Financial Planning

Submitted by Kate Hennessy on June 23, 2019

Probably not.

The reason is usually two-fold – you don’t have access to a retirement account (like 401Ks), or you don’t make it a priority. But, let’s be realistic – those that don’t make it a priority, may have other obligations like student loans, building a business and raising a family.

Here’s reality – a recent study found that the median retirement savings for Americans between age 55 and 64 was $107,000. This sum would only translate into $3,000 - $4,000 per year  in retirement - hardly enough to cover the cost of living. If you are reading this newsletter, you are likely doing better than the average American.  However, we still find many HENRYs (High Earners, Not Rich Yet) are not saving much beyond their 401Ks, so they are not on track to meet their retirement needs.

If you find yourself at a crossroads, here are three steps that you can do today to get yourself back on track:

Submitted by Susan Powers on June 23, 2019

Challenges exist for everyone saving for retirement, but we can take steps to make them less daunting.  By identifying the challenges specific to your situation, we can build them into your financial plan to avoid surprises.  While many of the challenges are the same for women and men investors, the majority of women will face some of the following challenges:

• Pay Gap and Time Away From Work – While improving, it still persists.  According a Pew Research Center analysis of median hourly earnings, women earned 85% of what men earned.  60% of caregivers are women, average age of 49 years old.  Caring for children, grandkids, aging parents magnifies the pay gap.
• Higher Heath Care Costs - In addition to simply more years of incurring medical expenses, as women live longer they are more likely to incur costs for Long-Term Care (LTC).  70% of nursing home residents are women, with average costs now exceeding $100,000 per AARP.
• Savings Need to Last Longer – Longer life expectancies mean savings will need to provide income for more years.  Your Social Security claiming strategy will significantly impact your total benefit if you live years longer.  You can start claiming at age 62 but you won’t collect the full benefit unless you wait until full retirement age (age 66-67).  Waiting until 70, increases your monthly income even further.

The good news is that women also have good financial habits that can address their financial challenges:

Submitted by Pat Cote on May 20, 2019

Everyone needs a financial plan, whether their situation is simple or complex.  Everyone has some goals for what they would like money to do for them, whether they are building up their wealth, maintaining it, giving it away or spending it in retirement.   There is still a good chance that you don’t have a financial plan in place, or if you do, it was a less-than-ideal plan put together by someone on commission to help sell their financial products.

There are three reasons why you need a good financial plan put together by a fiduciary and not a salesperson.  A good financial plan:

1. Helps you to think about your goals

What do you want to achieve for yourself and your family?  This often goes beyond money - it is a healthy exercise to take a step back and think about what is important to you.

Submitted by Kate Hennessy on April 18, 2019

As I get older, I’ve become more curious about Social Security.  I’m in my mid 40s and I have been paying into the system since high school. Hopefully, I’m 20+ years out from claiming benefits but  given how fast life goes by, it’s never too early to start thinking about and planning for Social Security. It’s a topic that many people shy away from, but in planning for your financial future, it’s an income stream that needs to be accounted for in a financial plan.

To kick off our series of articles on this topic, I am starting with 5 myths about Social Security:

Submitted by Kate Hennessy on March 19, 2019

Recently my husband, Pat Hennessy, and I were looking for something important - one thing led to another and the next thing we knew we were spring cleaning. We don’t consider ourselves pack rats, but when we started cleaning we realized we had tax returns dating back to 2002!  So, maybe we are pack rats? We both agreed it was time to organize and shred.  Let’s face it – life goes by fast –there are big milestones (moving, marriages, births, deaths), but there are also little events leading up to the big milestones. Getting your financial house organized isn’t a top priority for most people.

Pat and I found what we were looking for, but we learned a valuable lesson.  The importance of getting your “ducks in a row.” For me as a financial planner – it means the following:

Registered Investment Advisor vs. Broker - is there a difference and does it matter? Yes, it does!

How the professionals you hire are paid is an important question you should always ask. Let's see how they compare.

Know the difference! Work with a fiduciary, someone that puts your interests ahead of their own compensation.

Submitted by Pat Cote on February 17, 2019

Politics aside, it was tragic to hear that many government workers ran into trouble paying their bills when they did not have a paycheck for a month.  Unfortunately, this cash shortfall is not unusual, as a Federal Reserve survey last year showed that 40% of American adults would not be able to cover a $400 emergency expense or would do so by borrowing or selling something.

Although many HENRYs (High Earners, Not Rich Yet) make more than the maximum government salary of $140K per year and may have substantial 401(k) balances, even HENRYs can sometimes run into trouble if they have not put enough emergency cash aside.  In fact, one of the key pillars of a financial plan is to make sure that emergency cash is available if needed.

The rule of thumb for the right amount of emergency cash is anywhere from three to twelve months’ worth of expenses.  The more risk in your personal situation, the higher the amount of emergency cash needed.

Submitted by Kate Hennessy on January 14, 2019

Although I’ve been in the financial industry for 20 years, I made a few mistakes before I became a financial advisor.  Here’s a quick run-down of three and what I did to right the ship-

Submitted by Pat Cote on January 14, 2019

Many of us have New Year’s resolutions, as Susan talks about in her Financial Fitness article.  Once you have addressed the key elements of financial fitness, the next step is to get or keep your financial house in order.

The first step is to know your finances.  What do you have and what do you make/spend?  You can put in many hours and make a very detailed spreadsheet if you are so inclined.  We find about 1% of people actually want that level of detail.  For the rest of us, a top-down, simple approach works fine and is a lot easier to maintain.

Submitted by Susan Powers on January 14, 2019

Feeling the need to take control?  You’re not alone. 

• The average American household owes $16,425 in credit card debt, which is an increase of 10% since 2013
• The Average Student Loan Debt is almost $48,000
• Only 32% of Americans maintain a household budget
• 56% of millennials don’t have any money saved in a retirement account
• 39% of both Baby Boomers and Gen-Xers have nothing put away for their golden years

Don’t panic, let’s define a few achievable goals to get 2019 off to a great start.

3 steps you should take now:

1.  Payoff debt

2.  Spend less by saving first

3. Utilize tax-efficient savings and withdrawal strategies