Retirement planning is crucial for everyone, regardless of gender. However, women often face unique challenges when it comes to retirement due to factors such as longer life expectancy, lower lifetime earnings, and time taken off for caregiving responsibilities. Here are some important steps for women to consider when planning for retirement:

1. Start Early: The earlier you start saving for retirement, the better. Compound interest can work in your favor over time, so even small contributions can grow substantially if invested wisely.

2. Set Clear Goals: Determine how much you’ll need for a comfortable retirement by considering your expected expenses, healthcare costs, and any other financial commitments.

3. Understand Social Security: Learn about the Social Security benefits you’re eligible for. You might be entitled to benefits based on your own work record or those of a spouse. Understand the best claiming strategies to maximize your benefits.

4. Contribute to Retirement Accounts: If your employer offers a retirement plan like a 401(k) or 403(b), contribute as much as you can, especially if they offer matching contributions. These accounts provide tax advantages and help you save consistently.

5. Consider IRAs: Individual Retirement Accounts (IRAs) can be an additional retirement savings option. Traditional IRAs offer tax-deferred growth, while Roth IRAs provide tax-free withdrawals in retirement. Choose the type that aligns with your financial situation and goals.

6. Invest Wisely: While investing involves risk, it’s important to have a diversified portfolio that includes a mix of assets like stocks, bonds, and mutual funds. Consider consulting a financial advisor to create an investment strategy that matches your risk tolerance and goals.

7. Stay Involved: If you’re married, make sure you’re aware of your family’s financial situation and actively involved in financial decisions. This knowledge is crucial for your long-term security.

8. Plan for Longevity: Women tend to live longer than men on average, so plan for a longer retirement. Ensure your savings and investments can support you through these extra years.

9. Address Career Interruptions: Women often take time off for caregiving responsibilities. While it’s important to prioritize family, try to plan for these career interruptions by maintaining connections in your industry or considering part-time work.

10. Healthcare Planning: Health costs can increase in retirement. Ensure you have adequate health insurance coverage and consider the potential need for long-term care insurance.

11. Educate Yourself: Financial literacy is key. Continuously educate yourself about retirement planning, investment strategies, and personal finance. There are numerous online resources, books, and courses available.

12. Review and Adjust Regularly: Life circumstances change, so regularly review and adjust your retirement plan as needed. Reassess your goals, investments, and financial situation to ensure you’re on track.

Remember that every individual’s situation is unique, so consider consulting a financial advisor to create a personalized retirement plan that takes your specific circumstances into account.

Any opinions are those of Thomas Fleishel and not necessarily those of Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

The post Retirement Planning for Women first appeared on Fleishel Financial.

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Everyone has money secrets and ways they feel about money, how do you begin the conversation?  First, can you agree together that money should be discussed?  When my wife Becky and I were receiving pre-marital counseling advise from our pastor, he advised us that if we can talk openly about money and sex, you’re going to avoid a majority of the arguments caused by misunderstandings and lack of communication.  It doesn’t mean there won’t be some disagreements and even arguments, but at least the issues will have been discussed and you each understand the other’s feelings and wishes.

We need to recognize that everyone has had different experiences and upbringing about money and finances.   To start, you can share with each other what lessons or messages about money you learned growing up.  My wife’s dad was an accountant so she learned the value of a sale and how to find bargains.  She learned how to balance a check book, manage credit and keep debt to a minimum.  They were a solid middle-class family in suburban Atlanta.  My experience was different, growing up in a small community, both parents were in low wage positions and money was always a challenge, it was never discussed and I learned zippo about personal finance.  My dad did help me go to the bank and get a loan for my first car but that was all I recall in any money discussions.

Next, you can each share some good and bad financial decisions you’ve made and what you learned.  But as a couple, openness and honesty is paramount to coming together on these topics.  Can you agree to be fully open and honest about your feelings around saving, spending and investing?

So, what if two people are too far apart from their feelings about money?  Start with open dialogue about the following topics as a guide:

1. How much should be in savings/cash reserve and how much should we save vs. invest per month? Wisdom and experience suggest that families have at least 4-6 month of expenses in cash reserve.   Setting us an auto deposit into savings each month can make this a seamless process.

2. Who handles the bills and expenses? We usually find that one spouse does the heavy lifting here but both should be aware of the household income, account information and how to access them. Its common that one spouse has a desire or willingness to take on the responsibility but the other should not be kept in the dark.  But what happens if neither prefers to take it on?  You could take turns for a period of time only to find out that one of you is better suited for the task.

3. Should we work from an agreed upon monthly budget for household expenses? It depends many times on your income.  Those with lower incomes may need to monitor expenses and stretch the dollars more closely.   More affluent families may not be so concerned with tracking their cash flows.  Budgets are hard work and tracking expenses can be a challenge but with some commercial software programs like Quicken or QuickBooks, it can be more easily automated.  Then there is the issue if you exceed a budgeted area of expense, do others need to be cut etc.?

4. This one’s a biggie- can you come to agreement on how much is ok for each spouse to spend without approval from the other? This is critical to avoid future blow ups and misunderstandings- what happens if you find out one went over the agreed upon limit without consulting the other?  For example, to surprise his wife, Roger goes to her favorite car dealer and signs a loan for a new car above their agreed amount for her 50th birthday. Did he violate the code?

5. Should we both work with our Financial Advisor, Tax professional and estate attorney or is it ok if only one of us deals with them? Its always better that both are engaged to a certain extent and aware of things like investment objectives, risk factors, income needs, to name a few. Both should know what insurance coverages are in place and who are the named beneficiaries.  Each spouse should be involved in decisions like who will act as our power of attorney, personal representative and health care surrogates for each.

6. How much consumer debt are we ok with? What kind of debt-to-income ratio (DTI) are you willing to take on?  DTI measures all your monthly debt payments divided by your gross monthly income. This number is one way lenders measure your ability to manage the monthly payments to repay the money you plan to borrow.  When it comes to home mortgages, auto loans and credit cards, its best to agree on a debt-to-income ratio that positively impacts your credit ratings.  At 35% or less, you’re looking good – Relative to your income, your debt is at a manageable level. You most likely have money left over for saving or spending after you’ve paid your bills. Lenders generally view a lower DTI as favorable.

7. Do we each have our own separate credit cards or use the same card #? If you’re using separate cards, I believe you’re opening up potential land mines that could blow up trust in the relationship.  My wife and I each have two copies of the same credit card, so no secrets are potentially lurking on our expenses.  Unfortunately, it does make it a little challenging to surprise her with birthday or Christmas gifts, so a little creativity is needed.

8. Do we maintain separately registered savings and investment accounts or in joint name? Each will most likely have their separate 401k, Roth or traditional IRA accounts.  There may be reasons to keep separate non-retirement accounts like an inherited investment account by one spouse.  Second marriages with pre-nuptials can often necessitate maintaining single ownership record keeping.  Sometimes separate trust registrations are appropriate for estate planning purposes.  More commonly though, using Joint Tenants by Entirety or Joint Tenants with Rights of Survivorship is the typical account registration.

9. How do we come together on what our idea of an ideal retirement looks like?

a. What kind of lifestyle are we both accustomed to living now?

b. How much do we actually want to have in full retirement?

It all starts with defining retirement goals together. It’s never a good idea for one spouse to decide on these goals without the other’s input!  Can you agree on what amount of income you really want to have from all sources?  The question is not necessarily what will we have from social security, pensions, retirement account distributions etc. but what do we want?  Having your financial advisor run projections on inflation, your longevity estimates, your goals and conservative rates of return can help determine the feasibility of your goals.

Bottom line, open and honest communication on all these topics should help families enjoy a well-balanced approach to their money matters.

This content has been made available for informational and educational purposes. For professional financial advice always seek the advice of your financial advisor or other qualified financial service providers with any questions you may have regarding your individual situation. Securities are offered through Raymond James Financial Services, incorporated member FINRA and SIPC. Investment advisory services offered through Raymond James Financial Services advisors incorporated. Fleishel Financial Associates is not a broker dealer and is independent of Raymond James Financial Services.

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While inflation has made things difficult for people across the board, young Americans seem to be more affected.

Just how bad is it? One survey showed that 79% of millennials (ages 27 to 42) and 85% of Gen Zers (ages 18 to 26) say they worry about not being able to cover a month of expenses if they lost their primary income compared to 69% of Gen Xers (ages 43 to 58) and 53% of Baby Boomer (ages 59-77).

Here are some other key findings about inflation’s toll on younger Americans’ finances.

Homeownership Feels Out of Reach

Homeownership is a significant milestone that many young people are delaying. About one in five Gen Zers and one in four millennials are put off buying a home, compared to 15% of Gen Xers and only 5% of Baby Boomers. Home prices have almost doubled since 1984, when the median home price was about $79,950 or $228,415 in today’s dollars. But in 2022, the median home price was $454,525. And while housing prices have doubled, household income has only risen by 27%.

Higher home prices left many people with no choice but to rent, and as people emerged from COVID-19 lockdowns, many were ready to move to new cities. This drove rent prices up 15.5% since February 2020.

While increased rent prices didn’t affect people who already owned their homes and were locked in low mortgage rates before they surged, renters were forced to pay more for housing and tend to be young. Add to this the increased costs of everyday goods and services like food, gas, and utilities, and some young people may have a tough time keeping afloat.

Student Loan Debt Is Crushing

Student loan debt is a significant financial barrier for younger Americans, too. About three-quarters of Gen Zers and 68% of millennials said that student loan debt was why they delayed a major financial decision, like buying a house or a car or building emergency savings.

Younger Americans pursued college degrees to find better-paying jobs, and it worked. According to Georgetown University, the median lifetime earnings of those with a high school diploma is $1.2 million; for those with a bachelor’s degree, it’s $2.8 million. But this came with a cost. College tuition and fees have increased by 700% since 1984, so younger generations who wanted to pursue a college education had no choice but to borrow money to pay for it.

Tips to Help Gen Zers and Millenials Meet Their Financial Goals

Here are tips for young Americans still hoping to meet their financial goals, even in these trying times.

1.     Make sure your cash is working for you as much as possible.

No matter how much you have to save, put it into an account where you get the most rewards. Look for a high-yield savings account and take advantage of compound interest. Every dollar counts, and even just the simple act of putting aside a little money can help you feel more confident about the future.

2.     Automate your savings deposits to build good habits.

It can be challenging and may feel hopeless when you start saving. Start by trying to build an emergency fund that will cover six to nine months of expenses, but focus on saving a little bit at a time. Building the habit is part of the journey. Start with a small goal. How are you going to save your first $250? Your first $500? Automating your savings can help you take small, consistent steps toward meeting these goals.

3.     If you’re thinking about making a nonessential purpose, wait 24 hours. If you still want it, buy it. If not, put the money into your savings.

You have to free up some money before you can save any, so the first thing to do is look for places to cut back. Many start by canceling subscription services or vowing not to eat out but consider first thinking about impulse purchases. If you wait a full 24 hours before buying something you want, you may find that you decide you don’t really want it after all. If you do, consider putting the money you would have spent on it into your savings.

4.     Plan entertainment into your budget.

We’ve all heard the line that Gen Zers and Millenials aren’t buying homes because they’re buying $5 coffees and avocados, but they know that these things aren’t what’s preventing them from buying a home. It can be hard for younger people to feel like the economy is always working against them, and it’s important to remember that it’s okay to treat yourself sometimes.

The goal should be to make your money work for you and help you meet your goals. Yes, this includes building an emergency savings fund and saving up for a vacation or an expensive pair of shoes.

5.     Look for ways to boost your income.

Americans who stay in one job for a long time generally do not see salary gains as large as those who move from job to job. Changing companies allows you to negotiate, and you can often get more than you currently make. Look for a new job with higher earning potential. While job hunting, consider a side gig, like delivering for Doordash or Instacart or doing freelance work through Upwork or Fiverr.

6.     Don’t automatically change your lifestyle if you get a raise.

If you get a job where you make more money or get a raise from your current employer, don’t automatically increase your budget. Consider contributing the difference to your savings, especially if you’re just getting started. Doing so will help you build better habits in the future, forcing you to look harder at how you spend your money.

7.     Save for retirement even though you are making student loan payments.

Student debt is a huge financial burden, but if you choose to pay down your loans over saving for retirement, you’ll be hurting your future goals. Pay the minimum on your student loans and invest what you can into your retirement or savings. Every bit of money that you save can make a difference. Take advantage of any retirement matches your employer offers, and start saving as soon as possible.

8.     Build your credit and improve your credit score.

When you have a high credit score, you get better deals from lenders, which can help you get better loan rates in the future. The best thing you can do to build your credit is to make all your payments on time and keep your balances below 30%.

9.     Research home-buyer assistance programs.

If you have never bought a home, you may qualify for some first-time home buyer assistance programs that can make buying a home more realistic. Some loans don’t require a 20% downpayment; if you get a conventional mortgage through Freddie Mac or Fannie Mae and have a strong credit score, you may be able to buy a home with only a 3% down payment. If you’re a veteran, you may be able to take advantage of opportunities through the Department of Veterans Affairs.

10. Relocate to a more affordable area.

If you live in an urban area where rents and the cost of living have increased significantly, consider moving to a more affordable area. Moving can be expensive, but it can save you money in the long run. Flexibility can be an asset, so if you are willing to try a new city or move to a more rural area, it can be an effective way to get ahead.

11.Don’t worry about what you can’t control.

It can be hard to stay positive in a bad economy, but it helps to remember that some things are out of your control. You can’t control when you were born, but you can control how you spend your money. Focus on what you can do right now to help you achieve your goals, and try not to think about how your situation differs from the generations before you. Focus on your opportunities, and try to make things happen for yourself.

Any opinions are those of Thomas Fleishel and not necessarily those of Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

The post How Inflation Affected the Finances of Younger Americans first appeared on Fleishel Financial.

The post How Inflation Affected the Finances of Younger Americans appeared first on Fleishel Financial.

Mental sharpness, or mental acuity, can mean a lot of things, but basically, it’s measured by how good your memory is, how you process and learn new ideas, and your levels of concentration, focus, and understanding. The stronger these things are, the more mentally sharp you are.

Some factors affecting brain health are out of our control, but we can still do a lot to improve mental sharpness. Here are four significant things you can do to support brain health as you age.

1. Exercise More

Everyone knows exercise is good for your body, but new research shows it can impact brain health. Interestingly, the benefits of exercise for your brain are only observed in moderate to high-intensity training when the heart rate is elevated to a higher degree than with lower intensity. The greater the stimulation, the more our brains must grow and develop.

Exercise also causes an increase in dopamine, the “feel-good” hormone, and increases sensitivity to dopamine in the brain. More dopamine leads to an improved mood and less depression and anxiety, which may protect against degenerative brain conditions.

2. Eat a Balanced Diet

We usually think of caloric intake and maintaining a healthy weight when we talk about nutrition, but what we eat can contribute to mental sharpness and increased brain acuity over our lifetimes.

Poor nutrition can affect the brain in a variety of ways. Diets high in processed foods and sugar can lead to mood disorders, and they cause inflammation and oxidative stress that can lead to neurological issues in the future.

What nutrients should we focus on to improve mental sharpness? Here are just a few:

• Iron: Low iron is associated with a variety of conditions, including anemia, which results in decreased oxygen delivery to the brain.
• Protein: Protein is necessary for muscle development but also plays a vital role in brain health. Protein is used to produce multiple neurotransmitters, including dopamine and tryptophan, the precursor to serotonin. Low levels of these neurotransmitters can cause mood disorders, anxiety, and depression.
• Essential fatty acids: Linoleic and alpha-linolenic fatty acids are not created in the body, but they are used to build omega fatty acids necessary for the structure and composition of neurotransmitters.

3. Get Enough Sleep

Many people do not get enough sleep, and as many as 70 million adults suffer from a sleep disorder. Poor sleep habits lead to multiple issues, including fatigue, increased cravings, and decreased cognitive performance. But it can also have longer-term effects on brain health, including increased oxidative stress, build-up of free radicals, and a smaller hippocampus and cerebral cortex. Some of these factors are precursors to dementia and Alzheimer’s.

If you don’t get enough sleep, here are a few things you can try to get a restful night’s sleep.

• Spend at least 20 minutes in a cool, dark room away from all electronics, including smartphones and tablets, before trying to sleep. The light from these devices can disrupt your natural sleep rhythm, which can make it harder to get into a deep sleep.
• Avoid working out and drinking caffeinated drinks before bedtime. These things can elevate your blood pressure and heart rate, which can make it challenging to calm down before bedtime.
• Be careful with naps. A 30-minute nap early in the day is enough to improve your focus or make you feel refreshed, but any longer than that can make you feel more tired and prevent you from sleeping soundly at night.
• Strength training can increase the body’s need for recovery, which can trigger your body to enter a deeper sleep and stay asleep longer.

4. Take Supplements

You may have gaps in your nutrition even if you try to follow a healthy diet, but supplements can help make up for these deficiencies. Some supplements you might want to consider include the following:

• Fish oil: A lot of research has been done on fish oil. It’s loaded with omega fatty acids, which can improve mental acuity. High levels of some of these fats can help people respond better to stress and may positively impact those with depression.
• Ginkgo Biloba: Researchers have studied Ginkgo Biloba thoroughly. It has been shown to reduce the risks of blood clots, has anti-inflammatory effects, and is a natural antioxidant.
• Choline: Choline is found naturally in legumes, beef liver, nuts, and eggs. It acts as a precursor to acetylcholine, a neurotransmitter that passes chemical messages between neurons in the brain. Choline can increase acetylcholine for faster information transfer and better overall mental sharpness.

Take Steps to Improve Your Mental Acuity

Aging has many effects on the body, and while we easily notice physical changes, like wrinkles, aches, and gray hair, we may not recognize it if we start to lose our mental sharpness. We must be proactive to protect our brain health. If we don’t take the necessary preventative steps, both our physical and mental health will decline.

As mentioned above, four of the best things we can do for our mental acuity are to make sure we get enough exercise and sleep, eat a proper diet, and take supplements when needed to make up for any deficiencies. Combined, these four factors will provide a strong defense against changes in mental acuity and support your brain health well into the future.

Any opinions are those of Thomas Fleishel and not necessarily those of Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

The post How to Increase Mental Sharpness first appeared on Fleishel Financial.

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According to a new report, Gen Z is taking saving for retirement seriously. Vanguard found that, in 2021, about 62% of Gen Zers are contributing to a 401(k), which is more than twice as many as similarly-aged workers in 2006.

Traditional 401(k) accounts have tax advantages. Workers contribute pre-tax money that is taxed upon withdrawal. On the other hand, Roth 401(k)s work a little differently, with the money being taxed before contribution and withdrawn tax-free in retirement.

So, why are Gen Zers embracing saving for retirement? It largely comes down to automatic enrollment. Many employers automatically enroll employees into a 401(k) plan as part of their onboarding process. This process is much more common today than it used to be. According to Vanguard, in 2006,  just 11% of 401(k) plans had automatic enrollment. By 2021, half of all plans did.

This change significantly affected how many workers participate in retirement plans, and not just for Gen Zers. From 2006 to 2021, the 401(k) participation rate for all employees jumped from 62% to 82%. For those with automatic enrollment, participation soared to 94%.

But that’s not all. In addition to more people saving, people are saving more. Vanguard also found that the average contribution rate from 2006 to 2021 rose from 7.2% to 7.7%. For Gen Zers, contributions rose from 4/8% to 5.4%.

Maximizing retirement savings will have the biggest impact on younger workers, but the more widespread use of automatic contributions will continue to improve the number of plan participants and improve allocations and retirement savings for generations to come.

One thing to keep in mind is that the information collected by Vanguard only looks at its own 401(k) plans. Employers use different plan providers and other types of retirement accounts, but no matter what kind of plan you use, the important thing is to get into the habit of saving early.

Any opinions are those of Thomas Fleishel and not necessarily those of Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

The post When It Comes to Retirement, Gen Z Has a Head Start first appeared on Fleishel Financial.

The post When It Comes to Retirement, Gen Z Has a Head Start appeared first on Fleishel Financial.

Retirement planning might seem overwhelming, but breaking it down into steps makes the
whole process much more manageable.

To thoroughly enjoy your retirement, you must take the planning part seriously. Think about your retirement goals and how much time you have to meet them. Consider the different types of retirement accounts and which type of investment is best suited to help you reach your goal. Finally, think about taxes. If you invested tax-free money, you’ll owe taxes when you begin withdrawing those funds, but there are ways to help minimize this hit.

Retirement plans evolve, so it’s important to be engaged throughout your working life as you make your way to retirement age. Here are five steps to managing an ever-changing retirement plan to help you ensure you can meet your goal.

1. Consider the amount of time you have.

Your current age and the age you plan to retire are two of the most important factors of your retirement plan. The more time you have, the more risks you can take. When you’re in your 20s and 30s, you have three or four decades until retirement, so it typically makes sense to keep your assets in something riskier, like the stock market. You will see your share of ups and downs over the years, but historically, the stock market has increased over long periods of time. When it comes to stocks, a long period of time means that you have 10 years or more until retirement.

You also have to consider inflation. Year-to-year inflation may not seem like that big a deal, but when you consider that the plan you’re making now involves money you’ll be using three or four decades from now, inflation is important to think about. You may be growing your money with compound interest, but inflation is growing, too. The power of your dollar today is not going to be the same as it will be when you retire. Over the course of decades, even the smallest rise in inflation can erode the value of your retirement fund significantly.

That said, compound interest is definitely something to take advantage of, and the younger you do so, the longer the opportunity for compounding interest. If you start saving a little bit in your 20s, compound interest is designed to have your potential earnings increase over time well into your 60’s and beyond..

Generally, the closer to retirement you are, the more you should likely focus on preserving capital. Choose investments like bonds that aren’t as volatile as stocks and will provide a less volatile income to rely on. As you get older, you don’t have to worry about inflation as much, either. The cost of living is not going to change as much for someone who is planning to retire in the next few years as it does for someone who is planning for several decades down the line. You should also consider dividing your retirement savings into different components to help you meet different goals. For example, if you are planning to retire in five years, contribute to a college fund for a child or grandchild, and move south, each of these should be addressed independently. Multi-stage plans should keep each time frame in mind as well as address liquidity and allocation. When appropriate for your individual situation, rebalance as needed to get closer to these goals.

2. Determine your future budget.

Be realistic about your retirement spending. Most people underestimate how much they will spend after they retire, especially if they are still paying a mortgage or if unexpected medical bills occur. Many people also overspend in the first few years of retirement by traveling or making big investments in bucket list items. Retirees are no longer working 40 hours a week, they’re still relatively healthy, and they want to shop, go sightseeing, and enjoy the fruits of a lifetime of labor.

Remember, the cost of living increases every year, so it’s not safe to assume that you will spend less per month on expenses when you retire. To be safe, plan on covering 100 percent of your pre-retirement monthly budget. This approach will also help you adjust for any unforeseen expenses.

One important thing to consider is how long a retirement portfolio has to last. This determines how much you can safely withdraw each year and how you should continue to maintain your investments. The average lifespan is increasing, meaning that most retirement funds have to last longer than they once did.

If you plan to buy a home, relocate, or fund a child’s education after retirement, these things should be factored into your retirement plan as early as possible. Revisit your plan once a year to make sure you’re on track and increase the contribution, replan, or reallocate as needed to ensure everything is as accurate as possible.

3. Figure out the after-tax real rate of return.

After you figure out your age and monthly after-retirement budget, consider the after-tax real rate of return to determine if the current plan is enough to get you where you want to be. A rate of return of 10 percent or more before taxes isn’t realistic in most cases, even for those who started young. The odds of reaching this go down every year. As you get closer to retirement, it’s even more unlikely as investments are not as risky and yield smaller returns.

So, for example, someone with a retirement portfolio worth $500,000 may take $50,000 a year and hope for a 10 percent return to preserve the balance of the portfolio; that is, recoup the $50,000 over the course of the year. But, someone with a $1 million portfolio could take $50,000 a year and would only need a 5 percent return.

That said, depending on the type of account, investment returns may be taxed, so to be as accurate as possible, the actual rate of return should be calculated on an after-tax basis. Determining what is taxable and the tax rate before you begin to withdraw funds is an important part of retirement planning. Be sure to work with your qualified professionals to
assist with these taxable events.

4. Weight risk tolerance against investment goals.

Properly allocating your retirement accounts can be a great way to balance risk versus return, and some consider it to be the most important part of retirement planning. It’s a very personal decision and one that has to be carefully considered. How much risk is too much? Should you make riskier investments with part of your retirement while setting some aside in something that is typically less volatile like bonds to help ensure you have enough to meet your budget?

Make sure that you are comfortable with the risks you’re taking and assess your needs and wants. Pay attention to trends, but don’t stress too much about day-to-day changes. If you have a mutual fund that doesn’t do too well, consider contributing little more to it and get it back up to speed. Sometimes, the accounts that are performing poorly need a little more attention.

If you’re investing money in an account you’re not going to need for 30 or 40 years, you will see many cycles with ups and downs. Don’t give in to the panic. When the market falls, buy what you can to take advantage of it, especially if you have time to wait through another cycle.

5. Don’t neglect estate planning.

Estate planning is another step to retirement planning, and it requires professionals in many fields to ensure that it’s done properly. Life insurance is also an important factor as proper estate planning combined with life insurance coverage ensures that you leave fewer financial burdens for your family after your passing.

Tax planning is a key part of the process as the tax implications of passing on assets must be considered. One approach is to produce returns that cover inflation while still maintaining the value of your assets.

Estate planning should change over the course of your lifetime. Early on, it’s important to establish a power of attorney and create a will. As you get older and start a family, you might want to consider a trust. How your money is disbursed is very important when it comes to taxes and fees.

Final Thoughts

Retirement planning is complicated, especially now. Fewer people have a pension these days and some may rely on contribution plans and other investments than ever before. One of the most important parts of retirement planning is the balance of what you expect your retirement lifestyle to be and what you can realistically expect to afford. A good solution is to create a flexible portfolio and update it ongoingly to adjust to the changing market and any deviations from your original plan.

You should discuss any tax or legal matters with the appropriate professional. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material nor is it a recommendation. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Thomas B. Fleishel and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Past performance does not guarantee future results. Future investment performance cannot be guaranteed, investment yields will fluctuate with market conditions.

Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

The post 5 Steps To Take To Prepare For Your Retirement first appeared on Fleishel Financial.

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Retirement researchers have been advocating for delaying Social Security benefits until as close to age 70 as possible, and new research backs up this advice.

Many people may realize that delaying means an increase in benefits, but they don’t realize just how much of a boost it can mean. According to a new paper by Steve Parrish and Wade Pfau in the Journal of Financial Planning, delaying benefits from age 62 until 70 can lead to an increase of 77 percent when adjusted for inflation.

One significant reason why it makes sense to delay taking benefits is that the data used to determine the levels was collected in 1983 and set to make the Social Security system indifferent to how old people were when they made their claims. These levels were determined by life expectancy, and the goal was to ensure that people who lived to the average life expectancy got the same amount of lifetime benefits.

Why does this matter? Because life expectancy has changed significantly since 1983. So, instead of half of the people in this age group living beyond average life expectancy, more than half do. So, more than half of people in this age group get higher benefits by delaying when they start their claim.

That’s not all. Interest rates are also much lower than in 1983, so you get less money from your investments than you would have back them. It makes more sense to use other assets to pay for retirement and put off collecting Social Security until age 70 when the monthly income will be significantly higher.

Factor in the annual tax-free benefits increases, and the monthly amount is even higher.

Considering all these things, it makes much more sense to wait to file for benefits than to take them early, even if you’re planning to invest them. The only way that taking benefits early and investing them is a better strategy is if you can earn enough to offset the guaranteed yearly increases, which is 8 percent, tax-free. A high hurdle and by no means guaranteed.

The researchers address this in the paper, saying that historical data shows that it is not common for investments to beat the increase in Social Security benefits, especially for people who live beyond average life expectancy.

For married couples, the case for delaying benefits is even stronger. While both partners are alive, they each receive Social Security benefits. When one spouse passes, their benefit stops and the surviving spouse usually continues to receive the higher benefit. Delaying Social Security benefits leads to a higher benefit; the higher the benefit, the better for the surviving spouse.

While it may make sense for some people to take their Social Security benefits before age 70, for most people, waiting until age 70 is the best way to ensure the highest lifetime payments.

Any opinions are those of Thomas Fleishel and not necessarily those of Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

The post The Case for Delaying Social Security Benefits first appeared on Fleishel Financial.

The post The Case for Delaying Social Security Benefits appeared first on Fleishel Financial.

It’s time to file your taxes again! Things have slowly been returning to normal since the height of the Covid-19 pandemic, and the same can be said for your taxes, as many of the benefits and exceptions put in place are going away.

Taxpayers may not see a refund this year or may even owe as many of the individual tax credits and deductions are changing. Some of the most important to keep in mind are the following:

• The Child Tax Credit is decreasing. In 2021, the American Rescue Plan made the Child Tax Credit completely refundable and increased it significantly. It went from $2,000 per child to $3,600 (children up to age 6) and $3,600 (children between 7 and 17). In 2022, the Child Tax Credit returns to $2,000 and is no longer refundable. It’s also once again limited to children under 16.
• The Earned Income Tax Credit is decreasing for people without children. For these people, the Earned Income Tax Credit was $1,502 in 2021; in 2022, it is dropping to $560. As for people with children, their credit is increasing slightly to help counter inflation.
• The Child and Dependent Care Credit is decreasing. This year, you can still receive credit for your expenses if you pay for someone’s care so that you can work, but the cap has dropped significantly. In 2021, this credit had a maximum of $8,000; in 2022, it’s only $2,100.
• Charitable deductions are decreasing. During the pandemic, people could take the standard deduction and claim additional charitable donations of up to $300 for single filers and $600 for couples filing jointly. For 2022, this is going away.
• Clean Vehicle Credit rules are changing. As part of the Inflation Reduction Act of 2021, new electric vehicles purchased after August 16, 2022, must have been assembled in North America to receive the $7,500 tax credit.
• Changes for 1099-K forms are coming. There’s been a lot of talk about changes in reporting requirements for third-party organizations like Venmo, PayPal, and Cash App. Before 2022, these companies only had to supply a 1099-K for people who received $20,000 or more in payments and processed at least 200 transactions. The new law removed the requirement for 200 transactions and requires a 1099-K for anyone who receives at least $600 for goods and services. This was set to go into effect for 2022, but the IRS delayed it until 2023.
• In addition to these changes, the IRS has increased its workforce significantly, adding nearly 90,000 more agents. What does this mean for you? Audits are more likely, so it’s crucial to understand these changes when filing your taxes for 2022.

Any opinions are those of Thomas Fleishel and not necessarily those of Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

Please note, changes in tax laws or regulations may occur at any time and could substantially impact your situation. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.

The post Many Covid Tax Changes Are Coming to an End first appeared on Fleishel Financial.

The post Many Covid Tax Changes Are Coming to an End appeared first on Fleishel Financial.

Disagreements over money can make trouble in even the best relationships, which is why many couples avoid talking about money at the beginning of a relationship. But if money has caused you trouble with relationships in the past, talking about it early might be exactly what you need to do.

But how can you broach the topic of money in a relationship, especially a new relationship? Here are some tips.

1. Be sure money really is the issue. Often, disagreements about money aren’t really about money at all. There may be other issues in the relationship, like self-esteem, love, security, or control. When you discuss money with your partner, especially if there is a problem, make sure there isn’t something bigger going on beneath the surface.

2. Be honest with yourself about money. You can’t work through tension about money with your partner if you don’t understand how you personally feel about money. How did your parents deal with money in their relationship? Did you have a bad experience with money in a previous relationship? Money is part of a relationship, and it is easy to attach emotions to it.

3. Find the right time to talk. Talking openly about money may make some couples uncomfortable, so choose the time and place carefully. The best time to have a discussion about money is when there’s no real issue going on, and you and your partner can both come to the conversation relaxed, calm, and ready to communicate.

4. Work through scenarios. During your talk, work through different financial scenarios with your partner. For example, you might discuss how you would handle an overdrawn checking account or what you would do if the primary earner lost their job. If you are worried about your partner’s spending habits or want a more prominent role in managing money, bring those up as well.

5. Be patient but persistent. Not everyone will feel comfortable talking about money at the beginning of a relationship. If you try to talk about something about your finances that is concerning you, and your partner gets defensive, it might be a sign that they are not ready to discuss money. But if you see the relationship developing into something long-term, keep trying.

6. Try to see your partner’s side of things. Everyone sees money differently, depending on your age, gender, career, and history. Some people like to save, while others are willing to take more risks. Try to see where your partner is coming from and be prepared to compromise. It’s okay to disagree, but you ultimately have to agree to keep the relationship going.

7. Establish financial rules. If you and your partner have committed to each other long-term, working together to set spending limits can help you when money troubles arise. Set a limit for how much you can spend without clearing it with the other person. For some couples, this figure might be $500; for others, it might be closer to $100. Some couples may need to have a strict budget where they track every penny, while others can be a little laxer. Work out what is best for you and your partner, and stick to the rules you set together.

Any opinions are those of Thomas Fleishel and not necessarily those of Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

The post Is Money Causing Tension in Your Relationship? Here’s How to Avoid It first appeared on Fleishel Financial.

The post Is Money Causing Tension in Your Relationship? Here’s How to Avoid It appeared first on Fleishel Financial.

There have been many news stories about high inflation lately, and you may be feeling it when you shop. Rising prices are eating up bigger parts of family budgets, and some necessary items are more expensive than they’ve been in years.

On the other hand, the highest price spikes are on a limited number of items, and they may prove to be temporary. Lower-income workers have seen strong wage gains that are outpacing inflation, improving their standard of living or at least keeping it somewhat steady. Instead of worrying about limited and temporary price spikes, the government should focus on keeping unemployment low, reducing the cost of necessary goods and services like housing and healthcare, even if their costs have begun to even out.

That said, there are a few reasons to worry about inflation.

First, prices can increase faster than wages, making it impossible for some families to pay their bills. While some low-wage workers have seen an increase in pay, this does not apply to everyone. In fact, low-wage workers often wage gains later in an economic recovery than high wage workers do.

Second, faster price increases and higher inflation can become cyclical. If low-wage earners are able to demand and receive higher wages, it raises costs for business which, in turn, may raise prices to compensate if they are unwilling to absorb high labor costs in another way.

Third, high inflation can cause people to change their spending habits in a way that will make inflation even higher. If people are afraid that prices are only going to continue to rise, they may buy things now to ensure they get them at a lower price. This scenario pushes up demand, which raises prices higher and faster.

While all of these scenarios are possible, they have not yet come to pass. Again, price spikes have been limited to a few items, for example, prices for used cars, hotels, and flights spiked sharply in summer when people were anxious to get back out into the world. In winter, prices went up for energy costs and some food items. Rent is increasing, but these increases seem to be concentrated in specific areas of the country, namely the South and Midwest.

Prices for other goods and services have stayed the same or risen only modestly. Healthcare costs for things like doctor’s visits, prescriptions medications, and hospitals have risen less than one percent over the past year. Some food items, like vegetables, are less expensive than they were last year, and the price surge for new household appliances and clothing have started to recede.

Ultimately, this is good news, but, as mentioned, it may still be challenging for low-wage earners. These households spend a disproportionate amount of their income on food and utilities, and they are more likely to rent than own their homes.

But low-wage earners have found ways to compensate. For example, they eat less beef and are more likely to buy processed foods, which are less expensive. While rent has increased as much as six percent in cities like Detroit, Tampa, and Atlanta, it’s less than one percent in Washington DC, San Francisco, Seattle, and New York City.

These workers also saw some improvements when it came to income. Workers in hotels, retail outlets, and restaurants have seen large wage increases, and low-income families received monthly child tax credits and  large stimulus checks. Increasing prices are certainly not helpful, but real incomes for some vulnerable Americans have risen.

It’s also worth considering that rising inflation seems to have been temporary. Price jumps for travel-related expenses have stopped and gas prices have fallen and stabilized. As the global supply chain corrects itself and the effects of the pandemic subside, it opens the door to lowering prices. If federal, state, and local governments devote more money to affordable housing, rental inflation may also decline.

There is also no evidence of higher wages leading to higher inflation as higher prices are not following the pattern of higher wages. For example, restaurant workers have received higher wages in recent years, particularly as the world started to open back up again after the pandemic. But these wage increases were a part of a pre-pandemic trend and restaurants were able to adjust for the increased wages without accelerating inflation. Since 2014 when restaurant wages began to increase, menu price increases have always been below the rate of wage increases.

Finally, there is no reason to think that prices are just going to continue to rise. If this was the case, people would be spending money quickly to ensure they got the best possible price, hoard things like appliances and cars, and shift their investments into things that would offer them better protection against resign prices.

Instead, people are buying fewer big ticket items, likely because they expect the price increases to be temporary, and Americans are not shifting their investments, indicating that they are not expecting inflation to keep rising.

All that said, policymakers should certainly be keeping an eye on inflation, but it is not as concerning as long-term economic issues like expensive medical care, unaffordable housing, and stagnant wages. Unlike the bump in inflation, these issues are here for the long haul, and it will take more work to get them to go away.

Any opinions are those of Thomas Fleishel and not necessarily those of Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

The post Inflation Is Up: Should You Worry? first appeared on Fleishel Financial.

The post Inflation Is Up: Should You Worry? appeared first on Fleishel Financial.