Retirement Compass

Tim discusses some of the top financial news from late May.

• The Stonebridge team can help with their various accounts in putting together a set financial plan for retirement
• The big current issue is the debt ceiling debate which was before Congress at that time. Back at 2011 when this issue was up again and how the market was affected by a brief government shutdown while the ceiling was worked out 
• There also is recent news that parents are continuing to spend down their retirement savings early to help out their children with things like house payments and other issues

Prices are going to be up for nearly everything involving vacation planning for this summer - hotels, airfare, meals, etc. But taking that summer trip should still be on your agenda. Tim and Jeff discuss why this is important.

• Getting away from work is good for the mind. Tim says there are many things to do that aren't extravagant or expensive, such as going to a nearby lake
• Jeff says you can check for deals that could make your trip less costly, such as when airline flights occur that could save money by staying an extra day 
• Planning for retirement is just as important as planning a vacation, and like travel planning, sometimes a small tweak can make a big difference

PLUS - at the end, since this originally aired on Mother's Day weekend, Tim suprises his mother with an on air phone call to wish her a happy Mother's Day.

The so-called Baby Boomer generation has been retiring for a number of years, but the next group, referred to as Gen X, is on the cusp of their retirement years. This podcast focuses on the latter group and the preparations they need to make in planning for life after working.

•            It is never too early to prepare for retirement, but people looking to retire in the coming year or two need to get their plans in order, or start putting one together, so that their retirement savings can be put to work in the areas where they are most needed
•           Social Security as it stands now shouldn’t be a factor for boomers, but for younger retirees, there may be changes such as delaying the full retirement age and/or older age for maximum benefits, or perhaps even reduced benefits
•           Two things which can help anyone planning for retirement are taking advantage of catch up contributions for those over age 50, and tax planning so that withdrawals of funds from any type of account can be made as tax efficiently as possible. This might include doing Roth conversions and pay taxes now at potentially lower rates in exchange for tax free withdrawals in the future

Remember that 80's phenomenon the Rubik's Cube, the six sided puzzle where you need to make every side the same color. There are a lot of parts to get right, and retirement planning can be the same way. Tim and Jeff discuss how this analogy fits and how the pieces can be arranged so that your retirement plan - i.e. Rubik's Cube - can be solved correctly.

Takeaways

• All the pieces of a Rubik's Cube, or any other puzzle for that matter, need to properly fit together. And so it is with retirement planning, where income needs to be coordinated with taxes, as well as Medicare and other benefits
• The growth vs. safety battle is a constant retirement planning issue. How much of each does your plan need? And how do those needs change as you get older? A good advisor can recognize what you need and can help make sure your money is properly arranged so that you have the right balance
• Income and tax strategies can affect other areas of planning, such as the cost of Medicare premiums that are income based if yours is too high. Also, the right charitable giving strategies can bring down the amount of Federal income tax you need to pay. So many aspects of the plan affect the other areas, which is why all the pieces need to be arranged in a way that makes it work for you

Retirement comes with a lot of potential risks, but two stand out – longevity and health care – because they are big unknowns. Jeff Gove addresses these as well as more known factors such as taxes and being prepared.

• The Retirement Compass process takes planning into account through age 95 to address the issue of longevity. Their software gives a probability of success for each individual plan
• Health care is expensive and Medicare plans have numerous options available – one of which can fit any situation. However, long term care is not covered by Medicare and needs to be addressed separately
• Most people don’t think about control of taxes, but in retirement you can determine when and how you can pay them. You also have control of your tax bracket, which will help determine the amount of taxes you pay

Tim and Jeff, along with Scott Nachtigal, are the three founders of Stonebridge Insurance and Wealth Management. This episode talks about their background, how Stonebridge got started and how each came to become part of the team, as well as their personal lives and families.

• Jeff originally wanted to go into the medical field. After some time in the service, in college at Evangel in Springfield, Missouri, and managing a local motel, he got a job with a financial services business in Kearney, Nebraska. Eventually he, along with Tim and Scott, who were co-workers, left that business to start Stonebridge.
• Tim graduated with a degree in finance from the University of Nebraska at Kearney. He, along with Jeff, is a Kearney native. He came to join Jeff and Scott while attempting to sell them advertising for a student publication at UNK. He works in the branch office in Lincoln while Jeff and Scott maintain the main office in Kearney as well as a branch in Grand Island.
• Stonebridge is not only a wealth management group, but also a full service insurance agency, not only with financial services but also with car, home, and other common types of insurance as well as with Medicare. They wanted to provide clients with plans to fit their financial and retirement needs, not just products or investments.

Today Tim and Jeff discuss the Stonebridge Retirement Compass, their way of formulating a complete retirement plan for each individual client, and the five components of it - income, growth, tax, health care and estate/legacy planning.

• The process was developed because the Stonebridge team to wanted to show folks that there is more to retirement planning than just investments.
• Clients who contact Stonebridge want to find out more about tax planning or Social Security strategies that their current advisor or CPA doesn't or can't provide information on. The Retirement Compass can help them with these issues and other details about a comprehensive plan which addresses these needs and many others.
• Income can affect the cost of Medicare premiums as well as taxes. The Retirement Compass takes these things into account so that people are not paying more than they need to for each of these things, which helps keep more money in their own pocket, not the government's.

Tim and Jeff interview Miguel Rios, a product specialist and research strategist with Blue Rock about the Total Income and Real Estate Fund.

Takeaways

• The fund is set up for income and capitol appreciation. In its ten year history, the fund has paid a quarterly dividend averaging 5.25% annual interest
• It primarily invests in real estate of all kinds, commercial and residential
• The main differences between this fund and typical mutual funds concern the amount of illiquid securities it can invest in – 95% as opposed to 15% in a typical mutual fund – and also features regular intervals for liquidity, as opposed to the daily liquidity found in regular mutual funds

Today Tim and Jeff are joined by Alex Bobbin, a senior investment analyst at Brookstone Capitol Management.

Takeaways

• The main topic is called a structured note, which is an alternative investment that combines a zero-coupon bond with an options package. They are positioned for investors primarily for income production
• There are two versions with different call dates. But each follows a stock index that can pay from 7-14% with a lower degree of risk than traditional stock or bond investments
• Risks involved include issuer risk involving the banks that issue these notes, market risk in case it drops more than thirty percent, liquidity risk and there is a cap on the percent of gain if the market index goes higher than that

A retired University of Kansas professor, Dr. David Eckert, recently talked in an interview about how what he thought retirement was going to be like is different from the reality of it. Tim and Jeff expand on this subject in today's podcast.

Takeaways

• You need a plan not only for your finances, but also with what you are going to do with your time. This could include hobbies, volunteer work, even part-time employment
• As advisors, Tim and Jeff include this as part of their Retirement Compass planning process, as well as staying with clients throughout their retirement as their needs change
• Married couples may have differences in ages that could affect the timing of their retirements. One could be retired while the other is still working. Making sure each other can deal with their individual situations is optimal