Tax Advice

I talk to a lot of people who will never be rich, but who certainly don't deserve to be poor.  When you plan for your retirement, there are straight forward strategies you can use to help ensure you don't end up outliving your retirement funds.

Over the next few months, I want to share with you four simple, yet powerful, financial strategies that will help you get the most out of your retirement money.

1. Start Planning for Your Retirement Tax Situation NOW!

Everyone hates this piece of advice. Minimizing your tax liability in the future seems a challenging prospect. I know of only a few people who like to spend their time thinking about taxes.Tax

But I promise you - it's where you're going to see some of the greatest gains to your retirement income.

Consider these facts and then answer the question below:

  • an 18 trillion dollar U.S. debt,
  • a looming estimated cost of almost $40 trillion to make the Social Security, Medicare and Medicaid financially solvent for the next 75 years,
  • local city and state government budgets over-extended,
  • the increasing cost of the "War on Terror" and the U.S. military budget,
  • a crumbling national road, bridge and underground infrastructure in desperate need of repair

Do you think taxes are going up or down in the future?

I believe taxes are going up.

If the only retirement product you own is a 401(k) or an IRA, or another qualified plan, remember you have just deferred paying tax, not eliminated paying it. The U.S. Department of Revenue wants their cut of your future income.

If you didn't pay tax when you put money into your retirement vehicle, then you're going to pay income tax on it when you take it out. And if tax rates are higher and your retirement deductions lower...you'll end up paying more in tax. A LOT more.

Plan-NowYou don't need to grit your teeth, stare straight ahead and just accept this tax situation. There are many financial strategies that will give you tax planning flexibility.

You just need the time to develop a flexible retirement strategy and to implement it. That's the point of planning BEFORE you are ready to retire.

Make the commitment to review your retirement tax scenario NOW.

We can work together to evaluate your retirement tax situation and then choose financial products and strategies that will give you the greatest financial flexibility while reducing your tax burden.


Published in Coach's Corner
Tuesday, 31 March 2015 10:51

Have You Created a "Retirement Paycheck?"

Your approach to retirement planning may be costing you money. A LOT of money.

Instead of thinking of your retirement fund as a "pile of cash," plan for the monthly income you want to have for the rest of your life.

Common financial advice encourages you to to save money and then ration out 4-5% from your 401(k) or qualified plan each year to fund your retirement.

But this strategy treats your money and your financial resources as if you were dealing with a pile of bricks. Based upon this approach, if you collect 100 bricks for your retirement; then no matter what happens to you or your family, you can only allow yourself 4-5 bricks per year to live.


But the wealthy don't treat their money and financial reserves this way. The wealthy understand that the key to financial control and independence is based upon how they manage the flow of their money through their financial system.

The wealthy think about "cash flow" instead of a pile of "cash." They think about how to make their money work for them by managing both the inflow and the outflow (i.e., taxes, interest, fees and service charges, and other expenses).


The wealthy also integrate money coming in from various sources (e.g., Social Security benefits, 401(k) distributions, investments, annuities, property, inheritance, etc.) with their tax situation. They stagger their how much money they receive each month in order to optimize their monthly income, minimize their tax liability and to have the financial resources to managed unexpected events.

Consider this. You can have your house and car paid off, but if you have no "retirement paycheck" or cash flow coming in every month, what will you live on?

If your only retirement strategy is rationing your annual income to 4% of your total financial reserves , then you don't have much of a plan to handle a stock market drop (and capital loss in your 401(k)), inflation or a sudden need for cash, be it for house repairs or medical expenses.

There are financial strategies that will preserve your wealth in case of unexpected health expenses, inflation, stock market fluctuations and unexpected life events.

You don't have to be Warren Buffett to enjoy your retirement, but you do need to plan ahead. Make sure you have a "retirement paycheck" that will provide for you and your family.

Published in Coach's Corner
Thursday, 26 February 2015 06:43

Is Your Money Working Together?

Ever been on a team that is working well together?

When you're on a strong team, be it a sports team or a business team, the unique gifts and strengths of the individual members contribute to the success of the whole.

Seattle-SeahawksIn fact, on a strong team, like say, the Seattle Seahawks, while the strengths of each individual member are obvious, it's the team working together that gets to the Super Bowl.

Let's apply this same team approach to your financial strategy.

Instead of thinking of your financial resources as isolated financial products, think of each financial product you have as a individual player on your financial team.

For example, don 't think about your bank account, 401(k), real estate, life insurance policy, certificate of deposit
(or any other product) as isolated money in "separate buckets."Money in cups

Instead, consider how your different financial products might actually work together to make your financial situation stronger.

When you develop a lifetime financial strategy that factors in the strengths and weaknesses of each financial product, along with your life values, then you create a winning financial team.

Your retirement strategy should take into account your life values and needs and potential life events - both planned and unplanned.

Then, each financial tool or product should be evaluated as to how it will contribute to your financial team and enable you to achieve your goals.


Pete Carroll, the Seahawks Coach, looks for defensive players that fit his strategic vision. He bids farewell to highly capable players that don't fit his long-term goals or whose strengths don't match his needs.

Think about your financial products in the same way. Choose each financial player carefully with your retirement needs and goals in mind.

You don't have to build your financial team alone. We know Pete Carroll looks to his management and coaching staff for expertise.

And that's why I'm here. Together, we can build a winning financial team that provides you with a secure retirement.


Published in Coach's Corner
Thursday, 30 October 2014 08:33

Risking it All by Chasing Returns

Payday rev1
Imagine your boss handing you your paycheck.  
And, as she does, she says,  "By the way, you'll be taking a 10% cut next year, but don't worry, over the long-term, you'll make it up.  I think."


You'd likely be appalled, angry and perhaps a little confused.


But you sign up for this same scenario when you place  a portion of your hard-earned paycheck in the stock market.


You hope that your money will grow.  You hope that whoever is watching over it knows what he or she is doing.


When the stock market drops, you prefer to look away, wanting to believe all the promises "that over the long-term it will come back."


Well...what if "the long-term" is too long for you?  Many of the folks who lost money in 2008 are still waiting to get back to their pre-2008 investment value.


So, I ask you again, how long can you wait to recover if you lose 10% or more of your investment value? Investment-Risk-of-Gain-and


When your money is in the stock market, you're hoping to build a secure financial foundation on money that is at risk of loss.


Why lose any of your money, at any age? With the diversity of financial instruments available today, there's no need to ever lose money.

It's that simple.  take-control-of-your-retire

Published in Coach's Corner

Last Thursday, as I do every morning, I was perusing financial news and updates across a number of newspapers and online sites.

I took a look at the SigFig Analysis in the USA Today. SigFig notes that they have "over a half a million investors nationwide with total assets of 200 billion." (USA Today, June 12, 2014, Money3B).

USA-Today SigFig-Analysis J

 Reference:  USA Today, June 12, 2014 Edition, Money 3B, SigFig Analysis

Over the most recent 6-month period, engaged SigFig investors tracking the performance of their investments, and willing to accept moderate risk of loss, achieved a 4.32% return. Those investors willing to accept a highest risk of loss achieved a 5.08% return.

Yet these types of returns are comparable to those achievable with other financial products that achieve this level of growth but with no risk of loss.

My question to you is this: why live with the worry of the potential loss of your money?

I want to know my money will be available to me in retirement, not just hope that it will be. Why should we accept losing our money at any age for any reason?

We can get caught in the cycle of choosing high-risk investments that promise enticing rates of return. If we lose our capital or don't achieve the promised rate of return, we invest more money into another high-risk product.

We want to believe that our nerve and willingness to take risks will eventually be rewarded with a windfall that more than makes up for our losses. This approach is akin to sitting at the slot machines, feeding in dollar after dollar, waiting for the jackpot. Of course, you cannot rule out a big win. But this strategy is hardly one you want to use to anchor a lifetime financial strategy.

You don't need to hope that it will all work out if you just shut your eyes and believe. This approach may have worked for Dorothy in the Wizard of Oz, but it's not a solid strategy as we move into a volatile and rapidly evolving 21st Century.Dorothy

Win Win StrategyYou can set yourself on a different path to financial stability and peace of mind.  Choose financial products with predictable financial results AND growth as the cornerstone of your financial strategy.

And then, if you so choose, place money you can afford to lose, in the stock market or other investments.

We live in challenging times. But with knowledge and the right financial products, we can face our future with confidence.


Published in Coach's Corner

So...today I read another article on "saving" for retirement in your 401(k):  Wall Street Journal: How to Fix the 401(k)

These words are often used interchangeably BUT saving and investing are NOT the same thing.


You invest for greater growth at the risk of loss. You save for moderate growth with security, stability, accessibility and minimal risk of loss.

When you have mutual funds in a 401(k) you are INVESTING in the stock market, not SAVING in the stock market. If your money is in mutual funds it is at risk for loss.


Among its recommendations, this article talks about reducing fees and requiring people to "save" more and but does not talk about the obvious impact of poor mutual fund performance.


Look at your 401(k) statements. How long it has taken you to recover from stock market losses you experienced 2008? The greater your loss, the harder it is just to get back to your starting point.


Develop a financial strategy that combines the elements of saving AND investing. An effective financial plan will consider growth but will be built upon a foundation of security and stability.




Published in Coach's Corner

Retirement-ImageOn January 3rd, the Boeing Machinists here in Seattle voted to accept the latest contract offer from Boeing. One of the core issues in this contract dispute has been retirement benefits.

The Seattle Times, January 4, 2014 article reporting on the machinist vote stated that "Between 1979 and 2011, the share of private-sector workers whose retirement was funded by only pensions dropped from 28 percent to 3 percent according to the Employee Benefit Research Institute."

Most of us have 401(k)s or other qualified plans, so what's the big deal with keeping a pension? Well...perhaps a little history will help answer this question.

You wouldn't know if from all the articles, but using 401(k) and other qualified plans as one of the fundamental financial tools for retirement only started 36 years ago. In 1978, the 401(k) plan (named for the IRS code, Section 401(k)) was initiated as a congressional action intended to offer taxpayers breaks on deferred income. At that time, the 401(k) plan was seen as a way for people to put money for retirement outside of, and in addition to, the traditional pension plan.Pensions-and-You

While the 401(k) plan was never intended to replace the company retirement pension plan, this is largely what has happened over the past 36 years.

More than 65 million 401(k) accounts now allow participants to invest in stocks, bonds and mutual funds. Many of these financial products are investments, allowing for potential high returns, but are also at risk for loss.

The bottom line: Our 401(k) and other qualified plans shift the investment risk and retirement planning from our employer directly and completely to us (the employee).

When the retirement pension plan is eliminated and exchanged for 401(k) or other qualified plan, as the employee we are no longer promised a guaranteed benefit upon retirement by the company.

Time-vs.-MoneyWhat we have instead, is the ability to control our investment, but absolutely no guarantee of financial performance or benefit over the short or long term. This is because products such as mutual funds within a 401(k) do not produce predictable outcomes or offer any performance guarantees.

Effectively, we're hoping to build a secure financial foundation for retirement on money that is at risk in the stock market.

I'm not saying that qualified plans are bad or that you shouldn't place money in your 401(k).  What I am saying is that your money within your 401(k) may be at greater risk of loss than you realize.  And that's why the Boeing machinists have been so concerned about their pension benefit.

A strong financial strategy will manage the risk of potential stock market losses and investment risk by placing part of your retirement money outside of qualified plans - in financial products that are focused on saving and not investing.

Published in Coach's Corner
Friday, 13 September 2013 17:04

Do You Have a Financial Strategy That Works?


Throughout the last 30 or so years we have been exhorted and encouraged to place a great deal of reliance on qualified plans, such as our 401(k), to fund our retirement.

Qualified plans are supposed to provide us with the income we need in retirement. It’s the approach that is embodied by the financial counsel we hear or read every day:

“Stay in the stock market, ride out the down-turn, the market will rebound.”

“Invest for the long-term.”

“Focus on your rate of return.”

Let’s consider the 401(k) plan once more. Many people have a very large percentage (if not all) of their retirement "savings” money situated within mutual funds in a 401(k). 

But remember, a mutual fund is an investment vehicle,  subject to loss at any time.  Saving and investing are not the same thing.  You invest for greater growth at the risk of loss.  You save for moderate growth with security, stability, accessibility and minimal risk of loss.

Control…or Lack of It…

You do not have control over how your mutual funds will perform in the marketplace. Clearly, we all want the stock market to go up and the value of our 401(k) funds to increase.  But what if this doesn’t happen and you lose money inside your qualified plan?

Mutual funds are operated by money managers. Does the fund manager lose money when you lose money? The money manager may lose sleep, but not money. The fund manager still gets paid and the institutions still collect their fees.

You’re the only one who loses. Your money is at risk, not theirs. Their ultimate loss is that they may lose you as a client. However, it’s you who have to endure the consequences of losing your hard-earned money.

When you are chasing a rate of return, you are not focused on what would happen if you lost your principal. Instead you concentrate your energy on possible gains. You do not think about how you would cope if you lost some or all of your initial investment.


Loss of your original capital is critically important to consider since the greater your loss, the harder it is just to get back to your starting point.

When you combine the loss of your original capital with the erosion of your wealth due to taxes, inflation, and fees, the financial result can be, and often is, devastating. Also, as you get older, you have less time to recover from the effect of loss.

At some point in your financial life, you need to decide whether you want to chase a return or create a financial strategy.

An effective financial strategy will consider growth. 

But the cornerstone of your lifelong financial strategy should be a solid foundation of security and stability. 


Published in Coach's Corner

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