Get Your 2nd Opinion Here!

TFS 12 | Financial Resolutions

 

2017 has come to a close and 2018 is here. It’s a new year for plans and a new year for another batch of financial stress. In a survey, it is found out that 62% of Americans were reported to be stressed about money. Yet only 25% of those have any financial resolutions. Why not start the New Year right? Plan your way to great retirement through proper financial planning rather than fall under those worries. Karen kicks off the year with a batch of 2018 financial resolutions and tips on how to achieve those goals. Bret takes his expertise on taxes and talks about the tax reforms that will greet us in the New Year. David and Joe continue to advocate for financial education, helping you make the most of the year this time and for the following years’ to come.

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Get Your 2nd Opinion Here!

Glad to be here along with David Bezar, Karen Bezar and Bret Elam. It feels good to be back. David, as we kick off 2018 and a very important time for all of us because that’s when a lot of resolutions are made. That’s when a lot of planning occurs and that’s when we start to try and organize our lives with what we’re going to accomplish in the year in front of us.

We’re happy to be back. The ball has dropped and the countdown is over, so that basically signifies the end of one year and the beginning of a new one. As we move away from reflecting over the past year, we focus on our goals for the year ahead. That’s where those resolutions come in.

We’ve got a great show lined up for you. First let me give you the number for Thrive Financial Services, 1-800-516-5861 and the website ThriveFinancialServices.com. A couple of things coming up on the big show when we move into the B block, Karen Bezar will be along and she will talk about 2018 financial resolutions. Bret Elam will be along at the bottom of the hour, he’s going to talk a lot about tax reform and you hear a lot about that in 2018. Bret will have some key takeaways and then later on some carryover from 2017 with our questions of the week and we lead you into some new questions as well. David, let me kick off our show with easy resolutions. That’s how we started this conversation and it falls under the mission and under the theme and what we’ve talked about throughout 2017. Let’s educate and in order to do that, you need to be smart, you need to understand and that’s what you’re here to do.

What I thought we would do is maybe a little bit of what’s upcoming and what’s going on in the economy. As a lead into Karen’s section on resolutions, I’ve got a few things I’d like to share. Now that we’ve got a week under our belt basically, the hot streak for the US economy looks like it’s going to continue in 2018. The economy is running hot with additional stimulus in the form of tax cuts. That seems unnecessary because the economy is growing so fast. After a month of debate, those tax reforms were approved and implemented. It leaves American households and businesses with more money to spend for the next five to ten years.

We anticipate that the plan should help stimulate the economic activity in the midterm. The thing we are worried about is it’s at the expense of higher debt. That may necessitate future cuts to entitlement spending and maybe even higher taxes in the future. Nevertheless, US stock markets rallied in response to the news. We go over 25,000 on the Dow and bond markets sold off a little bit, sending yields a touch higher on the week. That’s been the basics that are happening from an economic viewpoint. There is a heightened level of optimism related to the economy and that’s expected, it’s been happening globally. It’s a little bit of a spillover but geopolitical events are still in the background.

TFS 12 | Financial Resolutions

Financial Resolutions: Second opinions count.

 

We’ve got the threat of military type things with North Korea, tensions between major powers in the Middle East. It sounds like a broken record at this point, but we’ve got lots of political events in Europe that remains on the radar, no question about it. Phase two of Brexit negotiations are set to begin and EU officials stated that they’ll have an EU/Canada style trade agreement in their pocket in case negotiations fail and that will help make material progress by summertime. Add elections in Italy, Sweden and Eastern Europe and it’s clear the European politics will dominate headlines for another year. We hope strong economic growth manages to trump uncertainty in 2018.

One of the reasons why the audience wants to connect with Thrive from my perspective is to get a handle, to get an understanding of how the headlines trickled down into our world and what they mean. Sometimes that’s where the disconnect is for us as consumers.

I’m going to talk about why people are likely to ignore experts in the financial field who are trying to get them educated and give some warnings. People sometimes like eating hot dogs but they don’t want to know how they’re made. A lot of financial advisory type of people tend to spend time in the weeds on that stuff. We focus at Thrive on answering the questions that are paramount to people and what their concerns are and how to address those concerns so that can navigate 2018 in a successful way. We’ll cover a little bit about that and that leads into the resolutions. I’ll be 55 years old and I’m also going to be married for 30 years. We hear lots of things about resolutions, mostly related to health and finances. Losing weight is usually a staple item among many people’s lists. We’re going to talk about that. One of the things I would like to say to our audience as we kick off the year, we invite you to schedule a complimentary, no obligation financial review with us.

Think of this as taking an actionable step towards achieving a resolution that might be on your list. We say at our workshops, why not come in and get a second opinion? You can’t get a second opinion from the person who gave you the first. I bring this up a lot of times because people talk about loyalty and I have a big respect for that concept of loyalty. When you’re dealing with health or you’re dealing with finances, which are two paramount issues, it’s okay to go out and seek additional information to make sure things are working. Don’t take it for granted that what your financial professional or even what your doctor tells you all the time is the gospel. Go out and find out and then make that evaluation based on all the facts versus some of the facts.

We invite you to set up one of those complimentary second opinion consultations. It’s free, it’s about an hour long. You come in, bring your areas of concern and we’ll address them. We can do a stress test on the retirement. We could do a social security maximization report. One of the big things that we do that people like is that forward tax planning report, taking a look at things going forward versus what happened last year. I’m going to be talking about Riskalyze report, which is a stress test on an investment portfolio.

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On one of our shows, you referenced a second opinion from a medical experience that you had and that resonated with me and holds true in life. Can I ask you to share that statement if you remember what it was, from when you were getting a second opinion? There was a placard on the wall is how you referenced it.

When I walked into the oncology department at Johns Hopkins University, there was a big sign that said, “Second opinions count.” It hit me like a ton of bricks, especially at a time where I was not only vulnerable but at a point where I was trying to find out information. I was the most important thing to me. I wanted to make sure that whoever was going to work on me, first of all, I liked them. Most importantly, they knew what they were doing and they were going to get the job done. That’s been a mantra for me for a very long time, but it’s carried forward in our Thrive business that we want to be that resource for people. We’ll give you that second opinion. Sometimes that second opinion is, “Thumbs up. Everything looks good. Your advisors are doing a wonderful job. Don’t see anything that we could do for you. Let’s shake hands and wish each other well. If we ever crossed paths and you need us, we’re happy to help.” There are times that we see little cracks in the armor and want to make some recommendations at least from a viewpoint. Take that information, go back to your advisor, see what happens and then we’ll go from there.

Let’s bring Karen Bezar in to congratulate her on 30 years. Well done on your part. She’s going to talk about financial resolutions. We’ll hear her as a mother and as a managing partner about two very different resolutions, but they’re out there. Let me give you a chance to talk about it.

Lots of people are setting their goals. What’s funny is there was an organization which did a survey on stress in America and 62% of Americans were reported being stressed about money. Oddly enough, another survey was done and only 25% of people’s resolutions include anything related to finance. We do see a lot of stress on people’s faces when they first come in to talk about their plan because they really don’t have a plan.

Bret, let me come to you for the seminar information. No rest for the weary, you’re kicking off the season right away.

We have two workshops. We are carrying over the theme of taxes in retirement. I’m going to jump into it in the next segment, talking about all the changes but we’re going to get the Ludington Library at Bryn Mawr. 7:00 AM is the start time and then we’re going to get into the Lower Southampton Library up in Bucks County Feasterville area.

Very comfortable opportunity for you to nestle into the comfort of a library, sit in and be in that learning environment to get educated at one. The seminars are very informational and there is no cost for you to attend. Karen, we talked about stress and some of that that falls under financial resolutions. There’s always a starting point and you are very familiar with that.

There was a survey done by the American Psychological Association. They said 62% of Americans reported being stressed about money, but not a lot of people when they made their resolutions made resolutions for money. Now we’re in 2018, why not get a fresh start with your financial resolutions? We have a list of ways for you to help that out. We all know how stress can affect us, especially financial stress directly affects our health and wellbeing. They actually found that that was one of the more stressful points for people. You don’t have to change your current resolutions if you have any, might not even have them yet, but get working on some goals that you have for the year 2018.

Here’s a list of steps that you can create in order to get your list of financial goals. We constantly hear that we need to save more money, but we’re not just saving for fun. Your chance of success in saving will dramatically improve if you have specific goals in mind. Here at Thrive, we tend to focus on long-term goals as far as financial comfort and retirement. If you’re younger, there are short-term goals that you can have, goals for two to five years, maybe traveling or paying off the loan and things like that. Then there are midterm goals. That’s two to five years more, maybe you want to buy that second home in warmer areas like Boca or Miami.

Long-term goal is when you want to retire and things of that nature. Step number two would be to create your two key financial statements. Everybody should have a budget plan for the year 2018 and also have a statement of the financials of your net worth. That will get you organized and it will show you your full financial picture. Some people are in better shape perhaps and they realize and some people are in worse shape but don’t stick your head in the sand. Figure out what you need to do, plan it and follow your plan and you’ll feel much better. If you have a plan then you might not feel so much stress.

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Bret has always referenced it as dental pain, but your point is well-taken. It’s good to be self-aware. Let’s get it on paper and understand it and then we can react to proceed.

It’s like that with normal everyday things. If you’re going to travel somewhere, you have your list of goals. What are your lists of goals or what are your steps? I need to pack, I need to plan, I need to rent a car. Plan your financial future. Make an appointment to see a financial advisor. Anyone can complete steps one, two or three on their own. Most, however, need a little bit extra guidance. That’s where we can come in. The process for some people can be intimidating. Some people, when I talked to them on the phone before they come in, they say, “I know I don’t have enough money saved for retirement. I don’t even know if I should waste your time.” I say, “Please come in. You don’t know that for a fact. We’re not going to pressure you in any way. We’re going to help you out and maybe give you a little bit of financial guidance.” Everyone should meet with a financial advisor for a full analysis and a comprehensive plan. If you’re not ready for that, just make an initial appointment to talk through what the process might be or what the beginning steps might be.

That’s the first thing I said to my sister-in-law who I was in a conversation with. She’s a high-power executive. She has two boys that are now both in college. Her husband is self-employed. They just built a new home and now they’re starting to try and figure out, “We’re 55 today but what’s it going to look like when we’re 65 when the boys are out of school?” That’s exactly what I said before you can start to understand what the end is going to look like. Start with a phone call, have a conversation and get started. There’s no timeline on starting. Once you start, things will fall out or at least you will have a better understanding of it.

When we start with a phone call, we have a worksheet that we give you to start the process. Even filling out the worksheet for some people is a dental pain. I’ve had people take a week and I’ve had people take a month to do that but that’s the beginning of the process. Whether you’re in retirement or working towards it, we can help you understand what needs to be on top of your financial to-do list this. There’s still time in our calendar. If you want to set up an appointment, give us a call. We have lots of tax changes coming. We can give you some guidance on that as well. Give yourself the gift of financial independence. With rate hikes on the horizon, we’re talking about interest rates going up, often it’s unclear what you should do next. Are you reliant on bonds at this point? Do you prefer safe investments to risky ones? We can help you cipher all of that information. We’d love to do it and it’s complimentary.

We’re going to jump into the topic of tax reform and key takeaways. David, I want to give you a chance to welcome some of our potential audience into one of the upcoming seminars that are happening at the library. There are that many seminars already scheduled and planned as you start to look out to 2018.

We have over a hundred seminars planned out for 2018. The demand is there, we get phone calls at the office constantly like, “I was at your seminar at such and such location. When are you going to be back? I told people about it.” We’ve put that all on the map for us and we’ve got our two upcoming ones at the Ludington library over in Bryn Mawr and at the lower Southampton library. They last about an hour and fifteen minutes, completely educational oriented. We’re going to be talking about taxes. It’s a hot topic today and people want to hear about it.

TFS 12 | Financial Resolutions

Roadmap to Retirement: Navigating Your Way to Peace of Mind

You may even see the new book, Roadmap to Retirement: Navigating Your Way to Peace of Mind. Congrats on that release. Bret Elam is here, tax reform and key takeaways seemed to be the one topic of conversation that we just don’t know what it all means.

We promised that we’d go through a lot of these changes as everything was signed into action. Tax reform is here. It’s the biggest changes that we’ve seen since 1986 when President Reagan made a lot of changes out there where at least on the individual side, these changes that I’m going to go through are set to expire after eight years. These are here through 2025 and then the corporate provisions, most of them are here to stay permanently. A lot of people hear on the news and it’s true, but they’re talking about $1.4 trillion is what the new tax bill is going to cost the government that they think they’re going to make up some way, shape or form. Regardless, that’s what they’re projecting. Some of the key highlights are that we’re still going to have seven brackets like we had previously. However the rates have changed and in fact, almost all of them have changed except for the first one there. We still have the 10% bracket right off the bat. We had 10%, 12%, 22%, 24%, 32%, 35% and 37%. There are definitely some new numbers on there that we have not ever heard previously.

When you say the brackets, and you referenced those rates, is there anything significant in those rates or are they what we are accustomed to or used to from the past?

They’re going down pretty much at each and every bracket. They’re down of anywhere from 2% to 3% across the board except for that initial first one that’s out there. It’s coming down. Another big change is standard adoptions. We spoke about it a little bit previously, but they’re still projecting about 94% of people are no longer going to be itemizing and here’s why. The standard deduction has essentially been doubled where the personal exemptions are now gone and state and local income taxes now have a cap. Single taxpayer previously had a $6,350 standard adoption. Now that’s going to $12,000. Then for married couples, it’s increasing from $12,700 to $24,000. Previously we’ve got a little over $4,000 exemption for each and every person in the household that is now gone. We’ll talk about where the replacement comes in just a moment. Then for state and local income taxes, we always had the ability to adopt 100% of those in the household, now we have a cap there of $10,000. Those are some major changes. There are individual tax rates along with the standard deductions. Those are pretty big changes.

Just going through that process of education, $6,350 to $12,000 for the single file or on a standard deduction and then $12,700 almost doubling up to $24,000. That’s a significant amount of an increase for a deduction.

When you give it, you take it away. That’s where those personal exemptions are gone away. It’s a big deal of losing that $4,000 per person. Where they’re picking that up especially for people that still have children is tax credits regarding dependents where the child tax credit has doubled from $1,000 to $2,000 for children under seventeen and taxpayers now can claim up to a $500 temporary credit for a non-children dependent. The big deal here as well is now they’ve increased the income limits were a lot of people will not be phase out of those child credits.

In addition, we meet a lot of people that have been hit with what they call an AMT or alternative minimum tax. There were some changes that had been done there where the exemption has been raised to a little over $70,000 for a single taxpayer and almost $110,000 for a married couple. AMT is still intact but they’ve increased the income in which you would be susceptible to being subject to the alternative minimum tax. Another big one is from now on, anyone buying a new home or refinancing will be only able to deduct up to $750,000 of mortgage interest. That number previously was $1 million and now was being dropped the $750,000. Interests that were able to deduct was being dropped down to $750,000. What are the things that we still can deduct?

We’ve got student loan interest. We can deduct up to $20,000 to $50,000 a year. Medical expenses, filers can still deduct whatever is greater than 7.5% of their adjusted gross income. This was a big one that they at least phase back into because there are a lot of teachers out there that are financing their classrooms with supplies, etc. They were talking about eliminating this, but at least they brought it back a little bit where educators can now deduct at least up to $250 to offset what they spend on classroom materials. The electric car credit lives on. Drivers with the plug-in cars can still claim up to a $7,500 credit. A lot of people take advantage of that. We have a lot of clients that are getting involved in the electric cars as well. Here’s a big deal. Home sellers who turn a profit can still keep it. Meaning if I have my house and I’ve made it 30 years ago, for $200,000 and I’m selling it today for $700,000. That $500,000 gain for my wife and me, we each get a $250,000 exemption. We do not have to pay taxes on that up to $500,000 gain.

That’s a big deal for all our audience because as you get to a point where you start to get into discussions about retirement and planning, what do we do with our home now? Should we sell? All of those conversations.

Those are all the conversations we have when we sit down with the people that we meet during the workshops and when you’re calling from the radio. These are all the things that we discussed and it’s why we hold these workshops to go into greater detail on what we’re going through with all these changes. 529 have changed a little bit where now you can use up to $10,000 annually to cover the costs of sending a child to public, private or religious, elementary or secondary schools. A lot of people think it’s more on the high school or college. Some of the other changes that we have out there, deductions that have left, moving expenses, alimony payments can no longer deduct those tax preparation fees. The estate tax has changed, it has doubled. Previously, what was exempt from estate tax was $5.5 million for an individual or almost $11 million for a couple, those numbers have now doubled. The individual mandate, Obamacare, Affordable Care Act, we no longer have to have healthcare insurance there as well.

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Corporate tax has changed from 35% to 21%. The bottom line is to start the year with a bang, that’s what we do. Feel free to give us a call to schedule for that complimentary financial review. We understand those intricacies associated with personal finance. We talk about always put those puzzle pieces together with tax strategies, social security, estate planning needs and everything works together. Your appropriate strategy is critical to maximizing your legacy potential. We always say retirement is your greatest holiday, but it requires an actionable plan to get there. Let us help you navigate your individual retirement planning decisions. Give us a call. Schedule that comprehensive, no obligation review and get started again.

I wish the audience could see the list of changes and applications from the new tax plan. If you’re smart enough to know what you don’t know, that will help you call Thrive Financial Services at 1-800-516-5861. Easy, fun, clear and no obligation other than your ability to listen and learn which will help you as you move through 2018. David, you talked a little bit about why people have a tendency to ignore. I wanted to bring you in on that investment-related thinking. What do you mean by ignore?

After doing this for 29 years, we’ve found that people buy things or do things typically based on emotion and then depending on how they ultimately work out, they’re going to try to defend logically. Right now, things are just gangbusters as far as the market’s going and it does create a lot of emotion. I’ve mentioned some shows back where we now get questions from people at our workshops, should they be investing in Bitcoin and all these types of speculative things that actually pop up when there’s this hysteria or mania or exuberance as we’ve heard in the past about the market. We here at Thrive are about trying to make sure people navigate that retirement successfully and it’s not about today or tomorrow, but when we see statistically people are going to probably live another twenty or possibly 30 or 35 years after they’ve made that retirement.

It’s not only about getting to retirement, but it’s also being able to last through retirement. People tell us one of the biggest concerns that they have, “Is my money going to last our lifetime?” both husband and wife, if it’s a married situation. We see a lot of times as what we classify as safe money management, where we try to secure those incomes, manage investment portfolios from a risk-based perspective versus being growth oriented. We’re a little bit more concerned about what happens when the market corrects versus is it going to keep going the way it is. We find it’s a little bit of emotion-based. One of the things that cause people to ignore advice is what’s called perceived potential.

The perceived potential is we just hear it, everything’s going well. Donald Trump’s doing a phenomenal job. Growth in jobs is incredible. This thing’s going to keep skyrocketing and I don’t want to miss out. I don’t want to miss the perceived potential of taking a different strategy on my investments. The second one, which is similar, is heard mentality. Back in 2000 when people were talking about companies in the dot-com era where they didn’t even know what the company did, but because somebody said, “I invested in and I’ve gotten 10% rate of return over the past two weeks,” it creates that heard mentality. The third is the fear of missing out. We even see commercials now on TV on the FOMO: Fear Of Missing Out.

If I take a more conservative approach today, I pull some of those risky or chips off the table per se. I’m fearful that I’m going to miss out another 20% upside or another 30%. The emotion takes over and that goes right in the last piece, which is the anticipation of the reward. What it’s going to be like if the market does another 26% return in 2018. What’s up my portfolio? What’s it going to be? It’s all that anticipated reward. Now when we see the flip side and sometimes the bottoms do fall out temporarily, but they do, you hear a whole different set of discussion points. Here at Thrive, we take a safe money approach to our strategies relating to trying to manage risk, how to make sure we’ve got secure income that covers our living expenses on a monthly basis no matter what happens. Taking our investment portfolios and designing them in a way that when the markets do correct, we’re not experiencing the full downside of the market as most people do because they did not modify their portfolio.

It’s one thing to get to retirement when you’re in retirement and as you said, people are now going to live longer. It’s a lot harder for us to react once we’re in it, so decisions and things that we make today through planning and through education are going to help that process, are going to help us along that spectrum in the last part of our last stretch or our last mile.

TFS 12 | Financial Resolutions

Financial Resolutions: People buy and do things based on emotion; and then depending on how they work out, they’re going to try to defend logically.

 

That’s our biggest challenge. I tell people a lot of times, it’s like trying to get an aircraft carrier to turn on a dime. It’s such an inertia that it takes five to ten miles before that aircraft carrier can be going in the opposite direction. It’s the same thing with people. If you’ve been doing what you’ve been doing for the past 25 or 30 years from an investment strategy, from a financial planning perspective, and then somebody comes in and say “We’re in retirement now and it’s a little bit different set of rules because now we’re distributing income. We have to plan a little bit differently. We have to look at tax efficiency, things like that.” A lot of times it’s that inertia that we’re fighting and we’ve got to be the instigator of, “Are you thinking about this? Are you thinking about that?”

One of the great tools that we utilize in our investment strategy planning is a tool called Riskalyze. This is a piece of technology that has become paramount in the industry and it’s a risk-based tool. I think investing is broken a little bit because what most advisors use today on how they’re going to build up their strategy is they use words like aggressive or conservative or moderate. What does that all mean? What Riskalyze does is it assigns a numerical value to the risk assessment that a client would fill out. It’s a behavioral questionnaire where we can figure out what is your true risk tolerance level and then we can design based on that. We have a link on our website that says get a free portfolio analysis, which will let people go through that process, fill out that questionnaire and find out what their risk number is.

That’s a scale of one to 99, where 99 is incredibly speculative and one meaning the money’s buried in the backyard in a cookie jar. They can see for maybe the first time what that value is and then if they want to take it a step further they can go now and see how to design a portfolio to marry that up. That’s on our website at ThriveFinancialServices.com and if they want to give us a call to come in and go through that risk analysis on the portfolio, they can call us at 1-800-516-5861.

Bret, give us the locations again.

It’s at Ludington Library, Bryn Mawr at 7:00 AM and then the Lower Southampton Library in Feasterville.

We welcome our entire audience into 2018. Don’t forget to call and find out how you can pick up a copy of Roadmap to retirement: Navigating Your Way to Peace of Mind. On behalf of David Bezar, Karen Bezar and Bret Elam and on behalf of all of our audience, I’m Joe Krause.

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