Financial Choices Matter

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Eye Opening Stats Showing How Americans Save

Vanguard’s “How America Saves 2020” report is packed with lots of intriguing stats and findings about Americans and how they save for retirement in the crazy year that is 2020 (most of the recent data is technically from 2019 although some figures are current through the Spring of 2020). Let’s look at some of the top takeaways from the study and how you might compare to the “normal” savings behaviors of Americans.

Show Notes: 

1:14 - Main Topic: Statistics On How Americans Save

1:47 - 100 Million Americans Use A Defined Contribution Plan

4:00 - Average Number Of Funds Used In These Plans Are 2.4

5:36 - 34% Of Participants Didn’t Contribute Enough To Meet Their Employer’s Match

6:46 - Is There A Reason To Not Meet An Employer Match?

7:56 - 80% Of Participants Still Had Assets With A Previous Employer

9:26 - 96% Of Those Assets Are Able To Be Rolled Over Into Something Else

11:16 - Tristen Has Asks About How Divorcing Later In Life Might Affect Retirement

This One’s On The House

We get a lot of questions about how the house (or houses) fit into retirement plans. From downsizing to rental properties to interest rates, let’s explore some of the top retirement questions as it relates to all things housing.

Show Notes: 

2:03 - Main Topic: This One’s On The House

2:25 - Pay Off The House, Or Enjoy The Low Interest Rates?

3:30 - Is It Wise To Downsize?

5:14 - Is A Rental Property A Good Idea?

7:06 - What Complications Have You Seen When Handling Real Estate In An Estate, Or Legacy Plan?

8:53 - Taking Care Of Our Bodies As We age

9:57 - Life Is About Contribution

12:52 - Shelby Asks If Retirement Spending Starts To Decrease After The First 5 Years

Longevity Risk

Living a long time isn’t supposed to be a bad thing and it almost seems counterintuitive to categorize it as a risk. But it is. Let’s take a look at how longevity plays a role in a financial plan and have an honest conversation about how deal with the “problem” of living too long.

Show Notes: 

1:12 - Main Topic - Longevity Risk

2:25 - How Old Is Your Oldest Client?

2:39 - Oldest Person In Your Family?

3:20 - Who Is The Oldest Person You Have Personally Known?

4:00 - Why Is Living Long Risky?

7:02 - Have People Prepared For Longevity Appropriately?

9:10 - Client Story

11:00 - Starting The Conversation

15:07 - Millie Says She Was Going To Get Serious About Retirement Within The Next Year, But Wants Out Of Her Job Now

Financial Issues Particularly Challenging For Women

Many financial issues impact us all the same. But, of course, other challenges have varying impacts from person to person because our situations are all unique. Let’s take a look at some of the financial and retirement challenges that are unique to women. We also discuss some rules of thumb and get Charles' take on them.

Show Notes: 

2:00 - Main Topic - Financial Issues That Are Challenging For Women

3:29 - Level Of Engagement Women Have Throughout Retirement Planning Process

5:00 - Spouse That Handled Money Passes Away First

6:49 - Why Do Some Women Find Themselves In A Difficult Situation?

8:14 - Specific Challenges Faced By A Widowed Woman

9:50 - Piece Of Advice For The Husbands

10:42 - Second Topic - Retirement Rules

11:06 - The 10%, 4%, 25X, & The 80% Rule

13:13 - The Rule Of 72

14:06 - The Rule of 2.67

15:14 - The Rule Of 100

Are Complicated Portfolios Necessary?

How complex should a financial plan be? On one hand, a single page plan sounds nice and easy to understand. But is that comprehensive enough if it can fit on one page?

Show Notes: 

2:07 - Headline: The Market Rebounding

5:44 - Main Topic: Are Complicated Portfolios Necessary?

6:19 - What Do You Typically See When It Comes To The Length Of The Financial Plan?

7:11 - Misconception Between Portfolio And The Plan

8:49 - The Rule Of 11

10:22 - Not Every Advisor Is The Right Fit

13:44 - Mailbag: Nancy Asks If She Should Invest In Her Employer’s Stock

Are You Making These Classic Pre-Retiree Mistakes?

There are some financial planning blunders that are interesting to talk about but are quite rare in reality. On the other hand, there are some financial planning mistakes that happen far too often. Let’s talk about the mistakes so many people have made in the past it has made them “classic”.

Show Notes: 

1:13 - Headline: 72% Of American Say They Will Prioritize Financial Planning Once Pandemic Is Over

3:15 - Classic Pre-Retiree Mistakes

4:03 - Mistake #1: Investing Like You’re In Your 20’s

5:09 - Mistake #2: Taking Social Security As Soon As Possible

6:49 - Mistake #3: Focusing On Tax Preparation Rather Than Tax Planning

8:10 - Mistake #4: Assuming The Majority Of Healthcare Expenses Will Be Covered By Medicare

9:15 - Mistake #5: Taking On Additional Risk To Make Up For Lost Time

11:20 - Mailbag: Rork Asks If His Is Getting All The Information He Needs From His Financial Advisor

Cracking Open The Financial Dictionary

Step into the classroom and let’s take a look at some financial terms, define them, and find out if they’re important for the typical investor and saver to know about them.

Show Notes: 

3:06 - Main Topic: Financial Dictionary 

3:35 - Accelerated Death Benefit 

4:21 - AGI 

5:28 - Fundamental Analysis

6:09 - Margin Account 

7:11 - High Yield/Junk Bonds 

9:31 - Sammantha Asks, “Should I Let The Kids Know About Our Plans To Leave An Inheritance?” 

11:25 - What”s Buggin’ Charles? 

 

Traditional IRA Vs. Roth IRA

It seems that most people don’t have a clear picture of whether they should contribute to a traditional IRA or a Roth. Let’s discuss how to determine what’s best for you.

Show Notes: 

1:23 - Headline: More Than 25% Of Americans Are Raiding Their Retirement Accounts Because Of COVID-19

4:16 - Traditional IRA Vs. Roth IRA - The Basic Definitions

5:10 - Why Are So Many In The Traditional Account?

6:11 - Is The Current Tax Environment We’re In A Catalyst For More People Wanting To Do Roth Conversions?

8:04 - Who Should Be Contributing To A Roth?

8:23 - Who Should Not Be Contributing To A Roth?

10:14 - Marshall Wonders If Paying The Penalty To Take Out His Variable Annuity Is Worth Avoiding The High Fees

12:37 - What’s Buggin’ Charles?

How To Avoid Critical Retirement Planning Mistakes

Let’s talk about some of the common mistakes that we see being made time and time again by retirees and pre-retirees.

Show Notes: 

2:24 - Bonds Are A Safe Investment

5:19 - Avoiding The Idea of Long Term Care Needs

8:43 - Guarding Against Market Declines

10:49 - Categorizing Different Investment Vehicles As Always Good, Or Always Bad

14:03 - Not Having A Plan In Place

16:06 - Beverly Asks If She Has Enough Diversification Between Her 33 Mutual Funds

Are You Paying Attention To Your Biggest Assets?

If you really took inventory of your financial situation, you might find that you’ve been taking for granted some assets that make up a huge piece of your puzzle. Is it possible you should be putting a little more thought into some of these assets?

Show Notes:

1:56 - Are you paying attention to your biggest assets?

2:32 - Should we be putting more thought into these assets?

3:32 - Asset #1: 401(k)

5:45 - Asset #2: House

8:54 - Asset #3: Social Security

11:15 - Asset #4: Smaller Accounts

13:38 - Mailbag: I have a lot of money in savings earning very little interest.

16:53 - Getting To Know Charles: What item would you want to be buried with?

 

Life Events That Spark Major Changes

Sometimes events happen in life that make it really important for you to carefully assess your financial situation. Let’s explain why each of these events is usually a good reason for a financial review.

Show Notes:

2:32 - Will Rogers Quote

4:00 - Life Events Can Spark Major Changes

9:50 - Unplanned Events Of Jobs

7:31 - Serious Medical Issue

11:09 - Estate Planning

17:56 - Mailbag Rick Worries About Running Out Of Money With Recent Downturn In The Market

Coronavirus Update

The Coronavirus (COVID-19) is having a dramatic impact on our daily lives and many people are taking a huge financial hit from lost wages, a volatile stock market, and general economic uncertainty. Charles will talk about his thoughts on this situation and we will briefly mention a couple elements of the new CARES Act.

Show Notes:

1:18 - How Business Has Been For Charles

3:27 - Being Able To Help A Client With The New CARES Act

6:03 - RMDs Are Not Required For 2020

8:51 - Taxes Will Have To Go Up, Which Is Why A Roth Conversion Might Be A Good Idea Right

12:00 - Great TP Shortage

13:49 - April Fools Story

15:53 - Mailbag Lucile Wonders What The Best Way To Save For Retirement Since She Cannot Contribute To A Roth

Financial Truths

There are many "it depends" situations in financial and retirement planning. On today's show we look at some truths we can state with confidence.

Show Notes:

2:07 - Financial Truths

3:17 - TV Can Be A Big Enemy

5:49 - The Market Moves In Cycles

8:10 - There’s No Magic Bullet

9:30 - Why Diversification Is Important

13:04 Mailbag Tim asks “My advisor is retiring and passing on the business. Should I Find A New Advisor?"

What’s Bugging Charles?

On today's episode Charles explains why people who give investment advice without a securities license are bugging him. We also talk about how past epidemics have affected the stock market and we answer a couple email questions that have come in.

Show Notes:

1:46 - What's Bugging Charles?

6:25 - How Past Epidemics Have Affected The Stock Market

7:46 - You Need A Plan To Help During These Pullbacks

9:35 - Mailbag Question from Conner: "How To Pay For College In Retirement?'

13:07 - Mailbag Question from Denver: "How Much Long Term Care Is Recommended?"

Who Really Pays Income Taxes?

With the national elections in November, the parties have VERY different opinions regarding who should be paying their fair share of income taxes. But do we really know who pays what? You certainly can’t rely on either political party to give you the straight information. We also dive into a discussion on how to reasonably incorporate emotions into your financial plan.

Show Notes:

1:32 - Who Pays Income Tax?

2:20 - Income Tax Statistics From 2016

5:12 - Top Wage Earners

7:01 - Emotions In Financial Planning

7:29 - Fear And Greed

9:59 - Invest For The Long Term

10:55 - Using Emotions For A Good Cause

12:23 - Taking Clients' Emotions Into Consideration

16:49 - Mailbag Question from Frank: "My 401 (k) got rolled over into American Funds, is this a good thing?"

The SECURE Act Passed - Now What?

After it simmered in Congress for a year, the SECURE Act is now law. If you have a retirement account of any kind, or will one day inherit a retirement account, this will affect you. Matt will hit the main points of this new bill and how it will change retirement planning.

Show Notes:

0:58 - The SECURE Act

1:23 - Death Of The Stretch IRA

2:14 - Small Businesses And Retirement Plans

2:48 - Required Minimum Distribution Change

3:38 - 10 Year Window Eliminated

5:36 - Multiple Beneficiaries

6:41 - Trusts Cannot Be A Contingent Beneficiary For An IRA

8:49 - Life Insurance As An Alternative Solution

14:17 - Mailbag Question from Emily: "Did 401 (k) Contributions Go Up?"

The Ins And Outs Of Mutual Funds

Mutual funds have long been the most popular way for people to invest, but is that landscape changing?

Show Notes:

1:45 - Financial Dictionary: Tax Loss Harvesting

5:06 - Ins And Outs Of Mutual Funds

5:19 - Point #1: What Percentage Of Clients Have Mutual Funds When They First Come To See You?

6:24 - Point #2: Expense Ratios

7:58 - Point #3: Front Load, Back Load, No Load

9:20 - Point #4: Tax Issues Mutual Funds Can Create

11:07 - Point #5: Should Mutual Funds Be Eliminated?

12:59 - Mailbag Question from Confused: "How to consolidate multiple investment accounts?"

Your Financial Advisor Must Have These Traits

Trustworthy. Likable. Problem-solving. Good listener. We should be describing your financial advisor or a potential advisor if you’re in the process of finding one. On today’s show, we’ll talk about why it’s so important for your advisor to embrace these kinds of characteristics. That’s the easy part. But we’ll also tackle the harder part and discuss some tangible ways how you can determine if an advisor has these characteristics or not.

Show Notes:

1:38 - Headline: Rand Paul Bill

6:45 - Traits A Financial Advisor Must Have

7:12 - Trait #1: Trust

8:56 - Trait #2: Likability

10:03 - Trait #3: Area Of Expertise

11:17 - Trait #4: Listening Ability

13:00 - Trait #5: Problem Solver

14:58 - Mailbag Question from Norm: "How much risk to take now that I'm in retirement?"

Top 5 Social Security Misunderstandings

Myths, rumors, and misunderstandings are pervasive in the world of Social Security. On this show, we’ll look to clear up the top 5 misunderstandings about Social Security.

Show Notes:

1:33 - Mailbag Question from Randall: "Places to start investing in for retirement."

5:21 - Top 5 Social Security Misunderstandings

5:42 - Misunderstanding #1: Social Security Is Going Broke

6:43 - Misunderstanding #2: You Should Start Social Security As Early As Possible

7:31 - Misunderstanding #3: You Should Start Social Security As Late As Possible

9:25 - Misunderstanding #4: The SSA Can Help You Choose The Best Strategy When You Go And See Them

11:37 - Misunderstanding #5: You Don't Pay Taxes On Social Security Benefits

14:48 - Do You See People Often Overestimating Their Risk Tolerance?

Avoiding Critical Estate Planning Mistakes

There are some people who don’t care at all about leaving a financial legacy, but for those who do, it’s important to eliminate some of the common estate planning mistakes.

Show Notes:

0:56 - In The News: How the stock market might react to the result of the upcoming election

5:27 - Avoiding Critical Estate Planning Mistakes

5:43 - Mistake #1: Not Planning Your Expenses In Retirement

7:17 - Mistake #2: Beneficiary Designations

10:01 - Mistake #3: Not Considering The Tax Implications Of Your Estate

13:25 - Mailbag Question from Helen: "Are there really no tax implications to rolling over the 401 (k)?"

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