January, 2019 | Live a Life By Design

Your Health — The Greatest Asset You Own

Posted on January 14, 2019February 11, 2019 by Jimmy J. Williams, CPA/PFS, CFP®

If you are concerned about running out of money during retirement, there are several steps you can take now to avoid this catastrophe. Healthcare costs continue to rise at an alarming rate in the United States. Based on estimates provided by The Centers for Medicare and Medicaid Services (CMS), total health care spending grew by an average of 4.6% in 2017, reaching nearly $3.5 trillion. Prescriptions are arbitrarily sacrificed by some retirees as if they had a choice in taking this life-extending medicine. The reason for such a drastic decision is the required choice some people make to purchase food, shelter and car fuel instead of their medications.

To mitigate the rising cost of healthcare, start making a few small changes in your lifestyle. One simply has to look around to notice many of us carry far too much weight on our body. This result was not realized overnight. We suffer, or enjoy, the results from our choices we make.

As a teenager, I enjoyed a hearty breakfast of eggs, bacon, biscuits, gravy, hash browns, fruit, pancakes and, sometimes, chocolate gravy (more on this delightful dish later). I consumed, at least, four thousand calories per day and could not gain weight. Oh, to be young again. Eating this breakfast today would be tantamount to physical torture for my knees, hips and feet. A more sensible approach to eating must be subscribed to at the age of 54. Now, I eat high fiber, low fat meals that are limited to 1,500 calories or less per day.

Another area of choice is activity. Unless you are physically incapable of walking, this form of movement is one of the easiest and best exercises anyone can perform. You can lose a pound of weight for every 3,500 calories you burn walking. Simply calculated, if you burn 350 calories a day, you would lose one pound every 10 days by doing nothing more than walking.

How does this relate to retirement planning? As a retirement expert, we use a factor of 20% of the person’s retirement income for medical purposes. This may seem like a lot of money but the rising cost of healthcare could require significantly more of your income in retirement than you think. Included in the 20% factor would be medicine, physician costs, dental costs, nurses aide expenditures, and, potentially, nursing home needs.

Oh, back to the chocolate gravy. This southern dish consists of Hershey’s Chocolate Baking Powder, sugar (lots of sugar), flour and pure vanilla extract. Mix in a big stew pot on the stove, add water and stir until it boils. Take from the stove, add a hot, home-made biscuit with lots of butter and you have a rib-sticking delight that is out of this world. Also, this is obviously not healthy. So, I only allow myself this treat for breakfast at Christmas. To offset the effects of the calories and sugar, I run a 5-K or complete a CrossFit Workout of the Day (WOD). Don’t tell my doctor!

If you wish for your money to last longer than you, make some simple changes in your lifestyle. Consult your physician before starting any eating or exercise programs. Hope to see you out walking and exercising in our Southeast Oklahoma outdoors!

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Help for those that are “Suddenly Single”

Posted on January 11, 2019February 11, 2019 by Jimmy J. Williams, CPA/PFS, CFP®

The sudden realization that you alone are responsible for all of your household, financial and health matters can be a shock. Life changes even the most detailed of plans for the future. Many people suffer financial discourse during times of life change due to a lack of preparation. Not to discount the emotional trauma resulting from a sudden loss of a spouse, divorce or the incapacity of your partner, but confidence can be gained by understanding a few simple strategies to maintain your lifestyle.

Start today by discussing with your spouse/partner the complete financial picture of your family. Include such mundane tasks as identifying your insurance agent, where to pay utility bills and the location of the safe deposit box key. I have experienced too many client situations in my career where one spouse has controlled the finances for the family without much input from the other spouse.

Next, obtain copies of all of your bank statements and review the disbursements from your account. Do you know the company/person to whom the payment was tendered? Do you know why you pay this company/person? Look for any “automatic drafts” that occur without your knowledge and determine if it is a continuing valid need.

In matters of divorce, it is critical to correct beneficiaries on life insurance policies, retirement accounts, etc. once the divorce has settled. One horror story comes to mind. A client of ours divorced and when we inquired about his life insurance beneficiary designations, we were informed that he “had taken care of the matter and changed them to his current spouse”. The client unexpectedly died about two years later and during the process of administrating his estate, the life insurance policy and beneficiary designation form was discovered. He had not changed the beneficiary to his current spouse! Imagine the difficulty of explaining to your current spouse why the decedent’s former spouse is receiving $1,000,000 of tax-free life insurance proceeds.

Property titles should be correctly titled after the loss of a loved one through divorce or death. Estate documents must be reviewed and amended for your current situation. This process may seem overwhelming but it is, in fact, very simple. See out a Certified Financial Planner registrant or attorney that can guide you through the changes and execution of the documents. You will be glad you did.

Action #1: Know where your income is deposited and where your money is spent.
Action #2: Review all IRA, qualified plans and life insurance statements for proper beneficiary designations.
Action #3: Consult an attorney or CFP^® practitioner to confirm your property titles correctly reflect the appropriate individuals or entities.

Ignoring the situation is the worst action to take in these matters. What you don’t know, can truly hurt you.

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Three Simple Steps to Secure Your Future

Posted on January 5, 2019February 11, 2019 by Jimmy J. Williams, CPA/PFS, CFP®

The word “retirement” sounds pretty scary to most people. The reason for this emotion is that they have failed to plan properly and lack confidence in the process. This article will provide you a simple, yet effective, roadmap to reach your retirement objectives.

First, stop thinking like everyone else when it comes to finances. Yes, it is fine to be different. You must understand that your circumstances in life are most likely different from many of your friends. Some employers support their employees in planning for their futures while others do not. Your new mindset should be that of “I will depend on no one but me for my future plans”.

Do you often wonder why the ultra wealthy have the financial security they do when they may have started life in a lesser social/fiscal position than you? Do they know a “secret” formula for success that has eluded you in life? The answer is a resounding NO. However, the ultra rich think far different than the typical person. For example, to accumulate wealth you must do this simple task:

Invest for retirement first and then spend the rest

If you have a goal of saving ten percent of your income, place this 10% in your retirement and then plan your spending with the remaining 90% of your paycheck. For many of us this will sound very opposite than what we have been doing for our adult lives. Remember, it is OK to be different because you have different dreams and aspirations than anyone else. Don’t listen to the negative comments of the mass population who struggle from paycheck to paycheck with no change. You can make this change rather quickly and simply.

Second, learn to live within your means. This step requires you to know where each of your dollars are spent. To accomplish this, write down every penny spent for a week. Upon the conclusion of the week, categorize the areas you have spent your money and you may be startled when you become aware of where your money went! For example, “Did I really spend $32 on specialty coffee this week?!?” “Do I need all of the subscriptions that I don’t read regularly?” “How did I accumulate a bad habit, like tobacco use, that costs me $40 per week or $160 per month??”

Once you analyze your spending, you will quickly see areas you may derive savings for a better purpose – your future. The most difficult part of this process is writing everything down. To accomplish this, purchase a small notebook and carry it with you at all times. Record every penny you spend for whatever reason. Be honest with yourself. The only person to be cheated by not being honest is your future you.

Remind yourself daily, if not several times per day, the “why” for taking these measures in your life. You deserve a comfortable retirement, in terms you define, and can reach your goals with small steps performed on a daily basis. The action step to take is:

Know where your money is being spent and correct course

Lastly, Step 3 is the most impactful, powerful and simple of the steps to reach your retirement goals – measure your progress and celebrate when reaching small goals. The purpose of this step is to remember that you are on a journey and the lifetime goal is too far away to see. The best method for reassuring yourself of the progress you are achieving is to look for the next step in conquering your next challenge, not the ultimate lifetime goal. The last action step is:

Celebrate small wins frequently!

To assist you in the process of defining your roadmap for the future, you may wish to seek out a financial adviser or CPA that specializes in retirement planning. The price paid by far too many people for failing to plan is very severe. Don’t pay that price, take these simple steps today to design the future you wish to live.