This week, I’m talking about navigating life’s important transitions before and during retirement. 

Today’s important life transition is navigating the health scare. Cancer, heart attacks, diabetes, strokes, and other major health events are obviously always an issue no matter what your age, but it’s no surprise that dealing with some kind of health event becomes more common and more likely as we age. 

And many of us will deal with some kind of health scare in our 70s or you may be perfectly healthy yourself, but your spouse may have a stroke or need a new knee or experience hearing loss, or a whole laundry list of other issues. 

And since many of these issues crop up or become worse in retirement, dealing with a major health event can disrupt your plans, causing you to put travel on hold or may make it difficult to stay in your home, or cause you to struggle financially to pay medical bills. It also may require caretaking if it’s your spouse who had the health event. 

Most of my clients approaching and transitioning into retirement are acutely aware that time is running short, so I think it’s a good idea to try to front-load as much as your fun activities in your early years of retirement. I had a husband and wife as clients, who were very frugal and put off travel until retirement, but then right after they both retired, the husband was diagnosed with terminal and aggressive cancer, and they ended up not getting to do any of the things together that they planned to do. You probably know someone in a similar situation. 

Now, I’m not suggesting that you blow through your retirement nest egg on a spending binge, but within reason and within the bounds of what you can afford, it’s wise to do the important things that really matter to you sooner rather than later, because later may not ever happen at all. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast

This week, I’m talking about navigating life’s important transitions before and during retirement. 

Today, I’m talking about the retirement transition. Most Americans retire in their 60s, with the most common retirement age being 62. Not surprisingly, this age coincides with the earliest age you can draw social security income. 

Navigating the retirement transition is a big topic that I could take weeks to cover, but today I just want to emphasize a few of the important and irreversible decisions that you’ll need to make at retirement. 

First of all, is the timing of your retirement. When will you retire, and can you afford to retire when you plan to or do you need to consider working longer. 

Related to the retirement timing decision is whether or not you’ll work part-time when you retire. Part-time work is increasingly an option for healthy Americans who have reached retirement age, but maybe can’t afford to fully retire, or don’t want to stop working for other reasons. More and more, I have clients who do consulting work, are still running their business, or are even driving Uber to bring in additional income and fund their retirement lifestyle in the early years of retirement.  

Another key component to the retirement transition is planning and running the numbers to make sure you can actually retire. You’ll also need to decide when to begin tapping into your investment portfolio for income, how much income you’ll need, and whether or not that is realistic and sustainable. Again it’s important to run the numbers on this before you retire, so you don’t have any negative surprises later on and deplete your portfolio after its too late to course-correct. 

In addition, you’ll usually have more travel, or take on some expensive home projects. These expenses are often front-loaded in the early years of retirement and need to be accounted for. 

Then lastly, one of the biggest financial decisions you’ll make is the timing of social security. The difference in lifetime income between taking social security at 62 and full retirement age, or even age 70 can add up to over half a million dollars in lifetime income. So the social security decision is one of the most important and impactful decisions you’ll make in retirement, and defaulting to timing social security with when you retire, may not be the best option. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast

This week, I’m talking about navigating life’s important transitions before and during retirement. 

Today, I’m talking about navigating caring for your elderly parents. This is an important transition that usually happens in your early to mid 60s. But it can happen much earlier or later depending on the age and health of your parents or your spouse’s parents. 

Caretaking of elderly parents often falls on family members, with 65% of older Americans who need care today are relying on family and friends exclusively. And of those caregivers, ⅔ of them are female. 

So for you women listening, it’s likely that at some point, if you aren’t already, you will be providing some type of care for mom or dad...or both. 

The implications of this are numerous and differ in each situation. The challenge for many women is that you just raised your kids and soon after may be thrust back into a caregiving role, so it’s important to understand and accept the possibility that that may happen so you can better cope with it. 

Other challenges of caretaking for elderly parents include time & energy commitments. You might need to also provide financial support if your parents don’t have the financial means to independently care for themselves or pay their bills. Another challenge is reduced income for you or your spouse. Because of the time commitments, you may decide to work part-time or stop working altogether to take care of mom or dad. This can be particularly challenging for your finances and retirement plan if you didn’t plan on this change. Not only do you reduce your income, but you also may not be able to contribute to your retirement during this time. 

Of course it’s different for everyone and every circumstance, but depending on the age, health, and financial resources of your parents, you’ll want to think through this important life transition that can blindside many people during their peak working and earning years, and either accelerate or delay your own retirement. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast

This week, I’m talking about navigating life’s important transitions before and during retirement. 

Today, I’m talking about navigating the empty nester transition. For most of you, kids start leaving the house when you’re about 10-15 years from retirement, and you become empty nesters by the time you’re in your mid-50s. 

While there’s a newfound time freedom that comes with being an empty nester, since you’re no longer schlepping kids to soccer practice or their friend’s house, there is usually a financial burden, since many parents are supporting kids financially during the college years, and often beyond as well. 

Most Americans are in their peak earning years in their 50s, so you probably have greater financial means to support your kids, but every dollar that goes toward college tuition or junior’s rent payment is one less dollar that gets socked away for retirement in those last, critical 10-15 years before retirement. 

There’s also navigating financial aid and scholarships and using funds from 529s to pay for college. 

You can prepare for this ahead of time, by better understanding what it’s likely going to cost to support your children in the college years and beyond, if you decide to continue financial support. Understanding your out-of-pocket expenses will help you determine if you’re still going to be able to save enough for retirement. 

The important thing to remember here from a financial standpoint is that you can get a loan for college, but you can’t get a loan for retirement. So be sure that you calculate the cost of supporting your kids and communicate with them whether or not they’ll need to pitch in for their own expenses and to what extent to make the numbers work for everyone. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast

Welcome to a new week and a new theme here on the One Minute Retirement Tip! 

This week, I’m talking about navigating life’s important transitions before and during retirement. Ah, life. Does it ever get easier!? No, but hopefully we can grow in wisdom as we age to better handle life’s inevitable challenges and changes. This week I’m talking about some of the biggest changes you’ll face in the years leading up to retirement...all the way through the important transitions you’ll likely need to handle later in life in your 80s and beyond. 

I’m diving into everything from becoming an empty nester to retirement to taking care of elderly parents to the death of a spouse. For most of you listening, these events are not just likely, they’re inevitable. And, they’re deeply connected to your finances. You’ll need to make some important decisions before and during each of these important transitions, so this week, my goal is to help you think through each of these life transitions, so you can navigate them with preparation and grace.

That’s it for today. Before you go, though, if you haven’t already left a review in Amazon or iTunes for the One Minute Retirement Tip, can I ask a favor of you to go do that right now? It just takes a few seconds and it helps to spread the word, and helps other people find this podcast.

In an Amazon review from last August, “frequent buyer” writes: “Waste of time for any serious listener seeking real information.”

Thank you,frequent buyer. And thank you to all of you who have taken the time to write a review. 

My name is Ashley Micciche and this is the One Minute Retirement Tip.

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast

It’s Sunday, which means...It’s recap time! 

This week, I talked about how to avoid the hidden danger of index fund investing. I spent much of this week talking about what no one tells you about index fund investing and what few people actually understand about index funds and ETFs - because of their market weights, they are not as diversified as you might think. 

Here’s what I covered in each episode this week:

• What You Think You Own in a S&P 500 Index Fund
• What You Really Own in a S&P 500 Index Fund
• Why You Can Get Burned By Index Funds in the Next market meltdown, and how to avoid the hidden danger of index funds
• And lastly, some key takeaways for this week about a prudent way to approach index fund investing

Hopefully after listening to the One Minute Retirement Tip this week, you now know that index funds is that in and of themselves are a perfectly good investments, but you still need to work to build a diversified portfolio when you own index funds, rather than just buying one or two and mistakenly believing you are diversified. 

If you missed any of these episodes or if you want to revisit any of them, you can find them on iTunes, Spotify, or Google Play by searching for the “One Minute Retirement Tip with Ashley”. 

Tomorrow, we are starting a brand new theme: Navigating Life’s Important Transitions Before and During Retirement. I’ll talk about how to prepare and plan for life’s inevitable transitions that happen in your 50s and beyond...everything from becoming an empty nester to retirement to taking care of elderly parents to the death of a spouse. For most of you listening, these events are likely and often inevitable, and there are important decisions that need to be made before and during each of these important transitions, to help you navigate each of them with preparation and grace. 

That’s it for this week! Thanks for listening and I hope you have a blessed Sunday! 

My name is Ashley Micciche and this is the “One Minute Retirement Tip”.

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast, index investing, ETF investing, index funds, ETFs, etfs vs mutual funds, etf vs stock, how to invest in index funds

This week, I’m talking about how to avoid the hidden danger of index fund investing. I’ve spent much of this week talking about what no one tells you about index fund investing and what few people actually understand about index funds and ETFs - because of their market weights, they are not as diversified as you might think. 

Today, I want to bring this home by mentioning a few key principles to keep in mind when you buy index funds. First of all, index funds are a great choice for a lot of people. They have tremendous benefits in being cheap, and accessible, and liquid. They trade like stocks so you can buy and sell any time the market is open and with a small investment, you can build yourself a nice little portfolio of index funds. 

But too many people think that they can just go out and buy a S&P 500 Index fund of the Russell 3000 and they think that's it. I’m done. I’m diversified and now I can just set it and forget it. Hopefully if you’ve been listening to the tips this week, you now realize it’s not that simple. 

Here’s what you need to do if you’re going to invest in index funds or ETFs: It’s crucial that you understand what you really own when you buy an index fund. Don’t assume that an indexing strategy is safe and prudent.  Indexing carries with it its own set of risks, so be sure to always know what you own and look under the hood!

Index funds aren’t bad investments.  We recommend them to clients all the time.  Most of the 401k plan clients that I advise offer a S&P 500 index fund in the fund lineup – that I selected!

But the gospel that is preached about investing in index funds, tries to oversimplify the process of investing by promoting the purchase of a market index fund as a holistic investment strategy.

The world’s richest stock picker, Warren Buffett, famously recommends that most people would be better off investing in the S&P 500 over the strategy that made him so wealthy – stock picking. There’s wisdom in his advice, but it’s important to understand WHAT you actually own when you invest in an index fund.  Or any fund for that matter!

So ask questions. Look under the hood. Know what you own. Don’t just assume that all funds are diversified. They’re not!

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast, index investing, ETF investing, index funds, ETFs, etfs vs mutual funds, etf vs stock, how to invest in index funds

This week, I’m talking about how to avoid the hidden danger of index fund investing. 

Today, I’m diving a little deeper on the dangers of owning a large portion of your portfolio in an index fund like the S&P 500 index whenever the next market meltdown arrives. 

If you go back and look at the technology sector around the year 2000, you would see that the sector as a % of the S&P 500 grew tremendously from about 12% of the index to 33% in just a couple years.  And by the time the dot-com bubble burst on the tech stocks, this sector was the largest in the S&P 500, which led to a bigger crash in the market, and a deeper dive in your portfolio if you had a large sum or all of your portfolio tied up in what you thought was a diversified index fund. 

The same pattern emerged (although less dramatic) in financial stocks just before the market crashed in 2008.  For most of the 2000s, financial and bank stocks comprised 22% of the S&P 500 index. Again, this sector’s weighting in the S&P 500 index was bloated, since the historical average was 14.7% of the index. Big banks’ stock prices were growing steadily in the 2000s leading up to the financial crisis and Great Recession, so the bank stocks were the most bloated and made up much more of the S&P 500 index, right at the worst possible time – when financials were hit hardest during the financial crisis.

These sectors were bloated compared to their historical weights and caused the index to crash harder than it otherwise would have if there was less concentration in the index. 

And that is why you can build a diversified portfolio with index funds, but you need multiple funds to be truly diversified, and need to be aware of the hidden dangers that exist with market-weight index funds. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast, index investing, ETF investing, index funds, ETFs, etfs vs mutual funds, etf vs stock, how to invest in index funds

This week, I’m talking about how to avoid the hidden danger of index funds. 

Today, I’m continuing yesterday’s discussion about how when you look under the hood of virtually every S&P 500 index fund, the diversification you find is lacking and troublesome. 

Did you know that the 5 biggest companies in the S&P 500 make up over 15% of the index. 5 companies out of 500 - just 1% of the total number of companies make up 15% of the weight and performance results of the index. These are Apple, Microsoft, Google, Amazon, and Facebook. 

And what else do you notice about all of these companies? They are all big tech firms. Compare these big tech stocks to Costco or Nike which each make up only about ½ of 1% of the index, and you begin to see that the S&P 500 index fund that you’re invested in isn’t as diversified as you think. In fact, if you bought just 20 individual stocks across a variety of industries in equal weights, you would be more diversified than the S&P 500 index. 

My point here is that you need to know what you really own when you buy index funds. What’s under the hood and what are your largest holdings? I use the example of the S&P 500 index fund, but most index funds and ETFs are market-weight which means the largest and often most bloated or overvalued companies could carry the most weight, and be the most influential, which helps when they’re moving up, but when you look back historically, it also leads to bigger drops on the downside as well. 

The takeaway here is that while you can build a diversified portfolio with index funds, you can almost never build a truly diversified portfolio with just one or two index funds. You may think you’re diversified, but chances are, you’re not. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast, index investing, ETF investing, index funds, ETFs, etfs vs mutual funds, etf vs stock, how to invest in index funds

This week, I’m talking about how to avoid the hidden danger of index funds. 

Most investors would like to diversify their investments and reduce their risk as much as possible.  One popular strategy for diversification and setting your investments on auto-pilot is the index fund.  The S&P 500 index fund is the most popular of them all – containing 500 of the largest and most well-known companies in the world.

With 500 companies in just that one fund, you’re pretty diversified, right? Not as much as you might think. Why? Because the S&P 500 index and other funds like it are market-weight index funds, meaning the largest companies make up the largest % of the index.

So what you actually end up with is an investment where just the largest 10% of companies make up half of the index! I wouldn’t exactly call that diversified. 

Many people mistakenly believe that the S&P 500 and most other index funds like it are equal-weight index funds, meaning that each stock in the portfolio represents an equal weight share.  This is not the case with most index funds. The vast majority of index funds are market-weight index funds, and therein lies the problem. 

Because over time, the largest companies get bigger and bigger and a portion of the index fund, and there isn’t a human behind the scenes who can say, I think this position and that position are bloated and overvalued. Let’s rebalance and reduce our risk. 

If you look back at all the major stock market meltdowns, tech stocks were a bloated portion of the S&P 500 index in the late 90s and bank stocks were bloated and made up a much higher percentage of the S&P 500 index compared to today. When the balloon popped on those bloated sectors of the market, investors who thought they were diversified were hit harder than those who were truly diversified. And the same is true today. 

Tomorrow, I’m going to share with you the 5 stocks in the S&P 500 that make up more than 15% of the entire index. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast, index investing, ETF investing, index funds, ETFs, etfs vs mutual funds, etf vs stock, how to invest in index funds