Retirement Planning for People Who Love to Travel – Beware the Bucket List

Beware the Bucket List - People run with the bulls, photo from above

Failing to Plan for Travel Spending Later in Life Can Sink Your Retirement Plans

The rule-of-thumb for spending in retirement is your expenses will drop to 80% of what they were pre-retirement. This number may be adequate for some retirees, but for travelers – it’s unacceptable.

The Botswanan safari you’ve always dreamed of is expensive. The RV you’re going to use to explore the country will set you back a fair amount too. Plane tickets to visit the Cup of Noodles Museum in Japan – not cheap, and a little odd, but no one is judging you here. That bucket-list of travel experiences and destinations you want to conquer can significantly affect your budget. And according to Merrill Lynch, 67% of retirees age 50 and older have not budgeted for travel in retirement.  

bucket list travel - safari where a giraffe stretches upward to eat leaves from a lone tree in the savanna

As a traveler, you should expect an increase in travel-related expenses for at least the first several years of retirement as you work through your bucket list. You’ve been dreaming about the moment for many years, you’re feeling healthy, and the jump in leisure-time all will contribute to a jump in travel spending.

How do you prepare for this new chapter in life? Create a retirement budget that includes all of these new, travel-related expenses. The earlier, the better, so you can make the necessary adjustments in your spending and saving habits along the way.

Expenses That Will Decline

Let’s start with the good news first. You have expenses during your working life that will likely go away or drop substantially when you retire.

Your daily commute can include gasoline, parking, wear and tear on your car, and the cost of public transportation. These will disappear except as they relate to leisure.

Your wardrobe will likely change, as well. Goodbye work clothes, hello loungewear! Yes, this may be an oversimplification, but you should be able to retire enough clothing to the point of actually being able to find something in your walk-in closet.

College tuition for children and mortgage payments are additional expenses that can go away. Taxes should decrease given the drop in work-related income. In addition, there’s no need to save for retirement anymore, because you’re living it!

Expenses That Will Increase

Yes, spending will increase in certain areas of your life during retirement. Some of these expenditures you will welcome with open arms, and some you will grudgingly pay wearing a look of disgust.

Travel expenses can jump dramatically in the first few years of retirement. However, there can be a considerable difference depending on your travel style. Flying in first-class while hop-scotching around the Pacific, staying in 5-star

5 Star Resort in the South Pacific on many people's bucket list

resorts, and dining at 3-star Michelin restaurants is one end of the spectrum. Driving a few states away to attend a barbecue with your family who put you up for the weekend will be less expensive.

The cost of health care in retirement is what every red-blooded American fears. But preparing for these expenses ahead of time can ease the sting.

Budgeting

If you don’t currently have a budget, I highly recommend you put one together. It’s retirement planning 101 and is key to projecting when you’ll be able to retire.

Your budget is likely to change dramatically, however, at retirement, especially if you’re a traveler. I recommend you put together a second budget, which will begin once you retire.

Many expenses in your life will not change at all. However, for those that will, do your best to estimate the change, especially for items that will significantly affect your budget.  

One expense that can drastically move up or down is housing. Paying off a mortgage or downsizing can bring down the cost substantially.

Is relocation a consideration? What does the cost of living look like in the new location? Do you want to buy a vacation home, but keep your original home? Adjust your budget for the potentially significant changes. 

Budgeting for Travel

If you love to travel, this part should be fun. Let your mind run wild and think of all the adventures you’d like to have in retirement. Create a travel bucket-list that contains all of the events you’d like to attend, destinations you’d like to visit, and experiences you’d like to…well, experience.

Do your best to estimate your travel costs accurately.  How many trips will you take per year? How long will they be? Will spending be extravagant or constrained?

Also, ask yourself how your travel might change. As people age, they tend to value service, comfort, and safety more, and they are willing to pay extra for it. Staying in nicer hotels and traveling with higher-end tour groups can be the result. For all but the most intrepid retirees, gone are the days of solo backpacking through Europe and sleeping 10 to a room in hostel bunk beds.

Travel in Style - a hostel room filled with bunk beds

However, there are also changes in retirement that can reduce the cost of travel. The time-freedom that comes with retirement allows travelers to vacation during the off-season, book last-minute deals, and travel in a more deliberate way, such as taking a bus or train instead of an expensive flight.

If you’re like me, you weren’t in a very good mood the day your first invitation to join AARP arrived in the mail. However, a benefit of being over 50 is discount offers start piling up. By the time you turn 65, discounts on airlines, hotels, restaurants, etc. are prevalent.

Now that you’ve put some thought into retirement travel, include it in your budget. Be as accurate as you can, but don’t be afraid to err on the high side. It’s better to budget for a bucket-list trip and decide not to take it than the other way around.

Here are some websites that will help you put together a budget and assist you with finding discounts:

TripAdvisor – an excellent resource for trip planning and pricing flights, hotels, tours, and more.

Kayak – another fantastic resource for pricing the major components of travel, includes one of the most flexible, user-friendly airfare search engines available.

The Senior List – an extensive list of discounts on transportation, lodging, and dining for people 50+.

Numbeo – if you’re trying to determine how expensive/inexpensive a city or country is, this website is includes the local cost of living index and the prices of everyday items.

Winding Down

A difficult part of budgeting far into the future is the many unknowns. One of the most important factors is health. I want to think I’ll still be the healthy, adventurous soul I am now when I’m 90. Unfortunately, this is unlikely to be the case.

Travel spending tends to decline with health. Ask yourself – how healthy and active are/were your parents later in life? How about your grandparents?

Studies show, on average, travel spending starts to decline as travelers enter their 80’s, so this is a good time to start lowering the travel component of your budget. Just don’t do it too rapidly, as many older retirees are still actively traveling. If you want to be conservative, don’t drop it at all.

Summary

Don’t be part of the two-thirds of Americans who fail to budget for travel in retirement. Instead, take a pro-active approach to plan your future and start saving early. The 80% rule-of-thumb may leave you ill-prepared for the active retirement many travelers desire, so try and budget for the large expenses later in life as accurately as possible and be conservative when making estimates. A little planning should ensure you’ll end up crossing off your bucket list in style.  


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    Financial Advisor David Tuzzolino

     

    David Tuzzolino, CFA, CFP®, is the Founder and CEO of PathBridge Financial, a firm that specializes in providing comprehensive financial planning and investment management services for clients that are nearing retirement and love to travel.

    The 5 Biggest Mistakes Made by Travelers Planning for Retirement

    Three pictures of travel destinations lay on a map next to a old film camera

    Do you like to travel? Are you looking forward to a future when your leisure time will be measured in months, not seconds gained by cutting your 30-minute lunch “hour” short?

    A man checks his watch and is pressed for time

    There are pitfalls particular to travelers when planning for retirement. This article will help you avoid them so you’ll be ready to retire and tackle the next chapter of your life with confidence.

    Not Budgeting for Travel in Retirement

    A retirement study published by Merrill Lynch reveals that 84% of retirees over the age of 50 have done “hardly any” planning for leisure activities for the next ten years. And 67% have not budgeted for travel in retirement.

    The best retirement plan in the world is useless if it doesn’t include spending on travel in retirement. For the first several years, retirement-bliss is often filled with bucket list travel, which can be extremely expensive. Your new RV, a trip to the Galapagos Islands, and the two-week African safari won’t be cheap. Sure, your travel spending may decline after this initial period, but it tends to stay elevated for people who love to travel.

    Failing to plan for travel will present you with two difficult choices. Either come up with the money from other places in your budget or miss out on the travel you love.

    Why not build travel into your retirement budget in the first place? Your future self will thank you for it.

    Not Acquiring the Right Health Care Insurance

    Medicare will not cover you in an emergency when you’re traveling internationally, except for very limited circumstances. If you’re a traveler who plans on leaving the U.S. in retirement, you need to make sure you’re insured in another way.

    Some Medigap policies and Medicare Advantage plans will cover you outside of the country, but not all. There are also time constraints to this coverage. For example, Medigap policies will only cover you for the first 60 days when traveling.

    There is also travel insurance that can be purchased on a one-time or annual basis. A year-long policy may be less expensive, depending on how often you are traveling.

    Some credit cards will also pay your emergency medical bills when traveling. Read the fine print carefully, but for travelers without an ongoing plan, this can be a good way to cover yourself without having to shop for a new policy each time you leave home.

    As a traveler, it’s important to objectively analyze your needs and make an informed decision as you approach 65. How much is each insurance option? How much of your medical bills will each alternative pay? What is your exposure if you have a severe medical emergency? Are there time limits when traveling?

    There are enrollment periods when signing up for the government plans, so if you decide to make a change, you might have to wait a while. This is another reason to prepare for the critical decision concerning health care well ahead of time.

    Another concern is early retirement. Travelers that retire before 65 must find health care insurance before Medicare kicks in. Alternatives include the Health Insurance Marketplace, a spouse’s insurance, or a part-time job that provides the benefit.

    Not Using the Right Credit Card

    Finding the right credit card as a traveler can be a warm fuzzy feeling. You will earn miles or points, you will not have to pay foreign transaction fees, you will have access to airport lounges, and sign up bonuses can be tremendous – equivalent to a free flight or more.

    Remember the medical insurance we discussed earlier? Some higher-end cards will not only cover you in case of a medical emergency when traveling, but also include rental car coverage, trip cancellation insurance, lost luggage reimbursement, and medical evacuation coverage.

    Two credit cards with stellar benefits are the Chase Sapphire Reserve Card and the American Express Platinum Card. The Points Guy does an excellent job of explaining the benefits of each. Don’t be shell-shocked by the $500 plus annual fees, as most semi-frequent travelers will easily recoup the cost via attractive benefits such as a $300 annual travel credit and reimbursement of TSA pre-check fees.

    If you’re using the wrong card, you could be missing out on thousands of dollars. That’s money you could spend on another trip!

    Paying Too Much in Taxes

    Raise your hand if you’d like to pay more in taxes. I didn’t think so.

    A woman raises her handMaxing out your retirement accounts is one of the best long-term, tax-saving moves you can make. If you work for a company that matches your contributions to a retirement plan, such as a 401k or 403b, make sure you’re at least investing enough money to capture the entire match. There are many additional tax-advantaged plans you may be eligible for, including an IRA, Roth IRA, SIMPLE, SEP IRA, etc. Use them to save aggressively.

    Do you have access to a Health Savings Account (HSA)? Max it out, and try not to touch the funds until retirement. An HSA presents the opportunity for you to deposit money before tax and withdraw it tax-free. Pay for your current health care needs with after-tax cash instead.

    People who love to travel don’t have to worry about what they are going to do in retirement, because…well, they love to travel. This can lead to early retirement and a prolonged period between a high-income career and the required minimum distributions that must be taken from retirement plans.

    During this stretch, you may find yourself in a lower tax bracket when you retire, which presents the perfect opportunity to convert an IRA or a Rollover IRA into a Roth IRA. You’ll be taxed on the conversion, but this can be your chance to take advantage of a lower tax bracket. This money will grow and be distributed tax-free. It’s better to be taxed early, while in a low tax bracket, then wait until you are forced to take money when you may be pushed into a higher tax bracket. This maneuver can be complicated, so I recommend checking with a financial advisor to see if it’s a good fit for your situation. For do-it-yourselfers who want to dig into this topic, Kitces.com has detailed information on the conversion here.   

    Waiting Until Retirement to Travel

    Waiting to travel can be the biggest mistake you make as a traveler when planning for retirement. If the COVID-19 pandemic has taught us anything, it’s – don’t wait until retirement to travel!

    Few quotes hit home now, during our coronavirus-hellscape, more the one from motivational speaker Wayne Dyer – “Do it now. The future is promised to no one.”

    (David Tuzzolino caveat: “You might want to wait until the pandemic dies down before “doing it now,” but I’m sure you get my point.”)

    Don’t make the mistake of waiting until retirement to start checking items off your bucket list. Things change; you might not get the chance if you wait.

    Your health can deteriorate rapidly, or new responsibilities can come along that make traveling problematic. Money issues may crop up.

    If you love to travel, plan diligently, and create an extra-long list of retirement destinations, events, and experiences. However, the worst thing you can do is sacrifice the present by delaying your travel dreams for a tomorrow that may never come.


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    Financial Advisor David Tuzzolino

     

    David Tuzzolino, CFA, CFP®, is the Founder and CEO of PathBridge Financial, a firm that specializes in providing comprehensive financial planning and investment management services for clients that are nearing retirement and love to travel.

    Retirement Planning for People Who Love to Travel

    A scale balancing a globe on one side and a stack of money on the other side - perfect to illustrate retirement planning for travelers

    What is PathBridge Financial?

    I am a financial advisor who is not going to be a perfect fit for every person seeking guidance. 

    Why? Because PathBridge Financial was designed for a very particular type of client. I developed a firm for people nearing retirement (or retired already), and who love to travel. 

    So what in the world does that look like?  

    B.P.F. – Before PathBridge Financial

    When I left my last job at one of those large, unnamed financial institutions, I had a decision to make. (Actually, the institution appears on my LinkedIn bio, but I thought “unnamed” financial institution added some mystery.)

    The easy path – find a position at another firm and resume my career doing the same thing. I am not someone who hates the corporate world. And I certainly was not the bitter, angry dude who sits in a cubicle all day badmouthing management while frequently shooting glances at a retirement countdown clock. Digital clock with a picture of a lounge chair on a beach that says Countdown to My Retirement

    I worked with a great group of people, and I thought we were adding real value to our clients’ lives. I enjoyed the work, and I was happy to go into the office each day. Sure there was some mind-numbing bureaucracy, but there were also some phenomenal benefits! Oh, how I miss employer-sponsored health care!

    The harder path was starting a firm from scratch. Where do I begin? What if I fail?  What do I do when my computer freezes up 20 minutes before a client Zoom meeting, and there’s no tech-support line to call? Questions I’ve had to answer.

    Eventually, I embraced the challenge of starting a firm of my own.  Computer issues be damned!

    Helping Others

    The idea of helping clients with the financial part of their lives excited me. I won’t go through my entire bio (you can find it here), but I’ve had a long career in the finance world, and I’ve picked up some valuable knowledge along the way. I wanted to share this hard-earned insight and make a difference in the lives of people looking for help.

    The investment and financial planning world is complex and can be challenging to navigate when it’s not your full-time job. But ignoring it is not an option. I’ve seen the change that comprehensive financial planning can make in people’s lives, and it can be monumental.

    Why Focus on Retirement?

    The 10-15 years before retirement are crucial to your financial future. Salaries tend to peak, images of life in retirement start to come into focus, and there’s still time to make meaningful changes, although it’s running out quickly. You’re not alone if you’ve recently woken up in a cold sweat and asked yourself, “Do I have enough money to retire?”

    Each one of us goes through a similar process when preparing for retirement, and by working exclusively with clients at this stage of life, I can deliver customized solutions. As in medicine, would you rather work with a generalist or a specialist?

    People Who Love to Travel

    Traveling adds another dimension to retirement planning. Expenses often jump in the two to three years after retirement as bucket list items are crossed off. Failing to plan for these expenses will lead to a budget shortfall and can damage retirement and travel dreams.Retirement traveler searches for a place to travel. Blue world map covered with a passport, camera, magnifying glass, and a bottle of wine.

    Health insurance, including Medicare, is a minefield for travelers. Many policies will not cover you overseas, and those that do often won’t protect you past 60 days.

    Additional areas of financial planning important to travelers are obtaining the right credit card and buying travel insurance. The right credit card can offer extremely valuable perks such as generous sign-up bonuses, complimentary checked-bag fees, and airport lounge access. The right card may also include travel insurance, which can often allow you to skip the expense of buying a separate policy.

    I have experience working through these issues with clients, and as an avid traveler, I’ve tackled many personally. Again, would you like to work with a generalist or specialist?

    Small Firm

    PathBridge Financial is a small firm. Is this good or bad? It depends on what you’re looking for.

    Some people feel all warm and fuzzy when they enter the wood-paneled offices of a multi-billion dollar banking institution such as Wells Fargo. A firm with an army of financial specialists at their disposal and tremendous resources.

    Unfortunately, you also can be exposed to less than ideal practices. I’m not pointing the finger at any one bad actor. But I have worked in the industry long enough to witness less-than-ideal practices at several firms.

    At large institutions, unless you’re a client with tens of millions of dollars, your account can be passed around to junior advisors with little experience. There is often pressure for advisors to invest client money in company-run products, regardless of whether they are the best alternative.

    Large, public companies are also under pressure from shareholders to maximize earnings each quarter. Questionable revenue-generating activities can be the unfortunate result. 

    On the other end of the spectrum are small firms. Regrettably, I have no wood-paneling. I also don’t have an army of financial specialists sitting in offices down the hall. I do, however, have an outside network of specialists who can help when their expertise is needed.

    I can guarantee that your financial plan and portfolio will be customized using products that are best suited for your situation. There are no proprietary products to be pushed here.

    When you call PathBridge Financial, you’re going to talk to me. And I’m never going to pass your account off to a junior associate because I’m leaving for another firm. There’s also a succession plan in place just in case I’m run down by the proverbial bus.

    Did I skew the benefits of working with a small firm a little in my favor? Hell, yes! I’m slightly biassed, and that’s why I started a small firm instead of going to work for another large institution. There is no right or wrong answer. This is a very personal decision, so do your homework and decide what’s best for you.

    Fee-Only

    There are many ways a firm can be paid for financial advice. Fee-only firms do not earn commissions on the products they sell and are compensated exclusively by clients. This fee structure reduces the likelihood of a conflict of interest arising and your hard-earned money going into a high-commission product sold to you so your advisor can afford a Christmas cruise.

    PathBridge Financial is, and always will be, a fee-only firm. I have also never been on a Christmas cruise. For more on the benefits of a fee-only advisor, please see the following article at smartasset.com: “What Is a Fee-Only Financial Planner?”

    Me

    I’d love to say that I’m the outgoing life of the party – the type of advisor that will enter a room of 100 and leave a half-hour later with 50 new friends. I am not. I’m an introvert. I prefer small groups as compared to a packed room, so networking is not my strongest attribute.

    All is not lost, however! Introverts are known as good listeners, analytical, observant, and trustworthy. Yes, I’d say that describes my 20 plus years in the financial industry.

    My financial planning style involves listening intently to client issues and carefully analyzing the data presented. Trustworthy? I have chosen to operate as a fiduciary because doing what’s in the best interest of my clients is non-negotiable.

    So, no, I will not walk out of that room with 50 new “friends”. But I might walk out of the room, having made a meaningful connection with one or two good people. And building meaningful connections is what being a financial advisor is all about.

    Humor

    If you are a regular reader of my blog, you’ve noticed I like to inject a little humor into my writing. The world of financial planning can get awfully dry sometimes. There’s no reason for this.

    I’m sure there are readers who roll their eyes when my attempt at humor falls flat, but if I can get a slight chuckle every so often, I’ve made financial planning more fun. I know when I find a topic fun, I am more likely to remember the material and implement the information into my own life. Most people react in the same way.

    Investments

    The investment knowledge of financial advisors can range from very little to expert level. Some advisors will contract the investment portion of their business to a third party. There’s nothing wrong with this, and it’s the right thing to do in situations where the advisor’s investment knowledge is lacking.

    I am on the other side of the spectrum. I have spent a good portion of my financial career analyzing and managing investments. I am a CFA® Charterholder, in addition to a CFP® Professional, a distinction only a small percentage of financial advisors can claim.

    I manage globally diversified portfolios with the goal of keeping fees as low as possible while monitoring performance. Tax efficiency is a focus, and investments are chosen based on a long-term time horizon.

    Summary

    PathBridge Financial is not for everyone. However, if you’re looking for a small firm that specializes in helping clients prepare for retirement with a focus on minimizing taxes, reducing fees, and personalized service with a touch of humor, you’re in the right place. If the idea of working with a fee-only, fiduciary with investment expertise, who takes pride in pro-active listening and in-depth analysis, you may have found a home.

    I decided to become a financial advisor to help people, so if any reader ever has a question or concern, big or small, please reach out. I’ll do my best to help. Financial/Retirement planning can be complicated and confusing, so if you decide you’d like an experienced guide to help you navigate the way – PathBridge Financial is here for you.


    If you’d like to see exactly what a comprehensive financial plan looks like that was specifically designed for travelers, please enter your information below. My promise to you, never any SPAM. 

     
     

  • Financial Advisor David Tuzzolino

     

    David Tuzzolino, CFA, CFP®, is the Founder and CEO of PathBridge Financial, a firm that specializes in providing comprehensive financial planning and investment management services for clients that are nearing retirement and love to travel.

    A Financial Advisor Looks at 50

    Birthday Cake for 50 year old

    At the beginning of Jimmy Buffett’s book, A Pirate Looks at Fifty, he summarizes his life in four paragraphs of approximately 400 words. A combination of love, work, failures, and success. It is powerful.

    I encourage anyone reaching the half-century mark to take a quiet evening and pour yourself a drink. Find a comfortable chair and reflect on the past fifty years of your life. There will be pain, joy, and laughter.

    After going through this exercise myself, I found that my first fifty years were remarkably similar to Jimmy’s. Minus the best-selling books, award-winning music, and entrepreneurial super-stardom. But I did win a recreational kickball championship in my forties, so I’ve got that going for me.

    This article is not about the past, however. It’s about planning for the future. After the reminiscing, it’s time to look forward.

    Hitting the Big Five-Oh!

    I’m writing this post because I just celebrated my fiftieth birthday. I managed to make it through the day without crying, but I can’t understand how the time went so quickly. Fifty is here, and it shows. I’ve discovered that when I now go to a restaurant with a large clientele of twenty and thirty-year-olds, I am escorted past the open tables near the front window. I am seated at a dark table in the back, near the bathroom, presumably, so I don’t scare off the young, desirable crowds passing by.

    Nervously, I had dreams about the morning of my fiftieth birthday. I would wake to a loud knock at the door and stagger out of bed. I’d groggily answer the door to be greeted by a smiling AARP representative holding a colonoscopy prep-kit. Welcome to fifty and all the wonderful, new experiences it brings!

    The morning of my fiftieth birthday came to pass with much less excitement than anticipated, however. Unfortunately, I did let out an old-man groan as I crawled out of bed that was decidedly louder than ever before.

    Happy at Fifty? You Might Be Alone

    According to leading happiness studies, the magic age of fifty is close to the most miserable point in our lives. (See chart below.) Mid-life can bring intense pressure when there is a delicate balancing act between the needs of our aging parents and the needs of children, who are messily turning into adults themselves. The dreams of youth are slipping away as there is a realization that time is running out to achieve our childhood dreams. Reaching that workplace mountaintop may now be an unrealistic goal.The Shape of Happiness

    Depressed? Don’t be. There is hope! Happiness rebounds sharply after mid-life until peaking around eighty years old. Who knew we’d all be deliriously happy in our twilight years?

    How can you arrive at this blissful nirvana in good financial shape? Start planning now. It’s never too early, but if you’re fifty like me, it’s time to plan with some urgency.

    Retirement Savings

    Fifty is just a number, but don’t tell that to Uncle Sam. He hands out some tremendously valuable gifts, unlike that deadbeat uncle who gave you expired coupons for Perkins on your big day. The government allows you to put extra money into retirement accounts in the year of your fiftieth birthday. Catch-up contributions can be sizeable. In 2020, you can add an additional $6,500 to your 401k, 403b, and 457 plans. Traditional and Roth IRAs allow for an additional $1,000 catch-up, and you can increase Simple IRA contributions by $3,000 more.

    These catch-up contributions come at a good time. There are often sizeable expenses that disappear around fifty. Extra savings can be deposited into retirement accounts as children finish college and move out on their own. Additionally, if you’ve sent off the final payment on your home or car, apply the extra cash to your retirement accounts and take advantage of these catch-up contributions.

    Asset Allocation

    Your asset allocation decision is very personal. Not only should you take into consideration your future goals and time horizon, but your tolerance for risk is also vitally important.

    Make sure your asset allocation isn’t too conservative. There is an old rule of thumb that says to determine your stock allocation subtract your age from 100, but this can often result in a weighting that is not aggressive enough given longevity trends.

    A fifty-year-old man or woman can expect to live into their eighties according to the Social Security Administration’s life expectancy tables. But you won’t get the chance to be deliriously happy with the other eighty-year-olds if you haven’t saved enough to live comfortably.

    Put forth a concerted effort to calculate a realistic life expectancy. There are dozens of calculators online to assist you that span from simple to complex. Verywellhealth.com has links to four good options. Take into consideration the age of your parents and your overall health. Even if the average life expectancy for a fifty-year-old woman is eighty-five, some will live well into their nineties and beyond. If you must use a rule of thumb, consider subtracting your age from 110, instead, to arrive at a rough stock-allocation estimate.

    Debt

    I am not as opposed to debt as some financial advisors. A reasonable amount of debt at a low-interest rate can be a useful part of your financial plan. However, as you glide by fifty, it’s essential to reevaluate your debt level. A low-interest mortgage is fine. A high-interest credit card loan generated by that spur-of-the-moment jacuzzi purchase, not so much.

    Now’s the time to be saving aggressively for the life you desire in retirement. It’s not time to load up on debt. If you have any high-interest debt, focus on paying it off. If the size of your debt load is significant when measured against your assets, reduce it now.

    Downsize

    You know that debt we just discussed? A great way to reduce it and increase savings is to downsize. The kids are off on their own, and you don’t need the five-bedroom McMansion anymore. By selling your large home and moving into a smaller place, you can save substantially. A lower mortgage payment, lower taxes, and reduced maintenance expenses are all benefits. You also don’t need as much stuff in your new, smaller home. eBay, anyone?

    Are you still going to the vacation home on the lake or using the Harley gathering dust in the garage? Now is the time to reevaluate whether you need all of the expensive things in your life. Sell anything you consider excess and use the money to prop up retirement funds.  

    Long-Term Care

    If you arrive at a point in life where you are unable to care for yourself, long-term care may be needed. The half-century mark is a good time to think about the need for long-term care insurance, even if you hold off several years before making a purchase. Unfortunately, this is not an easy decision to make.

    I usually advise against this insurance for clients who are capable of self-insuring against the risk. Long-term care insurance is full of unknowns that can make policies unattractive. Rates can change dramatically and unexpectedly. The need for long-term care may never occur, or it may be for a relatively short period. Some people may be lucky enough to have a strong family network who they can rely on for care.

    Like many things in personal finance, the final decision on whether to buy insurance depends on your risk tolerance. Some people will sleep better at night, knowing they are insured against whatever risk may come their way.

    Whether you lean toward insuring or not, now is a good time to take a hard look at the issue. Weigh the pros and cons and decide which direction is best for you. Talk to someone knowledgeable about the trade-offs.  

    Estate Planning

    Hopefully, this is something you’ve already considered. No? Now is the time. You’re not getting any younger, and you don’t want the state deciding who gets your collection of Elvis figurines.Elvis Figurine

    The first thing you can do is assign a beneficiary to all of your retirement, brokerage, and bank accounts. This can often be done online and should only take about fifteen minutes per account. Next, make an appointment with an estate attorney who will help you create the necessary documents to ensure your wishes are carried out. 

    Plan Your Future

    So far, we have discussed some rather somber topics. This next part is better. It’s time to decide how you want to spend the rest of your life. How long do you want to work? Where do you want to live? Do you want to travel when you retire?

    After answering these questions, you will get a better idea of how much money you will need to save. It will help you make important decisions about your lifestyle. Save aggressively now so you can relax on a beach in retirement? Or would you prefer to work at a job you love well past the average retirement age? Answering these questions is crucial to your retirement planning.

    Also, consider different scenarios. What does your dream retirement look like if money is not a consideration? What type of retirement is most likely given your expected savings? What concessions are you willing to make if your nest egg doesn’t grow as much as estimated?

    Health

    I’m not a physician. I don’t even play one on tv, so I’ll keep this brief. The best retirement planning in the world is useless if you’re not healthy enough to live out your dreams. Exercise and follow your doctor’s advice. Stick to moderation and go easy on that family-size bag of pork rinds. It was meant to be shared.

    Conclusion

    These topics are not new, and you’ve probably thought about many of them before. However, turning fifty is an excellent excuse to revisit them and nail down a plan for the next chapter of your life. Craft a plan that’s ideal for you and enjoy the journey.


    Would you like to receive the PathBridge Financial newsletter? You’ll receive about 4 emails a month. My promise, only the best stuff and never any spam.

     
     
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    Financial Advisor David Tuzzolino

     

    David Tuzzolino, CFA, CFP®, is the Founder and CEO of PathBridge Financial, a firm that specializes in providing comprehensive financial planning and investment management services for clients that are nearing retirement and love to travel.

    How to Spot a Terrible Financial Advisor You Can’t Trust

    A Terrible Financial Advisor You Can't Trust

    There are dozens of articles available online that will help you find a great financial advisor. This is a little different. If you’re more concerned about spotting an advisor that might steal your entire life’s savings and have a starring role in the next episode of American Greed…this is your article! If you can answer yes to one or more of the following questions, then you have likely uncovered an awful financial advisor.

    Do you own an annuity as you walk out of your first advisor meeting?

    The first meeting with any reputable financial advisor should be mostly about you. What are your goals, dreams, and concerns? Are you being asked open-ended questions? If you find yourself talking very little and the meeting is moving toward the perfect product for you, you’ve stumbled upon a salesperson masquerading as a financial advisor. If you’re being offered an annuity, a variable whole-life insurance policy, or any product, in your first meeting, you have found a terrible financial advisor that is likely more concerned about their commission-checks than your financial well-being.

    Were you guaranteed market-beating returns?

    Welcome to American Greed 101. A slick financial advisor guarantees mouthwatering investment returns. They proceed to deliver splendidly, at least on paper. The victim, already projecting their future fortune, increases their initial, cautious deposit and entrusts the advisor with everything they own. This is usually when the financial advisor starts looting the account, stops answering the phone, and becomes nearly impossible to reach. If you are guaranteed anything involving returns, you have found an awful financial advisor.

    Does the advisor have a lot of white space after their name?

    You think, “This business card looks much cleaner without that confusing, alphabet soup, so why worry?” You’re not sure what those designations mean anyway. CERTIFIED FINANCIAL PLANNER™ professionals (CFP®) and individuals with the Chartered Financial Analyst designation (CFA) have been tested on knowledge crucial to being a competent financial advisor. They have also completed thousands of hours of professional work in the field. These designations will not guarantee you find a great advisor, but it is an excellent place to start your search. The white space on a business card might look great aesthetically, but it guarantees you have found an advisor that has not completed the requirements associated with these highly-respected credentials. (For more detailed information about these designations, please scroll to the bottom of my “About” page.)

    Is the advisor free?

    Only suckers pay for advice! Thankfully your new advisor doesn’t charge a dime! This is never the case. If you are not paying your advisor a fee, either for financial planning or investment management, they are being paid through commissions on the products they sell you. There are plenty of commissioned financial advisors that will have your best interests in mind, but this incentive structure rewards behavior that is less than ideal. Unfortunately, not everyone is as noble as they should be.

    Fee-only advisors do not receive commissions, and your interests will likely be aligned. This is an ideal situation if you want to increase your chances of finding a good financial advisor. If you are unclear as to how your advisor is compensated, ask. If they will not tell you or you are more confused after the explanation than before, you’ve likely found a sketchy financial advisor.

    Are you too busy to do a little background research?

    Information such as criminal charges, convictions, disciplinary actions, customer disputes, and bankruptcies is available online. If you have no interest in checking the background of the financial advisor who will manage your life’s savings, there’s no need to use these resources. But in case you were wondering, this information is available at brokercheck.finra.org and adviserinfo.sec.gov.

    Mistakes happen, so if there is a blemish on an advisor’s past, don’t immediately dismiss them. Ask them about it. They should have a clear and reasonable explanation. If this explanation is lacking or an advisor is associated with more than a few negative incidents, then you have probably found a terrible financial advisor.

    Does the advisor act as a custodian?

    A custodian will hold the assets of a client for safekeeping. Usually, a custodian will be a large, reputable firm acting as a middleman. If an advisor also acts as their own custodian, they have access to your money, and unsavory things may happen. The Bernie Madoff pyramid scheme would not have occurred if a third-party custodian was used.

    Do you hate the word fiduciary almost as much as the word moist?

    When I was growing up, the word moist was most commonly used to describe a perfectly baked cake on tv commercials. Somewhere along the way, it became one of the most offensive words in the English language. Don’t believe me? You could spend the better part of a day putting off blog writing to watch YouTube videos dedicated to the hatred of the word moist. (One of my favorites you can send to your moist-hating friends.)

    Unfortunately, the word “fiduciary” brings out the same reaction in many people. They simply don’t like the word. I get it; it’s confusing and sounds odd. But all fiduciary means is the advisor will do what is in the best interests of their client. Sounds good, no? Avoid the word, and you might find a terrible financial advisor who is doing what’s in their best interests instead.

    Did you sign up with the advisor over the phone without an interview meeting?

    A good advisor will want to meet you to determine if you’re a good fit for their firm. This meeting can be done in person or virtually, but it should be a two-way conversation. Do you feel comfortable with the advisor? Do they seem interested in your wants, needs, and concerns? Are they asking you questions to gauge if you would be a good match for their skillset? A lousy advisor just wants to be paid and will take any client with a pulse.

    Are you confident in your ability to spot a financial advisor you can’t trust?

    Hopefully, you now have all of the tools you need to identify a genuinely awful financial advisor. Are there quality advisors who may run afoul of one or two of the topics just discussed? Yes, but the more red flags you uncover, the more concerned you should be.

    Guaranteeing returns, trying to sell a product in the initial meeting, and acting as a custodian are severe warning signs. These red flags should be non-negotiable.

    It can be a minefield out there, so proceed with caution. And good luck avoiding that awful advisor who will siphon off your retirement savings to buy an apple-red Hummer in order to attend Fyre Festival II in style!

    Below is a picture of David Tuzzolino, CFA, CFP®. He is definitely not a terrible financial advisor. Of course, I’m biased. Schedule a call and find out for yourself.

    Schedule a Call

    Financial Advisor David Tuzzolino

     

    David Tuzzolino, CFA, CFP®, is the Founder and CEO of PathBridge Financial, a firm that specializes in providing comprehensive financial planning and investment management services for clients that are nearing retirement and love to travel.