Retirement Answer Man

Setting retirement goals can be a big waste of time. In my 23 years of advising individuals and families, I've rarely found someone that had clear retirement goals.  Guess what?  They were still able to live a great life and retire comfortably.In this episode I'll explore the problems with setting retirement goals and offer a better way to plan. Retirement Tip of the Week How to Prepare for the Unthinkable: a House FireRecently someone close to me went out for a movie and returned to find their home burnt to the ground. They lost everything, including their dog.  In a few short hours they had no home, no clothes, no furniture, no family photos, no records, no nothing.This is the type of thing that can never happen to us, right? It's the type of thing that happens to "other" people. Think again.Here are some simple tips to help you prepare for this unthinkable crisis. Complete a Video Inventory Work room to roomNarrate, describing items (brands, models, amounts)Specifically document valuables (jewelry and artwork)Don't forget the garageKeep copy of video outside the homeUpdate annuallyBack Up Important Documents Tax returnsPhotosContractsEstate planFinancial informationKeep back up offsite (loved one's safe or safe deposit box)Update AnnuallyUnderstand Your Home Fire Coverage Full replacement cost coverageMarket value coveragePersonal property coverageValuables rider for expensive items such as Jewelry, etc.After the Fire contact insurance agent immediatelyAsk for advance on your claim to cover short-term costsSecure your propertyFile claim right awayKeep track of all living expenses (with receipts)Don't stop paying your homeowners insurance premiumDon't close your claim out too fastGet grief counselingFeature Presentation: Screw Retirement Goals, Here's a Better Way Retirement Goals. In my experience, few people set them and even fewer stick to them over the long-term. Retirement goals are something we are told we need to have so we can plan for them. Traditional planning forces them upon you and then shows you all the saving and sacrificing you'll have to do to achieve them.   No wonder nobody plans.Recently a mentor of mine, Michael Hyatt, wrote a great blog about the problem with the traditional concept of retirement (Why Retirement is a Dirty Word). I agree with him.If retirement and retirement goals are outdated concepts than how do you plan for the future?In this episode, I'll explore some of the problems with setting retirement goals and show you a more productive way to plan for the the future.I discuss:The problem with traditional retirement goal settingWhy we don't stick with retirement goalsHow you might be limiting your futureHow you might be limiting your current lifeThe importance of prioritiesHow to turn your financial priorities into actionsHow to negotiate with yourselfHow to live a more balanced lifeQUESTION:  Do you have retirement goals?  If so, are they meaningful?  If not, Why? Let me know via Twitter Tweet to @roger_whitney

If you chose to invest in real estate as part of your retirement plan, you better understand what you're signing up for.  Most "educational" classes, workshops etc. focus on all the benefits of real estate and gloss over the realities of doing it. Buying, owning and operating rental properties is hard work.  This week, I talk with Philip Wetzel about the real work that goes into investing directly in real estate. Retirement Tip of the Week 3 lessons from Jim Collins' books Good to Great and Great By Choice that you can use to make smarter financial decisions. Two of my favorite business books are Great By Choice and Good to Great. Last week, I had the pleasure of hearing the lead author of each, Jim Collins, speak. It was awesome.  The lessons learned from his research on what made companies great can easily be applied in managing your financial life. Here are 3 that you should start using today...First who, than whatConfront the brutal facts (yet never lose faith)Fire bullets, then cannonballsFeature Presentation: What You Should Know Before Investing in Real Estate Investing in real estate can be a good thing-as long it fits your situation, you truly understand the risks and work involved and stay diversified.There are plenty of workshops, classes, seminars, infomercials systems, etc. out there to "teach" you how you should do it. Unfortunately, they are typically strong on the benefits and light on all the work needed to position yourself for success.  In this episode, I start to give you the rest of the story.Some of the topics we cover are:Why you need to run it like a businessHow to do your homework before you buy your first homeWhy passive real estate investing is not really passiveThe difference between flipping house and real estate investingThe importance of having cash reservesThe advantages of being a handymanThe advantages and dangers of using leverageWhy you need to put 20% down when you buy a propertyThe importance of finding quality tenantsHow management companies work 

My financial records are a mess. Are yours?In this episode, I'll outline the framework I'm going to use to get my recording keeping in order. Could you find that important docuement if you needed to?If not, listen and we can get organized together.In the Retirement Tip of the Week, I'll give you a framework for lending money to friends or family so you can help out without ruining the relationship.

Is the stock market correction here?  In the last week of July the S&P 500 index lost 2.7%. The worst weekly loss in over two years. It didn't take long for the sensationalist headlines to pop up. Here are two of my favorites. Warning: That plunge in stocks is just the beginning MarketWatch.com 3 market warning signs predict 20% stock tumble Insight: When these indicators flash together, it’s time to sell MarketWatch.com Strategies to Help You Handle Market Corrections I'm all about investing wisely for retirement. If you are a trader, market timer, trend follower, etc. you might want to click away. For the rest of you, here are my suggestions to help you invest wisely and sleep better at night. 1. Have a Plan Sounds simple but most people don't. They invest based on intuition, emotion and trust rather than facts, process and purpose.  Your plan doesn't have to be elaborate it just needs to be clear and actionable. It should include:Goal for investment assetsInvestment timeframeRisk/reward targetTarget investment allocationRebalancing policyCommunication and evaluation schedule2. Have adequate cash reserves More than anything, this may the most practical strategy to weather market corrections. One of the biggest mistakes you can make is  to sell an investment at the wrong time because you need the money.With interest rates on savings accounts near 0%, it is tempting to put all your money "to work". Don't. Cash reserves give you the flexibility to weather uncertain times in your life as well as the markets. (in episode #17 I discuss cash reserves). Here are the basics of cash reservesEmergency fund (3 months to 2 years living expenses) + Expected expenses within the next 12 months=Less emotional decisions 3. Have at Least a 3 Year Investment Timeframe Anything under a three year time frame is speculating not investing. Investing wisely requires time. 4. Be Well Diversified Every time I say this I feel like the teacher in the Peanuts cartoons...Blah, Blah, Blah. Diversification and asset allocation help you avoid the trap of trying to pick winners and losers. They position you to participate in the economic growth of the world. That is the point of investing.  The more you try to game the system, the more likely you'll miss out (Here is a recent episode on investing mistakes).One thing you can do right now is make sure your allocation is rebalanced back to the target you should have set in the beginning. Over the last 4 years, the stock markets have done quite well. If you haven't rebalanced to your target you probably have a lot more equities than you originally intended. This could mean you have more volatility than you bargained for. Studies have shown that rebalancing your portfolio regularly helps you achieve better results. Rebalancing Feels bad, but works good. 5. Understand Market Corrections are Healthy for the Markets and Your Portfolio You've heard it said that investing is like gambling. In a sense that's true. If you invest based on intuition, emotions and the advice of the financial press, you're just one of the suckers walking into the casino. If, however, you invest based on history, research, process and prudence you are more likely to have the odds of the casino over the long-term. That is investing wisely. Retirement Tip of the Week Try it Before You Buy it You need to be very careful when you are in the Retirement Nesting stage of life. Retirement Nesting occurs during the 3 years prior to retirement and the 2 years after you retire. This is the time of retirement lifestyle dreams. AND a time when you are susceptible to marketers selling the retirement dream.The Retirement Nesting stage is a danger zone for poor financial decisions. Don't fall for the emotional urges to buy an R.V., vacation lot, condo or big toy. They can be great but you need to be certain, very certain, that it is something you will truly use. Just recently, I had to help a gentleman unload a beach condo he purchased on a whim 5 years ago. He lost over $100k on the deal (and only used once). Don't be that guy.Here are some tips to avoid the same mistake:Do LOTS of research over  a 12 month period before you buyAlways pay cash.Rent the object of your desire for the first 2 years to see how much you actually use it. It is easy to rent anything anywhere nowadays.Test drive vacation homes, R.V.s and resorts over the first 5 years of you retirement. It can be great fun and save  you from making a costly mistake.Resources Discussed A Field Guide to Market CorrectionsVacation Rentals By Owner (VRBO)Episode on the Importance of Cash ReservesCommon Investment Mistakes

The cost of a financial misstep in retirement can be devastating. During retirement it is hard to "earn" your way out of poor decisions. Poor planning or a big loss during retirement can ruin your financial security. In this episode I discuss the most common retirement "screw ups" I've seen and how you work to avoid them. 7 Ways to Screw Up Your Retirement Having unrealistic return expectations for your investment assets (too high in 1990s, too low in 2007-08) Crazy as it sounds, in the 1990s people retired thinking they could earn 15%-20% per year and take 10% from their assets for retirement income.Today, we see the opposite extreme. After 2008-07, people aren't so optimistic about retirement. In fact, they are down right pessimistic. Not sticking to a spending plan and reviewing it annually When you  retire it is essential that you become more intentional about your spending. In retirement your earnings power diminishes. You'll have less opportunities to earn your way out of poor spending choices.Set a spending plan and review it annually. This will allow out adjust as your situation changes. Falling in love with an investment or investment strategy Real estate; Gold; Rental houses; Tech stocks; Dividend stocks. I've seen it all over the last 23 years. Just because you've had great success with a particular investment or strategy doesn't mean it is the be all end all.  Managing assets during your retirement years is more about consistency and protection than stellar returns. The past is littered with "sure thing" investment that have gone bust. Just look at the list above. Financially supporting/enabling adult children I'm not sure where the line is between occasionally helping a child out and enabling them. We've seen retired parents destroy their financial security by bailing out their children from there poor choices. A good litmus test is to ask yourself: Are you preparing your children for the path, or the path for the child? Starting or investing in a small business Starting a business or investing in a new venture is exciting. Be careful. They all sound exciting at the start but most small businesses fail. Retirement is not the time to invest a lot of money in an entrepreneurial dream. Buying expensive lifestyle toys (vacation home, R.V. or land) Go ahead and dream big but be careful about spending big money on your retirement toy. It's very common to see older retirees saddled with debt on an expensive R.V. or vacation lot that isn't used and worth a fraction of the loan amount. Sticking your head in the sand when it comes to your financial life Not being aware and willing to address the financial realities of your retirement is a sure way to screw it up. Retirement Tip of the Week Complete your estate plan. Yeah it's boring and can cause some uncomfortable conversations, but get it done. PleaseTips to getting the estate planning questionnaire done:Don't try to do it at homeSet an appointment with your spouse outside of the house to completeHave your advisor or a trusted friend interview to complete itTips for Keeping it up to date:Review it once a year with your spouse and trusted advisorReview the same time each year (like a holiday or annual family gathering)[button_2 color="red" align="center" href="https://itunes.apple.com/us/podcast/plan-well-invest-wisely/id834314596"]Subscribe in iTunes[/button_2]

This week I speak with Burt White, Chief Investment Officer of LPL Financial. Burt and I discuss LPL's mid-year outlook Titled: The Investor's Almanac. Burt and his team do a great job simply communicating the economic and investing environment.  Their Investor's Almanac is a great tool to help us invest wisely.  No bold predictions or market calls here, just easy to understand insights you can use to make better informed investing decisions. If you'd like a free copy of their Investor's Almanac you can access it in the Retirement Answer Library. In this episode we discuss:how to use investment outlooks to Invest Wiselywhere the U.S. is in the economic cyclewhere they see potential risks and opportunitieshow international markets are not in sync with U.S. marketswhy you should consider harvesting high quality bondspossible alternatives to traditional fixed incomeplaces to find incomesuper themes that should provide a benefit the U.S. economythe importance of turning off the worry factory of financial mediaRetirement Tip of the Week:  Designating a Trust as a Beneficiary of an IRA Last week a client called requesting the beneficiary of his Individual Retirement Account (IRA) be changed to a trust. This planning strategy has become more popular over the last few years. This strategy for IRAs can has some benefits if the ultimate beneficiary is:a minor childsomeone with special needsa spouse from a second marriagea spendthrift with poor financial skillsThe trust can help protect the inherited assets and better control how those funds are used by the beneficiary of the trust.Be careful using this strategy though. Done incorrectly, the strategy could conflict with IRS rules and possibly create big tax problems. It is important the attorney drafting the trust be familiar with certain aspects unique to inherited IRAs.  Some things to consider are:Make sure the beneficiaries of the trust are people. They cannot be non-persons (like a charity)Consider adding language specifically prohibiting distributions to non-personsMake sure it is a Conduit Trust. It should include language that requires the distribution from the trust to the beneficiaries of the Required Minimum Distributions coming from the inherited IRA.If there is more than one beneficiary, consider having a separate trust for each. This will also each trust beneficiary to use their own age for required minimum distributions

In this episode, I'll show you how to come to terms with your worry and the uncertainty about retirement. "I worry" I talk to a lot of people about retirement. Not only clients but most everyone I meet over age 50.  I'll always ask them what their #1 thought is on retirement. I've learned a lot from this exercise. The most important thing I've learned is that people worry about retirement....alot!.They worry about:all the uncertaintyliving without a paycheckinflationrunning out of moneymaintaining my standard of livingmy health and healthcare costsbeing a burden to my childrenlong-term care costslosing money in the marketsthe economymy countryIn this episode, I'll show you how to come to terms with your worry and the uncertainty about retirement. Once you've done that, you'll be free to build a system to manage through the uncertainty in your life. I discuss:Market uncertaintyEconomic uncertaintyUncertainty in your lifeHow to begin to manage it by:Scheduling "little conversations"Using checklistsMaking lots of little adjustments as your life unfolds during retirementBuilding this structure is really what this blog, the Retirement Answer Library and podcast is all about. Retirement Tip of the Week The importance of tax diversity on your balance sheet as you near retirement. If you're within 5 years from retirement, why it may make sense to significantly lower the amount you save in your 401(k) retirement plan. Resources Discussed The Retirement Answer LibraryTax Deferred vs. Taxable Savings CalculatorEnjoy the Podcast? A big THANK YOU to Dean for sending me your kind note, thanking me for the podcast and Retirement Answer Library. So glad it's been helpful to you. It really means the world to me.[button_2 align="center" href="https://itunes.apple.com/us/podcast/plan-well-invest-wisely/id834314596"]Subscribe in iTunes[/button_2] 

“How do I understand Social Security and Medicare?”  This is a question I hear most often from people planning for retirement. It's understandable. Social Security and Medicare benefits will play a big part in your retirement. In this episode we begin to unwrap both and begin to build a framework for you make decisions about your Social Security and Medicare benefits. I say we “begin” intentionally. These are BIG subjects. In future episodes, we’ll continue to improve your understanding of your Social Security and Medicare. Announcements If you enjoy the podcast, I would consider it a great favor if you subscribed in iTunes and leave a review. This helps others discover the show. Last week I announced my Retirement 2.0 project. This is an initiative to redesign the retirement planning process to serve you better.  To help, go here and share your thoughts on retirement.Retirement Tip of the Week I suggest you visit and explore our government's Social Security website. It is an easy to navigate, useful resource to help you manage your Social Security benefits. YES, I just said “useful” and “government” in the same sentence. They did a great job designing the site. You can easily: Apply for benefits,Check the status of an applicationSet up direct depositEstimate your Social SecurityEstimate your spouse’s benefitSign up for your Social Security benefitSet up direct depositAccess their Retirement Toolkit (a great PDF document that outlines key dates for Social Security and Medicare) Unwrapping Medicare: The Basics This week I talk with Misty Kimbrough, a local insurance expert about the basics of Medicare. She outlines the basic parts of Medicare and the 3 most common missteps people make when planning medicare benefits for retirement.Part A “major medical” coverage covering health care costs at hospitals Part B Covers the costs of health care outside of a hospital. Doctor visits, outpatient procedures, x-lab test and related servicesMedicare Supplements (Medigap)Part C Medicare Advantage PlanPart D Prescription Drug Plan3 Common Medicare Missteps Resources Discussed Social Security websiteMedicare websiteMedicare Plan FinderRetirement Answer LibraryRed Apple Insurance

I Hate Keeping a Monthly Budget. Yes, I know that keeping a monthly budget is personal finance 101.  Over the years I've tried, repeatedly, to track every expense in a monthly budget. Each time I failed after a few months. It's just too much work. I have better things to do than be a part-time bookkeeper. Do You Hate to Keep a Monthly Budget? Tracking all your expenses is easier than ever. Programs like Quicken and Mint have powerful accounting tools in simple to use packages. Still...most of us don't track monthly expenses or keep monthly budget for one simple reason; We have better things to do than being a part-time bookkeeper. In this episode, I walk you through my budget system which gets you 80% of the benefits of detailed budgeting, without all the work. In just four easy steps you can take control of your spending and capture the excess income as savings. I Call It the Cash Flow Bucket System.The advantages of the Cash Flow Bucket System:1. You don’t waste time tracking every transaction.2. You have less stress deciding how to spend money each month.3. You don’t spend money just because it’s there.4. You easily capture (save) excess income as savings.5. You can make smarter decisions on allocating savings.6. You maintain flexibility for unexpected expenses. Try It and Stop Feeling Guilty About Not Keeping a Monthly Budget I've added a worksheet to the Retirement Answer Library to walk you through the process. It's free, just sign up here. The Retirement Tip of the Week I give you Sammy's 5 secrets to living a happier retirement. These are worth listening to!

Deal with Death By Celebrating Life Last week, I wrote about my sister's passing and her wish that her family have a "Celebration of Life" picnic (you can read it here).In this podcast, I share my thoughts on my sister's choice and how you can do the same. How to Overcome New Car Fever New car fever is a difficult bug to beat. Everyday, driving, you window shop as you drive, imagining yourself in the car models you see whizz by. Once you're bitten, the fever typically ends in you in a shiny new car.Remember your prioritiesDetail your car at least every other monthPay for a complete car wash once per weekBuy a some key accessories to refresh your cars lookA Useful App to Help You Identify Spending Habits Once every two months you should track your spending habits with an app like Expensify to:Create an opportunity to discuss spending habitsReconcile your spending habits with your stated financial prioritiesIdentify wasteful spending habitsKeep you and your partner accountable to each other Resources Discuss Storyline 2.0, by Donald MillerExpensifyHow to BudgetHow My Sister's Death Became a Celebration of Life