Pre-Retirement

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Financial Efficiency 

Even savvy investors can find ways to improve. 

One of the most common questions I get from clients when they first come in is, "How can I be more efficient with my money?" Usually followed by something like, "Am I doing everything I can to be financially successful?"

Typically these are people who are somewhat savvy with their finances, or at least take an active interest in their money. Maybe they listen to Dave Ramsey or other finance podcasts, or have read a couple of personal finance books. They are paying down any debts they might be carrying and saving towards a retirement plan. Most have even put together a budget of some sort.

Sometimes these are clients who have gotten to a point in their life where they have a good bit of expendable income, and before they spend it, they want to make sure they don't need to be doing anything else in terms of a financial plan. These are usually great clients and easy to work with. Other times, they are just coming out of a graduate program or doctorate, and want to know how to pay down the loans, while also saving and still having somewhat of a life that doesn't involve too much ramen or mac & cheese. Again, these are great clients to work with.

I love working with these types of people, as it's an interesting and enjoyable challenge to find new and creative ways they can make changes to the already pretty solid financial plan they're following. That's the beauty of this job - even someone who knows a lot and is doing all of the right things can always make a couple of small changes that become significant later on.

You might be thinking, "But I know quite a bit about my finances, have a great budget, I really doubt you could find anything different that I need to be doing." Is it a possibility? Sure. But likely? No. Here's why. Have you ever heard a recording of your own voice, and it doesn't sound the way you think you sound? Getting a third-party view of your finances can be like that. It doesn't mean you're doing anything wrong, but a neutral party can look at things differently and think of things you probably haven't. And if you are making some small mistakes here and there, a third party can help you spot and correct them.

Let me give you an example. I have a divorced client who was doing a number of good things for herself and her kids. However, upon closer investigation into her financial life, I discovered that the beneficiary on one of her life insurance policies had not been updated since the divorce. Her ex-husband, instead of a trust for her children, was the designated beneficiary. It's a simple change, and one that would make a huge difference to her family in the event of a tragedy.

Another example is a client who's an accountant and made too much money to contribute to a Roth IRA. This person had been contributing to what he thought was a college savings account, but upon review, I discovered that it was actually a Roth. This is a very smart and diligent client, but if this had gone on, it could have meant substantial IRS penalties.

The point is that there are numerous ways to review your plan and identify ways to be more efficient. Being investigative and questioning why you are doing what you are doing is a great first start. Again, if you aren't financially savvy, and even if you are, it's always a good idea to review how you could be more efficient. A good planning team can help your finances run smoothly, and like a well-oiled machine. We're always ready to help, so call us today.

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