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DECEMBER 2017
HEALTHY, WEALTHY,
&Wise
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An Early Christmas Gift for Federal Employees ALL THE BUDGET GOSSIP COMES TO NOTHING ... FOR NOW
W hen I was growing up, we always had Christmas at my grandparent’s house in southwestern Wisconsin. What I most remember from those days is that it always seemed to be snowing while we were there. At the very least, there never failed to be snow on the ground. That was great news for my cousins and me, because it meant we could spend the days sledding. Those afternoons flying down hills are some of my most cherished memories. We definitely had no shortage of holiday cheer. This year, federal employees got one early Christmas present in the form of the passing of the federal budget. The cuts that were initially proposed for federal retirement didn’t end up making their way into the approved bill, putting off all the stress and worry of 2017 until next year. For many people, reading that elicits a big, “Phew.” You’re probably thinking, “Now I don’t have to retire.” There’s no doubt that this should be cause for celebration, but you can bet those cuts are still on the minds of policymakers. Enjoy the Christmas present, but don’t count on an entirely happy new year. When it comes time to hash out the budget for 2019, the proposed cuts will likely be revisited. As I’ve dug into the documents, it seems two changes are most likely. First, federal employees will be required to make bigger contributions to the Federal Employees Retirement System (FERS).
Second, there will be a rate change for the Thrift Savings Plan (TSP) G Fund. While these are the most likely outcomes, I don’t need to tell you that nothing is guaranteed. Tax reform is hard to pass, and with that on the agenda, negotiations will be fierce. At any moment, any consideration is subject to a complete overhaul.
If you want to be forward thinking, that’s great, but there’s no use in guessing what the 2019 budget will look like. You’re much better served by focusing on the things you can control, like savings and investment options. If you’ll allow me a winter analogy, I’d say that you can’t shovel snow that hasn’t fallen yet. What you can do is make sure your house is as ready for a blizzard as possible. That way, if the snow falls, you’ll be ready and able to deal with it. I cannot stress enough that worrying about things that may or may not happen will only lead to rash decisions. Remember, change is a long, protracted process, especially when it comes to the federal government. This year is a perfect example: Budget revisions happened over and over. Ignore the gossip. Stick to the facts. Finally, I want to wish everyone reading this a happy holiday season. We may talk often about financial issues in this newsletter, but this is the time to focus on spending time with loved ones. I might be getting a little too old for sledding, but I certainly cherish the holidays as much now as I did growing up. I hope you can say the same.
–Ann Vanderslice
As always, then, the best way to plan for a great 2018 is to make decisions based on what you know rather than on speculation.
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The Rightsizing Retirement Revolution ARE YOU FINANCIALLY PREPARED TO LEAVE THE WORKFORCE?
A recent Google consumer survey reported that almost 50 percent of the baby boomer generation has less than $1,000 in savings accounts. What’s more, according to a report by the Economic Policy Institute, the average boomer has saved a nest egg of about $8,178 per year for a 20-year retirement, and 41 percent of this generation has no retirement savings whatsoever. But, despite these troubling statistics, retirement is feasible for nearly all of us. It just requires a bit of “rightsizing.” As opposed to downsizing, rightsizing implies that you’re moving into a monetary space that’s right for you. With rightsizing, nothing matters more to the financial success of your retirement, regardless of the breadth of your budget, than carefully managing your spending. Seems obvious, right? But according to an
Employee Benefit Research Institute report, 46 percent of retirees actually increase their spending after leaving the workforce. To prepare for retirement, you need to start living below your means as soon as possible and develop habits that will last until long after you’ve left the workforce. And no, this certainly doesn’t have to be as grim a process as it sounds. You don’t need to give up the things you love to do or purchase. It simply means taking a hard look at your surroundings, your possessions, and your spending habits and do something about it. Are you sticking around in a house much larger than you need, simply because it’s full of old stuff? It might be time to jettison the junk lying around and give your mind — and your budget — some wiggle room. Concentrate on what you actually need in your life and identify how much of your
spending is simply to impress others. These are tough decisions to deal with, but if you want to have a fulfilling, long retirement, they’re absolutely essential things to consider. If you really want to zero in on your expenses, use an app like Mint or iFinance that imports your banking data and organizes your spending by category. You’ll likely find at least one surprise on your spending pie chart that you might just live without. It’s vital to acknowledge that your happiness has nothing to do with your stuff. This fact will be thrown into sharper relief as you age. After all, you can’t take a high-end coffee maker or fancy curtains with you when you pass. Trim your life down to the essentials and live with the comfort that you can retire comfortably with money to spare.
JOIN US FOR OUR COOKIE EXCHANGE AND CRAFT FAIR As the holidays roll around, one tradition we observe here at Retirement Planning Strategies is our annual cookie exchange and craft fair. This year, we’re planning our biggest event yet, and we’d love for you to join us. After all, nothing spreads holiday cheer quite like artisanal gifts and delicious cookies. Mariko’s cookies would be reason enough to attend, but that’s just half of the event. We also feature one-of-a-kind crafts, which make the perfect gift for that hard-to-buy- for person on your list. We have new local creatives unveiling their work every year, and we’re always amazed by their wares.
One final note: Dress warm! We’re thinking of holding the event outside this year. There will be heaters to add a little warmth, but it’s December in Colorado, so we can’t promise we’ll entirely eliminate the chill. Regardless of the temperature, we promise that the cookie exchange and craft fair will be an awesome day. We are hoping to donate as many socks as possible, so we hope you’ll come by, check out some gift ideas, and enjoy some of Mariko’s cookies. You may think 2,500 sounds like more cookies than we could ever go through, but we expect them all to go home with our wonderful, generous clients. Don’t miss out on this annual holiday event.
Our cookie exchange is a little different from others. Instead of bringing your own cookies to trade with other attendees, we let our resident baking expert (and new mom!), Mariko, handle the cookie-crafting responsibilities. Using facilities from a professional bakery, she whips up over 2,500 mouthwatering creations in a variety of flavors. We ask that you bring a new pair of socks to benefit Serving Kids. Those socks will get you a box that you can fill with a dozen cookies in whatever combination you’d like. Great cookies and donating to a worthy cause? That’s the definition of a win-win.
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Wisdom From a Recent Seminar Market Corrections and Your Portfolio
As you may know, Retirement Planning Strategies often hosts seminars based on topics that clients are interested in. On Nov. 16, we held a seminar on market corrections and their impact on investment portfolios. With the market at an all-time high, many people are wondering when things will take a turn. Should they be worried? Is another 2008 on the horizon? How can they insulate their portfolio against risk? These were some of the questions we sought to answer. But before we recap those talking points, it’s probably best to give a broad overview on what a market correction is. Generally speaking, a correction occurs when a stock experiences a reverse movement of at least 10 percent. Unlike crashes, corrections are usually small, temporary downturns, offsetting periods of growth. These declines are a fundamental part of capitalism and shouldn’t cause undue concern for investors.
The first tenet of strong investment strategy is always to remain diversified. It can be easy to focus on insane returns when the market is strong. Unabated, extreme growth, however, is not sustainable over your investment lifespan. Diversification of assets allows investors to limit their exposure to risk. If a company’s stock, or an entire segment of the market, experiences a correction, the other portions of your portfolio will minimize the losses you suffer. These corrections can hurt you more as you approach retirement, so if you suspect some of your holdings may undergo a correction, it is worth considering moving into more stable investments. It’s important to remember that corrections are a natural part of our economy, and are not a guaranteed sign of long-term instability or the onset of a bear market. The housing crash in 2008 was caused by a convergence of factors that are not likely to be repeated anytime soon. The historic nature of that crash underscores just what a rarity it was. Prudent investment strategy is always the best way to defend yourself from market corrections. To ensure your portfolio is healthy, we recommend scheduling an
analysis and review of your portfolio with Retirement Planning Strategies. Once we see where your holdings are allocated, we can recommend a course of actions that best meets your needs.
Train Your
BRAIN!
CHEESE FONDUE EASY HOLIDAY PARTY Scrambling to find something for the holiday potluck? This fondue is sure to impress!
Recipe inspired by PinchofYum.com.
INGREDIENTS
• ¾ cup dry white wine • 1 tablespoon cornstarch • 1 (8-ounce) package sliced Swiss cheese
• 1 clove garlic • Salt to taste • Foods to dip (apple slices, bread cubes, roasted vegetables, etc.)
DIRECTIONS
1. In a large bowl, whisk together wine and cornstarch. 2. Chop cheese slices into small, uniform pieces. 3. Rub clove of garlic
bottomed pot, then discard. 4. Heat wine mixture over medium-low heat in
whisk gently. Repeat until all cheese is melted. If mixture seems too tight, add 1 tablespoon wine.
the pot until thick and bubbling. Add some cheese and slowly whisk. When nearly smooth, add more cheese and
5. Season with salt and
serve immediately. Keep pot on low heat to keep the fondue dippable.
all over the sides and bottom of a heavy-
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PO Box 260787 Lakewood, CO 80226-0787
issue INSIDE THIS
An Early Present for Federal Employees PAGE 1 Are You Financially Prepared for Retirement? PAGE 2 What You Need to Know About Market Corrections PAGE 3
Easy Holiday Party Cheese Fondue PAGE 3
Christmas Trees Are German? PAGE 4
THE UNCLEAR ORIGIN OF CHRISTMAS TREES
When you brought home this year’s Christmas tree, you and the family most likely spent an evening decorating it with lights, store-bought and homemade ornaments, a star or angel topper, and maybe even tinsel. If you’re more traditional, you may have even included a popcorn string. But have you ever wondered why we started decorating our Christmas trees in the first place? While the origins of the Christmas tree are uncertain, we’ve used the evergreen fir to celebrate winter festivals, both pagan and Christian, for thousands of years. The tree has represented many things, including the winter solstice, Saturnalia, and everlasting life with God. During the 1500s in Germany, people brought full pine trees, called paradise trees, into their homes to celebrate the
Name Day of Adam and Eve on Dec. 24. The families decorated the tree with apples and gingerbread. Before long, glassmakers began crafting small ornaments to hang on the trees. In Victorian times, trees were even decorated with candles! Over time, paradise trees evolved into Christmas trees. In the 18th and 19th centuries, when many Germans immigrated to the United States, they brought the tradition with them. However, the practice of decorating a pine tree with apples didn’t quite catch on. Then, In the winter of 1841, Queen Victoria of England requested a Christmas tree at Windsor Castle for her husband, Prince Albert, who was of German descent. The Queen thought the tree would be a nice gesture, and the London News published
a story about the royal Christmas tree in 1848. The tradition quickly spread throughout Europe and North America. When Christmas trees first rose to prominence in the United States, they were often decorated with homemade ornaments, while many German- Americans continued to use apples, nuts, and marzipan cookies. Popcorn joined later, dyed bright colors and interlaced with berries and nuts. Electricity brought lights, making it possible for Christmas trees to glow for days on end. And with that, Christmas trees quickly became an American tradition.
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