Are you Psychologically Fit?

It’s the day you’ve dreamt of. The day that has caused your imagination to run like a stallion. You’ve watched others experience it many times over only wishing it was you in their place. This day, the day you’ve been working for is here.

Retirement!


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So, you’re good financially? Great! But, what about psychologically? Asking the question, “Do I have enough?” is not the only question that you should be asking. Although it is important and can be liberating, having enough is just one of many steps along the path of a having a successful retirement.

Think back to the very first day you began your career. The excitement, the newness, the possibilities. Retirement is like that! Now think back to the day you began your seventh year. The normalcy, yet you're filled with questions and new roles. Retirement is also like that.

Change occurs early and often. Unfortunately, many retirees do not think practically past the first day of retirement or even the first year. The questions of worth, purpose and identity may creep in. What you must realize is that you are a creature of habit and when change occurs, you deal with it differently than someone else. Below are some questions/strategies to spur thought as you begin that transition into retirement and if you're already to that point - start where you are now.

  • Do I have enough?
  • Am I ready to retire or am I just retiring because that is the natural progression?
  • Will I miss the relevancy that my job provided? If so, what can I get involved in to fill the void I may experience?
  • What will I be leaving behind?
  • What is my purpose in life? In what ways can I go about accomplishing that?
  • Realistically, what will my lifestyle look like? Have I put off activities or interests that I want to pursue?
  • Who has transitioned into retirement that I know? Call them and talk about the transition they had.
  • What tasks will I implement to stay active, healthy and keep my mind sharp?
  • Just like your career goals, formulate retirement goals. Set short-term, intermediate and long-term goals.
  • After the bucket list items are checked off and the grandkids have been visited, what will my day-to-day look like?
  • If I am social, what organizations or clubs are available for me to join?
  • What type of legacy do I want to leave?


Final Thought: There is no one-size-fits-all solution to retirement. Everyone has different desires and different circumstances. What everyone can do is take those desires and circumstances into consideration before and during retirement and apply serious thought to them. Each decision creates complexities. Keep in mind that life happens, so remain adaptable just like you are in your career. Keep an open mind and surround yourself with people you trust and can have tough ongoing conversations with. This is where we want to end up:

 

via GIPHY

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Do you have an extra $250,000 to pay for healthcare in retirement?



A recent CNBC article asks the question whether $245,000 is enough to cover healthcare costs in retirement. Let that number sink in for a second. Especially, when you consider the article goes on to project those same healthcare costs up to $367,000 using the Medicare Board of Trustee’s estimate of inflation. That’s even before considering that “high-income beneficiaries” have to pay a higher percentage of the total cost of Medicare premiums. High-income beneficiaries are considered to be individuals with Modified Adjusted Gross Income of greater than $85,000 and married couples above $170,000. Currently, beneficiaries pay about 25% of the cost, but high-income beneficiaries will pay 35, 50, 65 or 80% of the cost depending on their level of income.

How much do you have saved for retirement? In your plans, have you allocated more than $250,000 to the cost of health insurance?

If not, what impact will an expense of this level have on your retirement? If the projections are correct, a quarter of a million dollar expense in retirement could derail any plan that’s not properly accounting for such expenses. As the article states, this expense could cause a detrimental impact to your yearly income at a point when going back to work is no longer a viable option. Don’t let this be your retirement picture.

If healthcare is going to be such an impact on your retirement, what other major expenses are not covered in your retirement plan? One of the core pieces of our financial planning process is to identify the specific expenses that your retirement could hold. We help you evaluate your current situation, your goals and desires, and your retirement years to create a financial plan than can hopefully withstand whatever life throws at us.

We can help you make sense of these complicated issues. Do you have questions about your retirement plans or need help figuring out how much healthcare will cost for you? Get an answer by sending us a question:

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Financial First Responders



When you hear sirens and see an emergency vehicle speed past, it’s likely on its way to respond to an accident.  These heroes head to the fire or the car wreck to help people. First responders deserve our thanks for their bravery and unwavering duty to help those in need.  Yet when not fighting fires or saving lives, these same men and women spend countless hours educating us on how to prevent these accidents.  They teach our children how to”stop, drop and roll”, remind us to change the batteries in our smoke detectors, and gently remind us to obey traffic laws by writing tickets if we run red lights.  They are dedicated to preventing disaster to reduce damage and save lives.

You may wear your seat belt and look both ways before you cross the street, but do you exercise the same behavior when it comes to your finances? 

 

Here are some questions to ponder as you reflect on your financial situation:

If you had a financial emergency, who would you call?

Do you have an advisor that you could call to help you if you had an unforeseen event, such as a job loss, or significant loss to your portfolio?

Do you focus on preventing financial risk?

Do you have someone who proactively counsels you on how to prevent devastating financial problems?

Has that someone called you (not taken your call) in the past year to address what would happen if things went haywire in the markets?

If you are contemplating retirement in the next five years, do you have a plan to help you get there?

 

Financial markets move in cycles.  Investors have consistently shown their inability to make the right investment decisions when things get messy in the financial markets.  They want to buy stocks when they are at their highest and sell them when they are at their lowest.   

Our family has a plan to get out of our house if the smoke detectors go off.  Do you have the same plan in effect for your portfolio?

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ROTH versus 529 college planning- a CPA's perspective

It’s surprised me how many times this topic has come up in my accounting work recently.  It could be that college just started back and people are keenly aware of the ever increasing cost of Junior’s education.  Thus, parents are often conflicted with the enormous burden of higher education expenses and the realization that they are responsible for funding their own retirement.  To add to the stress, they are inundated with information on College 529 plans and ROTH IRA’s.

So here’s the question I always get “Where should we put the money and which comes first?”  The answer to this question is very dependent of personal situations, but my initial advice is to always take care of retirement first.  When you get to retirement age, the sources of money are limited, so you better have planned well.  If not, you may be fighting for one of those scarce Wal-Mart greeter jobs.  While maybe not ideal, your children have other options to pay for school from savings, scholarships, part-time jobs, and as a last resort borrowing.

If the situation is right, a ROTH IRA does provide some powerful flexibility in saving for the future. While your investable dollars added to a ROTH can be used for both Retirement and college expenses, you have to remember that those dollars can’t be used for both goals.  You need to use this wonderful tax advantage account prudently as part of your overall financial plan.

Do you have a plan to navigate the path of funding college education without sacrificing your own retirement happiness?  We can provide clarity and experience that can help you utilize these options to meet your goals.

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