, Newburyport, MA

February 19, 2013

Taxes stir money thinking

Money Matters
Donald E. Askey

---- — Just the thought of preparing our taxes or preparing documents for our tax preparer stirs our thinking about bigger money challenges. Am I saving enough in my 401(k)? Am I doing enough to help my money grow without risking serious loss in value? OMG, will what I have last in retirement?

If we have any money at all, it is so much easier and more fun to plan a vacation than to have to dredge through statements of investments, which may be inappropriate for what we’re trying to do, if we understood them in the first place.

This is the time of year we want to escape the cold and the snow and we want to escape the fear our money is either inadequate or inappropriate or both. Let’s go to Naples and leave the piles of snow and statements behind!

Unfortunately, somebody has to shovel the snow, if we want a clear and safe path forward. Here are some thoughts that might help give us some relief from an unclear and uncertain financial road ahead:

It’s never too late to start planning seriously. In fact, many couples find out that with the help of a professional financial planner, they are in better shape than they had thought. I would say this is true for two out of three couples I work with. Let’s imagine the feeling when our doctor tells us that we are a lot healthier than we’d thought. That’s not going to happen though, until we make an appointment to see the doctor.

Saving a little more or spending a little less are concepts we understand, but have difficulty executing. This is especially true when husband and wife have significantly divergent views on money priorities. Over the years, I’ve found couples are more comfortable saving and spending if they talk together at least once a month about what they’ve spent in the last month and what they see in the month ahead. We can’t manage or measure figures — savings figures or spending figures — if we don’t have a handle on them.

More often than I’d care to think, couples forfeit tens and sometimes hundreds of thousands of dollars by not coordinating their Social Security benefits or claiming them too early. I understand the instinct to grab the benefit and run with it early. However, that typical baby-boomer, gratification-now impulse will in time be costly in forfeited benefits and maybe even higher taxes.

Finally, we might just want to revise our idea of what a financial planner is and the value a good one could bring to clarifying the perspective on our financial future. All too often, many of us see financial advisers as folks who manage our money for a fee. Some do manage money and always there is a fee. But if we’re looking for clarity about the path we’re on toward retirement and want to be sure our money will last, then investing alone will not be our answer. So we may wish to stress finding a planner.

In the 20-plus years I’ve been advising individuals and couples, the greatest value I’ve offered is a plain, simple, easy-to-implement retirement road map. So, those daunting piles of indecipherable investment statements ... what’s in them or not in them may not be as important as our spending and savings habits and an understanding of the non-investment risks to a well-planned retirement, to a comfortable retirement.

So, this season, as working our taxes may possibly stir uneasy thoughts about our financial future, let’s avoid the risk to escape to Florida before we’ve made the decision to work on a way to build more financial confidence in ourselves. Let’s avoid letting another year pass before taking a hard close look, with professional help or on our own, to define what we want financially and determine whether our current assets and habits will get us there.


Donald E. Askey, a fee-only financial adviser and planner with offices in Newburyport and Boston, can be reached at