Common Retirement Investment Mistakes

Only one-in-four Americans (27%) feel very confident that they will have enough money to live comfortably when they retire, according to the 2020 Retirement Confidence Survey Summary Report.⁠11 While the number is up slightly from the 2018 survey (23%), it underscores a pervasive sense of uncertainty among those approaching retirement age. While there is no single action that can boost the collective confidence of retirees, there are several key investment mistakes that, if avoided, can help maximize retirement savings and provide confidence to those who are entering their Golden Years. Pitfall #1: Failing to Maximize Your Contribution If you can afford to do so, contributing the maximum amount to your employer-sponsored retirement plan will increase the chances that you’ll reach your investment goal. The earlier you start, the better; it will allow your investments, and any potential earnings to grow on a tax-deferred basis. Pitfall #2: Failing to Develop a Concrete Plan Establishing clear goals that incorporate a time element (number of years until retirement) is necessary to create a relevant investment plan. Without such a plan, it is difficult to understand whether your savings will provide you with the living standard to which you’ve grown accustomed and for each year of your retirement. Pitfall #3: Short-Term Investment Mindset The stock market fluctuates; that’s a fact. And in the short-term they face a relatively high risk of price volatility. But in the long-term stocks have historically delivered relatively stable earnings. So selling off your holdings whenever the market takes a dip is a sure way to incur losses that impact your long-term goals. Pitfall #4: The Quest for Perfection Buying low and selling high is evergreen advice, but trying to

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Tax Identity Theft Awareness – Protecting Yourself from Tax Identity Theft

Tax identity theft is when someone steals your Social Security Number, files a tax return with your number, and directs a refund to their own bank account. In other cases, this type of identity theft may involve a scam artist calling on the phone, pretending to be a rep from the Internal Revenue Service (IRS), and demanding payment over the phone. To protect yourself, keep these tips in mind. Remember the IRS Doesn’t Make Surprise Phone Calls The IRS does call taxpayers, but these calls are never a surprise. By the time an IRS agent calls you about a delinquent tax bill, you should have received numerous notices and demands for payment in the mail. If you get a call that you weren’t expecting, the caller is likely a scam artist. Hang up and contact the IRS directly. Never make a payment over the phone. Be Aware of the Signs That Someone Has Filed a Return in Your Name There are several red flags that can indicate someone has fraudulently filed a tax return in your name, and they include the following: A letter from the IRS about a tax return you know you didn’t file A tax transcript that you didn’t request A notice that an online account has been created in your name A notification that your online account has been accessed or disabled when you know you didn’t take those actions A rejection notice saying you already filed when you try to file your return electronically IRS records indicating that you received wages or income from an employer you didn’t work for If you notice any of these red flags, you should also reach out to the IRS and

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The Importance of Financial Wellness

Financial wellness, like physical wellness, isn’t something you should ignore. Instead, it’s a critical concept for anyone who wants to be knowledgeable and confident about their finances, and in fact, financial wellness is so important that more than half1 of employers now offer financial wellness programs to their workers. So, what is financial wellness and why is it so important? Keep reading for an overview of this concept.  What Is Financial Wellness? Financial wellness refers to having a happy, healthy, and relatively stress-free relationship with your finances. Typically, people who have financial wellness have the following four elements in place: Their income covers their expenses and allows them to stay on top of their debt repayments. They have savings for emergencies or financial upsets such as critical home repairs, unexpected medical bills, or job loss. They are saving and working toward long-term financial goals. They have the freedom to make choices that allow them to enjoy their lives.  Which Factors Determine Your Financial Wellness? The amount of money you earn plays a significant role in your ability to create a plan for financial wellness, but this is certainly not the only factor you need to take into account. You should also consider how you manage your money. For instance, someone could make a million dollars per year but feel stressed due to overspending, not having a savings account, or being in an excessive amount of debt. In contrast, another person could earn $100,000 a year and have financial wellness due to managing their money carefully.  How Do You Manage Financial Wellness? If you are having trouble with financial wellness, look for tools and education to help you develop a healthier relationship

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We’re Here For You

As we enter a new year many things in our lives have been altered, adjusted, or at least reinformed by the experiences brought to light from the pandemic and the year that was, 2020. Here at Puckett and Sturgill Financial Group we empathize and understand how life can change in an instant.  It’s part of what we deal with every day as financial professionals.  Our ability to offer guidance and direction, relevant to individual and unique circumstances, is always priority one. One thing that stands out in my experiences is the importance clients express when meeting with a professional guide who truly puts them first.  We listen to help make sense out of the decisions you’re facing. As CERTIFIED FINANCIAL PLANNERS™, we act in your interest, taking the time to discover the details, and understand your views before fitting you into any planning outcomes.  We take care to offer solutions designed along your objectives and consistent with your risk acceptance too. Most of us, you, and I, understand things we learned early in life have truths that tend to stand the test of time. We’ve all heard the sayings, “you get what you pay for” and “nothing is free” or “there’s risk in most decisions” and “nothing ventured, nothing gained”. These sayings may invoke fear, we understand.  Even so, we help clients consider these concerns or fears when designing and planning for them.  Outcomes are centered toward your life goals and intentions. We’re only a phone call away and happy to listen.  Give us a call and let’s see how we can help you “make a plan”.   -From the desk of David A. Hemler, MS, MPAS®, CFP®    

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Four Common 401(k) Mistakes to Avoid

A lot of 401(k) investors end up making the same mistakes when choosing their investments. The results are low returns and unbalanced portfolios. Avoiding these four mistakes is a good start for getting more out of your 401(k). There is no easy answer to how you should allocate your 401(k). You have to make these decisions on your own based on your personal risk tolerance, investment choices and the allocation of your other investments. Mistake #1: Going Overboard on Risk Avoidance Many 401(k) plan participants are either overwhelmed by the list of investment choices or are simply afraid to take any risk in their investments, and so put all of their savings into a money market or stable value fund. Sometimes the money market fund is the default option for their employer’s plan — meaning their money ends up there, earning very low interest. Nobody bothers to change it. Money market and stable value funds are basically fancy words for cash, a low risk, low return investment, and the return from cash usually lags behind inflation. This means that a 401(k) in these safe investments will probably decline in value over time. For many folks, the investment horizon is long, so you can tolerate some volatility to get the higher returns later. Mistake #2: The Equal Allocation Trap Another common mistake made by investors in their 401(k)s is to invest an equal portion into each available investment option. This is called the 1/N Rule. There are many problems with taking this approach. First, you do not need to invest in every option available in your plan. Especially now that target date retirement funds (mutual funds that change allocation based on

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Tips for Organizing Your Financial Documents

In an increasingly paper-free society, organizing your financial documents can still be a challenge. No matter how simple or complex your financial picture might be, it takes some thought-out organization to keep your tax documents, service records, and paid bills in a format that will allow you to easily access information when you need it. What steps can you take now to organize your financial documents for 2021 and beyond? Clean and Evaluate If your financial files look more like a pile of loose papers, it’s time to clean up this pile and evaluate what you have. Broad category labels like “House,” “Bills,” “Healthcare,” or “Taxes” can be enough to help you begin sorting documents into piles. Once you have your documents organized into tidy piles (or online file folders), the next step is to determine what you need to keep. Saving documents you’ll never need again can lead to clutter and leave you unable to find information quickly. On the other hand, throwing something away too early (like W-2s or 1099s) can create a headache if you’re audited or need to go back to find something specific. Create a Filing System After you have a better idea of what financial documents you’re dealing with, you can create a filing system. There’s no one-size-fits-all answer here, and the best filing system for you, is the one that is easiest for you to use. This can mean creating folders by month, keeping items segregated by category, or something else—whatever makes sense for you based on what you’re trying to keep organized. Decide on a Storage Option If you’re not a fan of paper clutter, your financial organization strategy may be to use a desktop scanner to scan and store

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New Year’s Resolutions to Get Your Finances in Order

New Year’s is traditionally the time to review your life and make resolutions for change. In addition to thinking about working out, eating healthy, and meeting personal and professional goals, you should also think about your finances. To make the most of the New Year, keep the following tips in mind. Outline New Goals To ensure you’re moving in the right direction, take some time to outline your goals. Think about long-term goals such as buying a home, sending the kids to college, or retiring by a certain age, and consider reaching out to a financial professional to get help creating a path toward those goals. Also, think about your short term goals. What do you want to accomplish this year? Do you want to save a certain amount of money? Expand your business? Reduce your spending so you can afford a vacation? Regardless of what you want, make a plan to get there. Review Your Expenses When you’re thinking about finances, you always need to consider two sides of the equation — spending and earning. Set aside some time to review your expenses and identify areas you can make cuts. Depending on your situation, you may want to skip buying lunches, or cancel some of your streaming services. You should also take some time to review your cell phone bill, insurance premiums, and similar expenses. Once you’ve made an assessment, considering shopping around to see if you can get a better deal. Update Your Tax Deductions Do you anticipate owing tax this year or getting a refund? If so, you should update your tax deductions. To do so, just ask your employer for a new Form W-4 and make

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Getting a Jump on January Tax Season

From pandemic-related stimulus payments to job losses and furloughs, for many taxpayers, next spring’s tax season may be more complex than usual. With the end of 2020 rapidly approaching, you should take some time to review your tax situation and make any necessary changes that can help you avoid surprises on April 15, 2021. Below are some steps you can take now to get a jump on next year’s tax season. Check and Adjust Your Withholdings January can seem like a lifetime ago, and taxpayers who haven’t checked their withholdings since then could find themselves facing a potentially larger tax bill (or a smaller refund than expected) if their personal circumstances have changed in the interim. By comparing the amount you’ve had withheld so far this year with your expected tax liability, you can get a good idea of whether you need to increase or decrease your withholdings through the end of 2020. For those whose income and deductions haven’t much changed since 2019, a quick glance at your 1040 can give you a good idea of what you’ll owe for 2020. For others, online tax-forecasting tools can provide an educated guess at your approximate federal income tax liability. If you’re likely to owe money in 2021, making an estimated payment now can help you avoid underpayment penalties. Get Organized Even though you won’t receive your 2020 W-2s, 1099s, or other tax statements until early 2021, organizing the documents you do have can give you a head start for next year. Moreover, much of the information you’ll need to input in your tax forms can already be found in your final paystub of 2020 (like federal, state, and FICA withholdings),

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A New Economic Start in 2021

After modest growth to begin 2020, the economy screeched to a halt as the onset of the pandemic ended the longest economic expansion ever. A record decline in gross domestic product (GDP) in the second quarter was followed by record GDP growth in the third quarter as the economy emerged from lockdowns. After such a tumultuous year in 2020, we take a look at what’s in store for the economy in 2021. 2021 Economic Outlook As we turn the page to 2021, we expect real GDP growth in the United States of 4–4.5%, modestly outpacing our forecast of 3.75%–4.25% for our developed international counterparts. Emerging market economies, particularly in Asia, have fared better in controlling the outbreak of COVID-19, and we believe their economies may be in a better position heading into 2021. We forecast 5–5.5% real GDP growth for emerging markets. After GDP contracted an annualized 5% during the first quarter of 2020 and then a record 31% in the second quarter, the economy revved back up with a 33% jump in the third quarter, bouncing off depressed levels. Record fiscal and monetary stimulus helped provide additional fuel for the economy as it emerged from lockdowns. We expected the 2020 recession would be one of the shortest recessions ever, and although the National Bureau of Economic Research (NBER) has yet to declare it officially, the recession probably lasted less than six months. When the economy began to shift into gear in the second half of 2020, we believe a new economic expansion likely began. Dating back to WWII, economic expansions have lasted more than five years on average, with the past four expansions averaging more than eight years [FIGURE 1].

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Tips For Navigating a Volatile Retirement

Retirement is the time in your life when you want to sit back, relax, and enjoy the fruits of years of hard work. But unfortunately, when the market is volatile, it may bring additional anxiety and stress. The good news is, a volatile market does not necessarily spell disaster, and by following a few simple tips, you may be able to reduce anxiety as you navigate through these times. Determine How Much Income You Have to Count On It is unlikely that all of your retirement savings is linked directly to the markets. Often times, retirement income will consist of investments, along with Social Security, or a pension income, with the latter two being sources of guaranteed income. Your guaranteed income should be enough to cover all essential spending, such as food, housing, transportation, and insurance. That way, when your other investment income may be down, you will have enough for your needed spending and will be able to push off non-essential needs to a later date. Look at Your Stock-to-Bond Ratio It is often common to reduce the risk of your financial portfolio in the early stages of your retirement. This is done to help you settle into your new retirement life and create a more stable foundation for your future retirement. Reducing the risk in your portfolio will often result in selling more stocks and buying more bonds, which could provide you with a lower risk investment if the market sees some fluctuation. Talk with a financial professional about your stock-to-bond ratio to determine if your long-term returns could help you with your retirement goals, while still providing some stability against volatility. Keep an Eye on Your Taxes

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