Ask the Expert

SPECIAL ADVERTISING SECTION 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.

Am I On Track for My Retirement/Financial Independence?

This is a good question and a broad one, too. The first question that you should ask yourself is “What do I want my retirement/financially independent living to look like?”

Are you jet setting around the globe in your private jet or do you just want a little cabin in the mountains with a great porch and view so that you can catch up on all your reading? Maybe it’s something in between? It likely is.

The first thing that you should do is to back into your cash flow need or what I affectionately call your monthly “burn rate.” What kind of cash flow is it going to take to facilitate your lifestyle?

That leads to the next question, which is the dreaded “Have you completed a budget?” Ouch. Many view this as a painful and tedious task but it doesn’t need to be. First of all, you could hire me to do it for you for a pretty nominal fee and that would take a decent amount of the pain out of it.

If you want to do it yourself, start with a spreadsheet, your bank statements and credit card statements. Record a calendar year’s amount of paid expenses by month so that you include seasonal spending.

Next, make necessary category adjustments for your lifestyle during retirement/financial independence. Those adjustments may be few or many. Again, it depends on what your “vision” is for the future.

Aside from looking at your cash flow need, you should really inventory ALL of your financial assets as well as debt (balance sheet) and make some estimates as to what it will look like on the day that you declare your retirement/financial independence. There will be things that will be gone (hopefully debt), and other things that you may not need anymore (life and/or disability insurance), and things that are still there and worth even more! (assets).

Now there’s a whole lot of other considerations that include income sources and deriving cash flow from investments, claiming Social Security, choosing pension/annuity options, income taxes, health care costs, etc., etc. The list goes on and I’ve only skimmed the surface of what needs to be considered when planning for your future but that’s the basics and should get you started. If you need a work sheet of any sort, just email me. I or one of my assistants will send it right out at no charge, of course.

David Hedges 209 Delburg Street Suite 205 Davidson, NC 28036 704.256.6016 david@bookmanbright.com

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

What Do You Want Your Money to Do for You?

Daniel Tobias, CFP® 17505 W. Catawba Ave., Suite #200, Cornelius 704.457.0060 www.passportwm.com

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.