Great article, Kristin!

You’d be surprised - there are a lot of people who can effectively manage credit while still having a financial disaster of insurance and investment products - too little protection, too much risk, too high of expenses paid, etc. Credit means you pay your bills on time, but not that you’re anywhere close to doing the…

The real powerful way to put financial decisions in perspective is to show the impact of those decisions. With some fantastic software, I sit with people and show on-the-fly what spending on something (or not spending on something) does to their chances of reaching other goals. If they are OK with it, great - they can…

Eric, one of the most effective exercises I put my clients through when they feel they don’t have enough money for a goal is to ask, “if your child went to the doctor and it was discovered that they had a condition that was 100% treatable but the medication was $x/month (whatever they need for the goal), where would…

Kristin, I’d like to be able to comment on your articles. Is there something I need to/should do to move my comments from Pending to visible? Thanks!

And in that retirement, you will spend the same amount every year (85% of current income). You will not be required to save for any other goals, you will encounter no unexpected expenses, you are free from all taxes ever, and the timing of your investment returns will have no impact on your account balance.

In situations where the company matches 100% contributions up to a certain amount, it can make sense to at least contribute that amount even if someone cannot afford to do so.

I’m not a CPA but a financial planner, but the taxation on the annuity is similar to that of your 401k. The benefit over a regular brokerage account is that the annual dividends and interest generated in the brokerage fund is taxed annually, and so you lose out on those funds and the compounding you would have on them…

Yes, there are shady people that sell annuities. There are shady people that sell cars, too, but it still makes sense to own one.

And what do you base that blanket statement on?

As a fee-only financial planner (meaning I do not sell the products), I still consider some annuity types to be valuable tools in retirement planning. The term is so clouded with negative connotations, but you don’t hear people saying that they would never take their company pension or Social Security, whose income…

If you never touch your principal, then you will die with a huge sum of money and will have lived unnecessarily frugally. And dividends are not enough to sustain a retirement income.

Roth IRAs do have those advantages, but they aren’t the only game in town. There are limitations to the amount of contributions you can make, they don’t get matching contributions from an employer (if deciding between the Roth and a work 401(k) for example).

Your tax rate at retirement is one of the biggest question marks in retirement planning. The example I use with clients is that you are starting a restaurant now with annual contributions, work to grow it, then at retirement the government will tell you how much of it you get to keep.

Though it’s becoming more transparent these days, most 401(k) fees have been “hidden” to the average consumer which is why they seem cheaper. With a few large company exceptions (I’m looking at you IBM), most of the time you can roll over a 401(k) to an IRA and purchase ETFs for a lower annual cost than the mutual…

And I say that about annuities with the disclaimer that I do not sell them (I am only paid a retainer by my clients). Properly used, they can be a useful tool in some situations.

Check out my blog post on this subject, WorryWart. A CFP who specializes in retirement income (like myself) can usually do much better than 3%.

Living off of dividends? Who still uses that as a strategy for lifetime income?The underlying volatility of individual stocks should be considered, first and foremost. The uncertainty of ongoing dividend payments is another.

Yes, I got into the business 11 years ago and had drank the media kool-aid that only term insurance was proper, annuities were bad, etc. But after years of discussions with experts, spreadsheets, and study about the irrationality of people with money, I understood when and how to use it. Demonstrating that to…

Whole life insurance has gotten so much bad press, but it's simply another tool to be used. Put it in the wrong hands, and damage can be done; used correctly, it can be powerful. I used to sell it as a commissioned advisor, and now that I am a fee-only fiduciary adviser, I still recommend to some of my clients that…