Archives for August 2017

Like a life plan, a well-thought-out financial strategy helps keep us on track and working toward our goals. And pursuing our financial goals goes hand in hand with working to achieve our life goals. For instance, if you have a specific retirement date in mind, creating a financial strategy can help you plan for that date and see if you are on track to meet your goals.

Here are three reasons you should implement a financial strategy:

1. It shows you whether your goals are realistic. Taking stock of where you are and where you want to be can help identify gaps and highlight potential shortfalls. Remember that specific retirement date you had in mind? A financial strategy can tell you whether that date is feasible or not.
2. It’s a port in the storm. It’s easy to stick with a strategy when things are good, but when things get challenging, it’s tempting to jump ship. A well-thought-out strategy will help act as an anchor for you when you have an unexpected event take place.
3. It helps you understand where your money goes. While some of us are good at following the money, some of us have no idea what we really spend our money on. Part of putting your financial strategy together is sitting down and accounting for your expenses.

We can help you create a financial strategy that helps you work toward your goals — just give us a call and we’ll schedule a meeting.

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.

The evidence-based approach originated in the medical field to promote the use of clinical experience and the best available research to make decisions about individual patient care.

In the investing world, this translates to a goal of using current evidence to help maximize an individual’s investment returns while minimizing risk from market downturns. In more simplistic terms, evidence-based investing (EBI) means that whatever you decide to do, make sure you have an evidence-based reason for doing it, and always be prepared to amend your plan when the evidence necessitates a change.

While we’re happy to explain to our clients various investing and wealth management approaches, including EBI, please keep in mind that our advice is tailored to each person’s needs. What works for one client may not work as well for another. We’d love to talk with you about our individual approach to investing – give us a call, and we’ll be happy to set up an appointment.

Financial professionals who use evidence-based investing typically take a four-step decision-making process:

1. Eliminate meaningless questions.
2. Ask meaningful questions.
3. Apply the evidence.
4. Monitor for effectiveness.

Another significant distinction about EBI is that it is commonly misinterpreted as passive investing. However, EBI is not so much about active versus passive management but rather is about keeping an eye on how much you pay for each investment and determining if what you’ve gotten in return is worth the price.

Please remember that investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

The American College of Financial Services recently posted some surprising results from its Retirement Income Literacy Quiz. Nearly three-quarters of respondents ages 60 to 75 failed the test with a score of 60 percent or less.

The quiz included topics such as which expenses are covered by Medicare and long-term care insurance and what age people should start drawing benefits from Social Security. If you’re not familiar with the answers to questions such as these, we invite you to schedule a consultation so we can help you delve into retirement planning. There are many factors to consider beyond where to invest and how much you’ve saved. Retirement is about preserving and distributing assets, as well as understanding the impact of longevity.

Let’s take a look at some other retirement-oriented questions that are important to answer. For example, do you know how long you have to work for your company before you can keep matched contributions to your 401(k) plan? Some companies that sponsor a 401(k) require employees to work around two to three years before employer-matching contributions are vested. If you leave the company before then, those matches won’t be added to your account balance — even if you maintain the plan with that employer after you go to work for another one.

It’s worth noting that 401(k) and other employer-sponsored retirement plans may be considered for tax reform. Recent discussions have included eliminating the tax-deferred status of retirement plan contributions, which represent a four-year tab of $583.6 billion that Congress could spend elsewhere. The discussions are in the very early stages, but things can happen quickly in Washington these days, so it’s an issue worth watching.

For those in the military, on Jan. 1, 2018, the military’s new Blended Retirement System goes into effect. Starting that day, all military personnel whose length of service spans one to 12 years will have one year to make an irrevocable choice between the old and new retirement plans. Service members who started before 2006 will automatically remain in the old plan, which offers a generous pension complete with inflation adjustments. However, anyone joining the military starting next year gets enrolled automatically in the new program, which combines reduced pension benefits with up to a 5 percent match of personal contributions to the government’s Thrift Savings Plan (TSP).

If you haven’t saved enough money to retire yet, you may be thinking you’ll just keep working until you have enough. However, according to a recent survey of 1,002 retirees, 60 percent said the timing of their retirement was unexpected, citing reasons such as health issues, job loss or the need to care for a loved one. While working longer is a worthy goal, it’s good to develop a financial plan that helps provide for possible contingencies just in case you have to pivot to “Plan B.”