Wealth Management & Financial Planning

Wealth Management & Financial Planning

Assessing Your Financial Journey in a New Year

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Welcome to 2017.  Most likely, you’ve set some goals for the year ahead, including financial objectives. Now it’s time to turn those objectives into actions. As I noted last week, my grandfather taught me that the smallest deed outweighs the grandest intention and I strongly encourage you to consider that perspective in your financial objectives.

Planning for your financial future involves five key areas: retirement planning, tax planning, investment management, “ordinary life” situations including the good, bad, and ugly, and finally, estate planning. Following are some attainable and meaningful financial objectives to consider as we embark on a new year.

Retirement planning should be about producing income rather than focusing on accumulated assets. If properly managed – and “properly managed” is the key phrase –  in today’s economy you can withdraw about 3.8% of your asset base. In our professional opinion, every $100,000 properly managed can generate $3,800 in annual income.

Tax planning must be done before December 31. Please don’t wait another year and forfeit huge opportunities to maximize the effectiveness of your marginal tax rate. We see countless retirees in tax scenarios that never should have occurred if they had planned properly during their working years.

The retirement process is challenging and different phases of the journey will necessitate different objectives. For example, during the accumulation phase, what you are currently saving matters more than what you’ve already saved. During the preservation phase, protecting and growing your nest egg matters more than new additions. And finally comes the distribution phase where you begin to live off of your lifetime savings. Each phase has different objectives and thus different strategies should be understood and applied throughout the retirement journey.

Life will bring about one-off situations that aren’t part of your routine financial decision making. There are good things like weddings, buying homes and sending your child to college. And then there are the tough things like taking care of a parent’s declining health or dealing with a child’s divorce. Though these “life bumps” are not frequent events for a single individual, they are routine occurrences for financial professionals. Who will you call for perspective?

Naturally, the estate plan or legacy plan matters more to those you leave behind rather than yourself. Very inexpensive and relatively painless things can be done to make times easier for your survivors upon your passing.

For retirement, figure out what your income stream needs to be based on the formula discussed above. For tax planning, make sure you are using the Roth option whenever possible at work or within your IRA and don’t forget to maximize your itemized deductions. Make certain your investment policy matches your current investments as things do indeed begin to drift over time. Make sure your spouse is aware of who to see if there is a problem and you are not there to help. Write a letter to your loved ones expressing your wishes should things change suddenly. Happy New Year!

Tax advice provided by CPA’s affiliated with Financial Enhancement Group.

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column offset=”vc_hidden-lg vc_hidden-md vc_hidden-sm”][vc_widget_sidebar sidebar_id=”sidebar-main”][/vc_column][/vc_row]

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