How To Be Your Own Economic Quarterback

You Need To Be The MVP Every Year, Financial Planner Says

After a lifetime of earning and saving, one might expect a comfortable and financially secure retirement, especially with a reliable financial advisor – right?

“Life is rarely that simple or black-and-white and, unfortunately, neither is the financial realm,” says Bryan S. Slovon, founder and CEO of Stuart Financial Group in Greenbelt, MD ().

“Perhaps the arithmetic of personal wealth should be much simpler, but like it or not, the rules of economics are riddled with fine print, unexpected or inadequately explained conditions, and loopholes.”

Further complicating matters are various professionals in the financial industry. Whether or not a professional means well, the fact remains that many are actually trying to sell products, he says.

“It’s worth reflecting on where your advisor is coming from,” Slovon says. “If they are not fully independent – as in not working for a large institution – their advice may be biased toward sales.”

Ultimately, each person must be his or her own best financial advocate. It may take a team of professionals in various fields to provide retirees with the good life, but individuals need to be their own most valuable player for their well-being. Slovon reviews basic measures to quarterback your life to financial wellness.

•  Listen to your doctor … so to speak. If you want to enjoy your golden years, good health is arguably the most important step – and it’s cost-effective.

“More specifically, doctors often tell patients that they can be of service only in as much as patients are doing their part for good health,” Slovon says. “A healthy diet, exercise, regular doctor’s visits, etc. are necessary. These things help provide good health. A similar kind of vigilance is required if you want to fully enjoy your money in retirement.”

•  Audit your current and future expenses; spell out your plan. If you don’t have a plan for your money then you’re just hoping for things to work out. You can do better than that, even though changes in your plan will likely occur at some point. The most basic aspect of a financial plan includes understanding your current budget, which could be compared to expenses expected in the future. The more technical side of things, such as how to save on taxes and make your money go further, would benefit from analysis by a truly independent financial advisor.

•  Focus on your taxes, and perhaps tax-favored investments. An important part of understanding your budget, and making it work better for you, is getting reliable professional analysis on your tax situation. You may be paying much more than is necessary. If you are expecting to retire in the near future, you may especially benefit from analysis of your tax budget.

Also, ask about investments that are tax-exempt and tax-deferrable. These include municipal bonds and certain money market funds, which provide a way to grow money that’s exempt from federal taxes.

“Most of us give our lives to our work and families our entire adult lives,” Slovon says. “If you’re nearing or in retirement, it’s time to focus on you. That means you’ll need at least some professional financial help. However, you are the best person to oversee your own economic fate.”

About Bryan Slovon

Bryan S. Slovon | Founder, CEOBryan Slovon is the founder and CEO of Stuart Financial Group, (www.stuartfg.com), a boutique financial planning firm exclusively serving retirees and soon-to-be retirees in the District of Columbia metro area. He is a financial planner specializing in retirement planning and wealth preservation to a select group of clients. He currently holds his Series 65 license and is a Registered Financial Consultant as well as a Comprehensive Wealth Manager offering investment advisory services through Global Financial Private Capital, an SEC registered investment advisor.

The quest for financial independence

7 Steps for Addressing ‘Bag Lady Syndrome’ –
a Fear of Losing Financial Independence

Study Finds Even Wealthy Women Worry About
Becoming ‘The Best Dressed Bag Lady in Their Community’

Nearly half of all American women, no matter their background, share a fear that may seem odd given the wealth of some: They are afraid of losing their financial independence, otherwise known as “Bag Lady Syndrome,” according to a 2013 study.

Of those who harbor BLS anxiety, 60 percent were the primary breadwinners for their households, according to the Allianz poll of 2,200 women ages 25 to 75.

“Financially, women’s needs are different from those of men, and the financial industry isn’t meeting them,” says Lance Drucker, CEO and president of the New York City-based Drucker Wealth Management, (www.DruckerWealth.com).

“Women typically live longer than men, so they need more retirement savings.  Further compounding the problem is the fact that, in many cases, women are paid less for the same job as men. Finally, many have fewer earning years because they dropped out of the labor force for a time to have and raise their children.”

Drucker, author of “How to Avoid Bag Lady Syndrome (BLS): A Strong Woman’s Guide to Financial Peace of Mind,” offers seven action steps that women can do to address their financial insecurity:

•  Identify your pain as well as your goals. Answer the following questions: What keeps me up at night?  What worries me most about my money & my future? What do I want to do with the rest of my life? When can I afford to retire? Can I afford to stay retired? Can I travel, change careers, or go back to school?

•  Create a budget that includes fixed and variable monthly costs as well as one-time expenses. Based on your budget, start building a cash cushion that will cover six to nine months of fixed expenses. The ultimate goal of retirement planning is to create an income stream that is sustainable and will support your retirement needs.

•  Create a balance sheet of savings and investments. This includes your savings account, stocks, bonds, mutual funds, investment real estate, cash value life insurance, annuities, retirement accounts, individual retirement accounts, 401 (k) plans and other assets.  Then further break it down by pre-tax and post tax-accounts.

•  Review insurance coverage and needs. Are you supporting anyone else? Is there a need for Life Insurance?  Who will take care of you if you get sick?  Do you have Long Term Care Insurance? One mother can raise 10 kids, but 10 kids can’t take care of one mother… Younger and healthier women may be tempted to overlook the importance of this step, but failure to anticipate potential health issues can be very expensive.

•  Address your estate-planning needs. Do you have a will, a durable power of attorney or a health care proxy?  Have you updated your beneficiary designations on your retirement accounts?  Does it make sense to put your assets in a trust to avoid probate? Answers for these questions are important. 

•  Develop your investment strategy. Is there a purpose to your current investment approach, or are you just accumulating funds? We recommend something we call a “4 Bucket Approach to Purposeful Investing” that has been designed with the help of a Wharton Business School professor.

•  Hire a Coach. Studies have shown that those investors that utilize a high quality financial advisor feel more confident, optimistic, and significantly more likely to stick to their plan versus do-it-yourself investors. 

About Lance Drucker ChFC, CLU

Lance Drucker is CEO and president of NYC-based Drucker Wealth Management, a wealth management firm specializing in financial issues that affect women. He’s the author of “How to Avoid Bag Lady Syndrome (BLS): A Strong Woman’s Guide to Financial Peace of Mind” and offers resources at www.DruckerWealth.com to empower women to make smart financial decisions. He graduated from SUNY Binghamton with degrees in Accounting & Finance, and soon after joined the firm Drucker Wealth Management, founded by his father in 1959. He earned his Chartered Financial Consultant (ChFC®) designation in 1990 and his Chartered Life Underwriter (CLU®) degree in 1993, and in 2012, he received a Certificate in Retirement Income Planning from the Wharton School of Business. He is a multiyear winner of the 5 Star Wealth Manager Award, as well as a recipient of the Women’s Choice Award for Financial Advisors.  As a proud sponsor of the Wounded Warrior Project, Drucker organizes the Polar Bear Plunge fundraiser for the WWP every January & has participated in the Tough Mudder challenge, and Spartan Race, which has helped to fund more than $2 million dollars for wounded warriors.

Common Money Traps

Top 10 Ways People Go Broke
Self-Made Millionaire Shares Common Mistakes to Avoid

You don’t have to come from a wealthy family, have the next billion-dollar idea or work 18-hour days to become rich, says self-made millionaire Mike Finley.

“You don’t have to be extraordinary in any of the headline-grabbing ways; what you need is the self-awareness to avoid wasting money on short-term, retail-priced happiness,” says Finley, author of “Financial Happine$$,” (www.thecrazymaninthepinkwig.com), which discusses his journey to financial literacy and the principles and practices that allowed him to retire from the Army a wealthy man.

“Money used wisely can give you the financial security associated with the good life.”

Finley lists 10 of the most common money traps that lead to consumers going broke:

•  Make the appearance of wealth one of your top priorities by acquiring more stuff. The material trappings of a faux lifestyle, as seen in magazines and advertisements, are not good investments either financially or in long-term happiness. 

•  Work a job you hate, and spend your free time buying happiness. Instead, find fulfilling work Monday through Friday so you’re not compensating for your misery with expensive habits during the weekend.

•  Live paycheck to paycheck and don’t worry about saving money. Live for today, that’s all that matters. Have you already achieved all of your dreams by this moment? If not, embrace hope and plan for tomorrow. (Appreciating your life today doesn’t require unnecessary expenditures.)

•  Stop your education when someone hands you a diploma; never read a book on personal finance. Just about any expert will tell you that the most reliable way out of poverty is education. Diplomas shouldn’t be the end of learning; they should be a milestone in a lifetime of acquiring wisdom.

•  Play the lottery as often as possible. While you’re at it, hit the casino!Magical thinking, especially when it comes to money, is a dangerous way to seek  financial security.

•  Run up your credit cards and make the minimum payments whenever possible. Paying interest on stuff you really don’t need is a tragic waste of money.

•  When you come into some free money, spend it. You deserve it. By that logic, you’re saying that a future version of you doesn’t deserve the money, which can be multiplied with wise investments.

•  Buy the biggest wedding and the biggest ring so everyone can see just how fabulous you really are. Nothing says “Let’s start our future together” like blowing your entire savings on one evening.

•  Treat those “amazing” celebrities and “successful” athletes as role models. Try to be just like them whenever possible. As far as we know, there’s only one you the universe has ever known. Don’t dilute your unique individuality by chasing an image.

•  Blame others for your problems in life. Repeat after me: I am a victim. The victim mentality is an attempt to rationalize poor habits and bad decision-making.

“If you’re feeling uncomfortable with your financial situation, don’t just sit there in a malaise of ‘If only I had more money,’ ” Finley says. “Instead, use it as motivation for a better life; that’s why the discomfort is there.”

About Mike Finley

Like most Americans, Mike Finley was raised with no education in personal finances. Joining the Army out of high school, he realized he didn’t understand money management and began the task of educating himself. After 26 years in the service, during which he practiced the principles he learned, he retired a millionaire. Finley is the author of “Financial Happine$$,” (www.thecrazymaninthepinkwig.com) and teaches a popular financial literacy class at the University of Northern Iowa. He donates much of his time to additional groups, including Junior Achievement of Eastern Iowa and organizations serving veterans and current military personnel.