Bob and Sharon, clients from Sequim, Wash., called last week. They are smart, semi-retired professionals and ex-Californians.
They are interested in simplicity, having enough income to last their lives and driven to protect a small financial legacy for their kids. Bob and Sharon worry a lot these days.
They worry about their friends’ irrational and emotional reactions to the recent elections. They are concerned about unions striking for benefits not available to the majority of Americans.
They are anxious about the future of families on the East Coast who denounce FEMA, but did not plan for their own protection.
And lately, they have spent sleepless nights wrestling with whether they sufficiently prepared themselves and educated their children for life’s unexpected financial challenges?
Bob, a World War II veteran, and Sharon have had plenty of their own financial challenges over the years. But when it comes to holidays, they try to get just a little more out of them than most folks.
They celebrate each holiday with a goal to measure the pulse of their financial health. This year they thought it appropriate to send their top five financial favorites to their kids to get done before year end.
They agreed I could share these with our readers:
— Stave off identity theft. Secure credit reports from the three credit reporting agencies:
Experian, (888) 322-5583); TransUnion (877) 322-8228); and Equifax, (800) 685-1111. Notify agencies of any inaccuracies and question anyone not known to you who has inquired about your personal data.
Ask your credit reporting agencies to report any irregularities to you immediately. You, in turn, would report these to your credit cards, banks, lenders and local authorities.
— Avoid paying unnecessary taxes. Check out your investment portfolio for any capital losses which could be used to offset capital gains, even an additional $3,000 in capital losses can be used to offset taxable income.
This needs to be done before year-end. Should you be a homeowner and your home value, like many, has declined over the years, check with your county tax assessor’s office to see whether a reduction of property tax is available to you now.
— Stop philosophizing about the economy. be sector driven. Now that we have some “clarity” after the elections, review your investment portfolio. Sectors like energy, health care, utilities, etc. are dynami. Past performance is past.
Decide which sectors you wish to overweight in the U.S. or abroad, in U.S. dollars or foreign currencies, in commodities or real estate, and reallocate your portfolio based on future expectations.
— Re-calculate either assets needed for retirement or income needed in retirement. Whether you are pre-retirement”or in retirement, get with your certified financial planner and tax preparer for a reality check.
With today’s low interest rates, your previous plans may have left you woefully underprotected. There may be several financial strategies developed out of a combination of your assets and lifestyle, which may be just waiting for you.
— Don’t underestimate health costs. Most elements of Obamacare do not take effect until 2014, and many parts of this plan remain to be defined.
Check with your certified financial planner and insurance representative for a review of your medical, dental and disability insurances.
Seriously study the advantages of long-term care insurance. Recent studies have shown that more than 20 percent of our expenses after age 65 are for uncovered, unexpected health issues! (Franklin/Templeton Retirement Study, July 2012)
Celebrate your holidays with purpose. In days when so many purport to be economic experts, simply be a good financial steward to your family and friends. That’s a good start.
Allen Ostrofe is president of Ostrofe Financial Consultants, Inc., a fee-based registered investment advisor. Contact Ostrofe at (530) 273-4425, email@example.com or at 565 Brunswick Road, Ste. 15, Grass Valley.