Recently, I spoke to a woman who had just lost her husband. While she missed her husband terribly, per his wishes that she not mourn too long, she was trying to move on. They had celebrated his life and she was feeling as much at peace as one can after losing the love of your life. She received what I would call an average life insurance payout. Not a huge sum of money, but enough to maintain her over the next 25 years. Her angst was caused by her brothers; she did not know what to do.
Next week she will be attending a family function and she knew they were going to ask her for money. Let me correct that: she knew they were going to pressure her because now she was “rich.” Her brothers have made a lot a bad choices; drugs, drinking, not paying their bills on time, not able to hold a job, things we have all heard before. I tried to assure her that she did not have to address, or more importantly, take care of their problems. I told her that I know no one can push our buttons better than our siblings, but she had to be strong.
She was not responsibly for how they had lived their lives and the choices they had made to get them into the positions they are in – she needed to let them know that their comments were rude and hurtful. It was time for her to be selfish. Selfishness in this situation would be her only salvation to assure that she could financially maintain her lifestyle.
We want to help our families, but if we do not take care of ourselves, we cannot help anyone.

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When my Daughter was young, we had my sister appointed as the person named to take care of her financially, and a friend named to take care of her physically. Many people do not split these responsibilities, for us it was the best choice. Now, my daughter is in her 20’s and should be able to take care of herself. The question is: do we burden her with the responsibility of taking care of us if that is necessary? Who will take care of you? Situations change, someone you may have appointed to take care of you either physically or financially may no longer be the best choice.
As the year comes to a close, please review your choices. Make sure that “your person” is still the best person for you.

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I was friends with a girl in high school that constantly wished she would just wake up thinner. She never did anything in the way of physical exercise and I have no idea what shape she is in now.
Financial fitness is just like physical fitness; one step at a time and a continual process. Here are a few steps to get you going:
Review where you stand.
Look at your account statements to see what your investments have been doing, bank statements should be checked for balances and potential errors, and review your spending. For 2016, commit one hour each month to this review process. Weigh your spending vs. what you set for a savings/investment goal. Adjust as needed.

Nutrition is important.
Just as eating properly is important to any fitness goal, feeding your investments is important to your future financial wellbeing. Money issues are one of the biggest stressors we have to deal with. Make sure this is not an issue by properly and regularly feeding your investments the proper amounts for your goals.

Be careful.
Many times when people are new at fitness, they get over zealous and end up hurting themselves. Take it slow and build. The same goes for saving and investing. Make sure you have a good emergency fund before you start long term investing.

Here’s to physical and fiscal fitness in 2016!

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I was recently asked this question by a couple I met. They have a long term relationship and are approaching retirement. This question came up when we started looking at their Social Security benefits. I found the question a bit funny because in the past I had advised couples not to get married as they would reduce their Social Security benefits.
My current couple is approaching full retirement age for Social Security purposes. Their incomes are not equal; the man makes quite a bit more than the woman does. The current rules state that you must be married for 1 year to receive spousal benefits through Social Security. In the case of this couple, getting married could make a major difference in their retirement income.
I hear wedding bells for the New Year!

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

We all do things that are so rote to our lives we don’t even realize that there can be long term damage. Here are a few things I know many people do that will ruin your retirement.

Not putting time on your side:
It is so easy to focus on the upcoming holidays and gifts to buy vs. saving for your retirement. Plan out your spending to see where you can cut expenses and boost your retirement savings. The biggest gift we have is time. What you save during your early years of working will make a huge difference in how much you have decades from now.

Putting all of your eggs in one basket:
Do you chase the hottest fund each year? I have known investors that at the beginning of each year will find the previous years’ best perform and move all of the retirement money into that fund. Their hope is that the climb will continue. Because they are doing this every year tells you this is not a strategy that usually works. Diversification and re-balancing is a great approach to long term investing.

You own too many funds:
There are those investors that are so diversified – that they really are not. You may own 20 different mutual funds but if they are invested in predominately the same companies, you are not diversified. To have a truly diversified portfolio you need to be in different sectors.

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No, I am not talking about with your Spouse- I am talking about your IRA. Do you have a number of Non-Spousal beneficiaries listed as either primary or contingent on your IRA? Not all Non-spousal beneficiaries (commonly called our children) will want to take the required withdrawals the same way when they inherit your IRA account.
A common practice is to equally split the IRA account into smaller IRA’s with each child as beneficiary on an account. That way, many, many years from now when you pass on, they will not have to consult each other or worry about what one of their siblings wants to do about required withdrawals.

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I have worked with clients that used to look at their portfolios every day. During the recent downswing this past September – how many times did you look at your portfolio? Was it many times a day? If so, this is a sign of two things you need to change.
1. Maybe your portfolio is over weighted in equities. While we often say that you need to have stocks in your portfolio to keep ahead of inflation, you also need to have some balance between equities and income.
2. Maybe it is time to hire a Certified Financial Planner™ Professional to manage your accounts. Many clients will confess to not looking at their portfolios as often once they have hired a professional set of eyes.

See Disclosure

I am referring to your RMD (required minimum distribution) from your qualified retirement accounts. Many of my clients are fortunate in that they don’t need their RMD to maintain their lifestyle. That being said, the funds must be withdrawn, the tax must be paid – what do you do with this money?
Here are a few ideas:
You can gift your RMD to charity. Currently, you can transfer up to $100,000 directly from your IRA to charity. This law had expired but was extended to the end of 2015. This direct transfer can count as your RMD.
Many of my clients reinvest their RMD in a tax free mutual fund. The idea is to allow the money to keep working for you but not pay tax on the earnings again.
You can help your grandkids by funding their college. There are a number of college savings plan you can deposit your RMD into such as a 529 savings plan or an educational IRA. Believe me, your grandchildren will be grateful.

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