MONEY matters

One of the main reasons people fail at retirement is they give too much money to their children.

Let’s say you’re in your 60’s when you retire or even early 70’s. At this time in your life, your children are adults, yet they’re still hitting up Mom & Dad for cash. What’s up with that? And how can or more likely, will that impact your financial security? Although every parent wants to see their children succeed, giving too much money away can cause a severe drain on a couples retirement resources and jeopardize their own financial security.

Let’s call this blog my annual financial planning public service announcement for those two years or less away from retirement.

At the end of the day, a financially successful retirement requires an honest assessment of where you are today, financially speaking. Although that sounds like a pretty obvious task to undertake, herein lies the problem.

I wrote this blogpost, Tax Planning Techniques & the Rise of the Backdoor Roth IRA a couple years back due to the intense interest from many clients about the Backdoor Roth IRA tax planning technique. It’s a bit surprising this savvy technique has not been shut down. It’s of course entirely legal and perhaps could be called a tax loophole. That said, as long as this option is available, why not take advantage of it? Tax planning at its core is about deferring taxes to a later date and or minimizing your current tax liabilities.

There are some big changes happening in the world of retirement planning. Some big and really good changes. First some background.

One of the most studied and researched topics in the field of financial planning is NOT the study of the accumulation phase of your life, where you’re saving and investing for the future. Instead, the subject that draws the most attention in the academic as well as professional world of personal finance, by a longshot, is that of the withdrawal phase of your life. The phase where you begin to distribute the money you’ve saved either with a planned retirement income strategy or a flying by the seat of your pants strategy.

 The stock market has long been considered a leading economic indicator. Given the recent stock market rally since the election, it’s fair to believe 'the market' is sending a clear signal of what’s to come in 2017. Oh, but if only it was that easy.

One of the best money articles I read post-election in terms of what do I do now with my investment strategy was written by Ron Lieber of the Times in his Your Money column titled One Crucial Investing Question: Are Your Goals Different Now? Thankfully, this article makes you think long and hard before you decide to change your portfolio strategy.

Last week, a good friend asked me if I would look over the retirement plan his financial planner had just completed. Let’s call my friend, Steve.

And for the record, if I may digress, I’ve discovered the hard way that maintaining and keeping long-term friendships intact when your occupation is financial advisor, means making sure your friends understand why recommending they work with an independent advisor who is not their friend, yet puts their best interests first. Sounds easy, yes? Not so much. On to Steve’s story...

According to Pew Research, every day for the next 14 years, 10,000 baby boomers will reach age 65. Think about that for a second, that’s a lot of people. And whether they plan to retire at age 65 or in a few years, preparing for retirement is now front and center in their lives.

The way boomers define ‘retirement success’ is changing rapidly. The old model of ‘success’ - where your goal is to accumulate as much money as you possibly can by the time you reach the finish line, regardless of the stress and impact on your physical, emotional and spiritual health, well, that model is no longer sustainable.

This is a true story of a couple that planned on launching into retirement with high hopes, only to find their dreams dashed. It’s a story of betrayal, self-sabotage, unconditional love and the amazing gift of forgiveness and redemption.

There’s not many people in the financial world that have earned as much acclaim and adoration as the founder of Vanguard, John Bogle. Like his good friend Warren Buffett, these two men exemplify radical humility in an industry loaded with oversized egos.