I love a sale as much as the next person and some would even say I make a sport of it. October brings about a great time to buy some big ticket items. Here are a few examples:
IPHONE AND ACCESSORIES
Apple’s new iPhone XR, XS, and XS Max were announced Sept. 12. That means now is the time to buy an iPhone 8, 8 Plus, or X at a discount. Along with the release of a new iPhone comes a slew of new cases, headphones, and other accessories. If you have an older model iPhone, you can get accessories for less as retailers look to move them out.
October is prime time for striking a deal on a new car that happens to be stamped with last year’s date. Auto dealers are eager to make room on their lots for 2019 models.
Prices on cruises and vacations typically take a dip in October, the shoulder month between summer vacations and holiday travel. With school is back in session, many destinations aren’t very crowded but still enjoy balmy and temperate weather.
Have fun but be a smart shopper this October.
I recently heard from three different people in one week that their identities had been stolen. Each case was different, but the end result was the same. In one case, the person used their debit card to pay at a restaurant vs. a credit card. When someone is walking away with your card, they have all of the information they need on the back of the card to make purchases online. A credit card provides much more protection than a debit card does in cases of identity theft. Use your debit card sparingly. Another had to present their driver’s license at a medical office. Later that day, they received a call from the driver’s license office stating that someone was applying for a license in their name. This case did not go any further than that, but it could have been devastating. The third person has no idea where they may have gone wrong in the use of their credit to allow their identity to be stolen. We have to be careful as the crooks are way ahead of us. Here are some tips you can follow to protect yourself:Security Center Excerpts
TDAmeritrade Risk Management Dept.
I would guess that when you read the term “financial shock”, you think of the market crash in 2008. Financial shock actually is an event that hits closer to home. Let me give you an example. In 1985, my father was a construction superintendent working on a high rise project. He got up at his normal 4:30AM to get ready for work, stepped into the shower, had a massive heart attack, and passed away. That is financial shock. He was 50, my mother was 48, and they were not prepared. Sudden death, the loss of a job, or costly medical issues can completely derail your life.
This is what we did to make sure the rest of our family was not caught unprepared:
When everyone was together for a happy family event we discussed these issues. One might think it is in bad form to discuss such depressing topics at a happy event, but it is not. We were all together, happy, and healthy, it was the best time to discuss these issues.
Please make sure that you have a good cash reserve, that your life insurance is up to date, beneficiaries are current, and the death benefit is enough to cover the unforeseen events. Make sure that all of your estate planning papers are in order and current.
Dealing with financial shock can take a huge toll on you emotionally, so please make sure it does not take a financial toll also.
I grew up in a suburb of Detroit and the Queen of Soul was a big part of my childhood. Sadly, just days after she passed there was an article reprimanding her for dying without a will. I say “so what.” Her passing without a will may have made little difference to her heirs. Here is why.
If she had qualified retirement accounts, annuities, and insurance, all of those have stated beneficiaries so that those accounts would go directly to the beneficiaries without going through probate.
If she had bank accounts, or non-retirement accounts that had Pay on Death, or similar designation in the title, those accounts would pass to the heirs with a step-up in basis and outside of probate.
If she had any type of Trust set up for her heirs, the assets named in her Trust would pass outside of probate.
There may have been very little in her estate to be probated. While I don’t agree with not having all of the necessary estate planning papers in place, she may have done fine by her heirs without a will.
I am always concerned as to how my clients are spending. Is a purchase a need or a want? Did you do sufficient research before that big purchase? There are a number of ways to live frugally, but not look like a cheapskate.
Shop at the back of the store first.
It does not matter whether you are shopping for clothing or office supplies, the sale items are always in the back of the store.
We always buy cars that have been leased by someone else, then returned. If you lease a car you must maintain the car and keep the mileage low in order to not pay a big chunk when you return the car. Lease returns end up being good cars to buy due to the good maintenance records, low mileage, and the often still have warranty left.
We also have only bought homes that have been in foreclosure. This may not be a choice for everyone as I did grow up in a construction family, but you can often buy below market.
I am a lover of shoes. I used to buy based only on appearance, not how they were made. My Husband asked me why I didn’t buy better made shoes and then just get them re-soled or repaired when needed. I started buying better made shoes and doing just as he suggested. I still love shoes but am saving money by buying better quality.
How you spend is everything and may make for a more successful retirement.
I am not referring to owning the stock, I am referring to using Google to answer our urgent and burning questions. Here are a few of the most Googled financial questions:
In Maryland and New Mexico, there are a lot of questions about student loans. There are more questions about how to qualify vs. how to repay them.
People in Maine and Pennsylvania are looking into mortgage calculators. I would guess with the rates still on the low side, people want to know how much they can afford in a house.
Sadly, in Georgia the most Googled financial questions are about Pay Day loans. Many of the questions were about how they work and how you qualify for them. I really hope that is the loan of last resort as they are very expensive loans.
On a happier note, in too many States to list, the most Googled financial question is how 401(k) accounts work. Questions regarding the contribution amounts, fees, when you can/or have to withdraw, etc. were the most popular.
I love Google, but talking to a human can often be better.
Supporting our kids is something we should do, but there needs to be a time when the Bank of Mom & Dad reduces its hours or shuts down completely. If your kids are well into their careers, it may be time for some tough financial love. Hopefully, you have done your job by teaching them how to budget, save, and spend wisely. It’s nice to be in a position to help, but you don’t want to be a lifelong ATM. If your adult children are still asking you for money, here are a few questions you should feel free to ask first:
Ask what it’s for. No matter the amount, you have a right to ask what the “loan” will be used for.
Set repayment terms. I put the word loan in quotes above due to the fact that often “loans” become gifts. You are not doing them or yourself any favors by not setting terms.
Feel free to say no. You may not be in a position to actually make the loan. If you are not on board as to the use of funds, or you will just help feeding a pipe dream, say no.
We owe it to our kids to teach them fiscal responsibility – do that and you will be able to gift them a lifetime of independence.
I work with a number of clients that are at or near retirement, so this question comes up a lot. Everyone wants to know when they should get out of stock funds and move completely to bonds for income. The simple answer is never. Here are a few points to consider:
First, just because you are retired does not mean that you will no longer being living a full and active life. Many of my clients will live, statistically, 20 years in retirement. To me, that is a long time. Stocks have proven to outperform bonds over the long term and you need growth of a portfolio to keep ahead of inflation.
Secondly, there are a number of stock funds that pay nice dividends. A combination of dividend paying stock funds + bond mutual funds may provide the income you need in retirement while your portfolio continues to grow.
Lastly, I had a conversation last week with a 92 yr. old client who does not wish to change from his moderately aggressive risk tolerance. He likes the growth he has realized, and still has a lot of things he would like to do.
There is no set time at which your portfolio mix has to change. Your lifestyle and health will determine your mix.
A popular strategy for withdrawing from your retirement nest egg, the 4% rule, was developed in 1994 by William Bengen. This rule went under the assumption that if retirees only withdrew 4% from their retirement accounts, adjusted for inflation, their nest egg would last at least 30 years. This rule also assumes that the investment mix is one of 60% equities and 40% bonds, which at the time bonds were paying 5%, well below what they are paying today.
Another assumption is that the 4% rules is based on life expectancy vs. income needs. Spending in retirement is anything but static and simply adjusting for inflation does not allow for emergencies or major health issues.
Our tax system is another issue that may blow up the 4% rule. Currently, we all expect to pay less in taxes under the new tax laws. These laws will expire, and we have seen that tax laws can be ever changing. Add to that the various types of retirement accounts to draw from and the 4% rule simply does not apply anymore.
When planning for retirement, try to factor in some fluid spending in retirement, and make sure to review your accounts and spending annually.
I have been asked this question a number of times in the past few weeks, most recently by two men that are past age 70 but still working at their corporate jobs.
Q: “If I am older than 70.5 years but am still contributing to my 401(k), do I need to take withdrawals?”
A: Withdrawals need to be taken from any standard IRA, or Rollover IRA that you may have, but if you are contributing to your company 401(k), you do not need to take required withdrawals from that account.