Michael C. McFeeley, MSFS, CRPC®
1.800.777.4798
410.825.0781 phone
www.academyfinancialinc.com
Chart Your Course Today
o The Financial Hawse Pipe
3 A/E and 3rd Mate (age 18-29): This is the time to develop good habits and set goals that will help create a foundation toward a successful retirement.
1. Create a Budget and Understand your Cash Flow: Understand how much you make, how much you spend, and where your money is going.
2. Access to Debt: Understand your current debt and the interest rates you are paying. Consider consolidating your debt at a lower rate. Now that you have an income and debt is more accessible, that does not mean you have to borrow the max.
3. Start Saving: Life is a marathon not a sprint. Save first and invest second. It is recommended to have 6 months of expenses saved in an emergency fund used only for emergencies.
4. Create Goals not just Habits: Good habits are great to establish but let us help you develop attainable targets for accountability.
5. Understand your Employee Benefits Package: Most employers offer incentives to their employees. Understand how you are covered and how to maximize this opportunity.
6. Personal Risk Management: Know your life insurance and disability income insurance needs and coverage. At this age your ability to work is your most important asset and you may need to insure this asset to protect yourself and others who may be dependent on your income if you were not able to work.
7. Protect yourself from the Unknown: Auto insurance, homeowners insurance, or renter’s insurance are ways to protect yourself from a catastrophic event that could cause a great financial hardship.
8. Investing in your 20’s: These early years are important to take advantage of the growth potential of compounding.
2 A/E and 2nd Mate (The accumulation phase: age 30-50): This Block of time is where people will save more for their retirement needs and create a road map toward a successful retirement.
1. Save for Retirement: Maximize your employer or Individual Retirement Accounts potential through tax deferred contributions.
2. Minimize Debt: There are certain advantages to having debt however at the end of this stage; the least amount of debt gives you the most flexibility in retirement. Develop a successful debt strategy, with an advisor.
3. Review your Insurance Needs: As your life change so does the amount of coverage you need to have. Do you have enough coverage to help meet the needs of you and your family in the case of a catastrophic event?
4. Asset Allocation & Diversification: Diversification through an asset allocation plan is a useful technique that can help reduce overall portfolio risk and volatility. An asset allocation strategy can help you to accomplish two important goals: first, it can help you to ride out the ups and downs of the market by diversifying your investments, and second, it lets you adjust your exposure to risk, based on your desired levels of relative fluctuation, potential return on investment and time frame.
5. Review your Will: As assets are accumulated and you experience other changes in your life; does your original will still provide the passing of assets to your heirs the way you want?
1 A/E and Chief Mate (Pre-Retirement Phase: age 50-retirement): This phase is when you begin to Iron out the details needed toward a successful retirement.
1. Update Retirement Plans: This is a good time to have a comprehensive retirement plan completed. This plan will give you an understanding of where you currently stand and not only what you will need to accomplish but what you can expect.
2. Evaluate Investments: As you grow older you may not want to be exposed to as much risk. Evaluate your holdings and identify what investments strategies will help meet your needs and which ones you may not want to have exposure to.
3. Long Term Care: Plan to meet your long term care needs. As people are living longer then ever the need for Long Term Care protection is an essential piece to preserve your estate.
4. Develop and Evaluate an Estate Plan: The goals of estate planning are to transfer assets to your intended beneficiaries at the lowest possible tax cost. Our estate planning strategies utilize techniques to leverage transfers to minimize estate and gift taxes.
5. Plan and Establish Trusts: Trusts can be an important piece of an estate plan to pass on an inheritance to help ensure your desired intentions are fulfilled.
6. Re-evaluate Insurance Needs: With down sizing, children moving out, and with being less dependent on your income their may be savings available. On the other hand in large estates life insurance is a great resource for liquidity to help pay estate taxes.
7. Optimize your Retirement: After age 50 you can use catch up provisions to put away more money into retirement plans.
8. Family Debt Strategy: The sandwich age when people are assisting their kids and also their parents. Develop a plan for these costs.
9.
Chief Engineer and Captain (The Biggest Decisions: 3 years before Retirement and 3 years after): Consider all your options and the effects of being retired. Most people only get to retire once so you want to make sure it is done properly.
1. My Next Phase: Consider the non-financial aspects of retirement. What are you going to do with your time? Where will I go? How will you react emotionally and psychologically?
2. Understand your Budget and Cash Flow: Things will be changing and you must create a budget to ensure your income needs will be met in retirement.
3. What to do with my Retirement Accounts: First you want to get them in your name and under your control by rolling them over into your own IRA which gives you greater flexibility and more investment options. From here each situation is unique and structured around your retirement needs.
4. Considering Annuities: An annuity provides a secure income that one cannot out live. They are a supplement to any retirement plan to help meet basic expenses and needs while providing a secure income stream.
5. Health Care: Ensure your health care needs will be met in retirement through individual health insurance coverage and Medicare. Evaluate these needs with a professional.
6. Pension decisions: Those lucky enough to have worked for a company that will provide a pension have decisions to make when they retire. How do you maximize your distribution strategy and also protect your family in the process.
Retirees (The Distribution Phase: From Retirement on): It is so important to have a relationship with a trusted financial advisor that understands your unique situation. During the Distribution phase of retirement many important decisions are made and periodic reviews are necessary.
1. Tax Implications: There are still tax payments one needs to prepare for during the distribution phase.
2. Social Security: When is the best age to receive your social security benefits? Every situation is unique and it is good to plan for this major decision. Do you take a reduced rate, full rate, or increased rate?
3. Income Investments: Your investments may need to be changed to have more income streams provided to help meet your retirement cash flow needs.
4. Review your will: Once again you will want to review your legal documents in preparation for assets to change hands.
5. Ensure your Long Term Needs are Met: By this time you should have protected yourself from the costs of Long Term Care. It is just as important to vocalize your needs with your family as you will become more dependent.
6. Supplemental Health Coverage: Medicare may not meet all your needs so you will need to sit down with a representative to evaluate these costs.
7. Annual Reviews: Retirees should meet at least annually to ensure their financial strategies are working after distributions have been made. Some may have to re-evaluate their goals and standard of living.
8. Philanthropic Gifts: Some individuals desire to give charitable gifts which are usually discussed in your estate planning and financial reviews. With the right structure you can feel good about giving to a charity and making a difference while still receiving a tax advantages.
Defined Benefit options? What do I need to consider: Many mariners have spoke about this decision for 20 years at coffee time, but the answer is different for each individual depending on their needs, habits, families, and long term goals.
1. Protect your Family: Ensure that you spouse will be protected and is currently protected with the election you have made. Many people do not know their current election and in a tragedy could unknowingly leave their loved ones in a financial hardship.
2. Analyze your Budget/Cash Flow: One of the most important factors of retirement that is often overlooked. A retiree does not know how much income they need in retirement if they do not know how much is going out.
3. COLA/NON-COLA: If this is an option understand the implications of having or not having a Cost of living adjustment (COLA). Find out from your plans department how this could impact your income.
4. Understand your Habits: If you are not good at keeping money ensure you have enough of a secure income stream to maintain the quality of life you wish to live.
5. My Next Phase: As much as the monetary issues are extremely important, one of the most overlooked problems in retirement are the non-financial aspects of retirement. What are you going to do with your time? Where will I go? How will you react emotionally and psychologically?
6. Create a Retirement Plan: Creating a plan allows you to project forward the possible outcomes of each choice you have. The investment in a plan allows you to make educated decisions based on a course to follow.
7. Passing on Wealth: If passing wealth to family members, your church, or favorite charity is important to you, it is important to understand the implications of each decision.
Getting married and/or having children: Recommendations when you get married and/or have children.
1. Insuring your Income: The ability for you to provide an income is even more important when others are also dependent on this income. Analyze your current insurance needs to find out if it is sufficient to help meet the needs and goals of your family.
2. Create a Simple Will and Living Will: This is your voice when you are not able to voice your desires. A living will makes medical decisions when you are not able to. A simple will helps distribute your property how you wish it to be distributed while saving your family from difficult legal issues.
3. Powers of Attorney: A written document that gives one or more persons the authority to make personal and financial decisions for another person when they cannot act on their own behalf due to absence or incapacity.
4. Name a Legal Guardian: Protect your children by naming a legal guardian to care for you children if you and your partner are not able to care for them.
5. Begin Saving for Education: Education is becoming more and more expensive these days. It is important to start early if providing an education is important to you. Many strategies can be employed depending on type of education.
6. Anticipate your Housing Needs: As new family members join the family and your needs change, consider creating a separate plan to save and pay for your new home.
7. Change your Beneficiary Designations: As loved ones enter your life you need to make sure they are included as beneficiaries in your employer plans much like your will to avoid probate. These plans are separate contracts.
To find out if you are working your way up the Hawse Pipe or have any questions about your track, Contact Michael McFeeley at (800)-777-4798 or by email at . For more general information about the financial planning aspects you should be considering and Academy Financial, please visit: www.AcademyFinancialinc.com.
“I take a service above self approach to help my clients obtain their financial goals
and objectives for themselves, their families, and their communities.”
Michael C. McFeeley is a Registered Representative of Lincoln Financial Advisors, Corp.
Securities and investment advisory services offered through Lincoln Financial Advisors Corp., a broker/dealer (member SIPC) and registered investment advisors.
Insurance offered through Lincoln affiliates and other fine companies. It is not our position to offer legal or tax advice.
Lincoln Financial Advisors,
1300 York Road Suite 200, Lutherville, MD 21093 (410) 339-6600 CRN200906-2030873