Your Financial Planning Building Blocks A · Building Block #5: Perform Regular Maintenance: Financial planning is an ongoing process. Youll need to perform regular maintenance to

APRIL 2017

Your Financial Planning Building Blocks

A strong financial plan doesn’tjust appear out of thin air —it’s something that takes con-

scious effort to create. By assem-bling your five basic building blocksof financial planning and under-standing how they fit together,you’ll be able to create a plan thatworks for you.

Building Block #1: Survey theLandscape: Before you make anybig moves, you need to know whereyou stand. Gather all your financialinformation together, includingbank and investment account state-ments, insurance policies, estate-planning documents, mortgage andcredit card statements, and anythingelse you think might be relevant.Then, take an inventory. Determineyour total assets and liabilities.Look at your emergency savings.Calculate the cost of your currentlifestyle. The goal of this exercise isto get a big-picture overview ofwhere things stand with your

finances so you know what areasyou may need to address.

Building Block #2: Look atYour Tools: First, there are thebasics: Do you have access to bud-geting software? What about a401(k) plan at work? Do you haveother kinds of savings accounts?Make sure you’re making the bestpossible use of these tools. Thenthink about what tools you mayneed to achieve your goals. Forexample, if saving for college is agoal, you may need to set up a 529

Is Early Retirement Still Feasible?

I s early retirement possible these days? Most will say no, but it can bedone. It just takes a little bit of planning on your part and a new look at

what it takes to become happy in life. Step one is save, save, save. It sounds obvious, but the more you save

now, the more you can leverage things like compound interest. The sec-ond side of this equation is to curb your spending and fully appreciatethe power of frugality. The bonus to this tactic: by the time you retire,you’ll already be acclimated to a more frugal lifestyle, which will furtherextend your retirement funds.

You may even want to reconsider retiring all together. The traditionalretirement for most people consists of sitting back in their easy chair allday. Why not redefine the concept of retirement and take the moneyyou’ve saved and use it to fund that second career you’ve alwaysdreamed of? Consider working as an artist, teacher, or even somethinglike a part-time job at a store you like. It’s a great way to rearrange yourlife to reap all the benefits of retirement without the negative mental sideeffects of abruptly quitting your job. mmm

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U C C E S S

plan. If you’re saving to buy ahouse, a separate savings accountfor that purpose may be warranted.

Building Block #3: Design aBlueprint: Even if you have the besttools, they’ll do little good if youdon’t use them in a coordinatedway. Sketch out what you wantyour financial future to look likeand design a plan for how you canget there. For example, let’s say youwant to retire abroad in 30 years.Your financial blueprint would

Continued on page 2

Copyright © 2017. Some articles in this newsletter were prepared by Integrated Concepts, a separate, nonaffiliated business entity. Thisnewsletter intends to offer factual and up-to-date information on the subjects discussed but should not be regarded as a complete analysis ofthese subjects. Professional advisers should be consulted before implementing any options presented. No party assumes liability for any lossor damage resulting from errors or omissions or reliance on or use of this material.

A Registered Investment Advisor

Securities o�ered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment Advisory Services o�ered through Kestra Advisory Services, LLC (Kestra AS) or Bridge Wealth Advisors,

LLC. Kestra IS and Kestra AS are not a�iated with Bridge Wealth Advisors or Gotleib & Associates.

RETIREMENT PLANNING

1120 Route 73, Suite 305 • Mt. Laurel, NJ 08054856.482.6100 • 1.800.644.4204 • Fax 856.482.5362

WWW.INVEST2RETIRE.COM

Leo A. Gotleib, CFP®

$

show you how to make that happen.You might start by building up youremergency fund and reducing debt.The next step might be to make sureyou are maximizing your retirementcontributions at work and have ade-quate insurance coverage to protectyour family from risk. As you getcloser to retirement, your blueprintmight address issues such as secur-ing health insurance outside of theU.S. and a plan for dealing withtaxes as an expatriate.

Building Block #4: Build YourHouse: This is the fun part. Nowyou get to put your financial planinto action by taking concrete stepsto achieve your goals. Just as youwould with a house, focus on thefoundation first. Make sure yourincome and expenses are in line andyou can meet all your immediatefinancial needs. Then build yourwalls and make yourself moresecure by investing and accumulat-ing wealth. Of course, you’ll alsoneed a roof over your head in theform of insurance to protect youfrom the unexpected. Finally, focuson the upgrades or the nice-to-havefeatures that make life a little morefun — vacations, nice cars, newtoys, etc.

Building Block #5: PerformRegular Maintenance: Financialplanning is an ongoing process.You’ll need to perform regularmaintenance to make sure every-thing is running smoothly. Your lifewill change in ways you probablycan’t anticipate right now (youmight experience an unexpected ill-ness or job loss, or even receive afinancial windfall). Your plan willhelp you cope with those changes,but you may also need to adjustyour plan to accommodate yournew situation. Check in a few timesa year with your financial advisor tomake sure no cracks have appearedin your plan and make adjustmentsas needed. mmm

Your FinancialContinued from page 1

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To Sell or Not to Sell?

T o buy or not to buy? To sellor not to sell? Those are per-haps two of the most diffi-

cult questions that an investor willever face. Fortunately, there aresome rough guidelines you canuse to make your buying and sell-ing decisions. When to Sell

You made a mistake in buyingthe stock. No, we don’t mean yousuddenly regret the purchase. Butif you did your research, choseyour stock, and then realized therewas some error in your analysis, itmight be right to sell.

When a stock no longer fits inyour portfolio. Your portfolio willevolve as your needs and investinggoals change. As that happens, acertain stock may no longer be agood fit. Perhaps you hold sharesof a more volatile stock or yourportfolio has become overweight-ed in stocks in emerging marketsor the technology sector. At thatpoint, you might want to sell someof your holdings to get your port-folio back on track.

When the business haschanged fundamentally. If youbought stock in a company thatdid one thing and now it suddenlydoes something completely differ-ent, that might be a good reason tosell. Ditto if something else haschanged dramatically. For exam-ple, the company’s core productturns out to be dangerous, or theentire industry is facing big chal-lenges. Basically, if the fundamen-tal reasons you bought the stockno longer apply, it may be time torethink your investment.

When a stock is overvalued.This one is tricky, and you mayneed the help of a trained invest-ment professional to help figure itout. But when a stock price contin-ues to increase, it’s not always agood thing. It might be because

investors have overvalued thestock. If that’s the case, a dramaticfall could be coming. When Not to Sell

Because everyone else is.Investors tend to move in packs.When everyone else is dumpingthe stock of a certain company, youmay take that as a signal that youshould get out, too. But the actionsof the many don’t necessarilymean that you should behave thesame way. Always make yourinvestment decisions based on acareful analysis of both larger eco-nomic issues and your own per-sonal situation, not what everyoneelse is doing.

Because the price has changed.Shifts in the price of a stock mightbe a reason to consider sellingshares, but that shouldn’t be yoursole motivating factor. Stock pricesmove up and down on a regularbasis — that’s the nature of thestock market. If you panic andwant to sell every time the pricedips, or get greedy and want tosell when the price skyrockets, youcould end up with both extratransaction costs and lost potentialgains.

When owning the stock is notpart of your overall financial plan.You’ll probably have the most success with investing if your decisions are guided by a solidfinancial plan. That plan will tellyou when it’s a good time to buyor sell an investment. If you’retempted to make a big move but itdoesn’t fit with your overall plan,you should probably hold off or atleast discuss your feelings with afinancial advisor before makingthat move.

Do you have questions aboutwhether or not now is a good timeto buy or sell a stock? Please call ifyou would like to discuss this inmore detail. mmm

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tures and compensation practices,as long as they follow certain rulesto alleviate conflicts of interest andprovide investment advice that is inthe best interests of their customers.

Proper disclosures under therule will require that a firm mustdevelop and maintain a websitethat clearly defines the firm’s busi-ness model, provides a writtendescription of the firm’s policiesand procedures, and discloses compensation and incentive agreements.

This exemption is importantbecause it provides the legalrecourse against advisors who donot work in the best interest of theirclients. The advisor must enter intoa contract with the participant orIRA account holder stating theywill: 1) attempt to act in his/herbest interest, 2) disclose all potentialconflicts of interest, and 3) providea detailed breakdown of his/hercollected commission.

The PTE 84–24 exemptionallows advisors to receive compen-sation for recommending fixed-rateannuity contracts to plans andIRAs. These simpler, lifetimeincome products feature a muchmore streamlined set of require-ments than the BICE.

The DOL has developed aphased-in approach for the imple-mentation of the rule. Firms willhave one year from April 2017 toimplement the definition of fiducia-ry and will be able to use the BICEwith simplified conditions for compliance. The full requirementsof the rule will go into effect January 1, 2018.

While many expect PresidentTrump to delay implementationdates, make modifications, or evenrepeal the rule, no changes havebeen made at this time.

Please call if you’d like to discuss this in more detail. mmm

The DOL Fiduciary Rule: What You Need to Know

A fter six years of obtainingfeedback from the public,consumer groups, and the

financial industry, the Departmentof Labor (DOL) finalized the Fidu-ciary Rule in April 2016. What Is the Rule?

The fiduciary rule more clearlydefines a fiduciary and the differ-ence between education and advice.Under the new rule, advisors whoprovide investment advice forretirement accounts, including indi-vidual retirement accounts (IRAs)and employer-sponsored retirementplans, will be required to follow thefiduciary standard. This standardrequires the advisor and the compa-ny to make prudent investment rec-ommendations without regard toany interests other than the cus-tomer, charge reasonable compensa-tion, avoid any misleading state-ments about fees, and avoid con-flicts of interest. How Is This Different?

Currently, there are two stan-dards for investment advisors: thefiduciary standard and the suitabili-ty standard. The suitability stan-dard simply requires an advisorhave a “reasonable basis to believethat a recommended transaction orinvestment strategy involving asecurity or securities is suitable forthe customer based on the informa-tion obtained through reasonable

diligence.” The law now requiresthat anyone providing investmentadvice on 401(k) plans and IRAsmeets the fiduciary standard. How Will the Rule Affectthe Average Investor?

The fiduciary rule should posi-tively impact the average investorbecause it aligns the interests of theinvestor and advisor in terms of recommendations and decisions.  The expectation is that investorsshould see their costs decrease overtime and their trust in advisorsincrease. Will the Rule Impact Fees?

The DOL estimates that thefiduciary rule will save investors upto $40 billion in fees over the next10 years. The rule expects that fidu-ciaries acting in the best interests oftheir customers will recommendlower-cost investments to theirclients. What Isn’t ConsideredInvestment Advice?

The fiduciary rule also clarifieswhat is not considered fiduciaryadvice. Specifically, it states that“education is not included in thedefinition of retirement investmentadvice so advisors and plan spon-sors can continue to provide generaleducation on retirement savingwithout triggering fiduciaryduties.” Are There Exemptions Tothe Fiduciary Rule?

Under the rule, advisors whoprovide fiduciary investment adviceto plan sponsors, plan participants,and IRA owners are not permittedto receive payments that create con-flicts of interest without a specificprohibited transaction exemptiongranted by the Secretary of Labor.

The Best Interest ContractExemption (BICE) allows firms tocontinue to rely on current fee struc-

Financial Thoughts

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W omen have retirementincome that is 25% lower

than their male counterparts. Thatdisparity is found both in tradi-tional pensions and 401(k) sav-ings, where women’s balances areapproximately two-thirds ofmen’s balances (Source: Journal ofFinancial Planning, October 2016).

The average Americanexpects to retire at age 65, upfrom age 63 in 2002. However,26% of baby boomers expect to

retire at age 70 or older (Source:Journal of Financial Planning, Octo-ber 2016).

The average amount of SocialSecurity benefits paid to thoseover age 65 in retirement was$12,232 in 2014 (Source: Market-Watch, 2016).

Approximately 30% of adultsborn in the 1940s and 1950s havea traditional pension plan, com-pared to 11% of those born in the

1980s (Source: Urban Institute,2016).

Medicare, by itself, coversapproximately 60% of medicalexpenses (Source: The New YorkTimes, 2016).

Approximately 20% of U.S.workers are making less than theydid five years ago, while 23% saythat their job does not take fulladvantage of their skills (Source:Gallup, 2016). mmm­­

Catch-Up Savings Options

Managing Your Home Investment

O nce you hit your 50th birthday,most people are well on their

way to retirement. What happens ifretiring in the near future seems likean impossibility? Don’t worry, thereare special provisions in place thatare dedicated just to individuals like you who are trying to playcatch-up.

First, let’s look at IRAs. Mostpeople can contribute $5,500 or100% of compensation; but if you’replaying catch-up and are over 50(by the end of the year), you can putin an additional $1,000 dollars. Nota huge additional amount, but itdoes make a difference.

If you’re over 50 (or will be bythe end of the year) and are enrolledin an employer-sponsored plan, youtoo can put your retirement savingsinto overdrive in excess of youryounger coworkers. If you have a401(k), 403(b), or a 457 plan whereyou’re able to defer $18,000, you canbump that up another $6,000, whichcan make a huge difference.

So you see, being over 50 doeshave its advantages. If you’re stillplaying catch-up at this age withyour retirement, there is still plentyof time to get back on track. Pleasecall to discuss this in more detail.mmm

F or many individuals, theirhomes are their largest assetand provide a major contribu-

tion to building net worth. Yourhome is an investment, so youshould develop strategies to man-age that investment. Some pointsto consider include:

4Don’t stretch to purchase themost expensive home you can

afford. The reason homes con-tribute so significantly to many peo-ple’s net worth is that you retainany price appreciation on the entirehome, even though you only putdown 10–20% of the purchase price.That fact causes many people tostrain their budgets and purchasethe largest home they can afford,hoping the increase in the home’svalue will more than offset the sac-rifices made along the way. Beforeembarking on such a strategy, con-sider all the risks. If home pricesstart to fall, you could end upowing more than the home isworth. Also, should your incomedecline or you lose your job, youmay have difficulty paying themortgage and other housing costs.It may be a better strategy to pur-chase a home you can afford.

4Don’t take equity out of yourhome in the form of a home-

equity loan or a higher mortgage

balance. While lower interest ratesallow many homeowners to reducetheir monthly mortgage payments,many also opt to take equity out oftheir homes and stretch mortgagepayments over longer periods. Oneof the main advantages of homeownership is it’s a forced savingsplan with part of each mortgagepayment going toward equity.Resist the urge to take that equityand spend it on something else.

4Make sure you have adequateinsurance. Your homeowners

insurance policy should be sufficientto completely rebuild and refurnishyour home in the event of a totaldisaster. Check the limits of yourpolicy every year and increase thoselimits if needed. You will probablywant a guaranteed replacementclause, which pays the entire cost ofrebuilding your home.

4 Inventory everything in yourhome. You can either write or

videotape the inventory. Includeeverything in your home, systemati-cally working your way aroundevery room so nothing is left out.Keep receipts for larger items withthe inventory. The inventory andreceipts will help substantiate aclaim in the event your home andits contents are destroyed. mmm