Today’s financial world is filled with uncertainty – volatile markets, economic flux and political unrest. These variables impact the balances of our accounts daily, which can make anyone feel helpless in regards to financial security.

But most medical costs aside, the cost of basic living expenses (shelter, clothing, food) and entertainment is determined by you. The key to a sustainable retirement is to limit spending in the face of everything else that you cannot control.

Start planning retirement expenses early
Planning for retirement expenses can be a bit of a guessing game, because you don’t really know how much you will spend until you are actually retired. Careful budgeting before you retire can help you get closer to an estimate. To start:

• Itemize your current expenses and think about which expenses will increase (travel) or decrease (lunches out) in retirement
• Think about which expenses might go away (monthly parking at work) or appear (full health insurance)

Often, people believe their expenses will decrease as soon as they retire – which is far from reality. In many cases, this new sense of “freedom” leads to increased travel, home remodels and even relocation. As such, retirees frequently find that they spend more money in the first few years of retirement than when they were still working. Anticipating for these changes and saving more for the first few years will provide an extra cushion so that you aren’t completely dependent on your investment portfolio.

Where to start?
Spending can often get out of control when it comes to your home. For some, relocation is a retirement goal, which is perfectly attainable. But it is important to know what costs are associated with relocation. Start by researching the following items to factor into your future budget:

• Get an estimate on your new real estate taxes
• Find out the premium on your new homeowner’s insurance
• Look at an average utility bill for that region of the country

If you plan to stay put, think first before investing significant money into a home remodel:

• How long will you be there?
• Is it worth investing the money now?
• If you are traveling and your children aren’t nearby, do you still need to live in a large home?
• Even if the memories of a family home are important to you, is it worth the heavy costs of maintenance and the potential strain on your resources?

Gifting to your family
Spending in retirement can add up quickly when it comes to your children and other family members. Gifting can provide estate tax benefits and, more importantly, benefit a person you love who might be in need. These are fine reasons to share your hard-earned wealth, but this pattern can quickly get out of control and create a detrimental strain on your cash flow. When gifting, make sure that you are actually helping and not enabling that person to become dependent on your financial support long-term.

Consider “self-imposed” inflation
A hidden factor that can also increase your spending in retirement is inflation. In general, prices go up over time. However, it is important to decipher between economic inflation and self-imposed inflation. A properly balanced portfolio can help protect you against economic inflation. However, if you are spending more each year through your own choices, you are the only one that can eliminate the rising expense.

For example, you may feel that it costs more to travel now than it did ten years ago. Economically, this might be true. Or, is it possible that the increase is because of the “upgrade” you have been making to your vacations? The cost of eating out might be going up, but is the increase because you have now become a regular at an upscale steakhouse instead of the local restaurant up the street? If these examples sound familiar, economic inflation might not be fully to blame.

Prioritize, then enjoy
As your advisor, we are here to help you with the planning process. You’ve worked hard for a long time and deserve to enjoy those rewards in retirement. But it is important to understand the difference between wants and needs. Prioritize what is (or what will be) important to you, and understand how that will factor in to your spending. The market and economy might be uncertain, but the key to your financial security is in your hands – you just have to control it.

If you are not currently a client but would like to learn more about Truepoint’s services, please contact Lisa Reynolds. If you are a client and would like more assistance with this process, please contact your lead advisor.

You can also listen to Heather discuss the Viewpoint.

Return to all Truepoint Viewpoints

Truepoint Inc. is an independent wealth management and multi-family office firm based in Cincinnati. Our specialists provide integrated broad-based services to high net worth individuals and families across the country.

We take great care to thoroughly research the information provided in our Viewpoints to ensure accuracy. However, these columns provide general commentary and are not intended to provide specific tax, legal, accounting, financial or professional advice. Readers are advised to seek qualified professional advice on these issues for their specific circumstances. Truepoint Inc. shall not have any liability with for any damages alleged to be caused, directly or indirectly, by the information contained in our Viewpoints. Additionally, none of the material included on our website constitutes a tax opinion and is not intended to be used, and cannot be used, for the purposes of avoiding any tax penalties imposed by the IRS.

You can also view the conference agenda to see more details of the sessions Scott attended.

On behalf of Truepoint, I’d like to thank our loyal clients for their continued support and welcome our new clients. As our client base has grown, it has allowed us to invest in additional resources and capabilities to enhance the experience of all clients.

As we look back on 2011, adding new talent to our team and expanding our office space has been exciting – but we are even more inspired by the high ratings received in this year’s satisfaction survey. For the category of overall satisfaction, over 99% of responses indicated we were either meeting or exceeding expectations. Of those clients, 48% specified we were exceeding expectations. (For more detailed survey results, view the summary.)

What do these results mean to you? Your feedback is essential to our strategic planning process and the direction of our firm. Although we were very pleased to learn we are doing a great job, we realize that our biggest challenge will be to continue to live up to this standard. Our focus in 2012 will be to ensure that our continued growth serves to further enhance the client experience.

In 2011, we experienced an increase in prospective clients who sought out Truepoint. In part, we can attribute this improvement to the success of our disciplined investment approach and personalized advisory services, but we have also benefited from a financial services industry which continues to underserve consumers. We are thankful to those clients who made referrals, as well as to the press, who found Truepoint’s message worth telling.

Going forward, we are narrowing our focus on the type of growth we are seeking. This means that we will be careful to bring the right clients on board who are best suited for our expertise. A specific example is P&G employees. Over the years, we have developed deep expertise in the tax and financial planning opportunities unique to P&G employees. Similarly, we have become particularly proficient in serving an emerging base of new business such as rising professionals, business owners and female investors. By leveraging our expertise to focus on these niche client groups, we are able to optimize our growth.

Two specific areas of focus that will help balance our growth lie in operational efficiency and the development of our team. In 2012, with the help of our technology and client services committees, we are working to ensure that our business processes are running as efficiently and optimally as possible. And by sharpening our hiring process and actively filling our talent pool pipeline, we are able to increase the expertise available to our clients.

We are grateful for the continued trust and confidence our clients place in our firm and will move forward deliberately to ensure that client service levels continue to increase as we grow. Thank you for providing us guidance through our survey process, and as always, we welcome feedback and insights throughout the year, not only at survey time.

You can also listen to Michael give his update here.

For more information, please contact Lisa Reynolds at 513.792.6648 or l.reynolds@truepointinc.com.

Return to all Truepoint Viewpoints

Truepoint Inc. is an independent wealth management and multi-family office firm based in Cincinnati. Our specialists provide integrated broad-based services to high net worth individuals and families across the country.

We take great care to thoroughly research the information provided in our Viewpoints to ensure accuracy. However, these columns provide general commentary and are not intended to provide specific tax, legal, accounting, financial or professional advice. Readers are advised to seek qualified professional advice on these issues for their specific circumstances. Truepoint Inc. shall not have any liability with for any damages alleged to be caused, directly or indirectly, by the information contained in our Viewpoints. Additionally, none of the material included on our website constitutes a tax opinion and is not intended to be used, and cannot be used, for the purposes of avoiding any tax penalties imposed by the IRS.

Our profession is often misunderstood. When a new acquaintance inevitably asks: “What do you do?” I say that I’m a CPA and a financial planner with an independent, fee-only wealth management firm – I help families with their financial decision-making.

“Wealth management, huh?” This typical response is followed by comments about the direction of the economy or which stock is ripe for outperformance. Very few will mention topics such as upcoming tax law changes, protecting one’s estate or arming future generations with the tools they need to be financially successful.

It’s no wonder most consumers are unfamiliar with our role, left to believe that all we do is invest money. The financial services industry is wide and varied, using multiple terms to describe itself and its professionals. Terms like financial advisor, wealth advisor, investment manager and money manager seem to be used interchangeably. More and more, advisors and firms that focus solely on investment management are terming themselves “wealth managers.” Why? Perhaps for the air of sophistication it lends to their marketing materials or to try to differentiate themselves from a competitor down the street.

It also may simply be because investment advisors – traditionally focused on adding value through selection of specific stocks or actively-managed funds – have repeatedly failed to deliver on their value proposition. How, then, would these advisors contend they add value? One way is to claim that they are not only managing investments, but overall wealth.

Our intent is not to generalize about every “wealth management” firm and who is (or who is not) delivering true wealth management services to their clients, but we’ll share our view with you. Wealth management:

• Is the holistic integration of people and information in financial decision making. This integration is best achieved on a real-time basis, with all relevant advisors involved in the decision making and aware of the coordinated strategy.
• Encompasses a variety of areas – investments, tax, estate planning, risk management, cash flow and budgeting, and legacy planning, to name just a few.
• Delivers the greatest value to a client through a team of advisors who can each provide unique expertise on these issues, seamlessly developing recommendations as a team to accomplish the client’s objectives. No one advisor bears the load of knowing every answer to a client’s question; rather, the team is tasked with finding the best answer, taking into account all known information about that client.

However, the value of integration lies not only in the coordination of expertise, but also through the ability to deliver this type of experience in a cost-effective manner.

The result of a successful wealth management experience is ultimately a long-term relationship between a client and his or her team of advisors. The relationship is one of open communication and understanding, where advisors act with the client’s best interest in mind at all times. It functions on a proactive and reactive basis, constantly adjusting to changing circumstances.

As wealth managers, we do more than just invest money. We also provide clients with the confidence of knowing that they can rely upon a team of financial professionals to help them make their next decision.

If you are not currently a client but would like to learn more about Truepoint’s wealth management services, please contact Lisa Reynolds at l.reynolds@truepointinc.com. If you are currently a client and would like to discuss your current wealth management experience, please contact your lead advisor.

Return to all Truepoint Viewpoints

Truepoint Inc. is an independent wealth management and multi-family office firm based in Cincinnati. Our specialists provide integrated broad-based services to high net worth individuals and families across the country.

We take great care to thoroughly research the information provided in our Viewpoints to ensure accuracy. However, these columns provide general commentary and are not intended to provide specific tax, legal, accounting, financial or professional advice. Readers are advised to seek qualified professional advice on these issues for their specific circumstances. Truepoint Inc. shall not have any liability with for any damages alleged to be caused, directly or indirectly, by the information contained in our Viewpoints. Additionally, none of the material included on our website constitutes a tax opinion and is not intended to be used, and cannot be used, for the purposes of avoiding any tax penalties imposed by the IRS.

Caring for your aging parents is something you hope you can handle when the time comes, but something you probably hope you never have to do. Caring for your parents includes helping them plan for the future, and this can be overwhelming, both physically and emotionally. Let’s not forget about the financial toll on your long-term financial security. When the time comes, you may be certain of only two things: your parents need you, and you need help.

Start caring for your aging parents by talking with them about their needs and wishes. In some cases they may not be willing to talk to you about their future, either because they are afraid to face it or they resent your interference. If this is the case, you may need to do as much planning as you can without them.

The first step you should take is to prepare a personal data record. A personal data record lists information you might need in case your parents become incapacitated or die. This record should include all financial, legal, medical, insurance and professional advisor information, as well as the location of important records.

Once this record has been assembled, prepare a statement of financial position for your parents including sources of cash, projected uses of cash and available assets such as mutual funds that can be liquidated to cover cash shortfalls. Making sure that your parents won’t outlive their money is a critical step in ensuring that your own finances will remain sound.

You can’t know everything, and you probably don’t have enough time to learn everything you need to know. That’s why you should seek advice from professionals. If you live far from your parents or are too overwhelmed to handle all your parents’ affairs, you can hire a geriatric care manager who will evaluate your parents’ situation, suggest options, and coordinate professionals.

Don’t try to care for your parents alone. Many local and national caregiver support groups and community services are available to help you cope with caring for your aging parents. If you don’t know where to start finding help, call the Eldercare Locator, (800) 677-1116, an information and referral service sponsored by the federal government that can direct you to resources available nationally or in your area.

What kind of advice will you need?

Your parents’ housing choice will depend upon how healthy they are. As your parents grow older, their health may deteriorate so much that they can no longer live on their own. At this point, you may need to find them in-home health care or health care within a retirement community or nursing home. On the other hand, you may want them to move in with you.

If your parents need financial assistance, you may need to contact professionals whose advice both you and your parents can trust, such as a financial advisor.

Legal advisors can help you plan for your parents’ incapacity by preparing the appropriate documents, contacting nursing home ombudsmen and establishing and monitoring guardianship.

What kinds of support and community services will you need?

If you are uncertain of your parents’ mental or physical capabilities, your parents can undergo a geriatric assessment. They will be evaluated to determine their capabilities and whether they can take care of themselves on a day-to-day basis.

If you need to work or run errands but you can’t leave your parents alone, consider using adult day care. These programs are located in hospitals, churches, temples, nursing homes or community centers. Although it can be expensive, the cost may be subsidized by Medicare, Medicaid, long-term care insurance or health insurance.

You may feel better about taking care of your parents if you are armed with knowledge. You may want to complete first-aid courses or take classes in gerontology.

Many caregiver support groups are available to provide information and emotional support. You may find these support groups helpful if you know little about caring for your aging parents.

Financial and tax considerations for you

Caring for your aging parents is often both an emotional and financial burden. Because many adults today are becoming first-time parents in their thirties, and others are remarrying and rearing second families, increasing numbers of adults are finding themselves in the “sandwich generation.” They face having to pay expenses of growing children, plan for their own retirement, and support their aging parents financially. Thus, it’s important to plan not only your parents’ finances, but your own as well.

If it is clear that your parents won’t have enough resources to pay for their own care, you may need to determine how this shortfall will be met. To do so requires a comprehensive analysis that determines what level of support you can provide without jeopardizing your financial security.

Federal income tax law provides several tax benefits if you are supporting your parents financially. For example, you may qualify for the dependent care credit, dependency exemption and medical expense deductions.

Maintain focus

Clearly this is a very complicated life event that can create a tremendous amount of emotional and financial stress. However, proper planning can help reduce the anxiety allowing you to focus your attention on helping your parents when the time comes.

For more information, please contact Lisa Reynolds at 513.792.6648 or l.reynolds@truepointinc.com.

Return to all Truepoint Viewpoints

Truepoint Inc. is an independent wealth management and multi-family office firm based in Cincinnati. Our specialists provide integrated broad-based services to high net worth individuals and families across the country.

We take great care to thoroughly research the information provided in our Viewpoints to ensure accuracy. However, these columns provide general commentary and are not intended to provide specific tax, legal, accounting, financial or professional advice. Readers are advised to seek qualified professional advice on these issues for their specific circumstances. Truepoint Inc. shall not have any liability with for any damages alleged to be caused, directly or indirectly, by the information contained in our Viewpoints. Additionally, none of the material included on our website constitutes a tax opinion and is not intended to be used, and cannot be used, for the purposes of avoiding any tax penalties imposed by the IRS.