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Sacramento Boomer

Cold Hard Cash: 6 Smart Money Moves

Jan 29, 2020 11:38AM

Are you seeking advice on how to strategize your retirement planning, or contemplating some small- or large-scale changes to maximize your retirement comfort level? It’s ironic that while we research and agonize over buying a new TV, many of us suffer from “procrastinitis” or, conversely, “analysis paralysis” when it comes to our own money management. Here are six tips that should help from Clint Herndon, CPA, president at Next Peak (nextpeakcpa.com), and Kimberly Foss, president and founder of Empyrion Wealth Management (empyrionwealth.com). 


1) Pay off your house before you retire, if possible. It’s much easier to live on a fixed budget, travel, and enjoy life when you don’t have to worry about a house payment!

2) Get long-term care insurance at 60. Don’t wait until you have health issues—it’ll be too late to qualify. LTC protects you, your spouse, and your family from having a catastrophic medical/housing bill and helps raise the standard of care. Think of it as your Super Bowl-winning defense!

3) Cultivate the savings habit. Nothing is more fundamental to financial well-being, but nothing is rarer in today’s America. As widely reported recently by CNBC and others, almost a third of Americans would be unable to handle an unexpected $400 expense without borrowing, and a fourth has no retirement savings and/or skipped needed medical care in 2018 because they couldn’t pay for it. 

4) Consider some ROTH conversions (IRA funds converted to ROTH) if you will not need the funds at 70. For taxpayers who may have fewer ways to shield income from taxation after retirement (which includes many self-employed individuals utilizing the business expense deduction), converting a traditional IRA to a Roth IRA can make a lot of sense. You’ll pay some taxes on the conversion now, and your ongoing contributions to the account will no longer be tax-deductible, but the account will continue to accumulate tax-free, and the distributions you take in retirement are not subject to income tax.

5) Retirees should strategize retirement income distributions. Most of us spend our working lifetimes focused on accumulating as much as we can for a comfortable retirement, but we forget that there are smarter ways to take the money out when we start using it in retirement. For example, if you have maintained proper diversification and rebalancing of your assets during your saving years, you can utilize that same strategy to prioritize which “buckets” should be tapped first. 

6) Stay diversified/stay your course. Year in and year out, the most successful investors are those who tune out the background noise of financial headlines and predictions and stick to their long-term strategy of diversification, rebalancing, and staying focused on long-term outcomes. Concentrate on what you can control; the rest of it will take care of itself.