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Financial Symmetry: Balancing Today with Retirement

When considering retirement, do you wonder what financial opportunities you may be missing? Busy lives take over and years pass without taking advantage. In this retirement podcast, Chad Smith and Mike Eklund unveil financial opportunities, to help you balance enjoying today so you are ready to retire later. By day, they are fiduciary fee-only financial advisors who answer questions about tax savings, investment decisions, and how to save more. If you’ve been putting off your financial to-do list or are just not sure what you’ve been missing, subscribe to the show and learn more at www.financialsymmetry.com. Financial Symmetry is a Raleigh Financial Advisor. Proudly serving clients in the Triangle of North Carolina for over 20 years.
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Now displaying: January, 2020
Jan 27, 2020

How do you best invest at all-time market highs? In this episode, we are walking through the strategies and disciplines you'll need to be a successful long-term investor. 

Short Youtube recap here: https://youtu.be/fEXnQ8GaCuk

Visit full article notes here: https://wp.me/p6NrVS-3i0

Short-term market forecasting is impossible to predict

We often get the question of whether people should continue to invest given the all-time market highs. Well, let’s take a look back to just a year ago. At the end of 2018, the U.S. stock market declined by 20% and everyone was worried about a potential bear market. But it turned out that 2019 was a fantastic year despite all the worries.

We can’t tell you when will be a good time to invest in the short-term. No one can. No one has a crystal ball that can predict those outcomes. It is important to formulate a decision-making process that is not outcome-based. Financial decisions should always be processed based instead. 

What does the long-term history of investing tell us?

Think about where you were in December 2009. You probably weren’t too optimistic about the economic future. But it turned out the S&P 500 was the best place to invest over the past 10 years. But in the 10 years preceding it was the worst place to invest. 

There is never an easy time to be an investor. Investing always involves risk and many see that risk as a reason not to invest. There is always a risk and plenty of reasons not to invest. But when you look back, you’ll realize recessions, while painful, happen quickly but the market rises over the long run.

A diversified portfolio will always include something you don’t like

After the S&P’s strong run the past 10 years many people wonder why bother to invest internationally or why they should hold any bonds in their portfolio. Even though the S&P 500 performed quite well over the past 10 years, it was the worst place to invest during the previous 10 years. To protect yourself, you’ll need to be diversified. Bonds can not only provide diversification but they can provide income and capital preservation as well. They may not be the most exciting, but bonds will ensure you don’t have all of your eggs in one basket. 

So what is the 2020 market outlook?

Once again we find ourselves in a time of uncertainty. There’s the threat of war, a presidential election, and who knows what else could happen next. Given this time of uncertainty, what changes should we be making to our portfolios? The only sure answer is that you should only be taking as much risk as you can handle. Don’t let recent market performance lull you into taking too much risk.

Listen in to hear the outlook for 2020 and beyond. 

Outline of This Episode

  • [2:27] Short-term market forecasting is impossible to predict
  • [5:35] Let’s look at how the markets have performed in the long-term
  • [10:52] Take a look at bonds
  • [15:10] What has happened with consumer confidence?
  • [17:35] Why hold foreign stocks?
  • [20:15] What changes should we be making to our portfolios given the current climate?
  • [23:54] What do the experts predict to happen over the next 10 years?

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Jan 13, 2020

The SECURE Act is the biggest piece of retirement legislation to pass since 2006.

On this episode, we discuss what the SECURE Act is and how it will affect you and your retirement plans. The acronym SECURE stands for "Setting Every Community Up for Retirement Enhancement." 

Watch corresponding Youtube video here: https://www.youtube.com/watch?v=d0K8KBlCYhs&t=2s

In our breakdown of the new bill, you’ll learn about the highlights including new IRA rules, changes to 401K’s, non-retirement changes, and extenders.

The Stretch IRA is not as stretchy

One of the most impactful changes in the legislation deals with the Stretch IRA provision for non-spouse beneficiaries. Under the old law, upon a person’s death, the non-spouse beneficiaries of their 401K’s and IRA’s could withdraw savings over the span of their entire lifetime.

Now, as of January 1, 2020, the Secure Act compresses that time period to only 10 years after the year of death, thus speeding up the timeframe for taxes to be paid on these pre-tax savings. This complicates some old strategies being used, but creates new planning techniques for others.

There are a few eligible designated beneficiaries that will avoid the 10 year payout. These include:

  • the surviving spouse of the deceased account owner
  • a minor child of the deceased account owner
  • a beneficiary who is no more than 10 years younger than the deceased account owner
  • a chronically-ill individual
  • a disabled individual

Tune in to see how you may need to tweak your retirement withdrawal strategies to best work for you and your heirs.

More changes to IRA’s

The Stretch IRA wasn’t the only thing that changed with IRA’s. The required minimum distribution (RMD) age was raised from age 70 ½ to 72. This means, for those yet to reach 70.5 by 1/1/2020, that you won’t have to take funds out of your IRA until age 72. You’ll have a year and a half longer to convert those funds to a Roth IRA, depending on tax brackets.

Despite the RMD age moving back, you still have the option to make a qualified charitable distribution (QCD) at age 70. If you'd like a refresher for some of these financial acronyms we're mentioning, check out episode 63, our Financial Acronymology guide.

Additionally, those over 70 and still working can now contribute to a traditional IRA if they have earned income. In the old law, this ability stopped at 70.5. But people are living and working longer now (without adequate retirement savings for many), so the SECURE act makes this possible.

Good news for 401K’s

Finally, we get to the part about setting communities up for retirement. With the changes in the Secure Act, more small business owners will be able to offer 401K’s to their employees.

The bill makes it easier to be auto-enrolled to help those people that never get around to setting up their 401K contributions. Part-time employees will also benefit from the new bill. Now part-timers who have worked 500 hours over the past 3 years will have access to 401K’s. These changes are designed to make retirement savings a bit easier.

How will the Secure Act change your financial plans?

The Secure Act is a great reminder of how quickly laws can change. Without close attention, your original intent could no longer be the most optimal strategy for your retirement plans.

One of our primary responsibilities is to help you uncover tax saving or planning opportunities when they become available. Remember, financial planning is like putting together a puzzle. Make sure you have all the pieces by learning as much as you can to improve your financial opportunities.

Financial Symmetry is a Raleigh Financial Advisor. Proudly serving clients in the Triangle of North Carolina for 20 years.

Outline of This Episode

  • [3:04] The biggest changes with the Secure Act are to IRA’s
  • [11:44] Small businesses will find it easier to offer 401K’s to their employees
  • [17:07] Non-retirement changes
  • [18:55] The extenders

Resources & People Mentioned

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