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Financial Resolutions for 2016

| Leslie Kelly

By Markus Bras, CFP ®, MBA; Director of Pilot Services, American Financial Advisors, Inc.

Most New Year’s resolutions concern health and family issues. Nearly all of us, including myself, could eat and live healthier, lose a few pounds, exercise more and devote more time to our family.

Additionally, we hope you use the start of the New Year to address some, or all, of the financial planning issues discussed below. We encourage you to discuss these financial planning topics with your spouse and/or other family members. Waiting for a significant life event to happen before starting to address these financial planning issues is similar to delaying memorization of emergency memory items until the emergency happens. Planning ahead is not only critically important when flying airplanes but also of significant importance when planning your and your family’s financial future.

Make Sure Your Portfolio is Working for You

  • Take time to review your will and other estate planning documents and update, if necessary. This is one of the items most Retired Pilot-Clients overlook. Many changes may have taken place within your family since your will was first established or last updated. These changes could result in your will being out of date. Your will should be the basis of your estate planning documents and it is therefore important to keep it up to date.
  • Determine if a Revocable Living Trust is appropriate for your financial situation. A Revocable Living Trust will help your family avoid probate and all problems associated with the probate process. It will assist your family with a more expeditious transfer of assets. It will also give you more control over what you want to happen with your assets after your death.
  • Have you taken advantage of the low mortgage rates by refinancing your current mortgage? Current mortgage rates are still at or near all-time lows, even after the first increase by the US Federal Reserve in Dec. 2015. Some mortgage companies will let you renegotiate the interest rate of your current mortgage. Other mortgage companies require a full refinance of your mortgage. Some of the issues which should be taken into consideration are your current mortgage rate, time and balance remaining of your current mortgage and the refinancing cost.
  • Are your beneficiary designations still appropriate? You can designate a beneficiary for your life insurance plans and retirement investment accounts. It is important to go over the beneficiary designations if there have been major changes in your family or financial situation. Designating the appropriate beneficiary will also be beneficial in avoiding probate.
  • Is the current asset allocation of your total investment portfolio appropriate? An appropriate asset allocation is the major factor in determining the success of your investments. Your asset allocation is indicated in your Investment Policy Statement (IPS) and is based on several factors including risk tolerance, risk necessity, time horizon, other assets, other sources of income, and withdrawal needs. Your asset allocation is the primary factor in determining the rate of return and standard deviation (volatility) of your portfolio.
  • Have you considered all insurance needs? Do you currently have or do you need Long Term Care Insurance? Is the level of Life Insurance you have for your spouse and yourself appropriate (remember that AA no longer offers retiree life insurance for pilots retiring on or after 11/1/12, and that the life insurance amount decreases annually for pilots who retired prior to 11/1/12)? Should you consider umbrella liability insurance?
  • Are you familiar with your Retiree Medical Options? Even though no changes were made to the Retiree Medical Options for AA Pilots retired prior to 11/1/12, it is important to be aware of all available Retiree Medical Options. Since many of our Retired Pilot-Clients are approaching age 65, coordination of Medical benefits is a critically important financial planning issue. Pilot-Clients, who retired on or after 11/1/12, will have to take the significant increases in monthly premiums into consideration as well.
  • Have you reviewed your Financial Flight Plan (FFP) recently? Your FFP covers many of the financial planning items discussed above and will be used by AFA as your document to track and review all pertinent financial planning issues. AFA reviews and updates your FFP on a regular basis and will forward the updated FFP and related questions to you. A prompt reply to AFA’s inquiries ensures an up-to-date Financial Flight Plan.
  • Are you affected by the recently announced changes in Social Security? The rules for two frequently used Social Security filing strategies have changed based on date of birth. The “File and Suspend” strategy must be used prior to the end of April 2016 and the “Restricted Application” will only be available to those born on or before 1/1/1954. We recommend a review of your Social Security filing strategies if you and/or your spouse have not yet commenced Social Security benefits.

If you need assistance with any of the above-mentioned financial topics or other financial planning related issues, feel free to contact any of the Certified Financial Planner ™ professionals at American Financial Advisors. Your AFA team can be reached at 888-679-9779 at the following extensions and email addresses:

Mark Bras, CFP®, MBAext.
Leslie Kelly, CFP®, AIF®ext.
Joan Moralesext.
Bill Mertes, CFAext.
Matt Boyce, CFP®ext.
Jim Cableext.
Alex Brasext.

Registered representative of and securities offered through Foothill Securities, Inc., member FINRA/SIPC. Advisory services offered through American Financial Advisors, Inc., a registered investment advisor. American Financial Advisors, Inc. and Foothill Securities, Inc. are not affiliated companies.

American Airlines, Inc. (“American Airlines” and/or “AA”) is not affiliated with, nor does it endorse American Financial Advisors, Inc. (“American Financial Advisors” and/or “AFA”). The AFA website is not authorized, sponsored, or otherwise approved by American Airlines, Inc., and American Airlines is not responsible for the content of the AFA website, nor of any promotional materials prepared by American Financial Advisors.


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