Occasionally, my position requires me to wear the hat of family counselor. I have a few clients that I am working with right now that are “lucky” to have money that their family members feel should be shared. A few of them are chronically requesting “loans” to pay rent, make a car payment, and various other items. Some of the children or siblings of my “lucky” client feel that cars should be bought for them, or credit card balances should be paid off for them.
My “lucky” clients have worked hard all of their lives, often, more than one job at a time. They have lived below their means, and the money that they have is all that they have. If my clients keep giving to their family members, will these family members care for them when they are broke?
By the way, most of my “lucky” clients have this extra money because they no longer have their parents, siblings, or spouse. Who is the lucky one?

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While many tax payers are still trying to sift through the Tax Reform bill to see what impacts, negative or positive, there will be for them, here are a few things that did not change.
Your 401(k) was spared:
A firestorm of criticism blew up last fall when it was learned that the House of Representatives was considering severely limiting the amount or pre-tax salary retirement savers could contribute to their 401(k) plans. In the end, though, Congress decided to leave 401(k) s alone, at least for now. For 2018, savers under age 50 can contribute up to $18,500 to their 401(k) or similar workplace retirement plan. Older taxpayers can add a $6,000 “catch-up” contribution, bringing their annual limit to $24,500.
You can still stretch your IRA:
Early on in the tax-reform debate, it appeared that Congress would put an end to the “stretch IRA,” the rule that permits heirs to spread payouts from an inherited IRA over their lifetime. This could allow for years, or even decades, of continued tax-deferred growth inside the tax shelter. One plan that gained traction on Capitol Hill would have forced heirs to clean out inherited IRAs within five years of the original owner’s death. The accelerated payout would have sped up the IRS’s collection of tax on the distributions. Ultimately, though, this plan wound up on the cutting room floor. The stretch IRA is still available as long as the heir properly titles the inherited account and begins distributions, based on his or her life expectancy, by the end of the year following the original owner’s death.
The Do-Over is done:
The new law will make it riskier to convert a traditional individual retirement account to a Roth. The old rules allowed retirement savers to reverse such a conversion—and eliminate the tax bill—by “recharacterizing” the conversion by October 15 of the following year. That could make sense if, for example, the Roth account lost money. Recharacterizing in such circumstances allowed savers to avoid paying tax on money that had disappeared. Starting in 2018, such do-overs are done for. Conversions are now irreversible.

Please make sure to review and update your retirement plans today.

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I am in MOB(Mother of the bride) mode, looking for the appropriate outfit for my daughter’s wedding. I waited until after the holidays specifically so I could buy a formal dress on sale. Every store I have gone to, including shoe stores (gotta have the rights shoes), I start in the back of the store where all of the sale items are. I have found some great bargains on formal dresses and shoes. Why do I think you care about this? Because how much you spend may be more important than how much you save.
A huge part of retirement planning is trying to anticipate expenses and emergencies. Through planning, we can get a pretty good handle on the assets that you have accumulated and potential returns from that nest egg, it’s the spending that tends to muck things up. Spending a bit foolishly while you are still working is one thing, there should be time to recover, but in retirement, that recovery time may not exist.
So take it from this MOB, start shopping at the back of the store for a bargain as there may be a bit of saving for a tiny splurge after all.

disclosures:http://www.hechteffect.net/?page_id=31

In a recent survey conducted by Financial Engines, 61% of those who took the survey underestimated average life expectancy by 5 years. The tool showed that the average non-smoking 65 year old has a 42% chance of living to age 90 and a 22% chance of living to age 95. Most retirees that I meet are shocked that I use age 90 for life expectancy in my planning. They do not feel that they will live that long, but what if they are wrong? Along with not estimating life expectancy correctly, many retirees underestimate their living expenses in retirement.
One solution is an extensive budget. We have put together an expense summary that includes many items most people do not think of when making a budget, but year after year on which you spend money.. If you would like a copy of this expense summary please email me at: nancy@financialgroup.com.
Think about the life you hope to lead in retirement. Will you stay in your current home? How will you spend your time? What legacy do you wish to leave?
Face this fear and plan for it.

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I have not seen the new Star Wars movie yet, I have tickets for this coming weekend, but there is always something to learn from the movies. Here are a few financial tips from the force:
Used cars can be a great value.
Obi Wan Kenobi and Luke Skywalker hurry to leave the Mos Eisley spaceport on Tatooine and they must quickly raise funds to pay for their transportation aboard the Millenium Falcon. Luke negotiates the sale of his landspeeder with a vendor, but is saddened by how quickly the value of his model has fallen since new models came to market.
My husband just bought a “new” car, a 2017 Buick that was a loaner. Low mileage, warranty, a lot of bells and whistles, but about $20,000 less than new.
Debt can be a killer.
Han Solo spends Episode 4 (the original film) running from Jabba the Hutt, a crime boss to whom he owes money; he is eventually captured in Episode 5 and handed over to bounty hunter Boba Fett. To begin Episode 6, we find our friend Han hanging on Jabba’s wall, frozen in carbonite, as a warning to those who owe money to Jabba.
Think carefully before you go into debt for anything. Is the item a need or a want? Can you really afford a loan or should you wait before you purchase to accumulate the necessary cash.
Patience is important.
Where is Luke Skywalker? The question is asked in the opening crawl of The Force Awakens with the answer only coming during the film’s final frames. Rey’s path to discover Luke only becomes clear as the pieces of a map are eventually connected throughout the movie. And even once she finds the reclusive Jedi, her own adventures with the Force are just starting to unfold.
Patience pays off in accumulating retirement assets also. We have been hearing a lot about cryptocurrency lately and how “rich” some people are becoming by buying this. That type of purchase is a gamble and not an investment. Investments take thought, research, and patience to be successful long term.

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Good idea or bad idea? Well, it all depends…

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Driving in to this office today, I heard a Rolex commercial. It spoke of how wonderful the watch I and how happy you will make your loved one this holiday. The next line was how you can take 3 years to pay for the watch. Three years! If you have to make payments for a watch, you don’t need that watch. A Rolex, and every other item in that category are wants, not needs. Create a fund specifically for purchases of want items. When you have saved that cash, stop and ask yourself if you really want that item. If the answer is still yes, go buy it now that you can pay cash for it.

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We love eggs. We go through about 18 eggs per week. If cooked properly, your hard boiled eggs will crack and peel easily. This is the type of egg you want to crack – not the retirement nest-egg. Here are a few things people fall short of when planning for retirement that can lead to a scrambled mess.

I like to use age 90 for life expectancy in my planning. Often, a client will state that there is no way they will live that long. Underestimating your life expectancy will wreak havoc on your plans. Most people retiring at age 65 will live 20 years or more beyond that age. I prefer to err on the side of longevity.

Most of us save to some type of retirement plan – many only save to the corporate match. Not knowing what to save can be another crack in the retirement nest egg. Fortunately, doing a budget can solve this problem. Knowing how much income is necessary to replace your earnings + emergencies is essential to a secure retirement.

While at a friend’s house, another guest stated that they want to retire at age 62 and start taking Social Security. I quickly explained that he would be taking a permanent 25% cut in those benefits during his lifetime, and relegating his wife to a reduced benefit when he passes. Waiting until full retirement age, or beyond, can be a great boost to your retirement income. In fact, delaying taking your benefit past age 65 until age 70 allows for an automatic 8% per year increase in your social security payment.

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3 Rules to live by.
Ok, so most of us don’t like rules, however, if you follow these 3 rules, you can get and keep you financial life under control.

Spend less than you earn.
It seems like an easy rule to follow but 71% of U.S. workers are in debt according to CareerBuilder. Make a budget and stick to it. Having positive cash flow gives you control of your financial life.

Wait 24 hours for that big purchase.

You’ve had your eyes and an expensive piece of jewelry, or a new car, or even a vacation. Do your homework, find your item and price, then sit on the decision for 24 hours. If you still feel that the expenditure is worthwhile and you have the cash, make your purchase.

Save for a rainy day.

I cannot say it enough or more clearly – YOU NEED AN EMERGENCY FUND. When establishing your emergency fund, look at replacing income vs. covering expenses. You will have to stash a bit more this way, but you will be better off in the long run.

I hope you agree that these rules are essential and not that hard to deal with.

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