Last time, we celebrated a winning 2017 idea: Rewarding ourselves with the joys and wisdoms of OLLI — and my seminar, (of course!). How about also giving ourselves the bountiful rewards from a first-of-the-year financial and estate plan tune-up?
Surely, we all strive to apply the best management strategies for our income and assets, to achieve the best results. Impacted by the rocketing costs of longer and sicker “golden age” living, and by the vexing complications in planning for our loved ones’ inheritances, indeed we have to. So, admitting our past years’ procrastination (c’mon, ‘fess up!), here’s our chance to let the new-year’s kick-off inspire us to get with it.
In fact, how about awarding the idea “Sacred Annual Custom” status, sandwiched between the two others, the Rose Bowl parade and the Super Bowl game?
Lots of improvement opportunities await, big and small, like:
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▪ Recording a year’s every expense. Surprise, where money goes!
▪ Adjusting payment schedules, to reduce the surcharges.
▪ Changing pin codes and passwords, to deter fraudsters.
▪ Closing unneeded credit accounts, for the same reason.
▪ Asking for the available senior and membership discounts.
▪ Itemizing all the income tax deductions that we’re entitled to.
▪ Fine-toothing all three free annual credit reports for errors.
▪ Re-strategizing our investment portfolios for maximum compliance with our cash-flow, risk-tolerance, liquidity, and estate-plan objectives.
▪ Oh, and yes, shouldn’t those very objectives be re-visited, too?
Thinking deeply and incisively, what do we NOW really want, and need, to accomplish?
▪ Plus, should the investments include opening an IRA, or rolling over an existing conventional one into a Roth IRA?
▪ And all of the financial assets: Are our elected dividend and capital gains distribution options best for now and the future?
▪ Re-thinking and line-item adjusting all the insurance, deductibles, limits, schedules: Unneeded coverage costs money.
A bonus: Reading the policies (Been paying for them for how long, and still haven’t, even though they’re written in plain English?) we’ll learn what’s covered — and not covered.
Knowing what we’ve bought — What a novel idea!
▪ Scouring the legal estate plan documents, estate-operators’ manual, legacy letters, and beneficiary and pay-on-death designations, for obsolete and outdated and no-longer appropriate names, fiduciaries, data, instructions, and mandates.
▪ Or, do we still need to get those vital documents, or some of them, done, in the first place?
▪ Thoroughly brainstorming all the financial business of the “you-enterprise” with your professional advisors. Yes, admit it, they know a lot more about financial management than we do.
▪ More? We both can think of many, right?
To add benefit to the project, I queried Kevin Kaylor, CFP (Certified Financial Planner), experienced and credentialed Grand Strand professional financial planning and wealth management practitioner and veteran OLLI guest presenter. Here are some of the “Q’s and A’s”:
What do you see as the biggest concerns for retirees?
“Medical costs, which includes both long-term care and normal health care costs. Many pre-retirees under age 65 believe that Medicare is free, which it is not. Many also think that Medicare pays for long-term care costs, and of curse, it doesn’t.”
How can retirees address long-term care costs?
“They can self-fund, which simply means they pay for it, themselves. Secondly, they can insure. There are several ways they can purchase LTC insurance. One way is traditional long-term care insurance for an annual premium, which they pay for the rest of their lives until they either pass away or utilize it. Secondly, several insurance companies have products that allow you to fund with a lump sum or perhaps a series of payments over one to ten years. These products offer minimum death benefits if not used, or you can get your money back. There can be some tax issues regarding the return of premium option, that one would need to discuss with professional advisors.”
Clearly, retirees are concerned about world events and the resulting volatile markets. How can they address this issue?
“We find that retirees who retire with a plan and stick with it are more confident that their goals will be achieved over their life expectancies. So, I recommend working with professionals that they trust, who put their best interests first, to develop plans. Consistent monitoring for these plans is crucial for long-term success.”
How can we help our grandchildren with their college expenses?
“Several ways: Each state has a ’529 Plan’. There even are estate-planning reasons to use 529 plans. Please consider the investment objectives, risks, charges, and expenses carefully before investing in a 529 plan. The plan’s official statement, which contains this and other information, can be obtained by calling your financial advisor. Read it carefully before you invest. Grandparents also could do educational savings accounts or custodian accounts. We recommend a trusted advisor for appropriate strategies.”
In today’s low interest-rate environment, how can investors generate income on their investment assets?
“Today’s low interest rates are a challenge for all investors. Again, there are numerous ways for folks to generate income, and all avenues present varying degrees of risk. Depending on one’s specific needs, we can use traditional fixed-income investments, such as corporate bonds, preferred stocks, and treasury bonds.
Even investments in fixed-income securities are subject to market, interest-rate, credit, and other risks. Bond prices fluctuate inversely to changes in interest rates. Credit risk is the risk that an issuer might default on payments of interest and/or principal. This risk is higher in lower-rated bonds. If sold prior to maturity, fixed income securities are subject to market risk. All fixed-income investments may be worth less than their original cost upon redemption or maturity. Therefore, a general rise in interest rates can result in a decline in the bond’s price.
Additionally, investors may utilize dividend-paying stocks to generate income; and some may utilize immediate or deferred annuities, fixed or variable. Annuity distributors differ from registered securities distributors, but many practitioners represent both. Dividends are not guaranteed, and are subject to change or elimination. Investment and insurance products are not FDIC insured, are not bank guaranteed, and they may lose value.
Each investor has specific needs and differing risk tolerances, so we obviously recommend sitting down individually with one’s financial adviser to determine specific needs and risk tolerance.”
Thanks, Kevin! Readers, if you’d like more info, please e-mail me.
Sacred annual customs? Sure, the parade and the game are. And we’ll really feel good about all the joys that our financial checkup will produce, too. Enjoy!
Contact Gary Newman at email@example.com. Your ideas and comments are always welcome.