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6 Ways to Get Healthy AND Spend Less
Contributed by: Gerri Harmer
If you could choose one of these items in retirement, which would you pick?
A vacation home
Shiny red convertible
Good health
A younger version of yourself would have probably gone for option 1 or 2. But many of us find when we get to retirement, our priorities change. Without good health, all the other choices are irrelevant if you can’t enjoy them. Many of us dream of living a very active lifestyle when we retire with some money in our pockets. Wouldn’t it be amazing if we could have all the options? Wouldn’t it be even more amazing if it only took adapting just a few new habits to improve our long-term health?
Here are 6 ways to lean into better health while spending less:
1. Start giving up that bad habit. Most things that are bad for your health are bad for your wallet. Smoking, junk food, fast food and pop can all be eliminated, adding money to your bottom line.
2. Go outside. Breathe the air and get fit by walking, gardening or bike riding. Better yet, head to the park to toss a Frisbee, join in on a sport, or hit a trail. No need to pay fees for gym memberships during the summer.
3. Buy local or grow your own. Farmers markets usually have a great variety of organic fruits and vegetables. You support your community and pay a fraction of the grocery store prices. Better yet, start your own garden and save even more.
4. Sleep 15 minutes more. Give your body a little more time to repair itself. Go to bed early or prep for your morning the night before so you can sleep an extra 15 minutes.
5. Drink water. Experts recommend drinking 8 glasses a day. Before you allow yourself even a drop of anything else, drink a glass of water first. You’ll be surprised how much energy you gain while flushing all the bad stuff. Water is one of the least expensive beverage options especially when it comes from your filtered fridge instead of a bottle.
6. Sit with nature. Reset your stress levels by simply listening to the birds, taking in the scenery or feeling the breeze on your face. It costs nothing and gives you peace and calm.
It might be difficult to change radically overnight, but leaning toward better habits may lead to a smoother, more permanent change in your health. And it doesn’t hurt that you’ll be saving money along the way!
Why Financial Planners are a lot like Personal Trainers
Contributed by: Matt Trujillo, CFP®
I recently had the opportunity to work with a personal trainer at my local gym. My wife was kind enough to purchase some sessions for me, and it was her gentle way of letting me know I’ve added on a few pounds! When I sat down with the trainer at my initial session I couldn’t help but notice the similarities between what I do for a living and what personal trainers do.
Personal Trainer's line of questioning: (I’m paraphrasing)
Trainer: What were you hoping to accomplish over the next 8 weeks?
Me: I would like to develop some good habits so I can get back on a systematic workout routine.
Trainer: Ok, I can certainly help with that…anything else on your mind?
Me: Yes I would like to lose 10 pounds.
Trainer: That’s definitely doable, but you’re going to have to push yourself in the gym as well as practice disciplined eating habits outside of the gym. Losing weight is a science and your body is a machine. Most people lack the mental discipline and have a hard time reaching their goals because of their behavior.
When I left the gym I couldn’t help but think about his comments the whole drive home. At The Center, our entire focus is on goals-based financial planning.
Our initial line of questioning with our clients is very similar to a personal trainer:
We Ask: How can we help you? What were you hoping to accomplish? What matters most to you with regards to your finance and money?
We Get Answers Like: I want to retire at 65. I want to be financially independent by 60. I want to leave a financial legacy. I want to make sure my family is taken care of if something were to happen to me. I need help with my investment decisions.
These are just a few of the most common answers. Our mission is to provide world class service in helping our clients achieve their goals. We do this by practicing a disciplined investment approach and by looking at all facets of a client’s financial life.
If you haven’t taken the time to establish specific financial goals then I strongly encourage you to do so. Financial planners can help you identify and define those goals, just like your personal trainer can help you build and define your muscles.
Matthew Trujillo, CFP®, is a Certified Financial Planner™ at Center for Financial Planning, Inc. Matt currently assists Center planners and clients, and is a contributor to Money Centered.
Any opinions are those of Matthew Trujillo, CFP® and not necessarily those of Raymond James. Investing involves risk and investors may incur a profit or a loss.
Women & Investing: How to get more Engaged with Finances
Contributed by: Laurie Renchik, CFP®, MBA
How does a busy, multi-tasking woman make sure the important financial stuff does not get missed? A statistic in a 2015 Fidelity Investments study recently caught my attention. According to the study:
83% of women would like to become more engaged with their finances within the next year.
Working with women over the last 20 years has taught me that the first step is usually the most difficult. Once the decision is made to pull a financial plan together, the pieces start to fall nicely into place. But getting over that initial hurdle of getting started can seem daunting.
Here is some practical advice to get you started:
Give your personal financial life the attention that is needed. If you feel like life is whizzing by, take time to step back and ask, “Am I on the right track?”
Start creating a mental picture of your goals. You probably have at least a vague picture in your head of what you want in the future. The beauty of the financial planning process is that it makes conversations happen especially with the help of a financial planner who serves as a thinking partner.
Pull a team together. Your financial planner, tax preparer and attorney can help you keep your arms around the different aspects of your financial plan. They’ll also help you make important course corrections when necessary and chart the progress as you go.
Practical advice to keep you on track:
Continue to ask questions. Financial planning means asking, “Where do I want to be in 3 years?, 10 years?, 20 years?” This may change as you go along.
Stick to your plan. Good financial habits are a foundation you can build on for a lifetime.
Stay focused on your priorities. A good plan will help you remind yourself what is most important in your life and decide how your financial resources can help you get there.
The future is not the finish line; it is just the beginning if you have the resources to lead the life you want. Is there a better reason to become more engaged with your finances and put your plan together?
Laurie Renchik, CFP®, MBA is a Partner and Senior Financial Planner at Center for Financial Planning, Inc. In addition to working with women who are in the midst of a transition (career change, receiving an inheritance, losing a life partner, divorce or remarriage), Laurie works with clients who are planning for retirement. Laurie was named to the 2013 Five Star Wealth Managers list in Detroit Hour magazine, is a member of the Leadership Oakland Alumni Association and in addition to her frequent contributions to Money Centered, she manages and is a frequent contributor to Center Connections at The Center.
Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served.
This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Laurie Renchik and not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Investing involves risk and investors may incur a profit or a loss regardless of strategy selected.
Green Money: Tracking the Socially Responsible Investing Trend
Contributed by: Laurie Renchik, CFP®, MBA
The concept of using investment dollars to support environmental and societal initiatives is not a new idea. For decades socially responsible investing, also called SRI, has been recognized as a broad investment category spurred on by religious values, social movements and concerns about health and the environment. Today the SRI landscape is changing. There are new strategies that fall under the responsible investing umbrella with differing objectives, more exposure to a wider range of asset classes and a growing number of investment dollars being put to work. This is good news for investors who have personal and financial goals to incorporate responsible investment strategies into their portfolios.
Navigating this emerging landscape is nuanced because there is no single term that describes the multiple approaches evolving from the original concept of responsible investing. Socially responsible investing (SRI), ESG investing (environmental, social and governance) and Impact investing make up three main categories. There are some distinct differences between the three.
At the most basic level, here are the philosophical guideposts:
SRI Investing: Creating a portfolio that attempts to avoid investments in certain stocks or industries through negative screening according to defined ethical guidelines.
ESG Investing: Integrating environmental, social and governance factors into fundamental investment analysis to the extent they are material to investment performance.
Impact Investing: Investing in projects or companies with the express goal of effecting mission-related social or environmental change.
What does responsible investing mean to you?
Incorporating responsible investment strategies into your portfolio is not a one-size-fits-all solution. Your goals are specific to you and your objectives for the future. Talk with your financial planner to better understand the opportunities available today to integrate responsible investment strategies in your portfolio.
Laurie Renchik, CFP®, MBA is a Partner and Senior Financial Planner at Center for Financial Planning, Inc. In addition to working with women who are in the midst of a transition (career change, receiving an inheritance, losing a life partner, divorce or remarriage), Laurie works with clients who are planning for retirement. Laurie was named to the 2013 Five Star Wealth Managers list in Detroit Hour magazine, is a member of the Leadership Oakland Alumni Association and in addition to her frequent contributions to Money Centered, she manages and is a frequent contributor to Center Connections at The Center.
Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served.
The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Laurie Renchik and not necessarily those of Raymond James. Investing involves risk and investors may incur a profit or a loss. Every investor's situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation.
Part 6: A Year of Lessons on Money Matters for your Children and Grandchildren
Contributed by: Matthew E. Chope, CFP®
When it comes to keeping track of finances, my advice for the young is to keep it simple and straightforward and get qualified help if needed. That starts by finding a way to track your money without making it an obsession. Begin by tracking your finances at least once a month. To do this, simply add up what’s coming in and then look at where it’s going. Once you’ve established that you are indeed living within your means, it is time to establish two kinds of savings accounts that you contribute to each month:
1. Build a “Save to Spend” account
2. Build a long-term financial security account (i.e. 401k or IRA)
The Save to Spend account is where you park money for the short term to be spent on things that lead you toward the 100 things you want to accomplish in life (read this blog if you don’t have your 100 things list yet). The long-term security account is for financial independence, which will eventually allow you to work because you want to not because you have to.
Investing does not need to be overly complicated either. For some good reading to help you build knowledge about investing, here are a few books I recommend:
The Wealthy Barber by David Chilton
A Random Walk Down Wall Street by Burton Malkiel
A Little Book of Common Sense Investing by John C. Bogle
The Investment Answer by Daniel C. Goldie & Gordon S. Murray
The Millionaire Next Door by Thomas J. Stanley & William D. Danko
Once you understand the basic principles -- like diversification, pay yourself first, don’t miss a match, maximizing deductions and credits, and dollar costs averaging -- and if you have the interest to follow those principles, then do it on your own but keep it simple. Remember to review my previous blog about using time to your advantage (start early – start now!). It might make sense though, to consider getting qualified help managing your money, especially if this is something you’re not interested in doing. If you’re looking for help, here are 7 key components to help you find the right person.
Matthew E. Chope, CFP ® is a Partner and Financial Planner at Center for Financial Planning, Inc. Matt has been quoted in various investment professional newspapers and magazines. He is active in the community and his profession and helps local corporations and nonprofits in the areas of strategic planning and money and business management decisions. In 2012 and 2013, Matt was named to the Five Star Wealth Managers list in Detroit Hour magazine.
Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served.
The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Matthew Chope, CFP® and not necessarily those of Raymond James. Investing involves risk and investors may incur a profit or a loss.
Reaching the Right Amount at my “Plan End”
Contributed by: Nick Defenthaler, CFP®
You’ve probably heard someone (morbidly) joke, “When I die, I want my last check to bounce.” For some, spending your last dollar on your last day would be considered a success. However, in the world of financial planning, we would consider it playing with fire. This mantra might seem like the ideal situation in a perfect world, but the reality is simple – we do not live in a perfect world! I believe having “excess” at the end of your financial plan is a product of thoughtful, prudent planning by the client and advisor.
The goal of the vast majority of our clients is simple: Don’t run out of money in retirement. So how do we help clients make that happen? When building a new plan or updating a client’s existing retirement analysis, we use a combination of sophisticated technology and good, old-fashioned human knowledge and expertise. When you put the two together and have a client who is realistic with their goals, it’s typically a recipe for success.
Tapping into Technology
Our financial planning software takes a look at many different factors (age, life expectancy, income, savings rate, retirement income sources, portfolio value and allocation, etc.) when testing the probability of success of the sustainability of a client’s financial plan. As with anything, there has to be a balance. We see some who are spending far too much in retirement and the software puts up red flags. We also have some families who live well below their means in retirement and could actually spend a lot more than they do. The key, as with anything in life, is finding the appropriate balance.
Can’t We Spend More?
When I’m walking a client through their retirement analysis, looking at a plan we consider to be in good shape, they often get a perplexed look. It happens when they see an estimate of the value of their investable assets at age 95 or “plan end”. For example, I recently met with a couple in their early sixties. At age 95 (in the year 2048!) they had an estimated $1.2M left at their “plan end”. The couple had a goal to spend approximately $70,000/yr in retirement (including Social Security) and had a child who they felt did not need the $1.2M the software program was telling them they would have left upon death. However, when we dug into the numbers, we showed them that the $1.2M in 2048 (33 years from now) is really the equivalent of just over $450,000 in today’s dollars if we factor in the negative effect inflation (3% assumption) has over your purchasing power. However, in their minds, it was still a good chunk of change to leave as an inheritance. They were still stuck on that $1.2M – couldn’t they spend more?! While this was an extremely fair and logical question, my answer was yes. But next I explained that the likelihood of having to adjust their current spending habits downward at some point in the future would increase. The reason for this is because we want your plan to have a “cushion” or “buffer zone” for the unknowns we haven’t fully factored into your plan. Things like unexpected medical events, long-term care needs, helping out family, extended periods of negative market returns, etc. can all eat into that “cushion” or “buffer zone” pretty quickly even though on paper, it looks like a large amount today.
The bottom line is this – financial planning is an ongoing process. Meeting annually, tracking progress, making adjustments when necessary and being consistent is planning done right. This approach has helped thousands of our clients feel confident during their 20+ years after working. While spending your last dollar on your last day might seem like the Holy Grail, it isn’t something we strive to do for our clients. Life is full of unknowns. That is why we plan and work together with you to make sure when those unknowns eventually do occur, you will be properly prepared.
Nick Defenthaler, CFP® is a CERTIFIED FINANCIAL PLANNER™ at Center for Financial Planning, Inc. Nick is a member of The Center’s financial planning department and also works closely with Center clients. In addition, Nick is a frequent contributor to the firm’s blogs.
This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Nick Defenthaler, CFP® and not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Investing involves risk and investors may incur a profit or a loss regardless of strategy selected. Any examples provided in this material are for illustrative purposes only. Actual investor results will vary.
Gas Prices Went Down But Where Did the Money Go?
Contributed by: Angela Palacios, CFP®
After oil and thus gas prices sharply declined late in 2014, many were expecting consumers to run right out and spend what they’d saved. What has surpised everyone is that isn’t happening. The chart below shows the direct correlation between the decrease in what consumers are spending at the pump (the light blue line) and the increase in their savings account dollars (the dark blue line). As consumers are spending less, they are saving more.
There are a number of reasons contributing to these increased savings rather than spending:
Most did not expect the temporary reprieve in gas prices to last
Prices of many other goods are perceived to be increasing
People are starting to recognize the importance of having a few months of living expenses set aside in the bank as a safety cushion
While all of these are probably contributing factors causing this “savings” to not be spent, I would hope the main reason for the pattern is the last bullet point -- people recognizing the importance of having some money set aside for a rainy day!
Angela Palacios, CFP® is the Portfolio Manager at Center for Financial Planning, Inc. Angela specializes in Investment and Macro economic research. She is a frequent contributor to Money Centered as well asinvestment updates at The Center.
This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Angela Palacios, CFP® and not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete.
Part 5 – A Year of Lessons on Money Matters for your Children and Grandchildren Contributed by Matthew Chope
Contributed by: Matthew E. Chope, CFP®
If you know where you’re headed, then you have a better chance of getting there. This applies in money matters and in life. To help you chart your course, try making a list of the top 100 things you want to accomplish in your life. The idea here is that if you know what you want to accomplish and what’s important to you, it might help you start on the path that will get you there.
Finance Your Goals
Along that path, I don’t think you should be concerned about spending money, especially if it’s towards these 100 things. This is what money was meant for. Money is not an end, but a means to an end. Part of your money is a temporary store of value to be used towards the goals in your life.
Do you think you could become president if you don’t intentionally set that goal? In my own life, I’ve seen how writing down my goals has helped me find the path to achieving them since I already know the end. Writing down goals will also help you invest in things that will lead them toward that end. You’ll be able to make choices differently than someone who has not considered what’s important to accomplish in life. Feel comfortable spending money alone this path. This is what is important to you.
Focus on What Matters
I think Oliver Wendell Holmes said it best:
“Most of us go to our grave with our music still inside us.”
I have seen many clients get to the end of their lives with much of the music still buried within them. Their time was spent focused on saving money to build wealth for financial independence. Or they felt that money should not be used unless necessary. Financial independence is very important, but so is finding a balance to pursue your interests along the way.
If you don’t have a list of your own, maybe you’ll get inspired by mine. I started this list in my early 20s and have tweaked it over the years. Here are some of my goals:
Fun – Travel
Paint a beautiful picture
Swim with a dolphin
Generosity – Giving
Be someone’s mentor
Make it possible for my niece to go to college
Education
Achieve Master’s degree
Give many motivational and inspiring speeches
Personal Achievement
Own a home in a warm sunny climate to escape the winter gray
Practice meditation and yoga daily
Professional Life – Career
Contribute to a healthy financial planning practice for 40 years
Help 1,000’s of people reach their financial objectives in life
Family
Earn the right to marry someone special.
Visit my grandparents and find out about their life as much as possible
Health / Fitness
To practice meditation and yoga daily
Exercise with a trainer every month to stay doing things correctly
Financial – Monetarily
To never be a burden to anyone else
To be financial independent by age 60
Maybe some of these categories or ideas will spark you to start your own list. I believe when you choose something (make a decision) you should put your full potential behind it. But remember nothing is set in stone. My list has evolved since I started it. After a good try, be open to changing your mind.
Matthew E. Chope, CFP ® is a Partner and Financial Planner at Center for Financial Planning, Inc. Matt has been quoted in various investment professional newspapers and magazines. He is active in the community and his profession and helps local corporations and nonprofits in the areas of strategic planning and money and business management decisions.
Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served.
Any opinions are those of Matthew Chope, CFP® and not necessarily those of Raymond James.
Should Ford Employees Contribute After-Tax Money to a 401k?
Contributed by: Nick Defenthaler, CFP®
Earlier this month, my colleague, Matt Trujillo and I hosted a webinar for Ford Motor employees to discuss the potential benefits of contributing after-tax dollars to their 401k plan. These Ford workers are not alone. About 25% of companies offer retirement plans with after-tax contributions that are completely separate from the plan’s Traditional 401k or Roth 401k (Columbia Management). Recent IRS rulings have made contributing to the after-tax component far more attractive because, once an eligible distribution event is met, the dollars can be rolled over to a Roth IRA for tax-free growth. Most employees aren’t even aware their plan offers after-tax contributions and, if they do, there is typically confusion around how it works and if it makes sense for them.
Do After-tax Contributions Make Sense for Me?
In most cases, the after-tax portion is the best fit for someone who is currently maximizing their pre-tax/Traditional 401k but who still has the capacity to save more for retirement. As mentioned before, the after-tax contribution is a separate contribution type and is above and beyond the normal 401k limits ($18,000 in 2015, $24,000 if over the age of 50 however, subject to the overall $53,000 plan limit). It is really all about making “excess savings” as efficient as possible. Tax-free accounts are about as efficient as they come and can potentially save an individual or family hundreds of thousands of dollars in retirement. For more information, this blog by Tim Wyman goes into greater detail on contributing after-tax dollars into your plan.
Every 401k plan is different and they all have their nuances. This is why we’ll be hosting company-specific webinars in the coming months to review how the after-tax component works in specific plans and to go over the pros and cons. This kind of information can help you decide if an after-tax plan makes sense for you. Keep your eyes open for e-mails, blogs, and more on our Facebook, Twitter, and LinkedIn pages for updates on webinars we will be hosting in the near future!
As always, if you have specific questions relating to your company retirement plan, never hesitate to reach out to us. We are here to help!
Unless certain criteria are met, employees must be 59½ or older and must have satisfied the five-year period that starts with the year the employee makes his or her first Roth contribution to the 401k plan before tax-free withdrawals are permitted.
This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Nick Defenthaler, CFP® and not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. You should discuss any tax or legal matters with the appropriate professional. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and investors may incur a profit or a loss. Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person's situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters.
Nick Defenthaler, CFP® is a CERTIFIED FINANCIAL PLANNER™ at Center for Financial Planning, Inc. Nick is a member of The Center’s financial planning department and also works closely with Center clients. In addition, Nick is a frequent contributor to the firm’s blogs.