My Smart Retirement

Do you avoid money, or do you worship it? The way you approach finances and retirement can be telling.

Money avoidance

If you prefer to avoid money conversations, decisions or planning, it’s best to recognize that you feel that way and try to work around it, through it or with it instead of trying to battle it.

The issues tend to reside in the back of our minds, and really, they’re not as spooky as they seem once we get to the place where we understand them.

We tend to have mistaken beliefs about money, and these beliefs can be a huge hindrance to correcting our negative habits and having more peace in this area.

Some big misconceptions are rich people are greedy, and people get rich by taking advantage of others. That is true in some cases, but not all, so you shouldn’t avoid money because you worry about those things.

Money worship

These are the kinds of people who hit the news, because of their money worship. We do find that money worship comes about because they give money more characteristics than it just being a tool in order to help us provide for ourselves.

“Often in money worship we’ll see people feel like money is power,” said Nancy. “Or, people equate money with happiness.”

Check out the full episode or use the timestamps below to hear a specific segment.

2:09 – Money avoidance

4:30 – Mistaken beliefs about money

6:01 – Good people shouldn’t care about money?

11:58 – Money worship

14:21 – Money buys freedom?

15:17 – Net worth and charity

For more, visit us online: https://www.flemingfinancialservices.com/podcast 

We like to do an annual talk about money and couples and how to have good communication. Money is one of the most common reasons that couples fight, and it is one of the top causes of divorce.

Here are some ways you can manage money with your mate. First, ask yourself these questions:

• What are the three best purchases you have made as a couple? That will bring up some happy memories.
• How does your partner feel about money? How you were raised plays a major role in how you feel about money. Focus on understanding each other’s mindset.
• Do you know your greatest fear with finances? All of these feelings will play into your marriage.

Experts say talking about finances with your loved one is really important, even though it might be awkward. You need to talk about your debt, income, investments, financial obligations, etc.

“Talking about money is never talking about money. I have learned that money is the most emotional subject,” said Nancy. “Even in the best of times, money can be a little bit of trap. Sometimes it can be a time bomb in a relationship.”

In today’s episode, Nancy also shares:

• How to align your financial goals with your spouse
• Why she doesn’t like the word “budget”
• Why keeping money secrets from your spouse is a terrible idea

Check out the full episode or use the timestamps below to hear a specific segment.

1:22 – Abraham Lincoln

2:50 – Managing money with your mate

4:42 – What are the three best purchases you have made as a couple?

5:28 – Talking finances is important

7:03 – How does your partner feel about money?

8:56 – Do you know your greatest fear with finances?

10:10 – Align your goals

12:44 – Why “budget” is a negative word

15:46 – Don’t keep secrets

17:09 – Set ground rules for talking about money

Read more and get additional financial resources here: https://www.flemingfinancialservices.com/podcast 

In the U.S., income exploded last year. It was the best year for income in American history by far, but I’m not discounting Americans who lost their business. Also, debt affordability has never been better in modern history. Americans still hold a lot of debt, but a big question is can you afford the debt.

Back in 1930, the U.S. Treasury secretary said liquidate labor, stocks, farmers, real estate, purge the rottenest out of the system, and high costs of living will come down. Enterprising people will pick up the wrecks from less competent people. That's how it was until 2020 when the stimulus was born.

We need to be aware that in our country, our economic activity is all about spending. Our base growth comes down to a most basic component of how do we spend. Consumer and business spending makes up 87% of our U.S. economy.

Getting money into the hands of people is a good thing, but once people get money, it doesn’t mean they want to give it up.

Another thing to look at is mortgage payments. Before 2008, the percentage of income going to mortgages was about 8%. Now, it has declined to a generational low of 4%. We’re also seeing student debt and auto loans rising at the slowest rate in 10 years.

As income surged, debt fell dramatically and savings exploded. The American consumer is in the best financial shape in history.

Check out the full episode to hear Nancy discuss these topics. Use the timestamps below to hear a specific segment.

1:10 – We used to handle recessions differently

2:23 – How we spend

4:45 – Debt affordability

6:21 – Cash in banks

7:03 – More money in checking accounts

12:00 – The American consumer

15:06 – Asset allocation and business cycles

18:20 – Bonds and cash

19:38 – Innovation

For additional financial resources, visit us online: https://www.flemingfinancialservices.com/ 

The past 12 months have tested many people financially and the volatility doesn’t appear to be going anywhere. These are the times that can cause people to hurt their financial future by acting on fear.

What we’ve seen and heard from a lot of people recently is they have been worried about losing significant amounts of their personal wealth in the market so they moved to cash. The problem with is when you pull it all out and move to the sideline, you then lose out on the opportunity for the money to recover when the market comes back. Just look at how the market has bounced back from huge dips over the past year.

So what brings on that level of stress and causes people to hover over their long-term money? We’ve found it’s usually the result of failing to sit down and building a well thought out financial plan.

This leads to fear that you’ll lose it all and you subsequently make decisions based on that emotion. If you don’t develop a plan for your money, then you let life control you rather than the other way around.

Another problem area for many people is procrastination. We get so inundated with life that we fail to get our financial house in order. The result is people leave behind a mess for our loved ones when we pass if these things aren’t taken care of.

Be pragmatic about getting your planning tasks completed. Take a step back and look at it from someone’s else’s perspective. What type of paperwork do you need to put in order? What documents do you need to have prepared should something happen to you?

Here are some of the areas to pay attention to:

• Power of Attorney
• Name your beneficiaries
• Make plans for inherited IRA changes
• List your assets and passwords

Ultimately, our goal is to help you take your net worth and create something that will sustain you. We’re here to meet whenever you’re ready to take the next step, but go ahead and request the Building Your Fiscal House booklet we’ve put together and get some great information now.

Check out the full episode to hear Nancy discuss all of these things. Use the timestamps below to hear a specific segment.

0:44 – Treating your money like you could lose it all

4:21 – Procrastination

6:43 – How can you change your mindset?

7:47 – Power of Attorney

9:07 – Name your beneficiaries

11:16 – Changes to IRAs

14:51 – Passing on your house  

16:01 – Keep a list of assets and passwords

For more financial information and resources, visit us here: https://www.flemingfinancialservices.com/ 

You’ve heard the old expression about putting your money to work for you, but what job are you going to give it? There are many different ways to invest and save your money but you have to know what results you’re trying to achieve.

When you think about your finances, ask yourself what does money represent and what do you want to get out of your money? There are many things you may look to accomplish, but the three primary things you hope to obtain are growth, safety, and liquidity.

The question we get a lot is what investment can achieve all three of these? Unfortunately, that’s the silver bullet of investing. You’re just not going to find it. So the key is building a portfolio that’s diversified by trying to accomplish two of the three qualities. Once you figure out the ‘job description’ of a specific account, you can determine what you want to do with the money.

Let’s look at investments that will help you get safety and liquidity. The first and most common is cash. Many people like to move more and more into cash as they get into retirement. Another option is savings bonds, which used to be used much more in prior decades. Something to think about with liquidity is it comes in different forms. You might need the money next week, in six months, or in a year. Different timeframes allows for different investment options.

If you’re looking for liquidity but you want to get growth out of your investments, the place most people turn is the market. We’d be dealing with individual stocks, bonds, ETFs, and mutual funds. This gives you the possibility of growth but also the option to access your money at any time.

Now let’s think about getting growth but also keeping the safety quality. Real estate is an investment that many people choose because it typically holds its value and appreciates over time. Annuities might also be in that category but it depends on the type of annuity. That’s something your advisor can assist you with.

The most important thing you can do is determine which objectives you have for each account you have and that’s where having a plan comes into play. We can look through your portfolio and see how balanced you are and whether you’re meeting those objectives. As you move forward, think about these qualities when evaluating an investment and it should make your decisions a little easier.

Use the timestamps below to hear a specific segment.

0:32 – What does qualities of money mean?

1:19 – The best investment to achieve all three

2:23 – Diversification is key

4:04 – How to get safety and liquidity.

6:30 – Different types of liquidity

7:58 – Liquidity and growth.

9:11 – Growth and safety

11:14 – Biggest thing for you to think about

13:08 – Here’s what we recommend

Thanks for listening! For additional financial resources, visit us online here: https://www.flemingfinancialservices.com/

In order for us to determine the direction we want to go with retirement planning, we’ve learned that it’s important to first get an idea of what we want our retirement lifestyle to look like. Everyone pictures something different and knowing that helps us build a plan that you can have confidence in.

On this episode of My Smart Retirement, Nancy Fleming will take you through six different retirement lifestyles that we commonly see clients choose. There are a few things to be thinking about as you go through this episode. If you’re in retirement, how is your lifestyle going? Are there any tweaks that you’d like to make?

If you’re getting close to retirement but haven’t stopped working yet, have you thought about how you want to spend all that extra time? Now is the chance to be thinking through that and envisioning what that lifestyle will look like without the stress of work.

With those things in mind, let’s look through the popular lifestyles for Arizona retirees that we’ll discuss.

Two-Location Solution

The first lifestyle we commonly see for people in our area is having two separate residences in different parts of the country. Maybe you want to spend the summer in a little cooler location or another place you really enjoy. The heat in Arizona isn’t for everyone so we work with a lot of clients that leave for a portion of the year. One way to get an idea if you like this lifestyle is to rent for a while in an area you think you’d like to live.

RV Life

The next lifestyle is the RV life. Some people choose to travel the country and see as much as they can at their own pace. They do that by living out of an RV for an extended period as they experience all the great things the country has to offer. This also gives people a chance to get a better idea of where they’d like to live in retirement so once they get off the road they decide to settle down.

Front Porch People

Some people are really happy with the home life and enjoy the activities they have around them. They don’t have drive to get up and be on the go all the time. This doesn’t necessarily mean you’re just sipping tea in a swing on the front porch, just that you won’t have as much travel to factor in.

College Town Living

Whether you want to continue learning or be close to a college or university that’s special to you, this is a lifestyle that you might consider. It allows you to be close to the action, whether it be concerts or sporting events or even top hospitals for medical care.

Living on the Water

Everyone knows that Florida and its beaches is always a popular retirement destination, but we have a lot of people in Arizona that love visiting the California coast for vacations. Maybe this is something you want to make more of a permanent thing in retirement.

Active Lifestyles

A lot of people just want to make sure they stay active in retirement, which is a great thing. This could typically include going to a good gym, playing golf a few times a week, or playing the growing sport of Pickleball

Passion for Giving

Something we see a lot of people devote their time to is helping others. They’ve had a passion for giving or volunteering but haven’t always had the free time to do as much as they’d like. Retirement is a great time to find a charity or a cause that is close to your heart and make that a core part of your daily life.

Whichever you choose, Fleming Financial Services can help you build a retirement plan that gets you to your preferred destination and lifestyle.

Get additional financial resources here: https://www.flemingfinancialservices.com/ 

Use the timestamps below to hear a specific segment:

0:34 – What we mean by retirement lifestyle

2:45 – Living two different locations through the year

4:58 – RV life

6:48 – Front Porch People

7:51 – College Town Living

9:10 – Living on the Water

10:06 – An Active Lifestyle

11:00 – Passion for Giving

13:55 – Let’s answer a question we’ve been getting a lot about Social Security

We’ve been spending a lot of time on the podcast discussing financial literacy and where the majority of people are falling short as it relates to planning and investing.

As we move forward this week, let’s start by talking about retirement concerns we continue to see. One of the biggest we’ve found is voluntary unemployment. The idea of giving up the career we’ve built and voluntarily give it all up to transition to a new chapter. Many times you might even be at the top of your game, and it can be a stressful and scary decision.

That’s why you want to as buttoned up as possible when it comes to your plan. The key question is to answer is how prepared and how knowledgeable do you feel today about retirement?

As we’ve pointed out before, a financial literacy quiz found that scores were actually lower in 2020 than they were in 2017. Many people did not pass the test and there wasn’t any section where scores were higher than 50%. That tells us that most people aren’t able to answer that question very well.

The good news is that many people in 2020 have at least been able to get a small preview into retirement because of the pandemic. Have you been able to spend less and be comfortable? Are you having trouble finding things to do when you’re at home all the time? These things have made people rethink retirement and whether they’re truly ready to transition.

So as you’re thinking more about that next chapter and what you need to do to get there, it’s critical that you get accurate information when it comes to finances. Whether that comes from us or other resources, you want to make sure you get it right. That’s why we’re clearing up a few misunderstandings on this show.

The first one we’ve seen comes with investing in bonds. Do you know how these change base on interest rates? Nancy will break it down on the show and explain exactly how the investment works and what causes the value to increase and decrease.

The next misunderstanding deals with small company stocks and dividends. Would you expect the yield to be higher or lower with a small company versus a large company? In general, the blue chip companies will pay a higher dividend because they are generating more revenue while the small company might have higher growth potential.

The third misunderstanding we want to clear up is actively managed funds and exchange traded funds. Only 28% of people in the survey knew the difference between the two, and most people will often lump them all into the category of mutual funds and assume they’re all the same thing. One big key is actively managed funds will have higher fees because someone is making investment decisions and managing the fund. You’ll want to compare the differences and understand the benefits of paying the higher amount for an actively managed fund, which we can help you sort through.

Hopefully this show will help you make better investing decisions, which is critical as more and more Baby Boomers move into retirement. We’re always here to help you with this so reach out and set up a complimentary consultation.

Use the timestamps below to hear a specific segment.

1:23 – A big concern we’ve found

2:40 – Financial literacy scores for 2020

4:52 – Being home this year allowed people to get a preview of retirement

5:58 – Clearing up misunderstandings

6:46 – Investing in bonds

9:07 – Small company stock

10:41 – Actively managed and Exchange Trade Funds

13:54 – Other categories of the financial survey that find

15:15 – Example of lifestyle changes that impact planning

17:23 – Make sure all of your affairs are in order

Read more and get additional financial resources here: https://www.flemingfinancialservices.com/ 

The biggest fear that anyone has for retirement is running out of money. No one wants to be forced to work if they’d prefer not to, and that’s where income planning comes in.

You might be surprised to know that less than half of all people are financially literate when it comes to retirement. Most people aren’t clued in on all the different aspects of planning and it can cause a lack of confidence in your financial future. But it’s not the individual’s fault. It just means more education is need and that’s the goal for this podcast.

After all, education is crucial to proper planning because we can base our decisions on correct information. There are a dozen different areas of planning and that requires advisors to spend time with their clients and help them understand the benefits and risks for every decision they make.

You’ll find that our process for planning is more extensive than most, but our goal is to give each client a sense of ownership in their plan. And that’s done by making sure they are looped in on each piece of the plan and why it’s a part of the overall process.

We’ll provide a couple examples on the show of times where mistakes can be made if you don’t have a complete understanding of an investment and how we worked with them to improve their situation.

Income planning is such a big piece to a successful retirement so let us help you build a portfolio that will provide you with the life you want to live. Give us a call us 480-632-8770 and let’s start putting a plan together.

Use the timestamps below to hear a specific segment.

2:00 – Why we’re talking retirement income

3:55 – Income literacy

5:12 – This is why having a planner is important

6:55 – How we help give you a sense of ownership in your plan

7:58 – Example of a client not fully understanding an investment

9:16 – The benefit of behavioral coaching

12:03 – 12 areas of retirement planning

13:32 – Our process is more extensive than most

15:44 – A lot of income considerations

Read more and get additional financial resources here: https://www.flemingfinancialservices.com/ 

As we approach the end of the year, people start thinking more about taxes and want to find ways to lessen their tax burden.

One area where you might already be lessening your tax burden and not fully realize it is through charitable donations. The holiday season brings that out even more so we want to make sure your contributions are being incorporated into your financial planning as we close out 2020.

On this episode of My Smart Retirement, Sean and Nancy will tell you about the three most significant tax changes that came with the Tax Cuts and Jobs Acts (TCJA_ from a few years ago. You might already know about these adjustments, but it’s important that everyone is aware of how they effect tax planning because it can be significant.

The first we want you to know about is that if you are making a cash contribution to a charity, you are allowed to deduct 60% of your adjusted gross income for that cash contribution. For example, if you have $100,000 of AGI and you make a contribution of $57,000, you can deduct that full amount. And don’t worry, an excess can be carried over into the next year.

Another thing the TCJA repealed is the ability to deduct a donation that’s used in exchange for buying a seat to a game. You used to be able to deduct 80% of that donation to a college or university but that’s no longer allowed. For many of the sports fans in our area, this has been a significant shift in their planning.

The third major change is that any charitable contribution in an amount greater than $200,000 has be documented in writing. Most charities will send you a letter thanking you for your donation or contribution so make sure you hang on to that.

With the changes in these laws, you have to itemize all your deductions for the charitable deductions to work. This is because standard deduction increased by a significant amount. The Tax Policy Center estimates that 9 out of 10 individuals will claim that standard deduction.

To help you understand when its best to use an itemized deduction, we’ll also break a few scenarios where this can be applied. Plus, we’ll share some strategies you might consider as you look to lessen that tax burden.

If you have any questions about charitable donations or tax planning after listening to the show, give us a call us 480-632-8770 and let us help you hold on to more of the money you’ve earned.

Use the timestamps below to hear a specific segment.

1:40 – Cash contribution deductions

2:19 – Another thing the TCJA repealed

4:18 – Third change has to do with getting record of your contribution in writing.

7:47 – The big caveat in this discussion

8:52 – What if you aren’t itemizing your deductions?

10:54 – Charitable donations as an RMD

13:10 – Another tip for itemizing deductions

For additional financial resources, visit us online here: https://www.flemingfinancialservices.com/ 

Regardless of what you know about annuities, you’ve probably heard an opinion about them. This investment tool, like any other, can be good or bad for your personal retirement plan, but is it?

Well, we’ve gotten a lot of questions about annuities recently because of all the market volatility. People are looking for ways to create reliable income and the annuity will always be a product that comes up in the conversation. So we want to use this episode of My Smart Retirement to educate you about how they work, why people choose them, and what our experiences have been.

Maybe the biggest thing we want to stress throughout the conversation is to do your homework. Ignore what you’ve heard about annuities and take the time to get the facts and become informed. They might not work for your goals but they might be exactly what you need. Every tool is valuable if used correctly and that’s no different with annuities.

One thing we’ve found is that the majority of people who need annuities are usually approaching retirement. The ages we normally see are between 55 and 75 with the peak around the early 60s. But when you get to this age, don’t just look up information online. This is such a nuanced product with so many different options that you need to take a detailed approach to planning.

That’s something we would be happy to work with you on. Give us a call and take advantage of our complimentary retirement plan.

Use the timestamps below to hear a specific segment.

1:08 – Why we’re talking about variable annuities today

2:09 – Annuities for many people are emotionally-driven

4:01 – Investments as a tool  

6:41 – Get the facts and then form an opinion

8:11 – Annuities have been evolving from income to growth

11:20 – Indexed annuities

12:24 – First thing you need to decide

15:37 – Planning becomes key

17:06 – Look deeper into annuities

18:33 – Who needs an annuity?

Read more and get additional financial resources here: https://www.flemingfinancialservices.com/