Advice for Savvy Retirement Planning

How to Save for Retirement Later in Life

This Article Originally Appeared in NewRetirement.com

We’re guessing there might be one or two readers out there who are overwhelmed by the amount of money they need to save to retire comfortably.

But there’s no need to panic, says Robert Henderson, president of Lansdowne Wealth Management in Mystic, Conn.

“It’s one step at a time,” he says. “There are options to minimize your retirement shortfall. And the SOONER you take action, the better.”

Robert recently checked in to outline the steps you can take to make sure you’re covered in your golden years – whether you started saving in your 20s or are catching up in your 50s. Read on to learn more:

Tell us about Lansdowne Wealth Management…what services do you offer?

We are a fee-only Registered Investment Advisor (RIA) in the state of Connecticut. Our primary services consist of investment management, financial planning, and divorce planning.

What sets you apart from other wealth management firms out there?

Robert HendersonIn our area, there are very few fee-only planning firms. While fee-only planning is not for everyone, I have found that many individuals have been specifically seeking out fee-only planners.
 In addition, my focus on planning and consulting in the divorce industry is unique. While I have many peers around the country that also specialize in this niche, I am one of very few in my local area that focuses on dealing with divorce, and more specifically women going through divorce. I credit this specialty to my patience and willingness to work on the “tough” cases.

What do you think are the smartest things we can do to prepare for retirement?

In my experience working with pre-retirees and retirees, I would say the most important things are focusing on paying down debt (though not necessarily mortgage debt), developing a sustainable lifestyle (sustainable from a financial perspective), and preparing for ALL aspects of retirement (i.e., researching healthcare, estate planning, long-term care, tax planning, etc.).

What are the biggest mistakes you see your clients (or Americans in general) making with regards to retirement?

Without a doubt, I see too many people who “live in the moment” during the pre-retirement years (i.e., 50s and 60s) and create a lifestyle that is simply unsustainable in retirement. And when they finally reach retirement, they have a very hard time scaling back on that lifestyle. I also see a fair number of people retiring too early. If you are used to earning and spending a $150-200K combined household income, and you only save $750K saved for retirement (plus social security and maybe even a small pension), you might be looking at only replacing 50 percent of your income. Had you learned to live on much less of that income, then you would be looking at replacing 75-100 percent of it.

In your opinion, what should Americans be concerned about the most today when it comes to saving for retirement?

People need to re-evaluate what they want their working years and retirement years to look like. Longevity is a big problem in America. People live longer, but this also means more need for retirement income and healthcare and long-term care costs.

What advice do you have for those who didn’t start saving for retirement until later in life…is there anyway to make up for lost time?

Sure. Generally when people have a big gap, I try to focus on a multi-faceted approach (as opposed to telling people they need to set aside a huge percentage of their income for retirement).

While every situation is unique, you could:

1. Work a few extra years in your primary career (this allows you to save more and have fewer years to provide for in retirement)
2. Plan to work part time in retirement for a while. These days, most healthy 65-year-olds have plenty of years left to work if they choose. And you don’t need to earn a lot. Sometimes it’s just spending money doing something you enjoy. It also has the added benefit of being flexible, keeping you engaged, and keeping you from spending money.
3. Ramp up your savings. This one is obvious, but bears mentioning. You certainly don’t want to add debt in order to prioritize added savings. But sock away as much as possible.
4. Focus on minimizing your lifestyle. Maybe it means downsizing your house when appropriate, moving to a less expensive area, buying a less expensive car, selling some of the stuff you don’t need or use anymore (e.g., boats, RVs, motorcycles, etc.). And maybe it means finding less expensive ways of enjoying your retirement.
5. Paying down debt.

What are your favorite types of investments for older Americans closing in on retirement?

I try not to get married to any one particular investment or strategy. The economic, interest rate, and investment climate is constantly changing. Fifteen or 20 years ago, you could buy short-term CDs and earn 5 percent. For conservative retirees, that was a great option. Even five years ago, I was still recommending fixed annuities for the shorter end of client portfolios. Today, CDs and fixed annuities pay virtually nothing and are merely short-term savings vehicles. The point is, one size never fits all. However, certain themes are always strong. For example, quality, dividend-paying stocks are – in most cases – a component of all of our portfolios.

What types of investments do you avoid?

I am not a fan of insurance products as investments. Various forms of permanent insurance can be critical in certain situations (e.g., estate planning or businesses continuity planning), but for the most part do not represent good “investments” in the truest sense. 

I also steer clear of illiquid investments such as non-traded REITs and private equity. While there are certain investors where these may be appropriate, for the vast majority of people, quality stocks, bonds, mutual funds, ETFs, CDs, and certain types of annuities should comprise most of their portfolios.

What do you think the future of retirement looks like for us?

The difference between retirement 30 years ago versus today is that today’s retiree needs to be more “self-directed.” You have to make your own savings decisions during your working years, your own investment decisions throughout your life, health and long-term care decisions are critical (and costly), and make important lifestyle decisions (when to retire, what type of lifestyle to lead). Gone are the days where Social Security, Medicare, and your employer (pension) took care of your retirement years.

Connect with Robert on Facebook, Google+, LinkedIn, Pinterest and Twitter.

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About Robert Henderson and Lansdowne Wealth Management

Robert Henderson is the President of Lansdowne Wealth Management, an independent, fee-only advisory firm in Mystic, CT. His firm specializes in financial planning and investment management for retirement, with a special focus on the particular needs of women that are divorced or widowed. He is an Accredited Asset Management Specialist and a Certified Divorce Financial Analyst. Mr. Henderson can be reached at 860-245-5078 or bhenderson@lwmwealth.com. You can also view his personal finance blog, The Retirement Workshop at http://lwmwealth.com/blog and the firm’s website at http://www.lwmwealth.com.

If you are an employee or retiree of General Dynamics, Pfizer, or L&M Hospital, and you would like advice and direction on managing your Fidelity 401K or Hewitt 401K plan, please sign up for our monthly newsletter, which provides complimentary ongoing advice, commentary, and model portfolios for each of those plans. You can sign up automatically at Your 401K http://www.lwmwealth.com/services/your401k.html.

See my Google+ Profile

What is the Social Security Leveling Option?

Social Security Leveling Option

A Social Security Leveling Option on your pension may help you afford early retirement

The Social Security Leveling Option

The Social Security Leveling Option is a pension plan payout option offered by pension plans to level out the income of someone who retires early. The leveling applies to the amount of pension payments and not to the amount of Social Security you will receive. If your employer offers a Social Security level option as a Pension Plan Payout Option, it may be easier to take an early retirement.

How Social Security Income Works

If you were born after 1942, Social Security retirement age is between 66 and 67 to collect full retirement benefits, depending on year of birth, . You can begin receiving reduced Social Security checks as early as age 62, but these benefits are reduced forever. However, there is no option (for non-disabled individuals and non-widowed spouses) to receive Social Security benefits prior to age 62. If you decide to retire prior to age 62, you will need other sources of income. Social Security is indexed to inflation, so every year the Social Security Administration will determine by how much (if at all) they will increase Social Security benefits.

READ: 401K Contribution Limits

How Social Security Level-Up Options Work

The idea behind the Social Security Leveling Option is to provide an increased pension benefit to early retirees while they wait for Social Security Benefits to kick in. Once SS benefits commence (or generally speaking, at age 65), the pension stream would be lowered, thus keeping the retirees total retirement income stable both before and after Social Security begins. It should be noted that the pension leveling option is independent of any Social Security decisions. In other words, you could elect the pension leveling option and then take Social Security benefits as early as 62, or as late as 70.

For example, let’s assume you opted to retire at age 60, and your initial pension payment would be $1,500 per month. In a couple of years when you turn 62, you will start receiving $1,000 per month from Social Security for a total retirement income of $2,500 at that time. If you elected the level pension option, your initial pension amount would be increased to $2,000 and then reduced to $1,000 when you start receiving $1,000 from Social Security. The level pension plan keeps your retirement income at a steady $2,000 per month throughout retirement instead of starting your retirement earning $1,500 and then jumping to $2,500 per month when you start to receive Social Security.

READ: Pension Plan Payout Options – Lump Sum or Other Annuity Options (including Social Security Leveling)

Considerations as a Pension Plan Option

Social Security Leveling has two main requirements: you must be eligible to receive benefits from your employer’s pension plan and you must provide your employer with a written estimate of your Social Security benefit. Although the estimate is usually based on benefits available at age 62, some plans will accept an estimate of benefits available at full retirement age (66), or age 65.

Whether leveling is a pension plan option that makes sense depends on how early you are retiring compared to how much money you give up in long-term pension payments. Social Security has cost-of-living increases, and your pension may also, which could also affect the long term results. But most private company pensions (versus municipal) do not have inflation adjustments. It is best to map out your various income options over time to determine which might work best for your circumstances.

READ: Desired Replacement Rate

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About Robert Henderson and Lansdowne Wealth Management

Robert Henderson is the President of Lansdowne Wealth Management, an independent, fee-only advisory firm in Mystic, CT. His firm specializes in financial planning and investment management for retirement, with a special focus on the particular needs of women that are divorced or widowed. He is an Accredited Asset Management Specialist and a Certified Divorce Financial Analyst. Mr. Henderson can be reached at 860-245-5078 or bhenderson@lwmwealth.com. You can also view his personal finance blog, The Retirement Workshop at http://lwmwealth.com/blog and the firm’s website at http://www.lwmwealth.com.

If you are an employee or retiree of General Dynamics, Pfizer, or L&M Hospital, and you would like advice and direction on managing your Fidelity 401K or Hewitt 401K plan, please sign up for our monthly newsletter, which provides complimentary ongoing advice, commentary, and model portfolios for each of those plans. You can sign up automatically at Your 401K http://www.lwmwealth.com/services/your401k.html.

See my Google+ Profile

 

Lansdowne Wealth Management in the News

Robert Henderson

Robert Henderson

Check out some of the articles that Robert Henderson and Lansdowne Wealth Management have published or been quoted in over the years.

Experts Share their #1 Retirement Planning Tip for Startup Founders

Mint.Com – Expert Interview with Bob Henderson on Managing Your Finances During a Divorce

LoanNow.com – Expert Interview with Robert Henderson on Preparing for Retirement

401K Contribution Limits for 2015

USA Today – Is Your Life Insurance Through Work Enough?, Alice Holbrook, NerdWallet

Investment News – Tips for Finding the Dirt During Due Diligence on Funds and Managers, Liz Skinner

Benefits Pro – Orphaned 401(k) Accounts Stacking Up, Paula Aven Gladych

Interest.com – 5 Good Reasons to Open a Roth IRA Right Now, Craig Guillot

NurseZone.com – Nurses Worried About Retirement Prospects, Jennifer Larson

Investment News – Noise of Potential Gov’t Shutdown Worries Advisers, Liz Skinner

Newsmax Finance – Analysts: Govt Shutdown Is Either a Stock Buying Opportunity or a Disaster, John Morgan

U.S. News and World Report – The 10 Most Difficult Retirement Decisions, Emily Brandon

Dividend.com – Financial Planners Every Investor Should Follow on Twitter, Shauna O’Brien

Time – Retirement Planning: How Do You Measure Up?

Benefits Pro – Should Retirement Plans Include Social Security Benefits?, Paula Aven Gladych

Social Security Leveling Options – The Retirement Workshop, Robert Henderson

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Robert Henderson is the President of Lansdowne Wealth Management, an independent, fee-only advisory firm in Mystic, CT. His firm specializes in financial planning and investment management for retirement, with a special focus on the particular needs of women that are divorced or widowed. He is an Accredited Asset Management Specialist and a Certified Divorce Financial Analyst. Mr. Henderson can be reached at 860-245-5078 or bhenderson@lwmwealth.com. You can also view his personal finance blog,The Retirement Workshop at http://lwmwealth.com/blog and the firm’s website at http://www.lwmwealth.com.

If you are an employee or retiree of General Dynamics, Pfizer, or L&M Hospital, and you would like advice and direction on managing your Fidelity 401K plan, please sign up for our monthly newsletter, which provides complimentary ongoing advice, commentary, and model portfolios for each of those plans. You can sign up automatically at Your 401K http://www.lwmwealth.com/services/your401k.html.

See my Google+ Profile

Connect with me on FacebookGoogle+LinkedInPinterest and Twitter.

Financial Planners Every Investor Should Follow on Twitter

Robert HendersonI was very honored to be mentioned in Dividend.Com recently, for an article highlighting the 16 financial planners that every investor should follow on Twitter.

From writer Shauna O’Brien:
“Twitter can be a great place to find resources and articles that will help you on your financial journey. Although many financial planners avoid social media, there are many that are very active on Twitter. Below are 15 Certified Financial Planners that every investor should follow on Twitter.”

I am very proud to be mentioned alongside some very competent and well-known national financial-planning experts. I personally follow each of them and regularly read their commentaries and posts on a variety of financial topics. Each one of them is worth following.

You can see the article with the list of planners here.

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Robert Henderson is the President of Lansdowne Wealth Management, an independent, fee-only advisory firm in Mystic, CT. His firm specializes in financial planning and investment management for retirement, with a special focus on the particular needs of women that are divorced or widowed. He is an Accredited Asset Management Specialist and a Certified Divorce Financial Analyst. Mr. Henderson can be reached at 860-245-5078 or bhenderson@lwmwealth.com. You can also view his personal finance blog,The Retirement Workshop at http://lwmwealth.com/blog and the firm’s website at http://www.lwmwealth.com.

If you are an employee or retiree of General Dynamics, Pfizer, or L&M Hospital, and you would like advice and direction on managing your Fidelity 401K or Hewitt 401K plan, please sign up for our monthly newsletter, which provides complimentary ongoing advice, commentary, and model portfolios for each of those plans. You can sign up automatically at Your 401K http://www.lwmwealth.com/services/your401k.html.

See my Google+ Profile

Connect with me on FacebookGoogle+LinkedInPinterest and Twitter.

Interview with Robert Henderson on Saving for Retirement Later in Life for NewRetirement.com

Retirement Planning Later in LifeSee my interview in NewRetirement.com, talking about how to make up for lost time when saving for retirement…

“We’re guessing there might be one or two readers out there who are overwhelmed about the amount of money they need to save to retire comfortably.

But there’s no need to panic, says Robert Henderson, president of Landsdowne Wealth Management in Mystic, Conn.”

Read the full interview here.

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Robert Henderson is the President of Lansdowne Wealth Management, an independent, fee-only advisory firm in Mystic, CT. His firm specializes in financial planning and investment management for retirement, with a special focus on the particular needs of women that are divorced or widowed. He is an Accredited Asset Management Specialist and a Certified Divorce Financial Analyst. Mr. Henderson can be reached at 860-245-5078 or bhenderson@lwmwealth.com. You can also view his personal finance blog,The Retirement Workshop at http://lwmwealth.com/blog and the firm’s website at http://www.lwmwealth.com.

If you are an employee or retiree of General Dynamics, Pfizer, or L&M Hospital, and you would like advice and direction on managing your Fidelity 401K or Hewitt 401K plan, please sign up for our monthly newsletter, which provides complimentary ongoing advice, commentary, and model portfolios for each of those plans. You can sign up automatically at Your 401K http://www.lwmwealth.com/services/your401k.html.

See my Google+ Profile

Connect with me on FacebookGoogle+LinkedInPinterest and Twitter.

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About NewRetirement

We started NewRetirement to help our own parents and the millions of baby boomers and seniors like them to retire securely. When our parents asked for help with their finances, we realized that most people do not have the resources to hire an advisor and most financial advice is only geared toward wealthy households, not the average retirees.

Retirement planning is a very complex and tremendously important endeavor. Our goals are to make high quality retirement planning: 1) easy to understand 2) available to and affordable for everyone and 3) inclusive of products and strategies beyond asset allocation and drawdowns.

http://www.newretirement.com/

 

Best Paying Careers

Best Paying CareerThis is a great article from Business Insider showing the Best Paying Careers among 820 different occupations. The article shows a data chart which was constructed by Reddit user Dan Lin, pulling wage data from the Bureau of Labor Statistics.

This chart is a must-read for parents out there helping their children navigate the difficult waters of career-exploration. There are some simple take-aways from this article:

1. The highest paying careers (generally, $75K and over) are clustered among Medicine, the STEM categories (Science, Technology, Engineering, and Math), and Business.

2. The lowest paying careers are clustered among Personal Services, Food Service, Hospitality, Creative/Arts careers, and Retail

3. Moderate paying careers tend to fall within the general categories of Teaching, mid-level Management, Manufacturing, Skilled Labor, Therapists/Social Workers, Technicians, and Mechanics.

Highest Paying Careers

Highest Paying Careers

 

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Robert Henderson is the President of Lansdowne Wealth Management, an independent, fee-only advisory firm in Mystic, CT. His firm specializes in financial planning and investment management for retirement, with a special focus on the particular needs of women that are divorced or widowed. He is an Accredited Asset Management Specialist and a Certified Divorce Financial Analyst. Mr. Henderson can be reached at 860-245-5078 or bhenderson@lwmwealth.com. You can also view his personal finance blog,The Retirement Workshop at http://lwmwealth.com/blog and the firm’s website at http://www.lwmwealth.com.

If you are an employee or retiree of General Dynamics, Pfizer, or L&M Hospital, and you would like advice and direction on managing your Fidelity 401K or Hewitt 401K plan, please sign up for our monthly newsletter, which provides complimentary ongoing advice, commentary, and model portfolios for each of those plans. You can sign up automatically at Your 401K http://www.lwmwealth.com/services/your401k.html.

See my Google+ Profile

 

IRA Contribution Limits 2017

IRA Contribution LimitsIRA Contribution Limits

Each year the IRS publishes updated IRA contribution limits, as well as catch-up contribution limits for the new year. Typically, the limits the IRS sets each year is based on inflation factors (with minimum $500 increases), so they do not necessarily increase the limit each year.

The IRA Contribution Limit for 2017 has been established with NO increase over 2016.

The limit on IRA contributions applies to both deductible and non-deductible Traditional IRA’s, as well as Roth IRA’s. You may contribute to either type (if you qualify), but you are still subject to the same total aggregate contribution limit.

Income Limits Adjusted Up $1,000-2,000

IRA contributions are only allowed if your Modified Adjust Gross Income is below a certain level . For single filers in 2016, that income threshold starts at $118,000 (up from $117,000) and ends at $133,000 (up from $132,000). In that range, your contribution is limited, eventually reaching zero. For married filers in 2016, that income threshold starts at $186,000 (up from $184,000) and ends at $196,000 (up from $194,000).

2017 2016
Roth IRA Contribution Limit $5,500 $5,500
Roth IRA Contribution Limit if 50 or over $6,500 $6,500
Traditional IRA Contribution Limit $5,500 $5,500
Traditional IRA Contribution Limit if 50 or over $6,500 $6,500
Roth IRA Income Limits (for single filers) Phase-out starts at $118,000; ineligible at $133,000 Phase-out starts at $117,000; ineligible at $132,000
Roth IRA Income Limits (for married filers) Phase-out starts at $186,000; ineligible at $196,000 Phase-out starts at $184,000; ineligible at $194,000


READ:
2016 Social Security Inflation Adjustment
401K Contribution Limits 2017
Don’t Buy-and-Forget the Investments in Your 401K Plan

Recent History of IRA Contribution Limits:

As you can see, the IRA contribution limits do not rise dramatically each year. Although over time, if investors are diligent about increasing their contributions, it can certainly make a difference.

  • 2017 – $6,000
  • 2016 – $6,000
  • 2015 – $6,000
  • 2014 – $5,500
  • 2013 – $5,500
  • 2012 – $5,000
  • 2011 – $5,000
  • 2010 – $5,000
  • 2009 – $5,000
  • 2008 – $5,000

Over Age-50 Catch Up IRA Contribution Limits

For those of you that are over age 50 (or turn age 50 before the end of the year), you are allowed an additional IRA “catch-up” contribution. These limits have not adjusted for inflation, but may at some point in the future:

  • 2017 – $1,000
  • 2016 – $1,000
  • 2015 – $1,000
  • 2014 – $1,000
  • 2013 – $1,000
  • 2012 – $1,000
  • 2011 – $1,000
  • 2010 – $1,000
  • 2009 – $1,000
  • 2008 – $1,000

IRA Deduction Limits

Roth IRA contributions are not tax deductible.

Your deduction is allowed in full if you (and your spouse, if you are married) aren’t covered by a retirement plan at work.

If you ARE covered by a retirement plan at work, you can see the income limitations at the IRS website by going here.

IRA Income Limitations for Deductible Contributions:

If you ARE covered by a company sponsored retirement plan:

If Your Filing Status Is… And Your Modified AGI Is… Then You Can Take…
single or
head of household
$61,000 or less a full deduction up to the amount of your contribution limit.
more than $61,000 but less than $71,000 a partial deduction.
$71,000 or more no deduction.
married filing jointly orqualifying widow(er) $98,000 or less a full deduction up to the amount of your contribution limit.
 more than $98,000 but less than $118,000  a partial deduction.
 $118,000 or more  no deduction.
married filing separately  less than $10,000  a partial deduction.
 $10,000 or more  no deduction.
If you file separately and did not live with your spouse at any time during the year, your IRA deduction is determined under the “Single” filing status.

If you are NOT covered by a company sponsored retirement plan:

If Your Filing Status Is… And Your Modified AGI Is… Then You Can Take…
singlehead of householdor qualifying widow(er) any amount a full deduction up to the amount of yourcontribution limit.
married filing jointly or separately with a spouse who is not covered by a plan at work  any amount a full deduction up to the amount of yourcontribution limit.
married filing jointly with a spouse who iscovered by a plan at work $183,000 or less a full deduction up to the amount of yourcontribution limit.
more than $183,000 but less than $193,000 a partial deduction.
$193,000 or more no deduction.
married filing separately with a spouse who is covered by a plan at work  less than $10,000  a partial deduction.
 $10,000 or more  no deduction.
If you file separately and did not live with your spouse at any time during the year, your IRA deduction is determined under the “Single” filing status.

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Robert Henderson is the President of Lansdowne Wealth Management, an independent, fee-only advisory firm in Mystic, CT. His firm specializes in financial planning and investment management for retirement, with a special focus on the particular needs of women that are divorced or widowed. He is an Accredited Asset Management Specialist and a Certified Divorce Financial Analyst. Mr. Henderson can be reached at 860-245-5078 or bhenderson@lwmwealth.com. You can also view his personal finance blog,The Retirement Workshop at http://lwmwealth.com/blog and the firm’s website at http://www.lwmwealth.com.

If you are an employee or retiree of General Dynamics, Pfizer, or L&M Hospital, and you would like advice and direction on managing your Fidelity 401K or Hewitt 401K plan, please sign up for our monthly newsletter, which provides complimentary ongoing advice, commentary, and model portfolios for each of those plans. You can sign up automatically at Your 401K http://www.lwmwealth.com/services/your401k.html.

See my Google+ Profile

Fee-Only Financial Advisor in CT

Financial Planners in Connecticut

Lansdowne Wealth Management, LLC (“LWM”) is an independent, fee-only financial planning firm based in Mystic, Connecticut that offers financial retirement strategies backed by education, knowledge, and experience. Our clients depend on us to provide personalized, thoughtful service and advice. As a fee-only Registered Investment Advisor, we present you with objective, independent guidance for achieving your goals. Successful individuals and families in southeastern Connecticut, Rhode Island and throughout the United States rely on us to guide the way so they can be confident in their futures.

Our goal is to provide our clients with the most complete Asset and Wealth Management services available. From the very beginning, our objective is to provide individual investors with the same level of sophisticated management as institutional investors. We are proud to say that the services our clients receive rival that of large institutions.

In addition to providing portfolio management services, we also provide our clients with the opportunity to access our comprehensive Fee-Only Financial Planning and Wealth Management services. More details are provided regarding our Asset and Wealth Managements services in our Services section.

401K Advice in CT

For those individuals that are employed at Pfizer, General Dynamics, or L&M Hospital, we have a unique 401K service that allows us to directly manage their Fidelity 401K assets, without removing their assets from the 401K plan.

Robert C. Henderson is the President and a financial advisor at LWM. Prior to founding the firm, Mr. Henderson was a financial advisor with a nationally recognized brokerage firm. His previous experience included numerous senior corporate financial positions, including Director of Finance and Accounting and Controller positions. Mr. Henderson holds a BS degree in Accounting from Bentley University, earned the Accredited Asset Management Specialist (AAMS) designation from the College for Financial Planning, and is a Certified Divorce Financial Analyst (CDFA).

Mr. Henderson can be reached at 860-245-5078 or bhenderson@lwmwealth.com. You can also view his personal finance blog, The Retirement Workshop at http://lwmwealth.com/blog and the firm’s website at http://www.lwmwealth.com.

See my Google+ Profile

What Is a Certified Divorce Financial Analyst?

CC-Dollar DrainOne of the most difficult aspects of divorce can be the financial trauma inflicted on both parties. Not only can the direct costs of divorce be significant (such as attorney fees, transitory costs, etc.), but the lifelong financial outcome and unanticipated financial consequences of divorce can be catastrophic.

There is no getting around the fact that a household income (be it one or both spouses working) that was supporting one household that now must support two, will often result in a lower standard of living for one or both parties. But there can also be a piece missing from the “typical” divorce process that can magnify negative financial outcomes. More often than not, parties to divorce do not seek financial counsel, either early enough, or at all.

What is a Certified Divorce Financial Analyst®?

A CDFA™ is a financial professional who has the requisite test results and experience level to be certified to help people navigate the specific money issues that come up during a divorce. A CDFA™ is someone who comes from a financial planning, accounting or legal background and goes through an intensive training program to become skilled in analyzing and providing expertise related to the financial issues of divorce.

What Does a CDFA™ Do?

The role of the CDFA™ is to help both client and lawyer understand how the financial decisions made today will impact the client’s financial future, based on certain assumptions.
The CDFA:

  • Becomes part of the divorce team, providing litigation support for the lawyer and client, or becomes a member of a Collaborative Law team.
  • Identifying the short-term and long-term effects of dividing property.
  • Analyzing pension and retirement plan issues.
  • Determining if the client can afford the matrimonial home – and if not, what might be an affordable alternative.
  • Evaluating the client’s insurance needs.
  • Establishing assumptions for projecting inflation and rates of return.
  • Bringing an innovative and creative approach to settling cases.
  • Provides the client and lawyer with data that shows the financial effect of any given divorce settlement.
  • Appears as an expert witness if the case should go to court, or in mediation or arbitration proceedings.
  • Is familiar with tax issues that apply to divorce.
  • Has background knowledge of the legal issues in divorce.
  • Is trained to interview clients.
  • Collect financial and expense data.
  • Help client’s identify their future financial goals.
  • Develop a budget.
  • Set retirement objectives.
  • Determine how much risk they are willing to take with their investments.
  • Identify what kind of life style they want.
  • Determine the costs of their children’s education.

Why Do I Need a CDFA™?

Just like a CDFA™ would not try to counsel someone on the legal or emotional aspects of divorce, many other professionals (ie. divorce attorney, therapist, stock broker, etc.) are not trained to advise on the financial aspects of divorce. If you and your spouse have significant financial assets, the financial ramifications can be substantial. It is best to enlist the help of a financial professional specifically trained to guide you through the process. It is a small price to pay when the implications of a major financial mistake can be significant.

How Do I Find a CDFA™?

The easiest ways to find a qualified CDFA™ are to either ask your divorce attorney for a recommendation, or to visit the Institute for Divorce Financial Analysts (InstituteDFA.com).

Robert Henderson is the President of Lansdowne Wealth Management, an independent, fee-only advisory firm in Mystic, CT. His firm specializes in financial planning and investment management for retirement, with a special focus on the particular needs of women that are divorced or widowed. He is an Accredited Asset Management Specialist and a Certified Divorce Financial Analyst®. Mr. Henderson can be reached at 860-245-5078 or bhenderson@lwmwealth.com. You can also view his personal finance blog,The Retirement Workshop at http://lwmwealth.com/blog and the firm’s website at http://www.lwmwealth.com.

Preparation of QDRO’s in Connecticut

In addition to their divorce financial planning work, Lansdowne Wealth Management also partners with Dr. Robert Hetsler, a national expert on the preparation of divorce QDRO’s (Qualified Domestic Relations Orders). As a team, they provide the most accurate QDRO’s in CT, with one of the fastest turnarounds in the industry. For more information on the preparation of QDRO’s in CT, please see our website, www.QDRO-CT.com.

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Financial Common Ground

Financial Common GroundOver the past few weeks, respected financial planner, author, and blogger, Tim Maurer addressed the financial planning community with what he saw as a breakdown in the authoritative qualities of our professional. More to the point, and to paraphrase what Tim said in his recent Forbes article, it seemed that the disagreement among various financial planners, bloggers, media personalities, and educators had become so vitriolic and uncomfortable that it has caused tremendous confusion in the eyes of the public.

So Tim set out to identify a series of principles that all financial professionals can agree on and live by. While there still remains many, many differences in the way professionals manage investments and dole out financial advice, the following are a list of the Principles that we agreed upon. In establishing these Principles, Tim reached out to the financial community to seek support, guidance, and collective wisdom in drafting these points.

His efforts culminated in his website entitled, Financial Common Ground – The Unifying Principles of Personal Finance. Here are the Principles that we agreed to:

  • Progress: The benchmark for success in personal financial planning is progress, not perfection. Excellence is more a product of good habits than a revolutionary event.
  • Discipline: A household must consistently spend less than it earns, regardless of the level of income. The foundation of financial success is a disciplined cash flow system (such as a budget), which is designed to make household spending decisions purposefully and in advance.
  • Debt: Debt wisely used can help build wealth, but fueling unsustainable lifestyles with borrowing is the quickest path to financial ruin. We are well-served to pursue an eventual debt-free path.
  • Buffer: Changes, surprises and failures are guaranteed, but their impact can be minimized through the creation of a financial buffer. This buffer—a cushion of cash savings—will help lessen the burden of emergencies and other unexpected events.
  • Risk: It is better to make an informed risk management decision than to act on a consequential reaction. Many risks can be adequately managed through risk avoidance, risk reduction or self-insuring through risk assumption. However, the potential for catastrophes from which a household could not survive financially should be transferred through insurance.
  • Investing: Investors have succeeded utilizing strategies on a continuum ranging from entirely passive to surprisingly active. None succeed purposefully, however, without following a disciplined strategy.
  • Taxes: Taxes are an important element of financial decisions, but rarely the most important. Tax minimization is wise while tax evasion is illegal.
  • Giving: Giving of time and money is good for everyone, donors and recipients alike, and may also result in a reduction in taxes.
  • Future: Plan for tomorrow, live for today. Failure to plan for major expenses, such as education and retirement, is folly; but deferring all gratification for the future strips the joy from life today.
  • Estate: Everyone, with very few exceptions, should have well-conceived and clearly written estate planning documents including, at minimum, a will (with or without a revocable trust), a durable financial power of attorney and advance directives (including a health care power of attorney and living will).
  • Legacy: Leaving a legacy—a relational impact on friends, family and community—is as or more important than leaving an estate—the sum of your assets less your liabilities at death.
  • Guidance: Whether from a book, blog, article, class, radio program, TV show, advisor or specialist, financial advice is only beneficial to the degree that it is consistent with your values and goals and leads to action.

Robert Henderson is the President of Lansdowne Wealth Management, an independent, fee-only advisory firm in Mystic, CT. His firm specializes in financial planning and investment management for retirement, with a special focus on the particular needs of women that are divorced or widowed. He is an Accredited Asset Management Specialist and a Certified Divorce Financial Analyst. Mr. Henderson can be reached at 860-245-5078 or bhenderson@lwmwealth.com. You can also view his personal finance blog,The Retirement Workshop at http://lwmwealth.com/blog and the firm’s website at http://www.lwmwealth.com.