Identify the connection between net worth and risk tolerance

Understanding your risk profile is an important component of managing significant wealth.

Nobody wants to financially erode the portfolio they’ve built by making risky choices at the wrong time. You spend nearly half of a lifetime working hard to prepare for a secure retirement, so no wonder it isn’t easy to convince yourself to embrace risk. As vital as wealth preservation is, especially when nearing retirement, returns are still an important consideration.

So how do you get over the risk hurdle? Research shows your financial advisor can help. Those who work with an advisor perceive potential higher-risk investments with less negativity. They’re also more apt to recognize the importance of holding thoughtfully selected risk within an investment portfolio compared with wealthy investors who don’t partner with an advisor.

But how risky is too risky when it comes to wealth preservation and generating returns for high-net-worth investors? You might be surprised.

Sometimes looking at the numbers is an exercise in perspective. Investors with significant wealth have a greater ability to absorb financial losses than others – but emotion can sometimes get in the way of seeing the broader context. An amount that may initially cause “sticker shock” may actually be a fraction of your liquidity when considering the bigger picture. Your advisor may be able to run simulations that show how your unique portfolio would react to market pullbacks or changes in interest rates. Seeing these potential outcomes can help clarify the level of risk that fits your tolerance and your investment goals – and it may turn out to be higher than you thought.

Age is less important when determining risk for investors with significant wealth. Your investment time horizon – the length of time you expect to hold an asset – is an important component of risk tolerance. Older investors typically have a shorter time horizon given their proximity to retirement and the usual need to make portfolio withdrawals at that time. However, age may have less impact on the overall risk tolerance of affluent investors whose income needs in retirement are already accounted for. If it’s unlikely you’ll need to liquidate assets in the near term to meet your spending needs, it may be appropriate to maintain a less-conservative allocation for longer.

Being too conservative can be a risk unto itself. Avoiding undue risk is always wise. However, you want to be sure to balance risk with potential return when it comes to your overall plan to outpace inflation and meet your financial goals in retirement, whether that’s supporting your grandkids’ education, giving to charitable causes or taking that once-in-a-lifetime trip. With the more complex planning needs that come with being an affluent investor, it’s important to discuss with your financial advisor an asset allocation that can help maintain your lifestyle over the long term.

Focus less on market timing and more on the timing of your life. Creating a diversified portfolio and revisiting it as your life and goals evolve is more important than any one investment decision. Your financial advisor can help you determine which opportunities provide the best potential for reward for the risk taken that aligns with your unique circumstances, life plans and goals, and provide you with the confidence not to “jump” into and out of the market at the wrong time.

More risk assets, more thoughtful rebalancing. Because private wealth individuals typically hold meaningful wealth in risk assets like equities, which can change significantly in value over time, it’s important to establish a plan with your advisor for periodically returning your portfolio to its target asset allocation. It’s also important for your advisor to see the whole financial picture; holding assets in multiple accounts without informing your advisor of your full portfolio may increase the risk of becoming overly concentrated or underexposed to certain markets. Your selected strategy will have important tax consequences, so talk through various approaches to determine the best fit.

Create a steady withdrawal strategy for retirement. Capital preservation is important to prevent income loss. You’ll still need to ensure your liquidity needs are met with a holistic income strategy. Consider the income sources you’ll have in place, which may include Social Security, pensions, annuities, dividends, bond coupons, etc., and work with your advisor to address any potential mismatch between what’ll be generated and what you’ll need to maintain your desired lifestyle as well as access capital if there is ever a need.

Confront concerns head on. One way to bring confidence to the idea of taking on risk is to simply talk about it openly. Have conversations with your financial advisor to help you understand your risk tolerance today and how risk can affect your future. When ideas and numbers become more tangible, they become more manageable. Your financial advisor can speak directly to the matters that will impact your portfolio the most but change your lifestyle the least.

Maintaining a large portfolio into and through retirement doesn’t have to mean giving up on returns and opportunities for growth, when that risk is managed thoughtfully. It may take a true understanding of your overall financial outlook, and transparent conversations with your financial advisor, to help you get there.

There is no assurance any investment strategy will be successful. Investing involves risk including the possible loss of capital. Asset allocation and diversification do not guarantee a profit nor protect against loss. The process of rebalancing may result in tax consequences.

IMPORTANT: The projections or other information generated by the firm’s portfolio simulation tool (Goal Planning & Monitoring) regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. Results may vary with each use and over time.

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.

From the Desk of Dale Crossley and Evan Shear

We hope this newsletter finds you and your loved ones well. Summer may be coming to an end, but the presidential race is heating up. With that in mind, you may expect that we would use this newsletter to address any anticipated election market impacts. As we’ve mentioned in other communications, election years tend to have a temporary impact on the markets, and our long-term financial plans are structured to manage the inevitable market ups and downs.

Instead, this quarter, we thought we would discuss a topic that’s becoming an increasing concern for our client base – longevity planning. According to the CDC, the average life expectancy in the United States is 77.5 years. As people live longer, planning for a fulfilling life in later years requires a more holistic approach to a prosperous and healthy future. Longevity planning goes beyond traditional retirement strategies, focusing on a balanced integration of financial security, physical health, and emotional well-being. By addressing these interconnected areas, individuals can create a roadmap that not only prepares them for the challenges of aging but also allows them to thrive in every aspect of their lives.

The Financial Side of Longevity Planning

There are a couple of important things to prioritize when you are considering how you will handle your financial life moving into your later years of life. In particular, you should think about the following:

• Preparing for Extended Retirement - It was once the case that one might expect to only have to plan for perhaps a few years of retirement. Now, with the potential for decades of retirement lying ahead, it is necessary to think about how you will have enough money to take to make it last. This calls for a dynamic investing strategy that will have you investing in selections that you might not have otherwise. In other words, you may consider putting money into investments that are likely to continue to generate returns for you long into the future.
• Anticipating Healthcare Costs - It is not necessarily fun to think about, but it is necessary to consider the healthcare costs that will likely sneak up on you at some point. Simply knowing that you are going to have healthcare expenses that you don't currently have to deal with is a step in the right direction. Prepare for a future where your healthcare expenses are going to go up and start investing for that future.

Health Insights From Blue Zones

Certain parts of the world are known as "blue zones." In these areas, the average lifespan of people who live within their boundaries is higher than for the planet as a whole.

This is exciting to know because it means we can intentionally try to create the conditions enjoyed by those in blue zones in our own lives to garner more enjoyment and appreciation. Using some of the practices of those in blue zones in your own life can potentially bring down your healthcare costs. A few things that people in these areas do well include:

1. Eating a diet rich in fruits and vegetables
2. Regular physical activity
3. Maintaining strong social bonds

These three things can help you enjoy a healthier and potentially longer life while also reducing your retirement costs.

Integrating Financial and Health Planning

Far too many people fall under the false assumption that they must only focus on financial planning or health planning. The reality is that the two should feed into one another. When you are making wiser health choices, you ought to be able to appreciate the benefits of doing so by experiencing rewards in your financial life. Those rewards come in the form of reduced expenses.

Using blue zone practices is a great place to start. Consider adding them to your overall healthcare approach to create the best possible atmosphere for improving your health and generating long-term savings that you might not otherwise have had.

We Help With Longevity Planning

While our financial plans are developed for longevity and long-term financial success, we always encourage a plan review to ensure we’re aware of all your life changes and adjustments to future goals. If you would like to review your financial plan please reach out and schedule an appointment.

Any opinions are those of CrossleyShear Wealth Management and not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members.

There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. All opinions are as of this date and are subject to change without notice. Past performance is not a guarantee of future results.

15-Minute Moist & Crispy Pan-fried Cod Recipe Doesn't Need a Sauce

This easy pan-fried cod recipe is sprinkled with so many flavorful spices, it doesn't need a sauce.
Serve this easy fish recipe with your favorite side dishes. A side salad wouldn't be a bad idea, either.

Cuisine: American
Prep Time: 5 minutes
Cook Time: 10 minutes
Total Time: 15 minutes
Servings: 4 to 6

Ingredients

• 1 1/2 - 2 pounds cod fillets (or your favorite white fish) 1/2 cup flour
• 1 1/2 teaspoons paprika
• 1 1/2 teaspoons garlic powder
• 1 teaspoon onion powder
• 1/4 teaspoon cayenne (or more to taste)
• 1/2 teaspoon dried oregano
• 1/2 teaspoon dried thyme
• 3 tablespoons olive oil, for frying
• lemon wedges

Here's how to make it:

1. Combine the paprika, garlic powder, onion powder, cayenne, oregano and thyme.
2. Season the fish with salt and pepper. Sprinkle the seasoning blend on both sides of the fish.
3. Put the flour into a shallow bowl. Dredge the seasoned fish in the flour.
4. Heat the olive oil in a skillet. Add the fish and cook until crispy, browned and cooked through, about 4 to 5 minutes per side depending on thickness of the fish. (You may have to do this in two batches so you don't crowd the pan.)

view recipe here

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.

Navigating Medicare decisions in tricky situations

What encore careers, young dependents and early retirement mean for your elections.

Medicare is an important component of holistic financial planning, but it can get complex for investors who retire early, care for young dependents or work beyond 65. But knowledge is power. Being aware that your unique situation should influence your Medicare choices is half the battle.

Tips for common scenarios

Not everyone retires right at 65. In fact, it’s becoming more common that people are making their own rules and timelines when it comes to retirement.

If you’re planning to retire before age 65, think about how you plan to bridge your healthcare coverage until you become eligible for Medicare. Medicare is designed for those 65 and older or people with certain disabilities. The only way to ensure healthcare coverage before that date is with private health insurance through your employer or the exchange.

What if you decide you’re working past the age of 65 (the Medicare eligibility point), and you’re not sure if you should enroll in Medicare yet? You can drop your employer’s healthcare plan and enroll in Medicare, but first you should consider the out-of-pocket costs associated with doctor’s visits and procedures. Many people will enroll in Medicare Part A, which is hospital insurance, because there's no premium for most people, as long as they have 10 years of Medicare-covered employment. But to enroll in Part B and simultaneously carry group health insurance is like paying double.

What if you’re married and cover your spouse on your employer’s plan? Medicare is individual healthcare coverage, so your spouse would either need to be eligible for Medicare or have their own private health insurance.

Let’s say you have young dependents at home. Maybe they’re your own kids you had later in life, or maybe you care for your grandchildren or other dependents. While Social Security offers benefits for young dependents, Medicare doesn’t. Your dependents would need their own healthcare insurance plans.

Keep up with changes

Regardless of the Medicare decisions you make, you should revisit your selections every year. Open enrollment starts annually in October, which is the time to review what works for you and your family.

Sometimes changes are made to the program or laws that get passed affect Medicare. An example is the Inflation Reduction Act that was passed by Congress in 2022. It doesn’t go into full effect until 2025, but it will reduce out-of-pocket costs for everyone from $7,000 to $2,000 for drugs. It also caps out-of-pocket insulin at $35 per month, which is significant for those with diabetes.

If you need a little bit more guidance with your Medicare decision-making, the first point of contact is Medicare.gov. That site offers a ton of information, including how to enroll. Of course, you can enlist your trusted advisor to help you navigate these important decisions as part of a holistic financial plan as well.

As you consider your Medicare elections:

• Determine if any of your dependents will need to switch to an individual healthcare plan.
• Speak to your advisor about your holistic financial situation to determine what makes the most sense.

Sources: aspe.hhs.gov

The information contained in this report does not purport to be a complete description of the healthcare issues referred to in this material. This material is being provided for information purposes only and is not a complete description, nor is it a recommendation.

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.

RMD rules delayed for inherited IRAs...again?

What the latest change can mean for some beneficiaries

If you’ve recently inherited an IRA or are set to inherit one soon, you need to know that the rules surrounding IRA inheritances have become more complicated for some designated beneficiaries. Most notably, a “10-year rule” applies to most non-spousal beneficiaries who receive inherited retirement accounts. This rule requires that beneficiaries of IRAs must liquidate the entire account by the end of the 10-year anniversary of the IRA owner’s death. However, proposed Treasury regulations require that beneficiaries under this 10-year clock, who inherit from an IRA owner who died after their Required Beginning Date, to take annual Required Minimum Beneficiary Distributions (RMBDs) in years 1-9. These proposed regulations have left taxpayers unsure if they’re required to follow them and take an annual RMBD.

What’s going on

The 10-year rule went into effect for most non-spousal beneficiaries who inherit IRAs after December 31, 2019. Most industry professionals believed that the 10-year rule only required the account to be fully distributed by the end of the 10th year, without annual distributions. But a proposed 2022 regulation added a required minimum beneficiary distribution to the equation for a subset of IRA beneficiaries: specifically, designated beneficiaries who inherit from an IRA owner who died after their Required Beginning Date. These beneficiaries will have to make an annual RMBD. If you an inherit from an IRA owner who died before their Required Beginning Date, only the 10-year rule applies, but there’s no RMBD.

RMBDs require you to withdraw funds at a specified amount and if not taken, penalties will apply. Since the 2022 proposed regulations took taxpayers and industry professionals by surprise, the IRS has issued penalty waivers for those individuals possibly affected by the proposed regulations, which also gives the IRS more time to issue final regulations.

How we got here

Beginning with the SECURE Act of 2019, the IRS applied stricter distribution rules on those inheriting IRA accounts by implementing a 10-year rule for most non-spouse beneficiaries, significantly reducing the distribution timeframe.

In February 2022, the IRS proposed an additional regulation that would impose both a 10-year rule and RMBDs on anyone who inherited an account from someone who was already past their own required beginning date.

It’s not difficult to see the problem: The IRS released proposed regulations in 2022 that applied to a group of beneficiaries that inherited them in 2020 and later. It also left taxpayers wondering if they need to follow proposed regulations or wait until final regulations are issued. This resulted in the IRS waiving penalties for RMBDs not taken in 2021 and 2022. On July 14, 2023, the IRS announced that inheritors who didn’t take RMBDs in 2023 will also receive penalty waivers, since the proposed regulation hasn’t been finalized yet as we head into 2024.

What you should do

If this all sounds confusing, that’s because it is. If you inherited an IRA after December 31, 2019 and you’re unsure if or how this applies to you, meet with your financial advisor – and perhaps also a tax professional – to review your situation. They can tell you how to comply with the new rules and how to factor those pesky RMBDs into your long-term financial plan.

Sources: keiter; kiplinger; kitces; putnam wealth management

Raymond James does not provide tax advice. Please discuss these matters with your tax professional. RMD rules delayed for inherited IRAs...again?

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.