Category Archives: Retirement Planning

Garrett Planning Network Retreat 2016

Posted on

I was recently out of the St. Louis area for a bit while I attended The Garrett Planning Network 16th Annual Retreat which was held in Denver, Colorado. I am a member of the Garrett Planning Network which is an international  group of financial planners that offer planning and investment advice on an hourly basis.  Each member owns their own firm. I have written about the Garrett Planning Network before.  This was the eighth year I have gone.

I attended the conference and earned continuing education credits by going to various educational programs, which I need so that I can keep my designations and licenses such as:

  • CERTIFIED FINANCIAL PLANNER™
  • NAPFA Registered Financial Advisor
  • CHARTERED RETIREMENT PLANNING COUNSELOR℠

During the four day conference I attended various educational programs such as:

  • Behavioral Finance: Psychology and Economics in Investing
  • Reverse Mortgages in Retirement Income Planning
  • Planning Costs Related to Caregiving
  • Fiduciary Best Practices for Registered Investment Advisor Owners
  • And others

Noted author William Bernstein, a bit of a rock star in our industry, gave one of the Keynote addresses titled “What the Liberal Arts Have to Teach Us about Finance.”  He talked about the difficulty of forecasting, and characteristics of good forecasters.  He discussed economic history; not the usual economic history going back to the market crash of the 20s, or even the tulip bulb bubble.  But economic history going back to biblical times and what conclusions can be drawn from such “longitudinal studies.”

Allan Roth, another well known author and fellow financial advisor delivered the Keynote address “Behavioral Finance: Psychology and Economics in Investing”, wonderfully telling it like it is in his typical style.  He shared financial decision making biases that negatively impact consumers and advisors alike based on academic research and personal observation.

You can see some of the live tweeting that I did at the conference under my Twitter handle @HourlyPlanner.  You do not need a Twitter account.

The Garrett Planning Network, has dozens of conference calls throughout the year, and the members interact on an internal forum to help each other with more complex planning cases on a daily basis.  One of the most beneficial outcomes of my annual trip to this retreat, is getting together with this group, sharing ideas, and getting updates from these amazing colleagues in person.  I am already looking forward to next year!

Michele Clark in the News: St. Louis Post Dispatch about Retirement

Posted on

In the St Louis Post Dispatch article “Gallagher: Can You Afford to Retire?” Jim Gallagher discusses a recent report by the Government Accountability Office (GAO) that estimated how much of your pre-retirement income one would need for retirement spending. I shared my experience with helping pre-retirees plan for retirement and how surprised people are by how expensive healthcare can be in retirement. Especially when you look at the impact that inflation has on it over time.  I also shared the figures I used when planning for retirees who do not have employer provided retiree healthcare.

Healthcare expenses are a significant portion of retirement spending and can prevent people from being on track for their retirement goals. In order to get on track you usually have to make adjustments such as;

1) increase the amount you are saving toward retirement, or

2) consider a later retirement age, or

3) spending less on other financial goals in retirement

or some combination of those three variables in order to reach your most important financial goals in retirement.

Jim also included information that I shared with him about the most common mistake I see when potential clients come in and would like me to double check their math to see if they can afford to retire. It is that they have added up their sources of income such as portfolio, Social Security, pension, etc. and compared it to their expected expenses their first year of retirement and since the two numbers (income verses expenses) finally match up they think they can afford to retire.  I know that that is a dangerous assumption because I have run so many financial plans and I have a lot of experience seeing the impact of inflation therefore I know that in a few years the income sources will not be covering the expenses due to the different inflation assumptions for income sources versus expense items.  For example Social Security income we assume will inflate at 2% while healthcare expenses we assume inflate at 6%.  The better course of action is to run a Monte Carlo analysis to determine if your money will last a lifetime and if not what changes to the three variables listed above would need to be made.

Some clients that initially hire me discover that they are already on track to make all of their retirement needs, wants, and wishes come true. But for most folks, we must create a plan with action steps to get there.  I have noticed that some people who thought they were on track were not, and some people who thought they were not, were.  Give yourself enough years before you would like to retire so that you can create the retirement for yourself that you deserve.  Especially considering what you now know about healthcare expenses and inflation!

 

Michele Clark Quoted in the News: LearnVest article about saving for retirement

Posted on

In the LearnVest article online this week “30 or Bust?  What Retirement Really Looks Like When You Put Off Saving” the article discusses the advantages of starting retirement saving in your 20s, and ways to ramp up your savings if you are starting in your 30s.

The majority of the reading audience is self-directed investors that are looking for financial education, probably not going to hire an advisor, and definitely need to know how to best help themselves. She asked me when she interviewed me if I thought that people should use online retirement calculators.  I told her, “yes!”  They should use everyone one of them that they could get their hands on.  I told her that in the online calculators that I have seen, there are usually one or two assumptions that I don’t like, but if you can do several of them that would give you a better picture than not doing planning or doing just one.

One challenge that I have as a professional financial advisor is that the majority of clients that come to me for retirement planning are coming to me in their 50s or sometimes in their 60s and they have never estimated how much they need for retirement.  Therefore some of the plans I do require some kind of adjustment in expectations:

1) saving more between now and retirement than they thought they needed to or

2) retire a little later than they hoped or

3) spend less than they had imagined they would,

or a combination of the three.

Which work out fine, and clients go away feeling relived to know what needs to happen to be on track.  But if they pulled up calculators when they were 20 or 30 and did some preliminary estimates, wow!  The results would be terrific.  And I am seeing more 20 and 30 year olds coming to see me for help with balancing financial goals.

I was so thrilled to participate in this article.  Financial journalists reach so many more investors than financial advisors ever could.  I am so glad that this message can get out.  Saving early has a big impact!

Michele Clark in the News: Wall Street Journal Article About Retirement

Posted on

In the Wall Street Journal article “Five Ways You Can Really Mess Up Your Retirement” Brett Arends discusses some of the biggest mistakes that recent retirees make.

I shared my experience of working with recent retirees who have not ever felt the need to track expenses in the past because their income surpassed their expenses.  However when they retired, they were stunned by how fast they saw their checking account balance go down once they stopped receiving income from their employer which in the past had replenished their accounts on a regular basis.  They then call me for help with retirement cash flow planning.

To read what other advisors and I had to say about errors new retirees make, you can read the article on the Wall Street Journal website.  If you do not have a subscription to the Wall Street Journal website, let me know that you would like to read it, and I would be happy to send you a reprint. Send me an email at: michele@clarkhourlyfinancialplanning.com

Retirement Planning: When You Haven’t Tracked Your Spending

Posted on

Planning for retirement is not a subject you dwell on every day until you realize it’s closer than you think. However, there are various components for you to consider when planning for your “golden years.” An important piece of this planning requires you to calculate your current spending so you can make wise financial decisions for your retirement years.

How much do you spend?

Some families track their spending using software, online tools, a homemade spreadsheet, or simple paper and pencil. If you have been tracking your spending, congratulations! You have some solid spending history to use when estimating how much you will need to spend each year to pay your bills and do the things you want to do to enjoy your retirement.

What if you do not track your spending?

Many families that are easily able to pay their bills and accumulate healthy balances in their savings and investment accounts have never felt the need to track their spending. However, as they get within a few years of retirement they realize they do not have any spending history to use for projecting whether they can afford to retire soon. They do not know if their investments will provide enough income to support them with the same lifestyle they have always enjoyed. Fortunately there is a solution.

How to calculate your current spending?

Before you decide to turn off your income from employment, you want to be confident that you know how much money you need for retirement. What you don’t want to do is not have enough income at the time of retirement to provide for you and your loved one. Therefore, it is best to use pure facts when calculating your current spending.

  1. You make A.
  2. You give B to the government for taxes.
  3. You save C.

The rest is what you spend.

A – B – C = what you spend

It’s that simple. Don’t let the fact that you have not been tracking your spending delay your retirement planning. You can use this simple calculation to estimate how much you spend currently. And track your spending going forward so that you can more accurately estimate your spending needs in retirement.

Tracking your monthly spending today is important to do in the last few years before retirement. If you haven’t started, it’s okay. Start now. When you have an accurate picture of your expenses today, you’ll be better off in your future.