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September is the perfect time for a financial la rentrée!

September is the perfect time for a financial la rentrée!

I’ve been a Francophile for as long as I can remember. I’ve studied the French language (and used to be pretty darned good!). As I teenager, I spent two full summers as a student in the South of France in Aix-en-Provence and Grenoble. I fell in love with French culture, food, literature and, yes, even some cute French boys! When late August rolls around, I’m sure I’m not alone in wanting to emulate the French who, like the rest of Europe, almost completely shut down for a much needed (and completely un-American) two-week-long vacation. But there’s something new about France that I only recently discovered: the French tradition of la rentrée.

As you might expect, la rentrée does have some association with back-to-school season, but it’s about so much more than school children. La rentrée is a time when everyone—school children, yes, but also authors, politicians, and even newscasters—returns from the summer break filled with a nationwide sense of optimism for a fresh beginning. We may be thousands of miles away from Paris, but in the spirit of all things French, I’m on a mission to create our own financial la rentrée right here at home.

The best thing about la rentrée is that it doesn’t feel like a chore. There’s no word to describe it in English, but the closest I can come to putting it into my own words is that while there may be work to be done, each task is approached with hope and happiness and positive energy. Here are five simple steps to kick off your own financial la rentrée this month:

  1. Review your tax strategy.
    With autumn comes the final stretch of the tax year, which means that it’s your last chance to make changes that can have a real impact on your tax bill come April 15. While tax planning is important every year, the new Tax Law makes careful planning particularly important in 2018. As I wrote in my recent tax planning blog post, the current tax tables may understate your withholding, so now is the time to compare your actual withholding amounts with your projected tax bill, and to seek out other opportunities to optimize your taxes.

     
  2. Check your credit report.
    When is the last time you checked your credit report? Monitoring your account balances and financial transactions is very easy and it’s the best way to prevent identity theft and fraudulent use of your credit history. I recommend CreditKarma which offers unlimited and free access to your credit report, as well as a free credit monitoring service. I also like the idea of placing a credit freeze on your account which requires institutions to contact you before approving any new request for credit. Learn more about protecting your financial privacy in my blog post Getting personal about privacy.

     
  3. Weigh your cash balances.
    Cash planning is the foundation for any solid financial plan. If you don’t already have a sufficient “freedom fund” of cash, read why it matters and how to get started in my post There’s no such thing as an unexpected expense. If you do have your fund in place, take a look at how your balance has changed in the past year. If your balance is increasing significantly, you’re likely living below your means and may need to review your financial plan to be sure you are making your money work effectively. If your balance is decreasing, take a close look at why. If you’re living beyond your means or not saving appropriately for vacations, household purchases, and other “expected expenses,” an adjustment is in order.

     
  4. Review your long-term goals.
    Are your financial goals SMART: Specific, Measurable, Achievable, Relevant, and Timely? Are they in writing? As I wrote in my last blog post Am I on the right path?, whether you are investing your time, your money, or both, you need a plan. Reviewing that plan regularly to be sure you’re on track toward your vision of the future is a must. Sit down and spend some dedicated time to explore your goals today—alone or with your partner if you have one—and create a SMART plan to get there on time and on target.

     
  5. Get help with the details.
    When I was in my 20s, I was able to keep myself motivated and physically fit all on my own. These days, not so much. That’s precisely why I hired a personal trainer. Nancy S. knows how to get me in shape and how to keep me motivated throughout the process. Most importantly, she points out things I didn’t know about how to get and stay fit and healthy. When it comes to your finances personnelles, a Certified Financial Planner (CFP®) can be your dream coach. A CFP is trained to help you identify SMART goals and create a realistic plan to get you where you want to be when you want to be there. No matter where you are in your financial life, hiring a fiduciary advisor may be the best la rentrée activity there is.

La rentrée is all about optimism and creating a fresh start.My personal la rentrée this year has been focused on rediscovering my love for French. I’ve been brushing up on my vocabulary and grammar using the Duolingo app (if you want to discover or rediscover any language, I highly recommend it!), I’ve been nose-down in Martin Walker’s Périgord-based detective series Bruno: Chief of Police, and I just discovered a French-language podcast called Coffee Break French that I can’t wait to start. I’m on my way to better, more proficient French and having fun along the way. I hope you’ll join me by embarking on your own la rentrée to improve your finances. What a wonderful way to slip into autumn. And if you do need help to make it happen, you know where to find me. À bientôt!

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Am I on the right path? Rosh Hashanah is the perfect time to be sure you’re on track

Am I on the right path?
Rosh Hashanah is the perfect time to be sure you’re on track

I’ve been listening to the inspiring Rabbi Lord Jonathan Sacks recently. His blog and his podcasts are inspiring (it’s no surprise coming from a man who served as Chief Rabbi of the United Hebrew Congregations of the Commonwealth for 22 years, was awarded the 2016 Templeton Prize, has taught at Yeshiva University, King’s College London, and New York University, and is the author of more than 30 books). His latest blog post, Investing Time, resonated with me. As I sit here today after the long Labor Day weekend, I ask myself, “Am I on the right path?” It’s a weighty question. Perhaps that’s why, so often, we tend to avoid it altogether—including from a financial perspective.

Sacks's blog post is rooted in the festivals of Rosh Hashanah and Yom Kippur, the days when Jews stop for a period of self-reflection. As Sacks says, “Time is short…without a wakeup call, we can sleepwalk through life, wasting time on things that are urgent but not important, or that promise happiness but fail to deliver it.” It’s a message that keeps coming back to me, both in my own life and in the lives of so many of my clients.

Like Dominic and Paula. When they retired two years ago, they found themselves in an enviable financial position. They had sizable retirement accounts after saving and investing for decades. They had wisely waited until age 70 to claim Social Security to maximize their benefits. (For more on the benefits of delaying your claim, read my blog post How long do you plan to live? And are you planning for it?) Plus, they each have something that has become increasingly rare: a guaranteed pension. They were enjoying their journey and had enough income to live a very (very!) good life.

What they didn’t have was a plan.

For the past two years, I’ve watched Dominic and Paula take oodles of money out of savings—far more than a safe 4% withdrawal. Dominic’s gut tells him everything will be just fine, so they have been living the high life. Though Paula stresses about how they can sustain their lifestyle, it’s easier to go with the flow and pretend money is not a concern. They say the current spending is temporary, but without a plan, they have no way to know when they need to change direction.

Sheryl is the opposite extreme. When her husband died last January, she took control of her finances—something she’d never had to do. Jack had handled everything himself, so she had no visibility into how much they owned or owed. Sheryl came to me for help right away, but changing direction has proved to be a challenge. We put together a carefully constructed plan, yet her emotions make her unable to see or believe the numbers. Because she feels off balance and out of control, her finances feel that way too. The result: she continues to work and continues to worry about money, even though she is far under-spending her savings. My job now is to help her stop and take an honest look at where she is today so she can trust that her path—and her plan—is on track.

Sacks says, “Rosh Hashanah and Yom Kippur are festivals that ask us how we have lived thus far. Have we drifted? Have we been traveling to the wrong destination? Does the way we live give us a sense of purpose, meaning, and fulfillment?” How interesting that these are the same questions we ask when building a financial plan. What have you done so far to reach your goals? Moreover, what can we do to be sure you are traveling in the direction of your goals and creating the financial capacity to live your life with a sense of purpose, meaning, and fulfillment?

What I find beautiful about this time of year is that it offers us hope. Our time on earth is short and “unlike money, time lost can never be regained.” When we invest our time wisely following Rabbi Sacks’s Ten Life-Changing Principles, we focus on the things that truly matter. And whether you are investing your time, your money, or both, you need a plan. Which once again brings me back to the words of the wise Rabbi: “Without it, we can sleepwalk through life, wasting time on things that are urgent but not important, or that promise happiness but fail to deliver it.”

No matter your faith or beliefs, may the new year bring health, happiness, joy, and peace.
L’ Shana Tova U’Metuka.

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Grandparenting… and striving to age in happiness and health

Grandparenting… and striving to age in happiness and health

When my grandson JJ celebrated his Bar Mitzvah last spring, I asked him what he wanted as a gift from Grandma. His answer: “I want to take a trip with you!” I was thrilled. I love to travel, of course, and I was utterly grateful that this energetic and amazing 13-year-old boy wanted to spend a week with me. It was a wonderful gift for us both. And boy, did we have an incredible time! However, there is one thing I would have changed if I could: my level of health and fitness.

Always the planner, JJ had cleared the idea with his parents long before making his request (I may be Grandma, but Mom and Dad still make the rules!). He had imagined us in Mexico, but after some research and a wonderful travel agent, we settled on Costa Rica. I had never been there, but it has a reputation for being great for families, chock full of activities, and reasonably priced. For my grandson, Costa Rica sounded exotic and exciting. JJ and I were Central America-bound!

As soon as we arrived, I knew we’d made a great choice. The resorts cater to American tourists, so communication is easy. There were lots of families and people of every age, and I loved watching these multiple generations enjoying their time together. The whole atmosphere was relaxed and comfortable, and it felt like the perfect tropical getaway but without the premium price tag. (Aside from the thermal waters in Arenal, complete with a swim-up lounge and a sushi bar which, I can attest, is crazy expensive when you are accompanied by your teenage grandson who happens to have a passion for sushi!) Our trip included a perfect balance of higher-end resorts and activities that took us away from the tourist area and into the surrounding country.

The further we ventured into the country, the more we learned about the people who live there. I loved talking to our driver, who told us where his family vacations (a wonderful rented cabin very near the expensive hotels) and shared that, thanks to the tourism industry, most families earn about $25K/year—a living wage in Costa Rica. With the help of local drivers, we did everything JJ had hoped for. We hurled down a mountain together on zip lines. We explored the Costa Rican jungle from river rafts. We snorkeled from a catamaran. We trekked over mountain terrain on ATVs. Whenever there was an hour or two to spare, JJ had a new plan—none of which included letting Grandma lounge in a hammock or read a book! Though I was able to get through the trip thanks to sheer willpower, I know it would have been a lot easier and enjoyable for me if I were in better shape. My sedentary lifestyle has taken its toll, which means I needed more time and more help to climb in and out of the jeep, climb to the top of the zip line, and even just walk wherever we wanted to go.

On the flight home, I couldn’t help but think back on how challenging it had been for me to keep up. Yes, JJ is 13 and has boundless energy, but there is no excuse for my physical state. When I stumbled across this list of 30 ThingsYou’ll Regret When You’re Old, number 7 hit home: Failing to make fitness a priority.I don’t consider myself “old”—at least not quite yet!—but I’m done with regret! It’s time to take health and fitness seriously. It’s time to make a change. I talk constantly to clients about ways to build better, happier lives as they age. In my blog, I’ve written that living a joyous life is as much about having financial freedom as it is about being mentally and physically healthy so you can enjoy every minute. It’s time I practice what I preach.

My late Uncle Joe was everyone’s favorite uncle—whether they were related to him or not. Years ago, he told me that the secret to meaningful relationships is sharing one-on-one experiences with others. Children. Adults. People you love, and people you wanted to like better. It’s some of the best advice I’ve ever received. However, Uncle Joe had gotten something else right too: a lifelong Manhattanite, his daily walks kept him fit and healthy as he aged.

My younger granddaughters Noa and Zoe are 11 and 9 respectively. A new goal of mine is to take similar trips with them when they celebrate their Bat Mitzvahs. However, this time, I plan to be fit enough to run circles around them. I've begun working with Nancy S—my new personal trainer. (If RBG can do it, so can I.)  I’m changing how I eat and how I live. My body is going to be with me for the rest of my life. I’ve finally decided to give it the attention it deserves. So get ready to try to catch me, Noa and Zoe, because your new and improved Grandma is on her way!

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Even during the dog days of summer, tax planning is at the top of our agenda

Even during the dog days of summer, tax planning is at the top of our agenda

Holy moly, it’s hot out there!We’re deep in the dog days of summer, when laziness and lethargy rule. Luckily for me (and my clients too!), I’ve been tucked away for two and half days in a perfectly chilly conference room at the IRS Nationwide Tax Forum in San Diego. I’m here, thwarting the dog days, to study up on something that matters more to your finances than you may realize: the new tax laws and how they affect your tax strategy for 2018.

While I am sure this may not be most people’s vision of a perfect late-summer escape, here’s why it is at the top of my list—and why that matters to you and your wallet:

  • The new tax law is (very) complicated!
    While the idea behind the Tax Cuts and Jobs Act (TCJA) may have been to simplify the tax code, getting the details of the law hasn’t been easy for CPAs, EAs, CFPs—and even the IRS! Even now, in mid August, we’re being told that certain forms and regulations are not yet available, but that they are “imminent.” Not only is that less than comforting, but the lack of information is also making it extremely challenging for us to create strategies for our clients that we can be confident will be effective. That said, the topics at this forum are advanced, and they do cover the new rules, laws, and regulations that are clear at this time. I’m here to study the facts, ask questions, and get answers so we can create smart strategies that are compliant and that are designed to work in your best interest.

     
  • Taxes and financial planning go hand in hand.
    As a CFP (Certified Financial Planner professional), my number-one goal is to help give you greater financial confidence. I do this by helping you create and protect the wealth you need to live your ideal life and (here’s the key!) by working to maximize your after-tax cash flow from your income and investments. Considering that the “average” American with an “average” annual income of just under $75,000 pays out a whopping 24% of their income on taxes (excluding sales, FICA, and Medicare), building a smart, compliant tax strategy is a key part of that equation. In down markets, that may mean harvesting losses for use at optimal times. In any market, it means locating assets in appropriate accounts where they’ll be tax efficient, planning backdoor Roth IRAs to give higher earners the benefits of a Roth IRA, determining when and how to defer Social Security claims, and much more.
  • Not all financial planners get it.
    It’s true that the CFP® curriculum includes tax planning and strategy, and CFP candidates are all required to study individual and business tax laws relating to trusts, estates, property, passive activity, at-risk rules, charity, stock options, inter-family matters, state laws, and more. Unfortunately, many financial planners don’t keep up with changes in the tax laws once they’ve passed the exam. (Don’t even get me started on the practices of uncredentialed “advisors”!) The people I have been fortunate to be sitting with for the past two days are all committed to tax planning excellence, and I love that I’m learning as much from them as I am from the IRS team that is hosting the event. These are “my people”!

     
  • There’s simply no such thing as “tax season.”
    August may seem an unlikely time to focus on taxes, but from a planning perspective, tax season lasts all year long. All too often, people opt see a tax pro when they need forms filled out just in time for April 15th. When they take that approach, they miss out on the greatest benefits of tax advice: planning. In reality, the sooner we can start building effective tax strategies under the new law, the better. As an IRS Enrolled Agent, one of my promises to clients is that all of your planning and investing decisions include tax optimization as a top priority. Fulfilling that promise takes training, continuing education, and practice. And that’s precisely why I’m here. (The air conditioning and the San Diego breeze are pretty nice perks as well.)

As we muddle through these last days of summer, make tax planning a priority. At the conference, I attended several sessions about the new Section 199A Qualified Business Income deduction (ask me about it). I also learned that the current withholding tables probably understate withholding, so it’s vital to compare your actual withholding amounts with your projected tax bill now to avoid surprises. It doesn’t stop there. For 2018 there is no unreimbursed employee business expense deduction; ask your employer to consider an accountable plan so he/she can capture the deduction. Look for opportunities to amend prior year returns for items like depreciation and 179 deductions. Personal exemptions have been eliminated but may be made up through increased and additional credits for children and other dependents. Most importantly, if you get a notice—any notice—from the IRS, contact us right away so it can be addressed quickly and properly.

It’s true that the new tax law is confusing (that’s a polite word for it!), but the good news is that knowing the facts and participating in smart planning can have tremendously positive results on your financial picture. While on a break at the conference, I received a call from a client I’ve worked with for years. Gary was walking into his estate attorney’s office with numbers I had provided regarding some community property and the inherited basis. “This looks too good to be true, Lauren. Are you sure the numbers right?” I assured him that, yes, the numbers were accurate—and I let him know that the happy surprise was due to changes in the tax law. Knowing that those changes (and my knowledge of them) saved him a bundle had me smiling all afternoon.

When it comes to your finances, it’s often easier to focus on the things that make the headlines: gaining a few tenths of a percent on CD yields, the dramatic highs and lows of the stock market, and more. But it is taxes that often have the greater impact on how much of your income and your investment returns stay in your pocket. The new tax law includes lots of changes. Know that we’re paying close attention to those changes in the dog days of summer and all year long to help ensure the tax law is being applied in your best interest and, hopefully, in your favor.


NOTE: BEWARE OF IRS SCAMS!
This has been a big topic at the conference. Scams are more prevalent than ever, and phishing scams have bilked more than 15,000 people out of an estimated $272 million dollars! Remember that the IRS will never contact you via phone or email demanding payment! If you are contacted and suspect a scam, forward it to  This email address is being protected from spambots. You need JavaScript enabled to view it. . And talk to us first before handing your hard-earned dollars over to anyone claiming to be from the IRS. We’re here to help!


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From Tanzania: Lessons in the importance of community and the riches of living an ideal life

From Tanzania: Lessons in the importance of community and the riches of living an ideal life

 I'm on a plane again, this time on my way back home from a two-week safari adventure in Tanzania. 

 

Why Tanzania? Why a safari?  It was a trip planned by a women’s dive and travel club called the OBDC (short for the Old Broads Dive Club). Only women can be members, but many of the old broads bring along their old men, too. While I enjoy independent travel, there’s a special loveliness about traveling with a group of like-minded club members. Mfirst OBDC trip was to Fiji last year, and I loved it. So when the luxury safari trip to see the Great Migration was announced, I answered the call and encouraged my friend Robin to go, too. 

 

What an experience.  

 

If you’re unfamiliar with Tanzania, here are some of the facts about this distant part of the world. It is in East Africa and is the location of Mt. Kilimanjaro, Lake Victoria, and the Serengeti region. With a population of 55 million, per capita GDP is about $1,100 per year, and the workforce participation rate is low. (What a contrast to our dollar-driven society!) Unofficially, about 15% of the population does not have enough to eat. Yet, there are so many wonderful things about their society. The population consists of five major tribes, and about 120 tribes in total. People speak their tribal language, the national language of Swahili, and most learn EnglishThere is compulsory education until age 15, and the people take great in pride in their natural environment and their efforts to protect it 

 

Despite the obvious hardships, the people I met did not seem to be suffering. They are a proud, strong, loving community. They told us stories about when they gained their independence, and although the economy regressed after that, they are hopeful and dedicated to a better futureAt a village school we visited (where the children treated us like bona fide VIPs), one little girl told me she wants to be a pilot. Another wants to be a writer. These are people who work hard, cherish family, sing with joy, and are welcoming to strangers—even to 21 Old Broads whose lives and perspectives are worlds apart from their own. 

 

When we were on safari, wwere blessed with marvelous, English-speaking guides who seemed to know every fact there is to know about the incredibly beautiful Serengetithe national park where we traveled. As our guide drove us through the bush, he seemed to know all the other driver guides. For the people we had the good fortune of meeting, there was an easy joy that seemed to come from life itself and their relationships with each other.  

 

Henry Miller once wrote, “One’s destination is never a place, but always a new way of seeing things.” In Tanzania, the people we saw on the streets, met working at our resort, and served as our guides were all living examples of the importance of community in a world that, in my experience, seems to reward independence and the strength to go it alone. In villages that some might see as disadvantaged, I saw joy, hope, and love. Among a people who lacked money for what we Westerners might consider their most basic needs, they seemed to want little. By focusing on community and honoring nature, everyone around me seemed to be living fully—together. This overwhelming sense of community was infectious.  

 

Observing the behaviors of wildebeests, zebras, giraffes, elephants, baboon, birds, hippos, leopards (yes, we saw the big five) was the most amazing part of the journey. Elephantin matriarchal families took care of each other with soft, deliberate gentlenessMillions of wildebeest carefully herded their babies across the Mara riverAs we watched, our group connected at deeper levels and, much like the animals around us, we took gentle care of each other. Perhaps the lesson from the Tanzania trip was how the ability to live an ideal life is defined not by riches or belongings, but from the inside out, and by the community that holds us close 

 

The trip to Tanzania gave me the opportunity to see life stripped down to the basics—for the people around me and for all other species. What are the basics? They are more simple than you might think. What I saw was that all we really need are the natural resources to sustain us, and our interdependence and communityFor better or worse, iour developed society, our primary resource is money. We need money to obtain food, shelter, and clean water. We need money to care for our families and give them safe, healthyand happy lives. Without money, I could never have traveled to Tanzania to share another experience with my friends in the OBDCHowever, money will never—and can never—give us everything we need.  

 

As I head home to Southern California and back to life and business, the importance of community and its role in making it possible to live an ideal life—however you define it—is the lesson I am bringing back home. Perhaps that is the gift the Old Broads and Tanzania itself had in store for me all along. 

 

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All written content on this site is for information purposes only. Opinions expressed herein are solely those of Lauren S. Klein, President, Klein Financial Advisors, Inc. Material presented is believed to be from reliable sources and we make no representations as to its accuracy or completeness. Read More >