Live Your Plan: Estelle Wade

Contributed by: Center for Financial Planning, Inc.

We think it’s as important to Live YOUR Plan™ as it is to make your plan. Every day we work with clients to build visions of retirement and we love seeing those visions become reality. About 30 years ago, Estelle Wade helped start Center for Financial Planning. From those early days until her retirement in 2002, she helped build hundreds of retirement plans. And as she worked for her clients, Estelle also took time to put her own plan in place. Today, she’s living it out with her husband Gene in Arizona. We caught up with her to find out how she had put her projections into practice.

Tax Free Growth: A Webinar Targeting Fiat Chrysler Retirement Plans

Contributed by: Center for Financial Planning, Inc.

A couple of weeks ago, Nick Defenthaler, CFP®, hosted a webinar targeting Fiat Chrysler employees and how they could save thousands of dollars by contributing to the after-tax portion of their 401k plan. Although not all 401k retirement plans have these same capabilities, knowing about the possible tax deferred options that could be available for your retirement plan can be helpful for future saving.

In the webinar below, Nick explains the difference between traditional 401ks and Roth 401ks, and also includes insight into other retirement saving vehicles like IRAs. He explains what retirement plan could be best for you and your future, which can depend on your current tax bracket and your predicted future bracket. The webinar is filled with basic information about retirement plans and then delves into the specific plan as it relates to Fiat Chrysler employees. Take 30 minutes to review the information and if you have any questions, feel free to contact us.

For further information, Nick has already shared advice for thinking about Back Door Roth IRA Conversion and what Ford Employees should do regarding this same topic.

Passing on Wealth & Money Values to the Next Generation

Contributed by: Matthew E. Chope, CFP®

I work with a lot of moms and dads who want their kids to know what they think is important. Since I’m their financial planner, these values are often tied to money. In an ideal situation, parents want to give their children and grandchildren the freedom to choose for themselves when wealth is passed on to them. But oftentimes, I’ve seen an inheritance turn into guilt, bring out greed, or even sprout into remorse…when all the parents wanted was for their kids to be okay.

Discussing Inheritance + Values

I recently spoke at The Private Wealth Midwest Forum in Chicago to other professional advisors regarding multigenerational family wealth issues. I shared how to help families manage wealth across the generations, covering the successes and challenges I’ve witnessed with families. A major part of the equation is communicating across the generations. The conversation is different when you’re talking to a tween than a college grad. By taking maturity level into consideration, you can tailor the conversation to focus on what brings meaning to money for them. I generally try to have parents or grandparents lead this discussion and share their values, how their wealth was conceived, and their ongoing intentions. Involving children in the conversation and encouraging them to share fosters deeper understanding.

Are My Kids too Young for this Conversation?

I had a meeting with an 11 year old and his father recently – he’s my youngest new client! We started chatting about what money means and providing an early education about stocks vs. bonds, working for the family business, and his wages vs. the company’s profits.  I was amazed at how much the 11 year old could understand. He was quicker with all of the math in his head than I was! Parents often assume their children are too young for serious conversations about wealth and inheritance. I feel the time is right as soon as the parents are ready and I always encourage my clients not to wait until it’s too late!

Knowing How to Give and How to Receive

Once your family has the conversation and develops an understanding of what is sacred, there are other ways to link money with meaning. I hear from clients that, “Our tax guy said gifting money is a smart thing to do.” But simply dropping checks into a bank account can be like a meteor strike if your family hasn’t invested time and effort in the money and in a meaningful conversation. I encourage parents and grandparents to accompany monetary gifts with a note about the value and meaning of the gift. Your goal is likely to help your children on their journey, but not provide for entropy … so tell them that. The act of transferring wealth may not change, but the values associated with the inheritance can provide valuable perspective for both the givers and the receivers. Is it time for you to begin the family conversation? I’m here to help.

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.

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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 Matt Chope and not necessarily those of Raymond James.

Don’t Let the Gender Pay Gap Derail Your Retirement

Contributed by: Laurie Renchik, CFP®, MBA

Women hold a tremendous amount of financial power and are an active part of the workforce and economy as a whole. At a time when women are assuming added responsibility for their families and finances, the gender pay gap that is a reality for many has the potential to derail security in retirement.  

Recently, Ellevate Network surveyed thousands of professional women and found that 26% of respondents worry that they are not making enough money today and 30% worry that they are not planning well enough for retirement.

If you have these concerns, here are some steps you can take: 

1. Do your homework about salary ranges for your given position and your growth prospects for the industry. Then be prepared to negotiate.

2. Leverage benefits provided by your employer.  Medical, dental, life insurance and disability are just some of the benefits that may be part of your compensation package.  Pay attention to when you become eligible.

3. Prioritize your own retirement and begin saving as soon as economically feasible. On average women live longer than men and accumulate less in retirement accounts. Don’t forget to increase your contribution every time you receive a raise.

4. Understand how your lifetime earnings directly impact your Social Security benefit. Benefits are calculated on the highest 35 years of earnings.  If there are fewer than 35 years, then zeros go into the calculation.

Shining some much needed light on the gender wage gap can make a difference for all women. In the meantime, women can adopt good financial habits early in life, set their own goals, and garner the support they need to stick to those habits over the long run. We can help you pull together the details you need to put your plan in place.

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.

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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.

Part 9 – A Year of Lessons on Money Matters for your Children and Grandchildren

Contributed by: Matthew E. Chope, CFP®

When it comes to teaching the next generation about money, it’s as important to talk about what NOT to do as it is to teach the right things to do. After working with clients for 25 years I’ve built a list of Things to avoid at all costs!!!  The 8 steps below are never a guarantee, but from experience, they are good financial lessons:

8 Things to Avoid:

1. Avoid expensive bad debt. Know what something costs and don’t pay for things with expensive interest.  Reasonable interest rates in 2015 are 2-4% for a car loan (some are even less!), 3-4% for a mortgage, and 3-6% for school loans (depending on your situation). Credit cards should be used only as a last resort and make sure the rates are less than 10%.

2. Don’t take on more debt than necessary. In the case of college loans, you’re likely to be offered more money on loan than you truly need. While it may be tempting to take out money for living expenses and books, finding ways to pay for as much as possible immediately can save you years of repaying debt.

3. Don’t be lazy or cheap. Do it now! Make a decision and do it – stop putting things off and being lazy. Also know what the value of things are and pay for them when needed and be reasonable.  Share and try to do more for others than yourself at all stages of your life it comes back to you.

4. Avoid negative modes of thought. Sentiments like envy, resentment, revenge and self-pity are not productive.  These modes of thought will sap the life out of you and derail you from what you should be focused on.  If you worry about what someone else has or getting back at someone, you lost already and you’re wasting precious resources that could be better used on yourself and personal improvement.  I strongly recommend asking your mentor for help with breaking this cycle.

5. Don’t be rude. Though it seems pretty self-explanatory, I once had a business meeting with a colleague at a restaurant and he was very short and rude to the waiter because of the slightest error.  After that, I never wanted to do business with him again.  Treat people the way you want to be treated.

6. Avoid investing in anything that you don't understand.  Buy what you know.  Invest in products and services that you use and feel work for you in your life because you will feel more confident with your investment.  Or break down an investment in a mutual fund to understand what it’s made up of so that when it goes south, you have staying power during the market downturns that will eventually come.

7. Don’t cosign for a loan. Should be self-explanatory, but you’re putting your credit on the line if the person you are cosigning for falls short or has any type of trouble.

8. Avoid taking a loan from your 401k at all costs. This is silly to do under most circumstances.  You actually pay extra tax in this process and rob the forward momentum of the retirement goal to fund another short term want.  The equation does not work out well for most people when it comes to wealth building.

While some of these “what not to do” suggestions seem obvious, I’ve seen them played out time and again.  Hopefully, the list will provide you with some insight on what to stay away from … or at least know when you are walking on thin ice! If you have questions, we are always here to help find answers.

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.

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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 Matthew Chope and not necessarily those of Raymond James. Investing involves risk and investors may incur a profit or a loss. You should discuss any tax matters with the appropriate professional.

Importance of a Net Worth Statement

Contributed by: Nick Defenthaler, CFP®

As summer comes to an end and school starts back up, I’ve been reminded yet again of the power a list can have.  Chances are your son or daughter was given a list of school supplies he or she was expected to purchase prior to school starting. Probably a much longer list than you would have liked!  On top of that, I’m sure you had to do some back-to-school clothes shopping, make a hefty grocery trip to account for lunches each day, plan your calendar with your work schedule and finish last minute things around the house before the craziness of the new school year started.  Can you imagine not having a list for any of these tasks or items?  Pure chaos!  Even with a list, I bet you still felt overwhelmed!  Studies have proven time and time again that lists help us reduce stress and dramatically increase the likelihood of getting the things done we want to accomplish.  With that being said, the significance of a list is no exception when it comes to your personal finances!

What’s in a Net Worth Statement?

One of the “cornerstone” documents we utilize with clients is a personal net worth statement.  Simply put, your personal net worth statement is an organized list of your assets and liabilities that helps you determine where you’re at, where you want to be, and things that can be done now and in the future to help you get there.  We start with the assets you own and break them out as cash accounts (checking/savings), investment accounts (after-tax brokerage accounts), retirement accounts (IRA, Roth IRA, 401k) and hard assets (real estate, automobiles, jewelry, art, etc.).  We then itemize any outstanding liabilities (mortgage, auto loans, student loans, credit cards, etc.) to see what your total debt load looks like.  When you take the difference between your assets and liabilities, we arrive at your net worth. 

How Can my Net Worth Statement Help?

It’s truly amazing how powerful such a simple, working document can be and how big of an impact it can have in a client’s life.  We track your net worth statement each and every year to look at the progress you’ve made and help us identify certain areas that need attention.  For example, we may notice that 100% of the assets you’ve earmarked for retirement are held within your Traditional 401k.  With 10 years prior to retirement, we may recommend that you start saving additional dollars into an after-tax brokerage account that will be used to help fund your retirement goals so the money isn’t taxed as heavily when withdrawn.  This is just one example of many that we can identify by reviewing your personal net worth statement each year together. 

If you have never taken the time to make even a rough draft of your own personal net worth statement, I would highly encourage you to do so.  I think many of us are hesitant to do this because deep down, we know we won’t like what we’ll see.  Even if this is true, how can you make a change if you don’t start somewhere?  A personal net worth statement is, in my opinion, one of your most important “lists” you will make and is a document everyone should have.  Don’t hesitate to reach out to us if we can help you get started or analyze your own net worth statement!

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.

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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 and not necessarily those of Raymond James. Investing involves risk and investors may incur a profit or a loss regardless of strategy selected. You should discuss any tax matters with the appropriate professional.

Why Investors Get Serious at Age 40

Contributed by: Timothy Wyman, CFP®, JD

In my experience, folks tend to get “serious” about financial planning when they near age 40. The earlier you start the better, but when you near the age of 40, you may have a variety of financial issues (sometimes disguised as challenges) you are dealing with.   For the 40+ crowd retirement is no longer simply an event that is way out in the distance.  It’s time to put pencil to paper, take stock of where you are financially today, and make real plans for ultimate financial independence.

4 Steps to Getting Started at 40

During a recent consultation a new client simply needed some guidance on where to prioritize savings.  Fortunately, they had both the desire and cash flow to start feeding the retirement nest egg. Even with the ability to save, the options available can be somewhat overwhelming.  If you find yourself in a similar situation – here are 4 ideas that might help:

1. Make maximum contributions to employer sponsored retirement plans such as 401k or 403b plans.  Under current law, you are able to contribute up to $18,000 per year to said plans.  For those over the age of 50, an additional $6,000 may be contributed.  The idea is that most people are in a higher marginal tax bracket during their working years than in retirement and these plans can provide tax leverage in addition to tax deferred growth of any earnings.

2. Make use of ROTH IRAs if eligible.  Higher income earners (singles earning over $116,000 and married/filing jointly over $183,000) may not be able to make an annual contribution to a ROTH IRA. However, we have assisted some people in making “Back Door Roth IRA” contributions.  Not only is the name cool – it can add a real punch to tax free income. We’d enjoy discussing if this is a potential strategy for you.

3. Consider Taxable Brokerage Accounts. While the contributions or deposits are not tax favored, having after tax investments can provide great flexibility, especially if you are considering retirement before age 59.5.

4. Look at tax deferred annuities and life insurance.  For some higher earners using either of these tax-favored vehicles may provide additional savings opportunities.  Generally, the first three vehicles mentioned above should be utilized first.

We are here to help you prioritize and make the best use of each and every dollar. Give us a call today.

Timothy Wyman, CFP®, JD is the Managing Partner and Financial Planner at Center for Financial Planning, Inc. and is a contributor to national media and publications such as Forbes and The Wall Street Journal and has appeared on Good Morning America Weekend Edition and WDIV Channel 4. A leader in his profession, Tim served on the National Board of Directors for the 28,000 member Financial Planning Association™ (FPA®), mentored many CFP® practitioners and is a frequent speaker to organizations and businesses on various financial planning topics.

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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 Center for Financial Planning, Inc. 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. Investments mentioned may not be suitable for all investors. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals are permitted.

Family and Finances: How to Help Aging Parents Stay in Control

Contributed by: Sandra Adams, CFP®

I recently attended my daughter’s college orientation.  During one of the presentations to parents, the speaker said something that struck a chord with me:

“As hard as it may be, it is time for you as parents to let go of the reigns and give your children control of their own lives. Let them take care of things for themselves and make their own decisions. This may mean that they make some mistakes, but this is the time for them to learn.” 

Wow!  Did that hit home!  How hard is it as a parent to let go and let your child start doing things for themselves when you have been doing things for them for the last 17 – 18 years?  But isn’t this what your child has been waiting for?  To be an adult and to have control over his or her own life?  Isn’t that what we all wait for?

Why Control Matters at Any Age

As I sat and thought about the issue of control a bit more, I began to think about the older adult clients that I work with and about how hard they fight to keep control over their lives as they age.  I thought about the adult children of those clients who often feel as if, at some point, they may have to take away that control if the older adult losses the capacity to maintain control for themselves.  It can be particularly stressful for adult children to be put in a situation of needing to take over “control” for their aging parents without having a clear idea of their parents’ desires for their lives as they age.  So, what can be done to avoid this potential situation?

• Have open and honest conversations about the older adult’s plans for their future aging life; this may include a family meeting (tips here on having your own) that is led by your financial planner to include conversations about financial assets and how longer term care planning and future housing options might be funded.

• Make sure that all of the proper estate planning documents are up-to-date and that they are accessible (consider keeping copies on file with your financial planner’s office, as well).  Particularly important are Durable Power of Attorney Documents for General/Financial and Health Care/Patient Advocate.

• Ensure that all wishes and plans for the future are documented in writing.  Also make sure to have your financial affairs organized and documented.  Our Personal Financial Record Keeping System & Letter of Last Instruction is one helpful tool you can use.

Control is something we all want to have over our own lives … and something we fight to keep.  As parents of young adults, we struggle to let go of the control for fear that our children might take a few falls.  At the same time, we might be struggling with the thought of having to take control from aging parents who might be struggling with capacity issues as they age.  But, if you’ve planned ahead and helped your parents communicate their wishes, you won’t have taken their control from them at all. Instead, you will be assisting them in carrying out their own well-designed future.

Sandra Adams, CFP® is a Partner and Financial Planner at Center for Financial Planning, Inc. Sandy specializes in Elder Care Financial Planning and is a frequent speaker on related topics. In 2012-2014 Sandy has been named to the Five Star Wealth Managers list in Detroit Hour magazine. In addition to her frequent contributions to Money Centered, she is regularly quoted in national media publications such as The Wall Street Journal, Research Magazine and Journal of Financial Planning.

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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 Sandy Adams, 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 legal matters with the appropriate professional.

3 Things a Widow can do to Gain Financial Control

Contributed by: Sandra Adams, CFP®

Typical of most couples, my clients “Mike and Sue” split the household chores evenly.  She handled the house – decorating, cleaning, meals, etc.  He handled the cars, and the finances, including paying the bills.  He was a retired engineer – he loved cars and he loved numbers and details.  She hated all of that numbers stuff – so much so that for the most part she didn’t even attend annual meetings with their financial advisor -- until the last few years that I offered to go out to their home to meet so she would be involved in the annual meeting. I felt like it was important that Sue at least have a basic understanding of what was going on.

Mike was killed unexpectedly in a car accident; a man taken way too young in his mid-70’s.   Sue was taken completely by surprise and was unprepared, as most of us are, to be alone.  Her children live nearby, so that was comforting.  From a financial perspective, she was at least knowledgeable about what she had to work with and knew who to call, and we were able to speak immediately.

In the coming months, Sue gave herself time, as we recommended, not to make any big decisions; to find her new normal without Mike.  This involved figuring out what her new cash flow looked like; she got rid of some services and added some others, etc.  Sue also worked her way through Mike’s bill paying system.  It was very detail oriented and complicated – way too rigorous for her tastes.  But she felt, somehow, like she needed to stick to his system because it had always worked for them.  My advice to Sue (and to any widow) as they take control of their own financial affairs after the death of a loved one is this:

1. Take the time to figure out what your new normal is and what changes can be made to fit your new lifestyle;

2. Use a system that makes things easy for you, don’t stick to a system that makes you crazy just because it’s the one that your deceased spouse used for years;

3. Use your financial advisor as a partner/coach to help guide you through the process as you take control of your financial life.  If this is new to you, it could take a year or two for you to feel comfortable with the process.  And that’s okay.

Becoming a widow at any age is challenging enough, without facing the additional hurdles of handling things you weren’t responsible for in the past.  Use your resources and give yourself permission to design your financial life to fit your new normal. 

Sandra Adams, CFP® is a Partner and Financial Planner at Center for Financial Planning, Inc. Sandy specializes in Elder Care Financial Planning and is a frequent speaker on related topics. In 2012-2014 Sandy has been named to the Five Star Wealth Managers list in Detroit Hour magazine. In addition to her frequent contributions to Money Centered, she is regularly quoted in national media publications such as The Wall Street Journal, Research Magazine and Journal of Financial Planning.

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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 Sandy Adams, CFP® and not necessarily those of Raymond James.

Playing Catch-Up with Retirement Planning

Contributed by: Matt Trujillo, CFP®

What happens if you don’t start saving for retirement in your 20s or 30s? Recently I’ve had a few initial meetings with potential clients who have, for various reasons, had to delay their retirement planning until later in life (i.e. late 40s to mid-50s).  In many cases I heard things like, “Will I ever retire?” and, “Should I even bother trying?” I tell them: Where there’s a will there’s a way.

Here are 4 things you should be doing if you are trying to play catch-up with retirement planning.

1. Save a lot of money: This almost goes without saying.  If you have nothing or very little saved for retirement, then you are likely going to need to save at least 20-25% of your income to catch up, depending on your time horizon before retirement. 

2. Consider taking more risk than your peers: Typically people in their mid-50s who have been saving for retirement for many years, don’t need to take significant risks in their portfolio to meet their retirement income goals. Often times a balanced 60% stock and 40% bond portfolio can generate sufficient risk adjusted returns. However, if your nest egg is small, then you may not have the luxury of having this type of portfolio. If you’re playing catch-up, you may consider allocating more of your capital to diversified stocks.

3. Get a handle on cash flow: Nobody likes budgeting, but if you are going to save the percentage of income necessary to catch up, then you will need to have a good base level of understanding of where your money is going on a monthly basis.

4. Put a plan in place: Get a written financial plan so you know what you need to be doing to get on the right track! Also, consider working with someone who will keep you accountable in terms of saving money.

These recent conversations with clients have ended with a reassuring message from me: Don’t lose heart! Everyone has to start somewhere!

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.

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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 Matt Trujillo, CFP® and not necessarily those of Raymond James. Investing involves risk and investors may incur a profit or a loss regardless of strategy selected. Prior to making an investment decision, please consult with your financial advisor about your individual situation.