Are you ready to retire? What you need to know about your financial health


You've conquered your professional goals, and now it's finally time to settle into some well-deserved downtime, dedicated entirely to you. But before you can plan your retirement party and start making travel plans, you have to make sure all your affairs are in order.

In other words: You're ready to start seriously thinking about retiring in the next few years, but you're unsure if you're financially prepared to do so. You're not alone. A recent study conducted by the Boston College Center for Retirement Research found that 40 percent of working-age Americans have an unrealistic understanding of their progress toward secure retirement

Don't worry - the retirement party is likely still in your near future. Here's what to know about your funds in terms of retirement financial planning:

Start with the math

Take a hard look at your finances to determine how retirement will affect your daily life. Find out the answers to questions such as:

  • How robust are your retirement savings?
  • Do you currently have any major debts to pay off?
  • How much income will you need in retirement?
  • What are the tax implications of receiving this retirement income?
  • Which accounts will you draw retirement income from first?
  • Is your investment portfolio properly allocated and diversified to your specific needs and risk capacity?

There are several retirement calculators that can help you do this critical math. The Social Security Administration offers a Retirement Estimator and Quick Calculator, which offer benefit estimates based on your personal standing. Other online calculators will help you draft a retirement plan or deduce an appropriate retirement budget.

Consider retirement income

Social Security is only one source of post-retirement income. However, remember that you must be at least 62 years young before you can start receiving these payments. In fact, the longer you wait to retire, the higher your monthly benefits will be, according to the SSA. If you have a pension or spouse who will still be working, you can calculate those payments into your retirement income.

There are also plenty of other avenues to pursue, such as investments in stock or real estate. You may also consider consulting or freelance opportunities to work at a smaller scale after giving up full-time hours.

Don't forget about health insurance

A major perk of working full-time is health care coverage. If you're eligible - meaning you're 65 or older - start looking into the basics of Medicare and supplemental health insurance. If you aren't quite of age for these care benefits, research your coverage options to determine how much health insurance will cost in the meantime.

Think about the retired life

Once you have a better understanding of your current financial standing and how much money you expect to earn in retirement, you can start forming a retirement budget to make astute adjustments now in preparation for later. For many soon-to-be retirees, this is the time to start managing funds with future investments in mind, such as a second home, RV or new car. You may also want to start setting aside money designated for the ways you want to spend your time and money once retired, such as funds for travel, personal trainers or family support.

Reach out for expert advice

Retirement planning can be overwhelming, but you don't have to go at it alone. At Northstar Financial Planning, we focus on working with you during periods of major transition like retirement. More than just managing your financial situation, retirement involves hefty perspective and emotional changes. Our Certified Financial Transitionists® are here to take the stress out of the process, making your retirement planning a productive and exciting experience.

Contact us today for a complimentary "Get Acquainted" meeting. From there, we can help you reach your retirement with confidence in your financial health.


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Do You Have Transition Fatigue?



Financial transitions come in many forms: selling a business, death or divorce, inheritance or a windfall. Regardless of the reason, managing a financial transition can be overwhelming, difficult and exciting – all at the same time.

We refer to ‘transitions’ as that period of change in which “what was” no longer exists and “what will be” has not yet taken shape. Transitions are temporary states, but that does not mean they are short-lived. By their very nature, transitions have broad-reaching implications for people’s lives – their finances, important relationships, where to live and how to live.

Occasionally, each of us has a day when we feel "off," when our capable, confident, focused and decisive selves seem to go AWOL. Given the circumstances, sometimes people make decisions they wouldn’t otherwise make.

Usually we can chalk these episodes up to something specific—a cold, a bad night of sleep or some other temporary issue. But what about when that off day turns into an off week? Or an off month? Or even an off year? We may start to wonder—with understandable anxiety—what ever happened to the person we used to be.

As an advisor, I've seen this phenomenon often with clients who are in the midst of major life transitions. And very often, the explanation for their malaise is very clear: They're experiencing a very natural phenomenon known as transition fatigue.

Transition fatigue may cause you to experience changes in several important aspects of your personal functioning, such as sleep, decision making, focus, energy, stress etc. It’s important to recognize and manage transition fatigue—especially because if you ignore it, the likelihood of making poor decisions increases.

The following brief self-assessment was designed to provide you with a quick survey of how you are doing mentally and physically:

Free Self-Assessment

Please note that the Self-Assessment is not intended to be a diagnostic tool, nor a substitute for professional advice. Use your results to help you reflect on how you’re faring, and to give you some ideas about how to move through your transition with greater ease.

If you're experiencing transition fatigue, it's important to be patient and compassionate with yourself. You're in the midst of a life transformation, after all. It's big, but it's temporary.

If you need assistance in managing your financial transition, let’s chat further about how we can help you improve your wealth and well-being as you navigate this major life change.

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Behavioral Biases A-Z Summary

We’ll wrap our series, the ABCs of Behavioral Biases, by repeating our initial premise: Your own behavioral biases are often the greatest threat to your financial well-being.

We hope we’ve demonstrated the many ways this single statement can play out, and how often our survival-mode brains trick us into making financial calls that foil our own best interests.

Evidence-Based Behavioral Finance

But don’t take our word for it. Just as we turn to robust academic evidence to guide our disciplined investment strategy, so too do we turn to the work of behavioral finance scholars, to understand and employ effective defenses against your most aggressive behavioral biases.

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ABCs of Behavioral Biases: S-Z

We have come to the end of our alphabetic run-down of behavioral biases. Today, we’ll present the final line-up: sunk cost fallacy and tracking error regret.


What is it? Sunk cost fallacy makes it harder for us to lose something when we also face losing the time, energy or money we’ve already put into it. In “Why Smart People Make Big Money Mistakes,” Gary Belsky and Thomas Gilovich describe: “[Sunk cost fallacy] is the primary reason most people would choose to risk traveling in a dangerous snowstorm if they had paid for a ticket to an important game or concert, while passing on the trip if they had been given the ticket for free.” You’re missing or attending the same event either way. But if a sunk cost is involved, it somehow makes it more difficult to let go, even if you would be better off without it.

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Feeling a Little Uncertain? Focus on Fixed Income

It’s been approximately a decade since the Great Recession began. By year-end 2008, the U.S. Federal Reserve (the Fed) had lowered the target federal funds rate to near-zero and embarked on an aggressive quantitative easing campaign, hoping to resuscitate the economy with a big booster shot of lending, borrowing and spending dollars.

Perhaps the economic recovery that followed was a direct result of these and other Fed initiatives. More likely, there were a number of contributing factors. Either way, the Fed has begun to reverse course, restoring its policies and targets closer to historical “norms” through quantitative tightening and gradually rising rates.

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Will I Lose my Mortgage Interest Deduction This Year?

After the Tax Cuts and Jobs Act (TCJA) was passed, there was concern that the beloved mortgage interest deduction for home equity loans had met its demise. While, on its face, that is what the law says, there is a loophole that taxpayers can use if they meet certain criteria.

As long as the loan is secured by a qualified residence (primary home or vacation home) and not for an investment property then you can begin evaluating whether the loan qualifies for the technique we are discussing that was approved by the IRS on February 21, 2018.

• The proceeds from the loan must be used for home improvements.
• The loan must be characterized as an acquisition debt. The law states that the debt was incurred to “buy, build or substantially improve” a qualified residence.

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The ABCs of Behavioral Biases: Overconfidence, Pattern Recognition and Recency

So many financial behavioral biases, so little time! Today, let’s take a few minutes to cover our next batch of biases: overconfidence, pattern recognition, and recency.


What is it? No sooner do we recover from one debilitating bias, our brain can whipsaw us in an equal but opposite direction. For example, we’ve already seen how fear on the one hand and greed on the other can knock investors off course either way. Similarly, overconfidence is the flip side of loss aversion. Once we’ve got something, we don’t want to lose it and will overvalue it compared to its going rate. But when we are pursuing fame or fortune, or even going about our daily lives, we tend to be overconfident about our odds of success.

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ABCs of Behavioral Biases: Hindsight, Loss Aversion, Mental Accounting, Outcome Bias

There are so many investment-impacting behavioral biases, we could probably identify at least one for nearly every letter in the alphabet. Today, we’ll continue with the most significant ones by looking at: hindsight, loss aversion, mental accounting and outcome bias.


What is it? In “Thinking, Fast and Slow,” Nobel laureate Daniel Kahneman credits Baruch Fischhoff for demonstrating hindsight bias – the “I knew it all along” effect – when he was still a student. Kahneman describes hindsight bias as a “robust cognitive illusion” that causes us to believe our memory is correct when it is not. For example, say you expected a candidate to lose, but she ended up winning. When asked afterward how strongly you predicted the actual outcome, you’re likely to recall giving it higher odds than you originally did. This seems like something straight out of a science fiction novel, but it really does happen!

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ABCs of Behavioral Biases: Fear, Framing, Greed, Herd Mentality

Let’s continue our alphabetic tour of common behavioral biases that distract otherwise rational investors from making best choices about their wealth. Today, we’ll tackle: fear, framing, greed, and herd mentality.


What is it? You know what fear is, but it may be less obvious how it works. As Jason Zweig describes in “Your Money & Your Brain,” if your brain perceives a threat, it spews chemicals like corticosterone that “flood your body with fear signals before you are consciously aware of being afraid.” Some suggest this isn’t really “fear,” since you don’t have time to think before you act. Call it what you will, this bias can heavily influence your next moves – for better or worse.

When is it helpful? Of course, there are times you probably should be afraid, with no time for studious reflection about a life-saving act. If you are reading this today, it strongly suggests you and your ancestors have made good use of these sorts of survival instincts many times over.

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Don't Let Your Sweepstakes Dream Become a Nightmare

Publishers Clearinghouse has long been famous for its big checks and big winnings, but it has recently come to our attention that scammers have been using the PCH name and logo to commit fraud.

Although PCH's sweepstakes are legitimate, you still need to be very cautious if you receive a prize notification from PCH or any other company claiming you are a big winner. We are advising all of our clients to shred and ignore notifications from PCH and to be wary of all prize notifications, especially ones that ask for money.

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The ABCs of Behavioral Biases (A-F)

Welcome back to our "ABCs of Behavioral Biases." This article introduces you to four self-inflicted biases that knock a number of investors off-course: anchoring, blind spot, confirmation and familiarity bias.


What is it? Anchoring bias occurs when you fix on or "anchor" your decisions to a reference point, or default when required to estimate an unknown value.

When is it helpful? An anchor point can be helpful when it is relevant and contributes to good decision-making. For example, if you've set a 10 pm curfew for your son or daughter and it's now 9:55 pm, your offspring would be wise to panic a bit, and step up the homeward pace.

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