Who’s Rich Anyway?

Presented By Nick Bautista

Think about this, in the US the top 20% households make $107,628 annually. If your networth is more than $415,700 you are also in the top 20%. Here is the total breakdown:

Household Income Annually
Top 1%	$521,411
Top 5%	$208,810
Top 10%	$148,688
Top 20%	$107,628

Household Net Worth
Top 1%	$6,816,200
Top 5%	$1,863,800
Top 10%	$952,200
Top 20%	$415,700

WSJ: 2012 data from Tax Policy Center
 

To put this into further perspective what is considered the poverty line for a two person household is $15,510. Meaning that a two person household making $46,530 makes 300% more than someone in poverty.  (http://aspe.hhs.gov/poverty/13poverty.cfm)

So who is rich anyway? This week I was reminded that the little things in life are what matter most. I read an interesting article about Brett Favre. When asked if he would return to the NFL with all the injuries to key quarterbacks, he simply said no. A man who made millions upon millions (top 1%). He thought he put his family on hold for 20 years and couldn’t stand the idea of putting them off any longer and he gets to fulfill being with them doing the things he loves, which actually isn’t football related. I found that refreshing, that someone who was defined by their work became something more, a father. No matter how much money he made he ultimately valued the things money and fame couldn’t buy.
 

What are you striving for today, this week, or in life? Do you have more than you need, or do you constantly need the next best thing? We all, including myself need to be reminded that what we have is enough. Don’t let money rule your life, for you might find out it’s not that satisfying.

 

Brett Farve article: http://espn.go.com/nfl/story/_/id/9872646/brett-favre-return-sources-saying-rams-reached-out

From A Six Figure Salary To Minimum Wage: A Story Of Bad Planning

Presented by Nick Bautista

Sometimes the stories we hear can mean more than words we read from any text book. Such is the case for Tom Palome. A man who was an executive earning a six figure salary most of his lifetime and now has to work two minimum wage jobs due to inadequate savings.  I define the unretired 77 year old as a failure to plan. He had a total of $90,000 saved for retirement. All I can think is, really? Of course, he can still enjoy life but how would you like to live to 77 and be flipping burgers instead of pursuing the dreams you have had your entire life?

To me it comes down to the most fundamental question of all. How much do you need in retirement to live the life you want to? As of 2011 the median retirement account had a value of $120,000. So tell me how that works for 30 years in retirement?

Maybe Tom Palome can help you get a better picture of what that looks like. Read the entire story here…

http://www.businessweek.com/articles/2013-09-26/former-executive-tom-palome-spends-his-retirement-flipping-burgers

Who Is Your Go-To Person For Financial Advice?

Presented by Nick Bautista 

Have you ever thought about the people in your life who you turn to for financial advice? Think about that for a minute. When you have a financial question, who do you call or text, and why? Is it because you perceive them to be smart, or wiser than you? Or is it simply because you believe they have the experience to handle your similar situation.

Whatever and whoever you listen to when making your financial decisions, there is one thing you should know. It goes back to the old saying you used to hear when you were a kid. “If Johnny were to jump off a bridge would you do jump too?” Although a ridiculous analogy for following what others do, the message is clear. Why do we blindly follow the advice from someone who doesn't necessarily know or understand our financial situation?

Okay maybe this doesn't hit too close to home or is just too simplistic. So instead, think of the first person you would ask if you had/needed medical attention, a gaping wound, would your parents or best friend know if you needed stitches and be able to do it right then if you did need them. Of course not, you would go see a doctor immediately. So why is it that in our financial need we turn to those who do not understand our situation?

Everyone agrees that finances are extremely important yet we automatically assume those around us with little or no experience can help us with our questions. No one financial situation is the same. Let me repeat that so it sinks in, no one financial situation is the same. Just ask any doctor and they will tell you how no one patient is exactly the same.  

So again I ask who do you ask for financial advice? How much experience do they really have and is it the exact same or similar situation you are in? If the answer is yes, then think one step further. Does your financial friend know if you should do a Roth Conversion or how much you should defer in 401k contributions to save on taxes now? Do they know how much you can contribute to your retirement in a given year based on your retirement plan? Do they understand the history of the stock market or the correlation between asset classes in a given time period, knowing what your allocation should be based on your age and amount saved already? Do they know your goals, and what the money is needed for in order to invest it in a suitable place? Do they know the effect on your retirement plan for buying that car or house you are thinking about?

If your answer is no to any of the above you are getting poor advice and ultimately the wrong answer. While your wound may be okay without stitches you don’t want to find out 30 years later you really needed them, or more importantly you were given the wrong financial advice and your retirement plan is now underfunded to meet your goals.