Reviewing your utility usage can lead to simple changes that add up over time. If you love technology, check out Google and Apple Home apps, but you don’t have to be an expert to adjust your thermostat a few degrees and change a few light bulbs. Avoid the “it just doesn’t make that big a difference” mentality.

An honest accounting of where your money goes can lead to positive results, and a few small changes could mean substantial savings down the road. You can save money without turning yourself into a miser.

Dana’s Take The world we live in has become one of credit cards, internet banking and online shopping. And because of this, kids rarely see people buying anything with physical money like notes and coins.

Not seeing money used for buying and bill paying makes it harder for kids to get their heads around what things cost. They might see this invisible money as an unlimited resource rather than actual money coming into and out of their parent’s bank accounts.

Talk to your kids about expenses to help make this invisible money real. When you use a debit or credit card to buy something, make sure they understand that there has to be real funds out there somewhere, in your name, in order for the purchase to take place. That way they’ll have a more realistic view of money and how it works.

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2016 – What Can We Learn From the Big Events?

Ray’s Take One of the most important disciplines in financial planning is the annual review. A time to look at what worked, what didn’t, what needs adjusting and what we learned. As we look back on 2016, we can learn some financial lessons from the big events of the year.

Gatlinburg. We all, locally and nationally, watched in horror as the fires took lives and devastated homes and businesses. Our lesson here is to be prepared financially for emergencies. Hopefully, none of us will experience this level of loss, but no one can predict the future. Having insurance and reserves in place to take care of some of the material losses is one less thing to worry about when the unexpected does happen.

Stock market. It started the year off low, leading many experts to make dark predictions. And yet, by the end of 2016, the Dow was substantially higher and near its highest levels in history. What lesson can we take from this? Don’t panic. Play the long game. No one can consistently time the market. Allowing emotion to take over can negatively impact your investments.

Another big headline making event was the Zika virus. A virus with devastating effects that seemed poised to spread across the U.S. at one point. What does a health scare have to do with financial lessons? It’s a good example of how important health is to us. When we take care of our health, we can avoid, delay, or at least mitigate, many medical issues that come with age and lead to big costs. Health insurance is a must, even if you’re in perfect shape. If a problem were to arise, you can rest assured that you’re covered and your financial goals won’t be derailed.

A financial adviser can help you look beyond conventional wisdom and manage your money in a way that works for you. The world changes quickly. It takes discipline and patience to achieve your goals.

Dana’s Take With the end of Christmas shopping and the beginning of a new year, I have to ask myself, “Where did all that money go?” The good news is that it’s a new year and January is a good time to reflect on financial successes of the past year. Did your 401(k) grow? Congratulations. Did you set up automated savings from your paycheck? Pat yourself on the back. Are credit card balances shrinking? Way to go. Did you set aside money all year for a future purchase or vacation before committing? Yay, you.

January is also a great time to correct course on any financial wrong turns of the year. Change is always possible and with financial stability comes peace of mind. Every tiny change can help. When the habits improve, the finances follow.

Make 2017 your financial best.

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Fixed Costs: Overhead That May Be Costing You Too Much

Ray’s Take There’s an old cash flow joke about having too much month at the end of the money. It’s usually more a function of spending than earning. For most people there’s a lot more control over the expenditures side of the equation than there is over the income – at least in the short run. So cutting how much you spend on extras sounds great. But how much of your spending can really be reduced or eliminated? Too much “overhead” can result in disaster.

To get a realistic picture of your fixed expenses, write them down – all of them. A visual is always a good way to look for overages. The list should include mortgage payments, car payments, insurance, cellphone, etc. Consider anything that is a regular use of funds. Most people will have a very similar list, but remember that some expenses that qualify as fixed for some people may be non-fixed, or variable, for you. For example, the cellphone bill is often considered a fixed expense. It’s true that everyone needs a phone, but the level of add-ons can be reviewed to reduce or even eliminate some costs.

Autopay is an increasingly popular option for monthly bills. It’s a great convenience, but it doesn’t give you the visual big picture the way sitting down, writing a check and balancing the checkbook does. It’s a good idea to review your banking online regularly if you handle bills this way. That health club that you may not use can stay on autopay for a long time. This is a great way to see where you can cut or reduce some of your current fixed expenses. Do you really need that extra movie channel on your satellite package? How about planning a way to pay off a fixed expense like a car loan to eliminate it from your monthly expenses?

On the other hand, if you are on track to meet your financial goals for retirement, education, etc., and want to splurge on those extras, by all means do so. Life is about balance.

Dana’s Take A new type of overhead is digital overhead. By that I mean monthly billing for digital access to music or entertainment (Spotify or Netflix), and even academic resources like Gradesaver. Millennials are particularly vulnerable to the appeal of these services.

Although each item seems small, usually around $10 a month, a few services each month add up fast. The good news is that these services are usually easy to cancel.

The convenience of digital services is nice, but if they don’t match up to actual cash flow, consider unplugging from digital overhead.

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Taxable or Tax-Deferred?

Ray’s Take Tax planning is an essential part of any budgeting or investment management decision. Generally there are two types of accounts to consider: taxable and tax-deferred. But which one will work best for you? The answer is usually both, but there are definite strategies to consider when choosing.

Tax-deferred accounts allow for immediate tax deductions to be realized on the full amount of the contribution. Future withdrawals from these accounts will be taxed. Because of their nature, tax-deferred accounts will provide the greatest benefit when they shelter investments that generate frequent cash flow or distributions that would otherwise be taxable. This allows these payments to remain whole and be reinvested most efficiently. 

The immediate advantage of paying less tax in the current year provides a strong incentive to put funds into a tax-deferred account. You will pay less tax on investments that have been in a tax-deferred account.

However, there are times when the tax from tax-deferred investments can be higher than the tax that would be realized from unsheltered taxable investments. There are several types of investments that can grow with reasonable efficiency even though they are taxable. In general, any investment or security that qualifies for capital gains treatment is a good candidate for a nonqualified investment account. 

Another possible reason for utilizing a taxable account could be that you’ve maximized the annual deferral amount allowed to your retirement plan but still need to save more for retirement. 

The “both/and” approach also gives flexibility when making distributions. Most people will retire through a number of different Congresses and tax codes. Since we can’t predict what the tax bracket will be before or after retirement, a combined strategy involving both pre-tax and post-tax accounts can provide a useful hedge. 

Dana’s Take “Payday someday.” That saying applies to taxes and also to grief. Most people expect to grieve soon after a loss, but are often caught off-guard when grief wells up long after the loss. 

People who express their grief through writing, talking and even crying usually have a better outcome than those who try to ignore those feelings.  

Grief recovery groups are particularly useful for healing. In the presence of a number of people experiencing a similar loss, your feelings and reactions become normalized. Someone in the group may bring up the anniversary of a loss or a trigger memory and how it has affected them. Other group members join in the conversation and leave feeling accepted and relieved. 

Seek out a grief support group or schedule with a certified marriage and family therapist or other counselor to vent your feelings and get support in moving forward after a loss. 

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Setting Financial Priorities in Your 50s and Beyond

Ray’s Take Every phase of life has its challenges – financial and otherwise. Your education gives way to career, which is often followed by marriage and children. Next comes educating those children. It would be great if all of these phases were managed and balanced as we pass through them, but most of us have a few detours along the way. 

If you’re in your 50s or beyond, you really need to be focused on your retirement plan. By this time, it’s getting pretty big in the windshield. If you haven’t started already, here are a few important things that need to be taken care of. 

Start by knowing your retirement number. In order to meet your goal, you have to know what it is. When you hit your 50s, you need to crunch the numbers for when you hope to be able to quit work and how you’ll live afterwards. That leads to the steps needed to make it happen.

Once you know your numbers, start by maxing out your retirement contributions. By contributing the maximum allowable amounts to your IRAs and 401(k), you create a bigger pool for retirement. If more savings are needed, review non-qualified savings and investment options.

Rebalance your portfolio. It’s important to do this step all along your planning line, but when you get into the home stretch toward retiring you should more regularly review your risk, as you have less and less time to recover from the inevitable bear markets.

Accelerate debt payoff, particularly mortgage debt. It may or may not be a deal breaker for you. If it’s important to you to have your home mortgage-free when you retire, now is the time to make that happen. Review any other debt you may have like credit cards and cars. 

Review spending. The truth is, the fastest way to save is to spend less. Building a lower-cost lifestyle now means less money will be needed to maintain your standard of living at retirement.

This is not the time to make quick, off-the-cuff decisions. A financial planning professional can help you to review your current situation and make a plan to meet your goals.

Dana’s Take People are living longer and conceptions of age and aging are changing. In fact, the old truism about 50 being middle age no longer holds true. The baby boomers are now over 50 and making major changes in how we perceive everything.

A grandparent is no longer the person who is at home relaxing. In fact, the grandkids may have a hard time keeping up with the new grandparent. Retirement is no longer playing golf or coffee klatches. It may include these things, but it’s now so much more. 

It’s important to take the more active lifestyle into consideration when we’re making decisions about retirement. We don’t want to find ourselves short of funds at a crucial time and unable to do the things we dreamed of or discover later in life.

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Financial Recovery Regrets

Ray’s Take When the market went into meltdown in 2008 a lot of investments and property values went south. People are recovering from losses to the value of their homes and losses in portfolios, but some still need to dig their way out. Getting out of a hole always takes a lot longer than falling in.

If you’re nearing retirement, you’re probably looking for ways to reduce your risk but still participate in some gain. Making good decisions now is imperative to making sure you preserve your future.

Many still owe a variety of debt, including possible 401(k) loans. Retirement and debt are not a good combination. Debt can force you into dangerous corners from which many will never recover financially. If you are not out of debt, delay retirement.

Many saw the value of their homes tumble as much as 50 percent by 2009, but that only mattered if they sold. The same was true with their retirement investments. The key is to be patient and not try to time the markets.

Many people turned to credit cards to make up for a variety of reversals and now are still trying to handle that debt. Credit card debt is financial cancer and must be eliminated.

The first step in undoing the damage is to put together a well-thought-out plan. A plan can help you figure out how to prioritize goals and how you’re going to achieve them. You can avoid having regrets about the impact of decisions not thought out over the long term.

An objective financial planner can help you create order out of the chaos while creating a sound plan to get back on track with your goals.

Dana’s Take The recent fire tragedies in Gatlinburg brought the possibility of unexpected loss right in our faces. It seems so unfair when terrible things happen to good people.

The sad truth is that it happens. If it happens to you, you’ve got to make a plan. You have to make choices. And those choices will probably mean you have to make sacrifices. Try to see the choices as a fork in the road, an opportunity to choose who you really want to be.

Hard choices are all about values. No data or advice can tell you what’s most important to you. Once you determine what’s most important, there are people who can help you along the path. Remember, no matter how hard it seems now, time brings change and hope.

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Retirement Drawdown – Which First?

Ray’s Take It’s not what you earn, but what you keep. That old saying is true when saving for retirement, and it’s just as important – if not more so – when it comes to withdrawing money from your various retirement accounts.

Most people own more than one type of account when they retire. With each type being taxed a different way, deciding when to take from each account can be a challenge. Because distributions from pretax retirement plans are taxable as ordinary income, long-term capital gains are taxed at lower rates or not at all. Distributions from Roth IRAs aren’t taxed at all when certain criteria are met.

You can control current taxation by picking and choosing to take from certain types of accounts. It’s also important to keep in mind that current IRS guidelines call for the commencement of mandatory taxable withdrawals at age 70 1/2 from all tax-deferred accounts – even if you’re still working.

By carefully deciding which accounts and how much you want to use, you can stretch your money and be tax-efficient. There is a common rule of thumb for withdrawing retirement savings – taxable savings before tax-deferred savings. However, pushing all tax-deferred accounts into the future can actually cause more tax liability when it pushes you into higher brackets. At the same time, a tax paid today is paid and it’s never coming back. Further, tax codes come and go, just like presidents and members of Congress.

Taking a long-range view can also help you determine which account to draw on first. This approach can help you withdraw money in ways that maximize the final total account balance over the long term. Either of these may work for individuals depending on their personal circumstances and plans.

The rules can be strict and confusing – not only in the law itself, but also among the various types of accounts. Solid professional advice can provide you with a plan to meet all your goals.

Dana’s Take The financial burden of student loan debt is leading some young adults to ask family members to repay their debts. The reasons are many. Some want to clear the debt so that they may borrow for a home. Others simply aren’t earning enough to repay the loans and live well.

Some parents are emptying their retirement savings to repay a child’s loans. Before giving so generously, try to remember how hard and long you worked and saved for those retirement savings. Your child has decades of potential earning power and your earning power may be on the wane.

Help where you can, but try to model Polonius’ sage advice in Hamlet: “Neither a borrower nor a lender be; for loan oft loses both itself and friend.” Relatives could be added to that counsel.

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