Managing Your Financial Future with Lucia Capital Group

Interest rates went up quite a bit in 2022 - did you notice?  It's a pretty sure bet that you did, since everything from mortgages to credit cards to the value of the stock market were affected.  But are higher interest rates good or bad?  Depends on whom you ask.  To borrowers, it's not so hot.  But to lenders and savers, these rate levels that we haven't seen for more than a decad...

The new year brings with it some new opportunities, on both the planning and the saving sides.  There are new contribution limits on your retirement plans, a fairly large cost of living adjustment on your Social Security benefits, a slight decrease in your Medicare premiums, and much more. Beyond that, there are also new opportunities to plan.  Should you adjust your tax withholding? Will the new...

It's a common scenario: you decide to take your Social Security early, maybe age 62 or 63, and then at age 65 you'll begin taking your pension benefits.  You've already calculated what both your Social Security and pension payments will be, and so you set up your budget and your lifestyle accordingly. But once your pension benefits kick in at age 65, you find out, maybe too late, th...

In the classic 60/40 stock-bond portfolio, the stock portion is supposed to provide the gains, while the task of the bond portion is to cushion the fall when stocks are going down in value.  This past year, though, things haven't quite worked out that way. Both stocks and bonds are down in 2022, as interest rates have risen in an effort to thwart inflation.  Without this so-called "prote...

If you’re accustomed to living on a certain amount each year, with fairly stable savings account balances, it can be a real shock to the system when you suddenly receive a large influx of money that alters your current financial situation.  While a small percentage of people achieve this through winning some kind of cash prize, more often than not it comes about through an inheritance.  Even if th...

A little over a year ago, when the markets were sitting at all-time highs, we addressed the wisdom (or maybe lack thereof?) of converting a traditional IRA (or 401k) to a Roth. Since taxes must be paid in the conversion process, we wondered if high valuations would make it less desirable at that time. The markets in 2022 have not been so kind to investors, as values across the board have come down...

As the year winds down, your opportunity window is also closing to get some things taken care of in 2022.  Taxes, retirement plan contributions, RMDs, charitable contributions -- these are things that need to be done before the new year. What money moves do you need to be concerned about while there's still time?  Tune in to this week's episode of Managing Your Financial Future with podc...

A couple of years ago, we asked the question: why would you own bonds when they (were) paying so little interest?  Many others wondered the same thing, turning to the stock market to help potentially bolster their overall rate of return. Interest rates have risen dramatically in 2022, which changes the question just a bit: is it good to own bonds during a period of rising interest rates?  As rates...

One of the most well-known investing terms is "diversification."  This is the idea that risk can be spread out by investing over a wide variety of different industries, areas, and/ or financial instruments.  While this true to an extent, there is such a thing as being over-diversified, to the point where much (if not all) of your rate of return is watered down by having too many stocks w...

We've been strong advocates of the Bucket Strategy since the 1990s, and came to the conclusion long ago that no one should have to depend on stock market gains to fund their current living expenses.  Buckets was designed to address that issue. With the stock market going through yet another down cycle in 2022, the issue of maintaining a guaranteed cash flow in retirement is once again at the...

2022 has been a year of stock market volatility, but it's also been a year that's given many people a surprise on their tax bill.  When income from stocks is down, you might think that your tax bill should be lower.  But in some instances, this hasn't been the case. Part of the problem stems from the fact that stocks ended 2021 on such a high note.  Because of that, your Required Mi...

As some investors already know, there is a distinct correlation between risk and reward.  The greater the potential reward for an investment, the higher the risk. On the other side of the coin, lower-risk investments tend to produce lower rates of return. This is something that many people often forget — especially those investors who are new to the game. If you pay attention only to a particular...

Creating a withdrawal strategy in retirement, one that aims to keep you from running out of money before you run out of time, is a unique - and difficult - challenge.  It involves much more than simply trying to achieve the best rate of return.  With so many external factors that are out of your control, a good financial plan will also focus on managing risk. How is a financial plan put together? ...

A 401k is often looked at as a "set it and forget it" type of plan: allocate your investments, and simply make regular ongoing contributions from there.  And if you're a young person who's many years away from retirement, that may be a very sound way to look at it.  But while a 401k may be somewhat "think-proof," your asset allocation within the plan is actually very...

How is it possible that two individuals could retire with the exact same portfolio allocation and use the exact same withdrawal strategy, and yet one is still going strong after 40 years while the other is completely destroyed before year 10? The problem comes with the uncontrollable element of investing: the stock market itself.  What happens with the markets in the first few years after retireme...

A  lot of people's attention is focused on building a nest egg: which investment strategies you should use in order to achieve a good rate of return.  But surprisingly little notice is given to how you should extract that money at retirement.  And this may be the more important aspect. No matter how much money you accumulate over your lifetime, if you're careless with how it's event...

How is inflation affecting retired people?  Does a rise in interest rates create problems or opportunities?  Are people in a panic about the stock market, as volatility seems to be the name of the game in 2022? These are all great questions, as podcast host Johnny Dean and his guest, "Professor" Rick Plum, CFP® invite Jonathan Savona, CFP® into the studio to discuss these issues, and wha...

We like to get the perspective of other advisors and what their clients are talking to them about.  In this episode of Managing Your Financial Future, podcast host Johnny Dean and Rick "the Professor" Plum, CFP® talk with longtime financial advisor Terry Keyes, ChFC about what's on the minds of retirees and near-retirees. Are people really concerned about interest rates, inflation,...

Is it really possible to take a six-figure income and pay no federal taxes?    Depending on your income sources, and how you use the tax brackets, it is indeed possible.  What it all comes down to is knowing how the tax brackets work, and knowing what income is taxed at what rate.  The bigger picture for you is this: tax management is one of the keys to potentially paying a lot less. Also: is now...

It's not uncommon for people to reach their retirement years with money socked away in different types of accounts: a 401(k) from work, some personal money in a brokerage account, and maybe some Roth IRAs, to name a few. Once you reach the stage of life where that money needs to be withdrawn, the important question is this: from which account(s) should my funds be taken out, and in what order...

You've saved a certain amount to live from during retirement, maybe many years.  This is your nest egg.  But you're concerned, because the markets are down, the balance has dropped, and since you don't know how long you'll live, you have no clue how much is "too much" to withdraw each month. Retirees face this dilemma all the time.  You need a certain amount to meet y...

In the world of investing, there are things you can control, and things you cannot.  Where is the stock market headed?  Which way are the economic trends going?  These are the uncontrollable aspects, impossible to predict with accuracy. Because of this, we have to assume that certain risks will occur along the way.  And while we don't know which risks will happen when, by being prepared for t...

The first half of 2022 has not been good to stocks.  After hitting record highs at the end of 2021, it's easy to forget that stocks also go down in value from time to time.  And often, when they go down, they do so quickly and painfully.  One question that's always on people's minds when these cycles turn south: Is this something  to be concerned about?  The answer to that question...

In last week's episode, we discussed the various ways that a guaranteed income stream can work; specifically, how annuities function in general.  We received a lot of response to that topic, and more than a few questions as well. When deciding when and how to take your annuity or pension payments, your options can seem almost unlimited.  Sorting it all out requires an understanding of the pot...

There are few financial tools out there with a greater disparity of information than annuities.  Locating the details you need in order to decide if an annuity is suitable for you is an onerous task, to say the least. We're here to help.  Is an annuity a good product for you?  The best answer is this: it depends.  There are several factors involved, but the first step is knowing something abo...