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JANUARY 2019
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PATRIOT WEALTH
DON’T LET YOUR FINANCIAL PLANS MEET THE SAME FATE AS NEW YEAR’S RESOLUTIONS
The new year is a perfect time to start fresh and look for new goals. As the calendar turns, you can take stock of the previous year and evaluate all the aspects of your life: the physical, spiritual, interpersonal, and of course, the financial aspects. Unfortunately, while the potential for new opportunity abounds, many people see their resolutions fall by the wayside. Gym memberships go unused, relationships dissolve, and spending goes off track. Although some goals might require a specific skill set that is foreign to you, money management is something everyone has the skills to do. The most common mistake with a financial plan is treating it like it’s a gym membership. It’s not optional, to be used as needed — it’s a guiding path for your future. I’m a firm believer in goal-based financial planning and how it can enhance your chances of long-term success throughout your retirement. Many individuals have their objectives derailed because they set the bar too high and leave it there. There’s nothing wrong with being ambitious about your money, but you need to harness that desire with attainable stepping stones; otherwise, your monetary goals are no different than the unachievable weight loss targets many resolutioners have. Small incremental feats are the key to accomplishing any goal you set, especially financial ones. If your objective is to live an abundant retirement, what little steps can you take to reach that goal? Savings-based planning can help you stockpile cash, but what’s the endgame with it? Each dollar you save needs to have a plan, but just as an endgame is necessary, so too is using that money along the way to help you stay focused. Stepping stones like traveling, vacations, and second homes all help you remain engaged with your retirement lifestyle before actually settling down. The key to making sure this stays afloat is to have a contingency plan for when things go wrong.
Just as resolutioners struggle with their goals after a few weeks, so do many financial plans. These often come in the form of adverse life events, such as home repairs, car maintenance, or hospital bills. It’s essential to have a secondary plan in place so that when your goal meets roadblocks, you know how to overcome them. The best practice for many is to develop an emergency savings fund. If something goes wrong, you can draw from this and not completely derail your goals. We’re in a financial environment where current tax rates are favorable, and that leaves many investors primed to make adjustments that will best serve their financial future, and that leaves many investors primed to make adjustments that will best serve their financial future. Many clients are considering a conversion to a Roth IRA to fit their retirement goals better, but multiple variables surround that decision. Age, lifestyle, and income are all factors, but it’s important to make sure you effectively tax plan throughout your life. With small stepping stones and proper advising, I’m confident everyone can find a path to retirement that suits them.
–Wes White
Investment Advisory Services offered through Retirement Wealth Advisors (RWA), a Registered Investment Advisor. Patriot Wealth and RWA are not affiliated. Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Consult your financial professional before making any investment decision.
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HOW TO SPEND WISELY IN RETIREMENT MAKE YOUR SAVINGS LAST
When it comes to retirement and finances, there’s enough material about saving to fill a library. You see commercials on TV showing one tiny domino gradually becoming a massive tower, you hear advice from coworkers and family members, and you read books and articles on the topic. Much less attention, however, is paid to how to spend those savings once you’re actually retired, even though it’s a significant part of the equation. After all, it doesn’t matter how much you save if you blow it all in a year. Here are a few considerations to keep in mind as you begin chipping away at that nest egg.
In this system, you simply estimate how many years your retirement will last and divide your savings by that number. It’s better to make a generous estimate rather than a conservative one. A survey of financial planners conducted by the American Institute of Certified Public Accountants (AICPA) found that outliving savings is the No. 1 concern of those approaching retirement. Underestimating your life span is an easy way for this fear to come true. Of course, a level spending plan assumes that your financial needs won’t change over the course of your retirement. If you’re the type of person who regularly meets and exceeds your budgeting goals, you can probably make it work. If not, you may want to consider a plan that allocates more money with each
passing year of retirement. In the event of increased medical costs or other later- life expenses, an escalating plan provides a financial safety net.
WHAT TO SPEND ON
Some of your spending choices will come down to personal preference and interests, but you might be surprised to learn that one category of spending consistently proves more fulfilling than others. Professor Michael Finke of The American College surveyed nearly 1,500 retirees and found that spending money on leisure activities and experiences caused the lowest rate of regret. Finke calls this “social spending” and surmises that it’s favored because it encourages older adults to get out into the world and enjoy their retirements.
HOW MUCH TO SPEND
The easiest way to budget for your retirement is with a level spending plan.
FIND PEACE IN A BUDGET THE TRUE PATH TO FINANCIAL FREEDOM IS THROUGH A PLAN
‘PEACEFUL, EASY FEELING’
For many people, budgeting is about as enticing as vegetables are to a 3-year-old. That’s often because their approach toward money is centered on the concept of freedom — if you spend how you please, then you’re free, but if you have to allocate every cent from your paycheck, then you’re limited. But if bills are sneaking up on you and you’re not prepared, are you in control of your money, or is your money controlling you? And if your money is controlling you, are you really free? Like any new habit, the hardest part of creating a budget is getting started. Studies suggest it takes 66 days to create a new habit, so you need patience in the beginning stages of budgeting. If you’re worried about it, let technology help. Few of us are spreadsheet savants, but the good news is you don’t have to be. New applications, like Mint, make managing your cash easier than ever. ‘START ME UP’
Once your budget is set, coming up with a plan for when payments should be dispersed will help put your budget on autopilot. The byproduct of this is significantly less stress — when you know what to expect every day of the month, you minimize the burden that comes from missing payments. Set up your schedule on auto pay to start, and once the initial work of the automated process is done, you can sit back, relax, and know your finances are taken care of. When unexpected events arise that aren’t in the budget, it can cause serious worry. Just as we mentioned in the cover, setting aside a specific amount of money for emergency expenses will create room for complications and, in turn, peace of mind about your money. A buffer like this is a great way to avoid debt and keep your financial plan on track. January is a perfect time to look at your financial goals, and we want to help. If you’re looking for budgeting tips that fit with your long-term objectives, give us a call today. ‘WE DIDN’T START THE FIRE’
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HOW THE DEBT SNOWBALL WORKS
IS YOUR FINANCIAL PLAN READY TO ELIMINATE UNNECESSARY PAYMENTS?
There is no perfect plan for how to spend your savings during retirement. But there is one very wrong way to go about it, and that’s mindlessly. However you choose to spend your savings, make sure you have a plan.
The path to financial freedom is paved with debt elimination. One tactic that can help get you there is called the “debt snowball.” Famous financial advisor Dave Ramsey illustrates this concept as a snowball rolling downhill. As the snowball continues to gather more snow, it gains more momentum, picking up more snow on the way until it finally reaches its destination. Start by attacking your lowest monthly payment. Once it’s paid off, you can then parlay that payment into your next smallest debt. The debt snowball grows when you reinvest into your payment plan rather than spending it. Once your second debt is eliminated, again, reinvest that money into the payment plan, and eventually, your debt snowball will turn into an avalanche, ultimately shedding debt in larger portions more quickly. Here’s an example: Let’s say your smallest debt has a payment of $20 per month and the second smallest has a payment of $50 per month. Once that first debt is paid off, you can then take that $20 and add it to the $50 payment. You’re now paying $70 per month to your second debt. Once that second debt is paid off, you can then take that payment of $70 per month and roll it into your third-largest debt and so on, until the balances are paid in full. The two keys to making this work are operating with a budget and committing to a lifestyle change. This doesn’t mean enjoyment ceases to exist and you turn into a hermit; instead, it’s about telling your money where it should go rather than your money telling you how it’s being spent. If you want to learn more about how a debt snowball or other strategies can impact your financial goals, contact us today. We are committed to helping you take control of your future, and that starts with eliminating debt.
BRUSSELS SPROUT HASH
INGREDIENTS
Inspired by Food Republic
• 4 cups Brussels sprouts, finely shredded • 4 eggs • 1/4 cup onions, chopped
• 2 cloves garlic, minced • 1 sprig fresh rosemary
• 2 tablespoons extra-virgin olive oil • Salt and freshly ground pepper
DIRECTIONS
1. In a cast-iron skillet or large sauté pan, heat oil to medium. 2. Once shimmering, add rosemary for 1 minute, then remove sprig. 3. Reduce heat to medium-low, add onion and garlic, and cook until onion softens, about 5 minutes. 4. Increase heat to medium-high, add Brussels sprouts, season with salt and pepper, and cook for 5 minutes. 5. Using a large spoon, create 4 wells for eggs. Pour 1 egg into each well and cook until set. 6. Carefully remove eggs and Brussels sprouts from pan and serve.
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INSIDE THIS ISSUE
Strategies for Accomplishing Your Financial Goals PAGE 1
Spending Tips for Older Adults PAGE 2
How to Budget PAGE 2
Brussels Sprout Hash PAGE 3
Debt Snowball 101 PAGE 3
The Best Skiing Destinations in the World PAGE 4
3 OF THE WORLD’S GREATEST WINTER SPORT DESTINATIONS WHO’S READY FOR SOME POWDER?
The sound of the first carve through fresh powder is the anthem of all winter sports enthusiasts. Here are three of the world’s best places to experience that powder you’ve been craving all year.
When you see the mountains of British Columbia, you’ll understand why they hosted the 2010 Winter Olympics. The location’s beauty is only part of your stimulating experience, because every curve of fresh powder makes your pupils dilate. Once you’re done flying down the hill where Bode Miller took the bronze, head over to the winter wonderland of the old Olympic Village for a cozy night in a picturesque town. If you want a great location for next year’s Christmas card photo, there’s no better place than the Tyrolean Alps. Nestled in a valley between perfectly molded mountains, the Austrian landscape provides a beautiful backdrop for your winter excursions. The densely wooded areas and the bright reflection of the snow frame the vibrant town that’s just waiting to be explored. When you’re ready for world- class runs, hop in one of the 11 gondolas and zip down the hills that hosted the 2001 Alpine World Ski Championships. ST. ANTON, AUSTRIA
BRECKENRIDGE, COLORADO
John Denver’s anthem “Rocky Mountain High” is about the freedom he felt here. Where there are great mountains, there’s even better snow. The ski resort boasts five peaks, 187 trails, 34 lifts, four terrain parks, and a renowned cross-country trail. After a day on the slopes, head into the town
of Breckenridge for dining and activities that ditch the glitz and glamour of Vail or Aspen and take you straight to the heart of fun.
WHISTLER, BRITISH COLUMBIA, CANADA
A destination that looks like a cross between Nordic paradise and Olympic-level runs, Whistler is filled with true magic, winter activities, and a town that captivates the senses.
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