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The stock market seems to be getting all the attention. What else in my financial plan should I be thinking about right now?

Ask yourself: Am I still on track? Revisiting your plan can provide reassurance during uncertain time. Susan Strasbaugh addresses IRA opportunities, tax management and what other elements we in that plan we can control.

Transcript

Tim Maurer:
Hello and thank you for tuning in to Ask Buckingham. An ongoing video podcast series where we invite thought leaders across many disciplines and wealth management to respond to your timely questions with timeless answers. My name is Tim Mauer and I have the privilege of hosting these short discussions as the director of advisor development for Buckingham Wealth Partners. And I want you to know, that I’m also a wealth advisor with more than 20 years of experience and a client of the firm.

Tim Maurer:
The volume of information coming at us these days is so vast and the pace at which that information arrives is so fast, that it’s a struggle to keep up with what you need to know in order to make the best decisions for you and your family. Our hope therefore, is that this ongoing conversation will become a source of clarity in the midst of confusion and provide insight that helps you better understand what’s going on in the world financially and otherwise.

Tim Maurer:
Today we’ll be hearing from Susan Strasbaugh, a wealth advisor in Colorado Springs with a wealth of knowledge and experience to share with us. And here’s the question we’ll be tackling. Susan, the stock market seems to be getting all of the attention right now. What else in my financial plan should I be thinking about?

Susan Strasbaugh:
There’s many things we can be doing right now. First of all, in terms of an individual plan, the question is, am I still on track to meet my goals? So revisiting that plan and being confident that for instance, if you’re already retired, that you’ll be able to keep spending money each year, and that there’s plenty of money put aside and safe investments to do that.

Susan Strasbaugh:
Some of the more specific things that you can be doing right now, it might be a good time to be looking at moving money out of an IRA and into a Roth IRA through something called a rock conversion. Stocks are on sale at the moment and so those funds in your IRA that are worth less today than they were a month ago. You can move that from the IRA to the Roth IRA, pay tax now on that reduced value and then all the growth in the future will be tax free. And that’s even more of a good… might be a great strategy for many people at the moment because of something called the secure act that was passed in December.

Susan Strasbaugh:
I won’t get into all the technical details of that, but that’s something you could talk with your advisor about. If because of some changes that happened in that passage of that act by Congress and signed by the president in December, would it make sense for you to be converting more money to a Roth IRA now?

Tim Maurer:
Great. Anything else in the broader financial planning perspective? In addition to keeping focused on our goals and looking at strategies that might be especially applicable because of a quick market decline, anything else we should be focusing on?

Susan Strasbaugh:
Sure. Another thing specifically because of the quick market decline, is tax loss harvesting that allows you to sell shares that have lost money and immediately reinvest in a similar funds. So you stay invested in that part of the market, but it allows uncle Sam to pick up part of your loss, which is really helpful when we have a period like this. We haven’t experienced that in quite a long time.

Susan Strasbaugh:
It’s always important to be looking at the other parts of your plan. Tax planning can be very important right now, we’re in a very different situation and because of some of these things happening, it might be a time for different tax strategies. And your advisor in conjunction with your CPA can help you address some of those issues. It may be time to be looking at your estate planning documents and revisiting those again in light of the Secure Act that was passed last year. That becomes even more important right now.

Susan Strasbaugh:
Interest rates are extremely low. Maybe time to look at refinancing your mortgage. Rates for a 30 year mortgage, were in the neighborhood of three and a quarter percent last time I looked, and if you have a rate of over 4% it may very well make sense to refinance and save you money there.

Tim Maurer:
It’s interesting, isn’t it? There’s power in just feeling a sense of control of things that you can actually control. Right now we feel as though the market is kind of out of control and we can’t do anything about it and that would seem to be where our attention is drawn, but through the utilization of these strategies, we don’t have to just sit around and do nothing in the midst of this. Through rebalancing and tax loss harvesting and possibly looking at the Roth conversion, we can actually do something to benefit from this particular downturn. And then all of these other worthy financial planning considerations, well we’ve got a little bit of extra time on our hands, probably these days. Right?

Susan Strasbaugh:
That’s absolutely correct and I think you’re onto something really important Tim. Working on the things we can control is extremely important right now because a lot of it is out of our control. We don’t know what’s going to happen with the coronavirus or what’s going to happen with the stock markets tomorrow or next week. We do know that over time it goes up, but right now, it’s anyone’s guess what might happen.

Susan Strasbaugh:
So, let’s refocus on the things within your plan that we can control. Are you saving in every area you can, if you’re still in the wealth accumulation mode? Are we taking money out of the appropriate buckets when you’re retired? And that may change because of where the market is today. So there’s a lot of things you can do in conjunction with your advisor to put yourself in the best position to maximize your situation during this downturn.

Tim Maurer:
Absolutely. And it’s probably also a decent idea to remind folks that unfortunately there are many out there, either in the financial media or other financial advisors who are looking opportunistically at this, to increase your level of stress with lots and lots of crazy headlines. And perhaps also to suggest that they have some sort of magic pill investment that’s going to make all of this better because you switched to it. I would encourage folks to always be cautious about these types of moves. Anytime someone puts pressure on you, that is time-based, the chances of that recommendation being more in their self interest than in your interests are also likely.

Susan Strasbaugh:
That’s absolutely right, Tim. That’s absolutely been my experience. And fear is a very strong motivator. A lot of sales people unfortunately use two factors, fear or greed. Right now it’s all about the fear. When markets are doing well, it’s about greed and how to take advantage of things being up when things are down. They take advantage of headlines and sell using fear, and I would caution anyone to think twice about interacting with an advisor who’s trying to make them fearful and using that for a decision making tool.

Tim Maurer:
Think twice indeed. Thank you so much Susan, and thanks to you for tuning into this episode of, Ask Buckingham. If you have a question that you’d like to see us address, you can do so by navigating to the website, askbuckingham.com or emailing your question to, question@askbuckingham.com, or you can just click on the screen where you see a little graphic and it’ll take you directly to the website.

Tim Maurer:
Remember, there are no dumb questions, but unfortunately there are plenty of poor answers out there. Our hope is that in giving you straight answers to your questions, you’ll be able to apply that knowledge
in pursuit of good decision making. So please follow us, and by all means, Ask Buckingham.

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