Frank Capra’s film “It’s A Wonderful Life” was released in the winter of 1946. It would take almost three decades before it became a classic. The finer things in life tend to take time.
Senior Angel: “A man down on earth needs our help.”
Clarence: “Is he sick?”
Senior Angel: “No, worse. He’s discouraged.”
The story is about a desperately frustrated banker, father, husband and community man who was thinking about throwing away God’s greatest gift — his life. And Clarence, who hadn’t yet earned his wings in 200 years, was sent to be George Bailey’s guiding angel.
We’re about to leave 2016, which may go down as one of the most eventful years for investors since the Financial Crisis. The year started with a tumultuous market sell-off, then major geopolitical events including Brexit and the surprise Trump victory. The U.S. stock markets (S&P and Dow Jones) have sky rocketed, the U.S. dollar has soared to its highest level in 14 years and interest rates are on the rise.
Some people are concerned. Others may be peering over the bridge’s edge into the icy waters below. There are reasons for nervousness. Control and don’t be discouraged for 2017. Here are three areas all focused on the theme “Be Flexible.”
Goals and financial plan
Are you planning for the “right” goals? Consider both big goals (retiring in 20 years or funding a 30 year retirement) and easy win goals (create a budget, a two-year credit card payoff plan or update beneficiary designations). Stay motivated using “eat an elephant one bite at a time” and recognize your progress.
Why do people tend to make decisions they later regret? Some pay to remove tattoos they once thought were great ideas, and others divorce the ones they rushed to marry. Are you possibly saving for something you won’t want in the future? The concept called “The End of History Illusion” was published in an article by Quoidbach, Gilbert and Wilson (Science, January 2013). They surveyed people asking them how much they had changed in the past decade and to predict their changes over the next decade. Surprisingly, people predicted minimal change in the future despite the significant changes they’ve made in the past “ … leading people to overpay for future opportunities to indulge their current preferences.” This has significant planning implications. Will you sell the second home or downsize the main home? Live longer than you think? (Inflation is a hidden menace — SS recipients get a measly pay raise of 0.3 percent or $5 a for the average recipient.) What if SS isn’t fixed and benefits are reduced by 20 percent (or 30 percent) for future retirees? Will your family dynamics change? You dream assisted living is for other people, not you? Be flexible.
Tax and estate plans
Read the full article at rgj.com.