Joe Lucey

Many individuals often spend large sums of their own money caring for an aging parent. A recent survey found that one out of three caregivers provide $5,000 or more per year helping their loved one, and nearly one in five provide $10,000 or more. One reason is because adult children are uncomfortable talking about their parents’ finances to discover what they can and can’t afford.

This often becomes an issue in the latter stages of retirement, when mature adults begin to have more health and mobility issues. It is important to know how much your parent(s) have in terms of ongoing income, expenses and overall assets. Otherwise, caregivers’ own savings and investments may suffer, making it more likely that they will need to rely financially on their own children during retirement — creating a cycle of dependency.

Parents may not even realize how much their children are contributing to their care or have a clear idea of how their own assets could potentially be used to offset their expenses.

To help evaluate a family member’s financial state, first determine how much income is available via Social Security and pension benefits, required minimum distributions and any automatic payouts. Then, determine the amount spent on bills and other household expenses. If the outgoing is more than the incoming, it’s time to take a hard look at assets.

It is also important to consider the level of risk for any given investment, since seniors do not have the luxury of time to make up for poor market performance. While it may be appropriate to maintain a growth component in the portfolio, it’s also important to consider risk-mitigation strategies such as diversification and insurer guarantees to help offset investment risk.

You should consult with the parent’s financial advisor or your own before making any financial changes to their portfolio.  Contact us at info@securedretirements.com or call us at (952) 460­-3260 to schedule a time to discuss your financial situation and the potential role of investments in your financial strategy.

The municipal bond market experienced a dramatic sell-off around the time of the election, with more than $10 billion departing muni funds in November.² President Trump’s promise for more infrastructure spending and lower taxes has made the market for these bonds less appealing.

For one thing, many investors are attracted to bonds for their federal tax-free interest income. However, with the prospect of income tax rates dropping over the next four years, this feature may not offer as much value. Second, more government spending means the issuance of new bonds to fund infrastructure projects and, with the recent rise in interest rates, new bonds will likely offer higher yields than existing ones. Furthermore, the current municipal interest tax exemption could even be reduced or cut as a part of tax reform negotiations going forward.

Municipal bonds provide a steady stream of income, which can be an important factor for retirees. Also remember that older bonds will continue to pay out until maturity.

Bond obligations are subject to the financial strength of the bond issuer and its ability to pay. Contact us at info@securedretirements.com or call us at (952) 460­-3260 to schedule a time to discuss your financial situation and the potential role of investments in your financial strategy.

Do you ever find that by the time you finish that last cup of coffee in the morning, you’re already exhausted? According to researchers, it’s because we use our relaxing coffee time to multi-task: Check emails, pay bills, peruse headline news, etc. The more challenging the tasks, the more energy-drained we feel.

Actually, scientists say multi-tasking isn’t actually possible. What we’re really doing is rapidly changing our focus from one project to another. The faster we keep switching back and forth, the more energy we use. Studies have not only shown that focusing on one thing at a time can make us more productive, but that taking a 15-minute break every couple of hours can also improve productivity.

Interestingly, if you use that break to check out social media, it doesn’t provide the rest your brain requires. Perusing a variety of posts, headlines or photos is just another version of multi-tasking. According to researchers, mind-wandering is necessary, whether you’re walking, staring out the window, listening to music or reading.

Other ways to “reboot” your brain power include light exercise, eating healthy and even having a friendly chat with a peer.

They say you’re never fully prepared to have children; the same could possibly be said for retirement. Life still gets in the way of plans, but one way to work out the kinks is to “test-drive” some of your retirement plans while you’re still employed. Consider the following tips to help prepare for retirement.

Spousal Perspective – Most of us have a vision of how we would like to spend our retirement. Sometimes couples who have been together for so long that they read each other’s thoughts and finish each other’s sentences just assume they share the same retirement dreams. Not so. Often one dreams of spending more time with family while the other imagines long days of peace and quiet on the golf course. One good exercise is for each spouse to create a budget covering the expenses they imagine they’ll have in retirement. It can be quite illuminating to see the differences; comforting to find similarities.

Testing Hobbies – Perhaps you dream of gardening, travel, opening a shop or writing a book. If you haven’t spent a lot of time doing these things in the past, they could fall short of your expectations. Give your hobbies a test run before you invest a lot of money in them. You may find you rather dislike the heat, dirt and bugs that come with gardening, or the logistical work involved with opening a shop. Much like life itself, it’s important to separate the dream of what you’d like to do from the reality of what you’ll actually do in retirement.

Make Exercise a Habit – Unfortunately, newfound leisure time often leads to inactivity, so try out a few low-impact exercise options before retirement to find one you like. Walking, swimming, yoga and Pilates are among the alternatives you may be able to continue throughout a long life. If you start classes now, you’ll have a schedule to follow in retirement — which can help prevent idleness.

Off-Season Visitation – If you’re considering relocating or purchasing a second home for retirement, first be sure to visit your preferred destination during the off-season as well as the high season. For year-rounders, you may find the locale to be too cold, too hot, too crowded or too desolate for your taste. For part-timers thinking they might rent out the home part of the year, these same conditions may make it difficult to find qualified renters.

Separate Income Plans – Many couples start out retirement with two people, but unfortunately end up with only one. If their retirement plan leans too heavily on assets of one spouse — such as a single life pension plan — the surviving spouse could experience a significant drop in income. It’s important to develop an income plan for the contingency of each spouse dying first to understand how much income would remain.

Streamline Finances – You might consider consolidating the number of banking and investment accounts you have so there’s less to keep track of. Automate deposits, distributions and bill-paying as much as possible so it’s easier to monitor your incoming and outgoing income.

You’ve likely heard a few clichés when it comes to investing: stay the course; buy right and hold tight; time is more valuable than money; etc. The point is clear, if your investments align with your goals, timeline and risk tolerance, then there may be no reason to make changes to your portfolio when the markets experience volatility.

After all, we can’t control what happens in the markets, the economy or in Washington, but we can control our own investment decisions and our temperament.

For an idea of how quickly the market can recover, just look at the Dow Jones Industrial Average (DJIA) following some historically difficult periods. After the market crash of 1929, the market began its steady climb back to positive returns within one month and reached its previous levels within six months. Throughout history, the DJIA has come back from crisis declines to double-digit returns (on average) within the ensuing 12 months.

Investors tend to react to a market decline in one of two ways, either by panicking and selling or freezing and doing nothing. The hold-steady types often fare better when holding for the long-term. In the case of someone in or nearing retirement, who doesn’t have time to wait for markets to recover, staying the course may not be the practical decision.

Another concern for those in or nearing retirement is what many financial advisors call “sequence risk,” which is basically withdrawing too much income after a period of market decline. Draw too much too early in retirement, and you’re more likely to run out of money. On the other hand, if a market decline occurs further along in retirement, that risk may be reduced.

Over the past 35 years, the stock market has experienced an average drop of 14 percent from high to low during each year, but still had positive annual returns more than 80 percent of the time. Hypothetical illustrations show that since 1980, an investor who was out of the market for just 10 of the best performing days may have earned less than half of the portfolio’s earning potential.

Staying the course is not always easy, especially when your account balance is declining. One way to help counter this impact, called dollar-cost averaging, is to keep contributing and, in turn, buying increasing numbers of shares at lower prices so that the balance can rise despite poor performance.

 

The content provided here is designed to provide general information on the subjects covered. It is not, however, intended to provide specific legal or tax advice.  Contact us at info@securedretirements.com or call us at (952) 460­-3260 to schedule a time to discuss your financial situation and the potential role of investments in your financial strategy.

Are you worried the next presidential administration will impact your overall retirement plan?

Regardless of who you supported in the election, chances are that you may believe the new inhabitant of the White House will have a significant impact on your investment portfolio. And, as it turns out many Americans feel this way.

A recent study of about 60,000 investors shows that people generally take greater market risks when their party controls Washington. This same study also discovered that people affiliated with the party out of power tend to feel uneasy about the market and trade stocks more often.

Not surprisingly, this impatient approach to investing led their investment portfolio to underperform when compared to when their party was in charge. This suggests that making investment decisions based solely on who is in office and how you feel about them is not always a good idea.

History further reinforces this notion. Since World War II, stocks have seen gains under every president except Nixon and George W. Bush. And those downturns can be attributed largely to global economic factors rather than policies directed from the President.

In actuality, stocks have been shown to generally rise over time no matter who (and what party) is in charge of the White House. But this won’t stop many Americans from still choosing erroneously to make moves in their investments based solely on who our President is.

If this sounds like you, I would like to invite you to take a deep breath. As we start the new year together your resolution for 2017 should be to avoid “Politicizing Your Portfolio”. By this, I mean you should never let who is in office drive the investment strategy for your retirement.

Your investment strategy should be based on the goals you have set for your retirement not who is in office. It should be about protecting you from large market drops first, while still positioning you to make an adequate return.

The good news is that if you are a client of ours, we are working hard every day to keep your retirement investment portfolio in good shape. And if you are not already a client of ours, I would like to invite you to come in for a free, no obligation strategy session so that we can get your retirement plan on the right track.

CALL 952-460-3260 TO SET UP YOUR FREE STRATEGY SESSION TODAY

I truly want you to feel like that you have a sound retirement plan in place. So during this time you will receive actionable ideas and concrete steps towards a more secure retirement and a better financial future for yourself and your family.

CALL 952-460-3260 TO SET UP YOUR FREE STRATEGY SESSION TODAY

P.S. If your new year’s resolution was to put a plan in place for your retirement, now is the time to act. We offer a free, no obligation Strategy Session for you to walk away with valuable ideas on how you can best secure your future in retirement. Many people make resolutions but rarely follow through with them. Having a good coach is the best way to make sure you stick to your goals for the year and don’t fall off the bandwagon.