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Almost all of us pass through several major transitions during our lifetime.<\/p>\n
After we\u2019re born, there\u2019s a period of dependency as we learn how to survive (and hopefully thrive) in the world.<\/p>\n
Then we leave our parents (or other guardians), venture into the world and begin supporting ourselves. Many of us marry or otherwise form committed relationships. Many of us bring children into the world and raise them until they reach their own independence.<\/p>\n
Then we reach a stage that\u2019s been rather awkwardly described as \u201cretirement.\u201d It\u2019s a troublesome word for a phase of life that begins when we stop actively working and ends when we die. But we\u2019ll use it here, as we describe everything Baby Boomers need to know for a secure retirement.<\/p>\n
The largest generation in history (until the Millennial generation arrived) has actually already begun entering retirement. The oldest Boomers were born in 1946. So, they\u2019re well into their 70s and many have been retired for several years.<\/p>\n
But most younger Boomers are still several years away from retiring. So, we\u2019re sharing ideas here that are relevant to all Boomers as they navigate retirement.<\/p>\n
There are a series of questions you should ask yourself, as you contemplate retirement. The first question is, when? The answer to this rather basic question is probably more complicated than you might first think. Deciding when to retire involves assessing your situation from several perspectives. At the most basic level, you have to determine if you have enough financial resources to meet your spending needs for the rest of your life. If you don\u2019t, then you\u2019ll need to defer retirement until you do.<\/p>\n
Another related question is, how much money will you need? There are various ways to determine this. Perhaps the easiest is to place to start is to simply tally how much you\u2019re spending currently and then consider how your spending will change in retirement. One rule of thumb says that at retirement you\u2019ll need 25 times the annual amount you expect to spend in retirement. So, if you expect to spend $100,000 a year, then you\u2019ll need $2.5 million when you retire. A far better approach to answering this question would be to work with a CERTIFIED FINANCIAL PLANNER<\/a><\/strong>\u2122 who can take you through a thorough analysis of your unique situation.<\/p>\n Assuming you\u2019ve saved enough to retire, what will you do in retirement? You\u2019ll have a lot of free time that was previously taken up by your work. Will you fill it with family involvement, community service, hobbies, spiritual journeys, exercise, or travel? The happiest people in retirement are those who are actively engaged in activities that are important and fulfilling to them. So, make sure you know what you\u2019ll do with your retirement life.<\/p>\n Do you plan to work part time in retirement? If so, will you work for your last employer? Will you start a business? Will you consult in your field of work? How much will you work? How much can you earn?<\/p>\n Research on retirement indicates that far fewer people actually work in retirement than thought they would. So, if you\u2019re planning to work in retirement, it would be wise to not rely on those earnings in your financial plan for retirement. If you\u2019re able to work and earn additional income, your plan will be that much stronger.<\/p>\n After people retire, they often move, for a variety of reasons. Couples who raised children in a large house may decide to downsize to reduce costs, free up resources and shrink their home maintenance responsibilities.<\/p>\n If you live in a high-tax state, perhaps it makes sense to move to a state that has lower taxes. Some states are friendlier to retirees than others. Kiplinger shows them on a map where you can compare states that might interest you.<\/p>\n Perhaps you\u2019re looking for a change in climate (or to escape fire and smoke). If you live in the rainy Pacific Northwest of Oregon or Washington, you might want to escape to the sunnier American Southwest.<\/p>\n Maybe you\u2019re looking to leave a place with a high cost of living. If you live in the Bay Area in California, you can probably sell your house, pay cash for a nicer, less expensive house in a different part of the country, and pocket the difference.<\/p>\n If you\u2019re tired of living in a congested urban setting, perhaps you want to move to the suburbs, the country or the mountains.<\/p>\n If you have kids, grandkids or other cherished family or friends who live elsewhere, perhaps you\u2019ll move to be closer to them.<\/p>\n Regardless of your motives, you should think about your ability to access quality, affordable health care wherever you decide to live. After housing costs, medical expenses are the largest item for most retirees. You can control these costs, at least to some extent, by where you live. Also, if you retire early, make sure you know how you\u2019ll pay for health insurance before you qualify for Medicare at age 65.<\/p>\n So, there are lots questions facing Boomers as they contemplate a secure retirement.<\/p>\n Retirement, like every other phase in life, is filled with risks. Boomers need to anticipate these risks and approach retirement with a plan to address them.<\/p>\n When faced with risks, you have several options. You can avoid it. You can accept it. You can transfer it or insure against it. So, let\u2019s consider the risks that face Boomers in retirement.<\/p>\n It\u2019s certainly possible that you could become sick or hurt during retirement. Because the costs for medical care can be significant, Boomers need to have health insurance.<\/p>\n Fortunately, eligible Americans are able to participate in Medicare, the federal health insurance program for people who are 65 or older. Medicare is not comprehensive health insurance, however. So, you\u2019ll need to either enroll in a Medicare Advantage plan or purchase Medicare supplemental insurance (called Medigap).<\/p>\n The rules surrounding Medicare are complex and mistakes can be costly. So, you should work with an expert, such as your state health insurance assistance program (SHIP) or an insurance broker who specializes in Medicare and Medicare supplement plans.<\/p>\n Why would you need life insurance in retirement? There are actually many reasons why Boomers may wish to have life insurance.<\/p>\n If you\u2019re among the fortunate few who will retire with a defined benefit pension plan, you have a planning opportunity. Normally, married recipients of these plans take the joint-and-survivor option which will provide a benefit (e.g. 50%, 75% or even 100%) to the surviving spouse. In fact, this is the default option by law. The survivor option provides a benefit that\u2019s lower than the single life option.<\/p>\n However, if you had the proper amount and type of permanent life insurance, you could opt to take the (higher) single life payout. Then, if you were to die prematurely in retirement, the life insurance would replace the income your spouse would have received under the joint-and-survivor option. Your spouse would have to sign-off on this single-life election with the pension plan administrator.<\/p>\n There are many other reasons to have life insurance in retirement. Life insurance can replace the Social Security income that\u2019s lost if one spouse predeceases the other early in retirement. It can provide funds for estate gifts to family and charity. Life insurance proceeds can be used to pay off debts that you might carry into retirement, like a home mortgage. It can provide funds to pay estate taxes. Life insurance can also fund emergencies, provide a source of income, and, under certain circumstances, pay for end-of-life care.<\/p>\n There are a two very significant risks in retirement, and living \u201ctoo long\u201d is one of them. You might think that living a long life is a blessing, and it can be, if you arrive in old age in good health and with financial resources. Unfortunately, people who live beyond normal life expectancy can face the prospect of having drained their with very little left to sustain them in their last years.<\/p>\n There\u2019s a simple and elegant solution to this problem – annuities. Annuities provide guaranteed income that can\u2019t be outlived. An annuity is a contract between an individual (or couple) and an insurance company. In its simplest form, an annuity involves the exchange of a lump sum of money for a stream of income that lasts for life. There are many varieties of annuities.<\/p>\n As financial planners, we know that retirement plans that include guaranteed income are stronger than those that don\u2019t. While that might seem obvious, it\u2019s been proven mathematically by academics. We also know that the more guaranteed income you have, the stronger your plan will be.<\/p>\n The ultimate annuity is Social Security. It provides income that\u2019s guaranteed by the government. The income is provided for life and it\u2019s adjusted annually for inflation. The more Social Security you have in retirement, the better financial shape you\u2019ll be in.<\/p>\n If you\u2019re fortunate enough to enter retirement with an employer-provided pension, you\u2019ll have additional annuity income to count on. Your pension probably won\u2019t increase over time for inflation. But it\u2019s still a valuable resource.<\/p>\n Boomers who want additional guaranteed income should consider buying an immediate (or deferred) annuity from a highly-rated insurance company. Annuities are one of the best tools to create a secure retirement.<\/p>\n We mentioned that there are two risks that are particularly threatening to Boomers in retirement. One is living too long. The other is becoming infirm and unable to care for yourself.<\/p>\n The longer you live, the more likely it is that you\u2019ll need assistance caring for yourself. If you don\u2019t live a healthy lifestyle, you\u2019re more likely to need care regardless of how long you live.<\/p>\n According to the Department of Health & Human Services<\/a><\/strong> 52% of Americans who are age 65 will need long-term services and support. According to AARP<\/a><\/strong>, men will need care for an average of 1 1\/2 years and women will need care for an average of 2 1\/2 years. One in seven will require care for more than five years.<\/p>\n Care can be provided at home, in an adult day-care facility or in a variety of long-term care facilities. Most people want to stay home as long as possible. That often places the burden of care on family members. This may become unsustainable if the care needs are too great and\/or those providing care are unable to continue provide it.<\/p>\n Care in any setting is expensive. In Portland, Oregon, adult day care is $85 per day, in-home care is $23 per hour, assisted living is $3,895 per month, and a semi-private room in a nursing facility is $265 per dayday. In Santa Cruz, California, adult day care is $120 per day, in-home care is $31 per hour, assisted living is $5,250 per month, and a semi-private room in a nursing facility is $8,973 per month. We\u2019ve had clients in memory care facilities who have spent in excess of $20,000 per month for care.<\/p>\n No one wants to end up needing care. But what will you do, if you need help in the later years of your life? Now is the time to think about. Who will provide the care you need? How will you pay for it?<\/p>\n There are several ways for Boomers to address the risk of becoming infirm. You can self-insure by setting aside some of your assets to pay for care if and when you need it. You could also purchase long-term care insurance which would pay for the care you might one day need.<\/p>\n If you think the federal government will pay for your long-term care, please know that this is highly unlikely. Medicare does not cover long-term care. Medicaid can provide this care, but you must be all but impoverished to qualify for it. So, for a secure retirement, have a plan for care late in life and don\u2019t count on the government.<\/p>\n While inflation has been very low for several years, this hasn\u2019t always been the case. As a Boomer, you probably remember the period in the 1970s and early 1980s during when inflation averaged nearly 8% per year.<\/p>\n Inflation is very hard on retirees. While it makes things more expensive for everyone, it tends to drive up the cost of the things retirees buy (like health care) even more. So, it\u2019s really important for Boomers to plan for potential inflation.<\/p>\n If we assume that future inflation will be 3%, then the car that costs $40,000 today will cost $53,800 in ten years. A medical procedure that costs $10,000 today will cost just under $21,000 in 25 years. Over thirty years \u2013 a typical retirement planning period \u2013 inflation can ruin a Boomer\u2019s retirement plan.<\/p>\n How can you hedge against the risk of inflation? You won\u2019t be able to do it with bank products like CDs, savings account or money market accounts. While those investments safe and secure, they won\u2019t allow you to keep up with inflation.<\/p>\n The best way to do so is with investments that historically have provided returns higher than inflation. The most obvious of these is the stock market. Stock market investors have earned an average return that has far exceeded the rate of inflation. Yes, the stock market is risky, and the returns can fluctuate from year to year. But the reward Boomers get for accepting the risk is returns that are far greater than those safe investments we mentioned.<\/p>\n Boomers who need their investments to stay ahead of inflation need invest a prudent portion of their investments in the stock market. This will maintain your purchasing power over time and help ensure a secure retirement.<\/p>\n Taxes represents another threat to your long-term financial security. You\u2019re taxed on your income from your IRAs, pensions, rental properties, part-time employment and even your Social Security. You\u2019re also taxed on the dividends, interest and capital gains from your portfolio.<\/p>\n Taxes can significantly reduce your spendable income and the value of your investments. Of course, you must follow the Internal Revenue Code and pay your taxes. However, you should avoid taxes whenever legally possible. So, while we advise strongly against illegal tax evasion, we strongly encourage legal tax avoidance.<\/p>\n As you transition into retirement, you\u2019ll encounter numerous income and tax planning opportunities. When should you begin taking Social Security? When should withdraw money from your retirement accounts? Should you convert funds from your traditional IRA to a Roth IRA? How can you minimize the Medicare Part B premiums you pay? Should you use your IRA to make gifts to charity?<\/p>\n Boomers can greatly enhance their retirement security through careful tax planning. Most Boomers don\u2019t have the expertise to tackle complex tax planning issues. If you need help, consult a tax expert like a Certified Public Accountant (CPA), enrolled agent (EA) or licensed tax consultation (LTC). You may also wish to consult with a CERTIFIED FINANCIAL PLANNER<\/a><\/strong>\u2122 who also carries the RICP\u00ae designation.<\/p>\n If you\u2019re relying on your investments for income in retirement, you undoubtedly know that the stock market can be a risky place. The stock market can drop without warning, if investors become skittish or economic bad news emerges. If this happens at the wrong time, the results can be destructive. You can also suffer long periods of mediocre returns. As an example, the return of the S&P 500 index (which tracks large cap US stocks) for the 10-year period from 2000-09 was negative.<\/p>\n While you can\u2019t totally eliminate investment risk from your retirement plan, you can plan for it. You can stress test the strength of your plan by modeling what would happen if the returns in your portfolio were low for an extended period of time, or even the entire length of your retirement. Economists and investment experts expect future returns to be less than they have been historically. So, make sure your plan \u201cworks\u201d even with low returns.<\/p>\n You can also stress test your plan for bad timing or, more formally, \u201csequence of returns risk.\u201d The idea is that it matters when bad returns occur. If they happen when you\u2019re 90, you might not be happy about it, but it won\u2019t change your life. However, if bad returns occur just as you\u2019ve retired, that can be a problem. You may not be able to avoid selling investments that have lost a lot of value before those values have a chance to recover.<\/p>\n Most Boomers don\u2019t know how to stress test their plans for low returns over an extended period, or for \u201cbad timing.\u201d If this is your situation, consider working with a CERTIFIED FINANCIAL PLANNER<\/a><\/strong>\u2122 who does retirement planning and who uses software that can model these risks. You want to be sure, not just hope, that your plan will be secure even if you end up with poor investment results.<\/p>\n Because so few Boomers are entering retirement with a defined benefit pension plan, the vast majority of them will need to rely on Social Security and their own savings for income. If you\u2019ve been saving in a qualified retirement plan like a 401(k), 403(b) or 457 plan, you\u2019ll need to convert the contents into spendable dollars. Easier said than done.<\/p>\n Not so long ago, retirees could invest in low-risk bonds, CDs and conservative, dividend-paying stocks to generate income. That\u2019s really no longer possible, because the yields on these investments simply are not high enough to produce sufficient income. Fortunately, there\u2019s another way to create income from a portfolio.<\/p>\n Before we discuss how to generate retirement income from a portfolio in low-return environment, let\u2019s consider how to build and manage a portfolio. Investing has been the subject of academic research for at least 100 years. The findings from this research should guide you as you build and manage your portfolio, or look for someone to do so for you. Let\u2019s review the basics.<\/p>\n It might seem obvious, but the reason investors buy risky investments is that they expect to be rewarded for doing so. The greater the risk, the greater the expected return. If you invest in bank products like a CD, you know it\u2019s guaranteed by the government and you can\u2019t lose your money. So, there\u2019s essentially no risk of loss of principal to you. Consequently, your return is very low. Low risk, low return, it\u2019s as simple as that.<\/p>\n However, if you invest in stocks in an emerging market like Brazil or India, the risk of loss is much greater. There\u2019s no government guarantee. So, you\u2019ll expect (and hopefully) receive a higher return.<\/p>\n In reality, the returns of risky investments are highly volatile. We measure the risk of an investment using a statistical concept called \u201cstandard deviation\u201d- a measure of the extent to which an investment\u2019s returns vary. In the case of emerging market stocks, the standard deviation is quite high. Because of this, investors in these stocks expect higher returns and, over a long period of time, they generally receive them.<\/p>\n Numerous studies have shown that the most important element of portfolio construction is asset allocation. Asset allocation is the process of apportioning your portfolio across various asset classes. An asset class, in turn, is simply a group of securities with similar risk, return and other investment characteristics. Examples of asset classes include US large company stocks, real estate investment trusts (REITS) and short-term, high-quality corporate bonds.<\/p>\n Proper asset allocation involves selecting the right asset classes for your portfolio, and investing the right amount in each. The more aggressive you wish to be, the more you\u2019ll need to add risky investments to your portfolio. Your portfolio will have a higher standard deviation. But it will also have a higher expected return. Alternatively, if you wish to be conservative, you\u2019ll add more conservative asset classes to your portfolio. The standard deviation will be lower and so too will be the expected return.<\/p>\n Let\u2019s assume that you\u2019ve selected the right asset classes in the proper amounts, given your unique circumstances as a Boomer in retirement. Now you need to make certain that you\u2019re properly diversified within each of those asset classes.<\/p>\n The most effective way for most investors to diversify a portfolio across many asset classes is by investing in mutual funds or exchange-traded funds (called \u201cETFs\u201d). Mutual funds and ETFs are attractive because they make it possible to invest in hundreds or thousands of securities through a single vehicle. As an example, the Vanguard Total Stock Market ETF (Ticker symbol VTI) invests in \u201clarge-, mid-, and small-cap stocks across both growth and value styles.\u201d It would be impossible for an investor with less than tens of millions to invest to achieve the diversification offered by this one fund.<\/p>\n It\u2019s also important to hold your investments in the \u201cright\u201d type of account whenever possible, taking into account tax characteristics. Let\u2019s illustrate this idea with a scenario.<\/p>\n Let\u2019s assume that you have $2 million to invest, as follows: $1.5 million in your IRA, $250,000 in your Roth IRA and $250,000 in your taxable brokerage account. You\u2019ve found that a 50% stock and 50% bond portfolio is appropriate for your plan.<\/p>\n We know the dollars in your IRA won\u2019t be taxed until they\u2019re withdrawn, and then they\u2019ll be taxed as ordinary income. The dollars in your Roth IRA won\u2019t be taxed when they\u2019re in the account, and can be withdrawn tax-free. The dollars in your brokerage account will be taxed based on the type of investments you own. Stock dividends, bond coupon payments and interest are generally taxed as current income. If you sell a position that has appreciated, the gain you realize will be subject to capital gains taxes.<\/p>\n Now, what\u2019s the best way to allocate your $2 million? We know that $1 million (50% of $2 million) should be invested in bonds. So, we\u2019ll put all of the bonds in your IRA. The bonds will generate current income, but that income won\u2019t be taxed until you withdraw it from your IRA. We\u2019ll invest the remaining $1 million in your IRA ($500,000), Roth IRA ($250,000) and brokerage account ($250,000).<\/p>\n How might we decide what to put in these three accounts? Let\u2019s imagine that you wish to have $500,000 in US stocks, $400,000 in international stocks and $100,000 in emerging market stocks. You might put the emerging market stocks in your Roth IRA, because emerging market investments are volatile and require a long investment horizon. You\u2019re also likely to take distributions from your Roth IRA later in life. So, the emerging market stocks might be well-placed in the Roth IRA. The remaining $900,000 in stocks would be placed in your IRA ($500,000), Roth IRA ($150,00) and brokerage account ($250,000).<\/p>\n Asset location matters, because it improves the tax-efficiency of your portfolio. The more tax-efficient your plan, the more secure your retirement.<\/p>\n Now that your portfolio is proper allocated across a wide variety of asset classes, diversified within those asset classes, and the investments for each are in the right type of account, you\u2019ll need to decide on the investments for each.<\/p>\n We discussed earlier the attractiveness of mutual funds and exchange-traded funds. However, there are literally thousands of funds and ETFs to choose from. So, let\u2019s start by splitting the universe of choice into two groups: funds that are \u201cactively managed\u201d and funds that are \u201cpassively managed\u201d. Active funds attempt to beat the performance of the market, an index or a benchmark. Passive funds simply seek to deliver the return of the market, an index or a benchmark.<\/p>\n Decades of research show that very few managers of active funds actually outperform their targets, much less so for a long period. When they do, it\u2019s not clear whether that out-performance was due to luck or skill. Therefore, we\u2019d encourage you to recognize the futility of active management and to use passive funds for your portfolio.<\/p>\n John Bogle, the legendary investor who founded the mutual fund company Vanguard, said that investors \u201ckeep what they don\u2019t pay for.\u201d This simple but wise insight reminds Boomers that they need to be cost-conscious investors.<\/p>\n There are several layers of expenses you typically incur as an investor. First, if you decide to work with an investment advisor, you\u2019ll pay an investment management fee. Second, your accounts will be held at a custodian like Schwab or Fidelity, and the custodian will charge commissions for the buy\/sell trades placed in your portfolio. Fortunately, those commissions are much lower now than they were just a few years ago. Third and finally, If your advisor uses mutual funds or ETFs to build your portfolio, you\u2019ll pay an \u201cinternal expense\u201d charged by the funds you own.<\/p>\n So, let\u2019s say that you pay an investment management fee of 1%, that commissions are negligible, and that the internal expense ratio for a portfolio of mutual funds and ETFs averages 0.25%. If you invest $2 million, the annual fees will be $25,000. This would be pretty typical for a low-cost, passively-managed portfolio.<\/p>\n Now you might be thinking, if I cut out the advisor, I can reduce my expenses by $20,000. This is true. But is it a good idea? Will you be able to do everything your advisor does, as well or better? Do you have the knowledge and skill to manage a portfolio? Do you have the time it takes? Will you enjoy the process? What will you do when, not if, the next market crash occurs?<\/p>\n The vast majority of Boomers who want a secure retirement should work with a professional investment advisor. While paying for such a service isn\u2019t cheap, your advisor should pay for him or herself through investment performance, tax efficiency and cost control. In addition, you\u2019ll almost certainly feel more relaxed knowing a professional is watching over your portfolio. You could argue that peace-of-mind is priceless.<\/p>\n When you transition to retirement, you\u2019ll be making another major shift. You\u2019ll go from saving for retirement to spending in retirement. It might seem like a simple thing. But you\u2019ve probably been saving for retirement since you were in your 20s or 30s. Hopefully, you were disciplined about it and managed to accumulate a substantial nest egg. Now you\u2019re spending, by drawing down on your savings.<\/p>\n While you were working, you earned an income. You paid your taxes, lived on a portion of your income, and save enough to retire comfortably. It was pretty simple.<\/p>\n In retirement, it\u2019s more complicated. You probably have several sources of income. You may have a defined pension from one or more employers. You have Social Security. You probably have savings in an IRA, a Roth IRA and a brokerage account. You might have rental property income. You might even be working part-time.<\/p>\n How do you convert these resources into income for the rest of your life? Actually, a better question is: how to do you generate income from your resources in the most cost-effective and tax-efficient manner? The answer isn\u2019t intuitive.<\/p>\n Let\u2019s review the how your possible sources of retirement income will be taxed.<\/p>\n The dollars inside an IRA aren\u2019t taxed until they\u2019re withdrawn. You\u2019ll be required to take minimum distributions from your IRA starting at age 72.<\/p>\n The dollars inside a Roth IRA aren\u2019t taxed unless they\u2019re incorrectly withdrawn<\/a><\/strong>.<\/p>\n The dollars inside a brokerage account are taxed as income, interest or capital gains (when realized).<\/p>\n If you receive a defined benefit pension, that income will be taxed as ordinary income.<\/p>\n The income you receive from Social Security<\/a><\/strong> may be taxed.<\/p>\n If you have rental property income, it will be taxed, although there are tax benefits associated with real estate that may allow you to reduce these taxes.<\/p>\n If you work part-time, that income will be taxed as ordinary income.<\/p>\n Now let\u2019s consider how to utilize your resources. Let\u2019s assume that, like most Boomers, you don\u2019t have a (defined benefit) pension, you don\u2019t have rental income, that you\u2019re not working, and that Social Security alone isn\u2019t enough to meet your needs. This means that you\u2019ll need to draw on your investments in your IRA, Roth IRA and brokerage account.<\/p>\n The conventional thinking around converting investments to retirement income would have you spend down your non-taxed accounts first, to delay as long as possible paying taxes on distributions from tax-deferred accounts. So, you might be inclined to withdraw from your Roth IRA early in retirement in order to delay distributions from your IRA until they\u2019re required at age 72. Once you\u2019d exhausted the Roth, you\u2019d probably move on to your brokerage account and take distributions from it.<\/p>\n The problem with this strategy is that while it may minimize taxes early in retirement, it\u2019s highly tax-inefficient when viewed over your entire retirement horizon. A far better approach is to you\u2019re your retirement income distributions every year. In this process, you\u2019d assess your tax situation this year and project what you expect to happen next year. We usually do this for our clients in the fourth quarter of the year.<\/p>\n You\u2019ll review what happened this year. Did you have unusually high medical expenses? Did you have large educational expenses, perhaps for a family member? Did you incur large investment losses? Did you make a large charitable contribution? Based on your answers to these questions, does it make sense to take withdrawals from your IRA? Should you convert some of your IRA to a Roth IRA? Can you sell positions in your brokerage account that have large embedded capital gains and offset them with other losses? What about your Medicare Part B premiums<\/a><\/strong>? Those are determined based on income from two years ago. (i.e. 2018 income for 2020 premiums). Are you not yet Medicare eligible and instead getting your health insurance through the Affordable Care Act and the Health Insurance Marketplace? If so, are you concerned about qualifying for a premium tax credit<\/a><\/strong>?<\/p>\n Now let\u2019s think about income for next year. How much will you need in spendable dollars? How much of that will come from Social Security? How much has to come from your other buckets (i.e. IRA, Roth IRA and brokerage account)? Do you expect any of the previously mentioned circumstances next year (i.e. large medical bills, educational bills, investment losses, charitable gifts)? Will there be a change in the tax laws in the next few years?<\/p>\n What can you do if you don\u2019t have a pension, but want more guaranteed income? You could convert a portion of your retirement savings into an income-paying annuity. There are a variety of ways to do this, but the simplest and most common is an immediate annuity which pays guaranteed income to you (and possibly your spouse) for as long as you live.<\/p>\n What if you find yourself with dwindling savings and a debt-free home? Many Boomers in the Bay Area in California find themselves in this situation. If you do, too, you should consider accessing the equity in your home through a home equity conversion mortgage (called a HECM, or a reverse mortgage).<\/p>\n We\u2019ve reviewed a wide variety of issues related to income and tax planning. Retirement income planning is complex, so some of the issues may be unfamiliar. If you need help, be sure to consult with a CERTIFIED FINANCIAL PLANNER<\/a><\/strong>\u2122 (CFP\u00ae) and a tax professional. Look for a CFP\u00ae with the RICP\u00ae credential and look for a tax professional who does sophisticated tax planning for retirees. Smart income and tax planning are vital to a secure retirement.<\/p>\n Boomers have transformed the nation unlike any previous generation. This generation \u2013 born between 1946 and 1964, and nearly 79 million strong at its peak \u2013 changed America\u2019s economy, culture, politics and even its religiosity. Now they\u2019re entering and moving through retirement and they\u2019ll surely change it as well.<\/p>\n Growing old is a privilege denied to many, and this has been the case in the Boomer generation, too. However, the journey of life does eventually come to an end for everyone. That\u2019s a given. What\u2019s not a given is the degree to which we\u2019re prepared to grow old and eventually pass on. Let\u2019s consider what every Boomer needs to do to ensure that their final years are lived with dignity.<\/p>\n As people live longer, they\u2019re more likely to reach a point at which they\u2019re no longer able to make sound decisions. This may affect their ability to manage their finances, live independently, care for themselves and guard against those wish to exploit them. When a person is deemed unable to manage their affairs due to mental deficiency or physical disability, the person has become \u201cincompetent.\u201d<\/p>\n No one wants to become incompetent. But it\u2019s happening with growing frequency to older Boomers due to cognitive impairment caused by Parkinson\u2019s disease, Alzheimer\u2019s disease, Lew body dementia and other forms of illness. The risk of impairment grows with age.<\/p>\n If you were to become incapacitated and unable to make decisions about your medical care, what would you want done? Do you wish every effort be made to keep you alive? Do you wish to have a feeding tube, if necessary, to sustain you? Do you wish to have breathing respirator, if you can\u2019t breathe on your own?<\/p>\n A living will (also known as an advanced health directive) is a written, legal document that expresses your preferences for medical care, if you\u2019re unable to make or communicate these decisions for yourself. You should give your spouse, personal representative, personal physician and caregivers a copy of your living will. If you\u2019re seriously injured, terminally ill or cognitively impaired, your wishes for care will be clear.<\/p>\n There\u2019s another reason why every Boomer should have a living will. Your advanced directive will take the burden of making decisions about your care off of family members and\/or close personal friends who may be looking after you.<\/p>\n There may be health care-related circumstances which aren\u2019t addressed by your living will (or advanced health directive). If decisions about your medical care need to be made, you\u2019re unable to make them and they\u2019re not already addressed in your living will, who will make them?<\/p>\n You (as \u201cprincipal\u201d) can identify someone to act on your behalf (your \u201cagent\u201d and also known as a proxy, surrogate, representative, or attorney-in-fact) through a health care power of attorney. In this document you can identify two (or more, but not fewer) doctors who you trust and who specialize in diagnosing cognitive impairments to legally certify your incompetence. Once you\u2019re deemed incompetent to make your own health care decisions, your agent or representative will be granted a health care of power attorney to make medical decisions for you.<\/p>\n Having a health care power of attorney prepared and ready allows you to avoid the costly, public and potentially embarrassing prospect of being taken to court and declared incompetent.<\/p>\n To whom should you grant a health care power of attorney? Someone you trust, who knows you and who\u2019s capable of making health care-related decisions that are consistent with your preferences and wishes. It would be a plus to name a person who has some background in medicine and health care.<\/p>\n Many states recognize a process and a form for end-of-life care called a \u201cPhysician’s Orders for Life-Sustaining Treatment\u201d, or POLST. You can learn more on the National POLST website and find what your state has in place. In general, the POLST form is meant for those who are seriously ill or have advanced frailty. It\u2019s completed and signed by your physician after a review of your medical condition and treatment options.<\/p>\n What if you\u2019re unable to make decisions about the financial aspects of your life? A durable financial power of attorney allows you (again, as principal) to name an agent (or attorney-in-fact) to make decisions about financial and legal matters on your behalf. Because this power is durable, it will remain intact even if you become incapacitated.<\/p>\n You could grant the same person a power of attorney for health care and a durable power of attorney for finances. But it might be wise to select different people for these roles, based on your preference and their capabilities.<\/p>\n You should select a financial agent who you trust to make wise financial decisions that are in your best interests and consistent with your values and preferences. You might select a financial agent who has a background in finance, accounting or law.<\/p>\n What do you want to happen to your assets after you die? Are your intentions written down in a legally enforceable document? Who will make sure your wishes are carried out after you\u2019re gone?<\/p>\n A trust is a legal entity that allows you as the trust maker (or grantor) to name a third party, called a trustee, to hold and direct assets on behalf of the trust\u2019s beneficiaries. A revocable trust is a trust that can be changed by you, the trust maker, as long as you\u2019re alive.<\/p>\n Assuming you\u2019re still capable of managing your financial affairs, you would most likely name yourself as trustee of your revocable trust. You would transfer title of your assets (real estate, investments, bank accounts, and other valuable possessions) into your living trust. During your life and at any time, you can make changes to your trust and\/or cancel provisions of the trust.<\/p>\n You\u2019d name a successor trustee in the trust document. If you\u2019re no longer able to serve as trustee of your revocable trust due to incapacity or death, your successor trustee will take over the administration of your trust. Your successor trustee will be responsible for managing your assets for your benefit while you\u2019re alive.<\/p>\n Your revocable trust document will include named beneficiaries. After you\u2019ve passed, your successor trustee will ensure that your wishes for the distribution of your assets to your named beneficiaries are followed.<\/p>\n What happens if you somehow forgot to transfer important assets into your revocable living trust? It happens frequently. The solution is a \u201cpour over-will,\u201d which is a legal document that ensures that these overlooked assets are properly transferred to your trust.<\/p>\n You, as \u201ctestator,\u201d draft your pour-over will. When you die, your trust will distribute assets in the trust to the named beneficiaries. Your \u201cpour-over will\u201d transfers the assets you overlooked to your trust. Once in the trust, these assets can be properly distributed.<\/p>\n If you\u2019ve taken all of the steps described above, you should be able to avoid a legal process called probate. If you were to die with just a basic will or with no will at all (i.e. intestate), your estate would be administered entirely through the probate process.<\/p>\n For an estate with a will, the probate court will appoint an executor named in the will. The executor will be responsible for identifying and gathering the assets and liabilities of the estate. The executor will pay any debts and distribute the remaining assets to the named beneficiaries.<\/p>\n If there\u2019s no will, the probate court will name an administrator for the estate. The court will determine through state intestacy laws how the estate\u2019s property is to be distributed.<\/p>\n Probate is a slow, clumsy, public and often expensive process. Through proper estate planning, you can avoid it.<\/p>\n Digital assets are resources you own that are stored electronically on a device or in the \u201ccloud\u201d. Digital assets include photos, music, digital currency, and electronic documents. They also include the \u201ckeys\u201d to your accounts, your social media profiles (like Facebook, Instagram, LinkedIn, and so on). Digital assets are typically accessed with a user name or ID and a password or PIN. Some may require additional authentication.<\/p>\n Some of these digital assets can have great economic and\/or sentimental value.<\/p>\n What will happen to your digital assets after you\u2019re gone?<\/p>\n Your estate plan should include an inventory of your digital assets and it should be stored securely. Make certain that your estate planning attorney and agent (acting as your power of attorney) know how to access it.<\/p>\n So, to review, you should execute a living will (advanced heath directive), grant powers of attorney to agents for health care and finances, and create a revocable living trust with a pour-over will. Your estate plan should also include an inventory for your digital assets.<\/p>\n [\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ _builder_version=”3.22.3″ background_color=”#0060a5″ custom_padding=”14px|0px|0|0px|false|false” global_module=”4205″][et_pb_row column_structure=”1_3,1_3,1_3″ _builder_version=”3.25″ custom_padding=”27px|0px|27px|0px|false|false”][et_pb_column type=”1_3″ _builder_version=”3.25″ custom_padding=”|||” custom_padding__hover=”|||”][et_pb_text admin_label=”PDX Office Address” _builder_version=”3.27.4″ text_font=”Montserrat||||||||” text_text_color=”#ffffff” z_index_tablet=”500″ text_text_shadow_horizontal_length_tablet=”0px” text_text_shadow_vertical_length_tablet=”0px” text_text_shadow_blur_strength_tablet=”1px” link_text_shadow_horizontal_length_tablet=”0px” link_text_shadow_vertical_length_tablet=”0px” link_text_shadow_blur_strength_tablet=”1px” ul_text_shadow_horizontal_length_tablet=”0px” ul_text_shadow_vertical_length_tablet=”0px” ul_text_shadow_blur_strength_tablet=”1px” ol_text_shadow_horizontal_length_tablet=”0px” ol_text_shadow_vertical_length_tablet=”0px” ol_text_shadow_blur_strength_tablet=”1px” quote_text_shadow_horizontal_length_tablet=”0px” quote_text_shadow_vertical_length_tablet=”0px” quote_text_shadow_blur_strength_tablet=”1px” header_text_shadow_horizontal_length_tablet=”0px” header_text_shadow_vertical_length_tablet=”0px” header_text_shadow_blur_strength_tablet=”1px” header_2_text_shadow_horizontal_length_tablet=”0px” header_2_text_shadow_vertical_length_tablet=”0px” header_2_text_shadow_blur_strength_tablet=”1px” header_3_text_shadow_horizontal_length_tablet=”0px” header_3_text_shadow_vertical_length_tablet=”0px” header_3_text_shadow_blur_strength_tablet=”1px” header_4_text_shadow_horizontal_length_tablet=”0px” header_4_text_shadow_vertical_length_tablet=”0px” header_4_text_shadow_blur_strength_tablet=”1px” header_5_text_shadow_horizontal_length_tablet=”0px” header_5_text_shadow_vertical_length_tablet=”0px” header_5_text_shadow_blur_strength_tablet=”1px” header_6_text_shadow_horizontal_length_tablet=”0px” header_6_text_shadow_vertical_length_tablet=”0px” header_6_text_shadow_blur_strength_tablet=”1px” box_shadow_horizontal_tablet=”0px” box_shadow_vertical_tablet=”0px” box_shadow_blur_tablet=”40px” box_shadow_spread_tablet=”0px”]<\/p>\n OUR LOCATIONS<\/strong><\/p>\n Our Portland office is conveniently located off the SW Denney Road exit from Highway 217.<\/p>\n 6600 SW 105th Avenue, Suite 155 Our Bay Area office is located in downtown Santa Cruz.<\/p>\n 133 Mission Street [\/et_pb_text][\/et_pb_column][et_pb_column type=”1_3″ _builder_version=”3.25″ custom_padding=”|||” custom_padding__hover=”|||”][et_pb_text admin_label=”Schedule Consultation” _builder_version=”3.27.4″ text_font=”Montserrat||||||||” text_text_color=”#ffffff”]<\/p>\n SCHEDULE A FREE CONSULTATION<\/strong><\/p>\n If you’d like to learn more about how we can help you build a solid plan for your future, let us know by filling out our contact form. Or give us a call at (888) 998-4796.<\/p>\n [\/et_pb_text][\/et_pb_column][et_pb_column type=”1_3″ _builder_version=”3.25″ custom_padding=”|||” custom_padding__hover=”|||”][et_pb_text _builder_version=”3.27.4″ text_font=”Montserrat||||||||” text_text_color=”#ffffff”]<\/p>\n CONNECT WITH US<\/strong><\/p>\n Want to keep up with the latest news from Springwater? Follow us across our social networks.<\/p>\n [\/et_pb_text][et_pb_social_media_follow _builder_version=”4.2.2″][et_pb_social_media_follow_network social_network=”twitter” url=”https:\/\/twitter.com\/SpringwaterWM” _builder_version=”4.2.2″ background_color=”#00aced” follow_button=”off” url_new_window=”on”]Twitter[\/et_pb_social_media_follow_network][et_pb_social_media_follow_network social_network=”facebook” url=”https:\/\/www.facebook.com\/SpringwaterWealth\/” _builder_version=”4.2.2″ background_color=”#3b5998″ follow_button=”off” url_new_window=”on”]Facebook[\/et_pb_social_media_follow_network][et_pb_social_media_follow_network social_network=”linkedin” url=”https:\/\/www.linkedin.com\/company\/springwater-wealth-management\/” _builder_version=”4.2.2″ background_color=”#007bb6″ follow_button=”off” url_new_window=”on”]LinkedIn[\/et_pb_social_media_follow_network][\/et_pb_social_media_follow][\/et_pb_column][\/et_pb_row][\/et_pb_section]<\/p>\n","protected":false},"excerpt":{"rendered":" Everything Baby Boomers Need to Know for a Secure RetirementAlmost all of us pass through several major transitions during our lifetime. After we\u2019re born, there\u2019s a period of dependency as we learn how to survive (and hopefully thrive) in the world. Then we leave our parents (or other guardians), venture into the world and begin […]<\/p>\n","protected":false},"author":2,"featured_media":0,"parent":5362,"menu_order":3,"comment_status":"closed","ping_status":"closed","template":"","meta":{"_et_pb_use_builder":"on","_et_pb_old_content":"The decision to divorce is one of the most significant decisions you will make in your lifetime. It has profound implications. It can affect your entire family (kids, parents, siblings, etc.) your friends, and where you live. It may affect your physical health, your mental health, and your career. It can also affect you financially.\r\n\r\nYou\u2019ll want to seek advice and support from a variety of experts who can support you during this challenging transition. You should work with a family law attorney to understand and address the legal aspects of divorce. You might want to consult with a family counselor\/therapist to work through the personal and family issues associated with divorce. You may wish to seek the advice of a financial planner\/advisor (Certified Financial Planner\u2122, Chartered Financial Consultant\u00ae, or Certified Divorce Financial Analyst\u00ae) who can help you navigate the many financial ramifications of divorce.\r\n\r\nWe are not attorneys and this guide is not designed to provide legal advice. We are also not licensed therapists, and, therefore, we are not trained to help you with the personal issues you will face. We are financial planners, and we hold the CFP\u00ae, ChFC\u00ae, and CDFA\u00ae credentials. We have decades of experience providing financial guidance and advice to women who are contemplating, going through, newly emerging from, and\/or living long after divorce. This guide is designed to help you prepare for, negotiate, avoid the mistakes of, and live beyond divorce.\r\n\r\n Table of Contents<\/strong>\r\nChapter 1: How Women Can Prepare Financially for Divorce<\/a>\r\nChapter 2: How Women Can Negotiate Financially in Divorce<\/a>\r\nChapter 3: How Women Can Thrive Financially After Divorce<\/a>\r\nChapter 4: Going through Divorce? -\u00a0 Surround yourself with Financial Experts<\/a>\r\n<\/p>\r\nWhat To Do When You Retire?<\/h3>\n
Will You Work?<\/h3>\n
Where Will You Live?<\/h3>\n
<\/a>2: Risk Management<\/h2>\n
Getting Sick or Hurt – Health Insurance<\/h3>\n
Dying – Life Insurance<\/h3>\n
Living Too Long \u2013 Annuities<\/h3>\n
Needing Care \u2013 Long-Term Care Insurance<\/h3>\n
Inflation \u2013 Stocks<\/h3>\n
Taxes \u2013 Income & Distribution Planning<\/h3>\n
Investment Risk \u2013 Stress Test Your Plan<\/h3>\n
<\/a>3: Investing Basics<\/h2>\n
Risk and Return<\/h3>\n
Asset Allocation<\/h3>\n
Diversification<\/h3>\n
Asset Location<\/h3>\n
Investing in Asset Classes<\/h3>\n
Controlling Costs<\/h3>\n
The Role of Your Advisor<\/h3>\n
<\/a>4: Income and Tax Planning<\/h2>\n
How Income is Taxed<\/h3>\n
The Conventional Approach to Generate Retirement Income<\/h3>\n
Retirement Income and Distribution Planning<\/h3>\n
Other Income Strategies<\/h3>\n
<\/a>5: Estate Planning for Boomers<\/h2>\n
Planning for Incompetency<\/h3>\n
Living Will<\/h3>\n
Health Care Power of Attorney<\/h3>\n
POLST<\/h3>\n
Financial Power of Attorney<\/h3>\n
Revocable (Living) Trust<\/h3>\n
Pour-Over Will<\/h3>\n
Avoiding Probate<\/h3>\n
Digital Assets<\/h3>\n
The Complete Boomer Estate Plan<\/h3>\n
Beaverton, OR 97008<\/p>\n
Santa Cruz, CA 95060<\/p>\n
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\r\n1: How Women Can Prepare Financially for Divorce<\/h2><\/a>\r\nMost of the biggest decisions we make in life have financial implications.\u00a0 Deciding where to go to college.\u00a0 Deciding on a career.\u00a0 Deciding where to live.\u00a0 Deciding whether or not to have children.\u00a0 All of these decisions impact you financially.\u00a0 However, none of them affects you as much as a\u00a0divorce<\/a><\/strong>.\r\n\r\nBecause women often delegate financial responsibility to their spouses, they are often not as familiar with their household finances.\u00a0 This means that they may not have thought about the financial impact of divorce on women.\u00a0 So, let\u2019s consider how you can\u00a0prepare financially<\/a><\/strong>\u00a0for divorce.\r\n\r\nA good place to start is with spending.\u00a0 What are you spending to live currently?\u00a0 What will change if you divorce?\u00a0 Presumably, either you or your spouse will move to a different living environment.\u00a0 If you remain in your current home, will you be able to pay the associated costs (mortgage\/rent, taxes, insurance, utilities, maintenance)?\u00a0 If you decide to move, what are those costs likely to be?\r\n\r\nWhat about health insurance?\u00a0 Are you on a plan that will continue after divorce?\u00a0 If not, how will you obtain coverage and what will it cost?\u00a0 Do you need life insurance?\u00a0 If so, how much and what kind and what will it cost?\r\n\r\nDo you expect to receive alimony from your ex-spouse?\u00a0 How much and for how long?\u00a0 If you have children, what about child support?\u00a0 How much child support and for how long?\u00a0 What about paying for your children\u2019s education (e.g. private school, college, grad school)?\r\n\r\nWhat financial assets (e.g. home, property, pensions, retirement accounts, investments, etc.) do you and your spouse own?\u00a0 What are the tax characteristics of these assets?\u00a0 How are they likely to be divided in a divorce?\r\n\r\nIf you have been out of the workforce, do you plan to return to work?\u00a0 Is returning to work an imperative?\u00a0 Do you have current skills, credentials, knowledge, and experience?\u00a0 If not, will you need to go back to school?\u00a0 How much would additional schooling or training cost?\u00a0 Once you are back at work, how much do you expect to earn?\r\n\r\nAs you might imagine, you will probably need advice as you think through these questions and prepare financially for divorce.\u00a0 You should talk to a family law attorney about all of the legal aspects of divorce.\u00a0 You should consult with a financial advisor (Certified Financial Planner\u2122, Chartered Financial Consultant\u00ae, or Certified Divorce Financial Analyst\u00ae) about the financial aspects.\r\n\r\nDivorce can be a very difficult experience.\u00a0 You can minimize the financial impact by preparing and planning ahead.\r\n\r\n
\r\n2: How Women Can Negotiate Financially in Divorce<\/h2><\/a>\r\nIf you have decided to divorce your spouse, there are several ways in which you can approach the process.\u00a0 If you and your spouse are on good terms and your situation can be simple (e.g., no kids, limited assets, no legal complexity, and good collaborative spirit with your partner), you might be able to \u201cdo it yourself.\u201d\u00a0 You would follow the laws in your county and state and complete the documents necessary to dissolve your marriage.\r\n\r\nIf your situation is more complex (kids, significant assets, legal complexity) and you and your spouse are on good terms as you discuss ending your marriage, then you might consider a collaborative approach.\u00a0 This process involves working with a team to negotiate an agreement to end your marriage.\u00a0 The team typically includes attorneys (one for you and one for your spouse), a divorce coach, a financial specialist (Certified Divorce Financial Analyst\u00ae), and, if you have children, a child specialist.\u00a0 The group will work together to achieve a dissolution agreement that will avoid litigation in court.\r\n\r\nIf you and your spouse are in dialogue, but struggling to come to terms on your divorce, you should consider mediation.\u00a0 This is true regardless of the complexity of your situation.\u00a0 In mediation, you and your spouse hire an attorney (or you each hire an attorney) to help you sort through and resolve the areas of conflict as you pursue the end of your marriage.\u00a0 The goal of mediation is to reach an agreement about the dissolution without going to court.\r\n\r\nIf you and your spouse are in unhealthy conflict and none of the other methods will work, then you will be forced to pursue a litigated dissolution.\u00a0 This is the least desirable approach, because it is contentious, unpleasant, public, and expensive.\r\n\r\nWhat are the financial\u00a0issues<\/strong><\/a>\u00a0that are negotiated in the dissolution of a marriage?\u00a0 Alimony (i.e. payments by one spouse to the other for the support and maintenance of the other spouse) and child support (i.e. payments by one spouse to the other to care for children and keep them in the same general standard of living they experienced before the divorce) are the most common.\r\n\r\nIf you and your spouse have accumulated assets, you will need to decide how to divide them between the two of you.\u00a0 Your home is probably the most obvious shared asset.\u00a0 Who will live in it?\u00a0 Will it be sold?\u00a0 Is there a mortgage?\u00a0 How will you divide the value of it?\r\n\r\nWhat about retirement assets?\u00a0 Do either of you have pensions, employer-sponsored retirement accounts (e.g. 401(k), 403(b), deferred compensation), IRAs, and Roth IRAs?\u00a0 What about employer stock and stock options?\u00a0 Remember that retirement assets are typically tax-deferred (i.e. the income tax due is deferred until distributed in retirement).\u00a0 That means that they are worth less than the stated value, because taxes will eventually be deducted from them.\r\n\r\nHow about other assets such as investment accounts, insurance contracts (cash value life insurance, annuities) loans to others, coin collections, intellectual property (patents, copyrights, trademarks), businesses, vehicles (cars, trucks, RVs, boats, etc.), timeshares, rental property, timeshares, raw land, collections, antiques, artwork, and household goods and furnishings?\r\n\r\nAre there debts to others (e.g. credit cards, home equity loans, personal loans, unpaid taxes)?\r\n\r\nHow do you value your assets?\u00a0 In some cases, there is a ready market that provides current values (i.e. stock in a publicly traded company).\u00a0 However, in many cases, you will need a professional appraisal of the asset.\u00a0\u00a0 You may need multiple appraisals, if you and your spouse cannot agree on an initial appraisal.\r\n\r\nAnything of any significant value will become part of the settlement process.\u00a0 Yes, there may be prior agreements between you and your spouse that segregate certain assets, but you will still need to come to an agreement about who gets what. Also, state law (e.g. community property law) may determine how assets are divided.\r\n\r\nYour objective in the financial part of the settlement process should be to identify all assets (and liabilities), obtain proper fair market value for them and determine how you would like them divided between you and your spouse.\u00a0 You may need the help of an attorney, tax professional, a financial planner (Certified Financial Planner\u2122, Chartered Financial Consultant\u00ae, or\u00a0Certified Divorce Financial Analyst\u00ae<\/strong><\/a>), and appraiser(s).\r\n\r\n
\r\n3: How Women Can Thrive Financially After Divorce<\/h2><\/a>\r\nIf you are just emerging from divorce, you are probably trying to reassemble your life.\u00a0 You may have just travelled through one of the darkest chapters in your life.\u00a0 But you made it to the other side.\u00a0 Now let\u2019s look at how you can thrive financially after divorce.\r\n\r\nThe place to start to rebuild your financial life is, perhaps curiously, to take care of yourself.\u00a0 Focus on your health.\u00a0 Make sure your diet is nutritious.\u00a0 Exercise several times each week.\u00a0 Get plenty of sleep (7- hours).\u00a0 Keep alcohol consumption to a minimum.\u00a0 Don\u2019t smoke and avoid recreational drugs and other dangerous behavior.\u00a0 Surround yourself with positive, uplifting people.\u00a0 Practice your religion or meditate or do whatever you do to nurture your inner self.\r\n\r\nOnce you are feeling better about yourself, you can start thinking about your financial life.\u00a0 Start with an assessment.\u00a0 What are your assets and liabilities?\u00a0 These make up your balance sheet and the difference between the two of them is your net worth.\u00a0 What are your sources of income?\u00a0 Perhaps you are working or soon will be working.\u00a0 How much will you earn?\u00a0 Are you receiving alimony?\u00a0 How much and for how long?\u00a0 What about child support?\u00a0 Will you have other income from, say, rental property?\r\n\r\nNow that you know how much income you will have coming in, let\u2019s consider your expenses.\u00a0 Do you know what you were spending before you got divorced?\u00a0 How will that change?\u00a0 Did you move?\u00a0\u00a0 What are your fixed costs for housing (mortgage\/rent, tax), utilities, insurances (personal, property, and casualty), cell phone, cable TV and internet, gym membership, groceries, transportation, entertainment, etc.?\u00a0 What about your variable expenses for vacations, home repair and maintenance (e.g. appliances), vehicle replacement?\u00a0 The more precise you are in identifying and projecting your expenses, the more confident you will be about your financial future.\r\n\r\nBefore we go any further, let\u2019s step back and acknowledge that you should be saving for any large future expenditures that are not in your core living expenses.\u00a0 That means saving for vacations, replacement vehicles, your children\u2019s education, and, above all, retirement.\u00a0 The best way to organize your finances is to save first and spend second.\u00a0 Most people spend first and save second, if there is anything left to save and too often there isn\u2019t.\r\n\r\nWhat do you do if your income is not big enough to save the way you need to and spend the way you want to?\u00a0 Well, you will have to make some tough decisions.\u00a0 What\u2019s most important to you?\u00a0 Do you need to live in the house you shared with your ex-spouse?\u00a0 Do you need to take as many vacations?\u00a0 Can you trim your cable TV package?\u00a0 Could you change jobs and earn more?\u00a0 What about taking on a second part-time job?\u00a0\u00a0 Try to find ways to reduce your expenses and\/or increase your income, so that you can save what you need to save and spend what you want to spend, but saving is your priority so don\u2019t compromise it.\r\n\r\nIn the wake of a divorce, there are some other tasks you need to take in order to be financially secure.\u00a0 You should change the beneficiary designations on your retirement accounts, your insurance policies and your \u201ctransfer-on-death\u201d accounts.\u00a0 You should check in with the\u00a0Social Security<\/a><\/strong>\u00a0Administration and clarify your benefits.\u00a0 If you were married for ten or more years, you will qualify for benefits based on your ex-spouse\u2019s record and those benefits may be larger than your own. (You receive the larger of the two.)\u00a0 If there are mistakes in your earnings record, you can correct them.\u00a0 You should establish an emergency fund that contains enough cash to pay for a large, unexpected expense or pay your basic, fixed living expenses for 3-6 months if you become unemployed for some reason.\u00a0 You should update your\u00a0estate plan<\/strong><\/a>\u00a0(will, durable power of attorney, and health directive).\r\n\r\nAs you might imagine, to work through and accomplish these financial tasks, you may need assistance from a financial advisor (Certified Financial Planner\u2122, Chartered Financial Consultant\u00ae, or Certified Divorce Financial Analyst\u00ae), insurance agents, tax professional, and estate planning attorney.\r\n\r\nThe key to thriving financially after divorce is developing a sound plan and following it.\r\n\r\n
\r\n4: Going through Divorce? -\u00a0 Surround yourself with Financial Experts<\/h2><\/a>\r\nThere are a lot of issues to consider as you go through a divorce.\u00a0 They fall into categories: legal,\u00a0financial<\/a><\/strong>, tax, and investment.\u00a0 Let\u2019s consider the issues and who can help you navigate them.\r\n\r\nUnless you plan to execute your own divorce (i.e. do-it-yourself) in your legal jurisdiction (state and county), you will need to hire an attorney who can walk you through the process of dissolving your marriage.\u00a0 While most attorneys are capable of guiding you, we suggest you work with a family law attorney who focuses on divorce.\u00a0 You can find family law attorneys by searching on your state bar\u2019s website, asking other professionals for a referral, or doing a simple internet search.\u00a0 You should interview 2-3 and select the person who is most qualified and with whom you have the best personal rapport.\r\n\r\nIf you are likely to receive alimony from your ex-spouse, your divorce attorney will help you negotiate an amount and a payment period that is fair.\u00a0 If you have children and expect to receive child support, your attorney will also negotiate those payments.\r\n\r\nDivorce results in a tangle of financial issues.\u00a0 What are the marital assets, what are they worth and how will they be divided?\u00a0 How much income will you have after your divorce?\u00a0 Will that be enough to support you?\u00a0 What will you do for insurance?\u00a0 How will you save for retirement?\u00a0 What will be your Social Security benefits?\u00a0 What happens if your ex dies and your alimony and child support end?\r\n\r\nThere are various financial advisors who can help you with the different financial issues you will encounter in your divorce.\u00a0 A financial advisor can help you with many aspects of\u00a0personal finance<\/a><\/strong>\u00a0<\/strong>(budgeting, insurance, taxes, estate planning, investments, education funding, retirement planning).\u00a0 Look for a fee only planner who does not sell financial products and earn commissions.\u00a0 The Certified Financial Planner\u2122 and Chartered Financial Consultant\u00ae credentials are the most respected credentials held by financial planners.\u00a0 If you feel you need particular expertise in the area of divorce financial planning, look for a\u00a0Certified Divorce Financial Analyst\u00ae<\/a><\/strong>.\u00a0 You can search for a CFP\u00ae at the\u00a0CFP Board website<\/strong><\/a>\u00a0and a CDFA\u00ae on the\u00a0Institute for Divorce Financial Analysts website<\/a><\/strong>. The American College awards the ChFC\u00ae designation, but there is no way to directly search for one on its website.\r\n\r\nIf you have difficult-to-value assets, you should hire an appraiser.\u00a0 The American Society of Appraisers confers\u00a0four appraisal credentials<\/a><\/strong>\u00a0<\/strong>related to the subject in need of appraising.\u00a0 There is a \u201cFind an appraiser\u201d tool on its\u00a0website<\/a><\/strong>.\u00a0\u00a0\u00a0 If you are trying to value a business, consider hiring an accountant with the Accredited Business Valuation (ABV) credential.\u00a0 There is a credential directory tool on the\u00a0AICPA website<\/a>.<\/strong>\r\n\r\nIf you need tax-specific advice, work with a Certified Public Accountant (CPA) or an Enrolled Agent (EA).\u00a0 The state society of Certified Public Accountants will often have a tool on its website that allows a consumer to find a CPA.\u00a0 You can search for an enrolled agent on the National Association of Enrolled Agents\u00a0website<\/a><\/strong>.\r\n\r\nWhat about insurance?\u00a0 If you need help with personal insurance including life insurance, disability insurance, annuities and long term care insurance, consider working with a Chartered Life Underwriter (CLU\u00ae).\u00a0 The American College bestows the CLU credential, but there is no search tool on its website to find a CLU.\u00a0 If you need help with health insurance, consider working with a Chartered Healthcare Consultant\u00ae (ChHC\u00ae), Registered Health Underwriter (RHU\u00ae) or Registered Employee Benefits Consultant (REBC\u00ae).\u00a0 All of these credentials are administered by the National Association of Health Underwriters, and there is a \u201cfind an agent\u201d tool on its\u00a0website<\/strong><\/a>.\r\n\r\nIf you need assistance with your investments, there are two credentials for which you should look.\u00a0 The Certified Financial Planner\u2122 (CFP\u00ae) and the Chartered Financial Analyst (CFA) designations.\u00a0 The latter can be found on the CFA Institute website on their\u00a0member directory<\/strong><\/a>.\r\n\r\nYou will need to update your estate plan. While most attorneys are capable of doing this, consider working with an estate planning attorney.\u00a0 These attorneys work more narrowly on estate planning matters.\u00a0 As with family law attorneys, you can find an estate planning attorney on your state bar\u2019s website.\r\n\r\nFor all of these professionals, you can, of course, ask for referrals from other friends, family members, and other professionals you know or conduct a search on the internet.\u00a0 It is always wise to interview 2-3 experts before selecting one to serve you.\r\n\r\nDivorce is a complex process with many and varied financial consequences.\u00a0 Surround yourself with experts to avoid pitfalls and achieve the very best outcomes.","_et_gb_content_width":"","_mi_skip_tracking":false,"footnotes":""},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/springwaterwealth.com\/wp-json\/wp\/v2\/pages\/5765"}],"collection":[{"href":"https:\/\/springwaterwealth.com\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/springwaterwealth.com\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/springwaterwealth.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/springwaterwealth.com\/wp-json\/wp\/v2\/comments?post=5765"}],"version-history":[{"count":0,"href":"https:\/\/springwaterwealth.com\/wp-json\/wp\/v2\/pages\/5765\/revisions"}],"up":[{"embeddable":true,"href":"https:\/\/springwaterwealth.com\/wp-json\/wp\/v2\/pages\/5362"}],"wp:attachment":[{"href":"https:\/\/springwaterwealth.com\/wp-json\/wp\/v2\/media?parent=5765"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}