Spotlight – Retirement Planning by the Decade

Retirement savings are important for everyone, no matter what their age. The earlier that you begin putting money away for retirement, the greater the chances are that you’ll be able to live the life you have dreamed of in retirement. For most people, Social Security is not sufficient on its own to cover everyday expenses during retirement. Its purpose is to replace a portion of your pre-retirement income, not the entire amount. A large majority of the working population is vastly underprepared for retirement. A 2019 survey from reported that 40% of the workers surveyed had no retirement savings at all, and around 64% reported that they had $10,000 or less in retirement savings.

No matter where you are in the retirement process—whether you are in your 20s or approaching 60—there are financial steps you can take to ensure that you are fully prepared for retirement. Here’s how you can prepare for retirement at any decade of your life:

Your 20s – Start Developing Good Habits

While most people in their 20s are thinking very little about retirement—if at all—it is an important period in your life in terms of helping you to establish good financial habits and to set yourself up for financial success in the future. Now is the time to set aside just a little bit of money from your paycheck each month. The earlier that you begin to establish good financial habits, the more likely it is that you will stick with them as you grow older. Be cautious of getting yourself into a financial situation from which you might not be able to recover. Carefully consider any debt you do take on, and do your best to avoid taking on any unnecessary or gratuitous debt. Now is also a suitable time to establish a responsible credit record. You will need a good credit score if you intend to make large purchases, such as buying a home or car later in life. You should also make on-time payments and establish responsible spending habits now to create a strong foundation for the future.

Your 30s – Create Retirement Goals

If you didn’t begin saving in your 20s, now is the time to do it. During your 30s, you still have time on your side to figure out what you will need for a comfortable retirement. You should begin to consider your plans for what you want your retirement to look like. Thinking critically about what you will need for expenses each month will help you to establish appropriate savings goals. This might also be an excellent time to meet with a financial advisor for some professional guidance related to your overall financial health. A financial advisor can help you to assess your financial situation and help you to make appropriate choices in order to reach your savings goals.

If you are fortunate enough to have an employer who offers you the option of a 401(k) plan with an employer match, now is the time to take full advantage of such an opportunity. Maxing out your employer match option is essentially like adding free money into your retirement savings account, so if it is at all possible for you to meet that threshold and take advantage of the full match, then you should do so. Now is also a good time to assess any debt you have and work toward paying it off as best you can. Paying off accumulated debt, such as credit card or student loan debt, will help to free up more of your income in order to save for retirement.

Your 40s – Buckle Down

Once you have reached your 40s, your life is probably becoming significantly more complicated. If you have been waiting to meet with a financial advisor, now might be a good time to do so. You will likely be considering additional expenses, such as helping your children with the cost of college and helping to care for aging parents. A financial advisor could potentially help you to navigate these sometimes tricky waters during this time. Additionally, you should start ramping up the percentage you are saving and aim to put around 12-15% of your income into savings, if possible. If you are just starting to save, you will want to increase that percentage to as much as 20% if you can.

Your 50s – Focus on Your Goals

Retirement is just around the corner now, and it’s time to narrow your focus. You should take advantage of catch-up contributions to put extra money into your 401(k). Put as much money as possible into your retirement accounts, especially if you are behind on your savings goals. Consider reassessing your budget in order to free up extra funds that you can put toward savings. Now is also an excellent time to develop an estate plan and to assess your health and life insurance needs. Consider meeting with a financial advisor who focuses on this type of financial planning in order to help you navigate this sometimes complex process. It’s never too early to save for retirement, so consider looking at the steps you can take today to achieve the retirement you want.

New to Cryptocurrency? Here’s What You Need to Know

Though a recent innovation, cryptocurrency has certainly taken the world by storm over the last several years. Originally introduced around 2009 with bitcoin, it did not at first attract international attention, viewed instead as a passing curiosity. But today, that has changed, and cryptocurrencies of all types are fast becoming an important focus of discussions on cybersecurity, regulation, and other financial issues as they continue to gain traction. For those new to cryptocurrency, here is more information about what you should know.

How Does Cryptocurrency Work?

Cryptocurrencies are, quite simply, forms of digital currency that can be used to purchase other goods or traded among users for profit. For most users of cryptocurrency, that trading is the main focus of their use. These virtual currencies are secured through the use of blockchain, a distributed ledger used to record and verify transactions made without a central authority. Cryptocurrencies are often called “tokens”, as well.

That essentially creates an important feature of cryptocurrency: the fact that it can bypass “the middleman,” so to speak, or that it can be used without one central regulating authority, like a bank or another type of financial institution. Practically speaking, this helps to lower transaction costs by allowing buyers and sellers to deal directly with each other, rather than with a middleman.

Understanding Blockchain Technology


If there is one aspect of cryptocurrencies that has captured the attention of industries outside of banking and financial services, it’s blockchain technology. Blockchain is what makes cryptocurrencies possible. However, blockchain has proven extraordinarily useful to many other sectors of the economy, including healthcare, supply chain management, insurance, real estate, and others.

The technology works with the use of a blockchain, a long chain made up of “blocks,” where each block contains information about transactions. These blocks can contain information about thousands of different transactions in the same place, and each block additionally contains a randomly generated cryptographic code, known as a hash, identifying it separately from every other block on the blockchain. The next block on the chain contains its own hash and the hash from the previous block.

This is part of why blockchain is so secure. For example, to change the details of a transaction after the fact, a hacker might try to edit the block, but that would generate a new hash, while the next block in the chain would still have the old hash. To alter details in a single block, the hacker would therefore have to change every single block after it—which would require a huge amount of computing power. 

All computers in the network contain a copy of the blockchain, essentially ensuring that there are thousands of copies in existence. This is why blockchain is described as “distributed” ledger technology; it is also another reason why blockchain technology is so secure. With so many copies in existence, it is even more difficult for hackers to change the information contained in the blocks. To make a change, all copies of the blockchain would need to be edited, a virtually impossible task.

Types of Cryptocurrency

Even though bitcoin was the first cryptocurrency on the market, today, there are nearly 6,700 different types of cryptocurrencies. As an industry, cryptocurrencies in total were valued at over $370 billion as of early September 2020. Bitcoin, the most popular cryptocurrency, is valued individually at nearly $210 billion.

Other than bitcoin, there are many other types of cryptocurrencies that you might choose to invest in, including Ethereum, Litecoin, Theta, and Chainlink. Though most have similar uses, the different cryptocurrencies do sometimes differ in processing times, with Litecoin notably having faster processing times, and lower costs for transactions than bitcoin.  Theta’s innovation is set to disrupt today’s rapidly growing online video industry, by improving video delivery at lower costs.

Purchasing Cryptocurrency

If you are looking to get into cryptocurrency as an investment asset, there are a few things you should know. First, consider that a cryptocurrency investment could be volatile, especially compared to more traditional types of investment assets. With regulation only recently beginning to be implemented and changing prices, enter cryptocurrency investment cautiously, only investing money you would be comfortable losing.

Many new investors in cryptocurrency also wonder where to purchase these assets. For most of the more popular cryptocurrencies, users can purchase them through a trading exchange like Coinbase, TradeStation, Kraken, or  SoFi. More obscure cryptocurrencies can be difficult to purchase and may not be available on popular trading exchanges.

To hold your cryptocurrency assets, you will need a “wallet,” a digital app to keep your cryptocurrency in. You may hear wallets referred to as being either “hot” or “cold.” That simply refers to internet connectivity; a hot wallet is connected to the internet, while a cold wallet is not. Cold wallets are external storage devices that can hold your assets, and they offer increased security, though they can take longer to access than hot wallets. Hot wallets offer easier accessibility, but they are more vulnerable to security breaches.

New Investments

Cryptocurrency as an investment is a relatively new asset class in the financial sphere, but it could have greater potential in the future. If you are looking to invest in cryptocurrency, consider that it is still a volatile market and prices can change often, and sometimes drastically. A handful of Self-Directed IRA Custodians already offer cryptos as investment choices for your IRA or ROTH IRA funds. Experts typically caution that you restrict your investments in cryptocurrency to a small and expendable portion of your portfolio. It’s also important to consider your own risk tolerance. With that said, cryptocurrencies can be an effective way to diversify your portfolio for the future. 

5 Financial Steps You Need to Take during a Recession

Recessions are a way of life when it comes to both local and global economies. The volatile nature of the stock market and other investments combined with the way world events affect economic trends means that swings between good and bad economic times are inevitable.

Like most people, you probably worry about the implications of a recession on your job and your finances. You also likely wonder what you can do to protect your family from an inevitable recession. Right now, this is more relevant than ever, as the world struggles with the economic impact of the global coronavirus pandemic.

If you already have a financial plan in place, you are ahead of the game. However, there are some additional steps you can take to help ensure that your finances can survive an economic downturn. Here are five:

Step #1: Understand How Recessions Work

Our economy has experienced recessions off and on throughout what we think of as the modern day. Following the end of World War II, the United States has experienced 12 different recessions, each triggered by a different type of event. From the Oil Embargo of the 1970s to the recent Great Recession caused by the housing crisis in 2007 and 2008, downturns have become a regular part of our financial situation.

Predicting recessions, however, can be tricky. By definition, the economic downturn that can be called a ‘recession’ must persist over a period of at least several months. Recessions are typically marked by higher unemployment numbers, a drop-off in certain types of economic activity (for instance, production and manufacturing), and a marked decrease in consumer spending.  Sometimes a recovery is swift and strong, and other times a recovery is slower and weaker.

Fortunately, these negative cycles don’t last forever. Eventually, the economy will make a comeback. But in the meantime, it is important that you take steps to reassess your own personal financial situation to help weather the economic storm.

Step #2: Reassess the Allocation of Your Resources

The first step in preparing for any type of economic crisis is to assess your financial situation. If you are fortunate enough to be in a comfortable place financially before a recession, that is a big plus.

During a crisis, you will want to strike a balance with your finances between how much return you are getting on your investments, how easy it is to access your money if you need it, and how safe your funds are right now. A professional financial planner can help you strike an appropriate balance for your particular situation.

When times are good, the best way for you to prepare for a potential downturn is to shore up your emergency savings accounts. Professionals typically recommend a minimum savings amount of three to six months of your current living expenses, but that recommendation is flexible depending on your particular situation.

Consider also making a plan for maintaining insurance coverage (like health insurance), especially if your coverage depends on your place of employment. In a recession, it is always possible you may lose your job. You don’t want to be caught without a backup plan if your insurance will be lost with it.

Step #3: Consider Your Risk Tolerance

You may have heard investment professionals discuss investment allocations based on your age. The general rule is the younger you are, the more risk you can tolerate. But the truth might be different for you. If your investments are giving you anxiety, don’t suffer through the feeling just because your assets are allocated how they are ‘supposed’ to be. If you are older, and closer to retiring, you will want to reduce your risk exposures ahead of recession warnings, or as soon as you hear about a downturn coming.  A professional planner or advisor is likely to be able to give you some advance warning and offer you lower risk steps to take and allocations to hold.

Do what feels right and what makes you the most comfortable. Particularly during an economic crisis, you may not want to take on more financial risk even if you are younger. The right answer is whatever makes you feel comfortable with your finances. A good financial planner will be able to help you arrive at an appropriate portfolio for your situation and preferences.

Step #4: Stay Focused on the Long Term

Even when taking your risk tolerance in consideration, try to stay focused on the long-term potential of your investments. Selling stocks at the bottom of the market often means you will lose out on significant amounts of money that could have been made if you had held on to them.  The old adage of “buy low and sell high” seems obvious, but in point of fact, is actually very hard to do for most people, because their emotions tell them not to sell when prices are high, and they are very comfortable with their holdings, and not to buy when prices are low, and there is plenty of fear and confusion and pessimism.  But the superior returns are made by not following the crowd-by buying assets when they are on sale and others are running away from them, and by selling into strength, when an asset is loved and demanded by the crowd.  Most people need the help of an advisor on this front, as proper buy and sell disciplines are quite difficult, even over longer periods of time. 

Trying to predict the market will almost always cause you trouble. The most-recommended strategy is usually to hold on to your investments, having faith that eventually the market will bounce back. Since it always does, your best bet is to focus on the long-term rather than the short-term potential of your investments. However, that “buy and hold” strategy may be inappropriate when you are in your late 50s or 60s, because if the market’s recovery takes a long time, it can alter your whole retirement outlook and time frame. For example, the S&P 500 Index reached the 1500 level in January of 2000, and did not see that level again until March of 2013—13 years and 3 months later! If a 10-15 year recovery period is too long for you to wait through, you need to use other investment vehicles that can keep your principal safe, while also keeping your money productive for you. Holding on to an unprotected portfolio can be dangerous as you approach retirement. We can have faith that the markets will always recover, but sometimes that recovery period is too long. After the great crash of 1929, it took 25 years for the markets to recover-1954!  Japan’s stock market crashed in December of 1989, and it is still down 35% from its highs 31 years later! A certain portion of your accumulated assets ( usually a majority percentage for most people) needs to be safe and produce income for you for as long as you live, in retirement. 

Step #5: Live within Your Means

An economic crisis is a great opportunity for you to reassess your monthly expenses. Check out your budget and where you are spending money now, looking for places you could save.

Perhaps there are monthly subscriptions you could put on hold or trivial expenses (like your daily coffee or even takeout) that could be cut down. Now is the time to tighten up your budget and live more frugally, to get through the bad cycle.

A Look at the Top Benefits of a Financial Plan

For many people, creating a financial plan is not a top priority, particularly when they’re young. Quite often, people don’t consider a financial plan until they begin to approach retirement age, a time when money concerns come to the forefront for most people. Many also think of financial planning as an activity that’s only necessary for the wealthy, not realizing the benefits it can have for those not part of the so-called 1 percent. None of this is a big surprise when you consider the lack of financial education in the US for elementary and high school students. Just 21 states require some type of personal finance class for high school students, and only 25 require an economics course.

Not only can a financial plan help you regardless of your income level, but it can also be a benefit no matter your current age. Most experts recommend establishing a financial plan when you’re young or when you start your career for the most benefit. If you have not yet considered a financial plan or you think it’s not worth your time, consider the following points.

Establish Clear Goals

Having any kind of financial goal is the first step forward. Creating a financial plan can seem somewhat unnecessary and time-consuming when you don’t have a goal to work toward. But if you have a few achievable financial goals in mind, this can make it easier to implement your plan and stay motivated to follow it. Your goal might be to pay off your credit card debt, establish a fund for your child’s education, or save up for a down payment on a house. Establishing goals for the short, medium, and long term will help you achieve financial success on your terms and get what you want out of life.

Get Confident about Money Management

Financial planners are not just for those who have more money than they know what to do with; working with a professional can be beneficial for anyone. If you’re a new graduate or just starting your career, engaging with a financial planner can help you immediately get on the right track with your spending and saving. Similarly, if you’re starting to plan for a baby, getting divorced, switching careers, buying a house, or coming into an inheritance, a financial planner’s advice can help you navigate these life events and make the best decisions for your money. Really, there’s never a bad time to work with a financial planner.

If you feel uncomfortable about managing your own money or you don’t know where to start, a few planning sessions with a financial professional might help to soothe your anxiety. They will try to get an in-depth view of your current finances, complete a cash flow analysis, help you define your goals, and come up with a detailed plan that will cover savings, investments, and so on.

Achieve Your Ideal Lifestyle in Retirement

Have you always dreamed of being able to travel the world during your golden years? Want to purchase a vacation home? A financial planner is invaluable in making your ideal retirement happen. Planning for retirement can be complicated—Social Security alone doesn’t provide enough for most people to live comfortably, and generous pensions are becoming a thing of the past. Even a 401(k) on its own may not be enough, especially if your employer fails to match your contributions.

For your ideal retirement, you may have to rely on a combination of Social Security, 401(k)s, individual retirement accounts (IRAs), health savings accounts (HSAs), and other sources of income. At the same time, you’ll likely confront higher healthcare expenses. You may also wish to move to a better location for your tax situation, or to leave a legacy for your family. With so many factors to consider and financial decisions to make, a good financial plan drawn up by a professional is practically a necessity if you want a retirement you actually enjoy.

Build Your Savings Faster

More people than you might think are unprepared when it comes to savings. Few have dedicated savings accounts for emergencies, and often those that do have such an account don’t have enough put away. Experts generally advise a minimum of six months of living expenses put aside for emergencies, but you might want to adjust that number depending on your situation.

At any rate, creating a comprehensive financial plan will go far in helping you save, and it can also help you reach your savings goals faster. Those with a financial plan often report saving a significantly higher percentage of their income than those who do not have a plan. A detailed plan also makes it easier to see when you’re falling behind or not meeting the savings benchmarks you need to meet to achieve your goals. Without a comprehensive plan, it’s all too easy to lose track of your goals and your progress toward them. You may be tempted to skip a month or two or savings here and there—which is fine if this happens rarely, but disastrous if it becomes a habit. A financial plan can help you take a more disciplined, consistent approach to saving.

Understanding the Risks and Benefits of Cryptocurrency

Cryptocurrency has been around for approximately 11 years now when Bitcoin first hit the scene, and though the initial boom of excitement has faded somewhat, it remains a popular investment choice for many individuals looking to supplement or diversify their financial portfolios. Some are even adding cryptocurrency assets into their retirement portfolio in pursuit of growth and to produce extra income for their golden years.

Cryptocurrency still has exciting potential, and it is a relatively easy form of investing, even for those without much knowledge going into it. But it is not without its pitfalls, and understanding the risks of cryptocurrency investing is an important thing to consider when purchasing cryptocurrency yourself.

What Is Cryptocurrency?

In simple terms, cryptocurrency is a type of digital currency that is made secure using cryptography, most commonly blockchain technology. It differs from both traditional currency and electronic currency in many ways, making its use somewhat confusing for many people.

Cryptocurrencies can exist without the backing of a central governing body, which makes them theoretically free from manipulation by a federal government or similar agency. That is one aspect of cryptocurrency’s use that appeals to many. Its use of cryptography allows for transactions to be extremely secure and less vulnerable to fraud and hacking, unlike banks and other institutions which use a central agency for control and accuracy.  At this time, the leading crypto names are Bitcoin, Ethereum, Ripple, Litecoin, and Theta, and the market values of these five ranges from $200 billion for Bitcoin to approx.. $600 million for Theta.  These different cryptos have different functions and use.


What makes cryptocurrency riskier than some other types of investments is the newness of the industry. With cryptocurrency still a newcomer in the world of finance, its regulation is not as established as other forms of financial services.

The legal status of cryptocurrency has different definitions in different areas. Depending on where you are located, it can be considered an asset, a product, money, or property. Even though cryptocurrency has been in the picture for around 10 years, regulation of the industry is not fully established and is the subject of much debate.

In the United States, various government agencies are still fighting for control; the US Securities and Exchange Commission sees cryptocurrency as a security, the Internal Revenue Service views it as property, and the Commodity Futures Trading Commission thinks of it as a commodity.

Due to the lack of consensus on both defining cryptocurrency and regulating it, cryptocurrency can be a risky investment. Its longevity is not yet established, and many places still do not accept cryptocurrency as a valid form of payment.

High Volatility

The cryptocurrency market is volatile, and quick shifts can lead to sudden gains or losses with very little warning. It is not out of the question for cryptocurrencies to suddenly rise or drop by hundreds or even thousands of dollars within hours. And with new types of cryptocurrency entering the market regularly, there is always a risk of discontinuation or a hard fork, which is a radical change to a protocol in a network that makes a transaction and blocks valid or invalid. Hard forks can often trigger substantial price volatility around that event, another risk for investors. To invest in cryptocurrency, you need to be prepared to deal with extreme fluctuations in price and the loss of potentially thousands of dollars at a moment’s notice.  Of course, the reason why you might consider devoting a small portion of your growth portfolio to cryptos is because they also offer explosive upside potential, and many people still recall the significant number of new “crypto millionaires” from the big run-up in 2016-2017.

Limited Trading Opportunities

Unlike other types of investment assets, cryptocurrencies can only be traded in a limited number of venues, just like stocks.  Generally, if you want to purchase or sell a cryptocurrency, you must do so through a cryptocurrency exchange, as you do with stocks. Depending on the type of cryptocurrency you are looking for, your choices might be even more limited. Some cryptocurrency exchanges cater to only a few cryptocurrency types, so if you have a more obscure type, selling it could be difficult.

Security Concerns

Because cryptocurrency is an online asset, it can be vulnerable to hacking and fraud if you are not careful. Scams using cryptocurrency are abundant, and exchanges that support trading of cryptocurrency are vulnerable to being hacked. If that happens, your cryptocurrency might simply be gone, and you will have little to no recourse available to get it back. For this reason, many investors who buy and hold cryptocurrency use a ‘cold storage’ option, also known as a digital wallet, in which you can store cryptocurrency offline in a secure device.

Consider Your Risk Tolerance

Any good financial advisor will likely tell you never to invest more money than you can afford to lose, and this is especially true when it comes to investing in cryptocurrency assets. Because of the high volatility of the market, your level of risk will also be relatively high. Carefully consider your risk tolerance before investing in cryptocurrency and be sure to consult a financial professional if you are not certain about how to proceed. The more diverse your portfolio, the more secure your investments are likely to be, so you should invest only a small portion of your assets in cryptocurrency. That will protect you from any significant fluctuations and volatility in the cryptocurrency market while still offering you a chance to make a profit, as the adoption of various cryptocurrencies in the economy and daily commerce grow.

4 Easy Steps You Need to Know to Save for Retirement

Retirement planning is a long process, and it can be intimidating for many people. The vast majority of workers, in fact, have not taken even the most basic first steps to begin planning for their eventual retirement. However, the process can be more straightforward than you think. There are a few easy steps you can take today to put yourself on the road toward a successful retirement that will allow you to live the lifestyle you want in your later years. Keep these planning steps in mind and watch out for a few pitfalls, and you can have the retirement you’ve always wanted.

Know the Purpose of Your Retirement Plan

Many think of retirement planning as synonymous with just one major goal: saving. Though building up your savings is certainly crucial, that shouldn’t be the only goal of a retirement plan. More broadly, your retirement plan should help you establish consistent revenue streams that will carry you through retirement without running out of funds. Ideally, that amount should be enough to maintain your lifestyle as is, without significant cutbacks, and supply you with enough money to offset unexpected expenses, whether they’re medical (such as a surprise surgery bill) or family-related (for example, helping a child financially while they are going through a divorce).

How Much Will You Need?

To determine how much you’ll need to retire comfortably, it can be helpful to calculate your monthly expenses, then add more to account for expenses that occur less frequently or irregularly—such as replacing an appliance, buying new tires for your car, and so on. If you’re younger and not yet approaching retirement age, you can use a simple rule of thumb and assume that you’ll likely need about 80% of your pre-retirement income to maintain your current lifestyle. However, consider that this may not hold true for every person. If you want to change your lifestyle during retirement, that may also require you to change your plan. Keep in mind your travel plans and family expenses, and be sure to consider medical expenses, as they are a frequently overlooked aspect of retirement planning for many.

As you get closer to retirement age, it’s helpful to track and record your monthly expenses to get a better idea of what you actually need. Retirement planning is not a once-and-done process. Your progress toward your goals and your plan itself should be reassessed throughout your life, from the time you begin saving right up until you start drawing your first retirement benefits. Any time your financial status changes significantly—for example, if you get a major raise, experience a divorce, have a child, or receive an inheritance—is also a good time to reassess your retirement plan.

Determine Your Sources of Income

Once you have a basic idea of the lifestyle you’d like to have during retirement and you have an approximate estimate of expenses, the next step is to look at all of your potential income streams to make sure you have enough. These include things like distributions from your retirement savings accounts (like 401(k)s or IRAs), pensions, Social Security benefits, annuities, and equity in your home. Though you might think of retirement as a time when you never have to work again, many retirees find it prudent to take on a small part-time job, and some even enjoy the change of pace and the chance to work again.

Another benefit of continuing to work after retirement is that it can help you stretch your money even further—it both reduces the number of years you’ll have to rely on your savings and gives your investments more time to grow before you start making withdrawals. A part-time job may also provide the cushion you need to delay claiming your Social Security benefit for a few years. This can be a good strategy for some people, since your benefit will increase each year you wait to claim it past your full retirement age, up until you reach age 70.

Don’t Forget Your Estate Plan

Estate planning is a separate aspect of retirement planning that is sometimes overlooked, and it typically requires expertise from different types of professionals, like lawyers or accountants. Your estate plan can help prevent those in your family from experiencing any financial hardships after your death and ensures that your assets are distributed in the way you want. This process also generally involves your life insurance plan and some tax planning. For example, if you want to leave certain assets to charity or your family members, there are tax implications involved. A professional experienced in estate planning can help you determine if it would be best to distribute assets as a gift or through the estate process.

It is never too early to start creating a retirement plan. In fact, many experts will tell you the earlier you begin planning, the better. With a plan in place, you can approach your retirement with confidence, not stress and worry, knowing that your needs and those of your family will be met.

Why You Need to Continue Financial Planning after You Retire

When people consider their finances, the most common things they focus on are saving for retirement, maximizing their current finances, saving for major purchases, and paying down debt. But there is an additional area of financial planning that tends to be overlooked: post-retirement financial planning. Many people see retirement planning as a process that ends the day they retire. The common assumption is that once you retire, you don’t have to think about financial planning anymore.

Unfortunately, that is not true in today’s world. People are living longer than ever, which means that you will likely need to save more money before you’re ready to retire. It also means that your finances during retirement will be stretched and tested more than ever and that you’ll have to keep planning for the future well into your retirement. Here are some of the ways that post-retirement financial planning can help you, with a look at what things you should be watching out for in terms of finances.

Unique Financial Challenges after You Retire

Though many view their retirement as a finish line, it’s also the starting line for post-retirement financial planning. There are several issues you may encounter during retirement, including chronic illness, the death of your spouse, an unexpected need to support your adult children, and plenty of others.

Even though it’s impossible to plan for every scenario, not planning at all is a big mistake. Any of these unexpected expenses could be the one that derails your retirement, making it so you outlive your retirement funds. By working with a professional financial planner with experience in post-retirement planning, you may be better able to achieve the retirement lifestyle you want while maintaining your financial health for decades.

Long-Term Health Concerns

One of the most obvious financial concerns after you retire is the cost of healthcare. Longevity has continued to increase over the years as healthcare has improved, meaning that most people are living well into their 80s today. But though you may be able to enjoy more years with your loved ones, this also means you are more likely to experience serious chronic health conditions, physical disabilities and mobility challenges, or simply the burden of poor health as you grow older. Planning for this possibility can help ensure your finances are not devastated by the expense of long-term healthcare and unexpected medical bills.

Many retirees who live well into their 80s and 90s find themselves unable to care for their own basic needs and must consider hiring live-in care or moving to a nursing home or similar facility. According to the US Department of Health and Human Services, 70% of 65-year-olds will require some type of long-term care; women typically require care for longer periods of time than men (likely due to their longer lifespans), and 20% of 65-year-olds will require care for more than five years. 

Unfortunately, the cost of this type of long-term healthcare can be staggering. Genworth conducted a nationwide survey in 2019 that found that the monthly median cost for a home health aide was $4,385 ($52,620 per year); for nursing home care, the average monthly median cost was $8,517 ($102,204 per year).

Given this fact, you may want to consider purchasing long-term care insurance, which provides for certain personal and custodial care expenses in your own home, services that are typically not covered by Medicare plans. Starting this insurance while you are still young may help you save on premiums, but it can still be prohibitively expensive for some people.  There are also certain life insurance policies that include riders for chronic illness expense funding (tax-free) that may be more efficient than the traditional long term care policies, which usually do not return any money to you or your loved ones if you die peacefully in your sleep, never having needed to use the policy.  The newer life policies will provide your beneficiaries with a full tax-free death benefit if you do not use the policy for long term care needs and expenses.

Effective Health Insurance

Many retirees assume that Medicare will cover all of their medical expenses during retirement, but this is rarely true. Some important types of healthcare, like dental coverage, are not covered in basic plans and require expensive add-ons. You will want to take a close look at your health insurance coverage with a financial planner to see exactly how you are being covered and where the gaps exist. This can help you make decisions about purchasing additional insurance during retirement or saving specifically for health expenses.

Family Expenses

When considering your expenses in retirement, you’re probably already considering your lifestyle and travel plans, but don’t forget your family. Many retirees want to be able to financially help their children and grandchildren in times of need. For example, you may want to help your adult child get back on their feet after a divorce, or help pay for a grandchild’s education. It’s important to consider the impact this may have on your finances. Plan in advance for unexpected expenses so you can help your family if you want, without having to worry whether you can afford it.  You may also wish to look into a regular tax-free gifting schedule for loved ones while you are alive and have the means.

Work with a Planner

Remember, retirement is not a finish line—it’s the start of a new phase of financial planning! You should not stop planning for your finances once you reach your retirement. In fact, the years immediately after you stop working may be the time you need a financial planner the most. Reach out to a planner well before then to start creating a plan for your income, investments, and benefits, along with the potential healthcare and other major expenses you may run into. A good financial planner can help you balance required withdrawals, investments, and other sources of income to ensure you can live your ideal retirement lifestyle and still have money for unexpected expenses.

5 Mistakes to Avoid When Planning for Retirement

Investing can sometimes appear to be a daunting task that many Americans would rather not attempt. In fact, only about 55% of Americans have actually invested in the stock market, and that number has remained fairly stable over the course of at least the last decade. While investing might seem intimidating, it is an essential way to ensure that you will have what you’ll need for a comfortable retirement. It might be a mistake to try and rely solely on other assets. With the help of a good financial planner, you can obtain solid guidance on how to invest your money. If you’re going at it alone without an advisor, you should keep in mind these common investing mistakes that could potentially have repercussions when it comes to your retirement savings.

Having No Plan at All

For many people, the most common investing mistake that they make is not having any plan at all for their investments. While saving is certainly a good first step in planning for retirement, it would be a mistake to depend solely on your savings to carry you through retirement. For all but the wealthiest people, there must come a time when your accumulated assets become oriented toward the generation of income for retirement expenses. Assets in various accounts are not income-they are assets! Unless you build intentional and lifelong income streams ( using investment vehicles specifically designed for income), you can deplete too much capital in a prolonged low interest rate environment, or in negative market cycles.  Compounding works both ways.  If you are relying solely on mutual funds or stocks for your retirement income above and beyond Social Security ( and a pension if you will have one) there is a very real danger that your withdrawals in down market years will make it much harder to recover, and hasten the possibility of running out of money.  Instead, you should consider the first step and make additional plans to have safe and secure investment accounts that can help to supplement your savings during retirement. Otherwise you may find yourself stuck with significantly less retirement income than you may have expected.

Placing Too Much Trust in Your 401(k)

Having a 401(k) available to you is a great step forward in saving for retirement. But again, just like you should not rely solely on your savings accounts, you should probably not depend on your 401(k) alone to get you through retirement. When it comes to many 401(k)s, you as the account holder do not have much control over how the investments are chosen, leaving you to rely solely on whatever strategy the fund manager chooses for asset allocation. If you like to be hands-on with your investments, you may want to look into some additional retirement accounts that offer you a bit more freedom in terms of how you can invest your money. Additionally, although much of the appeal of the traditional 401(k) is the ability to save money pre-tax, these accounts are subject to taxes at your current income level when you begin to withdraw the funds. Depending on your financial situation, that could mean you will pay a significant amount in extra taxes during retirement.  Since every dollar coming out of a 401k or IRA rollover is taxed as ordinary income, these withdrawals can also make your Social Security taxable as well.  Converting these funds to ROTH status over several years will eliminate or possibly greatly reduce the taxes due on your Social Security, and also shelter all of that money from all future tax increases that may come down the road.

Failing to Diversify

In any type of investment strategy, but particularly in regards to your retirement savings, it is important to develop a portfolio that can withstand fluctuations in the market and remain stable in spite of some expected volatility. This means that you will want to ensure that your investment portfolio is “diversified,” meaning that your investments should be spread across different asset classes and types of investments. You will want a mixture of US stocks, Treasury securities, foreign stocks, real estate, and other items, such as precious metals and natural resources, in which you have an interest. This act of diversifying your portfolio will help to protect your accounts from fluctuations in the market in one specific area.

Not Reassessing Your Strategy

At various points in your life leading up to retirement, you will need different kinds of investment strategies. Many experts advise that the most aggressive investment strategies should be undertaken early on in your life when you still have time to make up losses. As you approach retirement age, your portfolio should slowly become more conservative in order to protect your savings from potential downturns in the market. One mistake that people often make with their investment and retirement accounts is not taking the time to reassess their investment strategies every few years or so. Doing so will help to ensure that your investments are working for you in the best way possible, no matter what your stage of life. As mentioned above, under the “Having no plan at all” section, for almost all people, there needs to be a period of transition from a pure accumulation and long term growth focus, to more of a preservation of capital and income generation focus, in the last few years before your retirement.

Timing the Market

Timing the market involves trying to sell various investments at their highest value and buying them when they are at their lowest, thereby cashing in on higher returns. However, trying to time the market can be extremely tricky, and if you guess wrong, it could cost you thousands out of your savings. Instead of trying to do so, a better investment strategy is to save for the long term.  While adopting a long term focus is imperative ( many retirements today will last 20-30 years or more), a simple “buy and hold” strategy can be deadly if you go through a prolonged period of market underperformance, and you need to take withdrawals for living expenses and lifestyle desires in retirement. For example, the S&P 500 Index first reached the 1500 level in January of 2000, and then did not return to that level until March of 2013-a period of 13 years and 3 months of a 0% return, before fees and any withdrawals! While these long periods of poor performance are not common, they can occur at any time, and most people cannot afford to wait through a 10-15 year period to just break even, or to take needed income. The solution is to devote a significant portion of your accumulated retirement assets ( whatever amount you do not want to go risk going through a 5 or 10 or 15 year period of poor returns with) to a principal-protected vehicle or vehicles that will provide income for you, for as long as you live

Saving for retirement is essential, and investments can certainly help you to achieve your retirement goals. If you have not yet done so, consider working with a financial planner who can help you to develop an effective strategy to save for retirement. Financial planners can not only serve as an invaluable resource when you’re trying to decide how and where to invest your funds, but they can help to increase your chances of achieving the retirement that you’ve always wanted.

Financial Planning for Major Life Events: What You Need to Know

For many people, financial planning may not appear to be an absolute necessity. However, anyone can benefit from a bit of financial planning to improve their finances, particularly in terms of major life events. Certain monumental events in your life can benefit from the advice of a financial planner. If you are approaching one of these events, here is more information about how you can adjust your financial plan to best suit your future finances.

Establishing a Financial Plan

The first step toward improving your finances is to establish a basic financial plan, which would include a detailed look at your expense budget and income sources, including any ability to save money above and beyond your expenses. But it is important to keep mind that your financial plan should have some flexibility in order to accommodate changes in your life. You will need to make a point of reassessing your financial plan before and after important life events in order to ensure that they still meet your needs and help you on the path toward achieving your financial goals.

Getting Married (Or Divorcing Your Spouse)

Couples are waiting longer than ever to tie the knot in today’s world, and with that delay in getting married comes more complex finances. If you wait to get married until you are in your 30s or even later, you and your partner will likely already have a substantial financial base involving multiple bank accounts, credit cards, and maybe even retirement accounts. Prior to your marriage, you might consider working with a lawyer to put a prenuptial agreement together, particularly if either you or your partner is entering into the marriage with children or substantial investments. While this notion may not be romantic, it can protect you financially. Not every couple chooses to combine their finances, but if you do decide to do so, it could turn into a complex process that could benefit from working with a financial planner.

Similarly, if you are going through a divorce, there are a number of important financial considerations that will need to be handled, such as updating your will, ensuring that your investments are protected, and changing your insurance policies, and beneficiary designations on various accounts or policies. These tasks should be handled by a financial professional in order to protect your interests, save time, and avoid mistakes.

Starting a Family

Having children can prove to be an expensive proposition, not only in regards to the immediate costs such as hospital bills, prenatal care, and baby clothes but also with regards to future costs such as college tuition. If you plan to have a baby is in the future, it is worth discussing your finances with a financial planner in order to ensure that you have a healthy financial plan in place prior to having a child. You will need to update and adjust your will and insurance policies and make sure you have planned for new expenses, which are all things that a financial professional can help you to navigate. In addition to these immediate expenses, it may be a good time to start a college savings fund for your new child, particularly when you consider the cost of a college education today.

Obtaining An Inheritance

If you receive an inheritance from a family member, it is unquestionably a major event that you should discuss with a financial planner. You will want to ensure that you minimize the tax consequences that receiving an inheritance can bring, particularly if it is in the form of a lump sum. A financial professional can provide you with guidance in handling this sudden influx of cash so that you can put it to good use for your own personal financial situation. They can advise you on how to adjust your spending habits and provide you with advice on where to invest your money.

Starting Your Own Small Business

Starting a small business can mean significant changes to your financial situation, as well. You should try to work with an accountant or financial planner who has experience in dealing with small businesses or with the particular type of business you are in so that you can obtain relevant advice for the specific size and type of business you are starting. A significant amount of time will be required to decide on the structure of your business, to register a name, and to obtain an employer identification number (EIN) for tax purposes. Depending on the eventual size of your business, you might also need to look for an attorney and accountant and financial planner.

Approaching Retirement

While you have hopefully been preparing for retirement long before you approach retirement age, it is absolutely critical that you consult with a financial professional as you approach retirement. An advisor can help you to maximize your investments and manage the transition to income production for life-which will replace all or a good part of your earnings from your job. Tax planning is also critical for most pre-retirees.  It can also prove helpful to meet regularly with a financial planner in order to reassess your retirement savings, particularly during your peak earning years (typically during your 40s and 50s, although it can be different). Mismanaging your assets during this critical time could prove detrimental to your overall retirement savings. A financial planner can help you to reassess your investments, create a budget, and determine how much you will need in order to achieve the retirement that you want.

Important Aspects of Retirement Planning You Need to Know

As the average life expectancy in the United States grows, retirement planning should change along with it. For most people, retirement will last for several decades beyond what used to be common. With that increased life expectancy comes increased costs, particularly as people approach the end of their lives. There are a number of expenses that retirees need to ensure that they have worked into their retirement savings plans. Otherwise, they may find that what they have saved is not sufficient. Here are a few of the more important aspects of retirement planning that you should consider now before you reach retirement and how to calculate the amount you may need.

Consider Downsizing to a Smaller Home

Once you retire, you might discover that your home is too large for your changing needs. Due to the high cost of owning a larger home, it might be in your best interest to sell your home and downsize to a smaller one in order to save on day-to-day expenses. Selling a home, especially one that you have lived in for a long time and may have even raised your children in can be an emotional undertaking, causing many retirees to think twice. But that larger home can end up presenting many challenges as you continue to age. You might find that as you grow older, stairs become more difficult for you to manage, which could be a problem if you live in a multi-story residence. Additionally, unless you can afford to hire a maid, cleaning a very large home might be too difficult for you, especially if you have any health concerns. Then, of course, there are the financial costs of a larger home. Insurance, maintenance and upkeep, and property taxes can all put a significant strain on your fixed retirement income.

The Rising Cost of Health Care

One important aspect of retirement that you may not currently be considering is the rising cost of maintaining your health and caring for yourself or your spouse when health issues become a bigger problem. Many people are not aware of the limitations of Medicare plans, which can lead to some surprise expenses down the road. Without enough money set aside to take care of unexpected medical costs, you might find that your retirement savings aren’t going as far as you initially thought they would. This is another area where extended life expectancy comes into play. The longer you live, the more struggles you are likely to have with your health, and that will result in increased medical expenses.

You may also want to work in the cost of end-of-life care into your retirement plan.

Although it is not a pleasant thing for most people to think about, the truth is that end-of-life care may become a reality for nearly 70% of adults turning 65, at least according to The same site estimates that the average cost of a private room in a nursing home nationwide is around $7,698 per month, a cost that can be lower or higher depending on where you live. For example, in large metropolitan areas, that cost might be much higher, as much as $13,000 a month.  If a chronic illness or long-term care event does, unfortunately, enter the picture at some point, where would that “extra” $80-120,000/year come from?!  If there is not a plan in place, it is quite possible to accidentally impoverish a healthier spouse, or to tun out of money, or to burden loved ones to a very significant degree.  In fact, often a family member interrupts their career or life in order to help out in a chronic illness situation, and the non-financial consequences associated with that can be painful as well.  Having a plan that creates a large new income stream in the event of a long term care event would allow family members to hire and manage the care, rather than providing it themselves. 

Stretch Your Savings And Consider Your Lifestyle

An important aspect of planning for your retirement involves thinking about the type of lifestyle you want in your golden years. Will you be spending most of your time at home and with your family? Or do you plan on traveling around the world? These are important considerations when you decide where you want to spend your retirement money. Some retirees choose to continue working at a part-time position during retirement in order to help stretch their retirement funds even further. Consider what your monthly expenses will be, including the cost of food, utilities, rent or mortgage payments, health care expenses, and any other costs. Be sure you are setting aside enough money to cover travel if that’s something you plan on doing and ensure that you have other funds available for emergencies or other unexpected costs.

Once you have those monthly costs calculated, you can work backward and determine what amount you need to have in your retirement account. That may change as you get closer to retirement, so it is extremely important that you reassess your retirement savings every few years. You do not want to deplete your retirement savings too early, because after those investments run dry, you must rely on Social Security. Unfortunately, Social Security benefits don’t generally provide enough income to cover basic living expenses.

Consult A Professional

These are just a few of the aspects that you will want to consider when planning for your retirement. Consider consulting with a financial planner when reassessing your investments. They can help you to manage your investments and examine whether your retirement savings accounts are sufficient and can last you through what could turn out to be quite a lengthy retirement.

Cryptocurrency Debit Cards: What You Need to Know

The cryptocurrency industry has grown rapidly over the past several years, and the idea of digital currencies is becoming an accepted part of the financial mainstream. More people than ever have heard of digital currencies. Many who might not have considered such a thing in the past are beginning to feel more confident about actually incorporating them into their financial portfolios.

As people become comfortable with cryptocurrencies, banks and other large financial institutions have begun to take notice, with some trying to develop their own cryptocurrencies as well. One of the newer ways that cryptocurrency is trying to enter the mainstream is through the use of cryptocurrency debit cards, though so far, the plans have been somewhat less than successful.

Here is what you need to know about what might be on the horizon if cryptocurrency debit cards do enter the mainstream market.

The Cryptocurrency Evolution

Over the last several years, cryptocurrency has experienced some significant changes. It has gone from humble beginnings as a medium used in transactions (two pizzas were traded for 10,000 BTC in the first cryptocurrency exchange) to a digital asset seen more as an investment than a true system of payment in transactions.

However, the role of cryptocurrency may be starting to shift again to be more in line with its original mission to function as an electronic cash system for transactions. So, will the next step be a cryptocurrency debit card? And does cryptocurrency really need to be used as a payment method to be adopted more thoroughly into the mainstream?

Cryptocurrency Cards: The Problems

The move into debit cards for use with cryptocurrency has long been a goal of many in the industry. Some of the traditional market’s most important players have been showing interest in the possibility for some time now. But the road to cryptocurrency debit cards has not always been smooth. In fact, just a few months ago a scandal in this marketplace rocked the financial industry.

Wirecard, long viewed as a potentially dominant player in this subset of the market, suddenly became the subject of controversy when news of the initiation of insolvency proceedings broke in June. The German fintech group filed for insolvency, admitting that the 1.9 billion euros (or $2.1 billion US dollars) it had claimed was missing from its accounts did not exist.

This was more than just a financial failure, however. Long-time company auditor EY even noted it seemed to be an ‘elaborate and sophisticated fraud.’ Markus Braun, the former CEO of Wisecard, was arrested and is now suspected of market manipulation.

Less recently, in 2018, the digital payment solutions provider WaveCrest was forced by Visa to immediately close all of the prepaid Visa cards it had issued, citing non-compliance with membership regulations. These incidents show some of the problems with regulation in the cryptocurrency space. Additional companies are likely to come under fire in the years to come for their business practices. Such problems are also a hindrance to the growth of the industry and its adoption into the mainstream.

Can Cryptocurrency Cards Work?

Credit cards and debit cards are some of the oldest ‘new’ financial technologies in the industry. Today, they are a common part of our daily lives, but when they were first introduced, they represented a revolutionary concept. It should come as no surprise then that the two main players in the traditional credit card market have begun looking for ways to get involved in the cryptocurrency space.

Both Mastercard and Visa, giants in the credit and debit card space, have expressed interest in improving technology and expanding into this new market space. Mastercard recently announced a partnership with Wirex, allowing it to issue a new digital payment card on the Mastercard network. Visa recently published a blog post detailing its interest in partnering with top blockchain players and expanding its technologies.

Even those uninterested in cryptocurrency in the past, like PayPal, have begun to enter the cryptocurrency space. In a partnership with another top player in the fintech industry, Venmo, Paypal is making moves to allow customers to purchase Bitcoin through its site and through the companies’ mobile apps. 

There are financial experts, though, who don’t believe cryptocurrency cards have a place in the industry. After all, the banks already pay these payment processing companies for the opportunity to issue cards, along with many other intermediaries that collect some form of payment along the way.

These extra expenses are part of the reason that non-traditional payment companies are entering the race to create a cryptocurrency card. But that doesn’t mean Visa or Mastercard couldn’t take the current options and make them work for cryptocurrency. Perhaps we will indeed see a cryptocurrency debit card soon.

A Look at Financial Planning for a Recession: How to Survive

In times of economic uncertainty, you might wonder how best to plan for your financial future. Where should you be investing your money, and what types of strategies will serve you best to help you maintain your finances and prepare for a potentially worsening situation?

No matter your situation or the state of the economy, financial planning is always a good idea. But investing in some financial planning can be particularly helpful in ensuring you’re able to hold on to your wealth and keep it secure during times of financial hardship. How can you adjust your finances now to protect against recessions in the future?

How do we define a recession?

The National Bureau of Economic Research defines a recession as a significant decline in economic activity felt throughout the entire economy. To be considered a true recession, this economic decline must persist for more than just a few months, and it must be noticeable in various segments of the economy, including employment, real income, GDP, wholesale-retail sales, and other areas. A true recession does not only affect one part of the market, and it does not bounce back quickly.

Causes of a recession can vary, but the primary trigger is typically a period of uncertainty that causes a drop in spending and purchasing. A recession can have a snowball effect on the rest of the economy, causing people to lose their jobs and homes. If you are lucky enough to avoid these direct consequences, you might still find that other aspects of your finances, like investments or your retirement accounts, may suffer.

Have a plan

financial planning

The simple truth is that having any kind of plan to prepare for a recession will put you ahead of most other people. Those without a plan are more prone to either over-react or under-react to changing market conditions, make short-term decisions, and second-guess themselves, which wastes valuable time and potentially causes more mistakes. Have a plan in place before a recession comes along so that you won’t have to spend time coming up with something when you could be implementing that plan instead. 

Bump up your savings

When planning for a potential recession, the first step is always to bump up your emergency savings fund. During an economic downturn, cash is important, especially because investments and other sources of income may not be reliable. Experts generally recommend that you keep at least six months of expenses on hand in your emergency fund, so that you could cover all of your essentials during that time period—your mortgage or rent, utilities, food, household expenses, insurance, and long-term financial obligations like loan payments.

Take some time to calculate how much you will need for a six-month fund so that you have a goal to aim for. Keep in mind that it will take time to build up an emergency savings fund, but having one in place is essential for weathering a recession and coming out ahead. After meeting your six-month goal, you might aim even higher and try to save at least one year in expenses. The healthier your emergency fund, the better you will fare during a recession, especially if the worst happens and you lose your job.

Eliminate high-interest debt as soon as possible

Though relying on loans and credit cards is sometimes necessary and even useful in certain circumstances (such as buying a home or using a credit card for the rewards), debt can be difficult and expensive to manage during a recession. If your financial situation is already somewhat limited, high-interest credit card debt can feel almost impossible to manage. An important way to prepare for a potential recession is to start paying down that high-interest debt as soon as possible. This can reduce your monthly expenses and allow you to save more in your emergency savings fund at the same time. 

Invest for the long term

When examining your investment portfolio, it is important to remember that many investments are long-term rather than short-term. The biggest mistake people make with their investments during a recession is trying to predict the market. If you’re preparing for a recession, take a “buy and hold” approach to your stocks—plan on owning those stocks for at least five years or more. Doing so will help protect you from some of the volatility that can occur in the short term during an economic downturn.

It’s also critically important to examine the diversity of your portfolio. Try to spread your investments out across many different types, mixing up stocks, bonds, fixed income funds, and other assets like real estate investment trusts (REITs) and exchange-traded funds (ETFs). There are several asset classes that often do not follow stocks and bonds movements, such as precious metals and commodities. Adding these asset categories for portfolio diversification is a key tool to minimize risks, and smooth out the cycles. 

Be ready

Trying to predict the timing of a recession is nearly impossible, although you can bet that one will occur at some point. There have been multiple recessions since the Great Depression in the 1930s and two in the last 20 years before the current coronavirus-related recession.

The prospect of dealing with the financial implications of a recession can be intimidating and even frightening. Keep your emergency savings fund healthy and minimize your high-interest debt, and remember that your investments should be aimed at your long-term gain. With these tips in mind, you can navigate the stormy waters of a recession and emerge unscathed, or in very respectable shape.