Shutdowns When to Retire & More: Cut Through The Noise

Welcome to Episode Three of Cut Through the Noise, where Anthony Saffer, CFP®,CKA® and Alex Okugawa, CFP®, CEPA®, CKA® tackle the hottest topics in financial markets, financial planning, and life, including:

– Financially preparing for more government shutdowns

– With bonds paying so little interest should I get out of bonds entirely?

– What tax strategies should we be looking at before year-end?

– Should I wait to retire in this economy?

Transcript:

Alex: Hi there, and Welcome to our segment Cut Through the Noise. Today we’re going to be answering your questions that we’ve been hearing throughout the month along with what’s happening around the world as always. If you have questions that you would like us to answer please drop us a comment below or you can send us an email at admin@onedegreeadvisors.com Let’s get right into it.

Government shutdowns: What should we do to prepare financially? [00:26-01:22]

So there’s talks of potentially more shutdowns due to COVID and so people are asking, “What should we do to prepare financially?”

Anthony: Everyone’s different. So it’s a tough question to answer but have a personal plan, you know cash reserves can help get you through periods of uncertainty ensuring that you do have some perspective on your short-term money versus your long term which you know is more for growth and even if it tends to fluctuate, but you know, you really see like different companies where they maneuvered differently

Alex: Thinking differently.

Anthony: You know, alcohol companies pivoting to hand sanitizer. You’ve kind of seen how some schools are just doing Great and others are kind of sitting around waiting. Yeah, you know, it’s like so what can you do to succeed through this?

Alex: I mean even personally for One Degree, I mean us doing a lot of virtual client appointments not sitting around saying well, well me, you know several months. No, it’s okay. It’s okay. Well, we’ll do Zoom meetings will make it the best experience. We possibly can given the circumstances so we can continue to move forward.

With bonds paying so little interest should I get out of bonds entirely? [01:25-02:29]

Anthony: Alright question for you Alex with bonds paying so little interest should I get out of bonds entirely. : It seems that they’re guaranteed to lose money at least after inflation.

Alex: Yeah, it’s a good question. It’s a very serious question especially for retirees or those heading into retirement at least from our perspective bonds still play an important piece in a portfolio. So we’re certainly not saying do away with bonds completely. Even if on a real return basis, they’re not keeping up. We do tilt towards the shorter-term side higher quality side. So that’s something to consider but more importantly at least from our perspective is to make sure that your diversified.

You’ve heard us preach about diversification in the past but going forward it’s going to be even more important. So diversification among stocks, you know, globally investing but also investing in real assets like Commodities and Real Estate. It can also include alternative strategies like a tactical strategy designed to be more offensive or defensive based upon where we’re at in the market cycle.

So again, not that we’re saying do away with bonds, but it needs to be supplemented as part of a diversified portfolio to help make sure you get the returns you need.

What Tax Strategies Should We Be Looking at Before Year-End? [02:31-04:43]

Anthony: Yeah, make sure that Investment plans aligned with your financial plan and other question for you Alex. What Tax Strategies should we be looking at before year end?

Alex: There’s a lot of things you can be looking at again. It will be dependent upon your personal situation whether or not these types of strategies will apply but some things that we are commonly looking out for our clients are Roth conversions, right? That’s a very powerful strategy to pay some taxes today to save a lot of taxes in the future. But again, you have to look at your Personal tax situation there are things like tax loss harvesting one that most people don’t often think about is tax gain harvesting that can be very powerful depending upon your tax situation.

But then you also have things like mutual fund distributions. Mutual fund companies coming up in this month should be releasing estimates. So paying careful attention to if you own mutual funds the distributions that might be coming up.

Anthony: Yeah, make sure you’re looking at that charitable giving as well.

Due to the uncertainty in the economy, are people retiring at this point or is it generally better to wait? [03:31-04:43]

Alex: Alright the final question we have here is I’m getting ready to retire but I’m having second thoughts due to the uncertainty in the economy are people retiring at this point or is it generally better to wait?

Anthony: Yeah again, very personal type question. Yes people. I mean people are retiring, sure, need to have that financial plan. Make sure that you can navigate, you know, there’s the short term here and you’re prepared for that but a financial plan should always be prepared for that.

So think about like people that are retired in 2006-2007. Felt wealthy at the time stocks were recovered real estate was doing really well, but it was right before a big drop and people still need to be prepared for that. Point being is that there’s always uncertainty the absolute that’s out there and then, you know, be thinking a little bit differently. It’s not it doesn’t always have to be, you know, a full-out retirement.

You know, if you if you feel more comfortable if you have the opportunity to protect perhaps work part-time then considering things like that.

Alex: Whatever decision you do make it to be made with confidence knowing I’ve examined my variables. I understand my financial situation where I sit and here are the strategies. I’m going to implement going forward to increase my chances of long-term success.

All right. Well again, that was our segment cut through the noise. We hope you found it helpful.

If you have questions that you’d like us to answer, please drop a comment below or you can send us an email at admin@onedegreeadvisors.com. We look forward to talking with you.

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