financial planning

3 Financial Planning Steps

Organization, efficiency and discipline can be considered as three primary steps of financial planning. Organization is knowing where your money comes and goes. An efficient portfolio means working towards a better chance of profits, and discipline can help keep you on the right track. Statistics tell us that the average credit card debt per person – including all people who pay off their cards each month – is over $5,500. Many folks struggle to handle the big picture of their personal financial world. If you are one of these folks, you can learn what the steps of financial planning are and even get started today, either on your own, using resources on the Internet, or by hiring a financial professional. An important first step of financial planning is organization. You can work towards your financial goals in life by organizing your finances and understanding money flows, both inflows (like your paycheck) and outflows (bills). If your financial life isn’t terribly complicated, an Excel spreadsheet may suit your needs perfectly. However, using something a little more sophisticated, such as Mint, Quicken or other online budgeting tools may become necessary, as you and your financial life continue to evolve. There are a million ways to approach organization, but the “how?” may be nowhere near as important as “when?” In some cases, the answer to when you should start organizing is now. Whatever method you choose, once you set up the system you can enter historic information as far back as 12 months (if you have it). This may require digging out the old bank, investment and credit card statements. It may not be as intimidating as it sounds. In today’s connected world,

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estate planning

12 Estate Planning Must-Dos

Many of you already have estate documents, probably executed many years ago. You need an estate attorney to look over your documents every 10 years or so. Here are a dozen points to review. Do you have a will and powers of attorney for health care and property? These are part of every complete estate plan. With health-care power, you choose an agent to act on your behalf if you become unable to make your own decisions. With durable power for property, you select an agent to act if you are incapacitated and can’t sign a tax return, make investment decisions, make gifts or handle other financial matters. Make sure your health-care power addresses the Health Insurance Portability and Accountability Act. This governs what medical information doctors can release to someone other than the patient. Do you need to change any beneficiaries, executors, trustees, guardians or others named in your documents? Are all still living? Can someone you recently found fill a role better? Any updates needed to addendums to your will that specify who gets what of your personal property? Often I read wills that mention addendums for personal property and the addendums don’t even exist. Did you move to a different state since the execution of your estate documents? If so, seek out a local estate attorney to check any legal differences for planning between your old and new states. Do you still need your trust documents or can you decant, which allows you to change some provisions? Consider this technique of emptying the contents of an irrevocable trust into another newly created trust if you are unhappy with your irrevocable trust. Not all states allow decanting. You

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Traditional vs. Hybrid Long-Term Care Insurance: Which is Appropriate for You?

Growing old is simply one thing you can’t avoid. The goal is to enjoy your retirement years as you imagined after a lifetime of working. One aspect of growing old that young people may overlook is long-term care insurance and how expensive it can be if you need it and don’t plan for it. According to, long-term care expenses can run upwards of $9,000 per month. When you are young, the prospect of declining health 30+ years down the road isn’t at the forefront of your mind. However, it can’t be overstated how critical it is to be prepared for the possibility that you may need care later in life. For those that see a benefit to investing in a long-term care insurance policy, one question you may have is which type of policy to choose – hybrid or traditional? What is long-term care insurance? Long-term care insurance is typically used for expenses that Social Security generally doesn’t cover; for example, home health care, assisted living facilities, and nursing homes. Social Security provides retirement, disability, and survivor benefits instead of long-term care costs. What is the difference between traditional and hybrid long-term care insurance? Traditional long-term care insurance (use it or lose it) – Traditional long-term care is a stand-alone policy where you pay regular premiums over time. Should you need long-term care, the policy will pay for covered services up to a limit. If you don’t ever need care, the money you paid toward the premiums, much like homeowner’s insurance, are not returned to you or your heirs. Hybrid long-term care insurance – Hybrid long-term care is what sounds like, a combination of long-term care insurance with life

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A Fall Financial Checklist

For many, autumn is the best time of year. The return of cool breezes, comforting foods, and pumpkins can be invigorating. It’s also a bookmark of sorts, especially for your finances—a perfect time to take stock of your spending after the summer’s over to see what lies ahead. These tips can help you make simple, sensible choices and take action to make the most of your money, from your food choices to your financial options to protecting your most valuable assets. Bask in the Bounty Autumn is all about fresh food, and you can get more bang for your buck with these tips. Fall Fruits & Veggies: This one’s all about supply and demand: you can usually get good prices on in-season fruits and veggies because they’re so plentiful. So stock up on autumn produce like apples, beets, pomegranates, squashes, and sweet potatoes, to name a few. They’ll be bursting with flavor and health benefits—especially at the local farmers market—without busting your budget. Store Up Soup: Speaking of fresh vegetables, they go really well in soup, another fall favorite—making it easier for you to maximize the produce you buy. A bonus for your bottom line: soup also freezes quite well. It can last up to three months frozen, so you can make one large pot of it and feed your family for weeks. Focus on Financials It’s been said that planning is bringing the future into the present so you can do something about it now, and that’s especially true when it comes to your end-of-year finances. Work Benefits: Company benefits often begin on January 1, so pay close attention to your company’s open enrollment period to determine the best

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5 Tips for Navigating Medicare in Retirement

One of the main concerns about retirement is health care. As healthcare costs continue to rise, medical bills may quickly derail your retirement plan. The good news is when you turn 65, you will be able to apply for Medicare, which provides you with coverage for some of the larger bills you may face during your retirement. Though navigating Medicare is a little tricky, the following tips can make the process less daunting. 1. Watch Your Dates There are deadlines for Medicare. The first is the Initial Enrollment Period. If you sign up during this time, you can avoid a significant amount of hassle. This enrollment period starts three months before you turn 65 and extends until three months after. Failing to sign up on time may result in up to $6,500 more in premiums over 20 years. This occurs because you may be assessed a 10 percent penalty for each year that passes without enrollment.1 2. Find the Correct Doctor A change in insurance may mean you need to change physicians. Providers have the option of accepting the Medicare program in different ways or not accepting it at all. If your doctor is a participating provider, they agree to the Medicare fee and will take that as the entire covered portion, which means you will likely only be responsible for 20%. If your doctor is a non-participating provider, they will accept Medicare as a form of payment but may charge you up to 15% more, which you will have to pay out of pocket.1 You may also want to consider switching to a doctor that specializes in geriatrics so that they have more experience in issues that you may encounter as

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Figuring Out a 401(k) Strategy That Works for You

Matching your tolerance for risk with your investment objectives   Everyone wants a comfortable retirement, but the road you take there will depend on your specific situation. When you invest, you assume a certain level of risk (but like everyone you’re hoping that your holdings will increase in value). One of the most challenging aspects of investing involves matching your tolerance for risk with your investment objectives. Beyond Your 401(k) Have you taken the time to really project the amount of money you may need in retirement? While setting aside a percentage of your income in a 401(k) is an important step, chances are you will need more than current limitations may allow you to save. Most people supplement their employer-sponsored retirement benefits and Social Security income with personal investments. In order to develop a fitting plan, you need to have your goals in sight. In 2022, your elective deferral (contribution) limit for your 401(k) is $20,500. If you’re age 50 or older, you may save an additional $6,500. While the contribution often rises in upcoming years and your employer may match contributions above this limit, will your employer-sponsored plan allow you to save enough? Cast your net as far as possible—can you contribute to your 401(k) and afford to invest in other opportunities? Increasing your savings rate now may help you later. Asset Allocation and Diversification Are you an aggressive, moderate, or conservative investor? Your answer probably depends in large part on your stage in life and your financial resources, and will most likely change over time. Aggressive investors tend to have a longer time frame—as many as 35 years or more to save and invest until they reach

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back to school

Reading, Writing, and Education Planning

The earlier you start saving, the easier it will be to send your kids to college   The month of August is when many parents are preparing to send children back to school this fall. While the checklists grow and the kids soak in the last few minutes of summer break, it’s important to remember college planning and back-to-school shopping. While getting an education can be difficult at times, paying for it can feel like climbing up an unending hill. More and more adults are going back to school, so this doesn’t just apply to kids. According to the U.S. Census, in the 40+ years since 1980, college costs have increased by 169% – while earnings for workers between the ages of 22 and 27 have increased by just 19%. Rising Costs of College Today, the average cost for college – which includes tuition, room and board, and supplies – is $54,800 for private colleges and $27,330 for public in-state colleges (that rises to $44,150 for public out-of-state students). Planning ahead for your children’s education can alleviate the burden on your family when you or your student must write a check or take out an education loan. College Savings Plans College savings plans offer many great benefits. For example, some taxpayers are eligible for a state income tax credit of up to 20% of contributions to a 529 account, which can add up to thousands of dollar per year. With a 529 plan, you put away money that grows tax-free, as long as you use it on education. These types of savings accounts are also very flexible. Just because a student has a 529 account set up in Kansas, doesn’t

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Six Keys to More Successful Investing

A successful investor maximizes gain and minimizes loss. Though there can be no guarantee that any investment strategy will be successful and all investing involves risk, including the possible loss of principal, here are six basic principles that may help you invest more successfully. Long-term compounding can help your nest egg grow It’s the “rolling snowball” effect. Put simply, compounding pays you earnings on your reinvested earnings. The longer you leave your money at work for you, the more exciting the numbers get. For example, imagine an investment of $10,000 at an annual rate of return of 8 percent. In 20 years, assuming no withdrawals, your $10,000 investment would grow to $46,610. In 25 years, it would grow to $68,485, a 47 percent gain over the 20-year figure. After 30 years, your account would total $100,627. (Of course, this is a hypothetical example that does not reflect the performance of any specific investment.) This simple example also assumes that no taxes are paid along the way, so all money stays invested. That would be the case in a tax-deferred individual retirement account or qualified retirement plan. The compounded earnings of deferred tax dollars are the main reason experts recommend fully funding all tax-advantaged retirement accounts and plans available to you. While you should review your portfolio on a regular basis, the point is that money left alone in an investment offers the potential of a significant return over time. With time on your side, you don’t have to go for investment “home runs” in order to be successful. Endure short-term pain for long-term gain Riding out market volatility sounds simple, doesn’t it? But what if you’ve invested $10,000 in the

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5 Compelling Reasons to Rethink Social Security

Relying extensively on social security may not meet your retirement needs   When it comes to planning for retirement, Social Security benefits have traditionally been viewed as a safety net for many individuals. However, in recent years, there has been growing concern about the long-term viability and sustainability of the Social Security system. As a result, it is becoming increasingly important for individuals to reconsider relying solely on Social Security benefits as a retirement plan. Here are five compelling reasons why you should not solely depend on Social Security as part of your retirement plan. Uncertain Future One of the key reasons to be cautious about relying heavily on Social Security benefits is the uncertainty surrounding the future of the program. The Social Security Administration has projected that the trust funds supporting the system will be depleted by 2034. While this doesn’t mean that Social Security will disappear entirely, it does suggest that future benefits may be significantly reduced. Depending solely on a benefit that might be subject to cuts or modifications is a risky proposition. Demographic Challenges The aging population is placing immense strain on the Social Security system. As baby boomers retire and life expectancy continues to rise, there is an increasing number of retirees relative to the number of workers paying into the system. This demographic shift is expected to result in a decline in the worker-to-beneficiary ratio, potentially leading to reduced benefits in the future. Relying solely on Social Security benefits means exposing yourself to the risk of diminished financial support in retirement. Inadequate Replacement Income Social Security benefits were never intended to replace one’s entire income in retirement. The formula used to calculate benefits replaces

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5 Tips for Saving and Investing as a Small-Business Owner

As a business owner, putting all your profits back into the business may be tempting, especially during the lean years. However, when it comes to saving and investing as a business owner, there are other paths you could consider for the long run without so much emphasis on the short term. Maintain Liquid Assets Everyone needs to have savings. For small business owners, savings are critical. Liquid assets may help you weather challenging times and make you a more attractive candidate for a loan. When times are tough, cash may help carry you through. Engage a Financial Professional You may assume you do not have enough money to make paying a financial professional a worthwhile investment. You may believe you cannot afford one. However, as a small business owner, you may benefit from getting help from a financial professional. A financial professional may help manage your tax burden and your operating expenses, with a focus on cash flow. Do Not Overinvest in Physical Space and Equipment It may be tempting to purchase or rent a storefront for your new business. However, it may help to avoid falling into the trap that hurts many business owners—the urge to quickly invest in a brand-new office, buy a company car, or otherwise overcommit to physical overhead as soon as the money starts coming in. By expanding at a more reasonable pace as your business growth demands, you may be able to maintain a more sustainable level of growth. Avoid Ultra-Risky Stocks Running a business is a gamble in and of itself, so adding a risky stock portfolio on top of this may expose you to extraordinary risk. Investing in individual stocks may be

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