Monthly Newsletter From Jim Eastwood for the J Edward Group

1. J Edward Group Jim Eastwood, CFP®
Financial Coach
P.O. Box 45484
Westlake, Ohio 44145
Financial Formulas…... Tel. (440) 655-1957
jim@jedwardgroup.net
“The real measure of your wealth is how much you’d be worth if you lost all your money.”
- unknown
Your Retirement Checklist the tendency was to assume double-digit returns on
all market-based accounts, while the past decade has
Every financial advisor has some sort of financial given annual returns of less than 5%. Life expec-
checklist to offer their clients. There are never two tancy can only be guessed, but family history, along
completely alike, but all contain some common ele- with your current health, can be used to make initial
ments that are critical when planning for a successful assumptions. Once again, update your initial as-
retirement. Let’s start with what makes for success in sumptions for changes in markets, cost of living, and
retirement, and it is always driven by the lifestyle you any personal factors.
have come to know and enjoy. Maintain your stan-
dard of living in retirement, and you have achieved Other factors to consider include your ability and
success! desire to keep working. Do you have the option to
continue part-time? Consider your own personality
The checklist begins with an assessment of the as well. Will you LIKE being retired? Many profes-
sources of income you can anticipate when you retire. sionals have worked for years to build recognition in
Those might include pension payments, Social Secu- their chosen field, and their identity is closely tied to
rity, STRS, PERS or fixed annuity payments from their work….give up one and you may find that you
some source such as TIAA. Once you know the give up the other! It’s also a good idea to take time
guaranteed sources, you can calculate the amount you to plan what you really want from retirement and de-
may need to withdraw from other sources such as cide whether you can build in some of the pleasures
IRA, Roth, 403(b) or 401(k) accounts to meet your like travel, time with family or any other considera-
monthly needs. If you are able to construct an Excel tions, while remaining employed. Many people say
spreadsheet, it’s a good idea to list your annual ex- they want to retire while they are still young enough
penses with a cost-of-living assumption, and compare to enjoy it, but the longer you can postpone your
the effect of withdrawals from your supplemental retirement date, the greater certainty that your retire-
retirement plans over time. You’ll need to make ment nest-egg will sustain you, no matter how long
some earnings assumptions, and those estimates will you live.
need to be updated from time to time to keep up
with the changes in prevailing markets. In the 1990s, One item that appears on (continued on page 2)
©2012-2013 J Edward Group, Inc. P.O. Box 45484 Westlake, Ohio 44145 Phone: 440-655-1957 Website: www.jedwardgroup.net

2. Page 2 Financial Formulas….
Your Retirement Checklist (continued from page 1)
the checklists of many trophic consequences if though, as any sustained
advisors is the question you guess wrong, and youdecline in the markets
each client should ask, would, in fact, be doingearly-on in a person’s re-
and that is, do you antici- no more than guessing! tirement is damage that
pate that the market will Who has that proverbial can’t easily be corrected.
rise in the early stages of crystal ball that can give
Time is no longer an ally,
your retirement, or is it them ANY degree of cer- and it may be impossible
likely to decline? I find tainty which way the mar-
to stop taking withdrawals
this question particularly ket is going to move next,
that might otherwise al-
bothersome for a number much less over any sus- low the portfolio to re-
of reasons, not the least tained period of time? cover. The better advice
of which is that it asks would simply be to go
you to make an assump- The issue CAN be one back to the figures show-
tion that could have catas- of ultimate importance, ing (continued on page 3)
“It frees you from
doing things you The “Tax Triangle”
dislike. Since I
There are three types of actual mix that is appro- brought into the spending
dislike doing assets that can be part of priate is different for stream. The next are tax-
nearly everything, every investment plan, every individual, but the deferred assets such as
money is handy.” and if you want to make three asset types are uni- IRAs and other retire-
your plan as bullet-proof versal: taxable assets such ment plans. Redemptions
as possible (protected as savings, money markets from these are fully tax-
from changes in tax codes and mutual funds, that are able at the prevailing ordi-
Groucho Marx as well as changes in mar- readily available with little nary income tax rate, and
ket conditions), it’s a or no redemption fees, represent perhaps the
good idea to have pieces and have a potentially greatest future tax liability.
of all three in place. The lower tax impact when (continued on page 3)
Active vs. Passive Portfolio Management
There are lots of people thought is, “The market nearly every investor
who have the tendency, goes up and the market when it comes to how
and understandably so, to goes down, but time will they look at their market-
put their money in the always bring me back on based savings, investment
market and keep it there, track. Nothing stays and retirement plans.
no matter whether it’s down forever.” This has
their retirement money, a been the advice given by The reality that exists
college fund, or some- financial advisors for today is simply that the
thing they may have in- nearly a generation. Right markets have become
herited from parents or or wrong, it has become much more volatile and
relatives. The prevailing the standard used by (continued on page 3)

3. Financial Formulas…. Page 3
Your Retirement Checklist (continued from page 2)
the amount necessary to of whether you may find faster than the ability of
supplement income in the yourself in the position of your portfolio to sustain
first five years of your caregiver at some point in them, so once again ad-
retirement, and position your retirement. An ill- vance planning must be
THAT amount in addi- ness to your spouse or done. The fact is, medical
tional guaranteed ac- partner may force the de- science has advanced to
counts. Once that is in cision to spend much of the point where many of
place, market volatility your time at home unless the maladies that were
early in retirement is only
you have made provision once fatal are now treat-
a minor consideration. with either a fund or in- able, but the degree to
surance to cover the cost which one is disabled may
Another item that needs of hiring a caregiver. linger almost indefinitely.
to be on any retirement Health care costs may rise Always be mindful
checklist is the question (continued on page 4)
that to achieve the
best possible outcome
The “Tax Triangle” (continued from page 2) from your financial
The other disadvantage IRAs and life insurance and thus can be used to planning, never
with retirement plans - accounts. With all these, supplement income and shortcut your
otherwise known as quali- care must be taken to as- maintain reasonable tax
fied savings is that there sure the tax-free status is brackets even in the face financial education,
are time restrictions built maintained, and it’s best of higher overall rates. whether you’re
in to account redemp- to consult a tax advisor to
tions, both on the front be sure they are used Think of the three taking responsibility
and back ends. Last properly, but they can forming a “Tax Triangle”, for your planning or
among the three are tax generate significant in- and do the planning nec-
essary to find out the ideal working with one or
free assets. Included here come streams with very
are tax-free bonds, Roth low or zero tax impact, tax balance for YOU. JE more advisors.
Active vs. Passive Portfolio Management (continued from page 2)
influences can come from $100,000. The passive time consideration and
any part of the globe, not approach of buying and tolerance for risk (both
just what happens here in holding, in this case may equally critical in properly
the U.S. If someone had require years to reach the managing assets). The
$100,000 in their portfolio point of recovery. manager’s job is to actively
and it suffered a drop in watch for changes that
value of 30%, as the 2008 One solution is to hire a will affect market trends,
market did, the new value professional portfolio either positively or nega-
of $70,000 would now manager who works on a tively, and, to use the
have to grow by 43% just fee basis, working with surfer term, “catch the
to get back to the original you to establish a portfo- wave”. (continued on p.4)
lio based on your specific

4. Dedicated To Helping You Find Your Financial Formula
"It is not the critic who counts: not the man who
points out how the strong man stumbles or where
the doer of deeds could have done better. The credit
belongs to the man who is actually in the arena,
J EDWARD GROUP whose face is marred by dust and sweat and blood,
who strives valiantly, who errs and comes up short
P.O. Box 45484 again and again, because there is no effort without
Westlake, OH 44145 error or shortcoming, but who knows the great en-
Phone: 440-655-1957 thusiasms, the great devotions, who spends himself
Website: www.jedwardgroup.net
for a worthy cause; who, at the best, knows, in the
end, the triumph of high achievement, and who, at
the worst, if he fails, at least he fails while daring
greatly, so that his place shall never be with those
cold and timid souls who knew neither victory nor
defeat."
Theodore Roosevelt
Stories from page 1, 2, and 3
Checklist - from page 3 Active vs. - from page 3 manager will admit that
it’s impossible to perfectly
The final consideration Where many advisors time trend changes, but
that goes along with the who do not offer active when you can remove
idea of being a caregiver portfolio management to emotion from the deci-
is the question of whether their clients criticize those sion-making process, it’s a
you may find yourself in who do is to use the old lot easier to make smart
the position of caring for expression, “you can’t decisions.
your children’s children! time the market”. I
It’s hardly an uncommon would agree that this is Passive portfolio man-
situation to find that re- true, but the best active agers usually charge 1%
tired families become the managers never try to time annually to manage assets,
custodians of children the market, instead they while active managers are
whose parents have gone TREND the market, at 2% or more, but the
through a divorce or stepping in to ride the real measure is who puts
when one parent has died. positive waves and back more money in your
Get your checklist to- out when conditions are pocket - or portfolio! JE
gether and plan! JE too rough. A good active