We are still getting better acquainted with our FA who is a younger associate of our FA who also was President of the group. Before our next meeting, I will email him some things we would like to see during our meeting, so we have a more productive meeting. Newer FA is getting better. In addition to his work as FA, he is ‘burning the candle on both ends’ - he has a young family, but has some land and property investments so he is a bit driven on his own financial wealth. During his first year with us, he had to complete certifications/courses; he was distracted. Our financial picture is fairly complete, but I am not as fully comfortable with him as I was with FA that was with us for a number of years and still has higher knowledge/skills/abilities. However some things we specifically ask FA to go over with the President — which during the first year or so of transition President was looking over his shoulder.
Yes…and this is the adjustment I was talking about. We spent our adult lives saving saving saving for retirement. DH and I contributed the max amounts annually to our 401k and 403b accounts. Our financial planner has helped us understand what this all means.
Our big expenses have been a new car, solar panels, and help with the down payment on a townhouse. We also gift our kids annually.
Our house is paid off, and we can pay cash to do these things…plus the travel we do (three weddings this year, plus visits to see our one kid who lives far away, and my family also, and vacations).
We feel comfortable with our spending because our FP and we can look at our accounts, see how they are doing, and also we know our incomes. DH has no pension but he has max SS. I have a pension but all my SS covers is my Medicare premium and one lunch out a month.
We have tapped into a couple of our retirement accounts, but not all of them. That is what those accounts are there for…we saved so we could have them for our use when we retired. That’s what they are for.
It’s a shift in thinking that took us about two years to wrap our heads around. I retired 12 years before DH, but since he was still working, we had a decent income to use. And some time to adjust to one earned income, and then really very little earned income.
It’s an adjustment for sure!!
It is probably because he’s seen other couples who were frugal and didn’t have to be. Our advisor said similar when encouraging us to be more at ease with spending. “If you don’t fly first class, your kids will when you are gone”. (Of course we would do it with frequent flier miles, at least for a while.). He also said tis very common for retirees to struggle with transition from saving a lot to tapping the savings… LOL - after I said it thinking we were unique in that concern.
I’m off to plan a round-the-world cruise. Just kidding. The savings aren’t that good.
@maya54, I suspect @Colorado_mom is on target. He’s seen other couples who could have spent and did not and he thinks they would have been happier doing so.
People often ask me if a) I’m going to retire; or b) if I’m already retired. I don’t take particular offense. I love my work and have worked to structure it so that I do much less of the bad stuff than I used to (all work has some bad stuff). I’m working reasonably hard but the travel is a lot lighter than it used to be as companies got used to not paying for travel and are really having trouble paying for it as much as they should. In a few years, I will be forced to take RMDs from my 401k even though I don’t think I will need it. Is there any way to reduce the tax hit as this will come on top of my regular income? (I assume not but it would be great if someone had an idea.)
100% of our spending is from retirement accounts. We don’t have pensions, and we have chosen to put off taking SS. We have adequate savings to cover our retirement expenses, but it is really disconcerting to spend what we worked hard for years to save. That’s why we saved, though. But I get it!
I find it interesting how many of you use financial planners. What qualifies someone to be a FP?
We are spending more freely in the last couple of years. When my husband hesitates on purchasing something especially for himself I tell him with love that he can afford it. We have enough that we can spend on ourselves and help our kids. We aren’t naturally big spenders by nature.
@Busdriver he recently bought a boat. He has been looking for years! He ended up with something smaller and less expensive than he thought but it’s perfect for him.
Different standards for different kinds of FAs. Here’s some info:
Does he want a couple more? 
There are various types of financial planners. Those who are fiduciaries must – by law – manage the person’s money and property for the benefit of the client, not for their own benefit.
We hesitated to hire a financial planner because … just because, I guess. But the guy we now use gave lunch & learn talks at H’s place of business. He focuses his business on engineers, and he’s great at connecting with them. H grew very comfortable with the advice that was being offered, and his coworkers who used the planner were happy, so we scheduled a meeting with him. We started with him just advising us on how to best invest in our company’s retirement plans, and we eventually put our assets under his management.
We have friends who use a fee only planner, and that works well for them. H & I need more hand holding. It’s been great to have our monthly “salary” sent to us, withdrawn from our accounts in the best manner, with the taxes automatically submitted to federal and state for us.
One is enough. He did once fly up to Washington to see a boat. It wasn’t the one. Lol. He comes from a family of boat owners so he does know what he’s getting into.
What type of boat are you selling?
It’s a Ranger Tug 31CB. I can’t believe it’s not sold yet, it’s low hours and in excellent condition, we cut the price three times. We also have an old Four Winns Horizon I’d like to get rid of, but my husband wants to try the boatsetter thing where you rent it out. 
I thought we were retired, but that sounds like work for little pay, and then you pay taxes on any profit.
What kind of boat did your husband buy?
Funny thing is he said today that he was glad he hadn’t bought a Ranger tug. I like the looks of them. He bought a 28 ft Tiara. It’s older but it’s been well cared for. For years he thought he wanted a Meridian.
That sounds like a nice boat! Funny, for years, we thought we wanted a Meridian, too. The Ranger Tug life is not for me. Some people really get into it, and we thought that we would after retirement. I never slept well on that boat, and I’ve realized I hate being the mechanic. I’m pretty good at figuring things out, and can put my body into the gyrations required to do the job (big boat equipment on a smaller boat), but I hate it. It’s the perfect boat for some people though, quite a friendly community. Some of them asked us to go on a trip with a bunch of them to Alaska. My husband was excited, and I said it was my version of a nightmare, spending several weeks on that boat. Anyone whose husband wants to buy a boat for retirement (and it’s always the husband ), talk to me and I’ll talk you out of it!
@busdriver11 I’m with you. My H bought a sea fishing boat about 10 years ago. I can’t even tell you the size. I know it’s a Grady White that was customized. I would go out fishing with H to keep him company and even caught fish, but staying out on the Atlantic for hours was not my favorite recreational activity. The boat was in the same area as our vacation place. Long story short, when the marina where he kept the boat raised its fees for just about everything, he sold boat to a husband/wife duo who are deep sea fishing guides. They have a big following and realized they could use another boat during the season. Part of the sale price included taking H out on 8 fishing trips per season. He’s a happy camper and so am I.
This came up this morning. I don’t think what the article is saying is correct. Any thoughts? For most trusts, we do pay the inheritance tax, don’t we?
That sounds like you guys worked it into the perfect situation!
This is a poorly written article that leaves out many nuances. It is also confusing because it doesn’t really explain how income taxes are different from estate taxes and inheritance taxes (not many states have inheritance taxes, and there are none at the federal level).
Always talk with a reputable estate taxation attorney licensed in your particular state if you want to get answers to questions specific to your situation!
As @kelsmom said, it is prudent to work with a FP who is a fiduciary. Some are fee only and will do what you ask and bill for it.
We work with two. One is the wealth management department of a major brokerage firm. They were not but have become fiduciaries. They provide great service but are largely money managers. The other takes no commission from products – any commissions go back into our account – though they generally steer towards the lowest costs vehicles, which generally means no commissions. I met the original person (who is now retired) because she was helping parents develop strategies to get some tax deductions related to college tuition. She also was a follower of a guy whose financial writing I have always respected. And, I was hoping for someone who could talk with ShawWife who was, at the time, very uncomfortable talking about money.
Her firm is very holistic and started by talking about what kind of life we want to lead and what we would want to do with money (help kids, travel, …). They did a very detailed financial plan (including any major expenses we were planning like weddings, colleges, etc.) and a real focus on what we were trying to do. They evaluated our insurance coverage and when we needed to switch from a 412i/415i holding a big whole life insurance policy to a 401k, they were very creative about figuring out how to get that done. We looked at possible choices for Long Term Care insurance. They helped ShawD evaluate which employee benefits choices and helped her figure out what kind of two family house she could afford. They suggested that she allocate the max to her 401k and helped her deal with stock options. I wondered whether my Roth IRA could invest in a company I was co-founding or my son’s company (answer really no, although some people have done so).
I rely on the second firm and not so much on the wealth manager but really appreciate the service that the wealth manager provides. If I had to pick one, I’d pick the more holistic FP.
I don’t mind them mixing up inheritance/estate taxes. Many people do. They are both death taxes. Giving the impression that with a trust, you don’t have to pay any death tax is more than confusing. That is simply wrong. you pay taxes on inheriting a trust just as you would for any inheritance. The main difference for most trusts is that you avoid probate that can be cumbersome in some states.
So far, we didn’t need a financial planner. We transfer a fixed amount every month. It is working well so far. Of course, having a FP helps you sleep well at night by all means. What are the typical fees for a FP?
Exactly. Moreover, it doesn’t address any step-up in basis.
The other thing the article fails to mention is that naming a Trust as a beneficiary of a IRA or other retirement-type plans can be sub-optimal, resulting in more trust income and therefore, trust taxes.