Insights from the NAPFA Conference

I just returned from sunny and warm Phoenix after several days of continuing education at the NAPFA conference.  Here are some things that are on my mind as a result –

• Purposeful estate and legacy planning – this has always been an important topic for me and I’m actively seeking new resources for legacy development.  The planning we do is so much more than just about money – I think it’s about preserving stories and conveying meaning to the next generation or to the charity of your choice. 
• Aging well – So important to think about not just your wealth but also your health.  This session was entitled Optimistic Aging and was a great reminder about how our actions in midlife will affect the retirement experience of our future selves.  Watch for this book on my bookshelf soon.  Health care is not only a large looming cost as we age, but it is also so integral to our enjoyment of those post working years.  Stay tuned… I’ll have more on this in the future. 
• Index annuities – I attended an interesting session examining these complicated products in more detail.  I’m not a fan as and as you know am fee only, and never sell any products, but keeping current on the products that others may own is an important part of my continuing education.  Many people were sold this product as an equity substitute with lower risk and the promise of equity like returns after the financial crisis.  Truly, they are more of a bond substitute with all of the caps on earnings.  If you own one though, it’s important to understand what you have AND how it fits into your overall plan and portfolio. 
• Speaking of annuities, there was another presentation on the role of a single premium immediate annuity in a retirement income scenario.  I’m still not a huge fan, but there are certain circumstances where this could be a safety net to hedge against longevity risk in a portfolio.  Timing is everything when it comes to portfolio performance.  The same average rate of return over a 35 year retirement can yield vastly different results depending upon the sequence of returns.  If you hit a rough market in the early years, your nest egg might be too depleted to fully recover.  We had some good discussion on this and I continue to work on incorporating new research into my planning.  Addressing the risk of bad timing is something we have already discussed when we run Montecarlo projections. 
• Tax planning – If you own a business, there are many opportunities to review in consideration of the new pass through business deduction.  It may be worth looking at your retirement plan contributions, business entity type, services offered, and filing status to determine if any changes should be made to make the best use of the new deduction for pass through business entities. 
• Medicare - There are so many complicated rules and long lasting consequences to getting it wrong.  I attended a good session on this and will follow up with the provider to learn more.  Be careful making your choices, especially if you are still working after age 65.  

Be in touch if you’d like to discuss any of these ideas and how they relate to your own financial planning.  I look forward to helping you on your financial journey.