SlideShare a Scribd company logo
Give Yourself a Financial
Check-Up:
25 Ways to Measure Your
Financial Health
(Older Adult Version)
Dr. Barbara O’Neill, CFP®, AFC®
Owner/CEO, Money Talk
Disclaimers
Class Objectives
• Provide assessment tools to determine
financial strengths and weaknesses
• Provide worksheets to make calculations
• Provide suggestions to improve “financial
fitness” and “screen” for potential problems
(like physical exams)
Repurposed a previous class to focus on older adult finances
Detailed Background
Information
http://www.cefe.illinois.
edu/JCE/archives/2013
_2014_vol_30/2013-
2014_vol_30_pg13-
29_ONeill.pdf
Question
What check-up tools or techniques
do you use to assess your financial
wellness?
Financial Self-Assessment
Tools and Methods
• Financial Statement Check-Ups
• Financial Planning Check-Ups
• Investment Check-Ups
• Later Life Planning Check-Ups
• Personal Characteristics Check-Ups
• Assessment and Comparison Tools
Financial
Statement
Check-Ups
1. Incremental Changes in
Net Worth
• Assets: everything that you own
– Liquid (cash assets)
– Tangible (property)
– Investment
• Debts: everything that you owe
– Short-term (a.k.a., current debt; < 1 year)
– Long-term
• Assets minus debts equals net worth
2. The “Wealth Test”
Source: The Millionaire Next Door (Stanley & Danko)
• Multiply your age by pre-tax income from all sources
except an inheritance
• Divide by 10
• This is what your net worth should be for your age
and income level
• Example: 65 x $40,000 = $2,600,000 divided by 10
= $260,000 minimum net worth
Wealth Test Worksheet
Your net worth (assets minus debts) ________________
Your annual household income from all sources (excluding income from inherited
wealth) _______________
Your age (if two spouses, average your ages) ________________
Multiply your income by your age ________________
Divide line 4 by the number 10 to get expected net worth for someone with your
age and income __________
Divide your net worth (line 1 by line 5) to get your final score. ________________
Interpretation of your Score
2.0 or higher, you rank in the top 25% of wealth builders called PAWs (prodigious accumulators of wealth)
1 to 1.99, you rank in the top half of Americans in your wealth building prowess.
0.51 to 0.99, you’re a below average generator of wealth for your age and income level.
0.50 or lower, you are one of Stanley and Danko’s UAWs (under accumulators of wealth)
Adapted from http://www.bauer.uh.edu/drude/Net.Worth.Worksheet.pdf.
3. Cash Flow Statement
• Relationship of income and expenses
• Track expenses
– Fixed
– Variable
– Periodic/irregular
• Track income (all sources)
• Income Minus Expenses = Cash Flow
4. Irregular Expense Review
• List all expenses that come irregularly throughout
the year
– Examples: car registration, school tuition,
birthdays, holidays, vacations, quarterly property
tax payment, water and sewer bills, insurance
premiums
• Total each expense and divide by 12
• Save that amount monthly in a “holding” savings
account to cover irregular expenses
Irregular Expense Worksheet
Identify the months that you pay irregular expenses, what they are, & the cost
(Example: February, property tax: $1,600). Then add up all of your irregular
expenses and divide the total by 12 to determine the monthly savings amount
• Jan ____________________
• Feb.____________________
• Mar ____________________
• Apr _____________________
• May ____________________
• June ___________________
• July ____________________
• Aug ____________________
• Sept ____________________
• Oct _____________________
• Nov _____________________
• Dec _____________________
• Total of Annual Irregular Expenses____________________
• Monthly Savings Amount __________
5. Financial Ratio Analysis
• Liquidity Ratio: Liquid assets divided by monthly
expenses
– Should be 3 (months expenses) or more
– Example: $10,000/$4,000 = 2.5
• Consumer Debt-to-Income Ratio: Monthly
consumer debt payments (not including a mortgage)
divided by take-home pay
– Should be less than 15% to 20% (overextension)
– Example #1: $250/$2,000 = 12.5%
– Example #2: $350/$2,000 = 17.5%
6. Spending Plan/Budget Analysis
• List after-tax sources of income
• List expenses
– Fixed (including revolving savings)
– Variable
– Irregular (periodic)
• Compare budgeted amount with actual amount
• Adjust as necessary
Spending Plan
Worksheets
• Excel Spreadsheet:
http://njaes.rutgers.edu/money/#resources
• Downloadable printed worksheet:
http://njaes.rutgers.edu/money/pdfs/fs421worksheet.pdf
Spending Plan Leaks
Financial
Planning
Check-Ups
7. Incremental Progress
Toward Financial Goals
• Financial goals should be SMART
– Specific (date, cost)
– Measurable (progress)
– Attainable
– Relevant
– Time-related (deadline)
• Short-, intermediate-, long-term goals (match
investments to goal time frame)
Financial Goal-Setting
Worksheet
http://njaes.rutgers.edu/money/pdfs/goalsettingworksheet.pdf
1
Goals
2
Approximate
Amount
Needed
3
Month & Year
Needed
4
Number of
Months to Save
5
Date to
Start Saving
6
Monthly
Amount
to Save (2-4)
Short-Term (under 3 years)
Medium Term (3-10 years)
Long-Term (10 or more years)
8. Credit Card Check-Up
• Are there credit cards you don’t use that can be cancelled
without hurting your credit score?
• Can you find or negotiate a better interest rate?
• Have you checked your credit report?
– www.annualcreditreport.com
• Do you have a summary list of credit card info (e.g.,
account numbers and 800 numbers)?
• What is the status of your rewards?
9. Housing Check-Up
Renters:
• Finding out about future rent increases
• Comparing rental options
• Purchasing/reviewing renter’s insurance policy
Homeowners:
• Cost-benefit analysis of refinancing or different
mortgage
• Review of home maintenance expenses
• Home maintenance/repair set-aside fund (1% of
home value)
• Purchasing/reviewing homeowner’s insurance policy
10. Income Tax Check-Up
• What is your marginal tax bracket?
– See http://njaes.rutgers.edu/money/taxinfo/
• Would you do better in taxable or tax-exempt
investments?
• Is your tax withholding accurate?
– If not, complete a new W-4 form.
Taxable Equivalent Yield
Formula
• Use to compare tax-exempt and taxable bonds
11-24
• Taxable equivalent yield = tax-free yield ÷ (100% - marginal
tax bracket %)
Example: Assume you are in the 22% tax bracket and have
an account with a 3.0% tax-free yield
To get the equivalent taxable yield, divide 3.0% by 78% (100%
- 22% or .78). The taxable yield is 3.84%.
In the 37% tax bracket, the taxable yield is 4.76%
11. Life Insurance Check-Up
• Follow these steps to determine life insurance need:
– Estimate annual income needed by survivors
– Calculate # of years income is needed
– Add expenses (e.g., funeral, debts, other)
– Subtract income such as government benefits
• Review periodically as needs change
• Many older adults no longer have life insurance
– Policies got too expensive and/or they can self-insure
Sample Life Insurance Worksheet
12. Other Insurance Check-Ups
• Is your home insured for at least 80% of its
replacement cost?
• Do you have replacement cost riders on property?
• Do you have at least $300k of auto liability?
• Do you have a umbrella liability policy?
• Have you considered LTC insurance?
• Have you recently compared health insurance options
(coverage and cost)?
Investment
Check-Ups
13. Investment Performance
Check-Up
• Can do for each investment individually or for a total
portfolio
• Write down beginning balance and ending balance
• Add half of annual contributions (deposits)-IF ANY-
to beginning balance and subtract half of annual
contributions from ending balance
• Divide adjusted ending balance by adjusted
beginning balance
• Convert into a percentage
Example of Calculating
Investment Performance
• January 1 balance: $15,368
• December 31 balance: $19,627
• Invest $200 /month or $2,400 over a year (deposits)
– $15,368 + $1,200 = $16,568
– $19,627 - $1,200 = $18,427
– $18,427 ÷ 16,568 = 1.11
– Subtract one, multiply by 100 to get a percentage = 11%
• Return if no deposits made: $19,627 ÷ $15,368 = 1.27 (27%)
14. Investment Risk Tolerance
Check-Up
• Check online quizzes like
https://pfp.missouri.edu/research/investment-risk-
tolerance-assessment/
• Ideally risk tolerance should be stable
• Most people are more sensitive to potential
losses than potential gains
• Consider possible losses in dollar figures
(e.g., $3,000)- NOT percentages
15. Investment Asset
Allocation Check-Up
• Review your desired asset allocation (% of portfolio in
stocks, bonds, cash, real estate, etc. )
• Rebalance back to the original weightings
– If percentages shift by a certain amount (e.g., 5%)
– Periodically according to a certain schedule
• Can rebalance by selling assets or directing new
deposits to underweighted asset classes
– Best if done within tax-deferred accounts (no CG taxes)
Later Life
Planning
Check-Ups
16. Social Security and/or
Pension Check-Up
• Review all SSA correspondence
– Annual letter with next year’s benefit and Medicare
Part B premium (late November)
– Correspondence about benefit changes (e.g., new
earnings)
• Revise Social Security tax withholding
• Be alert to pension plan changes and revise tax
withholding as needed
17. Retirement Taxation Check-Up
Are you close to the
limits for…
• Taxation of a portion
of Social Security
benefits?
• IRMAA premiums for
Medicare Part B and
D?
• Net Investment
Income Tax (3.8%)
Is tax withholding adequate?
18. Retirement
“Paycheck” Check-Up
• How are you determining withdrawals from retirement
savings accounts?
• RMD requirements?
• 4% Rule?
• Another strategy?
• Are you adjusting withdrawals for inflation?
• Do you a plan for RMD withdrawals?
19. Estate Planning
Check-Up
• Do you have a current will?
• Have you recently reviewed beneficiary designations on
insurance and retirement accounts?
– http://njaes.rutgers.edu/money/pdfs/beneficiary-
designations.pdf (Worksheet)
• Are there any conflicts between your will and the titling of
assets?
• Do you have a living will, power of attorney, trusts (if
needed)?
Quick Estate Planning Check-Up
• Do you have a will and/or trust? (Yes/No)
• Do you have a Power of Attorney for Financial Matters? (Yes /No)
• Do you have a Power of Attorney for Healthcare Decisions? (Yes /No)
• Do you have a Living Will? (Yes/No)
• Have your estate planning documents (wills, trusts, powers of attorney)
been prepared or reviewed in the last five years? (Yes /No)
• Are all of the beneficiaries of your estate over 18 years old? (Yes/No)
• Are all of the beneficiaries of your estate without disabilities (i.e., not
receiving any type of government assistance)? (Yes/No)
• Have you done any type of planning for long-term care? (Yes/No)
If you answered “No” to any of these questions, you should get an estate
planning review.
Personal
Characteristics
Check-Ups
20. Personal Capital Check-Up
• Financial Capital
– Savings and investment accounts
– Credit card limits, HELOCs, and home equity
• Human Capital
– Degrees, certifications, knowledge
– Skill set (e.g., arts & crafts, computers, career knowledge)
• Social Capital
– Close friends and family members
– Paid services and professionals
21. Lifestyle Check-Up
Changes in Family Status: marriage, children
leaving home, children returning home, divorce,
widowhood, remarriage, retirement, moving, etc.)
• Financial Implications:
• Increased or decreased income
• Increased or decreased taxes
• Increased or decreased expenses
• Changes in estate planning
• Changes in housing
22. Health Finance Check-Up
• Increased or decreased out-of-pocket costs for
health benefit plan(s)
• Annual review of health benefit plan options during
open enrollment period
• Health Savings Account (HSA) review
• Annual cost of unhealthy behaviors
• Community wellness services (e.g., health fairs)
Assessment and
Comparison
Tools
23. Online Financial Self-
Assessment Tools
(Personalized Quizzes)
• Financial Fitness
Quiz (20 questions);
available online at
https://njaes.rutgers
.edu/money/assess
ment-tools/financial-
fitness-quiz.pdf
Other Online
Assessment Tools
• Identity Theft Risk Assessment Quiz:
http://njaes.rutgers.edu/money/identitytheft/
• Investment Risk Tolerance Quiz:
http://njaes.rutgers.edu/money/riskquiz/
• Personal Resiliency Assessment Quiz:
http://njaes.rutgers.edu/money/resiliency/
• Wise Credit Management Quiz:
http://njaes.rutgers.edu/money/wise-credit/
• Personal Health and Finance Quiz:
http://njaes.rutgers.edu/money/health-finance-quiz/
24. Comparison With Others
• Median U.S. household income in 2020: $67,521 ($55,660-FL)
https://worldpopulationreview.com/state-rankings/median-
household-income-by-state
• Median net worth of all U.S. households in 2020: $121,700
Sources: Federal Reserve
Board and
https://www.nerdwallet.com
/article/finance/average-
net-worth-by-age
Are You Rich?
https://www.nytimes.com/interactive/2019/08/01/upshot/are-you-rich.html
25. Top Percent Income & Assets
Income
Household Net Worth
Source:
https://www.investopedia.com/personal-
finance/how-much-income-puts-you-top-1-5-10/
Source: Federal Reserve Survey of
Consumer Finances:
https://www.federalreserve.gov/eco
nres/scfindex.htm
Final Thoughts
A financial check-up is as important as a
medical check-up
– Can assess problems (e.g., high debt ratio) and
risks (e.g., lack of disability insurance)
– Can evaluate progress toward goals
– Can help identify “action steps” to take
– Can provide motivation to change financial
practices
Thank You for Attending
Try a few of the 25 financial check-up strategies that are of
most interest and relevance to you.
Questions? Comments?
Experiences?

More Related Content

Similar to Give Yourself a Financial Check-Up-Older Adult Version

How to Manage Money with a Volatile Income
How to Manage Money with a Volatile IncomeHow to Manage Money with a Volatile Income
How to Manage Money with a Volatile Income
Barbara O'Neill
 
Global Money Week Talk on Young Adults and Money-03-15
Global Money Week Talk on Young Adults and Money-03-15Global Money Week Talk on Young Adults and Money-03-15
Global Money Week Talk on Young Adults and Money-03-15
Barbara O'Neill
 
Personal Financial Planning – Managing your finances to achieve ‘p.docx
Personal Financial Planning – Managing your finances to achieve ‘p.docxPersonal Financial Planning – Managing your finances to achieve ‘p.docx
Personal Financial Planning – Managing your finances to achieve ‘p.docx
herbertwilson5999
 
Three B's Budgeting (Bad) economy Banking foundation bank 09 26-12
Three B's  Budgeting (Bad) economy  Banking  foundation bank 09 26-12 Three B's  Budgeting (Bad) economy  Banking  foundation bank 09 26-12
Three B's Budgeting (Bad) economy Banking foundation bank 09 26-12
Christy Murphey
 
NJCFE Webinar-How to be Money Smart-12 Things to Know-04-14
NJCFE Webinar-How to be Money Smart-12 Things to Know-04-14NJCFE Webinar-How to be Money Smart-12 Things to Know-04-14
NJCFE Webinar-How to be Money Smart-12 Things to Know-04-14
Barbara O'Neill
 
NJCFE Webinar-Financial Planning for Entrepreneurs-09-13
NJCFE Webinar-Financial Planning for Entrepreneurs-09-13NJCFE Webinar-Financial Planning for Entrepreneurs-09-13
NJCFE Webinar-Financial Planning for Entrepreneurs-09-13
Barbara O'Neill
 
Telling Your School’s Story through Your Financial Statements: A Lender’s Poi...
Telling Your School’s Story through Your Financial Statements: A Lender’s Poi...Telling Your School’s Story through Your Financial Statements: A Lender’s Poi...
Telling Your School’s Story through Your Financial Statements: A Lender’s Poi...
Nonprofit Finance Fund
 
“Interpreting Financial Statements” by Philip Drake
“Interpreting Financial Statements” by Philip Drake“Interpreting Financial Statements” by Philip Drake
“Interpreting Financial Statements” by Philip Drake
Megan Calcote
 
What Women in Agriculture Need to Know About Personal Finance 05-17-purdue
What Women in Agriculture Need to Know About Personal Finance 05-17-purdueWhat Women in Agriculture Need to Know About Personal Finance 05-17-purdue
What Women in Agriculture Need to Know About Personal Finance 05-17-purdue
Barbara O'Neill
 
Personal finance and portfolio management strategies
Personal finance and portfolio management strategies Personal finance and portfolio management strategies
Personal finance and portfolio management strategies
Babasab Patil
 
Personal finance and portfolio management strategies
Personal finance and portfolio management strategies Personal finance and portfolio management strategies
Personal finance and portfolio management strategies
Babasab Patil
 
Financial Wellness: Twelve Timeless Tips Presentation-06-19
Financial Wellness: Twelve Timeless Tips Presentation-06-19Financial Wellness: Twelve Timeless Tips Presentation-06-19
Financial Wellness: Twelve Timeless Tips Presentation-06-19
Barbara O'Neill
 
Sebs rutgers-young adults and money-03-13
Sebs rutgers-young adults and money-03-13Sebs rutgers-young adults and money-03-13
Sebs rutgers-young adults and money-03-13
Barbara O'Neill
 
Financial Planning for Second Half of Your Life
Financial Planning for Second Half of Your LifeFinancial Planning for Second Half of Your Life
Financial Planning for Second Half of Your Life
Barbara O'Neill
 
money management strategy
money management strategymoney management strategy
money management strategy
ghanchifarhan
 
FINANCE MG'T FOR NON-FINANCE MANAGERS.pptx
FINANCE MG'T FOR NON-FINANCE MANAGERS.pptxFINANCE MG'T FOR NON-FINANCE MANAGERS.pptx
FINANCE MG'T FOR NON-FINANCE MANAGERS.pptx
MuyangaMark1
 
FALLSEM2020-21_BMT1014_ETH_VL2020210103582_Reference_Material_II_30-Jul-2020_...
FALLSEM2020-21_BMT1014_ETH_VL2020210103582_Reference_Material_II_30-Jul-2020_...FALLSEM2020-21_BMT1014_ETH_VL2020210103582_Reference_Material_II_30-Jul-2020_...
FALLSEM2020-21_BMT1014_ETH_VL2020210103582_Reference_Material_II_30-Jul-2020_...
MohammedsamehR
 
Basics of investing - Balance Sheet Approach
Basics of investing - Balance Sheet ApproachBasics of investing - Balance Sheet Approach
Basics of investing - Balance Sheet Approach
aditya72
 
HUSC 3366 Chapter 2 Money Management Skills
HUSC 3366 Chapter 2 Money Management SkillsHUSC 3366 Chapter 2 Money Management Skills
HUSC 3366 Chapter 2 Money Management Skills
Rita Conley
 
Budgeting and Building Cash Reserves
Budgeting and Building Cash ReservesBudgeting and Building Cash Reserves
Budgeting and Building Cash Reserves
MHM (Mayer Hoffman McCann P.C.)
 

Similar to Give Yourself a Financial Check-Up-Older Adult Version (20)

How to Manage Money with a Volatile Income
How to Manage Money with a Volatile IncomeHow to Manage Money with a Volatile Income
How to Manage Money with a Volatile Income
 
Global Money Week Talk on Young Adults and Money-03-15
Global Money Week Talk on Young Adults and Money-03-15Global Money Week Talk on Young Adults and Money-03-15
Global Money Week Talk on Young Adults and Money-03-15
 
Personal Financial Planning – Managing your finances to achieve ‘p.docx
Personal Financial Planning – Managing your finances to achieve ‘p.docxPersonal Financial Planning – Managing your finances to achieve ‘p.docx
Personal Financial Planning – Managing your finances to achieve ‘p.docx
 
Three B's Budgeting (Bad) economy Banking foundation bank 09 26-12
Three B's  Budgeting (Bad) economy  Banking  foundation bank 09 26-12 Three B's  Budgeting (Bad) economy  Banking  foundation bank 09 26-12
Three B's Budgeting (Bad) economy Banking foundation bank 09 26-12
 
NJCFE Webinar-How to be Money Smart-12 Things to Know-04-14
NJCFE Webinar-How to be Money Smart-12 Things to Know-04-14NJCFE Webinar-How to be Money Smart-12 Things to Know-04-14
NJCFE Webinar-How to be Money Smart-12 Things to Know-04-14
 
NJCFE Webinar-Financial Planning for Entrepreneurs-09-13
NJCFE Webinar-Financial Planning for Entrepreneurs-09-13NJCFE Webinar-Financial Planning for Entrepreneurs-09-13
NJCFE Webinar-Financial Planning for Entrepreneurs-09-13
 
Telling Your School’s Story through Your Financial Statements: A Lender’s Poi...
Telling Your School’s Story through Your Financial Statements: A Lender’s Poi...Telling Your School’s Story through Your Financial Statements: A Lender’s Poi...
Telling Your School’s Story through Your Financial Statements: A Lender’s Poi...
 
“Interpreting Financial Statements” by Philip Drake
“Interpreting Financial Statements” by Philip Drake“Interpreting Financial Statements” by Philip Drake
“Interpreting Financial Statements” by Philip Drake
 
What Women in Agriculture Need to Know About Personal Finance 05-17-purdue
What Women in Agriculture Need to Know About Personal Finance 05-17-purdueWhat Women in Agriculture Need to Know About Personal Finance 05-17-purdue
What Women in Agriculture Need to Know About Personal Finance 05-17-purdue
 
Personal finance and portfolio management strategies
Personal finance and portfolio management strategies Personal finance and portfolio management strategies
Personal finance and portfolio management strategies
 
Personal finance and portfolio management strategies
Personal finance and portfolio management strategies Personal finance and portfolio management strategies
Personal finance and portfolio management strategies
 
Financial Wellness: Twelve Timeless Tips Presentation-06-19
Financial Wellness: Twelve Timeless Tips Presentation-06-19Financial Wellness: Twelve Timeless Tips Presentation-06-19
Financial Wellness: Twelve Timeless Tips Presentation-06-19
 
Sebs rutgers-young adults and money-03-13
Sebs rutgers-young adults and money-03-13Sebs rutgers-young adults and money-03-13
Sebs rutgers-young adults and money-03-13
 
Financial Planning for Second Half of Your Life
Financial Planning for Second Half of Your LifeFinancial Planning for Second Half of Your Life
Financial Planning for Second Half of Your Life
 
money management strategy
money management strategymoney management strategy
money management strategy
 
FINANCE MG'T FOR NON-FINANCE MANAGERS.pptx
FINANCE MG'T FOR NON-FINANCE MANAGERS.pptxFINANCE MG'T FOR NON-FINANCE MANAGERS.pptx
FINANCE MG'T FOR NON-FINANCE MANAGERS.pptx
 
FALLSEM2020-21_BMT1014_ETH_VL2020210103582_Reference_Material_II_30-Jul-2020_...
FALLSEM2020-21_BMT1014_ETH_VL2020210103582_Reference_Material_II_30-Jul-2020_...FALLSEM2020-21_BMT1014_ETH_VL2020210103582_Reference_Material_II_30-Jul-2020_...
FALLSEM2020-21_BMT1014_ETH_VL2020210103582_Reference_Material_II_30-Jul-2020_...
 
Basics of investing - Balance Sheet Approach
Basics of investing - Balance Sheet ApproachBasics of investing - Balance Sheet Approach
Basics of investing - Balance Sheet Approach
 
HUSC 3366 Chapter 2 Money Management Skills
HUSC 3366 Chapter 2 Money Management SkillsHUSC 3366 Chapter 2 Money Management Skills
HUSC 3366 Chapter 2 Money Management Skills
 
Budgeting and Building Cash Reserves
Budgeting and Building Cash ReservesBudgeting and Building Cash Reserves
Budgeting and Building Cash Reserves
 

More from Barbara O'Neill

Final Rutgers Syllabus-Fall 2019
Final Rutgers Syllabus-Fall 2019Final Rutgers Syllabus-Fall 2019
Final Rutgers Syllabus-Fall 2019
Barbara O'Neill
 
Inflation Causes, Impacts, Mitigation Strategies, and Benefits
 Inflation Causes, Impacts, Mitigation Strategies, and Benefits Inflation Causes, Impacts, Mitigation Strategies, and Benefits
Inflation Causes, Impacts, Mitigation Strategies, and Benefits
Barbara O'Neill
 
Income Tax Issues for Older Adults-02-23-UPDATED.pptx
Income Tax Issues for Older Adults-02-23-UPDATED.pptxIncome Tax Issues for Older Adults-02-23-UPDATED.pptx
Income Tax Issues for Older Adults-02-23-UPDATED.pptx
Barbara O'Neill
 
Dr. Barbara O'Neill-Short CV
Dr. Barbara O'Neill-Short CVDr. Barbara O'Neill-Short CV
Dr. Barbara O'Neill-Short CV
Barbara O'Neill
 
Inflation Fighting Strategies Class-01-23.pdf
Inflation Fighting Strategies Class-01-23.pdfInflation Fighting Strategies Class-01-23.pdf
Inflation Fighting Strategies Class-01-23.pdf
Barbara O'Neill
 
Can Farmers Ever Afford to Retire-01-23.pdf
Can Farmers Ever Afford to Retire-01-23.pdfCan Farmers Ever Afford to Retire-01-23.pdf
Can Farmers Ever Afford to Retire-01-23.pdf
Barbara O'Neill
 
Carney Clan Cookie Contest Entries
Carney Clan Cookie Contest Entries Carney Clan Cookie Contest Entries
Carney Clan Cookie Contest Entries
Barbara O'Neill
 
RMD Planning Worksheet-12-22.pdf
RMD Planning Worksheet-12-22.pdfRMD Planning Worksheet-12-22.pdf
RMD Planning Worksheet-12-22.pdf
Barbara O'Neill
 
2022 Reference List
2022 Reference List2022 Reference List
2022 Reference List
Barbara O'Neill
 
2022 Personal Finance Trends-References
2022 Personal Finance Trends-References2022 Personal Finance Trends-References
2022 Personal Finance Trends-References
Barbara O'Neill
 
Income Tax Issues for Older Adults-MTP-02-22.pdf
Income Tax Issues for Older Adults-MTP-02-22.pdfIncome Tax Issues for Older Adults-MTP-02-22.pdf
Income Tax Issues for Older Adults-MTP-02-22.pdf
Barbara O'Neill
 
Beyond Legal Documents-12 Planning Strategies-Good Ending-08-22.pdf
Beyond Legal Documents-12 Planning Strategies-Good Ending-08-22.pdfBeyond Legal Documents-12 Planning Strategies-Good Ending-08-22.pdf
Beyond Legal Documents-12 Planning Strategies-Good Ending-08-22.pdf
Barbara O'Neill
 
Five Tips to Flip Your Retirement Switch-06-22.pdf
Five Tips to Flip Your Retirement Switch-06-22.pdfFive Tips to Flip Your Retirement Switch-06-22.pdf
Five Tips to Flip Your Retirement Switch-06-22.pdf
Barbara O'Neill
 
Leveraging LinkedIn Presentation
Leveraging LinkedIn PresentationLeveraging LinkedIn Presentation
Leveraging LinkedIn Presentation
Barbara O'Neill
 
AAFCS 2022 Presentation on Opiods
AAFCS 2022 Presentation on OpiodsAAFCS 2022 Presentation on Opiods
AAFCS 2022 Presentation on Opiods
Barbara O'Neill
 
Digital Assets Inventory Presentation-BMO-04-22.pdf
Digital Assets Inventory Presentation-BMO-04-22.pdfDigital Assets Inventory Presentation-BMO-04-22.pdf
Digital Assets Inventory Presentation-BMO-04-22.pdf
Barbara O'Neill
 
Creating Attractive Graphics Presentation-MTP-03-22.pdf
Creating Attractive Graphics Presentation-MTP-03-22.pdfCreating Attractive Graphics Presentation-MTP-03-22.pdf
Creating Attractive Graphics Presentation-MTP-03-22.pdf
Barbara O'Neill
 
35 Useful Personal Finance Web Sites
35 Useful Personal Finance Web Sites35 Useful Personal Finance Web Sites
35 Useful Personal Finance Web Sites
Barbara O'Neill
 
Social Media 101 Handouts
Social Media 101 HandoutsSocial Media 101 Handouts
Social Media 101 Handouts
Barbara O'Neill
 
Social Media 101 Twitter-Facebook-LinkedIn-02-22
Social Media 101 Twitter-Facebook-LinkedIn-02-22Social Media 101 Twitter-Facebook-LinkedIn-02-22
Social Media 101 Twitter-Facebook-LinkedIn-02-22
Barbara O'Neill
 

More from Barbara O'Neill (20)

Final Rutgers Syllabus-Fall 2019
Final Rutgers Syllabus-Fall 2019Final Rutgers Syllabus-Fall 2019
Final Rutgers Syllabus-Fall 2019
 
Inflation Causes, Impacts, Mitigation Strategies, and Benefits
 Inflation Causes, Impacts, Mitigation Strategies, and Benefits Inflation Causes, Impacts, Mitigation Strategies, and Benefits
Inflation Causes, Impacts, Mitigation Strategies, and Benefits
 
Income Tax Issues for Older Adults-02-23-UPDATED.pptx
Income Tax Issues for Older Adults-02-23-UPDATED.pptxIncome Tax Issues for Older Adults-02-23-UPDATED.pptx
Income Tax Issues for Older Adults-02-23-UPDATED.pptx
 
Dr. Barbara O'Neill-Short CV
Dr. Barbara O'Neill-Short CVDr. Barbara O'Neill-Short CV
Dr. Barbara O'Neill-Short CV
 
Inflation Fighting Strategies Class-01-23.pdf
Inflation Fighting Strategies Class-01-23.pdfInflation Fighting Strategies Class-01-23.pdf
Inflation Fighting Strategies Class-01-23.pdf
 
Can Farmers Ever Afford to Retire-01-23.pdf
Can Farmers Ever Afford to Retire-01-23.pdfCan Farmers Ever Afford to Retire-01-23.pdf
Can Farmers Ever Afford to Retire-01-23.pdf
 
Carney Clan Cookie Contest Entries
Carney Clan Cookie Contest Entries Carney Clan Cookie Contest Entries
Carney Clan Cookie Contest Entries
 
RMD Planning Worksheet-12-22.pdf
RMD Planning Worksheet-12-22.pdfRMD Planning Worksheet-12-22.pdf
RMD Planning Worksheet-12-22.pdf
 
2022 Reference List
2022 Reference List2022 Reference List
2022 Reference List
 
2022 Personal Finance Trends-References
2022 Personal Finance Trends-References2022 Personal Finance Trends-References
2022 Personal Finance Trends-References
 
Income Tax Issues for Older Adults-MTP-02-22.pdf
Income Tax Issues for Older Adults-MTP-02-22.pdfIncome Tax Issues for Older Adults-MTP-02-22.pdf
Income Tax Issues for Older Adults-MTP-02-22.pdf
 
Beyond Legal Documents-12 Planning Strategies-Good Ending-08-22.pdf
Beyond Legal Documents-12 Planning Strategies-Good Ending-08-22.pdfBeyond Legal Documents-12 Planning Strategies-Good Ending-08-22.pdf
Beyond Legal Documents-12 Planning Strategies-Good Ending-08-22.pdf
 
Five Tips to Flip Your Retirement Switch-06-22.pdf
Five Tips to Flip Your Retirement Switch-06-22.pdfFive Tips to Flip Your Retirement Switch-06-22.pdf
Five Tips to Flip Your Retirement Switch-06-22.pdf
 
Leveraging LinkedIn Presentation
Leveraging LinkedIn PresentationLeveraging LinkedIn Presentation
Leveraging LinkedIn Presentation
 
AAFCS 2022 Presentation on Opiods
AAFCS 2022 Presentation on OpiodsAAFCS 2022 Presentation on Opiods
AAFCS 2022 Presentation on Opiods
 
Digital Assets Inventory Presentation-BMO-04-22.pdf
Digital Assets Inventory Presentation-BMO-04-22.pdfDigital Assets Inventory Presentation-BMO-04-22.pdf
Digital Assets Inventory Presentation-BMO-04-22.pdf
 
Creating Attractive Graphics Presentation-MTP-03-22.pdf
Creating Attractive Graphics Presentation-MTP-03-22.pdfCreating Attractive Graphics Presentation-MTP-03-22.pdf
Creating Attractive Graphics Presentation-MTP-03-22.pdf
 
35 Useful Personal Finance Web Sites
35 Useful Personal Finance Web Sites35 Useful Personal Finance Web Sites
35 Useful Personal Finance Web Sites
 
Social Media 101 Handouts
Social Media 101 HandoutsSocial Media 101 Handouts
Social Media 101 Handouts
 
Social Media 101 Twitter-Facebook-LinkedIn-02-22
Social Media 101 Twitter-Facebook-LinkedIn-02-22Social Media 101 Twitter-Facebook-LinkedIn-02-22
Social Media 101 Twitter-Facebook-LinkedIn-02-22
 

Recently uploaded

Eco-Innovations and Firm Heterogeneity. Evidence from Italian Family and Nonf...
Eco-Innovations and Firm Heterogeneity.Evidence from Italian Family and Nonf...Eco-Innovations and Firm Heterogeneity.Evidence from Italian Family and Nonf...
Eco-Innovations and Firm Heterogeneity. Evidence from Italian Family and Nonf...
University of Calabria
 
University of North Carolina at Charlotte degree offer diploma Transcript
University of North Carolina at Charlotte degree offer diploma TranscriptUniversity of North Carolina at Charlotte degree offer diploma Transcript
University of North Carolina at Charlotte degree offer diploma Transcript
tscdzuip
 
Tdasx: Unveiling the Trillion-Dollar Potential of Bitcoin DeFi
Tdasx: Unveiling the Trillion-Dollar Potential of Bitcoin DeFiTdasx: Unveiling the Trillion-Dollar Potential of Bitcoin DeFi
Tdasx: Unveiling the Trillion-Dollar Potential of Bitcoin DeFi
nimaruinazawa258
 
What's a worker’s market? Job quality and labour market tightness
What's a worker’s market? Job quality and labour market tightnessWhat's a worker’s market? Job quality and labour market tightness
What's a worker’s market? Job quality and labour market tightness
Labour Market Information Council | Conseil de l’information sur le marché du travail
 
一比一原版美国新罕布什尔大学(unh)毕业证学历认证真实可查
一比一原版美国新罕布什尔大学(unh)毕业证学历认证真实可查一比一原版美国新罕布什尔大学(unh)毕业证学历认证真实可查
一比一原版美国新罕布什尔大学(unh)毕业证学历认证真实可查
taqyea
 
1:1制作加拿大麦吉尔大学毕业证硕士学历证书原版一模一样
1:1制作加拿大麦吉尔大学毕业证硕士学历证书原版一模一样1:1制作加拿大麦吉尔大学毕业证硕士学历证书原版一模一样
1:1制作加拿大麦吉尔大学毕业证硕士学历证书原版一模一样
qntjwn68
 
Earn a passive income with prosocial investing
Earn a passive income with prosocial investingEarn a passive income with prosocial investing
Earn a passive income with prosocial investing
Colin R. Turner
 
Discover the Future of Dogecoin with Our Comprehensive Guidance
Discover the Future of Dogecoin with Our Comprehensive GuidanceDiscover the Future of Dogecoin with Our Comprehensive Guidance
Discover the Future of Dogecoin with Our Comprehensive Guidance
36 Crypto
 
1. Elemental Economics - Introduction to mining.pdf
1. Elemental Economics - Introduction to mining.pdf1. Elemental Economics - Introduction to mining.pdf
1. Elemental Economics - Introduction to mining.pdf
Neal Brewster
 
在线办理(GU毕业证书)美国贡萨加大学毕业证学历证书一模一样
在线办理(GU毕业证书)美国贡萨加大学毕业证学历证书一模一样在线办理(GU毕业证书)美国贡萨加大学毕业证学历证书一模一样
在线办理(GU毕业证书)美国贡萨加大学毕业证学历证书一模一样
5spllj1l
 
Applying the Global Internal Audit Standards_AIS.pdf
Applying the Global Internal Audit Standards_AIS.pdfApplying the Global Internal Audit Standards_AIS.pdf
Applying the Global Internal Audit Standards_AIS.pdf
alexiusbrian1
 
Tdasx: In-Depth Analysis of Cryptocurrency Giveaway Scams and Security Strate...
Tdasx: In-Depth Analysis of Cryptocurrency Giveaway Scams and Security Strate...Tdasx: In-Depth Analysis of Cryptocurrency Giveaway Scams and Security Strate...
Tdasx: In-Depth Analysis of Cryptocurrency Giveaway Scams and Security Strate...
nimaruinazawa258
 
Tumelo-deep-dive-into-pass-through-voting-Feb23 (1).pdf
Tumelo-deep-dive-into-pass-through-voting-Feb23 (1).pdfTumelo-deep-dive-into-pass-through-voting-Feb23 (1).pdf
Tumelo-deep-dive-into-pass-through-voting-Feb23 (1).pdf
Henry Tapper
 
在线办理(TAMU毕业证书)美国德州农工大学毕业证PDF成绩单一模一样
在线办理(TAMU毕业证书)美国德州农工大学毕业证PDF成绩单一模一样在线办理(TAMU毕业证书)美国德州农工大学毕业证PDF成绩单一模一样
在线办理(TAMU毕业证书)美国德州农工大学毕业证PDF成绩单一模一样
5spllj1l
 
Economic Risk Factor Update: June 2024 [SlideShare]
Economic Risk Factor Update: June 2024 [SlideShare]Economic Risk Factor Update: June 2024 [SlideShare]
Economic Risk Factor Update: June 2024 [SlideShare]
Commonwealth
 
Does teamwork really matter? Looking beyond the job posting to understand lab...
Does teamwork really matter? Looking beyond the job posting to understand lab...Does teamwork really matter? Looking beyond the job posting to understand lab...
Does teamwork really matter? Looking beyond the job posting to understand lab...
Labour Market Information Council | Conseil de l’information sur le marché du travail
 
falcon-invoice-discounting-a-premier-investment-platform-for-superior-returns...
falcon-invoice-discounting-a-premier-investment-platform-for-superior-returns...falcon-invoice-discounting-a-premier-investment-platform-for-superior-returns...
falcon-invoice-discounting-a-premier-investment-platform-for-superior-returns...
Falcon Invoice Discounting
 
The Impact of GST Payments on Loan Approvals
The Impact of GST Payments on Loan ApprovalsThe Impact of GST Payments on Loan Approvals
The Impact of GST Payments on Loan Approvals
Vighnesh Shashtri
 
2. Elemental Economics - Mineral demand.pdf
2. Elemental Economics - Mineral demand.pdf2. Elemental Economics - Mineral demand.pdf
2. Elemental Economics - Mineral demand.pdf
Neal Brewster
 
1.2 Business Ideas Business Ideas Busine
1.2 Business Ideas Business Ideas Busine1.2 Business Ideas Business Ideas Busine
1.2 Business Ideas Business Ideas Busine
Lawrence101
 

Recently uploaded (20)

Eco-Innovations and Firm Heterogeneity. Evidence from Italian Family and Nonf...
Eco-Innovations and Firm Heterogeneity.Evidence from Italian Family and Nonf...Eco-Innovations and Firm Heterogeneity.Evidence from Italian Family and Nonf...
Eco-Innovations and Firm Heterogeneity. Evidence from Italian Family and Nonf...
 
University of North Carolina at Charlotte degree offer diploma Transcript
University of North Carolina at Charlotte degree offer diploma TranscriptUniversity of North Carolina at Charlotte degree offer diploma Transcript
University of North Carolina at Charlotte degree offer diploma Transcript
 
Tdasx: Unveiling the Trillion-Dollar Potential of Bitcoin DeFi
Tdasx: Unveiling the Trillion-Dollar Potential of Bitcoin DeFiTdasx: Unveiling the Trillion-Dollar Potential of Bitcoin DeFi
Tdasx: Unveiling the Trillion-Dollar Potential of Bitcoin DeFi
 
What's a worker’s market? Job quality and labour market tightness
What's a worker’s market? Job quality and labour market tightnessWhat's a worker’s market? Job quality and labour market tightness
What's a worker’s market? Job quality and labour market tightness
 
一比一原版美国新罕布什尔大学(unh)毕业证学历认证真实可查
一比一原版美国新罕布什尔大学(unh)毕业证学历认证真实可查一比一原版美国新罕布什尔大学(unh)毕业证学历认证真实可查
一比一原版美国新罕布什尔大学(unh)毕业证学历认证真实可查
 
1:1制作加拿大麦吉尔大学毕业证硕士学历证书原版一模一样
1:1制作加拿大麦吉尔大学毕业证硕士学历证书原版一模一样1:1制作加拿大麦吉尔大学毕业证硕士学历证书原版一模一样
1:1制作加拿大麦吉尔大学毕业证硕士学历证书原版一模一样
 
Earn a passive income with prosocial investing
Earn a passive income with prosocial investingEarn a passive income with prosocial investing
Earn a passive income with prosocial investing
 
Discover the Future of Dogecoin with Our Comprehensive Guidance
Discover the Future of Dogecoin with Our Comprehensive GuidanceDiscover the Future of Dogecoin with Our Comprehensive Guidance
Discover the Future of Dogecoin with Our Comprehensive Guidance
 
1. Elemental Economics - Introduction to mining.pdf
1. Elemental Economics - Introduction to mining.pdf1. Elemental Economics - Introduction to mining.pdf
1. Elemental Economics - Introduction to mining.pdf
 
在线办理(GU毕业证书)美国贡萨加大学毕业证学历证书一模一样
在线办理(GU毕业证书)美国贡萨加大学毕业证学历证书一模一样在线办理(GU毕业证书)美国贡萨加大学毕业证学历证书一模一样
在线办理(GU毕业证书)美国贡萨加大学毕业证学历证书一模一样
 
Applying the Global Internal Audit Standards_AIS.pdf
Applying the Global Internal Audit Standards_AIS.pdfApplying the Global Internal Audit Standards_AIS.pdf
Applying the Global Internal Audit Standards_AIS.pdf
 
Tdasx: In-Depth Analysis of Cryptocurrency Giveaway Scams and Security Strate...
Tdasx: In-Depth Analysis of Cryptocurrency Giveaway Scams and Security Strate...Tdasx: In-Depth Analysis of Cryptocurrency Giveaway Scams and Security Strate...
Tdasx: In-Depth Analysis of Cryptocurrency Giveaway Scams and Security Strate...
 
Tumelo-deep-dive-into-pass-through-voting-Feb23 (1).pdf
Tumelo-deep-dive-into-pass-through-voting-Feb23 (1).pdfTumelo-deep-dive-into-pass-through-voting-Feb23 (1).pdf
Tumelo-deep-dive-into-pass-through-voting-Feb23 (1).pdf
 
在线办理(TAMU毕业证书)美国德州农工大学毕业证PDF成绩单一模一样
在线办理(TAMU毕业证书)美国德州农工大学毕业证PDF成绩单一模一样在线办理(TAMU毕业证书)美国德州农工大学毕业证PDF成绩单一模一样
在线办理(TAMU毕业证书)美国德州农工大学毕业证PDF成绩单一模一样
 
Economic Risk Factor Update: June 2024 [SlideShare]
Economic Risk Factor Update: June 2024 [SlideShare]Economic Risk Factor Update: June 2024 [SlideShare]
Economic Risk Factor Update: June 2024 [SlideShare]
 
Does teamwork really matter? Looking beyond the job posting to understand lab...
Does teamwork really matter? Looking beyond the job posting to understand lab...Does teamwork really matter? Looking beyond the job posting to understand lab...
Does teamwork really matter? Looking beyond the job posting to understand lab...
 
falcon-invoice-discounting-a-premier-investment-platform-for-superior-returns...
falcon-invoice-discounting-a-premier-investment-platform-for-superior-returns...falcon-invoice-discounting-a-premier-investment-platform-for-superior-returns...
falcon-invoice-discounting-a-premier-investment-platform-for-superior-returns...
 
The Impact of GST Payments on Loan Approvals
The Impact of GST Payments on Loan ApprovalsThe Impact of GST Payments on Loan Approvals
The Impact of GST Payments on Loan Approvals
 
2. Elemental Economics - Mineral demand.pdf
2. Elemental Economics - Mineral demand.pdf2. Elemental Economics - Mineral demand.pdf
2. Elemental Economics - Mineral demand.pdf
 
1.2 Business Ideas Business Ideas Busine
1.2 Business Ideas Business Ideas Busine1.2 Business Ideas Business Ideas Busine
1.2 Business Ideas Business Ideas Busine
 

Give Yourself a Financial Check-Up-Older Adult Version

  • 1. Give Yourself a Financial Check-Up: 25 Ways to Measure Your Financial Health (Older Adult Version) Dr. Barbara O’Neill, CFP®, AFC® Owner/CEO, Money Talk
  • 3. Class Objectives • Provide assessment tools to determine financial strengths and weaknesses • Provide worksheets to make calculations • Provide suggestions to improve “financial fitness” and “screen” for potential problems (like physical exams) Repurposed a previous class to focus on older adult finances
  • 5. Question What check-up tools or techniques do you use to assess your financial wellness?
  • 6. Financial Self-Assessment Tools and Methods • Financial Statement Check-Ups • Financial Planning Check-Ups • Investment Check-Ups • Later Life Planning Check-Ups • Personal Characteristics Check-Ups • Assessment and Comparison Tools
  • 8. 1. Incremental Changes in Net Worth • Assets: everything that you own – Liquid (cash assets) – Tangible (property) – Investment • Debts: everything that you owe – Short-term (a.k.a., current debt; < 1 year) – Long-term • Assets minus debts equals net worth
  • 9. 2. The “Wealth Test” Source: The Millionaire Next Door (Stanley & Danko) • Multiply your age by pre-tax income from all sources except an inheritance • Divide by 10 • This is what your net worth should be for your age and income level • Example: 65 x $40,000 = $2,600,000 divided by 10 = $260,000 minimum net worth
  • 10. Wealth Test Worksheet Your net worth (assets minus debts) ________________ Your annual household income from all sources (excluding income from inherited wealth) _______________ Your age (if two spouses, average your ages) ________________ Multiply your income by your age ________________ Divide line 4 by the number 10 to get expected net worth for someone with your age and income __________ Divide your net worth (line 1 by line 5) to get your final score. ________________ Interpretation of your Score 2.0 or higher, you rank in the top 25% of wealth builders called PAWs (prodigious accumulators of wealth) 1 to 1.99, you rank in the top half of Americans in your wealth building prowess. 0.51 to 0.99, you’re a below average generator of wealth for your age and income level. 0.50 or lower, you are one of Stanley and Danko’s UAWs (under accumulators of wealth) Adapted from http://www.bauer.uh.edu/drude/Net.Worth.Worksheet.pdf.
  • 11. 3. Cash Flow Statement • Relationship of income and expenses • Track expenses – Fixed – Variable – Periodic/irregular • Track income (all sources) • Income Minus Expenses = Cash Flow
  • 12. 4. Irregular Expense Review • List all expenses that come irregularly throughout the year – Examples: car registration, school tuition, birthdays, holidays, vacations, quarterly property tax payment, water and sewer bills, insurance premiums • Total each expense and divide by 12 • Save that amount monthly in a “holding” savings account to cover irregular expenses
  • 13. Irregular Expense Worksheet Identify the months that you pay irregular expenses, what they are, & the cost (Example: February, property tax: $1,600). Then add up all of your irregular expenses and divide the total by 12 to determine the monthly savings amount • Jan ____________________ • Feb.____________________ • Mar ____________________ • Apr _____________________ • May ____________________ • June ___________________ • July ____________________ • Aug ____________________ • Sept ____________________ • Oct _____________________ • Nov _____________________ • Dec _____________________ • Total of Annual Irregular Expenses____________________ • Monthly Savings Amount __________
  • 14. 5. Financial Ratio Analysis • Liquidity Ratio: Liquid assets divided by monthly expenses – Should be 3 (months expenses) or more – Example: $10,000/$4,000 = 2.5 • Consumer Debt-to-Income Ratio: Monthly consumer debt payments (not including a mortgage) divided by take-home pay – Should be less than 15% to 20% (overextension) – Example #1: $250/$2,000 = 12.5% – Example #2: $350/$2,000 = 17.5%
  • 15. 6. Spending Plan/Budget Analysis • List after-tax sources of income • List expenses – Fixed (including revolving savings) – Variable – Irregular (periodic) • Compare budgeted amount with actual amount • Adjust as necessary
  • 16. Spending Plan Worksheets • Excel Spreadsheet: http://njaes.rutgers.edu/money/#resources • Downloadable printed worksheet: http://njaes.rutgers.edu/money/pdfs/fs421worksheet.pdf
  • 19. 7. Incremental Progress Toward Financial Goals • Financial goals should be SMART – Specific (date, cost) – Measurable (progress) – Attainable – Relevant – Time-related (deadline) • Short-, intermediate-, long-term goals (match investments to goal time frame)
  • 20. Financial Goal-Setting Worksheet http://njaes.rutgers.edu/money/pdfs/goalsettingworksheet.pdf 1 Goals 2 Approximate Amount Needed 3 Month & Year Needed 4 Number of Months to Save 5 Date to Start Saving 6 Monthly Amount to Save (2-4) Short-Term (under 3 years) Medium Term (3-10 years) Long-Term (10 or more years)
  • 21. 8. Credit Card Check-Up • Are there credit cards you don’t use that can be cancelled without hurting your credit score? • Can you find or negotiate a better interest rate? • Have you checked your credit report? – www.annualcreditreport.com • Do you have a summary list of credit card info (e.g., account numbers and 800 numbers)? • What is the status of your rewards?
  • 22. 9. Housing Check-Up Renters: • Finding out about future rent increases • Comparing rental options • Purchasing/reviewing renter’s insurance policy Homeowners: • Cost-benefit analysis of refinancing or different mortgage • Review of home maintenance expenses • Home maintenance/repair set-aside fund (1% of home value) • Purchasing/reviewing homeowner’s insurance policy
  • 23. 10. Income Tax Check-Up • What is your marginal tax bracket? – See http://njaes.rutgers.edu/money/taxinfo/ • Would you do better in taxable or tax-exempt investments? • Is your tax withholding accurate? – If not, complete a new W-4 form.
  • 24. Taxable Equivalent Yield Formula • Use to compare tax-exempt and taxable bonds 11-24 • Taxable equivalent yield = tax-free yield ÷ (100% - marginal tax bracket %) Example: Assume you are in the 22% tax bracket and have an account with a 3.0% tax-free yield To get the equivalent taxable yield, divide 3.0% by 78% (100% - 22% or .78). The taxable yield is 3.84%. In the 37% tax bracket, the taxable yield is 4.76%
  • 25. 11. Life Insurance Check-Up • Follow these steps to determine life insurance need: – Estimate annual income needed by survivors – Calculate # of years income is needed – Add expenses (e.g., funeral, debts, other) – Subtract income such as government benefits • Review periodically as needs change • Many older adults no longer have life insurance – Policies got too expensive and/or they can self-insure
  • 27. 12. Other Insurance Check-Ups • Is your home insured for at least 80% of its replacement cost? • Do you have replacement cost riders on property? • Do you have at least $300k of auto liability? • Do you have a umbrella liability policy? • Have you considered LTC insurance? • Have you recently compared health insurance options (coverage and cost)?
  • 29. 13. Investment Performance Check-Up • Can do for each investment individually or for a total portfolio • Write down beginning balance and ending balance • Add half of annual contributions (deposits)-IF ANY- to beginning balance and subtract half of annual contributions from ending balance • Divide adjusted ending balance by adjusted beginning balance • Convert into a percentage
  • 30. Example of Calculating Investment Performance • January 1 balance: $15,368 • December 31 balance: $19,627 • Invest $200 /month or $2,400 over a year (deposits) – $15,368 + $1,200 = $16,568 – $19,627 - $1,200 = $18,427 – $18,427 ÷ 16,568 = 1.11 – Subtract one, multiply by 100 to get a percentage = 11% • Return if no deposits made: $19,627 ÷ $15,368 = 1.27 (27%)
  • 31. 14. Investment Risk Tolerance Check-Up • Check online quizzes like https://pfp.missouri.edu/research/investment-risk- tolerance-assessment/ • Ideally risk tolerance should be stable • Most people are more sensitive to potential losses than potential gains • Consider possible losses in dollar figures (e.g., $3,000)- NOT percentages
  • 32. 15. Investment Asset Allocation Check-Up • Review your desired asset allocation (% of portfolio in stocks, bonds, cash, real estate, etc. ) • Rebalance back to the original weightings – If percentages shift by a certain amount (e.g., 5%) – Periodically according to a certain schedule • Can rebalance by selling assets or directing new deposits to underweighted asset classes – Best if done within tax-deferred accounts (no CG taxes)
  • 34. 16. Social Security and/or Pension Check-Up • Review all SSA correspondence – Annual letter with next year’s benefit and Medicare Part B premium (late November) – Correspondence about benefit changes (e.g., new earnings) • Revise Social Security tax withholding • Be alert to pension plan changes and revise tax withholding as needed
  • 35. 17. Retirement Taxation Check-Up Are you close to the limits for… • Taxation of a portion of Social Security benefits? • IRMAA premiums for Medicare Part B and D? • Net Investment Income Tax (3.8%) Is tax withholding adequate?
  • 36. 18. Retirement “Paycheck” Check-Up • How are you determining withdrawals from retirement savings accounts? • RMD requirements? • 4% Rule? • Another strategy? • Are you adjusting withdrawals for inflation? • Do you a plan for RMD withdrawals?
  • 37. 19. Estate Planning Check-Up • Do you have a current will? • Have you recently reviewed beneficiary designations on insurance and retirement accounts? – http://njaes.rutgers.edu/money/pdfs/beneficiary- designations.pdf (Worksheet) • Are there any conflicts between your will and the titling of assets? • Do you have a living will, power of attorney, trusts (if needed)?
  • 38. Quick Estate Planning Check-Up • Do you have a will and/or trust? (Yes/No) • Do you have a Power of Attorney for Financial Matters? (Yes /No) • Do you have a Power of Attorney for Healthcare Decisions? (Yes /No) • Do you have a Living Will? (Yes/No) • Have your estate planning documents (wills, trusts, powers of attorney) been prepared or reviewed in the last five years? (Yes /No) • Are all of the beneficiaries of your estate over 18 years old? (Yes/No) • Are all of the beneficiaries of your estate without disabilities (i.e., not receiving any type of government assistance)? (Yes/No) • Have you done any type of planning for long-term care? (Yes/No) If you answered “No” to any of these questions, you should get an estate planning review.
  • 40. 20. Personal Capital Check-Up • Financial Capital – Savings and investment accounts – Credit card limits, HELOCs, and home equity • Human Capital – Degrees, certifications, knowledge – Skill set (e.g., arts & crafts, computers, career knowledge) • Social Capital – Close friends and family members – Paid services and professionals
  • 41. 21. Lifestyle Check-Up Changes in Family Status: marriage, children leaving home, children returning home, divorce, widowhood, remarriage, retirement, moving, etc.) • Financial Implications: • Increased or decreased income • Increased or decreased taxes • Increased or decreased expenses • Changes in estate planning • Changes in housing
  • 42. 22. Health Finance Check-Up • Increased or decreased out-of-pocket costs for health benefit plan(s) • Annual review of health benefit plan options during open enrollment period • Health Savings Account (HSA) review • Annual cost of unhealthy behaviors • Community wellness services (e.g., health fairs)
  • 44. 23. Online Financial Self- Assessment Tools (Personalized Quizzes) • Financial Fitness Quiz (20 questions); available online at https://njaes.rutgers .edu/money/assess ment-tools/financial- fitness-quiz.pdf
  • 45. Other Online Assessment Tools • Identity Theft Risk Assessment Quiz: http://njaes.rutgers.edu/money/identitytheft/ • Investment Risk Tolerance Quiz: http://njaes.rutgers.edu/money/riskquiz/ • Personal Resiliency Assessment Quiz: http://njaes.rutgers.edu/money/resiliency/ • Wise Credit Management Quiz: http://njaes.rutgers.edu/money/wise-credit/ • Personal Health and Finance Quiz: http://njaes.rutgers.edu/money/health-finance-quiz/
  • 46. 24. Comparison With Others • Median U.S. household income in 2020: $67,521 ($55,660-FL) https://worldpopulationreview.com/state-rankings/median- household-income-by-state • Median net worth of all U.S. households in 2020: $121,700 Sources: Federal Reserve Board and https://www.nerdwallet.com /article/finance/average- net-worth-by-age
  • 48. 25. Top Percent Income & Assets Income Household Net Worth Source: https://www.investopedia.com/personal- finance/how-much-income-puts-you-top-1-5-10/ Source: Federal Reserve Survey of Consumer Finances: https://www.federalreserve.gov/eco nres/scfindex.htm
  • 49. Final Thoughts A financial check-up is as important as a medical check-up – Can assess problems (e.g., high debt ratio) and risks (e.g., lack of disability insurance) – Can evaluate progress toward goals – Can help identify “action steps” to take – Can provide motivation to change financial practices
  • 50. Thank You for Attending Try a few of the 25 financial check-up strategies that are of most interest and relevance to you.