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End-Of-Life Care Costs

March 23, 2022 by Jacob Sensiba Leave a Comment

End-of-life care is a treatment someone nearing death receives in the final days, weeks, months, or sometimes years of his or her life. During this time, medical care and support continue regardless of whether the patient’s condition is curable or not. Many receive professional medical care in hospitals, nursing homes, or even in their own home. Patients are then placed in either palliative care or hospice care, and the costs are paid by Medicare, Medicaid, private insurance, charities, the individual, or other payment programs. Here are some things to know about end-of-life care costs.

Eligibility for Medicare’s Hospice Benefit

The patient must be 65 years or older
Diagnosed with a serious illness
Certification from a doctor that he or she has six months or less to live
Agrees to forgo life-saving or potentially curative treatment
Hospice provider must be Medicare-approved

Medicare provides care for two 90-day periods in hospice, followed by an unlimited number of 60-day periods. At the start of each period of care, a doctor must re-certify that the patient has six months or less to live.

Medicare’s hospice coverage includes a broad range of services:

Nursing care
Medical social worker services
Physician services
Counseling (including dietary, pastoral, and other types)
Inpatient care
Hospice aide and homemaker services
Medical appliances and supplies (including drugs and biologicals)
Physical and occupational therapies
Speech-language pathology services
Bereavement services for families

Hospice costs not covered by Medicare

Room and board
Emergency care such as ambulance fees or emergency room costs
Treatment or prescription drugs attempting to cure illness

Hospice costs are paid for in the following manner: Medicare – 85.4%; Medicaid – 5%; managed care or private insurance – 6.9%; other (including charity and self-pay) – 2.7%.

Respite care is a short-term break for caregivers of terminally ill patients. The patient can stay for up to five days in a Medicare-approved nursing home, hospital, or hospice facility.

Some Costs

Studies showed 42% of people died at their home at $4,760 in their last month of life. Whereas in a hospital it cost $32,379. Dying in a nursing home was the second most expensive, hospice care was third, and the emergency room.

Now that all of this has been explained, there are some things you need to do or things you should do to prepare for these costs.

Planning

You have to save for it. A lot of retirement planning is determined by how much you are going to spend in retirement. Heck, that’s basically all of what retirement planning is. You need to save and plan for this.

Not everyone has to be concerned about it. If you have all of your debts paid off and your retirement account is in a place where you don’t have to be worried about running out of money, then you probably don’t have to think about it too much. That doesn’t negate the fact that you should plan, your planning just looks a little different. Instead of buying final expense life insurance, maybe you’re buying a plot in a cemetery.

Planning will look different for everyone, but your circumstances don’t excuse you from planning.

Final expense insurance is a life insurance product that’s purchased to pay for burial and/or funeral expenses. It’s also called burial insurance and senior insurance. In most cases, the benefit from the insurance product reimburses the costs incurred from burial and funeral, as it takes longer for those to get paid out.

End-of-life care is a necessity for most people. It’s important to plan for it.

Disclaimer:

**Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. Please see the website for full disclosures: www.crgfinancialservices.com

Jacob Sensiba

My name is Jacob Sensiba and I am a Financial Advisor. My areas of expertise include, but are not limited to, retirement planning, budgets, and wealth management. Please feel free to contact me at: jacob@crgfinancialservices.com

www.crgfinancialservices.com/

Pros and Cons of Self-Employment

March 2, 2022 by Jacob Sensiba Leave a Comment

The number of businesses that have started since the start of the pandemic has shot through the roof. People realized how short life can be and decided to take their earning potential and work-life into their own hands. Here are a few stats to illustrate the self-employment picture in the U.S.:

As of 2019, the self-employed section of the population accounted for nearly 30% of total employment (Source).
As of November of 2021, there are 9.9 million self-employed people in the United States.
96% of self-employed people don’t want regular jobs (Source)

Business structures

Sole proprietorship – There is no separate business entity. You are the business entity. That means your assets and liabilities are your assets and liabilities. Banks are more hesitant to lend to sole proprietors than they are for other entity types.

Partnership (LP/LLP) – An limited partnership (LP) has one general partner with unlimited liability and all the other partners have limited liability. Creditors can come after all of the general partner’s assets including things they personally own. Limited liability partners can only lose what they put in. A limited liability partnership provides limited liability to all partners. Profits are paid through on personal tax returns, except for the general partner – they must pay self-employment taxes.

LLC – Very similar to the LLP in terms of how profits, losses, and liabilities are treated. Profits are passed through to employees on personal returns. However, members of the LLC are required to file and pay self-employment taxes.

Retirement plan options

As a self-employed individual, you have a few options when it comes to retirement accounts – Traditional IRA and Roth IRA (available to everyone), SIMPLE IRA, Solo 410(k), and SEP IRA.

Traditional IRA and Roth IRA – Contribution limits up to $6,000 ($7,000 if you’re 50 and older). Withdrawals prior to 59 ½ are subject to a 10% tax penalty unless certain conditions are met.

SIMPLE IRA – available to employers with fewer than 100 employees. Contribution limits up to $14,000 ($17,000 if 50 or older). Employer match available.

Solo 401(k) – Contribution limit is $61,000 ($67,500 if 50 or older). Available to self-employed individuals and self-employed individuals that have their spouse as their only employee.

SEP IRA – Contribution limit is 25% of employee compensation up to $61,000.

Click here for more information about business retirement plans.

Be your own boss

You get to set your own hours and work with whoever you want to. There’s no one to tell you what to do and how to do it. For people that like to make their own schedule and like to go to the beat of their own drum, self-employment makes a lot of sense.

Earning potential

There’s no ceiling on your earning potential. You don’t have a salary range, you make what you make. You can make $10,000 or you can make $10 million. That’s a double-edged sword though, your effort determines your income. You will only make money if you work for it. Someone who isn’t a self-starter, should not be self-employed.

Costs

You have to pay for everything. Whatever the cost of business is for your sector or industry, that’s on you. Health insurance, you have to pay for that. There’s no business or employer that can foot those costs for you. Same with your retirement plan, a lot of employers offer an employee match. If you’re the business owner and the employee, ALL of your contributions are your responsibility.

Disclaimer:

Jacob Sensiba

www.crgfinancialservices.com/

Finance Lessons Learned from the Pandemic

February 23, 2022 by Jacob Sensiba Leave a Comment

The Covid-19 pandemic changed life for two years and there are definitely still elements of what life was in the world today. No doubt there were some terrible things that happened. People lost their lives and their jobs. But there were also positives that came out of it. We’re going to highlight the lesson we can learn from this pandemic, particularly some personal finance lessons we can learn.

Working from home

This new type of work does not apply to everyone and I don’t like leaving people out, but this needs to be talked about. Working from home and articles about it took over during the pandemic and continue to be discussed.

Working from home, at least from some of those articles and studies, appears to be a net positive for employees and employers. Let time commuting, less overhead costs, more productivity thanks to no commute, increased job satisfaction, and improved work-life balance.

Thanks to the work-from-home setup, people who were able to do that moved out of the city or rented an Airbnb for an extended amount of time. In either case, those people were, likely, able to reduce their housing costs by moving to the suburbs or giving themself a little vacation/change of scenery.

Savings rate

A lot of people saved money during the pandemic thanks to stimulus payments. In April of 2020, the personal savings rate for Americans was 33%. In March of 2021, the personal savings rate for Americans was 26.6%.

The savings rate has fallen since then but is still above 12% which is higher than it was before the pandemic (less than 10%).

Stimulus payments

According to the National Bureau of Economic Research (NBER), most Americans either saved or paid down debt with the majority of their stimulus payments. 40% of the stimulus payment was spent, 30% was saved and another 30% was used to pay down debt.

Personal finance lessons

I think there were a lot of personal finance lessons that can be learned from the pandemic. Here’s a list of them below:

People saved more money

The future was very uncertain so people were more conservative with their spending and less conservative with their savings. That mindset shouldn’t change. The future, in principle, is uncertain. We do not know what tomorrow holds, so saving for a rainy day/goals/retirement is very important.

You don’t need to spend money to have fun

At the very beginning of the pandemic, you couldn’t go anywhere. Quarantine and lockdown orders came in right away. Instead of getting together in person, people utilized Facetime, phone calls, and Zoom. I, personally, had group Zooms with family members where we played and had conversations like we would if we were in person.

Diversification is important

Early in the pandemic, the market tanked. We lost over 30% in six weeks. Granted, it came right back up not long after, but that might not always be the case. If you don’t have time to ride out the ebbs and flows of the market, it’s important you get your asset allocation right. Talk with your adviser to make sure your investment matches your time horizon and risk tolerance.

Get rid of debt

You never know when your job and your ability to earn can be taken from you. Some people lost their jobs, some people were furloughed, and some people just weren’t able to go to work. If you don’t have an income, the only other part of the balance sheet you can affect is your expenses. Get rid of your debt. That’ll help you reduce your expenses in case that happens (you can also save more).

Protect your loved ones

Get life insurance. A lot of people passed away during the pandemic. If you contribute income to your household, you need to make sure you financially protect the people that rely on your income.

Disclaimer:

Jacob Sensiba

www.crgfinancialservices.com/

What To Do With Your Old 401k

February 16, 2022 by Jacob Sensiba Leave a Comment

When you leave your job and you have a 401k, there are a few things you can do with it. You can leave it there, you can cash it out, you can roll it into an IRA, or you can roll it into a retirement plan with your new employer. So what should you do with your old 401k?

Theoretically, you have four options.

Withdrawing your funds

If you are under the age of 59 ½ and you withdraw the money, you’ll have to pay a tax penalty on it. UNLESS, you meet some of the exceptions: medical expenses, your first, primary residence (up to $10,000), health insurance premiums while unemployed, distributions from an inherited IRA, pay off an IRS tax levy, higher education expenses, as well as a few others.

If you don’t meet any of those criteria and you’re under 59 ½, you’ll have to pay that penalty. It’s not worth it. UNLESS you’re using that money to pay off a credit card. Credit card interest rates are usually well above 10%. So if you’re saving yourself from paying a 27% interest rate, theoretically, you’re making a 17% return on your money (27–10=17). But this calculation doesn’t account for taxes so you might come out even, or behind.

95% of the time, it makes the most sense to pursue other options.

Keep it where it is

Some people will leave their old 401k with their previous employer. I think a lot of that has to do with laziness, but it could be a good, rational decision as well. The primary factor has to do with cost. What are the expenses of the 401k? Typically, if it’s a large employer and/or a large plan with a lot of assets, the fees are going to be low.

That might be a good reason to leave it. The plan might also have good investment options. If the fees are reasonable, or at least average, then the investment options might be reason enough to stay.

Roll it to your new employer

Nine times out of ten, I’ll have people roll their old 401k into their new one. If they’re able to. Some employers don’t allow income transfers. Having everything with one firm makes managing it so much easier.

The only time I don’t think it would be appropriate is if the new firm has high fees, but it’s also important to compare the new fees to the fees of the alternative. That alternative is rolling it into an IRA at a separate firm.

Roll it into an IRA

As an independent financial advisor, this option is best for me, but not typically best for the client. If you take a standard fee for a financial advisor (1.00 %) and compare it to the standard expense paid by a 401k participant. Employers with 2,000 employees pay below 1% and employers with 50 or fewer employees pay 1.25%. Here’s some more info on that.

That might be the case if it’s a small plan. The large plans, however, can have ALL IN fees of around .5%.

As is the case with a lot of things in the finance world, the answer is not black and white. You need to compare and contrast your options and then make a decision. Here are things to consider: cost, investment options, ease of management, and customer service. How do the fees compare? What are the investment options? Do you have everything in one place and is it easy to make changes? Can you get in touch with someone if you have problems/questions?

Disclaimer:

Jacob Sensiba

www.crgfinancialservices.com/

How to Set Investing Goals

December 15, 2021 by Jacob Sensiba Leave a Comment

Saving money for the future is important, but I believe it’s even more important to invest that money and make it work for you. With that said, you can’t just start investing. You need to lay some groundwork first, you need to have goals in mind, and you have to be intentional so that when things get difficult, you stick with the plan instead of abandoning it during the discomfort. Today, we’re going to talk about how to set investing goals.

What kind of goals are there?

There are typically three-goal time horizons: short-term, medium-term, and long-term. A short-term goal is something you plan on achieving in 2-10 years. Saving for a down payment is a pretty common goal that fits into that window. A medium-term goal is 10-20 years. Saving for educational expenses for a child fits into that window. A long-term goal is retirement or anything else that’s 20+ years down the road.

These time windows are my opinion, though I think they’re pretty close to conventional opinion. Also, there are more goals than the ones I listed above.

How to think through your goal-setting

There are three things to keep in mind when you set investing goals (not to mention figuring out the goal itself). How much time do you have? Is this a short-term, medium-term, or long-term goal? Do you have time to take some risks or do you have to play it safe?

Speaking of risk…what are you comfortable with? Usually, this goes hand in hand with how much time you have. A short-term goal like saving for a down payment will need to be invested conservatively, if at all. In this scenario, you’ll have a set price you’re saving for so you can’t take a chance that the market dips and your savings fall below what you need it to be at.

Conversely, when you’re saving for retirement, you’ll have an opportunity to be more aggressive (at least in the beginning) because you have time to make back the money that you’ve potentially lost.

The last part of positioning your portfolio according to your goals is your comfort level/investor psychology. Time horizon and risk tolerance are small factors here, but it’s more about how volatility affects your mind. If the market drops and you’re panicked, maybe you need to be more conservative.

How to invest based on your goals

Here are some thoughts on how to invest based on your goals. If you’re saving for a short-term goal, like a down payment, I wouldn’t even invest it. UNLESS you’re very confident and you’re an expert in the particular field (though that applies to all of the time horizons).

If you’re saving for a medium-term goal, like saving for college, here’s what I’d do. You can be a little aggressive in the beginning because you have time to earn some money back. As you get closer to the end of your window, you’ll need to be more cautious. Maybe start 50/50 (stocks/bonds) and as you get closer, either get out of the market entirely or something like 10/90 or 20/80.

For your long-term goal, you’re able to be more aggressive for a longer period of time. 90/10, 80/20, 70/30, 60/40 all work great here. It depends on what you’re comfortable with. Same as the last one, as you get closer to the end of your window, you need to shift your allocation to be more conservative.

Keep in mind, these are blanket recommendations. I don’t know your situation, so you need to talk to a professional first before you set investing goals and make investment decisions.

Disclaimer:

Jacob Sensiba

www.crgfinancialservices.com/

Financial Resolutions: Debt, Savings, Investing, Real Estate, and Crypto

December 8, 2021 by Jacob Sensiba Leave a Comment

The new year is right around the corner so I thought it fitting to layout some resolutions for a few different financial topics. Here are financial resolutions for crypto, investing, real estate, savings, and debt.

Debt

Pay down or pay off your debt. If you have credit card debt, make it a goal for next year to pay it off completely. The interest rates that credit card companies charge are so brutal. Getting rid of credit card debt would relieve a lot of stress and save you a lot of money that you’re wasting on interest. Not to mention, whatever you’re currently paying towards your credit card can be used for something way more productive.

If all you have is a mortgage, make extra payments. If you have no debt, congratulations! Try and save more so there’s no chance of you going into debt again.

Savings

Would you like to buy a house next year? Save for your down payment. The bigger your down payment is the smaller your responsibility will be; in terms of monthly payments and in terms of total money owed. Especially if your down payment is 20% or more. If that’s the case, you don’t have to pay mortgage insurance (AKA PMI).

If a down payment isn’t something you need to save for, increase your savings rate for retirement. Or set yourself up to cover some unexpected expenses by creating an emergency fund. Do some math, establish a goal number (emergencies, down payment, retirement savings), and then create a plan to save and hit that number.

Investing

For the most part, investing will take place in your retirement account. And for most people, the amount of time you have until retirement is a couple of decades. With that said, you can be a little more aggressive with your investments.

If this description doesn’t fit you, then figure out what works for you. Determine your time horizon, risk tolerance, and what you’d be able to tolerate in terms of short-term losses. If you’d like to get a good idea about what your preference is, take our risk tolerance quiz.

Real Estate

This one is a little challenging because it’s not like you’re going to move once per year. Also, investing in real estate isn’t for everyone. So I’m going to try and hit a few groups with this one.

Buy a new home. If you need more space for your growing family, you got a new job that requires relocation, you want to be closer to your church or family members, then make a move.

Make improvements to your current home to increase the value of your home or to make better use of the space. It can also improve tax credits especially if you use sustainable materials like solar panels. Either way, the improvement has a positive effect on your living situation.

Most people can invest in real estate, they just do it differently. Some people are going to invest in physical properties and some can invest in Real Estate Investment Trusts (REIT). Either way, you need to be picky (like all investments) so you get a good return on your money.

Crypto

This applies to everything in this post, but especially here…do your homework. I like crypto. I think there are investment opportunities, but I also think there’s a possibility it all collapses. I like the technology it’s created on, but I don’t know how it’ll transform and what the adoptability will be. Invest only what you can afford to lose is my best advice. With all that said, make financial resolutions to get more educated about cryptocurrencies and the blockchain.

Disclaimer:

Jacob Sensiba

www.crgfinancialservices.com/

Here’s Some Investment Advice After an Inheritance

September 6, 2021 by Tamila McDonald Leave a Comment

Getting an inheritance is often bitter-sweet. While the money may be an opportunity, it is attached to losing someone who may have been important to you. As a result, it can be hard to think clearly about how to handle the windfall, potentially setting you up for some poor decisions. However, by using the right approach, you can make smart choices. Here’s some investment advice after an inheritance.

Take a Breath

First and foremost, don’t make any financial moves if you are still grieving. Emotionally difficult events often cloud a person’s judgment. If you are still struggling with significant feelings of sadness, anger, confusion, or frustration, you may make a choice that you wouldn’t usually. At times, that may be a decision you would later regret.

If you don’t feel emotionally calm enough to make big financial decisions, wait. Give yourself a chance to breathe and recover. That way, when you do make investment choices, you can be more confident about them.

Define Your Goals

Another step that you need to take before you choose any investments is to define your financial goals. Not only do you need to figure out your general plans for the money, but you also need to determine a timeline for its potential use.

Some types of investments are better for short-term objectives, while others are more suited for long-term ones. For example, while purchasing stocks, ETFs, index funds, or similar investments through a brokerage may work for goals positioned a few years out, while retirement account investments don’t usually align with short-term objectives.

If you want to save for a child’s college, a 529 plan provides you with benefits you won’t get elsewhere. If your goal is to set the money aside for retirement, then putting the money in an IRA, 401(k), or similar account could be your best choice.

By understanding your goals, you can choose investment vehicles that align with the objective and timeframe involved. That way, you get the best approach for your situation.

Understand Your Risk Tolerance

All investments include some level of risk. You are never guaranteed to receive a particular return. In fact, you may not just miss out on gains; you can also experience losses.

The amount of risk varies between investment options, at times dramatically. When risk levels are higher, the potential for significant growth and losses are both elevated. With lower amounts of risk, growth and loss rates are usually both reduced.

Not everyone has the same perspective when it comes to the amount of risk they find acceptable. Some investors are bolder; they are willing to tolerate a substantial amount of risk in exchange for the possibility of significant gains. While they understand that hefty losses are also possible, they feel the risk is worthwhile.

Others aren’t comfortable with high amounts of risk, accepting lower growth potential in exchange for a sense of increased financial safety. They would instead prefer that their investments feel reliable above all else, even if that means achieving less when it comes to gains.

Before you invest, you need to estimate your risk tolerance. That way, you can choose a strategy that meets your needs.

Diversify Your Portfolio

Regardless of your goal, you want to diversify your investment portfolio. With diversification, you reduce overall risk by having a variety of stocks, ETFs, index funds, bonds, or other assets in your portfolio.

That way, if one asset experiences a problem, you aren’t guaranteed to see losses across the board. Instead, the other investments may remain stable or could potentially rise, offsetting the decrease associated with the one asset or, at least, preventing widespread losses.

Get Help from a Professional

While some investing strategies are relatively straightforward, not all types are easy to navigate, especially for beginners. If you are new to investing, working with a financial adviser or similar professional can be a smart move. Sign-up to The Motley Fool for good advice.

When you work with an adviser, they can discuss your goals with you to understand what you want to achieve. Then, they can provide recommendations or outline all of your options, answering questions about the pros and cons of investing using each of those approaches.

As you start to research financial advisers, make sure to vet them carefully. Review their credentials. See if they are commission or fee-only. Read reviews from past clients. Request recommendations from trusted family members, friends, or colleagues.

Choosing the right financial adviser is essential. That way, you can get sound guidance that you can trust, ensuring you’re able to start your investment journey with greater ease.

Do you have any investment advice for after an inheritance? Did you receive an inheritance and think people could benefit from your experience? Share your thoughts in the comments below.

Tamila McDonald

Tamila McDonald has worked as a Financial Advisor for the military for past 13 years. She has taught Personal Financial classes on every subject from credit, to life insurance, as well as all other aspects of financial management. Mrs. McDonald is an AFCPE Accredited Financial Counselor and has helped her clients to meet their short-term and long-term financial goals.

How Much Cash Is Needed to Start a Pawnshop?

January 6, 2021 by Jacob Sensiba Leave a Comment

So you want to start a pawnshop. Where do you start? What do you buy? How much is this all going to cost?

A pawn shop can be a very cash-positive business. While doing research for this post, I stumbled onto a Quora thread that showcased how much money can be made with such an operation. The profits ranged from $30,000 per year to $60,000 per month.

But, you have to get started. In today’s post, we’ll highlight what you need and what it’s going to cost.

What do pawn shops do?

First off, we have to talk about what a pawnshop actually does. Pawnshops buy, sell, and trade items. These items can come from the owner’s personal collection, something they acquired via purchase or something they acquired via loan collateral.

When someone comes to a pawn shop to borrow money, they have to bring something of value for collateral. When the pawnshop lends money to this individual, they retain that valuable item until the principal (plus interest) is repaid. If they fail to repay, the pawnshop keeps the item.

Legal and location

There are many things you need to obtain when you start a pawnshop.

You need to take care of the legal requirements first. This includes licenses, articles of incorporation for your business entity, and permits.

Licenses include pawnbroker’s license, precious metal dealer license, secondhand dealer license, Federal Firearms License (if you plan on selling firearms) from the ATF.

The next thing you need is space. Where you set up shop is an important decision. The right location can bring in a lot of traffic and improve your earning potential. However, the right location comes at a cost.

Areas with high foot traffic cost more. Often, pawnshops will choose a space that’s close to a popular area, far enough away that it’s not too expensive, but close enough to make it convenient for the consumer.

Assets

There’s a minimum asset requirement needed to open. That number depends on the municipality, state, and country you plan on setting up shop in. For example, Texas has a $150,000 minimum requirement.

What do you need?

After you have all of the proper licenses and permits and pick where you’ll operate, you need to buy things to be operational.

These items include a computer (computer system/network), cash register, signs, equipment to display your products, record keeping, insurance, lockable cases, and a state of the art security system.

What you’ll also need is an adequate amount of capital to purchase more inventory and lend money to consumers.

What’s going to cost

Depending on the size of your pawnshop and the anticipated foot traffic, your start-up costs will vary. If you’re a larger shop with a high probability of having a lot of visitors/customers, your starting capital could be between $50,000 and $75,000. A smaller shop with lower projected traffic can get by with $15,000.

Last bit of advice

When you start a pawnshop, you need to refine and learn some new skills. You have to educate yourself on how to assess the value of goods so you can acquire sellable items, but not at a cost that eats into your profit margin.

Also, you have to come up with a business plan. What interest rate will you charge on your loans? How much will you mark up the items you sell? How much are you willing to pay for inventory?

All of these questions need answers. Keep in mind, this planning process should take place prior to buying the necessary licenses and other items to get the business started.

Mistakes to Avoid in Retirement

May 27, 2020 by Jacob Sensiba Leave a Comment

In many finance websites, blogs, and articles, a lot has been said about how to prepare for retirement, but I believe there hasn’t been enough written about what to do when you get there. More specifically, there’s a lack of content about mistake, or mistakes, to avoid.

In this article, we’ll explore several mistakes to avoid when you reach this milestone.

Spend beyond your means

This seems obvious, but once the psychological barrier of spending versus savings is breached, people (not everyone) develop this mentality of “I saved for 40 years for this moment, why shouldn’t I enjoy it?”

You should enjoy it. You worked your butt off for it, right? There are strategic ways to do this, however. The mistake is going gangbusters right away.

Create a budget/spending plan – Your budget in retirement will be different than your budget before retirement. Create line items for everything, and get real granular with your discretionary spending (i.e. sub line items to breakdown where the discretionary spending is actually going).
Plan for healthcare – Healthcare costs, generally speaking, will be your largest expense in retirement. Plan accordingly.
Income strategy – More than likely, you’ll have a few different income sources (social security, pension, retirement distributions, etc.). Create a line item for each source.
Senior discounts – Take advantage of every single one. There might be a psychological hesitation with this, as it forces you to come to terms with your age/where you are in life
Spoil grandkids – Every grandparent wants to spoil their grandkids to death, but it must be done within reason. Get creative and be strategic about when and how much.

Make Quick Decisions

Another mistake is making quick decisions. Don’t do it. Any decision you classify as BIG needs to be well thought out. This could be anything like moving, downsizing, vacations, or eliminating a vehicle.

I would argue that any decision about an expense that’s not in your budget/spending plan, should be thought about for several days. My rule of thumb is a week. By then, the euphoria of such a purchase has gone away, then you think more logically about it.

Investing Aggressively

Over the years, a big mistake clients make is the desire to invest more aggressively than they should. Oftentimes, this is to compensate for an inadequate savings rate during their working years or a significant market pullback that hurt their portfolio.

While capital appreciation is still an investment objective in retirement, it’s no longer the primary goal.

This primary goal should be capital preservation. Limiting losses on what you have. This has less to do with time and more to do with your decreasing ability to go out and make more money. Allocate your portfolios accordingly.

Ignoring Estate Planning

Estate planning is a key ingredient to your financial planning recipe. It mustn’t be ignored. Every debt and asset you have needs to be accounted for, listed, and given a task for when you pass.

Estate attorneys can be expensive, but I believe it’s 100% necessary to find one you trust, so your estate is well taken care of.

Isolating Yourself

Your social life is more important than ever. Countless studies show that people with strong relationships outlive those that don’t. So the mistake here is not making your social life a priority.

Join a community, volunteer, retain, and nourish friendships. Whatever flavor of social life sounds desirable, make it a priority.

Letting Yourself Go

Taking care of your mind and body is always important, but especially now. It will keep you healthy, therefore, lowering your healthcare expenditures, but it’s also another way for you to meet people.

Go for walks with neighbors and/or friends. Join a gym. Many of which have reduced rates for seniors. Additionally, many health insurance companies have “silver sneaker” programs that offer inexpensive services and programs for seniors.

Expecting it to be easy

This is a BIG life change and the transition will not be easy.

Not only will you shift from saving to spending, but those social connections you developed over your working years can reduce in frequency and strength.

Go easy on yourself and be patient.

Taking Social Security too early

Unfortunately, there are situations and scenarios where taking Social Security Income (SSI) distributions early is necessary. However, for those of you where this does not apply, speak with a trusted advisor about optimizing your SSI strategy.

Getting Swindled

Scammers adapted. They’re smart and they know how to target susceptible people. Unfortunately, elderly individuals are inherently more at risk than the general population.

Any email, phone call, or text that you receive (unsolicited, of course) should be greeted with a fair amount of skepticism. Don’t willingly give out any pertinent information (name, DOB, social security number, etc.).

Doing it alone

A BIG mistake people make is thinking they can plan by themselves. It would behoove you tremendously to consult with several experts. Estate attorneys and financial advisors should be at the top of this list.

Do your research, check online reviews, and get testimonials from trusted contacts. Having capable professionals in your corner could set you up for success and put your mind at ease.

Audit Your Digital and Financial Life

April 22, 2020 by Jacob Sensiba Leave a Comment

There’s no better time to audit your financial and digital life than tax time.

Having these two things orderly and up to date not only helps you stay organized but also gives you an opportunity to review your progress.

Review your budget

First things first. Review your budget.

Have any line items changed? Have there been additions? Maybe you paid off a debt and that line item can be dropped off?

If that’s the case, you can adjust your debt repayment plan. Whatever money was going to that paid off debt, funnel it a different one. You can do that by using one of two strategies.

One, the debt avalanche, where your dollars go to the debt with the next highest interest rate. Two, the debt snowball, where you focus that money on the debt with the next lowest balance.

Increase savings rate

If it’s been a while since you adjusted your savings rate, now is the time to see if you can tolerate an increase. Bump up your salary reduction plan an additional 1%. If you’re saving $50 per month for emergencies or your kid’s college fund, can you do another $10?

Review investment portfolio allocation

Is your current portfolio allocation still suitable? Whether or not you rebalance can hinge on two things. One, did your risk tolerance or time horizon change enough to warrant an adjustment? Or two, did your investments perform so that you’re no longer where you started?

Asset allocation tends to get out of whack when stocks perform well. 2018 is a good example, where the S&P 500 index finished up over 20%. More than likely, some rebalancing took place at the beginning of 2019.

Related: Why Asset Allocation Matters

Tighten up your expenses

Sell items you no longer have use for. You get rid of some clutter and can make a little money in the process.

Review your subscription list and get rid of things you don’t need. With so many subscription-based offerings, it’s easy to keep saying yes until you’re shelling out too much money each month. Audit these subscriptions and get rid of the ones you don’t need.

Call your internet provider. It’s more costly to acquire a customer than it is to retain a new one so they should work with you a little.

Do the same thing with your credit card company. They want to collect on the debt you owe them, so if that means lowering your APR by a percentage point or two, they’re more willing to help you out.

Related Reading: Quick and Easy Ways To Save Money

Digital

As our devices become more and more embedded in our way of life, we accumulate various types of accounts. Email, social media, and the like; this leads to endless different amounts of information that can be used against you. Time to purge (not like the movie).

Destroy or recycle old devices – This will clear up space that can be better used by something else. Make sure you wipe the device before recycling it.
Change passwords – Complex passwords are vital in our data-driven society. Long passwords with numbers and special characters must be used to protect your data.
Remove old accounts. Social media, email, and apps that you no longer use can be deleted and removed. Make sure that you delete the data from those accounts before you remove them, however. Just in case the owners of the site/app/program use the data from those apps for their personal gain.
Make sure your devices are up to date – This is elementary data protection. Up to date devices have patches for bugs and possible holes in their system. Your operating system is your first line of defense.

Keeping your life organized and performing a regular review/audit is imperative, whether we’re talking about your digital or financial life.

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Some Costs

Planning

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Debt

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Assets

What do you need?

What’s going to cost

Last bit of advice

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Tighten up your expenses

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