Author: Gene Gard

Categories
News News Feature

Five Habits of Successful Retirement Savers

Be a successful saver. (Photo: Annie Spratt | Unsplash)

A recent report indicated that a mere 46 percent of American households have savings in a retirement account. Of those who have saved, 6 percent reported having more than $100,000 in retirement savings, and only 9 percent have more than $500,000, indicating a significant retirement savings gap between the amount they say they need for retirement and the actual amount saved for many Americans. 

The good news is that successful retirement savers can teach us a lot about how to set aside money for the future. The following habits of successful savers can help you bridge the retirement savings gap.

1. They start saving early in life.

Successful retirement savers understand the importance of saving early and consistently throughout life. This practice allows them to maximize the benefits of compound interest over time because as investment gains accumulate, they increase an account’s balance and begin earning their own interest. Over the years, this cycle can lead to significant earnings. 

2. They gradually increase the amount they save. 

Successful retirement savers understand that gradually increasing the amount they save over time can have a significant impact on their assets, with a minimal impact on their current lifestyle. These savers often make an effort to increase the amount they contribute to their retirement accounts by 1 percent to 2 percent each year. Over time, small, regular increases such as these can have a big impact on your retirement savings, and you’re unlikely to even notice the difference in your net income. 

3. They prioritize saving for the future. 

Saving for the future requires focus and dedication. Successful savers often prioritize saving over paying for nonessential expenses. A great way to prioritize saving is by incorporating it as a line item on your budget. Just as you need to pay the electric bill each month, so should you save for the future.

4. They remain focused on the long term. 

Successful retirement savers understand the importance of taking a long-term approach, both with their investment allocation and their savings behavior. For example, they tend to establish a long-term investment allocation and stick with it rather than trying to time the market. 

In addition, successful savers typically avoid behaviors that could derail their savings goals, such as taking 401(k) loans or withdrawals before retirement. 

5. They save in multiple accounts. 

Successful savers often save in multiple accounts. For example, you may wish to start by saving enough in an emergency fund to cover three to six months of unexpected expenses. At the same time, be sure to contribute to your workplace retirement account. If you have additional funds available, make regular contributions to an IRA and a health savings account (HSA). Regularly contributing to multiple accounts can help maximize your savings over time. 

Gene Gard, CFA, CFP, CFT-I, is a Partner and Private Wealth Manager with Creative Planning. Creative Planning is one of the nation’s largest Registered Investment Advisory firms providing comprehensive wealth management services to ensure all elements of a client’s financial life are working together, including investments, taxes, estate planning, and risk management. For more information or to request a free, no-obligation consultation, visit CreativePlanning.com.

Categories
News News Feature

Long-term Care Insurance

What are your long-term healthcare goals? (Photo: Dominik Lange | Unsplash)

There is often debate among financial professionals about whether long-term care insurance (LTCI) is worth the expense. Some advisors argue having long-term care coverage in place is vital to protecting clients’ assets in retirement. Others believe it’s more cost effective to invest the money a client would have used on premiums into a diversified portfolio that can continue growing over time to cover future care expenses. The correct answer is “it depends.” When determining whether long-term care insurance is right for you, consider the following. 

What are your goals? 

• Do you hope to leave a financial legacy for your children or grandchildren after you pass away? If yes, an LTCI policy may help protect the assets in your estate. If no, your current assets may be enough to cover the cost of long-term care. 

• Do you hope to continue living in your home for the rest of your life, or do you wish to move to a senior living community? If you want to continue living in your own home, you may need LTCI to cover the cost of an in-home caregiver. If you plan to move to a senior living facility, the assets from the sale of your home may be enough to cover your housing and care expenses. 

• Do you have children or other family members who would take care of you should you become unable to take care of yourself, or would you prefer having a professional help with your daily living tasks?

What is your current financial situation?

Perhaps this question should be, “Do you have enough assets to cover the cost of long-term care without a policy in place?” Healthcare is one of the largest expenses faced by Americans in retirement. A 2021 study by Fidelity estimated the average retired couple, aged 65, would need approximately $300,000 in after-tax savings to cover healthcare expenses in retirement. And, according to the U.S. Department of Health and Human Services, 70 percent of adults who reach age 65 will require some type of long-term care as they grow older.

If you have enough available savings to use for long-term care expenses without derailing your other financial goals, an LTCI policy may not be necessary. On the other hand, if you or your loved ones would struggle to pay such a large expense, it might make sense to invest in LTCI. 

How old are you?

One of the most important considerations in determining whether or not LTCI makes sense is the age at which you purchase it. If you wait too long to implement coverage, you may not qualify. On the flip side, if you implement a policy too early, you may end up making premium payments for longer than necessary. 

Gene Gard, CFA, CFP, CFT-I, is a Partner and Private Wealth Manager with Creative Planning. Creative Planning is one of the nation’s largest Registered Investment Advisory firms providing comprehensive wealth management services to ensure all elements of a client’s financial life are working together, including investments, taxes, estate planning, and risk management. For more information or to request a free, no-obligation consultation, visit CreativePlanning.com.

Categories
News News Feature

Where to Retire?

Photo: Mehdi Mirzaie | Unsplash

One of the greatest freedoms of retirement is the ability to live wherever you want. But your choice can have a big impact on your lifestyle and budget, so it’s important to choose wisely. Here are six considerations as you decide on a locale. 

1. Cost of living

The amount you pay for daily living expenses can vary between different cities and states. By choosing a location with a more affordable cost of living, you may be able to do more in retirement, such as travel, pursue hobbies, and purchase a nicer home. Be sure to consider expenses beyond just housing, utilities, and transportation. You’ll also want to consider food and groceries, entertainment, and recreational activities. 

2. Healthcare availability

During early retirement years, you may not need to worry much about healthcare. However, as you age, it may become more likely that you need access to quality healthcare and, potentially, long-term care. Consider the quality and availability of healthcare and evaluate the availability of good doctors, hospitals, senior living facilities, and long-term care facilities. 

3. Taxes

The amount you pay in taxes can have a big impact on the lifestyle you’re able to afford, which is why it’s important to consider how much of your retirement income may go toward paying Uncle Sam. Evaluate the impact of the following taxes as you consider your retirement location:

• State income taxes: Different states impose different tax rates on retirement income. 

• State tax on Social Security benefits: There are nine states that tax Social Security benefits (Colorado, Connecticut, Kansas, Minnesota, Montana, New Mexico, Rhode Island, Utah, and Vermont). Regardless of where you live, up to 85 percent of your Social Security income may be subject to federal income tax. 

• Taxes on retirement plan distributions: Assets held in tax-deferred accounts, such as traditional IRAs and 401(k)s, are subject to federal ordinary income taxes when withdrawn in retirement. However, some states don’t tax these distributions, which can help lower your tax exposure.

• Pension income: Some states differentiate between public and private pensions and may tax only public pensions. Other states tax both, and some states tax neither. Again, the amount of state tax you pay on this retirement income source can have a big impact on your lifestyle. 

• Capital gains: Long-term capital gains are subject to more-favorable federal tax rates than ordinary income. However, many states don’t differentiate between earned income and capital gains, which means, depending on where you live, you may face significant tax liabilities on your investment income. 

• Estate taxes: In 2024, the federal government allows individuals to pass on up to $13.61 million without any federal estate tax ($27.22 million for married couples filing jointly). However, depending on where you live, your estate may be subject to state taxes. 

• Property taxes: Property tax rates vary significantly from state to state, and even between counties. Depending on which state you live in, you may be eligible for a property tax exemption (which can add up to big savings over time). 

4. Leisure activities 

How do you envision spending your free time once you retire? If you’re an avid golfer, it’s probably important to live in a location with ample golf courses and a moderate climate. If you hope to hit the slopes on a regular basis, mountains and snow are likely essential. While finding an affordable location is important, it’s just as vital that it meets your lifestyle needs. 

5. Climate

If you’ve ever felt the impact of seasonal affective disorder, you know how big an impact a location’s climate can have on your mental health. Once you’re retired, you may have fewer responsibilities to occupy your time, which can give you more freedom to enjoy the outdoors. Be sure to choose a location with a climate you enjoy. 

6. Family and friends

Some retirees choose to move closer to their kids and grandkids, while others prefer the social aspects of an active adult community. Choosing a location with an adequate amount of social interaction can help you avoid loneliness and isolation in your retirement years. 

Gene Gard, CFA, CFP, CFT-I, is a Partner and Private Wealth Manager with Creative Planning. Creative Planning is one of the nation’s largest Registered Investment Advisory firms providing comprehensive wealth management services to ensure all elements of a client’s financial life are working together. For more information or to request a free, no-obligation consultation, visit CreativePlanning.com.

Categories
News News Feature

Early Estate Planning

(Photo: Andre Hunter | Unsplash)

You may not feel like your child is fully grown when he or she leaves for college, but at age 18, your student is considered a legal adult. This means that, unless you complete some estate planning steps, you’ll no longer have the legal authority to remain informed about his or her medical records or financial assets.

Why does this matter? Consider the following situation. 

Your 18-year-old daughter, attending college out of state, is involved in a car accident. Her roommate calls you to let you know she’s in the hospital. You frantically call the hospital, asking for an update on her medical condition. Instead of reassuring you that she only suffered minor injuries, the hospital worker states they unfortunately cannot release any confidential medical information. You ask if you can make the drive to visit her and are told you’ll be turned away upon arrival at the hospital. 

You also learn that if your daughter becomes incapacitated for a period of time, you won’t have access to her financial accounts to pay any of her living expenses, such as rent or utility bills. 

Without certain legal documents in place, you’ll likely need to petition the court for the right to manage your daughter’s medical care and handle her financial matters. This situation only adds to the anxiety and frustration of an already stressful circumstance. 

Fortunately, an estate planning attorney can help you draft several documents that can prevent you from experiencing such a scenario. Three essential documents are as follows:

• HIPAA waiver — According to the provisions of the Health Insurance Portability and Accountability Act of 1996, hospital and healthcare providers can’t legally disclose an individual’s medical information to others without the patient’s consent. By signing a HIPAA waiver, your child can ensure you have access to his or her medical information in the event of an emergency. 

• Advanced medical directive — This document functions as a healthcare power of attorney, allowing you to make medical decisions for your child should he or she become incapacitated. This document also typically includes a living will, which specifies how your child would like you to handle end-of-life decisions. 

• Financial power of attorney — A financial power of attorney allows your child to designate you as an agent to manage his or her financial assets. With this document in place, you’ll be able to manage your child’s finances, including paying bills and filing taxes on their behalf. 

In addition to the three essential documents noted above, you may also want to consider executing the following:

• Financial Educational Rights and Privacy Act (FERPA) waiver — This allows you to have access to your child’s education records, such as transcripts, class schedules, etc. 

• Last will and testament — While college students typically have few assets (no home or car in their name, etc.), your child may want to designate who would receive important items, such as jewelry, collectibles, or pets, if they were to pass away. It can make sense to execute a will at the same time as the documents above so that your family is better prepared once your child graduates from college. 

Gene Gard, CFA, CFP, CFT-I, is a Partner and Private Wealth Manager with Creative Planning. Creative Planning is one of the nation’s largest Registered Investment Advisory firms providing comprehensive wealth management services to ensure all elements of a client’s financial life are working together, including investments, taxes, estate planning, and risk management. For more information or to request a free, no-obligation consultation, visit CreativePlanning.com.

Categories
News News Feature

Personal Financial Planning

Plant seeds for success. (Photo: Micheile Henderson | Unsplash)

Most people realize the importance of saving and investing for the future, but only 32 percent of Americans have a written financial plan in place to help them prioritize their goals and track their progress.

If you’ve been putting off establishing a financial plan, you may want to reconsider. Following are five ways a comprehensive financial plan can help improve your financial outlook.

1. A financial plan serves as a map to guide you toward achieving your financial goals.

One of the benefits of creating a personal financial plan is that it identifies and prioritizes your goals and objectives. Achieving major goals such as planning for retirement, paying for a child’s college education, making a large purchase, paying down debt, etc. requires focus and determination. A financial plan can guide your decision-making and coordinate the various elements of your financial life to help ensure they’re working together toward achieving your goals. 

2. A financial plan can help you feel more confident about your future. 

A study conducted by Charles Schwab indicated that 54 percent of people with a financial plan feel confident they’ll be able to reach their financial goals, yet only 18 percent of those without a plan have the same level of confidence.

Creating a comprehensive financial plan to guide your decision-making can be a big step toward helping you feel more confident and in control of your financial future. 

3. A financial plan can assist in protecting your family and managing your risk. 

A comprehensive financial plan not only helps you build wealth but can also help you protect it. If not properly planned for, risks such as a medical emergency, an accident, a lawsuit, or a natural disaster can quickly jeopardize everything you’ve worked so hard to accomplish. 

A thorough and well-designed financial plan will include personalized insurance and asset protection strategies to help protect your wealth and loved ones from unexpected risks. 

4. A financial plan can guide your investment strategy. 

Without a financial plan in place, it can be difficult to determine whether your investment strategy meets your ever-evolving needs and goals. Instead, a well-crafted plan recognizes that your investments play a crucial role in supporting you as you navigate the different stages of your financial life. 

By having a financial plan in place, you can implement long-term investment strategies that allow you to take advantage of opportunities during periods of volatility while also protecting your assets against loss during market downturns. 

5. A financial plan can assist you in leaving a financial legacy.

If your goals include leaving a financial legacy for the people and causes that matter most to you, it’s important to have a proper plan in place. Incorporating estate planning as part of your overall financial strategy can help ensure your assets are distributed according to your wishes and in the most tax-efficient manner possible. 

Your financial plan can also help you identify opportunities to support charitable causes both during your lifetime and after your death, such as through a donor-advised fund or charitable trust. 

Gene Gard, CFA, CFP, CFT-I, is a Partner and Private Wealth Manager with Creative Planning. Creative Planning is one of the nation’s largest Registered Investment Advisory firms providing comprehensive wealth management services to ensure all elements of a client’s financial life are working together, including investments, taxes, estate planning, and risk management. For more information or to request a free, no-obligation consultation, visit CreativePlanning.com.

Categories
News News Feature

Relax This Summer

Photo: Giulia Squillace | Unsplash

Summer is a time of afternoons by the pool, barbecues, and relaxation. It’s a chance to take a break from your usual routine and enjoy outdoor hobbies and time with loved ones. As important as it is to enjoy summer while you can, it’s equally important to stay financially focused and not lose sight of your financial goals. The following tips can help you remain financially on track throughout the summer months.

1. Automate your finances.

Need a break from constantly managing your finances? Give yourself some time to kick back and relax this summer by automating your accounts and investments. Here are a few ways to add automation to your financial routine so you can spend more time poolside.

• Set up automatic debits with your credit card company, loan servicer, utility companies, etc. This practice removes the stress of having to schedule payments each month. Just make it a point to regularly check in on your accounts and ensure the correct amounts have been debited.

• Set up bill pay with your bank. For any service providers that don’t offer automatic debits, consider setting up direct payments through your checking or savings account. It’s still easier than mailing a check each month.

• Automate your retirement plan contributions through payroll deferrals.

• Establish a direct transfer from your paycheck to your savings account.

2. Review your beneficiaries.

Checking this important task off your list can provide you with peace of mind this summer. Beneficiaries can quickly become outdated as your life evolves and your relationships change over time. That’s why it’s important to periodically review your beneficiaries on all accounts, investments, trusts, and other estate planning documents. Also, make sure the custodians you’ve designated to care for your children are still the people you wish to name and that your successor trustee remains relevant.

3. Rebalance your portfolio.

Use the change in seasons as a reminder to review your asset allocation and rebalance if necessary. Rebalancing to your original (or an updated) asset allocation helps lock in gains from top-performing sectors and ensure your portfolio remains in line with your investment objectives and risk tolerance. Contact your wealth manager for assistance.

4. Check in on your insurance.

Want to feel extra carefree this summer? Review your insurance policies to ensure you’re covered should something unexpected happen. Your wealth manager can help review your existing insurance policies and identify any gaps in coverage.

5. Plan for summer expenses.

Don’t let summertime expenses catch you off guard. Make a plan to cover the added costs of summer vacations, kids’ camps, childcare expenses for when the kids are out of school, etc. Having a plan in place allows you to comfortably spend a bit more without negatively impacting your other financial goals. If you have a dependent care FSA, this can be used to pay for summer day camps (in addition to daycare and preschool) in a pre-tax manner, assuming the expenses are allowing you to be gainfully employed or look for work.

6. Take steps to lower your taxes.

The midyear point is a great time to check in on your tax planning strategies. Your wealth manager can help you take advantage of tax-loss harvesting, asset location, charitable giving, and other strategies to help lower your annual tax liabilities.

Gene Gard, CFA, CFP, CFT-I, is a Partner and Private Wealth Manager with Creative Planning. Creative Planning is one of the nation’s largest Registered Investment Advisory firms providing comprehensive wealth management services to ensure all elements of a client’s financial life are working together, including investments, taxes, estate planning, and risk management. For more information or to request a free, no-obligation consultation, visit CreativePlanning.com.

Categories
News News Feature

How to Prepare for Retirement as a Stay-at-Home Spouse

Photo: Surface | Unsplash

A common misconception is that if you’re not working outside the home, you’re not eligible to save for retirement. In reality, a stay-at-home spouse can have a significant impact on a couple’s retirement savings. Here are six tips to help you prepare for retirement as a stay-at-home spouse.

1. Establish a financial plan.

Establishing a financial plan should be the first step you take toward establishing financial goals and a savings strategy.

A comprehensive financial plan is essential to growing your wealth, avoiding potential pitfalls, and remaining on track toward achieving your goals. A plan can help increase your level of confidence in making financial decisions and ensure your family will be provided for in unexpected circumstances.

2. Focus on paying off debt.

High-interest debt, such as credit card balances, can make a big impact on your ability to save for the future. Interest charges and late fees can add up and quickly result in debt becoming unmanageable, so it’s important to pay these balances off before taking steps to save.

Two effective strategies for paying off debt include the snowball method, which involves paying off your smallest debt balance as quickly as possible, or the avalanche method, in which you begin paying on whatever loan has the highest interest rate. Once that loan is paid off, you move on to the loan with the next-highest interest rate until all loans are paid off.

3. Establish an emergency fund.

Often, high-interest debt results from unexpected expenses you’re unable to cover from normal cash flow, such as a job loss, medical expenses, or an emergency home repair. In a household with a stay-at-home spouse and only one income, it’s important to have at least three to six months of living expenses saved in a short-term, liquid emergency fund that’s available to cover any unexpected expenses. Having immediate access to funds can help you avoid taking out high-interest debt or tapping into your retirement savings in an emergency.

4. Save in a spousal IRA.

Spousal IRAs are retirement savings vehicles specifically intended for non-working or part-time working spouses who would otherwise not have access to a qualified retirement account. A stay-at-home spouse may have the ability to contribute to a spousal IRA if he or she files a joint tax return with a spouse that has taxable compensation. Both traditional and Roth spousal IRAs are available, and the 2024 annual contribution limits are the same: $7,000 for those under age 50 and $8,000 for those age 50 and older.

5. Increase contributions to the working spouse’s 401k.

Although retirement accounts are held in individual spouses’ names, funds contributed during the marriage are considered marital assets, meaning they’re generally considered the property of both spouses. Given this, it’s beneficial for couples with a stay-at-home spouse to maximize contributions to the working spouse’s employer-sponsored retirement plan.

In 2024, individuals who haven’t yet reached age 50 can contribute up to $23,000, and those age 50 and older can make an additional $7,500 catch-up contribution for a total contribution of $30,500. At a minimum, it’s important to contribute at a rate that allows you to qualify for the full employer matching contribution.

If cash flow doesn’t allow you to contribute the maximum to start, consider raising your deferrals by 1 percent to 2 percent each year. You probably won’t even feel the impact on your take home pay, yet these small increases can make a big difference in the balance you accumulate over the long run.

6. Save in a taxable account.

Once you’ve saved the maximum in your 401k and spousal IRA, consider saving additional funds in a taxable brokerage account. While 401k and IRA assets have limitations on withdrawals prior to retirement, funds in a taxable brokerage account are accessible at any time. In addition, saving in a variety of retirement accounts with different tax treatment (e.g., taxable, tax-deferred and tax-free) provides you with maximum flexibility to structure a tax-efficient withdrawal strategy in retirement.

Gene Gard, CFA, CFP, CFT-I, is a Partner and Private Wealth Manager with Creative Planning. Creative Planning is one of the nation’s largest Registered Investment Advisory firms providing comprehensive wealth management services to ensure all elements of a client’s financial life are working together, including investments, taxes, estate planning, and risk management. For more information or to request a free, no-obligation consultation, visit CreativePlanning.com.

Categories
News News Feature

Getting Children Interested in Philanthropy

Encourage charitable giving. (Photo: Katt Yukawa | Unsplash)

Cultivating the virtue of charitable giving in your children is an endeavor that’s never too early to start. The following tips can help you pass along your philanthropic values to the next generation. 

1. Lead by example. 

One of the best ways to instill values in your children is by modeling them. Talk to your children about the causes you support with both your money and time. Don’t worry about bragging; instead, be honest about what you do and the impact your actions have on the lives of others. It’s important that your children know how much you do for others. 

2. Involve your children in charitable decisions. 

Make giving to charity a family event by involving your children in charitable decisions. If you have a budget for charitable donations, give your kids a say in how to allocate a portion of the funds. Websites such as Charities Aid Foundation and Charity Navigator can help you discover a wide range of charitable organizations that align with your children’s passions, values, and interests. 

3. Volunteer together. 

Once they’re older, your children can volunteer with you at organizations such as food pantries, animal shelters, churches, hospitals, etc. Volunteering alongside your kids can be a great way to get them excited about helping others. However, even younger children have an opportunity to help others. Consider taking your child to help a neighbor with a small job, such as raking leaves or shoveling a driveway. You can also encourage young children to “pay it forward” by doing something nice for someone else each time someone does something nice for them. 

4. Help your children develop their own charitable goals. 

Talk with your children about their values and what’s important to them, then find opportunities for them to make an impact. Maybe your son loves reading and wants to share his joy by starting a book drive. Or perhaps your daughter has dreams of someday becoming a veterinarian and would like to walk dogs at your local shelter. Your kids will be more motivated to support causes that are important to them. 

5. Encourage your children to donate their own money. 

One effective way to teach children the importance of giving to others is by implementing a “three-bucket” strategy. Consider offering your kids an age-appropriate allowance and teaching them to separate it into three categories — save, spend, and give. Not only does this practice teach your children that a portion of their money should be used to help others when possible but it also helps them learn the importance of saving for the future. 

Gene Gard, CFA, CFP, CFT-I, is a Partner and Private Wealth Manager with Creative Planning. Creative Planning is one of the nation’s largest Registered Investment Advisory firms providing comprehensive wealth management services to ensure all elements of a client’s financial life are working together, including investments, taxes, estate planning, and risk management. For more information or to request a free, no-obligation consultation, visit CreativePlanning.com.

Categories
News News Feature

Buying a Home?

Photo: Tierra Mallorca | Unsplash

In a seller’s market, buyers can end up getting the short end of the stick. Housing inventories have yet to revert to normal levels, and the demand is high for mid-price homes, often driving multiple offers on many properties. If a buyer is lucky enough to get an accepted offer, they still need to contend with the reality of higher interest rates taking a bite out of their household income (unless they’re an all-cash buyer).

So, what’s a buyer to do? Before you start looking at homes, you need to know three key numbers: what the bank will lend you, what you can afford, and what you’re willing to pay. It’s essential to understand the difference between these three numbers, or you might end up biting off more than you can chew.

1. What Will the Bank Lend You?

Unless you’re holding enough cash to buy a house outright, your first step is getting preapproved for a mortgage. This is especially important in a hot real estate market. When there are multiple offers on the table, sellers may reject offers outright that aren’t accompanied by a preapproval letter.

But don’t take the first mortgage deal you’re offered. Even if you have an existing relationship with your local credit union or community bank, it’s in your best interest to get at least one comparison quote before you sign on for a mortgage. A rate difference of as little as 0.25 percent can really add up over 30 years. While you can shop different lenders for the best terms and rates, a better option is to use a mortgage broker. They can save you time by shopping different lenders on your behalf.

Because brokers work with multiple lenders, they often have more flexibility in how they structure your loan. They can alter terms like cash down, interest rates, closing credits, and loan duration, which will likely result in a mortgage that better fits your financial needs.

2. What Can You Afford?

Unfortunately, regardless of which lender you work with, you can’t rely on them to tell you what you can afford. While they will tell you what they will lend you, that is by no means a bellwether for what you should spend because the calculation they perform is essentially a measure of risk, not a measure of cash flow.

Credit scores are used as an indicator of how much risk a lender assumes when they sell you a mortgage. Not only can a very low credit score impact your ability to get a mortgage, but it will also factor into the interest rate you’ll pay. The lower your score, the higher your interest rate will be. That translates into a larger mortgage payment overall.

3. What Are You Willing to Pay?

The last number you need to know is what you’re realistically willing to pay.

This number will change from property to property, depending on what features the home has and what projects you may have to take on. Understand that in a seller’s market, you’ll likely have to pay above list price, and you may have to pay above the property’s appraised value.

If you’re willing to pay more than the appraised value of the home, you’ll need more cash in the deal because your lender won’t cover the gap between the offer price and the appraised value with a mortgage.

This can put you in a sticky situation if you have little leftover cash to cover the unexpected expenses that inevitably come with home ownership.

Keep a Healthy Cash Reserve on Hand

Home buying is a stressful process, but owning a home without adequate cash reserves is a recipe for disaster. Regardless of the condition of the real estate market, it’s important to keep a healthy cash reserve on hand to handle emergency expenses without going into credit card debt.

It’s a tough market for buyers right now. But if you go into the home buying process armed with the appropriate information, you’ll be well positioned to make a strong offer on a property that meets your needs and budget. In the end, your perfect house is probably the one that allows you to sleep soundly in the short term and helps you build value over the long term.

Gene Gard, CFA, CFP, CFT-I, is a Partner and Private Wealth Manager with Creative Planning. Creative Planning is one of the nation’s largest Registered Investment Advisory firms providing comprehensive wealth management services to ensure all elements of a client’s financial life are working together, including investments, taxes, estate planning, and risk management. For more information or to request a free, no-obligation consultation, visit CreativePlanning.com.

Categories
News News Feature

Why Planning for Retirement Is About More Than Money

Photo: Anukrati Omar | Unsplash

As you plan for retirement, it’s important to focus on having enough assets to live the life you want. Money and assets are just tools we use to express personal values and highlight what we view as important.

In the years leading up to retirement (or at any stage of life), be sure to focus on the things that will bring you joy, meaning, and fulfillment throughout the next chapter of life.

Health

You may have scrimped, saved, and invested your entire adult life to prepare for retirement, but what does it matter if you’re not healthy enough to enjoy your golden years? As you plan for your financial future, don’t forget to take care of your physical health.

Not only can a healthy lifestyle lead to a more fulfilling retirement but it can also help lower your retirement healthcare expenses and free up more money for enjoyable experiences. As an added potential benefit, your fitness journey may even lead to new hobbies as you transition into your retirement years.

Friends

It can be difficult to transition from the workforce, where you’re constantly surrounded by people, to a relatively solitary life. Social isolation can lead to multiple emotional and health-related issues, including depression, anxiety, and dementia. Even if you have a spouse to keep you company, you may benefit from spending time with friends outside your home.

In the years leading up to retirement, it’s important to start developing friendships with others. Consider seeking companionship through common interests. Perhaps you enjoy golfing, volunteering, or painting. Make an effort to connect with other people you encounter in these settings, and work to build some friendships prior to retiring.

Hobbies

Speaking of interests, retirees often find fulfillment by participating in hobbies. Have you always wanted to take up golf? Write a book? Try your hand at pickleball? Learn to throw a ceramic pot? Retirement is the time to do it! Don’t be afraid to put yourself out there and try something new. As you begin to explore new hobbies, try lots of new things and experiences — but don’t be afraid to quit quickly and try something new!

Purpose

Few retirees are done pursuing their goals after they leave the workforce. In fact, those who are most satisfied in retirement continue to have a clear sense of purpose in their lives — a mission that guides their actions. While it’s important to relax and have fun in retirement, it’s also important to find a sense of purpose and continue finding meaning in your daily life.

You may find purpose by continuing to work in retirement. Or perhaps you’re driven to volunteer with an organization that’s near and dear to your heart. Maybe your purpose comes from spending time with loved ones, caring for relatives, or teaching your grandchildren special skills.

It can be helpful to write down your purpose and view each action through the lens of “does this help me move toward my purpose or away from it?” You might be surprised how many decisions you make out of inertia or neglect and not in pursuit of your purpose!

Gratitude

Practicing gratitude can have a big impact on both your physical and emotional health. The benefits of gratitude include:

• Lower stress

• Improved sleep

• Lower blood pressure

• A stronger immune system

• An improved ability to identify and regulate emotions

• Higher emotional intelligence

• More positive feelings

• Better connections with others

To find more fulfillment in retirement, make an effort to regularly reflect on the people and things you’re grateful for. Be grateful for small things, such as the sun shining on your face, as well as big things, like the birth of a new grandchild. Taking time to recognize and appreciate the things that bring you joy can lead to a happier and more fulfilling life at any stage in your journey.

Gene Gard, CFA, CFP, CFT-I, is a Partner and Private Wealth Manager with Creative Planning. Creative Planning is one of the nation’s largest Registered Investment Advisory firms providing comprehensive wealth management services to ensure all elements of a client’s financial life are working together, including investments, taxes, estate planning, and risk management. For more information or to request a free, no-obligation consultation, visit CreativePlanning.com.