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Why you should NEVER buy an RV in retirement

“When I retire, I’m gonna buy an RV and travel the country”.

This may be great and all, but the year you turn 65 (or retire, pardon if I offend those who retire at 45 or 70) $60-80 thousand dollars could be a bit much.

I’m going to show you why buying an RV in retirement is a poor choice for most people.

Let Me Explain

Most motor homes people purchase cost somewhere between $50,000 and $300,000. This cost can be significant especially to the future value of your money. This graph is an example.

This is using a low-end camper probably used at about $60,000 dollars. ( https://www.rvtrader.com/dealers/American-River-RV—Sacramento-3018028/listing/2017-Coachmen-Freelander-26RS-119765660 ) over 30 years of retirement, that money can become quite substantial.

Now, Let’s consider vacations. Using “Get Away Guru’s” and other exciting promotionals. It’s not hard to find vacations. If you could budget $10-15,000 in travel a year during retirement that would be great! Maybe your goals are higher, but here’s the deal. In retirement you can travel a lot easier and on a moment’s notice. If you suddenly leave for 2 weeks in the middle of January to the southern hemisphere for warmer weather on a jungle safari, or to travel New Zealand, it won’t be as big of an issue as a family with kids going to school.

The mobility of being retired makes it easier to find travel opportunities at discounted prices.

Figure out what you want to do with retirement. Are you going to do several week-end trips, or do you want to do a 2-week expedition every year? How about several 4 day weekends at national parks around the country? There are so many options. Remember to consider that most people in retirement have a little bit less energy than a 30-year-old.

This is only assuming $80,000 of an investment in an RV type home. If you’re dropping $200,000 on an RV the numbers will only be bigger. With $200,000 the income at 6% being $12,000 a year.

How much vacation and travel can you get out of $5000 a year?

Remember, owning an RV doesn’t mean costs are gone, that’s just the cost of buying it. You’re still spending other money from retirement on gas, maintenance, RV parking, licencing, registration, and more.

Here are three articles that give some awesome consideration to costs, and lifestyle of owning an RV.

Consider the Costs of an RV- https://www.budgetsimple.com/blog/rvs-timeshares-and-vacation-homes-a-good-idea/

More thoughts on the expenses behind an RV – http://livingstingy.blogspot.com/2011/05/future-of-rving.html

Is an RV lifestyle right for you? – http://wheelingit.us/2012/10/17/the-darker-side-of-fulltime-rving-5-thoughts-to-ponder-before-making-the-leap/

My advice is If you are going to buy an RV in retirement to take trips in multiple times a year, save the money instead and use it on hotels and airfare. The bang for your buck is much stronger there, plus you aren’t putting your limited retirement savings into one of the fastest depreciating things you can. AAANND lets be honest, if you want to take an RV out for a couple of days, go rent one for one of those trips.

Ultimately it comes down to this: Keep it invested, the investment return is your play money in retirement.

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5 Ways to Take Dividends From Your Life Insurance Policy

Everyone at some point gets a Life Insurance policy. Why? Because if you die and you’re a parent, what is going to take care of your kids? If you have a spouse, what will keep your spouse running?

But I’m not here to argue whether you should or shouldn’t have life insurance.

I’m also not hear to deep dive insurance or explain the process of buying insurance.

This is about what you do when they ask you “How would you like to take your dividends?” My what? Aren’t dividends a stock thing? (Some maybe even asked, “What’s a dividend”?) To be brief: Dividends are the little extra bits a company pays to you for owning their stock. Some companies don’t give dividends because they reinvest earnings. Many life insurance policies pay dividends in some form, any policy that either invests in the market directly, or allows you to control the investments in the market will yield dividends.

There are 5 ways you can receive dividend payments. Here’s the simple way to remember: CRAPO

Cash

Reduces your basis and is not taxable. Basis is how much money you’ve put into the investment. If you’ve invested $2000 in a stock, and then sell it for $3000 later. You made $1000 dollars. Your basis is that $2000 you put in. With this option you’re reducing your basis by the amount paid out. This also has no tax consequences immediately.

Reduction of Premiums

This is just reducing your premiums. Premiums are how much you pay for your insurance contract. So, you can use the dividend money to make your expense a little less.

Accumulate Interest

With this option you basically keep the dividends invested. The insurance company keeps this money in the same account, but tracks its earning separately. The reason for this is that it’s taxable in the future. The rest of your invested money is still in that tax advantaged insurance.

Paid-Up Additions

Think of Paid-Up as “Paid-In-Full”. You utilize the dividends to add a tiny little bit of permanent insurance to your policy that you no longer pay premiums for. A lot of life insurances have options where you can convert your entire policy over to a permanent paid-up insurance. Of course, this reduces the amount of coverage, or money you get at death, due to the fact that you’re no longer paying into it.

One Year Term

Term insurance is a lot cheaper than Paid-Up insurance. This is when you use the dividends to buy term insurance that lasts one year then expires. The reason someone may do this is because they decide Paid-Up doesn’t add very much. If you look into the cost of permanent insurance compared to term insurance, you’ll see really quickly that term insurance pay-outs can be huge compared permanent insurance. The other real difference though, is term insurance expires. So, if you don’t pass away during the time, then it expires.

Most people usually go with Paid-Up additions, but depending on your situation you may choose another.

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Why you want a Certified Financial Planner, Why I don’t want to just be a “Financial Advisor”

Confidence comes through cognizance.

Now, everyone has heard the term ‘Financial Advisor’ before. However, did you know that not all terms mean what you think they mean.

Literally anyone can be a Financial Advisor. According to Investopedia,

“Financial advisor” is a generic term with no precise industry definition… What may pass as a financial advisor in some instances may be a product salesperson, such as a stockbroker or a life insurance agent. A true financial advisor should be a well-educated, credentialed, experienced, financial professional who works on behalf of his clients as opposed to serving the interests of a financial institution.

“Go to college;” I’m now a Financial Advisor by the legal definition. “Spend all your tax refunds on Pringles and Custom Baby-Seal Leather Boots;” I’m now a Financial Advisor. “Put that million dollars you inherited into this annuity;” I’m now a Financial Advisor and, depending on the company I work for, possibly $30,000 richer (assuming a 3% commission, some can be as high as 10%!).

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A well diversified Pringle portfolio
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Custom Leather Boots – Good Investment

 

 

 

 

 

 

 

 

Click on this link and print your own certificate of being a certified Financial Advisor from Last Week Tonight’s Financial Advisor Academy signed by John Oliver, the Dean of Financery! That’s how easy it is to say you’re a Financial Advisor.

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Boom – My dog is a Financial Advisor

The reason I want to be a Certified Financial Planner Designee is so that those served will be confident and secure the advice they are given is for their best interest. A CFP designation requires a LOT of work. Here are some of the many requirements

  • A Bachelor’s degree
  • Mastery of 100 topics of financial planning
  • Classes and credit hours in these areas:
    • Insurance Planning
    • Employee Benefits Planning
    • Investment and Securities Planning
    • State and Federal Income Tax Planning
    • Estate Planning
    • Retirement Planning
    • Asset Protection Planning
    • Estate Tax, Gift Tax, and Transfer Tax Planning
    • Financial Counselling
    • Capstone Course
  • Passing a 6 hour test with 170 questions about the application of the 100 areas including:
    • Two case studies
    • Mini-case problem sets
    • Stand-alone questions
    • This test has about a 42% pass rate
  • 3 years of work experience in all areas
    • Establishing and Defining Relationships
    • Gather Client Data and Goals
    • Analysing and Evaluating Financial Status
    • Developing and Presenting Financial Planning Recommendations and Alternatives (yeah. you can’t give one idea, but a cluster of them)
    • Implementing the choice
    • Monitoring the Financial Plan

Oh. And there are is more. There are ongoing requirements to be a CFP Designee.

There is a strict code of ethics involving criminal background checks and compliance to track everything you do. Every two year period requires thirty hours of ongoing continuing education.

Also, you CAN’T have a CFP Certification if you’ve had any of these.

  • Felony conviction for theft, embezzlement or any other financial crime
  • Felony for tax fraud
  • Revocation of any professional license previously (with exceptions)
  • Felony conviction for any degree of murder or rape
  • Felony for a violent crime in the last 5 years.
  • Two or more bankruptcies (with exceptions)

So, except for a violent crime lasting 5 years on your record, anything else is a permanent block from ever being a CFP Designee.

Who would you rather work with on creating your financial action plan?

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CFP Designees provide the best advice

Do you understand why it’s worth looking for a CFP with all of that under their belt, compared to just a “Financial Advisor” (I hope you printed that URL off, because if so, you’re an Advisor now, too!)

My interest in studying financial planning by becoming a CFP Designee is to help individuals feel aware, secure, and prepared for retirement. The peace that comes from knowing you are acting and achieving your own goals financially is  powerful and strong that builds real confidence to act. I’m also motivated to become a CFP Designee because it is something that is universal and needed for everyone; this field is a way to help all individuals and therefore families too, no exceptions. A CFP designation gives strong support to show I can do comprehensive planning, and have dedication to providing value and accuracy.  Attendance at finance conferences, Financial Planning Association meetings, and volunteer work through my school’s student financial counselling centre, the Money Management Resource Centre, are all ways I’m becoming as knowledgeable I can for the benefit of those I will work for. Individuals need help on a vision, and then they can make the wise decision.

I want to help millennial entrepreneurs, newlyweds, dance teachers, college students, and the active high paced people of today to understand how their money works and how to keep their wealth from slipping through their fingers. People are scared of money, or worried about money. If they are cognizant then they can be confident. My goal is to become a reliable counsellor; I will be a planner to help others make educated choices to feel confident and prepared to reach their vision: bear hunting in Europe, having a large family, creating a company from scratch, or planning 40 years in advance for retirement.

– Jacob Johnson is a student of Personal Financial Planning at Utah Valley University, He is a member of the student Financial Planning Association there and enjoys competitive ballroom dance.

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– Thank you Rebekah White for the wonderful craftsmanship and help in editing and reviewing my writing. Thank you for helping me to be confident. Rebekah has a degree in Creative Writing and helps authors and individuals express their thoughts in more effective and clear methods using their own natural voice. * If you’d like contact to her please let me know!

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Publications from Searcy

While I was at Searcy Financial Services. I had the chance to publish several articles for Allos Investment Advisors. Here are some of the works!

I hope you can find people that could benefit from these to share them with! Please let me know if any of them catch your eye and your stories!

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