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3 Tips to Make Your Money Last a Lifetime

By Jeff Gilbert

You’ve got big plans for your retirement. But nothing spoils a happy retirement more than the fear and anxiety of running out of money. Every retiree wants the comfort and confidence of knowing their retirement funds will allow them to check off every item on their bucket list. Nearly 56% of Americans worry they’ll outlive their retirement savings, so it’s more important than ever to make sure you’re prepared. 

Of course there’s no quick-fix guarantee you will never run out of money, but there are certain steps you can take to maintain your wealth and improve your financial stability. Rather than worrying about running out of money in retirement, take these 3 steps to make your money last a lifetime.

Diversify Your Income

A great way to make your retirement funds last is to diversify your income. The truth is, no matter what your net worth, your income will always be your greatest wealth-building tool. That’s why a solid income stream is great, but multiple streams of income are even better. 

Diversified income streams act in much the same way that diversified investments do. They allow for less demand and stress on any one income source, so that if an unforeseen event were to occur, the remaining income streams can pick up the slack. There are many ways to diversify your income, including:  

  • Invest in real estate. Owning rental properties is a great way to earn passive income without dipping into your retirement savings. Real Estate Investment Trusts (REITs) are another popular option.
  • Continue to earn active income. You could also pursue a passion, become a freelancer, or work for a nonprofit. You will earn less than what you’re making now, but all these options will provide flexibility and a form of income diversification that will keep your retirement savings intact for longer.
  • Use dividend-paying stocks. Often considered an annuity-like cash stream, dividend-paying stocks give company earnings to investors, typically once a quarter. The top dividend-paying stocks even raise their payouts over time. This not only gives you an income stream, but you can also reinvest the dividends to pursue more growth.

Avoid Overspending & Invest for Growth

Do you know what you will do with your newfound freedom in retirement? Many people start by pursuing all the things they didn’t get to do while working—traveling the world, picking up a new hobby, remodeling their home, and the list goes on.

But many people underestimate the amount of money they’ll spend in those first few years of retirement. With so much extra time on your hands, it’s easy to make a lot of little purchases that add up over time. Avoid overspending by creating a detailed (but realistic) budget for your retirement years. You can budget for extra expenses like vacation or pursuing a new hobby, but make sure you know how it will affect your nest egg before you follow through.

In addition to budgeting, another strategy for making your retirement income last is to invest excess cash for growth (stocks) instead of fixed income (bonds). This may sound counterintuitive since retirees tend to invest in more conservative investments to maintain steady income. But as bond yields remain historically low and inflation reaches new highs, many experts have expressed concerns over the sustainability of retirement investments that have a larger allocation toward bonds.

You certainly need the fixed-income component, but it’s important to consider including investments that have a greater growth potential in order to keep up with inflation and maintain your ability to withdraw funds every year. 

Make sure you are investing with the proper perspective, and don’t cheat yourself out of years (or even decades) of potential growth. 

Create a Withdrawal Strategy

When it comes to withdrawing from your retirement accounts, how you take your distributions can make all the difference. Your retirement income sources are likely produced from a variety of assets, including employer-sponsored retirement plans, Social Security, personal IRAs, or other income-generating investments. Each asset has different tax characteristics, and properly structured investments can help lower your tax burden if you plan how and when you’ll withdraw from each.

For example, most people will receive Social Security benefits during retirement, but 85% of your Social Security income can be taxed at your regular tax rate if your income exceeds a certain amount. 

Regarding your personal savings, a $50,000 withdrawal from a Roth IRA will have a wildly different tax impact than that same distribution from a traditional IRA. If you blindly take your money and run, you could trigger an avalanche of higher Social Security taxes, investment surtax, capital gains taxes, and even higher Medicare premiums, which will eat away at the funds that were supposed to carry you through retirement. Creating a withdrawal strategy and a tax plan can help you maximize your retirement funds and improve your financial situation.

We Can Help Make Your Money Last

Your situation is unique to you, so there’s no cookie-cutter answer to when you can retire or how much money you need to live a comfortable life. But there are concrete ways to improve your financial stability. At Balboa Wealth Partners, we’re here to help you achieve your short-term and long-term goals, worry less about your finances, and focus more on your life’s passions. 

If you would like to learn more about how to manage your money through retirement, we’d love to hear from you! Schedule an introductory appointment online, or call us at 949-445-1465. For any questions, feel free to reach out to me at jgilbert@balboawealth.com.

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With over three decades of industry experience, he has worked as both an advisor and executive-level manager, partnering with and serving a diverse range of clients. Specializing in serving high- and ultra-high-net-worth families, Jeff aims to help clients achieve their short-term and long-term goals, worry less about their finances, and focus more on their life’s passions. Based in Orange County, Jeff works with clients throughout the entire country. To learn more, connect with Jeff on LinkedIn or email jgilbert@balboawealth.com. 

Advisory services provided by Balboa Wealth Partners, Inc., an Investment Advisor registered with the SEC. Advisory services are only offered to clients or prospective clients where Balboa Wealth Partners and its Investment Advisor Representatives are properly licensed or exempt from registration.

Securities offered through Kingswood Capital Partners, LLC, member FINRA, SIPC.

Balboa offers advisory services independent of Kingswood. Neither firm is affiliated.

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4 Steps to Take Toward Your Dream Retirement

By Jeff Gilbert

As financial advisors, we are often very focused on the long-term goals and the big picture. While this is certainly a good strategy because solid financial plans take time and consistency to be successful, it’s easy for us to forget about the present. Sure, it’s great to know that you’re getting top-notch financial planning and investment management, but we are also interested in improving your day-to-day life now—not just in the distant future. There is no guarantee about what the future will hold, so it’s our mission to strike a balance between the present moment and your long-term goals.

At Balboa Wealth Partners, we take financial planning further by helping our clients create a balance between working toward the retirement of their dreams and living their retirement dreams now. Here are four tips to help you get started.

What Do You Want Your Life to Look Like? 

Financial conversations can often be left-brain dominant. But since money impacts every area of your life, it’s critical that financial discussions also include your hopes and dreams for life. That means we need to dig into the emotional side of our thinking.

One simple way we do this is by asking our clients specific questions about what their retirement goals look like, such as:

  • Tangible goals: What would you like to have? 
  • Conceptual goals: What would you like your life to be like?
  • Freedom goals: What would you like to be able to do?

Principle in Action

Many people don’t even know where to begin when faced with the above questions and will sometimes provide a surface-level answer, something like “I’d like to travel” or “I’d like to spend more time with my family.” These are great starts, but it may take some time to truly uncover what’s most important to you. That’s okay. Even if you don’t know exactly what you want, there are ways to take practical steps toward leading a happier, more fulfilled life now. 

1. Expect Less

It’s no secret that money can buy comfort, stability, and less stress. But can money buy you happiness? The answer? To an extent. Researchers have found that increased income is associated with increased levels of happiness and life satisfaction up to a point—$105,000 to be exact. (1) Beyond that threshold, happiness levels plateau and additional increases in income result in negligible changes in happiness. 

Instead of focusing on the ultimate retirement dream (e.g., a certain amount of money in the bank, or a specific car or household item), try focusing on what you do have and live in the moment as much as possible. Practicing meditation or mindfulness can have significant impacts on your overall sense of happiness and well-being, (2) and letting go of expectations of what your life should look like can be a great first step in living your retirement dream now.

2. Set Sub-Goals

If your dreams are more on the tangible side, that’s great too. To help with these goals, try setting smaller sub-goals that can be achieved more quickly than the ultimate retirement dream. For instance, if your retirement dream consists of retiring in a condo on a beach in South Florida, maybe set a sub-goal of vacationing in South Florida first. Taking that trip could inspire you even more to make your ultimate dream a reality, while also allowing you to live your dream in the moment as well. 

3. Find Purpose

Studies show that individuals who live a purpose-driven life are happier and healthier on average than those who don’t. (3,4) Not only that, they also live longer! (5) A purposeful life is commonly associated with fulfillment and motivation, and can be found in many ways. Volunteering for a local nonprofit or church, spending time with your children, or pursuing a newfound hobby are great ways to find purpose in your day-to-day life.

4. Prioritize Family & Friends

This one sounds obvious, but it’s often one of the hardest things to do. Life gets in the way and before you know it, you’ve spent a whole month getting stuff done but not really spending any true quality time with the people who matter most. Living your retirement dream now often comes in the form of just slowing down for a moment. Realizing that the laundry list of stuff to buy, deadlines to meet, and things to do is important, but so is connecting with and learning from those around you.

The great news is that you don’t have to wait until retirement to do that. You can start setting aside time every week to check in with your loved ones and find meaningful ways to connect. You might just find that in doing so, your to-do list becomes a little lighter and maybe even easier to accomplish.

Get Started Today

So, what are some of the action steps you can take to start pursuing your dreams now? You may be surprised to realize that some of your goals can be accomplished sooner rather than later. 

At Balboa Wealth Partners, we are here to celebrate your successes and cope with your challenges as you work toward living your retirement dream now. Learn more about how we can help by calling our office at 949-445-1465 or emailing me at jgilbert@balboawealth.com.

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With over three decades of industry experience, he has worked as both an advisor and executive-level manager, partnering with and serving a diverse range of clients. Specializing in serving high- and ultra-high-net-worth families, Jeff aims to help clients achieve their short-term and long-term goals, worry less about their finances, and focus more on their life’s passions. Based in Orange County, Jeff works with clients throughout the entire country. To learn more, connect with Jeff on LinkedIn or email jgilbert@balboawealth.com. 

Advisory services provided by Balboa Wealth Partners, Inc., an Investment Advisor registered with the SEC. Advisory services are only offered to clients or prospective clients where Balboa Wealth Partners and its Investment Advisor Representatives are properly licensed or exempt from registration.

Securities offered through Kingswood Capital Partners, LLC, member FINRA, SIPC.

Balboa offers advisory services independent of Kingswood. Neither firm is affiliated.

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(1) https://www.gobankingrates.com/money/wealth/minimum-salary-to-be-happy-state/

(2) https://www.helpguide.org/harvard/benefits-of-mindfulness.htm#

(3) https://living.medicareful.com/finding-a-purpose-makes-you-happier-healthier

(4) https://psychcentral.com/news/life-purpose-linked-to-better-brain-health

(5) https://hrs.isr.umich.edu/publications/biblio/11635

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Financial Planning for Aging Parents

By Jeff Gilbert

Taking on the role of your parents’ caretaker comes with many responsibilities for which you may not be prepared. As they approach old age, they no longer just need help reading fine print or moving heavy furniture around the house; they will need more serious assistance like managing their finances and planning their estate. While it’s no kid’s dream to one day have to care for the people who you once believed were invincible, having a plan in place can help ease the burden, especially during a stressful time of transition. Keep in mind the following legal and financial considerations when planning for your aging parents’ financial legacy. 

1. Get That Will in Place! 

How many times have you heard a story in the news about a celebrity who died without a will and left their relatives and business partners with a raucous legal battle? Case in point: The battle over Jimi Hendrix’s estate continues to this day (more than 50 years later!) all because he had no will. (1)

While you may consider your family above such squabbles, it’s better not to test that assumption. You never know how large amounts of money will affect people and their behavior. Your parents need to have a will that spells out their final wishes, including who will carry out those wishes as the executor of their estate.

This is especially important in situations with blended families. It’s all too common for someone to neglect to update their will and leave an ex-wife or ex-husband as the sole inheritor or executor of an estate. Not only do your parents need a will, but they also need to make sure it is updated to reflect their current situation and desired legacy. 

The importance of double-checking beneficiary designations goes beyond just a will. Make sure your parents have gone through all of their accounts, including life insurance policies, retirement accounts, and other savings, and verified that their listed beneficiaries are correct. 

2. Start the Long-Term Care Conversation

If your parents are over 65, there’s a 70% chance they’ll need some sort of long-term care services in their lifetime. (2) That’s a high possibility that should be taken seriously.

Your whole family needs to come together to develop a plan for caring for your parents when the time comes. Discuss topics such as: Who will provide care for them? Who will pay for the care? Does it make sense for them to purchase long-term care insurance?

All too often, the most responsible or local son or daughter ends up shouldering the entire burden. This leads to burnout and resentment toward the other siblings. Save your family the trouble and proactively come up with a plan that everyone can agree on.

3. Assign Roles and Responsibilities

Approximately one in nine people age 65 and older are living with Alzheimer’s. (3) There’s a chance that a time will come when at least one of your parents is no longer able to make decisions for himself or herself. Who is going to make decisions for them at that point, both financial and medical?

While this can be an uncomfortable conversation, don’t avoid it. This is something you need to discuss with your parents and get the proper legal documents in place before they become incapacitated. Having simple powers of attorney written up will save you the trouble of going to court to request the right to help your parents when they need it most. And if your parents are comfortable with it, it would be a good idea to have one or more of their kids added to a bill-paying account. This way, if an emergency situation arises, they can access cash reserves to pay bills and debt payments immediately instead of waiting for assets to be released or legal documents to be enacted.

4. Invest in Your Relationship

While it is important to have all of the proper legal documents in place and have a plan for how to take care of your parents when they can no longer take care of themselves, for most people, their biggest regret is simply that they didn’t make the most of their time with their parents.  

We all know that our time here on earth is limited, so we need to spend it investing in those we love. As you watch your parents age, it’s a visual reminder that your time with them is coming to an end. Consider creating a routine to make sure you spend time with them frequently while you still can. Can you make a standing date for breakfast on Fridays or a phone call on Sunday afternoons? Carving time out of your busy schedule for your parents is one of the very best ways to prepare for these final years of their lives.

5. Enlist the Help of a Professional

Attempting to manage your parents’ financial situation on your own can feel overwhelming with all the decisions to make and various family opinions to contend with. Parents may also not be receptive to these difficult conversations with their children and the role reversal they find themselves in. This is where the help of an experienced financial advisor can make a world of difference for everyone involved. Someone knowledgeable and skilled in helping families make important decisions about such things as wills, retirement, and estate planning can be a great asset in these sensitive situations.  

At Balboa Wealth Partners, we are dedicated to supporting, educating, and providing informed direction to every client. If you would like help planning for your parents’ future, contact our office by calling 949-445-1465 or emailing jgilbert@balboawealth.com.

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With over three decades of industry experience, he has worked as both an advisor and executive-level manager, partnering with and serving a diverse range of clients. Specializing in serving high- and ultra-high-net-worth families, Jeff aims to help clients achieve their short-term and long-term goals, worry less about their finances, and focus more on their life’s passions. Based in Orange County, Jeff works with clients throughout the entire country. To learn more, connect with Jeff on LinkedIn or email jgilbert@balboawealth.com. 

Advisory services provided by Balboa Wealth Partners, Inc., an Investment Advisor registered with the SEC. Advisory services are only offered to clients or prospective clients where Balboa Wealth Partners and its Investment Advisor Representatives are properly licensed or exempt from registration.

Securities offered through Kingswood Capital Partners, LLC, member FINRA, SIPC.

Balboa offers advisory services independent of Kingswood. Neither firm is affiliated.

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(1) https://www.guitarplayer.com/news/the-estates-of-jimi-hendrix-and-noel-redding-and-mitch-mitchell-are-suing-each-other-heres-whats-going-on#:~:text=The%20estates%20of%20all%20three,from%20streaming%20and%20digital%20media.

(2) https://acl.gov/ltc/basic-needs/how-much-care-will-you-need

(3) https://www.alz.org/alzheimers-dementia/facts-figures

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Do You Have Multiple Retirement Plans? How to Consolidate and Maximize Returns

By Jeff Gilbert

Forward-thinking people have been saving for retirement since day one on the job. So it’s not uncommon to have multiple retirement accounts—both from previous employers and plans set up individually. Does this apply to you? Even if you haven’t given them much thought, those accounts could cause headaches down the road as you find yourself juggling various investment decisions, fee breakdowns, and rules for each.

Before you stress, be aware that there is a way to streamline the management of your retirement savings and possibly maximize your returns: account consolidation. Let’s discuss how it works and why it may be a good option for you.

Understanding Your Options When Consolidating

Different retirement plans have their own benefits, but also their own sets of rules. It’s important to first get an understanding of the rollover options available to you. You may or may not be able to roll some types of accounts into others; some accounts only allow rollovers once every 12 months; and some only let you roll over after two years. (1)

Is Consolidating Right for You?

How do you know if it’s time to consolidate? There are a few things you’ll want to consider before consolidating multiple retirement accounts.

  • What kind of benefits and features do your retirement accounts offer?
  • Are there similar investment options in all of your accounts? 
  • What are the fees like on each of your accounts?
  • Can you roll over previous plans to a new employer? Or do you need to move to a self-directed retirement account?

You’ll want to do your research to answer these questions before you make any moves. And remember, you don’t necessarily need to consolidate everything into one. You can merge some while keeping others open. What’s best for you will depend on your specific situation and goals for retirement.

Benefits of Consolidating Multiple Retirement Plans

When it comes time for retirement, there are several benefits of consolidating multiple plans into one account. 

Here are just a few benefits to consider:

  • Reduced investment fees: Fewer retirement accounts can also mean fewer fees. Instead of paying fees for each of your account management services, you only need to pay one—meaning more of your money can grow.
  • More opportunities to save: You can’t contribute to an old employer-sponsored 401(k). You need to roll over the account to a new 401(k) or a self-directed account so you can continue contributing to that retirement fund. 
  • Reduced administrative work for you: Fewer accounts means simpler management. You don’t need to worry about managing investments and documentation across different platforms. For example, instead of three different monthly statements, you just have one. You can see all your investments in one location for more cohesive planning.
  • Simpler portfolio rebalancing: When it comes time to rebalance your portfolio, having all your accounts consolidated makes it easier to calculate your asset allocations.
  • Easier calculations and withdrawals of required minimum distributions: If you have multiple 401(k)s at retirement, you need to take required minimum distributions (RMDs) from each of those accounts. (2) When juggling multiple accounts, you risk missing a required minimum distribution, for which the IRS can make you pay a penalty. Having a single account makes RMDs much easier. 
  • A clear picture of your money: Consolidating your accounts allows you to clearly understand how well your investments are working for you while enabling you to easily tweak the account to meet your retirement goals.

Lastly, one of the biggest benefits of consolidation is saving time. Time is one of your most valuable assets. Having one consolidated account means you’ll spend less time managing all your accounts and free up more time and energy for doing what you love. 

We Can Help You Consolidate and Maximize

Consolidating your accounts can mean greater returns and less headache in the future, but it can be challenging to navigate the process. If you have multiple retirement plans, Balboa Wealth Partners is here to help. Our ultimate goal is to be your advocate to help you make decisions and achieve your financial goals while tackling life’s challenges. 

Let’s review your overall financial plan and discuss how we can help maximize your returns. To get started and see if we’d be a good fit, give me a call at 949-445-1465 or email me at jgilbert@balboawealth.com. Or reach our Scottsdale office at 480-801-5100, info@balboawealth.com to set up a complimentary get-acquainted meeting!

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With more than three decades of industry experience, he has worked as both an advisor and executive-level manager, partnering with and serving a diverse range of clients. Specializing in serving high- and ultra-high-net-worth families, Jeff aims to help clients achieve their short-term and long-term goals, worry less about their finances, and focus more on their life’s passions. Based in Orange County, Jeff works with clients throughout the entire country. To learn more, connect with Jeff on LinkedIn or email jgilbert@balboawealth.com. 

Advisory services provided by Balboa Wealth Partners, Inc., an Investment Advisor registered with the SEC. Advisory services are only offered to clients or prospective clients where Balboa Wealth Partners and its Investment Advisor Representatives are properly licensed or exempt from registration.

Securities offered through Chalice Capital Partners, LLC, member FINRA, SIPC.

Balboa offers advisory services independent of Chalice. Neither firm is affiliated.

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(1) https://www.irs.gov/pub/irs-tege/rollover_chart.pdf

(2) https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-required-minimum-distributions

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Client Profile: How I Help My Clients Retire Early

By Jeff Gilbert

At Balboa Wealth Partners, our goal is to help our clients retire and enjoy their golden years the way that they want to. Often, our clients come to us with an array of retirement goals that may seem difficult to obtain. But in the end and with careful planning, our clients are able to look forward to retirement with confidence. This case study examines just that: our clients had a goal of retiring early. With thorough risk analysis and wealth management planning, we were very happy to have helped our clients work towards achieving their objectives. 

The Client

These particular clients were a couple who, for privacy reasons, we will call Susan and Greg. Susan and Greg had both been married before and had children from previous marriages but they had none with each other. I had been working with Susan longer than they had been married. 

Susan and Greg were well suited for each other. They entered their marriage with about the same amount of assets and were working hard to blend their finances and their families by making all three children from their previous marriages equal beneficiaries in their estate plan. Susan and Greg had major positions with their corporate employers and both have been successful at climbing the corporate ladder for over 30 years. 

The Goal 

Susan and Greg both wanted to retire early from their careers, and after three decades working for their respective companies, they deserved some rest and relaxation. Susan was planning to retire at age 58, while Greg was planning his retirement at age 60. 

While these are reasonable goals for any couple, Susan and Greg came to me with this plan less than two years before their desired retirement age. We had much to accomplish and sort out before Susan and Greg took that first step toward retirement.  

How We Helped

Luckily, I knew Susan and Greg from working with them at my previous firm,. Unfortunately, at the old firm Susan and Greg did not feel like they were getting the personal attention and planning needed for them to achieve their retirement goal. So in early 2019, they reached out to me and asked if we could work together again to maintain their wealth management plan. 

I was delighted to re-engage with my old clients and further develop their retirement strategy. With my help, we ironed out a wealth management and retirement plan that allowed both Susan and Greg to retire early.

It was important to this couple that they maintain their upscale lifestyle into retirement, and with my help, Susan and Greg have been able to do just that. This couple is now on track to retire in about 18 months, right on time with their goal. They live each day confident that they have done the right things in accumulating assets, and I look forward to the day that we will all celebrate their retirement.

With all our clients, we are diligent about keeping their financial plan updated and accurate. We tend to refresh it every three to four months and work hard to tweak it to reflect all worst-case scenarios. We also check in with our clients on a monthly basis and look for the optimal financial tools to use when any large spending is needed. 

We’re Here for You

At Balboa Wealth Partners, we strive to provide our clients with the very best financial tools available and unobstructed guidance to maximize their wealth management strategy. If you are interested in working with us, give me a call at 949-445-1465 or email me at jgilbert@balboawealth.com. You can also contact us at the Scottsdale office at 480-801-5100, info@balboawealth.com.

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With nearly three decades of industry experience, he has worked as both an advisor and executive-level manager, partnering with and serving a diverse range of clients. Specializing in serving high- and ultra-high-net-worth families, Jeff aims to help clients achieve their short-term and long-term goals, worry less about their finances, and focus more on their life’s passions. Based in Orange County, Jeff works with clients throughout the entire country. To learn more, connect with Jeff on LinkedIn or email jgilbert@balboawealth.com. 

Advisory services provided by Balboa Wealth Partners, Inc., an Investment Advisor registered with the SEC. Advisory services are only offered to clients or prospective clients where Balboa Wealth Partners and its Investment Advisor Representatives are properly licensed or exempt from registration.

Securities offered through Chalice Capital Partners, LLC, member FINRA, SIPC.

Balboa offers advisory services independent of Chalice. Neither firm is affiliated.

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Personal IRA Vs. Employer-Sponsored Retirement Plans

By Jeff Gilbert

I’m willing to bet that after the year we’ve just had, you’re looking forward to an enjoyable retirement! But not so fast. Those golden years don’t come without active planning and saving. There are countless retirement savings options—the problem is finding the right account for your unique needs. 

The two most common retirement savings vehicles used to maximize growth and ultimately reach your goals for retirement are the Individual Retirement Account (IRA) and Employer-Sponsored Retirement Plans (ESRPs). Let’s go over the 3 key differences between these accounts so you can make the best choice for your particular situation.

1. Contribution Limits

You want to save as much as possible, right? Well, that might determine what account you choose. One major difference between a personal IRA and an ESRP is the contribution limit. For an IRA, you can contribute up to $6,000 per year if you are under the age of 50, or $7,000 per year if you are age 50 or older.

On the other hand, the maximum annual contribution for ESRPs is $19,500, or $26,000 if you are over the age of 50. And that’s just how much you can contribute; anything your employer chooses to match or contribute doesn’t count toward that limit.

Although it is wise to make sure you contribute enough to receive any match your company

offers through an ESRP and max out those accounts each year, if possible, anyone with a taxable income can contribute to an IRA as well. This increases your total contribution limit to $25,500, or $33,000 for those 50 and older, each year when you max out both an IRA and an ESRP.

2. Investment Options

IRAs are accounts you open and can control, which means you have quite a few more options. Stocks, bonds, mutual funds, and index funds to choose from compared to what your ESRP offers. Employers select a certain number of investment options to offer and that is what you get, which means you tend to have more flexibility with where your money is invested with an IRA.

Choosing investment options using an IRA and contributing the full $6,000 per year to that account before making maximum contributions to your ESRP could be a wise strategy, depending on how advantageous the employer-selected options are for your financial situation. Also, watch out for fees with your ESRP funds. With fewer options, you may not have as many low-fee choices as an IRA.

3. Tax Implications

Would you like to save more on taxes? That’s what I thought. How you save your money impacts your tax treatment, so pay attention to this point.

Many employers now allow their employees to choose how to invest their money: in a traditional ESRP or Roth ESRP. With traditional ESRPs, you can claim a deduction on the full amount of your contribution, no matter what your annual income or tax filing status is currently. The difference between contributing to a traditional versus a Roth account is that you are using pre-tax dollars for traditional contributions and post-tax dollars if you contribute to a Roth ESRP. Contributions using pre-tax dollars allow you to claim the deduction now and be taxed on your withdrawals later. Alternatively, if you contribute to a Roth account using post-tax dollars, all growth and contributions grow tax-free, but you are not able to claim a tax deduction. This is also true of Roth and traditional IRAs.

This is where things can get confusing. If you are covered by an ESRP and make more than $75,000 as a single filer or more than $124,000 as a joint filer, you will not be able to claim any deduction for contributing to a traditional IRA. If you don’t have the option to contribute to an ESRP, you can claim a deduction on your contributions to an IRA, but there are a few limitations on income, which you can see here.

Are You Taking Advantage Of All Your Retirement Options?

There are no do-overs when it comes to retirement, and the savings options can get overwhelming. These options have a long-term effect on growing your portfolio and your ability to reach financial goals to live the retirement lifestyle you want and can enjoy. So if you’re not sure what all your retirement options are, or if you’re not certain you’re maximizing them, don’t stay in the dark! 

If you need help choosing the best way to grow your wealth, we at Balboa Wealth Partners are here for you. We specialize in handling the many aspects of retirement planning, taking the burden off of you. If you choose to partner with us, we will navigate your retirement account opportunities and maximum contribution limits and strategize appropriately. To get in touch, give me a call at 949-445-1465 or email me at jgilbert@balboawealth.com. I look forward to hearing from you soon!

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With nearly three decades of industry experience, he has worked as both an advisor and executive-level manager, partnering with and serving a diverse range of clients. Specializing in serving high- and ultra-high-net-worth families, Jeff aims to help clients achieve their short-term and long-term goals, worry less about their finances, and focus more on their life’s passions. Based in Orange County, Jeff works with clients throughout the entire country. To learn more, connect with Jeff on LinkedIn or email jgilbert@balboawealth.com. 

Advisory services provided by Balboa Wealth Partners, Inc., an Investment Advisor registered with the SEC. Advisory services are only offered to clients or prospective clients where Balboa Wealth Partners and its Investment Advisor Representatives are properly licensed or exempt from registration.

Securities offered through Chalice Capital Partners, LLC, member FINRA, SIPC.

Balboa offers advisory services independent of Chalice. Neither firm is affiliated.

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Don’t Outlive Your Money: 3 Retirement Budget Tips

By Jeff Gilbert

Retirement is a milestone unlike any other, but rather than eagerly anticipating these golden years, almost half of all Americans worry about running out of money in retirement. (1) Are you one of them? Even if you’re not, you likely feel the need to be fiscally responsible in retirement in order to avoid problems down the road.

As the foundation of personal financial management, a budget is essential if you want to stay on top of your finances in retirement. Here are three budgeting tips to help boost your confidence and peace of mind as you enter and enjoy retirement.

1. Identify Flexible Spending Categories

As you build your budget, organize it based on needs. Every single expense should be identified as either fixed or variable and essential or non-essential. For example, your housing expenses are likely fixed and essential. Food is essential, but it is a variable expense. A gym or country club membership may be fixed, but it is non-essential. Other forms of leisure or travel are likely variable and non-essential.

Knowing which expenses are necessary and which are flexible can give you incredible peace of mind. If you’re used to spending $8,000 a month, once you sort your expenses and discover that only $4,500 of them are truly necessary, it relieves a lot of pressure. 

It also allows you to make wiser financial decisions and adjust better to market conditions. If we enter a bear market and your portfolio is down, you can cut spending back to cover the necessary expenses you identified. Maybe you put off that big trip or eat out less. This can potentially keep more of your money invested so you can be better positioned if and when the market bounces back.  

2. Plan For Taxes

Unless all of your money is in an after-tax account or Roth IRA, you will have to deal with taxes in retirement. Having your mortgage paid off before retirement is a common—and excellent—goal. However, don’t make the false assumption that no mortgage equals no payments. 

Part of your monthly mortgage payment may be going toward property taxes and homeowners insurance if you escrow. Don’t forget that you still have to pay these bills when your home is fully paid off, and it’s important that these figures be included in your budget. Keep in mind, these numbers will be inflating over time as well. One way to handle property taxes and homeowners insurance in retirement is to set aside money on a monthly basis, just like you did with your mortgage, so that you have the funds when those bills are due.

Property taxes won’t be the only taxes you will owe in retirement. Distributions from 401(k)s and IRA accounts will most likely be considered taxable income. Even your Social Security benefits may be taxable, depending on your overall income. It’s critical that you are withholding and paying the proper taxes so that you don’t get into a large tax bill situation. A competent tax preparer can help you with this.

3. Work With A Professional

Tax preparers aren’t the only financial professionals you’ll want to work with in retirement. A competent financial planner can make the difference between a retirement marked by fear and stress (like the 49% of Americans mentioned previously) and one of confidence.

The closer you get to retirement, the more you’ll find investment advisors who want to work with you and manage your money for you. Yes, it’s wise to have a professional help you with your investments, but that isn’t enough. You need a financial professional who will not only manage your money but help you manage your entire financial life as well. 

We at Balboa Wealth Partners will help you develop a comprehensive financial plan that includes your short-term and long-term goals, a sustainable budget, and a general road map to help you navigate retirement. To learn more about what it’s like to work with a professional who cares more about your life than your investments, contact us at 949-445-1465 or jgilbert@balboawealth.com to set up a no-obligation conversation.

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With nearly three decades of industry experience, he has worked as both an advisor and executive-level manager, partnering with and serving a diverse range of clients. Specializing in serving high- and ultra-high-net-worth families, Jeff aims to help clients achieve their short-term and long-term goals, worry less about their finances, and focus more on their life’s passions. Based in Orange County, Jeff works with clients throughout Southern California as well as Arizona, Oregon, and Washington. To learn more, connect with Jeff on LinkedIn or email jgilbert@balboawealth.com. 

Advisory services provided by Balboa Wealth Partners, Inc., an Investment Advisor registered with the SEC. Advisory services are only offered to clients or prospective clients where Balboa Wealth Partners and its Investment Advisor Representatives are properly licensed or exempt from registration.

Securities offered through Chalice Capital Partners, LLC, member FINRA, SIPC.

Balboa offers advisory services independent of Chalice. Neither firm is affiliated.

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(1) https://www.aarp.org/retirement/planning-for-retirement/info-2019/retirees-fear-losing-money.html

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5 Ways To Prepare For A More Affordable Retirement

By Jeff Gilbert

Retirement is expensive. That’s one thing everyone can agree on. But what if there were steps you could take now to actively reduce the amount of money you’ll need later on? That’s exactly what we’ll talk about today. Ready? Here are 5 ways to prepare for a more affordable retirement. 

1. Pay Off Your Mortgage

Your mortgage is arguably your largest recurring expense in retirement. Getting rid of this payment before you enter your golden years can significantly reduce the amount of money you need each month. 

Start by calculating how much extra money you could throw toward your principal. Could you make one extra payment every few months? What about one extra payment a year? 

If there’s not a lot of wiggle room in your monthly budget, consider cutting down on discretionary expenses. Or earmark any extra money you get from bonuses or tax refunds for your mortgage. Every little bit counts.

2. Downsize Or Relocate

If you’re still living in the same house where you raised your family, there’s a good chance you don’t need all that space in retirement. Downsizing may seem extreme, but it’s a quick way to reduce your long-term retirement costs, lower utility bills, and pay off debt. Plus, a one-story house with a smaller yard may be easier to keep up with as you age. 

If you’re not tied down to your current city, take it a step further by relocating to an area with a lower cost of living. You might be surprised by how much further you can stretch your retirement dollars. For example, a $1 million nest egg lasts around 13 years in California, but 23 years in Mississippi. (1)

3. Travel During The Off-Season

Ask 50 people what they plan on doing in retirement, and I’m sure most of them will say travel. Whether it’s traveling across the country to visit the grandkids or traveling around the world to visit the Eiffel Tower, it’s on everyone’s list—and for good reason. After working 30+ years, you deserve to go to all those places on your bucket list. 

But if you want to stretch your travel budget even further, consider traveling during the off-season. It has many perks. Not only are airlines, hotels, and activities cheaper, but you beat the crowds too! Plus, you have extra money left over to jump-start your next trip. Sounds nice, right? 

4. Consider Long-Term Care Insurance

It’s estimated that nearly 70% of people turning 65 today will need some type of long-term care during retirement. (2) This could be anything from a home health aide (which costs an estimated $4,290 a month) or a private room in a nursing home (which costs an estimated $8,517 a month). (3) Unfortunately, these outrageous costs often result in financial plan failures for 32% of households with a $1 million net worth. (4)

So, what do you do? We recommend buying a long-term care insurance policy. While Medicare covers costs for acute illnesses, long-term care insurance fills in the gap by covering personal costs for health home aides, assisted living facilities, nursing homes, and more. 

Studies show we’ll all have long-term care expenses at some point. Insurance helps preserve your nest egg and fill in the gaps where Medicare falls short.

5. Delay Social Security

The average life expectancy is 84.3 for men and 86.6 for women. If your health and family history indicates that you may live this long (or longer), delaying Social Security until age 70 could earn you thousands of more dollars in retirement.   

For example, the chart below shows how much your monthly Social Security payout would be if your estimated payment was $2,000 at full retirement age and you claimed benefits at age 62, 66, and 70.* 

If you start collecting benefits at this age… your monthly payout will be this much…
62 (reduced benefits) $1,500
66 (full benefits) $2,000
70 (increased benefits) $2,640

*Assuming a full retirement age of 66

According to this example, you earn $1,140 more a month if you wait to claim benefits at age 70 instead of 62.  

How We Help You Prepare For A Secure Retirement

As you can see, there are many ways to prepare for a more affordable retirement. We hope that you’re able to implement some of these strategies today, so you can live out your retirement dreams later on. 

At Balboa Wealth Partners, we’re passionate about helping you live your ideal retirement life. If you’d like to chat with a financial professional about your current situation, we invite you to schedule a no-obligation conversation today. During this meeting, we review your current retirement plan, answer any questions you may have, and help you create a financial road map that leads to success. To get started, give me a call at 949-445-1465 or email me at jgilbert@balboawealth.com.

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With nearly three decades of industry experience, he has worked as both an advisor and executive-level manager, partnering with and serving a diverse range of clients. Specializing in serving high- and ultra-high-net-worth families, Jeff aims to help clients achieve their short-term and long-term goals, worry less about their finances, and focus more on their life’s passions. Based in Orange County, Jeff works with clients throughout Southern California as well as Arizona, Oregon, and Washington. To learn more, connect with Jeff on LinkedIn or email jgilbert@balboawealth.com. 

Advisory services provided by Balboa Wealth Partners, Inc., an Investment Advisor registered with the SEC. Advisory services are only offered to clients or prospective clients where Balboa Wealth Partners and its Investment Advisor Representatives are properly licensed or exempt from registration.

Securities offered through Chalice Capital Partners, LLC, member FINRA, SIPC.

Balboa offers advisory services independent of Chalice. Neither firm is affiliated.

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(1) https://finance.yahoo.com/news/long-1-million-retirement-last-090000023.html

(2) https://longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html

(3) https://www.genworth.com/aging-and-you/finances/cost-of-care.html

(4) https://www.businessinsider.com/10-things-to-know-about-long-term-care-2016-9

The Top 4 Retirement Regrets

The closer you get to retirement, the more excited you probably get. It’s a milestone we often start thinking about as soon as we enter our working years, and many of us relish the idea of slowing down, changing pace, and finally having all the time we need to pursue passions and invest in relationships. But what happens when you get to retirement and it’s not all it’s cracked up to be? Have you considered the idea that you could regret your decision to retire? Here are four common retirement regrets to keep in mind as you prepare for your golden years.

1. Retiring Too Soon

Whether you were forced to retire earlier than planned or you made the decision on your own, retiring before you are ready can cause plenty of regret. In fact, 30% of retirees admitted they would gladly re-enter the workforce if a job became available. (1)

If you decided to retire prior to turning 65, you probably had to find pre-Medicare coverage, which is often quite a bit more expensive than an employer-sponsored plan. By waiting until you turn 65, you will qualify for Medicare and not be forced to obtain other health insurance to cover you during the transition.

Financially, the earlier you retire the fewer years you have to save and the longer you will have to live off of your money. If your finances are keeping you up at night or you are living at a lower quality of life than you are used to, you may regret retiring when you did.

Working even a few years longer can provide these valuable benefits:

  • More time to accumulate savings
  • More years to apply towards Social Security which could result in a larger benefit amount
  • Health insurance coverage through your employer
  • Purpose and identity
  • Stronger mental and physical health (2)

2. Not Creating a Social Security Claiming Strategy

Social Security benefits can be claimed anytime between ages 62 and 70. However, the timing of when you choose to collect these benefits will impact the amount of benefit you receive.

Full retirement age (FRA) changes based on the year you were born. For those born in 1937 and earlier, FRA is 65. After 1937, two months is added each year until FRA becomes 66 for those born between 1943 and 1954. Starting in 1955, two months a year is added again until the FRA becomes 67 for those born in 1960 or later.

If you wait until you reach full retirement age to begin collecting your Social Security benefits, you will receive your full Primary Insurance Amount, which is the full benefit that you have earned, but if you choose or are forced into an early retirement, you will receive a reduced benefit. Your basic benefit is reduced a fraction of a percent for each month you begin receiving benefits prior to full retirement age, up to 30%.

3. Overspending in the First Years of Retirement

Even if you have a solid nest egg saved to carry you through retirement, you still need to exercise financial discipline to ensure your money lasts. Dipping too deep into your savings as soon as you retire could make or break your retirement dreams. Instead, create a realistic retirement budget, factoring in travel or hobbies, then work with your advisor to find a withdrawal rate that will stretch your money for as long as possible.

4. Not Having a Retirement Bucket List

Free time is a major perk of retirement, but when you go from working full-time to not working at all it can be a shock to your system. Saying goodbye to your career, your colleagues, and your routines can cause anxiety and depression. But if you plan ahead to fill your time with activities that will fulfill you, you can avoid the negative emotions that can come with this life transition.

Do you want to know what activities result in a fulfilling retirement? A BMO study on retirement planning reveals that retirees who stayed busy and active, pursued independence, and volunteered their time were satisfied with their life. (3) One study of retirees even found that those who volunteered 200 hours a year were less likely to develop high blood pressure. (4) The takeaway here is to be intentional about your time in retirement. Make a list of things you want to do, places you want to go, and people you want to spend time with, then strategically map out the details so your goals become a reality. It’s easy to lose your identity when you say goodbye to your career, but filling your time and venturing out into new territory will help you build a new identity and give you something to look forward to.

Live With No Regrets

You probably don’t want to celebrate the incredible milestone of retirement and then wake up the next day wondering if you made the right decision. Deciding when and how to retire is one of the most difficult decisions you will make in life, but you don’t have to make the hard choices alone. If you want to avoid facing these common regrets when you retire, reach out to us for a no-obligation conversation by calling 949-445-1465 or emailing jgilbert@balboawealth.com.

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With nearly three decades of industry experience, he has worked as both an advisor and executive level manager, partnering with and serving a diverse range of clients. Specializing in serving high and ultra-high net worth families, Jeff aims to help clients achieve their short-term and long-term goals and to worry less about their finances and more on their passions in life. Based in Orange County, he works with clients throughout Southern California, as well as Arizona, Oregon, and Washington. To learn more, connect with Jeff on LinkedIn or email jgilbert@balboawealth.com.

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(1) https://www.cnbc.com/2014/08/21/retirees-go-back-to-work.html

(2) http://www.medicaldaily.com/planning-retiring-early-consider-these-5-health-risks-first-247669

(3) https://commercial.bmoharris.com/resource/wealth-management/whats-your-retirement-game-plan/

(4) http://psycnet.apa.org/journals/pag/28/2/578/?_ga=1.177767717.1281536077.1488342343

How Much Risk is in Your 401(k)?

We frequently hear about how important and necessary a 401(k) plan is for retirement, but with such a beneficial investment opportunity comes inherent risks, from choosing appropriate funds to understanding hidden fees. When was the last time you analyzed your 401(k), or even logged into your account? Do you know how much risk is in your 401(k)?

What Makes a 401(k) Unique?

A 401(k) plays a unique role in your financial planning and is different from other accounts in a few ways. First, you likely receive your 401(k) from an employer who may match contributions, encouraging you to contribute a larger percentage of your income. You can also choose how and where your money is invested, your contributions are made on an after-tax basis and, at the maximum, you and your employer can contribute jointly up to $55,000 (for 2018) or $61,000 for those aged 50 or older.

However, a 401(k) does require maintenance. Your company provides a way for you to save for retirement, which is great, but their job is not to help you manage the risk in your account, give investment advice, or insight into fees you may not be aware of.

So what can you do to ensure your 401(k) is working hard for your financial future and isn’t carrying too much risk?

Risks To Avoid

Let’s look at a few risks 401(k)s are susceptible to and ways you can avoid them.

Improper Allocation

401(k) values typically rise and fall with the stock market, meaning they don’t offer protection from losses. If the stock market does well, so does your 401(k). But if it drops, so will your retirement account, no matter how soon you need the money. The key to avoiding this risk is to maintain the proper asset allocation for your risk tolerance level. Examine the investment options offered by your company and choose the ones at your risk level, being sure to diversify your choices accordingly.

Turning On Autopilot

Most companies enroll their employees at a 3% contribution rate, but 3% will not get you to your retirement goals. Likewise, many plans choose allocations for you, but are those really the best choices for your situation? Because of the many decisions that come with starting and managing your 401(k) account, many people employ a “set it and forget it” method, neglecting to review its progress and regularly rebalance. In fact, 25% of workers with a 401(k) have never made adjustments to their account. (1) In a matter of a few years, those who neglect their 401(k) may realize that their account no longer reflects their risk tolerance, time horizon, and needs. Take the time to create a 401(k) strategy, check in with your account to rebalance, and increase your contribution rate as your financial situation allows.

Investing Heavily In Company Stock

If you have the option to purchase employer stock, be sure to exercise caution. Do you really want so much of your financial well being tied up in one company? This is important because if your company performs poorly it will depress the stock price and could lead to layoffs as well. There go your portfolio, your income, and your health insurance all at once. Sadly, many people have experienced this. Back in 1999 when Enron filed for bankruptcy, more than $1 billion in employee retirement savings simply evaporated. Many Lehman Brothers employees experienced the same thing as well. (2)

Ignoring Fees

According to a survey commissioned by retirement investment advisory firm Rebalance IRA, nearly half of investors don’t think they pay any fees in their retirement accounts, and 19% believe their fees are less than 0.5%. But the reality is, you are likely paying closer to 2% or 3%. Depending on the account and company, mutual fund fees can be staggering and consume a large chunk of your gains. On top of that, there are many undisclosed costs (such as transaction fees, bookkeeping fees, finder’s fees, etc.) that eat away further at your retirement dollars. By choosing investments with lower fees, you may be able to achieve higher returns.

Lack of Investment Guidance

The average 401(k) plan offers 25 investment choices. While options are good, sometimes too many can confuse and overwhelm investors. Without sufficient investment knowledge, employees may choose a little of each and end up with a portfolio that isn’t diversified or appropriately aligned with individual needs.

Getting On Track with Your 401(k)

The question is, do you really know how fast your 401(k) is careening down the investment highway towards retirement? Are you on track toward your retirement goals or do your strategies need adjusting? You have worked hard your entire career to save for retirement; now is not the time to be passive about protecting your nest egg.

Let us help you create a retirement strategy that can get you where you want to go when you want to get there. We can help you understand how your employee retirement plan works, how to optimize benefits, and coordinate your plans with your other retirement and investment strategies. To get your 401(k) on the right track, complete a complimentary risk assessment here and give me a call at 949-445-1465 or email me at jgilbert@balboawealth.com

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With nearly three decades of industry experience, he has worked as both an advisor and executive level manager, partnering with and serving a diverse range of clients. Specializing in serving high and ultra-high net worth families, Jeff aims to help clients achieve their short-term and long-term goals and to worry less about their finances and more on their passions in life. Based in Orange County, he works with clients throughout Southern California, as well as Arizona, Oregon, and Washington. To learn more, connect with Jeff on LinkedIn or email jgilbert@balboawealth.com.

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(1) https://www.cbsnews.com/news/401ks-why-set-it-and-forget-it-can-be-a-disaster/

(2) https://www.fidelity.com/viewpoints/stock-plan-mistakes