A little planning now gives peace of mind later
By Deborah Jeanne Sergeant
The beginning of a new year can represent a good time to make a few resolutions, whether it’s to get in better shape, lose a few unwanted pounds or fine tune your financial plans.
Here is what a few area financial experts recommend to improve your fiscal fitness:
• “As people age into their mid-50s, they want to focus on being on track for retirement: what do they want their retirement to look like? They need to set their goals to make sure they’re in a position to meet those goals, whatever those goals are. They need to put a plan together to move from accumulation to distribution phase. As they go through their last five to 10 years of work, they should focus on making sure they maximize their retirement savings in their 401k, consider funding individual retirement accounts, focus on eliminating debt to the extent possible and also review their asset allocation as they get closer to retirement. They don’t want to go too conservative, because they still have 30 to 40 years’ life expectancy. If they’re eligible for a pension, that can have an impact on asset allocation. They can be more aggressive with other investments if they have a pension. The pension helps them take on a little more risk.
• “They may want to consider looking at long term care insurance in their mid- to late-50s to protect assets and begin to think about how they’ll pay for healthcare in retirement. Once they’re 65, they can rely on Medicare, but if they retire sooner, they have to think of how they’ll fund it. A high deductible plan with a health savings account is one way and they should maximize contributions to the account.
• “They should look at their Social Security statement to make sure their earnings statement is accurate.
• “They should make sure their beneficiary designations for life insurance and IRA accounts are up to date, along with the power of attorney and healthcare proxy.”
— Jim Eckl, registered financial adviser and principal and director of Wealth Management at Cobblestone Capital Advisors, LLC in Rochester
• “Ensure that you’re not overpaying on taxes from your investments. A good financial plan would certainly address this concern as well.
• “With the high inflation that the economy has been running, you should ensure that your investments are not losing you money, which is the case with cash or money market accounts and CDs.”
— Diana Apostolova, investment consultant, Rochester Investments, Rochester
• “Have your Medicare looked at by a professional to make sure you’re in the right plan. Many buy a plan based on the premium, but for that year, they pay more than they need to because they didn’t base it on health. They should review their plans in the event that one of them gets ill.
• “Medicare doesn’t pay for long-term care. Long-term care insurance may be expensive but there are other ways to do planning. Evaluate all the different means of paying for it if long-term care is needed.”
— Tammy Mogiliski, certified financial planner, chartered financial consultant and CEO of Legacy Financial Planning, Rochester
• “I’m hearing a lot, ‘When should I take my Social Security?’ There’s a lot of information on Social Security. We have software programs to help clients analyze that. If you’re not working with a financial adviser, www.SSA.gov is a nice website. If people have not logged onto the ‘My Social Security’ portal, they should do that to review their options.
• “Depending on when they’re going to start to taking withdrawals from their retirement accounts, people are worried the stock market has had a nice run and it’s getting ready for a drop. If you’re going to start to take a distribution from your retirement buckets or any investments, start reviewing asset allocation to make sure you have enough money in a ‘safety bucket.’ It’s a place where I can put cash where it is not aligned with the volatility of the stock market and can be easily accessed without losses. Sometimes that means low-interest accounts or fixed accounts. Those assets are so poorly performing. It’s very challenging for us in the financial services field to find those buckets.
• “We have encouraged people to know more about Medicare parts A, B, and C, and the supplement plans. Healthcare and long-term care are going to be the two biggest challenges for clients in their retirement. As part of our fee-based financial planning, we are allocating higher than average dollars for healthcare for our participants in the future.”
— Marlene Dattilo, certified financial planner, certified family business specialist, certified long-term care planer, Keystone Capital Partners Group, Rochester
• “Do financial worksheets, which are different from a plan. It gives a snapshot of income, assets, debt, interest rates you’re paying on your debt. It shows if you’re invested properly to meet your needs and goals. If you’re already retired or close, you should have this blueprint and it should be updated annually.
• “Your assets must be allocated into different buckets to serve its purpose: an emergency fund for short-term needs; a fund for intermediary needs, like planning for a wedding or buying a car; a bucket for income needs; and a bucket for growth to combat inflation. The income needs help you supplement Social Security and pension. The growth would be invested for the future to combat inflation.
• “Pay down your debt. Being debt-free is very liberating and will allow you to keep much more of your monthly income. Having debt is often a hurdle that will prevent people from retiring when they want to. So start with your debt that has the highest interest rate and work your way down. This information will be on your financial worksheets which you can request at www.Moneydocs.com.
• “Only use a credit card if you pay off your balance every month. I am not against getting points or rewards; however, if you are maintaining a balance, you are most likely paying a very high interest rate and taking on unnecessary debt.
• “If you have legacy concerns, and you want to pass money on to your children or grandchildren, if you are in the lower tax bracket, consider converting money from your retirement accounts into a Roth IRA. Check with your accountant to make sure you will not lose any benefits or discounts by doing so.
• “If you are in good health, consider purchasing a life insurance policy with a long-term care rider that will allow you to use the death benefit for long-term care if you should need it. If you don’t need it, the death benefit will pass to your beneficiaries tax-free.
— Chuck LaRocco, senior partner, certified retirement counselor, and one of the “Money Doctors” on WHAM 1180 Sundays at 7 a.m. with Commonwealth Financial Group in Webster and Florida