“Retirement, like any other important event, can be practiced,” wrote John Diehl in an April 2012 On Wall Street article. “It is highly recommended, in fact, so pre-retirees can make the back nine of their lives all they want it to be. More importantly, practice can help inform how ready someone is or isn’t for retirement and, if not, what they might do differently to prepare.”  

 Years before making an Olympic team, athletes first determine what sport they enjoy, what skills they possess and then work on perfecting those skills. Only after years of dedication may they find themselves representing their country at the Olympics. Retirement planning also starts years before the big event. You must determine your retirement expenses and should start planning your budget at least five years before you plan to retire to help you determine whether you’ll have what it takes – enough accumulated income – to actually afford retirement.

 The best test for determining if you are ready to retire is to practice living on your retirement budget for at least three months. If you struggle, look back through your budget and see which expenses you can cut. If your expenses are as bare as you can make them, you may want to look at working longer. Athletes reassess themselves after every win and every loss. Following a win, they record the things that went well so they can repeat them. After a loss, they revaluate what went wrong and make changes. Retirement, like all athletics, requires you to closely manage your skill sets – your income and your budget – so you can enjoy the game of life. If you don’t plan and practice now, your future may be limited.

 Contact your personal financial advisor, Jordan Dechtman at 303-741-9772, email him at Jordan@JordanDechtman.com or visit our website at www.JordanDechtman.com today for more information and coaching on how you can work on your skills and practice for retirement so you don’t enter the big game unprepared.

Begin by drafting a retirement budget. Estimate how much money you will need to meet your expenses and still have enough left to meet a standard of living you will enjoy. Remember to include food costs, mortgage payments or rent, utilities and transportation costs.

To help track your expenses, MoneyInstructor.com recommends gathering your entire bank and billing statements and receipts from the past three months (or keep track of all of them for the next three months). Your goal is to record every dollar you spend including credit, checking and cash. Once you have every expense recorded, divide your expenses into three categories: fixed essential, variable essential and non-essential.

Fixed expenses are expenses that are the same each month, such as rent or mortgage, car payments and car insurance. Variable expenses change each month and include car maintenance, gasoline, food, electricity and phone. Non-essential expenses include most of the things you don’t need, such as movies, magazines, dining out, gifts and snacks. Clothing can be labeled both essential and non-essential. Budget enough money just for the essential amount of new clothes (to replace things that are worn or no longer fit), but not the impulse buys you purchased just because something was on sale.  

Once you have all your expenses in writing, and separated into these three categories, it will be easier to see where your money goes, including potential wastes. After determining your expenses you can continue to work on building your budget, including examining your retirement income and potential big ticket expenses such as long-term care, health care and vacation or travel expenses, and eventually practicing living on your budget prior to retirement. If you need help tracking your expenses and creating your retirement budget, contact your personal financial advisore, Jordan Dechtman, at 303-741-9772, email him at Jordan@JordanDechtman.com or visit our website at www.JordanDechtman.com for assistance today.

1. Pick a point of contact. One sibling or other close relative should be in charge of communicating with doctors. This person should have a health care power of attorney for the parent.
2. Find a family-friendly primary doctor. An elderly parent may receive care from multiple specialists. With your parent, decide on one doctor to be the primary medical resource. Make sure reports from specialists are sent to the primary doctor. If you are caring for your parent from a distance, consider asking your doctor if he or she is willing to communicate via email.
3. Create a central storage place for vital documents, including medical records, Social Security number and health insurance policy information. In an emergency, you don’t want to be digging through decades of files to find what you need. Hard copies should be duplicated and stored in at least two fire- and water-proof locations. Digital imaging and storage services offer a convenient place to access files remotely.
4. Talk to your parent about long-term care insurance. Nursing home costs continue to rise faster than inflation and can quickly deplete your parent’s savings. If your parent is healthy enough to qualify, paying the premiums yourself can help safe-guard your savings from your parent’s health-care expenses in the future.
5. Discuss finances. The point-of-contact relative, or another relative equipped to deal with financial matters, should have a financial power of attorney. This person should know the location of key accounts and policies, and the names and phone numbers for key advisors.

A final word of advice: Don’t make promises you can’t keep. A parent who resists help can use emotional leverage to extract promises you’ll later find difficult to keep – like withholding information from other family members or vowing not to place the parent in a nursing facility. Discussing such issues ahead of time can help you and your family avoid these situations. If you would like help in creating a plan for caring for an aging parent, contact your personal financial advisor, Jordan Dechtman, at 303-741-9772, email him at Jordan@JordanDechtman.com or visit our website at www.JordanDechtman.com.

• 31 percent of students polled do not worry about debt, believing they can pay it back once they are out of school and earning a regular paycheck
• 23 percent of students polled choose to ignore overdraft penalties
• Less than half (46 percent) always keep records of their spending and receipts

Researchers agree children should begin learning money lessons early and that those lessons should be appropriate to the child’s age and development. For example, kindergartners learn how to identify and count currency and coins, so it’s a good time to start a piggy bank and, regardless of whether the money comes from gifts, an allowance or chores, to emphasize the concept of saving. Introduce new concepts every few years – how interest works around fifth grade, budgeting in junior high and the dangers of debt by the time they graduate from high school.

You can also encourage your child’s or grandchild’s school to place a greater emphasis on financial literacy and offer your help with extra projects or events that focus on money lessons. Groups like Boy Scouts or Girls Inc. often welcome help from adults in teaching children valuable life lessons. You can find a wealth of information and materials for teaching finances to kids with the Jump$tart Coalition – one of the founders of Financial Literacy Awareness Month.

We often view our legacy as tangible assets we leave behind for our children and grandchildren. Financial literacy is a legacy you can begin imparting today to prepare your loved ones for the monetary gifts you may leave them in the future. If you need help talking to your kids, grandkids or other family members (children or adults) about money, please feel free to call your personal financial advisor, Jordan Dechtman, at 303-741-9772, email him at Jordan@JordanDechtman.com or visit our website at www.JordanDechtman.com.

Given the incentives some companies offer their employees for purchasing company stock, it’s easy to see how quickly this stock can become a large portion of a 401(k) investment portfolio. How much employer stock should you hold in your 401(k)? That depends on your personal situation. Traditional pension plans are restricted by law from holding more than 10 percent of their own firm’s stock. There are no restrictions for 401(k) plans. If your 401(k) plan is only one part of a much larger retirement saving strategy that includes IRAs and other investments, a larger allocation of employer stock may be acceptable, depending on your holdings in those other accounts.

If your company’s stock constitutes a disproportionate amount of your total retirement assets, it may be necessary to sell some of your position to rebalance your account. Emotionally, that may be a challenge, so having a set investment plan with a specific threshold for your employer’s stock provides an objective rationale for rebalancing.

A regular review of your account can determine whether the amount of company stock you own has become overweighted. If your employer has contributed additional company stock to your 401(k) plan as a bonus or for other reasons, it may also be time for a review. Call your personal financial advisor, Jordan Dechtman, at 303-741-9772, email him at Jordan@JordanDechtman.com or visit our website at www.JordanDechtman.com today to schedule an appointment.

The IRS is not sending reminders of your tax obligation, so be sure to refer to your 2010 tax return, form 8606, line 25A to determine the amount of income you’re required to pay taxes on when you file this year. Most taxpayers will report this income on line 16B of form 1040.

Even if you did not take advantage of this opportunity in 2010, Roth IRA conversions may still be a good idea if you meet the income requirements. For 2012, if you are married or widowed and file a joint tax return, you must make less than $179,000 a year to qualify for a Roth IRA. If you are single or married filing separately, you must make less than $125,000 a year to qualify. Contribution limits and “catch-up” provisions are the same as traditional IRAs, but contributions to Roth IRAs are made with after-tax dollars and are not tax deductible. Also, earnings from a Roth IRA will not be taxed when you make qualified withdrawals, provided you have reached age 59 ½ and have held the account at least five years. There are no age limits on contributions and no required minimum distributions; however, restrictions on distributions do apply.

Roth IRAs share many of the same qualities as Traditional IRAs, but even the slightest differences can make all the difference in the world when deciding which is best for you. Contact your personal financial advisor, Jordan Dechtman at 303-741-9772, email him at Jordan@JordanDechtman.com or visit our website at www.JordanDechtman.com today for more information on Roth IRAs and to determine what options suit your retirement plan best.

Pay off the loan or try to reduce your monthly payments.  If your mortgage won’t be retired before you are, the planning question becomes whether to pay off the loan and eliminate that expense in retirement or try to reduce your monthly payments to free cash in your current budget that you can invest for retirement.

That depends on the form of your retirement assets. If you have the cash in savings or low-paying interest-bearing accounts, you might consider paying off the mortgage, as the interest you pay will likely be more than the interest you earn.

If the bulk of your assets are in IRAs or 401(k)s, it may be best to resist the urge to withdraw a large amount and relieve yourself of your biggest piece of debt. Early withdrawals from a qualified account – meaning before age 59½ – may require payment of an IRS penalty, and you’ll face an income-tax bill on the proceeds at any age. After retirement, using systematic withdrawals from IRAs or 401(k)s to make monthly house payments can help spread out the tax burden and keep you eligible for the mortgage-interest tax deduction.

Refinancing your mortgage at a lower interest rate can reduce payments, as can extending its length to spread the balance over more years, although that may cause you to pay more overall in interest. Selling your home and purchasing a smaller one may also be an option, and depending on equity, you may have money left over to invest for your retirement years.

Entering retirement with a mortgage may not be ideal, but it can be done, especially as part of a comprehensive retirement plan. Call your personal financial advisor, Jordan Dechtman, at 303-741-9772, email him at Jordan@JordanDechtman.com or visit our website at www.JordanDechtman.com to discuss your residential plans and how your options can impact your overall retirement finances.

Data from the Employee Benefit Research Institute (EBRI) showed that housing-related costs accounted for nearly half of Americans’ total expenses in 2009. Americans age 50 to 64 spent 47 percent of their total expenses – a median of $18,828 – on mortgages or rent, insurance, property taxes and repairs.

For Americans 50-64, the median spent on health care costs in 2009 was $2,844, or 9 percent of total expenses. That number increases with age up to $3,692 for Americans age 75 to 84 – accounting for 15 percent of expenditures – and dropping slightly to $3,000 for Americans 85 and older, but making up 18 percent of their total expenses.

Housing costs typically decrease as people age and eventually pay off their mortgages, but they still have large expenses associated with property taxes, utilities and maintenance costs. Sudipto Banerjee, a research associate with EBRI, notes that retired households spend about 80 percent of what they spent as a working household, but their income is equal to only 57 percent of their working counterparts.

To help lower your housing expenses, you may want to consider moving into a smaller home, condominium or apartment to reduce property taxes, utilities and maintenance costs. You may also consider selling or renting out your vacation home to reduce housing-related expenses.

Accurately estimating and managing your retirement expenses, including health care and housing, can help your retirement funds last longer. Call your personal financial advisor, Jordan Dechtman, today at 303-741-9772, email him at Jordan@JordanDechtman.com or visit our website at www.JordanDechtman.com to schedule a review of your retirement expenses and your housing options.

 Retire without quitting your job.  According to a February article by MSN Money’s Liz Weston, another option is to retire without quitting your job. T. Rowe Price, a global investment management firm, found that many people can afford to stop saving for retirement at age 60 and start using the extra income they were putting toward their retirement savings to do the things retirees enjoy such as travel, hobbies or spending time with grandchildren.

 “The only catch: They can’t quit work,” Weston writes. “The key to this ‘practice retirement’ is putting off the day you tap into Social Security and your savings, so that both can grow. The result is more money, both in your 60s and beyond.”

 Delaying your withdrawals.  Retirement contributions in your 60s make little impact to your overall wealth whereas delaying your withdrawals can increase your bottom line for life. On average, Social Security benefits grow 8 percent a year between age 62, when you’re first eligible, and age 70. Also, the longer you delay retirement-plan withdrawals, the less you will need to save.

 “You don’t even need to stick with your current job,” Weston writes. “Any job that allows you to pay your bills (and that includes health insurance, at least until age 65 when Medicare kicks in) will do.”

 Balancing fun and sufficient funding in retirement.   Like all retirement plans, this option is not for everyone, but it can be a good middle-of-the-road choice for pre-retirees trying to balance fun and sufficient funding in retirement. Contact your personal financial advisor, Jordan Dechtman, at 303-741-9772, email him at Jordan@JordanDechtman.com or visit our website at www.JordanDechtman.com  today for an assessment of your retirement financial readiness and more information on retirement options that fit your desired lifestyle.

Becoming a business owner later in life has its advantages: Your working years have given you skills and experience you may be able to market on your own. You also have the benefit of observing gaps in your industry that a small business could fill. And unlike younger entrepreneurs, you have greater financial resources at your disposal – which is why starting a business in your retirement years holds greater risk than it does for those in their 20s and 30s. You have less time to financially recover should your business fail.

If your retirement dreams include becoming your own boss, start early and be prepared for plenty of planning. You will need a thorough business plan and a retirement plan that allows you to fulfill your dream without betting the farm. Both plans need to take into account best and worst case scenarios. Your business could succeed wildly, creating unforeseen tax, estate planning and succession issues. Or the business could struggle, creating a whole different set of problems. Your plans should set some automatic action points – points at which you would sell the business at its peak value and points at which you may need to pull the plug.

Our office can provide insight on a variety of challenges facing new business owners, especially those starting their enterprise later in life. Your professional team should also include an attorney, a business accountant and an insurance professional. You may also want to consider finding a mentor with business ownership experience, preferably in your field, through programs such as SCORE and the Small Business Development Centers. For more on these and other services for entrepreneurs, visit the Small Business Administration website at www.sba.gov.

Pave your path to business ownership with thorough, comprehensive planning. Call your personal financial advisor, Jordan Dechtman, at 303-741-9772, email him at Jordan@JordanDechtman.com, or visit our website at www.JordanDechtman.com  today to get started.