2020 is the Year to be Money Savvy

Definition of Savvyhaving or showing perception, comprehension, or shrewdness especially in practical matters.

Money Savvy: smart with money, money-wise, financially astute, shrewd.

If you started saving for retirement early you are money savvy and, chances are you’ll hit your retirement goal. However, if you’re like most Americans, you didn’t start right away and will need to plan for a possible retirement savings shortfall. How can you make up the difference? Don’t put off saving more later, start now!  Now is the time to start maximizing your savings, while you still have time to make up the difference. Review your saving and spending habits and assess what you can do to save more this year:

Save Unexpected Money Windfalls.

If you’ve received a bonus at work or inherited money, instead of spending it, save it!  Expecting a tax return? Add it to your emergency fund, start or max out Roth IRA contributions, or invest it into another investment.  If you have debt, pay it off using your refund

Don’t Spend More Than You Make.

Overspending, credit card debt, and debt in general, will hamper your savings if your extra income goes toward paying the debt.  Not living beyond your means is easier said than done, right?  Controlling your spending and sticking to a budget should be a priority for you in 2020.

Get Your Employer’s Retirement Account Match.

Make sure you’re contributing enough in your employer’s retirement plan to receive the employer’s matching dollars. If you’re not saving enough to receive a matching contribution from your employer (commonly a 2-4% match), you’re throwing away ‘free money.’

Max Out Your Retirement Contributions. Roth IRA contributions are $5500 if you’re under 50, $6500 if you’re over 50.  In your Tax-Sheltered retirement savings accounts, max your contributions at $19,500 and if you’re over 50, $25,500.

Take Some Risk. If you have your retirement savings in an interest-bearing account outside of the stock market, you will not keep up with inflation in retirement over time. Meet with me to have your investor risk profile evaluated to determine how much market risk you can tolerate. Having 100% of your retirement savings in the stock market may not be best for you, but all of it outside the market may not be either.

Be Aware of Future Tax Implications. Part of your retirement savings should be in tax-sheltered accounts. Discuss investment options and their tax benefits with your financial advisor and your tax professional so you fully understand how taxes impact your retirement savings contributions now and in retirement. If you’re anticipating retiring in the next 1-2 years, this is critical. Many new retirees don’t realize that their taxes may dramatically increase from liquidating too much from their pre-tax retirement accounts during the first five years of their retirement.

Monitor Your Investments.  Always meet for a financial review at least yearly to determine if your risk tolerance, fund choices, and timeline until retirement are still on target.  Getting financial help is never a bad investment.

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In addition Demo DMS specializes in providing strategies and guidance for those who want to be more money savvy. If you have retirement savings of five million dollars or $50,000, we can ensure it works as hard. As a result, we offer our experience and knowledge to help you design a custom strategy for financial independence. Contact us today to schedule an introductory meeting!


Aging in Place: Growing Older at Home

The U.S. population continues on growing older, with the baby boomer generation now the largest generation ever. By 2035, one in three heads of households will be someone age 65 and older. The American population will have one in five people age 65 or older, an increase of 30 million people over the next thirty years. Not all people in this group have recovered from The Great Recession, leaving them with lower incomes and homeownership rates than previous generations. As our population ages, the demand for affordable housing connected to accessible services will continue to increase, and many will find their own homes the only affordable option.

90% of homeowners approaching retirement plan on “growing older at home” in their own homes, according to a 2018 survey by AARP. Although survey respondents say they plan to stay in their own homes, only half think they’ll be able to stay until the end of their lives. Other findings:

  • 36% plan to modify their homes to enable them to age in place
  • Bathrooms and entryways are the most likely modifications
  • 32% were willing to share their home with others to stay, 29% said they were not.

Aging In Place Takes Planning

While you never know what your needs may be as you are growing older, the first step is thinking about what help you may need in the future. Do you have health issues now, or does your partner? Will there be a progression of your illness over time requiring special care or modification of your home? In addition, health problems can make it hard for someone to care for themselves as they age.

You can get almost any type of care at home-but at a cost. Check into home health care in your area and include health care costs (including long term care) in your financial planning. Health care is one of the highest expenses in retirement, especially as health issues arise.

A Broader Definition

However, on a broader definition, aging in place means living independently in a home that is right for your needs. That definition may mean down-sizing to a smaller home, living in an assisted living facility, or a long-term care facility. Aging seniors may choose to live near or with family members. Common concerns of aging seniors include:

  • Personal care
  • Household chores
  • Money management
  • Meals
  • Healthcare
  • Getting around/transportation
  • Staying active and maintaining friendships

In conclusion, if you plan to age in place, it’s important to discuss your intention with your family. In addition, a discussion with your financial advisor now will help you prepare and make it possible.

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In addition Demo DMS specializes in providing strategies and guidance for those planning on growing older at home. If you have retirement savings of five million dollars or $50,000, we can ensure it works as hard. As a result, we offer our experience and knowledge to help you design a custom strategy for financial independence. Contact us today to schedule an introductory meeting!


Until Debt Do Us Part

The thought the division of joint debt discussed when saying “I do,” to any relationship. For couples that combine both assets and liabilities, a split signals the dilemma of dividing both. About half of all marriages in the U.S. end, according to the American Psychological Association, making debt a significant hindrance to financial security for some divorcees.

In a perfect world, the spouse that acquired the debt would pay if off; however, that is not always the case. Creditors will hold both spouses listed on the note or agreement. This is regardless of the way the court determines the debt is to divide.

When it comes to a bank loan or credit card debt, the original agreement will likely override any decree. If the spouse not on the agreement made the payments for the other who is the legal debtor, the paying spouse isn’t obligated by the bank or credit card company to continue payments, despite any decree.

What steps can you take to help transition the obligation of debt best in a divorce situation?

Work Out a Debt Repayment Plan Before the Divorce

Although it’s not always easy, working together to get debt each of you is responsible for paying off is essential. If you have joint liability, you both have an obligation for it and need to work out a plan that is fair to both of you.

Transfer Balances or Consolidate Debt

You may need to open new credit card accounts or take out a loan to transfer debt into your name only. The only way to get your spouse’s name (or yours) removed from an account with a balance is to either pay it off or transfer the debt. Seldom will a credit card company or a bank remove someone from a debt obligation, leaving it in the other’s name. The creditor has requirements on removing someone from an account, so consulting them is your best resource.

Individually Pay off Mutual Debt Before the Divorce

You may choose to pay off the debt and then seek repayment from your spouse during the divorce negotiations. Protecting yourself from future liability during the time leading up to the divorce is important. Especially if you’re concerned about your spouse acquiring more debt.

In-home and auto loans, the loan titling determines the responsibility or obligation. To remove a spouse from payment responsibility many times requires a new loan, paying off the joint loan, or liquidating the asset. If one or both spouses aren’t creditworthy on their own, or if the liquidation of the asset isn’t enough to pay off the loan, this may impact the credit of both.

What About Credit Score?

Your credit score is yours. If you have joint debt your credit score is substantially impacted. Divorce can be devastating, both emotionally and financially. Consulting your creditor is the first step in resolving your joint debt.

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Disclosure: This article is not intended to provide legal advice and is for informational purposes only. 

In addition Demo DMS specializes in providing strategies and guidance for those who are seeking a better lifestyle in retirement.  As a result, we offer our experience and knowledge to help you design a custom strategy for financial independence. Contact us today to schedule an introductory meeting!


Understanding Fixed Income: For Today and the Future

Fixed income is something many Americans don’t understand, according to the 2019 survey, “Fixed Income, Not Fixed Thinking,” by BNY Mellon Investment Management, one of the largest asset managers in the world. The study revealed that the majority of Americans surveyed have a limited understanding of fixed income investments, regardless of age, income, education level, and other demographics. The lack of understanding ranged from bonds, different fixed-income solutions including fixed-income insurance products, comprehending how fixed-income plays into retirement planning, and understanding its risk in comparison to other asset classes.

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Dare to Dream: Your Success Depends on It

Dreaming and goal setting are interrelated; first, you dream about what you want, then you determine how to obtain it. Our dreams should help guide us to make the right choices at the right time and in the proper manner. But merely dreaming about something is not enough; we must set goals to achieve it. In psychology, goal setting refers to a successful plan of action that we set for ourselves.

Psychologist Frank L. Smoll, a Ph.D. and working psychologist at the University of Washington, emphasized through his studies the three essential features of goal-setting, which he calls the A-B-Cs of goals. Smoll said that effective goals are:

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10 Financial Tasks To Complete Before 2020 (Yes, You Have Time)

Here we are, already to the end of 2019! The end of a year and the start of a new one is when most people decide to clean up and implement changes in some areas of their lives. Whether it is financial or health-related, starting the New Year off with tasks completed feels good! Here are ten financial tasks that can make a difference to you now, and later:

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Retirement Plan Contribution Limits Increase in 2020

In November 2019, the Internal Revenue Service (IRS) announced the cost of living adjustments for 2020 for most retirement savings plans. However, IRA contribution limits will stay the same. If you plan to make the maximum contributions to your retirement plan in 2020, here’s what you need to know:

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Is Lowering Interest Rates Good for the Economy and the Markets?

In this article we look at the effect lowering interest rates can have on the economy and the markets. Interest rates can have a positive or a negative effect on the U.S. economy, the stock markets, and your investments. When The Fed changes the Federal Funds Rate (the rate at which banks can borrow money to lend to businesses or you), it creates a ripple effect

The raising and lowering of the Fed Funds Rate is the role the Fed plays in stimulating the economy. In theory, the lowering of interest rates should help boost the U.S. economy by encouraging borrowing and spending. Therefore consumers and businesses are more willing to make big purchases. Whereas higher interest rates slow down borrowing and restrict the flow of money into the economy.

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Today’s Pre-Retirees: Financial Planning with a Contingency Plan

Financial planning with a contingency plan is a requirement for all those who expect to retire at some point. The demographics of retirement and a ‘retired person’ is rapidly changing worldwide. Over the past 200 years, there have been remarkable changes in health and wealth around the globe. Now, there is a converging demographic between countries, thanks to world aid and trade, and technology. Human life expectancy is increasing; in just the United States, thirty years have been added to our life expectancy over the past 100 years.

Retirement is no longer viewed as winding down one’s life like it was in the 1950s. Today’s pre-retirees are making plans for their second phase of life. According to Age Wave, the nation’s foremost thought leader on issues relating to an aging population, today’s pre-retirees view retirement as an ‘Aspirational Life Stage’:

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World Trade: Is It Just Regulated Politics?

StaThe World Trade Organization (WTO) is the only global international organization dealing with the rules of trade on a worldwide scale. It is a place for member countries to settle arguments and negotiate trade deals. But what happens when negotiations between two counties go awry, and tariffs continue to apply for long periods? The WTO can only intervene when its members create undesirable consequences for one another by disputing or blocking economic development and citizen’s well-being. 

This is important for all Americans, as the flow of trade domestically and abroad impacts the profitability and returns in our portfolios and personal savings. We continue to invest in global economies, even when world politics and trade disputes have far-reaching effects.

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