Why You NEED An Emergency Cash Stash
How much cash should you have stashed around the house?
This is a really important and often overlooked aspect of financial preparedness. This advice is not just for retirees but I believe is sound advice for everyone.
Usually when we think of financial preparedness we think of an emergency fund to cover unexpected expenses that we know will pop up from time to time (medical bills, auto expenses, home repairs). But that’s not what I’m talking about.
I’m talking about Emergency Cash!
What would you do if your bank is closed, ATM’s and Credit Card machines are down or even electrical power is out for a few days or maybe even weeks. What will you use to purchase things you must have to get by?
Understanding the “Why”:
The core reason for holding physical cash is to cover immediate necessities if electronic payment systems (credit cards, debit cards, ATMs, online banking) become unavailable due to:
- Natural Disasters: Power outages can render electronic systems useless for days or even weeks.
- Cyber Attacks: A widespread cyber attack could compromise bank systems, making accounts inaccessible or transactions impossible.
- Bank Run/Financial Crisis: While rare, a severe crisis could lead to temporary bank closures or limits on withdrawals.
- Local Disruptions: Even a local internet outage or a power grid issue can prevent you from using digital payments.
In such scenarios, businesses that are open (like gas stations, small grocery stores, or pharmacies) might only be able to accept cash.
How Much Cash to Keep at Home?
Most financial experts suggest a range, and it depends heavily on your personal circumstances:
- The “Starter” Amount: 3 to 7 Days of Essential Expenses
This is the most common recommendation for a basic emergency cash stash. - Calculate your daily essential expenses: Think about what you absolutely need for food, water, medicine, and potentially gas for a few days. Don’t include discretionary spending.
- Aim for $500 – $2,000: Many experts suggest a baseline of $1,000 to $2,000 as a good starting point to cover immediate needs for a few days to a week. For example, if your essential daily spend is $100, then $700 covers a week. If it’s $200, then $1,400 covers a week.
For Extended Disruptions (Weeks to Months – The “Worst Case”):
- This is where it gets more nuanced and less commonly advised for physical cash at home, due to security risks.
- 30 Days of Essential Expenses: If you’re truly preparing for a prolonged disruption, aiming for one month’s worth of essential living expenses in cash at home is a more robust approach. This would cover rent/mortgage (if due during that period), utilities (if they can be paid with cash or in person), food, medicine, and transportation.
- Consider Your Risk Tolerance: If you live in an area prone to natural disasters or are particularly concerned about systemic risks, you might lean towards the higher end.
Important Considerations for Your Cash Stash:
- Denominations: Keep a mix of small bills ($5s, $10s, $20s). Larger bills ($50s, $100s) can be hard to break in an emergency situation, especially if change is scarce. Quarters can also be useful.
- Security: This is paramount. Keeping large amounts of cash at home makes you a target for theft.
- Don’t keep it all in one obvious place.
- Consider a fireproof and waterproof safe: Ideally, one that is bolted to the floor or very heavy. This protects against fire, flood, and makes theft more difficult.
- Diversify hiding spots: Don’t just put it under the mattress. Think about less obvious places a burglar might not immediately check.
- Replenish: If you use your emergency cash, make it a priority to replenish it as soon as possible.
Beyond Cash:
Remember that a well-rounded emergency preparedness plan includes non-perishable food, water, a first-aid kit, essential medications, communication devices (like a hand-crank radio), and a plan for meeting up with family. Cash is just one piece of the puzzle.
In summary:
For most people, $1,000 to $2,000 in smaller denominations is a reasonable amount of cash to keep at home for short-term emergencies. If you are specifically preparing for more extreme, prolonged scenarios like a months-long banking system outage or a natural disaster, you might consider closer to one month’s worth of essential expenses, but be acutely aware of the increased security risks involved and take robust precautions to remain safe.
Thank you for taking the time to read this article.
Please check out my YouTube Video on this topic: Your Emergency Cash Stash – Do You Have One?
If you would like, please leave a comment below or you can email me at www.feedback@wewaonthenet.com.
I’ve also begun a YouTube channel, www.youtube.com/@wewaonthenet where I will be discussing various retirement topics and topics I come across that I think may be of interest. Check it out!
Commonalities and Benefits of Having Retirement Dream Team
In the past few posts we’ve explored the crucial roles of financial advisors, tax advisors, estate planning attorneys, healthcare insurance advisors and lifestyle coaches. While each plays a distinct part, their effectiveness is magnified when they operate as a cohesive team.
Please remember what I said in the original post “Retirement Warning: Don’t Go It Alone“, each of these advisors are players on your retirement team. You are the coach, you listen to their advice and suggestions. They help you build a good retirement plan but the ultimate responsibility for your retirement rests with you. Having a team doesn’t mean giving up control or direction of your retirement. It just gives you the best opportunity to have the retirement you deserve.
So let’s move on with the intent of this post.
Let’s look at the shared traits of these invaluable advisors and the benefits of having them work together for your retirement success.
Commonalities Among Your Retirement Team Advisors
- Putting You First: This is the number one commonality. Every member of your team should prioritize your unique needs, goals and well-being. They should listen more than they talk, ask probing questions and tailor their advice specifically to your situation. Not some cookie-cutter template.
- Specialized Expertise and Credentials: Each advisor brings deep focused knowledge to their respective field. They possess the necessary license, certifications and ongoing education to navigate the complexities of their domain. They’re experts in their niche, allowing you to benefit from their years of dedicated study and practice.
- Clear and Transparent Communication: Each advisor should have the ability to explain complex information in plain, understandable language. They should be transparent about their processes, recommendations and fees. There should be no hidden fees or confusing jargon. They’re educators as much as advisors.
- Proactive and Forward Looking: Effective advisors don’t just react, they anticipate. They help you plan for future challenges and help you identify opportunities to optimize your outcomes well in advance.
- Ethical Conduct and Trustworthiness: You’re sharing highly personal information with each of these professionals. They must operate with the highest ethical standards, upholding confidentiality and always acting with integrity. Trust is the foundation of any successful advisory relationship.
- Commitment to Ongoing Relationship: Retirement planning isn’t a one-time event. Your team members should be committed to a long-term relationship, offering regular reviews, updates, and accessibility as your life circumstances change or market conditions evolve.
Benefits of Having a Cohesive Retirement Team
Beyond the individual strengths of each advisor, bringing them together as a team offers profound advantages:
- Integrated Planning: This is perhaps the greatest benefit. Instead of isolated advice that might conflict or create gaps, a team approach ensures all aspects of your retirement are seamlessly integrated.
- Maximized Efficiency and Minimized Cost: While there are fees associated with each advisor, a coordinated team can often lead to greater efficiency and potentially save you significant money in the long run. For example: avoiding costly mistakes such as tax penalties, poor investment choices or legal oversights.
- Reducing Stress and Enhanced Peace of Mind: Retirement planning can be overwhelming. Having a dedicated team allows you to delegate tasks and know that the experts are helping manage different facets of your plan. This significantly reduces anxiety, freeing you to focus on enjoying your retirement rather than worrying about its complexities.
- Proactive Problem Solving and Adaptability: Life and regulations are constantly changing. A team of advisors means multiple sets of eyes are monitoring for potential issues or new opportunities. They can collectively help you pivot your plan as needed.
- Empowerment Through Education: While advisors provide expertise, they should also educate you on your options and the rationale behind their advice. This will help you make confident, informed decisions and feel more in control of your retirement journey.
- Increased Likelihood of a Fulfilling Retirement: By addressing all the critical components from financial security to legal protection, healthcare access and personal well-being a retirement team significantly increases the probability of achieving a truly fulfilling, worry-free and enjoyable retirement.
Conclusion
Building a retirement team is an investment in your future well-being. It’s about recognizing that a successful retirement isn’t just about money. It’s about a well-orchestrated plan that touches every aspect of your life. By choosing advisors who share core values of putting you first, expertise and transparency and by you fostering an environment where they can collaborate, you’re creating a powerful support system. This support system is designed to navigate the complexities of retirement and help you live your golden years to there fullest potential.
Thank you for taking the time to read this article. I hope you have enjoyed these series of articles on Building Your Retirement Team.
If you would like, please leave a comment below or you can email me at www.feedback@wewaonthenet.com.
I’ve also begun a YouTube channel, www.youtube.com/@wewaonthenet where I will be discussing various retirement topics and topics I come across that I think may be of interest. Check it out!
Memorial Day: More Than Just a Long Weekend
For many, Memorial Day weekend signals the unofficial start of summer – barbecues, trips to the lake and shopping the sales. But for us older retirees, this solemn observance often carries a more personal significance. In a world that sometimes seems to forget, this generation holds tight to the true meaning of Memorial Day.
For those of us who have lived through more decades, Memorial Day isn’t just a historical footnote, it’s a day etched with personal memories. We recall fathers, uncles, siblings, friends, and neighbors who answered the call to serve. Some returned, forever changed, while others made the ultimate sacrifice, their names forever etched in our hearts, if not on our monuments.
This isn’t about glorifying war, but about honoring the individual lives lost in service to our nation’s ideals. It’s about remembering the brave young men and women who never came home from distant battlefields, from the beaches of Normandy to the jungles of Vietnam, the deserts of Iraq, or the mountains of Afghanistan. We remember the quiet sacrifices made by families left behind, enduring unimaginable heartache.
As the years pass, it becomes increasingly important for our generation to keep these memories alive. We are the living link to those who fought and fell. Our stories, our quiet moments of remembrance, and our visits to gravesites or memorials serve as vital lessons for younger generations who may only know Memorial Day as a holiday. It’s our responsibility to ensure the sacrifices of yesterday continue to inspire gratitude and patriotism today.
So, this Memorial Day, amidst any gatherings or plans, let us pause. Let us reflect on the immense cost of the freedoms we enjoy. Let us remember the fallen heroes, by name if we know them, or simply in spirit if we don’t. Their legacy is our liberty, and their memory deserves our enduring respect and gratitude
Thank you for taking the time to read this article. I also made a YouTube video “Memorial Day: More Than Just a Long Weekend” you may want to check out. It’s a short clip with scenes taken around the city including our Veterans War Memorial and the flag we put out each year on Memorial Day.
If you would like, please leave a comment below or you can email me at www.feedback@wewaonthenet.com.
I’m also beginning a YouTube channel, www.youtube.com/@wewaonthenet where I will be discussing various retirement topics and topics I come across that I think may be of interest. Check it out!
Retirement Team: Choosing a Lifestyle Coach
Today we’ll discuss what to look for when choosing a Retirement Lifestyle Coach.
This is continuing with the “Retirement Warning: Don’t Go it Alone!” article where I discussed the importance of building a Retirement Team to help with retirement and retirement planning. As I mentioned in the original article a lifestyle coach is optional but can be a valuable addition to your retirement team. I will go over the core credentials and expertise to look for in a Lifestyle Coach and give you a few questions you need to ask when choosing the right retirement team member.
This is the one team member I didn’t and still don’t have on my retirement team. While doing the research for this article, I realize how much I’m missing by not having a lifestyle coach helping me with non-financial issues. As I’ve said in earlier posts, my biggest surprise since I retired is how little prepared I was for the daily lifestyle changes. I’m looking forward to using the information below to help me find my lifestyle coach. Enough about me!
This role is increasingly recognized as vital for a fulfilling retirement, focusing on the non-financial aspects of the transition into retirement.
The Lifestyle Coach (optional but valuable)
- Experience Coaching Retirees or Those in Transition: Look for a coach who has specific experience helping individuals navigate the psychological, social and emotional aspects of retirement. This is different from a career coach or general life coach.
- Relevant Certifications (optional but a plus): While not as regulated as financial or legal fields, some coaches have certifications from reputable coaching organizations like the International Coach Federation (ICF). This demonstrates a commitment to professional standards.
- Understanding of Retirement Challenges: A good coach understands common retirement challenges such as loss of identity, managing free time, maintaining social connections, finding new purpose and navigating relationship changers with partners and family.
- Empathy and Active Listening Skills: A successful coach is a great listener, empathetic and skilled at asking probing questions that help you discover your own answers and path.
- Clear Coaching Process and Fees: Understand their coaching methodology, the duration of their programs and their fee structure (per session, monthly package, program-based). Get this in writing.
- Communication Style and Availability: Do they communicate clearly, are they encouraging and do they hold you accountable? How often will you meet and what is the format (in-person, video call, phone)?
- Focus on Action and Goals: A good coach helps you set realistic goals for your non-financial retirement life and works with you to create actionable steps to achieve them. They should inspire you to move forward.
- Tools and Resources: Do they provide any specific tools, exercises or resources (assessments, journaling prompts, reading recommendations) to support your journey?
- Client Testimonials and Success Stories: Ask for references or look for testimonials from other retirees they’ve coached.
- “Discovery Call” or Initial Consultation: Many coaches offer a free introductory session. Use this to assess their style, approach and whether you feel a good connection. This “chemistry” is vital for coaching.
- Authenticity and Personal Fit: You need to feel comfortable opening up and being vulnerable with a lifestyle coach. Choose someone whose personality and approach align with yours.
- Boundaries and Ethics: A professional coach maintains clear boundaries and adheres to ethical guidelines, respecting confidentiality.
Questions to Ask Potential Lifestyle Coaches:
- “What is your experience specifically coaching people through the retirement transition?”
- “What is your coaching philosophy and methodology?”
- “How do you help clients discover their purpose and plan for their non-financial life in retirment?”
- “What is your fee structure and what’s included in your coaching packages?”
- “What kind of commitment (time, effort) is expected from me?”
- “How do you measure success in coaching?”
- “Can you provide references or testimonials from other retirement clients?”
- “What is your process for an initial consultation to see if we’re a good fit?”
I have drawn from my own experience when planning for retirement and Gemini AI to help with these articles. I was fortunate early on to realize I needed a team to help me in the retirement planning process and have continued with my team in retirement.
Unfortunately, as I mentioned earlier, I have not added a Lifestyle Coach to my team. Doing the research for this post I realize just how much a lifestyle coach would help me in my retirement journey. I will be immediately seeking out a coach to complete my retirement team.
Hopefully, the information I’m providing is giving you a good start to retirement planning and a wonderful retirement. In the next post I will wrap up this series with the commonalities and benefits of having a retirement team approach
Thank you for taking the time to read this article.
If you would like, please leave a comment below or you can email me at www.feedback@wewaonthenet.com.
I’m also beginning a YouTube channel, www.youtube.com/@wewaonthenet where I will be discussing various retirement topics and topics I come across that I think may be of interest. Check it out!
Retirement Team: Healthcare Insurance Advisor (Specialist)
What do you need to look for when choosing your Healthcare Insurance Advisor (Agent)?
This is continuing with the “Retirement Warning: Don’t Go it Alone!” article where I discussed the importance of building a Retirement Team to help with retirement and retirement planning. I will go over the core credentials and expertise to look for in an Healthcare Insurance Specialist and give you a few questions you need to ask when choosing the right retirement team member.
Choosing the right healthcare insurance advisor for retirement planning is critical. Not all healthcare insurance agents are created equal. Finding a competent, trustworthy, and communicative agent who understands your specific needs and with whom you feel comfortable can take time and effort. Poor communication or lack of understanding can lead to frustration and potentially poor outcomes.
This advisor specializes in the complex world of health insurance options for retirees, particularly Medicare.
The Healthcare Insurance Specialist
- Specialization in Medicare and Senior Health Insurance: Look for an advisor who exclusively or primarily works with Medicare and other senior health insurance plans (Medigap, Medicare Advantage, Prescription Drug Plans). The rules are complex and constantly changing.
- Licensed and Certified: Ensure they are licensed by your state’s Department of Insurance and hold any required certifications to sell Medicare plans. They should also be certified annually by the Centers for Medicare & Medicaid Services (CMS).
- Breath of Carrier Options: A good advisor isn’t tied to one insurance company. They should represent multiple carriers to offer you a wide range of options and help you compare.
- Understanding of Your Health Needs: The advisor should take the time to understand your current health status, prescription medications, preferred doctors/hospitals and any specific health conditions that might influence your plan choice.
- Clarity of Compensation: Understand how they are paid. Most Medicare brokers are paid by the insurance companies when you enroll in a plan, so their services are often “free” to the client. Verify this and ensure there are no hidden fees.
- Communication Style and Accessibility: Choose an advisor who can explain complex Medicare terms in an easy-to-understand way. Are they patient, willing to answer all your questions and responsive? Will they provide ongoing support after you enroll?
- Scope of Services Offered: Do they only help with enrollment or do they offer ongoing annual reviews (during the open enrollment period) to ensure your plan still meets your needs? Do they help with appeals or understanding claims?
- Reputation and Client Testimonials: Seek referrals from friends, family or other trusted professionals. Check online reviews or testimonials if available.
- No Pressure Sales Tactics: A reputable advisor will educate you on your options and let you make the decision, without high-pressure sales. They should focus on finding the best fit for your needs, not pushing a particular plan.
- Long-Term Relationship Potential: Medicare and health needs change. Look for someone whois committed to a long-term relationship to help you navigate future changes.
Questions to Ask Potential Healthcare Insurance Advisors:
- “How are you compensated for your services?”
- “Are you licensed and certified to sell Medicare Plans in (your) state?”
- “Which insurance carriers do you represent, and why do you choose to work with them?”
- “How do you help clients compare different types of Medicare plans?”
- “What information do you need from me to help me choose the best plan?”
- “Will you provide ongoing support after I enroll, particularly during the Annual Enrollment Period?”
- “Can you provide references from other clients you’ve helped with Medicare?”
I have drawn from my own experience when planning for retirement and Gemini AI to help with this article. I was fortunate early on to realize I needed a team to help me in the retirement planning process and have continued with my team in retirement. Hopefully, the information I’m providing is giving you a good start to retirement planning and a wonderful retirement.
In the next post I will discuss the core credentials and expertise needed in a Lifestyle Coach. I will also include some questions to ask when choosing this retirement team member
Thank you for taking the time to read this article.
If you would like, please leave a comment below or you can email me at www.feedback@wewaonthenet.com.
I’m also beginning a YouTube channel, www.youtube.com/@wewaonthenet where I will be discussing various retirement topics and topics I come across that I think may be of interest. Check it out!
Retirement Team: Estate Planning Attorney (Lawyer)
Today we’ll discuss what to look for when choosing your Estate Planning Attorney (Lawyer). This is continuing with the “Retirement Warning: Don’t Go it Alone!” article where I discussed the importance of building a Retirement Team to help with retirement and retirement planning. I will go over the core credentials and expertise to look for in an Estate Planning Attorney and give you a few questions you need to ask when choosing the right retirement team member.
Choosing the right Estate Planning Attorney for retirement planning is critical. Not all Estate Attorneys are created equal. Finding a competent, trustworthy, and communicative lawyer who understands your specific needs and with whom you feel comfortable can take time and effort. Poor communication or lack of understanding can lead to frustration and potentially poor outcomes.
This attorney helps ensure your assets are distributed according to your wishes and that your healthcare and financial decisions are handled if you become incapacitated.
The Estate Planning Attorney (Lawyer)
- Specialization in Estate Planning (Elder Law): Look for an Attorney whose primary practice area is estate planning, will, trusts and potentially elder law. This field has specific and frequently changing laws.
- Licensed in Your State: Ensure they are licensed to practice law in the state where you reside and where your primary assets are located. Estate laws vary significantly by state.
- Understanding of Complex Estates (if applicable): If you have a complex financial situation, multiple properties, a business or high net worth, ensure they have experience with such intricacies.
- Knowledge of Tax Implications: A good estate planning attorney understands how estate, gift and inheritance taxes may apply to your retirement plan and can advise on strategies to minimize them.
- Familiarity with Non-Traditional Family Structures: If your family structure is complex (blended families, unmarried partners), ensure they have experience drafting plans that address these unique needs.
- Clear Fee Structure: Estate Planning Attorneys typically charge hourly or flat fee for specific documents (wills, trusts, power of attorney). Get a clear understanding of their fees in writing before proceeding.
- Communication Style and Patience: Estate Planning can be emotionally sensitive and involve complex legal concepts. Choose an attorney who is patient, empathic and can explain legal terms clearly in plain language.
- Collaborative Approach: Do they work well with your other advisors to ensure a cohesive and optimized plan? This is crucial for comprehensive retirement planning.
- Process for Review and Updates: How often do they recommend reviewing your estate plan and what is their process for making updates due to life changes or changes in law?
- Reputation and Peer Reviews: Check their standing with your state bar association. Look for peer reviews or ask other trusted advisors for recommendations.
- Client Centered Approach: They should prioritize your wishes and goals, rather than pushing pre-packaged solutions. They should be transparent about the pros and cons of different strategies.
- Comfort Level and Confidentiality: You’ll be sharing highly personal information. Choose an attorney with whom you feel comfortable and confident in their discretion.
Questions to Ask Potential Estate Planning Attorneys:
- “What percentage of your practice is dedicated to estate planning?”
- “Are you licensed to practice law in this (your) state?”
- “How do you structure you fees for estate planning services?”
- “What is your philosophy on probate avoidance vs probate efficiency?”
- “How do you ensure my estate plan integrates with my overall financial and tax strategies?”
- “How often do you recommend reviewing and updating my estate plan, and what’s the process?”
- “Can you provide references from other clients?”
- “What specific documents do you recommend for my situation?”
I have drawn from my own experience when planning for retirement and Gemini AI to help with this article. I was fortunate early on to realize I needed a team to help me in the retirement planning process and have continued with my team in retirement. Hopefully, the information I’m providing is giving you a good start to retirement planning and a wonderful retirement.
In the next post I will discuss the core credentials and expertise needed in an Healthcare Advisor/Insurance Specialist. I will also include some questions to ask when choosing this retirement team member
Thank you for taking the time to read this article.
If you would like, please leave a comment below or you can email me at www.feedback@wewaonthenet.com.
I’m also starting a YouTube channel, www.youtube.com/@wewaonthenet where I will be discussing various retirement topics and topics I come across that I think may be of interest. Check it out!
Retirement Team: Tax Advisor (CPA)
Continuing with last week’s blog “Retirement Warning: Don’t Go it Alone!” where I discussed the importance of building a Retirement Team to help with retirement and retirement planning. Today I’ll discuss The Tax Advisor (CPA). I’ll go over the core credentials and expertise to look for and give you a few questions you need to ask when choosing the right Tax Advisor (CPA) for your retirement team.
Choosing the right Tax Advisor for retirement planning is significant. Not all Tax Advisors are created equal. Finding a competent, trustworthy, and communicative advisor who understands your specific needs and with whom you feel comfortable can take time and effort. Poor communication or lack of understanding can lead to frustration and potentially poor outcomes.
What to look for when choosing the Right Tax Advisor
1) Relevant Credentials and Education: While certifications aren’t everything, look for tax professionals with specific credentials and a strong understanding of retirement related tax issues. Key designations include:
- Certified Public Accountant (CPA): CPA’s have met vigorous educational and examination requirements and are licensed by their state. They have broad tax expertise and will most likely be the person you’re looking for in a Tax Advisor.
- Tax Attorneys: Lawyers specializing in tax law. They can be valuable for complex situations, estate planning and potential disputes with the IRS.
2) Experience with Retirement Tax Planning: Inquire about the advisor’s specific experience in retirement tax planning. This is a specialized area with unique considerations like:
- Taxation of different retirement account types (401(k)s, IRAs, Roth accounts).
- Required Minimum Distributions (RMDs)
- Strategies for minimizing taxes in retirement income
- Understanding the tax implications of Social Security benefits
- Planning for potential tax law changes
3) Knowledge of Federal and State Tax Laws.
4) Understanding Your Specific Retirement Income Sources: The advisor should understand the sources of your retirement income (pensions, annuities, investment withdrawals, Social Security) and how each is taxed and tailor their advice based on your specific income streams.
5) Clarity of Fees and Compensation: Understand how the tax advisor charges for their services. This could be hourly, per form or a flat fee for specific services. Ensure the fee structure is transparent and you understand what you’re paying for.
6) Communication Style and Accessibility: Choose a tax advisor who communicates clearly and in a way you understand. They should be responsive to your questions and willing to explain tax concepts. Regular communication, especially regarding potential tax planning opportunities or changes is crucial.
7) Scope of Services Offered: Determine if the advisor offers the specific services you need, such as tax planning, tax preparation, estimated tax calculations and representation before the IRS if necessary.
8) Reputation and References: Check online reviews and ask for references from other retirees they have worked with. A good reputation and positive feedback are indicators of reliable service.
9) Ethics and Professional Conduct: Ensure the advisor has a strong ethical track record and adheres to professional standards. You can check for disciplinary actions with state licensing boards or professional organizations.
10) Comfort Level and Trust: You need to feel comfortable discussing your personal financial information with your tax advisor. Choose someone you trust and who makes you feel confident in their expertise and guidance.
Questions to Ask Potential Tax Advisors
- “What are your relevant credentials and your experience specifically with retirement tax planning?”
- “How are your fees structured?”
- “Can you explain the tax implications of my various retirement income sources?”
- “What strategies can you recommend to minimize my taxes in retirement?”
- “Are you familiar with both federal and state tax laws?”
- “What is your communication style, and how often will we be in touch?”
- “Can you provide references from other retirement clients?”
I have drawn from my own experience when planning for retirement and Gemini AI to help with this article. I was fortunate early on to realize I needed a team to help me in the retirement planning process and have continued with my team in retirement. Hopefully, the information I’m providing is giving you a good start to retirement planning and a wonderful retirement.
In the next post I will discuss the core credentials and expertise needed in an Estate Planning Attorney. I will also include some questions to ask when choosing this retirement team member.
Thank you for taking the time to read this article.
If you would like, please leave a comment below or you can email me at www.feedback@wewaonthenet.com.
I’m also starting a YouTube channel, www.youtube.com/@wewaonthenet where I will be discussing various retirement topics and topics I come across that I think may be of interest. Check it out!
Your Retirement Team: Financial Advisor-The Quarterback
In last week’s blog “Retirement Warning: Don’t Go it Alone!” I discussed the importance of building a Retirement Team to help with retirement and retirement planning. The article was getting a little too long so I decided to break this topic up into several different parts. Over the next few posts I will go over the core credentials and expertise to look for in each member of your team and give you a few questions you need to ask when choosing the right team member.
Today we’ll discuss The Financial Advisor.
- Fiduciary Duty: This is paramount. Look for an advisor who operates as a fiduciary. This means they are legally obligated to act in your best interest, putting your needs above their own or their firm’s. You don’t want someone that may not be totally committed to doing what’s best for you. Ask directly if they are a fiduciary and if they will commit to this in writing.
- Relevant Credentials and Education: While certifications aren’t everything, certain credentials demonstrate a level of expertise and commitment to professional standards. Certified Financial Planner (CFP) and Chartered Financial Analyst (CFA) are two of the most common credentials you will probably see. These credentials alone aren’t a guarantee of quality, but they show a baseline level of knowledge and commitment.
- Experience in Retirement Planning: Inquire about the advisor’s experience in retirement planning. Have they worked with clients in similar situations to yours? Do they understand the nuances of retirement and retirement planning such as: retirement income, healthcare cost, Social Security optimization and estate planning?
- Understanding your Specific Needs: The advisor should take the time to thoroughly understand your unique financial situation, goals, risk tolerance, time horizon and concerns about retirement. Watch out for cookie-cutter solutions but rather look for someone who tailors their advice to your individual circumstances.
- Clarity of Fees and Compensation: Know exactly how the advisor is compensated. Are they fee-only (charging a percentage of assets under management, hourly or flat fee), fee-based (charging a combination of fees and commissions) or commission based? Fee-only is generally considered the most transparent and least prone to conflicts of interest.
- Communication Style and Accessibility: Choose an advisor you can communicate with. Are they clear, patient and responsive? How often will they communicate with you and can you easily reach them when you have questions or concerns?
- References and Reviews: Ask for references from current clients and check online reviews. This can provide insights into the advisor’s reputation and client experience.
- Transparency and Honesty: The advisor should be transparent about their qualifications, fees, potential conflicts of interest and risks associated with any recommendations.
- No Guarantee of Higher Returns: While a good advisor can help you make sound investment decisions, they cannot guarantee higher returns or protect you entirely from market downturns. If someone is guaranteeing or promising higher returns or no-risk investments be very cautious. This is probably not the right advisor for you!
- “Gut Feeling” or Comfort Level: Ultimately you need to feel comfortable and trust your financial advisor. This is a long-term relationship, so choose someone you feel understands you, listens to your concerns and acts in your best interest. Don’t underestimate the importance of personal rapport.
Questions to Ask Potential Advisors
“Are you a fiduciary and will you commit to acting in my best interest in writing?”
“What are your relevant certifications and experience specifically in financial planning?”
“How are you compensated? Please explain all the fees clearly.”
“What is your investment philosophy and how will you tailor it to my risk tolerance and goals?”
“How often will we meet and what kind of communication can I expect?”
“Can you provide references from current clients?”
“What is your process for developing and reviewing a retirement plan?”
Choosing the right Financial Advisor for retirement planning is significant. Not all financial advisors are created equal. Your financial advisor will probably be the quarterback of your team. Finding a competent, trustworthy, and communicative advisor who understands your specific needs and with whom you feel comfortable can take time and effort. Poor communication or lack of understanding can lead to frustration and potentially poor outcomes.
I have drawn from my own experience when planning our own retirement and Gemini AI to help with this article. I was fortunate early on to realize I needed a team to help me in the retirement planning process and have continued with my team in retirement. Hopefully, the information I’m providing is giving you a good start to retirement planning and a wonderful retirement.
In the next post I will discuss the core credentials and expertise needed in a Tax Advisor. I will also include some questions to ask when choosing this retirement team member
Thank you for taking the time to read this article
If you would like, please leave a comment below or you can email me at www.feedback@wewaonthenet.com.
I’m also starting a YouTube channel, www.youtube.com/@wewaonthenet where I will be discussing various retirement topics and topics I come across that I think may be of interest. Check it out!
Retirement Warning: Don’t Go It Alone!
Dreaming of a comfortable retirement? Don’t go it alone. It’s time to start building your retirement team of advisors.
Many of us underestimate the complexity of the financial and lifestyle shifts that come with retirement. Retirement planning is multifaceted and involves areas where specialized knowledge is beneficial and needed. It’s not a sign of weakness to seek help but a sign of being proactive and wanting the best outcome for your future.
Starting retirement, especially without a team, can feel overwhelming and lead to costly mistakes. Professionals can provide specialized knowledge and advice on investment strategies, tax planning, estate planning and other aspects of retirement.
Building a retirement team of professional advisors is crucial before retiring to ensure a well-structured and secure financial future. A team approach allows for more comprehensive planning ensuring all areas are addressed. Your team can help you stay on track with your retirement plan and provide support as you transition into retirement. Lastly and maybe most important, your team of experts can alleviate much of the stress and uncertainty associated with retirement planning and into retirement.
When I decided to retire, my Kindle was full of books on retirement, the math showed we had saved enough but I couldn’t help but worry that I must be missing something. I had always made my own investment decisions and done ok, but retirement seemed different. A few years earlier, I quit doing my own taxes which proved to be a good decision. It was my CPA that suggested I talk with a financial advisor to help with our retirement planning. I was somewhat reluctant but I thought what could it hurt. After talking to him, I quickly realized retirement planning was far more complex than I anticipated.
I knew to be successful I needed to surround myself with the best advisors I could find. I felt as if I was a coach without any players. In my working career, whether as a team member or team leader, we always had the most success when we had all-star players and worked as a team. So, I started building my team, maybe a little late, but a couple of years before I retired. My team was in place by the time I retired and so far retirement is mostly going as planned.
So, this is the way I’m looking at its my retirement team. To be successful I need the advice and help from my team of advisors. I’m still the coach and the final decisions rest with me (at least as long as I’m competent). So, with good advice, a well prepared plan and proper execution we should have the best chance for a successful retirement.
Here’s who you should have on your retirement team!
- Financial Advisor (Retirement Specialist): Retirement finances are often more complex than in the accumulation phase. Navigating Social Security, IRA and 401(k) withdrawals, required minimum distributions (RMDs) and generating sustainable income requires expert guidance. The Financial Specialist is often the quarterback of the team and will have deep knowledge of the unique challenges and opportunities retirees face.
- Tax Advisor (CPA): Taxes can significantly impact your retirement income. Proactive tax planning can save you a substantial amount of money over the long run. A Tax Advisor helps navigate the often intricate tax implications of retirement income, including Social Security taxation, IRA and 401(k) withdrawals, capital gains and potential state taxes. They can also assist with tax-efficient planning and withdrawal strategies.
- Estate Planning Attorney: Retirement is a time to think about legacy planning and protecting your loved ones. Proper estate planning provides peace of mind and avoids potential legal complications. An Estate Attorney assists with creating essential legal documents such as wills, trusts, power of attorney (for healthcare and financial matters and advanced directives). This assures your wishes are respected and your assets are distributed according to your plan.
- Healthcare Advisor/Insurance Specialist: Healthcare cost are a significant concern in retirement. Understanding your options and having adequate coverage is essential for financial security and well-being. A Healthcare Advisor helps navigate the complexities of healthcare in retirement, including Medicare options, Medigap plans and potentially long-term care insurance. They can help you understand your coverage options and help you make informed decisions about your healthcare insurance needs.
- Lifestyle/Retirement Coach (Optional but Valuable): Retirement isn’t just about money, it’s a significant change in the way you think about the future. A coach can provide guidance and support in creating a fulfilling and meaningful post-career life. A Lifestyle coach will focus on the non-financial aspects of retirement, such as finding purpose, structuring your time, exploring new hobbies, maintaining social connections and navigating the emotional transitions of leaving the workforce.
How to build your retirement team!
- Start Early: Begin building your retirement team several years before your planned retirement date.
- Do Your Research: Read articles and books, watch videos, listen to podcast, attend seminars and talk to trusted friends and family who have retired to learn more about the professionals you need.
- Interview Potential Professionals: Meet with several financial advisors, accountants and estate attorneys to find the best fit for your needs.
- Consider Cost: Factor in the cost of professional services when making your decisions.
- Communicate Regularly: Stay in regular contact with your team members to ensure that your plan is up-to-date and you are achieving your goals.
You don’t need to assemble your entire dream team overnight but don’t put it off to long. Good decisions made 3 to 5 years before retirement can dramatically affect the timing and success of your retirement. If you’re getting close to retirement, understanding your income options and tax implications might be the top priority. You should probably seek a financial advisor and tax professional first.
If you’re still hesitant to start building a team or thinking you can continue doing your retirement planning yourself, as I was, I encourage you to start with a fee-only financial advisor who acts as a fiduciary. View this advisor as an investment and not an expense. This advisor can help you identify any mistakes or shortcomings in your plan and advise you on other areas where specialized expertise might be needed.
Even if you’ve already retired, it’s not too late to build your Team of Advisors. Getting professional guidance at any stage of your retirement journey can be beneficial.
Early planning for retirement and having your dream team of experts working with you will help ensure your retirement years are the best they can be!
Over the next few posts, I will explain the core credentials and expertise to look for in each team member. I will also give you a few questions to ask when choosing your team.
Thank you for taking the time to read this article
If you would like, please leave a comment below or you can email me at www.feedback@wewaonthenet.com.
I’m also starting a YouTube channel, www.youtube.com/@wewaonthenet where I will be discussing various retirement topics and topics I come across that I think may be of interest. Check it out!
Credit Card Interest: It’s a “Fine” for Overspending!
Hey, everyone, let’s talk about credit cards or more specifically the fees we’re charged for spending more than we earn. This is a topic I’ve been putting off for a while, but if you’re retired, planning retirement or having trouble managing your credit card spending, it’s time to talk. I’m going to give you my thoughts on credit card spending and the cost of spending more than you have or make.
I’m not here to bash credit cards. In fact, when managed properly, credit cards can be really useful. But there’s a “trap” many of us fall into: Credit card companies make it too easy to overspend (spending more than we actually have or make). When we can’t pay the bill at the end of the month, well, that’s where the fees begin on any unpaid balances.
Banks and credit card companies call it “interest” but I think of it more as a Fine – a financial penalty for spending money you don’t have or haven’t earned yet.
Think about it. When you swipe your credit card for something you can’t immediately pay for with your current earnings, you’re really borrowing against the future. So, the credit card company says “Hey, you spent more than you made, so you’re going to have to pay a little extra for that privilege.”
This privilege is the interest you pay on the unpaid balance, which is the cost of overspending or as I think of it an “Overspending Fine”.
These “overspending fines” can really add up. The more you overspend and the longer you take to pay it off, the more interest “fines” you’ll accumulate. It can trap you in a cycle where a chunk of your payments goes towards these penalties instead of actually reducing what you owe.
Transunion Credit reports the average credit card balance is $6,580 and CNBC is reporting the average credit card rate is 20.12% APR. So, if I do a little math the average overspending fine is $1,323.90 per year or about $110.00 per month.
If you don’t know your credit card unpaid balance or percentage rate, take time in the next few days to get your statement out and find your rate and balance and do the math. I think you may be surprised just how much you’re paying in overspending fines.
Thinking of interest as a “fine” for overspending should be a wake-up call. It shifts the focus from just another fee or number on the credit card statement to a direct result of our spending habits. Calling it a fine might sound harsh, but It highlights the consequence of not managing our credit cards responsibly. It’s not some abstract percentage, it’s real money coming out of our pockets!
So, how to avoid this overspending fine?
- Spend less than you earn! Create a budget and stick to it!
- If you do use your credit card, aim to pay off the full balance each month.
- Be mindful of your spending habits. Are you using your credit card to buy things you really don’t need?
- Addressing these habits can help you avoid overspending and the resulting “fines”.
And if you find yourself paying a fine each month what can you do? Commit to:
- Stop spending more than you earn! You must create a budget and stick to it!
- Focus on aggressively paying down the unpaid balances to minimize future “overspending fines”.
- Consider strategies like balance transfers to lower your interest rates and reduce the fine amount while you pay down your debt.
- If you need help, find a qualified (preferably non-profit) credit counselor to help you develop a plan to get this debt paid off and get your spending habits back in order.
So, let’s change how we think about credit card interest. It’s not just a “cost of borrowing” it’s a fine for spending more than we’ve earned. By understanding this connection, we can become more conscious of our spending habits and take steps to avoid these unnecessary financial penalties.
So why do I think this is such an important topic for retirees and those planning retirement?
When I was planning for retirement, the biggest variable in our expenses was the credit card expense. Like many people our age we don’t carry much cash, so nearly everything we buy goes on the credit card. (We don’t use debit cards, which I’ll discuss “why” in a future post.) Our credit card bill typically is our largest monthly expense. I knew in retirement, once we were on a fixed income, managing our use of credit cards would become very important. There certainly would not be room in our budget for any overspending fines.
Our plan is to fully pay our credit card bills each month. We will do our best not to spend more than we’ve budgeted, but if something does come up, we have an emergency fund for these expenses. If for some reason our plan fails, I look at our paid off credit cards as a short term safety net to use while we adjust.
If you’re retired or getting ready to retire and finding credit card expenses to be a problem, I hope this article has been of some help. Now is not a time for wasteful spending. Overspending fines are wasteful and should be avoided. It’s not too late to change any bad spending habits you have but you must start today. Quit spending more than you earn and aggressively work to have no (zero) debt in retirement so you can fully enjoy your golden years and have the retirement you’ve always hoped for.
What are your thoughts on this perspective?
Does it change how you view credit card spending?
Let me know!
Thank you for taking time to read this article.
If you would like, please leave a comment below or you can email me at www.feedback@wewaonthenet.com.
I’m also starting a YouTube channel, www.youtube.com/@wewaonthenet where I will be discussing various retirement topics and topics I come across that I think may be of interest. Check it out!
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