About Jerry Maldonado

Jerry specializes in retirement, insurance and tax off-set strategies for professionals and small business owners. His focus is to help clients identify their definitions of legacy and financial security while simultaneously implementing innovative strategies to help make those financial goals a reality. For more information on his services, he can be reached at [email protected] www.pacificadvisors.com/jerry_maldonado

The 12 Steps to Living Confidently: How to Retire With Confidence

Take Worry Out of Planning for Retirement!   Imagine you’re planning a round-the-world cruise. It won’t happen for a few years but you’re serious about going. One of the first things you do is figure out the cost. As the date draws closer, you nail down the exact amount of money you’ll need. Now, imagine you’re planning to retire. Wouldn’t you do the same thing? Figure out exactly what it will take to keep you afloat during your retirement journey? Most Americans don’t. In one survey, only 14% of pre-retirees knew what their Social Security payments were likely to be at retirement.1 “That’s scary,” says Douglas Dubitsky, Guardian Vice President, Product Management, Retirement Solutions. “Social Security benefits were never meant to be the only source of income in retirement. Understanding your benefits will help you plan confidently for retirement. And we know that having a plan is one of the key behaviors in achieving financial and emotional confidence.” What else is scary according to Dubitsky – not having other retirement assets on hand to cover you should you opt for delayed Social Security payments. Being strategic about your overall retirement income plan in this way is one way to become more financially and emotionally confident. Dubitsky has some additional rules of thumb. The 75% rule. You need about 75% of your pre-retirement earnings to live comfortably in retirement. If you earn $76,000 a year, for example, you’ll need retirement income of $57,000. Social Security will only cover part; about $32,000 a year would have to come from other sources.2 Wait if you can. While there is no “right time” to retire, the age you activate your benefits makes a big difference. If you were born between 1943-1954 and apply for Social Security benefits at age 62, you’ll receive about $1,000 less per month than if you wait until age 70. Again, if you do choose to delay Social Security, make sure you have other retirement assets on hand to cover you. Get real numbers. Calculating Social Security benefits is complex. Calculators on the Social Security website can help you estimate. Factor in healthcare costs. Medicare premiums and health care costs keep rising. A married couple, both age 65 in 2020, may need up to $365,000 over retirement just to cover health care.3 There are no guarantees. The mass migration of Baby Boomers leaving the workforce is putting a financial strain on the Social Security program. Payout may only be 77 cents for each dollar of scheduled benefits by 2033. All the more reason to plan for alternative sources of income! “There are other practical things you can do,” adds Dubitsky. “Limit your dependence on Social Security earnings in retirement planning by increasing retirement contributions to both your IRAs and 401(k)s. Set up automatic deductions if possible. Estimate your retirement expenses now and calculate them out 30 years to see what a long retirement will cost. And stay on top of rising medical expenses by building up a health savings [...]

2018-09-18T12:05:46+00:00 By |

The 12 Steps to Living Confidently: Business Succession Planning

What Happens to Your Business if You Are No Longer Able to Run It?   Nearly 75 percent of small businesses don’t have a succession plan, according to a recent survey.1 To put that into perspective, it’s as though three-quarters of the commercial jets in the air right now don’t have a co-pilot. That may sound dramatic but think about it. If the owner of a small business suddenly dies or becomes incapacitated, the company may stay aloft for a time — but the odds of an optimal outcome rapidly diminish without a plan in place. This daredevil bent is not surprising: Entrepreneurs tend to be calculated risk takers. In a recent study, it was shown that entrepreneurs typically align with the financial profile of Ambitious Spenders who put an emphasis on saving to start or expand a business. But protecting a business is as important as growing it. Research also shows that Ambitious Spenders prioritize creating wealth and building a legacy. With the right succession planning, small business owners can help to ensure both the long-term success of their business — and greater financial security for themselves and their family for years to come. Here are three steps to help get your succession planning off the ground: ASK TOUGH QUESTIONS Succession planning is a blueprint for continuing or liquidating a business when the owner is no longer involved. If continuance is the goal, who will take control? Many business owners assume their children will want to be involved, but that may not be the case. Some issues to explore: Are my family members interested in running the business? Do they have the skills and aptitude? How will those family members who are uninterested in the business share in the legacy? Would it be preferable for an outsider to assume ownership? How will that transition be managed to protect my heirs? INSURE AGAINST THE UNKNOWN Insurance is a key element in a business succession plan. Whole life insurance: In the event of an owner’s untimely death, the benefits from a whole life insurance plan may be used to pay creditors and provide survivors with financial resources to either maintain the business or liquidate it. If the owner decides to retire, a whole life policy may be used to fund supplemental retirement income.2 Disability insurance: Disability insurance provides valuable stop-gap financial protection if an owner is unable to work due to illness or injury. The proceeds can help the business meet its day-to-day expenses, as well as business loans and other longer-term financial obligations — until the owner is back on his or her feet. CONSULT WITH A FINANCIAL SPECIALIST Developing a well-designed succession plan can be one of the most significant financial decisions you’ll make, which is why you should consider consulting with a knowledgeable financial professional who will take the time to understand your business and provide unbiased advice. Owners of high-growth, small businesses are more likely to rely on advice from professionals than owners [...]

2018-09-07T16:54:20+00:00 By |

The Steps to Living Confidently: Time Horizon, Risk Tolerance, and Compounding

Learn the Benefits of Starting a Retirement Fund Early in Age!   Investing for retirement may have a simple premise: make sure your savings are working hard, so when you stop working, you can live comfortably on your retirement income for many years to come. But the best way to do that differs for each person. Here are three factors to consider in creating your plan: TIME HORIZON How long before you retire? Forty years? Twenty years? Ten years? Your horizon is the amount of time before you begin drawing income from your retirement savings. It’s the prime period to build your retirement funds — and its length plays a role in determining how much risk you can afford to take. Generally speaking the more years you have before retirement, the greater the risk you may be willing to take with your money. If you’re nearing retirement, you may benefit from more conservative investments. This can help you plan more confidently. Let’s consider Humpty Dumpty. A good egg, Humpty is 42 years old. He intends to retire at 65, so his time horizon is 23 years. Many financial specialists consider a horizon of more than 10 years to favor an aggressive investment portfolio — i.e., one designed to provide a higher rate of return while also involving a greater likelihood that those funds could lose value. The closer to retirement Humpty gets, the more his financial advisor may advise him to scale back risk. But Humpty’s horizon is not the only factor in his decision. RISK TOLERANCE Just because you are decades away from retirement, that doesn’t automatically mean you should opt for higher-risk investments to chase a rate of return. You want to figure out your risk tolerance. What is your relationship with money? Are you comfortable riding an investment roller-coaster if you gain a favorable return down the road? Or do dips in market value give you high anxiety? The answers to these and other questions can help you determine whether you want an investment portfolio weighted toward stocks (aggressive) or fixed-income investments (low-risk) or a balance between the two. Because you want to make rational, rather than emotional, investment decisions, it is helpful to be aware of your financial goals and behaviors and to work with a financial professional to devise a plan that suits your level of risk tolerance. Learning how your personal style and financial habits intersect can help you plan more confidently. THE POWER OF COMPOUNDING What Humpty may have sacrificed by starting later in life (age 42) and choosing a very low-risk investment strategy was the ability to fully exploit the incredible power of compounding. Compounding is the ability of investments to generate earnings. Here’s how it works, i.e., from age 20 to 30, Jack contributed $1,000 to his retirement account, earning seven percent compounded monthly. That $11,000 investment grew to $168,514 by age 65, when he retired from taking cows to market.1 Similarly, if he started saving at 55 years [...]

2018-08-22T18:11:28+00:00 By |

The Steps to Living Confidently: The Small Business Dream

How to keep your small business from failing.   Thinking about starting a small business? Join the club – 97 percent of US employer firms are small businesses, a total of 27.9 million.1 While everyone starts with a dream and the best of intentions, an uncertain economy plays a role, for sure, and some businesses just tend to tank more than others. Then there are the businesses that are exposed to structural shifts, like travel agencies and office supply stores. But opportunity abounds in growth areas like shared services, healthcare, construction, food and hospitality, technical consulting, and senior care. So, do your homework and hedge your bets by finding a suitable growth area (shared services, for example) and the type of business that has a higher chance of success (accounting and payroll management, for example). Then, once you’ve decided on the right business for you, these five steps can help you to realize your entrepreneurial dream. ASSESS YOUR FINANCIAL PERSONALITY Your attitudes toward life, money, and financial decision-making will influence your entrepreneurial success. Small business owners in America tend to be Ambitious Spenders, according to recent research. They struggle with work/life balance, and while most hate to delay gratification, they still prioritize saving to grow their business and estate. Sound like you? PRIORITIZE CASH FLOW Over 80 percent of small businesses fail because of negative cash flow. They don’t have enough money coming in at the right time to meet their financial obligations. Making healthy cash flow a top priority will help your business weather the ups and down. Put together a forecast of anticipated payables and receivables so you’re not blind-sided, set up and enforce realistic payment terms for customers, and work with suppliers to get favorable pricing and discounts. PROTECT AGAINST COMMON RISKS You can forecast cash flow, but you can’t forecast disaster. Small businesses need big protection. Consider different types of disability income and life insurance policies to help safeguard your business if you were unable to work due to illness or injury, or if a key employee passed away suddenly. Property insurance may be important, depending on your business. And liability insurance will help protect you from lawsuits. GROW THE RIGHT CULTURE Culture isn’t just for yogurt. Successful small-business owners build a collaborative workplace environment in which employees unite behind a shared mission, values, and behaviors. Learn how to delegate effectively to others within your business and build strong personal relationships with employees, vendors and customers. It’s all about creating a positive network, inside and outside the business, that enables everyone to perform at their best. SEEK ADVICE FROM PROFESSIONALS Owners of high growth small businesses are more likely to rely on advice from professionals and informal business support groups than do owners of companies with declining revenue, according to our research.2 In particular successful entrepreneurs continuously work on developing their skills around strategic planning, money management, and hiring. Starting a new business is exciting — and a huge commitment of your time and money. To [...]

2018-08-09T11:10:09+00:00 By |

The Steps to Living Confidently: Legacy and Estate Planning

How to protect your loved ones with legacy and estate planning.   You work hard for your money. And you protect it. Year after year, you build net worth as your cash and other assets (house, real estate, investments) grow. Now, imagine that you never protected your money — that you left your paychecks on the bus or your front steps for anyone to take. Where would you be now? Without a basic estate plan, you’re taking the same risk with your wealth. If you don’t have the right documents to protect and transfer your assets, decisions will be made based on the law, not your wishes. And the value of your estate could plummet due to estate settlement costs and taxes. Working Americans are seriously stressed out. One reason is the disconnect between financial priorities and behaviors. You want to protect your loved ones, yet maybe you’ve put estate planning on the back burner. Instead, follow the lead of Confident Planners, the least stressed Americans. They use estate planning to take control of the unknown and safeguard their family’s future. You can do the same!   “I DON’T KNOW WHERE TO START.” Fair enough. Estate planning sounds complex. One way to start is to focus on the top three tools everyone needs: Last will and testament: Simply put, a will is what you want done with your stuff when you die. It specifies who gets the house, the investments, your bobblehead collection, and everything else you hold dear. Die without a will, and the state steps in to make those decisions. A DIY will is possible (and probably better than nothing), but it always helps to consult an expert.   Living will and healthcare proxy: A living will spells out your wishes about end-of-life care. For example, how long would you want to stay on life support? The healthcare proxy designates a person to make those decisions if you become physically or mentally incapacitated. The two documents go hand-in-hand, and you can find forms online.   Durable power of attorney: This is the legal counterpoint to the living will: a document that specifies who can make financial decisions in the event you are incapacitated.   There are many other valuable estate planning tools, but at the bare minimum, complete these three documents as soon as possible. Once you do, you will feel much more confident that you’ve protected your estate and loved ones.   “I DON’T WANT TO THINK ABOUT IT.” A surprising finding in recent research centered on Ambitious Spenders—people who have high incomes but are still financially and emotionally stressed. They prioritize building an estate but avoid planning to ensure its long-term viability. If that sounds like you, it may help to look at estate planning as the opportunity to build a powerful “future spending” engine to meet important goals, such as: Funding children’s and grandchildren’s education Providing ongoing care for elderly relatives or a special needs child Supporting your favorite charities or arts [...]

2018-07-24T16:49:29+00:00 By |

The Steps to Living Confidently: Savings and Cash Flow

Increase your working capital to multiply your savings and cash flow!   While the savviest CEOs and bankers understand complex financial concepts that would confound most of us, there’s one critical concept they use that we can all get our heads around: cash flow. Cash flow is, in short, all the money (the cash) moving in and out (the flow) of a business – or household – over a given period. Why is it so important? It allows a business to operate, and without adequate cash on hand, well, a business can go bust, and quickly. The same principal applies to your own finances. Whether working or retired, you need enough cash coming in, and a little less going out, over the course of a month. This allows you to cover your costs, and then some, so you can live confidently now and plan for the future. MOVE THE BALANCE IN YOUR FAVOR Most of us monitor our bank balances regularly. Examining your cash flow balance is just as important. You may be earning a high income or a low one. You may be a woman balancing family and work obligations. You may be a member of the LGBTQ community with unique family and estate planning needs. But as far as cash flow goes, you’ll land in one of three types: Neutral – Your income is roughly equivalent to your spending and you’re living from paycheck to paycheck, which makes you vulnerable to unexpected expenses and unable to save money. The Day-to-Day Decision-Makers (15 percent of whom earn over $350,000 a year) may find themselves here.   Negative – Your regular expenses exceed your take-home pay. This is a high-stress scenario. You’re probably putting more on credit cards than you’d like and may be paying bills late. The Ambitious Spenders among us may recognize this.   Positive – Because your income exceeds your spending, you can live confidently, saving money for goals (education, buying a house, retirement) and the occasional splurge. This tends to be where Confident Planners land, and we can all get here based on adopting model behaviors such as having a written financial plan and living within your means. The first step to establishing positive cash flow is to evaluate how much money you have coming in and going out each month. A quick way to do it is take a look at your bank statement, tally your credits (the inflow) in one column, and debits (the outflow) in another column. YOUR WORKING CAPITAL To complement your cash flow, you need working capital. Sometimes you need a little more money than your monthly cash flow allows. Maybe your car broke down. Maybe you lost your job. Whatever the case, to survive a major disruption to your income, most experts recommend you set aside enough savings to handle six months’ worth of expenses. In a recent survey, Americans identified building savings as one of their top priorities. Yet, 69 percent reported having less [...]

2018-07-13T19:07:30+00:00 By |

Steps to Living Confidently: How to Make Smart Debt Decisions

Learn how to make smart financial decisions that will help you build wealth.   Is debt the D in our DNA? Seems to be. The day after a Stone Age genius invented the wheel, a fast-talking salesman was probably advertising hot deals—low cost financing!—on a new set of wheels. Going into debt—using someone else’s money to buy something we want—is still how many of us pay for big-ticket items like cars, houses, and college educations. But should it be? When we look at the most financially and emotionally confident Americans, they are long-term planners with clear and attainable goals who live within their means. Learning the behaviors of the financially and emotionally confident, and becoming savvy about debt, can help you down the road to living confidently, no matter your DNA. Here are some tips to help you make smarter debt decisions: Keep your mortgage payment to 15% (or less) of your gross monthly income. Let’s say your household makes $60,000 in pre-tax income. That’s $5,000 per month. So, you should try to keep your monthly mortgage payment at or below $750. Higher mortgage payments squeeze out your ability to save, can make it difficult to afford other necessities, and can tempt you to put those necessities on credit cards. Don’t try to keep up with the Joneses. The likelihood is that they are being crushed under the weight of the debt of their brick McMansion. Use a budget worksheet to find out what you can comfortably afford. Don’t rush to pay off your mortgage. Keep up with your payment schedule, but don’t be in a hurry to pay off your entire loan. (Unless you’re close to retirement – see below.) Mortgage interest rates are currently around 4%, and that’s cheap money compared with other lending sources. Plus, mortgage interest is tax deductible, which helps you save money. If you can refinance at a significantly lower rate, go for it, providing the fees aren’t too high. Take big swings at credit card debt. For starters, stop using the card. Try to pay more than the minimum, and be on time. If you can’t pay off your balance, try, for example, sticking to an amount above the minimum that you can afford and set up an automatic payment. Carrying a large balance forward on your credit cards is like pushing the same boulder up the mountain, month after month. You’ll never get out from under the obligation. Also, you’re subject to escalating fees for each late payment you make. But don’t strike out on protection. It’s also important to remember that you still want to have protection measures in place, or at least be actively building them, while paying down your debt. This includes things like a six-month cash cushion and appropriate insurance coverage. Allocating every dollar towards paying off your debt without building up your savings cushion is a classic mistake. Why? You could pay down all your debt, then be hit by an unexpected expense, and [...]

2018-06-26T15:54:59+00:00 By |

The Steps to Living Confidently: How to Protect Yourself

Protection. We’re obsessed with it these days. We switch passwords, slather on sunscreen, install detectors and alarms, and wear our lucky socks on every flight. That’s all good. But are you taking meaningful steps to protect yourself financially as well? Safeguarding your most important possessions—life, health, ability to earn money, and the assets you’ve accumulated—is a big step toward increasing your financial and emotional confidence. Think of it like when you were younger, and your parents would insist on you layering up; “You can always take layers off, but you can’t put on what you don’t have with you.” By all means, change your online banking password every 90 days (you do that, right?), but also consider adding these five defensive layers to protect what matters most to you. LAYER 1: HEALTH INSURANCE* Healthcare is expensive, and we often need it when we least expect it. This can mean a mountain of medical bills. In fact, the inability to pay medical bills is the number one cause of personal bankruptcies.[1] No matter what the current or future state of healthcare holds, if your employer provides a health insurance option, sign up. Even if the cost of premiums makes you cringe, it’s better than incurring a crushing load of medical debt. If you’re self-employed, look for the best coverage you can afford. Also, consider a Health Savings Account (HSA). It’s a tax-advantaged way to save for medical emergencies. Even if you don’t use it today, it travels with you and can be used well into retirement. LAYER 2: LIFE INSURANCE In the event of your death, the proceeds will help your loved ones maintain their lifestyle, avoid financial hardship or bankruptcy, and pay essential bills such as rent, mortgage, health insurance, college tuition and loans. In addition, certain types of life insurance allow you to build cash value, which can be used during your life to fund things like mortgage payments, education, and loans. LAYER 3: DISABILITY INSURANCE If an accident or illness prevented you from working for an extended period, your financial well-being could take a serious hit. Disability insurance fills that gap by replacing a percentage of your lost income. It’s typically tax-free and you can even use the money to cover retirement contributions and student loan payments. And don’t fall for the myth that disability insurance is only for rare, catastrophic accidents. Many people rely on these policies to cover the income lost due to relatively common conditions such as heart disease and arthritis. LAYER 4: LONG TERM CARE INSURANCE* Seven out of 10 Americans age 65 or older will need long term care (LTC) at some point.[2] And it can be expensive: In 2016, the national average for nursing home care for a shared room was $225 per day.[3] Yet, only one-third of Americans age 40 or older have set aside money for this eventuality.[4] LTC insurance is one way to help reduce the cost burden. Caring for an aging, sick relative can wipe out a [...]

2018-06-12T16:52:55+00:00 By |

The Steps to Living Confidently: How to Cut Your Expenses

“Cut spending.” “Slash expenses.” “Avoid shopping.” No wonder many of us haven’t learned to be good financial managers. The overwhelming advice about cutting your expenses makes it sound downright unappealing. The fact is, getting fit—whether fiscally or physically—should be enjoyable, or at least tolerable. Otherwise, you’ll never stick with it. Research tells us that having enough money to enjoy life is really important to seven out of 10 people.* (The remaining three out of 10 may be excused now.) Here, we’re proposing ways to retain more of your hard-earned cash by increasing (not reducing, cutting, or slashing) certain activities. It’s all gain, no pain. Here we go. Increase scrutiny of recurring monthly payments on your credit cards. You’re streaming more shows and watching less premium cable. And you haven’t set foot in the gym in six months. Automatic deductions for subscriptions and memberships that no longer fit your life can erode your liquidity, drip by drip. Cancel them and enjoy the savings each month.   Increase your digital savvy about money-saving apps. Today’s financial apps can turn your smartphone into a personal money manager. Digital budgeting tools help you track purchases so you spend less. Shopping apps show you offers, discounts, and coupons from retailers. There are even apps to find the lowest gas prices, the cheapest parking lots, and the nearest free Wi-Fi spots.   Increase potential returns on your investments by searching for low/no fee funds. Here’s a statistic that will curdle your milkshake: paying just 1% in fees could cost a young investor more than $590,000 in sacrificed returns over 40 years of saving.** Yikes! Time to pull out your portfolio—even if it’s relatively sparse—and work with a financial professional to make sure you’re not paying avoidable fees on your investments.   Increase your bulk buying habits. You can save considerable cash by buying in large quantities at discount warehouses. But too many of us only go when we’re throwing a party. Get in the habit of purchasing non-perishables—pet food, toothpaste, paper products, detergent—in bulk. Do it regularly and you’ll bulk up financially.   Be proactive about your health. Maintaining your body is like maintaining your car and helps to reduce the risk of expensive repairs, so take advantage of preventative medicine. Regular teeth cleanings. Flu shots. Eye exams. Screenings. Taking these steps may help you live longer and can reduce healthcare costs in retirement, when health costs tend to increase.   Increase your donations to charity. Donating to charities is a good idea, well, just because. But you may also qualify to deduct up to 50% of your adjusted gross income. Save money by doing good. Genius. Finally, increase your self-knowledge. By taking steps, technically steps 1 through 3 so far in this series, to gain financial insight, you’re well on your way toward improving your financial confidence. www.pacificadvisors.com/jerry_maldonado CA Insurance License #0H33733, Registered Representative Park Avenue Securities LLC (PAS). OSJ: 3585 Maple Street, Suite 140, Ventura, CA 93003, 909-399-1100. Securities products [...]

2018-05-30T12:55:53+00:00 By |