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3 Reasons Why Robots Won’t Replace Financial Advisors

Robo-advisors have been heralded as the “future of investing” by their fans, but can computer algorithms really replace human financial advisors?

Robo-advisors are less expensive than traditional advisors—but their low, up-front price comes with a loss in quality. Robo-advisors lack an irreplaceable human element, which prevents them from providing the essential qualities and services characteristic of traditional financial advisors. When you look more closely at the differences between the two, it seems obvious that robo-advisors could never truly replace human financial advisors.

How do robo-advisors work?

Robo-advisors are low-cost, digital platforms that use automated algorithms to provide investment advice. Investors fill out an online form detailing their current financial situation, monetary goals, and investing preferences. Then, the robo-advisor software analyzes the responses and dispenses investment advice.

A recent study by LendEDU found that Millennials, once believed to be the biggest proponents of robo-advisors, actually chose human advisors nearly two-to-one over automated investment services. Other findings from the study revealed that 52% of Millennials believed that robo-advisors are more likely to make mistakes, and nearly 70% thought a human advisor would get a better return on their investments.

Here are 3 reasons why human financial advisors provide more value than robo-advisors.

  1. Money is an Emotional Matter

When you compare a robo-advisor to a human financial advisor, the key difference is a human advisor’s ability to offer emotional guidance. Meeting our clients face-to-face allows us to provide behavioral coaching and hand holding, helping clients develop positive budgeting and wealth management habits that lead to long-term financial security. When markets decline or experience an upset, we work with our clients to help them make rational financial decisions and overcome detrimental emotions or impulses.

  1. Everyone has a Unique Financial Situation

Human financial advisors provide personalized counseling and guidance to help clients achieve long-term financial success. Automated online platforms are unable to match this level of personalization. Instead, robo-advisors rely solely on computerized algorithms to determine asset allocation. While traditional financial advisors may use similar strategies, we also rely on our professional history, as we have worked with a variety of clients with unique financial situations. Additionally, we may work with a team or have additional financial tools at our disposal to determine the best investment objectives for each client.

  1. It’s About More Than Just Investments

Investment advice is just a small part of a complete financial plan. The most sophisticated robo-advisors may offer automatic portfolio rebalancing and tax-loss harvesting, but they don’t come close to providing the full range of services that human financial advisors offer. As people move through life, their priorities and financial goals evolve. Human financial advisors are able to create nuanced investment strategies that take into account changing life circumstances. We provide comprehensive financial planning that includes retirement, insurance, and estate planning services, the best exercise of stock options, cash flow monitoring, and more to help our clients achieve their financial aspirations.

While robo-advisors are gaining more capabilities and media attention, they aren’t close to replacing human financial advisors. Robo-advisors may be useful for beginner investors with limited assets, but they lack the full range of benefits that would let them serve as true replacements for traditional, human financial advisors. If your finances could benefit from a personal touch, please contact us for a complimentary consultation.

 

Sources:

Brown, Mike. (2018, Aug. 23) Robo Advisors vs. Financial Advisors – Millennials Still Prefer Real-Life. [Blog post]. Retrieved from https://lendedu.com/blog/robo-advisors-vs-financial-advisors/

Rixse, Chad. (2018, Apr. 25) The 4 advantages of human vs. robo-advisors. [Blog post]. Retrieved from https://www.cnbc.com/2018/04/25/the-4-advantages-of-human-vs-robo-advisors.html

Wohlner, Roger. (2018) Is An Online Financial Advisor Right For You? [Blog post]. Retrieved from https://www.investopedia.com/articles/financial-advisors/121914/online-financial-advisor-right-you.asp

Investopedia. (2018) Robo-Advisor (Robo-Adviser). [Reference] Retrieved from https://www.investopedia.com/terms/r/roboadvisor-roboadviser.asp

Retirement Savings Tips: From Your 20s to Your 60s

Financial planning is a lifelong endeavor, but people often seek out investment advice that doesn’t fit their current stage in life. When it comes to saving for retirement, most Americans invest and manage those savings for six decades or longer. It’s important to consider how your resources and risk tolerance change as you move through different life stages. Saving for your retirement looks very different at age 30 compared to age 60. As financial advisors, we strive to help our clients develop retirement savings plans that are appropriate to the changing circumstances they face at every age. Here are some areas that we consider when giving age-appropriate retirement advice.

Ideal Asset Allocation by Age
In the past, investment experts advocated the “100 Rule,” which called for subtracting your age from 100 to determine how much of your assets should be invested in stocks. For example, this rule called for 25-year olds to hold 75% of assets in stocks or “riskier” investments and 25% in bonds, CDs, equities or other low-risk investments. Now this has been updated to the “110 or 120 Rule” because Americans are living longer, making it extremely important to generate enough money to last throughout retirement. While this rule is useful for general guidance, it’s important to look at your particular situation and develop a more nuanced investment mix that is more closely aligned with your retirement savings goals and risk comfort level.

In Your 20s: Balance Saving and Investing
Your earning ability is at its lowest in your 20s, but the power of compound interest makes this decade the best time to invest. Many professionals recommend that people in their 20s invest a majority of their retirement savings in stocks rather than bonds or savings accounts. A 2016 investment analysis by NerdWallet found that a 25-year old with a $40,456 salary who invested 15% a year exclusively in the stock market would likely end up with as much as $3.3 million more than if they kept their money in savings accounts. Regardless of how you invest your retirement savings, you should strive to balance your approach with paying off outstanding debt (student loans, credit cards) and saving for an emergency fund.

In Your 30s: Invest Aggressively in Stocks
Take full advantage of your employer’s contribution by investing 10 to 15% of your salary in your office retirement plan in your 30s. Investing in a home or rental property is a good idea, provided you will be able to keep the real estate for at least five years. When you compare long-term investment returns on stocks and bonds, stocks vastly outperform cash and bond investments over time. You have decades to potentially make up any temporary losses in the stock market, so invest as aggressively in equities as your risk comfort level allows.   

In your 40s: Maximize Your Retirement Contributions

By the time you reach your 40s, you need to be saving as much as possible for your retirement. Now is the time to max out your retirement contributions by investing the full $18,500 allowed each year. Investing in a tax-advantaged Roth IRA in addition to your 401(k) or 403(b) will help boost your retirement savings. It’s the right time to start investing in some lower-risk bonds too unless you have been neglecting your retirement savings plan. A financial advisor can help determine the ideal investment mix to achieve your savings goals while maintaining an acceptable risk level.

In Your 50s and 60s: Start Preparing for Retirement
If you need to build emergency funds to meet unexpected medical expenses and other costs in retirement, mature investors are allowed to start making catch-up contributions to tax-free savings accounts in the year they turn 50. In 2018, you can save up to $24,500 in a 401(k) and up to $6,500 in an IRA each year.

When you are in your last decades of saving for retirement, it is time to start rebalancing your portfolio. Consider moving some of your funds into bonds and money markets. A financial advisor can help you compile a comprehensive financial profile, assessing all your funding sources to figure out your ideal investment mix to provide income throughout your retirement.

We suggest using the above recommendations as starting points to saving for retirement throughout the different life stages. However, regardless of age, everyone can benefit from a personalized retirement plan. As financial professionals, we are available to help you figure out the ideal asset allocation for your retirement savings plan at your stage of life. Please contact us for a complimentary consultation.

Sources:

Friedberg, B. (2018, May 21) Here’s How You Should Invest at Every Age. [Blog post]. Retrieved from https://www.thebalance.com/how-to-invest-at-every-age-4148023

Leary, E. (2007, November). Best Investing Moves at Every Age. [Blog post]. Retrieved from https://www.kiplinger.com/article/investing/T052-C000-S002-best-investing-moves-at-every-age.html

Kumok, Z. (2017, Jan. 7) Are Your Investments Right for Your Age?. [Blog post]. Retrieved from https://www.investopedia.com/articles/investing/090915/are-your-investments-right-your-age.asp

Frankel, M. (2017, May 28). Here’s How to Determine Your Ideal Asset Allocation Strategy. [Blog post]. Retrieved from https://www.fool.com/retirement/2017/05/28/heres-how-to-determine-your-ideal-asset-allocation.aspx

Top 5 Biases that Impact Investment Decisions

As financial advisors, we use facts and logic to guide our clients through investment decisions, rather than emotion. Even the most perceptive investors, armed with years of market experience, can fall prey to mental biases that lead to poor investment decisions. While it’s impossible to completely eliminate mental biases, we help our clients identify and minimize common investment biases that can lead to costly investment mistakes.

What are the most common biases in investing?

Behavioral psychologists Daniel Kahneman and Amos Tversky first explained the biases that inhibit investors’ ability to make rational economic decisions. There are two main categories of investing biases: cognitive and emotional.

Cognitive investing biases involve information processing or memory errors, whereas emotional investing biases involve taking actions based on feelings rather than on facts. Let’s take a look at the 5 most common investment biases, along with the remedies we use to minimize their impact on our clients.

  1. Confirmation Bias
    It is natural for investors to be drawn to information that supports their existing views and opinions. Confirmation bias leads investors to attach more emphasis to information that confirms their belief or supports the outcome they desire. This can have a negative effect by reducing diversification and causing investors to overlook signs that it is time to make adjustments.

How We Help Minimize the Effects: We provide our clients with up-to-date information gathered from a variety of reputable sources. Our investors are fully informed of the pros and cons of their desired investments, giving a more balanced view that leads to better decisions.

  1. Overconfidence Bias
    A common behavioral bias in investing is overconfidence, which causes investors to overestimate their judgment or the quality of their information. This can lead to “doubling down” on a losing investment instead of knowing when to cut losses or under-reacting to important information about changing market conditions.

How We Help Minimize the Effects: We help our clients develop and stick to a solid investment plan and make adjustments that are based on actual market conditions.

  1. Recency Bias

Investors who suffer from recency bias have a tendency to overvalue the most recent information over historical trends. For example, recency biases can threaten an investors’ financial well-being by spurring them into increased risk-taking after experiencing a favorable gain in their portfolio.  It can also occur when the investor experiences an isolated loss and decides not to make any portfolio adjustments for fear of further loss.

How We Help Minimize the Effects: We help our clients focus on the long-term performance of their portfolios, by reviewing both historical and current performance.

  1. Loss Aversion Bias
    Research has shown that humans feel the pain of a loss approximately twice as much as they feel the pleasure of a similarly sized gain. This can lead investors to focus on their investment declines more than gains and can lead to inaction that stagnates the growth of their portfolios.

How We Help Minimize the Effects: We help our clients accept that losing money is an inevitable part of investing. We work together to create a financial plan with predetermined exit strategies.

  1. Anchoring Bias

Anchoring bias is the tendency to “anchor” on the first piece of information received rather than evaluating the market as new information develops. For example, when investors anchor their belief about the value of a stock at the initial trading price rather than the current market conditions, this can lead to unwise decisions that can damage their portfolio’s profitability.

How We Help Minimize the Effects: We help our clients to assess investments based on current market value.

Investing biases can lead people into making financial decisions for reasons other than factual market conditions, significantly diminishing their financial stability. That’s why we believe one of our main responsibilities as financial advisors is to help our clients avoid the cognitive and emotional biases that can lead to faulty investment decisions.

Sources:

Parker, Tim. (2018, May 3). Behavioral Bias: Cognitive Versus Emotional Bias in Investing [Blog post] Retrieved from https://www.investopedia.com/articles/investing/051613/behavioral-bias-cognitive-vs-emotional-bias-investing.asp

McKenna, Greg. (2014, Nov. 20) Trading Insider: 5 Cognitive Biases That Can Hold Traders Back [Blog post] retrieved from https://www.businessinsider.com.au/trading-insider-5-cognitive-biases-that-can-hold-traders-back-2014-11

Lazaroff, Peter (2016, April 1) 5 Biases that Hurt Investor Returns [Blogpost] Retrieved from https://www.forbes.com/sites/peterlazaroff/2016/04/01/5-biases-that-hurt-investor-returns/

DesignHacks.co (2017, August). Cognitive Bias Codex [Infographic]. Retrieved from http://www.visualcapitalist.com/wp-content/uploads/2017/09/cognitive-bias-infographic.html

How the Right Advice Can Boost Financial Confidence

What value does a financial advisor actually provide? This may surprise you, but the value of a quality financial advisor goes far beyond portfolio advice. It’s about guiding clients to develop sophisticated financial behaviors. With robo-advisors and consistent market volatility in the headlines, it’s important to realize the comprehensive advantages of working with a personal advisor – not a computer algorithm.

A recent study by Fidelity Investments discovered that working with a financial advisor can add up to 4% higher investment returns. In a similar study, Vanguard estimated that the quantitative value of a financial advisor is about 3% on a net basis (4% minus a 1% fee). Additionally, an advisor can give you peace of mind by boosting your financial confidence in the following areas:

  1. Developing a workable financial plan
  2. Serving as a behavioral coach
  3. Creating a consistent investment strategy
  4. Navigating retirement savings plans
  5. Developing a tax-sensitive investment strategy
  1. Developing a workable financial plan

Regardless of life stage, we work with families and individuals to develop plans that allow them to achieve several financial goals at once, such as paying off student loans, saving for a desired vacation, and building a reserve for emergency expenses. After examining a client’s income, expenses, and spending habits, we can set priorities, identify areas where expenses can be reduced, and develop a savings plan to achieve both short and long-term goals.

  1. Serving as a Behavioral Coach

In a world where personal financial issues have become increasingly complex, we help clients figure out what’s true or false, what works, what matters, what is useful, and what can go wrong. Not many people have sufficient expertise to do that themselves—especially with an objective mindset. We provide support to clients so they stay on course in times of financial stress to help eliminate poor financial decisions. It’s easy for investors to fall victim to common cognitive biases that affect their decisions. Guiding clients to more responsible financial behaviors can help in a myriad of ways, such as realizing the benefits of long-term investments and enjoying the security and peace of mind that comes from having sufficient retirement funds.

  1. Creating a consistent investment strategy

Numerous studies show that when investors manage their accounts themselves, they tend to overreact to market changes by trading too frequently. According to the 2016 Dalbar Quantitative Analysis of Investor Behavior Study, disciplined investors can see nearly double the returns on their investments over 20 years compared to those who try timing the market. With many clients, we guide them through selecting an appropriate mix of investments, rebalancing their investments as needed, and executing a consistent investment strategy that will keep them from making rash decisions.

  1. Navigating retirement savings plans

A lack of retirement savings is a significant problem for many Americans due to longer lifespans, expensive medical care, and the rising cost of living. Without the guidance of a financial advisor, many Americans ignore the need for a solid retirement savings plan. Working with a financial advisor can help you determine the ideal time for retirement, the amount of savings needed to meet your retirement goals, and your ideal retirement age to guarantee income for life.

  1. Developing a tax-sensitive investment strategy

Tax efficiency is a critical part of financial planning. We often give advice on issues such as tax-loss harvesting in brokerage and other taxable accounts, managing exposure on short-term capital gains, charitable giving, and more. While tax issues are not the main focus of our clients’ investment strategies, advice on how to manage, defer, and reduce tax exposure has the potential to improve returns by as much as 1% to 2% per year.

While financial advice is often perceived as simply implementing an investment portfolio or dispensing financial guidance, that truly is just one slice of the pie. When it comes to the five financial areas above, you can’t get any better than having a personal advisor there to help you navigate the complexities of your financial situation.

If you’re interested in learning more about how we can help you with your finances, please contact us for a complimentary consultation.


Sources:

Fidelity Investments. (2017, Dec. 14). The value of advice [Blog post]. Retrieved from https://www.fidelity.com/viewpoints/investing-ideas/financial-advisor-cost

Pfau, W. (2015, Jul 21) The Value of Financial Advice [Blog post] Retrieved from https://www.forbes.com/sites/wadepfau/2015/07/21/the-value-of-financial-advice/#71caf4ca1333

Douglass, M. (2017, Apr. 2). Yet another study shows that timing the market doesn’t work [Blog post]. Retrieved from https://www.fool.com/investing/2017/04/02/yet-another-study-shows-that-timing-the-market-doe.aspx

Benjamin, J. (2014, Jan 27) Financial advisers can add 3 percentage points to client portfolios: Vanguard [Blog post]. Retrieved from http://www.investmentnews.com/article/20140127/FREE/140129915/financial-advisers-can-add-3-percentage-points-to-client-portfolios

4 Reasons Your Retirement Plan Might Fall Short

May AOTM

Ever find yourself daydreaming about retirement? Whether your dream retirement entails traveling the world, dedicating time to beloved hobbies, or helping your children and grandchildren, saving enough for retirement is critical to enjoying all of these endeavors. Everyone deserves the best retirement possible, but numerous planning mistakes can cause retirement plans to fall short.

According to recent studies, retirement savings look grim for many Americans for reasons such as living longer, expensive medical care, and the rising cost of living. One survey showed that 45% of all Americans have saved nothing for their retirement, including 40% of Baby Boomers. This trend continues with younger generations too, with a recent report from The National Institute on Retirement Security showing that 66% of Millennials haven’t saved a penny towards their retirement.

May AOTM

(Credit: Time/GoBankingRates)

If you have started saving for retirement, you’re definitely ahead of the curve. However, you could still be engaging in some of the biggest retirement planning mistakes—without even realizing it. How can you save enough to thoroughly enjoy your ‘golden years,’ without hurting your finances in the meantime? Here are 4 retirement planning mistakes worth avoiding:

Mistake #1: Focusing on the Return Rate

If you have an investment that produces a high rate of return, it’s easy to get caught up in always pursuing that outcome. However, be wary of that type of bias, as it could negatively impact your future investments. Rather than chasing rates of returns, shift your focus to creating a diversified portfolio that spreads out investments through a variety of fund types. This might include balanced, index, equity, or global. Working with a financial advisor that helps you diversify your portfolio can help protect your retirement savings if/when the economy goes sideways. Plus, they’ll help you discover investments that match your retirement goals and risk tolerance.

Mistake #2: Retiring Too Early

Many of those saving for retirement aren’t saving as much as they need to continue their lifestyle during retirement. If that sounds like your situation, then possibly consider staying in the workforce a little longer and wait to take your Social Security benefits. This will allow you to save longer and also maximize your benefits if you don’t apply for them at age 62.

Additionally, Social Security data shows that around 33% of retirees live until 92 years old, and 75% of retirees apply for benefits as soon as they hit 62. With this in mind, pushing retirement back a bit could benefit you in the long-run.

With that said, pushing back retirement isn’t the best option for everyone. There are many reasons to retire as soon as you can, such as having health issues or other life circumstances that encourage early retirement. Whether you plan to retire early or need to retire later than expected, working with a financial advisor can help you determine the best way to prepare yourself for your specific retirement needs.

Mistake #3: Not Saving Consistently

One of the worst retirement mistakes to avoid is saving too little now and hoping you can ‘catch up’ in the future. The truth is, catching up rarely happens, and unexpected life circumstances can make catching up impossible in some cases.

According to the Center for Retirement Research at Boston College, the median retirement account balance for 55 to 64-year-olds was just over $110,000. If this money had to stretch over 20 to 25 years (which it likely will as people are living longer), it amounts to just over $400 per month to live on. We can see this is just not realistic in today’s world.

To save more, create a budget, cut out unnecessary spending, open a 401(k) through your employer or an individual retirement fund as a self-employed individual, and save extra money with each raise or bonus you receive from work. Working with a financial advisor is one way to shed light on other financial strategies to boost your retirement savings.

Mistake #4: Not Factoring Taxes into the Equation

 Another common mistake made during retirement is forgetting about taxes and their effect on your savings. Tax deductions change for many people once in their in retirement, and some retirees end up paying more in taxes. Consider speaking with a financial professional about tax-free withdrawals from Roth IRAs or about timing withdrawals from accounts that will be taxed.

Want to avoid other retirement saving mistakes and create a personalized retirement plan? Contact us today for a complimentary consultation.

Preparing Your Children for Adulthood through Financial Literacy

AOTM April GraphicAs a financial advisor, I learn a lot about clients’ short and long-term financial goals through many conversations and building relationships with them. I also often learn about their frustrations and regrets regarding past financial decisions. During these conversations about financial regrets, I often remind clients that it is important to remember that with time comes perspective and experience. So while they, as adults, may have regrets about past financial blunders, they can use their knowledge and experience to help their children steer clear of the same mistakes. With April being Financial Literacy Month, there is no better time to learn about the importance of teaching children about financial matters and helping them form good habits.

Are you hesitant to speak with your children about financial matters because of how you’ve handled past situations? Well, you aren’t alone. Many parents are reluctant to speak with their kids about finance but haven’t considered using their personal experiences as a lesson to teach their kids about financial consequences. While some parents think their child will learn financial literacy in school, only 17 states in America currently require students to take a personal finance course. If children aren’t learning about money from their parents and/or guardian, many children are left in the dark or could learn negative financial habits from their peers or media.

Broach the financial conversation with your children knowing you don’t have to be a financial genius in order to teach them helpful lessons for the future. Sometimes these conversations even help parents take better control of their own financial situation, in order to be a strong role model for their children.

Not sure which financial lessons are most important for your children to be aware of? Here are 4 to consider when you prepare to teach your son or daughter how to build a solid financial future:

  1. Earning Money. One of the first experiences your child will have when it comes to financial matters is earning money. Whether you are offering a small stipend for jobs around the home or your child has a part-time job after school, earning money through physical or mental effort helps your child associate value to labor.
  1. The Importance of Budgeting. The topic of budgeting can be brought up at a relatively early age. Whether your child earns an allowance or is paid from a job outside of the home, discuss how he or she can create a budget with the earnings. Some parents require the income a child earns to be used for their discretionary spending – things like gas, going out with friends, or buying a new clothing item. Be sure to help your child create a system where a portion of his or her money will go into savings, an emergency fund, their car or phone payment, etc.Budgeting helps children learn the value of money and gain a clearer picture of the time and effort involved in obtaining something of value or make a major purchase in the future.
  1. Saving Money. It seems like such a simple topic yet saving money is often not discussed with younger generations. As young men and women between the ages of 17 and 25 make plans to move away from the family home, many are unprepared for the shock of monthly bills and being tied to contractual obligations, such as rent, phone, and monthly car payment contracts.By having a firm grasp on saving money and budgeting ahead of time, your child can bypass “bill shock”, in addition to feelings of anxiety and confusion when he or she moves out of the home.You can teach younger children about the topic of saving money through the use of a piggy bank, and older children through opening a savings accounts and setting up various goals.
  1. The Difference of Needs vs. Wants. Because we live in a want-driven society, this is a crucial discussion to have with your child. We “need” food, shelter, clothing and security to survive – whereas our “want” is something we desire but do not depend on to live. Teach your child that “needs” should be built into their budget, whereas a splurge or extra money fund is what should be paying for the “wants” in life.

Of course, this can segue into a much broader discussion of why your child wants something – possibly because his or her friends have it, because they think it will make them more likeable, etc. There are many helpful conversations that can come from this topic that can benefit your children for years to come!

Take advantage of Financial Literacy Month this April and make a plan to start having regular discussions about money with your children. Teaching them while they’re young can help them build a strong and positive relationship with money, and instill in them the value of earning money, budgeting, saving, and setting up a secure future.

For more information on how to teach financial literacy to tweens, click here, and for teens, click here. Both links offer concepts and tasks that will help them develop the financial skills they need as they prepare for adulthood. If you would like more personalized financial guidance as you educate your kids about money, please contact us for a complimentary consultation.

Financial Complexities of a Longer Life

Americans are living longer. That’s the good news. The bad news is that most people aren’t financially prepared. Many Baby Boomers will be in retirement for over 20 years and unfortunately, many aren’t saving and investing with a longer life-expectancy in mind.

 There are serious consequences to financial planning around the wrong life expectancy. Some retirees are working later in life; others live in fear of running out of money, while others are leaving less of a legacy than they hoped. No one wants to run out of money in retirement.

 

How Long Should You Expect to Live?

The Social Security Administration notes that at 65-years old, the average man can expect to live to roughly 84.3 years of age, whereas the average 65-year old woman can expect to live until age 86.6. This means that on average, Americans can expect to spend about 20 years in retirement.

 

However, there is a strong chance that you should plan to be in retirement much longer than 20 years. One out of every four 65-year olds will live past the age of 90, and one out of every 10 will live past the age of 95. Are you prepared for three decades of retirement? Most people aren’t.

 

With these figures in mind, here are 3 steps that can be taken to ensure your financial longevity:

 

Step 1) Develop a Clear Vision of Your Retirement Lifestyle

 

To create a well-conceived plan and have the will to faithfully execute it, you need a clear vision of your lifestyle in retirement. Start by defining your goals and asking yourself:

  • Where will I live?
  • Where will I travel?
  • What will I drive?
  • How will my hobbies change?
  • Where will I donate my time and money?

It’s important to factor realistic spending assumptions into the cost of your retirement, based on your goals and desired lifestyle. Your plan should also include contingencies for health care costs and unexpected expenses.

 

Step 2) Adjust Investment Strategies

Start to plan for a longer retirement by adjusting your investment strategies — like saving more, being slightly more (or less) aggressive with your investment strategy, etc. We ensure our clients have these bases covered, so consider calling us if you’d like someone to review your investment strategies. We’re experienced in retirement planning if:

  • You are within 5 years of retirement
  • You have recently experienced a significant change in your income
  • Your investment accounts are exposed to higher risk due to natural market fluctuations
  • You aren’t confident that you are still on-target for your retirement and legacy goals

 

Step 3) Consider Health Insurance Options

Health insurance is the most expensive and bothersome insurance the average individual carries. Unfortunately, many people approach retirement and believe that the burden of health insurance will be lifted. In reality, even when covered by Medicare and other supplemental insurance plans, there are still substantial costs left for the individual to pay.

In addition to premiums, deductibles, and co-pays, prescription drug costs are likely to rise. In the last decade, the average annual cost of one brand-new drug used to treat chronic health conditions cost a senior $5,800 (2015), compared to $1,800 less than a decade earlier (AARP). Planning for a longer retirement requires keeping a keen eye on the rising cost of healthcare in the US.

Understanding the stresses that come with ensuring your financial longevity, we’re here to help you sort out the complications of an ever-changing financial plan. Contact us to review your retirement, legacy, and estate plans. Together, we’ll create a clear strategy that points you toward a comfortable retirement, whether it lasts one decade or three.

 8 Key Life Events that Require Financial Guidance

 

Almost everyone stresses over the daily obligations of financial planning, but many also neglect the significant life stages that require special attention and strategies. Here are 8 key life events that could benefit from professional financial guidance.

 

  1. Graduating from College

College graduation marks the first major transition into adulthood. The progression from school to career is a significant milestone and the perfect time to get financial advice.

 

Whether you or a loved one has graduated, this is also a great time to assess needs such as college debt repayment, savings strategies, or insurance.

 

Luckily, most recent graduates have time on their side. With the decades ahead and the power of compound interest, it’s the perfect time to have a discussion about the benefits of saving right now. The financial foundation built now will have a major impact on the rest of your financial life.

 

  1. Marriage or Divorce

Professional finance advice is extremely beneficial at the time of marriage. Goals such as combining finances, handling credit issues or debt problems, and building a successful financial life with your spouse will be hard to establish without objective financial advice.

 

On the other end of the spectrum, divorcees should ensure that they protect their finances. If you’re entering divorce proceedings, important tasks like updating your will, changing your insurance policies, and protecting your investment accounts need to be handled with care and are best managed by a professional.

 

  1. Adding a Member to Your Household

The birth of a child is a miraculous event, but that new addition will bring huge financial and lifestyle changes. College funds will need to be created, wills and insurance policies need to be updated, and a whole host of new expenses will need to be managed. Make sure that your new bundle of joy is off to the best start possible by bringing in a professional.

 

  1. Job and Income Changes

Whether you are starting a new job, changing careers, or accepting a well-deserved promotion, there are important financial considerations to address. During a job change, you’re better off with a financial planning professional who can help you minimize taxes by rolling over retirement accounts and making the most of your stock options. A professional can also help you adjust your financial plan so you start putting more money aside and preparing for a future of continued financial growth.

 

  1. Buying and Selling Property

If you’re buying a home, a professional can help you review your situation in an effort to maximize your tax benefits, deal with capital gains exclusions and taxes, and find write-offs and deductions you might otherwise have missed. Buying and selling property is complicated, and it’s not worth tackling on your own.

 

  1. Illness or Hospitalization

An unexpected illness or hospitalization can strike at any time, and when it does, your finances are soon to be impacted. If you find yourself hospitalized or stricken by a sudden illness, reaching out to a professional could minimize the financial impact and help you recover more quickly. A financial advisor will also help with long-term care options and disability insurance, estate planning, life insurance, and a host of other planning topics that will have an impact on your overall portfolio.

 

  1. Inheriting Property

Dealing with an inheritance can also be complicated, hence why it made our list. If your inheritance comes in the form of a lump sum, it is important that you minimize the tax bite and address outstanding debts. If you are inheriting a retirement account like a 401(k) or IRA, you’ll definitely benefit from assistance with rollover options and investment advice.

 

  1. Retirement

Retirement may be the most important transition in your life. From maximizing and managing benefits to developing a distribution strategy, the right professional can be an invaluable resource.

 

Everyone wants to feel comfortable by establishing long-term financial security, so it’s worth taking an honest look at your current financial situation and goals. Every day we take the complexity out of financial planning for our clients. We can make it simple for you too, so don’t hesitate to contact us directly if you need someone to look over things with you.

(How to) Avoid Expensive Divorce Mistakes

Certified Divorce Financial Analyst

During divorce, it’s important to get a solid understanding of your finances.  Simply put, financial mistakes today can cost you for the rest of your life. Regardless of where you may be in the divorce process, there are key financial decisions you need to make.

Emotions run high in divorce and chances are you’re feeling overwhelmed.  It’s hard to stay focused on the big picture given the complexities involved.  The decisions you make today will position you for the future.  The role of the certified divorce financial analyst (CDFA™) is to assist a client and his/ her lawyer/ mediator to understand how the divorce financial planning decisions made today will impact the client’s financial future.

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7 Small Changes You Can Make Today to Retire Sooner

You probably started thinking about retirement the day you entered the workforce. For some of us, retirement is very far off. For others, it’s right around the corner. No matter what stage of life you’re at, PA retirement income planning should always be at the top of your mind.

What if you haven’t saved enough for retirement? Or worse, what if you haven’t saved anything at all? Relax and take a deep breath. All hope isn’t lost. There are seven small changes you can make today that will help you save more money and may even help you retire sooner.

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