Longview Welcomes Joe Bedingfield

Longview is happy to introduce Joe Bedingfield as the newest member of the Longview Team. Joe has spent the last 18 years in the financial planning profession, with the last 10 years as owner of Bedingfield Financial Planning. Joe is an active volunteer within the Birmingham metropolitan area, serving as a member of his church, Cathedral Church of the Advent, as well as the Monday Morning Quarterback Club and the Crippled Children’s Foundation. Outside of Birmingham, Joe has served as a board member for NAPFA’s South Region and was the Director for the State of Alabama on NAPFA’s and Kiplinger’s Money Bus Tour in 2010.

Joe lives in the Mountain Brook community with his wife, Catherine, and two children, Pearson (12) and Julia (10). Outside of the office, Joe enjoys coaching Pearson and Julia in their various activities as well as playing golf, racquetball, and watching college football

Joe Family

Joe, his wife Catherine, and children – Pearson and Julia

A Goal Without a Plan

JJ

He who fails to plan is planning to fail  - Winston Churchill 

I’ve heard it said that a goal without a plan is just a dream. How often have we set a New Year’s resolution only to see it fall by the wayside before the chill of winter has dissipated? How many times have we vowed to eat better only to sabotage ourselves with the dessert menu or promise to get more sleep only to find ourselves watching late-night television or trying to squeeze in one more chapter of the latest bestseller? Churchill probably wasn’t talking about his New Year’s resolution, but he was spot on in his assessment of personal failure.

We use goals in many aspects of our lives. We set goals for our education and career, for our family, friends, and community. We set goals for our fitness and health and, of course, for our personal finances. Yet, when we fail to put into place a plan to take the steps necessary to achieve a goal, we are setting ourselves up for, well…failure.

This is where SMART goals come into play. SMART is an acronym which lists the criteria we should use for each and every goal we set. I was first introduced to SMART goals over a decade ago and the original idea is attributed to an article written by George Doran in the November 1981 issue of Management Review magazine. It has been updated and expanded a few times since, but the original criteria are as follows:

Specific

Measurable

Assignable

Realistic

Time-bound

Let’s choose a simple goal with which to apply the SMART criteria. For example, “I want to take a European vacation.” That was easy enough, right? The problem is, we have left out all of the specifics, have no way of measuring if we can complete the goal, and have not determined who is responsible for making it happen. Not to mention if we can even afford it or when we are going. Let’s begin applying the criteria to build our goal plan.

Specific: This is usually the “Who?”, “What?”, “Where?”, and “Why?” of the goal. Let’s update the goal to say, my spouse and I would like to take a two-week trip to France. 

Measurable: We need something to determine how we are progressing and when our goal has been met. For this type of goal, we can easily measure the total cost required to complete it. Let’s use a cost of about $10,000. Now that we have an amount, we can easily determine how much money we need to save each week, month, or year to meet our goal when given the timeframe. Let’s use $500 per month savings for our example. We can now measure our savings as we move closer to our trip.

Assignable: Every action required to meet the goal needs to be assigned. In this example, who will ensure the monthly savings is taking place? Who is booking the trip? Be sure that someone is identified for each and every action. Since I usually pay the bills, I’ll take the task of transferring the funds into savings. My spouse will handle bookings: airfare, accommodations, meal reservations, sightseeing tours and the like. 

Realistic: Be sure the goal can be accomplished. If our capacity to save is only $100/month, we clearly will not be able to accomplish the goal in a short period of time. If I’m afraid to fly and want to travel by boat, two weeks isn’t feasible. Choosing an unrealistic goal is setting you up to fail from the beginning. The goal must be achievable. 

Time-bound: Finally, the “When?” This applies not only to the goal itself but to the actions necessary to complete the goal. We’ve already stated that we would like to take a two-week trip. Let’s expand it to say we want to take the trip in two years. We’ll start saving today and begin booking the trip six months out. 

Now, when we put it all together, we have our plan. We will take a two-week vacation to France in two years at a cost of $10,000. I will transfer $500 each month into a dedicated savings account to fund it, and my spouse will begin booking the trip in 18 months. If our cost estimate is correct, our goal will be funded in 20 months. That’s four months to spare! If our savings capability is cut short one month because we had to replace the dishwasher, our goal plan isn’t adversely affected. We could also use those four months to save up a bit of extra spending money for that really nice bottle of French wine.

Cabernet Sauvignon, anyone? 

À la vôtre!

Jeff Jones is a part of the planning team at Longview Financial Advisors in Huntsville, Alabama. He holds a Masters in Financial Planning from the University of Alabama. Jeff can be reached via e-mail at jjones@longviewfa.com

What Do You Want to Hear?

With financial planning being our passion, there is a wide array of topics that we are always willing to talk about. However, we want to write about what you are interested in! Call or e-mail us on any topic in financial planning you want to read about. We may not get to them right away, but we will do our best to incorporate them in future posts.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Longview Financial Advisors, Inc.), or any non-investment related content, made reference to directly or indirectly in this newsletter or post will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter or post serves as the receipt of, or as a substitute for, personalized investment advice from Longview Financial Advisors, Inc.. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Longview Financial Advisors, Inc. is neither a law firm nor a certified public accounting firm and no portion of the newsletter or post content should be construed as legal or accounting advice. A copy of the Longview Financial Advisors, Inc.’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

When Should I Take Social Security?

Jessica Hovis SmithBy Jessica Smith, CFP®, CLU®, CPWA®
NAPFA-Registered Financial Advisor

“When Should I Take Social Security?”

As clients approach retirement, this is one of the first questions asked. It is a question that shouldn’t be taken lightly because the timing could have a big effect on retirement cash flow.  Here are 5 key facts everyone should know about the timing of Social Security benefits:

  1. Early Retirement: You can file for Social Security retirement benefits as early as age 62 (60 for widows). However, for those reaching 62 this year, you’ll take a 25% cut in your benefits for the rest of your life. The additional 4 years of benefit between ages 62 and 66 may not make up the loss in benefits. For example, take a 62-year-old man whose full retirement benefit is $1,500/mo. At age 62, that benefit will be $1,125/mo. If that individual lives past age 77, he would have more cumulative lifetime benefits if he would have waited until his full retirement age of 66 to take benefits. As a reminder, normal life expectancy for a man is around 83 years old.

  2. Working while receiving benefits: If you wait until your full retirement age to receive benefits, you can work and receive benefits at the same time without any penalty. However, if you are younger than full retirement age, there is a limit to how much you can earn without being subject to a penalty. If an individual has not reached full retirement age, but will within the calendar year, their benefit is reduced $1 for every $3 earned above $41,400 (for 2014) until they reach age 66.  If an individual is under age 66 for the entire year, works, and takes Social Security, their benefit is reduced by $1 for every $2 earned above $15,480 (for 2014). These reductions are in addition to the reduction mentioned in fact #1. The Social Security Administration will recalculate your benefit upon you reaching full retirement age to leave out the months that your benefits were withheld, which will result in a slightly higher benefit, but this benefit will still not be as high as the benefit that would have been received had you simply waited until your full retirement age to take your benefits.

  3. Delaying Benefits: You can delay benefits until a maximum age of 70. For each year you delay taking your Social Security beyond full retirement age, you receive an 8% increase in benefits. It is hard to beat an 8% increase that is backed by the government. If you consider the individual mentioned in fact #1, his benefit would increase from $1,500/month at full retirement age to $2,040.73/month at age 70. If he lives past age 80, he would have more cumulative lifetime benefits if he would have waited until age 70 to take benefits.

  4. The Marriage Factor: The timing of Social Security benefits has a bigger effect if you are married. In fact, I’d even suggest that a married couple should look at the decision of when to take benefits jointly, even if one spouse hasn’t reached age 62 yet. If you are considering taking benefits, you’ll also want to consider the survivorship benefit for your spouse, especially if you think your spouse will live longer than you. It may be best to maximize one spouse’s benefit by delaying just so that a higher survivorship benefit can be locked in for the other spouse. If spouse #2 waits until his/her full retirement age to receive benefits after the spouse #1’s death, then spouse #2 will qualify for 100% of spouse #1’s benefit. The survivorship benefit could be substantially higher than spouse #2’s own benefit.

  5. Lesser Known Strategies: If you wait at least until full retirement age to apply for Social Security benefits, there are two lesser known strategies, file and suspend and restricted application, that can be used maximize family accumulated benefits through Social Security. Under the file and suspend option, one spouse can apply for benefits and have payments suspended so that the other spouse can receive spousal benefits. The restricted application allows a spouse to file and receive a spousal benefit, but not take his/her own benefit. The purpose of these two strategies is to find a way to receive some benefit while letting the other benefit, usually the higher income earner’s benefit, grow until age 70. This will also help to potentially lock in a higher survivor benefit when one spouse dies. These options can lead to more accumulated family benefits over the lives of both spouses.

The Social Security system is complex. If you don’t have a good handle on what you are trying to accomplish, you could leave thousands on the table over your lifetime. Luckily, Longview financial planners are equipped to help you with this important decision. We recommend you give us a call before you begin any benefits. 

Jessica Smith is the director of financial planning at Longview Financial Advisors, Inc.  She is a CERTIFIED FINANCIAL PLANNER® practitioner with extensive experience and expertise in insurance and retirement planning.  Visit “Our Team” to learn more about her and other team members at Longview. Jessica can be reached via e-mail at jessica@longviewfa.com.

What Do You Want to Hear?

With financial planning being our passion, there is a wide array of topics that we are always willing to talk about. However, we want to write about what you are interested in! Call or e-mail us on any topic in financial planning you want to read about. We may not get to them right away, but we will do our best to incorporate them in future posts.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Longview Financial Advisors, Inc.), or any non-investment related content, made reference to directly or indirectly in this newsletter or post will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter or post serves as the receipt of, or as a substitute for, personalized investment advice from Longview Financial Advisors, Inc.. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Longview Financial Advisors, Inc. is neither a law firm nor a certified public accounting firm and no portion of the newsletter or post content should be construed as legal or accounting advice. A copy of the Longview Financial Advisors, Inc.’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

Longview Welcomes Jeff Jones

We are happy to introduce Jeff Jones as the newest member of the Longview team. Prior to joining the financial services profession, Jeff spent 12 years supporting the Department of Defense and NASA after receiving his undergraduate degree in Information Systems from UAH. In 2012, Jeff received his Master’s degree in Financial Planning from the University of Alabama and is currently studying for the CFP® exam.

A native of North Alabama, Jeff and his family now call Huntsville home. He and his wife, Jamie, are proud parents to Taylor (11), Grayson (6), and Ayda (1). Jeff has long been involved with the United Way serving the Huntsville community through the Creating Assets, Savings, and Hope (CASH) program. He spends time coaching his sons’ baseball and soccer teams, watching college football and Atlanta Braves baseball, playing softball, and honing his pumpkin carving skills.

Jones Family Pic

 Jeff, his wife Jamie, and children – Taylor, Grayson, and Ayda

 

1st Quarter Market Letter

cedarholm cond
By Jeffrey Cedarholm, CFP®, ChFC®, CLU®

Chief Investment Officer

Only when the tide goes out do you discover who’s been swimming naked.

-Warren Buffet

Don’t you think it odd that market sentiment has a habit of changing with the calendar, or more precisely, from one calendar year to the next?  Other than a tax-year change, which admittedly is a significant change for some, what really changes overnight from December 31 to January 1?  As we go into 2014, our research sources have mostly the same forecast:  a year where returns should be high single digits (8 – 9%) with the U.S. economy stronger, Europe on the road to recovery,  Asia, both developed and developing, having a mixed bag of problems and more market volatility than we have seen in a couple of years.

A wise old market truism says that as goes January, so goes the year.  Unfortunately, back testing data shows this to be correct a high percentage of the time.  So with January over and the S&P down almost 5%, the positive returns may be in jeopardy, but the return of volatility is spot on. Many investors, including some prominent academics, equate volatility with risk, but we tend to view this relationship a little differently.  Human emotions are sometimes slow to turn and where last year’s fourth quarter showed unadulterated greed, it seems the magic of the calendar year change has reintroduced greed’s counterbalance, fear.  Investors knew that our Federal Reserve was beginning to taper its massive quantitative easing program and the initial withdrawal was causing some turmoil in the emerging markets debt and currency markets, but they just kept buying and buying global stocks right up until New Year’s Eve!

As we review portfolios at any time, but especially in last year’s fourth quarter, we do so with the intent of investing any new cash accrued. We typically hold only 2 – 4% cash by design, so this is an endeavor of asset allocation.  Also, we have software that allows us to study our portfolios back tested with the actual assets used in their construction.  With these reviews, the cash percentage numbers were quite dissimilar – about 3% cash we hold on purpose to over 12% showing in our models.  Why such a discrepancy?  Some of our investment managers tend to reverse the greed / fear equation that leads to volatility by accumulating cash as excess greed builds and then deploying that cash as volatility, lower prices and some sanity returns.  This past month has given us a small taste of this smoothing process.

So if we don’t completely agree with many market participants on risk, how do we define it?  Longview really views risk not as volatility per se, but as the “permanent impairment of capital”, a loss so deep that you could not accomplish the monetary life goals you intended.  We view volatility as a necessary reset, where our investment managers get us collectively better values and the investment markets return closer to stable conditions

We wish you all a good investing year and as always, we are very appreciative of your continued confidence.

Jeffrey Cedarholm is the Chief Investment Officer at Longview Financial Advisors, Inc.  He is a CERTIFIED FINANCIAL PLANNER™ practitioner with a passion for investment and wealth management. Jeff can be reached via e-mail at jeff@longviewfa.com.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Longview Financial Advisors, Inc.), or any non-investment related content, made reference to directly or indirectly in this newsletter or post will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter or post serves as the receipt of, or as a substitute for, personalized investment advice from Longview Financial Advisors, Inc.. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Longview Financial Advisors, Inc. is neither a law firm nor a certified public accounting firm and no portion of the newsletter or post content should be construed as legal or accounting advice. A copy of the Longview Financial Advisors, Inc.’s current written disclosure statement discussing our advisory services and fees is available for review upon request.