Do I pay it or do I save it?

I have had two clients ask me in the past week if they should use funds that they received unexpectedly to pay down debts or save the funds.
My answer was different for both clients. Let’s look at the circumstances.
Client # 1 has a daughter with student loans that is also looking to buy a house. Their question was regarding where to gift the dollars for student loan or down payment? I felt that since the loan payments have not been a burden, putting the funds toward a down payment and avoiding PMI would be better in the long run.
Client #2 also has student loans and will be graduating soon. My recommendation was to pay extra toward the highest interest loan, but to keep the bulk of the funds available for an emergency fund.

Everyone is different; therefor, the use of funds will be different too. There is no correct answer for everyone.


Why do you want to save money?

We have a big problem in this country – not enough people have cash on hand. We are a mere two weeks away from the start of hurricane season and when the power goes out, cash is king. An emergency fund is, in my opinion, so important, but so few people have one. My question to you is, “Why do you want to save money”?
Retirement is a big reason to save as social security is not going to cut it in retirement if that is your only source of income. We need to start saving for retirement from the very first pay check. My recommendation is to start with 10% of your pay and increase that amount as you get raises and bonuses.
Many people save for a home purchase. Housing prices are very high right now. Once you figure out how much you can afford, the goal should be to save 20% for a down payment so you do not need to pay PMI. Private Mortgage Insurance (PMI) is a special type of insurance policy, provided by private insurers, to protect a lender against loss if a borrower defaults.
Vacations seem to be another big reason people save money. When planning a family vacation, add an additional 10% to what you think you might need as you never know what could happen on a trip, good or bad, that could require extra funds.
Identify why you want to save money and be diligent about stashing away cash for that reason, even if you have to sacrifice a bit to achieve your goal.


A man is Not a Plan – 3 things to do before you re-tie the knot.

We have all had clients that have gotten remarried but have not looked at their full financial picture before doing so. Here are 3 things to pay attention to before you re-tie the knot:

Put all of your cards on the table:
When combining families, there is a lot to consider. Does one spouse have child support to pay? Are there alimony agreements with your former spouse that may change? What liabilities are you bringing into the new marriage? It is important to have full disclosure of all assets and liabilities, pensions, retirement plans, bank accounts, and estate plans.
Update your beneficiary designations:
Sadly, I have seen more than one case where a second spouse has passed on, but they never changed their beneficiary designations after a remarriage. There is nothing worse than having to tell the second spouse that they will inherit nothing because they are not the beneficiary on the life insurance or retirement plans.
Take care of your legal documents:
Make sure to update your living will, Florida medical surrogate statements, and powers of attorney, both standard and durable powers to your new spouse.

Take time to address all of these important issues and you plan your new life.


A retirement product ≠ a retirement plan.

Even though I am in the business, each week I receive a number of dinner invitations to hear about the retirement product to end all retirement products. Annuities, trading platforms, structured investment platforms, and real estate have all been touted as the perfect product for a successful retirement. Please don’t take me wrong, these products I have mentioned may have a place in your retirement, but they will not be the mana from heaven that some tout them to be. When we ran retirement seminars, we offered the opportunity to plan your retirement, we did not offer THE retirement product.
Without a personalized, comprehensive retirement plan, you have no idea what your retirement may look like throughout your retirement years. A comprehensive retirement plan can be your roadmap to a successful retirement.
Contact me at to schedule a complementary consultation to determine if you might want to develop a true retirement plan.


You’re Never Too Old!

I work with a lot of retirees, or those who are about to retire. One common question I get is, “when is the proper age to transition from a stock portfolio to a bond portfolio”? The answer is:
You are never too old to own stocks, or equity mutual funds, which I prefer, in your portfolio. Let’s look at some reasons why equities are always a good thing.
History has proven that equity funds outperform income funds over the long term (and of course, there is no guarantee that will continue; however, for the past 80+ years, that is the history of equity performance). Many retirees under estimate how long they will live in retirement. If equities can add, conservatively, 4% annually to your balance, your portfolio may last an additional ten years.
Many stocks can be safe. There are a number of very old, stable companies that have modest growth and pay regular dividends. AT&T is one that comes to mind. Most of us are very familiar with AT&T and we probably use their services. While the stock value has been very stable over the past five years, the current dividend it pays is 5.73% (according to
Through diversification, stocks can make up a portion of your portfolio, but should not make up the whole portfolio. Bond funds and cash should be part of your mix to provide some stability that the stocks may not.
Cash and bonds provide some safety, but they can be boring. Stocks can be more fun to watch, and through mutual funds you can own a piece of the pie.


Don’t let your emotions get the best of you.

Stock markets have been pretty volatile this year, and it’s only April. If you are worried that turbulence is getting to be too much, I’ll ask you to take a moment, sit down, and let’s talk emotions and their impact on investing.
According to DALBAR (a well-respected research firm), most investors tend to buy high and sell low causing them to significantly underperform versus the larger markets over a 20 year timeframe. Why? Most investors tend to follow the crowd. I strive to do the opposite. I like to buy when the markets are in the red, things are on sale, and sell when the markets are in the green. Most investors will panic when the markets are in the red and sell, so please try to resist following the crowd in the action.
We always talk about being diversified because it is so important. Being diversified is investing in different asset classes, sizes of companies, equities, and income items. Mutual funds provide one of the easiest ways to diversify your portfolio. Diversification is not holding the same fund in different accounts. I had a client that had CD’s in a number of banks and thought they were diversified until I explained it was just the same asset in a number of locations. Please, check your diversification.
F.O.M.O. This new term is “fear of missing out.” I had a number of clients experience FOMO when bitcoin first started trading. In my opinion for my clients, bitcoin and other cyber currencies were more of a gamble vs. an investment. Influence from the news and friends can cause FOMO. I ask you to step back and think of your own plan before acting on this emotion.
There are often a number of emotions attached to money and investing. A quality financial plan can help keep those emotions in check.


What message are you sending to your kids?

In many households, discussing money is taboo. Some think it is crass, some think it is a burden and sometimes self-esteem is associated with money. Kids pick up on how you feel and think about money. We need to have some frank, and positive discussions with our kids. No matter what your economic status is, we worry about money. I believe in facing fears head-on so the worry can be lessened.
Wealthy people may not lose sleep over paying everyday bills, but they do have concerns about passing on wealth prudently, a reversal in the stock markets wiping them out, or making bad choices in professional help. These may not seem like problems to some, but they are real problems that prevent people from talking to their kids about how to manage their money, and how to make sure that their future families, and communities are cared for upon their passing.
The uses of money is often not discussed either. How much do you save regularly? How do you establish credit? What is the difference between saving and investing? Basic money knowledge can lead to confidence and self-esteem when it comes to managing your money.
If the topic of money was taboo in your household, you can change the money story for your family. Have real conversations with your kids. Think of money as your tool – we control our tools, they do not control us.


It’s an uncomfortable conversation, but one that must be discussed.

Many people have all of their basic estate planning issues taken care of, but have you spoken to your kids about any of it? Most people have not. Most people think it is crass or depressing to discuss these issues. Take it from me, it is not, and it is necessary. Your heirs need to know your final wishes and where to find all of your information. Here are a few of the most common problems that occur when a loved one passes on:
What happens to their IRA?
As a non-spouse, you cannot rollover an IRA. You must open an Inherited IRA if you chose not to cash the whole account out and pay tax upon receiving the IRA. Once you open the Inherited IRA, you must then start taking out annual withdrawals based on your life expectancy. These withdrawals will be taxable. If you inherit a Roth IRA, the same rules apply.
What is step-up in basis?
We often use the term “cost basis”, but many people do not know what that means. Further, when you inherit non-retirement assets, you receive a step-up in basis. Here is an example of how it works:
If you paid $250,000 for your home, but it is worth $500,000 when you pass, the $500,000 value is what the home steps-up to for sale and estate tax purposes. This rule applies for mutual fund investments also.

Who knows where all of this financial stuff is?
Contact information for all of your financial professionals should be stashed in the same place as you would keep your final papers. If you would like a Financial Organizer to help you put all of this information together, please contact me at


I have to pay taxes on that?

Most of my clients are surprised to find that their tax bill does not go down in retirement. Often, their tax bill can be higher than in their working years. Let’s take a look at some of the retirement incomes that carry a tax surprise.
While we know that while saving into qualified plans during our working years, many retirees underestimate what percentage of tax they will have to pay on the withdrawals. Roth accounts are the exception, assuming that your funds have been on deposit for five years or more.
Once upon a time Social Security benefits were tax-free, but that all ended with the signing of the Social Security amendments in 1983. Currently, depending on your “provisional income,” up to 85% of your Social Security benefits are subject to federal income taxes. To determine your provisional income, take your modified adjusted gross income, add half of your Social Security benefits and add all of your tax-exempt interest.
If your income is between $32,000 and $44,000 ($25,000 to $34,000 for singles), then up to 50% of your Social Security benefits can be taxed.
If your income is more than $44,000 ($34,000 for singles), then up to 85% of your Social Security benefits are taxable.
Most pensions are funded with pretax income, and that means the full amount of your pension income would be taxable. Payments from private and government pensions are usually taxable at your ordinary income rate, assuming you made no after-tax contributions to the plan.

Plan carefully, as taxes never seem to go away.