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Ask The Expert - Financial Edition
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ASK THE EXPERT
Managing our finances is an important part of our everyday lives, from creating a realistic monthly household budget to building savings and funding a college account for your children. It can be overwhelming to consider all aspects of budgeting, saving, spending, and making sure to have an action plan for retirement. We asked three local experts for their best practices for managing your money in the following pages.
What Do You Want Your Money to Do for You?
The smartest thing you can do with your money in 2022 is to figure out what you want it to do for you. No matter what the rate of return is for your investments, if you don’t know what you want your money to do for you, then you are working without a plan.
For most families, what they want their money to do for them changes throughout their lives. Perhaps your goal is to amass wealth so you can purchase a yacht and sail around the world, or perhaps you want to retire early and spend your time pursuing your hobbies and interests. Perhaps you want to pay for the higher education of your children and grandchildren or leave a legacy of philanthropic giving. Like any goal, you are more likely to get there with a plan.
Deciding what you want your money to do for you may not be easy, and many clients come into our office having never set a goal for their wealth. Sometimes family members aren’t on the same page, and that’s ok. Often, our first step is to get to know the family and clarify their goals. Why is this so important? Besides getting to know each other, it is critical to laying out a long-term comprehensive plan. Investments are only one element of comprehensive and holistic financial planning. Investment management, tax planning, estate planning, and a review of insurance and long-term care needs are some of the elements that we consider when we look at your financial goals and set a strategy to achieve them. Regular review and adapting to changes in the market, tax code, and estate planning laws allows us to ensure that our clients are well positioned to meet their goals in the long-term.
As a fee-only CERTIFIED FINANCIAL PLANNERTM Professional, I believe that the trust of my clients is my most valuable asset. Passport Wealth Management is a feeonly client-fiduciary financial planning firm, which means we are beholden only to our clients – we earn no commissions, fees or kickbacks from anyone else. Being a fiduciary means that Passport Wealth Management always put our clients’ interests ahead of our own, acting with prudence and never misleading clients about investment advice or opportunities.
Whatever your financial choices and goals, I hope you make a plan to achieve them and wish you a very happy, healthy and prosperous 2022. Daniel Tobias, CFP® 17505 W. Catawba Ave., Suite #200, Cornelius 704.457.0060 www.passportwm.com
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. Securities and Advisory Services offered through LPL Financial, a Registered Investment Advisor, Member FINRA, SIPC.
Jeff Karp, CLU®, ChFC®, CASL®
jkarp@karpfinancial.com www.karpfinancial.com 704.658.1929
Why is it that once many of us get to a certain age, we believe too much time has passed to really pursue what we desire? “It’s too late” or “I’m too old” are words we at Karp Financial have heard countless times over 30 years. Before you can pursue anything, you have to give yourself permission to dream it, then plan it. Permission Granted to “Dream It. Plan It. Pursue It.” has been central to Karp Financial Strategies empowering clients to do just that.
Planning for your next chapter of life should not mean you must put the rest of your life on hold. At the same time, knowing what you want your life to look like in “retirement” is key to being able to enjoy life now with confidence and plan effectively for when you do.
Permission Granted to consider this question: Is there a different way for me to approach my own retirement planning that includes a wealth of experiences now and into the future in addition to monetary wealth?
The core philosophy that built Karp Financial Strategies will help you think differently.
1. Stop calling it retirement. It’s the next in a series of life reinventions. First, as kids, different in high school, re-invented maybe the first time in college, again in our first career in a major way, from single to married lifestyle, empty nesting, and then comes our next big reinvention. Do you embrace the changes that come with this next phase of life or fear it?
2. Consider Goals an in-depth look at your Dreams. If you never dream about what you want, how do you get it? Make it personal by finding your “why.” Ask yourself, “What is important to me about…?” Give yourself permission. Period.
3. Each of us has a financial personality created by our upbringing and experiences. Do you understand your money bias to better give yourself permission to spend it? Is your financial DNA serving you or hurting you?
Dream achievement is what builds a life well lived. Once you embrace these three key principles, planning becomes about realizing your dreams, not just numbers on a spreadsheet. Financial software programs can functionally create budgets or calculate needed retirement income. So, has it been a lack of motivation or capability that has kept you from basic financial organization?
Finally, consider that each 5-10 years, after 55 can hold unique potential experiences helping to add to the spice of your life. What could these experiences be for you? Tennyson wrote, “It is better to have loved and lost than to never have loved at all.” I say, it is better to have experienced and lived, than to have never experienced at all.
It’s Never Too Late to Plan Your Future
When it comes to your financial goals, a good advisor will help you reach them. Unfortunately, most people that come into our office do not have a Comprehensive Holistic Financial Plan. As many of you know, most people don’t plan to fail, they simply fail to plan, and this is one of the biggest mistakes I see retirees making today. The typical person is so busy running their day to day lives with their careers, families, and church time that they never seem to get around to doing effective comprehensive financial planning. I know some people think they have waited too long to start planning—however, it’s never too late to start planning for your future.
The strategy that helps you accumulate your wealth is not necessarily the strategy that will help you keep your wealth in retirement. We know that more people die coming down Mount Everest than those going up. Equate going up to Wealth Accumulation Planning and coming back down to Retirement Distribution Planning. Our focus and passion at A4 Wealth Advisors is helping those who are retired or retiring soon. Thus, we want to ensure that our clients do not run out of money! Some big mistakes are not understanding how to mitigate Inflation, Taxes, Sequence Risk, Longevity Risk, Behavior Risk, and Long-Term Care Risk, to name a few.
Additionally, life insurance in retirement is something we always analyze. Is it necessary or not in retirement? The answer is different for everyone. Life Insurance has really evolved over the past 15 years. Figuring out your primary objective to solve for is key—are you seeking pure death benefit, additional tax advantaged supplemental retirement income, long-term care benefits, college planning, or simply to maximize your estate and pass assets tax-free to your heirs? Unlike the old school whole life polices 30 years ago earning a paltry interest, new life insurance policies have much better upside potential, can protect downside market risk, and can solve for a variety of potential needs. A good advisor can assess and prioritize your needs and determine how to best solve for your objectives by designing a custom life insurance plan for you.
If you’re reading this, a good action item for you to do NOW is some proactive tax planning. We believe that taxes are ON SALE currently, so it is a great time to do tax planning BEFORE they go up. There are many strategies to help reduce future Required Minimum Distributions (RMD’s) and the taxes that go with it. The IRS forces you to take RMD’s at age 72. Getting an advisor to help find solutions for minimizing taxes will help prevent what I like to call a “tax time bomb” at age 72.
Lastly, be sure you’re incorporating estate planning techniques into your financial plan. Deciding whether you could benefit from different types of trusts and wills is an essential part of your financial plan. Whoever you decided to work with, be sure you are getting the help you need in this area as well. John Balcerzak, CFP®
16140 Northcross Dr, Huntersville 704.509.1141 a4wealth.com
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Questions? Contact: Christine Ogden COgden@YourOasisAdvisor.com Rebecca Harrah RHarrah@YourOasisAdvisor.com
