With respect to your appreciated company stock, here is a strategy that you could consider. It is important to note that this strategy forces you to pay taxes and penalties up front. So, whether the approach is right for you depends on several factors such as your age, how much the stock has appreciated, your anticipated tax rates and the future performance of the stock.
George, the long bond has been the best asset performer for several years in the last 15. So good diversification should include fixed income. Certainly over the long haul the fixed income portion won't perform as well but it will reduce portfolio volatility/risk and make it easier to stick with the investment plan when the market drops.
Keith - Congratulations on your pending retirement. Even more congratulations are deserved for having a solid retirement plan! I start to get worried about concentrated stock when it amounts to more than 10% of someone's net worth. If that is the case, I'd be looking to diversify some of the position to a more comfortable level.
Keith, TOO MUCH COMPANY STOCK. Just ask the folks who worked for Enron or even one of the banks in 2008. Diversify. You can do this over a fixed period of time like 12 months if you wish. Be sure to get tax advice from your preparer to see how best to do this from a tax perspective.
George - The 40/60 split is not a hard recommendation; your "right" mix might be quite different. I'd never recommend investing 100% of your portfolio in *any* one asset type. It's my guess that bonds will not likely keep up with inflation over the next several years, but they are part of "the team" because they add a safety benefit to your asset mix.
Marc, I need to hand out the gold stars to you. I wish more people did so much to protect their future. Now for the kids I don't know if it is $5K each or $5K per year. Do you expect them to go to college? If so, the best place for the money would be a 529 College Savings Plan (I like the one from Utah.....you don't have to live in the state to use their plan. To compare go to savingforcollege.com). The beauty of this is that any growth is TAX FREE if the money is used to fund education. There are penalties if you don't use it for that purpose. But you can always change the beneficiary to the other child or later a grandchild. I usually advise funding about 50% of the total expected cost with a 529 plan. This leaves some room if there are scholarships or one child doesn't go to college. But the money can also be used for graduate school. Check it out.
Marc - If you are saving for college, the 529 is a good option as Bonnie noted. If you are looking for investment options within your 529 accounts, I'd look towards the "age-based" options available in the plan. These will change the asset mix to be more conservative as your kids get towards college age. (Which will be here before you know it!)
Seb, she should apply for social security three month before benefits should start. I see no reason in delaying as even if it is taxed, you still have the net cash and the benefit will not grow anymore after she is 70. Now Medicare is another issue and there can be some long term reductions that result from not filing properly. Visit www.medicare.gov and get their contact info. Speak with a representative to develop and action plan.
Seb - Social Security does have a short look back period, but I'd recommend getting everything setup now so checks start at age 70. Benefits do not increase after 70, so there is no benefit for waiting.
Marc, like Mark I love the aged based options...set it and forget it. Now you can change most at least once a year. So when the market was down in Feb, we did change some clients from an age based moderate allocation to an age based aggressive allocation. That shifted more into equities when the market was down. So even with the "do nothing" strategy you have some options for maximizing return.
Great job Kevin! Approx. what's your salary and when do you hope to retire? That info will help give me a better idea of where you're at in terms of retirement savings progress.
Kevin, on track for what kind of retirement and when? How much are you saving compared to your income (really should be 15% including employer contributions) for most retirements. You know, most people think that they shouldn't do a financial plan until they are close to retirement. But I think the sooner the better so I do work with couples your age as do many advisors who include an hourly option. Retirement doesn't mean much at 30 but doing a quick plan (this is what I have, this is what I'm saving, this is what I want) will let you know if you need to make course corrections while doing a little will have a big long term benefit. And I remind my younger clients that if they do follow the savings requirements of a plan, they are likely to have better options all along the way...more flexibility to change jobs or careers, ways to fund more time with family....you get the idea. I call it financial freedom and it feels good.
Kevin - Are you going to retire this year? :) The fact that you are asking this question tells me you are on track! If you are 30 and saving 10%-15% of your income, you are heading in the right direction. At your age, your savings rate is the most important thing you can control as you plan for retirement. Next, consider investing a good chunk of your retirement accounts in the stock market. Over the long-term, you will benefit from the stock market return and, if you are saving every month, stock market declines allow you to "buy low."
Oh Kevin, I forgot to add GOOD JOB!
Gary, a loss can offset other gains but if their aren't gains, you can take up to a 3K net loss per year. You don't loose the excess lost, you just carry it forward to the next year. You report it on Schedule D of your tax return.
Hi All, This is Rich Feight just arriving to the group chat. Glad to be here.
Joe, I'd shop around and talk to a reputable mortgage broker in your area as well as a few local/regional banks or mortgage companies. When you're asking for their quoted rates, get their "par" rate as it's sometimes called or the "0 point" rate. That way it's more of an apples to apples comparison between lenders.
Joe, I would check with your current lender to see what they could do on a re-fi. Bankrate.org is a great place to compare current rates and offers in your area and they have a wealth of educational information. What is your current interest rate? Are you going to be able to lower it enough to make paying closing costs reasonable? Is your payment going to increase making your cash flow tighter? These are all things you want to consider.
Gary - I'd be careful with the reported loss before doing any tax planning. Calculating the correct basis on a spinoff can be tricky and your custodian may not be reporting this accurately. If you are working with a tax professional, I'd chat with them before spending your potential tax refund.
First off Joe, as a retiree, I'd shoot to be debt free if at all possible. Second, I've had the best luck going directly with local and regional banks for rates. Look at at APR or annual percentage rate. This is the actual rate after all fees are added.
Dick, I've had clients with luck using Healthcare.gov and getting a policy in the marketplace. That said, you could also ask a local agent, or even go to an association in your related field and ask if they have group coverage available.
Dick, I second Richard's comments. Also, depending on your state or area, it's worth checking into any locally based HMO plans if you don't qualify for a government subsidy for health insurance.
Hi Scott, that's a big "it depends". I'm debt-averse, I'd probably pay cash. If you're in a high tax bracket, you might get a 15yr or 10yr loan for the tax deductions. If you have other goals and might use the money for that, you might split the difference. Pay cash for half and finance the rest. But if it were me, I'd pay cash.
Dick, I like healthcare.gov. Open enrollment starts 11-1-16 and ends 12-15-16. You could also check with a local agent and compare what they recommend with what you can get at healthcare.gov. Oh, I forgot, since you are getting off of COBRA which is a change in status, you may not have to do this during open enrollment. healthcare.gov for more information.........BEFORE it gets busy when open enrollment starts.
Scott, this comes down to your philosophy and comfort level on mortgage debt. With that said, I've never heard anyone say, "I wish I had a mortgage."
Well said Tyler. I've never heard that either Scott.