Learn about Socially Responsible Investing
Contact Frankly Financial for Retirement and Insurance Planning Assistance


It isn't how much you make
. . .It's how much you keep!

Archive for Blog – Page 5

Six Ways to Get Your Financial House in Order During the Virus

Posted by Frank McKinley on
 February 9, 2021

Many families think they have a sound “financial plan” because they own investments or have established a saving strategy for retirement.  This is a good start but it’s incomplete. There are many components to ensuring your financial future and getting your “house in order” is the first step. What do I mean by that? I’d like to share 6 ways you can accomplish this. Let me explain…

Do you know what the three leading causes of death are in the United States? Many people correctly guess cancer and heart disease as numbers one and two. What is number 3? Accidents? Alzheimer’s? Strokes? You may be surprised to learn that the third leading cause of death in America is medical malpractice! The doctor’s fault? Nope- our fault. We go to the hospital totally unprepared. The average American over the age of 65 will take 11 different prescription drugs this year. You’re in an accident and brought to the hospital, the hospital administers a pain reliever and the combination of what you are taking and what they have given you- kills you. Have you ever had a heart attack? Do you carry nitroglycerine with you? Have you been warned that the combination of Cialis and Nitro will kill you? Is this a risk you are willing to take? Or maybe when they ask you what prescriptions you are taking you mispronounce Omicor when you meant Amicar. Yes, medical malpractice is third leading cause in America. We don’t want this to happen to you, so it is time to get your house in order!

Resolution number 1.  Don’t go to the hospital unprepared!

Do you remember the story about Terri Schiavo? At 26, Terri had a massive coronary, was resuscitated but experienced irreversible brain damage that left her in a coma. Fifteen years later, the Supreme Court made the final decision to remove the feeding tube. This long-term ordeal would not have happened if a simple healthcare directive and a living will had been in place. A misconception we frequently encounter is that healthcare directives are only for older adults. We’ve seen clients experience unexpected, lifechanging circumstances at all ages and believe that health care directives should be a priority for everyone. Please don’t let this happen to you or a loved one; get your house in order!

Resolution number 2.  Sign a healthcare directive and living Will.

What do Steve McNair, Abraham Lincoln, Pablo Picasso and the musician Prince have in common? They all died without a Will. Steve McNair’s mother was removed from the house he had given her because there was no Will to prove he had given it to her- I’m pretty sure that was not his intent. Having this document is essential to ensuring your wishes are carried out but it is one of the most frequently postponed documents to be put in writing. Your Will protects you and ensures that your future wishes for your estate are carried out. According to the Virtual Attorney, 32% of Americans would rather do their taxes, get a root canal, or give up sex for a month than create or update their Will! Even though I am not an attorney, I can help you facilitate this- let me help you get your house in order!

Resolution number 3.  Create or update your Will.

In 2005, Anne Friedman, a former school principal, died suddenly of a massive heart attack. She had accumulated over $900,000 in her Teachers’ Retirement Fund but never named anyone as her designated beneficiary. By law, her surviving spouse would have been entitled to the money. However, in 1978, in a previous job, before she was married, she had filled out a designated beneficiary form naming her mother, her uncle and her sister as her designated beneficiaries. Her mother and uncle had since passed away, but her sister was still living. By law, the sister was entitled to the money, which she received, and didn’t share a dime with the now destitute husband. We see this every day. Proceeds from Life Insurance, 401(k) plans, and IRAs are being left to the wrong beneficiaries because the owners never thought to update them.  Your financial documents must be regularly reviewed and evaluated as your life evolves, particularly when it comes to your beneficiaries. Marriages, divorces, births, deaths and other major life events can all warrant changes. These documents are too important to leave unattended. Let me review these for you.

Resolution number 4.  Review and update beneficiary designations with life changes.

How many of you own a business?  How about those of you that have a real estate investment?  Better yet, how many of you have children driving a car? Do you have proper insurance?  Have you fully limited your liability? Are your investments titled properly to limit liability? If you have trust documents, titling of property, insurance coverage(s) and other liability documents, also need to be regularly reviewed. I can help you do this.

Resolution Number 5.  Regularly review legal/liability documents.

Frederick Vanderbilt, J.D Rockefeller, JP Morgan, Franklin Roosevelt, and Elvis Presley all died without an estate plan. Please re-read that list. Some of the most successful, intelligent, and powerful people in America did so much for so many- they failed, however, to protect all the wealth they had created. Although we can’t predict the future, it’s important to have a comprehensive plan in place for how your money and other assets should be distributed when needed.  Your life stage will determine the needs of your estate plan. If you’re young and single, your plan may only include a few items, such as a Will, beneficiary designations and medical and financial powers of attorney. If you have substantial wealth, you may need one or more trusts to control how your assets are taxed, managed and distributed.

Resolution Number 6.  Establish an Estate Plan.

It’s critical to remember that financial planning is not solely based on investment planning or picking the right insurance coverage. While this must be done properly, there are many other vital areas that get overlooked or forgotten. Keep your financial house in order by regularly reviewing your plan and ensuring that you have the fundamentals in place. By this time next year, you’ll be glad you did.

If you would like more information or to discuss your financial concerns
Click Here

Categories : Blog, estate planning, financial planning, Financial Services

How to Set Savings Goals – A Few Thoughts

Posted by Frank McKinley on
 January 18, 2021

Setting clear, specific savings goals is one of the best ways to achieve your financial objectives, but it’s a task that many people struggle with. Unfortunately, establishing savings goals is a bit more complex than simply picking a number out of the sky and hoping you can eventually set aside that much cash. Below is a simple seven-step plan that you can use to set — and reach — your savings goals.

1. Select Goals

Before you start saving, it helps to know what you are saving for, since most of us find it easier to save money if we know it will eventually be used for a specific purpose. Common savings goals are creating an emergency fund with at least six months of living expenses or saving for retirement, a child’s college education, a down payment, or a vacation. Your goals will be as unique as you are; the most important thing is that you select them and make them as specific as possible.

2. Determine How Much You Need to Save

Exactly how much money do you need to accomplish your goal? For example, you may want to have $5,000 saved for your dream vacation, $30,000 for a down payment on your first home, or $1 million for retirement. Don’t pick a random number at this point — research how much you’ll actually need so you can be confident that your savings will be sufficient to achieve your goals.

3. Consider Your Timeline

Savings goals can generally be divided into three broad categories: short-term (those that you hope to reach in a year or less), mid-term (those that are roughly one to five years away) and long-term (goals you hope to achieve in five years or more). It’s important to know your timeline, since it will have a direct impact on how aggressively you need to save to hit that target and where you put your money.

what to consider when saving

4. Determine How Much to Set Aside Each Week or Month

For short-term goals, this step is fairly simple. Say you plan to get married in a year, and you want to have $10,000 saved toward that goal before your big day. To meet that goal, you’ll need to save roughly $833 per month for the next year, or $10,000 divided by 12. Determining how much you need to save to hit your long- and mid-term goals can be a bit more complicated, as you’ll need to take into account the growth of your in-vestments. Whatever the timeframe for your goals, making these calculations is important because it allows you to adjust your savings as your budget allows. For example, if you can’t afford to save the over $800 a month you need for the wedding, you have two options: You can ei-ther adjust your timeline or opt to keep it the same and save less.

5. Automate Your Savings If Possible

Once you know how much you need to save, you’ll likely find it easier to stick to your plan if you can automate your savings. Adopt the pay-yourself-first principle and set up automatic transfers to your savings or investment accounts. The key is to save the money before you ever have a chance to spend it, as well as to avoid forgetting to make the transfers.

6. Choose the Right Way to Save

Depending on your goals and timeline, you have different options for savings. Traditional savings ac-counts are a good option for short-term goals, since your money will be safe. Investment accounts and retirement accounts, like a 401(k) plan or IRA, are good options for longer term goals, since you’ll earn money as you save.

7. Watch Your Money Grow

Once you have your savings plan in place, keep an eye on how it is doing. You will need to periodically review your results and make adjustments as necessary. Please call if you’d like to dis-cuss your savings goals in more detail.

If you would like more information or to discuss
your savings goals or other financial concerns

Click Here
Categories : Blog, Financial Services, Savings, Savings Goals

Financial Rules of Thumb

Posted by Frank McKinley on
 January 11, 2021

Rules of thumb are designed to provide quick guidelines for your finances. However, you shouldn’t blindly follow them without giving
thought to your personal circumstances. Some of the more common
rules of thumb include:

Save 10% of your gross income. While this will give you a good start, it’s typically the minimum, not the maximum, you should be saving. Analyze how much you’ll need for your financial goals, and then work backwards to calculate how much you should be saving.

Plan on spending 80% of your pre-retirement income during retirement. This may be true if you don’t plan to be very active during retirement, but more and more people expect retirement to include extensive travel and expensive hobbies. On the other hand, if you’ve paid off your mortgage and your children have finished college, you may need less
than this. Review your individual situation to determine how much
you’ll need.

Set the percentage of stocks in your portfolio to 100 minus your age. With increased life expectancies, this can result in a portfolio that is too heavily weighted in income investments. Set your asset allocation based on your risk tolerance and time horizon for investing. Stocks should be considered for long-term financial goals of 10 years or more.

Keep three to six months of income in an emergency fund. While an emergency fund is a good idea, how much you keep in that fund will depend on your circumstances. You may need a larger fund if you are the sole wage earner in the family, work at a seasonal job, own your own business, or rely on commissions or bonuses.

A smaller fund may be required if you have more than one source of
income, can borrow significant sums quickly, or carry insurance to
cover many emergencies.

Pay no more than 20% of your take-home pay toward short-term debt. Once considered a firm rule by lenders, you may now be able to obtain loans even if you exceed this amount. Try to reduce your debt or at least reduce the interest rates on your debt.

Keep your mortgage or rent payment to no more than 30% of your gross income. While you can obtain a mortgage for more than that, staying within this rule will help ensure you have money to devote to other financial goals.

Refinance your mortgage if interest rates decline by 2%. This rule of thumb assumes you’ll pay significant refinancing costs, including points, title insurance, appraisal fees, and other fees. However, many lenders now offer refinancing deals with significantly lower costs.  Thus, you should assess whether it makes sense to refinance when mortgage rates decline by as little as half a percent.

Obtain life insurance equal to six times your annual income. Different individuals require vastly different amounts of insurance, depending on whether one or both spouses work, minor children are part of the family, or insurance is being obtained for other needs, such as to fund a buy-sell agreement or to help pay estate taxes. Thus, you should  determine your precise needs before purchasing insurance.

Most financial rules of thumb should not be followed without first considering your individual circumstances. Please call if you’d like to address your needs in any of these areas.

If you would like more information or to discuss your financial concerns

Click Here
Categories : Blog, estate planning, Financial Services, Life Insurance, Retirement

Debt and Your Retirement

Posted by Frank McKinley on
 January 4, 2021

Most people’s vision of  retirement not only involves freedom from work but also freedom from debt. A debt-free retirement is a laudable goal, but it’s one that has become increasingly difficult for many to achieve. Mortgage, credit card debt, even student loans now follow people into their golden years, and that can have serious consequences for their long-term financial health.

When you retire, you stop actively earning income and start living on your savings. If you’re still paying off debt, those payments will be another fixed expense. By going into retirement debt free, you’ll lower your living expenses,  which will make that nest egg last longer.

Reducing Debt before Retirement

If at all possible, you’ll want to eliminate your debt before you retire. Of course, some types of debt are worse than others. High-interest credit card debt can be a significant burden, so you’ll want to eliminate it as quickly as possible. Look for areas in your budget where you can cut back and make extra debt payments, or consider a second job to make extra payments.

If you have a car loan and are close to retirement, consider selling the car after you quit working, since many people find they no longer need multiple vehicles in retirement.

Becoming debt-free before retirement may mean aligning your mortgage payoff date with your retirement date; you may be able to bring your mortgage payoff date closer by making extra payments. Often, retirees want the peace of mind that comes with knowing they’ll own their home when they retire. But that accelerated payoff plan might not be right for everyone. If you have a relatively low interest mortgage, no other debt, and are already maxing out your retirement savings, you may feel comfortable sticking with your standard repayment plan, especially if you can get more from investing the money that you’d otherwise use to make the extra mortgage payments.

One thing you shouldn’t do: take money out of your retirement accounts to pay off credit card or mortgage debt. If you focus all your financial resources on paying off your loans, you run the risk of retiring with inadequate savings. Another potential misstep:  prioritizing debt payoff over saving. While you don’t want to be saddled with excessive debt, you also don’t want to end up cash poor in retirement, without enough money to
meet everyday expenses.

Debt in Retirement

Unfortunately, many people still end up nearing retirement holding a significant amount of debt. If that’s your situation, you have several options. One is to delay retirement for a few years while you concentrate on paying off debt. Plus, if you continue to work, you’re not tapping your nest egg, and it can continue to grow. In
addition, if you delay claiming Social Security, your monthly payment will increase by up to 8% a year until you reach age 70.

If you must enter retirement with debt, you may need to pare down your lifestyle — traveling less frequently, moving to a smaller home, or giving up your boat or RV — to reduce debt and minimize the risk of outliving your retirement savings. You could also continue to work part-time or as a consultant. That can bring in extra income, and many people enjoy a more gradual transition to full retirement.

Finally, know that going into retirement with debt poses some other, specific risks. While most creditors can’t garnish your Social Security payments, the federal government is an exception. If you owe back taxes, student loans, alimony, child support, or
certain other types of payments, you may lose up to 15% of your Social Security benefit.

Frankly Speaking

“Political power does not rest with those who cast votes; political power rests with those who count votes.” -Joseph Stalin

THE SAME SCORE – Donald Trump beat Hillary Clinton 306 – 232 in the Electoral College in 2016, but then lost to Joe Biden 306 – 232 in the Electoral College in 2020 (Electoral College).

“The saddest aspect of life right now is that science gathers knowledge faster than society gathers wisdom.” -Isaac Asimov

The dust has settled and as we approach the New Year, the ravages of the old one continues to vex us. Granted, markets seem to be reflecting a sense of exuberant well-being, but we all know that life isn’t so copesetic and we are feeling the seeming relentless strain of Rona. So, what can we do? Certainly, continue with your financial plan, perhaps modify it a bit but do NOT abandon it. ‘Follow the  guidelines’ staying socially distant, wear masks and distract yourself with physical activity like walks, (great if you have a dog), exercise, meditation, yoga and ‘mindfulness’ (look it up as I had to).

Realize that this too shall pass like the Tech Wreck; 9-11; the Debt Wreck; MERS; SARs – all of which seemed so terrible… for a while.  remember to say the prayer, “Lord grant me the serenity to accept the things I cannot change, courage to change the things I can, and the wisdom to know the difference”.  We have a vaccine now; all we need is a distribution method.

Interested in learning more about
what you can do to retire debt-free?
Please call to discuss this in more detail

Click Here
Categories : Blog, Financial Services, Retirement

Get Your 401(k) Plan on Track

Posted by Frank McKinley on
 December 18, 2020

For many people, their 401(k) plan represents their most significant retirement savings vehicle. Thus, to make sure you have sufficient funds for retirement, you need to get  your 401(k) plan on track. To do so, consider these tips:

Increase your contribution rate. Strive for total contributions from you and your employer of approximately 10% to 15% of your salary. If you’re not able to save that much right away, save what you can now and increase your  contribution rate every six months until you reach that level. One way to accomplish that is to put all pay increases immediately into your 401(k) plan. At a  minimum, make sure you’re contributing enough to take advantage of all employer-matching contributions.

Rebalance your investments. Don’t select your investments once and then ignore your plan. Review your allocation annually to make sure it is close to your original allocation. If not, adjust your holdings to get your allocation back in line. Selling  investments within your 401(k) plan does not generate tax liabilities, so you can make these changes without tax  ramifications.

Use this annual review to make sure
you are still satisfied with your investment
choices. Avoid common mistakes made when investing 401(k) assets, such as allocating too much to conservative investments, not diversifying among several investments, and investing too much in your employer’s stock.

Don’t raid your 401(k) balance.
Your 401(k) plan should only be used for your retirement. Don’t even think about borrowing from the plan for any other purpose. Sure, that money might come in handy to use as a down payment on a home or to pay off some debts. But you don’t want to get in the habit of using those funds for anything other than retirement. Similarly, if you change jobs, don’t withdraw money from your 401(k) plan. Keep the money with your old employer or roll it over to your new 401(k) plan or an individual retirement
account.

Seek guidance. It is important to
manage your 401(k) plan carefully
to help maximize your future retirement income. If you’re concerned about the long-term future, call for a review of your 401(k) plan.

Pay Yourself First

To force yourself to save regularly, treat those savings as a bill to yourself and pay that bill first. Consider these tips:

Reduce spending, diverting those reductions to savings. One way to accomplish this is to cut back on your spending, perhaps reducing your expenditures for dining out, traveling, clothing, or entertainment. Another alternative is to find ways to spend less for the same items. For instance, get quotes for
your car and home insurance from several companies, placing any premium reductions in savings.

Save all unexpected income. Immediately save any money from tax refunds, bonuses, cash gifts, and inheritances. Before you get used to any salary increases, put that raise into savings.

Make saving automatic. Resolve to immediately set up an investment account that automatically deducts money from your bank account every month. Another good alternative is to sign up for your company’s 401(k) plan. (Keep in mind that any automatic investing plan, such as dollar cost averaging, does not assure a profit or protect against loss in declining markets. Because such a strategy involves periodic investment, consider your financial ability and  willingness to continue purchases through periods of low price levels.)

Financial Thoughts

Baby boomers are expected to transfer $68.4 trillion in wealth to heirs over the next 25 years (Source: Journal of Financial Planning, May 2020).

In a recent survey of those who do not expect to retire, 60% do not believe they will be able to afford retirement. The other 40% preferred not to retire in order to continue socializing with coworkers and maintain the mental stimulation of working. Only 25% of workers who are delaying their retirement are doing so because they want to maintain their medical insurance until they qualify for Medicare. Approximately 79% of workers are interested in  the possibility of a phased retirement program (Source: MetLife, 2020).

Approximately 60% of U.S. adults do not have a will. And approximately 1/3 are missing a healthcare directive in their estate planning (Source: Journal of Financial Planning, April 2020).

About 55% of inheritances are less than $50,000 (Source: Federal Reserve, 2020).

Approximately 26% of of people who stop working entirely will return to work (Source: Journal of Financial Planning, November 2019).

If you would like more information or to discuss your financial concerns

Click Here
Categories : Blog, financial planning, Financial Services, Retirement

Overcoming 5 Retirement Fears

Posted by Frank McKinley on
 December 11, 2020

We’ve all heard stories about people losing their
retirement money in a stock market crash, outliving their money, or incurring unexpected
medical expenses that forces 80-year-olds back into the workforce. At times, these stories can seem overwhelming — even to the point of deterring people from planning for retirement. Are these fears likely to become realities? Probably not, but the truth is that they can happen.  Here’s how you can deal.

1. Outliving your money —
There’s a rule of thumb to decrease the odds of outliving your money over a 25 year retirement: by the time you’re ready to retire, you should have saved 8 times your annual salary. To get there, gradually work up to it. For example, at age
35, you should have 1 times your current salary saved, then 3 times by 45, 5 times by 55, and so on.

Of course, the amount of money you need to have saved by the time you’re ready to retire depends on a huge range of very individual factors: What are your plans for retirement? How old are you? Will you still have a mortgage? Do you have long-term-care insurance? To truly
decrease the odds that you’ll outlive your money, work with a financial advisor to develop a robust retirement plan — then stick to the plan and revisit it often to make sure it remains in alignment with your goals and your  circumstances.

2. High inflation —
What if inflation went up to 12–14% like in the 1970s? What would you do? It’s not likely that inflation would spike similarly again. However, because it has happened before, you want to
be prepared. This is where an annual review of

carefully navigate your financial compass

your investments can be wise. In periods of very high inflation in the U.S., for example, you may need to adjust your investment strategy. If you are properly diversified, your portfolio should
include investments that move opposite each other — so when one asset class or subclass is down, another is up.

3. Unexpected medical expenses before retirement —
Unexpected medical expenses you may incur
while you are still working could totally derail your retirement. To prepare for them, it’s important to
have insurance in place. Disability insurance will ensure that if you lose your income due to a disability, you will still be able to take care of
your basic necessities. Life insurance will protect your family in the event of your death — especially
important if your income was the key to your spouse’s retirement.

4. Unexpected medical expenses
during retirement —
For most people, healthcare is one of the largest (often the largest) expense incurred during retirement. There are a few ways to prepare for medical emergencies: private health insurance to fill the gaps in Medicare, long-term-care insurance,
and rainy day savings. For today’s retirees, Medicare takes care of most medical expenses. However, you need savings to cover what
insurance won’t — like copays and expenses exceeding your insurance limit. And just as you save before retirement for unexpected expenses,
so should you continue your rainy day fund in retirement; even if you are adequately insured, copays can be significant if you have a medical
emergency.

5. Market crash —
As with high inflation, the key to surviving a market crash is diversification. (To be clear: there is no way to insulate yourself completely from the effects of economic turmoil. But you can take steps to ensure that turmoil doesn’t completely ruin your retirement plans.) As you get closer to
retirement, you should be invested less heavily in equities and more in investments like bonds.

If you would like more information or to discuss this in more detail please contact me.

Click Here
Categories : Blog, Financial Services, Retirement
← Previous Page
Next Page →

Archives

 

Frankly Financial | Copyright © 2014. All Rights Reserved.
Site Designed by TriDelta Design Group