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The Secret to Growing Your Retirement Account

Stay the course. That’s the secret.

The pain we experience when we see the account balance drop is much greater than the joy we feel when we see the account balance increase by the same amount. Imagine you have a retirement account with $500,000 in it and it declines by 20% to the end the month at $400,000. That can be scary – you’ll most likely question your allocation and investments. Unfortunately and in too many cases that is exactly what investors do: The sell out of their losers and buy something inappropriate for themselves.

There are still many investors that are still sitting in cash after selling out of the stock market during the worst moments of the recession of 2008.

Fidelity has some data that backs up this statistic

How To Retire in 4 Years

The story about a couple’s desire to retire in 4 year is compelling.

They have applied many of the important financial planning concepts:

1) The plan to live a very modest lifestyle in retirement – They plan to need 30,000 a year in retirement.
2) They have cut and reduced many of their expenses. They realized how freeing it is to not have a large mortgage.
3) They plan to work part time. Retirement is being redefined. Working part-time, doing a fun job, is becoming common.
4) They have a plan. While I have not checked their math, it’s appears they have thought through many of the common issues retirees face.
5) They are diversified. Between side jobs, investments, and real estate they will have multiple sources of income available for them.

Tracking Your Asset Allocation Across Multiple Accounts

Recently we introduced The Money Management Tool to help clients better organize their financial lives. The tool has lots of features and we will occasional explain how some of the features are being used by our clients (or should be used) to help them reach their financial goals.

This post will deal with a prospective client who has many accounts and struggles to keep track of how they are invested.

Situation: A prospective client couple approached us looking for help managing his investments. They had multiple investment accounts held at different institutions. And in most cases, the accounts could not be moved or consolidated.

Problem: They struggled to understand what they really owned. They thought they were diversified by owning several different funds, but in reality they owned many passive index funds that tracked the same index. Even though the fund names were different, the underlying investments were all very similar.

Solution: The Money Management Tool could be used to connect all the accounts together. After establishing the connections between the tool and their accounts, they would be able to see a total asset allocation across all their account. We were then able to work with them to adjust their allocation.

asset allocation

Using The Money Management Tool: Setting a Budget

Recently we introduced The Money Management Tool to help clients better organize their financial lives. The tool has lots of features and we will occasional explain how some of the features are being used by our clients (or should be used) to help them reach their financial goals.

This post will deal with prospective client who needed some help staying on budget.

Situation: A young couple with two children asked us for guidance on getting a handle on their debts. They had multiple credit card balances with obscene interest rates, a result of unexpected bills. They were spending more and more of their income to make debt payments instead of saving for retirement. They were slowly realizing that they would not be digging themselves out of debt anytime soon and needed a plan to get back on track to save for retirement.

Problem: During the initial meeting, we discovered a significant amount of their take-home pay was going toward non-essential expenses, such as the most premium cable package available and eating out for lunch every single day.

Solution: Directing savings originally intended for retirement to pay down credit card debt is an acceptable strategy in some cases. But when there is a lot of non-essential spending occurring, a tightening of the belt should be the first strategy. In this case, the client could connect their credit card account to The Money Management Tool and analyze their spending habits to see just how much is spent on restaurants and entertainment. They could then develop a budget to help them stay on track.


If you or someone you know needs help getting their financial house in order, this tool can help.

Contact us today to get started.

The Relationship Between Happiness and Income Is Being Turned Upside Down

New research on the relationship between happiness and income is changing the rule of thumb. For years, it has been touted that an annual income of $75,000 is ideal and earning more than that results in a diminishing return of happiness.

Contrary to the old rule of thumb, there is a linear relationship between money and happiness, suggesting the more some makes, the happier they are in life.

So, maybe money can buy happiness after all?

You can read the study here

Is Retirement Savings Being Crowded Out by Student Debt?

A recent study conducted by HelloWallet suggests that a dollar of student loan debt is associated with a 35-cent decrease in retirement account balances! That means, investors with lots of student loans are unable to save as much for retirement.

This is a big problem on a large scale:

  1. 60% of college graduates take on some form of student loan.
  2. The average loan size has tripled over two decades form $9,400 to $27,300
  3. There is more student loan debt than credit card debt.

You can read the study here

I take issue with this study in several areas:

  1. The study assumes that people have a given number of dollars available and must split it between debt repayment and saving for retirement. In reality, I am seeing many people make significant sacrifices in their lifestyle in order to stay on top of their debts and retirement planning. People are living at home longer, avoiding more debt by not buying a house, or living a more modest lifestyle.
  2. People I see coming out of college with significant levels of debt are going through a crash course in personal finance much faster than those with no student loans. They are experiencing a wake-up call in their 20s and 30s as opposed to their 40’s or 50’s. Smart financial habits that they develop now could lead them to a more prosperous future.
  3. I’m working with many families on a more complicated dilemma. Not only do they need to weigh existing student loan debts and saving for retirement, but they also struggle to save for their own children’s education.

The final issue I take with this study is a line repeated multiple times: “There are few widely available tools to help individuals decide whether to prioritize student loan repayments or retirement savings.” In reality, there are lots of tools available to help people analyze that question, such as a Certified Financial Planner™ professional.