Comprehensive Guide To Retirement Planning in New Jersey

Retirement is like the ultimate vacation – you finally get a break after years of hard work. But here’s the catch: you absolutely need to plan it right to enjoy retirement to its fullest. Just like you wouldn’t go on a road trip without a map, you shouldn’t leap into retirement without a solid game plan. The good news is that with some sensible steps, you can avoid financial headaches and make the most of this new chapter in life. Some of the most important things you should do before retirement include:

• Make a plan (and talk to a retirement planner)
• Prepare for unexpected scenarios
• Decide how you will pay for health insurance
• Figure out when to pull from Social Security
• Know what you are retiring to – what purpose and meaning will you fulfill during retirement?

Read more: “5 Things You Must Do Before You Retire”

The earlier you start planning for retirement, the better prepared you will be to enjoy your golden years without financial stress. Here are some first steps to consider when you are thinking about retirement:

• Evaluate Your Current Financial Situation: Begin by assessing your current assets, debts, income, and expenses. This will give you a clear picture of where you stand financially and how much you may need to save for retirement.
• Set Clear Retirement Goals: Envision your desired retirement lifestyle. Consider factors like desired retirement age, potential relocation, travel aspirations, and any other planned activities. This will help you determine how much money you will need annually during retirement.
• Choose the Right Retirement Accounts: Familiarize yourself with different retirement savings vehicles, such as 401(k)s, IRAs, or Roth IRAs. Each has its tax implications, withdrawal rules, and contribution limits. Select the ones that align with your needs and circumstances.
• Diversify Investments: Distribute your investments across different asset classes like stocks, bonds, and real estate. A diversified portfolio can help minimize risk and improve potential returns. As you approach retirement, you might consider shifting towards more conservative investments.
• Review and Minimize Debt: Aim to enter retirement with as little debt as possible. Paying off high-interest debt, especially credit card debt, should be a priority. Also, consider strategies for paying off your mortgage or other long-term loans.
• Plan for Healthcare: Healthcare can be a significant expense in retirement. Investigate options like Medicare, supplemental insurance, and Health Savings Accounts (HSAs) to ensure you’re adequately covered.
• Reassess and Adjust Periodically: Your circumstances, market conditions, and goals can change. Regularly review your retirement plan and adjust as necessary to stay on track.
• Consult with Financial Professionals: Retirement planning can be complex. Meet with a financial advisor specializing in retirement planning who can offer tailored advice and strategies.

A CFP®, or Certified Financial Planner, is the gold standard in the personal financial industry. These financial experts have gone through an exhaustive set of qualifications defined by the CFP® Board of Standards. They have essentially been through a financial boot camp. These individuals have to tackle a broad curriculum, which includes financial planning, insurance, investments, wealth management, retirement strategies, tax planning, and estate planning. This coursework takes nearly two years to accomplish.

A CFP® candidate also needs to have three years of practical experience under their belt, pass a 10-hour exam, and pledge to adhere to a set of ethical standards.

Even after earning the title, a CFP® can’t rest on their laurels. They need to keep up with the latest developments, which means 30 hours of ongoing education every two years. It’s about staying sharp and being on top of the game in an ever-evolving field.

There are three ways Certified Financial Planners (CFPs®) are compensated, and this can affect your experience with them:

• Commission-Based Financial Planners make all their money from commissions by selling products. Think of them like a pushy car salesperson who just wants you to buy the fanciest car, even if you just need something simple and safe for your family. They might not really care about what’s best for you.
• Fee-Based Financial Planners charge you a bit but also make money from sales. They’re like a car salesperson who helps you find the family car you want but tries to sell you all the fancy extras you don’t need. There’s still a bit of tension because they make money from selling.
• Fee-Only Financial Planners just charge you directly and don’t make any money from sales. They’re like a helpful car salesperson who listens to what you need, helps you figure out what’s best for you, and doesn’t try to sell you anything extra. They’re focused on making sure you’re happy.

Working with a fee-only financial planner is your best option for several reasons:

• Objectivity: They don’t earn commissions, so their advice is unbiased and focuses on your financial goals.
• Transparency: You know exactly what you’re paying for with upfront compensation structures.
• Fiduciary Duty: They’re legally bound to put your interests first.
• Custom Packages: Solutions tailored to your unique financial situation.
• Education: They will help educate you on financial matters, making complex concepts easier to grasp.
• Comprehensive services: Their services include retirement, tax, estate, and insurance planning, giving you a well-rounded approach to managing your finances with just one advisor.

This is a difficult question to answer, but it is one we are asked often. We often say that the key to financial success lies in living below your means. Spending less than you earn is fundamental; if you spend more, you’ll be drowning in debt and interest. By keeping expenses below income, even marginally, you create room to utilize financial planning strategies, like saving for emergencies, planning for a cozy retirement, and leaving something behind for your loved ones.

Preparing for retirement can be an overwhelming prospect, but our retirement checklist can help you get started. Begin by envisioning your retirement lifestyle, consider where you want to live and how you want to spend your time. Evaluate your financial readiness to retire and weigh the benefits of potentially postponing retirement for a financial boost. Taking steps like establishing a detailed budget for expenses, and calculating your income from Social Security, and pensions is a great start. Don’t hesitate to be cautious! Setting up contingencies like an emergency fund equivalent to a year’s worth of expenses, and paying off your mortgage can help alleviate some external stressors.

A major facet of retirement is reviewing healthcare options, enrolling in Medicare and exploring supplemental policies. A comprehensive and strategic approach will pave the way for a secure retirement.

Budgeting for a comfortable retirement is a nuanced process that calls for a tailored approach, as it’s not a one-size-fits-all affair. It’s imperative to recognize that each person’s journey into retirement is unique, influenced by their individual needs, aspirations, and financial standing. While ‘broad application principles’ can offer general guidance, they may not fully address the complexities of one’s personal circumstances.

This approach to budgeting empowers you to strike the right balance, safeguarding against the pitfalls of either underspending or depleting your savings too hastily. Ultimately, personalized planning forms the bedrock of a fulfilling retirement.

The sooner you start contributing to your 401k plan, the better. At a minimum, contribute enough to take advantage of your employer’s match – do not miss out on that free money. Typically, we say that saving 10%-15% of one’s salary in their 401k will lead to a healthy nest egg if you have 30+ years compound interest to grow the account.

Beyond finances and estate planning, it’s time to think ahead towards your post-retirement life. Find and discover the activities that you love, invest time in relationships, take on long-awaited challenges, and contribute to something larger than yourself!

A retirement that’s bursting with fulfillment and joy should be within your grasp. Don’t let retirement be just an end; make it a thrilling new beginning!

Read more: “What Are You Retiring “To”?”

While states like Florida and Arizona are popular among retirees due to their climate and tax policies, it’s important to weigh the emotional and practical aspects of relocating in retirement, including:

• Relocating from family: for a majority of individuals, family is the source of some of their greatest joys in retirement. While New Jersey is known for a high cost of living, retirees should weigh the pros and cons of moving away from loved ones.
• Leaving behind a social circle: while numerous people take pleasure in forging new bonds and immersing themselves in a novel community, establishing relationships can prove challenging for many.
• Access to healthcare: it is crucial to be informed not just about the range of healthcare facilities accessible in the new area, but also about the standard of care they provide.

When the tax filing deadline approaches, it’s crucial to have all sensitive tax documents in order, especially for retirees who need to report and pay tax on sources of retirement income.

Essential tax documents include:

• Form 1099-INT for earned interest.
• Form 1099-DIV for individual stock dividends.
• 1099-B for taxable brokerage account transactions.
• Form 1099-R for pension or retirement plan distributions.
• 1099-SSA for Social Security income.
• W-2 for any part-time or full-time work income.

Remember to consider your tax deductions as well, such as mortgage interest (Form 1098), and keep track of documents related to medical bills, charitable donations, property taxes, and dependent care.

An immediate fixed annuity is a type of annuity contract that provides a guaranteed income stream to the purchaser starting immediately after the contract is initiated. A retiree typically makes a large lump-sum payment to the company issuing the annuity. In return, the annuitant receives regular payments, usually on a monthly basis, for a specified period or for the rest of their life.

This is a controversial topic among financial advisors, and not a fit for every retiree’s situation. Some advantages include longevity, peace of mind, and security. On the other hand, some disadvantages include the large initial payment, low protection against inflation, and implications for estate planning – the annuity will disappear should you die early and there will be nothing left for your heirs.

Read more: The Pros and Cons of an Immediate Fixed Annuity

When retirees are offered either a lump sum or annuity pension plan, it can be a difficult decision. It is important to weigh the pros and cons of each option:

• The annuity option is traditionally the best option for your peace of mind. You can rest easy knowing you will have a steady monthly paycheck for the rest of your life, especially if you outlive your life expectancy. This is generally a very safe and secure retirement income stream.
• The lump sum is a better option for big-ticket purchases that require a large chunk of money. It is also a safer option for inflation protection and estate planning.

Read More: Collecting the Lump-Sum or the Annuity Payments: Which is Better?

Equity compensation, in the context of retirement planning, refers to a portion of an employee’s benefits that is paid in the form of ownership stakes in the company, rather than cash. This might include stock options, restricted stock awards (RSA), restricted stock units (RSUs), employee stock purchase plans (ESPPs), incentive stock options (ISO), and other forms of equity awards.

While equity compensation is a great way to boost your savings to help you achieve your goals and objectives, it requires special attention.

Read our Equity Compensation Guide to learn more.

Equity compensation plans, such as stock options or restricted stock units (RSUs), may or may not include dividends for participants. Dividends are payments made by companies to shareholders as a share of profits. The inclusion of dividends in equity compensation depends on the specific terms and conditions outlined in the plan and the company’s dividend policy. It is important for individuals to carefully review the details of their equity compensation plan and consult with their company’s HR department or a financial advisor to understand whether dividends are part of their compensation package and how it may impact their overall financial situation.

Read more: FAQ: Can You Expect to Receive Dividends on Your Equity Compensation?

This is a question we are often asked by our clients. Ultimately, there’s no one-size-fits-all “magic number” for retirement, as everyone’s financial and lifestyle needs vary. While there are general guidelines, they might not suit everyone. Retirement isn’t just about savings; it’s about ensuring you have the income to match your desired lifestyle. If you dream of world travel and a vacation home, you’ll need more than someone with simpler tastes. It’s essential to plan based on income needs, not just a savings target.

Read More: How Much Do I Need for a Comfortable Retirement?

In the United States, if you choose to retire at 62, you will not receive full Social Security benefits, which are calculated based on your “full retirement age” (FRA). The FRA varies depending on your year of birth, but for those born in 1960 or later, the FRA is 67. If you start collecting Social Security benefits at 62, your monthly benefits will be permanently reduced by a certain percentage for each month you claim before reaching your FRA.

However, once you reach your full retirement age of 67, you will not see an increase to make up for the early reduced benefits. Your benefits will be adjusted annually for cost-of-living changes, but they will remain at the reduced rate established when you first claimed them at 62. It’s essential to carefully consider the long-term financial impact of retiring early and claiming reduced Social Security benefits, especially if you expect to rely heavily on this income during retirement.

The “$1,000 a month rule for retirement” is a simple guideline often mentioned in financial planning circles to help individuals estimate their retirement needs. The principle suggests that for every $1,000 of monthly income you desire in retirement, you need to save $240,000.

Here’s how it works: Suppose you aim for an annual withdrawal rate from your savings of about 5%. If you’ve saved $240,000, a 5% withdrawal would equate to $12,000 a year or $1,000 a month. So, if you’re hoping to generate an additional $3,000 monthly in retirement outside of other income sources like Social Security or pensions, you’d need a savings target of $720,000 (3 times $240,000).

While the $1,000 a month rule offers a straightforward benchmark, remember it’s a broad estimation. Factors like investment returns, inflation, healthcare costs, and lifespan can influence how much you truly need. Additionally, the 5% withdrawal rate might be too aggressive for some, with many financial planners recommending a more conservative 3-4% rate. As with any financial guideline, it’s essential to customize it to your unique situation and consult with a financial advisor to develop a more detailed and tailored retirement plan.

Beneficiaries play a pivotal role in estate planning, facilitating the seamless distribution of assets posthumously. There are two main types: primary and contingent beneficiaries.

• Primary Beneficiaries: These are the main individuals or entities nominated to inherit assets, be it through wills, trusts, retirement accounts, or insurance policies. While immediate family members like spouses or children often serve as primary beneficiaries, accountholders might also choose charities, friends, or distant relatives. The asset distribution reflects the accountholder’s desires.
• Contingent Beneficiaries: Functioning as backups, contingent beneficiaries inherit when primary beneficiaries can’t or won’t accept the assets. This might occur if the primary beneficiary predeceases the accountholder, can’t be located, or rejects the inheritance. Naming them adds an extra layer of safeguarding to the estate plan.
• Regular Reviews: It’s imperative to frequently assess and amend beneficiary designations, particularly after significant life events like marriages or births. Outdated designations might result in unintended asset distributions.

To protect one’s legacy, it’s essential to carefully choose primary and contingent beneficiaries. Regular updates keep the estate plan relevant to one’s evolving life and intentions. Through diligent beneficiary designation, individuals can guarantee their assets are allocated as desired, offering peace of mind and facilitating a smooth transition to heirs.

Read more: Utilizing Beneficiary Designations to Ensure the Orderly Transfer of Assets

The safest place to put your retirement money typically involves low-risk investment options prioritizing capital preservation and liquidity. While there is no one-size-fits-all answer, here are some safe options to consider:

• FDIC-Insured Bank Accounts: Bank accounts like savings accounts and certificates of deposit (CDs) offered by FDIC-insured banks are among the safest places to park your money. The Federal Deposit Insurance Corporation (FDIC) insures deposits up to $250,000 per account.
• U.S. Treasury Securities: Investments in U.S. Treasury securities, such as Treasury bills, notes, and bonds, are considered extremely safe because they are backed by the full faith and credit of the U.S. government.
• Money Market Funds: Money market funds aim to maintain a stable $1 share price and invest in short-term, highly liquid securities. While not risk-free, they are generally considered safe and offer higher yields than traditional savings accounts.
• Annuities: Fixed annuities provide a guaranteed income stream in retirement. They are offered by insurance companies and can provide a predictable source of income, but they may have limited liquidity and growth potential.
• High-Quality Bonds: Investment-grade bonds issued by stable governments or corporations can offer safety, regular interest payments, and the return of principal at maturity.
• Emergency Fund: Keeping a portion of your retirement savings in a readily accessible emergency fund in a bank account or money market fund can provide financial security and peace of mind.
• Diversified Investment Portfolio: A well-diversified investment portfolio that includes a mix of asset classes, such as stocks, bonds, and cash equivalents, can balance risk and potential returns. Consider working with a financial advisor to tailor your portfolio to your risk tolerance and retirement goals.

It’s essential to remember that while these options are generally considered safe, they may offer lower returns compared to riskier investments like stocks. The trade-off for safety is often lower growth potential. Your choice should align with your risk tolerance, investment horizon, and financial goals. Additionally, consider consulting with a financial advisor to create a retirement investment strategy that matches your specific needs and circumstances.

Avoiding a 20% tax on your 401k withdrawal can be challenging because 401k withdrawals are generally subject to income tax. However, there are strategies to minimize the tax impact or potentially reduce the withholding. Here are some steps you can consider:

• Rollover to an IRA: One common strategy is to perform a direct rollover (also known as a trustee-to-trustee transfer) of your 401k funds into an Individual Retirement Account (IRA). This is a tax-free transfer that allows you to maintain the tax-advantaged status of your retirement savings. Once the funds are in an IRA, you have more control over how and when you withdraw them.
• Roth Conversion: If you’re eligible and willing to pay taxes upfront, you can convert your traditional 401k to a Roth IRA. This conversion will trigger income tax on the converted amount, but future qualified withdrawals from the Roth IRA will be tax-free. This can be a powerful long-term tax planning strategy.
• Employer-Sponsored Retirement Plans: If you’re still employed and at least 59½ years old, some employer-sponsored plans allow for “in-service withdrawals.” You may be able to transfer a portion of your 401k into an IRA while still working, potentially avoiding the 20% withholding tax.
• Choose Your Withdrawal Method: When you decide to take a withdrawal from your 401k, you can typically choose between a lump-sum distribution or periodic payments. Lump-sum distributions may trigger the 20% withholding tax, but periodic payments, if structured correctly, may not.
• Use Net Unrealized Appreciation (NUA): If your 401k includes employer stock, you might be eligible for Net Unrealized Appreciation (NUA). NUA allows you to take a distribution of the employer stock at its cost basis (what you originally paid for it) rather than its current market value. The NUA portion is taxed at your ordinary income tax rate, not the 20% withholding rate. Gains on the stock are subject to capital gains tax when sold.
• Plan for Your Marginal Tax Rate: If you’re in a lower income tax bracket when you retire compared to when you were contributing to your 401k, you may pay less in taxes on your withdrawals. Proper tax planning and coordination with other sources of income can help reduce your overall tax burden.
• Complete IRS Form W-4P: If you need to take a withdrawal and want to adjust the withholding, you can complete IRS Form W-4P, which allows you to specify the amount of federal income tax to be withheld from your distribution.
• Consult a Tax Professional: It’s advisable to consult with a tax professional or financial advisor who can help you plan your 401k withdrawals in a way that minimizes your tax liability based on your individual circumstances.

Keep in mind that while these strategies can help you manage the tax impact of 401k withdrawals, it’s essential to understand the tax rules and consequences fully. Taxes can be complex, and the right approach will depend on your specific financial situation and goals.

The IRS has announced that in 2025, workers can contribute up to $23,500 into their 401(k) retirement plans. This is a $500 increase from the 2024 limit, which was $23,000.

This new limit is also applicable for 403(b) plans and some 457 plans. This increase is not as big as the one we saw between 2022 and 2023, which was $2,000.

These changes in the 401(k) plans apply to all workers who earn a salary. The catch-up contribution limit for investors over 50 will stay the same at $1,000 in 2025.

Also announced by the IRS, the annual contribution limit for IRA accounts in 2025 will be $7,000, remaining the same as 2024.

The catch-up contribution limit for investors over 50 will stay the same at $1,000 in 2025.

“Stealth wealth” refers to a financial and lifestyle approach where individuals maintain substantial wealth and financial security but intentionally avoid flaunting their wealth or being flashy. The goal is to blend in with the general population and avoid drawing attention to one’s wealth.

People who practice stealth wealth often do so for various reasons:

• Privacy: They value their personal privacy and prefer to keep their financial affairs discreet, shielding themselves from unwanted attention or potential risks.
• Humility: Maintaining a modest lifestyle allows them to stay grounded, avoid arrogance, and prioritize values other than material possessions.
• Security: Displaying excessive wealth can make one a target for theft, scams, or even legal disputes. Staying low-key can enhance personal security.
• Focus on Goals: By not succumbing to societal pressure to showcase their wealth, individuals can prioritize long-term financial goals, such as early retirement or philanthropy.

Stealth wealth strategies include living within or below one’s means, avoiding extravagant purchases, and keeping investments and assets low-profile. While stealth wealth can provide peace of mind and financial security, it’s a personal choice that may not align with everyone’s values or circumstances.

The value of your pension depends on several factors, making it challenging to provide a precise figure without specific information. Key elements that influence your pension’s worth include:

• Accrual Rate: Your pension plan’s formula dictates how benefits accumulate over time. Typically, it’s based on factors like your years of service and salary history. A higher accrual rate generally leads to a more valuable pension.
• Years of Service: The longer you work for an employer with a pension plan, the larger your pension is likely to be. Each additional year of service increases your eventual benefit.
• Salary: Some pension plans use your final salary or an average of your highest-earning years to calculate your benefit. Higher salaries often result in larger pensions.
• Vesting Period: You may need to work a certain number of years before you become vested in your pension plan, meaning you’re entitled to receive benefits upon retirement.
• Retirement Age: The age at which you start receiving your pension can affect its value. Some plans offer full benefits at a specific age, where taking early retirement can lead to reduced payments.
• Inflation Adjustments: Some pension plans provide cost-of-living adjustments (COLAs) to keep your benefits in line with inflation, increasing their value over time.

To determine your specific pension value, review your pension plan’s documentation or consult with your plan administrator. They can provide personalized estimates based on your unique circumstances and plan details.

A 401(k) and an IRA are both retirement accounts that play important roles in retirement planning. Which one is ‘better’ depends on individual circumstances, including employment status, employer offerings, investment options, and financial goals.

401(k):

• Advantages: Often offers employer matching contributions, higher contribution limits, and automatic payroll deductions. Contributions are typically tax-deferred.
• Disadvantages: Limited investment options, potential fees, and restrictions on withdrawals.

IRA:

• Advantages: Greater flexibility in investment choices, including stocks, bonds, mutual funds, etc. Contributions may be tax-deductible (Traditional IRA) or grow tax-free (Roth IRA).
• Disadvantages: Lower contribution limits compared to 401(k)s. No employer matching contributions. Income limits may affect eligibility for Roth IRA contributions.

Many individuals benefit from having both a 401(k) and an IRA to diversify their retirement savings and maximize tax advantages.

The “5-year rule” for retirement accounts refers to the requirement that must be met for certain distributions to be considered qualified and avoid early withdrawal penalties. This rule applies to Roth IRAs and Roth 401(k)s. To meet the 5-year rule, the account must have been open for at least five tax years, and the account holder must be age 59½ or older, permanently disabled, or using the funds for a first-time home purchase (up to $10,000). If these conditions are not met, early withdrawals may be subject to a 10% penalty in addition to regular income taxes.

The safest IRA to have depends on your definition of safety and your risk tolerance. Generally, traditional IRAs and Roth IRAs are considered safe in terms of government protection and tax advantages. Traditional IRAs offer tax-deferred growth, potentially lowering your current taxable income, while Roth IRAs provide tax-free withdrawals in retirement.

For those seeking minimal risk, conservative investment options within an IRA, such as certificates of deposit (CDs), money market accounts, or high-quality bonds, can be considered safer choices. However, these options may offer lower potential returns compared to stocks or riskier investments. It’s crucial to align your IRA choice with your financial goals and risk tolerance.

A realistic retirement budget varies based on individual lifestyle, location, and needs but generally includes housing, healthcare, food, transportation, insurance, and leisure activities. Many financial planners suggest aiming to replace 70-80% of your pre-retirement income. For example, if you earned $60,000 annually before retirement, you might need $42,000 to $48,000 per year. Consider fixed expenses (housing, utilities, insurance) and discretionary spending (travel, hobbies). Healthcare often increases with age, so plan accordingly. Adjust your budget for inflation and unexpected expenses to ensure financial stability throughout retirement. Consulting a financial advisor can help tailor a budget to your specific circumstances.

You might have “lifestyle creep” if your spending increases as your income rises, but your savings do not. Signs include consistently upgrading to more expensive goods and services, frequent luxury purchases, and living paycheck to paycheck despite higher earnings. If you notice that your financial goals remain unmet and you struggle to save or invest, lifestyle creep may be the cause. Regularly reviewing your budget, tracking expenses, and comparing them to your financial goals can help identify lifestyle creep. To combat it, prioritize saving and investing increases in income before spending on non-essential items.

Receiving a cash windfall, whether from a bonus, lottery, inheritance, or unexpectedly large tax refund, can be exciting, but it also requires careful planning. The best approach is to prioritize financial stability and future growth. Start by paying off high-interest debt, such as credit cards, to reduce financial strain. Next, establish an emergency fund with three to six months’ worth of expenses for unexpected situations.

Consider contributing to retirement accounts like a 401(k) or IRA. Investing in diversified assets, such as stocks, bonds, mutual funds, or high yield savings accounts, can also grow your wealth over time. Finally, set aside a portion for personal enjoyment, but avoid extravagant spending.

Gold IRAs can be a good investment for those looking to diversify their retirement portfolio and hedge against economic uncertainty. These accounts allow you to hold physical gold or other precious metals as a part of your retirement savings. The primary benefit of a Gold IRA is its potential to protect against inflation and currency fluctuations, as gold often maintains its value over time compared to paper assets.

However, investing in a Gold IRA also comes with risks. Gold does not generate income like dividends or interest, and its value can be volatile. Additionally, there are storage and insurance costs associated with holding physical gold. Fees for setting up and maintaining a Gold IRA can also be higher than those for traditional IRAs.

Retiring at 62, if possible, can be a good idea for several reasons. First and foremost, it allows individuals to start enjoying their retirement years while they are still relatively young and healthy, providing more opportunities for travel, hobbies, and family time. Early retirement can reduce work-related stress and improve overall well-being.

Additionally, those with sufficient savings, investments, or pensions can comfortably sustain their lifestyle without relying heavily on Social Security benefits. Early retirees might also take advantage of part-time work or freelance opportunities, maintaining a balance between leisure and income.

However, it’s essential to consider the potential reduction in Social Security benefits when claiming early, as waiting until full retirement age or later can result in higher monthly payments.

Funflation refers to the recent trend of increased spending on entertainment and leisure activities, driven by a desire for experiences over material goods. This can include spending on travel, dining out, events, and recreational activities. Consumer behavior has shifted towards valuing enjoyable and memorable experiences, which can drive up prices in these sectors due to high demand. One common example often pointed to is the astronomical prices for tickets to Taylor Swift’s sold-out Eras Tour concerts. Many economists speculate that this trend is a lingering result of COVID-19 shutdowns, with consumers eager to make up for that lost time.

There is no single “best” formula for picking stocks, as successful investing often involves a combination of strategies. However, a commonly used approach is the GARP (Growth at a Reasonable Price) strategy, which combines elements of both value and growth investing. Key metrics include:

• Price-to-Earnings (P/E) Ratio: Identify stocks with a P/E ratio lower than the industry average.
• Earnings Growth: Look for companies with consistent earnings growth, typically 10-20% annually.
• PEG Ratio: A PEG ratio (P/E ratio divided by earnings growth rate) below 1 can indicate a potentially undervalued stock.

The 25-25-25-25 portfolio is a diversified investment strategy where an investor allocates 25% of their assets to four different asset classes:

• U.S. stocks.
• International stocks.
• U.S. bonds.
• Cash or cash equivalents.

This allocation balances risk and reward by spreading investments across various markets and asset types. The strategy is designed to reduce volatility and protect against market downturns while providing growth potential through equities and stability through bonds and cash. This approach appeals to investors seeking a straightforward, balanced portfolio that can adapt to various economic conditions.

The Golden Butterfly portfolio is an investment strategy that balances growth and stability. It allocates assets into five even classes:

• 20% to U.S. large-cap stocks for growth.
• 20% to U.S. small-cap stocks for higher returns potential.
• 20% to long-term treasury bonds for stability and income.
• 20% to short-term treasury bonds for liquidity and low risk.
• 20% to gold for inflation protection and diversification.

This mix aims to perform well in various economic conditions, offering a blend of safety, growth, and inflation hedge. The strategy minimizes volatility while achieving consistent, moderate returns over time.

An EE Bond is a U.S. government savings bond that guarantees to double in value over 20 years. Purchased at face value, it earns a fixed interest rate for up to 30 years. Interest accrues monthly and is compounded semiannually. If held for at least five years, EE Bonds can be cashed in without penalty; if redeemed earlier, a three-month interest penalty applies. EE Bonds are exempt from state and local taxes, and federal taxes can be deferred until redemption or maturity. Like I Bonds they are considered low-risk investments suitable for long-term savings goals.

An effective cash management plan ensures optimal use of cash resources, maximizing liquidity and minimizing idle cash. It includes accurate cash flow forecasting to anticipate cash needs, efficient collection and disbursement processes to speed up receivables and delay payables, and maintaining a cash reserve for emergencies. Diversifying cash investments into short-term, liquid assets such as money market funds or short-term bonds yields better returns without sacrificing liquidity. Regularly reviewing and adjusting the plan based on financial conditions and business needs ensures continued financial health and efficiency.

A good retirement plan for women over 50 focuses on maximizing savings, ensuring financial security, and addressing longevity risks. Key elements include:

• Catch-Up Contributions: Take advantage of higher contribution limits to 401(k)s and IRAs.
• Diversified Investments: Maintain a balanced portfolio with stocks, bonds, and other assets to manage risk and growth.
• Social Security Strategy: Optimize Social Security benefits by planning the best time to start collecting.
• Health Care Planning: Look for adequate health insurance and consider long-term care insurance.
• Debt Management: Pay down high-interest debt to reduce financial burden.

Regularly review and adjust the plan with a financial advisor.

Using retirement funds to pay off credit card debt is possible but generally not advisable. Withdrawals from accounts like 401(k)s and IRAs before age 59½ incur penalties and taxes, reducing the amount available. This diminishes retirement savings and potential growth. Additionally, tapping into these funds can compromise long-term financial security.

Alternatives include:

• Consolidating debt
• Negotiating lower interest rates
• Seeking credit counseling
• Considering a 401(k) loan, which avoids penalties but must be repaid with interest

All of the recent public discussion around inflation has investors curious about the possibility of deflation and what it would mean for their assets. During deflation, the value of money increases as prices for goods and services fall. This means your purchasing power rises, allowing you to buy more with the same amount of money. However, deflation can also lead to lower wages, reduced economic activity, and increased debt burdens. Savings may gain value, but investments, particularly in stocks and real estate, may decline in value. While your money becomes more valuable, the overall economic impact of deflation can be negative, leading to a contraction in growth and potential job losses.

Empty nesters should reassess their retirement goals and savings now that expenses may be lower:

• Consider downsizing your home to reduce costs and free up equity.
• Maximize contributions to retirement accounts like 401(k)s or IRAs, taking advantage of catch-up contributions if eligible.
• Review and adjust your investment portfolio to align it with your retirement timeline and risk tolerance.
• Pay off any remaining debt, including mortgages, to reduce financial burdens in retirement.
• Finally, revisit your estate plan and update beneficiary designations to reflect your current situation and future legacy goals.

Yes, a 70-year-old can still be actively investing in the stock market, but with a more conservative approach. The focus should be on preserving capital while still seeking growth to outpace inflation. Consider maintaining a balanced portfolio with a smaller allocation to stocks, emphasizing dividend-paying or blue-chip stocks for stability. The majority of investments should be in safer assets like bonds, fixed-income securities, or cash equivalents. Consulting with a financial advisor can help tailor a strategy that aligns with your specific retirement objectives and risk profile.

The 30 Day Rule is a straightforward personal finance strategy designed to prevent overspending. When you feel the urge to buy something you don’t need, the rule suggests that you pause for 30 days before making the purchase. This cooling-off period gives you time to think about whether you truly want or need the item or if the desire to buy it was driven by emotion or impulse at that moment. After 30 days, if you still want to make the purchase, go ahead and buy it. But if the desire has faded, you’ve successfully avoided an unnecessary expense. If you’re someone who’s prone to impulse buy, this can lead to significant savings in the long term.

A normal distribution of investments refers to a pattern where most investment returns cluster around a central average, with fewer extreme outcomes. In a graph, this forms a bell curve, where the peak represents the most frequent returns, and the tails represent the rare high or low returns. In theory, many asset classes, such as stocks and bonds, are assumed to follow this distribution, though real-world returns may deviate due to market volatility. Understanding this distribution helps investors anticipate the likelihood of various outcomes and manage risk effectively.

“YoY” stands for “Year over Year.” It is a method of comparing data for one period to the same period in the previous year. For example, if a company’s revenue in 2025 is compared to its revenue in 2024, this is referred to as a YoY comparison. It is often used to analyze trends and assess growth or decline over time.

A tangency portfolio is the best mix of investments that gives the highest return for the amount of risk you’re willing to take. It includes both safe and risky investments and is designed to be the most efficient.

A market portfolio is a mix of all the investments available in the market, like stocks, bonds, and other assets, weighted by their size in the market. It represents how the entire market is doing.

In short, the tangency portfolio is about finding the best risk-return balance, while the market portfolio reflects the overall market.

Assessable income is calculated by adding up all sources of income that are subject to tax. This includes wages, salaries, bonuses, business income, rental income, interest, dividends, and any other earnings. Certain deductions, like work-related expenses or business costs, are subtracted from this total to determine taxable income. Some forms of income, such as government benefits or tax-exempt investments, may not be included in assessable income, depending on tax laws. The final assessable income figure is what’s used to calculate the amount of tax owed.

When applying for Social Security retirement benefits, you may be asked the following questions:

• Personal information: Name, date of birth, and Social Security number.
• Work history: Employment details, including past jobs and earnings.
• Bank account information: For direct deposit of benefits.
• Marital status: Current marital status and spouse’s details (if applicable).
• Citizenship status: U.S. citizenship or legal residency.
• Desired start date: When you want your benefits to begin.

These questions help Social Security determine your eligibility and the correct benefit amount.