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All posts tagged retirement

If you had a dollar for every time you heard the phrase “Start investing early,” you could retire with a million. If you actually acted on that phrase, you are probably retiring with more. Now is the time to encourage your children and grandchildren to start saving as soon as they get their first job. Let’s assume that your teenage child or grandchild is employed for five years from age 16 to age 21. During this time, he or she saves $276 per month ($3,315 per year) and invests the money in a Roth IRA (paying taxes, of course, but at a low tax bracket). This may be a serious sacrifice for a teenager, so any contribution from you would be of great help. Assuming the money returns the historical equivalent of a diversified 60% stock/40% bond portfolio, your child can retire at 65 with $1 million tax-free, without having to invest another dollar after age 21.retirement

savings-piggybankWrtten by: Lisa Castle, CFP®

While we would all love to win the lotto or have a hefty salary or even pick the right combination of stocks to beat Wall Street, there are ways that we can keep ourselves focused and spend less and save more.  Small steps can add up and here are a few small steps to help you along the way!

  1. Start now and start small!  Putting it off until your salary is bigger is not the answer.  This is mostly because the more money you make, the more money you tend to spend.  Even if you could save $50 per paycheck, that will add up faster than you know!
  2. Make a simple budget and write down specific goals.  Sometimes seeing things on paper gives you more motivation.  Need a vacation, write down a pledge and you will be more likely to save the money needed for it.
  3. Separate accounts for each goal.  Now that you have written your goals out, you need to set up separate accounts for these items that way you can track your progress.
  4. Participate in employer retirement plans.  Why not take advantage of your employers retirement account.  If they do a match, then be sure to be putting enough away to take advantage of it.  Not taking the employer up on their retirement match is like throwing away free money!
  5. Save your change.  I know this sounds silly, but grab a large jar or bank and put your spare change in it.  You will be surprised how fast you will have saved enough for your holiday spending or other small goal you may have.
  6. Eat in more.  Try to take your lunch to work more often.  Reward yourself by putting the money you would have spent on lunch in an account.
  7. Pay off an item, keep writing that check!  After you pay off a loan or bill, put that same payment in an account to build up.
  8. Emergency Fund – this is a very important part of savings.  The general rule of thumb is to have at least 6 months of your expenses saved in an account that is easily accessible in case of an emergency.  Life can be unexpected and having this will eliminate a lot of stress when an emergency happens!

Worried about Social Security and Medicare cuts?  So are thousands of people.  With our current economy and a climbing deficit, it leaves us wondering just how long these programs will last as is before going dry.  It also has many people taking Social Security at age 62 instead of waiting until 66 (which will give them an 8% boost in their check). 

An article by William Barrett in Forbes Magazine gives you a complete picture of what is happening.  Click here to read on…

If you have recently changed jobs, it is a good idea to take a look at your qualified retirement plan with your former employer.  Rolling this over into your own individual retirement account will give you more control and choice over investments while continuing to defer taxes. 

An article by Bill Bischoff discusses a few things to consider when wanting a tax-free IRA rollover.  Click here to read entire article.

So you set up your retirement plan say ten or 15 years ago, it’s time for a checkup!  The sooner you can make adjustments the better, especially if you are going to have to make some big changes in your plan.  One important factor is we are living longer.  Twenty years ago statistics said the average male could expect to live to age 80 and the average female to age 85.  In recent studies, these numbers are age 88 for males and 90 for females.  Now these are just averages, a good source which allows you to enter personal variables is  One you have a better idea of your life expectancy, you can calulate how long your savings might last and determine if you will fall short. 

If there is a shortfall, then a thorough look at your portfolio is in order next.  Maybe your being too conservative for your portfolio to last the additional time.  That being said, we are not encouraging our clients to run out and load up on risky investments, but rather take a pro-active approach and find the right funds for your needs.  If it looks as if you are going to be extremely short of your needs, you may have to consider downsizing to a smaller home or taking a reverse mortgage to compensate for the shortfall.

Another item to look at is your spending habits.  You may have set up a budget at the beginning of your retirement, but ten or 15 years later, you have a much better idea of how much money you need.  It is a good reality check for people to keep tabs on what they are spending their money on.  Many people do not realize the money that is being spent on ATM fees and small items such as coffee or entertainment.

If things become tight and keeping up with your premiums for long-term-care insurance or any other insurance for that matter is becoming a problem, you may want to ask your children to help out.  It would be more economical for your children to help you pay the premiums than to allow the coverage to lapse.

Contact us today if it is time for a review of your retirement plan.