Are YOU a Target in the Green Book?

Last week we heard from many experts who believe it may be time to dump the 401(k).

Two weeks ago we discovered that many experts, like retirement guru and CPA, Ed Slott and former US Comptroller General David M. Walker, believe income taxes are going up – I even conducted my first-ever webinar on how you might be able to plan for an income tax-free retirement.

(You can access a recorded version here.  Be aware: There’s a lot of information, so it lasts about an hour).

This week, I want to tell you about the Green Book.   The Green Book is what the administration releases every year, detailing budget and tax proposals for the coming year.   The Obama Administration released their latest version in February, detailing their proposals for the fiscal year beginning this October.

Surprise:  Many of the Green Book retirement planning proposals are aimed at limiting taxpayer use of tax-advantaged qualified retirement plans and IRAs.

Maybe you’d like to view that recorded webinar, after all.

This proposal should cause some concern because many who have contributed to retirement plans throughout their working lifetime and hit the proposed “retirement savings cap” will lose the ability to make future contributions and lose matching contributions provided by an employer.

By the way, under the Green Book proposals, after-tax contributions to an IRA could not be converted to a Roth IRA.

As many experts recommended in the second video featured in last week’s post, the current system might be better replaced with an insured solution, taking market-risk off the table and potentially removing much of the legislative risk, as well.

What the Green Book proposals would do.

According to David Cordell, PhD, CFP®, CFA, CLU®, and Thomas Langdon, J.D., LL.M., CFA, writing for the Journal of Financial Planning, these are some of the key proposals:

  • Raise the capital gains rate from 20% to 28%
  • Treating gifts of appreciated property (this would include your investments) as realized gain, requiring the payment of capital gains tax
  • Reducing the estate and generation-skipping transfer tax exemptions from their current level of $5.43 million to $3.5 million with (ready?) no inflation indexing
  • Reducing the lifetime gift tax annual exclusion from $5.43 million to $1 million. Eliminating the IRC Sec. 1014 “step-to” basis provision and replacing it with a $100,000 per person exclusion at death – the “steps” can be down, as well as up.

How this might impact your planning:

The “insured solution” may be where much planning is headed.  The Green Book proposals might make life insurance policies designed for cash accumulation even more attractive than they already are, for both individuals and businesses.

The most significant changes in the Green Book include:

  • Eliminating “stretch” IRAs by requiring non-spouses to distribute inherited IRA funds within five years.
  • Depriving individuals with more than a specified amount in their retirement accounts from making contributions to retirement accounts – they’re currently projecting this figure to be about $3.4 million, which could be expected to produce an annual income of $119,000 before taxes with a comfortable margin of safety using a 3.5% withdrawal rate while allowing for inflation adjustments. The figure, however, could vary – the government will let you know.
  • Repealing the special exclusion for net unrealized appreciation for lump-sum distributions of employer securities from employer plans.
  • Requiring plans to expand eligibility requirements to include part-time employees who worked at least 500 hours per year in three consecutive years, and
  • Limiting Roth conversions to pre-tax dollars

[Source:  Journal of Financial Planning, May 2015]

If you missed my webinar, you might want to take a look now.  Grab a cup of coffee, a pad and pen – you’ll be taking notes – and see what you might be able to do to secure your future and remove, as much as possible, government intervention from the picture you have of your 30+ year retirement.

Jim

IS IT TIME TO RETHINK (Dump) THE 401(K)?

6a017c332c5ecb970b01a5116fb332970c-320wiMany Believe It Is…. including some well-known experts
Jim Lorenzen, CFP®, AIF®

In his book, The Retirement Miracle, Patrick Kelly writes about a man who had built-up a 401(k) balance of over $2 million over his career.  Then, on the brink of retirement, his world was shattered.  It was a September day in 2008.  He’d lost about 10% of his nest-egg in a single trading day.   By October 7th, he found his balance was down to $1.5 million!  By the time he reached his last day of work, his account was down to $1.2 million – actually about $1 million less than what it had been before all this happened.

And, just as an aside,  if that wasn’t bad enough, that $1.2 million had an embedded tax liability.  If this man was in the 30% combined federal and state tax brackets, $360,000 of that belonged to the state and federal government, leaving him with only $840,000 to retire on – and THAT’s only if taxes don’t go up while he’s in retirement.

Is the 401(k) really an answer to America’s growing retirement crisis?  After all, 401(k)-type plans are a little less than 40 years old in this country, created when most people were accumulating assets.  They haven’t been around long enough to see what happens when the ‘baby-boom bubble’ begins to drain them.

More than a few experts believe it’s time to shake things up, as you’ll see in this video (there’s a very brief ad in front – it’s quick).  There’s also another video (scroll down below this one) I think you’ll find very interesting.

A recent article by Wealth Management Systems, writing for the FPA noted the following:

“Recent research indicated that a third of retirement plan participants were “not at all familiar” or “not that familiar” with the investment options offered by their employer’s plan. The study went on to reveal that individuals who were familiar with their retirement plan investments were nearly twice as likely to save 10% or more of their annual income, compared with those who report having little-to-no knowledge about such investments. Understanding your investment options is essential when building a portfolio that matches your risk tolerance and time horizon. Generally speaking, the shorter your time horizon, the more conservative you may want your investments to be, while a longer time horizon may enable you to take on slightly more risk.”

Here’s another one I think you’ll find very interesting.

The 401k Failure

How familiar with their options are 401(k) investors? Not very, apparently. Many now believe it’s time to move from a stock market-based system to something that’s insurance-based. While this may not be the right path for everyone, it certainly appears it is for most, as the following clips from FrontLine, 60-Minutes, and others.

According to The Power of Zero, by David McKnight (with a forward by Ed Slott, a CPA and well-known retirement expert, and a back cover endorsement by David Walker, former Comptroller General of the United States), an insurance-based approach makes far more sense, particularly if properly designed. And, there are a number of advantages.

The  insurance-based approach to funding retirement you saw in the video clips, does seem to have it’s benefits.

Indexed Universal Life:  A Life Insurance Retirement Plan is one 401k Alternative.
• No contribution limits
• No Pre-59-1/2 withdrawal penalties AND no mandatory distributions
• Tax Free Income at retirement
• Zero Loss From Market Crashes – with annual reset locking-in gains!
• Tax Free to heirs
• Self-funding option in case of disability
• Protection from market loss – You never lose money

It also doesn’t create taxation of Social Security benefits, provides protection from lawsuits in many states,  has no minimum age or income requirement, avoids probate, and – this is a big one – provides accurate return figures, an issue I’ve discussed in other writings.

There’s a lot more to this,of course.  If you’d like to visit with me about this, you can schedule your introductory phone call with me so I can gather some preliminary information.  Just let me know you’re interested in discussing an alternative to your 401(k).

Jim

Did You Think Trusts Were Only for the Wealthy?

Jim Lorenzen, CFP®, AIF®

6a017c332c5ecb970b01a5116fb332970c-320wiWhen most people think about estate planning, they think about protecting assets from estate taxation.  But, most people aren’t worried about that liability.

You may be surprised to learn that the upper middle class, defined as clients with between $500,000 and $5 million in investable assets can also benefit from estate planning.    There are other issues, many never think about.

If you are concerned with any of the issues on this checklist below you may need an estate plan:

See if any of these are of concern to you:

  •        Do you have concerns about family members or beneficiaries that cannot manage their financial affairs?  In this case the estate plan can contain a trust to prevent these beneficiaries from squandering their inheritance, protect them from creditors, predators, lawsuits, and divorces.
  •        Are you recently divorced, or your spouse has recently died?
  •        Are you in a second (or later) marriage and/or have a blended family?
  •        Do you have a disabled child or beneficiary?  In this case the plan needs to be carefully structured to be sure that your disabled child or beneficiary continues to receive their crucial governmental benefits, because even a modest inheritance can cause loss of important benefits such as health care and housing.
  •        Do you have  a family or closely held business or hold  an interest in such a business?
  •        Do you want  to minimize the costs of administration of your estate (financial affairs) if you should become disabled or pass away unexpectedly?
  •        Do you want to leave money and things of value to people you care about?
  •        Are you looking to benefit charities or causes that matter to you?

It is possible to create an estate plan using trusts affordable for middle class families dealing with the issues mentioned above.  If these issues are of interest and you don’t have a written plan in place, I may be able to provide you some guidance and assistance.  Just call my office at 802-265-5416, extension #1.

Does Time REALLY Reduce Risk? Don’t bet on it.

You’ve seen this chart.  Advisors have been using it – or something like it – with clients and prospective clients for years.   It’s supposed to educate you.

It doesn’t.

Image_Rolling Period Returns_001

The chart is designed to address the issue of risk by showing that it’s time, not timing, that reduces risk for the investor.  After all, as you can see, a 50-50 stock and bond portfolio might go down 15% if held over one year; but, should expect a ‘downside’ risk of +5% if held twenty years.

While it may be true that the volatility of long-term outcomes may be reduced, it actually means little in the real world.

Patrick Kelly, in his book The Retirement Miracle, talks about the story of Tom who had been contributing to his 401(k) plan for years, riding the market ups and downs, and finally feeling good about the $2.5 million he’d accumulated in November, 2007 on his 64th birthday as he looked forward to retiring the following year.

On the day he planned to retire in November 2008, he walked into the office finding a lot of commotion.   During the next three days his $2.5 million was at $2.2 million.  By October 7th, it was down to $1.5 million – down about $1 million in 12 months.  His dreams of traveling with his wife had gone up in smoke.

The chart above didn’t let him know that when you’re one year away from retirement, you aren’t looking at the 20-year data anymore; it’s the one-year data that may be more relevant.

Now, obviously, the 2008 market meltdown was an extremely rare occurrence, and one arguably caused as much by (and that’s being generous) elected officials as anything Wall Street did; but, the lesson is no less worth learning:  Managing the downside becomes critical as time passes and we get closer to the time we begin to draw-down on assets.

‘Nuff said.

 

You can begin your planning here!   Let me know if I can help.

Jim

Guarantees Against Loss Not A Panacea… but maybe still valuable.

Jim Lorenzen, CFP®, AIF®

Active managers can’t beat their indexes consistently.   Who cares?

In twenty-four-plus years of helping people navigate financial waters, I can honestly say I have never had a single client who cared about beating an index – any index – except inflation.

Actually, our industry is at fault, as well.  Look at our quarterly or annual reports.  Performance is always measured against an index or some blend of indexes.  Industry custodians don’t get it, either.

 

The ONLY index that REALLY counts is long-term performance measured as progress toward your personal goals, measured in probabilities.  Probabilities, after all, are all we really have to work with since there are no guarantees in life.  Even our money isn’t guaranteed; it’s “backed by the full faith and credit of….”  

 

So, what approach offers the best chance of meeting your goals?  As you might guess, there is no one right answer.  The answer will depend on which approach is most appropriate for you.

 

Managing the downside

 

When active managers are chosen for a portion of a client’s portfolio, in most cases what the investor is really seeking are returns that outpace inflation while limiting downside risk.

Take a look at this purely hypothetical 10-year market environment.  You’ll see our hypothetical market begins and ends with 20-point gains.  There are six years of +20% and four years of -20%.

Image_Managing for Downside

Portfolio A begins with $500,000 and invests in that market.  To keep things simple for illustrating this concept, we’ll ignore expenses and taxes.  Those aside, you’ll note the average annual compound return and the ending value.  The numbers aren’t important except for comparison with the next chart.

 

IHere’s a hypothetical portfolio that’s been managed for downside risk.  Here our fictitious manager is very conservative, capturing only 80% of the upside of each up-market, and also very effective, capturing only 70% of the downside moves.  Despite the fact this manager never beat the market on up years, outperforming by limiting losses in down years lead to an overall outperformance.

 

It’s a made-up scenario, I know, but it does illustrate a concept:  Limiting the downside can be quite effective – maybe even more than trying to beat the market indexes and accepting big downside losses.

 

What if we eliminate the downside altogether? 

 

Insurance companies market their equity-indexed annuities and equity-indexed universal life products with this guarantee.  What if you could capture 100% of the upside up to a ‘cap’ of 12%, for example, and be guaranteed that you never lose money?  You’ve seen the commercials.

 

Here’s the same hypothetical market return, this time compared to the strategy that eliminates downside risk!  Wow!  Looks good!  Compare the ending values with our manager limiting losses in the prior example.  Now, even if you factor in expenses and inflation, it would still look pretty good.

Image_Eliminiating the Downside

But, does this method outperform in all markets?

 

In this third chart, I’ve created another hypothetical series of market returns starting at -10% and moving all the way up to +35% over ten years.  There are only two down years, yet despite that, this market return series outperformed the guaranteed return.  In fact, our downside guaranteed portfolio came in $477,000 BELOW the ‘market’ portfolio.

 

You could create a million market return sequences and come up with a million different variations.  The point is while these downside guarantees don’t necessarily mean you will make more money, they can provide a valuable ‘protected’ return.

Image_Protected Return

Again, who cares?  If the portfolio is advancing you to your goals, that should be all that counts.

 

But, how do you position these guaranteed products in your portfolio?   

 

What asset-class should they be assigned to?  Just because you may have participation with a stock index, do those assets get assigned to the stock portion of your allocation?   If not, why not?  And, how would you position them?

 

The answer might surprise you. 

 

Jim

Do YOU Know What Provisional Income Is?

6a017c332c5ecb970b019104599445970c-320wiIf your retirement is still ten years or more in the future, NOW is the time to get your ducks lined-up.  Don’t wait until you’re at the doorstep – and, here’s why:

You may think you’ll spend less in retirement – that’s what all the experts say – but, if you’ve been a disciplined saver and investor with a nice nest-egg, you’ll probably want to enjoy life!  You may travel!  But, even if you don’t, here’s what you need to know:

You’ll probably lose some deductions.

Four deductions typically lost are:

  •  Mortgage interest
  •  Dependent Children
  •  Retirement Plan  Contributions
  •  Charitable Gifts

For most retirees, that leaves them with the standard deduction and personal exemptions.  Currently, for a married couple filing jointly, the standard deduction is $12,600.  Personal exemptions for each are $4,000; so, that gives a couple a total of $20,600 in deductions they can take when they’re no longer itemizing.  Historically, these have been adjusted for inflation, so you can do the same as you estimate what they’ll be in retirement.

So, any income below that number won’t be taxed.  But, what if income is higher? – and it probably will be.

The IRS looks at Provisional Income.  And, here’s what’s counted:

  • 1/2 of Social Security income
  • Distributions from tax-deferred accounts (your retirement accounts)
  • 1099 interest from taxable accounts
  • Employment income
  • Rental income
  • Interest from municipal bonds

Did you notice?  Municipal bond interest, which is normally tax-free, is counted!

What’s the significance of provisional income?  The total determines how much of your Social Security benefit gets taxed!    Here are the brackets:

Married Couples

Single People % of Social Security Subject to Income Taxation
< $32K <$25K 0
$32 – $44K $25 -$34K 50
> $44K > 34K

85

Here’s the kicker:  These brackets were created by President Reagan and House Speaker “Tip” O’Neil back in the early 1980s in an effort to save Social Security.  But, just a swith the Alternative Minimum Tax (AMT), they made no provisions for inflation adjustment.

That means inflation alone may force many into the higher brackets by the time they retire… a land-mine you need to be aware of.

What does all this mean for your advance planning?  It means you need to understand two things:

  1. Asset allocation decisions – the arrangement of assets – shouldn’t be limited to simply choosing a risk-adjusted allocation of asset classes and picking investments.  Before that stage, you must arrange assets – well in advance of retirement – into the right tax buckets.
  2. You (your advisor) will need to do some “reverse engineering” to guard against your provisional income in retirement exceeding your standard deduction and personal exemptions.  Example:  if you plan to retire ten years from now, those deductions should total about $27,700, using a 3% inflation factor.  So, for planning purposes, we’ll want to arrange assets into the right tax buckets well in advance to keep provisional income below that number.

How you should approach this strategy depends on too many variables to go into here – but, it should be a component of an overall financial plan for your life.

If you’d like help, feel free to contact me – there’s information below.

Hope this helps!

Jim

What (Many) Life Insurance Agents Won’t Tell You.

Jim Lorenzen, CFP®, AIF®

6a017c332c5ecb970b017c37fc6922970b-320wiFirst, let me state up-front that I AM a big believer in the power of life insurance, especially when designed as a financial tool using an “investment-grade” company in order to execute a larger financial plan.  

The fact is life insurance can do things for you – while you’re alive – that no other financial vehicle can do.

And, although being licensed myself as a California independent agent, there are a few things anyone considering a life insurance purchase should remember:

  • Be wary of a packaged solution.  Participating whole life and Indexed Universal Life can be designed as a financial tool to meet retirement income needs*, but only as a component of a larger strategy, i.e., to supplement other income strategies.
  • Don’t believe beautiful illustrations.  Identifying an investment-grade insurance company means understanding the company’s own investment portfolio (this might be where an agent who is not only a certified financial planner, but also a Registered Investment Advisor, might come in handy).Before Executive Life of New York went under, they had over 50% of their portfolio invested in less than investment grade ‘junk’ bonds, despite the fact that in June 1987, the New York legislature had mandated that insurance companies licensed to business in that state were to limit their general portfolios to no more than a 20% allocation to such bonds.  Remember, there are no guarantees; there are only guarantors.[Source:  The New Insurance Investment Advisor, Ben G. Baldwin, McGraw-Hill 2002, p. 37.].  When screening companies for my clients, I like to see what the company promised ten years ago vs. what their clients are actually experiencing today.  Quality companies today generally create conservative projections, many using a 7% default rate.  I usually ask them to use 6.5%.  It’s not as pretty, I know; but, the probability of an unpleasant surprise drops dramatically.
  • Most of the well-known rating agencies we’re familiar with are actually paid by the insurance companies they rate.  Little wonder many insurance companies that failed during the big ‘melt-down’ actually had good ratings when they went under.While I do check all those agencies, my ‘go-to’ is Weiss, which receives no money from the insurance companies they rate; they’re paid by customers who access their ratings.  Like Consumer Reports, their supported by subscribers, not advertisers.Their ratings are called ‘safety ratings’ and they seem to be a little more stringent.  For example, according to the September 2002 Insurance Forum, of 1,221 life and health companies rated by Weiss, only 3.9% of companies made it into the ‘A’ category.  Compare that with the 54.9% rated ‘A’ by Standard and Poor’s.  At Moody’s, 90% of their list made it to ‘A’ that year.  A.M. Best gave ‘A’ to 56.3% of the companies they rated.  With Weiss, a B or B+ rating can still be regarded as a strong company.
  • Company strength is more than assets.  It’s about liabilities and the investment portfolio, too.Remember, insurance benefits, including claims and/or loans you may use for income, are paid from the general investment portfolio of the company – money that came from deposits required to provide pure insurance protection.  So your safety is as good as the safety of the insurance company’s investment portfolio.   Again, being able to understand the company’s investment portfolio – and history – is critical.

Hope this helps!

Jim

*  I’ll be conducting a webinar (my first) on this topic on April 22nd and 25th.  You’ll likely hear more about it next week.

**  Today, many quality companies are using 7% as their default for creating illustrations.  While I feel 7% can be considered a responsible, conservative figure, I personally like to use 6.5%.  It won’t look as rosy, I know; but, you have a higher probability of never facing an unpleasant surprise.

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Become an IFG client!  Don’t play phone-tag; schedule your 15-minute introductory phone call using this convenient scheduler!

Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER® professional and An Accredited Investment Fiduciary® serving private clients since 1991.   Jim is Founding Principal of The Independent Financial Group, a fee-only registered investment advisor with clients located across the U.S.. He is also licensed for insurance as an independent agent under California license 0C00742. IFG helps specializes in crafting wealth design strategies around life goals by using a proven planning process coupled with a cost-conscious objective and non-conflicted risk management philosophy.

The Independent Financial Group does not provide legal or tax advice and nothing contained herein should be construed as securities or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader. The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional.

Julie Andrews Turns 79! … and does it with a sense of humor.

6a017c332c5ecb970b01a5116fb332970c-320wi

James Lorenzen, CFP®, AIF®

This was sent to us by one of my wife’s friends;  I thought you might enjoy it.

To commemorate her 79th birthday , actress/vocalist, Julie Andrews made a special appearance at Manhattan ‘s Radio City Music Hall for a benefit. One of the musical numbers she performed was ‘My Favorite Things’ from the legendary movie‘Sound Of Music’.   Here are the lyrics she used:

(If you sing it, it’s even funnier.)

Botox and nose drops and needles for knitting,
Walkers and handrails and new dental fittings,
Bundles of magazines tied up in string,
These are a few of my favorite things.

Cadillacs and cataracts, hearing aids and glasses,
Polident and Fixodent and false teeth in glasses,
Pacemakers, golf carts and porches with swings,
These are a few of my favorite things.

When the pipes leak, When the bones creak,
When the knees go bad,
I simply remember my favorite things,
And then I don’t feel so bad.

Hot tea and crumpets and corn pads for bunions,
No spicy hot food or food cooked with onions,
Bathrobes and heating pads and hot meals they bring,
These are a few of my favorite things.

Back pain, confused brains and no need for sinnin’,
Thin bones and fractures and hair that is thinnin’,
And we won’t mention our short shrunken frames,
When we remember our favorite things.

When the joints ache, When the hips break,
When the eyes grow dim,,

Then I remember the great life I’ve had,

And then I don’t feel so bad.

(I’m told Ms. Andrews received a standing ovation from the crowd
that lasted over four minutes and repeated encores. )

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Become an IFG client!  Don’t play phone-tag; schedule your 15-minute introductory phone call using this convenient scheduler!

Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER® professional and An Accredited Investment Fiduciary® serving private clients since 1991.   Jim is Founding Principal of The Independent Financial Group, a fee-only registered investment advisor with clients located across the U.S.. He is also licensed for insurance as an independent agent under California license 0C00742. IFG helps specializes in crafting wealth design strategies around life goals by using a proven planning process coupled with a cost-conscious objective and non-conflicted risk management philosophy.

The Independent Financial Group does not provide legal or tax advice and nothing contained herein should be construed as securities or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader. The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional.

Adult Children Living at Home? Here are a few tips!

6a017c332c5ecb970b019aff2c523c970c-320wiWhen I grew up – I was an only child – there was my mom, my dad, and me.  When I graduated from college, I took my first job in central Illinois over 1,000 miles away from my parent’s home in Virginia.

I wasn’t unique.  In those days, no one I knew – or even heard about – remained living at home once schooling was completed.  Many even took summer jobs away from home.  The world has changed.

According to a study in 2010 by researchers at Columbia University using the U.S. Current Population Survey, 52.8% of 18- to 24-year-olds were living at home, up from 47.3% in 1970.  The study also showed that one-in-seven young adults is are entering their 20s with no pathway to financial and economic independence.1

One advantage of being an experienced (read: older) advisor is that, in many cases, I’ve actually lived many of the experiences I write about and help clients plan for:  Caring for aging parents with Alzheimer’s (ten years), dealing with wealth transfer issues, and caring for adult children – and their children, too – are all things I can talk about from first-hand experience.

Many of the lessons include the financial impact of doing – or failing to do –  the things that did, or could have, made a big difference in everyone’s lives.

For parents with live-in adult children,it can be trying; But, it can also be rewarding.  Part of you truly enjoys having a lot of family all together – and grandchildren add a lot of life to a home.  The flipside, of course, is that you know they need to learn independence; and, if there’s a free ride, there’s little incentive to leave the nest.

People dealing with special needs children face a myriad of other issues arise:  What happens to them financially if something happens to the family’s main provider?   Leaving a sizable death benefit may sound like enough; but, what if they can’t manage money?  How will they budget, pay bills, or hold a job if they can’t handle basic math?

While we’re lucky – in our family, it’s surprisingly harmonious – there can be friction from time to time in any home, especially when financial issues are involved.

Getting your financial ducks lined-Up.  Here are a few tips that help get the process moving in the right direction:

  • Track your expenditures.  You need to know where money is going.  It’s not that hard, really.  If you have even basic bookkeeping software, you can set-up spending categories.  Here’s an abbreviated example of what some categories might look like.  You’ll get the idea:
      • Home
        • Mortgage
        • Utilities
          • Water
          • Electricity
          • Trash pickup
      • Household
        • Food
        • Lawncare
      • Auto
        • Gas
        • Ser vice
        • Registration
        • Repairs
        • Insurance
      • Recreation
        • Dining out
        • Special Events
        • Vacation
        • Day-trips
      • Insurance
        • Homeowners
        • Life
        • Health, Disability, Long-term-care
      • Adult child’s name – share of out of pocket costs
        • Food
        • Food – special
        • Water
        • Electricity
        • (add others as they arise)

Begin with a basic category list, then add others as you need them.  Keeping receipts and entering them is easy.  The biggest problem is your own inertia.  If you’re used to not paying attention, it might be time to start.

  • Set-up your Accounts:  Household checking and a cash account for you and your spouse.
  • Paying their fair share.   If your adult child is working, s/he can share in the costs noted above; but, if not, they can still earn their way:
      • A job-search plan – with accountability meetings.  If s/he had a job, they’d have those meetings there, wouldn’t they?
      • Doing their share of household chores – no free ride.
  • Separate the individual costs. Is your live-at-home son or daughter a finicky eater? Do they demand certain foods or sundries that you would not buy otherwise?  See the ‘Food-Special’ category above.  If you’re making the purchase, they go into that account.  Otherwise, let them pay for those items themselves.   They may quit drinking gourmet coffees at ridiculous prices.

Like everything else in life, it’s better when there’s a plan and a process.  Once there’s a roadmap and process, everyone knows where they’re headed.

Enjoy

Jim

1Source: Columbia University, National Center for Children in Poverty, “A Profile of Disconnected Young Adults in 2010,” December 2010 (latest available).  Our thanks to Wealth Management Solutions, Inc., for this information.

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Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER® professional and An Accredited Investment Fiduciary® serving private clients since 1991.  Opinions expressed are those of the author and do not represent the opinions of IFG any IFG affiliate or associated entity.

The Independent Financial Group is a fee-only registered investment advisor with clients located across the U.S.  He is also licensed for insurance as an independent agent under California license 0C00742. Jim can be reached at 805.265.5416 or (from outside California) at 800.257.6659.

Interested in becoming an IFG client?  Why play phone-tag?  You can easily schedule your 15-minute introductory phone call!

The Independent Financial Group does not provide legal or tax advice and nothing contained herein should be construed as securities or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader. The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional.

News and Markets Make You Worry?

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Jim Lorenzen, CFP®, AIF®

When I first entered this business back in 1990, most people were watching financial tv shows – virtually all of which were covering mutual funds in those days.  It seemed everyone wanted to buy mutual funds!

In a way, it made sense.  In those days, the large baby-boom demographic bubble was largely made-up of people who were accumulating and in their peak earning years.  Now, however, the story is different.

Growth with some risk seemed okay.  Retirement was still a long ways off.  But, today, the story has changed.  Baby-boomers are getting closer to retirement and other issues are more important:  Security and predictability.

If those issues are important to you, you may enjoy reading our IFGi_Report_Let’s Review that may help put things in perspective for you.  Enjoy!

Jim

 

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Learn more about IFG here!

Become an IFG client!  Don’t play phone-tag; schedule your 15-minute introductory phone call using this convenient scheduler!

Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER® professional and An Accredited Investment Fiduciary® serving private clients since 1991.   Jim is Founding Principal of The Independent Financial Group, a fee-only registered investment advisor with clients located across the U.S.. He is also licensed for insurance as an independent agent under California license 0C00742. IFG helps specializes in crafting wealth design strategies around life goals by using a proven planning process coupled with a cost-conscious objective and non-conflicted risk management philosophy.

The Independent Financial Group does not provide legal or tax advice and nothing contained herein should be construed as securities or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader. The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional.