Saving – TGIF 2 Minutes with Kerrie Debbs, CFP

Difficult Spending Realities

*Please see footnote below for a CORRECTION to last week’s edition, TGIF 2 Minutes – Tax & 401k Infor for ALL Ages. Thank you to my astute readers!

On to this week’s edition:
So far, 2023 has been a decent year, even slightly better than decent, for the stock market and the short-term end of the bond market (total return).

When times are mostly good it becomes easier to feel comfortable spending more money or making major purchases. BUT –

as we are still in a fairly dire inflationary environment,
with longer-term consumer price effects still to be seen (up or down, but most likely UP)
and following over 12 months of Federal Reserve interest rate increases,

currently it makes sense to thoroughly think through – and take more time (perhaps a couple of years) – making major spending decisions.

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The question, “Why save and invest?” is one not emphasized nearly enough. Often, savers and investors – whether having accumulated millions of dollars or those just getting started – focus almost exclusively on the various investments themselves, without first and often taking a step back to establish the “WHY” of investing.

The WHY can vary greatly, which is the reason the question is so meaningful.

Just this week I heard about the show currently on Netflix called “How to Get Rich” (haha, I may have just lost a few readers who will jump to find out more about the show). But it is not the show that is the focus of this week’s edition of TGIF 2 Minutes but rather one of the ideas behind the show. The idea comes from the author and successful entrepreneur, Ramit Sethi. One of the key ideas Sethi emphasizes is the “rich life” we all may wish to attain.

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Looking Back On… Money & Therapy

Money and Therapy: two things that people may love or hate thinking about. However, among other things in life, money and therapy help.

About five years ago I read a must-read book for young and old, wealthy, or building wealth, married or single. Anyone who wants to have a “life” someday… or even have a life NOW. The book is called The Number* and was written by Lee Eisenberg nearly 15 years ago but reads like he wrote it yesterday.

Here are several of the chapters:

“Welcome To Numberland”
“Debt Warp”
“Alone At Sea”
“Covering Your Assets” (nice play on words)
“Night Sweats”
“Deep Breathing”
“Bottom Lines”

All of these topics could be covered in conversations with friends, or by reading The Number, explored in a therapy session… or all 3! I recommend all three (and the therapy session could be with your financial adviser – because a real financial adviser makes this conversation mandatory.)

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Champagne & William Shatner

Last week William Shatner – at 90, who knew?! – became the oldest person to achieve space flight. Completion of a 10-minute journey on the reusable New Shephard rocket, including four minutes of weightlessness, was cause for major celebration immediately afterwards.

But notable was that upon disembarking from the space capsule Shatner politely turned down taking part in the champagne shower amongst the crew, Blue Origin promotional people and members of the press.

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Quick 401k Tax Tip Video

From the January 2021 archives of TGIF 2 Minutes – a relevant 401k tax tip video. Remember, the 2020 tax filing deadline was delayed until MAY 17^TH, 2021. Considering this extra time, it is never too late to plan for the rest of 2021 and beyond. Enjoy this quick video.

Click the PLAY button above.

Thank you for watching, stay safe and TGIF!

*The 401k Trap: Contact me for a copy at kdebbs@msfsolutions.com*

PCL is The New Thing!

“Retirement” is so yesterday.

How about PCL instead? PCL = Post Career Lifestyle. It may turn out to be the way to go for a number of reasons.

First of all, “retirement” may be impossible to imagine if you are embarking on a first job or are early in a career. I mean… age 59½?? That age is nearly irrelevant and definitely forever in the future!
On the other hand, “Post-Career Lifestyle” feels way more attainable and easier to imagine. Think: someday… when I can have a lifestyle that is more balanced – on MY terms – somewhere between work and relaxing.

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Money, Therapy, and Life

From the Archives of 2016… updated for the “Coronavirus Life Experience”.

Money and Therapy. Two things that people may love or hate. However, among other things, money and therapy help.

Recently I finished a must-read book for all ages – wealthy or building wealth, married or single. Anyone who wants to have a “life” someday… or even have a life NOW. The book is called The Number* and was written in 2006 by Lee Eisenberg (long time editor-in-chief of Esquire magazine) but reads like he wrote it yesterday.

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The 401k Trap

The real title of this edition is: The 401k Trap – Have a 401k Strategy.

It has become clear that there is more to saving in a 401k than…simply saving in a 401k. Last year, amidst no travel and not being able to see clients and friends face-to-face, two colleagues and I took 5 months to write an actionable guide to the critical need – due to potentially higher taxes in the future – for a strategy around 401k saving TODAY. For Everyone. The name of the paper is: The 401k Trap.

For those who are just getting started saving in a company 401k or 403b, the strategies we suggest could make a huge difference in 10 years and beyond; for those who have been saving in a 401k for 15-20 years or more, a strategy may be even more urgent.

The key reason is taxes. It is true that no one knows for sure where tax rates will be in 5-10-20 years from today. But with history as a guide and the fact that tax rates on the federal level are near all-time lows, the conclusion can be drawn that tax rates will only be higher in the intermediate- and long-term future. This state of affairs will punish those who have done the hard work of saving large balances in pre-tax 401k and IRA accounts.

Here is the Table of Contents – please email me at kdebbs@msfsolutions.com for a copy of the paper.

Oh, How Times Have Changed!
Longevity
401k Today
Risk of Increased Government Spending

An Aging Population
Dirty Little Secret
Historic Tax Brackets
Surprise

The Earlier the Better
The Debt Clock
The Wake-Up Call

Bonus Checklist

Thank you for reading, stay safe and TGIF!

Biggest Losers

Upon recently personally experiencing the multiple shocks of:

Minimal amounts of people at rush hour in one of the typically busiest cities and train stations in the world,
Open parking spaces and empty parking lots at one of the busiest train lines in the world,
No lines at Starbucks in the typically busiest city in the world…

… I started thinking bigger-picture about who will be most deeply affected in the intermediate-term by the virus pandemic and the resulting slow-downs, shut-downs, cuts, and service eliminations. Near the top of the list of business types and job types negatively affected are (obviously),

Restaurants and their owners
Airlines
Commercial real estate property owners
Business conference managers
…the list goes on.

*New York Penn Station at the morning “rush hour”, October 2, 2020.*ation at “rush hour”

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Women, Men, Long Lives & Money

Married, Single, Divorced or Widowed – women tend to live longer than men. There are also new statistics of how mentally sharp and physically fit women stay longer into life. Why is this important? If you guessed that these facts mean that women need to save and invest more then you guessed right. Men AND women, please keep reading!

joyful adult daughter greeting happy surprised senior mother in garden — Women need to build an awareness of saving both on their own (married or not) and together with a spouse if married.

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