There are a lot of important considerations to weigh before doing a Roth Conversion. As a result of the current market condition and changes due to the SECURE Act, Roth conversions are becoming an important strategy that advisors are discussing with their clients. This flowchart addresses some of the major decision points to help guide you in the right direction.

I spent some time this morning helping a client get some money out of one of his investments. The virus has made a mess of his business for at least the first half of 2020. He came in this morning to sign some paperwork, because as you know, there is always paperwork in this business. We were talking about the benefit of “having a plan.” We had discussed where the money should come from among his options.

I started working in this business in 2006. One of the first lessons I got from my Father and business partner was this “Our clients have two questions; the first is am I ok, the second is where are we going to lunch?” While I might argue for a more sophisticated wording, this has proven very consistent. Our clients want to know if their plan is still on track, and then they are ready to talk about something else.

The coffee can full of $100 bills buried in the back yard is the safest investment available, right? Not really. The assumption is that the number of dollars contained in the can will not rise, or more importantly, fall. Right? Kind of. The number of bills is fixed, but the price of what they will purchase is going up everyday. Those pieces of paper are not intrinsically very valuable. 

Whether it is tennis shoes and cheerios, golf clubs and sails or cruises and plane tickets, they are all subject to inflation. Inflation has averaged a bit more than 3% annually in the long run. Just 3%. No big deal. Those cheerios that costs $2.99 today will cost about a third more ten years from today ($3.89). In 20 years, twice as much, ($5.98) and in 40 years, the price will have quadrupled to $11.96!

Viewed another way, that coffee can lost 3% of its value each and every year. A CD earning 2% only lost 1%. Not as safe as it might seem. 

To be sure, assets which are intended to fund expenses which may well occur in the relative nearer future need to stay in a more liquid, stable asset form, where the impact of inflation is less pronounced because of the shorter time period.

It’s one of the most common sentiments we hear: I wish I’d saved more.

Boy, who doesn’t!

It is doubtful that anyone has ever regretted saving too much. Saving makes so much sense, so we are too few of us saving and why are so many of us not saving enough?

It is so clear that to have money in the future, it needs to be saved now.

How much you save, how often and for how long will determine how much you have in the future. Those decisions actually are much more important than how much you earn on those savings.

So, why is it so difficult to do, when it is so easy to talk about and agree with?

Life gets in the way – braces, college, vacation, bigger house. They are true, and they are valid. But there are simple ways to start saving and stay motivated.

Here’s how to start:

• Set aside half of any raise or bonus: Deposit that portion of each paycheck automatically into a retirement plan. This is a no-brainer since you’re putting away the money before your lifestyle has not expanded to incorporate the added spending money. It still feels like a raise, and you don’t miss the money you never had.

• Find something that motivates you. Retirement can seem like such a distant dream, but here are a couple of more immediate reasons to motivate yourself to save:

  • Save money so you can say “NO.” If you have a decent nest egg, and a job you really don’t like, you can tell the boss “no.” It’s difficult to do when you have a goose egg instead of a nest egg but much easier to do when you have an account statement in your pocket.

  • Put a visual image where you will see it often: It could be a dozen photos of places you want to travel, a photo of a kid in a cap and gown, or a picture that depicts the life you will live when you can afford to work at a different career or working for yourself. Your dream may mean making less income but using an income from your nest egg to supplement your pay and meet the bills. The key here is to find a motivation that is real today — real, felt and not just thought

Each person has such a dream or goal, but it is not usually voiced or even recognized. We can help you identify and clarify it. Once it is clear, you can hold it and use it to help you to save.

These days, “what’s your number” isn’t just a pick-up line as it is a question that keeps you up at night.

How much should I save to pay for my kid’s college?  When can I retire?  What if I retire today?  What if I quit/get laid off today?  Am I spending too much now that I am retired?  What does it cost me when I retire to go on that cruise now in terms of reduced future income?  How much will it affect my monthly income if the markets drops 10 percent? 

Since the answer to that sort of question might generate a number that is uncomfortable, too many of us avoid the question altogether.

But knowledge is power. It puts you back in control.

At Context Financial, we believe it is far better to know the number because it is usually nowhere near as unpleasant as what you imagine it to be. Planning and preparation begin with knowledge and end in a better night’s sleep. 

As these numbers alter with changes in your life – those of your choosing and those that happen to you, it is good to identify them. Often we can help you navigate changes and achieve your dreams and goals at the same time.

There are many facets to legacy. 

One is the worldly goods you bequeath to some person or some organization. As big as a bucket of bucks, or as small as an old book of poems. 

Another aspect is charitable giving, whether at death or during a lifetime. If properly constructed, charitable giving during life can actually generate more income for the donor during life, more asset to the family, a deduction to the donor, and a gift to the charity at death.  Not to mention recognition and involvement for the donor during their lifetime.

Perhaps the greatest aspect of your legacy is the effect you have had on the lives you have touched. This would include your family and your friends for sure. What about the folks you have worked and played with over all of your years? The gal who bagged your groceries? What about that “not very lovable” neighbor? Every contact in your day affects your legacy in some way, large and small.

The lives you changed for the better, the sort of heirs you leave to carry on, the actions you take today – all will create your legacy. It’s not the balance in your account, the house you live in, the car you drive or your handicap on the golf course. 

Your life,accomplishments and contributions are your legacy. By paying attention to that now, you can experience more joy today.

We are here to help in all the facets of your life — with decades of charitable giving experience and a knack for listening carefully to your goals and wishes.

No two people would define a blissful life in the same way.  The personal definition is created by life experiences, imagination, challenges, fears, dreams and values.  We have created our practice to help our clients to live just such a life.  No small task.  And we recognize that we cannot create that blissful life for them, but we know we can help.

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Sometimes, people ask us why we named our business: “Context Financial.”

We tell them our name means a lot to us. We chose it because it encapsulates our approach to our business. We are intensely interested in the full context of our clients’ lives. We believe that in order to help clients achieve their goals, we must first come to understand the way they define those goals and what that may mean in terms of concrete plans and actions.

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