My Smart Retirement

Today, we’re opening up the mailbag and answering some retirement questions we get from our listeners and clients.

George says he has all of his retirement savings in one IRA. Should he move some of that money elsewhere to be diversified?

Since we don’t know how close George is to retirement and what his risk tolerance is we can’t give him a definite answer. Instead, what should he look at to determine the right move for him?

You want to look at whether the IRA you are invested in is all in one stock or has some diversification inside the account. Do you have only one or two mutual funds? What is the size of the IRA? A smaller IRA has different diversification needs than a larger IRA. It is possible to be diversified within an IRA instead of rolling that money into a different account.

Mark feels like he needs to reduce the risk in his portfolio, but he doesn’t know where to turn. He’s looked at bonds, annuities, and even cash. But all of these options have drawbacks he doesn’t like.

Unfortunately, there is no perfect financial instrument out there. We have to analyze each tool and what the benefits and drawbacks are. You know when bonds will mature and bonds mature at the cost of their core value. Cash is difficult because there is a low-interest rate on this type of savings. But having emergency funds is essential. Lastly, annuities can offer some protection but there is probably a certain amount of time that you have to keep hold of the annuity. Always ask yourself what the pro, the con, and the string attached is.

Doug says he doesn’t like the options in his 401(k), but his company says he is not eligible to roll his money into an outside account. He knows people have moved money out of their 401(k), how does this work?

The Federal government doesn’t have a rule against rolling over your 401(k) into an IRA, but it’s up to your company’s HR. Individual companies have their own rules and policies. Most of the time people are eligible to roll over their own contributions to an IRA once they are 59 ½. This doesn’t necessarily apply to the employer match. If you’re leaving the job, at that point you can roll over your money into a new account or into a new employment account.

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

2:00 – Growing grapes!

3:13 – Should I move some of my money to be diversified?

8:07 – I want to reduce my risk, what should I do?

16:02 – How do I roll over the money in my 401(k)?

 

For more, visit us online at http://flemingfinancialservices.com

Many of us want to keep our money in our pockets. We can use financial intelligence to direct that money in the ways we want to. But, what are some ways we are losing money? On today’s episode, we’re going to break down our philosophy on keeping money in our pockets and how it's about much more than just inflation. 

 

Whenever we have federal government deficit spending, we are going to have inflation. Our incomes and the cost of living have become unbalanced. Some of this is seen in the increased costs of an item, increased taxes, and more. The government collects from various sources. So, we must ask ourselves, where is our money going? 

  The money we don’t keep and direct, determines where we can put money towards our lives. There is a sales tax, income tax, state income tax, and on top of that various fees on our utility bills and more. As you can tell, there is attrition coming out of the money we earn. There’s always another hand in our pocket.   

When we talk about inflation, it’s often about the cost of goods. Everyone is feeling inflation when it comes to gas, but we also need to be aware of inflation through taxes. We also don’t talk enough about the deficit spending that reduces the buying power of Americans. So that's what we will explore on this episode.   

Join us today as we take a look at government spending and how it impacts our personal finances through taxes, inflation, and much more. 

 

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

1:41 – 4th of July is around the corner

3:42 – Let’s talk about inflation

6:37 – Where is our money going?

8:50 – Inflation impacts taxes too

10:38 – Does high inflation stick around?

12:02 – Should we expect hyper-inflation?

13:12 – How is this impacting Social Security?

15:27 – Inspecting the budget as a fiscal conservative

17:29 – Some of the good things in this budget

 

For more, visit us online at http://flemingfinancialservices.com 

If you’ve ever planned a trip, planned a wedding, or planned your retirement you may have realized how fun the anticipation of the adventure was. We can’t always predict the future and a lot of pre-retirees are getting started early on their bucket list before they are in retirement.

On today’s episode, we’re going to explore Mark and Mona’s journey to retirement. Theories about retirement planning are great but sometimes it’s nice to hear a true-life story. They recently retired, going through various steps and weighing their priorities before making the big change. How do your dreams, plans, and priorities compare?

Both Mark and Mona enjoyed their careers and Mark liked his so much he didn’t really want to retire. Mona wanted to explore more hobbies in retirement and decided to retire a little sooner than Mark.

For Mark and Mona, we set up multiple contingency plans. We prepared them for what would happen if they retired sooner or later, depending on their wishes. Because of Mona’s interests and Mark’s desire to continue working she retired before her full retirement age and took Social Security. She decided taking less of the benefit from Social Security sooner was the best fit for her. Mark on the other hand would be able to wait until full retirement age, meaning he got the full benefit.

After they solved the Social Security piece of their retirement, they needed to address their retirement accounts. When Mark decided to continue working he went to his 401(k) company and explained that he no longer wanted to keep that money in the market.

The closer they got to retirement the more likely a market downturn would hurt their plan. While they didn’t let him take all of it, Mark took a big chunk out of his 401(k) and put it away in a safe account. He didn’t let greed mislead him and protected what he had worked for. In 2022, he was able to retire comfortably without worrying about the recent market decline.

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

1:07 – Anticipation!

2:17 – Mark and Mona

3:11 – Background on their retirement plan

5:40 – Contingency plans and Social Security

10:07 – Addressing their retirement accounts

13:10 – How Mark traded risk as he got close to retirement

14:35 – The last years before retirement

 

For more, visit us online at http://flemingfinancialservices.com 

Let’s open up the mailbag and answer some of our listener’s questions about retirement, market volatility, and more.

Wanda says, “With my 6 siblings I inherited a 70-acre farm. 4 of my siblings want to sell and the rest of us want to keep it. Is it worth trying to buy out the rest of the farm? Or should we argue until we get to keep it all?”

We definitely don’t recommend arguing it out with your siblings. The four that want to sell it are in the majority so you’d probably lose out on that. We’ve seen too many family members fight during an estate settlement. If it’s possible to buy out the rest of the farm, that’s probably your best approach. Certainly, have a unified plan with your siblings that want to keep it.

Marty has been out of the market for several years. He’s missed out on a lot of growth. Should he wait to jump back in if there is a market crash?

There are no right answers in the market. We can’t predict whether there will be a crash or not. We suggest developing a long-term investment strategy. Depending on how far away you are from retirement determines how much risk you can take on.

Investing does involve a degree of volatility. Sometimes staying the course can be a bit intimidating, but preparing your plan to withstand volatility is your best approach.

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

1:27 – Have you seen Top Gun?

2:55 – “Is it worth buying out the farm my siblings and I inherited?

7:52 – “Should I stay out of the market in case there is a crash?”

10:08 – Breaking down volatility

16:15 – You are doing this for the long term

 

For more, visit us online at http://flemingfinancialservices.com 

The famous Elon Musk has recently predicted a recession and we often hear this worry from clients as well. It’s a big question being discussed with the down markets and high inflation. Are we entering a recession? On today’s episode, we’ll explore what it means if we are at the beginning of a recession and how well we are prepared for this possibility. 

The net worth of American households has actually gone up in the past few years. If we are entering a recession, this increase in net worth will act as a bigger cushion for a lot of American families. This is especially true with the historically low debt Americans have. This savings boom has been unprecedented.

Businesses are also in a stronger place than they were at the beginning of the pandemic and we are currently seeing higher profit margins. This is important if we are entering a recession, stronger profits lead to fewer layoffs and spending cuts.  

All of these factors are putting the American people in a stronger position than they were at the start of the 2008 financial crisis. As the year progresses, we’ll be able to see for sure whether this is a recession, but either way, it seems we are in a strong position to weather the storm.

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

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

1:47 – Enjoying Starwars

3:37 – Elon Musk’s predictions

5:21 – Where are we as a society

8:39 - Business is strong

9:18 – In a better place than 2008

10:14 – The Feds impact on the market

11:28 – Recessions have shorter durations

14:11 – Mailbag: “Should I wait to retire until I’m eligible for Medicare?”

16:46 – Mailbag: “Can I start giving my children their inheritance now?”

 

For more, visit us online at http://flemingfinancialservices.com 

There are various debates out there around life insurance. But this investment tool can be invaluable to yourself and your family. On today’s episode, we’ll break down some good reasons you should think about getting life insurance and the benefits it could provide you and your family. 

We most often think of life insurance as income replacement. When we are raising a family or have someone dependent on us, this is especially important. But, how is this different for a retired person? If you pass away, can your plan support your spouse? Life insurance is a way to ensure a surviving spouse is cared for. 

Another reason to consider life insurance is the tax benefit. Your children, spouse, or other beneficiaries will be limited on the money they can take from your 401(k) or IRA. But when it comes to life insurance, those payouts are tax-free. This can also help them pay the taxes on the taxable parts of the estate they inherit.

The younger you start putting away into life insurance, the cheaper those premiums will be. Inflation will increase prices as well as your health. The older you get, the more likely you are to develop certain health conditions that raise your premium.

If you own a small business, your approach to life insurance may be a bit different. But this tool can play a big part in a succession plan. Life insurance can be a tool for a surviving business partner, allowing them to buy out the interest of the surviving family members.

Lastly, life insurance can be a way to fund long-term care. Many policies are being built today with living benefits. If you fell ill or were injured and needed long-term care, your insurance could help you pay those bills. This protects you and your family’s estate in the long run.

Join us today as we discuss various reasons to consider life insurance as a crucial part of your retirement plan.

 

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

1:55 – Memorial Day

3:01 - Life insurance

4:40 - Income replacement

8:09 – Tax free income

9:11 – Life insurance premiums

11:08 – Small business owners

13:21 – Long-term care

14:48 – These benefits are tax-free!

 

For more, visit us online at http://flemingfinancialservices.com 

When planning for retirement, we hear a lot about managing risk in our portfolios. On today’s episode, we are going to approach risk in a different light. How prepared are you for the risk of needing long-term care to cope with a chronic or lifelong condition? This is the least favorite topic of many pre-retirees and retirees because most of us want to plan for the fun things: vacations, hobbies, family legacy, etc. Yet, this is one of the most important components of a healthy retirement plan.

7 out of 10 people will need some type of care in their life. Despite this statistic, many people ignore this issue or assume family will be able to take care of them.

While this is a great sentiment, it doesn’t always work out this way. If you end up needing assistance, where will these funds come from? Preparing for this possibility protects us from the immense price of long-term care.

There are several solutions to this problem. Long-term care insurance isn’t offered as much as it used to be, but it is still an option for many people. You’ll need to decide on a type of benefit and how long you assume you’ll need coverage. While we hope we’ll never need this insurance, it’s very beneficial to have coverage if something were to happen.

Sometimes people assume long-term care costs are covered by Medicare. Medicare does not pay for long-term care, they pay for hospitals, doctors, and parts of rehabilitation. If you still need care after a medical event, the issue is considered chronic and the costs for care are up to you. When long-term care insurance payouts start is up to you and the policy you pick. You need to be considered legally chronically ill in order for these policies to pay.

Join us today as we break down some of the basics of long-term care planning and how you can reduce the risk this issue may pose to your retirement.

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

1:22 – Today’s topic

2:07 – Do you have a plan for long-term care?

4:00 – Where will these funds come from?

4:54 – Long term care discussed in the workplace

5:49 - Long term care insurance options

9:49 - A client story on long term care insurance

11:38 – Does Medicare cover long-term care?

13:45 – When does insurance start to pay?

16:05 – Receiving long term care in home

19:02 – We can get ourselves prepared

 

For more, visit us online at http://flemingfinancialservices.com 

There’s this consensus that people who obtain wealth just make a lot of money or they inherited a lot of money. But the reality is most people who have a lot of money are good savers.

A lot of wealth is built by people who just make a decent salary or even an average salary. They just live within their means. We’ll share some of the commonalities of people who are wealthy.

They buy used cars

Wealthy people often don’t buy a new car. Studies show that new car values go down in the first month by 10% and within the first year, 20%.

It’s not prudent to buy a vehicle that will lose that much value. The average person has a car that’s about 5 years old. If you’re constantly making payments on a car, you’re not using your money wisely.

By keeping the same car for a long time, you can save a lot. But that goes against the grain of what many people do.

They don’t buy a house they can’t afford

People often rationalize house purchases. But people who are good with money know a good piece of real estate is one you can afford. Most people want to have their house paid off before they retire or way before.

They don’t use credit cards or they pay them off each month

Credit cards get people in trouble. They can be a slippery slope. If you use them, you have to be extremely diligent and pay it off every month. Or, even better, don’t use credit cards at all.

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

0:21 – What brings about wealth

2:05 – Buy used cars

6:15 – Don’t buy a house you can't afford

8:53 – Don’t use credit cards

11:36 – Don’t buy name brand

 

For more, visit us online at http://flemingfinancialservices.com 

What does a soccer game have in common with retirement planning? On today’s episode, we are going to break down the retirement playbook and what lessons we can learn from retirement’s All-Star players. We’ll break down ten critical factors you need to have in your retirement plan to score big. 

The big challenge for many retirement players is replacing income for an indefinite number of years in an ever-changing economic environment. Winners have one thing in common, they plan and prepare for retirement.

#1 Have a strategy

A financial strategy should be written out and will break down the moves you plan to use when you need income in retirement. Calculate how much you need to save and how much you need to generate once in retirement based on realistic expectations and your desired lifestyle.

#2 Start early

The sooner you start planning for retirement, the more likely you are to hit that big goal. Most of the time, retirement All-Stars, give themselves plenty of time to save. You are able to recover from market loss more easily and there’s more time for your assets to compound.

#3 Stick to a budget

Whether you call it a budget or a spending plan, practicing constraint in your spending is important. This helps you from spending more than you earn. The biggest way to do this is by cutting costs.

#4 Planning it out

Discipline is important as you enter retirement, you need to plan out how you’ll be spending your money. Do you want to pay off your house? Or build up a larger 401(k)? What’s the motivation behind these long-term goals?

#5 Tax-efficient strategies

Successful winners in retirement recognize that they aren’t helpless, including when it comes to your tax bill in retirement. As part of your plan, we want to look at your tax plan and strategize how you can mitigate the impact of taxes.

Join us as we break down these important retirement plays and more on today’s show!

 

TIMESTAMPS: 

1:16 – Enjoying a soccer game

6:31 – Have a strategy

8:01 – Start early

9:35 – Stick to a budget

11:45 – Planning it out

13:47 – Tax-efficient strategies

16:39 – Healthcare costs

17:52 – Updating your plan

18:44 – Optimize Social Security

20:12 – Are you ready for retirement?

 

MORE INFORMATION:  https://www.flemingfinancialservices.com/podcast

We had a question come up recently that got us thinking about music and some of the greatest artists that have enjoyed huge financial success outside of their careers.

We thought that would make for a fun discussion on the podcast so that’s what we’re going to discuss today. Nancy will take you through a handful of the most successful artists, singers and composers across different genres and pull out the financial lessons we can learn from their ventures inside and outside of music.

The first person we’ll spotlight is composer Andrew Lloyd Webber, whose net worth rose to over a billion dollars. One way he did that was to create a company that help create residual income from the work he was doing, which is what we want to do with our retirement income as well. Using Social Security, pensions, and other tools allows us to create a guaranteed income for clients.        

The next artist is the great Bono from the popular band U2. When you look through his portfolio, you’ll see that he has invested in major companies outside of music and it’s paid off huge. We can apply this to our own finances by making sure we’re diversified and not too reliant on any one investment.

Sean Combs, also known as P. Diddy, has become a mogul in the rap industry, but the majority of his assets are outside of music. He was the first rapper to build an empire through clothing, food, and other brands, and that shows the importance of investing in staples rather than fads. We want to stick to the tried and true methods that have stood the test of time.

And finally, we spotlight the wonderful and talented Dolly Parton. Her net worth stands at nearly a half-billion dollars. She shows what hard work and steady growth can do for someone that doesn’t come from a lot of money. Over time through singing and song-writing, Parton built her brand and image into one of the most familiar in our country.

We hope you enjoy this episode and this look through some of the great musicians of our lifetime. If you have any questions for us, please don’t hesitate to reach out. We’d love to hear from you.  

 

TIMESTAMPS: 

1:23 – Family update

2:52 – Question on inheritance

4:43 – Our topic today

5:17 – Andrew Lloyd Webber

7:24 – Bono from U2  

8:40 – Sean Combs

10:10 – Dolly Parton

13:04 – Mailbag question on leaving a legacy

16:16 – Happy Mother’s Day

 

MORE INFORMATION:  https://www.flemingfinancialservices.com/podcast