How Much Retirement Income Can You Really Get From Your Portfolio?

January 10, 2013

As a rule of thumb, financial planners generally say that you can safely withdraw about 4% of the value of your nest egg as income in retirement and increase it by inflation each year. That number was based on the “Trinity study” that looked at the outcomes of various withdrawal rates from 1926-2009 as well as additional research by financial planner and author William Bengen. However, I recently came across this interesting blog post that points out a few shortcomings of the study: Continue reading “How Much Retirement Income Can You Really Get From Your Portfolio?”

How to Make 2013 a Financially Productive Year

January 03, 2013

If you’re like most people, New Year’s resolutions are usually a source of endless disappointment. We start the year with grand ideas that often melt away before the end of winter. One of the biggest reasons for this is the tendency to try to do too many big changes at once, which causes us to burn out and get nothing done at all. That’s because we tend to overestimate what we can accomplish in the short run and underestimate what we can accomplish in the long run. To break things down, here are some ideas for each month to improve your financial situation in 2013: Continue reading “How to Make 2013 a Financially Productive Year”

Setting Financial Priorities for the New Year

December 27, 2012

Now that Christmas is over and we’re approaching the New Year, you may start thinking about New Year’s resolutions and many of those probably involve financial goals. But we all have a limited amount of cash flow to work with. Which of those goals should you prioritize first? Continue reading “Setting Financial Priorities for the New Year”

Do You Have These Essential Financial Protections in Place?

December 20, 2012

One of the most difficult financial challenges people often face is trying to decide how to balance competing goals. A typical situation might be someone who wants to pay off student loans and credit card debt, save for emergencies and a home purchase, start putting something away for retirement, open a college account for their newborn, and purchase disability and life insurance. Yet, they only have a limited amount of money they can save each month. Continue reading “Do You Have These Essential Financial Protections in Place?”

Should You Do a Roth Conversion to Protect Yourself From the Fiscal Cliff?

December 13, 2012

If you’re like many Americans, you may be worried that an ability of the politicians in Washington to cut a deal could lead us over the so-called “fiscal cliff,” in which the Bush tax cuts would expire for everyone. While you can’t do much about the taxes on your income, you can at least protect your retirement accounts from higher tax rates in the future by converting them into tax-free Roth accounts by the end of the year. (In addition, many employers are allowing employees to convert pre-tax money in their current retirement plans into Roth accounts.) This conversion would allow you to pay taxes on the money at today’s relatively low rates and avoid the higher future rates. But does it make sense for you? Continue reading “Should You Do a Roth Conversion to Protect Yourself From the Fiscal Cliff?”

What Your Financial Planner Needs to Know About You

December 06, 2012

One of the questions I commonly get from people is about what information to bring to a financial planning consultation. In my own meetings with employees, some people come with spreadsheets or even thick binders of information while many bring nothing at all. In both cases, they often have no idea what information is relevant and useful in making financial decisions. Whether you work with a planner or manage everything on your own, here is some information that you’ll want to have at your fingertips: Continue reading “What Your Financial Planner Needs to Know About You”

Are the Rich Really That Different?

November 29, 2012

At Financial Finesse, we are expanding more into financial planning for high-income executives, which is surprisingly an underserved population for unbiased financial guidance. Many high net worth individuals have access to financial advice but not necessarily from an unbiased source. I recently had the opportunity to work with a group of senior executives with much higher incomes and account balances than the employees that we typically talk with. Now, you may expect that those in the top income tax brackets would have significantly different financial problems than the rest of us and to some extent you would be right. They’re generally able to cover their expenses so they usually aren’t struggling with debt or cash management problems. But other than that, many of their problems are the same ones typically facing other people at the same stage of life. They just have more digits in their numbers. Here are their three biggest financial issues: Continue reading “Are the Rich Really That Different?”

Why You May Be Wrong About Your Retirement Time Horizon

November 15, 2012

I recently received a question from someone who was using our risk tolerance profile and asset allocation worksheet and noticed that the worksheet’s guidelines were to have 0% in stocks since his time horizon was less than 5 years away while his target date retirement fund had 40% in stocks. While there are differences between the asset allocations of various models and target date funds, that gap was pretty stark. So who was right? Continue reading “Why You May Be Wrong About Your Retirement Time Horizon”

5 Unromantic Reasons to “Put a Ring On It”

November 08, 2012

I’m amazed at how often I speak to people who have lived with a significant other for many years and even have children together but haven’t tied the knot. Now, I’m not trying to make a religious or moral argument for marriage. In fact, I’m a bachelor myself. Rather, I think it’s important for these couples to understand the various financial implications of “living in sin.” Continue reading “5 Unromantic Reasons to “Put a Ring On It””

If You Have to Do a Short Sale, Do It NOW

November 01, 2012

We talk to a lot of people who are struggling with underwater mortgages. Not only is the mortgage less than the value of home, but the mortgage payments often make it difficult for them to pay their other bills, especially if they’ve had a financial hit like a divorce or a job loss in the family. For some of them, it may make sense to just walk away from their mortgage obligations. Continue reading “If You Have to Do a Short Sale, Do It NOW”

Protecting Your Portfolio from Inflation

October 25, 2012

Last week, I wrote about some ways to potentially protect your retirement from rising inflation but we didn’t get a chance to discuss how to protect your portfolio. Here are some options to consider: Continue reading “Protecting Your Portfolio from Inflation”

Protecting Your Retirement From Inflation

October 18, 2012

Are you worried about rising inflation and how it could impact your retirement planning? With the Federal Reserve announcing QE3 (printing more money) and our rising federal debt and entitlement obligations (may need to print more money in the future), you’re not alone. Many economists are warning about the dangers of inflation in our future. Continue reading “Protecting Your Retirement From Inflation”

10 Ways to Get Cash in a Crunch

October 11, 2012

We recently received a question about how to get money “within minutes.” While we certainly can’t promise any way of getting a significant amount of cash that quickly (at least legally), there may be times when we need money for an emergency but don’t yet have sufficient savings. Here are some pros and cons of ways to get cash…(Generally, the quicker you can get the money, the more it will cost you.) Continue reading “10 Ways to Get Cash in a Crunch”

Can You Really Trust Your Financial Adviser?

October 04, 2012

When it comes to financial advisors, we often hear the term “trusted adviser” so often that we can take the “trusted” part for granted and forget just how important that trust is. This is someone we may entrust with some of our deepest and most intimate goals, our financial secrets, and our life savings. Yet, we often rely on very little to decide who’s worthy of that trust. We may choose an adviser based on who greets us at the nearest brokerage office, a cold call, a casual recommendation from an acquaintance, or even who happens to be sitting next to us at our child’s soccer game. Equally difficult can be the decision of when to fire an adviser we’re working with, especially if it’s been for a long time. Continue reading “Can You Really Trust Your Financial Adviser?”

Have You Outgrown Your Mutual Funds?

September 27, 2012

When it comes to investing, many of us stick to mutual funds. After all, they’re generally the only option in employer retirement plans (except perhaps for company stock) and financial advisers like to sell funds because they’re relatively easy for them to manage. They also make a lot of sense when you’re just starting out with investing and don’t have enough to purchase in individual securities. However, as your portfolio grows, you may want to consider purchasing individual securities, especially if your portfolio is taxable. Here are some reasons why: Continue reading “Have You Outgrown Your Mutual Funds?”

Should You Invest with a Commissioned Broker? Maybe

September 20, 2012

I recently had dinner with a friend of mine who just got a job working for an investment brokerage firm. Yes, that means she’s going to be one of those commissioned brokers that I’ve warned so much about. (If they work for a brokerage firm, they’re a broker even if they call themselves something else.) Ironically, she was looking for some advice from me in getting clients and building her business. Did I tell her to forget it and join a fee-only financial planning firm? No. In fact, there are some very good reasons why an investor could be better off with a broker than one of the many fee-only advisers she’s competing against: Continue reading “Should You Invest with a Commissioned Broker? Maybe”

What Another Obama Term Could Mean For Your Wallet

September 13, 2012

With the party conventions now over and the presidential election cycle in full swing, you may be wondering what the candidates’ plans might mean for you personally. Last week, we looked at how a Mitt Romney presidency could affect your wallet and this week we’ll do the same for a second Barack Obama term. Let’s start with the good news: Continue reading “What Another Obama Term Could Mean For Your Wallet”

What Could a Romney Presidency Mean For Your Wallet?

September 06, 2012

Now that Mitt Romney is officially the Republican nominee, polls are showing a tight race between him and President Obama. Given the state of the economy and Obama’s relatively low approval ratings, Romney has a fairly decent chance of being sworn in as our next President in January. Regardless of how you feel about this possibility, you may be wondering what a Romney presidency could mean for you and your wallet. Continue reading “What Could a Romney Presidency Mean For Your Wallet?”

7 Reasons NOT To Roll Your Retirement Plan into an IRA

August 30, 2012

Do you have a retirement plan from a former employer? Last week, I received two separate questions about what to do with a 401(k) from a previous job. Both times the person asking the question was thinking about moving it and both times they decided to leave it where it is after reviewing the pros and cons. Continue reading “7 Reasons NOT To Roll Your Retirement Plan into an IRA”