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Clarity Financial Planning Services is an advocate for your financial future who takes a holistic approach to your needs and goals.

Deciding When to Claim Social Security Isn’t a Guessing Game

The summation of a Bloomberg article that states that many Americans opt to receive Social Security benefits at the wrong time may be confusing: “Most retirees should wait longer to access their benefits, researchers find. Some should claim them sooner.”

Why does this advice seem to be contradictory? Because there is no one rule for claiming Social Security. It really depends on you and your situation.

You cannot guarantee you’ll live to 100 and beyond but if you have clear evidence that you may not live well into old age, perhaps you shouldn’t wait. If you are healthy and robust and think you will live well into old age, perhaps you should wait.

But it isn’t just a guessing game. There are other factors to consider, such as your marital status. And beyond that, if you are married, do you make more or less than your spouse?

The Bloomberg article discusses a study which found that participants’ decisions about when to start receiving social Security benefits seemed random. That might make you suspect that people just don’t know enough about Social Security and that it is an issue of financial literacy. And while there are people who do not realize that they are locking in a lower rate by taking benefits in their 60s, the study found that:

“…affluent and educated retirees are more likely to make a mistake than are poorer and less-educated ones. Rather, the problem is that the ideal claiming decision can be very difficult psychologically. Balancing your savings with Social Security means, in effect, betting on when you are going to die.” Something that undoubtedly makes people uncomfortable.

Rather than become preoccupied with the very end of life, why not ask as Fee-Only financial planner to help you find a way to maximize your Social Security benefits and other resources to make the most of your golden years?

Spending on Little Luxuries Can Add Up…to More Happiness

In “The Personal Finance Industry is a Scam,” a writer for GQ discusses her thoughts on why “Suze Orman’s rant against coffee is the latest in cable-news advice that puts the blame for an increasingly unequal financial system on individuals.”

The writer recalled meeting Orman years earlier as an unpaid intern saddled with heavy law school debt. Orman told her not to worry about the student loan did since it didn’t affect her credit score. The writer found this advice to be disappointing, as she was hoping to hear something that would help her get on firmer financial footing. Paying off student loans affects an individual’s purchasing power and when many individuals have a lot of student loan debt, it affects the economy because those people cannot spend the money they must dedicate to student loans.

An investment strategist who writes for MarketWatch riffed on the GQ article, adding the kind of advice that the writer of the original article might have found useful was a young person starting out: “Buy all the coffee and avocado toast you want — but skimp on your house and car.” Instead of promoting the idea that the small luxuries add up, the writer thinks that you should spend on small things that make you happy in the moment but economize on big-ticket items. Rather than trying to keep up with appearances with a big house or car, you could spend modestly in those areas and leave room in your budget for the slightly expensive haircuts that make your feel your best every day or the avocado toast you really enjoy.

Some of these same principles can be found in Happy Money, a book that Clarity Financial Planning recommends; the book focuses on how to spend money on yourself and your family in ways that make you happier.

The Market Watch article includes a list of questions to help you assess your financial stability because if your needs are being adequately met, it is okay to consider how to spend you make yourself happier as opposed to doing just what all the experts say.

Remember that a Fee-Only financial planner is an expert who works directly with you so they don’t have to give one-size-fits-all advice.

Fee-Only Financial Planners Have Independence

On July 4th, the United States celebrates its Independence Day. And if you remember anything from history class, you know that the United States did not complete the process of becoming independent all in a day. It took time but July 4th was chosen to mark the occasion after there was a vote for independence on July 2.

While the founding of NAPFA (The National Association of Personal Financial Advisors) may not have had the same impact on the world stage as July 4th, things weren’t the same after a discussion about how to change things for the better in the field of financial advising began at a meeting of the Society of Independent Financial Advisors in 1982.

According to the NAPFA website:

“These independent-minded advisors did not yet have a name for what they were doing, but they knew that accepting commissions for the sales of financial products was putting them in direct conflict with the best interests of their clients. How could they serve the client first, yet have their compensation vary by what they sold to the client?

These planners began to exchange ideas about how to provide high-quality, long-term financial planning and access to a full range of investment and insurance products—but without the influence of commissions.”

What started with 125+ professionals is now an organization of over 3000 financial advisors dedicated to providing their clients with service that meets needs without having to work within the constraints of commissions.

This Independence Day, we want you to think about what it means to get advice from an independent financial planning professional. Financial advisors that work for brokerage firms are beholden to the firm and get commissions for getting you to buy certain financial projects.

As a Fee-Only financial planner, Claire Emory of Clarity Financial Planning proudly honors the National Association of Personal Financial Advisors’ (NAPFA) Fiduciary Oath.Clarity Financial Planning is here to offer financial advice that best fits you, your situation, and your goals so you can achieve your own financial independence.

Talk to a Financial Planner Before Getting a Wedding Loan

The Washington Post reports that “Couples are taking out loans to pay for their weddings.” And while one person interviewed found that it wasn’t all that difficult to get a personal loan to pay for an engagement ring (adding that it might not be the only loan he takes out for his upcoming nuptials), he doesn’t question this decision because the loan meant he didn’t take away from his savings or investments. In his mind, a loan makes sense because it leaves his savings intact.

While that interviewee felt okay, “Financial planners say they’ve seen an uptick in clients who are tempted to take out loans to cover wedding costs. But, they say, they try to steer clients toward less expensive options, or to encourage them to put off the reception while they save.”

More people are getting married later in life and couples necessarily don’t expect their parents to pay for a wedding but the article gives examples of people and their families taking out loans for weddings and related expenses.

No one is saying you can’t have a wedding at all. However, you may want to think about ways to have a wedding or a celebration that does not involve taking out a loan. One couple who says they have no regrets has fond memories of their big day and told the Post that they are making monthly payments and want to pay off their loan before the two-year time period ends.

This increase in wedding loans comes a time when “The average cost of an American wedding is rising, according to financial advisers. At the same time, Americans have more student loan debt than ever before — nearly $1.5 trillion of it. They are saving less and spending more on basics such as housing, food and transportation.”

Whether you have plenty of money to spend on a wedding or if you are just throwing caution to the wind because you really want the wedding of your dreams, talk to a financial planner. A financial planner is not trying to put a damper on the joy of your big day but rather help to make sure you and your future spouse have the financial foundation to build the life you want together.

Fathers Sue for More Parental Leave

Father’s Day has just past and once this holiday has ended, many fathers return to business as usual at home and on the job.

We once wrote about that “Fathers Are Reluctant to Take Paternity Leave” and while that may still be the case for some, things are changing. The Washington Post recently reported on “How a dad’s lawsuit against JP Morgan Chase could lead to more parental leave elsewhere” and while this is the first such case in recent years, it is a very high-profile one. JP Morgan Chase will end up paying $5 million for a class action lawsuit in which fathers said they did not get the same kind of parental leave that mothers did.

While those employees wanted the same leave that mothers got, “…many [employers] don’t offer any to new fathers — a survey by the Society for Human Resource Management found that just 29 percent of organizations offer some kind of paid leave to dads.”

And some employers have taken a tiered approach, offering different leave based on whether or not an employee was considered a primary or secondary caregiver in order to accommodate all kinds of families including same-sex couples and those who adopt. This too became problematic as those primary and secondary designations were not as neutral in practice as they seemed in theory.

In the future, employers may offer gender-neutral parental leave policies that do not even use primary and secondary designations. But one expert warned that offering equal parental leave to all employees may lead employers to split the different between what a mother would traditionally get and what a father would get by cutting down on caregiving leave for all.

For this reason, financial planning will ensure that you have your finances in order so that you have a savings cushion in place for when you need caregiving leave.

Celebrate Your Financial Planning Milestones

This is the time of year when we hear about graduation and moving up ceremonies. People gather to congratulate students of all ages as they move forward from one grade to another or as they make a  leap from one part of their schooling to start anew in junior high school, high school, college, or the work world. And while you may hear some people ask why is there a ceremony to mark a move from Kindergarten to first grade or from 5th grade to 6th grade, you have to consider that these young kids are moving into unknown territory and will need the memory of being celebrated as they progress.

Have you considered celebrating your own financial milestones in this way? While we don’t suggest you buy yourself gifts or spend money on a dinner, you do need to mark positive changes in your financial life so you have the motivation to keep going. Why not find a small way to celebrate when you:

  • Get your estate planning documents in order
  • Increase your 401(k) contributions
  • Pay off a credit card
  • Reach your savings goal for your emergency fund
  • Get long-term care insurance
  • Organize crucial financial planning documents in a binder
  • Put necessary financial planning documents in a safety deposit box
  • Take a risk and sell a stock
  • Take a risk and invest
  • Open a 529 account for your child’s education

It is important to pat yourself on the back for taking small steps to reach your financial goals as well congratulating yourself on really big financial moves. Just as we encourage children through their educational journey, we need to encourage ourselves on the road to greater financial stability. Building wealth and letting go of  harmful financial habits is no small task so it is important to recognize how far you have come on your journey.

Don’t Make Rash Moves if You’re Forced Into Retirement

We talk a lot about retirement planning: taking time out to think about your financial goals and planning out how to reach them. But in “Forced to retire? Here’s what to do” Marketwatch covers a scenario that you may not be able to anticipate: being forced into retirement before you are ready.

The article advises that you do not do anything rash like selling investments right after you hear the news that you must retire. This doesn’t mean that you do not need to examine your assets but rather that you shouldn’t just sell things off too fast before taking time to consider your financial situation:

“Before you sell stock, withdraw from your tax-advantaged retirement account or impulsively claim Social Security now rather than wait a few more years, formulate a comprehensive, long-term strategy. Review all your assets and liabilities in a clearheaded manner.”

This is advice for those who are healthy and who are not in financial straits. However, whether you have an adequate financial cushion or you know your money will run out soon, you should seek help. A Fee-Only financial planner can help you figure out what you need to do when you are forced into retirement before you were anticipating.

Some people will never experience the unexpected jolt of being forced into retirement but having plans in place and working on financial planning means you have a framework to change or adapt no matter what happens.

And while people who are forced into retirement have not planned for it, they can think on their feet instead of panicking. If what you are being offered to leave doesn’t seem enough, ask questions to see if there is more you can get from the organization that is forcing you to retire.

The Debate Over Aretha Franklin’s Estate

Aretha Franklin is the latest celebrity to have her estate in the news because of a lack of estate planning documents and unclear instructions. Not long after the singer’s death, it was reported that she had left no will. Then last week, news surfaced that Franklin had indeed left a will (Did Aretha Franklin Leave Her Will Under the Couch Cushion?).

In an article about the newly found documents, The New York Times reported:

“Since Aretha Franklin died in August, her family has operated with a simple understanding about her estate: Because she was believed to have had no will, Franklin’s assets and income would be divided equally among her four sons, in accordance with Michigan law.” (Aretha Franklin’s Sons Debate Whether New Will Is Valid)

The fact that there was more than one will, that they are handwritten, and the dates they are believed to be written will all come into play. This, plus IRS claims on the estate, will complicate matters a great deal.

The truth is when someone has a will drawn up by a professional and it is not left under a couch cushion, there can be complications. Still, wouldn’t you prefer to clearly outline how you want your assets distributed instead of leaving your heirs to fight and possibly see much of the estate eaten up by legal fees?

While Franklin’s estate made headlines, many other people’s lack of estate planning will not make headlines but it may cause untold grief to the people they leave behind. You can work with a Fee-Only financial advisor to manage your money and seek legal counsel on execute documents such as wills, trusts, and power of attorney.

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